CJEU - Recent Developments in Direct Taxation 2021

S. 2281. Introduction

Whereas residents benefit from an exemption or reduced withholding tax rate, the taxation of dividends obtained by non-resident taxpayers through a withholding tax has been raised several times and has led to an already extensive case law.

The Court of Justice of the European Union (“CJEU”) is faced once again with a new case dealing this time with a withholding tax on dividends distributed to non-resident collective investment undertakings (“UCITS”) in Case C-545/19, Allianzgi-Fonds Aevn referred by the Portuguese Centro de Arbitragem Administrativa (“CAAD”).

The issue has been raised in Portugal in multiple court and arbitration cases since a reform was introduced in 2015 on the taxation of resident UCITS. The reform basically established a quarterly stamp duty (“Imposto do Selo”) being applied on resident UCITS net asset value while exempting such UCITS from Corporate Income Tax.

The question of whether different taxation techniques – if they are indeed merely different techniques as will be discussed below – used to tax resident and non-resident UCITS is relevant for determining whether a discriminatory treatment or restriction exists has been raised by both Portuga...