Portugal NRIs · Dividend Tax

Dividend tax on Indian shares for NRIs in Portugal

Dividends from Indian companies are withheld at the non-resident rate before they reach you in Portugal. Here's the treaty position and how to reclaim any excess.

When an Indian company pays you a dividend while you live in Portugal, the company withholds tax at source before the money reaches you. India's default withholding on non-resident dividends is 20% under Section 393(2), the successor to Section 195. The India-Portugal treaty position is more favourable, capping the rate at 15% for individual residents, a real saving over the 20% default (Article 10). To claim it you need Form 41, the successor to Form 10F, and a Tax Residency Certificate on file with the company or your broker.

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India-Portugal key facts: dividend tax

Default non-resident TDS rate	20%
India-Portugal DTAA treaty rate	15%
Your saving via the treaty	5%
Treaty article / basis	Article 10: 15% for an individual (10% only for a company holding at least 25% for two years)
Your TRC issuing authority	the Autoridade Tributaria e Aduaneira (AT)

Rates reflect India's domestic withholding under Section 393(2) (Section 195 until 31 March 2026) and the India-Portugal treaty. Surcharge and cess apply on top where relevant.

How it works on the India side

Since the 2020 shift back to classical dividend taxation, dividends from Indian companies are taxable in the shareholder's hands and the company deducts TDS before paying. For a non-resident the default is 20% under Section 393(2) (Section 195 until 31 March 2026), plus surcharge and cess, and Section 115A taxes those dividends at 20% of the gross amount with no expenses allowed. A lower rate only ever comes from a treaty, and only where that treaty writes one for individuals: several of India's treaties reserve the reduced dividend rate for companies holding a large stake in the Indian payer, and some countries have no treaty with India at all, so portfolio investors there stay at the domestic rate.

Where a lower individual rate does apply, you claim it with Form 41 (formerly Form 10F) and a Tax Residency Certificate lodged with the company or broker, and any dividend withheld at the higher rate before your paperwork was on file is reclaimed through your Indian return. Where no lower rate applies, the 20% is generally your final Indian tax, so the questions worth asking are whether the payer withheld more than the correct rate and surcharge, and whether the country you live in gives you a credit for that Indian tax.

What changes because you live in Portugal

Your holding period matters more in Portugal than the rate does. The flat 28% everyone quotes on foreign investment income only holds if the asset was yours for a full 365 days. Sell Indian shares or other securities inside that window and article 72(14) of the IRS code pushes the gain into the progressive table instead, so once your taxable income including that gain reaches 86,634 euro, the 2026 top bracket, it's taxed at 48%. Waiting a fortnight can be worth more than any treaty claim, so date every lot before you sell. Article 22(5) sets the second trap: opt to aggregate one payment so your Indian tax credit has something to bite on, and you're aggregating every other item in that same category, so one Indian dividend pulls all your interest and dividends in with it.

Frequently asked questions

Common questions from Portuguese NRIs

India's default is 20% under Section 393(2), but the India-Portugal treaty caps it at 15% for individual residents, a saving of 5%. To get the lower rate you file Form 41 with a Tax Residency Certificate from the Autoridade Tributaria e Aduaneira (AT). Any excess withheld beforehand is reclaimed on your Indian return.

Yes. With Form 41 and a Tax Residency Certificate on file, the treaty rate of 15% applies instead of the 20% default, a 5% reduction. Dividends withheld at the higher rate before your paperwork was lodged are reclaimed when you file your Indian return.

Go further

Read the full guide, or see your country's complete picture

NRI ITR for interest, rent and dividend income Portugal NRI tax guide: every income type and the rates that apply

Dividend Tax sorted, by an Indian CA who works with Portuguese NRIs

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