Ricardo Seabra Moura authors the article "Tax discrimination on intragroup payments – the EEA perspective"

Ricardo Seabra Moura, counsel at Morais Leitão, authored the article "Tax discrimination on intragroup payments – the EEA perspective" in the International Tax Review (ITR), analysing how Portugal's withholding tax rules on interest payments may unlawfully discriminate against companies based in European Economic Area (EEA) countries.

The article focuses on Directive 2003/49/EC (Interest and Royalties Directive), which exempts interest payments between associated companies situated in different European Union (EU) Member States from withholding tax, provided certain conditions are met. Despite this, companies based in EEA countries such as Norway, Iceland, and Liechtenstein remain subject to withholding tax in Portugal, even when fulfilling similar conditions, potentially constituting tax discrimination.

According to Ricardo Seabra Moura, Portuguese legislation explicitly restricts withholding tax exemptions to companies resident in EU Member States, unjustifiably excluding EEA companies. This limitation breaches the principles of freedom of establishment and free movement of capital enshrined in the EEA Agreement.

In practical terms, this means multinational groups with legitimate intragroup financing arrangements between Portugal and countries like Norway, Iceland, or Liechtenstein face additional taxation burdens, negatively impacting financial efficiency and creating competitive disadvantages.

Ricardo Seabra Moura further highlights that, under the Portuguese Constitution, international treaties ratified by Portugal take precedence over domestic law, including the EEA Agreement. Therefore, companies affected by this discrimination have valid legal grounds to claim reimbursement of improperly withheld amounts for the past four years.

Read the full article on the ITR website.