The ECJ released the facts & background in the case
Keywords: pension fund, request for VAT refund, burden of proof
Subject:
– Treaty on the Functioning of the European Union: Article 63;
– Council Directive 77/799/EEC of 19 December 1977 concerning mutual assistance by the competent authorities of the Member States in the field of direct taxation;
– Council Directive 2008/55/EC of 26 May 2008 concerning mutual assistance for the recovery of claims relating to certain levies, duties, taxes and other measures.
Facts & background
Facts:
The applicant is a pension fund with a statutory seal in Madrid. During the tax years 2020 and 2021, the pension fund held shares in several companies established in Portugal. The net dividends received from these were subject to tax in Portugal, as this is the state where the dividends originate. The dividends were taxed by withholding at source. The applicant requested a refund of the tax withheld, as the amount exceeded the agreed rate of the treaty (for the avoidance of double taxation) concluded between Portugal and Spain. The applicant initiated arbitration proceedings against the Portuguese Tax and Customs Administration.
Consideration:
Under national law, in order to benefit from an exemption from corporate income tax on income received in Portugal, pension funds established in the European Union must demonstrate, before the date on which the income is made available, that they meet the conditions for this, by means of a declaration confirmed and certified by the authorities of the Member State responsible for supervisory duties. However, since the entry into force of the law, no procedural mechanism has been expressly provided for allowing taxpayers to claim reimbursement of tax paid for failure to comply with the evidentiary requirements. The referring court seeks clarity on the formal evidentiary requirements laid down by law which prevent the applicant in the present case (due to the burden of proof) from exercising its right to an exemption from corporate income tax.
Questions
1. Are the evidentiary requirements imposed by Article 16(7) and (8) of the EBF on pension funds without a tax residence in Portugal for the purposes of applying the exemption from withholding tax or for the refund of withholding tax withheld compatible with European Union law (and in particular with the free movement of capital as enshrined in Article 63 TFEU)?
2. Should the applicant claim that it is difficult or impossible for it to obtain such evidence from the authorities of its State of establishment, are the Portuguese tax authorities obliged to use the mechanisms provided for, for example, in Council Directive 77/799/EEC of 19 December 1977 or Council Directive 2008/55/EC of 26 May 2008 in order to obtain the information required by Article 16(7) and (8) of the EBF?
Source
Case law cited
- C-493/09 Commission v Portugal
- C-377/13
- C-283/81 CILFIT
- C-436/08
- C-437/08
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