Press Release: Direct taxes: the Commission refers Portugal to the Court of Justice for its discriminatory tax provision against non-Portuguese service providers

The European Commission decided to refer Portugal to the Court of Justice for its discriminatory tax rules according to which non-resident entities providing services in Portugal are subject to a withholding tax based on the gross amount of their income, whereas domestic providers are taxed only on their net profits. The Commission considered that these rules are incompatible with the EC Treaty, which guarantees the free provision of services.