21st January 2026
Background
Notice No. 1/2026/1 was published in the Portuguese Official Gazette, making public the entry into force of the new Convention between the Portuguese Republic and the United Kingdom of Great Britain and Northern Ireland for the Elimination of Double Taxation with respect to Taxes on Income and on Capital Gains and the Prevention of Tax Evasion and Avoidance.
The Convention was signed in London on 15 September 2025, approved by Resolution of the Assembly of the Republic No. 206-A/2025 and ratified by Presidential Decree No. 124-A/2025, both dated 29 December 2025.
Scope
The new Convention applies to tax residents of Portugal and the United Kingdom in respect of taxes on income and on capital gains covered by its provisions.
Its material scope includes, inter alia, income derived from:
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Business activities;
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Dependent and independent personal services;
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Dividends, interest and royalties;
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Capital gains on movable and immovable property.
Key impacts
The entry into force of this Convention is particularly relevant for:
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Corporate groups with operations in Portugal and the United Kingdom;
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Investors resident in one Contracting State deriving income from the other;
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Cross-border payments of dividends, interest, royalties and capital gains;
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International structures relying on mechanisms for the elimination of double taxation.
The new Convention replaces the previously applicable treaty framework and strengthens mechanisms for tax cooperation between the two States, including provisions aimed at combating tax evasion and avoidance.
Entry into force
Pursuant to Article 28 of the Convention, it entered into force on 29 December 2025 and shall have effect as from 1 January 2026.
Next steps
An assessment of existing and future cross-border income flows is recommended, together with a review of current tax structures, in order to ensure proper alignment with the new Convention.
Our team is available to support the assessment of the specific impact of this change and the implementation of the necessary measures.
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The above information does not purport to constitute an exhaustive analysis of all amendments to the applicable legal framework, but rather a selection of those deemed most relevant, and does not dispense with consultation with our Firm and/or the legal instruments to which it refers.
For further information, please contact Catarina Breia (+351 91 7575 832 or cbreia@pt-nexia.com) from our Tax Department.
