Press Release: Direct taxation: The European Commission requests Portugal and Spain to change restrictive exit tax provisions for companies

The European Commission formally requested Portugal and Spain to change their tax provisions which impose immediate exit taxes when companies cease to be tax resident in these countries or transfer their assets to another Member State. The Commission considers these provisions to be incompatible with the freedom of establishment (art. 43 EC) provided for in Article 43 of the Treaty and Article 31 of the EEA Agreement. The requests took the form of a reasoned opinion (second step of the infringement procedure provided for in Article 226 of the EC Treaty). If there is no satisfactory reaction to the reasoned opinions within two months, the Commission may decide to refer the cases to the Court of Justice of the European Communities.