Order of the Court (Sixth Chamber) of 21 January 2020 — State of Canada

(Case C‑613/18) ( 1 )

(Reference for a preliminary ruling — Article 99 of the Rules of Procedure of the Court of Justice — Restrictions on the free movement of capital to or from a third country — Direct taxation — Tax on the revenue of legal persons — Profits distributed by companies resident in the territory of Portugal — Reduction in the tax base)

Free movement of capital and liberalisation of payments — Restrictions — Tax legislation — Taxation of dividends — National rules requiring deduction at source from dividends paid to resident and non-resident taxable persons and establishing a reduction in the tax base exclusively for residents — Unlawful — No justifications — Convention to avoid double taxation concluded with another State — Effect — Determination by the national court

(Arts 63 and 65 TFEU)

(see paras 28-37, operative part)

Operative part

Articles 63 and 65 TFEU must be interpreted as precluding the legislation of a Member State, such as that at issue in the main proceedings, under which the dividends distributed by a resident company are subject to a tax the effective rate of which is higher where those dividends are received by an entity resident in a third country which does not principally carry out activities of a commercial, industrial or agricultural nature than where such dividends are received by such an entity resident in that State. The situation is different only if the application of the tax convention between Canada and the Portuguese Republic signed on 14 June 1999 for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income allows the effects of the difference in treatment under the legislation of that Member State to be completely neutralised, which it is for the referring court to ascertain.

( 1 ) OJ C 445, 10.12.2018.