A recent landmark decision by the Court of Justice of the European Union (CJEU) led to a positive outcome for a refund of excess withholding taxes (WHT) for Santander Renta Variable España Pensiones, Fondo de Pensiones. Globe Refund, the tax reclaim service provider behind the success of the WHT refund for the Santander pension fund, reflects on ECJ case C-525/24 of 27 November 2025.
An initial administrative request was made for a WHT refund, in which the Portuguese tax authorities required the fund to obtain a certificate from the Spanish authorities. That certificate had to be provided both to the relevant dividend payers, in order to benefit from an upfront exemption from dividend WHT, and to the Portuguese tax authorities, in order to claim a refund.
The fund was unable to obtain this certificate. The purpose of the certificate was to confirm that (i) the fund was the beneficial owner of the dividends, (ii) it was managed by an institution for occupational retirement provision (IORP), and (iii) its exclusive purpose was to provide pension-related benefits, including old-age, disability, and survivors’ pensions, pre-retirement or early-retirement benefits, post-employment healthcare benefits, and supplementary death benefits.
“Upon receiving the Portuguese tax authorities’ feedback, our team reviewed it against the grounds used to initiate the withholding tax (WHT) reclaim and Globe Refund’s track record in order to reassess Santander Pension Fund’s right to a refund in light of the authorities’ position,” said Sam Edj, Head of Business Development at Globe Refund, explaining why Globe Refund did not stop at the administrative stage and instead challenged the Portuguese tax authorities’ position before the European Court.
The CJEU made it clear that procedural rules governing withholding tax (WHT) exemptions or refunds for non-resident pension funds cannot be used as a means of arbitrary discrimination or as a concealed restriction on the free movement of capital. They are acceptable only where the situations at stake are genuinely not comparable, or where they are justified by overriding public-interest considerations. In this case, the Court confirmed that Portuguese and foreign pension funds stand on equal footing: both are, in principle, subject to Portuguese corporate income tax on dividends received from Portuguese subsidiaries, yet both ultimately benefit from an exemption.
The Court also acknowledged that Member States are entitled to protect the integrity of their tax systems. They may therefore require taxpayers to submit supporting documentation — including certificates issued by another Member State — to demonstrate eligibility for a WHT exemption or refund. However, this power is not unlimited. Such requirements remain lawful only if the foreign authority is empowered to issue the requested documents and can do so within a reasonable timeframe, ensuring that the measures remain proportionate to the legitimate objective of effective tax control.
Ultimately, it falls to the national court to test whether the Portuguese rules pass this strict proportionality threshold. In doing so, the court must consider that the Portuguese tax authorities indicated a degree of flexibility, stating they would accept any evidence substantiating the exemption conditions, provided it was accompanied by a certificate from the Spanish tax authorities confirming the fund’s residence and tax status in Spain. The Court further underlined that the proportionality analysis shifts in the context of refund claims, where tax authorities can also rely on robust EU mutual assistance mechanisms to verify the relevant information.
“The CJEU stressed once again that procedural rules and formal steps can, in practice, operate as hidden obstacles to the exercise of fundamental freedoms, and that those freedoms must be effective, rather than theoretical. It is essential to look beyond the substantive tax provisions and examine the administrative conditions and formalities that may obstruct access to tax advantages,” said Stanislas Conte, CEO and Founder of Globe Refund.
The ruling in case C-525/24 by the CJEU could lead several EU Member States to reconsider domestic regulations that impose more stringent documentation requirements on foreign entities than those applied to local entities. When both resident and non-resident entities are entitled to comparable tax advantages, authorities should refrain from imposing exclusive or excessively burdensome proof obligations on non-residents, particularly in refund processes, as such practices may conflict with the principle of free movement of capital.
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