Press Release: Direct taxes: Commission requests Portugal to end discrimination against investments held abroad

The European Commission sent Portugal a formal request to amend its legislation concerning the tax rules applicable to investments held in financial institutions established outside Portugal. The income flowing from these investments may, in certain cases, be more heavily taxed than the income of investments held in Portugal. The Commission considered that these rules are incompatible with the EC Treaty, which guarantees the free movement of capital. The request is in the form of a ‘reasoned opinion’ under Article 226 of the EC Treaty. If Portugal does not reply satisfactorily to the reasoned opinion within two months the Commission may refer the matter to the Court.