The common concept of ’financial institution’ has been interpreted by the ECJ
C‑207/22., C‑267/22. and C‑290/22. – Lineas – Concessões de Transportes SGPS, S.A. and Co.
According to EU regulations, a holding company that does not acquire shares in businesses belonging to the banking or financial sector does not qualify as a “financial institution”.
The plaintiffs in the underlying case are holding companies based in Portugal, which acquired and held shares in enterprises not engaged in activities within the banking or financial sectors. These holding companies financed their share acquisitions by taking loans from various banks and investing their funds in securities of credit institutions. The banks charged to the holding companies the transaction tax payable under Portuguese law. All three plaintiff holding companies disputed the obligation to pay the tax, arguing that they qualify as financial institutions. According to Portuguese regulations, transactions performed to financial institutions are exempt from this tax. The Portuguese Administrative Court referred to the European Court of Justice for a preliminary ruling to determine whether the plaintiff holding companies could indeed be considered “financial institutions.”
The European Court of Justice first affirmed its jurisdiction to examine the matter since Portuguese law explicitly refers to the concept of financial institution under community law. The judgment concluded that only those holding companies can be deemed “financial institutions” that hold stakes in regulated businesses within the banking or financial sector.
