In the context of the package of infringement proceedings brought to the Member States for infringements of European law, the Community executive announced that it has requested Portugal and Luxembourg to amend the respective laws transposing the anti-tax avoidance directive (Community law) adopted in 2016.

“Both Member States use the possibility to exempt financial institutions from the interest limitation rules provided for in the anti-tax avoidance directive. However, the respective national legal acts go beyond the permitted exemptions and provide for unlimited interest deductibility for the purposes of Corporate Income Tax (IRC), including securitization entities, which do not qualify as 'financial companies' under of the directive”, points out the European Commission.

Brussels warns that if the two countries do not act accordingly within the next four months, it will move to the second and final step of the infringement process before an eventual appeal to the Court of Justice of the European Union.