Summary
Full Decision
ARBITRAL DECISION
The Arbitrators José Pedro Carvalho (Presiding Arbitrator), Gustavo Courinha and João Sérgio Ribeiro, appointed by the Deontological Council of the Administrative Arbitration Center to form an Arbitral Tribunal, agree:
I – REPORT
On 23 February 2016, A…, with registered office in …, Hong Kong, taxpayer no. …, in its capacity as management company of the B… Investment Fund, filed an application for constitution of an arbitral tribunal, pursuant to the combined provisions of articles 2 and 10 of Decree-Law no. 10/2011, of 20 January, which approved the Legal Regime for Arbitration in Tax Matters, as amended by article 228 of Law no. 66-B/2012, of 31 December (hereinafter abbreviated as RJAT), seeking a declaration of illegality of the act of rejection of the Administrative Complaint relating to withholding tax suffered in Portugal, in 2013, on interest from bonds in 2013, in the total amount of € 99,678.08.
To substantiate its application, the Claimant alleges, in summary, that B… was taxed twice under Corporate Income Tax (IRC) – once on the transfer of bonds to C… and once on the maturity of those same bonds – on the same income: the accrued interest up to the date of transfer of the bonds, having incurred duplicate taxation, which is illegal as results from the applicable tax provisions (e.g. article 78, paragraph 6 of the General Tax Law and articles 175, 204, paragraph 1, item g) and 205 of the Code of Tax Procedure and Process (CPPT)).
On 24-02-2016, the application for constitution of the arbitral tribunal was accepted and automatically notified to the Tax Authority (AT).
The Claimant did not appoint an arbitrator, therefore, pursuant to the provisions of paragraph a) of article 6, paragraph 2 and paragraph a) of article 11, paragraph 1 of the RJAT, the President of the Deontological Council of CAAD appointed the undersigned as arbitrators of the collective arbitral tribunal, who communicated acceptance of the appointment within the applicable period.
On 20-04-2016, the parties were notified of these appointments and manifested no intention to refuse any of them.
In accordance with the provision of paragraph c) of article 11, paragraph 1 of the RJAT, the collective Arbitral Tribunal was constituted on 06-05-2016.
On 14-06-2016, the Respondent, duly notified to that effect, filed its response defending itself solely by impugning the claim.
Having been raised by the AT the issue of lack of translation of some of the documents attached to the initial petition, the Claimant was notified to attach translations, should it wish to do so.
On 12-07-2016, the Claimant attached the translations it deemed relevant, as well as additional documentation.
In exercise of the right of reply that was afforded to it, on 12-09-2016, the Respondent made pronouncements on the documentation and translations submitted, raising, among other matters, the absence of proof of powers of representation of B… by the Claimant, as well as the latter's lack of procedural standing.
The Claimant was afforded the opportunity to exercise the right of reply in relation to the issues raised by the Respondent, in light of the documentation submitted by the latter, which it did.
Given that in arbitral proceedings the general procedural principles of procedural economy and prohibition of unnecessary acts apply, pursuant to the provisions of paragraphs c) and e) of article 16 and paragraph 2 of article 29, both of the RJAT, the holding of the meeting alluded to in article 18 of the RJAT was dispensed with.
The parties were afforded the opportunity to submit, should they wish, written arguments, which they did, pronouncing themselves on the evidence produced and reiterating and developing their respective legal positions.
A period of 30 days was fixed for the delivery of the final decision, following the presentation of arguments by the AT, which period was extended by a further 30 days.
Pursuant to article 21, paragraph 2 of the RJAT, the period referred to in paragraph 1 of the same article was extended twice.
Doubts having been raised regarding the procedural standing of the Claimant, stemming from the lack of powers to act in representation of B…, the parties were afforded the opportunity to pronounce themselves on that matter, the Claimant presenting a document dated 03/12/2017, which proves its powers to represent that Fund (and H…) in the present arbitral action, and to request the refund of withholding tax withheld by the AT, in 2013, on interest from bonds.
The Respondent was afforded the opportunity to exercise the right of reply in relation to the said document submitted by the Claimant.
The Arbitral Tribunal is materially competent and is regularly constituted, pursuant to articles 2, paragraph 1, item a), 5 and 6, paragraph 1, of the RJAT.
The parties have legal personality and capacity, are legitimate and are legally represented, pursuant to articles 4 and 10 of the RJAT and article 1 of Ordinance no. 112-A/2011, of 22 March.
The proceedings do not suffer from any nullities.
Thus, there is no obstacle to the examination of the merits of the case.
Having considered all the above, it behooves us to render judgment.
II. DECISION
A. FACTS
A.1. Facts Established as Proven
1. The Claimant is a limited liability company constituted under the legislation of Hong Kong.
2. B… is a limited liability company, resident, for tax purposes, in the Cayman Islands, which acts as management company of a fund with registered office in the Cayman Islands.
3. As a result of the re-privatization of D… SGPS, S.A. ("D…"), with a view to reducing the State's stake in the company's share capital, E…, SGPS, S.A. ("E…"), proceeded with the issuance of bonds capable of exchange with shares representing the share capital of D…, pursuant to the terms set forth in Decree-Law no. 185/2008, of 19 September.
4. The ISIN code of the bonds referred to is PT….
5. On 18/09/2013 ("trade date"), a transfer of bonds took place which was completed on 23/09/2013 ("settlement date"), between the Claimant, as transferor, and C… ("C…"), a company resident, for tax purposes, in the United Kingdom, as transferee.
6. The transfer value of the bonds totaled the amount of € 6,004,795.50, of which € 5,720,000.00 corresponds to principal and € 284,795.50 to accrued interest, computed from the date of the last coupon payment up to the date of transfer of the bonds (23/09/2013).
7. On the date of transfer of the bonds (23/09/2013), F… S.A., in its capacity as tax withholding agent, withheld tax at the rate of 35% on the value of accrued interest (€ 284,795.50 x 35% = € 99,678.08) pursuant to the terms provided in article 87, paragraph 4, item i) of the Corporate Income Tax Code ("CIRC") and article 5, paragraph 5 of the Personal Income Tax Code ("CIRS").
8. On 28/09/2013, the date of maturity and payment of coupon interest ("payment date"), a new withholding tax was effected, at the rate of 35%, on the total value of accrued interest computed from the date of the last coupon payment up to the said 28/09/2013 (€ 288,750.00 x 35% = € 101,062.50).
9. In point 11.1 of the "Terms and Conditions of the Bonds", payment of accrued interest is made to the entity registered as owner of the bonds on the 15th day prior to the payment date ("record date").
10. The aforementioned operation of transfer of bonds with ISIN code PT… was effected from the securities account held by the Claimant with the Agents F… (of E…) and Credit G… (of the Claimant), identified by number….
11. The operations of payment of matured interest by the issuer and withholding tax at the time of such payment, pursuant to points 8 and 9 above, took place in the account with the said number….
12. The Claimant, duly and in a timely manner, filed an administrative complaint, alleging duplicate taxation and requesting refund of the amount of € 99,678.08.
13. The Tax Authority rejected the administrative complaint.
A.2. Facts Established as Not Proven
1. That the Claimant is the management company of B….
2. The Claimant acquired, in representation of B…, from E…, bonds of the type referred to in point 3 of the facts.
A.3. Justification of Proven and Not Proven Facts
With respect to the facts, the Tribunal is not required to pronounce on everything alleged by the parties; rather, it has the duty to select the facts that are relevant to the decision and to distinguish the proven facts from the not proven facts (cf. article 123, paragraph 2 of the Code of Tax Procedure and Process and article 607, paragraph 3 of the Code of Civil Procedure, applicable by virtue of article 29, paragraph 1, items a) and e) of the RJAT).
Thus, the facts relevant to the determination of the case are selected and defined according to their legal relevance, which is established in light of the various plausible solutions to the question(s) of law (cf. former article 511, paragraph 1 of the Code of Civil Procedure, corresponding to the current article 596, applicable by virtue of article 29, paragraph 1, item e) of the RJAT).
Thus, considering the positions assumed by the parties, in light of article 110, paragraph 7 of the Code of Tax Procedure and Process, the documentary evidence and the administrative record submitted to the proceedings, the facts listed above were considered proven, of relevance to the decision, in the following terms:
1. Fact acknowledged by both parties;
2. Fact arising from document 1 submitted by the Claimant;
3 and 4 - Public and notorious facts;
5. Fact arising from document 3 submitted by the Claimant;
6 and 7. Facts arising from document 4 submitted by the Claimant;
8. Fact arising from document 5 submitted by the Claimant;
9. Fact arising from document 2 submitted by the Claimant, combined with the translation also subsequently submitted by the Claimant;
10 and 11 – Facts arising from documents 4 and 5 submitted by the Claimant;
12 and 13 - Facts acknowledged by both parties.
The facts established as not proven are due, essentially, to the lack of evidence to corroborate them.
The first fact established as not proven takes into account the contracts submitted by the Claimant, from which it appears that the management company of B… would be the company H… and not the Claimant. According to such contracts, the applicant here presents itself as Investment Consultant, with the said company being the one that (even before the Claimant) assumes itself as Managing Entity.
Regardless, from a reading of the contracts themselves, there do not result, beyond any reasonable doubt, powers of representation of the Claimant in relation to B…, it being noted that clause 3.5 of the contract between the Claimant and H… expressly states that:
"For the avoidance of doubt, it is understood that nothing in clause 3.1 [where the powers of the Claimant are referred to] (or in any other provision of this Contract) should be interpreted as permitting or authorizing the Investment Consultant to:
(a) accept or reject any Subscription Agreement or Redemption Request on behalf of the Management Company; or
(b) negotiate, execute or conclude any other contracts or agreements on behalf of the Management Company and/or the Funds."
By contrast, the contract between the said H…, as Management Company, and the funds (which includes B…), grants it powers such as:
"3.1 During its appointment, subject to the overall supervision and control of the Board and the Administrators and in compliance with the Investment Program and always subject to the terms of this Contract, the Management Company shall manage the acquisition, maintenance and realization of Investments on a discretionary basis.
3.2 Without prejudice to the generality of clause 3.1, the Management Company shall provide the following Services to the Funds, always subject to the Bylaws and Documents of Incorporation (...)
(h) Make investments or (as the case may be) recommendations to B… regarding potential investments and opportunities;
(i) Issue orders and instructions to third parties (including, without limitation, Financial Intermediaries) regarding the acquisition and realization of any investments;
(j) Carry out purchases, acquisitions and sales in connection with Investments;
(k) Exercise all rights, powers, privileges and other prerogatives connected with ownership or possession in relation to any interest of the Funds and other property or assets held by them or belonging to them, including, without limitation, the right to possess, lend, transfer, mortgage, pledge or otherwise, and ensure payment of the obligations of the Funds through mortgage, assignment or pledge, of all or part of the property owned by the Funds, present or future, and to exercise the right to vote attached to securities, participate in agreements with creditors, institute, establish agreements in lawsuits and administrative and similar proceedings;
(l) Direct, monitor and supervise the Investment Program and the composition of the Investment portfolio on a continuous basis;
(m) Negotiate and participate in any other Investments in connection with transactions carried out, which includes carrying out small sales, negotiating profit margins, requesting borrowing of money, lending of securities, selection of Financial Intermediaries and resellers for the execution of transactions, the exercise of rights on behalf of B… and effecting transactions on behalf of B…;
(n) Negotiate, participate and carry out all contracts, agreements and other commitments which in the opinion of the Management Company prove necessary, advisable or useful for the pursuit of the Services;
(o) Combine purchase and sale orders, on behalf of B…, and orders from other accounts, through which associates or any of their Subsidiaries provide investment services and allocate assets, purchased or sold, on a basis of average price, or through any other method of fair allocation, among the said accounts;
(p) Instruct the Administrator, or any other person designated or agent appointed by the Administrator, to pay or deposit all money, accounts, notes or other certificates or evidence of titles relating to investments, received by the associates on behalf of B…, after deduction of all properly incurred expenses (if any);(...)
(u) Open, maintain and close accounts with Financial Intermediaries on behalf of B…, including the prerogative of giving them instructions and authorizations regarding currencies, securities and money in those accounts, and to make B… pay, or authorize payment and refund of their commissions;
(v) Open, maintain and close bank accounts and custody accounts and authorize the passage of checks or other payment orders of money; (...)
(x) Incur borrowings, raise funds or use any other form of leverage and issue, accept, endorse and execute promissory notes, drafts, bills of exchange, warrants, bonds, debentures, other instruments, negotiable or not, and evidences of indebtedness.
(y) On behalf of B…, instruct the principal Financial Intermediaries (or others of their choosing) to make, buy, sell or dispose of any investment at any time and in any manner that seems convenient;
(z) Manage the corporate affairs and daily administration of the Funds;".
It is true that, pursuant to Clause 6.1, of the contract between the said H…, as Management Company, and the funds (which includes B…), there is provision for the possibility of delegating to third parties the management powers conferred on it in such contract. However, no proof was made in the proceedings – and such burden fell on the Claimant – that such faculty was exercised by H…, with the exception of the document dated 03/12/2017, which merely grants powers to the Claimant to represent H… and B… in the present arbitral action, and to request refund of withholding tax withheld by the AT, in 2013, on interest from bonds.
In these terms, it must be considered not proven that the Claimant is the management company of B…, since, in light of the evidence produced, nothing points in that direction, and it appears, rather, that such role falls to H….
As for the second fact established as not proven, this is essentially due to the absence of any evidence regarding it. Indeed, from the documents submitted, it can only be concluded that at some point (as appears from documents 3 to 5 submitted by the Claimant), in an account in the name of the Claimant were deposited the bonds in question, and that such bonds were transferred to C…, in exchange for payment to the same account, on which tax withholdings were made. Nothing is derived as to how the bonds in question came to be in the said account, namely whether they were acquired from E…, or from third parties that had acquired them, directly or indirectly, from that company, nor by whom and/or in whose name the bonds in question were acquired.
B. ON THE LAW
The Claimant, as results from its initial petition, presents itself before this arbitral tribunal in representation of B…, requesting refund of tax improperly withheld from it, on income derived from interest on bonds capable of exchange with shares representing the share capital of D…, with ISIN code PT…, which were subject to withholding tax, both at the time of transfer to C… and at the time of maturity of those same bonds.
Given that doubts were raised regarding the existence of powers of representation of the said B…, by the Claimant, to bring the present arbitral action, the Claimant proceeded to clarify them, presenting the document dated 03/12/2017, which proves its powers to represent that fund (and H…) in the present arbitral action, and to request refund of withholding tax withheld by the AT, in 2013, on interest from bonds.
Given the said data – the manner in which the Claimant presents itself in court (as representative of B…), and the documentation submitted (which legitimizes it to do so) – any doubts regarding the procedural standing of the Claimant to present itself in court as it did are dispelled.
That being the case, it is necessary to proceed to the merits of the case, which, as configured by the Claimant, consists of determining whether, in fact, the said B…, was or was not subject to double taxation.
Having examined the established facts, it is found that it is not possible to confirm that such occurred.
Indeed, it is established that in the account numbered …, of the Agents F… (of E…) and Credit G… (of the Claimant), a withholding tax at the rate of 35% was effected on 23/09/2013 on the value of accrued interest computed from the date of the last coupon payment up to that date, and a new withholding was effected, in the same terms, on 28/09/2013, the date of maturity and payment of coupon interest, on the total value of accrued interest computed from the date of the last coupon payment up to that 28/09/2013.
Such situation indicates, beyond any reasonable doubt, the occurrence of double taxation, as alleged by the Claimant.
The question that arises, then, is whether the taxpayer subject to such double taxation was, in fact, B….
In light of the established facts, the answer to such question cannot but be negative.
Indeed, as far as it was possible to determine on the basis of the elements that the Claimant deemed fit to present, the account in which the withholding taxes in question were effected was held in the name of the Claimant, and not of B….
Also, as far as it was possible to determine on the basis of the elements that the Claimant deemed fit to present, it was not proven that the Claimant was the management company of B…; rather, the available elements indicate that such status falls to H…, and it was equally not proven, in light of the absence of any documentation to that effect, that the Claimant acquired the bonds in question in the present proceedings in representation (in the name) of B….
Given such circumstances, it is not possible to validate, beyond any reasonable doubt, that B…, represented in the present action by the Claimant, was the taxpayer subject to the double taxation which all evidence indicates occurred.
Now, the fact is that the Claimant bases its claim herein on the double taxation of the said Fund, which, having examined all matters, is not proven, and therefore necessarily its claim must fail.
This is a case of what is called substantive lack of standing, in which the party that presents itself in court as the titleholder of the disputed substantive legal relationship – in this case, the Fund, represented procedurally by the Claimant – fails, ultimately, to prove that it is.
As has been written on this matter, in the judgment of the Supreme Court of Justice of 02-06-2015, rendered in case 505/07.2TVLSB.L1.S1[1]:
"Pursuant to the provisions of article 30, paragraph 1, of the Code of Civil Procedure, 'the plaintiff is legitimated when it has a direct interest in bringing an action', an interest which is expressed, continues its paragraph 2, 'by the utility derived from the success of the action', adding the respective paragraph 3 that, 'absent indication to the contrary by law, those considered to be titleholders of the interest relevant for the purpose of standing are the subjects of the disputed legal relationship, as configured by the plaintiff'.
For the establishment of a principle of legitimacy of the parties, from the start, beginning with Decree-Law no. 224/82, of 8 June, continued by the Reform of 1995/96, a formulation of article 26, paragraph 3, of the Code of Civil Procedure, then in force, was used, which has as its basis the ownership of the disputed legal relationship, as configured by the plaintiff, with a view to establishing a normal criterion for determining the standing of the parties, limited, however, to the scope of the definition of standing singular, direct and personal, so that, by exclusion, it no longer depends merely on the invocations of the plaintiff, conveyed in the initial pleading, but rather on the effective configuration of the situation on which is based, after all, the very legitimation of the intervening parties, extraordinary or anomalous legitimation, attributed to those who are not titleholders of the disputed legal relationship, objectified in the requirement of joinder or in the attribution of indirect standing[3].
Indeed, the philosophy underlying this new redefinition of the paradigm for establishing the criterion of standing of the parties, following the doctrinal position of Barbosa de Magalhães[4], in the dispute that opposed him to Alberto dos Reis, is based on the consideration that the question of ownership or relevance of the disputed substantive legal relationship is strongly interconnected with the examination of the merits of the case, whereas the presuppositions on which are based, both plural standing [joinder], and indirect legitimation [representation or procedural substitution] generally appear, highlighted as separate from the object of the proceeding, as preliminary questions, conditioning the possibility of rendering a decision on the merits of the case.
It is the procedural standing assessed by the relationship of the parties with the object of the action, substantiated in the affirmation of their interest therein, and situations may occur in which these titleholders are not recognized as having procedural standing, whereas, for certain subjects who are not titleholders of the object of the proceeding, such standing may be recognized[5].
Thus, the mere affirmation by the plaintiff that it itself is the titleholder of the object of the proceeding has no definitive relevance for the assessment of its standing, which, indeed, does not depend on the ownership, active or passive, of the disputed legal relationship, and the existence of procedural standing is manifest in actions that terminate with the dismissal of the claim founded on the recognition that the plaintiff lacks substantive standing, so that, only in the event of success of the action, does there arise grounds to support, 'a posteriori', both procedural standing and substantive standing, and moreover, whenever the Court recognizes the non-existence of the object of the action or its non-ownership by any of the parties, such a decision of dismissal consumes the examination of the lack of standing of the party, so that, in a somewhat reductive manner, the parties are considered endowed with procedural standing until their substantive standing is analyzed and assessed.".
Possibly, and taking into account the facts ascertained, it could have been the Claimant itself, and not B…, that was the taxpayer subject to the double taxation that appears to have occurred.
However, that is not the legal relationship configured by the Claimant in these proceedings, that is to say, the Claimant does not present itself in court in its own name, as the taxpayer of the disputed legal relationship, but rather as representative of the said B…, which is presented in court as the injured party.
Therefore, such putative legal relationship between the Claimant, in its own name, and the national Tax Authority cannot be examined within the scope of the present arbitral action, since, on the one hand, it does not form part of its object and, on the other, the Claimant, in its own name, is not a party to the action (intervening solely in the capacity of representative of the Fund).
Contrary to what the Claimant appears to understand, the ownership of the disputed legal relationship is not irrelevant to the outcome of the action.
Indeed, the Claimant alleges, in the last petition presented in the proceedings, that "the AT recognized to the Claimant standing to be the 'target' of withholding tax, in representation of the Fund", but has not demonstrated, however, that the withholding taxes were effected in representation of the Fund, nor that the AT recognized this.
On the other hand, confirming, in the same petition, that it presents itself "in representation of the Fund, for purposes of request for refund of improperly withheld withholding tax", it concludes that "either the Claimant is recognized as having standing to be the 'target' of tax withholding and, consequently, to request, also, the refund of that same improperly withheld withholding tax (...) Or, if the Claimant is not recognized as having standing to request refund of improperly withheld withholding tax, it should also be recognized as lacking standing to be the 'target' of the withholding effected, in which case the withheld amount should be refunded to it".
Now, the issue is that the Claimant conflates, mixing the capacities in which it acts, its standing (substantive) in its own name, with its standing (substantive) in representation of the Fund. Indeed, if it is established that the income, and consequent taxation, occurred within the sphere of the Fund, the right will be recognized for the Claimant, on behalf of the latter, to request refund of the duplicate taxation. Similarly, if it is established that the income, and consequent taxation, occurred within the sphere of the Claimant, the right will be recognized for the Claimant, in its own name, to request refund of the duplicate taxation. However, neither can be recognized as the right of the Claimant to:
- request refund of duplicate taxation, in its own name, if it is established that such occurred within the sphere of the Fund; nor to
- request refund of duplicate taxation, in the name of the Fund, if it is established that such occurred within the Claimant's own sphere.
It cannot be forgotten that it is the Claimant that is in the correct position to know on whose behalf the taxation occurred and to effect the corresponding demonstration, which burdens it in terms of proof, by being a direct intervening party in the facts that generated it. The Claimant is in the correct position to know whether, in fact, it acted in Representation of the Fund, and to produce the corresponding proof which constitutes its burden, all the more so since, in court, at least, the AT questioned, in a timely manner, such representation (both in the Response, at point 6.2.1.1, and in exercise of the right of reply after the submission of translations by the Claimant, where, among other matters, it alleged that "the Claimant does not prove the capacity it alleges for purposes of representation of B… in the present proceedings").
Thus, if in fact the (doubly) taxed operation was executed by the Claimant on behalf of the Fund, the Claimant should have produced the corresponding proof, such that no reasonable doubts remained that this was so. And if, on the contrary, such proof does not exist, or, in any case, things did not occur thus, and the Claimant acted in its own name and is therefore the taxpayer subject to taxation, it should present itself in court in that capacity (in its own name) – and not in representation of a third party unrelated to the disputed legal relationship – to request what is its right.
Accordingly, given that it is not proven that the Fund, here represented by the Claimant, was the taxpayer subject to the double taxation indicated, or, in other words, was the titleholder of the disputed substantive legal relationship, the conclusion must be reached, in the words of the aforementioned judgment of the Supreme Court of Justice, of "dismissal of the claim founded on the recognition that the plaintiff lacks substantive standing", rendering the examination of the remaining issues raised by the Respondent prejudicial.
C. DECISION
For these reasons, this Arbitral Tribunal decides to dismiss the arbitral claim filed and, in consequence,
a) Absolve the Respondent of the claim; and
b) Condemn the Claimant to pay the costs of the proceedings, as set forth below.
D. Value of the Proceedings
The value of the proceedings is fixed at € 99,678.08, pursuant to article 97-A, paragraph 1, item a) of the Code of Tax Procedure and Process, applicable by virtue of items a) and b) of paragraph 1 of article 29 of the RJAT and paragraph 2 of article 3 of the Regulation of Costs in Tax Arbitration Proceedings.
E. Costs
The arbitration fee is fixed at € 2,754.00, pursuant to Table I of the Regulation of Costs in Tax Arbitration Proceedings, to be paid by the Claimant, since the claim was entirely dismissed, pursuant to articles 12, paragraph 2, and 22, paragraph 4, both of the RJAT, and article 4, paragraph 4, of the said Regulation.
Let it be notified.
Lisbon 13 February 2017
The Presiding Arbitrator
(José Pedro Carvalho - Rapporteur)
The Arbitrator
(Gustavo Lopes Courinha
dissenting, as per dissenting opinion, which forms an integral part of this decision)
The Arbitrator
(João Sérgio Ribeiro)
DISSENTING OPINION
We voted against the decision contained in the present judgment for the following reasons:
1. We consider it to be demonstrated, from the instruction of the present Arbitral Proceedings, that the interest income was subject to double taxation;
2. Such double taxation, given the provision of paragraph 5 of article 5 of the Personal Income Tax Code - which fictionalizes such income as "interest" - constitutes duplicate collection, as they are the same income, with the same nature (only the sphere in which they were produced being in question), with the withholdings effected by F… as tax withholding agent (submitted by the Claimant, under documents 4 and 5);
3. Furthermore, while we agree with the generality of the factual description contained in the decision, we do not consider it not proven that the Claimant is the management company of B…, given the provision of clause 6.1, whereby precisely the company H… grants extensive powers of action to the present Claimant - as indeed makes sense, given the nature normally of limited substance of organizations established in low-taxation jurisdictions (such as the Cayman Islands), which therefore delegate such powers to other entities with financial expertise (of which Hong Kong is a good example). The granting of such delegations does not require, most often, any special formality; hence the issuance of a declaration, attached to the proceedings on 10 January, to confirm such powers (doc. 2 and respective translation);
4. Neither is the fact irrelevant that the taxation concerns the same economic factuality (they are precisely the same interest, taxed at two different moments), with only the legal-fiscal sphere in which the taxation is produced being in question - that of the Claimant or of the Fund represented by it;
5. We consider it to be possible, rather, to remedy a possible non-conformity between the capacity in which the Claimant acts - in this case, of management company of the Fund, to acting in its own name;
6. It is, although with different presuppositions, what is suggested by the Respondent itself, at point 5 of the response to the Order of 13 January of this Tribunal, so as to remedy any incoherencies between the substantive situation and the procedural situation: "The initial petition should be amended or perfected, for the purposes of modification of the subjective composition of the parties...";
7. Furthermore, given that clearly the Claimant incurred in the taxation of the same interest in which its represented party had already incurred, nothing should have prevented the redefinition of that capacity, since all elements for that purpose were available to the Tribunal - only the capacity of action might not have been rigorous;
8. It is further to be noted that we consider the fact that both withholdings were promoted by a third party (F…), little concerned with determining the nature of autonomous property (or not) of the Fund at issue - nor, indeed, was it obligated to do so, given that it is a fund constituted under the legislation of the Cayman Islands. F… merely limited itself to proceeding with the transfer of the amounts and to effecting the respective withholding tax for the indicated client (treating, apparently, the Fund as a non-autonomous fund, part of the assets of the present Claimant);
9. To question, in judicial proceedings, the qualification made by that institution (F…) by the fact that the same is non-conforming with national corporate and tax regulation (which recognizes the quality of autonomous fund to Funds, to which it attributes its own tax identification number) is a formal punctiliousness for us little understandable;
10. We believe, indeed, that good faith required in the relationship between taxpayer and Tax Administration required that, after a procedural relationship initiated with the presentation of an administrative complaint in December 2014 - in which it never contested (but rather recognized, by omission) the quality that the Claimant invoked - it abstain from invoking the Claimant's lack of standing;
11. It happens, finally, that (although, perhaps, unconsciously) the fact that the Fund that the Claimant represents is located in a low-taxation area (so-called offshore) may have led the interpreter (beginning with the AT) to supposed justice-oriented decisions. It is that, not only is such role of repression of such jurisdictions reserved to the legislator - who, indeed, at the time already dealt with such jurisdictions at a specially penalizing rate of 35% for income obtained by entities located in these suspected jurisdictions - but, through the interpretation advanced by the AT (and now sustained by the present Tribunal), to these 35% are added another 35%, which constitutes an accumulated taxation of 70%;
For all these reasons, the act of rejection of the administrative complaint should have been annulled and the amount doubly taxed refunded, as requested by the Claimant; and therefore, we render this dissenting vote.
Lisbon 13 February 2017
The Arbitrator
(Gustavo Lopes Courinha)
[1] Available at: http://www.dgsi.pt/jstj.nsf/954f0ce6ad9dd8b980256b5f003fa814/4e3eb84be982fa8480257e5900365fbb?OpenDocument.
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