CAAD Case 170/2018-T: IRC Depreciations, Proof Requirements & Document Retention Period

ARBITRAL DECISION (see full version in PDF)

The arbitrators Counselor Jorge Lopes de Sousa (arbitrator-president), Dr. Henrique Nogueira Nunes and Dr. Armindo Fernandes Costa (arbitrator-members) appointed by the Deontological Board of the Center for Administrative Arbitration to constitute the Arbitral Court, constituted on 14-06-2018, hereby agree as follows:

1. Report

A..., S.A., legal entity no. ..., with registered office at..., ...-... ... (hereinafter "Claimant" or "A..."), in accordance with the provisions of articles 2º, no. 1, letter a), 6º, letter a) and 10º, no. 1, of Decree-Law no. 10/2011, of 20 January (hereinafter "RJAT"), requested the constitution of an Arbitral Court, with a view to annulling the additional corporate income tax assessment no. 2017..., of 23 November 2017, concerning the financial year 2013 in the amount of € 11,617.61.

The Claimant indicated the value of the case as € 216,474.76, stating that it is the "result of the corrections contested by the standard corporate income tax rate and municipal surtax in the financial year 2013".

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

The Respondent is the TAX AUTHORITY AND CUSTOMS.

The request for constitution of the arbitral court was accepted by the President of CAAD and automatically notified to the Tax Authority and Customs on 05-04-2018.

On 24-04-2018, the Claimant submitted documents that it had protested to submit with the request for arbitral decision.

On 03-05-2018, the Tax Authority and Customs informed that "it is the understanding of the Respondent's services that the additional corporate income tax assessment in dispute should be, and will be, partially revoked, concerning the financial year 2013, in the part in which it is recognized as valid for items 493, 496, 521, 522, 524 and 534".

The Tax Authority and Customs also raised the question of the value of the case, arguing that the request for arbitral decision should be considered by a single arbitrator tribunal.

On 15-05-2018, the Claimant stated that the announced partial revocation decision suffers from lack of reasoning, and should therefore be annulled.

On 23-05-2018, pursuant to the provisions of letter a) of no. 2 of article 6º and letter b) of no. 1 of article 11º of the RJAT, in the wording introduced by article 228º of Law no. 66-B/2012, of 31 December, the Deontological Board appointed as arbitrators of the collective arbitral court the signatories, who communicated acceptance of the charge within the applicable period.

On that same date, the parties were duly notified of this appointment and did not manifest their will to refuse the appointment of the arbitrators, in accordance with the combined provisions of article 11º no. 1 letters a) and b) of the RJAT and articles 6º and 7º of the Deontological Code.

Thus, in compliance with the provisions of letter c) of no. 1 of article 11º of the RJAT, in the wording introduced by article 228º of Law no. 66-B/2012, of 31 December, the collective arbitral court was constituted on 14-06-2018.

On this same date, the Tax Authority and Customs was notified to respond, which it did on 03-09-2018, arguing that the claim was unfounded.

By order of 04-09-2018, the meeting provided for in article 18º 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 period for submissions by the Claimant beginning upon notification of the order and the period for submissions by the Tax Authority beginning upon notification of the Claimant's submissions.

Only the Claimant submitted submissions.

The question of the value of the case was decided by order of 09-10-2018, with the value being fixed at € 773,224.99, which justifies the intervention of a collective arbitral court.

The arbitral court was regularly constituted, in accordance with the provisions of articles 2º, no. 1, letter a), and 10º, 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 4º and 10º, no. 2, of the same decree-law and article 1º of Order no. 112-A/2011, of 22 March).

The case does not suffer from nullities.

2. Factual Matter

2.1. Proven Facts

• The Claimant carries out its commercial activity within the scope of the industry of wood fibers, particleboards and veneers, and their commercialization;

• The company has accounting organized by legal requirement, computerized and located at its registered office;

• An inspection action was carried out on the Claimant, under Service Order OI2016..., conducted on 23-11-2016, of general scope, covering the period of 2013;

• In that inspection, three corrections to the taxable income for corporate income tax purposes were made, among others:

  • a correction with various grounds relating to depreciation, in the amount of € 249,873.86;

  • another correction concerning a subsidy arising from a non-reimbursable investment project, entered into between B... and the firm C... SA, in the amount of € 587,050.00, with the amount at issue in the present case being € 555,576.06;

  • the third correction relates to the accounting of € 15,222.20 as bad debts;

• In the Tax Inspection Report contained in document no. 3 attached with the request for arbitral decision, whose contents are deemed to be reproduced, it is stated, among other things, the following:

III. Description of the facts and grounds of purely arithmetic corrections to the taxable income

In possession of the SAF-T files of the accounting and invoicing for the year 2013, having initiated the inspection acts, several accounting and tax irregularities were detected which will be developed in the following points:

III.1. Corrections in the context of Corporate Income Tax

III.1.1. Depreciation

Through the postal notification referred to in the previous chapter, in its point 10, we requested the supporting documents for the acquisition/production of tangible fixed assets, with date of use up to 31-12-2012, in depreciation in the year 2013, contained in the reinstatement schedules models 32 and 33, taking into account that in accordance with article 21 of Regulatory Decree 25/2009:

"3 - Accounting organized in accordance with article 123 of the Corporate Income Tax Code and article 117 of the Personal Income Tax Code must allow the control of the values contained in the schedules referred to in no. 1, in compliance with the provisions of this regulatory decree and other applicable legislation."

With respect to tangible fixed assets with date of use after 01-01-2013, in point 11 of the aforementioned notification, we requested "the identification of the journal entry and the number of the internal document for viewing in the folders located at the registered office".

Following an extension of the deadline for responding to the aforementioned notification, the taxpayer submitted on 26-09-2017, part of the documents requested regarding point 10 of the notification, via digital support via Wetransfer, which after analysis it is important to note the following:

1- The corresponding ones are missing from the table below, either by "lack of historical record" or by "document not found", as can be concluded from the analysis of columns 7 and 10, whose data were completed and reported by the taxpayer:

(...)

2- On the other hand, the taxpayer used internal documents entitled "MAC (computer-assisted maintenance) - Entries to be made regarding the month of...", to justify the values that make up the table below:

(...)

3- With respect to the remaining items, the taxpayer presented purchase invoices that prove the expenses incurred, via depreciation, in 2013.

In view of the data provided by the taxpayer following the notification made, contained in the above tables, the following accounting and tax analysis is necessary:

In accordance with letter g) of no. 1 of article 23 of the Corporate Income Tax Code: "Expenses are considered to be those that are demonstrably indispensable for the realization of income subject to tax or for the maintenance of the income-generating source, notably Depreciation and amortization".

There are thus two requirements for the expenses of the companies to be deductible from a tax perspective: that they be proven by documents issued in accordance with legal requirements and that they be indispensable for the realization of the income.

In the case at hand, only the verification of the formal requirements required for the proof of expenses is at issue, and whose violation implies non-deductibility from the income.

Internal documents are prepared within the company, normally for exclusive internal use (leave sheets and entry notes, among others), however external documents are those that come from or are intended for the outside, such as invoices, receipts and debit notes, and it is these that normally fall within the concept of "supporting documents", which accompany any and all expenses.

Accounting is essentially based on the respective supporting documents, and as for those that should be, and the external origin that gives them a character that can be designated as a presumption of authenticity.

In short, for all that has been stated, in the case under analysis, the internal documents titled "MAC" accounted for by the taxpayer, because they are not external documents nor do they identify the main characteristics of the operations performed, namely, the object of the operation, the purchaser, the supplier and the price, are considered incapable of serving as suitable documentary support to prove the respective expenses, for the purposes of the provisions of articles 23, no. 1, letter g) of the Corporate Income Tax Code, a provision that requires for the purpose of determining taxable profit that expenses be duly documented.

In the context of Corporate Income Tax, formal rigor identical to that imposed on invoices or equivalent documents is not required for the substantiation of expenses by way of documentation for the deduction by the taxpayer of Value Added Tax mentioned therein (articles 19 no. 2 letter a) and 36 no. 5 Value Added Tax Code).

Nevertheless, the depreciation under analysis contained in maps 32 and 33 cannot be considered properly proven expenses, associated with the items mentioned in points 1 and 2, both without support from invoices or equivalent documents:

• Point 1 - either by "lack of historical record" or by "document not found",

• Point 2 - supported by mere internal documents (MAC)

Thus, in the tables below the correction to the depreciation recorded in the year 2013 will be indicated.

• Goods mentioned in point 1:

Table X: Revalued and depreciated goods in 2013 - Model Schedule 33.18

(...)

In accordance with letter a) of no. 1 of article 7 of Decree-Law 31/98, "The following are not deductible for tax purposes, the product of 0.4 by the amount of the increase in annual reinstatements resulting from the revaluation...",

Which is also determined by Decree-Regulation 25/2009, in its article 15.

The taxpayer in the year 2013 added the amount of €22,552.00 (line 21, column 9) to field 720 of Q07 of the tax return Form 22, and therefore, in order to determine the correction to the depreciation of revalued goods in the amount of €148,639.80 (line 22, column 9), it was necessary to subtract it from the amount of €171,192.40 (Line 19, column 8).

B. Goods mentioned in points 1 and 2:

Table XI: Goods without supporting document (point 1) and goods supported by internal document (point 2) - Model Schedule 32

(...)

C. Goods mentioned in point 2:

Table XII: Part of the value is supported by internal document - Model Schedule 32

(...)

D. Non-accepted depreciation - acquisitions in 2013

From the analysis of schedule 32 of the year 2013, we verified several items with date of use in 2013, with depreciation in the period above the tax limit, as demonstrated in the table below in column 8.

The total amount of €3,787.28 (line 7, column B of the above table), corresponding to the value of the above-mentioned fixed asset items, indicated in column 15 of model schedule 32, is not accepted as an expense, pursuant to article 34, no. 1, in conjunction with article 23 of the Corporate Income Tax Code, however the taxpayer did not increase the respective amount in Field 719 (Impairment losses on non-current assets (art. 31-B) and depreciation and amortization (art. 34, no. 1), not accepted as expenses) of Q07 of the tax return Form 22 of the year 2013, and is thus missing.

E. Correction determined in Depreciation:

Table XIV:

(...)

III.1.2. Subsidies

In the analysis carried out on the taxpayer's accounting for the year 2013, in account 5750000 - Subsidies, we detected the opening credit balance in the amount of €555,576.06, with the account not having been moved in the year under analysis, whereby the credit balance carried forward to 2014.

We requested clarification from the taxpayer regarding the balance existing in the financial statements, namely that it present the contracts and accounting records associated with that subsidy, and it did not provide the requested information.

It only sent, via email of 2017-05-30, a copy of the "Annexes to the financial statements of 1998", referring to the information: "Situation prior to 1998, as can be observed on page 4 of the Notes to the attached accounts."

In the Print of the annex to the accounts of 1998, note 40, it is actually visible that the balance (in escudos) is prior to 1998:

(...)

Maintaining the Tax Authority's interest in obtaining the clarifications requested by email, a new attempt was made, through the postal notification of 2017-07-13, already referred to in the previous chapter, in its point 9, which we transcribe again:

9- With respect to the amount of €555,576.06 contained in the trial balance as a credit in account 575000 - Subsidies, we request the contracts that were the basis for the respective allocation and the accounting movement from the date of allocation until 31-12-2015. See the comments in the Financial Statements of the year 2013, regarding the accounting treatment of subsidies:

(...)

Now, on 2017-08-17, the company only sends via email, print relating to account 57500000, occurring on 2001-09-30, associated with document ..., in the amount of €555,576.06, as shown in the data contained in the table below.

It also reported in the body of the email: "In the attached we send the account statement where the accounting of 2001 of the amount of 555,576.06 euros presented as a credit in the Subsidies item can be observed."

Table XV:

(...)

Checking the company's responses, relating to account 57500000 - Subsidies, we notice some confusion, as in the first report it is stated that the subsidy was accounted for prior to 1998 and in the second response it is said that its accounting occurred in the year 2001.

However, the contracts that were the basis for the respective allocation were not provided, however the taxpayer in the notes to the Annual Balance Sheet and Financial Statements of 2013 makes reference to operating subsidies and investment subsidies, and from the analysis of the analytical trial balance no other accounts are visualized that relate to subsidies, in accordance with the description indicated in the chart of accounts.

The Corporate Income Tax Code, in letter j) of article 20 - Income, provides for the taxation of operating subsidies, as the taxpayer mentions in the notes to the Annual Balance Sheet transcribed.

If it is an investment subsidy, the taxpayer should account for income the value proportional to depreciation (%) calculated on the cost of acquisition or production, multiplied by the number of years already elapsed (allocation period and previous periods), in accordance with article 22 of the Corporate Income Tax Code, as also mentioned in the notes to the Annual Balance Sheet of 2013.

(...)

We therefore verify that, with respect to the amount of €555,576.06:

• The contracts that were the basis for the respective allocation were not presented;

• It entered the company's sphere in a period prior to 1998 (information certified by the notes to the accounts sent);

• It was accounted for as a credit in account 57500000 - Subsidies;

• There is reference in the notes to the Annual Balance Sheet of 2013 to operating subsidies and investment subsidies in depreciable assets;

• No other accounts are visualized in the analytical trial balance, of the year 2013, that relate to subsidies, in accordance with the description indicated in the chart of accounts;

• Until now no regularization has been made through income accounts relating either to operating subsidies or investment subsidies;

• It currently remains open in account 575000 - Subsidies.

Given the foregoing, considering that the balance existing as a credit in account 5750000 - Subsidies, has not been taxed for tax purposes up to now, the Tax Authority considers the amount of €555,576.06 a positive patrimonial variation, provided for in article 21 of the Corporate Income Tax Code, to be taxed in the year 2013, with reflection in the declared tax results.

(...)

III.1.4. Expenses and Extraordinary Losses - Bad Debts

From the analysis of the trial balance of the year 2013, we verified the accounting in account 69201000 - E.P.Ext. - Bad Debts from Customers, of the amount of 16,614.85, of which €15,222.20 concern a debt of customer D..., Lda, whose insolvency process no. ...11...TYLSB - became final on 10-10-2011.

We transcribe the accounting movement occurring in the year 2013, extracted from the SAF-T file of the accounting, by means of which the taxpayer transfers the balance from account 211031 - Customer current account to account 6920100 - E.P.Ext. - Bad Debts from Customers, when the insolvency process had become final in the year 2011:

(...)

Article 35 of the Corporate Income Tax Code determines the impairment losses that can be deducted, namely those related to credits resulting from normal activity which, at the end of the tax period, may be considered of doubtful collection and are shown as such in the accounting, while article 36 of the same code considers doubtful collection credits those in which the risk of uncollectibility is duly justified, that is, it establishes the requirements and limits for determining impairment losses in customer credits:

(...)

In turn, no. 1 of article 18 of the Corporate Income Tax Code, which establishes the periodization of taxable profit, provides that:

(...)

In accordance with the aforementioned legislation (article 35 and 36 of the Corporate Income Tax Code), we conclude that for the case in question, the law establishes as requirements for impairment losses in doubtful collection credits to be accepted for tax purposes, that the debtor has an insolvency process pending, which is verified through process no. .../11...TYLSB, initiated in the year 2011.

With the initiation of the insolvency process in 2011, a fact revealing the debtor's difficulties in settling its debt, considering what is described in conjunction with the aforementioned legislation, motivated the constitution of an impairment loss of 100% of the debt value already in the year 2011.

Therefore, considering the principle of economic periodization provided for in no. 1 of article 18 of the Corporate Income Tax Code, the amount of the impairment loss accounted for in 2013, in the amount of €15,222.20, relating to customer D... Lda, cannot be accepted for tax purposes as an expense in this period, since it met the conditions for its accounting in 2011.

(...)

VIII.2. Tax losses to be deducted

Finding the accounting of depreciation relating to tangible fixed assets not documented, it was proposed to open internal orders no. DI2017..., relating to the years 2008 and 2009, in order to proceed with the analysis of the declared tax losses.

Not having the Tax Authority knowledge of the reinstatement rates practiced in the years under analysis, we took as a basis those known in 2013, in accordance with schedules 32 and 33 presented under this service order, calculating the depreciation to be corrected contained in column 3 of table XXI.

Considering the change occurring in the year 2009 relating to ownership of at least 50% of the capital stock (no. 8 article 52 of the Corporate Income Tax Code), it prevents the application of no. 1 of the same article, relating to the losses generated in the year 2008.

IX. Right to a Hearing

(...)

Considering such allegations, it is appropriate to expose the following;

With respect to the issue of Depreciation and Amortization, in articles 4 through 44 of the right to a hearing, the taxpayer presents its argument based essentially on article 123 no. 4 of the Corporate Income Tax Code, arguing that it was only obliged to preserve the supporting documents and accounting records for 10 years, ceasing such obligation after the expiry of that period.

It further justifies the failure to present several supporting documents for the acquisition/production of tangible fixed assets, resulting from the change in the composition of shareholders and in the company's business life.

At no time in the right to a hearing did the taxpayer pronounce itself regarding the content of letter g) of no. 1 of article 23 of the Corporate Income Tax Code (mentioned in the draft report), establishing that "Expenses are considered to be those that are demonstrably indispensable for the realization of income subject to tax or for the maintenance of the income-generating source, notably Depreciation and amortization", basing, however, its arguments on article 123 of the Corporate Income Tax Code, not presenting or proving the acquisition production of various items that make up schedules 32 and 33, relating to 1990 and onwards, that is, more than 10 years have elapsed.

There are two requirements for the company's expenses to be deductible from a tax perspective: that they be proven by documents issued in accordance with legal requirements and that they be indispensable for the realization of the income, regardless of whether the acquisition/production of the assets occurred more than 10 years ago.

Note that article 23, which defines the conditions for acceptance of the expense in the period, does not contain any temporal element or reference to article 123, both of the Corporate Income Tax Code. Furthermore, article 123 is not limiting in the time period when using the expression "must maintain in the period of 10 years", it being up to the taxpayer to have knowledge of the expenses reported in the period and the documents that prove them, in order to comply with article 23 of the Corporate Income Tax Code so that they are accepted for tax purposes.

Not having the taxpayer presented the documentation requested regarding tangible fixed assets in depreciation in the year 2013, the depreciation under analysis contained in schedules 32 and 33 cannot be considered properly proven expenses, associated with the items mentioned in points 1 and 2, both without support from invoices or equivalent documents:

• Point 1 - either by "lack of historical record" or by "document not found",

• Point 2 - supported by mere internal documents (MAC)

With respect to the issue of Subsidies, between articles 45 through 68, the taxpayer presents its arguments in the right to a hearing, also attaching a copy of the contract for the allocation of direct financial participation for the execution of an industrial investment project, to which was assigned the number .../90/DRS (SINPEDIP).

It was a non-reimbursable investment project, whose global cost was estimated at 1,240,924 thousand escudos (€6,189,703), entered into between B... and the firm C... SA, within the scope of the Financial Incentives System of PEDIP, later amended the corporate name of the initial promoter of the contract to A... SA, as per the amendment to the contract attached.

The gross amount provided in the direct financial participation was to be 117,693 thousand escudos (€587,050), with 115,893 thousand escudos (€578,072) linked to innovation and modernization (studies and projects, buildings and installations, equipment and cargo transport material) and 1,800 thousand escudos (€8,978) for strengthening of technical personnel, as per the information contained in clause 4 of said contract.

Now, the amount accounted for as a credit in account 5750000 ~ Subsidies in the amount of €555,576.06, (amount close to the direct financial participation of €587,050) has carried forward in the financial statements through the year 2013 and beyond (verified in inspection action for the years 2014 and 2015).

Already in the Corporate Income Tax Code that came into force on 01-01-1989, was provided, in article 22, the taxation of investment subsidies:

• If the subsidies concerned elements of the fixed assets that were capable of reinstatement or amortization, and their useful life period was not more than 10 years, the fraction of the subsidy to be included annually in taxable profit would be proportional to the reinstatement or amortization quota effected.

• If the useful life period was more than 10 years, the fraction to be considered would be equal to 1/10 of the value of the received subsidy, for the period of 10 years.

Furthermore, the fact that in the Official Chart of Accounts, in 1989 and thereafter, establishes the accounting of investment subsidies in deferred income accounts (class 2) upon receipt thereof, (and not in reserve accounts (class 5), as occurred previously) transferring the value of these subsidies to income and gain accounts (class 7) as the respective reinstatements (class 6) were accounted for.

If the value of the financial participation of €587,050 had been accounted for in a reserve account (as indicated in the contract), the transfer to results, in compliance with article 22 of the Corporate Income Tax Code, would not have been verified in full, considering the balance that still remains in account 5750000 of €555,576.06,

Given that the taxpayer has not up to now identified the goods associated with the investment project, being unaware of whether they are still in depreciation, nor has it effected the accounting and tax treatment to which it was obliged, the Tax Authority maintains the position presented in draft report, in considering the amount of €555,576.06 a positive patrimonial variation, provided for in article 21 of the Corporate Income Tax Code, to be taxed in the year 2013, with reflection in the declared tax results.

(...)

IX.1. Conclusion:

Considering the submissions presented in the right to a hearing subscribed by the taxpayer, in the persons of E... and F..., and previously analyzed, we conclude that:

The correction proposals determined and notified on 2017-10-30, for proper purposes, in the context of the draft tax inspection report for the financial year 2013, are duly grounded in fact and in law, with the taxpayer not raising in the right to a hearing and in accordance with the provisions of no. 7 of article 60 of the General Tax Code, any new elements that would promote their alteration, whereby the same should be converted to definitive in their entirety.

(...)

• Following the inspection, the additional corporate income tax assessment no. 2017..., of 23 November 2017, concerning the financial year 2013, was issued in the amount of € 11,617.61 (document no. 1 attached with the request for arbitral decision, whose contents are deemed to be reproduced);

• On 03-05-2018, the Tax Authority and Customs, pending the present case, declared having partially revoked the assessment, in accordance with article 13 of the RJAT, stating as follows:

Esteemed Sir

President of CAAD

THE TAX AUTHORITY AND CUSTOMS Respondent in the above-referenced proceedings hereby submits and requests of Your Excellency the following:

It is the understanding of the Respondent's services that the additional corporate income tax assessment in dispute should be, and will be, partially revoked, concerning the financial year 2013, in the part in which it is recognized as valid for items 493, 496, 521, 522, 524 and 534, and considering the documents attached to the request, the amounts identified in column 10 of the table below:

(...)

Accordingly, the value of the economic benefit of the claim in this case should be, not that indicated by the Claimant (€ 216,474.76), but rather that which results from the application of the provisions of letter a) of no. 1 of article 97 of the Tax Procedure Code, by reference to article 3 of the Costs Regulation in Tax Arbitration Proceedings, that is, the value of the assessment.

Now, as results from the additional assessment that the Claimant attaches as Document no. 1, the value of the case should be € 10,203.15, now corrected, by force of the partial revocation of the act advocated, to the amount of € 9,491.44 [consistent with the change in the amount of depreciation, taxable profit became € 632,762.79 x 1.5% (municipal surtax rate) = € 9,491.44].

Value that should be considered for purposes of constitution of the arbitral court, in this case, single.

Consequently, the tax act should remain regarding the remainder, as it is considered that the Tax Authority interpreted and applied the corresponding legal rules taking into account the plausible legal solution, and the Claimant's allegations are manifestly insufficient to call into question the final conclusion contained in the tax inspection report.

(...)

• On 09-01-2018, the Claimant paid the liquidated amount (document no. 2 attached with the request for arbitral decision, whose contents are deemed to be reproduced);

• On 04-04-2018, the Claimant submitted the request for arbitral decision that gave rise to the present case.

2.2. Unproven Facts

It was not proven that the Tax Authority and Customs partially revoked the impugned assessment or the act correcting the taxable income.

In fact, the Tax Authority and Customs announced on 03-05-2018, that "it is the understanding of the Respondent's services that the additional corporate income tax assessment should be, and will be, partially revoked", but the fact is that it did not show that it had implemented this understanding that it said it had.

The facts were deemed proven based on the documents attached with the request for arbitral decision.

2.3. Justification for the establishment of the factual matter

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

There is no controversy regarding the factual matter.

3. Legal Matters

3.1. Object of the Case

As mentioned, the Tax Authority and Customs communicated that "it is the understanding of the Respondent's services that the additional corporate income tax assessment in dispute should be, and will be, partially revoked", but did not prove that it had implemented this announced revocation, namely by performing a substitute act, as required by no. 1 of article 13 of the RJAT.

On the other hand, the Claimant argued that the announced revocation should be annulled for lack of reasoning, which demonstrates that it does not accept it.

Furthermore, indeed, it can be inferred from the table presented by the Tax Authority and Customs with its request that it will accept as valid the documents presented regarding the items that are indicated in that table, but it is not clear to which goods the Tax Authority and Customs is referring when it says that it accepts as valid the documents "regarding items 493, 496, 521, 522, 524 and 534", as no item with that numbering is indicated in the following table.

In these terms, the original object of the case is maintained.

3.2. Issue of Depreciation

The Tax Authority and Customs made a correction in the amount of € 249,873.86 relating to depreciation.

The Tax Authority and Customs notified the Claimant to present supporting documents for the acquisition/production of tangible fixed assets, with date of use up to 31-12-2012, in depreciation in the year 2013, contained in the reinstatement schedules.

The Claimant presented documents, but the Tax Authority and Customs understood, in short, that "the internal documents titled 'MAC' accounted for by the taxpayer, because they are not external documents nor do they identify the main characteristics of the operations performed, namely, the object of the operation, the purchaser, the supplier and the price, are considered incapable of serving as suitable documentary support to prove the respective expenses, for the purposes of the provisions of article 23, no. 1, letter g) of the Corporate Income Tax Code, a provision that requires for the purpose of determining taxable profit that expenses be duly documented".

Following this, the Tax Authority and Customs made corrections, with different grounds:

i. Revalued goods, in the amount of € 148,639.80 (see Table X of the Tax Inspection Report);

ii. Goods without supporting document and with internal document, in the amount of € 18,691.59 (see Table XI of the Tax Inspection Report);

iii. Goods supported in part by internal document, in the amount of € 78,755.18 (see Table XII of the Tax Inspection Report); and

iv. Goods with date of use in 2013, in the amount of € 3,787.28 (see Table XIII of the Tax Inspection Report).

3.2.1. Revalued goods indicated in Table X of the Tax Inspection Report (correction in the amount of € 148,639.80)

The justification for this correction is based on the limit provided for in article 7, no. 1, letter a), of Decree-Law no. 31/98 and article 15, no. 2, letter a), of Regulatory Decree no. 25/2009.

Article 7, no. 1, letter a) of Decree-Law no. 31/98 provides that "the following costs or losses are not deductible for tax purposes (...) a) The product of 0.4 by the amount of the increase in annual reinstatements resulting from the revaluation".

Article 15, no. 2, letter a), of Regulatory Decree no. 25/2009 provides that "with respect to revaluations under fiscal character decrees, the following is to be observed: a) Not accepted as an expense, for tax purposes, is the product of 0.4 by the amount of the increase in depreciation resulting from these revaluations".

Thus, this correction is based on this legal limit and not on the lack of documents proving the expenses or the revaluations.

On the contrary, the application of these rules presupposes that the Tax Authority and Customs considered proven the expenses in question.

The Claimant does not challenge the justification for these corrections, namely by not suggesting that the goods considered by the Tax Authority and Customs were not revalued or that the product of 0.4 by the amount of the increase in depreciation resulting from these revaluations is not as determined by the Tax Authority and Customs.

Thus, it not being demonstrated that this correction suffers from the defect of non-consideration of documents that the Claimant attributes to the depreciation corrections nor of any other illegality, the request for arbitral decision is unfounded as to this correction in the amount of € 148,639.80.

3.2.2. Goods without supporting document - amount of € 18,691.59 (see Table XI of the Tax Inspection Report);

The table is as follows:

(...)

The Claimant argues that it was not obliged to hold documentation with antiquity exceeding 10 years, by virtue of the provisions of article 123, nos. 4 and 5, of the Corporate Income Tax Code, in line with article 40 of the Commercial Code.

The Claimant invokes in support of its thesis jurisprudence of the Supreme Administrative Court and the Central Administrative Court.

The period imposed on the taxpayer by article 123, no. 4, of the Corporate Income Tax Code (in the wording in force in 2013) for preservation of "books, accounting records and their supporting documents" is 10 years, a period which is applicable to computerized accounting, in accordance with no. 5 of the same article.

As the Supreme Administrative Court understood, after the 10-year period has elapsed, "not having the taxpayer presented any elements justifying the values considered as real estate acquisition values, alleging that he no longer possessed them 'due to the passage of time', the Tax Administration cannot conclude that the taxpayer did not prove the elements that make up the respective acquisition value" and that "not having the Tax Administration demonstrated the incorrectness of the establishment of the book value, it is not legitimate, once the period has elapsed (...) to require the taxpayer to prove the same" (decision of the Plenary of the Supreme Administrative Court of 08-11-2006, case no. 0244/06). ([1])

In line with this jurisprudence of the Plenary of the Supreme Administrative Court, it is recognized that the Claimant is correct as to these corrections in the amount of € 18,691.59, whereby the request for arbitral decision proceeds in this part.

3.2.3. Goods supported in part by internal document, in the amount of € 78,755.18 (Table XII of the Tax Inspection Report)

The Table is as follows:

(...)

As to this correction, one of the goods was acquired or produced more than 10 years ago (no. 2, with acquisition/production in 2003), whereby what was referred to in the previous point applies here.

As for the remaining goods, the Claimant presented documents nos. 5 to 11, and these are the items contained in the table that the Tax Authority and Customs included in its request of 03-05-2018, saying that it accepts the documents as valid.

Thus, there is agreement between the Parties as to the proof of the depreciation relating to these items, whereby the request for arbitral decision proceeds as to this correction in the value of € 78,755.19.

3.2.4. Goods with date of use in 2013, in the amount of € 3,787.28 (Table XIII of the Tax Inspection Report).

The grounds for this correction are that "several items with date of use in 2013" were detected, "with depreciation in the period above the tax limit".

There is no question, as to this correction, of the lack of supporting documents, as the correction is based on the documents relating to the goods to which it refers.

The Claimant says nothing regarding this correction, namely not alleging or demonstrating that the depreciation was not effected above the tax limit.

Thus, it is not demonstrated that this correction suffers from any defect, whereby the request for arbitral decision is unfounded as to this amount of € 3,787.28.

3.3. Correction relating to Subsidies: € 555,576.06

The Tax Authority and Customs made a correction to the taxable profit of the Claimant concerning a subsidy arising from a non-reimbursable investment project, entered into between B... and the firm C... SA, in the amount of € 587,050.00, with the amount at issue in the present case being € 555,576.06.

The Tax Authority and Customs, "considering that the balance existing as a credit in account 5750000 - Subsidies, has not been taxed for tax purposes up to now, considers the amount of €555,576.06 a positive patrimonial variation, provided for in article 21 of the Corporate Income Tax Code, to be taxed in the year 2013, with reflection in the declared tax results".

The Tax Authority and Customs considered the following:

We therefore verify that, with respect to the amount of €555,576.06:

• The contracts that were the basis for the respective allocation were not presented;

• It entered the company's sphere in a period prior to 1998 (information certified by the notes to the accounts sent);

• It was accounted for as a credit in account 57500000 - Subsidies;

• There is reference in the notes to the Annual Balance Sheet of 2013 to operating subsidies and investment subsidies in depreciable assets;

• No other accounts are visualized in the analytical trial balance, of the year 2013, that relate to subsidies, in accordance with the description indicated in the chart of accounts;

• Until now no regularization has been made through income accounts relating either to operating subsidies or investment subsidies;

• It currently remains open in account 575000 - Subsidies.

In the exercise of the right to a hearing, the Claimant presented a copy of the contract to which the subsidy refers, dated 1990 (part 3 of the administrative file), but the Tax Authority and Customs maintained this correction, concluding as follows:

Given that the taxpayer has not up to now identified the goods associated with the investment project, being unaware of whether they are still in depreciation, nor has it effected the accounting and tax treatment to which it was obliged, the Tax Authority maintains the position presented in draft report, in considering the amount of €555,576.06 a positive patrimonial variation, provided for in article 21 of the Corporate Income Tax Code, to be taxed in the year 2013, with reflection in the declared tax results.

The Claimant concludes in its submissions the following, as to this correction:

• With respect to the correction relating to subsidies, the Claimant believes it has demonstrated that the crux of the matter concerns, in fact, the interpretation of the meaning and scope of the rules relating to the distribution of the burden of proof, between the Tax Authority and taxpayers, in light of the provisions of article 75 of the General Tax Code;

• Since, despite the Claimant having conclusively demonstrated, by attaching the contract that supports the allocation of the subsidy in question, that it dates back to 1989 when exercising its right to a hearing;

• The Tax Authority maintained the correction in question on the sole ground of "guaranteeing nothing" that the value to be corrected comes from the identified investment project, without however proving, or even arguing, any possible relationship between the amount in question and the tax result of the financial year 2013, confessing in fact the contrary by emphasizing that the amount in question already appears repeatedly in the financial statements of prior years;

• In doing so, the Tax Authority violated not only the provisions of article 75 of the General Tax Code, but also article 45, no. 1, of the General Tax Code, relating to the expiration of the right to assess taxes, in this case, corporate income tax;

According to what can be inferred from the Tax Inspection Report, the Tax Authority and Customs does not dispute that the subsidy whose amount was the basis for the correction made in the financial year 2013, as a positive patrimonial variation "entered the company's sphere in a period prior to 1998, information certified by the notes to the accounts sent".

As the Claimant argues, there was no proof of any relationship between the amount in question and the financial year 2013, and the positive components of taxable profit are imputable to the tax period in which they are obtained and those relating to prior periods are only imputable to the tax period when on the closing date of the accounts of that to which they should have been imputed they were unforeseeable or manifestly unknown (article 18, nos. 1 and 2, of the Corporate Income Tax Code), without prejudice to special rules, such as those contained in article 22 of the Corporate Income Tax Code, relating to subsidies related to non-current assets, in which the effects of the taxable event are distributed over several periods.

In the case at hand, there was no proof of being faced with a situation classifiable under this article 22, but even with such classification, the correction would suffer from illegality, as the repartition of the subsidy value over several periods was not effected, in any of the ways indicated therein, and from that repartition it would result that only a fraction, at most, could be imputed to the financial year 2013.

If article 22 of the Corporate Income Tax Code does not apply, account must be taken that the positive relevance of the aforementioned subsidy in the Claimant's patrimonial sphere occurred well before the term of the four-year period provided for in article 45, no. 1, of the General Tax Code, counted (as for periodic taxes, such as corporate income tax), from the end of the year in which the taxable event occurred (no. 4 of the same article).

The taxable event, which constitutes a positive patrimonial variation, is the patrimonial increase generated with the entry of the subsidy amount into the Claimant's patrimonial sphere and not the maintenance of its accounting in 2013 and subsequent years.

Now, as it is jurisprudence of the Supreme Administrative Court, "the reasons for certainty and legal security that underlie the institute of expiration prevent the Tax Authority from being able to legally make corrections to the taxable profit of a financial year with respect to which expiration of the right to assess has already been shown to have occurred, even if it refrains from assessing the tax relating to that period, in order to extract tax consequences from them in subsequent periods (...), because through that means it would be allowed to extract new tax-legal consequences from situations that the law, for reasons of social peace, intends to permanently consolidate in the tax domain" (decision of the Supreme Administrative Court of 10-5-2017, case no. 0699/16).

For this reason, independently of the accounting that is appropriate (and, in particular, of any possible accounting reclassification), for tax purposes, in particular for the determination of taxable profit, the possibility of attributing relevance to taxable events occurring in periods with respect to which the expiration period for the right to assess has already occurred is excluded.

Thus, in any case, as the Claimant argues, it is certain that "the Tax Authority could not impute to the Claimant, in the financial year 2013, the entirety of the amount of a subsidy that has no direct relationship with this financial year".

Based on the foregoing, this correction suffers from illegality, whereby the request for arbitral decision proceeds in this part, as to the amount of € 555,576.06.

3.4. Correction relating to Bad Debts: € 15,222.20

This correction relates to a debt of a customer of the Claimant, D..., Lda, who was declared insolvent, by judgment rendered in case no. .../11...TYLSB, which became final on 10-10-2011, a matter which is not disputed.

The Tax Authority and Customs did not accept the amount of the impairment loss accounted for by the Claimant in 2013 based on this debt, because, considering the principle of economic periodization provided for in no. 1 of article 18 of the Corporate Income Tax Code, the conditions were met for its accounting in 2011.

The Claimant argues that "in acting as it did, the Tax Authority imposed on the Claimant a manifestly unjust taxation, for being unfounded, (once again...) in violation of the principles of justice, proportionality and impartiality, arising from elementary constitutional principles and explicitly enshrined in article 55 of the General Tax Code", citing jurisprudence of the Supreme Administrative Court in the sense of setting aside the principle of specialization of periods by prevalence of constitutional and legal principles.

Article 18 of the Corporate Income Tax Code establishes the following in its nos. 1 and 2, which are relevant here:

Article 18

Periodization of taxable profit

1 – Income and expenses, as well as other positive or negative components of taxable profit, are imputable to the tax period in which they are obtained or incurred, regardless of their receipt or payment, in accordance with the economic periodization regime.

2 – The positive or negative components considered as relating to prior periods are only imputable to the tax period when on the closing date of the accounts of that to which they should have been imputed they were unforeseeable or manifestly unknown.

In light of this principle, also designated as the principle of specialization of periods, the impairment loss derived from bad debts should be considered an expense of the financial year 2011 and not 2013, as the Tax Authority and Customs states.

However, the application of this principle that emanates from article 18 of the Corporate Income Tax Code, must be limited by the constitutional and legal principles set forth in articles 266, no. 2, of the Constitution of the Portuguese Republic, and 55 of the General Tax Code, as has been repeatedly affirmed by the Supreme Administrative Court, with relevance to the principle of justice.

Observance of the principle of justice is imposed on the entirety of the activity of the Tax Authority, by articles 266, no. 2, of the Constitution of the Portuguese Republic and 55 of the General Tax Code.

From the concurrent observance of the principles of legality and justice it is concluded that the duty of the Tax Authority to apply the principle of legality does not translate into a mere formal subordination to the rules that specifically regulate certain situations, but also encompasses the duty of the Tax Authority to take into account the consequences of its activity and to refrain from the strict application of rules when it results therefrom a manifestly unjust result.

The Supreme Administrative Court has decided, with respect to the principle of specialization of periods, that "this principle should tend to conform itself and be interpreted in accordance with the principle of justice, with constitutional and legal conformation (articles 266, no. 2 of the Constitution of the Portuguese Republic and 55 of the General Tax Code), in order to allow the imputation to a period of costs (now expenses) relating to prior periods, provided it does not result from voluntary and intentional omissions, with a view to effecting the transfer of results between periods". ([2])

Moreover, it has been long established that the Tax Authority recognized the need for flexibility in the application of the principle of specialization of periods, in Circular Letter no. C-1/84, of 8-6-84, published, together with the respective opinion, in Tax Science and Technique, nos. 307-309, pages 781-791, in which the following understanding was adopted, regarding the parallel issue that arose in the domain of Industrial Contribution:

Whenever in a given period there are costs and income from prior periods, the corresponding tax treatment should obey the following rules:

a) Non-acceptance of costs and income resulting from voluntary or intentional omissions in the period in which they are accounted, being considered, in principle, as such those that were practiced with tax intentions, namely, when:

• a period of exemption is about to expire or begin;

• the taxpayer has an interest in reducing losses in a given period to derive greater benefit from the carryforward of losses provided for in article 43 of the Code;

• the taxpayer intends to reduce the amount of taxable profits to relieve its tax burden.

b) In the remaining cases, costs and income from prior periods should not be corrected.

However, underlying the aforementioned jurisprudence is the circumstance that the Taxpayer was prejudiced or did not benefit from the delay in the fiscal relevance of the expense, which, if verified, is a decisive relevant element to presume that the error was involuntary and not intentional.

But, being so, this question of the prevalence of the principle of justice will not arise in situations such as those in this case, in which the Taxpayer had tax losses in the period to which it should have imputed the expense, as no tax payment resulted from the omission.

On the other hand, in the specific case at hand, in which there is a question of imputation of expenses to the periods of 2011 or 2013, it is manifest that the Claimant had an advantage in imputing them to the period of 2013, even having tax losses in both, as it alleges, because the possible period for carryforward of losses was greater.

Indeed, the tax losses determined in the financial year 2011 could be deducted from taxable profits, where they existed, in one or more of the four following periods, in accordance with article 52, no. 1, of the Corporate Income Tax Code, in the wording of Law no. 3-B/2010, of 28 April, but the tax losses determined in the financial year 2013 could be deducted in one of the five following periods (wording of that article introduced by Law no. 64-B/2011, of 30 December, only applicable to tax losses determined in tax periods beginning on or after 1 January 2012, by force of the provisions of no. 1 of article 116).

That is, while the impairment loss was imputed to the financial year 2011, the Claimant could deduct its value from the taxable profit of the periods until 2015, while with imputation to the financial year 2013, aggravating the loss for this year, it was able to deduct its value from the periods until 2018.

Thus, it must be concluded that the delay in the imputation of the impairment loss constitutes a situation of advantage for the Claimant.

Furthermore, the explanation that the Claimant gives for not having imputed the debt to the financial year 2011, which is the "maintenance of an 'optimistic' expectation of collection fed by the age and confidence in the professional relationship maintained with the customer in question" (article 153 of the request for arbitral decision) was not minimally proven, nor is it credible, because it is not normal, after a declaration of insolvency of the debtor.

In this context, having the Claimant tax losses in the year 2011, it is not demonstrated that the non-imputation to that period of the expense in question caused it any prejudice and, on the contrary, it is clear that the imputation of that expense to the financial year 2013 provides it with the advantage of extending the period of possible fiscal relevance of that expense.

In practice, the period in which that expense imputable to the financial year 2011 could be deducted would become seven years (until 2018) instead of four years, which would translate into treatment that is unjustifiably more favorable than that which was recognized in 2011 to the generality of corporate income tax taxpayers, and for this reason incompatible with the constitutional principle of equality.

Furthermore, the Claimant neither sees nor explains how the correction in question could violate the principles of proportionality or impartiality it invokes.

In fact, the correction is adequate to the end that was intended to be pursued, which is to prevent the imputation of the expense to a period to which it cannot be imputed.

As for the principle of impartiality, which imposes on the Tax Authority "to treat impartially those who enter into relations with it, in particular, by considering with objectivity all and only the relevant interests in the decision context and by adopting the organizational and procedural solutions necessary to preserve administrative impartiality and confidence in that impartiality" (article 9 of the Code of Administrative Procedure), it is not seen how its violation could have occurred in the situation in question.

Based on the foregoing, the request for arbitral decision is unfounded as to this correction, in the amount of € 15,222.20.

3.5. Reimbursement of the amount paid and compensatory interest

On 09-01-2018, the Claimant paid the liquidated amount and its reimbursement with compensatory interest.

As results from the foregoing, illegalities of the impugned assessment occur, in the part in which it is based on corrections in the amounts of € 18,691.59, € 78,755.19 and € 555,576.06, in the total of € 653,022.84.

Following the annulment of the assessment made, the Claimant is entitled to reimbursement of the amount unduly paid, which results from the annulment of the assessment, and is supported by articles 24, no. 1, letter b), of the RJAT and 100 of the General Tax Code.

The amount to be reimbursed should be calculated in execution of this decision, in accordance with article 24, no. 1, of the RJAT, taking into account the corrections that were considered illegal.

In accordance with the provisions of letter b) of article 24 of the RJAT, the arbitral decision on the merits of the claim, against which no appeal or impugnation lies, binds the Tax Authority from the end of the period provided for appeal or impugnation, with this, in the exact terms of the finding of the arbitral decision in favor of the taxpayer and until the end of the period provided for spontaneous execution of the decisions of the judicial tax courts, obliged to "restore the situation that would have existed if the tax act object of the arbitral decision had not been performed, adopting the acts and operations necessary for the purpose", which is in line with the provisions of article 100 of the General Tax Code [applicable by force of the provisions of letter a) of no. 1 of article 29 of the RJAT] which provides that "the tax administration is obliged, in case of total or partial procedence of complaint, judicial impugnation or appeal in favor of the taxpayer, to immediate and full restoration of the legality of the act or situation object of the dispute, including the payment of compensatory interest, if applicable, from the end of the period of execution of the decision".

Although article 2, no. 1, letters a) and b), of the RJAT uses the expression "declaration of illegality" to define the jurisdiction of the arbitral courts that function at CAAD, not making reference to condemnatory decisions, it should be understood that the powers which, in judicial impugnation proceedings, are attributed to tax courts, are comprised in its jurisdictions, this being the interpretation that accords with the meaning of the legislative authorization on which the Government relied to approve the RJAT, in which it proclaims, as a first directive, that "the tax arbitration process should constitute an alternative procedural means to judicial impugnation proceedings and to the action for the recognition of a right or legitimate interest in tax matters".

The judicial impugnation process, although it is essentially a process of annulment of tax acts, admits condemnation of the Tax Authority in the payment of compensatory interest, as can be inferred from article 43, no. 1, of the General Tax Code, in which it is provided that "compensatory interest is due when it is determined, in gracious complaint or judicial impugnation, that there was error attributable to the services which results in payment of the tax debt in an amount greater than legally due" and article 61, no. 4 of the Tax Procedure Code (in the wording given by Law no. 55-A/2010, of 31 December, which corresponds to no. 2 in the original wording), which "if the decision that recognized the right to compensatory interest is judicial, the payment period is counted from the beginning of the period for its spontaneous execution".

Thus, no. 5 of article 24 of the RJAT, when it says that "payment of interest, regardless of its nature, is due in accordance with the terms provided for in the general tax law and in the Code of Procedure and Tax Process", should be understood as allowing the recognition of the right to compensatory interest in the arbitration process.

The substantive regime of the right to compensatory interest is regulated in article 43 of the General Tax Code, which provides, as relevant here, the following:

Article 43

Unduly paid tax liability

1 – Compensatory interest is due when it is determined, in gracious complaint or judicial impugnation, that there was error attributable to the services which results in payment of the tax debt in an amount greater than legally due.

2 – There is also considered to be error attributable to the services in cases in which, despite the assessment being made on the basis of the taxpayer's declaration, this has followed, in its completion, the general guidance of the tax administration, duly published.

The illegalities of the assessment that result from the corrections that were considered illegal are attributable to the Tax Authority, which made them on its own initiative.

Thus, the Claimant is entitled to compensatory interest calculated on the amount to be reimbursed, in accordance with articles 43, nos. 1 and 4, and 35, no. 10, of the General Tax Code, 61, no. 5, of the Tax Procedure Code, 559 of the Civil Code and Order no. 291/2003, of 8 April, at the legal default rate, and counted from 09-01-2018 until the date of processing of the respective credit note.

5. Decision

In accordance with the foregoing, the Arbitral Court hereby agrees to

• Judge the request for arbitral decision partially grounded, as it concerns the corrections in the amounts of € 18,691.59, € 78,755.19 and € 555,576.06, in the total of € 653,022.84, referred to in points 3.2.2., 3.2.3. and 3.3.;

• Annul the corrections referred to and the corporate income tax assessment no. 2017..., of 23-11-2017, in the part in which it is based on the said corrections;

• Judge the request for arbitral decision unfounded as to the corrections referred to in points 3.2.1. (€ 148,639.80), 3.2.4. (€ 3,787.28) and 3.4. (€ 15,222.20) and absolve the Tax Authority and Customs from the claims, in the respective part;

• Condemn the Tax Authority and Customs to reimburse the Claimant of the amount paid corresponding to the corrections considered illegal, plus compensatory interest, in accordance with point 4 of this decision.

6. Value of the Case

In accordance with the provisions of articles 296, no. 2, of the Code of Civil Procedure and 97-A, no. 1, letter a), of the Tax Procedure Code and 3, no. 2, of the Costs Regulation in Tax Arbitration Proceedings and as already decided in the order of 09-10-2018, the value of the case is fixed at € 773,224.99.

7. Costs

Pursuant to article 22, no. 4, of the RJAT, the amount of costs is fixed at € 11,016.00, in accordance with Table I attached to the Costs Regulation in Tax Arbitration Proceedings, to be borne by the Claimant and the Tax Authority and Customs in the percentages of 21.19% and 78.81%, respectively.

Lisbon, 24-10-2018

The Arbitrators

(Jorge Lopes de Sousa)

(Henrique Nogueira Nunes)

(Armindo Fernandes Costa)

[1] Substantially in the same sense, one can see, with respect to the parallel issue that arises in Personal Income Tax matters, the decision of the Supreme Administrative Court of 19-11-2014, case no. 056/14, in which it was understood that "The period for which the taxpayer must keep the supporting documents for the actual payment of the price of acquisition of a corporate stake is 5 years, as results from article 119 of the Personal Income Tax Code (now article 128)" and that "notified the taxpayer to present such documents after such period has elapsed, and not having presented them, either because they no longer had them in their possession, or because the banking institution also no longer held the elements relating to the year of acquisition, it is not possible for the Tax Authority, solely on the basis of such omission, to disregard the value of the purchase contained in the deed of acquisition of said stake for the purpose of calculating the tax for the year in which the sale of said stake occurred".

[2] Decision of the Supreme Administrative Court of 2-4-2008, case no. 0807/07.

In the same line, one can see the Decisions of the Supreme Administrative Court of 5-2-2003, case no. 01648/02, of 25-6-2008, case no. 0291/08 and of 21-11-2012, case no. 0809/12.