Summary
Full Decision
ARBITRAL DECISION
The arbitrators Dr. Alexandra Coelho Martins (arbitrator president), Dr. Pedro Miguel Abreu Marques and Dr. Ricardo Rodrigues Pereira (arbitrators members), appointed by the Ethics Council of the Administrative Arbitration Centre ("CAAD") to form the present Arbitral Tribunal, constituted on 21 June 2018, agree as follows:
REPORT
A..., S.A., a legal entity number..., registered at the Commercial Registry Office of Lisbon under the same number, with registered office at building...–..., Lisbon, hereinafter designated as "Claimant", presented a request for constitution of a Collective Arbitral Tribunal and for arbitral pronouncement, under articles 2, paragraph 1, subparagraph a), 5, paragraph 3, subparagraph a) and 10, all of the Legal Regime for Arbitration in Tax Matters ("RJAT"), approved by Decree-Law No. 10/2011, of 20 January, having as its object additional assessments of Corporate Income Tax ("IRC") relating to the tax periods 2013 and 2014, issued under numbers 2017... and 2017..., and respective compensatory interest (numbers 2017... and 2017...), as shown in account adjustment statements numbers 2017... and 2017..., in the total amount of € 376,973.62.
The Tax and Customs Authority ("AT") is the Respondent.
The Claimant requests the annulment of the said tax acts and the condemnation of the AT to pay compensation for undue provision of guarantee, under the provisions of article 53, paragraph 2 of the General Tax Law ("LGT").
As grounds for the request, it alleges error in the factual and legal premises, due to incorrect interpretation and application of articles 23, paragraphs 1 and 2, subparagraph c), 46 and 47 of the IRC Code and article 51 of the Tax Benefits Statute ("EBF"), as follows:
According to the Claimant, the financial charges incurred in the financial years 2013 and 2014, in the amount of € 827,840.29 and € 1,265,178.12, respectively, relating to foreign capital partially channelled, without remuneration, to related companies, do not fall outside the scope of its activity, contrary to what the AT understands. This use of funds falls within the object and social interest of the Claimant, which is not exhausted by the set of productive or operational operations. The shareholdings that the Claimant holds in other entities constitute an asset that is also part of its assets and pursue a profit-making purpose, as they may generate dividends and capital gains. The Claimant cannot refrain from having an active and strategic role in the management of these shareholdings and, if necessary, from providing the investee companies with financial means to develop their activities, with the majority of investee companies being in the same sector of activity as the Claimant. It is not necessary that the income-generating activity be carried out directly by the Claimant and, in that case (if it is not), such does not mean that third-party interests are being realised. Moreover, the individual interest of the Claimant must be contextualised within the common interest of the economic group to which it belongs.
The principle of freedom of business management that prevails in our legal system is satisfied by the economic causal relationship between expenses and the productive activity of the enterprise, with a view to obtaining profits, with the AT only being able to disregard expenses that do not have the potential to generate an increase in earnings, whereby the subjective judgment relating to the purpose of the loans obtained is not valid. On the other hand, the AT has not proven that the charges were incurred against the profit-making interest of the company, as it would have to do under article 74, paragraph 1 of the LGT, whereby the Claimant concludes that the financial charges satisfy the criteria set out in article 23, paragraph 1 of the IRC Code.
With regard to the proportional allocation method employed by the AT (value of loans obtained versus value granted), the Claimant argues for its inadmissibility, due to lack of legal support and provision of a proportional imputation criterion, the AT's "simple formula" being discretionary and arbitrary. Moreover, since direct allocation is possible, as appears to result from the response to the right of hearing, it is contradictory to apply this methodology and invoke the argument that the available elements did not make it possible to carry out a direct allocation of the financial charges incurred.
Additionally, the calculation formula created by the AT contains an error in treating supplementary contributions—a distinct reality—as loans granted, a position that is inconsistent with the position adopted by the AT itself in tax inspection procedures carried out in previous years, in which this treatment was not applied to supplementary contributions.
The Claimant rejects the argument that it should have suggested another method, not only because it understands that the financial charges are fully deductible, but also in light of article 74, paragraph 1 of the LGT, the burden of proof of the fulfilment of the legal prerequisites for assessment rests with the AT.
For the Claimant, the adjustment of the tax benefit applicable to shipowners of the national merchant fleet, in the financial years 2013 and 2014, is also not due, in the corresponding amount of € 651,242.67 and € 481,955.91, under article 51 of the EBF. The income recorded in accounts #78 and #79 derives from operations that form part of the concept of maritime transport activity carried out by the Claimant, regulated by Decree-Law No. 196/98, of 10 July, and inseparable from it, as necessary for its development, and therefore do not constitute ancillary activities excluded from the scope of the benefit, contrary to what the AT argues.
This interpretation respects the objective underlying the rule, which is to stimulate merchant fleet activity, as was subsequently established in the "Tonnage Tax and Seafarer" regime – Special Tax Regime for Maritime Transport Activity – which covers a set of activities necessary for the development of maritime transport, such as the alienation of operating assets, strategic, commercial, technical and operational management services and dredging.
The operation of ships requires, to function effectively as a whole, services directly related to the characteristics of the cargo. Maritime transport cannot be carried out without these operations. The leasing of forklifts and cranes (means of horizontal and vertical movement of cargo) and containers (which package the transported cargo) constitutes a provision of services carried out in connection with transport, essential to ensure delivery of cargo to customers. Some port terminals do not have this equipment, or it is not always available due to high traffic volume in the docks, making it essential to provide them to enable maritime transport, which involves placing cargo in containers, transporting containers and placing them on the ship (as well as the reverse process on arrival). Similarly, indemnities for container damage, or related to cargo packaging and handling, the sale of containers at the end of their useful life (approximately 7 years) and the charging of "demurrage" to customers, for exceeding the container return deadline, represent or generate income from maritime transport activity.
Equally inseparable from the (maritime transport) activity developed is the imputation of expenses to other Group companies associated with the implementation and parameterisation of an acquired computer application (recorded as an intangible asset of the Claimant), which is essential for the functional management of the transport process, from service scheduling to invoicing the customer.
With respect to profits generated recorded through application of the equity method ("MEP"), these are not relevant on a tax basis, nor do they have any impact associated with the application of article 51 of the EBF.
Furthermore, the AT subjected only the income to the general taxation regime and not the correlative expenses of those operations, so that the profit from those activities was not determined (and should have been), comprising the difference between income and expenses.
It is improper to adjust part of the tax loss determined in the financial year 2014, calculated in the amount of € 355,356.22, as a result of the alienation of a ship. The Claimant accepts the component relating to exchange rate differences, of € 56,033.71, but challenges the amount of € 299,322.51 arising from the change in the currency depreciation coefficient applied to the residual value of the ship.
This latter correction arises from the fact that the currency depreciation coefficient of 1.07, corresponding to the year 2010, in which the residual value was defined in the transition from the POC to the SNC, was considered, when, in the Claimant's view, the coefficient of 1.50 relating to the year of acquisition of the ship, 1996, should be applied, in accordance with article 47 of the IRC Code and Ordinance No. 281/2014, of 30 December. In the Claimant's perspective, the AT is based on the incorrect assumption that the residual value of the ship constitutes a "new" asset recorded in the accounting records in the financial year 2010, not applying the coefficient relating to the year of acquisition of the asset. Moreover, the application of the currency depreciation coefficients provided for in article 47 of the IRC Code is intended to reflect the effect of inflation on the acquisition value of assets for the purpose of determining the respective capital gain or loss resulting from their future alienation, taking into account the corresponding year of acquisition, and, in this case, the asset was acquired in 1996, and the coefficient for that year should be applied.
The Claimant concludes that the IRC assessment relating to the financial years 2013 and 2014 and the inherent compensatory interest are illegal, with the consequent duty of payment by the AT of compensation for undue provision of guarantee. It attached 29 (twenty-nine) documents and requested witness testimony.
The request for constitution of the Arbitral Tribunal was accepted by the President of CAAD and followed its normal proceedings, including notification to the AT.
In accordance with articles 5, paragraph 3, subparagraph a), 6, paragraph 2, subparagraph a) and 11, paragraph 1, subparagraph a), all of the RJAT, the Ethics Council of CAAD appointed as arbitrators of the Collective Arbitral Tribunal the signatories, who communicated acceptance of the mandate within the applicable deadline.
The parties, duly notified of this appointment, did not object, in accordance with articles 11, paragraph 1, subparagraphs b) and c) and 8 of the RJAT and articles 6 and 7 of the Code of Ethics of CAAD.
The Collective Arbitral Tribunal was constituted on 21 June 2018, as communicated by the President of the Ethics Council of CAAD.
The Respondent presented a reply and attached the administrative file ("PA"). On the partial non-deductibility of financial charges, it emphasises that the interest applied in operations, as provided in article 23, paragraph 2, subparagraph c) of the IRC Code, must be in the activity pursued by the entity itself that bears them and not by other companies or third parties. Each company is an autonomous taxable subject, as determined by article 2, paragraph 1 of the said code, regardless of whether or not it is part of a group of companies.
The Respondent advocates that the concept of indispensability contained in article 23, paragraph 1 of the IRC Code (2013) and the economic causal nexus (2014) cannot be disconnected from the factuality of the specific case. In the Claimant's situation, financing to the parent company itself stands out, which benefits from these without payment of any remuneration, resulting in a transfer of results – an indirect profit diversion. Thus, for the AT, the expenses were borne by the Claimant in the interest of others (the parent company) and not in its activity, whereby the conditions for consideration as a tax expense provided for in article 23 are not met, an interpretation that does not appear to be contrary to law.
With regard to the calculation method for financial charges not deductible for tax purposes, the Respondent considers that it was the absence of elements that would allow the specific allocation of expenses, which were not provided by the Claimant, that led the AT to resort to a proportional allocation formula, depending on the weight that non-remunerated financing to Group entities represents in the total financing obtained. This methodology is not prohibited by law and does not violate taxation based on actual income; the OECD recommends the use of proportions when necessary to overcome difficulties. Nor is it an indirect method, since it only takes into account the values of operations recorded in the accounts, which it takes to be true, merely altering their tax qualification as deductible expenses, whereby they constitute technical adjustments. In this regard, it is incumbent upon the taxable subject claiming full deduction of expenses to produce the burden of proof of the facts constituting the right it alleges, in accordance with article 74, paragraph 1 of the LGT.
With regard to article 51, subparagraph a) of the EBF, the Respondent argues that this rule limits the tax benefit to "[t]axation of profits resulting exclusively from maritime transport activity" stricto sensu, thus excluding income from ancillary or complementary activities, such as those expunged by the AT, whereby the correction carried out is not tainted by any illegality.
The recalculation of the tax benefit effected by the AT cannot accept the Claimant's claim to take into account expenses incurred for the acquisition of income recorded in accounts # 68 – Other Expenses and Losses and # 69 – Financing Expenses and Losses, due to the lack of evidence relating to management accounting by the taxable subject.
Finally, on the calculation of the capital gain in the alienation of a ship, the Respondent states that the "residual value of the ship" was not considered a new asset in 2010. What actually occurred was the updating of this "residual value of the ship" in 2010, at fair value of the market, whereby it does not make sense to update such an amount with a monetary depreciation coefficient relating to 1996 – the year of acquisition of the ship.
The Respondent requested dispensation of witness testimony and concluded that the request for arbitral pronouncement should be dismissed and the requests for relief should be denied with the legal consequences.
By order of 14 September 2018, the Tribunal determined that the meeting provided for in article 18 of the RJAT be held, with examination of the witnesses indicated by the Claimant, given the potential contribution to ascertaining the material truth. The meeting was postponed due to an impediment on the part of the Respondent.
On 27 November 2018, the said meeting was held, in which the two witnesses for the Claimant, B... and C..., were heard.
The Tribunal notified the parties for successive written submissions and extended by two months the time limit for delivery of the decision, in accordance with article 21, paragraph 2 of the RJAT. Finally, the Claimant was cautioned to, by the end of the deadline, proceed with payment of the subsequent arbitration fee, in accordance with article 4, paragraph 3 of the Costs Regulation in Tax Arbitration Proceedings and to communicate this payment to CAAD.
The Claimant and Respondent presented submissions maintaining, in essence, the arguments set out in the request for arbitral pronouncement and the reply, respectively.
The time limit for the decision was extended by two additional months, under article 21, paragraph 2 of the RJAT, given the complexity of the matters.
PRELIMINARIES
The Tribunal was regularly constituted and is competent ratione materiae, given the configuration of the object of the proceedings (cf. articles 2, paragraph 1, subparagraph a) and 5 of the RJAT).
The request for arbitral pronouncement is timely, as it was presented within the deadline provided in subparagraph a), paragraph 1, of article 10 of the RJAT.
The parties have legal personality and capacity, have standing and are regularly represented (cf. articles 4 and 10, paragraph 2 of the RJAT and article 1 of Ordinance No. 112-A/2011, of 22 March).
The accumulation of claims is admissible, inasmuch as it involves the assessment of identical circumstances of fact, even if relating to different financial years, and the same principles or rules of law, in accordance with article 3, paragraph 1 of the RJAT.
The proceedings are not vitiated by nullities, no exceptions having been raised.
REASONING
FACTUAL MATTERS
With relevance to the decision, the following facts are deemed to be proved:
A. A..., S.A., here Claimant, is a Portuguese public limited company, classified under CAE 50200 – maritime freight transport, whose corporate purpose encompasses "maritime transport industry, including in particular insular maritime transport of cabotage and coastal shipping for the transport of persons and goods, ship chartering, as well as activities that may contribute to its development or to achieve its corporate objectives" – cf. Tax Inspection Report, also designated "RIT", contained in the PA and attached with the request for arbitral pronouncement ("ppa") - documents 1 (draft RIT), 2 (RIT), and 18 (permanent certificate).
B. In concrete terms, the main activity developed focuses on the exploitation of maritime traffic between the continental territory and the autonomous regions of the Azores and Madeira, inter-island traffic in the Azores and on the west African coast, covering traffic between northern Europe, Cape Verde and Guinea-Bissau – cf. RIT.
C. The Claimant is a subject to IRC covered by the general taxation regime of this tax – cf. RIT.
D. In fulfilment of its reporting obligations, the Claimant proceeded to file model 22 IRC statements for the financial years 2013 and 2014 on 16 May 2014 and 21 May 2015, respectively, determining a taxable profit of € 279,104.00 in 2013 and € 206,552.53 in 2014 – cf. documents 10 and 11 attached with the ppa and PA.
E. In the financial years 2013 and 2014, the Claimant presented the following balances of loans obtained (essentially banking) and loans granted (intra-group):
2013
2014
Loans Obtained
13,317,632.50
15,006,647.70
Relationship of participation - %
2013
2014
Loans Granted
7,226,112.82
7,726,339.88
D..., Lda
E..., SA
F..., SA
Subsidiary – 100%
Subsidiary – 100%
Parent company
1,520,909.15
1,038,478.60
4,666,725.07
134,673.68
7,591,666.20
– cf. RIT and Documents 16 and 17 attached with the ppa (Report and Accounts).
F. The Claimant also granted supplementary contributions to investee companies, with a view to strengthening their financial position, as shown in the following table:
Relationship of participation - %
2013
2014
Supplementary contributions granted
5,408,792.63
5,300,806.56
E..., SA
G..., SA
H...
Subsidiary – 100%
Associate – 20%
Subsidiary – 51%
1,600,806.56
3,700,000.00
107,986.07
1,600,806.56
3,700,000.00
– cf. RIT and Documents 15, 16 and 17 attached with the ppa.
G. The Claimant incurred, in the same financial years 2013 and 2014, financial charges from bank loans obtained of € 1,461,945.12 and € 1,424,276.25, respectively, having not received and/or recorded any income as a result of the financing granted to other Group companies – cf. RIT.
H. In the scope of its activity, the Claimant offers its customers a global transport service and integrated and customised solutions, using other specialised companies that have specific competencies, making it possible to offer efficient and integrated maritime transport – cf. testimony of the two witnesses examined.
I. The Claimant's regular cargo transport activity is based on the operation of ships, through its own fleet or with recourse to third-party fleet, and on a set of activities that allow the operation to function effectively as a whole. These activities are related to the characteristics of the cargo, ships and ports where the operations are carried out – cf. testimony of the two witnesses examined.
J. The lack of operational means for vertical movement (cranes) and horizontal movement (forklifts and reachstackers) of cargo from ships at ports made it imperative for the Claimant to use its own equipment to effect the loading and unloading of its ships, in order to carry out efficient transport and meet customer needs. In this regard, the Claimant, by ensuring that its ships have these loading and unloading means, provides for cases in which such means do not exist or are not available at the ports of embarkation and disembarkation, which occurs, even today, in many of the destinations where it operates, such as in some islands of the autonomous regions and in Africa and, at the time of the facts, also at the terminal used in Lisbon – cf. testimony of the two witnesses examined.
K. Indeed, this was the case with the Lisbon Port Terminal, which did not have shore-based cranes that would allow the ship to be unloaded (vertical movement) and cargo delivered to customers. For this reason, cargo was necessarily moved using the cranes available on board the various ships of the Claimant – cf. testimony of the two witnesses examined and Documents 22 and 23 attached with the ppa (invoices issued to I...).
L. The Claimant cannot, however, directly operate, with its crew, the loading and unloading means it has at ports. According to the regulations applicable to the sector, this activity must be carried out by port operators. Thus, the forklifts and cranes of the Claimant, used for the loading and unloading operations of its ships, are always operated by employees of port operators, with the Claimant having to charge port operators for service provision of leasing of forklifts and cranes for loading and unloading of its ships, at the port terminals (as occurred with the invoicing of the service to port operator I...). These operators then invoice their services in the normal manner – cf. testimony of the witnesses.
M. The maritime transport service provided by the Claimant is containerised, constituting the system that best packages cargo and ensures its identification, with cargo generally not being transported in bulk. Thus, without containers it would not be possible for the Claimant to transport cargo on its ships and carry out its activity – cf. testimony of the two witnesses examined.
N. For reasons of efficiency, the Claimant operates in partnership with other companies in the same economic group – J... and K... – several regular containerised cargo lines, minimising the duplication of assets, structures and their respective costs. Thus, the container fleet operated by the Claimant is also used by those two entities to serve their direct customers, being managed in a centralised manner by the Claimant, which imputes and charges them the respective share of usage – cf. testimony of the witnesses and Document 24 attached with the ppa.
O. In 2013 and 2014, the Claimant received indemnities for damage occurring to containers (related to cargo packaging or container handling), or other equipment, which were attributed to the port operator or the customer, giving rise to pecuniary compensation to the Claimant and the recording of the corresponding income. These indemnities are also due by insurers, in cases where there is insurance coverage, as is common – cf. testimony of the two witnesses examined and Document 25 attached with the ppa.
P. The indemnities in question normally have associated expenses, relating to the repair of damage that occurred to the equipment – cf. testimony of the two witnesses examined.
Q. The Claimant imputed and charged to other companies of the economic group to which it belongs (L... and M...), in the financial year 2013, part (€ 365,000.00) of the expenses associated with the implementation and parameterisation of a computer application it had acquired and recorded as an intangible asset, for operational management of maritime transport activity and monitoring of the entire transport process, from service scheduling to invoicing the customer, to the extent that those investee companies also benefit from (and use) the said application – cf. testimony of the two witnesses examined and Document 26 attached with the ppa.
R. Whenever there is an anomaly in transported cargo, there is compensatory indemnification for the damaged cargo, to be paid by the Claimant to its customer, resulting in an expense in its sphere. However, as they are insurable events, the Claimant receives monetary compensation from the insurer (on the value of the damage paid to the customer), which it recognises as income. In the financial years 2013 and 2014 the Claimant obtained income of this nature in the amounts of € 97,066.54 and € 23,340.03 – cf. testimony of the two witnesses examined and Document 27 attached with the ppa.
S. In 2013 and 2014, the Claimant obtained income of € 93,736.25 and € 133,054.83, respectively, from the sale of containers whose useful life had expired, in particular for scrap, it being the policy of the Claimant to make available to its customers and partners quality containers, renewing them when they show clear signs of wear and their repair presents very significant values – cf. testimony of the two witnesses examined and Document 28 attached with the ppa.
T. In 2013 and 2014, the Claimant obtained income of € 95,000.00 and € 49,149.08, respectively, from supplementary income relating to "demurrage", which concerns the circumstance that customers, to whom containers were made available for them to package their cargo in the loading phase (filling the container), or in the return phase (emptying the container), exceeded the normal period stipulated for performing these tasks (the "free" period), being charged a fee for delay in loading/unloading the containers – cf. testimony of the two witnesses examined.
U. In this context, the Claimant proceeded to calculate the tax benefit provided for in article 51, subparagraph a) of the EBF, in force at the time of the facts (2013 and 2014), taxing only 30% of its profits, considering for this purpose the totality of its income on the assumption that it derived from maritime transport activity, including that resulting from activities connected/inseparable from this maritime transport, recorded in accounts #78 Other income and gains and #79 Interest and other similar income, namely container leasing, forklifts and cranes; indemnities for container and other equipment damage; cargo recovery and claims; sale of waste and scrap and administrative technical assistance – cf. Document 19 attached with the ppa, RIT and testimony of the witnesses.
V. During 2014, the Claimant alienated the ship..., which it had acquired in 1996. In this regard, it calculated an accounting gain of € 379,632.90 and a tax loss of € 15,627.54 – cf. Document 20 attached with the ppa (statement of gains and losses for tax purposes relating to 2014) and RIT.
X. Of the components considered in the calculation of the accounting and tax result of the ship sale operation, emphasis is placed on that referring to the residual value of the asset – of € 696,098.85 – which resulted from the fact that, in 2010, upon transition from the POC to the SNC, with the ship being fully depreciated for accounting purposes, it was revalued on the basis of the estimate of the realisation value that was expected to be achieved at that date (2010) if the asset were alienated (fair value). For the purpose of calculating the tax capital gain, the monetary depreciation coefficient corresponding to the year of acquisition of the ship (1996) – of 1.50 – was applied to this component, of € 696,098.85 – cf. RIT.
Z. The Claimant was subject to an external tax inspection action for the financial years 2013 and 2014, of limited scope, under service orders No. OI2017... and No. OI2017..., covering Value Added Tax ("VAT") and IRC – cf. Documents 1 and 3 attached with the ppa – RIT.
AA. As a result of this inspection action, the Claimant was notified, on 10 October 2017, of the draft tax inspection report, to exercise the right of hearing on the corrections advocated to the taxable income of IRC declared by the Claimant in those financial years 2013 and 2014, in the total amount of € 1,479,082.96 and € 2,811,637.37, respectively – cf. Document 1 attached with the ppa (draft RIT).
BB. The projected corrections relate to:
Financial charges not deductible for tax purposes, in the amount of € 827,840.29 and € 1,265,178.12, for 2013 and 2014 respectively, relating to loans obtained, the proceeds of which were transferred, without remuneration, to investee companies, under article 23 of the IRC Code;
Calculation of the tax benefit attributed to shipowners of the national merchant fleet, in accordance with article 51, subparagraph a) of the EBF, insofar as it included income from so-called "ancillary" activities, in the amounts of € 651,242.67 (2013) and € 481,955.91 (2014);
Exclusion of part of the tax loss determined in the financial year 2014, as a result of the alienation of a ship, in the amount of € 355,356.22, for being incorrectly calculated, with € 299,322.51 arising from the use of the currency depreciation coefficient of 2010 and not 1996, and € 56,033.71 from exchange rate differences that should not have been considered, in accordance with articles 46 and 47 of the IRC Code;
Losses from impairment of receivables not deductible for tax purposes, in the financial year 2014, due to non-compliance with the criteria set out in articles 28-A and 28-B of the IRC Code, in the amount of € 709,147.12
– cf. Document 1 attached with the ppa (draft RIT).
CC. On 25 October, the Claimant exercised the right of hearing, disagreeing with the position expressed by the AT – cf. Document 2 attached with the ppa.
DD. The AT maintained the advocated corrections, proceeding to notify, on 22 November 2017, the definitive Tax Inspection Report, on which an order of the Director of Finance of 20 November 2017 was favourable, the contents of which are hereby fully reproduced, from which the following reasoning is extracted, with relevance to the matter at issue in the present arbitration proceedings (cf. RIT – Document 3 attached with the ppa):
"III. – DESCRIPTION OF FACTS AND GROUNDS FOR PURELY ARITHMETIC CORRECTIONS
Following the inspection action carried out for the periods 2013 and 2014, the following facts were identified for purposes of IRC that are subject to correction for tax purposes.
III.1. – Financial Charges – 2013 and 2014
III.1.1 – Description of Facts
From the analysis of the accounts, it was verified that the company presents, in the two tax periods under analysis, financial charges arising from loans obtained from credit institutions, evidenced in the sub-accounts of account #25101 – Financing Obtained from Credit Institutions and #25202 – Securities Market – Commercial Paper.
On the other hand, it is verified that it grants loans to its subsidiary companies, associate companies and also to its parent company, the records of which are evidenced in the sub-accounts of account #26 – Shareholders and #41 – Financial Investments.
In tables 1 and 2, the financial position of A... is presented at the end of each of the tax periods under analysis, relating to the financing obtained and granted.
Table 1 – Loans granted to related companies (2013 and 2014)
Unit: euro
Related Companies
Loans Granted (balance at 31 December)
Shareholding in Share Capital
2013
2014
Shareholders (account #26)
Financial Investments (account #41)
Shareholders (account #26)
Financial Investments (account #41)
D... LDA
1,520,909.15
134,673.68
100%
E... SA
1,038,478.60
1,600,806.56
0.00
1,600,806.56
100%
G... SA
3,700,000.00
3,700,000.00
20%
H...
107,986.07
51%
G...
F... SA
4,666,725.07
7,591,666.20
61,733.86
Parent Company
Total
7,226,112.82
5,408,792.63
7,726,339.88
5,362,540.42
The entity G... SGPS despite not presenting a balance at the end of the tax periods recorded movements during the same.
Table 2 – Financial Position of Loans Obtained (2013 and 2014)
Unit: euro
Sub-accounts #251 and #252
Loans Obtained (balance at 31 December)
2013
2014
251010105
N...
251010203
O...
900,000.00
251010703
P...
140,000.00
251010902
Q...
421,875.00
234,375.00
251011005
R...
909,090.90
1,000,000.00
251011106
S...
727,272.72
251011107
S...
2,000,000.00
251011302
T...
1,005,000.00
251011401
U...
851,666.60
364,999.98
251011802
V...
2,735,000.00
635,000.00
252020101
W...
1,400,000.00
252020501
X...
5,000,000.00
252020901
Y...
2,500,000.00
2,500,000.00
252021601
Z...
5,000,000.00
13,317,632.50
15,006,647.70
The accounts relating to loans to N... and AA... despite not presenting a balance at the end of the tax periods recorded movements during the same.
The financial charges incurred with financing obtained from the various credit institutions are evidenced in the sub-accounts of account #69 – Financing Expenses and Losses and in account #6810205 – Stamp Duty, as shown in the values below.
Table 3 – Financial charges incurred (2013 and 2014)
Unit: euro
Sub-accounts #68 and #69
Financial Charges
2013
2014
681020501
Stamp Duty on Loans Obtained
67,113.54
102,057.43
69101
Interest – Loans Obtained
604,296.43
575,944.81
69103
Interest – Commercial Paper
431,234.88
438,439.47
69801
Other Financing Expenses and Losses – Loans Obtained
359,300.27
307,834.54
1,461,945.12
1,424,276.25
On the other hand, it should be noted that from the analysis of the sub-accounts of account #79 – Interest and Other Similar Income, from the analytical trial balances of 2013 and 2014, no evidence is found of income from collection of interest on the financing granted to the entities mentioned in table 1. [...]
From consultation of Q07 of the IRC DRM22 – Calculation of Taxable Profit, no positive adjustment is evident relating to the financial charges recognised in the accounts, in the periods referred to, considered non-deductible for tax purposes by A....
III.1.2 – Tax Framework
[...]
From 2013 to 2014 the wording of paragraph 1 of article 23 of the CIRC was altered, by Law No. 2/2014, of 16 January, the changes of which were intended to simplify and standardise its legal interpretation.
Article 23 of the CIRC establishes the general principle of deductibility of expenses, which, relating to the activity of the taxable subject, incurred or borne by it, are accepted in the determination of taxable profit.
The fundamental requirements for the financial charges borne by A... to be valued and accepted as a tax expense, in the periods under analysis, are therefore as follows:
1 – Their substantiation (justification) – a general requirement applicable to all expenses recorded, provided for in paragraph 3 of article 23 of the CIRC, following the 2014 legislative amendment, and paragraph 1 of article 23 of the CIRC, in the previous wording;
2 - Their connection to the statutory activity developed by the company, an activity which is presumed to generate income subject to IRC – requirement provided for in paragraph 1 of article 23 of the CIRC;
3 – Their connection to financial charges covered by subparagraph c) of paragraph 2 of article 23 of the CIRC.
From the data presented in point III.1.1, it is verified that the company channels part of the financing obtained from credit institutions for the free financing of related entities, bearing in full the respective financial charges for the use of credit, namely interest and stamp duty, among others. In turn, no recharging of the expenses borne is verified for the entities to whom financing was granted, nor the recording in income of any remuneration as counterpart to such transfer.
[...]
In the course of the inspection procedure, the taxable subject was notified to justify and/or present some informational elements relating to this matter [...]
The following sub-items received responses a), b) and d), which are transcribed herein:
"a) The nature of these financing is framed in the shareholding structure of participated and participating support for the implementation of the policies implemented by the company in the scope of its activity;
b) In addition to the funds generated by its activity, the company obtains financing from financial institutions present on the national market, there having been no variation compared to previous years; and
d) The company obtained no income from the financing it granted."
As stated, the taxable subject justifies the nature of the loans granted (recorded in account #26 – Shareholders and #41 – Financial Investments), in the context of supporting the implementation of the policies defined by the company, in the implementation of its activity.
It should be noted that the activities that form part of the corporate purpose of A..., described in point II.4.1 of this report, cover maritime transport activities, namely insular maritime transport of cabotage and coastal shipping and, also, transport of persons and goods, as well as any other activities that may contribute to the development of the foregoing, not including in this list any activities related to financial support and/or management of investee entities or in which it participates.
Analysing the structure of the loans granted [...] there is an increase in this item in the final months of 2014 compared to 2013. The loan granted to the parent company (F...– SGPS, SA) registers an increase of approximately 63%, representing this, almost the totality of the value of the loans granted in the period of 2014.
In 2013, the most representative are the loans made to the parent company and another corporate holding company – the E...– SGPS, SA, which is 100% owned by the taxable subject.
Of the various activities that the taxable subject may develop, covered by the corporate purpose registered in the CRCL and by the activities registered in the AT's cadastre, it is not evident, in what manner, any one of these activities, restricted to maritime transport, allow it to control and manage the activities exercised by other companies in the group. Taking as an example the financing granted to the parent company, which, being an SGPS, has as inherent to the legal regime under which it is classified, the main activity of management of the shareholdings of its participations, this being presumed, not the subsidiaries, to define a common policy for the entities in which it participates in the share capital and which it controls (through voting rights).
Nevertheless, the assessment of any operation that generates expenses or income must be made in an individualised perspective of each company to the detriment of a group management perspective. The maximisation of group profit may even justify a common commercial and economic policy, thought as a whole, and in that logic be attributed to one of the companies in that group, the performance of certain operations, whose expenses and income relate to several companies, but if it does so, it should bring such operations to account, dividing these results among the remaining companies.
Being this the case, A... should recharge to the beneficiary entities of the granted loans the respective charges in which it incurred.
The provision of article 23 of the CIRC is intended to prevent the deductibility of expenses with the pursuit of interests alien to the corporate activity of the taxable subject, hence the expenses recognised in its sphere must respect the taxable company itself, or as previously described, if that is not the case, must be "nullified" through the recognition of income, so as to be recompensed for such expenses, which fact did not occur.
In conclusion, the corporate scope of the various companies that constitute an economic group is distinct from that of the company that transferred the financing, and for a given amount to be considered an expense it is necessary that the respective activity be carried out by itself, not by other companies, even if in a relationship of dominance.
[...]
This is also the position sustained in several judgments of the Supreme Administrative Court (STA), which point to the non-deductibility of the financial charges contested, on the grounds that, under article 23 of the CIRC, only expenses relating to the activity developed by the taxable subject itself are deductible, the STA sustaining that, even when there is a relationship of dependence or dominance, companies have distinct personal and tax capacity and that were it not so, how could the exercise of the activity of one company be attributed to another with which it had some relationship (Judgment of 12 July 2006, Case No. 186/06, Judgment of 7 February 2007, case 1046/05 and the Judgment of 20 May 2009, case No. 1077/08).
The STA based the reasoning of its decisions by emphasising the autonomous character of the taxable subject, in the consideration of its costs or losses, reflected in the elucidative expression: "must respect first and foremost the taxable company itself, that is, for a given amount to be considered a cost of that company it is necessary that the respective activity be carried out by it itself, not by other companies".
That same jurisprudence seems to denote a concern to take into account all factual circumstances in which the taxable subject develops its activity to ascertain whether and to what extent the financing was, or was not, carried out with a view to profit and in the interest of the company itself.
With regard to the verification of requirement No. 3, it requires that financial expenses, in order to be accepted for tax purposes, be included in or related to those described in subparagraph c) of paragraph 2 of article 23 of the CIRC, that is, correspond to expenditures used in the "exploitation" of the company, which is equivalent to saying, in its statutory activity. The same subparagraph recognises as deductible for tax purposes, for example, interest derived from the use of foreign capital, provided that applied in the exploitation, being the remaining expenses associated with the use of such foreign capital understood to be accepted.
Given the foregoing, the financial charges borne by A..., resulting solely from credit obtained, corresponding to interest, stamp duty and others related to credit operations, have tax framework in subparagraph c) of paragraph 2 of article 23 of the CIRC. However, from its combination with paragraph 1 of article 23 of the CIRC, are only accepted, provided that applied in the development of its activity, as analysed in the context of requirement No. 2.
[...]
In the specific case, it is important to note that the financial charges whose deduction is under analysis relate to foreign capital that was not entirely applied in the exploitation of the activity of A... and that, being channelled free of charge to group companies, cannot be accepted for tax purposes.
In light of the foregoing, the financial charges borne do not represent, from the perspective of the activity of A..., an expense correlated with the development thereof, whose maximum corporate objective is the realisation of income, subject to tax, by directing part of the financing obtained to support the activities of group companies. Although there is no legal impediment to its transfer, nor is it intended to go against the principle of freedom of management attributed to companies, when such a situation occurs, these financing operations should be brought to account, for example, through the recharging to group companies of the proportional amount of the financial charges borne with respect to the amounts of loans granted for which no remuneration was charged (for example – interest).
In conclusion, on the grounds and facts presented, two of the fundamental requirements for the deductibility of the amount of financial charges recognised in the accounts are not considered to be met, as provided in article 23 of the CIRC.
III.1.3. – Financial Charges not accepted for tax purposes (2013 and 2014)
In light of the facts described and the verification of their tax framework, it is concluded not to accept the totality of the financial charges recognised by the taxable subject in the tax periods 2013 and 2014 [...].
Therefore, considering the items and balances presented in tables 1, 2 and 3, of this report, with evidence of loans granted, loans obtained and financial charges borne respectively, the proportional amount of the financial charges recognised in the accounts not accepted for tax purposes was calculated, the value of which is presented in columns (6) of the tables below.
Table 4 – Calculation of financial charges not accepted for tax purposes - 2013
Unit: euro
Period
2013
Loans
Obtained
Financial Charges
Total Financial Charges Incurred
Loans Granted
Financial Charges not accepted for tax purposes
Financial Charges accepted for tax purposes
Interest
Other Expenses
(1)
(2)
(3)
(4)=(2)+(3)
(5)
(6)=(5)*(4)/(1)
(7)=(6)-(4)
January
17,140,277.76
50,780.99
15,026.39
65,807.38
4,510,965.54
17,319.14
48,488.24
February
14,904,722.20
89,373.51
13,177.47
102,550.98
4,510,965.54
31,037.41
71,513.57
March
14,789,166.64
44,658.96
12,178.18
56,837.14
4,510,965.54
17,336.36
39,500.78
April
14,626,736.08
98,779.75
8,010.20
106,789.95
4,510,965.54
32,934.61
73,855.34
May
14,511,180.52
83,698.29
12,926.29
96,624.58
5,944,767.46
39,584.01
57,040.57
June
14,395,624.96
171,805.32
13,970.81
185,776.13
5,944,767.46
76,717.47
109,058.66
July
13,233,194.40
70,563.03
54,459.97
125,023.00
7,413,996.30
70,045.07
54,977.93
August
13,372,184.29
54,764.51
10,367.65
65,152.16
7,413,996.30
36,122.59
29,029.57
September
13,756,628.73
95,855.59
8,868.46
104,724.05
7,413,996.30
56,439.97
48,284.08
October
13,594,198.17
67,443.55
19,044.23
86,487.78
7,413,996.30
47,188.66
39,319.12
November
13,433,187.16
88,291.04
10,340.20
98,631.24
7,413,996.30
54,436.20
44,195.04
December
13,317,631.60
119,496.77
248,043.96
367,540.73
12,634,905.45
348,688.82
18,841.91
TOTAL
1,035,531.31
426,413.81
1,461,945.12
827,840.29
634,104.83
Table 5 – Calculation of financial charges not accepted for tax purposes - 2014
Unit: euro
Period
2013
Loans
Obtained
Financial Charges
Total Financial Charges Incurred
Loans Granted
Financial Charges not accepted for tax purposes
Financial Charges accepted for tax purposes
Interest
Other Expenses
(1)
(2)
(3)
(4)=(2)+(3)
(5)
(6)=(5)*(4)/(1)
(7)=(6)-(4)
January
14,555,201.94
50,452.78
10,397.95
60,850.73
12,634,905.45
52,822.57
8,028.16
February
14,394,191.83
59,317.29
11,485.71
70,803.00
12,634,905.45
62,149.32
8,653.68
March
14,278,636.27
82,821.19
23,723.73
106,544.92
12,634,905.45
94,279.66
12,265.26
April
14,413,080.71
115,126.73
9,815.97
124,942.70
12,709,905.45
110,178.38
14,764.32
May
14,205,195.61
87,148.93
15,453.19
102,602.12
12,719,905.45
91,874.08
10,728.04
June
14,089,640.05
114,944.06
12,606.85
127,550.91
12,839,846.58
116,236.76
11,314.15
July
13,927,209.49
79,240.60
11,715.61
90,956.21
14,131,132.34
92,288.00
1,331.79
August
13,766,199.38
95,819.89
14,945.68
110,765.55
13,092,653.74
105,346.07
5,419.48
September
15,510,643.82
119,551.42
13,681.57
133,232.99
13,092,653.74
112,462.99
20,770.00
October
15,493,213.26
74,112.47
13,346.11
87,458.58
13,099,653.74
73,947.03
13,511.55
November
15,572,203.16
77,098.86
12,055.29
89,154.15
13,099,653.74
74,998.28
14,155.87
December
15,006,647.60
58,750.06
260,664.33
319,414.39
13,088,880.30
278,594.98
40,819.41
TOTAL
1,014,384.28
409,891.97
1,424,276.25
1,265,178.12
159,098.13
For the calculation of the proportional amount of the financial charges recognised in the accounts but not accepted for tax purposes, the following premises were considered:
The value of the credit used monthly by the taxable subject, verified in the account statement of each loan on the last day of each month – credit balance of the sub-accounts of accounts #251 and #252 [column (1)];
The value of the credit granted monthly by the taxable subject, verified in the account statement on the last day of each month – debit balance of the sub-accounts of accounts #26 and #41 [column (5)];
The value of the monthly expenses recognised in accounts #68 and #69 [columns (2) and (3)];
From the consultation of the documentary support of the accounting records of the recognition of financial charges, it appears that these, are not sufficient to understand the cause and the indispensability of the expenses borne by A... for the pursuit of income, in the exercise of its activity, by not allowing the allocation of the loans obtained to the purposes to which they are destined, namely to credits used for financing related entities.
Thus, in view of the complexity of such allocation, a simple formula was defined that would allow allocation of part of the financial charges borne in obtaining bank credit, to the operation of financing related entities, as calculated in columns (6) of the above tables, so as to calculate the value of charges not accepted for tax purposes.
The detailed monthly calculation maps of the value of both the loans obtained used and the loans granted, as well as the financial charges recognised monthly, are attached on pages 14-21 of Annex I.
In light of the analysis carried out, it is concluded not to accept for tax purposes, partially, the financial charges recognised in the accounts in the periods 2013 and 2014.
The correction proposed to what was declared by the taxable subject, relating to the period of 2013, amounts to the value of € 827,840.29 and, that relating to the period of 2014, to the value of € 1,265,178.12, both for infringement of article 23 of the CIRC, in light of the grounds presented in this report.
III.2 – Tax Losses – 2014
III.2.1. – Description of Facts
In the tax period of 2014, the taxable subject recognised accounting gains with the alienation of assets as recorded in account #7870101 – Tangible Fixed Assets, in the amount of € 379,632.90, having been this value deducted in field 767 – Accounting gains, in Q07 of the IRC DRM22 for these not to contribute to the calculation of taxable profit.
In the same field, in field 739 – Positive difference between gains and tax losses without reinvestment intention (article 46), the amount of € 15,627.54 was added for the calculation of taxable profit.
Analysis of the Map of Gains and Tax Losses (Model 31)
From the analysis of Model 31, which is attached on pages 22-23 of Annex I, it is verified that the alienated asset, from which the accounting gain was calculated, mentioned above, refers to a ship named N/M....
The statement for the calculation of gains and tax losses presents several lines that correspond to the relationship of items acquired between 1996 and 2012 that make up the asset – the ship. Of which, the following stood out:
Table 6 – Detail of Model 31 map – (level of materiality – Items of AFT with impact on the value of tax losses determined above € 50,000.00)
Unit: euro
Line
Value of Realisation
Year
Acquisition Value
Depreciation Value
Difference
Depreciation Coeff.
Net Value Updated
Gain or Tax Loss
(1)
(2)
(3)
(4)=(2)-(3)
(5)
(6)=(5)*(4)
(7)=(1)-(6)
(1)
810,798.93
1996
6,554,510.96
5,858,412.11
696,098.85
1.50
1,044,148.28
-233,349.35
(2)
134,657.86
2011
1,088,576.23
653,145.75
435,430.48
1.03
448,493.39
-313,835.53
(3)
23,807.57
2012
192,460.80
76,984.32
115,476.48
1.00
115,476.48
-91,668.91
(4)
7,909.68
2012
63,943.59
0.00
63,943.59
1.00
63,943.59
-56,033.71
Legend:
Line (1) – N/M... (acquisition)
Line (2) and (3) – N/M... – Reclassifications
Line (4) – N/M... – Residual Value 31.12.2012 (exchange adjustment)
Value of realisation of the ship N/M... – column (1)
The said ship was alienated to the entity BB..., NIPC DE..., with headquarters in Germany, for the value of USD 2,550,000.00, which corresponded, on the date of alienation, to the value of € 1,933,576.01, as per the sale invoice No...., dated 2014-10-01, a copy of which is attached on page 24 of Annex I.
It should be noted that in Model 31, the total realisation value of the ship is attributed to various items that make up tangible fixed assets (AFT) – ship MV..., grouped under the following headings: N/M... (acquisition), N/M equipment, N/M reclassifications, N/M drydockings, and finally the adjustment of the exchange rate variation of the residual value of the ship.
The value of realisation of the ship was reduced by the expenses with the commissions for the sale of the ship, in the total amount of € 126,153.60, as documented in pages 25-27 of Annex I.
The said breakdown of the realisation value by groups of items, as observed in Model 31, does not have identical discrimination in the sales document, which mentions only the value of the sale of the ship in a global manner.
Acquisition value of the ship N/M... – column (2)
Documents requested from the taxable subject, substantiating the initial and subsequent costs of the ship, recorded in the accounts, between 1996 and 2012, were provided with the acquisition documents of the items that make up this AFT, of more significant value.
Below will be analysed the lines of table 6 – Detail of Model 31, with the greatest impact on the value of the calculation of the tax gain presented:
A... mentioned in Model 31, as per column (2), an acquisition value, in the amount of € 6,554,510.96, value indicated as the initial cost of acquisition of the ship N/M....
At the date of alienation of the ship, in 2014, it is verified that the ship still presents a net value updated of € 1,044,148.28, as per column (3), which, with the imputation of the share of the realisation value, of € 810,798.93 (in the alienation phase), led to the taxable subject calculating a tax loss of € 233,349.35, as per column (7).
With regard to line (1), the acquisition value of the ship presents a non-depreciated value of € 696,098.85, which was verified to be a residual value defined during the transition from the Official Chart of Accounts (POC) to the Accounting Standardisation System (SNC), with effects on financial statements from 2010 onwards.
The value was defined based on NCRF No. 7, depending on the weight of the ship and the average steel quotation, defined in specialised sector publications, which on 2009-12-31 was at USD 400.00 per tonne.
This residual value, when measured and recorded in the accounts, in 2010, had already been systematically depreciated together with the acquisition value of the ship, since 1996, whereby in 2010 the taxable subject made the following records:
Measurement of the residual value of the ship in its Tangible Fixed Assets
Annulment of the depreciation of the ship
Through the following accounting entry:
Debit of account 43803 – AFT – Basic Equipment by credit of account 64203 – Depreciation Expenses – Basic Equipment as per the journal of miscellaneous operations No. DO..., dated 2010-12-31 € 696,098.85
From consultation of the DRM22 of IRC of 2010, presented in a timely manner, it was verified that there was no adjustment to the results presented on account for this matter (see pages 28-29 of Annex I).
[...]
In summary, the following was verified from the facts analysed:
A... revalued the ship after it was fully depreciated (null net value) with a residual value (fair value) referring to the value attributed to the weight of the ship;
The residual value of the ship was revalued in USD;
The accounting entry reflects the annulment of the depreciation of the asset and its revaluation directly in the account corresponding to this fixed tangible asset:
With the alienation of the ship, it calculates a tax loss to which the residual value attributed to the ship contributed;
It uses the currency depreciation coefficient of 1.50 (applicable to the acquisition values of the year 1996) applied to the residual value defined in 2010.
III.2.2. – Tax Framework
In tax terms, paragraph 2 of article 46 of the CIRC states that:
[...]
And paragraph 1 of article 47 of the CIRC states:
[...]
Thus, we observe that the value of the gain or tax loss may, or may not, coincide with the value of the accounting gain or loss. The calculation of the gain or tax loss is carried out in accordance with the following formula:
Gain = VR – (VAQ – DAC – PI) x Coeff.
VR = Value of realisation net of expenses inherent to it
VAQ = Value of acquisition
DAC = Accumulated depreciation accepted for tax purposes
PI = Losses from impairment accepted for tax purposes
Coeff = Monetary correction coefficient
In the case under analysis, the following items are relevant for the purpose of calculating the gain or tax loss:
The value of acquisition of the ship and the various items that make up the asset € 14,611,230.29
The value of alienation of the ship and the various items that make up the asset € 1,807,422.41
The depreciation (accepted for tax purposes) calculated on the value of acquisition of the asset and the remaining items that make it up € 13,183,440.88
The monetary correction coefficient, as defined in article 47 of the CIRC and coefficient determined by Ordinance No. 281/2014, of 30 December.
III.2.3. – Correction to be made for tax purposes (Tax Gain)
From the analysis of the facts, the values evidenced in lines (1) and (4) of Model 31 stand out.
Table 7 – Detail of Model 31 map
Unit: euro
Line
Value of Realisation
Year
Acquisition Value
Depreciation Value
Difference
Depreciation Coeff.
Net Value Updated
Gain or Tax Loss
(1)
(2)
(3)
(4)=(2)-(3)
(5)
(6)=(5)*(4)
(7)=(1)-(6)
(1)
810,798.93
1996
6,554,510.96
5,858,412.11
696,098.85
1.50
1,044,148.28
-233,349.35
(4)
7,909.88
2012
63,943.59
0.00
63,943.59
0.00
0.00
Legend:
Line (1) – N/M... (acquisition)
Line (4) – N/M... – adjustment of the exchange rate variation of the residual value
Line (1)
As referred to, the tax loss calculated is being influenced by the value estimated by the taxable subject, in the year 2010, based on the total weight of the ship and the steel quotation of that year.
It is thus verified that the value designated as residual value corresponds to an estimated value attributed to the ship, in the final stage of its life, following the transition from the POC to the SNC, by application of the NCRF from the tax period 2010 onwards.
Taking into account the year in which this value was defined, the monetary depreciation coefficient to be considered for the purpose of calculating the gain or loss for tax purposes is 1.07, considering the lapse of time between 2010 and 2014, the year in which the ship was derecognised, by application of the monetary correction coefficient as referred to in article 47 of the CIRC applied to assets alienated in 2014, the coefficient of which is defined by Ordinance No. 281/2014, of 30 December.
Thus, and following the procedure used by the taxable subject in the distribution of the residual value by the components relating to the acquisition value of the ship, the acquisition value, in the amount of € 6,554,510.96, was decomposed into two lines: one relating to the residual value, of € 696,098.85, and another, relating to the gross value of the ship accounted for in 2014, proceeding with the recalculation of the gain or loss for tax purposes of the two lines, presented in table 8 on page 27 of this report.
Line (4)
The tax loss calculated in this line is being influenced by the exchange rate difference recognised by the taxable subject, relating to the residual value of the ship N/M....
[...]
In light of the foregoing, the gain or loss for tax purposes calculated as a result of the alienation of the ship N/M... was recalculated.
Table 8 – Recalculation of Gain or Tax Loss in Lines (1) and (4) of Model 31 map
Unit: euro
Line
Value of Realisation
Year
Acquisition Value
Depreciation Value
Difference
Depreciation Coeff.
Net Value Updated
Gain or Tax Loss
(1)
(2)
(3)
(4)=(2)-(3)
(5)
(6)=(5)*(4)
(7)=(1)-(6)
(1)
724,690.87
1996
5,858,412.11
5,858,412.11
0.00
1.50
0.00
724,690.87
86,108.06
2010
696,098.85
0.00
696,098.85
1.07
744,825.77
-658,717.71
810,798.93
6,554,510.96
5,858,412.11
696,098.85
744,825.77
65,973.16
(4)
7,909.68
2012
63,943.59
0.00
63,943.59
0.00
0.00
Legend:
Line (1) – N/M... (acquisition)
Line (4) – N/M... – adjustment of the exchange rate variation of the resid
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