European Court of Justice Issues Preliminary Ruling on Portuguese Withholding Tax Rules

The European Court of Justice (ECJ) March 17 issued a preliminary ruling in Case No. C-545/19, clarifying the Portuguese withholding tax treatment of dividends paid to a non-resident undertaking for collective investment in transferrable securities (UCITS). A German UCITS received dividends from Portuguese companies, which Portugal taxed at a 15 percent withholding rate under the applicable DTA. The company sought removal of the withholding taxes for 2015 and 2016, because resident companies are also exempt from the withholding tax in question. The ECJ allowed the challenge to continue and held that the EU principal on free movement of capital precludes ...