The Portuguese tax authorities can insist Portuguese companies withhold 25% of the payment, when they are paying invoices submitted by British companies who have sold them goods or services.
To avoid this retention, the Portuguese tax authorities need the Mod 21 document in order to confirm that the British company is based in the UK and pays its taxes in the UK.
If you need to provide the Mod 21 to a Portuguese company in order to get paid the full amount, please download the document here.
You must send the Certificate of Residence (which can be requested here) together with the Mod 21 documents.
The Mod 21 RFI document must be completed with your company details and the company details that you work with. Please make sure you print:
Page 1 front and page 3 back – goes to the company you are exporting the products to.
Page 2 front and page 3 back – stays with the beneficiary of the income, which in this case is you.
The new Mod.21 doesn’t require a stamp and signature from the HMRC but has to be accompanied by a specific CoR (Certificate of Residence) issued by the tax authorities of the other contracting state (valid for a period of one year from CoR issue date).
Page 1/3 and the CoR are then sent to the company you are working with, so that they can complete the process.
Please note that these are the steps we take when filling the Mod 21 for our members. If you have further doubts or would like to have more specific questions answered please contact HMRC in the UK or the tax authorities of the country of origin.