CAAD 103/2017-T: IRS Category F Expense Deductions Under Article 41 CIRS – Rental Income Tax

ARBITRAL DECISION

REPORT

A - PARTIES

A..., non-resident, with NIF..., with fiscal address at Rua..., ... - Postal Code...-..., hereinafter referred to as the Claimant or taxpayer.

AUTHORITY FOR TAX AND CUSTOMS (which succeeded the General Directorate of Taxes, through Decree-Law No. 118/2011, of 15 December) hereinafter referred to as the Respondent or AT.

The request for constitution of the arbitral tribunal was accepted by the President of CAAD, and the Arbitral Tribunal was regularly constituted, on 19-04-2017, to review and decide on the subject matter of the present proceedings, and automatically notified the Authority for Tax and Customs on 19-04-2017, as appears from the respective minutes.

The Claimant did not proceed with the appointment of an arbitrator, whereby, pursuant to the provisions of No. 1 of article 6 and of subparagraph b) of No. 1 of article 11 of Decree-Law No. 10/2011, of 20 January, as amended by article 228 of Law No. 66-B/2012, of 31 December, the Ethics Council appointed Arbitrator Paulo Ferreira Alves, the appointment having been accepted pursuant to the legally provided terms.

On 03-04-2017 the parties were duly notified of this appointment, having not manifested the will to refuse the appointment of the arbitrators, pursuant to article 11 No. 1, subparagraphs a) and b), of the Regulation on Arbitral Procedure (RJAT) and of Articles 6 and 7 of the Code of Ethics.

In accordance with the provision of subparagraph c) of No. 1 of article 11 of Decree-Law No. 10/2011, of 20 January, as amended by article 228 of Law No. 66-B/2012, of 31 December, the sole arbitral tribunal is regularly constituted on 19-04-2017.

Both parties agree with the waiver of the holding of the meeting provided for in article 18 of the RJAT.

The Respondent being duly notified, a period of 10 days was granted for the presentation of written pleadings. The respondent presented its written pleadings.

The arbitral tribunal is regularly constituted. It is materially competent, pursuant to the provisions of art. 2, No. 1, subparagraph a), and 30, No. 1, of Decree-Law No. 10/2011, of 20 January.

The parties have legal personality and capacity, are legitimate and are legally represented (art. 4 and 10, No. 2, of the same statute and art. 1 of Order No. 112-A/2011, of 22 March).

The proceedings do not suffer from defects that would invalidate them.

B - CLAIM

1. The present Claimant seeks the declaration of illegality of the tax acts of additional assessment under the Personal Income Tax (IRS) for 2012, 2013, 2014, with the numbers 2016..., No. 2016... and 2016..., which fixed a total tax to be paid of €8,107.06 (eight thousand one hundred and seven euros and six cents).

C - GROUNDS FOR THE CLAIM

1. To substantiate its request for arbitral pronouncement, the Claimant alleged, with a view to the declaration of illegality of the tax act of assessment under Personal Income Tax (IRS), already described in point 1 of this Award, in summary, the following:

2.1. The claimant is a non-resident taxpayer pursuant to article 13 No. 1 of the CIRS.

2.2. The Claimant earned income from the rental of one of its real properties located in Portugal.

2.3. The Claimant contends there is a defect of form and lack of reasoning in the inspection report.

2.4. It contends that the inspection report, despite indicating which concrete expenses are not deductible when the description does not allow classification of the asset/service provision supported, those that are not deductible because they are current expenses, or other non-deductible expenses.

2.5. The Claimant alleges that the AT bases the tax obligation on an alleged proportionality that should exist between the expenses incurred and the periods in which the Claimant's real property generates income.

2.6. The Claimant contends that imposing the burden of renting its real property on all days of the year so that maintenance and conservation expenses can be deductible pursuant to article 41 of the CIRS is not only a reality that the Claimant cannot control, but also a superfluous and inadequate interference in its daily management.

2.7. The Claimant provided the AT with the probative elements that were required of it, demonstrating, in particular, the invoices for the maintenance and conservation expenses it incurred.

2.8. The Claimant contends that it has demonstrated that the expenses are documentarily proven, and whose description of the invoices and their supporting documents are clear and are effectively maintenance and/or conservation, which is why they should have been considered deductible by the AT.

2.9. The Claimant further alleges that the AT's understanding of the proportionality of expenses violates the principle of legality.

D - THE RESPONDENT'S REPLY

1. The Respondent, duly notified for that purpose, presented its response in a timely manner in which, in brief summary, it alleged the following:

3.1. Regarding the lack of reasoning, it will always be said that, with due respect for a different understanding, the Claimant's thesis regarding the lack of reasoning of the tax act has no support whatsoever.

3.2. The Respondent contends that the Claimant cannot seek to make the Tribunal believe that the assessments, statement of assessment and account reconciliation statements it received are isolated in the proceedings, since it well knows that all notifications made to it were made as a result of an inspection procedure - in fact as is amply demonstrated in its lengthy dissertation - in the course of which, in strict compliance with legal precepts, notified for the exercise of the right of prior hearing, it chose not to exercise it.

3.3. It being also demonstrated that the reasoning is clear, sufficient and congruent, at least to the point of being understandable in light of the reasonable person and, more importantly, understandable upon reading by the Claimant.

3.4. In fact, it is not possible to state that a given act is without foundation when, in the concrete case, the contextual motivation allowed its addressee to understand the reasons of fact and law that led to

3.5. The Respondent contends that conservation, maintenance expenses and IMI paid in relation to a real property rented for a few months - Since, for the purposes of taxation under Category F of the IRS Code, what is considered is the net income obtained, i.e., the rents received less the expenses and charges incurred to produce the property income encompassed and to maintain intact the source of income, that is, the properties subject to lease, it appears that such expenses should be proportionally considered on the basis of the number of months of rental.

3.6. From which it follows that, in the absence of income, i.e., in the absence of gross income, no charge incurred can be considered, because, in such a situation, there would be no need to proceed with the determination of net income subject to taxation under Category F of the IRS Code.

3.7. In this same order of ideas and in a situation of partial rental, that is, in which the property is rented only during part of the year, only those expenses can be considered as eligible for the purposes of what is established in article 41 of the IRS Code that, proportionally, prove to be attributable to the number of months of rental.

3.8. The Respondent contends that the correction of the deductible amounts with reference to the expenses that actually fall within the deductible charges for this type of income took into account that the property was only occupied for part of the year, and not all expenses could be deducted, whereby it proceeded to the accounting of the nights in which the property was occupied by customers.

3.9. In the then-current wording, article 41 of the IRS Code, No. 1, provides for deduction from the gross income referred to in article 8 of the maintenance and conservation expenses that are incumbent on the taxpayer, borne by him and documentarily proven, as well as the local municipal contribution that is charged on the value of the properties or part of the properties whose income has been included in taxation in the fiscal year.

3.10. No. 2 would also provide for deduction, in the case of an autonomous fraction of property in the horizontal property regime, of conservation, enjoyment and other charges that, pursuant to civil law, the condominium must necessarily bear, borne by him, and documentarily proven.

3.11. For the purposes of taxation under category F of the IRS Code, account must be taken of the net income obtained, that is, the total income obtained, less the expenses and charges incurred to produce the property income encompassed and to maintain intact the source of income, that is, the property in question, which implies the existence of a correspondence and proportionality of the charges and expenses incurred.

3.12. Not all and any charges borne by the claimant are to be considered.

3.13. Expenses relating to conservation, maintenance and IMI paid in relation to the property, provided that properly documented and that should be considered as costs, must contain a relationship and/or correspondence with the obtaining of the property income encompassed for the purposes of category F of the IRS Code.

3.14. In the periods in which the property was not occupied and, for that reason, did not produce any property income, there being no gross income from which any charge incurred can be deducted, whereby, in such circumstance, it will not be possible to determine net income subject to taxation under category F of the IRS Code.

3.15. Thus, maintenance, conservation and tax paid expenses should be proportionally considered on the basis of the periods in which the property was occupied and to that extent generated property income.

3.16. Only through consideration of the occupancy coefficient was the tax administration able to establish an adequation and proportionality between the gross property income and the deductible charges and expenses for the purposes of category F of the IRS to thereby obtain the net property income.

3.17. In fact, any other interpretation that does not support the position contained in the RIT, and which is the interpretation of the AT, frontally violates Constitutional provisions, namely the principle of equality (art. 13 CRP) and, as well, that of contributive capacity (104 CRP), by discriminating those who rent a property for very few days, deducting all and any expenses provided for in art. 41 without any limit, from those who, constantly and during the entire fiscal year using the property for rental, find themselves in the contingency of being placed at the same level of contributive capacity (which is not at all equal) as those others.

3.18. The interpretation given by the AT and which moreover is contained in the instructions for completing the MOD. 3 which expressly states that in table 5 of Annex F "... the expenses actually incurred and paid in the year by the taxpayer should be declared, for the period in which the property was rented, namely those that relate to the conservation and maintenance of the property, condominium expenses, taxes and local municipal charges. The value of the Municipal Property Tax (IMI) to be mentioned is that which was paid in the year to which the income relates."

3.19. The Respondent concludes by contending the inadmissibility of the present request for arbitral pronouncement, maintaining in the legal order the tax act of assessment and absolving, accordingly, the Respondent Entity from the claim.

E - STATEMENT OF FACTS

1. Before proceeding to examine these issues, it is necessary to present the material facts relevant to their understanding and decision, which was done based on documentary evidence, and taking into account the facts alleged.

2. The facts that are given as proven based on the documentary evidence that the parties submitted to these proceedings, the Claimant together with the arbitral claim filed and the Respondent with the attachment of the respective administrative proceedings.

3. It should be noted that, regarding the material facts, the Tribunal does not have to rule on everything that was alleged by the parties, but rather its duty is to select the facts that matter for the decision and distinguish the proven facts from the unproven ones, as results from the provision of art. 123, No. 2, of the CPPT and art. 607, No. 3 of the Code of Civil Procedure (CPC), applicable ex vi art. 29, No. 1, subparagraphs a) and e), of the RJAT. In this way, the facts relevant to the judgment of the case are chosen and cut out according to their legal relevance, which is established in light of the various plausible solutions of the legal question(s) (cf. article 596, applicable ex vi article 29, No. 1, subparagraph e), of the RJAT).

4. On material facts of relevance, the present tribunal considers the following facts as established:

5. On 17 September 2015, the AT conducted an internal inspection action on the Claimant for the years 2012, 2013 and 2014.

6. On 21 December 2015, the Claimant was notified of the Draft Inspection Conclusions.

7. The Claimant did not exercise the right of prior hearing on the draft conclusions.

8. The Claimant was notified of the Inspection Report through office No. ... of 18 January 2016.

9. On 22 January, the Claimant was notified of the IRS assessment statement and the statements of assessment of compensatory interest and the statements of account reconciliation, respectively:

12.1. Relating to the year 2012, IRS assessment statement No. 2016..., statements of assessment of compensatory interest No. 2016..., and the account reconciliation statement No. 2016...;

12.2. Relating to the year 2013, IRS assessment statement No. 2016 500013904 statements of assessment of compensatory interest No. 2016... and the account reconciliation statement No. 2019...;

12.3. Relating to the year 2014, IRS assessment statement 2016... statements of assessment of compensatory interest No. 2016... and the account reconciliation statement No. 2016....

1. On 6 July 2016, the Claimant filed a gracious complaint of the above-described acts.

2. On 6 November the presumption of tacit dismissal of the gracious complaint was formed.

F - FACTS NOT PROVEN

1. Of the facts with interest for the decision of the case, contained in the challenge, all of those that were the subject of concrete analysis, those not contained in the factuality described above were not proven.

G - QUESTIONS TO BE DECIDED

1. Given the positions of the parties assumed in the arguments presented, the following constitute the central issues to be resolved, which must be reviewed and decided:

a. As alleged by the Claimant:

(i) Declaration of illegality of the tax acts of assessment under Personal Income Tax (IRS) for 2012, 2013, 2014, with the numbers 2016..., No. 2016... and 2016..., which fixed a total tax to be paid of €8,107.06 (eight thousand one hundred and seven euros and six cents).

(ii) Condemnation for payment of indemnifying interest.

H - LEGAL MATTERS

1. Given the positions of the parties assumed in the pleadings presented, the central issue to be resolved by the present arbitral tribunal consists in examining the legality of the acts of assessment of Personal Income Tax (IRS) for 2012, 2013, 2014, with the numbers 2016..., No. 2016... and 2016..., which fixed a total tax to be paid of €8,107.06, by reason of violation of law.

2. The substantive issue in the present arbitral proceedings relates to the application of the legal regime of Personal Income Tax and in particular the legal regime for property income established in article 8 and the regime for deductions from property income established in article 41, both of the CIRS.

3. Regarding Personal Income Tax, it has an annual nature, as established by the general rule in article 1 No. 1 "Personal income tax (IRS) applies to the annual value of income", in other words, IRS applies to the annual value of income from certain categories, after the corresponding deductions and allowances have been made.

4. It raises no doubt that the tax applies to the annual value of income, whether obtained at a single moment or in phases during the duration of the respective year.

5. The Claimant during the periods of 2012, 2013 and 2014, received income from Category F or Property Income, by application of article 8 No. 1 and No. 2 subparagraph a) of the CIRS, to which reference is made:

"1 - Property income is deemed to be the rents of rural, urban and mixed properties paid or placed at the disposal of their respective owners.

2 - Rents are deemed to be:

a) The sums relating to the transfer of the use of the property or part of it and the services related to that transfer;".

1. From gross property income it is legally permissible pursuant to article 41 of the CIRS to proceed with the following deductions:

"Article 41 - Deductions

1 – From the gross income referred to in article 8 are deducted the maintenance and conservation expenses that are incumbent on the taxpayer, borne by him and documentarily proven, as well as the property tax and the stamp duty that is charged on the value of the properties or part of the properties whose income is subject to taxation in the fiscal year.

2 – In the case of an autonomous fraction of property in the horizontal property regime, are also deducted the conservation, enjoyment and other charges that, pursuant to civil law, the condominium must necessarily bear, borne by him, and documentarily proven.

3 – In sub-leasing, the difference between the rent received by the sub-lessee and the rent paid by him does not benefit from any deduction". (our emphasis).

1. It results from the provision of article 41 of the CIRS, a set of requirements and consequent permissible deductions to the gross income of category F (rents), respectively:

a) Maintenance and conservation expenses provided they are documentarily proven.

b) Property tax and stamp duty; and

c) The income is subject to taxation in the fiscal year, that is, paid in the year of the income to be taxed in IRS.

1. Given the factual situation proven and in accordance with the position of the Respondent and Claimant, the deductible expenses presented by the Claimant, the same meet the requirements of article 41 of the CIRS, that is, they are maintenance and conservation expenses documentarily proven, and the respective property taxes and stamp duty.

2. However, being the expenses legally accepted as deductible from the gross income of Category F pursuant to article 41, the issue arises as to whether a proportionality coefficient can be applied to the respective expenses.

3. In other words, it falls to the present tribunal to decide whether the expenses of article 41 of the CIRS can only be deductible from the gross income of Category F in a manner proportional to the period in which the rented property is actually rented during the respective fiscal year.

4. Thus, the expenses being in their nature legally admissible, the AT argues that on the basis of the "occupancy coefficient", it invokes that these expenses can only be deductible in proportion to the period in which the property was rented.

5. In the present case the property was rented for the following period: in 2012 for 16 days, in 2013 for 36 days and in 2014 for 21 days.

6. The rule of deductibility of costs of category F is always associated with the costs of maintenance necessary for obtaining the property income subject to taxation, which the legislator has never, not even by way of example, typified.

7. That is, the charges necessary for maintaining the source of income production are deductible.

8. There necessarily exists a cost relationship indispensable to obtaining the income, when documentarily proven and actually borne by the holder of the asset.

9. It was not demonstrated that the expenses do not meet this indispensable requirement; on the contrary, they are accepted by the AT, which accepts them as to their deductible nature from income, although only proportionally.

10. This proportionality deductibility of expenses based on the number of days of occupation of the rented property invoked by the AT or the innovative argument of the "occupancy coefficient" has already been ruled on by jurisprudence within the scope of Case No. 294/2015-T of the CAAD, which states

33.1. "With regard to the reduction of expenses and charges through the application of an 'occupancy coefficient', such a procedure cannot be accepted, since all expenses incurred, such as cleaning of dwellings and swimming pool and their health treatment, water, electricity, insurance, IMI and others, will always have to be borne, regardless of the occupancy rate. This 'occupancy coefficient', as mentioned, a 'sui generis' foundation that apparently had not been used by the Inspection until now, does not, in the opinion of this tribunal, have any legal basis."

1. A position which we subscribe to, since it does not result from the IRS Tax Regime or from the tax regime of property income itself, the reference to proportionality or occupancy coefficient.

2. Not being able in such a way to accept that expenses legally admissible and indispensable for the pursuit and obtaining of income are proportional to the days in which such income is obtained.

3. Such understanding violates the principles of legality and the IRS Tax Regime itself.

4. One could perhaps invoke that the expenses incurred by the Respondent do not meet the requirement of indispensability, given the number of days of rental, however such was not done or proven.

5. Of significant importance for the present decision, the jurisprudence contained in Case No. 201/2015-T of the CAAD, on an identical issue regarding the period of reference for the deductibility of expenses and costs provided for in article 41 of the CIRS, from which we highlight:

"The disregard of the expenses relating to the property in the parish of Carnide is based in any case on the argument that the expenses were incurred outside the period in which the property was rented (N of the established facts). The same ground is in fact invoked to refuse the deduction of the expenses in question from the urban property in the parish of ... (O of the established facts).

There is thus a need to determine what the temporal period is in which the expenses materially deductible from the gross income of category F can actually be considered. In other words, there is a need to see how the period in which expenses are to be considered for the purposes of determining the income should be determined.

It is undisputed to state that IRS applies to the annual value of income from certain categories, after the corresponding deductions and allowances have been made (article 1-1CIRS). It does not seem that the basic norm for the determination of the tax presents great questions; IRS applies therefore to the annual value of income and this is determined in relation to each fiscal year, which for the purposes of this tax coincides with the calendar year (1-1, 22-1 and 143 of the CIRS).

Now, since the elementary operation of the calculation of the tax consists in determining the taxable income, through deductions and allowances from gross income, there is no reason why these negative components should not in fact have the same period of reference as the gross income, which is the positive component. Basically, the income (gross) earned in each year constitute the positive elements that contribute to determining annual taxable income, and account must also be taken of the negative elements of the same period, which are the deductions and allowances. It must thus be concluded that the general rule of IRS affirms that the tax has an annual nature and it is in relation to each calendar year that the elements that permit determining the incidence must be considered, namely gross income, deductions and allowances.

Concurrently, also the rule that presides over the declarative obligations, discipline in the sense that a single declaration must be presented for the entire annual period (57-1 CIRS).

However, these general rules of the annuality of IRS have specialties, as can be seen, among other examples, in the limitation to a four-year period of the allocation of income from categories A and H (74-1 CIRS), in the allocation to the year of final judgment of the decision of an action on disputed income, even if they relate to several previous years (62 CIRS) or in the possibility of deduction of losses from previous years (55-2 and 3 CIRS). It is important therefore to verify whether the discipline of category F income contains any specialty that imposes the application of some special command.

(…)

It does not seem that this article 41, or any other, can lead to an exception regime with respect to the aforementioned general rule of the annuality of IRS. In fact, this provision does no more than state the general rule: from gross income are deducted the maintenance and conservation expenses, as well as the local contribution. Clearly nothing is stated as to the period to consider, as this was already stated in article 1; it is the annual period.

There are thus no doubts that there is no need to make any other temporal correspondence between the gross income and the expenses to be deducted. There is only a need to ensure that the deductions relate to the calendar year in which the property income was paid or placed at the disposal of the holders.

Another question must still be raised, for rigorous determination of the temporal window in which expenses should be placed, and that is to know whether the relevant moment, which allows linking expenses to a certain date, is their actual occurrence or if it is rather the time when the deductions are borne. As experience has demonstrated, it sometimes happens that a certain work is carried out and invoiced in a certain calendar year and that a certain tax or fee is charged in that same year but are only paid, or satisfied in another way, in a later calendar year. It is believed that in the law there is only one criterion and it is important to determine it, as, in the present case, the question will arise, as we shall see.

At the level of gross income, whose paradigm of category F are the rents, the answer seems facilitated by the clarity of the norm; article 8-1 of the CIRS explicitly refers that the tax applies to rents paid or placed at the disposal, making clear that the income of a certain year does not consist of rents collected in advance in a previous year (e.g. the rent of January of a year which tradition requires to be paid at the beginning of December the preceding month, is income of the year in which it is actually paid) nor those rents which the tenant has not come to pay nor placed at the disposal of the lessor (e.g. through deposit), for not having satisfied them. In fact, rents which the tenant does not satisfy and which are to be collected judicially, will undoubtedly constitute income of the year in which the judicial decision that allows determining what the actual value of the income is becomes final (62 CIRS) and are not income of the year in which they should have been paid in accordance with the lease agreement.

The same line of reasoning is also followed for the deductions, as clearly results from the specific provisions of the law. The norm of article 41-1 of the CIRS makes clear that from income are deducted the expenses that are borne and are documentarily proven; in other words, are deducted the expenses that have been borne in the annual period in question, even if the obligation was constituted in previous years. It thus seems clear that the relevant moment for determining gross income and the expenses to be deducted obeys a cash flow perspective and does not take into account the moment of constitution nor is the principle of specialization of the exercises followed.

Having determined the interpretation of the norms in question – which are contained in Nos. 1 and 2 of article 41 CIRS – it is important to apply them to the facts determined, while always respecting the actual invocation of both by the Claimants, in compliance with the principle of the dispositional rule."

1. From the aforementioned judgment, we list that and the position of jurisprudence in which it is written "article 41, or any other, can lead to an exception regime with respect to the aforementioned general rule of the annuality of IRS. In fact, this provision does no more than state the general rule: from gross income are deducted the maintenance and conservation expenses, as well as the local contribution. Clearly nothing is stated as to the period to consider, as this was already stated in article 1; it is the annual period."

2. In light of the foregoing, it does not result from the letter of the law an exception to the deductibility of expenses based on an "occupancy coefficient", whereby the expenses presented by the Claimant in the years 2012, 2013 and 2014, within the scope of article 41 of the CIRS, are legally accepted in their entirety, the argument of proportional deductibility of expenses based on the rental period being inapplicable.

3. In these terms it is illegal due to violation of law, tax acts of assessment under Personal Income Tax (IRS) for 2012, 2013 and 2014, formalized, regarding the incorrect application of article 1 No. 1, article 8 and article 41 all of the CIRS.

J - ISSUES OF IMPAIRED KNOWLEDGE

1. In the judgment, the judge must rule on all issues that must be examined, refraining from ruling on issues of which it should not know (end segment of No. 1 of article 125 of the CPPT), and that the issues on which the powers of cognition of the tribunal rest, are, according to No. 2 of article 608 of the CPC, applicable subsidiarily to arbitral tax proceedings, by referral of article 29, No. 1, subparagraph e), of the RJAT, "the issues that the parties have submitted to its examination, except those whose decision is impaired by the solution given to others (...)".

2. In light of the solution given to the issue relating to the prerequisites of taxation of the Claimant's income by the applicable regime, the knowledge of the remaining issues included in the request for arbitral pronouncement is impaired.

I - INDEMNIFYING INTEREST

1. The Claimant also petitions for payment of indemnifying interest.

2. In light of the foregoing, the assessment of the IRS, in the part covered by the annulment, which will be decreed, result from errors of fact and law attributable exclusively to the tax administration, in that the Claimant fulfilled its duty of declaration and those errors were committed by it and the same could not be unaware of different understandings.

3. In fact, being demonstrated that the claimant paid the tax disputed in the amount higher than that which is due, by virtue of the provision of art. 61 of the CPPT and 43 of the LGT, the Claimant has the right to indemnifying interest due, such interest to be counted from the date of payment of the undue (annulled) tax until the date of issuance of the respective credit note, counting the term for that payment from the beginning of the term for the voluntary execution of this decision (art. 61, Nos. 2-5, of the CPPT), all at the rate determined in accordance with the provision of No. 4 of article 43 of the LGT.

4. Provision is granted to the claimant's petition.

L - DECISION

Therefore, in light of all the foregoing, the present Arbitral Tribunal decides:

To judge as meritorious the claim for declaration of illegality of the tax acts of assessment under Personal Income Tax (IRS) No. 2016..., No. 2016... and 2016..., which fixed a total tax to be paid of €8,107.06 (eight thousand one hundred and seven euros and six cents), due to violation of law, due to error on the legal prerequisites, which justifies the declaration of its illegality and annulment.

To condemn the Respondent to restore to the Claimant this amount wrongfully assessed and paid plus the payment of accrued indemnifying interest relating to the period between the date of payment of the tax to be calculated on the amount of €8,107.06 (eight thousand one hundred and seven euros and six cents), until the date of actual restoration, pursuant to Nos. 2 to 5 of art. 61 of the CPPT and at the rate determined in accordance with the provision of No. 4 of art. 43 of the LGT until full reimbursement.

The value of the proceedings is set at €8,107.06 (eight thousand one hundred and seven euros and six cents) based on the value of the assessment, in view of the economic value of the proceedings measured by the value of the tax assessments contested, and accordingly the costs are set, in the respective amount of €918.00 (nine hundred and eighteen euros), at the charge of the Respondent in accordance with article 12, No. 2 of the Regime of Tax Arbitration, article 4 of the RCPAT and Table I attached to the latter. – No. 10 of art. 35, and Nos. 1, 4 and 5 of art. 43 of the LGT, art. 5, No., subparagraph a) of the RCPT, 97-A, No. 1, subparagraph a) of the CPPT and 559 of the CPC).

Notify.

Lisbon, 26 June 2017

The Arbitrator

Dr. Paulo Ferreira Alves