A shadowy negotiation involving dams and its fiscal and legal implications: a Portuguese case study

• Date: 06 August 2024
• Pages: 117-128
• DOI: https://doi.org/10.1108/JITLP-02-2024-0013
• Published date: 06 August 2024
• Subject Matter: Strategy,International business,International business law,Economics,International economics,International trade
• Author: Eva Costa Dias,Micaela Pinho,Diana Preto

A shadowy negotiation

involving dams and its f‌iscal and

legal implications: a

Portuguese case study

Eva Costa Dias

Portucalense Legal Institute –IJP, Portucalense University, Porto, Portugal

Micaela Pinho

Research on Economics, Management and Information Technologies –REMIT,

Portucalense University, Porto, Portugal and Research Unit in Governance,

Competitiveness and Public Policies –GOVCOPP, Aveiro University,

Aveiro, Portugal, and

Diana Preto

Portucalense Legal Institute –IJP, Portucalense University, Porto, Portugal

Abstract

Purpose –This paper aims to explore the intricate and controversial sale of six hydroelectric dams in the

Douro hydrographic basin by Energias de Portugal(EDP), a prominent Portuguese energy company, to a French

Consortium –ENGIE. The transaction,completed at the end of 2020, has sparked signif‌icant debate and scrutiny

within the Portuguese legal and f‌iscal spheres due to its corporate and budgetary manoeuvres. The crux of the

controversy lies in the complex corporate restructuring strategies used by EDP and the acquiringconsortium to

execute this transaction. These strategies, aimed at achieving tax neutrality, effectively circumvented the

traditional tax liabilities typically associated with large-scale asset transfers. The paper delves into the legal

intricacies of this operation, scrutinisingthe application of taxes such as stamp duty, corporate income tax, value

added tax and property transfer tax, which were,in theory, applicable to the transaction. Furthermore, this study

examines the broader implications of the deal, particularly concerning the principle of tax neutrality in corporate

restructurings, the enforcement of anti-abuse clauses and the economic substance over legal form doctrine.

Design/methodology/approach –This study is based on secondary data supported by publicly

reportedevidence.

Findings –This case study highlights the challenges in taxing corporate transactions in the modern

f‌inanciallandscape and ref‌lects these corporate manoeuvres’societaland ethical considerations.

Originality/value –Through an analysis of legal frameworks,corporate strategies and tax policies, this

paper provides a comprehensive understanding of the transaction and its implications, offering insights

valuableto legal professionals, policymakers and scholars in corporatelaw, taxation and business ethics.

Keywords Corporate restructuring, Fiscal neutrality, Hydroelectric dams, Tax evasion strategies,

Business ethics

Paper type Case study

The authors declare that this work is original and has not been published elsewhere nor is it

currently under consideration for publication elsewhere.

Funding: This research did not receive any specif‌ic grant from funding agencies in the public,

commercial, or not-for-prof‌it sectors.

Conf‌lict of interest: The authors declare that they have no conf‌lict of interest.

Shadowy

negotiation

involving

dams

117

Received23 February 2024

Revised17 July 2024

Accepted22 July 2024

Journalof International Trade

Lawand Policy

Vol.23 No. 2/3, 2024

pp. 117-128

© Emerald Publishing Limited

1477-0024

DOI 10.1108/JITLP-02-2024-0013

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