CJEU limits the levying of Portuguese transfer tax as part of capital restructuring

Practical impact

This judgment appears to prohibit the levying of Dutch transfer tax in the case of restructurings involving the contribution of shares in a property company to a capital company. It follows from the judgment that the levying of transfer tax may be contrary to Directive 2008/7/EC concerning indirect taxes on the raising of capital (‘Directive 2008/7/EC’), if the transaction in question qualifies as a restructuring as referred to in Article 4 of that Directive.

This appears, in any event, to be relevant to situations in which shares in a property company are contributed to pay up shares in another capital company. In such a case, it may involve an exchange of shares or capital restructuring that falls within the Directive’s scope of protection. If so, a national scheme that treats such a contribution of shares as an acquisition of the underlying immovable properties for transfer tax purposes does not appear to be automatically compatible with EU law. Besides, this cannot be ruled out for other forms of (re)structuring either.

In the Netherlands, under certain conditions specific exemptions from transfer tax apply to such restructurings, although these exemptions are subject to detailed conditions. This judgment calls into question the extent to which these conditions are permissible and raises the question whether these conditions may be invoked in full when the transaction qualifies as a restructuring as referred to in Article 4 of Directive 2008/7/EC. In that case, it may be argued that Union law does not merely prescribe an exemption, but opposes the levy itself. The question is whether in light of this judgment the Ministry of Finance sees grounds to amend the existing exemptions and policy decisions.

If you are thinking of carrying out such a restructuring, we advise you to map out the consequences. In respect of recently completed restructurings, we advise verifying the impact of this judgment and whether an objection and/or appeal is possible.

Case

Nova Iberomoldes is a Portuguese public limited liability company that was formed for the purpose of holding and managing participations. Its authorised share capital was fully paid up through a contribution in kind. To this end, its sole shareholder contributed participations in various companies. One of these companies held two immovable properties.

The Portuguese tax authority took the position that the contribution was subject to Portuguese transfer tax, known as IMT (imposto municipal sobre as transmissões onerosas de imóveis). Under Portuguese legislation, the acquisition of a shareholding of at least 75% in a company that owns immovable properties is, under certain circumstances, equated to that of a transfer of immovable properties. The tax was calculated using the reference value for tax purposes of the immovable properties, or the balance sheet book value, if that was greater.

Nova Iberomoldes argued that this levy was contrary to Directive 2008/7/EC. It took the position that it either concerned a capital contribution or a restructuring, on which Member States may not levy indirect tax.

The Portuguese court referred requests for a preliminary ruling to the Court of Justice of the European Union (‘CJEU’) regarding the interpretation of Directive 2008/7/EC. These questions related in particular to the classification of the IMT as an indirect tax on the raising of capital, the question whether the contribution must be classified as a capital contribution or as a restructuring, and whether the Directive allows for a levy which, under national law, is structured as a transfer tax on underlying immovable properties.

Judgment of the Court of Justice of the European Union

The CJEU states first and foremost that the formation of Nova Iberomoldes and the paying up of its capital through the contribution of participations fall within the scope of Directive 2008/7/EC. Since Nova Iberomoldes acquired, upon its formation, participations representing a majority of the voting rights in other capital companies, and the consideration consisted of shares in Nova Iberomoldes, the transaction qualifies as a restructuring as referred to in the Directive.

In the case of such restructurings, Member States are prohibited from levying indirect tax. The CJEU argues that this prohibition must be interpreted broadly, as the Directive aims to eliminate tax obstacles to the raising of capital and to restructurings. A Member State may not circumvent this protection by equating a contribution of shares with that of a transfer of immovable properties for national tax purposes.

The CJEU subsequently ruled that the Portuguese IMT levy qualifies as an indirect tax, as the levy is payable on the acquisition of shares in a company that owns immovable properties. The tax base being determined according to the value of those underlying immovable properties does not alter this. For the purposes of the Directive, the decisive factor is that the tax relates to a transaction falling within the scope of protection of the Directive.

The CJEU argued that the exceptions to the prohibition on taxation do not provide any room for the Portuguese tax either. The contribution of participations cannot be qualified as an independent transfer of securities that is separate from the restructuring. It does not concern a transfer of immovable properties either, as the legal ownership of the immovable properties remained with the property company. Neither did it involve a consideration other than in shares.

Finally, the CJEU rejected the position that the levy may be justified on the grounds of preventing tax evasion or tax avoidance. A general levy applied to a contribution of shares as part of a restructuring, without any concrete evidence of abuse, goes beyond what is necessary. The Directive therefore precludes the Portuguese IMT levy in a case such as this.

Source:

• Court of Justice of the European Union, 4 June 2026, C-837/24, ECLI:EU:C:2026:445