Summary
Full Decision
ARBITRAL DECISION
A…, with the TIN…, resident at …, no. … - …-… - ... (with the prior names of …, … …, no.…), hereby, under the terms of article 2.º, paragraph 1, subsection a) of Decree-Law no. 10/2011, of 20 January and articles 96.º et seq. of the Code of Tax Procedure and Process (CPPT), submits a request for constitution of an arbitral tribunal and arbitral decision against the said Personal Income Tax (IRS) assessment notice.
INTRODUCTION AND PRELIMINARY MATTERS
The additional IRS assessment impugned has its origin in the disregard shown by the Tax Administration to the personal and family situation declared by the Applicant as living in de facto union with B…, with the TIN …, as appears in his model 3 IRS declaration for the year 2009, timely submitted, which gave rise to assessment no. 2010…, issued on 02/07/2010, in the amount of € 3,881.20, paid on 30/09/2010, within the payment deadline of 39/09/2010.
This assessment was subject to correction by TA, ex officio, which gave rise to the additional IRS assessment for 2009, with no. 2013…, in the amount of € 14,037.11, issued on 12/11/2013, with payment deadline of 18/12/2013 and payment on that date.
The Applicant, not agreeing with the said additional assessment, filed a voluntary reclamation, under the terms of article 18.º, paragraph 3 and article 65.º of the General Tax Law (LGT) and article 9.º of the Code of Tax Procedure and Process (CPPT), which TA considered timely, given the terms of article 70.º, paragraph 1 of the CPPT, together with article 140.º, paragraph 1 of the Code of Personal Income Tax (CIRS).
The said voluntary reclamation request was dismissed by order of 25/11/2016, which was notified to the Applicant on the same date of 25/11/2016, via CTT, being informed that "could file a hierarchical appeal within 30 days, under the terms of article 66.º, paragraph 2 of the CPPT or challenge judicially within three months, under the terms provided for in article 102.º also of the CPPT, counted from the date on which notification was made under article 39.º, paragraph 10 of the CPPT".
The Applicant submitted to CAAD on 27/02/2017, the request for constitution of an arbitral tribunal and arbitral decision, now in question.
Thus, and considering the terms of article 10.º, paragraph 1, subsection a), together with the terms of article 102.º, paragraph 1, subsection e) of the CPPT, as well as the terms of article 39.º, paragraph 1 and article 38.º, paragraph 3 of the CPPT, the request for constitution of an arbitral tribunal and arbitral decision submitted on 27/02/2017 is timely.
De facto union.
The Respondent is the Tax Administration and Customs Authority (TA).
CAAD appointed on 10/03/2017, as arbitrator of the singular arbitral tribunal Dr. José Rodrigo de Castro, designation which he accepted on 12/03/2017.
The singular arbitral tribunal was constituted on 09/05/2017.
The parties are legitimate and properly represented, the case is proper and no dilatory exception was presented, nor were witnesses called.
TA timely presented its Response on 12/06/2017, for which it was notified on 10/5/2017.
The holding of the Meeting referred to in article 18.º of the RJAT was dispensed with, as there was no additional evidence to present and the parties were notified for pleadings, within the period of 10 days, successively, by order of the arbitral tribunal of 14/04/2017.
No pleadings were presented either by the Applicant or the Respondent, despite being properly notified thereof by CAAD.
The case is, therefore, in a position to be considered and decided, since the Tribunal was regularly constituted on 09/05/2017 and is competent, the arbitrator was designated by the Deontological Council of CAAD, in accordance with legal formalities, the matter to be considered is covered by the Binding Order of the Tax Administration and Customs Authority no. 112.º-A/2011, of 22 March, the parties are legitimate, no nullities were identified and the request for arbitral impugnation was timely submitted.
I – Report
The Applicant, now impugning party, with the TIN…, submitted his model 3 IRS declaration regarding income for the year 2009, on 28/05/2010, therein mentioning the marital status of de facto union with B…, with the TIN…, as well as two dependents with the TIN … and…, born of the common life of both, respectively on 05/07/1993 and 12/05/1997.
Based on the elements of the said IRS declaration, assessment was made and issued on 2/7/2010, IRS no. 2010…, with the amount payable of € 3,881.20, with payment deadline of 30/09/2010, IRS which was effectively paid on that date.
The Respondent, in the context of subsequent internal analysis of the declaration elements, detected a discrepancy against the elements existing in the TA computer system, concerning the requirements of de facto union with B…, which determined the necessity of its verification.
As a consequence of the alleged discrepancy, an ex officio declaration was prepared by the Local Tax Services of …, considering the Applicant in the marital status of single, resulting in the ex officio additional IRS assessment for the year 2009, with no. 2013…, in the amount of € 14,037.11, issued on 12/11/2013, with payment deadline of 18/12/2013 and payment on that date.
The Applicant, not agreeing with the said additional assessment, filed a voluntary reclamation, under the terms of article 18.º, paragraph 3 and article 65.º of the General Tax Law (LGT) and article 9.º of the Code of Tax Procedure and Process (CPPT), which TA considered timely, given the terms of article 70.º, paragraph 1 of the CPPT, together with article 140.º, paragraph 1 of the Code of Personal Income Tax (CIRS), but which it dismissed by order of 25/11/2016, which was notified to the Applicant on the same date of 25/11/2016, via CTT.
The grounds invoked by TA for dismissal of the Voluntary Reclamation were that, "regarding income for the year 2009, the taxpayers should have the same tax domicile, at least from 31 December 2007 (inclusive), which does not occur following consultation of the said SGRC".
Thus, absolute prevalence was given to the non-communication to TA of the tax address of both de facto partners, at least from 31 December 2007.
II - OF THE FACTS
We turn, therefore, to the relevant and controversial facts, which consist of knowing from which date the Applicant, A…, with the TIN…, resident at …, no. … - …-… - ... (with the prior names of …, …, no.…) has lived in de facto union with B…, with the TIN…, under the legally required terms, for the purposes of their joint taxation in IRS.
And, on the other hand, to know on which date or dates, each of the de facto partners notified their respective tax domicile to TA, as prescribed in article 19.º, paragraph 4 of the LGT.
The Respondent alleges that in the TA computer record the Applicant A… has as tax domicile …, no. … in ..., from a date which is not specified, an address which relates to the premises of a pharmacy of which the Applicant is the owner.
Furthermore, the Respondent states that only from 01/07/2010, the tax domicile of both, A… and B…, is the said …, no.…, in ..., the date on which B… changed her tax domicile from Av. …, no.…, …, …, to the premises of the said pharmacy, situated at …, no.…, in ....
From which it can be understood that, from prior years, not specified, but which would be between 1991 (according to B…) and 1994 (according to TA), the tax domicile of B… was allegedly …, no.…, …, …, in Lisbon, and which according to TA was what appeared there on 31/12/2009, without further details.
The Respondent attached a certification of tenor of the urban property situated at …, no.…, …-… in Lisbon, registered in the matrix of the parish of … under article…, only in 1994, issued by the Local Tax Services of Lisbon….
The Applicant, for his part, alleges that he has lived in de facto union with B…, since 1991, in the family residence, situated in …, …, …, …, in Lisbon, clarifying that this location of his residence was formerly designated as….
The Applicant attached to the application Doc. 4, relating to 3 bills from C…, one dated 20/10/2006, another relating to the period from 22/12/2009 to 12/8/2010 and a third relating to the period from 21/10/2010 to 22/12/2010, all addressed to the Applicant at Av. …, …, …-… Lisbon.
He also attached 5 bills from D…, S.A., whose dates refer, respectively, to the periods of 14/11/2006 to 14/12/2006, 13/11/2008 to 12/12/2008, 12/11/2009 to 14/12/2009, and another from 12/11/2010 to 14/12/2010, all also addressed to the Applicant at Av. …, …, …, ...-… Lisbon.
The Applicant also attached 5 Combined Statements from E…, of 29/12/2006, 31/12/2007, 31/12/2008, 31/12/2009 and 31/12/2010, in which the Applicant A…, …, …-… in Lisbon appears as holder of a bank account.
The Applicant attached the citizen cards of two children born of the union of A… with B…, F…, born on 05/07/1993 and G…, born on 12/05/1997, conf. doc. 3, without it being possible to ascertain from them the address of either their parents, A… and B…, or themselves (children).
The Applicant further alleges that since the 2003 tax year he has been filing model 3 IRS declarations jointly, as de facto partners with B…, which were always properly treated fiscally, which the Respondent confirms, adding that regarding the year 2009 it was the Tax Services of … that considered the requirements for acceptance of de facto union to be unmet and, hence, the opening of a procedure to analyze the discrepancy.
III – Proved Facts
All facts described are duly proved, with the exception of what follows.
IV – Unproved Facts
It is not proved, from when, B… notified TA of her tax domicile as being at Av. …, …, …, ... in Lisbon, formerly designated as …, but TA confirms that the tax domicile of A… which appeared in the computer system on 31/12/2009, was at the said Av. …, no.…, …, …, in Lisbon, but does not state from when.
On the other hand, B… further states that she had lived at this address since 1991 and TA counters with the registration of the property in 1994, but again fails to state from when she notified her tax address at Av. …, no.…, …, …, in Lisbon.
Also not stated by TA is what the tax domicile of B… was in the years 2003 to 2009, the period in which model 3 IRS declarations were submitted by the Applicant and B…, as de facto partners, assessed without objection, except regarding the one for 2009.
TA merely states that only as of 01/07/2010 both domiciles became coincident, because B… notified TA of her residence as being at …, no., in ..., to coincide with that notified by the Applicant A…, which, we must agree, is very little, due to the absence of reference to the prior records at TA.
Finally, TA also does not deny the fact that it was at the family residence, at Av. …, …, …, …, Lisbon (formerly…), that the children F…, in 1993 and G… in 1997, were born, fruit of that de facto union.
V – Of the Law
The legal question which needs to be resolved is whether, in the absence of notification to the Tax Administration of identical tax domicile of the Applicant A… and B…, in a period of more than 2 consecutive years prior to the date of the tax year in question, 2009, they can, nonetheless, be fiscally considered as living in de facto union and benefit, consequently, from the taxation regime applicable to married taxpayers not judicially separated from persons and property, provided for in article 14.º of the IRS Code (CIRS).
The TA contends that they cannot, citing the various applicable legal norms, on one hand and, on the other, that the question under analysis is based on a norm of personal incidence - that of article 14.º of the CIRC - which contains no legal presumption, thus considered in light of article 349.º of the Civil Code (CC).
Furthermore, it argues that the fact that TA accepted model 3 IRS declarations as de facto partners from 2003 to 2009, without any objections, does not mean that, at the moment it detected that the legal requirements for joint taxation were not met, it must consider that option as valid - citing for this purpose the STA Decision of 14/3/2006 - No. 509/05.
The Applicant, on the other hand, understands that the norm of article 14.º, paragraph 2 of the CIRS cannot be interpreted "as imposing an absolute obligation, upon which everything depends, without permitting the interested party to prove the correctness and adequacy to law of their tax situation".
And he refers to the Jurisprudence of Tax Courts, citing the TCA South Decision of 7/4/2011, No. 04550/11, which deals with a situation identical to that of the Applicant, and also referring to the arbitral decision rendered in case no. 497/2014-T, relating to the 2008 tax year, favorable to the Applicant therein.
The Applicant even argues that "given the norm contained in article 19.º, paragraph 8 of the aforementioned LGT, TA itself could and should, based on the elements it had (which were many), have corrected the tax domicile of the impugning party, or warned him for this purpose, during the long period of 7 years in which he presented himself to it always in the same manner", ...bearing in mind "the principle of cooperation enshrined in article 59.º of the LGT...".
Let us then examine the various legal provisions which govern the problem of de facto union and, subsequently, the most relevant jurisprudence already established:
a) - First, we cite the Constitutional norms contained in articles 26.º, paragraph 1 and 36.º, paragraphs 1 and 4, namely:
"Article 26.º
(Other Personal Rights)
1. Everyone is recognized the rights to personal identity, development of personality, civil capacity, citizenship, good name and reputation, image, speech, privacy of private and family life and legal protection against any forms of discrimination".
...
Article 36.º
(Family, Marriage and Filiation)
1. Everyone has the right to establish a family and to marry in conditions of full equality.
...
b) - Subsequently Law no. 6/2001, of 11 May, which provides, in essence, the following:
"Article 1.º
Scope of Application
1 - This law establishes the protection regime for persons living in common economy for more than 2 years.
2 - The provisions of this law do not prejudice the application of any legal or regulatory provision in force intended to protect legal situations of de facto union, nor of any other special legislation applicable.
3 - Cohabitation in de facto union does not constitute an impeditive fact to the application of this law.
Article 2.º
Common Economy
1 - Common economy is understood as the situation of persons living in communion of board and lodging for more than two years and have established a life in common of mutual aid or sharing of resources.
2 - The provisions of this law are applicable to households constituted by two or more persons, provided that at least one of them is of legal age.
Article 3.º
Exceptions
The following prevent the production of legal effects arising from the application of this law:
a) The existence between persons of a contractual bond, particularly subletting and lodging, which implies the same residence or common lodging;
b) The obligation of cohabitation by performance of labor activity towards one of the persons with whom one lives in common economy;
c) Situations in which the common economy is related to the pursuit of transitory purposes;
d) One of the persons being subject to a situation of physical or psychological coercion or contrary to individual self-determination.
Article 4.º
Applicable Rights
1 - Persons in a situation of common economy are granted the following rights:
a) .....
b) ...
c)....
d) - Application of the personal income tax regime under the same conditions as married taxpayers not judicially separated from persons and property, under the terms provided for in article 7.º;
d) Protection of the common family residence, under the terms of this law;
e)....
2 - ..."
c) - Following the provisions of Law no. 7/2001, also of 11 May:
"Article 1.º
Object
1 - This law adopts protection measures for de facto unions.
2 - De facto union is the legal situation of two persons who, regardless of sex, live in conditions analogous to those of spouses for more than two years.[2]"
Article 2.º
Exceptions
The following prevent the attribution of rights or benefits, during life or upon death, based on de facto union.
a) Age under 18 years at the date of recognition of de facto union;
b) Obvious dementia, even with lucid intervals, and interdiction or incapacity due to psychic anomaly, except if dementia manifests itself or the anomaly occurs at a moment subsequent to the beginning of de facto union;
c) Marriage not dissolved, except if judicial separation of persons and property has been decreed;
d) Kinship in the direct line or in the 2nd degree of the collateral line or affinity in the direct line;
e) Prior conviction of one of the persons as author or accomplice by willful homicide even if not consummated against the spouse of the other.
Article 2.º-A
Proof of De Facto Union
1 - In the absence of legal or regulatory provision requiring specific documentary proof, de facto union is proved by any legally admissible means.[3]
2 - In the case of proving de facto union by declaration issued by the competent parish council, the document must be accompanied by a declaration from both members of the de facto union, under oath, that they have lived in de facto union for more than two years, and certified copies of the full birth certificate of each of them.
3 - In case the de facto union has been dissolved by the will of one or both members, the provisions of the preceding paragraph apply, with the necessary adaptations, the declaration under oath being required to state when the de facto union ceased; if one of the members of the dissolved union is not willing to subscribe to the joint declaration of the past existence of de facto union, the interested party must present a singular declaration.
4-...
5 - False declarations are punished under the terms of criminal law.
Article 3.º
Effects
Persons living in de facto union under the conditions provided for in this law have the right to:
a) Protection of the family residence, under the terms of this law;
b) Benefit from the legal regime applicable to married persons in matters of holidays, public holidays, absences, leaves and preference in placement of Public Administration workers;
c) Benefit from legal regime equivalent to that applicable to married persons bound by employment contract, in matters of holidays, public holidays, absences and leaves;
d) Application of the personal income tax regime under the same conditions applicable to married taxpayers not judicially separated from persons and property;[4]
e) ...
f) ...
g)... ...
2 - No provision of this law prejudices the application of any other legal or regulatory provision in force intended to protect de facto unions or situations of common economy.
3 - Without prejudice to the provisions of article 7.º of this law, and article 6.º, paragraph 1 of Law no. 32/2006, of 26 July, any provision in force intended to grant rights or benefits based on de facto union is applicable regardless of the sex of its members."
Beyond this framing part of the regime in question, its respective requirements and rights which assist de facto partners, finally see the respective applicable tax norms:
d) - Let us begin with article 19.º of the LGT,[5] which although it is not a law of enhanced value, is nonetheless a law framing the Portuguese tax system:
"Art.º 19.º
Tax Domicile
1 - The tax domicile of the taxpayer is, unless otherwise provided:
a) For natural persons, the place of habitual residence;
b) For legal persons, the place of their seat or effective management or, in the absence of these, of their stable establishment in Portugal.
2 - It is mandatory, under the terms of the law, to notify the tax domicile of the taxpayer to the tax administration.[6]
3 - Change of domicile is ineffective until it is notified to the tax administration.[7]
4 - Taxpayers resident abroad, as well as those who, although resident in national territory, are absent from it for a period exceeding six months, as well as legal persons and other legally assimilated entities that cease activity, must, for tax purposes, designate a representative with residence in national territory.
5- Independently of any applicable sanctions, the exercise of the rights of taxpayers therein referred to before the tax administration, including those of reclamation, appeal or impugnation, depends on the designation of a representative under the terms of the preceding number.
7 - The tax administration may rectify ex officio the tax domicile of taxpayers if this results from the elements at its disposal.[8]"
e) - Let us move to article 13.º of the IRS Code (CIRS):
"Article 13.º
Taxpayer
1 - Persons subject to IRS are natural persons who reside in Portuguese territory and those who, not residing therein, obtain income here.
2 - Where there is a family household, the tax is owed by the aggregate of the income of the persons who constitute it, considering as taxpayers those to whom its direction falls.
...
7 - ..."
f) - And also to article 14.º also of the CIRS:
"Article 14.º
De Facto Unions
1 - Persons living in de facto union who meet the prerequisites contained in the respective law, may opt for the taxation regime of married taxpayers not judicially separated from persons and property.[9]
2 - The application of the regime referred to in the preceding number depends on the identity of tax domicile of the taxpayers during the period required by law for verification of the prerequisites of de facto union and during the taxation period, as well as the signature, by both, of the respective income declaration.[10]
3 - In the case of exercise of the option provided for in paragraph 1, the provisions of article 13.º, paragraph 2 apply, with both de facto partners being responsible for compliance with tax obligations."
From the set of legal provisions cited, the following conclusions can easily be drawn:
1 - That constitutionally the legitimate right to establish a family and to marry in conditions of full equality is recognized, as well as the right to good name and reputation, image, speech, privacy of private and family life and legal protection against any forms of discrimination.
2 - That by Law no. 7/2001, of 11 May, the protection regime for persons living in de facto union for more than 2 years is established, further stating that this law does not prejudice the application of any legal or regulatory provision in force intended to protect de facto union situations, nor of any other applicable special legislation, nor does it constitute an impeditive fact to the application of this law to de facto union cohabitation.
3 - That Law no. 7/2001 also establishes that two persons, regardless of sex, living in conditions analogous to those of spouses for more than two years, in the absence of legal or regulatory provision requiring specific documentary proof, de facto union is proved by any legally admissible means.[11] Moreover, it is regulated in this same law that persons living in de facto union under the conditions provided for in the law, that is, for more than 2 years, have the right, among others, to the application of the personal income tax regime under the same conditions applicable to married taxpayers not judicially separated from persons and property.
4 - Now it is important to proceed with the analysis of the tax norms also cited, namely article 19.º of the LGT and article 14.º of the CIRS, with the wording in force on the date of the 2009 tax year in question and to combine them with those previously referred to.
5 - Thus, it is clear that:
a) - That by Law no. 7/2001, of 11 May, the protection regime for persons living in de facto union for more than 2 years is established, further stating that this law does not prejudice the application of any legal or regulatory provision in force intended to protect de facto union situations, nor of any other applicable special legislation, nor does it constitute an impeditive fact to the application of this law to de facto union cohabitation.
b) - That Law no. 7/2001 also establishes that two persons, regardless of sex, living in conditions analogous to those of spouses for more than two years, in the absence of legal or regulatory provision requiring specific documentary proof, de facto union is proved by any legally admissible means.[12] Moreover, it is regulated in this same law that persons living in de facto union under the conditions provided for in the law, that is, for more than 2 years, have the right, among others, to the application of the personal income tax regime under the same conditions applicable to married taxpayers not judicially separated from persons and property.
6 - Now it is important to proceed with the analysis of the norms cited and to combine them with the tax norms also cited, namely article 19.º of the LGT and article 14.º of the CIRS, with the wording in force on the date of the 2009 tax year in question.
7 - Thus, it is established that:
a) - Independently of the constitutionally enshrined right as regards the legitimate right to establish a family and marriage in full equality and of legal protection against any forms of discrimination, under Law nos. 6 and 7/2001, of 11 May, the de facto union regime is defined and the requirements for its consideration as such are established, its protection and the fiscal rights, among others, which they are granted under conditions identical to married taxpayers not judicially separated from persons and property.
b) - It is article 19.º of the LGT which expressly states, in its paragraphs 2, 3 and 7, in the wording at the relevant date of 2009, that:
- It is mandatory, under the terms of the law, to notify the tax domicile of the taxpayer to the tax administration.
- Change of domicile is ineffective until it is notified to the tax administration.
- The tax administration may rectify ex officio the tax domicile of taxpayers if this results from the elements at its disposal.
c) - It is article 14.º of the CIRS which requires proof of the requirement of living together in de facto union for more than 2 years,[13] that is, of the same identity of tax domicile of both taxpayers (that is, of both de facto partners), and in the absence of legal or regulatory provision requiring specific documentary proof, de facto union is proved by any legally admissible means.[14]
Furthermore, it is required in paragraph 2 of this same provision that the application of the de facto union regime depends on the identity of tax domicile of the taxpayers during the period required by law for verification of the prerequisites of de facto union and during the taxation period, as well as the signature, by both, of the respective income declaration.
8 - Now, what occurred, then, regarding the Applicant and B…, in the 2009 tax year (and prior years from 2003):
1st - That the Applicant A…, taxpayer A in the model 3 IRS declarations, presented between 2003 and 2009, jointly with B…, had associated with his taxpayer identification number the address of a commercial establishment where he carries out his professional activity, situated at …, no.…, in …, municipality of ....
2nd - That B…, taxpayer B in the said declarations, had her tax domicile declared at the (alleged) common family address situated at …, …, …, …, in Lisbon - formerly designated by …-, at least until 1/7/2010.
3rd - That from the alleged union of Applicant A… with B…, two children were born, according to their respective citizen cards, F… and G…, respectively, on 5/7/1993 and 12/5/1997.
4th - That according to documents attached to the file, among others, the bills from C…, from 2006 to 2010, these are addressed to Applicant A… at … -…, …- …, …-… Lisbon, those of D…, in identical circumstances and Combined Statements from E…, from 2006 to 2010, all addressed to Applicant A… at …, …, …-… Lisbon, currently Av. …, no.…, …, …, in Lisbon.
9 - Which leads to the conclusion, then, that:
a) - The habitual residence, that is to say, the domicile of Applicant A… was, in fact, at least from 2006, (conf. documents from C… and others attached), at …- formerly … - …-…, …-… Lisbon, although this was not the tax domicile notified to TA, in light of article 19.º, paragraph 2 of the LGT.
b) - But that Av. … was the tax domicile which his partner B… and mother of the children of both communicated to the tax services and made appear, implicitly, given her TIN … appearing in the IRS declarations for the years 2003 to 2009.
c) - The Services of the Tax Administration became aware of this discrepancy of tax domiciles from, at least, 2003 to 2009, the period of joint submission of model 3 IRS declarations.
d) - These same tax services did not use the power granted by article 19.º, paragraph 7 of the LGT to proceed with clarification and adjustments and any corrections that needed to be made, that is, they did not promote the clarification of what would be, in fact, the tax domicile of the de facto partners A… and B… - either at … or at …, no. … in ..., the place where the pharmacy establishment of which A… was manager was situated.
It is thus proved that in fact the habitual residence and, therefore, the domicile of the de facto partners A… and B… was, at least from 2003 …, - formerly … - …- …, …-… Lisbon, although the residence notified to TA by A… was the place where he carries out his activity, at … of …, no.…, ....
Quid Juris?
- Is the norm of article 14.º, paragraph 2 of the CIRS (indication of a common address and the joint signature of the income declaration - and this latter legal requirement was met between 2003 and 2009), as a norm of incidence, which contains no legal presumption, an absolute value norm and, as such, does not admit any means of proof that exceeds the tax obligation contained in article 19.º, paragraph 2 of the LGT, that is, to notify the tax domicile?
- This is the question which needs to be resolved.
And it is here that Jurisprudence can help us clarify which is the best understanding of the legal norms in question, proved as it is that the Applicant lived in union and communion of roof, board and lodging with B…, at least from 2003 to 2009, the date on which both began to jointly submit model 3 IRS declarations, declaring themselves to be de facto partners.
Reference is made, for all purposes, to the STA Decision, No. 0761/15, of 16/11/2016, as it is from a Superior Instance and as it is very recent.
This is a situation of non-compliance with article 14.º, paragraph 2 of the CIRS, in the wording in force at the date of the facts and which the Board of this Superior Court understood that such did not prevent the interested parties from opting for the regime of joint taxation of taxpayers united by marriage...provided that the daily living in a situation analogous to that of spouses for more than 2 years was proved (therefore, at least, two years and one day), conf. article 1.º, paragraph 2 of Law no. 7/2001 and provided that none of the concrete situations referred to in article 2.º occur - which was not alleged).
By the Superior and Venerable Court it was then decided, summarily, the following in the Learned Decision:
"...Both TA and the appealed decision understand that the identity of tax domicile is a further requirement of substance for the appealing/impugning parties to be able to benefit from the regime contained in article 3.º, subsection d) of Law no. 7/2001, of 11 May.
From the outset it can be stated with certainty that such an interpretation of the legal precepts directly collides with the principles which preside over the recognition of de facto unions and their assimilation to formal unions, to marriage.
The life in common between two persons and the constitution of a family, independently of formalization before an official public officer, finds Constitutional protection in articles 26.º, paragraph 1 and 36.º, paragraphs 1 and 4, as well as in various precepts of the Civil Code and separate legislation, and is imposed as an expression of the individuality and freedom of each individual, as well as free affirmation of the personality of each.
The regulation of the protection of de facto union between two persons found express basis, more recently, in the said Law no. 7/2001, of 11 May.
There two requirements of substance were established for it to be recognized and protected, one positive, the daily living in a situation analogous to that of spouses for more than 2 years (therefore, at least, two years and one day), conf. article 1.º, paragraph 2, and another negative, that none of the concrete situations referred to in article 2.º occur (in the case none of these hypotheses are alleged).
Therefore, for the legal effects of that life in common, during those two years, to be recognized, it must correspond to what the legislator requires of persons who celebrate marriage, conf. articles 1671.º et seq. of the CC, among which is the duty to establish a family residence, conf. article 1673.º of the Civil Code.
A family residence which is legally the domicile of the children, conf. article 85.º of the CC, falling to the parents the choice of the place where it will be established, conf. article 82.º of the same CC.
And, therefore, the choice of this residence, of a place to live, of a concrete address, where the couple will receive their correspondence, where they will receive their friends and where TA will send the correspondence intended for family members, conf. article 19.º of the LGT.
Therefore, the choice of a concrete address where the taxpayers, married or in de facto union, live together their daily life, has implications of various kinds, particularly as regards postal contacts with TA. The indication of this concrete address to TA is mandatory under the terms of that legal precept and the failure to indicate it results in penalties and negative consequences for taxpayers.
But what is certain is that the recognition of de facto union, and its assimilation for tax purposes to formal marriage, depends solely on the two requirements previously stated, as moreover results from paragraph 1 of article 14.º of the CIRS.
The obligations resulting from articles 19.º of the LGT and 14.º, paragraph 2 of the CIRS, for taxpayers in de facto union can only be viewed as formal requirements which, however, do not prevent the option for the joint taxation regime, since this depends on other substantive requirements.
Indeed, as the legislator assimilates the tax situation of de facto partners to married persons, for income taxation purposes, the reason is not seen why the non-compliance with certain formal obligations in the first case should lead to an aggravated penalty, prevention of the option for a certain taxation regime, and in the second case has much less serious consequences, which do not imply exclusion from the taxation regime proper to married persons. If one were to consider, as the appealed decision did, and likewise TA, we would be in manifest violation of the provisions of articles 103.º and 104.º of the CRP, by offense to the principles of legality, equality and proportionality.
Thus, what must be determinant for de facto partners to be able, if they wish, to benefit from the taxation regime of married persons is solely the compliance with the legally provided requirements of Law no. 7/2001.
The exigencies contained in article 14.º, paragraph 2 of the CIRS, indication of a common address and the joint signature of the income declaration, can only be viewed as formal requirements which facilitate proof before TA of the said de facto union and, in case the interested parties do not comply with such exigencies, it is incumbent upon them to prove, by any means, that they can effectively benefit from the regime proper to de facto unions. As well as they incur the penalties and legal burdens prescribed by the non-updating, with TA, of their personal and family situation.
And thus, the non-compliance with such formal obligations cannot be sanctioned with sanctions proper to the non-verification of substantive requirements.
We can, thus, conclude that it was well decided in the challenged sentence when it annuls the tax acts which were impugned."
From the present and Learned Decision, it is extracted with full clarity that it is in Law 7/2001, of 11 May, that two requirements of substance are established for the recognition of de facto union, namely that of daily living in a situation analogous to that of spouses for more than two years, conf. article 1.º, paragraph 2 and that of the non-occurrence of any one of the concrete circumstances referred to in article 2.º, both of the same Law 7/2001, not having been brought to the file the verification of any one of them.
And further it is concluded from the same Decision that the obligations resulting from articles 19.º of the LGT and 14.º, paragraph 2 of the CIRS, namely that of notification to TA by both de facto partners, in this case, Applicant A… and B…, of the same tax address, are regarded as formal requirements which do not prevent the option of the joint taxation regime, since this option depends on the substantive requirements previously referred to and not on the formal obligations.
And the substantive requirements previously referred to result from the proof made in the file that the place of daily life in common of Applicant A… and B… was at Av. …, no. …, …, …, in Lisbon, at least from 2003 to 2009.
VI - CONCLUSIONS
Given, thus, the verification of the de facto union prerequisites already previously referred to in the file, which prove the living in common between A… and B…, at least from 2003 to 2009, this Tribunal understands that the means of proof presented are legally more relevant than the formal - and not substantive - question of the non-notification to TA of the identity of tax domiciles, which has only as a consequence a tax penalty.
This Tribunal, following the decided and profusely and legally grounded by the Venerable Supreme Administrative Court in the Learned Decision partially transcribed, understands, therefore, to take an identical decision, which grants the right to Applicant A… and B… to be taxed in IRS, at least from 2003 to 2009, by the taxation regime of married taxpayers not judicially separated from persons and property, by option, as they effectively did.
And, consequently, this Tribunal understands it should consider as correct the 1st IRS assessment for the year 2009, no. 2010…, in the amount of € 3,881.20 and declare the ex officio and, therefore, corrective assessment of IRS for the same year 2009, no. 2013…, in the amount payable of € 14,037.11, affected by illegality, and should therefore be annulled.
This Tribunal does not wish to fail to express its understanding that it is not even relevant to the file that B… changed her tax domicile to …, no.…, in ..., on 01/07/2010, on the one hand because it is a change effected in 2010, on a date subsequent to the taxation period under analysis and, on the other, because it is also understood by this Tribunal that B… thus proceeded as a way to overcome TA's understanding regarding the gap in communications of the tax domiciles of both and, consequently, to avoid further ex officio assessments and further tax litigation. It shall fall to TA to ascertain whether the formal notification of the change of address effected in 2010 to …, no. … in ..., coincides with the factual reality.
VII - OF COMPENSATORY INTEREST
Because the Tribunal's conclusions are in the sense of the illegality of the ex officio assessment in question of IRS for 2009, whose additionally assessed tax was comprovedly paid on 18/12/2013, this Tribunal understands to take the following:
VIII - DECISION
a) To recognize the illegality of the ex officio additional IRS assessment for 2009 no. 2013…, in the amount of € 14,037.11 (fourteen thousand, thirty-seven euros and eleven cents), for the reasons expressed;
b) To determine the annulment of the said assessment, duly paid on 18/12/2013 and, consequently, its restitution of the value of IRS improperly paid and any accrued amount;
c) To further condemn the Respondent, Tax Administration and Customs Authority, to payment of compensatory interest to be calculated on the IRS improperly paid, under the terms of article 43.º of the General Tax Law.
IX – Of the value of the case
The value of the case is fixed at € 14,037.11, as results from the file and the attached documents, under the terms provided in articles 305.º and 306.º of the CPC, 97.º-A, paragraph 1, subsection a) of the CPPT, applicable ex vi article 29.º, paragraph 1, subsection a) of the RJAT and article no. 3.º, paragraph 2 of the Regulation of Costs in Tax Arbitration Proceedings.
X – Of costs
Under the terms of articles 12.º, paragraph 2 and 22.º, paragraph 4, of the RJAT and Table I of the Regulation of Costs in Tax Arbitration Proceedings, the costs payable entirely by the Respondent, are those owing under the terms provided in paragraph 1 of article 4.º of the said Regulation.
Notify the Parties.
Lisbon, 10 July 2017.
The Arbitrator,
(José Rodrigo de Castro)
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