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Portuguese Tax Amnesty Against EU Law, Says Commission

by Ulrika Lomas, for LawAndTax-News.com, Brussels

17 May 2007


The European Commission announced on Wednesday that a tax amnesty put in place by the Portuguese government on undeclared funds held abroad was contrary to EC Law.

The EC argued that the 2005 Portuguese tax amnesty did not respect the free movement of capital, since it provided for regularization at a preferential penalty rate of 2.5% for investments in Portuguese government bonds (instead of 5% in any other assets).

Therefore, the Commission has this week sent a reasoned opinion under Article 226 of the EC Treaty, requesting Portugal to eliminate this violation of the EU law by applying the same fiscal treatment to all regularizations made in 2005.

If Portugal does not take the necessary steps to comply with the EU law, the Commission may decide to bring the matter before the European Court of Justice (ECJ).

"The rules of the Internal Market forbid any discrimination of investments made by individuals in other Member States" explained EU Taxation and Customs Commissioner László Kovács. "Investment held in other Member States should be taxed in the same way as investments held in the Member State of residence, even on the occasion of tax amnesties."


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