The European Commission has decided to refer Portugal to the European Court of Justice for its discriminatory tax rules against non-Portuguese service providers, said the commission on Thursday.
Under Portugal's current tax rules, 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, the executive body of the European Union (EU), considers that these rules are incompatible with the EU Treaty, which guarantees the free movement of services within the internal market of the EU.
The commission believes that the Portuguese policy is likely to dissuade foreign service providers from offering services in Portugal, and might dissuade Portuguese clients from buying services from foreign providers.
Source:Xinhua
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