Information;Order — ECLI:EU:C:2022:635
Date: 2022-09-01
Language of the case: Portuguese
Court formation: Sixth Chamber
Subject matter: Free movement of capital
Procedure: Reference for a preliminary ruling
Origin: Portugal

Summary C-67/22 – 1 
Case C-67/22 
Summary of the request for a preliminary ruling pursuant to Article 98(1) of 
the Rules of Procedure of the Court of Justice 
Date lodged: 
2 February 2022 
Referring court: 
Supremo Tribunal Administrativo (Portugal) 
Date of the decision to refer: 
16 December 2021 
Appellant: 
Pharol, SGPS, S.A. 
Respondent: 
Autoridade Tributária e Aduaneira 
  
Subject matter of the main proceedings 
Appeal brought before the Supremo Tribunal Administrativo (Supreme 
Administrative Court; ‘the STA’) by Portugal Telecom, SGPS, S.A., now known 
as Pharol, SGPS, S.A., against the judgment of the Tribunal Tributário de Lisboa 
(Finance Court, Lisbon) of 21 March 2016, which had dismissed the application 
lodged in these proceedings by that company concerning the decision by the 
Autoridade Tributária e Aduaneira (Tax and Customs Authority) to refuse the 
application for a review of the assessment of the imposto sobre o rendimento das 
pessoas colectivas (corporation tax; ‘IRC’) due for the 2005 financial year. 
Questions referred for a preliminary ruling 
‘1. In a situation such as the present one [that is, in a situation in which the 
application of the arrangements for the elimination of economic double taxation of 
distributed profits is not conditional on the existence of cooperation agreements], 
can the fact that, as regards cooperation between tax authorities, there are 
differences between the situation obtaining, on the one hand, between EU 
EN 
SUMMARY OF THE REQUEST FOR A PRELIMINARY RULING – CASE C-67/22 
 
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Member States and, on the other, between EU Member States and third States 
justify a difference in tax treatment between dividends distributed by companies 
resident in EU Member States and dividends distributed by companies resident in 
third States? 
2. Where, using the evidence at the taxpayers’ disposal, the requirements 
needed in order for dividends distributed to a company resident in a Member State 
to benefit from a tax advantage are shown to have been satisfied, may that 
Member State refuse to grant the aforesaid tax advantage on the grounds that the 
third State from which the dividends originate is not under a treaty obligation to 
provide tax information?’ 
Provisions of European Union law relied on 
Articles 63 and 65 TFEU. 
Provisions of national law relied on 
Article 46(1) and (5) of the Código do Imposto sobre o Rendimento das Pessoas 
Colectivas (Corporation Tax Code; ‘the CIRC’), entitled ‘Elimination of 
economic double taxation of distributed profits’, as it applied at the time of the 
events, provided as follows: 
‘1 – In determining the taxable profit of commercial companies, non-commercial 
companies having the form of a commercial company, cooperatives and state-
owned enterprises which have their registered office or centre of effective 
management in Portuguese territory, any income included in the taxable amount 
which represents distributed profits shall be deducted, provided that the following 
requirements are met: 
(a) the company making the distribution has its registered office or centre of 
effective management in the same territory, is subject to corporation tax and is not 
exempt therefrom, or is subject to the tax referred to in Article 7; 
(b) the beneficiary entity does not fall within the tax transparency regime 
established in Article 6; 
(c) the beneficiary entity holds a direct stake of not less than 10% in the capital 
of the company making the distribution, or the acquisition value of its direct stake 
is not less than EUR 20 million, and it has held that stake continuously for the 
year prior to the distribution of the profits or, if it has held the stake for a shorter 
period, it continues to hold the stake for the time required to complete the 
qualifying period. 
… 
PHAROL 
 
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5 – The provisions in paragraph 1 shall also apply where an entity resident in 
Portuguese territory holds a stake, in accordance with the terms and conditions of 
that paragraph, in an entity resident in another Member State of the European 
Union, provided that both entities satisfy the requirements laid down in Article 2 
of Directive 90/435/EEC of 23 July 1990.’ 
Pursuant to Article 31(1) of the Estatuto dos Benefícios Fiscais (Statute on Tax 
Incentives; ‘the EBF’), as it applied at the time of the events, the provisions of 
Article 46(1) and (5) apply, inter alia, to holding companies (sociedades gestoras 
de participações sociais; ‘SGPS’), irrespective of whether they satisfy the 
requirements in that provision concerning the percentage or value of their stake. 
Succinct presentation of the facts and procedure in the main proceedings 
1 On 22 December 2000, PT VENTURES, then still known as PORTUGAL 
TELECOM INTERNACIONAL, SGPS, S.A, acquired 12 500 shares in the 
company governed by Angolan law known as UNITEL, S.A.R.L. 
2 The stake it acquired amounted to 25% of UNITEL’s share capital. 
3 UNITEL is a company governed by Angolan law which has its registered office in 
Luanda and is subject to the general system of taxation as regards industrial tax in 
that country. 
4 In 2003, UNITEL carried out two increases in share capital; following the 
increases, the company’s share capital comprised 106 040 160 shares. 
5 As a result of those increases in share capital, PT VENTURES held 26 510 040 
shares, representing 25% of UNITEL’s share capital. 
6 That stake continued to be owned by PT VENTURES until (at least) late 2005. 
7 In 2005, UNITEL paid PT VENTURES dividends totalling EUR 13 290 952.02. 
8 The EUR 13 290 952.02 paid in dividends by UNITEL in 2005 was deemed to 
constitute a positive component in the determination of the taxable profit for the 
2005 financial year. 
9 As already stated, the sum of EUR 13 290 952.02 paid in dividends by UNITEL 
in the 2005 financial year increased the taxable profit for GRUPO PT recorded by 
the appellant in that year. 
10 On 31 May 2010, the appellant – who considered that the assessment of IRC 
payable for the 2005 financial year (which applied the domestic tax regime 
governing dividend distributions) was incorrect as regards the dividends 
distributed by UNITEL, on the grounds that the domestic arrangements were 
contrary to EU law because they did not permit the elimination of double taxation 
on dividend distributions from third countries – asked the authority to conduct a 
SUMMARY OF THE REQUEST FOR A PRELIMINARY RULING – CASE C-67/22 
 
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review of its own motion, to annul the assessment of tax due and to repay the 
amount which the company considered it had wrongly paid by way of IRC and 
surcharge, amounting to EUR 3 641 056.31. 
11 In its application, the appellant argued that failure to apply the arrangements 
established in Article 46 of the CIRC and Article 32 of the EBF (as they applied at 
the time of the events) to the profits obtained from entities domiciled in third 
countries amounted to discriminatory treatment contrary to Article 63 of the 
Treaty on the Functioning of the European Union (‘TFEU’) (formerly Article 56 
of the Treaty establishing the European Community, ‘EC’). 
12 On 13 November 2012, the appellant was notified that the deputy director-general 
of the Direção de Serviços do Imposto sobre o Rendimento das Pessoas Coletivas 
(Corporation Tax Services Directorate) had dismissed the application in the 
proceedings for a review conducted of its own motion. 
13 In the grounds for the decision, the Tax Authority stated, first, that the application 
lodged on 31 May 2015 was out of time, since the deadline for challenging the 
assessment for the 2005 financial year was 25 May 2008, and, secondly, that a 
review of its own motion was not warranted because such a review was only 
possible in the event of an error in assessment attributable to the tax services and, 
since there was no such error in this case, the assessment had been performed in 
accordance with the tax regulations. 
The essential arguments of the parties in the main proceedings 
14 The main issue submitted by the appellant for consideration by the court of first 
instance (the Finance Court, Lisbon) is whether or not, when interpreted as 
excluding dividends paid by entities domiciled in third countries (such as Angola) 
from their scope, Article 46(1) and (5) of the CIRC and Article 31(1) of the EBF, 
as they applied at the time of the events, constitute a restriction on the free 
movement of capital between Member States and third countries which is 
prohibited by Article 63(1) TFEU. 
15 In its response to this question, the court of first instance stated that ‘the effect of 
the legislation in question [namely Article 46(1) and (5) of the CIRC and 
Article 31(1) of the EBF] is to discourage taxpayers resident in Portugal from 
investing their capital in companies domiciled outside the EEA. Indeed, in so far 
as the dividends which those companies pay Portuguese residents receive less 
favourable tax treatment than dividends distributed by a company established in 
an EEA Member State, the shares of such companies are less attractive to 
investors residing in Portugal than shares in companies established in that 
Member State (in that regard, see the judgments of the Court of Justice of 6 June 
2000, Verkooijen, C-35/98, EU:C:2000:294, paragraphs 34 and 35; of 
7 September 2004, C-319/02, Manninen, EU:C:2004:484, paragraphs 22 and 23; 
and also, with regard to movements of capital between Member States and third 
countries, the judgment of 12 December 2006, C-446/04, Test Claimants in the 
PHAROL 
 
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FII Group Litigation, EU:C:2006:774, paragraph 166)’; it therefore confirmed 
that ‘legislation such as that at issue in the main proceedings therefore entails a 
restriction of the movement of capital between Member States and third countries 
which, in principle, is prohibited by Article 56(1) EC’. 
16 The appellant agrees with the assessment that the national arrangements for the 
elimination of economic double taxation of dividends distributed to SGPS do not 
comply with EU law, which is what led the court of first instance to confirm that, 
in the case under consideration, those arrangements constitute an effective 
restriction on the principle of the free movement of capital which is prohibited by 
Article 63(1) TFEU (formerly Article 56(1) EC). 
17 However, turning to the need to ensure the effectiveness of fiscal supervision [as 
grounds for maintaining restrictions on the free movement of capital within the 
meaning of Article 65 TFEU (formerly Article 58 EC)], the court of first instance 
went on to observe that, in the final analysis, the restriction that had been 
identified is permitted by Article 65 TFEU, since it is justified by the fact that, in 
the absence of any relevant treaty provision, the Portuguese Tax Authority cannot 
require the Angolan entities to provide information relating to the conditions 
required in order for the more favourable regime established in Article 46(1) of 
the CIRC and Article 31(1) of the EBF to apply. 
18 Consequently, what the appellant is seeking to challenge in this appeal is that 
assessment of the admissibility of the restriction on the free movement of capital 
in question, which the court of first instance considered admissible in the light of 
Article 65(1)(a) TFEU. 
19 Article 65(1) TFEU establishes two general exceptions to the principle of the free 
movement of capital required by Article 63 TFEU; the effect of those exceptions 
is to justify the imposition by Member States of restrictions on the principle of 
free movement of capital, in the terms set out in the provision. 
20 In that context, the exception in Article 65(1)(a) TFEU is particularly relevant, 
since this is the provision relied on by the court of first instance as justification for 
the restriction on the free movement of capital which, in its opinion, is entailed by 
Article 46(1) and (5) of the CIRC and Article 31(1) of the EBF in this particular 
case. 
21 With regard to Article 65(1)(a) TFEU, particularly as regards the ground of 
combating tax evasion, the Court of Justice ‘has, on many occasions, held that 
effectiveness of fiscal supervision constitutes an overriding requirement of general 
interest capable of justifying a restriction on the exercise of the fundamental 
freedoms guaranteed by the Treaty’ and also that ‘before granting … a tax 
exemption, a Member State is authorised to apply measures enabling it to 
ascertain in a clear and precise manner whether … the conditions imposed by 
national law in order to be entitled to the exemption and to monitor its effective 
management [are met]’; on this latter point it has, however, made clear that ‘there 
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is nothing to prevent the tax authorities concerned from requiring [the entity] 
claiming exemption from tax to provide relevant supporting evidence to enable 
those authorities to carry out the necessary checks. Further, national legislation 
which absolutely prevents the taxpayer from submitting such evidence cannot be 
justified in the name of effectiveness of fiscal supervision’ (see the judgment of 
the Court of Justice of 14 September 2006, C-386/04, Centro di Musicologia 
Walter Stauffer, EU:C:2006:568, paragraphs 47, 48 and 49). 
22 It should also be noted that Article 65(3) TFEU limits the scope of any of the 
aforesaid exceptions, stipulating that under no circumstances may arbitrary or 
disguised restrictions be placed on the principle of the free movement of capital 
enshrined in Article 63 TFEU. 
23 In view of the above, the appellant considers that the restriction on the principle of 
the free movement of capital resulting from Article 46(1) and (5) of the CIRC and 
Article 31(1) of the EBF gives rise to an arbitrary restriction, which is therefore 
inadmissible under Article 63 TFEU in conjunction with Article 65(3) TFEU. 
24 In support of its claim, the appellant argues that, under the regime introduced by 
Article 46(1) and (5) of the CIRC, which establishes the arrangements for the 
elimination of economic double taxation on dividends distributed to SGPS, the 
application of those arrangements is not conditional on the existence of any 
administrative cooperation agreement between Portugal and the State of residence 
of the company making the distribution. 
25 The appellant infers from this that the restriction in question is not justified on 
grounds of ensuring the effectiveness of fiscal supervision since, as formulated in 
Article 46(1) and (5) of the CIRC and Article 31(1) of the EBF, the restriction 
applies across the board both to third countries with which Portugal has actually 
concluded agreements that include provisions on the exchange of tax information 
(such as Brazil, Cape Verde, Macao and Mozambique) and to third countries with 
which Portugal has not concluded any such agreement (including Angola). 
26 In other words, it is clear from the relevant legislation that the exclusion of 
dividends distributed by companies resident in third countries from the scope of 
the arrangements for the elimination of economic double taxation of dividends 
distributed to SGPS is not justified by the alleged lack of fiscal supervision 
resulting from the absence of agreements on the exchange of tax information. 
27 Moreover, the Court of Justice has already stated this precise position in its 
judgment of 10 February 2011 in joined Cases C-436/08 and C-437/08, Haribo 
Lakritzen Hans Riegel and Österreichische SALINEN (EU:C:2011:61), in which it 
stated that while ‘the national legislation at issue in the main proceedings does not 
provide that any exemption of portfolio dividends received from a company 
established in a non-member State other than a State party to the EEA Agreement, 
or any credit for the tax paid in such a non-member State, is conditional upon the 
existence of an agreement for mutual assistance between the Member State and 
PHAROL 
 
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the relevant non‑member State …, the difference which exists, as regards 
cooperation between tax authorities, between the situation obtaining, on the one 
hand, between Member States within the European Union and, on the other hand, 
between Member States and non-member States cannot justify a different tax 
treatment of nationally sourced portfolio dividends and portfolio dividends from 
non-member States other than States party to the EEA Agreement’ (see 
paragraphs 132 and 133 of the judgment). 
28 The appellant adds that, even where a Member State stipulates in principle that an 
agreement providing for the exchange of information with third countries must be 
in place in order for a particular tax advantage to apply (which is not, however, 
the situation in the present case), the Court of Justice considers that such a 
restriction will be permissible only in the case of ‘requirements, compliance with 
which can be verified only by obtaining information from the competent 
authorities of a third country’, and the Member State may only ‘refuse to grant 
that advantage if … it proves impossible to obtain such information from that 
country’ (see the judgment of the Court of Justice of 18 December 2007, 
C-101/05, A, EU:C:2007:804, paragraph 63). 
29 It can thus be inferred from this case-law of the Court of Justice that, where it is in 
practice possible to verify the relevant requirements without the cooperation of the 
third country, the aforesaid restriction on the free movement of capital must be 
considered not to be justified and must, therefore, be deemed contrary to EU law. 
30 The final point to note in this regard is that the national arrangements for the 
elimination of economic double taxation of profits distributed to SGPS established 
in Article 46(1) and (5) of the CIRC and Article 31(1) of the EBF did not lay 
down any special procedures for verifying that the relevant requirements had been 
met, meaning that all forms of evidence provided for by national law are 
admissible. 
31 Consequently, since the appellant has demonstrated by means of the evidence at 
its disposal that all the requirements governing the application of the arrangements 
for the elimination of economic double taxation of the dividends distributed to 
SGPS by UNITEL have been met, it must be concluded that, in the present case, 
there are no valid grounds under Article 65(1)(a) TFEU and therefore, according 
to the appellant, the answer to the question of whether the exception to the 
principle of the free movement of capital provided for in Article 65(1)(a) TFEU 
applies in this case must be that it does not; the appellant therefore asks the 
Supreme Administrative Court to overturn the contested part of the judgment 
given by the court of first instance and thus to annul the part of the contested 
decision concerning the taxation of the dividends distributed by UNITEL to PT 
VENTURES in the 2005 financial year, since the taxation is contrary to Article 63 
TFEU. 
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Succinct presentation of the reasoning in the request for a preliminary ruling 
The key issue to be determined is whether the rules in Article 46(1) of the CIRC 
and Article 31(1) of the EBF, as they applied at the time of the events, infringed 
the principle of the free movement of capital enshrined in Article 63 TFEU when 
they were construed as not applying to dividends paid by entities domiciled in 
third countries. 
The judgment under appeal took the view that, in the present case, all the 
requirements needed in order for Article 46(1) of the CIRC and Article 31(1) of 
the EBF to apply had been met, except the requirement for the entity making the 
distribution to be resident in Portuguese territory or in another EU Member State, 
and that, therefore, the sole, decisive reason why Grupo PT paid tax on the 
dividends in question was the failure to satisfy that requirement, inasmuch as the 
disputed legislation constitutes a restriction on movements of capital between 
Member States and third countries which is, in principle, prohibited by 
Article 56(1) EC (Article 63(1) TFEU). 
The judgment nevertheless considered that the restriction was permissible in the 
present case due to the need to ensure the effectiveness of fiscal supervision since, 
in the absence of any agreement or convention in this respect, the Tax Authority 
could not obtain information from the competent authorities of the State of 
establishment of the company making the distribution (in this case, Angola) on 
whether the requirements needed in order for the relevant arrangements to apply 
had been met; the judgment concluded that the restriction was objectively justified 
under the Treaty provisions. 
Article 63 TFEU prohibits all restrictions on movements of capital between 
Member States and between Member States and third countries, and there is 
absolutely no question that the arrangements provided for by Article 46(1) and (5) 
of the CIRC and Article 31(1) of the EBF, as they applied at that time, constitute a 
restriction on the movements of capital between Member States and third 
countries that is prohibited by that provision of the TFEU. 
However, it is clear that the principle established in Article 63 TFEU is not 
absolute, since the Treaty itself, specifically Article 65(1)(a) TFEU, guarantees 
the right of Member States to apply the provisions of their tax law which 
distinguish between taxpayers who are not in the same situation with regard to 
their place of residence or with regard to the place where their capital is invested; 
moreover, the Court of Justice has taken the view that the need to ensure the 
effectiveness of fiscal supervision constitutes a valid justification for the exception 
to the principle of free movement of capital, and it is this overriding requirement 
of general interest which, according to the judgment under appeal, justifies the 
exception to that principle, given that the Portuguese State and the Angolan State 
have not concluded any agreement or convention providing for the exchange of 
information for the purposes of verifying whether the requirements for the 
application of the arrangements in question have been met. 
PHAROL 
 
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The STA considers that the present case involves a clear dispute concerning the 
interpretation and application of EU law to which the ‘acte clair’ theory 
manifestly does not apply, and therefore it is necessary, as the appellant suggests, 
and having regard to the fact that there is no judicial remedy against the decision 
of the STA, to make a request to the Court of Justice of the European Union, 
pursuant to Article 267 TFEU, for a preliminary ruling on the questions set out 
above.