Municipal Surcharge (Derrama) Self-Assessment Challenge: IRC Group Taxation Ruling 192/2013-T

Process No. 192/2013-T

Arbitral Decision

Claimant:
A …

Respondent:
Tax and Customs Authority (Ministry of Finance)

I. Report

1. A, a collective person with number … (hereinafter referred to as "Claimant"), submitted a request for arbitral decision, under the terms of paragraph a) of number 1 of Article 2nd and Articles 10th et seq. of Decree-Law No. 10/2011, of January 20th (Legal Framework for Arbitration in Tax Matters, hereinafter referred to as "RJAT"), in which the Tax and Customs Authority (hereinafter referred to as "AT" or "Respondent") is respondent, with a view to:

   i) the declaration of partial illegality of the self-assessment of the municipal surtax of the Claimant's fiscal group, relating to the fiscal year 2011, in the amount of € 105,348.16, with its consequent annulment in this part;

   ii) the reimbursement to the Claimant of this sum, plus compensatory interest at the legal rate; and

   iii) the condemnation of the Respondent to reimburse the Claimant for the expenses resulting from the litigation.

   By understanding that it incurred an error in the self-assessment of the tax, by virtue of the guidance provided in Circular No. … of the IRC Department, dated April 14, 2008, which does not conform with the legislation in force.

2. The request for constitution of an arbitral tribunal was accepted on July 29, 2013 by the Illustrious President of the Administrative Arbitration Center (hereinafter referred to as "CAAD") as a process in the arbitral procedure phase, with the AT being notified of the presentation of said request on July 30, 2013.

3. In the request for arbitral decision, the Claimant chose not to appoint an arbitrator. Under the terms of paragraph a) of number 2 of Article 6th and paragraph b) of number 1 of Article 11th of the RJAT, with the wording introduced by Article 228th of Law No. 66-B/2012, of December 31st, the Deontological Council of the CAAD appointed as arbitrators the Illustrious Councilor Jorge Lino Ribeiro Alves de Sousa, the Illustrious Doctor António Rocha Mendes, and the Illustrious Doctor Jorge Carita, which was notified to the parties on September 12, 2013.

4. In accordance with the provision in paragraph c) of number 1 of Article 11th of the RJAT, with the wording introduced by Article 228th of Law No. 66-B/2012, of December 31st, the collective arbitral tribunal was constituted on October 1st, 2013.

5. Both the response of the AT and the administrative process underlying the tax assessment in question were attached to the record and notified to the Claimant and to the arbitrators.

6. The meeting with the parties, referred to in Article 18th, number 2, of the RJAT, was dispensed with, given the repetition in previous processes of the questions raised, and the parties' lack of opposition to this dispensation, with the Tribunal, in light of this, having communicated to the parties that the final decision in the process would be delivered by January 6, 2014.

II. Appreciation of Preliminary Matters – Exceptions Raised by the Respondent

1. The Respondent, in its Response to the Claimant's request for arbitral decision, invokes certain exceptions which, by virtue of the fact that they could prevent knowledge of the merits of the claim, it is important to address in advance.

2. Indeed, these are questions summarized in Articles 79th and 80th of the Respondent's Response and consist of the following:

   A) Lack of passive standing of the AT – Tax and Customs Authority to be in court as sole defendant in matters concerning the Municipal Surtax, to the extent that this is a tax co-administered with the municipalities.

   B) The municipalities' interest to act in this litigation, in so far as, in addition to being co-administrators of the tax, they have a personal and direct interest in its outcome, and any decision rendered on the litigation should necessarily constitute res judicata in relation to them.

   C) The possibility of curing the alleged lack of passive standing through an incident of forced intervention, to be appreciated by the arbitral tribunal, a question that will, however, be dependent upon the appreciation of the question of the municipalities' non-binding nature to the jurisdiction of the CAAD and, consequently, the incompetence of the Arbitral Tribunal to render a decision on the merits of the question in litigation, in so far as this will not be apt to constitute res judicata in relation to the municipalities, which will have relevant consequences in the event that the Claimant's claim is granted, leaving this entity unable to execute the arbitral decision against the municipalities, because it will not have, as to them, the nature of res judicata.

   D) Safeguarding the possibility that the Arbitral Tribunal considers its competence to render a decision on the merits established, the incident of forced intervention of the municipalities is raised.

3. However, these arguments do not succeed, as will be explained, already invoked many times by the AT in processes concerning the taxation of the Municipal Surtax, and now again raised, all ultimately reduced to the question of the competence of this Tribunal to appreciate and decide the matter, having come to be unanimously understood that the CAAD has competence to render a decision on the merits without need for intervention of the municipalities.

4. And this is also the understanding that this Tribunal sustains.

Let us see:

A. Of the incompetence of the Arbitral Tribunal and lack of passive standing of the AT to be in court as sole defendant

First, we will address the alleged dilatory exception of incompetence of the arbitral tribunal, given that, if the arbitral tribunal is found to be incompetent, it is prevented from addressing the remaining exceptions and incidents. The decision on this exception must, therefore, precede knowledge of any other question.

1. The alleged incompetence of the arbitral tribunal to address the question sub judice is based on the fact that the municipalities are not subject to arbitral jurisdiction, due to lack of binding. Add to this that in the case of the surtax it is the municipalities that are the active subjects of the controversial tax legal relationship and not the AT.

2. Regulation No. 112-A/2012, in its Article 1st, establishes that: "By means of this regulation, the following services of the Ministry of Finance and Public Administration are bound to the jurisdiction of the arbitral tribunals that function, under the terms of Decree-Law No. 10/2011, of January 20th, in the CAAD - Administrative Arbitration Center: a) The General Directorate of Taxes (DGCI); and b) The General Directorate of Customs and Special Taxes on Consumption (DGAIEC)."

3. And Article 2nd of the same Regulation provides that "The services and organisms referred to in the previous article are bound to the jurisdiction of the arbitral tribunals that function in the CAAD that have as their object the appreciation of claims relating to taxes whose administration is entrusted to them".

4. It results, thus, from the cited provisions that the General Directorate of Taxes and the General Directorate of Customs and Special Taxes on Consumption - to which the Tax and Customs Authority succeeded - are bound to the jurisdiction of the arbitral tribunals that function in the CAAD and that have as their object the appreciation of claims relating to taxes whose administration is entrusted to them.

5. Thus, another question arises here whose answer is shown to be urgent, and which concerns to whom the administration of the Municipal Surtax falls.

6. On this point, it is irrefutable that the AT has: i) to carry out the administration of the tax (even though it does not have disposal over the destination of its revenue), in so far as it is that entity to which it falls to conduct the entire procedure of assessment and collection of the Municipal Surtax; and ii) to confirm the values declared and assessed by the taxpayers, in the relevant declarations, issue additional assessments and/or ex officio assessments, and also to supervise, through the services of tax inspection and the powers entrusted to it, compliance with tax obligations under this tax.

7. With relevance to the case, it should also be noted that the AT has the duty to appreciate and exclusively decide on gracious complaints filed by taxpayers and the consequent hierarchical appeals and, likewise, to review ex officio the self-assessment acts that have been issued based on error or grave or notorious injustice.

8. In this way, there are no doubts whatsoever as to the exclusive competence of the AT for the practice of the administrative acts of the Municipal Surtax.

9. In truth, the fact that we are facing a tax administered by the AT is not confused with the fact that the Municipalities are the beneficiaries of the revenue of the Surtax, the revenue of this tax reverting to them, as indeed happens with other taxes. However, to determine passive procedural standing, what is relevant is the ownership of the competence to assess and collect the tax – which falls, in the present case, to the AT by application of numbers 9th and 11th of Article 14th of the Law of Local Finances, and not the beneficiary of the revenue.

10. Therefore, the thesis of the Respondent does not proceed, in this part, as to the preliminary question raised, concerning the incompetence of the Arbitral Tribunal to pronounce itself on the claim presented by the Claimant.

B. Of the municipalities' interest to act and the necessity of their forced intervention

1. The Respondent argues that the Municipalities are co-administrators of the Municipal Surtax, which, consequently, would generate a situation of lack of passive standing, at least in part, in so far as the Municipalities should also be, in its view, equally sued.

2. However, as has already been established and explained above, to determine the procedural standing of the intervening parties, it is not necessary to know who is the tax creditor of the fiscal revenue in question, but rather to whom the law attributes the competencies for the assessment and collection of the tax – which, as we concluded above, falls to the AT.

3. Note Article 9th, number 1, of the Code of Tax Procedure and Process (CPPT) which provides the following: "Have standing in tax procedures, in addition to the tax administration, taxpayers, including substitutes and persons liable, other tax-obligated persons, parties to tax contracts and any other persons who prove legally protected interest." Providing, with similar importance, number 4 of the same article that "have standing in tax judicial process, in addition to the entities referred to in the previous numbers, the Public Ministry and the representative of the Public Treasury."

4. The Respondent understands and intends that it be considered that the Municipalities have personal and direct interest to act, by application of number 1 of Article 26th of the Code of Civil Procedure ("CPC"), which provides that "The plaintiff is a party with standing when he has direct interest to sue; the defendant is a party with standing when he has direct interest to contest", which would show the necessity of their forced intervention.

5. However, number 1 of Article 26th of the CPC does not have practical application to the present case, given that the provision in Article 9th of the Code of Tax Procedure and Process ("CPPT") constitutes a special rule on standing in tax judicial process and, therefore, precludes the application of that Article 26th of the CPC, invoked by the Respondent.

6. Accordingly, competence for the AT, under the terms provided for in the Law, and as we have seen, to carry out the effective administration of the Municipal Surtax with respect to all intermediate or final administrative acts and holding exclusive decision-making competence over these, must conclude that that entity has the powers for the representation of the tax-creditor entity in arbitral court as to the legality of acts of assessment or self-assessment of the Municipal Surtax.

7. With no provision attributing passive standing to the Municipalities, it is concluded that passive standing belongs, exclusively, to the AT to be in court in the present process.

8. And, in this way, considering that this competence belongs exclusively to the AT, it is understood that the appreciation of the forced principal intervention of the Municipalities is prejudged.

9. Therefore, the arguments put forth by the AT do not succeed as to the lack of standing of the Tribunal, nor do they succeed as to the necessity of having the Municipalities intervene in the present action.

III. Sanation

Given the preliminary matters, it is necessary to proceed with the Sanation of the Process:

The Arbitral Tribunal is competent (Article 2nd, number 1, paragraph a) of Decree-Law No. 10/2011, of January 20th).

The process contains no nullities or procedural incidents of which knowledge is necessary.

The parties have personality and judicial capacity, are legitimate and are legally represented (Articles 3rd, 6th and 15th of the CPPT, by cross-reference to Article 29th, number 1, paragraph a) of Decree-Law No. 10/2011, of January 20th).

IV. Matters of Fact

It is presented as a matter of fact proven and with relevance to the present decision:

1. The Claimant is a Company Managing Entity for Social Participations ("SGPS"), being, in 2011, the dominant company of a Group of companies taxed in accordance with the Special Regime for Taxation of Groups of Companies (RETGS), under the terms and for the purposes of the provision in Articles 69th to 71st of the IRC Code.

2. In its capacity as dominant company, the Claimant submitted, on May 31, 2012, its income statement Form 22 of the Group for the fiscal year 2011.

3. The income statement Form 22 reflects the determination of the taxable income of the Group in the fiscal year 2011, in the amount of € 513,400.50, calculated under the terms of Article 70th of the IRC Code.

4. And it presents, under the heading of Surtax, the amount for payment of € 112,946.49, which was self-assessed and delivered to the State coffers.

5. The Claimant, on January 11, 2013, filed a gracious complaint of the self-assessment of the Surtax, requesting its partial annulment, by virtue of considering that it incurred an error in the self-assessment of that tax, given that it is its understanding that the Surtax should have been based on the taxable income of the group, and not on the taxable income of each one of the companies (individually) that compose the fiscal group of which it is the dominant company, as sustained by the AT in Circular No. … of April 14, 2008 of the Department of Services of the Tax on Income of Legal Persons. Thus the Claimant understands that the self-assessed Surtax does not comply with the rules provided for in Article 14th, number 1 of the Law of Local Finances (Law No. 2/2007, of January 15th), according to the wording in force in the fiscal year 2011.

6. Through a circular of May 6, 2013 of the Unit of Large Taxpayers of the Division of Management and Tax Assistance, the Claimant was notified of the draft decision denying the gracious complaint, with the sole reason presented for the denial of the request, based on arguments put forth in the cited Circular, being disagreement with the substantive question.

7. Subsequently, after exercising its respective right to be heard, through a circular of June 20, 2013, of the Unit of Large Taxpayers, the Claimant was notified of the order denying the gracious complaint, converting into final the draft decision previously notified and on which the Claimant had pronounced itself.

The facts given as proven integrate matter not contested and documentally demonstrated in the record.

There are no facts given as not proven, in so far as all facts relevant to the appreciation of the claim were given as proven.

V. On the Law

A. Of the partial illegality of the assessment of the municipal surtax

1. The principal question sub judice is that of determining whether the calculation of the Municipal Surtax owed by a grouping of companies, subject to the RETGS, as to the fiscal year 2011, should be based on the consolidated income of the group, or, on the contrary, should be based on the individual income of each one of the companies composing that group.

2. To properly appreciate the question that occupies us, let us examine the most relevant legal provisions.

3. Number 1 of Article 69th of the IRC Code ("CIRC"), in the wording in force in 2011, provided that "1- Where there exists a group of companies, the dominant company may opt for the application of the special regime for the determination of the taxable matter in relation to all companies of the group."

4. And number 1 of Article 64th of the same instrument provided that: "Relative to each one of the taxation periods covered by the application of the special regime, the taxable income of the group is calculated by the dominant company, through the algebraic sum of the taxable incomes and fiscal losses determined in the periodic individual declarations of each one of the companies belonging to the group."

5. Already, the Law of Local Finances, in the wording in force in 2011, contemplated Article 14th which provided that "The municipalities may annually deliberate to levy a Surtax, up to the limit of 1.5% on the taxable income subject to and not exempt from corporation tax generated in their geographic area by taxpayers resident in Portuguese territory who exercise, as a principal activity, a commercial, industrial or agricultural activity and non-residents with permanent establishment in that territory".

6. With particular significance, in the latter legal norm cited, we find the reference that the Municipal Surtax will be levied "on the taxable income subject to and not exempt" from IRC. That is, we have that the object of incidence of the tax in question is not merely the "taxable income", but the "taxable income subject to and not exempt" from tax, therefore, the Municipal Surtax had as its basis of incidence the global taxable income of the group and not that corresponding to each company individually considered.

7. Indeed, only with the legislative amendment made with the entry into force of Law No. 64-B/2011, of December 30th (Budget Law of the State for 2012), the Surtax came to contain its own rule for determination of taxable income in a grouping such as that in question.

8. This Budget Law of the State for 2012 introduced an amendment to Article 14th of the LFL, establishing that "Where the special regime for taxation of groups of companies is applicable, the Surtax is based on the individual taxable income of each one of the companies of the group, without prejudice to the provision in Article 115th of the IRC Code."

9. Thus, with this legislative amendment, and whenever we are faced with the application of the RETGS, the Surtax came to be based on the individual taxable income of each one of the companies of the group. It removed, thus, the general rule provided for in the CIRC, which took into consideration the consolidated taxable income and not the individual taxable income of each company that integrates the group of companies subject to the RETGS.

10. On the matter, in fact, it was the position of the jurisprudence of the Supreme Administrative Court, before the legislative amendment effected by Law No. 64-B/2011, of December 30th, that the Municipal Surtax had as its basis of incidence the global taxable income of the group and not that corresponding to each company individually considered.

11. Thus pronounced itself that Court, in a Decision of February 2, 2011, considering that: "Providing the CIRC, in its Articles 69th to 71st, a special regime for taxation of groups of companies, situation in which the Claimant now appealed finds itself, and having this opted, as the law permits it, for the application of that regime for determination of the taxable matter in relation to all companies of the group, the determination of the taxable income, for purposes of IRC, is determined through the algebraic sum of the taxable incomes and fiscal losses determined in the individual declarations of the companies that belong to the group. And, thus determined the taxable income for the purposes of."

12. Now, this interpretation was repeated by the Supreme Administrative Court, still before the legislative amendment that is analyzed here, in a Decision dated June 2011, and can be considered settled, until that date, this interpretation within that Court.

13. And to this Arbitral Tribunal, this is, equally, the interpretation that appeared to be the most consonant with the literal element of the norm in question (Article 14th of the Law of Local Finances) and with the systematic logic of the normative system in force at the time. In fact, in accordance with the logic of fiscal unity that presides over the RETGS, with the subsidiary application of the norms of the CIRC, the companies belonging to a given group would be taxed in an aggregated logic.

14. In truth, there was no support in a literal or systematic interpretation of the relevant norms, before the amendments made by Law No. 64-B/2011, of December 30th, to consider that, for purposes of IRC, there would be only one fiscal entity and, for purposes of Surtax, there would be as many fiscal entities as those belonging to the group.

15. The AT comes, however, to argue, in this process, that Law No. 64-B/2011, of December 30th, in amending the normative text, and in establishing that "where the special regime for taxation of groups of companies is applicable, the Surtax is based on the individual taxable income of each one of the companies of the group" did no more than embody a mere interpretive law, without innovative character and that, therefore, this interpretation should be extended even to cases of assessment of Surtax prior to its publication, including that of the present case which relates to the fiscal year 2011.

16. It does not seem, however, to succeed the argument of the AT, and the materially retroactive application requested does not appear to be viable. Firstly, because we are not dealing with a norm of interpretive character, when we refer to the amendment promoted by Law No. 64-B/2011, of December 30th, to Article 14th of the Law of Local Finances, namely because the same comes to determine a solution manifestly contrary to that which resulted from the application of the previous norm, without the legislator having warned of its interpretive intention, rather giving sign of wanting to alter the regime in force (and which had conditioned the jurisprudence of the Supreme Administrative Court theretofore emitted, which the legislator was not unaware of).

17. On the other hand, it is the very Supreme Administrative Court that until then, for the reasons above cited, defended the position that the AT wishes to set aside through the retroactive application of the new wording of the norm – and which, it should be noted, at the time was manifestly the most compatible with the norms previously existing – that, in various pronouncements after the said amendment, clarifies that the norm does not have an interpretive character, but rather an innovative one.

18. See, specifically on the subject, the doctrine expressed in the Decision of the Supreme Administrative Court, dated May 2, 2012, where it was affirmed that "certainly the legislator would not fail to make this known in the respective text, saying that it was an interpretive norm. But it did not do so, nor is found in the text of the Budget Law of 2012 or in the referred number 8th of Article 14th of the Law of Local Finances any reference to the interpretive character of the norm or to any controversy generated by the solution of the previous law. It is certainly a different legislative option, perhaps motivated by the necessity to collect revenue imposed by the economic situation, given that the interpretation possible of the norm in its previous wording, adopted by the unanimous jurisprudence of this Supreme Administrative Court, had as a consequence a significant tax saving for groups of companies in which co-existed companies with taxable income and companies with fiscal losses".

19. This position was, in fact, confirmed in the Decision of July 5, 2012, where the same Court affirmed that "The norm of number 8 of Article 14th, introduced by the law of the budget of the State for 2012, cannot be applied to the case of the record because, by the interpretation that has just been made, it is not an interpretive norm that can be integrated in the meaning and scope of number 1 of the same article. (…) Being an innovative norm, which goes against the logic of the RETGS, the alteration that it introduces only applies from 2012 onwards, so the case of the record should be judged according to the meaning that had been given to the norm of number 1 of Article 14th of the Law of Local Finances of 2007, which leads to the dismissal of the appeal."

20. In this sense, that the new wording of Article 14th of the Law of Local Finances does not have an interpretive character and that, therefore, the norm of its number 8 only applies to cases subsequent to its entry into force, has unanimously pronounced itself the remaining jurisprudence of the Supreme Administrative Court that has addressed this question, after the legislative amendment to which we refer.

21. And, as to the jurisprudence of the CAAD, several decisions are verified to have followed the same understanding, standing out, among others, the decisions given in processes No. 19/2011-T of March 29, 2012, No. 2/2012-T of April 24, 2012, No. 5/2012-T of May 24, 2012, No. 16/2012-T of June 8, 2012, No. 23/2011-T of June 18, 2012, No. 40/2012-T of June 26, 2012, No. 38/2012-T of June 29, 2012, No. 18/2011-T of July 5, 2012 and No. 82/2012-T of October 18, 2012, among others.

22. To add, still, the recent Circular No. 19201 of November 8, 2013 of the Department of Services of the Tax on Income of Legal Persons which comes to give a final orientation as to the question at hand, in the sense that: "(…) considering that:

i) the jurisprudence already emitted, namely by the Supreme Administrative Court, on the determination of the municipal surtax to companies subject, within the scope of IRC, to the RETGS, is uniform and contrary to the interpretation assumed by the Tax and Customs Authority (AT) on the same matter;

ii) the amendment introduced by Law No. 64-B/2011 of December 30th, to Article 14th of the Law of Local Finances (LFL), was not introduced with an interpretive character;

It was, by the order of the Secretary of State for Tax Affairs (SEAF) No. 464/2013-XIX, of October 18, 2013, set out in the information of the Department of Services of the IRC No. 1846/2013, determined the non-application of the Circular Memo No. 20132, of April 14, 2008, of the IRC Department, in the part that refers to the RETGS (number 2 of that circular memo), relative to taxation periods whose taxable fact is considered to have occurred between January 1, 2007 and December 31, 2011, resuming in full its applicability to the following periods, in conformity with the new wording of Article 14th of the LFL (Law No. 2/2007).

Therefore, in procedures that are pending a decision, such as, in particular, gracious complaints, appeals or challenges, the understanding should be reflected that, as to companies subject to taxation in IRC within the scope of the special regime for taxation of groups of companies, the municipal surtax is based on the taxable income of the group and not on the individual taxable income of each one of the companies."

1. And by there being no reasons that undermine the solid arguments on which such jurisprudence is based, attending to the arguments put forth by the intervening parties in this process, it is equally the conviction of this Tribunal that the amendment to Article 14th of the Law of Local Finances, promoted by Law No. 64-B/2011, of December 30th, is applicable only for the future, and is not applicable to tax acts performed before its entry into force.

2. It should be said, in fact, that the fact that the Municipal Surtax has as its basis of incidence the global taxable income of the group appears to be more compatible with the constitutional principle of taxation on real income, enshrined in Article 104th, number 2 of the Constitution of the Portuguese Republic ("CRP"), which determines that "taxation of companies is based fundamentally on their real income", a situation weighed by the legislator who chose to amend the norm in obedience to other principles.

3. Presenting itself, in any case, the interpretation proposed by the analyzed jurisprudence as the most in accord with the principle, constitutionally enshrined, of the non-retroactivity of tax law (cf. Article 103rd, number 3, of the CRP).

4. Thus, following the jurisprudence of the STA and of this Arbitral Tribunal, we are of the understanding that, not having, at the date of the facts, the legal regime of the Municipal Surtax a normative provision that specifically disposed on the determination of its taxable matter in the context of a group of companies, this should be determined by the application of the common rules of the IRC, that is, attending to the taxable income of the group and not to the individual taxable income of each one of the entities that compose it.

5. Based on the above set forth, in particular based on the partial illegality above recognized, it is concluded that the Claimant self-assessed and paid Municipal Surtax in excess in the year 2011, in the amount of € 105,348.16.

6. It is concluded, thus, that the order denying the gracious complaint suffers from illegality, due to error on the legal presuppositions, in not recognizing the partial illegality of the acts of self-assessment of the Municipal Surtax for the year 2011, in regard to the use that was made in them of the taxable incomes of the companies that constitute the group, as the basis for calculation of the Municipal Surtax.

B. Of compensatory interest

1. Article 43rd, number 1, of the LGT establishes "Compensatory interest is due when it is determined, in a gracious complaint or judicial challenge, that there was error attributable to the services from which results payment of the tax debt in an amount greater than legally owed". It is established in number 2 of the same article that "It is also considered that there is error attributable to the services in cases in which, even though the assessment is made on the basis of the taxpayer's declaration, this party followed, in its completion, the generic guidance of the tax administration, duly published".

2. In the present case, the Claimant made the self-assessment of the Surtax in the declaration that it submitted, with the error generated showing itself to be attributable to the services in so far as the completion of the declaration resulted from the pursuit, by the Claimant, of doctrine contained in generic guidance, in this case the circular memo No. 20132/2008, of April 14.

3. The said circular memo affirms, in its point 2, that "for companies that integrate the perimeter of the group covered by the special regime for taxation of groups of companies, the municipal surtax should be calculated and indicated individually by each one of the companies in its declaration (…). The sum of the Surtaxes thus calculated will be indicated in field 364 of Table 10 of the corresponding declaration of the group, with payment falling to the dominant company (…)".

4. Therefore, the Claimant did no more than apply the understanding indicated in generic guidance of the General Directorate of Taxes, so that the error in the self-assessment shows itself to be "attributable to the services" and framed in number 2 of Article 43rd of the General Law of Taxation ("LGT").

5. Therefore, the request for compensatory interest proceeds, which should be counted, at the rate determined in accordance with the provision in Article 43rd, number 4, of the LGT, between the days in which the undue payments were made until the date of issuance of the corresponding credit notes.

VI. Decision

Attending to all the above set forth, this Arbitral Tribunal hereby decides:

– to judge well-founded the claim for partial annulment of the self-assessment of IRC and Surtax made by the Claimant relative to the fiscal year 2011, on the ground of a violation of law, due to error on the legal presuppositions, reflected in violation of number 1 of Article 14th of the Law of Local Finances, in regard to the determination of the taxable matter of the Surtax of the group of companies;

– to judge well-founded the claims for reimbursement of the sum of € 105,348.16 and payment of compensatory interest calculated on the basis of that sum, at the legal rate, from the date of payment until the date in which full reimbursement of that sum is made, condemning the Tax and Customs Authority to effect such reimbursement and payment.

Value of the process: € 105,348.16

Costs: Under the terms of Article 22nd, number 4, of the RJAT, the amount of costs is fixed at € 2,754.00, in accordance with Table I attached to the Regulation of Costs in Tax Arbitration Processes, to be borne by the Respondent.

Let this arbitral decision be registered and notified to the parties.

Lisbon, January 6, 2014

Text prepared by computer, under the terms of Article 138th, number 5 of the Code of Civil Procedure (CPC), applicable by cross-reference to Article 29th, number 1, paragraph e) of the Tax Arbitration Regime, with blank verses and reviewed by the Collective of Arbitrators.

The drafting of this decision is governed by the spelling prior to the Orthographic Agreement of 1990.

The Arbitrators,

Jorge Lino Ribeiro Alves de Sousa

António Rocha Mendes

Jorge Carita