Portugal's Supreme Administrative Court Holds All Foreign-Source Income Subject to Municipal Surcharge Unless Attributable to a Foreign Permanent Establishment.

Portugal's Supreme Administrative Court issued a judgment on 25 February 2026 concerning the levy of municipal surcharge (derrama municipal) on foreign income. The case concerned a company resident in Portugal that challenged the collection of municipal surcharge on its foreign-source interest income earned from debt securities issued by foreign entities. The company argued that the foreign source interest income has no territorial connection to any Portuguese municipality, was generated ent…