IRS Withholding Tax and General Anti-Avoidance Clause (CGAA): CAAD Arbitration 173/2015-T

ARBITRAL DECISION

The arbitrators Fernanda Maçãs (presiding arbitrator), Nuno Miguel Morujão and Fernando Araújo, appointed by the Deontological Council of the Administrative Arbitration Centre to form the Arbitral Tribunal, constituted on 22 May 2015, hereby decide as follows:

I. REPORT

1. The taxpayer A…, …, S.A., with tax identification number … (hereinafter "Claimant"), filed, on 13 March 2015, a request for constitution of a Collective Arbitral Tribunal, pursuant to the combined provisions of Articles 2 and 10 of Decree-Law No. 10/2011, of 20 January (Legal Regime for Arbitration in Tax Matters, hereinafter "RJAT"), in which the Tax and Customs Authority is the Respondent (hereinafter "TA" or "Respondent").

2. The Claimant requests the arbitral decision on the illegality of assessments Nos. 2014…, relating to withholding of personal income tax, and 2014…, relating to compensatory interest, in the total amount of €99,976.76, essentially on the grounds of alleged lapse of the right to apply the General Anti-Abuse Clause (GAAC), or by nullity / inefficacy of the decision applying the GAAC, or alternatively by error in legal qualification, from which derives the inapplicability of the GAAC. It requests, as a consequence, the annulment of such assessments.

3. The request for constitution of the arbitral tribunal was accepted by the President of CAAD and automatically notified to the TA, on 16 March 2015.

4. The Claimant did not proceed with the appointment of an arbitrator, therefore, pursuant to the provisions of subsection a) of Article 6(2) and subsection b) of Article 11(1) of the RJAT, as amended by Article 228 of Law No. 66-B/2012, of 31 December, the President of the Deontological Council appointed as arbitrators of the Collective Arbitral Tribunal the present signatories, who communicated acceptance of the appointment within the applicable period.

5. On 6 May 2015, the parties were notified of the appointment of the arbitrators, with neither raising any objection.

6. In accordance with the provisions of subsection c) of Article 11 of the RJAT, the Collective Arbitral Tribunal was constituted on 22 May 2015.

7. In these terms, the Arbitral Tribunal is duly constituted to consider and decide the subject matter of the proceedings.

8. To support the request for arbitral decision, the Claimant alleges, in summary:

a. The lapse of the right to apply the GAA, given that until Law No. 64-B/2011, of 30 December, there was a special period of 3 years (Article 63(3) CPPT), which thereafter disappeared, being replaced, in its understanding, by the period of lapse of four years which applies to the invocation of illegality;

b. Given that the transaction in question occurred on 30 December 2009, the period for the decision applying the GAA would have ended on 31 December 2013, thus exhausted before the institution of the inspection procedure and subsequent acts (all occurring between June and October 2014);

c. The Claimant further invokes that, even if it were understood that no lapse had occurred, the decision applying the GAA would nevertheless be null, or ineffective, also because, in its view, the meaning and scope of the administrative act in which the application of the GAA is decided would not be comprehensible to the addressee – essentially because it would not be clear whether the GAA is related to the resolution passed at the General Assembly of 28 June 2010, or whether it encompasses all resolutions of the same tenor to be taken in the future, relating to the reimbursement of "supplementary contributions";

d. Such alleged lack of definition, reflecting in the assessment now contested, would violate the principle of tax legality;

e. From the Claimant's perspective, there would also be an error of legal qualification, resulting in an improper application of the GAA to the case, given that, in its view, there was no demonstration of the transactions that should have been conducted in substitution for those disregarded by the application of the GAA;

f. The Claimant alleges that such demonstration did not occur for the simple reason that there was no transaction involving abuse of legal form. In fact, it argues, what was at issue would be "transfer pricing" and not the aforementioned "abuse": what would be at issue would be merely the tax correction of an element of the transaction, not the requalification of the transaction itself;

g. In its defence, the Claimant sets forth what it states are the economic reasons for the transaction conducted, which would be the establishment of a "second-level" company, B…, S.G.P.S., S.A., attracting new shareholders without loss of control by A…, …, S.A., with a view to altering the structure of the economic group. It admits that the transaction was accelerated by the effect of the modification of the tax regime for capital gains, but that such acceleration is legitimate, not even constituting "tax planning".

1. The TA filed a Response, accompanied by the Administrative File, alleging, in essence:

a. That the disputed assessments constitute a correct application of the Law, not being affected by any defect;

b. Resuming the conclusions reached in the inspection report, it invokes, in particular, that, through the procedures described, the shareholders of A…, … S.A., believed they could receive up to the total value of the alienation of B…, S.G.P.S., S.A. (€42,000,000.00), by means exempt from taxation, specifically through successive "partial reimbursements" of such "supplementary contributions", such as that which took place on 18 August 2010;

c. In the view of the Respondent, such payments conceal the distribution of dividends from B…, S.G.P.S., S.A., given that A… S.A. does not have the financial capacity, nor the activity, capable of generating such income;

d. Thus, the invocation of the GAA, based on the absence of non-tax economic advantages for the legal form adopted, would aim to disregard the "reimbursement" of the "supplementary contributions" and requalify the act as distribution of dividends, with the corresponding tax implications;

e. As to the issue of lapse, the Respondent clarifies that the requalified act corresponds to the payment of €400,000, made on 18 August 2010, with the lapse period commencing, pursuant to Article 45(4) of the LGT, on 1 January 2011;

f. As to the alleged nullity due to unintelligibility of the meaning and scope of the decision applying the GAA, the Respondent says it finds the Claimant's argument strange where it suggests lack of reasoning and recapitulates the arguments set forth in its design of the abusive act;

g. It also notes that the Initial Application contains the admission that there was indeed an abusive act, in that the Claimant admits that, in its view, there would be a problem of "transfer pricing" resulting from the fact that a legal qualification of the transaction had obviated the payment of taxes normally due;

h. The Respondent insists that, from the acquisition of the shares of B…, S.G.P.S., S.A., no patrimonial flow resulted for A…, …, S.A., given that both the assets and liabilities increased by the same amount of €42,000,000 (which was not paid), lacking, therefore, an economic motivation for this operation;

i. With such transfer, only an indirect holding was obtained that was previously direct, generating a credit in favour of the shareholders to disguise "dividends" as "reimbursements", with no added value at the level of organization or management, nor substantial alteration in its capital structure. The successive alienations were, moreover, unnecessary, alleges the Respondent, in that the law permits the exchange of shareholdings which enjoy neutrality, so that, substantially, the same would be obtained with an exchange of shareholdings;

j. On the other hand, notwithstanding taking the Claimant's reference to "transfer pricing" as an admission of the evasive purpose of the transaction, the Respondent clarifies that the figure of "transfer pricing" is inapplicable to a situation in which "dividends" are transformed into "reimbursements" - a transformation effected by a succession of operations which precisely calls for, by reason of its complexity and intent, the figure of the GAA – a succession within which "transfer pricing", should it occur, would be merely partial and instrumental;

k. The subsumption to the GAA regime would be further justified, in the view of the Respondent, by the circumstance that the operations under examination configure, by their values, abnormal transactions, generating volumes of indebtedness as unsustainable for the company as advantageous for the shareholders – a superposition of personal interests over corporate interests which denotes, in its view, the anomaly of the evasive instrument which hides behind the "corporate veil" (materialized, for example, in the extensive indebtedness of A…, …, S.A., created with the sole announced purpose of balancing the shareholdings of the two shareholders);

l. From all of this, the Respondent concludes that illegitimate tax planning occurred, with abuse of legal figures subversive of legal purposes, justifying, therefore, in its view, the full application of Article 38(2) of the LGT.

1. By Arbitral Order, of 4 July 2015, the date of 7 September 2015 was set, pursuant to Article 18 of the RJAT, for the holding of the hearing, with the parties being invited to indicate their preference for oral or written final arguments, as well as to identify the subject matter of proof required and the attachment of documentary evidence.

2. At said hearing, the Claimant proceeded with the rectification of an error in its request for arbitral decision, with the Respondent withdrawing from the examination of its designated witness. Moreover, witness evidence offered by the Claimant was produced and a deadline was set for the presentation of written and successive arguments, in accordance with the parties' agreement, and 20 November 2015 was set as the final date for delivery of the Arbitral Decision.

3. The parties submitted written arguments within the legal period, arguing, in essence, for the positions initially defended.

II. PRELIMINARY MATTERS

1. The parties have legal personality and capacity, as well as the benefit of procedural standing (Articles 4 and 10(2) of the RJAT and Article 1 of Ordinance No. 112-A/2011, of 22 March).

2. The TA proceeded with the appointment of its representatives in the case and the Claimant attached a power of attorney, thus being the Parties duly represented.

3. In accordance with the provisions of Articles 2(1)(a), 5, 6(1) and 11(1) of the RJAT (as amended by Article 228 of Law No. 66-B/2012, of 31 December), the tribunal has jurisdiction and is duly constituted.

4. The proceedings are not affected by nullities.

5. No preliminary or subsequent questions, prejudicial or exceptions, have been raised which prevent the consideration of the merits of the case, with the conditions being met for a final decision to be delivered.

III. MERITS

III.1. Matters of Fact

1. With relevance for the consideration and decision of the questions raised as to the merits, the following facts are established and proven:

a) On 23 October 2014, the Claimant was notified of assessments Nos. 2014… (relating to withholding of personal income tax) and 2014… (relating to compensatory interest), in the total amount of €99,976.76, to be paid by 19 December 2014;

b) B…, S.G.P.S., S.A., of which C and D were shareholders (holding, respectively, 56% and 44% of the capital), held all the capital of A…S.A.;

c) On 16 October 2009, B…, S.G.P.S., S.A. alienated all the capital of A…, S.A. to C and D (10,000 shares, in the proportion of 50% each), for €472,877.39 (thus each shareholder becoming a debtor of €236,438.70), without any immediate payment taking place (B…, S.G.P.S., S.A. merely recorded the debt in account 2781 – Other debtors and creditors);

d) On 30 December 2009, C and D, in turn, sold B…, S.G.P.S., S.A. to A…, …, S.A., for €42,000,000.00, without again any payment taking place for the 5,700,000 shares alienated (A…, …, S.A. merely recorded, as a liability in its balance sheet, a debt to its shareholders);

e) The value thus attributed to the shares transmitted represents a doubling of the value of such assets, when reference is made to the price of transmission fixed, among independent entities, within the framework of contracts for the alienation of shares executed between 2007 and 2008;

f) No tax declarations of onerous alienation of shares were delivered relating to the transaction of 16 October 2009, nor to the transaction of 30 December 2009, in violation of the provisions of Articles 10, 11 and 138(1) of the Income Tax Code ("CIRS") and Ordinance No. 694/2002, of 22 June;

g) The management of shareholdings does not form part of the corporate object of A…, … S.A. and no modification was made to its articles of association to include this object;

h) At a General Assembly of 28 May 2010 (Minutes No. 21), the credit of the shareholders of B…, S.G.P.S., S.A., in the amount of €42,000,000.00, was converted into ancillary contributions, with characteristics of "supplementary contributions";

i) At a General Assembly of 28 June 2010 (Minutes No. 22), it was resolved to pay €200,000 to each of the shareholders (in a total of €400,000), by way of partial reimbursement of such "supplementary contributions", such payment being made on 18 August 2010;

j) On 9 August 2010, B…, S.G.P.S., S.A. proceeded with the transmission of €400,000 to A… S.A., with good collection on 10 August 2010;

k) In June and July 2014, A…, …, S.A. was subjected to an inspection action, from which resulted, on 30 July 2014, a draft inspection report and, on 15 October 2014, a final inspection report, in which the application of the GAA was indicated, it being understood that the facts ascertained resulted in the intention of artificial generation of a capital gain, excluded from taxation at the time, as well as the creation of an artificial credit, in order to proceed with non-taxed payments, in substitution for a distribution of dividends on which tax is due – it being, in the understanding set forth in the report, a true distribution of dividends (from B…, S.G.P.S., S.A.), given that the purported amortization of a credit by the alienation of shareholdings had no economic substance;

l) The parties intervening in the acts and legal transactions executed acted with full and dominant awareness of the tax advantages that would result therefrom;

m) The inspection procedure commenced on 25-06-2014;

n) On 30-07-2014, A…, …, S.A. was notified of the draft inspection report, which contained the intention to apply the anti-abuse norm;

o) The Claimant did not exercise the right of prior hearing with respect to said draft inspection report;

p) The assessment, notified on 23 October 2014, to the Claimant, is based, according to the final inspection report, on the conviction of the assessing entity that the values paid on 18 August 2010 are capital income subject to personal income tax and the system of withholding at source, and that the application of the GAA is fully appropriate, from which results the disregard of the tax advantages sought whose scope determined the performance of the acts and legal transactions through which the parties proceeded;

q) On 13 March 2015, the Claimant submitted a request for the constitution of an Arbitral Tribunal for the consideration of the legality of the personal income tax assessment and respective compensatory interest (see the electronic application in the CAAD system).

25.2. Justification of the Matters of Fact

The facts proven were based on a critical appraisal of the position assumed by each of the parties, as well as on the critical analysis of the documents attached to the case, whose authenticity and veracity were not disputed by any of the parties.

It was based, moreover, on the considered appraisal of the content of the witness statements produced at the hearing, with one of the witnesses (E), although providing clarifications in an assertive manner, stating that he had only indirect knowledge of the facts; the other witnesses (2) set forth, as to various aspects (in particular with respect to the true reasons determining the sequence of transactions effected), insufficiently supported reasoning. These circumstances were taken into account by the Tribunal in its consideration of the matters of fact.

25.3. There are no other facts, with relevance for the consideration of the merits of the case, that were not proven.

III.2. Matters of Law

The central question to be decided revolves around ascertaining whether the personal income tax assessments (No. 2014… - by withholding at source) and relating to compensatory interest (No. 2014…) are or are not illegal, on the grounds of consequential illegalities arising from:

III.2.1. Lapse of the right to apply the general anti-abuse clause

III.2.2. Unintelligibility of the decision applying the anti-abuse clause

III.2.3. Non-verification of the prerequisites for application of the anti-abuse clause

III.2.1. Lapse of the right to apply the general anti-abuse clause

The Claimant alleges that the decision applying the general anti-abuse clause took place when its period had already lapsed, which would render it manifestly illegal, because affected by lapse.

Should this ground for the request proceed, there would be a defect which would determine the illegality of the subsequent assessment, which, in turn, would prejudice the consideration of the other grounds of illegality alleged, considering the order of consideration of defects imputed to the act received in Article 124 of the CPPT, here applicable, subsidiarily, by force of the provision of Article 29(1)(a) of the RJAT.

It behooves us to consider this.

The application of the anti-abuse clause, provided for in Article 38 of the LGT, was, before the amendments in wording created by Law No. 64-B/2011, of 30 December (State Budget Law for 2012) subject to a certain procedure (of a procedural nature) set forth in Article 63 of the CPPT, which provided, among other things, that the administrative decision (made by the highest-ranking official) applying that clause could be judicially reviewed, in an autonomous manner (as a detachable act of the assessment procedure), through a special administrative action (No. 10 of that provision of the CPPT).

On the other hand, originally, the procedure for applying an anti-abuse clause could only be opened "within the period of three years after the performance of the act or the execution of the legal transaction subject to the application of the anti-abuse provisions" (Article 63(3) of the CPPT). With the wording introduced by Law No. 64-A/2008, of 31 December, which entered into force on 1/1/2009, it was added that the procedure could be opened within three years "counting from the beginning of the following calendar year to the performance of the legal transaction subject to the anti-abuse provisions".

By the aforementioned State Budget Law for 2012 (Law No. 64-B/2011, of 30 December) a paradigm shift was introduced. Article 153 of the aforementioned statute repealed No. 10 of Article 63 of the CPPT, passing to apply the system of unified challenge (provided for in Articles 54 of the CPPT and Article 66 of the LGT), according to which taxpayers may challenge the final decision of the tax procedure on the ground of any illegality, including that referring to any interlocutory act of the procedure.

In fact, from 1/1/2012, there was no longer the possibility of autonomous challenge of the administrative decision applying the general anti-abuse clause, by the highest-ranking official of the services or by an official with delegated powers, passing to be judicially reviewable, through the challenge of the final act of the assessment procedure. Another novelty was the repeal of the three-year period to begin the procedure for applying said clause, with the legislator ceasing to fix a period for that purpose.

According to Article 63 of the CPPT, the "assessment of taxes based on the anti-abuse provision contained in Article 38(2) of the general tax law", follows the procedures provided therein, with No. 7 of the provision merely establishing that the "application of the anti-abuse provision referred to in No. 1 is prior and necessarily authorized, following the prior hearing of the taxpayer provided for in No. 5, by the highest-ranking official of the service or by the official to whom he has delegated this competence".

It is settled and uniform case law that, where norms of a procedural nature are in question, they are of immediate application, pursuant to Article 12(3) of the LGT (see, among others, the Decision of the Administrative Court of the Supreme Court, 26/2/2014, case No. 1088/2013 and Arbitral Decision No. 258/2013-T, of 14 June 2014).

By application of the aforementioned case law, the aforementioned norm of Article 63(10) is considered repealed with effect from 1/1/2012, by force of the Budget Law and is of immediate application to situations in progress.

In the case at hand, the Claimant does not dispute the system just set forth, in particular as it regards its immediate applicability.

From the Claimant's perspective, the decision applying the anti-abuse clause is affected by lapse, because: i) "The transaction (or legal transactions, if one wishes to include the purchase of the shares of A… S.A.," - The sale to A… S.A., by C and D, of the shares they held in B…, S.G.P.S., S.A., -) which is intended to be "requalified", as it was considered abusive, took place in 2009"; ii) "(…) the period for the institution and decision applying the G.A.A. ended on 31 December 2013 (four years after in which the transaction(s) considered abusive were performed)" (point 8 of the arbitral Request); iii) "(…) the tax decision concluding for the application of the G.A.A was notified to the Claimant on 15/10/2014" (point 7 of the arbitral Request).

The Claimant bases the alleged "lapse" (expiration of the period) of the procedure for applying the anti-abuse clause on two essential presuppositions, stating that:

a) there exists "a period, counted from the performance of the abusive act or transaction, for the TA to decide on the application of the G.A.A" and that the same corresponds, for reasons of legal certainty and security, to the normal period of four years, counted from the abusive act or legal transaction;

b) the initial term of the period for opening the procedure for applying the anti-abuse clause corresponds, in the case, to the abusive transaction which translates to the "sale to A… S.A., by C and D of the shares representing the capital of B…, S.G.P.S., S.A.".

Let us see if these arguments are valid.

Although the legislator of the 2012 Budget Law did, as we have seen, cease to establish a period for the application of the anti-abuse clause, it can be understood that such circumstance (the non-provision of a period) affects, as the Claimant refers, fundamental legal principles of our legal order, such as that of certainty and legal security. In that sense, Diogo Leite de Campos and others (General Tax Law, Annotated and Commented, 4th ed., Encontro da Escrita Editora, 2012, pp. 306) consider that such principles "(…) lead to the Tax Administration not having all the time to invoke" the inefficacy of transactions subject to the application of an anti-abuse clause, just as "it does not have an unlimited period to invoke the illegality of legal transactions."

According to the aforementioned authors, the "general rule provided for in the General Tax Law regarding the invocation by the TA of the illegality" of legal transactions "is 4 years counting from the tax fact" and "the same should happen with the application of the anti-abuse clause". "Except that", they conclude, "here the legislator understood that, given the greater uncertainty of the norm, the period should be shorter. And so, Article 63 of the CPPT established the period of three years".

Transposing this reasoning to the regime introduced with the 2012 Budget Law, if it were understood that the principles of certainty and legal security oppose the Tax and Customs Administration having an unlimited period to initiate the procedure tending to make application of the mechanism of Article 38(2) of the LGT (general anti-abuse clause), imposing a limitation as to the period of exercise of that competence, such limitation need not necessarily coincide with the period of 4 years, as the Claimant contends.

In any case, even admitting that the exercise of the administrative competence to open the proper procedure established in law for the application of anti-abuse norms can only take place within a certain period, the truth is that there will be no illegality of the assessment if the procedure is initiated within that period (in this sense, see the doctrine set forth in the Arbitral Decision, of 23 October 2013, case No. 34/2013-T, making, moreover, strict application of the criterion adopted by the legislator when it established a period for that purpose).

Even if we follow the Claimant's orientation as to the first presupposition from which it proceeds, the reasons it invokes do not, however, hold.

In fact, to determine which transaction is considered abusive (which will mark the initial term of the period of the procedure for applying the abusive clause) it is important to pay attention to the complex set of acts and legal transactions integrating the various steps of the evasive scheme. This must be analyzed as a whole, since only in its complete vision can that scheme be detected.

According to this way of viewing things, faced with a complex set of acts subject to global architecture (comprising preparatory and final acts), the initial term of the period of the procedure will not begin to run from the performance of preparatory acts, but rather with the final step of the entire scheme set in motion. In this sense, see the case law of the Decision of the Central Administrative Court of the South, in case No. 4255/10, on 15/2/2011, where the following was recorded:

"We are here faced with the so-called "step by step transactions" in which is found a "factual species", complex, involving a succession of acts/transactions coordinated among themselves, although they may occur at different temporal moments, and with the common objective of achieving a tax advantage. Faced with this type of operations, the law applier should operate an integrated treatment visualizing them as a single transaction, tending towards a single and final result. This is the "step transaction doctrine", which should be applied to the case at hand, from which it follows that the anti-abuse provision can and should apply to the decisive and final moment (…)".

By application of this case law, the transaction or act requalified corresponds, in the case, to the payment of €200,000 to each of the shareholders of A,,,, S.A.; payment which occurred on 18/8/2010. Which means that, serving this legal act as reference for the beginning of the counting of the period for opening the procedure for applying the general anti-abuse clause, the 4 years were completed on 18/8/2014 and not in 2013, as the Claimant contends.

Thus, flowing from the facts admitted by it that "the inspection action aiming at the application of the G.A.A (that is, the procedure which concludes by the decision of its application) commenced on 25-06-2014)" and that "the notification of the Draft Inspection Report (through which the now Claimant became aware that application of the C-G.A was in question) happened on 30-07-2014" [point 7 of the arbitral Application], the institution of the procedure for applying the general anti-abuse clause occurred within the period of lapse of four years which the Claimant defends to be applicable.

The alleged lapse of the decision applying the general anti-abuse clause is therefore unfounded.

III.2.2. Unintelligibility of the decision applying the anti-abuse clause

The Claimant alleges, among other things, that "the administrative act that gave rise to the assessment now contested (decision applying the general anti-abuse clause) is unintelligible as to its meaning and scope …" (point 16 of the arbitral Request), in that the fiscal consequences of the assessment are not minimally clear. It can be understood that "the decision applying the GAA is reduced to constituting presupposition and grounds" for the same, but also that it projects itself in successive future assessments (points 18 and 20 of the arbitral Request).

In sum, for the Claimant, because the "fiscal consequences which, in the future (…) will result for A... S.A., from this decision applying the GAA" (points 19 and 20 of the arbitral Request) are not minimally clear, the same suffers from nullity, because the requirements as to the comprehensibility of the administrative act are not met.

It behooves us to consider this.

It is within the requirements relating to the content of the act that Vieira de Andrade inserts the requirement of comprehensibility, stating that the administrative act is comprehensible when it is not "contradictory, vague or unintelligible".

To be able to evaluate whether the content of the administrative act is comprehensible or not, it must first be verified what is, in terms of law, the proper content of the act in question, that is, the principal content (typical legal content), for it is only with respect to that content that the requirement of intelligibility is required.

It falls, therefore, to ascertain what is the typical legal content of the act of application of the general anti-abuse clause.

The legislator is very clear, in Article 38(2) of the General Tax Law, when it distinguishes the administrative act of application of the general anti-abuse clause from the subsequent administrative acts of assessment following that first decision. Reference is made to the anti-abuse clause in the first part of the norm ("Acts or legal transactions are ineffective within the tax sphere…") and to subsequent acts in the second part of the same provision ("…with taxation then being carried out in accordance with the norms applicable in its absence and the stated tax advantages not being produced").

This distinction is also apparent in Article 63(1) of the Code of Tax Procedure and Process, when mention is made of the "assessment of taxes based on the anti-abuse provision" (emphasis ours). Here too the legislator thus autonomizes the application of the anti-abuse clause from the subsequent acts of assessment.

Moreover, this autonomy is not unknown to the Claimant, which refers to it several times in the initial petition. It does so at point 2 of the Application when it writes: "The administrative acts of decision applying the G.A.A. and those relating to decisions to proceed with additional assessments (consequences of that decision) are not confused. Such decisions correspond to different administrative acts, autonomous, notwithstanding the sequential dependence of the latter on the performance of the former". And, at point 4, it further points out that, despite the legislative amendment introduced by the 2012 State Budget Law, "the procedure and the decision applying the G.A.A. maintained their autonomy with respect to the (possible) assessments arising from them, not least because the application of the anti-abuse provision must be authorized, following the prior hearing of the taxpayer, by the highest-ranking official of the service or by the official to whom that competence is delegated (Article 63(7) of the CPPT), authorization which is not necessary for the subsequent additional assessments".

It is to be concluded, in fact, that the act of application of the anti-abuse clause and the acts of assessment subsequent to the first are distinct.

It now falls to verify what the "typical legal content" of the act which the Claimant invokes to be unintelligible (administrative act applying the anti-abuse clause) is.

Pursuant to law (Article 38(2) of the General Tax Law), that act has as its content or immediate object the declaration of inefficacy, within the tax sphere, of "acts or legal transactions essentially or mainly directed, by artificial or fraudulent means and with abuse of legal forms, to the reduction, elimination or deferral of taxes that would be due as a result of facts, acts or legal transactions of identical economic purpose, or to the obtaining of tax advantages that would not be achieved, in whole or in part, without the use of such means".

It is, therefore, as to this content that the comprehensibility of the act is evaluated. Content which does not form part of, therefore, the reference to subsequent administrative acts of assessment. These are, as was verified, mere consequence, to be subsequently defined (in accordance with proper procedure and criteria), of the application of the institute of the anti-abuse clause.

The Claimant invokes, however, in the present action, the unintelligibility of the administrative act applying the anti-abuse clause, alleging that it does not contain the consequences that will result from such application as to possible future assessments and that, for that reason, various hypotheses would remain open as to that aspect.

Now, that mention (as to the successive and particular acts of subsequent assessment that the Administration may come to perform) is not contained, in the concrete case, in the act applying the anti-abuse clause, nor did it have to be contained, given that (as concluded above) it does not form part of its typical legal content. This has as its object acts or legal transactions and not assessments.

The unintelligibility which the Claimant invokes thus relates to content which does not form an integral part of the act whose validity it puts in question. On the other hand, the taxpayer does not question the intelligibility of the true content of the act applying the anti-abuse clause, not contending (neither now, nor when exercising its right of prior hearing, which it did not exercise) that that act is, for it, incomprehensible as to the identification of the acts or legal transactions declared ineffective or as to the reasoning for that declaration of inefficacy.

For the reasons set forth, the allegation made by the Claimant of the defect of unintelligibility of the act applying the anti-abuse clause is unfounded.

III.2.3. Non-verification of the prerequisites for application of the anti-abuse clause

The consideration of whether or not the valid application of the general anti-abuse clause by the Tax and Customs Authority is valid presupposes the verification of the prerequisites legally provided for that purpose.

Pursuant to the provision of Article 38(2) of the General Tax Law:

"Acts or legal transactions are ineffective within the tax sphere if they are essentially or mainly directed, by artificial or fraudulent means and with abuse of legal forms, to the reduction, elimination or deferral of taxes that would be due as a result of facts, acts or legal transactions of identical economic purpose, or to the obtaining of tax advantages that would not be achieved, in whole or in part, without the use of such means, with taxation then being carried out in accordance with the norms applicable in its absence and the stated tax advantages not being produced".

The norm in analysis is thus constituted by two parts: one, first, relating to the requirements for application of the clause and another, second, relating to the consequences of application of the clause.

A- With respect to the first part of the provision, four conditions are distinguished:

a) that there has been performance of acts or legal transactions;

b) that from such performance there has resulted a tax gain (reduction, elimination or deferral of taxes that would be due as a result of facts, acts or legal transactions of identical economic purpose or the obtaining of tax advantages that would not be achieved, in whole or in part, without the use of such means);

c) that such performance took place with the intent essentially or mainly to obtain such gain; and

d) that the aforementioned acts or transactions have been performed by artificial or fraudulent means and with abuse of legal forms.

The aforementioned requirements assume cumulative nature and permit assessment – as if it were a test – of the verification of activity characterizable as abusive tax planning.

The analysis, however, cannot be compartmentalized, because, as COURINHA emphasizes, "the fixing of one element may, in practice, depend on another", whereby these "will frequently [...] not fail to assist each other mutually".

It should be noted, moreover, that, in accordance with the provision of Article 74(1) of the General Tax Law, the burden of proving the facts constituting its right falls on the Tax and Customs Administration. On the TA there lies, therefore, not only the burden of pleading, but also the burden of demonstrating the verification of the requirements of fact set forth above.

From Article 63(3) of the Code of Tax Procedure and Process, it is further extracted that the mentioned elements must be contained in the draft and the decision applying the anti-abuse provision.

It behooves us to evaluate whether such burdens are met in the case at hand.

a) Element-means - the requirement aforementioned under subsection a) corresponds to the path freely chosen by the taxpayer to obtain the desired gain or tax advantage, such path coinciding with the performance of acts or legal transactions - isolated or as parts of a structure of sequential, logical and planned legal acts or transactions, organized in a unitary manner.

In the present case, a sequence of legal transactions is at issue, which leads to the bringing into play, in the present situation, of the already-mentioned and so-called "step-by-step transaction doctrine".

This is a theory which underlies the argumentation of the Respondent entity and which, having been constructed in Anglo-Saxon legal systems, leads to the consideration, as has been stated, of the complex set of acts or legal transactions, thus taken under its global, planned architecture, composed of preparatory and complementary legal acts or transactions, and not only of the act or legal transaction which is objectively censured, in that only through the adoption of this complete perspective is the evasive design detected with clarity.

The aforementioned sequence of transactions was, in the case at hand, in essence, the following:

1st - Purchase, on 16 October 2009, of all the shares of A…, …, S.A., by C and D (50% each), from B…, S.G.P.S., S.A., for €472,877.40;

2nd - Sale of all the shares of B…, S.G.P.S., S.A., on 30 December 2009, by C and D, to A…, …, S.A., for €42,000,000;

3rd - Resolution, by the general assembly of A…, …, S.A., on 28 May 2010, of establishment of ancillary contributions, by the shareholders, embodied in credit (of the shareholders over such company) of value corresponding to the price of the sale mentioned in the previous point (€42,000,000);

4th - Receipt, by A…, …, S.A., from B…, S.G.P.S., S.A., of the value corresponding to €400,000, by means of a check issued on 9 August 2010, by the first company to the second;

5th - Bank transfer, made on 18 August 2010, by A…, …, S.A., to each of the shareholders, of the value corresponding to €200,000, by way of reimbursement of ancillary contributions (thus in the total value of €400,000).

b) Element-result - the element mentioned above under subsection b) concerns the obtaining of a tax advantage, following the adoption of the element-means; advantage which is assessed by considering the tax burden that would be verified if acts or legal transactions of equivalent economic effect had been performed and not liable to generate application of the anti-abuse clause.

Comparing, in the case at hand, the tax burden resulting from the acts and legal transactions mentioned above as element-means, with the tax burden that, alternatively, would result from the absence of performance of such acts, that is, from not altering the original configuration of the group B…, S.G.P.S., S.A. and the distribution of dividends (for the value corresponding to what, within the framework of the formalized operations, corresponded to the value of reimbursement of the ancillary contributions) to the shareholders (C and D), it becomes inequivocal that the first situation provided a more advantageous legal tax regime than that which the second would generate, both as regards the moment of performance of the acts and to future periods.

In fact, and on the one hand, within the framework of the operations identified above, there was payment of €400,000, by B…, S.G.P.S., S.A., to A…, …, S.A., which was not subject to taxation, by virtue of the elimination of double economic taxation in corporate income tax.

On the other hand, the contracts of purchase and sale of shares of B…, S.G.P.S., S.A., in which C and D figured as transferors, generated a credit in favor of these shareholders from the acquisition of the shares, without the capital gains generated in the sphere of the alienators having been taxed under personal income tax, by force of the exclusion of taxation provided for in subsection a) of Article 10(2) of the CIRS, in the version prior to Law No. 15/2010, of 26 July.

To this is added the fact that the increase in the cost of acquisition of the shares of B…, S.G.P.S., S.A., will lead to that, when the sale of such shares takes place, the value due by way of capital gains be lower than that which would be due if, these remaining in the ownership of the shareholders C and D, their prior cost of acquisition were considered.

It is further to be noted that the creation of a balance of €42,000,000, by way of the realization of ancillary contributions, permitted the performance of payments to the shareholders by qualification of such payments as reimbursements of such contributions and not as distribution of dividends and thus, without there being any taxation under personal income tax, nor withholding at source of the value legally due.

Differently, had the aforementioned legal acts not been performed, there would have been taxation, under personal income tax, of capital income inherent to the distribution of profits/advance on account of profits, pursuant to subsection h) of Article 5(2) of the CIRS; such income subject to withholding at source at a liberatory rate of 21.5%, as provided for in subsection c) of Article 71(3) of the CIRS (in the wording given by Law No. 12-A/2010, of 30 June), to be effected by the entity owing the income (see subsection a) of Article 101(2) C.I.R.S.).

It being verified, in these terms, that from the performance of the acts and legal transactions performed there resulted the obtaining of a tax advantage, it is concluded that also the element-result is, in the present case, filled.

c) Element-intellectual - the element identified above under subsection c) is considered satisfied when the choice of the element-means is "essentially or mainly directed" to the reduction, elimination or deferral of taxes" or to the obtaining of other tax advantages (Article 38(2) of the L.G.T.).

It is required, therefore, not only the verification of a more advantageous tax treatment, but also that it be ascertained that the taxpayer "intends an act, a transaction or a certain structure, solely or essentially, for the prevailing tax advantages that provide it".

It is important, in these terms, that the means utilized was chosen with the principal purpose of "reduction, elimination or deferral of taxes", for only should transactions be considered evasive in which the objective of tax savings is manifestly the principal ("tax driven transaction").

There are, it is true, certain motivations which may have relevance in more than one quadrant.

The demonstration of this principal (tax) intent can, therefore, prove to be complex, and, in most cases, it will be, considering the inherent difficulties of proving the subjective aspect (that is, the motivations of the taxpayer), which, in the limit, would lead to "diabolic" or impossible proof.

In these terms, being in question the shifting ground of intentions, it cannot be imposed that, directly, the psychological and emotional state of the agents at the moment of performance of the acts or the execution of the transactions be demonstrated, for such access is not had.

Rather, the motivation of those subjects will be relevant, as it is revealed in objectively and concretely apprehensible facts, without such confusing, obviously, with mere embodiment, in documents, of declarations of intent. That is, proof of the tax purpose will be based, in accordance with the objective conception embraced by Article 63 of the C.P.P.T., on elements of fact, objective, from which inference is drawn relating to the intention of the taxpayer.

The Claimant alleges, as to this aspect, that the motivations which guided it were not fiscal, but economic, setting forth the following: i) the wish to equalize (thus attributing in equal terms) the power over the group, among shareholders C (holder of 56% of the capital of B…, S.G.P.S., S.A.) and D (holder of 44% of the capital), ii) the search for new shareholders for the group, by way of B…, S.G.P.S., S.A., to meet its financial needs, and iii) to reconfigure the group so that, in a scenario of entry of new shareholders, a sense of single vote would be preserved on the part of the aforementioned two shareholders, so as to prevent new shareholders from being able to ally with one of the original shareholders, forming a majority capable of imposing its will on the other.

With respect to the intention to equalize the exercise of corporate power and to prevent future coalitions which could prove prejudicial to one of the shareholders, admitting that such was an objective which moved the parties, it is manifest that they resorted to a most complex means to pursue that end.

The claimant dismisses the alternative solution of a shareholders' agreement between C and D, invoking that it would not be binding on new shareholders. It starts from the presupposition, therefore, that the new shareholders would not themselves be parties to that shareholders' agreement. They could, however, condition the sales of shares to adherence, by the new shareholder(s), to such an agreement. And neither would such circumstance render the sale of shares less attractive, given that the same effects of control which were implemented with the solution adopted would be produced.

The parties could also alter the articles of association of B…, S.G.P.S., S.A., so as to differentiate categories of shares (those held by C and D, relative to those of new shareholders), assigning to the shares of the original shareholders special veto rights in corporate resolutions. Nor can objection to this course be raised on the grounds that it would create situations of deadlock, given that it would generate the same blocking effects which were implemented with the solution adopted.

The Claimant is not, therefore, correct when it maintains that "no other solution would permit achieving, with equal effectiveness, this result."

There is not, however, qua tale, a legal obligation to resort to the legally most expedient and simple means of achieving a certain objective of an economic nature.

If it were to be considered, however, that one of the objectives to be achieved was, as the Claimant invokes, the attraction of new shareholders to B…, S.G.P.S., S.A., it could not (contrary to the allegation of the TA) redound against the Claimant the circumstance that, up to the date corresponding to the closure of discussion at this instance, no new shareholders entered the capital of the group, given that, for various reasons, management objectives are not always achieved immediately or within the desired timeframe.

It is important to highlight, however, a particularly salient circumstance: what distinguishes the complex path for which the parties opted, relative to all the other paths (simpler), cited as alternatives, is the fact that these latter do not provide the tax advantages which the adopted one granted. That in which these differ from the labyrinthine path selected consists, thus, in not creating credits in benefit of C and D, and as such, not permitting the tax advantage, achieved by this means, under personal income tax. That is, the solution adopted created, for the intervening subjects, advantages which none of the other paths would permit.

Faced with the foregoing, considering the frail nature of the alleged economic motivations, the manifest and notorious character of the tax advantage and the magnitude or significance thereof, it is concluded that such advantage could not have passed unnoticed by the parties and been perceived, weighed and desired by them, if not exclusively, at least principally.

All the more so since, as the Claimant refers, the transaction subjects were attentive and were knowledgeable of the tax regime, it being a factor taken into account at the level of the transaction planning in question, it being the case that the operation was "accelerated by the foresight of the amendment of the tax law (abolition of the exclusion from personal income tax of capital gains obtained from the sale of shares" (as referred to by the claimant in the initial petition).

The tax advantage sought thus assumes itself as prominent, to the extent that one can say that it represented a decisive impulse for the implementation of the operation which translates the element-means.

d) Element-abusive (normative) - this element is embodied in the requirement set forth above under subsection d), by force of which it is required that the acts or transactions have been performed by artificial or fraudulent means, with abuse of legal forms.

Although the foregoing findings suffice for the requirements corresponding to be considered met, these are, by themselves, insufficient for the application of the general anti-abuse clause. In fact, and as to what is referred to, for example, as the element-result, "in no case will a tax advantage or benefit indicate by itself any idea of legal abuse", for, in principle, taxpayers are free to choose the means to achieve their objectives, within the scope of their freedom of management or tax planning.

The threshold of legitimate tax planning is surpassed, however, when, to obtain advantages of a tax nature, resort is had to artificial means, fraud or, in general terms, abuse of forms. The application of the anti-abuse clause, in these circumstances, does not therefore wound the principles of freedom of transaction, freedom of management and choice of organizational forms, nor the freedom of "legitimate tax planning".

Thus, only when to the requirements just mentioned is associated that now being considered does the application of the anti-abuse clause appear legitimate, in that it is this last requirement that justifies the normative-systemic disapproval of the advantage obtained, having "as its primary function to distinguish cases of tax evasion from cases of legitimate tax savings, in consideration of the principles of Tax Law, such that only in cases in which a legal intention contrary to or not legitimating the result obtained is demonstrated can one speak thereof".

In the case at hand, abuse of form manifests itself, in a central manner, at a particular point, which is now to be explained. Such manifestation, however, is revealed in harmony and is further corroborated by other elements (which will equally be set forth), indicative of resort to artifice and abuse of forms.

The first and cardinal element to which we refer consists in the fact that, by virtue of the new architecture of the corporate group, engineered by the parties, through the set of operations explained above, the corporate group came to be headed by a company whose legal object consists in "the provision of marketing consultancy services, industrial design, elaboration, organization and development of prototypes, selection of materials, automation and precision measures, as well as consultancy in other areas of management". It represents, thus, a legal person manifestly not vocationed for the management of shareholdings, such management not being its corporate object. Different from the activity associated therewith (the corporate object of the company in question), that activity (management of shareholdings) involves an integrated and coordinated series of acts, projected over a set of shareholdings, which have profit as their objective and which "(…) can neither should be equivalent to an ineluctably static activity of mere collection of dividends".

If nothing requires that a corporate group be headed by a company managing shareholdings, highly doubtful is the aptitude of a company providing marketing and factory consultancy services to assume control of a company managing shareholdings. Anti-natural is revealed, in fact, in the case under analysis, that the role of each of the companies in question has been inverted, with the role of parent company of the group passing, from the company managing shareholdings, to the company providing marketing and factory consultancy services, thus unusually transforming, from a practical point of view, the latter (notwithstanding the specificity of its object), into "manager of the management company".

To this element of abnormality are added, however, as we mentioned above, various others, which corroborate the global image of artificiality, denouncing the illicit nature of the corporate architecture reconstructed by the parties. Elements which, if, by themselves, individually considered, might not be of a nature to, in an absolutely solid manner, permit the conclusion of the verification of the element in analysis, are so when considered in a coordinated manner, as, in reality, they took place.

Thus, for example, with the fact that all the transactions in question were always executed among the shareholders and the companies of which they were the sole holders of shares. It should be noted, specifically, that, by way of the aforementioned sequence of acts, the shareholders sold a company which they already held, to a company which they had acquired, only two months before, from the company subsequently transmitted.

Thus also, on the other hand, with the circumstance that there was never an actual financial flow as consideration for the transmissions effected, nor was a payment plan defined, nor interest for the capital owing, nor a penalty clause in case of non-performance. So much, contrary to what had occurred in previous contracts, by means of which C and D had acquired the shares of B…, S.G.P.S., S.A., between 2007 and 2008, within the framework of which a payment plan for the price was defined, interest for the capital owing and a penalty clause for non-performance.

It further adds that, in the sphere of B…, S.G.P.S., S.A., the value to be received, relating to this transaction, was recorded as a debit movement in "Other debtors and creditors" and not in "Shareholders", as it should have been and, in the sphere of A…, … S.A., the account to be paid, relating to this transaction, was recorded in the liabilities in "Other debtors and creditors" and not in "Shareholders", as it should have been. In both situations the intervening parties thus resorted, artificially, to conduct of little transparency, concealing the transactions with shareholders and reducing the capacity of the Tax and Customs Authority to scrutinize the respective tax treatment.

It is further relevant, the disproportionate comparative value attributed to the shares in the transactions effected. In fact, the sale price of the shares representing the capital of B…, S.G.P.S., S.A., in December 2009, between C and D, on the one hand, and A…, …, S.A., on the other, was significantly higher than that practiced among independent entities in 2007 and 2008, when those shareholders acquired the capital of B…, S.G.P.S., S.A.. In fact, when, between 2007 and 2008, the shareholders acquired 70% of that capital, they did so for a total value of €12,474,276, which has implicit an average valuation of 17,820,394 €. Already in December 2009, the value attributed to the shares transacted, among the related entities, was €42,000,000, which means that, between 2007/2008 and 2009, the value more than doubled. The price stipulated for the acquisition of B…, S.G.P.S., S.A. by A… S.A. represented, in these terms, more than twice that which had been attributed to the same assets two years earlier, without any independent valuation supporting it and with the questionability resulting from the fact that, on the selling and buying side, the same subjects were found.

The price attributed to the object of this transaction was based on an evaluation, made by the claimant, in accordance with the "multiples method".

Although the method of evaluation adopted is common in the practice of evaluation of companies, i) the fact that such evaluation was not made by an independent entity, ii) the circumstance that the multiples utilized as to comparable companies taken into account were not justified and iii) the fact that the financial debt which, as of 31 December 2009, includes at least €13,000,000, relating to the acquisition, from C, of the shareholding in I, was not deducted from the evaluation of the assets, greatly weaken the credibility of the evaluation in question.

In fact, the greater the price of this transaction, the greater would be the potential tax advantages inherent to the credit thus generated in favor of the shareholders (in a scenario of distribution of funds) and to the revaluation of the financial holding (in a scenario of future determination of capital gains).

The relevance of the evaluation act emerges, therefore, in the global architecture, when considering the potential of advantage, in the context of determination of capital gains, in case of alienation.

Notwithstanding the validity of the legal transaction not being put in question, since the parties can, as a rule, in accordance with their real will, determine the value of the transacted object, it is found that, in the present case, that value is exuberantly superior to the conditions practiced among independent entities in a very close temporal period, which cannot fail to assume relevance in the global context now being considered: that of the set of legal acts performed, perspectivized under the relevant framework within the scope of the legal figure which the Respondent mobilizes - general anti-abuse clause (which is not the special anti-abuse clause on transfer pricing, contrary to what the claimant suggests).

In that domain, "(…) what is at issue is the requalification of dividends and not the sale of shareholdings in the context of capital gains, which in the concrete case is merely instrumental relative to the final act of the circuit which is the reimbursement of supplementary contributions".

The inflation of the price thus represents another indication of resort, by the parties, to an artificial means of creation of tax advantages.

It is important to emphasize, moreover - and that makes particularly clear the abusively evasive objective which moved the parties - that the value paid, on 18 August 2010, by A…, …, S.A. to C and to D (€200,000 to each of these), is precisely the same (€400,000) that, a few days before (on 10 August 2010), had been transmitted, by B…, S.G.P.S., S.A. to A… S.A.. Value not taxed under corporate income tax (in accordance with the provision of Article 51 of the CIRC, relating to the elimination of double economic taxation of distributed profits). Thus, and by force of the performance of such acts, the payment of the tax value legally due would ultimately not occur if, if the anti-abuse clause were not applied, the appearance (created by the sequence of transactions arranged by the parties) of "reimbursements" to the shareholders subsisted.

Thus the evasive scheme underlying the entire sequence of transactions becomes transparent: the price not paid within the framework of the acquisition of B…, S.G.P.S., S.A. by A… S.A., was recorded as a credit of C and D relative to A… S.A. itself and converted into ancillary contributions, performed by them, to permit the configuration as "reimbursements" (and not, as it should, as distribution of dividends) of the financial flows that might circulate from A…, S.A., to those shareholders, arising from the value consigned under the designation of ancillary contributions. Thus would be subtracted from taxation that which is, materially, capital income corresponding to distributions of profits or advances on account of profits.

It is thus revealed, in a complete manner, the global image of the "artificial" or "fraudulent" means of evading the taxation of income which should take place (resulting, as aforementioned, from the application of subsection h) of Article 5(2) of the CIRS, with subjection to withholding at source at a liberatory rate of 21.5%, pursuant to subsection c) of Article 71(3) of the CIRS, in the wording given by Law No. 12-A/2010, of 30 June, to be effected by the entity owing the income - see subsection a) of Article 101(2) CIRS).

Only with the performance of such "reimbursements" is the evasive scheme thus consummated, which had begun, a few years earlier, with the complex sequence of transactions explained above.

Only then becomes clear, in a manifest manner, the dominant reason for the unusual sale of a company (B…, S.G.P.S., S.A.) to one of its former subsidiaries (A…, …, S.A.), when the latter does not have the characteristics nor the object of a company managing shareholdings, nor did it acquire them in the interim, being unable thus to derive the financial and tax advantages of a true company with that nature.

Only then is the reason understood for the fixing of such an elevated price for the transmission of shares; only then is the motive comprehended, in fullness, which led the shareholders to execute transactions which, in practice, almost represent contracts with themselves (although through interposed legal entities), in that no one other than the shareholders themselves intervenes in them; only then is it reached why the transactions did not give rise to any actual payment; only then does it become clear why the fixing of timeframes, guarantees or sanctions relating to the payment of the price was omitted.

If, act by act, the evasive purpose is not easily discernible, notwithstanding it causing strangeness at the unusual nature of each one of those acts performed, that purpose becomes, in the end, clear, permitting comprehension, in a particularly clear manner, of the intentional thread which unifies the scheme, considered in its entirety, at the moment in which it is consummated.

The evasive objective is thus uncovered: the heavy indebtedness of A…, …, S.A., would serve, in ultimate analysis, for the conversion into "reimbursements to the shareholders" of all the financial flows, generated in favor thereof, by means thereof: "reimbursements" which, given the amount of the debt, would cover, for many years, the distributions of profits and advances on account of profits generated by the corporate group headed by A…, without the corresponding tax obligations being met, given that "reimbursements" (contrary to the aforementioned distributions of profits and advances on account of profits) are not subject to taxation.

It is verified to occur, in summary:

a) a sequence of legal transactions of anomalous and unjustifiable complexity, as well as of doubtful effectiveness relative to the purposes stated by the parties and the available alternatives (requisite-means for application of the GAA);

b) developed with the intent, (if not exclusive) at least dominant, of obtaining a tax result different from that which would correspond to "normality" in transactions, generating the artificial over-indebtedness of a company, without any congruent and solid explanation, other than that of generating an "inflated" credit in favor of the shareholders, under the guise of right to reimbursement of ancillary contributions (intellectual requisite for application of the GAA);

c) thus leading (through apparent conversion of "taxable dividends" into "non-taxable reimbursements") to the consequence of the evasion of the corresponding tax duties (element-result requisite for application of the GAA);

d) through resort to means the artificial or fraudulent character of which is manifest (abusive requisite – normative - for application of the GAA).

Such requisites, in addition to being procedurally demonstrated, are substantially reflected within the framework of the administrative process of decision applying the general anti-abuse clause, this not suffering, consequently, from the invalidity alleged by the Claimant.

B - Concluded (in A) the analysis, in the concrete case, of the various prerequisites for valid application of the anti-abuse clause, contained in Article 38(2) of the General Tax Law, it falls to proceed to consider the second part of such norm, referring to the inferences to be drawn from the verification of such prerequisites, in the context of determination of the sanction to be applied to the taxpayer.

In accordance with that contemplated in the enactment of the mentioned provision, the fulfillment of the indicated requirements and the associated application of the anti-abuse clause leads (exclusively within the tax sphere) to the inefficacy of the acts or legal transactions deemed abusive and, consequently, "to taxation in accordance with the applicable norms", which determines the non-production of the "tax advantages" sought by the taxpayer, "with taxation then being carried out in accordance with the norms applicable in its absence and the stated tax advantages not being produced" (final part of Article 38(2) of the LGT).

That is, it being legitimate and due, in the present case, the application of the GAAC, the situation that, for tax purposes, would be verified, if the claimant entity had not performed the operation deconstructed by the application of the anti-abuse clause and, as a consequence thereof, considered ope iuris ineffective, must be reconstructed.

Such means, in the case at hand, to refuse the obtaining of the tax advantages enjoyed by the Claimant, it being necessary to consider it (the entity owing the income, in accordance with subsection a) of Article 101(2) CIRS), subject to withholding at source, at a liberatory rate of 21.5%, pursuant to subsection c) of Article 71(3) of the CIRS (in the wording given by Law No. 12-A/2010, of 30 June), falling, consequently, to be communicated to it the withholding assessment note corresponding to the value of withholding due and not delivered.

Which leads, precisely, to the acts of assessment which are the subject of challenge in the present action, not suffering from any invalidity on the grounds of the arguments adduced by the Claimant and analyzed above (at point II.2.3).

In these terms, the request of the Claimant fails when it maintains the illegality of the assessment acts on the alleged circumstance of the prerequisites for application of the anti-abuse clause not being met.

IV. DECISION

Considering the various reasons set forth above in the grounds, the Tribunal judges unfounded the request for annulment of the assessment acts which are the subject matter of the present action, with the consequent maintenance, in the legal order, of the assessments made.

V. VALUE OF THE CASE

In accordance with the provisions of Articles 306(2) and 297(2) of the CPC, Article 97-A(1)(a) of the CPPT and Article 3(2) of the Regulations on Costs in Tax Arbitration Proceedings, the value of the case is fixed at €99,976.76.

VI. COSTS

In accordance with the provisions of Articles 22(4) and 12(2) of the Legal Regime for Arbitration, Article 2, Article 3(1) and Articles 4(1) to (4) of the Regulations on Costs in Tax Arbitration Proceedings, as well as Table I attached thereto, the total value of costs, to be borne by the Claimant, is fixed at €2,754.00.

Lisbon, 4 November 2015

The Presiding Arbitrator,

Fernanda Maçãs

The Co-Arbitrators,

Nuno Miguel Morujão

Fernando Araújo