CJEU judgment affects (Dutch and other) transfer tax

The Court of Justice of the European Union (CJEU) has ruled on 4 June 2026 that no (Portuguese) transfer tax may be levied on the transfer of a company with real estate, where it concerns a transaction that falls under the EU Directive on Indirect Taxes on the Raising of Capital (EU Capital Duty Directive). The EU Capital Duty Directive stipulates that EU countries may not levy indirect tax on the raising of capital in the case of capital companies. The CJEU ruled that the transfer tax that Portugal wanted to levy is therefore also not permitted.

The judgment of the CJEU

The Netherlands has not levied capital tax since 2006. To that extent, one might think that a CJEU ruling on the EU Capital Duty Directive would have few Dutch consequences. But now that the CJEU has come to the conclusion that transfer tax is also a levy that is prohibited by the directive, it also has consequences for the Netherlands. This also applies to the necessary other EU countries. 

The case concerned the setting up of a Portuguese private limited liability company, Nova Iberiomoldes SGPS S.A. ('Nova'). Nova's share capital was paid up by the contribution of the shares to a Portuguese private limited liability company holding two Portuguese immovable properties. For Portuguese RETT purposes, the acquisition of 75% or more of the share capital in a company that owns Portuguese real estate is a taxable event.

The CJEU ruled that the transaction falls under the EU Capital Tax Directive, because Nova acquired controlling shares in other capital companies in exchange for issuing its own shares. Therefore, on the basis of the Directive, the transaction must be exempted from any form of indirect taxation. Although the Portuguese RETT has the character of a transfer tax domestically, the CJEU characterises it as an indirect tax that is triggered by a paying-up of share capital by means of shares held by the contributing company in companies owning immovable property capital contribution and was therefore prohibited by the Directive.

In concrete terms, the CJEU's ruling may have important consequences for the scope that Member States have to levy transfer tax on capital contributions and restructurings under the EU Capital Duty Directive. This includes the raising of capital, such as share contributions, and restructuring, including (cross-border) mergers and demergers, as referred to in the EU Capital Duty Directive. For the Netherlands, this would amongst others concern transactions with real estate entities, whereby the acquisition of real estate entities is also subject to real estate transfer tax. 

If such a real estate entity is acquired in the event of a contribution or restructuring that can be brought under the EU Capital Duty Directive, transfer tax is now in principle levied (unless an exemption is applicable). This judgment would make that levy no longer permissible (except for abuse scenarios). The (indirect) acquisition of real estate would therefore remain untaxed for real estate transfer tax. Portugal and Germany argued that the transaction is covered by an exception allowing transfer tax to be levied, and that the levying of tax is also justified for the purpose of preventing tax avoidance. The CJEU does not agree with this, contrary to the analysis by the Advocate General of the CJEU. EU Member States may combat tax avoidance, but cannot rely, in that context, on general presumptions.