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The Difficult Conversion to EU Tax Law in Portuguese Courts
Taxand Portugal asks the question is European tax law specifically such a difficult issue to tackle within Portuguese national Courts?
The answer is yes for many reasons.
Firstly, Brussels is sometimes seen as this far away "kingdom" and EU tax issues have not been on the top of the agenda of local tax authorities let alone courts.
Secondly, there is a degree of 'lost in translation' with occasions where the EU tax developments are difficult to follow, especially for non-specialists.
Thirdly, Portuguese and foreign companies are well versed on the pitfalls of tax procedure on complex matters and the waiting game of pursuing the tax litigation avenue. In fact, the prevalence of infringement procedure by the EU Commission on direct taxation matters is also demonstrative of a lack of activity in this field. In addition the obligation of the national Court to submit a question for a preliminary ruling is sometimes understated.
A fourth point is the custom of the Portuguese tax authorities and Courts of simply ignoring decisions (not directly addressed) when it is clear that the domestic law does not conform to EU law. The cases involving dividends are a good example of this reluctance to accept this 'new order'. Still today we find cases in national Courts dealing with stamp tax on share capital increases after a clear ruling in 2007 on the Optimus case (C-366/05).
Finally, the Portuguese tax authorities have made only very shy efforts to align certain provisions of Portuguese tax law with EU law. There is still some catch up to do in areas such as group taxation or CFC legislation.
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Your Taxand contact for further queries is:
Tiago Cassiano Neves
T. +351 218 913 310
All of the above points taken into account, after almost 25 years after the Portuguese accession to the European Union, although some problems of perceiving the impact of EU tax law are evident, there has also been significant ground made for EU tax law issues to become more important and discussed in Portuguese Courts. Projects like the Common Consolidated Corporate Tax Base (CCCTB), Financial Transaction Tax (FTT) and the action plan to strengthen the fight against tax fraud and tax evasion are bound to raise more attention towards this important cornerstone of taxation.