Process: 22/2016-T

Date: June 16, 2016

Tax Type: Selo

Source: Original CAAD Decision

Summary

Process 22/2016-T involved a taxpayer challenge to Stamp Tax (Imposto do Selo) assessments under Verba 28.1 of the General Stamp Tax Table (TGIS) totaling €10,337.92 for the 2014 tax year. The Claimant initiated tax arbitration proceedings at CAAD on January 21, 2016, seeking annulment of the assessments. After the single arbitral tribunal was constituted on March 31, 2016, and the Tax Authority submitted its response, the Claimant filed a motion on May 24, 2016, to withdraw the arbitration request pursuant to Article 283 of the Portuguese Civil Procedure Code (CCP). The Claimant also requested application of Law 7/2012 regarding extrajudicial dispute resolution. The tribunal ruled that withdrawal was permissible but required proper power of attorney with specific withdrawal powers under Article 45(2) CCP. Critically, the tribunal denied the application of Law 7/2012, holding that this statute does not apply to tax arbitration proceedings. Instead, the Regulation on Costs of Tax Arbitration governs, which explicitly provides in Article 4 that there is no refund, reimbursement, or compensation of arbitration fees beyond cases expressly provided in the Regulation. After the Claimant submitted proper documentation and paid the subsequent arbitration fee, the tribunal approved the withdrawal. Under Articles 283 and 285(1) CCP, withdrawal extinguishes the underlying right, meaning the Respondent (Tax Authority) was absolved of the request, and the contested Stamp Tax assessments were maintained in full. The tribunal fixed costs at €918, to be borne entirely by the Claimant per Article 22(4) LRTA. This decision establishes important precedents regarding procedural requirements for withdrawal, non-applicability of general ADR legislation to tax arbitration, and the finality of withdrawal on taxpayers' rights to challenge assessments.

Full Decision

ARBITRAL DECISION

I. Report

A…, S.A., a company with registered office at Street…, no.…, …, registered at the Commercial Registry under the unique registration number and collective person…, (hereinafter, the "Claimant"), filed a request with the Administrative Arbitration Centre (CAAD), on 21 January 2016, for the constitution of an arbitral tribunal in tax matters, pursuant to the provisions of Articles 2 and 10 of Decree-Law no. 10/2011, of 20 January (Legal Regime for Tax Arbitration, hereinafter referred to as "LRTA"), with the Tax and Customs Authority (AT) as the Respondent, seeking the declaration of illegality and consequent annulment of the assessment acts for Stamp Tax ("ST") relating to the year 2014, third instalments, corresponding to documents no. 2015… and 2015…, in the total amount of €10,337.92 (ten thousand three hundred and thirty-seven euros and ninety-two cents).

The Claimant elected not to appoint an arbitrator.

The request for the constitution of an arbitral tribunal was accepted by the President of the CAAD on 22 January 2016 and automatically notified to the AT on the same date.

The undersigned was appointed by the President of the Deontological Council of the CAAD as arbitrator of a single arbitral tribunal, pursuant to the provisions of Article 6 of the LRTA, having communicated acceptance of the appointment within the legal deadline, pursuant to the provisions of Article 4 of the CAAD Code of Professional Conduct.

The Parties were notified of the appointment of the undersigned on 15 March 2016, pursuant to Article 11, Section 1, subsections a) and b) of the LRTA, and did not object thereto.

The single arbitral tribunal was thus regularly constituted on 31 March 2016, in accordance with the provisions of Article 11, Section 1, subsection c) of the LRTA.

The AT was notified by arbitral order of 8 April 2016 to submit its response within a period of 30 (thirty) days.

The AT submitted its Response on 11 May 2016.

By arbitral order of 19 May 2016, the Arbitral Tribunal ordered notification to the Claimant to submit its statement on the exceptions raised by the AT in its Response within a period of 10 days.

By motion of 24 May 2016, the Claimant withdrew the Request for Arbitral Decision, pursuant to the provisions of Article 283 of the Code of Civil Procedure (CCP), applicable by virtue of Article 29 of the LRTA. Furthermore, it requested the application of the provisions of Article 5 of Law no. 7/2012, of 13 February.

By arbitral order of 30 May 2016, the Arbitral Tribunal indicated that the withdrawal of the request, which extinguishes the underlying right (Article 285, Section 1 of the CCP), is permissible. However, the Arbitral Tribunal noted that the power of attorney submitted with the case file did not include such powers, and therefore ordered the Claimant to submit a power of attorney conferring the same powers, pursuant to Article 45, Section 2 of the CCP. It further decided that the Claimant's request for the application of Law no. 7/2012, of 13 February, would not be granted, as such statute is not applicable to tax arbitration. The Regulation on Costs of Tax Arbitration is the applicable regulation, which clearly provides in its Article 4 that, beyond the cases expressly provided for in the Regulation, there is no refund, reimbursement or compensation of the arbitration fee, for any reason whatsoever. Furthermore, there is no referral provision that permits the application sought by the Claimant.

The Claimant submitted a power of attorney with special powers and proceeded to pay the subsequent arbitration fee.

The Parties have legal personality and legal capacity and are legitimate parties (Articles 4 and 10, Section 2 of the LRTA and Article 1 of Regulation no. 112-A/2011, of 22 March).

The proceedings do not suffer from defects that would invalidate it.

II. Decision

In view of the foregoing, the present arbitral decision approves and ratifies the declaration of withdrawal of the request presented by the Claimant.

Consequently, and pursuant to Articles 283, Section 1, 285, Section 1, 289, Section 1 a contrario and 300, Sections 1 and 3 all of the CCP, applicable by virtue of Article 29 of the LRTA, the Respondent is absolved of the request for arbitral decision, and the contested assessments are maintained.

Value of the proceedings: €10,337.92 (ten thousand three hundred and thirty-seven euros and ninety-two cents)

Costs: Pursuant to Article 22, Section 4 of the LRTA, and in accordance with Table I attached to the Regulation on Costs in Tax Arbitration Proceedings, the amount of costs is fixed at €918.00 (nine hundred and eighteen euros), to be borne by the Claimant.

Lisbon, 16 June 2016

The Arbitrator

Ana Pedrosa Augusto

Frequently Asked Questions

Automatically Created

What is Verba 28.1 of the Tabela Geral do Imposto do Selo (TGIS) and how does it apply to Stamp Tax assessments?
Verba 28.1 of the Tabela Geral do Imposto do Selo (TGIS) is a specific provision in Portugal's General Stamp Tax Table that governs certain taxable transactions or operations subject to Stamp Tax. While the decision does not detail the specific content of Verba 28.1, it applied to the Claimant's 2014 assessments totaling €10,337.92 across two assessment documents. Stamp Tax under various Verbas of the TGIS applies to a wide range of operations including financial transactions, guarantees, credit operations, and other documented acts. The application of Verba 28.1 resulted in third installment assessments for 2014 that the Claimant initially contested but ultimately withdrew from challenging, leaving those assessments in full force.
Can a taxpayer withdraw an arbitration request (desistência do pedido) at CAAD after the tribunal is constituted?
Yes, a taxpayer can withdraw an arbitration request at CAAD even after the tribunal has been constituted. Process 22/2016-T clearly demonstrates this: the Claimant filed a withdrawal motion on May 24, 2016, nearly two months after the tribunal was constituted on March 31, 2016, and after the Tax Authority had already submitted its response. The withdrawal is governed by Article 283 of the Portuguese Civil Procedure Code, applicable to tax arbitration via Article 29 LRTA. However, the legal representative must have specific powers of attorney to withdraw (Article 45(2) CCP). The tribunal will approve the withdrawal if procedural requirements are met, but this extinguishes the taxpayer's right to challenge those specific assessments through that proceeding.
What are the legal requirements for withdrawing a tax arbitration claim under Article 283 of the Portuguese Civil Procedure Code?
Under Article 283 of the Portuguese Civil Procedure Code (CCP), applicable to tax arbitration via Article 29 LRTA, withdrawing a tax arbitration claim requires: (1) A formal motion declaring withdrawal of the request; (2) A power of attorney specifically conferring powers to withdraw the claim, as required by Article 45(2) CCP - general powers of representation are insufficient; (3) Payment of any subsequent arbitration fees; and (4) Compliance with the timeline and procedural formalities. As established in Process 22/2016-T, withdrawal can occur at any stage of proceedings. However, pursuant to Article 285(1) CCP, withdrawal extinguishes the underlying right to challenge the contested acts, meaning the taxpayer cannot later re-litigate those specific assessments. The tribunal will absolve the Respondent (Tax Authority) and maintain the contested assessments in full force.
How does the withdrawal of an arbitration request affect the taxpayer's right to challenge Stamp Tax (Imposto do Selo) assessments?
Withdrawal of an arbitration request under Article 283 CCP has definitive and adverse consequences for the taxpayer's right to challenge Stamp Tax assessments. According to Article 285(1) CCP, withdrawal extinguishes the underlying right - this means the taxpayer permanently loses the ability to contest those specific Stamp Tax assessments through arbitration or other judicial means. In Process 22/2016-T, when the Claimant withdrew, the tribunal absolved the Tax Authority and maintained the contested €10,337.92 in Stamp Tax assessments in full. The assessments become final and enforceable. Additionally, under Article 22(4) LRTA and the Regulation on Costs of Tax Arbitration, the withdrawing party bears all arbitration costs (€918 in this case), with no possibility of refund of arbitration fees per Article 4 of the Regulation, regardless of the reason for withdrawal.
Does Law 7/2012 on extrajudicial dispute resolution apply when a party withdraws from CAAD tax arbitration proceedings?
No, Law 7/2012 of February 13 on extrajudicial dispute resolution does NOT apply when a party withdraws from CAAD tax arbitration proceedings. Process 22/2016-T explicitly addressed this issue when the Claimant requested application of Law 7/2012 upon withdrawal. The tribunal categorically denied this request, ruling that Law 7/2012 is not applicable to tax arbitration. Instead, the Regulation on Costs of Tax Arbitration exclusively governs. Article 4 of this Regulation clearly provides that beyond cases expressly provided in the Regulation itself, there is no refund, reimbursement, or compensation of arbitration fees for any reason whatsoever. The tribunal noted there is no referral provision permitting application of Law 7/2012 to tax arbitration. Therefore, taxpayers who withdraw from CAAD proceedings cannot invoke Law 7/2012 to seek fee refunds and remain liable for all costs under the tax arbitration-specific cost regime.