# C_2017053EN.01000201.xml

| 20.2.2017 | EN | Official Journal of the European Union | C 53/2 |
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20.2.2017

EN

Official Journal of the European Union

C 53/2

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Judgment of the Court (Fourth Chamber) of 21 December 2016 — European Commission v Portuguese Republic

(Case C-503/14) (1)

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((Failure of a Member State to fulfil obligations - Articles 21, 45 and 49 TFEU - Articles 28 and 31 of the Agreement on the European Economic Area - Freedom of movement for persons - Freedom of movement for workers - Freedom of establishment - Taxation of natural persons on capital gains resulting from a share exchange - Taxation of natural persons on capital gains resulting from a transfer of all the assets used in the exercise of a business or professional activity - Exit taxation of individuals - Immediate recovery of taxation - Difference in treatment between natural persons who exchange shares and maintain their residence in the national territory and those who make such an exchange and transfer their residence to the territory of another Member State of the European Union or the European Economic Area - Difference in treatment between natural persons transferring all the assets related to an activity carried out on an individual basis to a company with its head office and effective management in Portugal and those who carry out such a transfer to a company with its head office or its effective management in the territory of another Member State of the European Union or of the European Economic Area - Proportionality))

(2017/C 053/02)

Language of the case: Portuguese

Parties

Parties

Applicant: European Commission (represented by: G. Braga da Cruz and W. Roels, acting as Agents)

Applicant:

Defendant: Portugal (represented by: L. Inez Fernandes, M. Rebelo and J. Martins da Silva, acting as Agents)

Defendant:

Intervener in support of the defendant: Federal Republic of Germany (represented by T. Henze and K. Petersen, acting as Agents)

Intervener in support of the defendant:

Operative part of the judgment

Operative part of the judgment

The Court:

| 1. | Declares that, by adopting and maintaining in force Article 10(9)(a) of the Código do Imposto sobre o Rendimento das Pessoas Singulares (Code on income tax of natural persons), according to which, for a taxable person who loses his status as a resident in Portugal, for taxation purposes for the year of such loss of residence status, the amount which, under Article 10(8) of that code, was not taxed when the shares were exchanged is to be reckoned as a capital gain, the Portuguese Republic has failed to fulfil its obligations under Articles 21, 45 and 49 TFEU and Articles 28 and 31 of the Agreement on the European Economic Area of 2 May 1992; |
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1.

Declares that, by adopting and maintaining in force Article 10(9)(a) of the Código do Imposto sobre o Rendimento das Pessoas Singulares (Code on income tax of natural persons), according to which, for a taxable person who loses his status as a resident in Portugal, for taxation purposes for the year of such loss of residence status, the amount which, under Article 10(8) of that code, was not taxed when the shares were exchanged is to be reckoned as a capital gain, the Portuguese Republic has failed to fulfil its obligations under Articles 21, 45 and 49 TFEU and Articles 28 and 31 of the Agreement on the European Economic Area of 2 May 1992;

| 2. | Declares that, by adopting and maintaining in force Article 38(1)(a) of the same code, which reserves entitlement to the tax deferral provided for by that provision to natural persons who transfer all the assets used in the exercise of a business or professional activity to a company which has its head office or effective management in Portugal, the Portuguese Republic has failed to fulfil its obligations under Article 49 TFEU and Article 31 of the Agreement on the European Economic Area; |
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2.

Declares that, by adopting and maintaining in force Article 38(1)(a) of the same code, which reserves entitlement to the tax deferral provided for by that provision to natural persons who transfer all the assets used in the exercise of a business or professional activity to a company which has its head office or effective management in Portugal, the Portuguese Republic has failed to fulfil its obligations under Article 49 TFEU and Article 31 of the Agreement on the European Economic Area;

| 3. | Orders the Portuguese Republic to bear its own costs and to pay those incurred by the European Commission; |
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3.

Orders the Portuguese Republic to bear its own costs and to pay those incurred by the European Commission;

| 4. | Orders the Federal Republic of Germany to bear its own costs. |
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4.

Orders the Federal Republic of Germany to bear its own costs.

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(1)  OJ C 16, 19.1.2015.

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