Provisional text

JUDGMENT OF THE COURT (Fifth Chamber)

5 June 2025 ( * )

( Reference for a preliminary ruling – Directive 2008/7/EC – Article 5(2)(b) – Article 6(1)(d) – Indirect taxes on the raising of capital – Concept of ‘other charges on land or other property’ – Stamp duty on guarantees provided for the purposes of the proper execution of a debenture loan )

In Case C‑685/23,

REQUEST for a preliminary ruling under Article 267 TFEU from the Tribunal Arbitral Tributário (Centro de Arbitragem Administrativa – CAAD) (Tax Arbitration Tribunal (Centre for Administrative Arbitration – CAAD), Portugal), made by decision of 10 November 2023, received at the Court on 15 November 2023, in the proceedings

Corner and Border S. A.

v

Autoridade Tributária e Aduaneira,

THE COURT (Fifth Chamber),

composed of M.L. Arastey Sahún, President of the Chamber, D. Gratsias (Rapporteur), E. Regan, J. Passer and B. Smulders, Judges,

Advocate General: A. Biondi,

Registrar: L. Carrasco Marco, Administrator,

having regard to the written procedure and further to the hearing on 14 November 2024,

after considering the observations submitted on behalf of:

– Corner and Border S. A., by A.P. Braga and M. Moreira, advogados,

– the Portuguese Government, by P. Barros da Costa, H. Magno and A. Rodrigues, acting as Agents,

– the European Commission, by P. Caro de Sousa, A. Ferrand and W. Roels, acting as Agents,

after hearing the Opinion of the Advocate General at the sitting on 13 February 2025,

gives the following

Judgment

1 This request for a preliminary ruling concerns the interpretation of Article 5(2)(b) and Article 6(1)(d) of Council Directive 2008/7/EC of 12 February 2008 concerning indirect taxes on the raising of capital (OJ 2008 L 46, p. 11).

2 The request has been made in proceedings between Corner and Border S. A. and the Autoridade Tributária e Aduaneira (Tax and Customs Authority, Portugal) concerning the imposition of stamp duty on guarantees provided for the purposes of the proper execution of a debenture loan.

Legal context

European Union law

3 Recitals 2, 3 and 9 of Directive 2008/7 are worded as follows:

‘(2) The indirect taxes on the raising of capital, namely the capital duty (the duty chargeable on contributions of capital to companies and firms), the stamp duty on securities, and duty on restructuring operations, regardless of whether those operations involve an increase in capital, give rise to discrimination, double taxation and disparities which interfere with the free movement of capital. The same applies as regards other indirect taxes with the same characteristics as capital duty and the stamp duty on securities.

(3) Consequently, it is in the interests of the internal market to harmonise the legislation on indirect taxes on the raising of capital in order to eliminate, as far as possible, factors which may distort conditions of competition or hinder the free movement of capital.

…

(9) Apart from capital duty, no indirect taxes on the raising of capital should be levied. In particular, no stamp duty should be levied on securities, regardless of the origin of such securities, and regardless of whether they represent a company’s own capital or its loan capital.’

4 Article 2 of that directive, entitled ‘Capital company’, states in paragraph 1(a) thereof:

‘For the purposes of this Directive “capital company” means:

(a) any company which takes one of the forms listed in Annex I’.

5 Points 16 and 22 of Annex I to that directive refer, inter alia and respectively, to a limited liability company ( société à responsabilité limitée ) under Luxembourg law and to a public limited company ( sociedade anónima ) under Portuguese law.

6 Article 3 of that directive, entitled ‘Contributions of capital’, states:

‘For the purposes of this Directive and subject to Article 4, the following transactions shall be considered to be “contributions of capital”:

…

(i) a loan taken up by a capital company, if the creditor is entitled to a share in the profits of the company;

(j) a loan taken up by a capital company with a member or a member’s spouse or child, or a loan taken up with a third party, if it is guaranteed by a member, on condition that such loans have the same function as an increase in the company’s capital.’

7 Article 5 of Directive 2008/7, entitled ‘Transactions not subject to indirect tax’, provides:

‘1. Member States shall not subject capital companies to any form of indirect tax whatsoever in respect of the following:

(a) contributions of capital;

…

2. Member States shall not subject the following to any form of indirect tax whatsoever:

(a) the creation, issue, admission to quotation on a stock exchange, making available on the market or dealing in stocks, shares or other securities of the same type, or of the certificates representing such securities, by whomsoever issued;

(b) loans, including government bonds, raised by the issue of debentures or other negotiable securities, by whomsoever issued, or any formalities relating thereto, or the creation, issue, admission to quotation on a stock exchange, making available on the market or dealing in such debentures or other negotiable securities.’

8 Article 6 of that directive, entitled ‘Duties and value added tax’, provides:

‘1. Notwithstanding Article 5, Member States may charge the following duties and taxes:

…

(d) duties on the creation, registration or discharge of mortgages or other charges on land or other property;

…’

9 Article 7(1) of that directive provides:

‘Notwithstanding Article 5(1)(a), a Member State which as at 1 January 2006 charged a duty on contributions of capital to capital companies, hereinafter “capital duty”, may continue to do so provided that it complies with Articles 8 to 14.’

Portuguese law

10 Article 1(1) of the Código do Imposto do Selo (Stamp Duty Code) provides:

‘Stamp duty shall be charged on all transactions, contracts, documents, securities, papers and other legal matters or situations provided for in the Tabela Geral do Imposto do Selo [(Schedule of Stamp Duties)], including transfers of goods free of charge.’

11 The Schedule of Stamp Duties includes an Item 10, concerning guarantees for debentures, which is worded as follows:

‘Guarantees for debentures, whatever their nature or form, namely collateral security, sureties, autonomous bank guarantees, autonomous guarantees, mortgages, pledges and insurance cover, except where they are incidental to contracts specifically subject to taxation in this tariff and are created at the same time as the guaranteed debenture, even if in a different instrument or security, for its respective value, according to the term, with any extension to the term of a contract being regarded as a new transaction:

…

10.3 Guarantees with no indication of term or having a term of five years or more, 0.6%.’

The dispute in the main proceedings and the questions referred for a preliminary ruling

12 Corner and Border is a public limited company under Portuguese law, the share capital of which is wholly owned by Onex Renewables Sàrl (‘Onex’), a limited liability company under Luxembourg law. On 21 July 2021, Onex acquired from EDP Renewables SGPS S. A., which is a public limited company under Portuguese law, the entire share capital in Éolica Do Sincelo S. A. (‘ES’) and Éolica da Linha S. A. (‘EL’), two other public limited companies under Portuguese law. On 29 July 2021, Onex assigned to Corner and Border its contractual position in the contract for the purchase of the shares in ES and EL.

13 On 27 January 2022, Corner and Border concluded a financing agreement (‘the financing agreement’), under which it issued a debenture loan made up of registered debentures for a total amount of EUR 348 900 000, subscribed in their entirety by Banco Santander Totta S. A. (‘the debenture loan’). That financing agreement was concluded in order to finance payment of the purchase price of the shares in ES and EL and to refinance the existing debt of those companies. According to the financing agreement, Corner and Border could transfer the contractual position of the subscriber, held by Banco Santander Totta, in return for the payment of penalties or commission.

14 In order to ensure the proper performance of the financing agreement, Onex, Corner and Border, ES and EL provided various real and personal guarantees. Those guarantees were provided under a contract concluded between those companies, in their capacity as guarantors, and Banco Santander Totta, as beneficiary and ‘security agent’ (‘the Security Agreement’).

15 In the context of the Security Agreement, Onex provided a series of guarantees in the form of, first, pledges over shares in Corner and Border and over receivables held by Onex in respect of shareholder loans granted to Corner and Border and, second, promises of pledges over shares in Corner and Border which may be issued in the future and over Onex’s future receivables in respect of shareholder loans granted to Corner and Border.

16 Under that agreement, Corner and Border also provided a series of guarantees, in three forms. These were, first, pledges over the shares in ES and EL, over receivables held by Corner and Border in respect of, inter alia, shareholder loans granted to those companies and over the balance of the bank accounts of Corner and Border, second, promises of pledges over any shares in ES and EL issued in the future, over the future receivables held by Corner and Border over those companies, and over the balance of future bank accounts of Corner and Border and, lastly, third, transfer of receivables.

17 Under that agreement, ES and EL also provided a series of guarantees and promises of guarantees in the form of, first, pledges over the balance of their existing bank accounts and over the receivables held by them, second, promises of pledges over the balance of their future bank accounts and, third, transfer of receivables.

18 The referring court states that the grant of those guarantees was necessary and essential for the conclusion of the financing agreement and the issue of the debenture loan.

19 On 27 January 2022, the notary who drew up and authenticated the financing agreement and the Security Agreement calculated the stamp duty in accordance with Article 10.3 of the Schedule of Stamp Duties, at a rate of 0.6% applied to the amount of EUR 348 900 000, thereby resulting in a tax liability of EUR 2 093 400.

20 Corner and Border brought an administrative appeal against the imposition of stamp duty on the guarantees provided. Since that appeal was rejected, Corner and Border brought an arbitration claim before the Tribunal Arbitral Tributário (Centro de Arbitragem Administrativa – CAAD) (Tax Arbitration Tribunal (Centre for Administrative Arbitration – CAAD), Portugal), which is the referring court.

21 In support of its claim, Corner and Border submits, inter alia, that the notice of assessment in respect of the stamp duty infringes Article 5(2)(b) of Directive 2008/7, since the guarantees which were the subject of that assessment were strictly essential for the conclusion of the debenture loan, with the result that the assessment in question is tantamount to taxing the transaction for the raising of capital at issue in the main proceedings as a whole. Moreover, the exception laid down in Article 6(1)(d) of that directive concerns only the guarantees on immoveable property.

22 The referring court has doubts as to whether the creation of guarantees in connection with transactions for the raising of capital is to be regarded as an integral part of those transactions or as a formality relating thereto and whether the prohibition on subjecting those transactions to indirect taxation laid down in Article 5(2)(b) of Directive 2008/7 therefore extends to those guarantees. The referring court also asks whether those guarantees come within the concept of ‘other charges on land or other property’ within the meaning of Article 6(1)(d) of that directive.

23 In those circumstances, the Tribunal Arbitral Tributário (Centro de Arbitragem Administrativa – CAAD) (Tax Arbitration Tribunal (Centre for Administrative Arbitration – CAAD)) decided to stay the proceedings and to refer the following questions to the Court of Justice for a preliminary ruling:

‘(1) Must Article 5(2)(b) of [Directive 2008/7] be interpreted as precluding taxation in the form of stamp duty on guarantees consisting of pledges of shares, bank account balances and shareholder loans, and of transfers of credits by way of collateral, provided in relation to a transaction to issue debentures?

(2) Would the answer to the first question referred differ according to whether the provision of the guarantees constitutes a legal obligation or whether it is optional and has been agreed voluntarily?

(3) Would the answer to the first question referred be different where the guarantees were provided in the context of a transaction to issue debentures, subject to private subscription by a bank, whose position as subscriber may be transferred at the discretion of the issuing entity, even if such a transfer is subject to certain conditions and to penalties/commissions?

(4) Must Article 6(1)(d) of [Directive 2008/7] be interpreted as meaning that it includes guarantees consisting of pledges of shares, bank account balances and shareholder loans, and of transfers of credits by way of collateral, provided in relation to a transaction to issue debentures falling within the scope of Article 5(2)(b) of that directive?’

Consideration of the questions referred

24 By its four questions, which it is appropriate to examine together, the referring court asks, in essence, whether Article 5(2)(b) and Article 6(1)(d) of Directive 2008/7 must be interpreted as precluding national legislation which provides for the imposition of stamp duty on guarantees provided in the form of pledges of shares, bank account balances or receivables resulting from shareholder loans and in the form of transfers of receivables for the purposes of the proper fulfilment of the obligations arising from a debenture loan issued by a capital company.

25 As a preliminary point, it should be noted that Onex, the initial purchaser of the shares the purchase of which was financed by the issue of a debenture loan, and Corner and Border, the company issuing the debentures at issue in the main proceedings, are, as a limited liability company and a public limited company respectively, ‘capital companies’ within the meaning of Article 2(1)(a) of Directive 2008/7, read in conjunction with points 16 and 22 of Annex I thereto. They therefore fall within the scope of that directive.

26 As stated in recital 9, the purpose of that directive is to exclude any indirect taxes on the raising of capital, apart from capital duty on capital companies, which may be charged under the conditions laid down in Article 7(1) of that directive. In particular, it is clear from that same recital that no stamp duty should be levied on securities, regardless of the origin of such securities, and regardless of whether they represent a company’s own capital or its loan capital.

27 In that context, Article 5(2)(b) of Directive 2008/7 prohibits indirect taxation, in any form whatsoever, on loans raised by the issue of debentures or other negotiable securities, by whomsoever issued, or on any formalities relating thereto, or on the creation, issue, admission to quotation on a stock exchange, making available on the market or dealing in such debentures or other negotiable securities.

28 In that respect, as regards, first, the concept of ‘formalities’ relating to a loan raised by the issue of debentures, which must be exempt from any indirect tax, it should be noted that that concept concerns possible steps that a capital company is, under national law, required to take in order to set up such a loan and to create, issue, admit to quotation on a stock exchange, make available on the market or deal in the negotiable securities concerned (see, to that effect, order of 19 July 2023, EDP (Taxation on the marketing of securities) , C‑416/22, EU:C:2023:604, paragraph 28 and the case-law cited).

29 As regards, in particular, guarantees such as those at issue in the main proceedings, it should be noted that, according to the information provided by the referring court, Portuguese law does not make the conclusion of a debenture loan subject to the provision of such guarantees and, moreover, that such guarantees are connected with the substance of the transaction for the raising of capital. It follows that, even where the lender makes the provision of guarantees a condition for underwriting the debenture loan, a situation referred to by the national court, such provision is not covered by ‘formalities’ referred to in Article 5(2)(b) of Directive 2008/7.

30 As regards, second, the prohibition on taxing actual transactions for the raising of capital, it must be noted that, having regard to the objective pursued by Directive 2008/7, Article 5 thereof must be interpreted broadly so as to ensure that that prohibition is not denied practical effect. Thus, the prohibition of a taxation of those transactions also applies to the transactions which are not expressly covered by that prohibition, where such taxation is tantamount to taxing a transaction forming an integral part of an overall transaction with regard to a raising of capital (judgment of 22 December 2022, IM Gestão de Ativos and Others , C‑656/21, EU:C:2022:1024, paragraph 28 and the case-law cited).

31 It also follows from the case-law of the Court that, where an issue of negotiable securities has no point until those securities find investors, a tax on the initial acquisition of a newly issued security is in reality levied on the very issue of that security as it forms an integral part of an overall transaction with regard to a raising of capital. The aim of maintaining the practical effect of Article 5(2)(b) of Directive 2008/7 implies, therefore, that ‘issue’, for the purposes of that provision, includes the first acquisition of securities immediately consequent upon their issue (judgment of 22 December 2022, IM Gestão de Ativos and Others , C‑656/21, EU:C:2022:1024, paragraph 29 and the case-law cited).

32 Similarly, since the guarantees are provided for the purposes of the proper fulfilment of the obligations arising from a debenture loan, they are therefore closely linked to the issue of that loan, within the meaning of Article 5(2)(b) of Directive 2008/7, so that it must be regarded as forming an integral part of an overall transaction with regard to the raising of capital, irrespective of whether it is provided in fulfilment of a legal obligation or voluntarily (see, to that effect, judgment of 22 December 2022, IM Gestão de Ativos and Others , C‑656/21, EU:C:2022:1024, paragraphs 31 and 35). In that context, the possibility that the borrower may have of substituting, at a later stage, another lender for the position of the initial lender, a situation referred to by the referring court, does not affect the link between those guarantees and the debenture loan and is, therefore, irrelevant.

33 It follows that, in principle, the provision of those guarantees must be subject to the prohibition on indirect taxation on the raising of capital for the purposes of Article 5 of Directive 2008/7.

34 However, Article 6(1)(d) of Directive 2008/7 provides that, notwithstanding the prohibitions on taxation laid down in Article 5 thereof, Member States may charge duties ‘on the creation, registration or discharge of mortgages or other charges on land or other property’.

35 Since Directive 2008/7 does not define the term ‘other charges on land or other property’ or refer to the law of the Member States for that purpose, it follows from the need for uniform application of EU law and from the principle of equality that the meaning and scope of the terms of a provision of EU law must normally be given an autonomous and uniform interpretation throughout the European Union, which must take into account the wording of that provision, its context and the objectives pursued by the rules of which it forms part (judgment of 20 March 2025, DL , C‑61/24, EU:C:2025:197, paragraph 38 and the case-law cited).

36 In that regard, it should be noted, in the first place, that Article 6(1)(d) of Directive 2008/7, in the vast majority of the language versions, uses the expression ‘mortgages or other charges on land or other property’. Since the legislature has used distinct terms to designate instruments creating preferential rights over a person’s assets, there is no reason to consider a priori that those terms relate only to one type of such rights, namely those of an immoveable nature.

37 In the second place, it must be borne in mind that Article 6(1) of Directive 2008/7 determines the duties and taxes that the Member States may charge ‘notwithstanding Article 5’ of that directive. Thus, in order to establish, as regards in particular the conclusion of a debenture loan, the meaning and the scope of the concept of ‘other charges on land or other property’ referred to in Article 6(1)(d) of that directive, it is necessary to take into account, as contextual factors, the characteristics of the prohibition laid down in Article 5(2)(b) of that directive.

38 In particular, the latter provision does not prohibit Member States from subjecting any loan raised by a capital company to indirect tax, but only those ‘raised by the issue of debentures or other negotiable securities’, namely, as set out in recital 9 of that directive, in the form of securities of a company’s loan capital.

39 However, like transactions for the raising of capital giving rise to the issue of securities representing a company’s own capital, which are covered by Article 5(2)(a) of Directive 2008/7, transactions for the raising of capital in the form of debenture loans, which are exempt from indirect taxation under Article 5(2)(b) of that directive, are likely to encourage the lender, in assessing the reliability of the promise of a particular return on its investment, to favour the future performance of the issuing entity rather than the assets of that entity as a guarantee of repayment.

40 That analysis is confirmed by Article 3(i) and (j) of Directive 2008/7, read in conjunction with Article 5(1)(a) of that directive. It is clear from those provisions that the contributions of capital in the form of a loan are exempt from any form of indirect tax only if the creditor is entitled to a share in the profits of the company or where those loans have the same function as an increase in the company’s capital.

41 Furthermore, in the third place, those conditions reflect the objective of Directive 2008/7 which is, as is apparent from recitals 2 and 3, to eliminate, as far as possible, discrimination, double taxation and disparities which may distort conditions of competition or hinder the free movement of capital, which may result from indirect taxation specifically on the raising of capital and not from indirect taxation on any form of loan granted to a capital company.

42 While it is true that, by adopting Directive 2008/7, the EU legislature did not in any way affect the possibility for contracting parties to establish preferential rights over moveable or immoveable property in order to secure repayment of a loan falling within the provisions of that directive, the fact remains that Article 6(1)(d) thereof preserved the fiscal competence of Member States as regards contractual instruments consisting of mortgages or other charges on land or other property drawn up in the context of a transaction for the raising of loan capital.

43 As pointed out in paragraph 37 above, the scope of Article 6(1)(d) of Directive 2008/7, which applies ‘notwithstanding’ the prohibition on tax laid down in Article 5 of that directive, is closely linked with the scope of Article 5(2)(b) thereof and demonstrates that the EU legislature did not intend to exclude from the fiscal competence of the Member States a category of duties, whether immoveable or moveable, which are intended to secure the repayment of a debenture loan. In those circumstances, as the Advocate General observed, in essence, in point 50 of his Opinion, the expression ‘mortgages or other charges on land or other property’ referred to in Article 6(1)(d) covers all the contractual instruments forming an integral part of a transaction for the raising of loan capital which enable the holder of a receivable to obtain preferential or priority payment of that receivable in the event that the debtor does not honour its obligations.

44 It is for the referring court to examine, in the light of the considerations set out in the preceding paragraph, whether the pledges, the promises of pledges and the transfers of receivables at issue in the main proceedings, in so far as they do not constitute mortgages, may be qualified as ‘other charges on land or other property’ within the meaning of Article 6(1)(d).

45 It follows from all of the foregoing considerations that Article 5(2)(b) and Article 6(1)(d) of Directive 2008/7 must be interpreted as not precluding national legislation which provides for the imposition of stamp duty on guarantees provided in the form of pledges of shares, bank account balances or receivables resulting from shareholder loans and in the form of transfers of receivables, for the purposes of the proper fulfilment of the obligations arising from a debenture loan issued by a capital company, in so far as those guarantees, even if they form an integral part of such a debenture loan, constitute other charges on land or other property within the meaning of Article 6(1)(d) in that they enable the holder of a receivable to obtain preferential or priority payment of that receivable in the event that the debtor does not honour its obligations.

Costs

46 Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the referring court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.

On those grounds, the Court (Fifth Chamber) hereby rules:

Article 5(2)(b) and Article 6(1)(d) of Council Directive 2008/7/EC of 12 February 2008 concerning indirect taxes on the raising of capital

must be interpreted as not precluding national legislation which provides for the imposition of stamp duty on guarantees provided in the form of pledges of shares, bank account balances or receivables resulting from shareholder loans and in the form of transfers of receivables, for the purposes of the proper fulfilment of the obligations arising from a debenture loan issued by a capital company, in so far as those guarantees, even if they form an integral part of such a debenture loan, constitute other charges on land or other property within the meaning of Article 6(1)(d) in that they enable the holder of a receivable to obtain preferential or priority payment of that receivable in the event that the debtor does not honour its obligations.

[Signatures]

* Language of the case: Portuguese.