13.2.2010

EN

Official Journal of the European Union

C 37/21

(Case C-493/09)

2010/C 37/25

Language of the case: Portuguese

Parties

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

Defendant: Portuguese Republic

Form of order sought

—Declare that, by taxing the dividends obtained by non-resident pension funds at a rate higher than the dividends obtained by pension funds resident in Portuguese territory, the Portuguese Republic has failed to fulfil its obligations under Article 63 TFEU and Article 40 of the EEA Agreement.

—Order the Portuguese Republic to pay the costs.

Pleas in law and main arguments

Under the provisions of the Portuguese Estatuto dos Benefícios Fiscais (Tax Relief Regulations) and the Código do Imposto sobre o Rendimento das Pessoas Colectivas (the Corporation Tax Code), the dividends paid to pension funds set up and operating in accordance with the Portuguese legislation are wholly exempt from the imposto sobre o rendimento das pessoas colectivas (corporation tax). By contrast, the dividends paid to non-resident pension funds are subject to corporation tax at a rate of between 10 % and 20 %, depending on whether there is a bilateral agreement between Portugal and the State of residence and the terms thereof. That corporation tax is collected by being withheld at source.

The detrimental difference in treatment by the Portuguese tax legislation of the non-resident pension funds makes the investment by those funds in Portuguese companies less profitable and attractive. The tax rules referred to therefore constitute a restriction prohibited by Article 63 TFEU and by Article 40 of the EEA Agreement.

The discriminatory treatment of non-resident pension funds, which has harmful consequences on the competitiveness of the financial markets of the European Union and on the revenue from the investments made by the pension funds, cannot be justified by any of the grounds put forward by the Portuguese Republic.