4.4.2009

EN

Official Journal of the European Union

C 82/12

(Case C-20/09)

(2009/C 82/23)

Language of the case: Portuguese

Parties

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

Defendant: Portuguese Republic

Form of order sought

—A declaration that, by providing, in connection with adjustment in accordance with Law No 39-A/2005, preferential tax treatment for public debt securities issued by the Portuguese State alone, the Portuguese Republic has failed to fulfil its obligations under Article 56 of the EC Treaty and Article 40 of the Agreement on the European Economic Area (EEA);

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

Pleas in law and main arguments

In September 2005 the Commission received a complaint concerning the incompatibility of certain provisions of the ‘Regime Excepcional de Regularização Tributária de elementos patrimoniais que não se encontrem no território português em 31 de Dezembro de 2004’ (Extraordinary Scheme for the tax adjustment of financial assets not situated within Portuguese territory on 31 December 2004), approved by Law No 39-A/2005.

The effect of that Extraordinary Scheme is that persons liable to tax must, in the context of tax adjustment, pay the sum corresponding to the application of a rate of 5 % on the value of the financial assets appearing in the tax adjustment declaration and that if any or all of the financial assets listed in that declaration were Portuguese State securities, that rate would be reduced to half in respect of those securities and that reduction would be applied also to other financial assets if their respective value had been reinvested in Portuguese State securities before the date on which the tax adjustment declaration was submitted.

The Commission maintains that the Extraordinary Scheme confers an advantage, with regard to the repatriation of pecuniary items and to investment in Portuguese State securities, consisting of the application of a reduced rate to pecuniary items that are Portuguese State securities or to the value of financial assets reinvested in Portuguese State securities. As a matter of fact, persons using that scheme are discouraged from keeping their adjusted assets in forms other than Portuguese State securities.

The Court of Justice of the European Communities has already declared that a provision of domestic fiscal law capable of dissuading tax-payers from investing in other Member States amounts to a restriction of free movement of capital for the purpose of Article 56 EC.

In the present case, the Commission, while not denying that public debt securities may enjoy more favourable treatment, maintains that a lower tax rate applicable only to adjusted financial assets that are Portuguese State securities constitutes a discriminatory restriction of movements of capital prohibited by Article 56 EC and cannot be vindicated on the basis of Article 58 EC.

The rules of the EEA Agreement relating to movements of capital are, substantially, the same as those laid down in the EC Treaty. In consequence, the fact that the persons who could make use of the Extraordinary Scheme for the tax adjustment of financial assets have been dissuaded from keeping their adjusted financial assets in Norway, Lichtenstein or Iceland also constitutes a restriction of movements of capital, prohibited by Article 40 of the EEA Agreement.