Portugal condemned for unfair tax rules

The European Commission (EC) is to take action against the Portuguese Government for unfair taxation rules regarding foreign pension funds and restrictive exit taxes, designed to entice foreign investors to hold Portuguese stocks...

Portugal, along with Spain, has been referred to the European Court of Justice for their rules surrounding foreign pension taxation.

Under Portuguese law, if a company moves assets to another EC state, they will be liable to pay unrealised capital gains in contrast to companies that remain in Portugal who do not have to pay these taxes.

The EC stated, "The Commission considers that immediate taxation penalises those companies that wish to leave Portugal or transfer assets abroad."

Currently, interest payments on foreign pension funds are taxed more heavily than domestic pension funds, breaking rules under the EC Treaty as they restrict the free movement of capital within the EC.

Countries that were previously found to be restricting the free movement of capital (including Denmark, Lithuania and Sweden) have all since rectified their taxation laws to adapt to the EC requests.

Source: www.homesoverseas.co.uk/news