CAAD Case 124/2018-T: Autonomous Taxation, SIFIDE Tax Benefit, and Collection Deduction in IRC

ARBITRAL DECISION

The arbitrators Counsellor Jorge Lopes de Sousa (arbitrator-president), Dr. Nuno Pombo and Dr. Arlindo José Francisco (arbitrator-members) designated by the Deontological Council of the Administrative Arbitration Centre to form the Arbitral Tribunal, constituted on 30-05-2018, hereby agree on the following:

1. REPORT

A..., SGPS, S.A., legal entity no. ..., with registered office at Rua ..., ... ..., ...-... Porto (hereinafter simply "A... SGPS" or "Claimant") came, pursuant to Article 2, No. 1, letter a), of Decree-Law No. 10/2011, of 20 January (hereinafter "RJAT"), to request the constitution of an Arbitral Tribunal, with a view to annulling the assessment No. 2016..., of 30-05-2016, relating to the year 2014 and the act of dismissal of the request for official review that it presented.

The Claimant further requests reimbursement of the tax paid unduly, plus compensatory interest.

The defendant is the TAX AND CUSTOMS AUTHORITY.

The request for constitution of the arbitral tribunal was accepted by the President of CAAD and automatically notified to the Tax and Customs Authority on 19-03-2018.

Pursuant to letter a) of No. 2 of Article 6 and letter b) of No. 1 of Article 11 of the RJAT, in the wording introduced by Article 228 of Law No. 66-B/2012, of 31 December, the Deontological Council designated as arbitrators of the collective arbitral tribunal the signatories, who communicated acceptance of the task within the applicable time period.

On 10-05-2018 the parties were duly notified of such designation, having manifested no intention to refuse the designation of the arbitrators, in accordance with the combined provisions of Article 11, No. 1, letters a) and b) of the RJAT and Articles 6 and 7 of the Code of Ethics.

Thus, in compliance with the provision in letter c) of No. 1 of Article 11 of the RJAT, in the wording introduced by Article 228 of Law No. 66-B/2012, of 31 December, the collective arbitral tribunal was constituted on 30-05-2018.

The Tax and Customs Authority responded, raising the exception of incompetence of the Arbitral Tribunal on the grounds that the request for arbitral pronouncement is presented following a request for official review and defending the inadmissibility of the request.

By order of 03-07-2018 the meeting provided for in Article 18 of the RJAT was dispensed with and it was decided that the case would proceed with optional written submissions for a period of 10 days, with the time period for the Claimant's submissions commencing with notification of the order and the time period for the Tax Authority's submissions commencing with notification of the Claimant's submissions.

The Claimant did not submit submissions, but did respond to the exception raised by the Tax and Customs Authority.

The Tax and Customs Authority, notified of this response to the exception, made no further statement.

The arbitral tribunal was duly constituted in accordance with the provision in Article 2, No. 1, letter a), and Article 10, No. 1, of Decree-Law No. 10/2011, of 20 January.

The Parties are duly represented and enjoy legal personality and capacity, are legitimate and are represented (Articles 4 and 10, No. 2, of the same decree-law and Article 1 of Ordinance No. 112-A/2011, of 22 March).

The case is not vitiated by nullities.

It is important to address as a priority the question of incompetence raised by the Tax and Customs Authority.

2. STATEMENT OF FACTS

2.1. Proven Facts

• The Claimant effected a self-assessment of Corporate Income Tax (IRC) for the year 2014, resulting in assessment No. 2016..., which is contained in document No. 1, attached with the request for arbitral pronouncement, the contents of which are reproduced herein, and which, inter alia, refers to the amount of €1,785,705.94 of autonomous taxation and the amount to be reimbursed of €13,571,704.39;

• In the year 2014, the Claimant made two special advance payments: the first on 31 March 2014, in the amount of €87,132.01, and the second on 31 October 2014, in the amount of €86,632.01 (document No. 3 attached with the request for arbitral pronouncement, the contents of which are reproduced herein);

• The Claimant had the amount of €43,138.18 in tax credit which was determined with respect to the SIFIDE tax benefit, requested by the subsidiary B..., S.A., for Research and Development activities carried out in the years 2012, 2013 and 2014, which came to be attributed by the Certification Commission for Tax Incentives for Corporate R&D, as per the declaration issued and communicated to the Claimant on 31-03-2016 (documents Nos. 4 and 5 attached with the request for arbitral pronouncement, the contents of which are reproduced herein);

• The Claimant effected the IRC self-assessment for 2014 on the basis of generic guidelines from the Tax Authority, having not deducted the aforementioned special advance payments and the SIFIDE amount from the tax resulting from autonomous taxation, such amounts having been reported as credits for subsequent periods;

• On 16-08-2017, the Claimant presented a request for official review of the aforementioned assessment 2016..., relating to the year 2014, which was processed under number ...2017... (document No. 7, attached with the request for arbitral pronouncement, the contents of which are reproduced herein);

• The aforementioned request was dismissed by order of 28-12-2017, issued by the Head of Division of the Large Taxpayers Unit, contained in document No. 2 attached with the request for arbitral pronouncement, the contents of which are reproduced herein, which manifests agreement with the arguments invoked in the draft decision notified to the Claimant on 06-12-2017, through Circular No. ... (document No. 8 attached with the request for arbitral pronouncement, the contents of which are reproduced herein);

• In the aforementioned draft decision the following is referred to, inter alia:

§ IV.I. On the calculation of tax

§ IV.I.I. On the deduction of PECs from autonomous taxation tax

§ IV.I.I.I. On the arguments of the Claimant

1. Notwithstanding the tax act whose review is now being requested corresponds to a "self-assessment" of tax, the Claimant still does not accept it, in this chapter, with regard to the deduction of sums delivered as special advance payment ("PECs"), in light of Article 106 of the CIRC, from the tax assessed under autonomous taxation pursuant to Article 88 of the same legal instrument.

2. In this regard, contesting this, the Claimant argues essentially that, since autonomous taxation of IRC is assessed pursuant to Article 90 of the respective code, then, from the tax resulting from this, the amounts meanwhile delivered as PECs may be deducted, in accordance, as it states, with the provision in letter d) of No. 2 of the aforementioned legal precept.

Whereby,

1. In keeping with its argument and thesis, it comes to request then that the sums referring to PECs be deducted from the tax assessed in light of the autonomous taxation regime of certain specific expenses and charges, in the total amount of €173,764.02 (one hundred and seventy-three thousand, seven hundred and sixty-four euros and two cents).

§ IV.I.I.II.

On the appraisal

1. As regards this matter, it should be said from the outset that the Claimant's reasoning has no merit, despite its learned arguments.

2. Our disagreement stems ab initio from the conceptual point of view, such that, in our view, it is prejudiced by our appraisal and, consequently, validation of the values now raised by the Claimant.

3. In this part the subject matter to be decided revolves around knowing whether sums relating to PECs may be deducted from autonomous taxation tax, and validation of the values in question will only be possible in the event that such deduction is possible. And it is not.

Let us see:

1. We begin by saying, resolving the matter completely, that, under this heading, Article 133 of Law No. 7-A/2016, of 30 March, amended the wording of Article 88 of the CIRC, clarifying that from autonomous taxation tax no deductions are made whatsoever.

2. In the event of any uncertainties persisting as to the interpretative nature of this rule, see what a recent decision of the Administrative Arbitration Centre ("CAAD"), of 19 November 2016, pronounced in the context of process No. 174/2016-T provides:

(...)

Without dispensing with,

1. We begin by determining the nature of autonomous taxation since the Claimant argues that this is an integral part of the tax on the income of legal entities (IRC), and is therefore susceptible to deduction of tax benefits pursuant to Article 90 of the CIRC.

2. Public taxes are traditionally divided into three categories: taxes, fees and contributions, the former being characterized from the outset by their unilateral nature, serving the purpose of revenue raising.

3. It is acknowledged that they may equally serve purposes of social ordering and orientation of conduct, albeit indirectly, as is the case with autonomous taxation since it is required without any counterpart.

4. By applying to facts that assume the nature of "expense" and not of "income", it reveals a certain independence in material terms in relation to the tax on income (in the strict sense), being, moreover, assessed autonomously, with little importance whether or not it presents taxable income at the end of the period, save as regards the aggravation of the rate in situations where expenses are incurred.

5. With this typology, notably anti-abuse and intentional in combating tax fraud and evasion anchored in the principle of contributive capacity (by connection with the principle of taxation of actual business income), the tax legislator sought to promote, to the extent possible, the reduction in the use of such expenses that negatively affect the collection and, consequently, the tax revenue in respect of Income Taxes.

6. Unlike what occurs at the level of the intrinsic component of IRC, autonomous taxation of expenses and charges is nothing more than an instrumental and subsidiary reality to obtaining the result of that tax on income, in the just measure that it was in function (and protection) of the same that gave rise to the conception of autonomous taxation and in which, all accounts made, the basis of its own raison d'être lies.

7. And so the aforementioned CAAD decision confirms when it states that:

"Indeed, and as has been had the opportunity to write elsewhere, "the complexity generated by successive amendments to the architecture of the CIRC has led (...) to an atypical normative building, in which one can discern a core corresponding to what may be called IRC tout court (or in the strict sense), which the Claimant wishes to exhaust all that is designated as IRC, and a periphery that integrates "marginal" regulations, largely abstracted from the logic, nature and principles of IRC tout court, but which, nevertheless, still situate themselves in the "gravitational field" of that."

Continuing:

1. Autonomous taxation seeks its objective incidence in expenses and charges and not in income (of the burdened entity), thereby distancing itself from IRC in the strict sense, although it is instrumentally and universally linked to this solely for operational and functional purposes.

2. As a revealing feature of this nuance we highlight the legislative change implemented in the current letter a) of No. 1 of the current Article 23-A of the CIRC, where, reinforcing the position here defended, the expression "including autonomous taxation" was added, which is equivalent to saying in other words that, on the one hand, autonomous taxation integrates the main tax in the broad sense, but, on the other, is distinct from it in the strict sense.

3. Another example: in Article 12 of the same code, the relationship of "operationality" and "functionality" between income taxation and autonomous taxation of certain expenses or charges is immediately emphasized, without prejudice to reiterating the distance between these same figures.

In these terms,

1. As results from the express terms in its own initial petition, the Claimant contests partially the "assessment" tax act and, in consequence, then requests that the sums referring to PECs be deducted from the tax determined and assessed via autonomous taxation of some certain expenses and charges.

Now,

1. Precisely because it is our understanding that the tax assessed under autonomous taxation cannot - nor should - be confused with the tax resulting in the strict scope of IRC, the Claimant's argument cannot be well-founded.

2. With respect to the autonomous taxation provided for in Article 88 of the CIRC, it is readily seen that this is assessed in a distinct and autonomous manner, in the light of the processing of IRC in the strict sense, in light of the provision in Article 90 of the same code, which latter is inherent to the nucleus of strict income taxation and not to that of taxation of certain expenses as occurs at the level of autonomous taxation.

3. It is in this sense that the recent CAAD decision converges:

"Thus, and concluding here, it will not be possible, it is believed, in the path of the solution to be obtained for the question to be decided, to obliterate that, notwithstanding that they do indeed converge in the form of assessment regulated in Articles 89 and 90/1 of the CIRC applicable, autonomous taxation and strict traditional IRC (or traditional) come, upstream, from profoundly distinct geographies, a fact that cannot fail to be duly weighed and taken into account in the solutions to be found downstream, namely, and for what matters to the case, as regards the reading to be made of the rule of Article 90/2 of the said Code."

1. Although both are inserted in the appraisal at the broader level of taxation of enterprises, they constitute manifestly distinct and individualized procedures, since one concerns the strict collection of IRC, and the other the collection assessed under autonomous taxation.

Proceeding:

1. The introduction of the PEC was made through Decree-Law No. 44/98, of 3 March and had as its objective the prevention of "evasive practices of concealment of income or exaggeration of costs" and was realized through an advance payment and provisionally by taxpayers that declared nil or negative income but continued in business activity.

2. Therefore, in accordance with the arbitral sentence pronounced in the context of Process No. 113/2015-T, of 30 December 2015, notwithstanding the changes that have since occurred, the PEC is considered as a form of preventing "tax evasion and to ensure tax payment by all enterprises in activity."

3. In the understanding of the same arbitral pronouncement:

"The current PEC regime is thus characterized by (i) having an inseparable link to the fight against tax evasion and fraud; (ii) it was introduced in the CIRC in March 1998, before autonomous taxation rates which only came to be part of its systematic in the 2000-2001 reform; (iii) in the conception of the PEC provision was made for its deduction from the collection in the assessment of IRC calculated on actual income; (iv) the recovery of the credit resulting from the PEC is subordinate to conditions of obtaining profitability ratios specific to enterprises of the sector of activity in which they are inserted or to justification of the credit situation by action of inspection done at the request of the taxpayer (87º-3 CIRC). In summary, the credit for sums delivered as special advance payment, does not constitute an enforceable credit that IRC taxpayers may dispose of. In order for them to be able to do so, certain conditions must be met."

1. It should be noted that the delivery of PEC continues to be mandatory even though the taxpayer determines tax losses, the amount of which may, however, be reimbursed pursuant to the provision in Article 93 of the CIRC.

2. In the event that the amount paid is greater than the IRC collection assessed in the self-assessment, the difference may be used for the purposes and effects of deduction of such value in the (strict) collection of IRC itself, without prejudice to such amount, in the case of Insufficient collection, being "carried" to subsequent years.

3. In light of this regime, IRC taxpayers resident in Portugal who exercise, as a main or ancillary activity, an activity of an agricultural, commercial, industrial or services nature and, as well as, non-residents with a permanent establishment in Portugal may proceed to deduct the respective value from the amount assessed pursuant to the provision in Article 90 of the CIRC, which was stated in the following terms:

(...)

1. That is, for the purposes and effects of the PEC, the deduction is made from the amount assessed in those precise terms, that is, from the strict collection of IRC related to taxable profit and assessed pursuant to Article 90 and not from the collection resulting from realities autonomously taxed pursuant to Article 88 of the CIRC, whose assessment procedures are, we repeat, distinct.

2. They cannot be confused moreover when it results manifestly clear that one is autonomous in relation to the other, implying that, in light of the PEC, the referred "amount assessed pursuant to Article 90 does not comprise in turn the "amount resulting from Article 88 of the CIRC" (autonomous taxation collection)."

3. The tax legislator considered them as autonomous and distinct, when, in the PEC, restricted to the perimeter of income, it only referred to the provision in Article 90, that is, to the appraisal concretely within the scope of strict traditional IRC and to other figures whose starting point is taxable profit and which reveal the same identity at the level of the entity itself subject to the tax legal relationship.

4. Indeed, the recent arbitral decision already referred to in this Report states the following:

"What decidedly means that, if no monetary sum is (in advance) to be delivered on account of the tax due finally, concerning the relevant period of formation of the tax fact (to which the "payment on account" refers) - namely due to the non-existence of taxable profit revealed by the accounting at that time - that "payment on account" lacks substantive foundation. (...) And thus, if there is no taxable profit, there is no tax due."

1. Thus, the autonomy of this reality is essentially linked to the facts on which it impacts and to the specificities of its assessment, but no longer, juridically, in relation to the remaining portions of IRC, since in this perspective autonomous taxation remains, nonetheless, IRC in its broader conception.

2. For its part, No. 2 of Article 90 of the CIRC dictates the manner of proceeding with the assessment of tax, enumerating, exhaustively and in order, all permitted deductions from the collection assessed pursuant to No. 1 of the same precept, and this assessment is that which has as its basis the taxable matter defined pursuant to Article 106 of the CIRC, that is, the values that translate this advance payment are deducted "from the amounts assessed pursuant to Article 90 of the Code of IRC, and up to their concurrent amount."

3. The collection to which this rule refers when the assessment is to be made by the taxpayer is assessed on the basis of the taxable matter that appears in that assessment, with the advance payment in which the PEC is translated being deducted only from the collection assessed on the basis of the taxable matter.

4. In fact, the collection of IRC is - and contrary to that of autonomous taxation - dependent on the achievement of a positive result on the part of the enterprise, and results from the application to it of the due rate, whereby it is not foreseen, at any time, to take into account autonomous taxation which, as the very name indicates, are autonomous, that is, independent of the result obtained by the enterprise, and always due in their entirety, since the Code provides for no deductions to the same.

5. Therefore, in light of the above, we understand that the value resulting from the PEC cannot in any way serve as a deduction from the collection resulting from the spectrum of autonomous taxation in the list provided for in Article 88, since, for these purposes, the collection assessed within the scope of Article 90 is not equivalent to the collection that in turn results from the aggregate of realities under the yoke of the autonomous taxation legal regime.

6. Allowing that the value assessed in the collection under autonomous taxation was susceptible to benefit from the effect of the "deduction" of sums relating to the advance payment resulting from the PEC, would lead to direct confrontation with its immediate purpose, namely the discouragement from the acquisition and use of certain consumer goods and services or mixed use.

7. More, by not falling within the strict component of the concrete tax on income, but rather in the inverse perspective (that of expense), autonomous taxation and the respective collection do not benefit from advance payments whose emphasis occurs at the level of income and not at the level of the expense itself.

8. It lacks absolute reasonableness to admit, in such terms, any deduction from the collection resulting from autonomous taxation, when the law from the outset equally does not permit that the value thereof can be deducted from the taxable profit of the period.

9. Therefore, it would be a paradox to promote the emptying of autonomous taxation collection by force of its reduction by benefit of sums granted for reasons and interests that ab initio conflict with the purposes of the enactment of the first, fiscally benefiting precisely those whom the legislator wished to "penalize" through a (subsidiary) mechanism that taxes expenses, eliminating or reducing indirectly any tax advantage that is within the strict perimeter of income taxation and, in consequence, in its respective collection and final revenue under pain of "fraud against the law."

10. More serious, it would be to fiscally accept that deduction when, pursuant to the law, the legislator itself took pains to highlight precautions regarding the coexistence between tax benefits and the verification of certain expenses and charges, as occurred, for example, in No. 2 of the said Article 88 of the CIRC.

Indeed,

1. As has been said, it was considered that "the possibility of deduction of the PEC to autonomous taxation would imply that even if a certain enterprise was eternally in a loss situation, no tax on its actual income would it have to bear, while applying the PEC to the satisfaction of autonomous taxation. Moreover, the autonomous taxation themselves would lose their anti-abuse character, ending up confusing themselves with the tax calculated on taxable profit. Now those are not the objectives of the corporate income taxation system and the best interpretation of the rule contained in Article 83-2-e CIRC is not decidedly that which permits the deduction of special advance payments from the collection resulting from the application of autonomous taxation rates.

2. So much so is this the case that, recall, since autonomous taxation is an exceptional regime in the constitutional legal framework of income taxation and actual income, the regime should then be subject to a restrictive interpretation, since it would be contrary to the spirit of the system to permit that, by force of the deductions referred to in No. 2 of the cited Article 90, autonomous taxation would be deprived of that anti-abuse character that presided over its implementation within the scope of the IRC system itself.

In fact,

1. As has been demonstrated, arbitral case law confirms indubitably that, if the deduction of the PEC from autonomous taxation collection were to be admitted in the same way as occurs with the strict collection of IRC or other tax figures immediately related to income, nothing more would be done than to depart from the sanctioning directive that presided over the consecration of that regime.

2. Recall what has been said, the deduction within the scope of the PEC is not of absolute exercise, since its regime is governed by limits of a formal, temporal and material nature, with the latter preventing the elimination or mitigation of collection assessed under the purview of the anti-abuse mechanism that postulates the autonomy of taxation of certain realities (of expense and not of income), such that, in consequence, it equally prevents the lesser tax burden for the financing of realities that the tax legislator considered as potentially litigious.

Accordingly,

1. In this part, given the above, considering the impediment of the requested deduction, the request now formulated by the Claimant must be dismissed, with all legal consequences that may apply to the present case, it being, as stated, prejudiced any appraisal and validation by us regarding the values placed in question.

§ IV.I.II. On the deduction of SIFIDE from autonomous taxation collection

§ IV.I.II.I. On the arguments of the Claimant

1. The Claimant begins by discoursing on the nature of autonomous taxation, considering that this represents an anti-abuse measure, aiming to "discourage the adoption of certain behaviors by taxpayers."

2. It further considers that the autonomous taxation collection constitutes IRC and therefore it becomes possible to perform the assessment procedure pursuant to Article 90 of the CIRC, which makes it possible to effect the deductions mentioned in No. 2 of this rule, more specifically that provided for in letter c).

3. In this regard, with respect to the benefit of the tax benefit relating to tax incentives for corporate R&D ("SIFIDE"), it seeks that the values that are available under this heading be in turn deducted from the autonomous taxation collection assessed pursuant to Article 88 of the CIRC.

Thus,

1. It seeks that the value of €43,138.18 (forty-three thousand, one hundred and thirty-eight euros and eighteen cents) be deducted from autonomous taxation collection since, regarding IRC, there was no collection susceptible to benefit from the deduction of that benefit.

§ IV.I.II.II On the appraisal

1. The subject matter to be decided consists here in knowing whether sums relating to tax benefits, maximally those relating to SIFIDE itself, may or may not be deducted from autonomous taxation collection.

2. Validation of the value in question will only matter if it is admitted that it is possible to make the deduction requested by the Claimant. And it is not.

3. One cannot overlook the spirit that presided over the enactment of autonomous taxation and of tax benefits, realities that are distinct and with immediate and mediate interests equally disparate to the extent that they prevent their respective convergence, especially as regards the deduction to the former of the amount relating to these latter.

Therefore,

1. Measuring the interests in contention, the claim formulated by the Claimant does not merit proceeding, since the exercise of the right to the benefit is not absolute, as it is itself received with limits, including material ones, as we shall better demonstrate below.

2. The so-called SIFIDE tax benefit allows enterprises to obtain a benefit under corporate income tax, and is promoted with respect to investment expenses in assets allocated to operations.

3. This benefit is embodied in a tax credit susceptible of being utilized for the purposes and effects of deduction of such value in the (strict) collection of IRC (or other realities whose taxation equally begins from taxable profit), without prejudice to such amount, in the case of insufficient collection, being "carried" to subsequent years.

4. In light of the SIFIDE regime it is readily evident that the sums resulting from that tax benefit are susceptible of deduction from the amounts assessed pursuant to that Article 90 of the CIRC, and up to their concurrent amount, always in the "assessment" relating to the tax period in which the accounting recognition of expenses covered by the benefit is inserted.

5. That is, for the purposes and effects of the aforementioned benefit, the deduction is made from the amount assessed in those precise terms, that is, from the strict collection of IRC related to taxable profit and assessed pursuant to Article 90 and not from the collection resulting from realities autonomously taxed pursuant to Article 88 of the CIRC, whose assessment procedures are, we repeat, distinct.

6. The tax legislator considered them as autonomous and distinct when, in the SIFIDE, restricted to the perimeter of income, it only referred to the provision in Article 90, that is, to the appraisal concretely within the scope of strict traditional IRC and to other figures whose starting point is taxable profit and which reveal the same identity at the level of the active entity of the tax legal relationship.

7. According to the jurisprudence already established, the autonomy of this reality is essentially linked to the facts on which it impacts and to the specificities of its assessment, but no longer, juridically, in relation to the remaining portions of IRC, since in this perspective autonomous taxation remains IRC in its broader conception.

8. For its part, No. 2 of Article 90 of the CIRC dictates the manner of proceeding with the assessment of tax, enumerating, exhaustively and in order, all permitted deductions from the collection assessed pursuant to No. 1 of the same precept, and this assessment is that which has as its basis the taxable matter defined pursuant to the SIFIDE regime.

9. The collection to which this rule refers when the assessment is to be made by the taxpayer is assessed on the basis of the taxable matter that appears in that assessment, with the credit in which the SIFIDE is translated being deducted only from the collection on the basis of the taxable matter.

10. In fact, the collection of IRC is - and contrary to that of autonomous taxation - dependent on the achievement of a positive result on the part of the enterprise, and results from the application to it of the due rate, whereby it is not foreseen, at any moment, to take into account autonomous taxation which, as the very name indicates, are autonomous, that is, independent of the result obtained by the enterprise and always due in their entirety, given that the Code provides for no deductions to the same.

11. Therefore, we understand that the values resulting from those benefits cannot in any way serve as a deduction from the collection resulting from the spectrum of autonomous taxation in the list provided for in Article 88, since, for these purposes, the collection assessed within the scope of Article 90 is not equivalent to the collection that in turn results from the aggregate of realities under the yoke of autonomous taxation.

12. Therefore, allowing that the value assessed in the collection under autonomous taxation was susceptible to benefit from the effect of the "deduction" of sums relating to the tax credit resulting from SIFIDE, would lead to direct confrontation with its immediate purpose, namely the discouragement from the acquisition and use of certain consumer goods and services or mixed use.

13. More, by not falling within the strict component of the concrete tax on income, but rather in the inverse perspective (that of expense), autonomous taxation and the respective collection do not benefit from tax benefits whose emphasis occurs at the level of income and not at the level of expense, as occurs in the well-known cases relating to tax benefits such as the one here in question.

14. It lacks absolute reasonableness to admit, in such terms, any deduction from the collection resulting from autonomous taxation, when the law from the outset equally does not permit that the value thereof can be deducted from the taxable profit of the period.

15. Therefore, it would be a paradox to promote the emptying of autonomous taxation collection by force of its reduction by benefit of sums granted for reasons and interests that ab initio conflict with the purposes of the enactment of the first, fiscally benefiting precisely those whom the legislator wished to "penalize" through a (subsidiary) mechanism that taxes expenses, eliminating or reducing indirectly any tax advantage that is within the strict perimeter of income taxation and, in consequence, in its respective collection and final revenue under pain of "fraud against the law."

16. More serious, it would be to fiscally accept that deduction when, pursuant to the law, the legislator itself took pains to highlight precautions regarding the coexistence between tax benefits and the verification of certain expenses and charges, as occurred, for example, in No. 2 of the said Article 88 of the CIRC.

17. Still following another line of arbitral jurisprudence, it was considered that "(...) it would not be reasonable, indeed quite contrary to the reason that led the legislator to autonomously tax those expenses which, through their deduction from taxable profit as expenses, the foundation of the existence of autonomous taxation would be eliminated," having been "(...) thus as certain that autonomous taxation do not constitute IRC in the strict sense but find themselves to this (IRC) interlocked, and should be contained in the "other taxes" of which we are informed by the final part of letter a) of No. 1 of Article 45 of the CIRC."

18. It is equally understood that "(...) aiming autonomous taxation to reduce the tax advantage achieved with the deduction from taxable profit of the costs on which it impacts and still to combat tax evasion that this type of expenses, by their nature, potentiates, it will not be possible for it itself through its deduction from taxable profit as an expense of the fiscal year to constitute a factor of reduction of that diminishment of advantage intended and determined by the legislator."

19. More: (...) autonomous taxation, which impacts on charges deductible for the purposes and effects of the appraisal of the tax base of IRC, are integrated in the regime and are due under this tax, not constituting the expenses with the payment of such taxation deductible charges for the purposes of the determination of taxable profit.

20. All the more so that, recall, since autonomous taxation is an exceptional regime in the constitutional legal framework of income taxation and actual income, the regime should be, then, subject to a restrictive interpretation, since it would be contrary to the spirit of the system to permit that, by force of the deductions referred to in No. 2 of the cited Article 90, autonomous taxation would be deprived of that anti-abuse character that presided over its implementation within the scope of the IRC system itself.

21. It is also necessary to highlight, by way of caution, that neither is it legitimate to say that the anti-abuse matrix of autonomous taxation does not prevent the impediment of the deduction of the benefit value from the collection thereof, as occurs with other anti-abuse specific provisions disseminated throughout the various tax codes.

In fact,

1. Unlike what happens at the level of autonomous taxation, of anti-abuse nature, of "indirect" action, in "direct" anti-abuse provisions (whether in the general anti-abuse clause, or in sniper approaches) the correlative fiscal treatment for the occurrence of the legally provided facts is found circumscribed to the calling to the tax base; the tax legislator understood that the action of these would be advocated within the scope of the step of the determination of taxable matter and not, downstream, in the phase of appraisal of the collection.

2. In "direct" anti-abuse rules, both the tax censure and its sanctioning are directly prescribed in the chapter of taxable matter, it being there that the tax legislator crystallized, on the one hand, its censure and, on the other, the respective sanctioning.

3. This is what occurs, for example, at the level of the legally provided rules regarding "transfer pricing," "thin capitalization," etc.

4. We have no doubt: if the deduction of the SIFIDE tax benefit from autonomous taxation collection were to be admitted in the same way as occurs with the strict collection of IRC or other tax figures immediately related to income, nothing more would be done than to depart from the sanctioning directive that presided over the consecration of that regime.

5. It would be a contradiction that this autonomous taxation (assessed in a context of potentially abusive conduct) would be exhausted by the deduction resulting from an expense (tax benefits) that the State bears with a view to inducing investment and consequent development of the States themselves and enterprises.

6. Recall what has been said, the deduction within the scope of tax benefits is not of absolute exercise, since its regime is governed by limits of a formal, temporal and material nature, with the latter preventing the elimination or mitigation of collection assessed under the purview of the anti-abuse mechanism that postulates the autonomy of taxation of certain realities (of expense and not of income), such that, in consequence, it equally prevents the lesser tax burden for the financing of realities that the tax legislator considered as potentially litigious.

Accordingly,

1. In this part, given the above, considering the impediment of the requested deduction, the request now formulated by the Claimant must be dismissed, with all legal consequences that apply to the case, it being, as stated, prejudiced any appraisal and validation by us regarding the values placed in question.

§ V. CONCLUSION

In accordance with all the foregoing, we propose that the review request formulated in the present proceedings be dismissed in accordance with the content of the "summary table" identified from the outset in the introduction of our report, with all legal consequences.

It is further proposed that, equally in the event of Higher Agreement, the notification of the Claimant be promoted, in accordance with the rules contained in Articles 35 to 41, all of the CPPT, through circular letter, to, if it wishes, within the period of 15 (fifteen) days, exercise its right to participate, in the modality of prior hearing, in written form, pursuant to the provision in Article 60 of the LGT.

• On 19-03-2018, the Claimant presented the request for arbitral pronouncement that gave rise to the present case.

2.2. Unproven Facts

There are no facts relevant to the decision of the cause that have not been proven.

2.3. Reasoning of the Establishment of the Statement of Facts

The proven facts are based on the documents attached by the Claimant.

There is no controversy regarding the statement of facts.

3. QUESTION OF INCOMPETENCE OF THE ARBITRAL TRIBUNAL TO APPRAISE REQUESTS FOR DECLARATION OF ILLEGALITY OF ACTS OF SELF-ASSESSMENT PRECEDED BY OFFICIAL REVIEW

The Tax and Customs Authority contends, in sum, that the request for arbitral pronouncement sub judice is formulated following dismissal of a request for official review of an act of self-assessment of corporate income tax (IRC) relating to the year 2014, formulated on 16-08-2017, when the period for administrative complaint already referred to in Article 131 of the Code of Tax Procedure and Process (CPPT) had already elapsed, and that Article 2, letter a) of Ordinance 112-A/2011, of 22 March, through which the Tax and Customs Authority became bound by arbitral jurisdiction, excludes claims relating to the declaration of illegality of acts of self-assessment that have not been preceded by resort to the administrative process pursuant to Articles 131 to 133 of the CPPT.

The Claimant responded, contending that the request for official review should be considered equivalent to an administrative complaint, as it provides an opportunity for the Tax and Customs Authority to appraise the legality of the self-assessment before the matter is submitted to the appraisal of the Arbitral Tribunal.

In the case in question, it is noted that, following the self-assessment relating to the year 2014, the Tax and Customs Authority issued assessment No. 2016..., which is contained in document No. 1, attached with the request for arbitral pronouncement, the contents of which are reproduced herein.

In the notification of this assessment issued by the Tax and Customs Authority, it is expressly indicated that the Claimant may dispute it contentiously.

Thus, despite there having been self-assessment, there was a subsequent position assumed by the Tax and Customs Authority in issuing assessment No. 2016..., which rules out, from the outset, the framing of the situation in letter a) of Article 2 of Ordinance No. 112-A/2011, of 22 March.

In any event, the exception does not stand.

The competence of arbitral tribunals operating in CAAD is, in the first place, limited to the matters indicated in Article 2, No. 1, of Decree-Law No. 10/2011, of 20 January (RJAT).

In a second line, the competence of arbitral tribunals operating in CAAD is also limited by the terms in which the Tax Administration became bound by that jurisdiction by Ordinance No. 112-A/2011, of 22 March, since Article 4 of the RJAT establishes that "the binding of the tax administration to the jurisdiction of the tribunals constituted pursuant to this law depends on an ordinance of the members of the Government responsible for the areas of finance and justice, which establishes, in particular, the type and maximum value of the disputes covered."

In face of this second limitation on the competence of arbitral tribunals operating in CAAD, the resolution of the question of competence depends essentially on the terms of this binding, since, even if one is dealing with a situation that could be framed in that Article 2 of the RJAT, if it is not covered by the binding, the possibility of the dispute being jurisdictionally decided by this Arbitral Tribunal will be ruled out.

In letter a) of Article 2 of this Ordinance No. 112-A/2011, there are expressly excluded from the scope of the binding of the Tax Administration to the jurisdiction of the arbitral tribunals operating in CAAD the "claims relating to the declaration of illegality of acts of self-assessment, withholding at source and payment on account that have not been preceded by resort to the administrative process pursuant to Articles 131 to 133 of the Code of Tax Procedure and Process."

The express reference to the precedent "resort to the administrative process pursuant to Articles 131 to 133 of the Code of Tax Procedure and Process" should be interpreted as referring to cases in which such resort is mandatory, through the administrative complaint, which is the administrative means indicated in those Articles 131 to 133 of the CPPT, for whose terms reference is made. In truth, from the outset, it would not be understood that, when prior administrative impugnation is not necessary "when its basis is exclusively a matter of law and the self-assessment has been made in accordance with generic guidelines issued by the tax administration" (Article 131, No. 3, of the CPPT, applicable to cases of withholding at source, by virtue of the provision in No. 6 of Article 132 of the same Code), the arbitral jurisdiction would be ruled out by such administrative impugnation, which is understood to be unnecessary, not having been made.

In the case in question, the declaration annulment of an assessment subsequent to self-assessment is sought, following dismissal of a request for review of tax acts made after the two-year period provided for in Article 132 of the CPPT has elapsed.

Thus, it is important, first of all, to clarify whether the declaration of illegality of acts of dismissal of requests for review of the tax act, provided for in Article 78 of the LGT, is included in the competencies attributed to arbitral tribunals operating in CAAD by Article 2 of the RJAT.

In truth, in this Article 2 there is no express reference to these acts, contrary to what occurs with the legislative authorization on which the Government based itself for approving the RJAT, which refers to "requests for review of tax acts" and "administrative acts that involve appraisal of the legality of assessment acts."

However, the formula "declaration of illegality of acts of assessment of taxes, self-assessment, withholding at source and payment on account," used in letter a) of No. 1 of Article 2 of the RJAT, does not restrict, in a mere declarative interpretation, the scope of arbitral jurisdiction to cases in which an act of one of those types is directly impugned. In truth, the illegality of assessment acts may be jurisdictionally declared as a corollary of the illegality of a second-instance act, which confirms an assessment act, incorporating its illegality.

The inclusion in the competencies of arbitral tribunals operating in CAAD of cases in which the declaration of illegality of the acts indicated therein is made through the declaration of illegality of second-instance acts, which are the immediate object of the impugnatory claim, results with certainty from the reference made in that rule to acts of self-assessment, withholding at source and payment on account, which are expressly referred to as being included among the competencies of arbitral tribunals. With effect, with respect to these acts it is imposed, as a rule, the necessary administrative complaint, in Articles 131 to 133 of the CPPT, whereby, in these cases, the immediate object of the impugnatory process is, as a rule, the second-instance act that appraises the legality of the assessment act, an act that, if it confirms it, must be annulled to obtain the declaration of illegality of the assessment act. The reference made in letter a) of No. 1 of Article 10 of the RJAT to No. 2 of Article 102 of the CPPT, in which the impugnation of acts of dismissal of administrative complaints is provided for, dispels any doubts that the cases in which the declaration of illegality of the acts referred to in letter a) of that Article 2 of the RJAT has to be obtained following the declaration of illegality of second-instance acts are covered in the competencies of arbitral tribunals operating in CAAD.

Indeed, it was precisely in this sense that the Government, in Ordinance No. 112-A/2011, of 22 March, interpreted these competencies of arbitral tribunals operating in CAAD, by ruling out from the scope of such competencies the "claims relating to the declaration of illegality of acts of self-assessment, withholding at source and payment on account that have not been preceded by resort to the administrative process pursuant to Articles 131 to 133 of the Code of Tax Procedure and Process," which has the effect of restricting its binding to cases in which such resort to the administrative process was used.

Having obtained the conclusion that the formula used in letter a) of No. 1 of Article 2 of the RJAT does not exclude cases in which the declaration of illegality results from the illegality of a second-instance act, it will also cover cases in which the second-instance act is that of dismissal of a request for review of the tax act, since no reason is seen for restricting it, especially that, in cases in which the review request is made within the period of the administrative complaint, it should be treated as equivalent to an administrative complaint.

The same occurs with the decision of the hierarchical appeal, expressly indicated in letter a) of No. 1 of Article 10 of the RJAT as the initial term of the time period for presentation of the request for constitution of the arbitral tribunal.

The express reference to Articles 131 to 133 of the CPPT made in Article 2 of Ordinance No. 112-A/2011 cannot have the decisive effect of ruling out the possibility of appraisal of requests for illegality of acts of dismissal of requests for official review of acts of the types referred to therein.

In truth, the interpretation exclusively based on the literal wording that the Tax and Customs Authority defends in the present process cannot be accepted, since in the interpretation of tax rules the general rules and principles of interpretation and application of laws are observed (Article 11, No. 1, of the LGT), and Article 9, No. 1, expressly prohibits interpretations exclusively based on the literal wording of the rules by providing that "interpretation should not be limited to the letter of the law," and should rather "reconstitute from the texts the legislative thinking, taking especially into account the unity of the legal system, the circumstances in which the law was drafted and the specific conditions of the time in which it is applied."

As to the correspondence between interpretation and the letter of the law, only "a minimum of verbal correspondence, albeit imperfectly expressed" is required (Article 9, No. 3, of the Civil Code), which will only prevent the adoption of interpretations that cannot at all be reconciled with the letter of the law, even acknowledging therein imperfection in the expression of the legislative intention.

For this reason, the letter of the law is not an obstacle to making a declarative interpretation, which explains the scope of the literal wording, nor even an extensive interpretation, when one can conclude that the legislator said less than what, in coherence, it would have intended to say, that is, when it said imperfectly what it intended to say. In extensive interpretation "it is the valuation itself of the rule (its 'spirit') that leads to the discovery of the need to extend the text of this to the situation that it does not cover," "the expansive force of the legal valuation itself is capable of leading the device of the rule to cover hypotheses of the same type not covered by the text."

Extensive interpretation is thus imposed by the evaluative and axiological coherence of the legal system, erected by Article 9, No. 1, of the Civil Code into a primary interpretative criterion through the imposition of observance of the principle of unity of the legal system.

It is manifest that the scope of the requirement of prior administrative complaint, necessary to open the contentious avenue of impugnation of acts of the types referred to in Articles 131 to 133 of the CPPT, has as its sole justification the fact that with respect to that type of acts there is no taking of position by the Tax Administration on the legality of the legal situation created with the act, a position that may even come to be favorable to the taxpayer, avoiding the need for recourse to the contentious avenue.

In truth, beyond not seeing any other justification for this requirement, the fact that necessary administrative complaint is provided for the contentious impugnation of acts of withholding at source and payment on account (in Articles 132, No. 3, and 133, No. 2, of the CPPT), which have in common with acts of self-assessment the circumstance that there also is no taking of position by the Tax Administration on the legality of the acts, confirms that this is the reason for being of that necessary administrative complaint.

Another unequivocal confirmation that this is the reason for being of the requirement of necessary administrative complaint is found in No. 3 of Article 131 of the CPPT, when it establishes that "without prejudice to the provisions of the previous numbers, when its basis is exclusively a matter of law and the self-assessment has been made in accordance with generic guidelines issued by the tax administration, the time period for impugnation does not depend on prior complaint, with the impugnation to be presented within the time period of No. 1 of Article 102," a regime that is applicable to acts of withholding at source by remission of No. 6 of Article 132 of the CPPT. In truth, in situations of this type, there was prior generic pronouncement by the Tax Administration on the legality of the legal situation created with the act of self-assessment or withholding at source, and it is this fact that explains why the necessary administrative complaint ceases to be required.

Now, in cases in which a request for official review of an act of self-assessment or withholding at source is formulated, the Tax Administration is afforded, with this request, an opportunity to pronounce itself on the merits of the taxpayer's claim before this recourse to the jurisdictional avenue, whereby, in coherence with the solutions adopted in Nos. 1 and 3 of Article 131 and 3 and 6 of Article 132 of the CPPT, it cannot be required that, cumulatively with the possibility of administrative appraisal within the framework of this official review procedure, a new administrative appraisal be required through an administrative complaint.

On the other hand, it is unequivocal that the legislator did not intend to prevent taxpayers from formulating requests for official review in the cases of acts of self-assessment, since these were expressly referred to in No. 2 of Article 78 of the LGT. And to acts of self-assessment, practiced by the taxpayer, are equivalent, by mere declarative interpretation, those of withholding at source that are practiced by the substituting taxpayer, who is considered a taxpayer (Article 18, No. 3, of the LGT).

In this context, allowing the law expressly that taxpayers opt for administrative complaint or official review of acts of self-assessment and withholding at source and being the request for official review formulated within the period of the administrative complaint perfectly equivalent to an administrative complaint, as was referred to, there cannot be any reason that can explain that access to the arbitral avenue cannot be had by a taxpayer that opted for review of the tax act instead of the administrative complaint.

For this reason, it is to be concluded that the members of the Government who issued Ordinance No. 112-A/2011, in making reference to Articles 131 to 133 of the CPPT, stated imperfectly what they intended, since, intending to impose prior administrative appraisal to the contentious impugnation of acts of the types referred to, ended up including reference to Articles 131 to 133 that do not exhaust the possibilities of administrative appraisal of such acts.

Indeed, it is to be noted that this interpretation, not limiting itself to the literal wording, is even particularly justified in the case of letter a) of Article 2 of Ordinance No. 112-A/2011, given the evident imperfections thereof: one is to associate the comprehensive formula "resort to the administrative process" (which references, beyond the administrative complaint, hierarchical appeal and review of the tax act) to the "expression pursuant to Articles 131 to 133 of the Code of Tax Procedure and Process," which has potential restrictive scope to the administrative complaint; another is to use the formula "preceded" by resort to the administrative process, referring to "claims relating to the declaration of illegality of acts," which, obviously, would be much better accommodated with the feminine word "preceded."

Therefore, beyond the general prohibition on interpretations limited to the letter of the law contained in Article 9, No. 1, of the Civil Code, in the specific case of letter a) of Article 2 of Ordinance No. 112-A/2011 there is a special reason not to justify great enthusiasm for a literal interpretation, which is the fact and that the wording of that rule is manifestly defective.

Moreover, ensuring that the review of the tax act provides the possibility of appraisal of the taxpayer's claim before access to the contentious avenue that is sought to be achieved with necessary administrative impugnation, the most correct solution, because it is the most coherent with the legislative design of "strengthening the effective and actual protection of the rights and legally protected interests of taxpayers" manifested in No. 2 of Article 124 of Law No. 3-B/2010, of 28 April, is the admissibility of the arbitral avenue to appraise the legality of assessment acts previously appraised in a review procedure.

And, because it is the most correct solution, it must be presumed to have been normatively adopted (Article 9, No. 3, of the Civil Code).

Moreover, containing that letter a) of Article 2 of Ordinance No. 112-A/2011 an imperfect formula, but which contains a comprehensive expression "resort to the administrative process," which potentially also references the review of the tax act, is found in the text the minimum verbal correspondence, albeit imperfectly expressed, required by that No. 3 of Article 9 for the viability of the adoption of the interpretation that consecrates the most correct solution.

It is to be concluded, thus, that Article 2, letter a) of Ordinance No. 112-A/2011, duly interpreted on the basis of the criteria of interpretation of the law provided for in Article 9 of the Civil Code and applicable to substantive and adjective tax rules, by virtue of the provision in Article 11, No. 1, of the LGT, enables the presentation of requests for arbitral pronouncement regarding acts of withholding at source that have been preceded by a request for official review.

As for the allegation of the Tax and Customs Authority that "the understanding (...) that disputes that have as their object the declaration of illegality of acts of withholding at source, as occurs in the situation sub judice, are excluded from the substantive competence of arbitral tribunals, unless preceded by administrative complaint pursuant to Article 131 of the CPPT, is imposed by force of the constitutional principles of the rule of law and separation of powers (cf. Articles 2 and 111, both of the CRP), as well as the right of access to justice (Article 20 of the CRP) and legality [cf. Articles 3, No. 2, 202 and 203 of the CRP and also Article 266, No. 2, of the CRP, in its corollary of the principle of indisponibility of tax credits inherent in Article 30, No. 2 of the LGT, which bind the legislator and all activity of the AT]."

In truth, the Constitution does not require that the interpretation of the normative diplomas be limited to the literal wording and, in the case in question, as was explained, duly interpreting the rules of Article 2, No. 1, of the RJAT and of Article 2 of Ordinance No. 112-A/2011, of 22 March, it is concluded that the binding of the Tax and Customs Authority to the arbitral tribunals operating in CAAD covers the cases in which acts of self-assessment were preceded by requests for official review. For this reason, the interpretation made did not increase the binding of the Tax and Customs Authority in relation to what is regulated, but rather defined exactly its terms, which result from the regulatory decree.

Moreover, in interpreting and applying legal rules, this Arbitral Tribunal is performing the function that is constitutionally assigned to it (Articles 202, No. 1, 203 and 209, No. 2, of the CRP), whereby neither is there any way to see how there can be a violation of the principles of separation of powers, rule of law and legality, since what is decided by this tribunal evidences, precisely, the perfect realization of such principles: the Assembly of the Republic authorized the Government to legislate (Article 124 of Law No. 3-B/2010, of 28 April); the Government, in the exercise of legislative powers, issued the RJAT; the Administration, through two Government members, issued Ordinance No. 112-A/2011, of 22 March; the Arbitral Tribunal interpreted and applied the aforementioned normative diplomas.

As concerns the principle of the right of access, there is perplexity at the allegation of its violation made before an Arbitral Tribunal, a body absolutely independent of both Parties, which gave them the opportunity to submit what they deemed convenient for defense of their positions on the question of incompetence, which weighed their reasons and applied its interpretation of the applicable legal regime in a profusely reasoned decision: it is precisely in this that the essence of the right of access to justice consists, the possibility of obtaining a decision from an independent body that, through an equitable process, weighs the arguments of the Parties and applies to the questions raised its interpretation of the applicable legal regime.

As to the invocation of the principle of indisponibility of tax credits, defined in Article 30, No. 2, of the LGT, in which it is stated that "the tax credit is indisposable, being able to establish conditions only for its reduction or extinction with respect for the principle of equality and tax legality," it will, certainly, be a lapse, as in deciding on its competence the Arbitral Tribunal is not practicing any act of disposition of credit. Moreover, neither is there any way to see to what credit the Tax and Customs Authority will be referring, as in the present case, in which an assessment act is at issue the tax of which has been paid, there is no issue of collection of any tax credit, being already extinguished, by payment, the hypothetical credit that could exist and neither is it even alleged that there exists any other credit of the Tax and Customs Authority in relation to the Claimant related to the self-assessment or the assessment in question.

Moreover, the principle of indisponibility of tax credits applies to the Administration and not to Courts, as understood by the Constitutional Court, in the wake of the generality of doctrine.

This exception of incompetence, derived from failure to present an administrative complaint to the acts of withholding at source, thus does not stand.

Essentially in this sense, regarding acts of self-assessment, reference can be made to the decision of the Central Administrative Court South of 27-04-2017, pronounced in case No. 08599/15.

4. MATTER OF LAW

4.1. Applicability of Articles 89 and 90 of the CIRC to the Calculation of Autonomous Taxation

Articles 89 and 90 of the CIRC establish the following, in the wording given to them by Law No. 2/2014, of 16 January, in force in the year 2014:

Article 89

Competence for Assessment

The assessment of the IRC is made:

a) By the taxpayer itself, in the declarations referred to in Articles 120 and 122;

b) By the Tax and Customs Authority, in the remaining cases.

Article 90

Procedure and Form of Assessment

1 - The assessment of the IRC is processed as follows:

a) When the assessment is to be made by the taxpayer in the declarations referred to in Articles 120 and 122, it is based on the taxable matter contained in them;

b) In the absence of presentation of the declaration referred to in Article 120, the assessment is made up to 30 November of the year following that to which it relates or, in the case provided for in No. 2 of the aforementioned article, until the end of the 6th month following the end of the time period for presentation of the declaration mentioned there and is based on the annual value of the minimum monthly remuneration or, when greater, the totality of the taxable matter of the closest tax year which is determined;

c) In the absence of assessment pursuant to the previous letters, the same is based on the elements available to the tax administration.

2 - From the amount assessed pursuant to the previous number, the following deductions are made, in the order indicated:

a) The one corresponding to international legal double taxation;

b) The one corresponding to international economic double taxation;

c) The one relating to tax benefits;

d) The one relating to special advance payment referred to in Article 106;

e) The one relating to withholding at source not susceptible to compensation or reimbursement pursuant to the applicable legislation.

3 – (Repealed)

4 - From the amount assessed pursuant to No. 1, regarding the entities mentioned in No. 4 of Article 120, only the deduction relating to withholding at source when these have the nature of tax on account of the IRC is to be made.

5 - The deductions referred to in No. 2 relating to entities to which the transparent taxation regime established in Article 6 is applicable are imputed to the respective partners or members pursuant to the terms established in No. 3 of that article and deducted from the amount assessed on the basis of taxable matter that has taken into account the imputation provided for in the same article.

6 - When the special taxation regime of groups of companies is applicable, the deductions referred to in No. 2 relating to each of the companies are made from the amount assessed regarding the group, pursuant to No. 1.

7 - From the deductions made pursuant to letters a), b) and c) of No. 2 no negative value can result.

8 - Regarding the taxpayers covered by the simplified regime of determination of taxable matter, from the amount assessed pursuant to No. 1 only the deductions provided for in letters a) and e) of No. 2 are to be made.

9 - From the deductions made pursuant to letters a) to d) of No. 2 no negative value can result.

10 - From the amount assessed pursuant to letters b) and c) of No. 1 only the deductions of which the tax administration has knowledge and which can be made pursuant to Nos. 2 to 4 are made.

11 - In cases in which the provision in letter b) of No. 2 of Article 79 is applicable, assessments are made annually on the basis of taxable matter determined provisionally, and, in view of the assessment corresponding to the taxable matter relating to the entire taxation period, the difference assessed is to be collected or cancelled.

12 - The assessment provided for in No. 1 may be corrected, if appropriate, within the time period referred to in Article 101, with the differences assessed then being collected or cancelled.

The aforementioned Articles 89 and 90 of the CIRC, as well as other rules of this Code, such as those relating to the declarations provided for in Articles 120 and 122, are applicable to autonomous taxation.

In truth, it is today settled, following numerous arbitral case law and positions adopted by the Tax and Customs Authority, that the tax collected on the basis of autonomous taxation provided for in the CIRC has the nature of IRC. Moreover, besides case law, Article 23-A, No. 1, letter a), of the CIRC, in the wording of Law No. 2/2014, of 16 January, leaves no room for any reasonable doubt today, corroborating what already previously resulted from the literal content of Article 12 of the same Code.

Now, Article 90 of the CIRC refers to the forms of assessment of the IRC, by the taxpayer or by the Tax Administration, applying to the appraisal of the tax due in all situations provided for in the Code.

Therefore, that Article 90 also applies to the assessment of the amount of autonomous taxation, which is appraised by the taxpayer or by the Tax Administration, following the presentation or non-presentation of declarations, there being, with effect in the year 2014, no other provision that provides for different terms for its assessment.

Thus, in the year 2014, the differences between the determination of the amount resulting from autonomous taxation and that resulting from taxable profit are restricted to the determination of the taxable matter and the applicable rates, which are those provided for in Chapters III and IV of the CIRC for the IRC that has as its basis the taxable profit and in Article 88 of the CIRC for the IRC that has as its basis the taxable matter of autonomous taxation and the respective rates.

But the forms of assessment provided for in Chapter V of the same Code are of common application to autonomous taxation and to the remaining taxable matter of IRC.

However, the circumstance that a self-assessment of IRC, made pursuant to No. 1 of Article 90, may contain several partial calculations, based on various rates applicable to certain taxable matters, does not imply that there is more than one assessment, as results from the very terms of that rule when referring to "assessment," in the singular, in all cases in which it is "made by the taxpayer in the declarations referred to in Articles 120 and 122," having "as its basis the taxable matter contained in them" (whether that determined on the basis of the rules of Articles 17 et seq. or that determined on the basis of the various situations provided for in Article 88).

Indeed, it is not only the assessments provided for in Article 88 that may encompass several calculations of application of rates to certain taxable matters, as the same may occur in the situations provided for in Nos. 4 to 6 of Article 87.

In any event, whatever calculations are to be made, the self-assessment that the taxpayer or the Tax and Customs Authority must make pursuant to Articles 89, letter a), 90, No. 1, letters a), b) and c), and 120 or 122, is unitary, and it is on the basis of this that the total IRC is calculated, whatever the taxable matters relating to each of the types of taxation underlying it.

Indeed, if this Article 90 were not applicable to the assessment of the autonomous taxation provided for in the CIRC, we would have to conclude that there would be no rule that, in 2014, would provide for its assessment, which would lead to illegality, by violation of Article 103, No. 3, of the CRP, which requires that the assessment of taxes be made "pursuant to the law."

Refer also to the new rule of No. 21 added to Article 88 of the CIRC by Law No. 7-A/2016, of 30 March, regardless of whether or not it is qualifiable as truly interpretative, in no way alters this conclusion, as therein is established, with respect to the form of assessment of autonomous taxation, that it "is made pursuant to the terms provided for in Article 89 and is based on the values and rates