9.5.2008

EN

Official Journal of the European Union

C 116/15

(Case C-105/08)

(2008/C 116/26)

Language of the case: Portuguese

Parties

Applicant: Commission of the European Communities (represented by R. Lyal and M. Afonso, Agents)

Defendant: Portuguese Republic

Form of order sought

—A declaration that, by taxing payment of interest abroad more heavily than payment of interest to entities resident in Portuguese territory, the Portuguese Republic imposes restrictions on the provision of mortgage and other loan services by financial institutions resident in other Member States and in States party to the EEA Agreement, and it has therefore failed to fulfil its obligations under Articles 49 EC and 56 EC and Articles 36 and 40 of the EEA Agreement;

—an order that the Portuguese Republic should pay the costs.

Pleas in law and main arguments

The Código do Imposto sobre o Rendimento das Pessoas Colectivas (CIRC) (the Corporation Tax Code) provides for different tax treatment of income relating to interest paid to financial institutions, depending on whether they are resident or not in Portuguese territory.

The taxation applicable in Portugal to interest paid to non-resident financial institutions leads to a far heavier real tax burden than that borne by resident taxpayers in respect of similar income. The national legislation thus dissuades non-resident financial institutions from offering their services on the Portuguese market, in particular mortgage loan services, and prevents persons resident in Portugal from gaining access to the loan services that might be offered them by those institutions. Such legislation therefore constitutes a restriction of the fundamental freedoms enshrined in Articles 49 EC and 56 EC and in the corresponding provisions of the EEA Agreement.