On June 4 2026, the Court of Justice of the European Union (CJEU) delivered a significant ruling in Nova Iberomoldes – SGPS, S.A. v Autoridade Tributária e Aduaneira (Case C-837/24), holding that the Portuguese real estate transfer tax (RETT), when applied to certain share-for-share exchanges, is incompatible with Council Directive 2008/7/EC on indirect taxes on the raising of capital (the Capital Raising Directive). The decision has immediate consequences for corporate reorganisations in Portugal and raises important questions for comparable regimes elsewhere in the EU.
This article sets out what the ruling means in practice:
Which transactions are affected;
How it changes the tax analysis of in-kind share contributions and other reorganisations; and
The concrete steps tax practitioners should be taking now, both for pending RETT assessments and for future deal structuring.
Background
Under Portuguese law, the acquisition of at least 75% of the share capital or quotas in a company whose assets consist of more than 50% Portuguese real estate (a real estate-rich company) is deemed a real estate transfer subject to RETT, under Article 2(2)(d) of the RETT Code.
Nova Iberomoldes, a Portuguese holding company, was incorporated through in-kind contributions of shares held by its sole shareholder in various companies, in exchange for newly issued shares (a share-for-share exchange).
One of the contributed companies was a real estate-rich company that exclusively owned two Portuguese real estate assets. The Portuguese tax authorities took the view that this reorganisation triggered RETT, and the case was referred by the Portuguese Tax Arbitration Court to the CJEU to determine whether such taxation is compatible with the Capital Raising Directive.
The CJEU’s ruling
The Capital Raising Directive harmonises indirect taxes on the raising of capital and, under articles 4 and 5(1)(e), prohibits EU member states from levying any indirect tax on reorganisation operations. The CJEU concluded that Portuguese RETT, as applied to the in-kind contribution of shares in a real estate-rich company, constitutes an indirect tax within the meaning of the directive and is therefore precluded by it.
The court held that this prohibition must be interpreted broadly, by reference to the objective characteristics of the tax rather than its domestic label. It found that RETT under Article 2(2)(d) of the RETT Code is not levied on income or the possession of assets but on the acquisition of real estate or real estate-rich companies, and that the fact the tax base is calculated by reference to the underlying tax value of the real estate, rather than the value of the shares contributed, does not alter that conclusion.
The CJEU also characterised the share-for-share exchange as a reorganisation operation within the meaning of the directive, given that the newly incorporated company acquired shares representing the majority of the voting rights in other companies and that the consideration for the contribution consisted of shares in the newly formed company. The absence of any transfer of other assets, resources, or the entirety of the equity instruments was held to be irrelevant.
The court went on to examine, and reject, each of the derogations available to member states under Article 6(1)(a) to (c) of the directive. The derogation for duties on the transfer of securities was found inapplicable because it covers only independent share transfers, not those incidental to a reorganisation. The derogation for transfer duties on immovable property required an actual legal transfer of ownership of the real estate, which had not occurred; the CJEU expressly rejected the notion that an “economic transfer” could satisfy this requirement. The derogation for consideration other than shares was similarly inapplicable, since the contribution was made through shares of the newly formed company.
Finally, the CJEU dismissed the Portuguese government’s argument that the tax was justified on anti-abuse grounds, holding that member states cannot rely on general presumptions to justify measures that apply automatically to any qualifying share transfer, irrespective of actual evidence of abuse. According to the CJEU, such an approach goes beyond what is necessary and proportionate to combat tax evasion and avoidance.
Implications for Portugal
The ruling directly addresses Portuguese law and confirms that RETT under Article 2(2)(d) of the RETT Code cannot be applied to transactions that qualify as reorganisation operations under the Capital Raising Directive. This has practical implications not only for incorporations and share capital increases carried out through in-kind contributions of shares in Portuguese real estate-rich companies but also for situations in which, following a share capital increase, a shareholder ends up holding 75% or more of the share capital of a real estate-rich company as a result of such a contribution.
It is also arguable that the prohibition extends to other reorganisation transactions, such as mergers and demergers. In practice, however, these transactions already benefit from a specific corporate reorganisation exemption from RETT under Article 60 of the Tax Benefits Statute, so the practical impact of the judgment on such transactions is likely to be limited. The most significant effect of the ruling will therefore be felt in structuring in-kind contributions of shares into Portuguese real estate-rich companies, including within intra-group reorganisations, where RETT exposure previously constituted a material cost and planning constraint.
Taxpayers with pending assessments or ongoing disputes involving RETT charged on qualifying reorganisation operations should consider invoking the direct effect of the Capital Raising Directive and the Nova Iberomoldes judgment. Given the primacy of EU law, national courts and tax authorities are required to disapply RETT provisions that are incompatible with the directive.
Wider European impact
Although the judgment concerns Portuguese law, its reasoning is not confined to Portugal. Several member states operate similar regimes that deem the transfer of shares in real estate-rich (or property-holding) companies to be equivalent, for tax purposes, to a direct transfer of real estate. Because the CJEU’s analysis turns on the objective characteristics of the tax and the scope of the Capital Raising Directive, rather than on features unique to Portuguese law, comparable regimes elsewhere in the EU are now open to challenge wherever they are triggered by reorganisation operations falling within the directive.
Germany, Austria, and Spain are examples of member states operating such regimes.
Looking ahead
The Nova Iberomoldes judgment is a reminder that domestic indirect taxes on share transfers in real estate-rich companies must be assessed against the Capital Raising Directive whenever a reorganisation operation is involved, regardless of how the tax is labelled or structured under national law. For Portugal, the ruling significantly narrows the scope for taxing in-kind contributions of shares in real estate-rich companies. Tax practitioners should treat this as a trigger for the review of pending assessments and future reorganisation planning.
For other member states with structurally similar regimes, the decision is likely to prompt renewed scrutiny of long-standing domestic case law and administrative practice, and taxpayers engaged in cross-border reorganisations involving real estate-holding structures would be well advised to monitor these developments closely.
