Judgment — ECLI:EU:C:2013:629
Date: 2013-10-03
Language of the case: Portuguese
Court formation: Fourth Chamber
Subject matter: Free movement of capital
Procedure: Reference for a preliminary ruling
Origin: Portugal

Summary — Judgment of the Court (Fourth Chamber), 3 October 2013 1. Freedom of establishment — Free movement of capital — Scope — Tax legislation — Corporation tax — Taxation of dividends — Tax treatment of dividends paid by a company established in a non-member country — Treatment not applying exclusively to situations in which the parent company exerts decisive influence over the company paying the dividends — Provisions governing freedom of establishment not applicable — Provisions governing free movement of capital applicable (Arts 43 EC and 56 EC) 2. Freedom of establishment — Free movement of capital — Scope — Tax legislation — Corporation tax — National rules precluding the deduction by a resident company which has special relations with a non-resident company of loan interest paid to the non-resident company — Not permissible — Justification on grounds of combatting abusive practices — Limits — Principle of proportionality not observed (Art. 56 EC) 1. See the text of the decision. (see paras 16-18, 23, 24) 2. Article 56 EC must be interpreted as meaning that, in the case of rules of a Member State which provide that, where interest applied to the part of an overall debt categorised as excessive has been paid by a resident company to a lending company established in a non-member country with which the borrowing company has special relations, it is not deductible as an expense for the purposes of determining taxable profit, but where such interest is paid to a resident lending company with which the borrowing company has special relations, it is deductible for those purposes, those rules are precluded where, if the lending company established in a non-member country does not have a shareholding in the resident borrowing company, they nevertheless presume that the overall debt owed by the borrowing company forms part of an arrangement designed to avoid the tax normally payable or where they do not make it possible, at the outset, to determine their scope with sufficient precision. It is true that such rules may be justified where they specifically target wholly artificial arrangements which do not reflect economic reality and the sole purpose of which is to avoid the tax normally payable on the profits generated by activities carried out on the national territory. However, if the rules do not make it possible, at the outset, to determine their scope with sufficient precision, they do not meet the requirements of legal certainty, in accordance with which rules of law must be clear, precise and predictable as regards their effects, especially where they may have unfavourable consequences for individuals and companies. In such circumstances, those rules go beyond what is necessary in order to attain their objective. (see paras 34, 40, 44, 45, operative part)