Approving The Agreement Between The Portuguese Republic And The British Crown Dependent Territory Turks And Caicos Islands, By Exchange Of Letters Respectively To 29 December 2004 And 17 April 2005, Concerning The Taxation Of Savings Income

Original Language Title: Aprova o Acordo entre a República Portuguesa e o Território Dependente da Coroa Britânica das Ilhas Turcas e Caicos, por troca de cartas, respectivamente de 29 de Dezembro de 2004 e de 17 de Abril de 2005, Relativo à Tributação dos Rendimentos da Poupança

Read the untranslated law here: http://app.parlamento.pt/webutils/docs/doc.pdf?path=6148523063446f764c3246795a5868774d546f334e7a67774c336470626d6c7561574e7059585270646d467a4c316776644756346447397a4c334277636a45334c5667755a47396a&fich=ppr17-X.doc&Inline=false

MOTION for a RESOLUTION paragraph 17/X whereas Directive No 2003/48/EC of 3 June 2003 on taxation of savings income in the form of interest payments (which aims to allow such income, paid in a Member State of the European Union to beneficial owners who are individuals with resident for tax purposes in another Member State, be subject to effective taxation in accordance with the legislation of the latter Member State) establishes that the application of the internal rules implementation depends on the conclusion of agreements or other arrangements that define that all the relevant dependent or associated territories of Member States to adopt measures equivalent or identical to those of the said directive; Whereas the agreement concluded with the Turks and Caicos establishes the regulatory framework for this territory to adopt such measures, particularly those relating to taxation for retention by the paying agent on interest payments to individuals resident in Portuguese territory with revenue sharing, and that is an essential element for the achievement of the objectives of Directive No. 2003/48/EC; So: under d) of paragraph 1 of article 197 of the Constitution, the Government presents to the Assembly of the Republic the following resolution: Approving the agreement between the Portuguese Republic and the British Crown dependent Territory Turks and Caicos Islands, by Exchange of letters respectively to 29 December 2004 and April 2005 17 Concerning the taxation of savings income, the text and its annex, authenticated versions in Portuguese and English, published in the annex.



Seen and approved by the Council of Ministers of 22 July 2005 the Prime Minister the Minister of Parliamentary Affairs Minister Presidency AGREEMENT in the FORM of an exchange of letters concerning the TAXATION of SAVINGS INCOME a. Letter of the Portuguese Republic Sir, I have the honour to refer to the text of the draft model agreement on taxation of savings income between the Turks and Caicos Islands and the Portuguese Republic " approved by the high-level Working Group (taxation of savings) of the Council of Ministers of the European Union, 22 June 2004.

In the face of that text, I have the honour of  propose you the «agreement on taxation of savings income ' in the Appendix 1 to this letter,  propose that this agreement enters into force on the date of application of Directive 2003/48/EC of 3 June 2003 on taxation of savings income in the form of interest payments , whose date is subject to the provisions of paragraph 2 of article 17 of the Directive, subject to the reciprocal notification that they were satisfied the constitutional requirements regarding internal entry into force of this agreement;

 propose the mutual commitment to finalizing as soon as possible the abovementioned constitutional formalities and we notified each other without delay through the formal channels of these formalities are completed.

I have the honour to propose that, if the above is acceptable by you, that this letter with its Appendix 1 and your confirmation form, together, mutual acceptance and the conclusion of the agreement between Portugal and the Turks and Caicos Islands.

Please accept, Sir, the assurances of our highest consideration, by the Government of the Portuguese Republic Minister of finance and public administration Made in Lisbon, in Portuguese and English languages, in triplicate. B. proposal for response of the Government of the Turks and Caicos Islands Sir, I have the honour to acknowledge receipt of your letter dated [...], which reads as follows: ' Sir, I have the honour to refer to the text of the draft model agreement on taxation of savings income between the Turks and Caicos Islands and the Portuguese Republic " approved by the high-level Working Group (taxation of savings) of the Council of Ministers of the European Union, 22 June 2004.

In the face of that text, I have the honour of  propose you the «agreement on taxation of savings income ' in the Appendix 1 to this letter,  propose that this agreement enters into force on the date of application of Directive 2003/48/EC of 3 June 2003 on taxation of savings income in the form of interest payments , whose date is subject to the provisions of paragraph 2 of article 17 of the Directive, subject to the reciprocal notification that they were satisfied the constitutional requirements regarding internal entry into force of this agreement;

 propose the mutual commitment to finalizing as soon as possible the abovementioned constitutional formalities and we notified each other without delay through the formal channels of these formalities are completed.

I have the honour to propose that, if the above is acceptable by you, that this letter with its Appendix 1 and your confirmation form, together, mutual acceptance and the conclusion of the agreement between Portugal and the Turks and Caicos Islands.

Please accept, Sir, the assurances of our highest consideration.»

I can confirm that the Government of the Turks and Caicos Islands is in line with the content of the letter from you, [...].

Please accept, Sir, the assurance of my highest consideration, [name, title and signature of individuality in the Turks and Caicos Islands responsible for signature] Done in [...], in Portuguese and English, in triplicate.

Agreement on the TAXATION of SAVINGS INCOME BETWEEN the TURKS and CAICOS ISLANDS and the Portuguese Republic whereas: 1. Provides the Article 17 of Directive 2003/48/EEC (' the directive ') of the Council of the European Union (' the Council ') concerning the taxation of savings income before 1 January 2004 Member States shall adopt and publish the laws , regulations and administrative provisions necessary to comply with this Directive, the provisions will apply from 1 January 2005, provided that:


' (i) the Switzerland Confederation, the Principality of Liechtenstein, the Republic of San Marino, the Principality of Monaco, the Principality of Andorra apply from that same date measures equivalent to those laid down in this directive, in accordance with the agreements concluded between these countries and the European Community, following a unanimous decision of the Council;

(ii) have been concluded all agreements or other arrangements that establish that all the relevant dependent or associated territories apply from that same date, the automatic exchange of information in the manner provided for in chapter II of this Directive, (or, during the transitional period defined in article 10, apply a withholding tax under the conditions laid down in articles 11 and 12);

2. The Turks and Caicos Islands showed that, in accordance with the conclusions of the ECOFIN Council of 3 June 2003, during the transitional period referred to in article 10 of the directive, the Council invites the Commission to initiate discussions with other important financial centres with a view to promoting the adoption by those jurisdictions of measures equivalent to those contained in the directive.

3. The Turks and Caicos Islands relationship with the EU is the subject of Part 4 of the Treaty establishing the European Community. The Turks and Caicos Islands are not in EU fiscal territory.

4. The Turks and Caicos Islands showed that, although the ultimate aim of the EU Member States is to permit effective taxation of interest payments in the Member State of residence for tax purposes of the beneficial owner through the exchange of information between them concerning these interest payments, three Member States, namely Austria, Belgium and Luxembourg , shall not be required to exchange information during a transitional period but shall apply a withholding tax to the savings income covered by this directive.

5. the ' withholding tax ' referred to in the directive will be referred to as ' withholding tax ' in the domestic law of the Turks and Caicos Islands. For the purposes of this agreement the two terms should be read coligadamente as ' withholding tax/withholding tax ' and have the same meaning.

6. The Turks and Caicos Islands have agreed to apply a withholding tax under the terms of agreements concluded with Member States with effect from 1 January 2005 provided that Member States have adopted the laws, regulations and administrative provisions necessary to comply with the Directive, and have been broadly complied with the requirements of article 17 of the directive.

7. The Turks and Caicos Islands have agreed to apply the automatic exchange of information in terms of agreements concluded with Member States in the manner provided for in chapter II of the Directive following the end of the transitional period as defined in paragraph 2 of article 10 of the directive.

8. The Turks and Caicos Islands have legislation on collective investment undertakings assumed equivalent as for your effect to the EC legislation referred to in articles 2 and 6 of the directive.

The Turks and Caicos Islands and the Portuguese Republic, hereinafter referred to as «contracting party» or «contracting party», unless the context requires otherwise, have agreed to conclude the following agreement which contains obligations which bind only the Contracting Parties and provides for: a) the automatic exchange of information by the competent authority of Portugal to the competent authority of the Turks and Caicos Islands along the lines provided for in relation to the competent authority of a Member State;

b) application by the Turks and Caicos Islands, during the transitional period defined in article 10 of the directive, of a withholding tax from the same date and under the same conditions as those set out in articles 11 and 12 of the directive;

c) the automatic exchange of information by the competent authority of the Turks and Caicos Islands to Portugal's competent authority in accordance with article 13 of the directive;

(d)) the transfer by the competent authority of the Turks and Caicos Islands to the competent authority of Portugal of 75% of the revenue of the withholding tax;

in relation to interest payments made by a paying agent established in a Contracting Party to a natural person residing in another Contracting Party.

For the purposes of this agreement the term ' competent authority ' when applied to the Contracting Parties means the Minister of finance or an authorised representative for Portugal and the Financial Services Commission in respect of the Turks and Caicos Islands.

Article 1 Retention by paying agents tax interest payments, as defined in article 8 of this agreement, made by a paying agent established in the Turks and Caicos Islands to beneficial owners within the meaning of article 5 of this agreement, which are residents of Portugal are without prejudice to the provisions of article 3 of this agreement, subject to a withholding tax in relation to the amount of interest paid during the transitional period referred to in article 14 of this agreement from the date mentioned in article 15 of this agreement. The rate of withholding tax must be of 15% during the first three years of the transitional period, 20% for the subsequent three years and 35% after this last period.

Article 2 provision of information on the part of the paying agents 1. Where are interest payments, as defined in article 8 of this agreement, by a paying agent established in Portugal to beneficial owners as defined in article 5 of this agreement, which are residents of the Turks and Caicos Islands, or where the provisions of subparagraph (a)) of paragraph 1 of article 3 of this agreement, the paying agent shall communicate to the competent authority : the) identity and residence of the beneficial owner established in accordance with article 6 of this agreement;

b) the name and address of the paying agent;

c) the account number of the beneficial owner or, where there is none, identification of the credit your generator of interest;

d) information regarding interest payments specified in paragraph 1 of article 4 of this agreement.

However, Contracting Parties may limit the minimum content of the information which the paying agent must communicate with regard to the payment of interest, the total amount of interest or income and to the total amount of the proceeds of the sale, redemption or refund; and Portugal must comply with paragraph 2 of this article.


2. Within six months following the end of your tax year, the competent authority of Portugal shall communicate to the competent authority of the Turks and Caicos Islands, automatically, the information referred to in (a)) d) of paragraph 1 of this article, for all interest payments made during that year.

Article 3 exceptions to the withholding tax system 1. To apply the withholding tax in accordance with article 1 of this agreement, the Turks and Caicos Islands should establish one, or both, of the following procedures to ensure that the beneficial owners may request the non-application of this retention: a) a procedure which allows the beneficial owner, the meaning given to it by article 5 of this agreement avoid withholding tax specified in article 1 of this agreement, expressly authorize your paying agent to report information concerning interest payments to the competent authority of the Contracting Party of establishment of the paying agent. Such authorisation shall cover all interest payments made to the beneficial owner by that paying agent; (b)) a procedure which ensures that withholding tax shall not be applied when the beneficial owner present to your paying agent a certificate issued in your name by the competent authority of the Contracting Party of residence for tax purposes in accordance with paragraph 2 of this article.

2. at the request of the beneficial owner, the competent authority of the Contracting Party of the country of residence for tax purposes shall issue a certificate indicating: i) name or name, address and tax identification number, or another, or, in the absence thereof, date and place of birth of the beneficial owner;

II) name and address of the paying agent;

III) the account number of the beneficial owner or, where there is none, identification of the title your credit.

This certificate is valid for a period not exceeding three years. Must be passed to any beneficial owner who requests it, within two months of the submission of such a request.

3. When you apply to (a)) of paragraph 1 of this article, the competent authority of the Turks and Caicos Islands of establishment of the paying agent shall communicate the information referred to in paragraph 1 of article 2 of this agreement, the competent authority of Portugal as a country of residence of the beneficial owner. That information shall be automatic and shall take place at least once a year, within six months following the end of the fiscal year as defined in legislation of the Contracting Party, for all interest payments made during that year.

Article 4 the Reserve Base of the withholding 1. A paying agent established in the Turks and Caicos Islands must apply the withholding tax in accordance with article 1 of this agreement as follows: a) in the case of an interest payment within the meaning of point (a)) of paragraph 1 of article 8 of this agreement: on the gross amount of interest paid or taken on credit;

b) in the case of an interest payment within the meaning of points (b)) or d) of paragraph 1 of article 8 of this agreement: on the amount of interest or income referred to in paragraph 1 (b)) or d) of this paragraph or by a levy of equivalent effect to be borne by the recipient on the full amount of the proceeds from the sale , redemption or refund;

c) in the case of an interest payment within the meaning of subparagraph (c)) of paragraph 1 of article 8 of this agreement: on the amount of interest referred to in that provision;

d) in the case of an interest payment within the meaning of paragraph 4 of article 8 of this agreement: on the amount of interest attributable to each of the members of the entity referred to in paragraph 2 of article 7 of this agreement to meet the conditions of paragraph 1 of article 5 of this agreement;

and) where the Turks and Caicos Islands have recourse to the option provided for in paragraph 5 of article 8 of this agreement: on the amount of annualised interest.

2. For the purposes of (a)) and b) of paragraph 1 of this article, the withholding tax will be deducted on a pro rata basis for the period during which the beneficial owner holds a credit. When the paying agent is unable to determine the period of holding on the basis of the information at your disposal, the paying agent will assume that the beneficial owner remained in the possession of the claim for the entire period of your existence, unless the latter provide evidence of the date on which the acquired.

3. the application of withholding tax by the Turks and Caicos Islands does not prevent the other Contracting Party of residence for tax purposes of the beneficial owner from taxing the income in accordance with your national legislation.

4. During the transitional period, the Turks and Caicos Islands may provide that an economic operator paying interest to, or assign the payment of interest, an entity referred to in paragraph 2 of article 7 of this agreement the other Contracting Party shall be considered the paying agent in place of the entity and apply the withholding tax on such interest unless the entity has formally accepted that your name and address, as well as the total amount of interest paid or attributed to him, are disclosed in accordance with the last subparagraph of paragraph 2 of article 7 of this agreement. Article 5 definition of beneficial owner 1. For the purposes of this agreement, ' beneficial owner ' means any individual who receives an interest payment or any individual for whom an interest payment is secured, unless he provides evidence that it was not received or secured in your advantage. It is assumed that a natural person is not beneficial owner where: a) acts as a paying agent within the meaning of paragraph 1 of article 7 of this agreement;

b) acts on behalf of a legal person, an entity with profits taxed within the framework of common law provisions on the taxation of businesses, a UCITS authorised in accordance with the provisions of Council Directive 85/611/EEC or an equivalent body for collective investment established in the Turks and Caicos Islands, or one of the entities referred to in paragraph 2 of article 7 of this agreement and in the latter case, the name or trading name and address of that entity to the economic operator responsible for the payment of interest, and the latter communicates such information to the then competent authority of your Contracting Party of establishment;

c) acts on behalf of another individual who is the beneficial owner and who discloses to the paying agent the identity of the beneficial owner.


2. If you have information suggesting that the individual who received an interest payment or who has an interest payment is secured may not be the beneficial owner and if you do not apply to (a)) or point (b)) of paragraph 1 of this article, the paying agent shall take reasonable steps to determine the identity of the beneficial owner. If you cannot identify the beneficial owner, the paying agent shall consider the individual in question as the beneficial owner.

Article 6 identification and determination of the place of residence of the beneficial owners 1. Each Party shall adopt and ensure the application in your territory, of the procedures necessary to allow the paying agent to identify the beneficial owners and their residence for the purposes of this agreement. These procedures must comply with the minimum standards established in paragraphs 2 and 3.

2. The paying agent shall establish the identity of the beneficial owner in accordance with minimum standards which vary according to the date of beginning of relations between the paying agent and the recipient of the payment of interest, namely: a) for contractual relations established before 1 January 2004, the paying agent shall establish the identity of the beneficial owner expressed by your name and address, on the basis of the information at its disposal, in particular pursuant to the regulations in force in your state of establishment and to Council Directive 91/308/EEC of 10 June 1991 in the case of Portugal, or, in the case of the Turks and Caicos Islands, pursuant to the relevant provisions of their laws and regulations on the prevention of the use of the financial system for the purpose of money laundering;

b) for contractual relations established, or for transactions carried out in the absence of contractual relations, from 1 January 2004 the paying agent shall establish the identity of the beneficial owner, expressed by your name or title, address and, if available, tax identification number allocated by the Member State of residence for tax purposes. These elements shall be determined on the basis of the passport or official identity card presented by the beneficial owner. If you do not appear in the passport or official identity card, the address is determined on the basis of any other evidence presented by the beneficial owner. If the tax identification number does not appear on the Passport, on the official identity card or any other documentary evidence, including, where appropriate, the certificate of residence for tax purposes, presented by the beneficial owner, the identity will be complemented by the indication of the date and place of birth of the beneficial owner, determined on the basis of your passport or official identity card.

3. The paying agent shall establish the residence of the beneficial owner in accordance with minimum standards which vary according to the date of beginning of relations between the paying agent and the recipient of the interest payment. Subject to the foregoing, it is considered that the residence is situated in the country where the beneficial owner has your permanent address: a) for contractual relations established before 1 January 2004, the paying agent shall establish the residence of the beneficial owner on the basis of the information at its disposal, in particular pursuant to the regulations in force in your state of establishment and to Council Directive 91/308/EEC in the case of Portugal, or in the case of the Turks and Caicos Islands, pursuant to the relevant provisions of their laws and regulations on the prevention of the use of the financial system for the purpose of money laundering;

b) for contractual relations established, or for transactions carried out in the absence of contractual relations, from 1 January 2004, the paying agents shall determine the residence of the beneficial owner on the basis of the address mentioned in your passport or official identity card or, if necessary, any other evidence presented by the beneficial owner according to the following procedure : for individuals presenting a passport or official identity card issued by a Member State and declare to be resident in a third country, residence shall be determined on the basis of a tax residence certificate issued by the competent authority of the third country where the natural person declare reside. In the absence of presentation of this certificate, it is considered that the residence is situated in the Member State which issued the passport or other official identity document.

Article 7 definition of paying agent 1. For the purposes of this agreement, ' paying agent ' means any economic operator who pays interest or assign the payment of interest for the benefit of beneficial owner, whether the operator be the debtor of the claim which the interest or the operator charged by the debtor or the beneficial owner of pay or assign the payment of interest.

2. Any entity established in a Contracting Party to which interest is paid or assigned the interest payment for the benefit of the beneficial owner shall also be considered as paying agent at the time of such payment or assignment. This provision does not apply if the economic operator has reason to believe, based on evidence presented by the officials, that: a) is a legal person, with the exception of those legal persons referred to in paragraph 5 of this article; or b) its profits are taxed under common law provisions in the field of business taxation; or (c)) it is an UCITS authorised in accordance with the provisions of Directive 85/611/EEC or of a collective investment undertaking equivalent established in Turks and Caicos.

An economic operator to pay or assign the interest payment to an entity of this type established in another Contracting Party that is regarded as a paying agent under this paragraph shall communicate the name and address of the entity, as well as the total amount of interest paid or allocated to the entity, the competent authority of your Contracting Party of establishment , which shall then this information to the competent authority of the Contracting Party of establishment of that entity.


3. The entity referred to in paragraph 2 of this article shall, however, be able to be treated for the purposes of this agreement as an UCITS or equivalent body referred to in point (c)) of paragraph 2. The use of this possibility shall be the subject of a certificate issued by a Contracting Party of establishment of the entity and delivered by that entity to the economic operator. The Contracting Party shall lay down the specific rules concerning this possibility to the entities established in your territory.

4. where the economic operator and the entity referred to in paragraph 2 of this article are set out in the same Contracting Party, the latter shall take the necessary measures to ensure that the entity complies with the provisions of this agreement when acting as a paying agent.

5. Legal persons excluded from the application of subparagraph (a)) of paragraph 2 of this article are: a) in Finland: avoin yhtio (Ay) and kommandiittiyhtio (Ky)/oppet bolag and kommanditbolag;

b) in Sweden: handelsbolag (HB) and kommanditbolag (KB).

Article 8 definition of interest payment 1. For the purposes of this agreement, ' interest payment ' means: a) interest paid or credited to an account, relating to debt-claims of every kind, whether or not secured by mortgage and whether or not carrying a right to participate in the debtor's profits, and in particular, income from government securities and income from bonds or debentures, including premiums and prizes attaching to such securities, but excluding interest from loans between private individuals who don't act within the framework of its activity. Penalty charges for late payment shall not be regarded as interest payments;

b) interest accrued or capitalised at the sale, refund or redemption of the debt claims referred to in subparagraph (a));

c) income from interest payments, either carried out directly or through an entity referred to in paragraph 2 of article 7 of this agreement, distributed by: i) a UCITS authorised in accordance with the provisions of Directive 85/611/EEC;

II) a collective investment undertaking equivalent established in the Turks and Caicos Islands;

III) entities which qualify for the option under paragraph 3 of article 7 of this agreement;

IV) undertakings for collective investment established outside the territory to which the Treaty establishing the European Community by virtue of Article 299 thereof and your off the Turks and Caicos Islands; and d) income realised upon the sale, refund or redemption of shares or units in the following undertakings and entities, if they invest directly or indirectly via other undertakings for collective investment or entities referred to below, more than 40% of your assets in debt claims referred to in subparagraph (a)): i) a UCITS authorised in accordance with the provisions of Directive 85/611/EEC;

II) a collective investment undertaking equivalent established in the Turks and Caicos Islands;

III) entities which qualify for the option under paragraph 3 of article 7 of this agreement;

IV) undertakings for collective investment established outside the territory to which the Treaty establishing the European Community by virtue of Article 299 thereof and your off the Turks and Caicos Islands.

However, Contracting Parties may limit the inclusion of income referred to in subparagraph (d)) of paragraph 1 of this article in the definition of interest only in proportion as such income corresponds to gains directly or indirectly come from an interest payment within the meaning of paragraph 1 (a)) and b) of paragraph 1 of this article.

2. as regards points (c)) and d) of paragraph 1 of this article, when a paying agent has no information concerning any part of the income from interest payments, the total amount of the income shall be considered an interest payment.

3. as regards subparagraph (d)) of paragraph 1 of this article, when a paying agent has no information concerning the percentage of the assets invested in debt-claims or in shares or units as defined in that subparagraph, should consider that this percentage is higher than 40%. When it cannot determine the amount of income realised by the beneficial owner, the income is the proceeds from the sale, refund or redemption of shares or units.

4. When they are paid or credited to the account of an entity referred to in paragraph 2 of article 7 of this agreement, as defined in paragraph 1 of this article, and it doesn't take advantage of the option provided for in paragraph 3 of article 7 of this agreement, such interest shall be considered an interest payment by such entity.

5. as regards paragraph 1 (b)) and d) of paragraph 1 of this article, the Contracting Parties may require paying agents in your territory to annualise the interest over a period that may not exceed one year, and treating such annualised interest as an interest payment even though there has been no transfer , repayment or redemption during this period.

6. By way of derogation from subparagraphs (a) (c)) and d) of paragraph 1 of this article, the Contracting Parties may exclude from the definition of interest payment any income referred to in those provisions from undertakings or entities established in your territory where the investment of such entities in debt claims referred to in subparagraph (a)) of paragraph 1 of this article shall not exceed 15% of your assets. Likewise, by way of derogation from paragraph 4 of this article, the Contracting Parties may decide to exclude from the definition of interest payment in paragraph 1 of this article interest paid or credited to an account of an entity referred to in paragraph 2 of article 7 of this agreement that does not take advantage of the option provided for in paragraph 3 of article 7 of this agreement and is established in your territory where the investment of such entities in debt claims referred to in subparagraph (a)) of paragraph 1 of this article shall not exceed 15% of your assets.

The use of this option by a Contracting Party makes it binding on the other Contracting Party.

7. with effect from 1 January 2011, the percentage referred to in point (d)) of paragraph 1 and in paragraph 3 of this article will be 25%.

8. The percentages referred to in point (d)) of paragraph 1 of this article and in paragraph 6 of this article shall be determined by reference to the investment policy as defined in the Fund rules or in the instruments of incorporation of the undertakings or entities concerned, or, in your absence, depending on the actual composition of the assets of these undertakings or entities.

Article 9 apportionment of revenue of the withholding tax


1. The Turks and Caicos Islands shall retain 25% of the withholding tax deducted under this agreement and transfer the remaining 75% of these recipes for Portugal.

2. In applying a withholding tax in accordance with paragraph 4 of article 4 of this agreement, the Turks and Caicos Islands should retain 25% of their revenue and transfer 75% of these recipes for Portugal in the proportion of transfers made pursuant to paragraph 1 of this article.

3. Such transfers shall take place each year in one instalment at the latest within a period of 6 months following the end of the fiscal year defined in the Turks and Caicos Islands.

4. To apply a withholding tax, the Turks and Caicos Islands shall take the necessary measures to ensure the proper functioning of the revenue-sharing system.

Article 10 elimination of double taxation 1. The Contracting Party of residence for tax purposes of the beneficial owner shall ensure the Elimination of any double taxation arising out of the imposition by eventually Turks and Caicos Islands of the withholding tax referred to in this Agreement in accordance with the following provisions: (i)) if interest received by a beneficial owner has been subject to withholding tax in Turks and Caicos Islands , Portugal shall grant him a tax credit equal to the amount of tax withheld in accordance with your national legislation. In the case of this amount exceeds the amount of tax due in accordance with your national law, Portugal should repay to the beneficial owner the amount of tax withheld in excess;

II), in addition to the withholding tax referred to in article 4 of this agreement, interest received by a beneficial owner has been subject to any other type of withholding tax/withholding tax and the Contracting Party of fiscal residence grant a tax credit for such withholding tax/withholding tax in accordance with your national law or conventions on double taxation , this other withholding tax/withholding tax shall be credited before being applied the procedure laid down in subparagraph (i)) of this article.

2. The Contracting Party of residence for tax purposes of the beneficial owner may replace the tax credit mechanism referred to in paragraph 1 of this article by means of a refund of the withholding tax referred to in article 1 of this agreement.

Article 11 transitional provisions for negotiable debt securities 1. During the transitional period referred to in article 14 of this agreement, but until 31 December 2010 at the latest, the national and international bonds and other negotiable debt securities whose initial emission before 1 March 2001 or whose initial prospects have been targeted before that date by the competent authorities within the meaning of Directive 80/390/EEC or by the responsible authorities in third countries should not be considered as credits within the meaning (a)) of paragraph 1 of article 8 of this agreement, as long as you don't perform any new issue of negotiable debt securities from 1 March 2002. However, if the transition period continue after 31 December 2010, the provisions of this article shall continue to apply to negotiable debt securities: a) that include clauses ' of all ' and early repayment; and (b)) in cases in which the paying agent is established in a Contracting Party to apply the withholding tax and where that paying agent pays interest or assign the payment of interest for the benefit of a beneficial owner resident in another Contracting Party.

If, from 1 March 2002, performing new issue of one of the abovementioned marketable securities issued by a public administration or related entity acting as a public authority or whose role is recognised in an international treaty, as defined in the annex to this agreement, all issues of this title, that is, the initial emission and any additional emission , must be regarded as an issue of a claim within the meaning of point (a)) of paragraph 1 of article 8 of this agreement.

If, from 1 March 2002, performing new issue of one of the abovementioned marketable securities issued by any entity not covered by the second paragraph, this new issue should be considered an issue of a claim within the meaning of point (a)) of paragraph 1 of article 8 of this agreement.

2. Nothing in this article shall prevent the Contracting Parties from taxing the income from the negotiable debt securities referred to in paragraph 1 in accordance with its national law.

Article 12 mutual agreement procedure where difficulties arising between the parties or questions about the application or interpretation of this agreement, the Contracting Parties shall resolve the matter by mutual agreement.

Article 13 Confidentiality 1. Should be preserved the confidentiality of all the information provided and received by the competent authority of a Contracting Party. The principle of confidentiality is essential to the implementation and continuity of this agreement.

2. The information provided to the competent authority of a Contracting Party may not be used for any purpose that is not for the purposes of direct taxation without prior written consent of the other Contracting Party.

3. The information should be disclosed only to persons or authorities concerned for the purposes of direct taxation, and used by such persons or authorities only for these purposes or for the purposes of supervision, which may include the establishment of a possible appeal. For this purpose, the information may be disclosed in public hearing or court decision.

4. When the competent authority of a Contracting Party considers that the information received from the competent authority of the other Contracting Party may be useful to the competent authority of another Member State, can provide such information in agreement with the competent authority which supplied the information.

Article 14 transitional period


At the end of the transitional period set out in paragraph 2 of article 10 of the Directive, the Turks and Caicos Islands should no longer apply the withholding tax and the revenue sharing provided for in this agreement and shall apply in respect of Portugal the provisions on automatic exchange of information in the manner provided for in chapter II of the directive. If, during the transitional period, the Turks and Caicos Islands choose to apply the provisions on automatic exchange of information in the manner provided for in chapter II of the Directive, will cease to apply the withholding tax/withholding tax and the revenue sharing provided for in article 9 of this agreement.

Article 15 entry into force 1. This agreement shall enter into force on the thirtieth day after the latter of the dates on which the respective Governments notify each other in writing that their respective formalities constitutionally required have been complied with, and its provisions produce effect from the date on which the directive is applicable pursuant to paragraphs 2 and 3 of article 17 of the Directive.

2. Article 2 of this Agreement shall take effect in Portugal in the absence of direct taxation in the Turks and Caicos Islands.

Article 16 Denunciation 1. This agreement shall remain effective until terminated by a Contracting Party.

2. Any Contracting Party may denounce this agreement by written notice to the other Contracting Party in a notification specifying the circumstances which led to this same notification. In this case, this Agreement shall cease to have effect 12 months after the notification.

Article 17 application and suspension of application 1. The implementation of this agreement is conditional on the adoption and implementation by all Member States of the European Union, the United States of America, Switzerland, Andorra, Liechtenstein, Monaco and San Marino, and by all the dependent territories and associated with the relevant Member States of the European Community, respectively, of measures which conform or are equivalent to those contained in the directive or in this agreement , and providing for the same dates of implementation.

2. subject to the mutual agreement procedure provided for in article 12 of this agreement, the application of this agreement or parts thereof may be suspended by either Contracting Party with immediate effect through notification to the other specifying the circumstances leading to such notification should the Directive cease to be applicable either temporarily or permanently in accordance with Community law or in the case of a Member State to suspend the application of your implementing legislation. The implementation of the agreement will be resumed soon to stop the circumstances which led to the suspension.

3. subject to the mutual agreement procedure provided for in article 12 of this agreement, either Contracting Party may suspend the application of this agreement through notification to the other specifying the circumstances leading to such notification in the case of one of the territories or third countries referred to in paragraph 1 to leave later to apply the measures referred to in that paragraph. The suspension may occur not less than two months after notification. The implementation of the agreement will be resumed as soon as the measures are reinstated by the third country or territory in question.

Done in the Portuguese and English languages, both texts equally authentic doing.

/Anexo: list of related entities list of related entities for the purposes of article 11 of this agreement, shall be considered as ' related entity acting as a public authority or whose role is recognised in an international treaty ', the following entities: ENTITIES of the EUROPEAN UNION: Belgium-Vlaams (Flemish Region) Region-Région wallonne (Walloon region)-Région bruxelloise/Brussels Region (Brussels region)-Communauté française (French Community)-Vlaamse Gemeenschap (Flemish Community)-Deutschsprachige Gemeinschaft (German-speaking community) Spain-Xunta de Galicia (Junta de Galicia)-Junta de Andalucía (Andalusian Junta)-Junta de Extremadura (Junta de Extremadura)-Junta de Castilla-La Mancha (Junta de Castile Mancha)-Junta de Castilla-León (Castile-Leon)-Gobierno Foral de Navarra (Regional Government of Navarre)-Govern de les Illes Balears (Balearic Islands Government)-Generalitat de Catalunya (Autonomous Government of Catalonia)-Generalitat de Valencia (Autonomous Government of Valencia)-Diputación General de Aragón (Regional Council of Aragon)-Gobierno de las Islas Canarias (Government of the Canary Islands)-Gobierno de Murcia (Government of Murcia)- Gobierno de Madrid (the Madrid Government)-Gobierno de la Comunidad Autónoma del País Vasco/Euzkadi (Government of the autonomous community of the Basque country)-Diputación Foral de Guipúzcoa (Provincial Council of Guipuzcoa)-Diputación Foral de Vizcaya/Bizkaia (Biscay Provincial Council)-Diputación Foral de Alava (Provincial Council of Alava)-Ayuntamiento de Madrid (municipality of Madrid)-Ayuntamiento de Barcelona (city of Barcelona)-Cabildo Insular de Gran Canaria (Island Council of Gran Canaria)-Cabildo Insular de Tenerife (Insular Council of Tenerife)-credit Institute Official (Official credit Institute)-Instituto Catalán de Finanzas (Catalan Institute of Finance)-Instituto Valenciano de Finanzas (Instituto Valenciano de finance) Greece-Оργανισμός Тηλεπικοινωνιών Ελλάδος (Telecommunications Agency of Greece) Оργανισμός Σιδηροδρόμων Ελλάδος-(Organization of railways of Greece) Δημόσια Επιχείρηση Ηλεκτρισμού-(public electricity Company) France-La Caisse d ' amortissement de la dette sociale (CADES) (Social debt Amortization box)-L'agence française de développement (AFD) (French Development Agency)-Réseau Ferré de France (RFF) (Railway Network France Railroad)-Caisse Nationale des Autoroutes (CNA) (National Highway)-Assistance publique Hôpitaux de Paris (APHP) (Paris hospitals Public Assistance)-Charbonnages de France (CDF) (coal mines of France)-Entreprise minière et chimique (EMC) (Mining and Chemical Company) Italy-regions-Provinces-Municipalities-Cassa Depositi and Prestiti (deposits and loans) Latvia-Pašvaldības (local governments) Poland-urban (commune)-powiats (districts)-województwa (provinces) związki gmin-(associations of communes)-powiatów (Association of districts)-województw (Association of provinces) miasto stołeczne- Warszawa (Warsaw capital)

Agencja Restrukturyzacji i Modernizacji Rolnictwa-(Agency for restructuring and modernisation of agriculture) Agencja Nieruchomosci-Rolnych (Agricultural Property Agency) Portugal-Madeira-Azores-Slovakia-Municipalities Mesta the obce (municipalities) Železnice Slovenskej republiky-(Railway Company of Slovakia) Štátny fond cestného hospodárstva-(State Road Management Fund)-Slovenské elektrárne (power companies of Slovakia) Vodohospodárska výstavba-(Water Economy Building Company) INTERNATIONAL ENTITIES :-European Bank for reconstruction and development European Investment Bank-Asian Development Bank African Development Bank World Bank/IBRD/IMF International Finance Corporation-inter-American Development Bank-Social Development Fund of the Council of Europe-EURATOM-European Community Corporación Andina de Fomento (CAF)--Eurofima European coal and Steel Community-Nordic Investment Bank Caribbean Development Bank-the provisions of article 11 shall be without prejudice to any obligations that Contracting Parties may have assumed with regard to the abovementioned international entities.

ENTITIES in THIRD COUNTRIES: The entities that meet the following criteria.

1. The entity is clearly considered to be a public entity according to the national criteria. 2. A public body of this sort be a non-market producer which administers and finances a group of activities, which consist essentially in providing non-market goods and services intended for the community, and which are effectively controlled by General Government. 3. A public authority like that issue debt securities regularly and in large quantity. 4. The State concerned is able to guarantee that such public entity shall early repayment where there are clauses of reimbursement (gross-up).















AGREEMENT IN THE FORM OF AN EXCHANGE OF LETTERS ON THE TAXATION OF SAVINGS INCOME. Letter from the Portuguese Republic Sir, I refer to the text of the proposed model "Agreement on the Taxation of Savings Income between the Turks and Caicos Islands and the Portuguese Republic that was approved by the High Level Working Party (Taxation of Savings) of the Council of Ministers of the European Union on 22 June 2004.

In view of the above mentioned text, I have the honour to propose to you  the Agreement on the taxation of savings income at Appendix 1 to this letter;

 to propose that the said arrangements may come into effect on the date of application of Council Directive 2003/48/EC of 3 June 2003 on taxation of savings income in the form of interest payments, which date shall be subject to the conditions set out in Article 17 (2) of the Directive, subject to the notification to each other that the internal constitutional formalities for the coming into effect of these arrangements are completed;

 to propose our mutual commitment to comply at the earliest date with our said internal constitutional formalities and to notify each other without delay through the formal channels when such formalities are completed.

I have the honour to propose that, if the above is acceptable to your Government, this letter together with its Appendix 1 and your confirmation shall together constitute our mutual acceptance and making of the arrangements between Portugal and the Turks and Caicos Islands.

Please accept, Sir, the assurance of our highest consideration, For the Government of the Portuguese Republic Minister of Finance and Public Administration Done at Lisbon, on, in the English and Portuguese languages in three copies.

B. Proposed reply from the Government of the Turks and Caicos Islands Sir, I have the honour to acknowledge receipt of your letter of [] date, which reads as follows: "Sir, I refer to the text of the proposed model" Agreement on the Taxation of Savings Income between the Turks and Caicos Islands and the Portuguese Republic that was approved by the High Level Working Party (Taxation of Savings) of the Council of Ministers of the European Union on 22 June 2004. In view of the above mentioned text, I have the honour to propose to you  the Agreement on the taxation of savings income at Appendix 1 to this letter;

 to propose that the said arrangements may come into effect on the date of application of Council Directive 2003/48/EC of 3 June 2003 on taxation of savings income in the form of interest payments, which date shall be subject to the conditions set out in Article 17 (2) of the Directive, subject to the notification to each other that the internal constitutional formalities for the coming into effect of these arrangements are completed;

 to propose our mutual commitment to comply at the earliest date with our said internal constitutional formalities and to notify each other without delay through the formal channels when such formalities are completed.

I have the honour to propose that, if the above is acceptable to your Government, this letter together with its Appendix 1 and your confirmation shall together constitute our mutual acceptance and making of the arrangements between Portugal and the Turks and Caicos Islands.

Please accept, Sir, the assurance of our highest consideration "I am able to confirm that the Government of the Turks and Caicos Islands is in agreement with the contents of your letter dated [...].

Please accept, Sir, the assurance of my highest consideration, [name, title and signature of the person in the Turks and Caicos Islands competent for signature] Done at [], in the English and Portuguese languages, in three copies AGREEMENT ON THE TAXATION OF SAVINGS INCOME BETWEEN THE TURKS AND CAICOS ISLANDS AND THE PORTUGUESE REPUBLIC WHEREAS: 1. Article 17 of Directive 2003/48/EEC ("the Directive") of the Council of the European Union ("the Council") on taxation of savings income provides that before 1 January 2004 Member States shall adopt and publish the laws, regulations and administrative provisions necessary to comply with this Directive which provisions shall be applied from 1 January 2005 provided that: (i) the Swiss Confederation, the Principality of Liechtenstein, the Republic of San Marino, the Principality of Monaco and the Principality of Andorra apply from that same date measures equivalent to those contained in this Directive , in accordance with agreements entered into by them with the European Community, following unanimous decisions of the Council;


(ii) all agreements or other arrangements are in place, which provide that all the relevant dependent or associated territories apply from that same date automatic exchange of information in the same manner as is provided for in Chapter II of this Directive, (or, during the transitional period defined in Article 10, apply the retention tax on the same terms as are contained in Articles 11 and 12).

2. The Turks and Caicos Islands notes that in accordance with the ECOFIN Council conclusions of 3 June 2003, during the transitional period referred to in Article 10 of the Directive, the Council calls on the Commission to enter into discussions with other important financial centres with a view to providing the adoption by those jurisdictions of measures equivalent to those in the Directive.

3. The relationship of the Turks and Caicos Islands with the I is determined by part 4 of the Treaty Establishing the European Community. The Turks and Caicos Islands is not within the EU fiscal territory.

4. The Turks and Caicos Islands notes that, while it is the ultimate aim of the EU Member States to bring about effective taxation of interest payments in the beneficial owner's Member State of residence for tax purposes through the exchange of information concerning interest payments between themselves, three Member States, namely Austria, Belgium and Luxembourg, during the transitional period, shall not be required to exchange information but shall apply the withholding tax to the savings income covered by the Directive.

5. The "withholding tax" referred to in the Directive will be referred to as the "retention tax" in the Turks and Caicos Islands ' domestic legislation. For the purposes of this Agreement the two terms therefore are to be read coterminously "withholding/retention tax" and shall have the same meaning.

6. The Turks and Caicos Islands has agreed to apply the retention tax pursuant to agreements entered into with Member States with effect from 1 January 2005 provided the Member States have adopted the laws, regulations, and administrative provisions necessary to comply with the Directive, and the requirements of Article 17 of the Directive.

7. The Turks and Caicos Islands has agreed to apply automatic exchange of information pursuant to agreements entered into with Member States in the same manner as is provided for in Chapter II of the Directive from the end of the transitional period as defined in Article 10 (2) of the Directive.

8. The Turks and Caicos Islands has legislation relating to undertakings for collective investment that is deemed to be equivalent in its effect to the EC legislation referred to in Articles 2 and 6 of the Directive.

The Turks and Caicos Islands and the Portuguese Republic, hereinafter referred to as the "contracting party" or the "contracting parties" unless the context otherwise requires, Have agreed to completion date the following agreement which contains obligations on the part of the contracting parties only and provides for: (a) the automatic exchange of information) by the competent authority of Portugal to the competent authority of the Turks and Caicos Islands in the same manner as to the competent authority of the Member State;

b) the application by the Turks and Caicos Islands, during the transitional period defined in Article 10 of the Directive, of the retention tax from the same date and on the same terms as are contained in Articles 11 and 12 of that Directive;

c) the automatic exchange of information by the competent authority of the Turks and Caicos Islands to the competent authority of Portugal in accordance with Article 13 of the Directive;

(d)) the transfer by the competent authority of the Turks and Caicos Islands to the competent authority of Portugal of 75% of the revenue of the retention tax.

in respect of interest payments made by a paying agent established in a Contracting Party to an individual resident in the other Contracting Party.

For the purposes of this Agreement the term ' competent authority ' when applied to the Contracting Parties means the Minister of Finance or an authorised representative in respect to Portugal and the Financial Services Commission in respect to the Turks and Caicos Islands.

Article 1 Retention of Tax by Paying Agents Interest payments as defined in Article 8 of this Agreement which are made by a paying agent established in the Turks and Caicos Islands to beneficial owners within the meaning of Article 5 of this Agreement who are residents of Portugal shall, subject to Article 3 of this Agreement, be subject to a retention tax from the amount of interest payment during the transitional period referred to in Article 14 of this Agreement starting at the date referred to in Article 15 of this Agreement. The rate of retention tax shall be 15% during the first three years of the transitional period, 20% for the three years and 35% by the company thereafter.

Article 2 Reporting of Information by Paying Agents 1. Where interest payments, as defined in Article 8 of this Agreement, are made by a paying agent established in Portugal to beneficial owners, as defined in Article 5 of this Agreement, who are residents of the Turks and Caicos Islands, or where the provisions of Article 3 (1) (a) of this Agreement apply, the paying agent shall report to its competent authority; the) the identity and residence of the beneficial owner established in accordance with Article 6 of this Agreement;

b) the name and address of the paying agent;

c) the account number of the beneficial owner or, where there is none, identification of the debt claim giving rise to the interests;

d) information concerning the interest payment specified in Article 4 (1) of this Agreement.

However, each contracting party may restrict the minimum amount of information concerning interest payment to be reported by the paying agent to the total amount of interest or income and to the total amount of the proceeds from sale, redemption or refund; and Portugal will comply with paragraph 2 of this Article.

2. Within six months following the end of their tax year, the competent authority of Portugal shall communicate to the competent authority of the Turks and Caicos Islands, automatically, the information referred to in paragraph (1) (a) – (d) of this Article, for all interest payments made during that year.

Article 3 Exceptions to the Retention Tax Procedure 1. The Turks and Caicos Islands when levying the retention tax in accordance with Article 1 of this Agreement shall provide for one or both of the following procedures in order to ensure that the beneficial owners may request that the tax be retained:


the) procedure which allows the beneficial owner as defined in Article 5 of this Agreement to avoid the retention specified in Article 1 of tax this Agreement by expressly authorising his paying agent to report the interest payments to the competent authority of the contracting party in which the paying agent is established. Such authorisation shall cover all interest payments made to the beneficial owner by that paying agent;

b) procedure which ensures that retention tax shall not be levied where the beneficial owner presents to his paying agent a certificate drawn up in his name by the competent authority of the contracting party of residence for tax purposes in accordance with paragraph 2 of this Article.

2. At the request of the beneficial owner, the competent authority of the contracting party of the country of residence for tax purposes shall issue a certificate indicating: i) the name, address and tax or other identification number or, failing such, the date and place of birth of the beneficial owner;

II) the name and address of the paying agent;

III) the account number of the beneficial owner or, where there is none, the identification of the security.

Such certificate shall be valid for a period not exceeding three years. It shall be issued to any beneficial owner who requests it, within two months following such request.

3. Where paragraph (1) (a) of this Article applies, the competent authority of the Turks and Caicos Islands in which the paying agent is established shall communicate the information referred to in Article 2 (1) of this Agreement to the competent authority of Portugal as the country of residence of the beneficial owner. Such communications shall be automatic and shall take place at least once a year, within six months following the end of the tax year established by the laws of the contracting party, for all interest payments made during that year.

Article 4 Basis of assessment for retention tax 1. The paying agent established in the Turks and Caicos Islands shall levy retention tax in accordance with Article 1 of this Agreement as follows: a) in the case of an interest payment within the meaning of Article 8 (1) (a) of this Agreement: on the gross amount of interest paid or credited;

b) in the case of an interest payment within the meaning of Article 8 (1) (b) or (d) of this Agreement: on the amount of interest or income referred to in (b) or (d) of that sub-paragraph or by a levy of equivalent effect to be borne by the recipient on the full amount of the proceeds of the sale, redemption or refund;

c) in the case of an interest payment within the meaning of Article 8 (1) (c) of this Agreement: on the amount of interest referred to in that sub-paragraph;

d) in the case of an interest payment within the meaning of Article 8 (4) of this Agreement: on the amount of interest attributable to each of the members of the entity referred to in Article 7 (2) of this Agreement who meet the conditions of Article 5 (1) of this Agreement;

and) where the Turks and Caicos Islands exercises the option under Article 8 (5) of this Agreement: on the amount of annualised interest.

2. For the purposes of sub-paragraphs (a) and (b) of paragraph (1) of this Article, the retention tax shall be deducted on a pro rata basis to the period during which the beneficial owner held the debt-claim. If the paying agent is unable to determine the period of holding on the basis of the information made available to him, the paying agent shall treat the beneficial owner as having been in possession of the debt-claim for the entire period of its existence, unless the latter provides evidence of the date of the acquisition.

3. The imposition of retention tax by the Turks and Caicos Islands shall not preclude the other contracting party of residence for tax purposes of the beneficial owner from taxing income in accordance with its national law.

4. During the transitional period, the Turks and Caicos Islands may provide that an economic operator paying interest to, or securing interest for, an entity referred to in Article 7 (2) of this Agreement in the other contracting party shall be considered the paying agent in place of the entity and shall levy the retention tax on that interest, unless the entity has formally agreed to its name , address and the total amount of the interest paid to it or secured for it being communicated in accordance with the last paragraph of Article 7 (2) of this Agreement.

Article 5 Definition of beneficial owner 1. For the purposes of this Agreement, "beneficial owner" shall mean any individual who receives an interest payment or any individual for whom an interest payment is secured, unless such individual can provide evidence that the interest payment was not received or secured for his own benefit. An individual is not deemed to be the beneficial owner when he: a) acts as the paying agent within the meaning of Article 7 (1) of this Agreement;

b) acts on behalf of a legal person, an entity which is taxed on its profits under the general arrangements for business taxation, an UCITS authorised in accordance with Directive 85/611/EEC or an equivalent undertaking for collective investment established in the Turks and Caicos Islands, or an entity referred to in Article 7 (2) of this Agreement and, in the last mentioned case , discloses the name and address of that entity to the economic operator making the interest payment and the latter communicates such information to the competent authority of its contracting party of establishment;

c) acts on behalf of another individual who is the beneficial owner and discloses to the paying agent the identity of that beneficial owner.

2. Where a paying agent has information suggesting that the individual who receives an interest payment or for whom an interest payment is secured may not be the beneficial owner, and where neither paragraph (1) (a) nor (1) (b) of this Article applies, it shall take reasonable steps to establish the identity of the beneficial owner. If the paying agent is unable to identify the beneficial owner, it shall treat the individual in question as the beneficial owner.

Article 6 Identity and residence of beneficial owners 1. Each Party shall, within its territory, adopt and ensure the application of the procedures necessary to allow the paying agent to identify the beneficial owners and their residence for the purposes of this Agreement. Such procedures shall comply with the minimum standards established in paragraphs (2) and (3).

1. The paying agent shall establish the identity of the beneficial owner on the basis of minimum standards which vary according to when relations between the paying agent and the recipient of the interest are entered into, as follows: a) for contractual relations entered into before the 1st

January 2004, the paying agent shall establish the identity of the beneficial owner, consisting of his name and address, by using the information at its disposal, in particular pursuant to the regulations in force in its country of establishment and to Council Directive 91/308/EEC of the 10th June, 1991 in the case of Portugal or in the case of the Turks and Caicos Islands pursuant to the relevant provisions of Turks and Caicos Islands ' laws and regulations on prevention of the use of the financial system for the purpose of money on Farmville;

b) contractual relations entered into, or or transactions carried out in the absence of contractual relations, on or after the 1st January 2004, the paying agent shall establish the identity of the beneficial owner, consisting of the name, address and, if there is one, the tax identification number allocated by the Member State of residence for tax purposes. These details should be established on the basis of the passport or of the official identity card presented by the beneficial owner. If it does not appear on that passport or official identity card, the address shall be established on the basis of any other documentary proof of identity presented by the beneficial owner. If the tax identification number is not mentioned on the passport, on the official identity card or any other documentary proof of identity, including, possibly the certificate of residence for tax purposes, presented by the beneficial owner, the identity shall be supplemented by a reference to the latter's date and place of birth established on the basis of his passport or official identification card.

3. The paying agent shall establish the residence of the beneficial owner on the basis of minimum standards which vary according to when relations between the paying agent and the recipient of the interest are entered into. Subject to the conditions set out below, residence shall be considered to be situated in the country where the beneficial owner has his permanent address: a) contractual relations entered into before for 1st January 2004, the paying agent shall establish the residence of the beneficial owner by using the information at its disposal, in particular pursuant to the regulations in force in its country of establishment and to Directive 91/308/EEC in the case of Portugal or in the case of the Turks and Caicos Islands pursuant to the relevant provisions of Turks and Caicos Islands ' laws and regulations on prevention of the use of the financial system for the purpose of money on Farmville;

(b) for contractual relations entered into), or transactions carried out in the absence of contractual relations, on or after the 1st January, 2004, the paying agents shall establish the residence of the beneficial owner on the basis of the address mentioned on the passport, on the official identity card or, if necessary, on the basis of any documentary proof of identity presented by the beneficial owner and according to the following procedure : for individuals presenting a passport or official identity card issued by a Member State who declare themselves to be resident in a third country, residence shall be established by means of a tax residence certificate issued by the competent authority of the third country in which the individual claims to be resident. Failing the presentation of such a certificate, the Member State which issued the passport or other official identity document shall be considered to be the country of residence.

Article 7 Definition of paying agent 1. For the purposes of this Agreement, ' paying agent ' means any economic operator who pays interest to or secures website the payment of interest for the immediate benefit of the beneficial owner, whether the operator is the debtor of the debt claim which produces the interest or the operator charged by the debtor or the beneficial owner with paying interest or securing the payment of interest.

2. Any entity established in a contracting party to which interest is paid or for which interest is secured for the benefit of the beneficial owner shall also be considered a paying agent upon such payment or securing of such payment. This provision shall not apply if the economic operator has reason to believe, on the basis of official evidence produced by that entity that:) it is a legal person with the exception of those legal persons referred to in paragraph 5 of this Article; or b) its profits are taxed under the general arrangements for business taxation; or (c)) it is an UCITS recognised in accordance with Directive 85/611/EEC of the Council or an equivalent undertaking for collective investment established in the Turks and Caicos Islands.

An economic operator paying interest to, or securing interest for, such an entity established in the other contracting party which is considered a paying agent under this paragraph shall communicate the name and address of the entity and the total amount of interest paid to, or secured for, the entity to the competent authority of its contracting party of establishment, which shall pass this information on to the competent authority of the contracting party where the entity is established.

3. The entity referred to in paragraph (2) of this Article shall, however, have the option of being treated for the purposes of this Agreement as an UCITS or equivalent undertaking as referred to in sub-paragraph (c) of paragraph (2). The exercise of this option shall require the certificate to be issued by the contracting party in which the entity is established and presented to the economic operator by that entity. The contracting party shall lay down the detailed rules for this option for entities established in their territory.

4. Where the economic operator and the entity referred to in paragraph (2) of this Article are established in the same contracting party, that contracting party shall take the necessary measures to ensure that the entity complies with the provisions of this Agreement when it acts as a paying agent.

5. The legal persons exempted from sub-paragraph (a) of paragraph (2) of this Article are: a) in Finland: avoin yhtio (Ay) and kommandiittiyhtio (Ky)/oppet bolag and kommanditbolag;

b) in Sweden: handelsbolag (HB) and kommanditbolag (KB).

Article 8 Definition of interest payment 1. For the purposes of this Agreement "interest payment" shall mean: a) interest paid, or credited to an account, relating to debt claims of every kind, whether or not secured by mortgage and whether or not carrying a right to participate in the debtor's profits, and, in particular, income from government securities and income from bonds or debentures, including premiums and prizes attaching to such securities , bonds or debentures, but excluding interest from loans between private individuals not acting in the course of their business. Penalty charges for late payment shall not be regarded as interest payment;


(b) interest accrued or capitalised) at the sale, refund or redemption of the debt claims referred to in (a);

c) income deriving from interest payments either directly or through an entity referred to in Article 7 (2) of this Agreement, distributed by – i) an UCITS authorised in accordance with EC Directive 85/611/EEC of the Council;

II) an equivalent undertaking for collective investment established in the Turks and Caicos Islands;

III) entities which qualify for the option under Article 7 (3) of this Agreement; or iv) undertakings for collective investment established outside the territory to which the Treaty establishing the European Community applies by virtue of Article 299 copies thereof and outside the Turks and Caicos Islands.

d) income realised upon the sale, refund or redemption of shares or units in the following undertakings and entities, if they invest directly or indirectly, via other undertakings for collective investment or entities referred to below, more than 40% of their assets in debt claims as referred to in (a): (i)) an UCITS authorised in accordance with Directive 85/611/EEC;

II) an equivalent undertaking for collective investment established in the Turks and Caicos Islands.

III) entities which qualify for the option under Article 7 (3) of this Agreement; or iv) undertakings for collective investment established outside the territory to which the Treaty establishing the European Community applies by virtue of Article 299 copies thereof and outside the Turks and Caicos Islands.

However, the contracting parties shall have the option of including income mentioned under paragraph (1) (d) of this Article in the definition of interest only to the extent that such income corresponds to gains directly or indirectly deriving from interest payments within the meaning of paragraphs (1) (a) and (b) of this Article.

2. As regards paragraphs (1) (c) and (d) of this Article, when a paying agent has no information concerning the proportion of the income which derives from interest payments, the total amount of the income shall be considered an interest payment.

3. As regards paragraph (1) (d) of this Article, when a paying agent has no information concerning the percentage of the assets invested in debt claims or in shares or units as defined in that paragraph, that percentage shall be considered to be above 40%. Where he cannot determine the amount of income realised by the beneficial owner, the income shall be deemed to correspond to the proceeds of the sale, refund or redemption of the shares or units.

4. When interest, as defined in paragraph (1) of this Article, is paid to or credited to an account held by an entity referred to in Article 7 (2) of this Agreement, such entity not having qualified for the option under Article 7 (3) of this Agreement, such interest shall be considered an interest payment by such entity.

5. As regards paragraphs (1) (b) and (d) of this Article, the contracting party shall have the option of requiring paying agents in its territory to annualise the interest over a period of time which may not exceed one year, and treating such annualised interest as an interest payment even if no sale, redemption or refund occurs during that period.

6. By way of derogation from paragraphs (1) (c) and (d) of this Article, the contracting party shall have the option of excluding from the definition of interest payment any income referred to in those provisions from undertakings or entities established within its territory where the investment in debt claims referred to in paragraph (1) (a) of this Article of such entities has not exceeded 15% of their assets. Likewise, by way of derogation from paragraph (4) of this Article, the contracting party shall have the option of excluding from the definition of interest payment in paragraph (1) of this Article interest paid or credited to an account of an entity referred to in Article 7 (2) of this Agreement which has not qualified for the option under Article 7 (3) of this Agreement and is established within its territory , where the investment of such an entity in debt claims referred to in paragraph (1) (a) of this Article has not exceeded 15% of its assets.

The exercise of such option by one contracting party shall be binding on the other contracting party.

7. The percentage referred to in paragraph (1) (d) of this Article and paragraph (3) of this Article shall, from 1 January 2011 be 25%.

8. The percentages referred to in paragraph (1) (d) of this Article and in paragraph (6) of this Article shall be determined by reference to the investment policy as laid down in the fund rules or instruments of incorporation of the undertakings or entities concerned or, failing which, by reference to the actual composition of the assets of the undertakings or entities concerned.

Article 9 Retention tax Revenue sharing 1. The Turks and Caicos Islands shall retain 25% of the retention tax deducted under this Agreement and transfer the remaining 75% of the revenue to Portugal.

2. The Turks and Caicos Islands retention levying tax in accordance with Article 4 (4) of this Agreement shall retain 25% of the revenue and transfer 75% to Portugal proportionate to the transfers carried out pursuant to paragraph (1) of this Article.

3. Such transfers shall take place for each year in one instalment at the latest within a period of six months following the end of the tax year established by the laws of the Turks and Caicos Islands.

4. The Turks and Caicos Islands levying retention tax shall take the necessary measures to ensure the proper functioning of the revenue sharing system.

Article 10 Elimination of double taxation 1. The contracting party in which the beneficial owner is resident for tax purposes shall ensure the elimination of any double taxation which might result from the imposition by the Turks and Caicos Islands of the retention tax to which this Agreement refers in accordance with the following provisions-i) if interest received by a beneficial owner has been subject to retention tax in the Turks and Caicos Islands , Portugal shall grant a tax credit equal to the amount of the tax retained in accordance with its national law. Where this amount exceeds the amount of tax due in accordance with its national law, Portugal shall repay the excess amount of tax retained to the beneficial owner;

II) if, in addition to the retention tax referred to in Article 4 of this Agreement, interest received by a beneficial owner has been subject to any other type of withholding tax and the retention/Contracting Party of residence for tax purposes grants a tax credit for such withholding/retention tax in accordance with its national law or double taxation conventions , such other withholding/retention tax shall be credited before the procedure in sub-paragraph (i) of this Article is applied.


2. The Contracting Party which is the country of residence for tax purposes of the beneficial owner may replace the tax credit mechanism referred to in paragraph (1) of this Article by a refund of the retention tax referred to in Article 1 of this Agreement.

Article 11 Transitional provisions for negotiable debt securities 1. During the transitional period referred to in Article 14 of this Agreement, but until 31 December 2010 at the latest, domestic and international bonds and other negotiable debt securities which have been first issued before 1 March 2001 the or for which the original issuing prospectuses have been approved before that date by the competent authorities within the meaning of Council Directive 80/390/EEC or by the responsible authorities in third countries shall not be considered as debt claims within the meaning of Article 8 (1) (a) of this Agreement, provided that the further issues of such negotiable debt securities are made on or after 1 March 2002. However, should the transitional period continue beyond 31 December 2010, the provisions of this Article shall only continue to apply in respect of such negotiable debt securities: a) which contain gross up and early redemption clauses and;

b) where the paying agent is established in a contracting party applying retention tax and that paying agent pays interest to, or secures website the payment of interest for the immediate benefit of the beneficial owner resident in the other contracting party.

If a further issue is made on or after 1 March 2002 of an aforementioned negotiable debt security issued by a Government or a related entity acting as a public authority or whose role is recognised by an international treaty, as defined in the Annex to this Agreement, the entire issue of such security, consisting of the original issue and any further issue , shall be considered a debt claim within the meaning of Article 8 (1) (a) of this Agreement.

If a further issue is made on or after 1 March 2002 of an aforementioned negotiable debt security issued by any other issuer not covered by the second sub-paragraph, such further issue shall be considered a debt claim within the meaning of Article 8 (1) (a) of this Agreement.

2. Nothing in this Article shall prevent the Contracting Parties from taxing the income from the negotiable debt securities referred to in paragraph (1) in accordance with their national laws.

Article 12 Mutual agreement procedure Where difficulties or doubts arise between the parties regarding the implementation or interpretation of this Agreement, the contracting parties shall use their best endeavors to resolve the matter by mutual agreement.

Article 13 Confidentiality 1. All information provided and received by the competent authority of the Contracting Party shall be kept confidential. The principle of confidentiality is essential to the proper implementation and permanence of this Agreement.

2. Information provided to the competent authority of the Contracting Party may not be used for any purpose other than for the purposes of direct taxation without the prior written consent of the other contracting party.

3. Information provided shall be disclosed only to persons or authorities concerned with the purposes of direct taxation, and used by such persons or authorities only for such purposes or for oversight purposes, including the determination of any appeal. For these purposes, information may be disclosed in public court proceedings or in judicial proceedings.

4. Where the competent authority of the Contracting Party considers that information which it has received from the competent authority of the other contracting party is likely to be useful to the competent authority of another Member State, it may transmit it to the latter competent authority with the agreement of the competent authority which supplied the information.

Article 14 Transitional Period At the end of the transitional period as defined in Article 10 (2) of the Directive, the Turks and Caicos Islands shall cease to apply the retention tax and revenue sharing provided for in this Agreement and shall apply in respect of Portugal the automatic exchange of information provisions in the same manner as is provided for in Chapter II of the Directive. If during the transitional period the Turks and Caicos Islands elects to apply the automatic exchange of information provisions in the same manner as is provided for in Chapter II of the Directive, it shall no longer apply the withholding tax retention/and the revenue sharing provided for in Article 9 of this Agreement.

Article 15 Entry into force 1. This Agreement shall enter into force on the thirtieth day after the latter of the dates on which the respective Governments have notified each other in writing that the formalities constitutionally required have been complied with, and its provisions shall have effect from the date from which the Directive is applicable according to paragraphs 2 and 3 of Article 17 of the Directive.

2. Article 2 of this Agreement shall not have effect in Portugal in the absence of direct taxation in the Turks and Caicos Islands.

Article 16 Termination 1. This Agreement shall remain in force until terminated by either Contracting Party.

2. Either Contracting Party may terminate this Agreement by giving notice of termination in writing to the other contracting party, such notice to specify the general circumstances leading to the giving of such notice. In such a case, this Agreement shall cease to have effect 12 months after the serving of notice.

Article 17 Application and suspension of application 1. The application of this Agreement shall be conditional on the adoption and implementation by all the Member States of the European Union, by the United States of America, Switzerland, Andorra, Liechtenstein, Monaco and San Marino, and by all the relevant dependent and associated territories of the Member States of the European Community, respectively, of measures which conform with or are equivalent to those contained in the Directive or in this Agreement , and providing for the same dates of implementation.

2. Subject to the mutual agreement procedure provided for in Article 12 of this Agreement, the application of this Agreement or parts copies thereof may be suspended by either Contracting Party with immediate effect through notification to the other specifying the general circumstances leading to such notification should the Directive cease to be applicable either temporarily or permanently in accordance with European Community law or in the event that a Member State should suspend the application of its implementing legislation. Application of the Agreement shall resume as soon as the general circumstances leading to the suspension no longer apply.


3. Subject to the mutual agreement procedure provided for in Article 12 of this Agreement, either Contracting Party may suspend the application of this Agreement through notification to the other specifying the general circumstances leading to such notification in the event that one of the third countries or territories referred to in paragraph (1) should subsequently cease to apply the measures referred to in that paragraph. Suspension of application shall take place in earlier than two months after notification. Application of the Agreement shall resume as soon as the measures are reinstated by the third country or territory in question.

Done in the Portuguese and English languages, all texts being equally authentic/Annex: list of related entities Annex: List of related entities For the purposes of Article 11 of this Agreement, the following entities will be considered to be a "related entity acting as a public authority or whose role is recognised by an international treaty": ENTITIES WITHIN THE EUROPEAN UNION : Belgium-Vlaams (Flemish Region) Region Région wallonne (Walloon Region) Région bruxelloise/Brussels Region (Brussels Region) Communauté française (French Community), Vlaamse Gemeenschap (Flemish Community) Deutschsprachige Gemeinschaft (German-speaking Community) Spain Xunta de Galicia (Regional Executive of Galicia) Junta de Andalucía (Regional Executive of Andalusia) Junta de Extremadura (Regional Executive of Extremadura) Junta de Castilla-La Mancha (Regional Executive of Castilla-La Mancha) Junta de Castilla-León (Regional Executive of Castilla-León) Gobierno Foral de Navarra (Regional Government of Navarre) Govern de les Illes Balears (Government of the Balearic Islands) Generalitat de Catalunya (Autonomous Government of Catalonia) Generalitat de Valencia (Autonomous Government of Valencia) Diputación General de Aragón (Regional Council of Aragon) Gobierno de las Islas Canarias (Government of the Canary Islands) Gobierno de Murcia (Government of Murcia) Gobierno de Madrid (Government of Madrid) Gobierno de la Comunidad Autónoma del País Vasco/Euzkadi (Government of the Autonomous Community of the Basque Country) Diputación Foral de Guipúzcoa (Regional Council of Guipúzcoa) Diputación Foral de Vizcaya/Bizkaia (Regional Council of Vizcaya) Diputación Foral de Alava (Regional Council of Alava) Ayuntamiento de Madrid (City Council of Madrid) Town Hall of Barcelona (City Council of Barcelona) Cabildo Insular de Gran Canaria (Island Council of Gran Canaria), Cabildo Insular de Tenerife (Island Council of Tenerife) Official credit Institute (Public Credit Institution) Instituto Catalán de Finanzas (Finance Institution of Catalonia) Instituto Valenciano de Finanzas (Finance Institution of Valencia) Greece Оργανισμός Тηλεπικοινωνιών Ελλάδος (National Telecommunications Organisation) Оργανισμός Σιδηροδρόμων Ελλάδος (National Δημόσια Επιχείρηση Ηλεκτρισμού Organisation) railways (Public Electricity Company) France La Caisse d ' amortissement de la dette sociale (CADES) (Social Debt Redemption Fund) L'agence française de développement (AFD) (French Development Agency) Réseau Ferré de France (RFF) (French Rail Network) Caisse Nationale des Autoroutes (CNA) (National Motorways Fund) Assistance publique Hôpitaux de Paris (APHP) (Paris Hospitals Public Assistance) Charbonnages de France (CDF) (French Coal Board) Entreprise minière et chimique (EMC) (Mining and Chemicals Company) Italy Regions Provinces Municipalities Cassa Depositi e Prestiti (Deposits and Loans Fund) Latvia Pašvaldības (Local governments) Poland gminas (communes) powiaty (districts) województwa (provinces) związki gmin (associations of communes) powiatów (association of districts) województw (association of provinces) miasto stołeczne Warszawa (capital city of Warsaw) Agencja Restrukturyzacji i Modernizacji Rolnictwa (Agency for Restructuring and Modernisation of Agriculture) Agencja Nieruchomosci Rolnych (Agricultural Property Agency) Portugal Região Autónoma da Madeira (Autonomous Region of Madeira) Região Autónoma dos Açores (Autonomous Region of Azores) Municipalities Slovakia Mesta the obce (municipalities) Železnice Slovenskej republiky (Slovak Railway Company) Štátny fond cestného hospodárstva (State Road Management Fund) Slovenské elektrárne (Slovak Power Plants) Vodohospodárska výstavba (Water Economy Building Company) INTERNATIONAL ENTITIES: European Bank for Reconstruction and Development European Investment Bank Asian Development Bank African Development Bank World Bank/IBRD/IMF International Finance Corporation inter-American Development Bank Council of Europe Social Development Fund EURATOM European Community Corporación Andina de Fomento (CAF) (Andean Development Corporation) Eurofima European Coal Steel Community Nordic Investment Bank & Caribbean Development Bank The provisions of Article 11 are without prejudice to any international obligations that the Contracting Parties may have entered into with respect to the above mentioned international entities.

ENTITIES IN THIRD COUNTRIES: The entities that meet the following criteria: 1) The entity is clearly considered to be a public entity according to the national criteria. 2) Such public entity is a non-market producer which administers and finances a group of activities, principally providing non-market goods and services, intended for the benefit of the community and which are effectively controlled by general government. 3) Such public entity is a large and regular issuer of debt. 4) The State concerned is able to guarantee that such public entity will not exercise early redemption in the event of gross-up clauses.