STA decision published on the tax regime applicable to dividends distributed to non-resident Collective Investment Undertakings

The Supreme Administrative Court (“STA”) published today a decision that standardises case law on the tax regime applicable to dividends paid by entities resident in Portugal to non-resident Collective Investment Undertakings (“CIUs”).

In this case, a non-resident CIU (resident in Germany) received dividends from an entity resident in Portugal, which were subject to CIT withholding tax. The CIU disagreed with the withholding tax and submitted a request for an arbitration ruling to CAAD in order to have the withholding tax levied on the dividends distributed declared illegal. In support of this claim, it argued that the withholding tax act resulted in different treatment being given to dividends paid by entities resident in Portugal to non-resident CIUs and resident CIUs (exempt from CIT under Article 22 of the EBF), contrary to European Union law.

In this context, the STA ruled that the limitation of the CIT exemption regime provided for in Portuguese legislation for dividends distributed to resident CIUs, excluding non-resident CIUs, is contrary to European Union law.

Click on the link below to see the decision:

https://diariodarepublica.pt/dr/detalhe/acordao-supremo-tribunal-administrativo/7-2024-853692250

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