## PROTOCOL TO THE CONVENTION BETWEEN THE UNITED KINGDOM OF GREAT BRITAIN AND NORTHERN IRELAND AND THE PORTUGUESE REPUBLIC FOR THE ELIMINATION OF DOUBLE TAXATION WITH RESPECT TO TAXES ON INCOME AND ON CAPITAL GAINS AND THE PREVENTION OF TAX EVASION AND AVOIDANCE
At the signing of the Convention between the United Kingdom of Great Britain and Northern Ireland and the Portuguese Republic for the elimination of double taxation with respect to taxes on income and on capital gains and the prevention of tax evasion and avoidance (hereinafter referred to as “the Convention”), the United Kingdom of Great Britain and Northern Ireland and the Portuguese Republic have agreed upon the following provisions, which shall form an integral part of the Convention:
### 1. With reference to paragraph 2 of Article 13 (Capital Gains):
It is understood that the term “comparable interest” includes, in the case of Portugal, participation units in an undertaking for collective investment within the scope of Portugal’s domestic law.
### 2. With reference to Article 23 (Mutual agreement procedure):
It is understood that:
#### Part I - Mandatory binding arbitration
- 1. Where:
- a) under paragraph 1 of Article 23 (Mutual agreement procedure) of the Convention, a person has presented a case to the competent authority of a Contracting State on the basis that the actions of one or both of the Contracting States have resulted for that person in taxation not in accordance with the provisions of the Convention; and
- b) the competent authorities are unable to reach an agreement to resolve that case pursuant to paragraph 2 of Article 23 (Mutual agreement procedure) of the Convention, within a period of three years beginning on the start date referred to in paragraph 8 or 9, as the case may be (unless, prior to the expiration of that period the competent authorities of the Contracting States have agreed to a different time period with respect to that case and have notified the person who presented the case of such agreement),
- any unresolved issues arising from the case shall, if the person so requests in writing, be submitted to arbitration in the manner described in this Protocol, according to any rules or procedures agreed upon by the competent authorities of the Contracting States pursuant to the provisions of paragraph 10.
- 2. Where a competent authority has suspended the mutual agreement procedure referred to in paragraph 1 because a case with respect to one or more of the same issues is pending before court or administrative tribunal, the period provided in subparagraph b) of paragraph 1 will stop running until either a final decision has been rendered by the court or administrative tribunal or the case has been suspended or withdrawn. In addition, where a person who presented a case and a competent authority have agreed to suspend the mutual agreement procedure, the period provided in subparagraph b) of paragraph 1 will stop running until the suspension has been lifted.
- 3. Where both competent authorities agree that a person directly affected by the case has failed to provide in a timely manner any additional material information requested by either competent authority after the start of the period provided in subparagraph b) of paragraph 1, the period provided in subparagraph b) of paragraph 1 shall be extended for an amount of time equal to the period beginning on the date by which the information was requested and ending on the date on which that information was provided.
- 4. The following rules shall apply to the arbitration decision:
- a) the arbitration decision with respect to the issues submitted to arbitration shall be implemented through the mutual agreement concerning the case referred to in paragraph 1. The arbitration decision shall be final;
- b) the arbitration decision shall be binding on both Contracting States except in the following cases:
- (i) if a person directly affected by the case does not accept the mutual agreement that implements the arbitration decision. In such a case, the case shall not be eligible for any further consideration by the competent authorities. The mutual agreement that implements the arbitration decision on the case shall be considered not to be accepted by a person directly affected by the case if any person directly affected by the case does not, within 60 days after the date on which notification of the mutual agreement is sent to the person, withdraw all issues resolved in the mutual agreement implementing the arbitration decision from consideration by any court or administrative tribunal or otherwise terminate any pending court or administrative proceedings with respect to such issues in a manner consistent with that mutual agreement;
- (ii) if a final decision of the courts of one of the Contracting States holds that the arbitration decision is invalid. In such a case, the request for arbitration under paragraph 1 shall be considered not to have been made, and the arbitration process shall be considered not to have taken place (except for the purposes of Parts III (Confidentiality of arbitration proceedings) and VII (Costs of arbitration proceedings) of this Protocol. In such a case, a new request for arbitration may be made unless the competent authorities agree that such a new request should not be permitted;
- (iii) if a person directly affected by the case pursues litigation on the issues which were resolved in the mutual agreement implementing the arbitration decision in any court or administrative tribunal.
- 5. The competent authority that received the initial request for a mutual agreement procedure as described in subparagraph a) of paragraph 1 shall, within two calendar months of receiving the request:
- a) send a notification to the person who presented the case that it has received the request; and
- b) send a notification of that request, along with a copy of the request, to the competent authority of the other Contracting State.
- 6. Within three calendar months after a competent authority receives the request for a mutual agreement procedure (or a copy thereof from the competent authority of the other Contracting State) it shall either:
- a) notify the person who has presented the case and the other competent authority that it has received the information necessary to undertake substantive consideration of the case; or
- b) request additional information from that person for that purpose.
- 7. Where pursuant to subparagraph b) of paragraph 6, one or both of the competent authorities have requested from the person who presented the case additional information necessary to undertake substantive consideration of the case, the competent authority that requested the additional information shall, within three calendar months of receiving the additional information from that person, notify that person and the other competent authority either:
- a) that it has received the requested information; or
- b) that some of the requested information is still missing.
- 8. Where neither competent authority has requested additional information pursuant to subparagraph b) of paragraph 6, the start date referred to in paragraph 1 shall be the earlier of:
- a) the date on which both competent authorities have notified the person who presented the case pursuant to subparagraph a) of paragraph 6; and
- b) the date that is three calendar months after the notification to the competent authority of the other Contracting State pursuant to subparagraph b) of paragraph 5.
- 9. Where additional information has been requested pursuant to subparagraph b) of paragraph 6, the start date referred to in paragraph 1 shall be the earlier of:
- a) the latest date on which the competent authorities that requested additional information have notified the person who presented the case and the other competent authority pursuant to subparagraph a) of paragraph 7; and
- b) the date that is three calendar months after both competent authorities have received all information requested by either competent authority from the person who presented the case.
- If, however, one or both of the competent authorities send the notification referred to in subparagraph b) of paragraph 7, such notification shall be treated as a request for additional information under subparagraph b) of paragraph 6.
- 10. The competent authorities of the Contracting States shall by mutual agreement, pursuant to Article 23 (Mutual agreement procedure) of the Convention, settle the mode of application of the provisions contained in this Protocol, including the minimum information necessary for each competent authority to undertake substantive consideration of the case. Such an agreement shall be concluded before the date on which unresolved issues in a case are first eligible to be submitted to arbitration and may be modified from time to time thereafter.
- 11. Notwithstanding the provisions of the preceding paragraphs:
- a) any unresolved issue arising from a mutual agreement procedure case otherwise within the scope of the arbitration process provided for by this Protocol shall not be submitted to arbitration, if a decision on this issue has already been rendered by a court or administrative tribunal of either Contracting State;
- b) if, at any time after a request for arbitration has been made and before the arbitration panel has delivered its decision to the competent authorities of the Contracting States, a decision concerning the issue is rendered by a court or administrative tribunal of one of the Contracting States, the arbitration process shall terminate.
#### Part II - Appointment of arbitrators
- 1. Except to the extent that the competent authorities of the Contracting States mutually agree on different rules, paragraphs 2 through 4 shall apply for the purposes of this Protocol.
- 2. The following rules shall govern the appointment of the members of an arbitration panel:
- a) the arbitration panel shall consist of three individual members with expertise or experience in international tax matters;
- b) each competent authority shall appoint one panel member within 60 days of the date of the request for arbitration under paragraph 1 of Part I (Mandatory binding arbitration) of this Protocol. The two panel members so appointed shall, within 60 days of the latter of their appointments, appoint a third member who shall serve as Chair of the arbitration panel. The Chair shall not be a national or resident of either Contracting State;
- c) each member appointed to the arbitration panel must be impartial and independent of the competent authorities, tax administrations, and ministries of finance of the Contracting States and of all persons directly affected by the case (as well as their advisors) at the time of accepting an appointment, maintain his or her impartiality and independence throughout the proceedings, and avoid any conduct for a reasonable period of time thereafter which may damage the appearance of impartiality and independence of the arbitrators with respect to the proceedings.
- 3. In the event that the competent authority of a Contracting State fails to appoint a member of the arbitration panel in the manner and within the time periods specified in paragraph 2 or agreed to by the competent authorities of the Contracting States, a member shall be appointed on behalf of that competent authority by the highest ranking official of the Centre for Tax Policy and Administration of the Organisation for Economic Co-operation and Development that is not a national of either Contracting State.
- 4. If the two initial members of the arbitration panel fail to appoint the Chair in the manner and within the time periods specified in paragraph 2 or agreed to by the competent authorities of the Contracting States, the Chair shall be appointed by the highest ranking official of the Centre for Tax Policy and Administration of the Organisation for Economic Co-operation and Development that is not a national of either Contracting State.
#### Part III – Confidentiality of arbitration proceedings
1. Solely for the purposes of the application of the provisions of this Protocol and of the provisions of the Convention and of the domestic laws of the Contracting States related to the exchange of information, confidentiality, and administrative assistance, members of the arbitration panel and a maximum of three staff per member (and prospective arbitrators solely to the extent necessary to verify their ability to fulfil the requirements of arbitrators) shall be considered to be persons or authorities to whom information may be disclosed. Information received by the arbitration panel or prospective arbitrators and information that the competent authorities receive from the arbitration panel shall be considered information that is exchanged under the provisions of the Convention related to the exchange of information and administrative assistance.
2. The competent authorities of the Contracting States shall ensure that members of the arbitration panel and their staff agree in writing, prior to their acting in an arbitration proceeding, to treat any information relating to the arbitration proceeding consistently with the confidentiality and nondisclosure obligations described in the provisions of the Convention related to the exchange of information and administrative assistance and under the applicable laws of the Contracting States.
#### Part IV – Resolution of a case prior to the conclusion of the arbitration
- For the purposes of this Protocol and the provisions of the Convention that provide for resolution of cases through mutual agreement, the mutual agreement procedure, as well as the arbitration proceeding, with respect to a case shall terminate if, at any time after a request for arbitration has been made and before the arbitration panel has delivered its decision to the competent authorities of the Contracting States:
- a) the competent authorities of the Contracting States reach a mutual agreement to resolve the case; or
- b) the person who presented the case withdraws the request for arbitration or the request for a mutual agreement procedure.
#### Part V – Type of arbitration process
- 1. Except to the extent that the competent authorities of the Contracting States mutually agree on different rules, the following rules shall apply with respect to an arbitration proceeding:
- a) after a case is submitted to arbitration, the competent authority of each Contracting State shall provide any information that may be necessary for the arbitration decision to all panel members without undue delay. Unless the competent authorities of the Contracting States agree otherwise, any information that was not available to both competent authorities before the request for arbitration was received by both of them shall not be taken into account for purposes of the decision;
- b) the arbitration panel shall decide the issues submitted to arbitration in accordance with the applicable provisions of the Convention and, subject to these provisions, of those of the domestic laws of the Contracting States. The panel members shall also consider any other sources which the competent authorities of the Contracting States may by mutual agreement expressly identify;
- c) the arbitration decision shall be delivered to the competent authorities of the Contracting States in writing and shall indicate the sources of law relied upon and the reasoning which led to its result. The arbitration decision shall be adopted by a simple majority of the panel members. The arbitration decision shall have no precedential value.
- 2. Prior to the beginning of arbitration proceedings, the competent authorities of the Contracting States shall ensure that each person that presented the case and their advisors agree in writing not to disclose to any other person any information received during the course of the arbitration proceedings from either competent authority or the arbitration panel. The mutual agreement procedure under Article 23 (Mutual agreement procedure) of the Convention, as well as the arbitration proceeding under this Protocol, with respect to the case shall terminate if, at any time after a request for arbitration has been made and before the arbitration panel has delivered its decision to the competent authorities of the Contracting States, a person that presented the case or one of that person’s advisors materially breaches that agreement.
#### Part VI – Agreement on a different resolution
Notwithstanding paragraph 4 of Part I (Mandatory binding arbitration) of this Protocol, an arbitration decision pursuant to this Protocol shall not be binding on the Contracting States and shall not be implemented if the competent authorities of the Contracting States agree on a different resolution of all unresolved issues within three calendar months after the arbitration decision has been delivered to them.
#### Part VII – Costs of arbitration proceedings
In an arbitration proceeding under this Protocol, the fees and expenses of the members of the arbitration panel, as well as any costs incurred in connection with the arbitration proceedings by the Contracting States, shall be borne by the Contracting States in a manner to be settled by mutual agreement between the competent authorities of the Contracting States. In the absence of such agreement, each Contracting State shall bear its own expenses and those of its appointed panel member. The cost of the chair of the arbitration panel and other expenses associated with the conduct of the arbitration proceedings shall be borne by the Contracting States in equal shares.
#### Part VIII – Compatibility
1. Any unresolved issue arising from a mutual agreement procedure case otherwise within the scope of the arbitration process provided for in this Protocol shall not be submitted to arbitration if the issue falls within the scope of a case with respect to which an arbitration panel or similar body has previously been set up in accordance with a bilateral or multilateral convention that provides for mandatory binding arbitration of unresolved issues arising from a mutual agreement procedure case.
2. Nothing in this Protocol shall affect the fulfilment of wider obligations with respect to the arbitration of unresolved issues arising in the context of a mutual agreement procedure resulting from other conventions to which the Contracting States are or will become parties.
#### Part IX – Cases eligible for arbitration
- The provisions of this Protocol shall apply only to issues arising under the provisions of Articles 5 (Permanent establishment), 7 (Business profits) and 9 (Associated enterprises) of the Convention, excluding:
- a) cases concerning items of income or capital gains that are not taxed by a Contracting State either because they are not included in the taxable base in that Contracting State or because they are subject to an exemption or zero tax rate provided only under the domestic tax law of that Contracting State;
- b) cases involving the conduct of a person directly affected by the case that, by final ruling resulting from legal or administrative proceedings, has been subject to a penalty for tax fraud, wilful default or gross negligence; for this purpose, penalties for tax fraud, wilful default or gross negligence shall include the penalties for tax crimes as well as for other serious tax infringements as defined by Article 23(3) of RGIT (Regime Geral das Infrações Tributárias), enacted by the Law 15/2001, of 5 June 2001. Any subsequent provisions replacing, amending or updating these provisions would also be comprehended;
- c) cases involving the application of domestic general anti-avoidance rules or anti-abuse rules contained in the Convention. For this purpose, the Portuguese Republic´s domestic general anti-avoidance rules shall include Articles 38 and 39 of LGT (Lei Geral Tributária) enacted by the Decree‑Law 398/98, of 17 December 1998. Any subsequent rules replacing, amending or updating these anti-avoidance rules would also be comprehended;
- d) cases eligible for arbitration under the Convention on the Elimination of Double Taxation in Connection with the Adjustment of Profits of Associated Enterprises (90/436/EEC), as amended, or under any other instrument of the European Union.
#### Part X – Entry into effect
Notwithstanding the provisions of paragraph 3 of Article 28 (Entry into force) of the Convention, the provisions of this Protocol shall have effect only with respect to cases presented to the competent authority of a Contracting State on or after the date of entry into force of the Convention.
### 3. With reference to Articles 24 (Exchange of information) and 25 (Assistance in the collection of taxes)
The terms “VAT”, “customs duties” and “excise duties” are as defined by Article PVAT.3 of the Protocol on administrative cooperation and combating fraud in the field of value added tax and on mutual assistance for the recovery of claims relating to taxes and duties and the exchange of information for customs duties is covered by the Protocol on mutual administrative assistance in customs matters, attached to the Trade and Cooperation Agreement between the European Union and the European Atomic Energy Community, of the one part, and the United Kingdom of Great Britain and Northern Ireland, of the other part.
IN WITNESS WHEREOF the undersigned, duly authorised thereto, have signed this Protocol.
DONE at London on this 15th day of September 2025, in two originals, in the English and Portuguese languages, both texts being equally authoritative.
For the United Kingdom of Great Britain and Northern Ireland: Yvette Cooper
For the Portuguese Republic: Paulo Artur dos Santos de Castro de Campos Rangel