Process: 180/2019-T

Date: August 26, 2019

Tax Type: IRS

Source: Original CAAD Decision

Summary

CAAD arbitration case 180/2019-T addressed whether taxpayers could deduct Category F rental income losses without opting for englobamento (aggregation) under the Portuguese IRS system. The married claimants submitted their 2016 IRS declaration with joint taxation but without aggregation, as permitted under Article 72(8) of CIRS. Taxpayer A reported Category F gross income of €10,148.69 with expenses of €20,285.29, resulting in a net loss of €8,475.81 after the Tax Authority's corrections. Meanwhile, Taxpayer B had positive Category F income of €5,658.45, taxed autonomously at 28%. The claimants argued they should be allowed to deduct the 2015 and 2016 losses against the positive income. The Tax Authority rejected this claim, emphasizing that the claimants had explicitly chosen not to aggregate their income in both 2015 and 2016. Under Article 22(3) and Article 72(7-8) of CIRS, rental income is taxed autonomously at a flat 28% rate unless taxpayers opt for aggregation. The Authority argued that loss carryforward under Article 55 of CIRS is only available when taxpayers choose aggregation, as it requires determining net income across categories. The tribunal sided with the Tax Authority, ruling that taxpayers cannot benefit from autonomous taxation's flat rate while simultaneously claiming loss deductions available only through aggregation. This decision establishes that the englobamento option is a prerequisite for deducting Category F losses, and taxpayers must make a strategic choice at declaration time between simplified autonomous taxation and aggregation with loss offset possibilities.

Full Decision

TAX ARBITRATION JURISPRUDENCE

Case No. 180/2019-T

Decision Date: 2019-08-26

Tax: IRS (Personal Income Tax)

Amount in Dispute: €936.54

Subject Matter: IRS - category F; loss deduction; aggregation; articles 41, 55 and 72 of CIRS.

ARBITRAL DECISION

I – REPORT

  1. A... and B..., taxpayers, respectively... and..., residing at Street..., no...,...,...-... Lisbon (hereinafter referred to as the Claimants), married to each other, filed on 2019-03-14 a request for constitution of an arbitral decision, under the terms of article 2(1)(a), 5(2)(a), 6(1) and 10(1 and 2), all of Decree-Law No. 10/2011, of 20 January (hereinafter referred to as RJAT) and articles 1 and 2 of Regulation No. 112-A/2011 of 2 March, in which the Tax and Customs Authority (hereinafter designated as TA or Respondent) is requested with a view to declaring the unlawfulness of the act of rejection of the gracious appeal No. ...2018..., and consequently of the assessment of Personal Income Tax No. 2018..., relating to the year 2016, in the amount to be refunded of €936.54.

  2. The request for constitution of the Tax Arbitration Court was accepted by His Excellency the President of CAAD, and immediately notified to the Respondent according to law.

  3. Under the terms and for the purposes of article 6(2)(a) of RJAT, by decision of His Excellency the President of the Deontological Council, duly notified to the parties within the prescribed periods, the undersigned was appointed as arbitrator, who communicated to that Council the acceptance of the task within the period provided for in article 4 of the Code of Deontology of the Administrative Arbitration Centre.

  4. On 2019-05-06, the parties were notified of this appointment, and have not manifested the will to refuse the appointment of the arbitrator, under the combined terms of article 11(3), paragraphs a) and b) in the wording given to them by Law No. 66-B/2012, of 31 December.

  5. The singular arbitration tribunal was constituted on 2019-05-27 in accordance with the requirement of article 11(c) of RJT, in the wording given to it by article 228 of Law No. 66-B/2012, of 31 December.

  6. Duly notified for this purpose, through an order issued on 2019-05-07, the Respondent submitted on 2019-06-25 its response, and on that same date proceeded to attach the administrative file (PA).

  7. Through an order issued on the last of the aforementioned dates (2019-06-25), duly notified to the parties, which justified, inter alia, the waiver of the meeting referred to in article 18 of RJAT, and the submission of final arguments, the fifteenth of September of two thousand and nineteen was indicated as the foreseeable deadline for the rendering of the final decision and its notification to the parties.

  8. To substantiate their request, the Claimants invoke, in summary and with relevance to what matters here, the following (which is mentioned mostly by transcription):

8.1. That in the years 2015 and 2016, the IRS declarations were submitted with the option for joint taxation, without aggregation.

8.2. Regarding the year 2016, and for income from category F, the taxpayer A (A...) presented in the IRS declaration a gross income of €10,148.69 and expenses of €20,285.29.

8.3. The TA notified the Claimants to inform that it only accepted as deductible expenses the amount of €18,624.50.

8.4. As a result of the correction carried out by the TA, taxpayer A obtained a negative net income of €8,475.81.

8.5. On 03/10/2018, the Claimants were notified in the assessment note No. 2018..., relating to income for 2016, from which results the amount of €1,584.37 relating to autonomous taxation, corresponding to 28% of the value of the positive result (€5,658.45) of income from category F of taxpayer B.

8.6. The Claimants filed a gracious appeal regarding the IRS assessment for the year 2016, because losses in category F were not recognized.

8.7. The Claimants conclude their request for an arbitral decision by petitioning that the "unlawfulness of the IRS note No. 2018... be declared, correcting the taxable income of the Claimants by deducting the loss established in 2015 and taxation of the positive difference at the rate of 28%, with the consequent restitution of IRS unduly paid in the amount of €936.54", be declared.

8.8. The Claimants further petition for the payment of compensatory interest.

  1. As mentioned, on 2019-06-25 the Tax and Customs Authority attached the PA and submitted its response where, fundamentally, in brief summary, and for what is relevant here, it defends the following (which is likewise mentioned, mostly, by transcription):

9.1. The Claimants petition the annulment of the assessment in question, arguing that it is unlawful because it does not reflect the loss established in 2015 and taxation of the positive difference at the rate of 28% with the consequent restitution of IRS unduly paid and the recognition of losses of taxpayer A in the amount of €8,475.81. (cf. article 5 of the response)

9.2. The Claimants have absolutely no reason, as they appear to have forgotten the option they took regarding the taxation of income when filing the IRS declaration underlying the tax act that they now put in question. (cf. article 6 of the response)

9.3. Article 22(1) of CIRS provides that "income subject to IRS is that which results from the aggregation of income from the various categories earned in each year, after the deductions and reductions provided in the following sections have been made". (cf. article 7 of the response)

9.4. However, article 22(3) of CIRS provides that "income referred to in articles 71 and 72 earned by residents in Portuguese territory are not aggregated for the purposes of their taxation, without prejudice to the option for aggregation provided therein". (cf. article 8 of the response)

9.5. (...) article 72(7) of CIRS establishes that "rental income is taxed autonomously at the rate of 28%", and article 72(8) provides that "income provided in paragraphs 4 to 7 may be aggregated by option of their respective holders resident in Portuguese territory". (cf. article 9 of the response)

9.6. (...) subsuming the identified legal norms and doctrine to the case in question, it is verified that: (cf. article 12 of the response)

9.7. In the first place, the Claimants expressly declared that they are residents on the Portuguese mainland (IRS Model 3, box). [cf. article 13 of the response]

9.8. In the second place, the Claimants expressly declared that they did not opt for the aggregation of income earned by them (IRS Model 3 - Annex F, box 5 - field 11). (cf. article 14 of the response)

9.9. As they had already done in 2015. (cf. article 15 of the Response)

9.10. Therefore, by not opting for aggregation, the resident Claimants here chose to tax separately the income from category "F" through the application of a fixed rate to that gross income. (cf. article 16 of the response)

9.11. Even though the obligation to report such income in their respective IRS declaration remained. (cf. article 17 of the response)

9.12. (...) the Claimants meeting, as they did meet, the requirement of national residence set out in article 22(3) of CIRS, and having opted, as they did indeed opt, for non-aggregation of income from category "F", naturally they are now prevented from seeing the net result reflected in the amount of €8,475.81. (cf. article 18 of the response)

9.13. Because the carryforward of losses is a downstream operation that presupposes the adoption upstream of the option for aggregation – which, it is emphasized, did not happen in the case in question. (cf. article 19 of the response)

9.14. Hence, not having the Claimants opted for aggregation, they cannot now – to put it in terms – "obtain the best of both worlds", namely:

• The application of a fixed rate to income from category "F" to the detriment of the aggregation option; and

• Simultaneously the carryforward of losses underlying it and an option for aggregation that was not taken. (cf. article 20 of the response)

9.15. And this is sufficient, without more, for the arbitral request to be dismissed as to the question of loss carryforward, given that the assessment sub judice merely reflects the result of the taxation option freely taken by the Claimants themselves and, consequently, what is provided by tax law (cf, PA – Gracious Appeal) [cf. article 21 of the response].

9.16. The TA concludes its response by contending for the dismissal of the request for an arbitral decision and, consequently, for the maintenance of the impugned act in the legal order.

  1. The Singular Arbitration Tribunal is materially competent and is regularly constituted, under the terms of articles 2(1)(a), 5 and 6 of RJAT.

  2. The parties have legal standing and capacity, and are duly and legally represented, the TA by the lawyers it appointed, and the Claimants by themselves (articles 3, 6 and 15 of the Code of Procedure and Tax Process, ex vi article 29(1)(a) of RJAT.

  3. No exceptions have been raised that need to be addressed.

II – JUSTIFICATION

A. FACTUAL MATTERS

A.1. Facts Established as Proven

With relevance to the assessment and decision of the question raised, the following facts are established as proven and settled:

  1. The Claimants, married to each other, submitted their IRS Model 3 declaration for the year 2015 on 2016-05-31, validated under the number ...

  2. Having submitted the Model 3 declaration for the year 2016 on 2017-05-31, validated under the number ...

  3. In both income declarations, the option for joint taxation was indicated, without aggregation.

  4. The Claimants, after the correction promoted by the TA, under the terms of article 65(4) of CIRS, were notified of the assessment note No. 2018..., relating to the year 2016, with a result of an amount to be refunded in the amount of €574.35.

  5. In the aforementioned assessment note is the amount of €1,584.37, relating to autonomous taxation calculated at the rate of 28% on the amount of €5,658.45, this corresponding to the positive result achieved by the Claimant "B".

  6. From the identified assessment, the Claimants came to file, by electronic means, on 2018-10-25, a gracious appeal to the Tax Service of Lisbon..., to which was assigned number ...2018...

  7. This appeal was rejected by order dated 2018-12-20, notified to the Claimants.

  8. In the decision proposal that substantiates the rejection of the gracious appeal, the following is extracted:

From the Analysis of the Claim

"The Taxpayer files this gracious appeal against the IRS assessment for the year 2016, with number 2018/..., arguing that the carryforward of losses determined in category "F" does not depend on prior option for aggregation of rental income, and therefore requests the deduction from the result determined of the losses established in 2015.

Examining the documents existing in this tax service, namely the computer applications, it is verified that the appellant taxpayer filed the IRS declaration for the year 2015 on 31/05/2016, to which was assigned number ...-2015-..., in which he mentioned his marital status as married with option for joint taxation of income.

On 31/05/2017, the income declaration for the year 2016 was filed in the same manner, that is, mentioning the marital status with the option for joint taxation of income.

In accordance with article 22(1) of CIRS, the taxable income subject to IRS is that which results from the aggregation of income from the various categories earned in each year, after the deductions and reductions provided in the following sections have been made.

Until the amendment introduced by the State Budget of 2013, the net income from category "F" (rental income deducted from deductions in article 41 of CIRS), was aggregated with the remaining income for the determination of the general IRS rate to apply to all income.

After the aforementioned amendment, the rental income deducted from eligible expenses for the purposes of article 41 of CIRS, came to be taxed at an autonomous rate of 28% (paragraph e of article 72(1) of CIRS), the taxpayer being able, however, to opt for its aggregation, under the terms and conditions established in article 22(3) paragraphs b) and (5) of the same statute, by marking, for that purpose, such option in the respective "F" annex.

Article 55 of CIRS determines that, in relation to each income holder, the negative net result determined in any category is only deductible from its positive net results of the same category, stipulating in its paragraph b) that the negative net result determined in a particular year in category "F" can only be carried forward to the six years following that to which it relates.

From which it follows that, if the option for aggregation is not made, that is, if the income from category "F" does not enter the total count of net income subject to taxation, the aforementioned legal mechanism cannot be applied in such a situation.

Concluding, the option for autonomous taxation of rental income does not permit the deduction of losses determined in previous years, nor the carryforward of losses determined in the very year in which the option for autonomous taxation is exercised; the enjoyment of those "benefits" is conditioned on the option for aggregation of income.

Now, from the analysis of the "F" annexes that appear in the appellant's declarations, referring to the years 2015 and 2016, it is noted that the option for aggregation of the income in question was not exercised."

DECISION PROPOSAL

"Having analyzed the documents that instruct the proceedings, as well as the information from the computer system, and considering the legitimacy of the appellant, also considering the timeliness of the request, I am of the opinion that a decision of rejection of this appeal should be rendered."

  1. On 2019-03-14 the Claimants filed a request for an arbitral decision with the CAAD, which gave rise to the present case. (cf. CAAD procedural management computer system).

A.2. Facts Established as Not Proven

With relevance to the decision, there are no facts that should be considered as not proven.

A.3. Justification of Factual Matters Established as Proven and Not Proven

Regarding factual matters, the tribunal need not rule on everything alleged by the parties; rather, it is its duty to select the facts that matter for the decision and to distinguish proven from unproven matters (cf. article 123(2) of CPPT and article 607(3) of the Code of Civil Procedure, applicable ex vi article 29(1)(a) and (e) of RJAT).

In this way, the facts relevant to the judgment of the case are chosen in function of their legal relevance, which is established in light of the various plausible solutions to the question(s) of law (cf. article 596 of the Code of Civil Procedure, applicable ex vi article 29(1)(e) of RJAT).

Therefore, taking into account the positions assumed by the parties in light of article 110(7) of CPPT, the documentary evidence and the attached PA, the facts enumerated above are considered proven, with relevance to the decision.

B. ON THE LAW

– Object and Delimitation

Notwithstanding the fact that the request for arbitral decision (ppa) does not constitute a model of technical legal perfection, even presenting some difficulty of understanding, the truth is that, given the position assumed by the parties, it can be stated that the issue to be resolved will be in determining whether the Claimants, residents in Portuguese territory, not having opted for the aggregation of rental income (category F) in the IRS declarations, may or may not benefit from the carryforward of losses from previous years provided for in article 55 of CIRS.

In the case in question, the issue to be resolved will be the answer to the following: having the Claimants determined in category F of income subject to personal income tax losses in the amount of €8,475.81, relating to the year 2015 within the framework of category F, does the carryforward of such losses presuppose the option for aggregation of rental income?

– The Normative Framework with Reference to the Date of Relevant Facts (2016 Tax Year)

Article 8

Rental Income from Category F

"1. Rental income is considered to be rents of rural, urban and mixed properties paid or made available to their respective holders, when the latter do not opt for their taxation under category B".

Article 41 of CIRS – Deductions (in the wording introduced by Law No. 82-E/2014, of 31 December:

"1. From the gross income referred to in article 8, all expenses actually incurred and paid by the taxpayer to obtain or guarantee such income are deducted, with the exception of expenses of a financial nature, those relating to depreciations and those relating to furniture, household appliances and articles of comfort or decoration."

Establishing, in turn, article 55 of CIRS:

Article 55

Deduction of Losses

"1. In relation to each income holder, the negative net result determined in any category is only deductible from its positive net results of the same category, under the following terms:

(...)

b) The negative net result determined in category F can only be carried forward to the six years following that to which it relates.

c) The percentage of the negative balance referred to in article 43(2) can only be carried forward to the five years following that to which it relates.

d) The negative balance determined in a given year, relating to the operations provided for in paragraphs b), c), e), f), g) and h) of article 10(1), can be carried forward for the five years following when the taxpayer opts for aggregation.

Now, having analyzed, albeit summarily, the normative framework with relevance to the underlying factuality, and without prejudice to what will be stated below, it can be advanced, as a partial conclusion, that article 55(1)(b) of CIRS, in establishing the regime for deduction of losses in category F, does not require the aggregation of rental income as a condition for loss carryforward.

As to this segment, this tribunal subscribes to the understanding that "(...) article 55(1)(b) of CIRS, which establishes the regime for deduction of losses in category F, does not require the aggregation of rental income as a condition for loss carryforward. This conclusion seems to us indubitable, given the fact that article 55(1)(d) of CIRS, by contrast, expressly provides that the deduction of losses regarding capital gains on securities determined in the following years depends on the taxpayer's option for aggregation.

In this manner, had the legislator intended for loss carryforward in the framework of category F to depend on the exercise of the option for aggregation, it would have said so, just as it did regarding capital gains and losses on securities."

In a sense identical to what has just been transcribed, and in the face of factual circumstances similar to those in the present case, the arbitral decisions issued, under the aegis of CAAD, in case numbers 351/2018-T and 538/2018-T point (among others).

From the first of those cited, with due deference, we subscribe without any reservation:

"It follows from the aforementioned provision that, in relation to each income holder, a negative net result determined in category F in a given year is deductible from the positive net results of the same category, provided it is carried forward to the five years following that to which it relates.

Contrary to what is expressly provided in paragraph d) of article 55(1) of CIRS, relating to operations provided for in paragraphs b), c), e), f), g) and h) of article 10, the legislator does not condition the deductibility of losses determined within category F [provided for in paragraph b) of article 55(1) of CIRS] to the option, by the part of the income holder, for aggregation, in the year in which he seeks to make the deduction."

Continuing the decision we are following:

"The taxation of income from category F is realized, as a rule, through the application of a special rate (autonomous taxation rate) of 28%, as provided for in article 72(1)(e) of CIRS.

The special rates provided for in article 72 of CIRS have a nature distinct from the liberatory rates provided for in article 71, with which they are not to be confused.

In fact, the application of the rates provided for in article 72 of CIRS does not result in any withholding at source as final, nor does it free the income holder from the fulfillment of the inherent tax obligations, from the outset the obligation to declare.

The rate of 28% referred to in article 72(e) is applied to the net income from category F, that is, to the value corresponding to the gross (or net) income subtracted from the amounts corresponding to specific deductions and loss deductions, under the terms, respectively, of articles 41 and 55(1)(b), both of CIRS.

Article 72(8) of CIRS provides for the possibility of the income holder from category F opting for aggregation, but does not provide that the exercise of this option by the income holder is a sine qua non condition for the deductibility of any losses determined in the same category.

Nor does it follow from article 22 of CIRS that loss deductions are only admitted when there is aggregation of income.

Furthermore, as clearly results from the wording of article 55(1), the legislator does not provide that the deduction of losses in category F be made to aggregated income, but rather to the net income determined in the said category."

Given the foregoing, without need for any other considerations, and reverting to the situation in the case, there is no legal basis permitting the Respondent to refuse the deduction of losses within category F, in the circumstance that the taxpayers did not exercise the option for aggregation of income from category F.

The request for arbitral decision formulated by the Claimants therefore proceeds.

III – COMPENSATORY INTEREST

In accordance with article 24(b) of RJAT, an arbitral decision on the merits of a claim that admits of no appeal or challenge binds the tax administration from the end of the period for appeal or challenge, the tax administration being obliged, in the precise terms of the procedence of the arbitral decision in favor of the taxpayer, and until the end of the period for voluntary execution of the sentences of tax courts, to "restore the situation that would have existed had the tax act subject to the arbitral decision not been performed, adopting the acts and operations necessary for this purpose", which is in harmony with the provision in article 100 of LGT, applicable ex vi paragraph a) of article 29(1) of RJAT, which provides:

Article 100

Effects of Decision Favorable to Taxpayer

The tax administration is obliged, in the event of full or partial procedence of the appeal, challenge or recourse in favor of the taxpayer, to immediately and fully restore the act or situation that is the subject of the dispute, including the payment of compensatory interest, if applicable, from the deadline for execution of the decision.

Although article 2(1)(a and b) of RJAT uses the expression "declaration of unlawfulness" to define the competence of arbitration tribunals functioning under the aegis of the Administrative Arbitration Centre (CAAD), making no mention of condemnatory decisions, it should be understood that they comprise within their competencies the powers that in judicial challenge proceedings are attributed to tax courts, this being the interpretation that harmonizes and combines with the meaning of legislative authorization on which the Government based itself to approve the RJAT, in which it proclaims, as the first directive, that "the arbitral tax process must constitute an alternative procedural means to judicial challenge proceedings and the action for the recognition of a right or legitimate interest in tax matters".

Article 24(5) of RJAT, in stating that "payment of interest is due irrespective of its nature, under the terms provided for in the general tax law and in the Code of Procedure and Tax Process", should be interpreted in the sense of permitting the knowledge of the right to compensatory interest in arbitral tax proceedings.

Compensatory interest has a reparatory function for damage, damage that results from the fact that the taxpayer was unlawfully deprived of a certain amount for a determined period of time, aiming to place him in the situation in which he would have been had he not effected the payment that was unduly required of him.

In light of what has just been set out, and given the sense of the decision on the merits of the case, already signaled, this singular arbitration tribunal decides to condemn the Respondent to the payment of compensatory interest calculated from the date of determination of the balance of the assessment note No. 2018... until its complete refund.

IV – DECISION

In light of what has been set out, this Singular Arbitration Tribunal decides:

– to judge the request for arbitral decision to be well-founded

– to declare unlawful the IRS assessment No. 2018..., relating to the year 2016

– to declare the nullity of the decision rejecting the gracious appeal No. ...2018...

– to judge the request for refund of the amount of €936.54 to be well-founded, to which is added that referring to compensatory interest.

– to condemn the Respondent to the payment of the costs of the proceedings.

V – VALUE OF THE PROCEEDINGS

In accordance with the provisions of articles 296(1 and 2) of the Code of Civil Procedure, approved by Law No. 47/2013, of 26 June, 97-A(1)(a) of the Code of Procedure and Tax Process, and article 3(2) of the Regulation of Costs in Tax Arbitration Proceedings, the value of the proceedings is fixed at €936.54 (nine hundred and thirty-six euros and fifty-four cents).

VI – COSTS

Under the terms of articles 12(2) and 22(4) of RJAT and articles 2 and 4 of the Regulation of Costs in Arbitration Proceedings, and Table I attached hereto, the amount of costs is fixed at €306.00 (three hundred and six euros).

LET IT BE NOTIFIED

Text prepared by computer, in accordance with article 131 of the Code of Civil Procedure, applicable by referral of article 29(1)(e) of the Legal Regime of Tax Arbitration, with blank verses, and reviewed by the arbitrator.

[The wording of this decision is governed by the spelling prior to the 1990 Orthographic Agreement, except with respect to transcriptions made]

Twenty-sixth of August of two thousand and nineteen

The Arbitrator

(José Coutinho Pires)

Frequently Asked Questions

Automatically Created

Can rental income losses (Category F) be deducted through aggregation (englobamento) under Portuguese IRS rules?
Yes, rental income losses (Category F) can be deducted through aggregation under Portuguese IRS rules, but only if taxpayers explicitly opt for englobamento when filing their declaration. Article 72(8) of CIRS allows resident taxpayers to choose aggregation for rental income. Without this option, Category F income is taxed autonomously at 28% under Article 72(7), and losses cannot be offset against other income categories or carried forward under Article 55 of CIRS.
How do Articles 41, 55, and 72 of the CIRS apply to the deduction of Category F losses in IRS?
Article 41 of CIRS governs the determination of Category F income (rental and property income). Article 55 addresses loss carryforward, allowing losses from certain categories to be deducted in subsequent years, but this mechanism requires aggregation of income. Article 72 establishes autonomous taxation at 28% for rental income as the default regime, with Article 72(8) providing the option for aggregation. Case 180/2019-T clarified that these articles work together: loss deduction under Article 55 is only available when taxpayers opt for aggregation under Article 72(8), rejecting any interpretation allowing simultaneous benefits from both regimes.
What was the outcome of CAAD arbitration case 180/2019-T regarding IRS Category F income?
CAAD case 180/2019-T ruled in favor of the Tax Authority, denying the taxpayers' claim for €936.54 in refunds. The tribunal held that the claimants could not deduct Category F rental losses because they had explicitly chosen not to aggregate their income in their 2016 IRS declaration. The decision established that taxpayers who opt for autonomous taxation at the flat 28% rate cannot simultaneously benefit from loss carryforward provisions available only under the aggregation regime. The arbitrators emphasized that taxpayers cannot obtain "the best of both worlds" and must accept the consequences of their declaration choices.
Is it mandatory to opt for englobamento to deduct rental property losses against other IRS income categories?
Yes, it is mandatory to opt for englobamento (aggregation) to deduct rental property losses against other IRS income categories. Under Article 72(7-8) of CIRS, rental income is taxed autonomously at 28% by default. Only by exercising the explicit option for aggregation under Article 72(8) can taxpayers access the loss deduction and carryforward mechanisms in Article 55 of CIRS. CAAD case 180/2019-T confirmed this requirement, ruling that loss offset is a "downstream operation" that presupposes the "upstream" choice of aggregation at the time of filing the IRS declaration.
Can taxpayers challenge IRS liquidation decisions through CAAD tax arbitration after a failed reclamação graciosa?
Yes, taxpayers can challenge IRS liquidation decisions through CAAD tax arbitration after a failed reclamação graciosa (gracious appeal), as demonstrated in case 180/2019-T. Under Article 2(1)(a) and Article 10 of Decree-Law 10/2011 (RJAT), taxpayers may request arbitration following rejection of their administrative appeal. In this case, the claimants filed for arbitration on March 14, 2019, after their gracious appeal was rejected. The arbitral tribunal was constituted on May 27, 2019, and rendered a decision on the merits, confirming CAAD's jurisdiction over IRS assessment challenges as an alternative to judicial courts.