The Court of Justice of the European Union’s judgment in Santander Renta Variable España Pensiones, Fondo de Pensiones v Autoridade Tributária e Aduaneira (C-525/24, November 27 2025) appears to be just another case on withholding tax over dividends paid to a non-resident pension fund. Beneath the surface, however, the court refines its approach to evidentiary burdens in cross-border settings. The central message is that EU member states (MSs) cannot make EU-law relief hinge on a single ‘magic certificate’ that a foreign authority may not be able (or willing) to issue.
The case reads as a strong restatement of the ‘substance over form’ principle. The court does not outlaw formal proof requirements as such, but it tightens the limits on how they can be used, especially when they risk transforming the right to relief into a purely theoretical entitlement. While the dispute concerns cross-border pension funds and Article 16 of the Portuguese Tax Benefits Statute (EBF), the reasoning is readily transferable to other cross-border relief regimes built around rigid certificate-based proof.
Facts and legal framework
Santander Renta Variable España Pensiones is a Spanish contractual pension fund that is tax resident in Spain, with no permanent establishment in Portugal.
In 2020–21, it received dividends from Portuguese-resident companies on shareholdings held for more than one year, subject to Portuguese corporate income tax (CIT) withholding at 25%. It first claimed partial relief to 15% under the Portugal–Spain tax treaty, and then claimed a full exemption under Article 16 of the EBF, which extends the domestic pension fund exemption to qualifying EU/European Economic Area (EEA) funds.
Article 16(7) of the EBF exempts Portuguese-source income earned by EU or EEA pension funds, provided they:
Offer exclusively retirement-type and related ancillary benefits;
Are managed by an institution falling under the institutions for occupational retirement provision framework (Directive (EU) 2016/2341);
Are the beneficial owner of the income; and
For dividends, hold the relevant shares for at least one year.
Article 16(8) adds a key formality for non-resident funds seeking exemption at source: before payment, the fund must give the withholding agent a declaration “confirmed and authenticated” by its home supervisory authority attesting compliance with Article 16(7)(a) to (c). If this declaration is not produced in time, tax is withheld at 25%. A refund can still be claimed under Article 98 of the Corporate Income Tax Code within two years, though in practice the Portuguese tax authorities often treat the certificate as decisive at that stage as well.
Restriction, proportionality, and the role of cooperation
The court notes that, since 2012, resident and non-resident funds are subject to the same substantive conditions for exemption; the real difference lies in proof.
Under Article 63 of the Treaty on the Functioning of the European Union, measures that are liable to deter non-residents from investing restrict the free movement of capital. Where an MS taxes dividends distributed by resident companies in the hands of both resident and non-resident investors, those investors are, in principle, in a comparable position for treaty purposes.
In Portugal, the exemption turns on the same substantive criteria for both categories, yet only non-resident funds must secure a declaration from their home supervisory authority as a gateway to exemption or a refund. That additional evidentiary hurdle is capable of deterring investment and therefore constitutes a restriction.
The issue, then, is justification and proportionality. Portugal relied on the familiar aims of effective tax supervision and securing tax collection. The court accepts these as overriding reasons in the public interest but insists on a context-sensitive proportionality analysis that draws a clear line between withholding at source and refund procedures.
At the withholding stage, it is the withholding agent (typically the Portuguese company paying the dividend) that must decide whether the exemption can be applied. The court accepts that a private payer cannot be expected to verify, on its own, the regulatory status of a foreign fund by analysing foreign-law documentation. In that context, requiring a declaration from the fund’s home supervisory authority can, in principle, be proportionate: it gives the payer a reliable, easily verifiable confirmation that the exemption conditions are met.
However, the court does not give MSs a blank cheque. The requirement is compatible with Article 63 only if three conditions are met:
The home supervisory authority is legally empowered to issue the declaration in the terms demanded by the source state;
The declaration can be obtained within a reasonable time; and
No equally effective, less restrictive measure is available.
Even at the withholding stage, substance over form prevails: a condition that is not realistically attainable (or that is unnecessary given workable alternatives) cannot be imposed to block relief without breaching the treaty.
The court is much stricter regarding refunds where withholding has already occurred and the decision lies with the tax administration rather than a private agent. Here the focus shifts from the payer’s need for certainty to the administration’s access to EU cooperation mechanisms. The Portuguese authorities are not in an ‘informational vacuum’: they can rely on Council Directive 2011/16/EU on administrative cooperation in taxation to request information from their Spanish counterparts, and Council Directive 2010/24/EU on mutual assistance in recovery further complements that framework.
Because these instruments are designed to facilitate cross-border exchange of tax-relevant information, it is disproportionate for an MS to insist on a single, exclusive form of proof – here, a certificate from the foreign supervisory authority – as the only acceptable evidence that the exemption conditions are met.
Non-resident funds must be allowed to rely on other documentation (fund rules, contracts, regulatory filings, audited accounts, certificates of residence and tax liability, etc.) that, taken together, demonstrate substantive equivalence to a domestic pension fund. If doubts remain, it is for the administration to use EU information channels, rather than rejecting the claim on purely formal grounds.
By narrowing admissible evidence to a single ‘magic’ document, the administration comes close to re-legislating: it turns a substantive exemption into a rigid formal test not clearly rooted in the statute and hard to square with the treaties.
Seen in the light of earlier case law, this is both continuity and evolution. In Meilicke (C-262/09) and van Caster (C-326/12), the court held that MSs cannot refuse tax relief solely because documents are not in the domestic template, provided the information submitted allows the authorities to verify the relevant facts clearly and precisely. In Köln-Aktienfonds Deka (C-156/17), it stressed that non-resident investors cannot be subject to proof requirements that make it impossible or excessively difficult to exercise their EU-based rights. More recently, in Credit Suisse Securities (Europe) (C-601/23), the court again scrutinised a withholding framework in light of the availability of administrative cooperation and the practical functioning of relief mechanisms.
Santander sits comfortably within this line but brings EU administrative cooperation to the centre of the proportionality analysis. Its availability becomes a relevant element in assessing whether an MS may insist on a particular form of proof. Berlioz Investment Fund (C-682/15) is also instructive, confirming that the use of Directive 2011/16 is not a right-free zone, but information requests and the domestic measures enforcing them are subject to proportionality, to the ‘foreseeable relevance’ test, and to effective judicial protection under Article 47 of the Charter of Fundamental Rights of the European Union.
Read together, Berlioz and Santander push the logic further: showing that MSs cannot ignore the cooperation tools they have created when these would help make treaty-based relief effective. In that sense, cooperation begins to operate as a form of ‘equality of arms’, with taxpayers expected to produce a coherent file and administrations expected to use available channels to clarify remaining gaps.
Beyond pension funds: where the judgment can travel
For Portugal, the immediate implications are clear. The architecture of Article 16 of the EBF survives, but its application must change. For exemption at source, withholding agents may still insist on robust documentary assurance; however, reliance on the supervisory certificate is defensible only where it is, in practice, obtainable under the fund’s home-state law and administrative practice within a reasonable time. Otherwise, the requirement becomes disproportionate.
For refunds, the implications are more far-reaching (and rightly so). The Portuguese tax administration can no longer reject claims simply because the foreign supervisory authority’s declaration is missing. It must engage with the substance of the evidence provided and, where that evidence points to substantive equivalence, use Directive 2011/16 and related tools to clarify unresolved points rather than treating the absence of a specific certificate as decisive. Any practice treating the supervisory declaration as a sine qua non condition for relief is, after Santander, difficult to reconcile with EU law.
This matters in the Portuguese context, where higher courts have often interpreted the burden of proof in tax litigation in a way that places a heavy, sometimes decisive, onus on the taxpayer.
Santander sits uneasily with any approach that treats the administration as a largely passive recipient of evidence and the taxpayer as the sole actor responsible for making cross-border relief work. At the same time, the judgment does not invite a reversal of the burden (nor could it, given that the legislation itself allocates it). The primary responsibility to collect and present documentation remains with the taxpayer; only where the taxpayer has made reasonable efforts, with no indication of negligence or inertia, does EU law point towards the administration using cooperation instruments to close any remaining informational gaps.
The decision therefore does not turn the tax administration into a substitute for the taxpayer’s diligence. It does, however, constrain an overly formalistic use of evidentiary rules that disregards available cooperation mechanisms. More broadly, it underlines that tax authorities are not mere collection agents but public bodies bound by the public interest and required to apply the law correctly and fairly, including EU-derived rights.
That logic is not confined to dividend withholding tax and is likely to resonate wherever relief depends on foreign elements – whether in VAT, CIT, or transaction taxes – and the administration is tempted to refuse relief simply because a foreign document is not produced in the preferred form. In practice, this preference often reflects a demanding format devised by the tax administration rather than by the legislator, which is less restrictive.
More broadly, many EU withholding tax relief regimes for dividends, interest, or royalties combine substantive conditions with formal proof requirements that fall especially hard on non-residents. Relief is often made contingent on certificates issued by foreign authorities, sometimes as the only acceptable evidence. After Santander, such regimes are most exposed where the foreign authority is under no clear duty (or has no settled practice) to issue the certificate in the form required by the source state, and where the refusing administration has cooperation tools that could readily bridge the information gap.
The judgment gives taxpayers and advisers a clear line of argument when the absence of a foreign public authority certificate is treated as decisive, since it is fair to ask:
Whether the authority is empowered to issue it;
Whether it is realistically obtainable; and
Whether the denying administration has made reasonable use of EU information channels.
Final thoughts on the implications of the Santander case
Formal proof requirements survive after Santander, though their use is now tightly constrained. The case reinforces a distinctly European notion of substance over form as a concrete legal constraint on how MSs design and apply evidentiary rules in a union built on free movement and institutionalised administrative cooperation. It also recasts that cooperation, as exchange-of-information mechanisms are no longer conceived as ‘one-way channels’ serving only the revenue interests of the requesting state but become mutual instruments that tax authorities and taxpayers can rely on to make treaty rights effective.
In practical terms, the judgment rebalances the mechanics of relief. The non-resident investor still bears the primary responsibility to present a coherent evidentiary file, but tax administrations can no longer remain passive and treat the absence of a preferred certificate as decisive where EU cooperation channels can clarify the facts and where those authorities are bound to pursue the public interest and establish the material truth of the tax-relevant facts.
In that sense, Santander is more than a victory for a single pension fund. It marks a small but significant constitutional victory for the union as a whole, with administrative cooperation operating not only as an enforcement device at the service of national treasuries but also as a union-level safeguard against formalism that would otherwise empty EU rights of content.
