CAAD Ruling 221/2018-T: Autonomous Taxation and PEC in Corporate Income Tax (IRC) 2013-2014

ARBITRAL AWARD

The Sole Arbitrator, Ana Teixeira de Sousa, appointed by the Deontological Council of the Administrative Arbitration Centre to constitute the Arbitral Tribunal, hereby rules as follows:

I – REPORT

1. A..., S.A. (hereinafter, "Claimant"), with unique registration and tax identification number..., with registered office in..., ...-... ..., notified of the dismissal of Hierarchical Appeal No. ...2016..., relating to self-assessments of Corporate Income Tax ("CIT") for the tax years 2013 and 2014, pursuant to which tax payable was determined in the amounts of €17,862.09 and €23,015.13 respectively, comes, under the terms of Article 2, No. 1, paragraph a), Article 5, No. 2, paragraph a), Article 6, No. 1 and Article 10, No. 2 of the Legal Framework for Arbitration in Tax Matters ("LFATM"), contained in Decree-Law No. 10/2011, of 20 January, to request the constitution of an arbitral tribunal.

2. The request for constitution of the arbitral tribunal was accepted by the President of CAAD and notified to the Tax and Customs Authority on 07-05-2018.

3. Pursuant to the provisions of paragraph a) of No. 2 of Article 6 and paragraph b) of No. 1 of Article 11 of the LFATM, with the wording introduced by Article 228 of Law No. 66-B/2012, of 31 December, the Deontological Council appointed the arbitrator, who communicated acceptance of the appointment within the applicable period.

4. On 20-06-2018 the parties were duly notified of this appointment and did not manifest any intention to challenge the appointment of the arbitrator, in accordance with the combined terms of Article 11, No. 1, paragraphs a) and b) of the LFATM and Articles 6 and 7 of the Deontological Code.

5. The Sole Arbitral Tribunal was constituted on 11-07-2018, in accordance with the provisions of Articles 2, No. 1, paragraph a), 5, 6, No. 1, and 11, No. 1 of the LFATM (with the wording introduced by Article 228 of Law No. 66-B/2012, of 31 December).

6. The Tax and Customs Authority filed a response, arguing for the inadmissibility of the request for arbitral pronouncement.

7. By order of 11-12-2018 the meeting provided for in Article 18 of the LFATM was dispensed with and it was decided that the proceedings would continue with successive written pleadings, the initial period having been extended in accordance with Article 21 of the LFATM.

8. The Claimant filed pleadings on 07-01-2019 and the Respondent on 22-01-2019.

9. To this extent, the subject matter of the present request for arbitral pronouncement is the decision dismissing the Hierarchical Appeal by the Tax Authority, in the context of which the annulment of the CIT self-assessments No. 2014... and 2015..., relating to the tax years 2013 and 2014 respectively, was requested.

10. As stated, the Claimant seeks to have declared the illegality of the CIT self-assessment acts No. 2014... and 2015..., relating to 2013 and 2014 respectively, in the context of which tax payable was determined in the amounts of €17,862.09 (2013) and €23,015.13 (2014), and, consequently, to have them annulled, in accordance with Article 2, No. 1, paragraph a) of the LFATM.

11. In the request for arbitral pronouncement, the Claimant essentially invokes, in its favour, that:

• Pursuant to Article 90, No. 2, paragraph d) of the CIT Code, "to the amount determined pursuant to the preceding number [CIT collection] the following deductions are made, in the order indicated: d) That relating to the special advance payment referred to in Article 106";

• The CIT Code therefore provides that the deduction relating to the Special Advance Payment (SAP) shall be made up to the limit of the CIT collection determined in the relevant taxation period;

• With the entry into force on 1 January 2014 of Article 23-A, No. 1 of the CIT Code, in accordance with which "The following charges are not deductible for purposes of determining taxable income, even when recorded as expenses of the taxation period: a) CIT, including autonomous taxes (…)", it appears to the Claimant to be undeniable and settled the question of the classification of autonomous taxes as CIT;

• The current rule resolves the question of the fiscal deductibility of autonomous taxes, in that Article 45, No. 1, paragraph a) of the CIT Code (in force until 31 December 2013) did not expressly mention them;

• Article 45, No. 1, paragraph a) of the CIT Code established that "The following charges are not deductible for purposes of determining taxable income, even when recorded as expenses of the taxation period: a) CIT and any other taxes that directly or indirectly affect profits";

• As can be seen from the new wording, now contained in Article 23, No. 1, paragraph a) of the CIT Code, it establishes unequivocally that autonomous taxation is CIT and, as such, is considered an expense not deductible for tax purposes;

• If the aforementioned Article 45, No. 1, paragraph a) of the CIT Code made no express reference to autonomous taxation, in the sense of including it in CIT, which in accordance with the general rules and principles of interpretation and application of laws above was not in itself an obstacle to qualifying it as CIT, Article 23-A, No. 1, paragraph c) of the CIT Code expressly includes it in CIT, with there now being a correspondence between the letter of the law and the legislator's intention that always sought to apply to autonomous taxation the entirety of the CIT regime;

• The fact that there exist in the CIT regime some specific rules for autonomous taxes, as occurs in Article 88 of the CIT Code, in which the tax base and rates applicable to autonomous taxation are established, cannot be used to argue that autonomous taxes do not qualify as CIT, insofar as they derive from the fact that the CIT regime itself, which is an indirectly assessed tax, includes elements of single obligation which is precisely the case with autonomous taxes;

• For this reason, and by application of the general rules and principles of interpretation and application of laws, it must be concluded that it was always the legislator's intention to classify autonomous taxes as CIT (i.e., it is itself CIT), an intention which is now literally enshrined in Article 23-A, No. 1, paragraph a) of the CIT Code;

• Now, classifying autonomous taxes as CIT, part of the value of the SAPs made by the Claimant should have been deducted from the CIT collection determined, pursuant to Article 90, No. 1 of the CIT Code, in the tax years 2013 and 2014, in the amounts of €17,862.09 and €23,015.13 respectively (which related exclusively to the amounts determined and paid as autonomous taxation);

• The SAP qualifies as a true advance payment of CIT ultimately due. Although this type of advance payment was initially considered a "minimum collection", only with the CIT reform carried out in 2000-2001 was its reimbursement prevented/restricted. In fact, with the subsequent 2013 CIT reform, in force since 2014, the possibility of reimbursement of the SAP at the end of the reporting period ceased to depend on the request by the taxpayer for a tax inspection;

• Both the possibility of reimbursement (except in 2001 and 2002) and the possibility of deducting the SAPs from the CIT collection have always existed. In fact, SAP amounts are always recovered by a diligent taxpayer compliant with the law, so we are never facing tax ultimately due, but rather a true advance payment of CIT ultimately due. Therefore, although the SAP may be considered, like autonomous taxes, to constitute a deviation from the principle of taxation by actual income, in fact, if the company is in a situation of tax loss it may recover the SAP amounts;

• Now, classifying as an advance payment of CIT ultimately due, there is no doubt that it can be deducted from CIT, which includes autonomous taxes.

1. The Claimant concludes by requesting:

• The annulment of the act expressly dismissing the hierarchical appeal, as well as of the CIT self-assessments No. 2014... and 2015... relating to the tax years 2013 and 2014, for having denied the deduction of the SAP from the CIT collection, which should include the amounts of €17,862.09 (2013) and €23,015.13 (2014) relating to autonomous taxation, thus failing to comply with the provisions of Article 90, No. 2, paragraph d) of the CIT Code;

• The condemnation of the Tax Authority to reimburse the amounts of €17,862.09 (2013) and €23,015.13 (2014), relating to autonomous taxation paid, on the grounds that such amounts form part of the CIT collection, from which the SAP in equal amount should have been deducted;

• The condemnation of the Tax Authority to pay compensatory interest to the Claimant, accrued and accruing until actual and full payment.

1. By means of the notification, the Tax Authority filed its Response, accompanied by the Administrative Record, sustaining the complete inadmissibility of the Claimant's request, arguing in its favour, among other things, the specific understanding set out in the Arbitral Decisions rendered in the arbitral proceedings Nos. 113/2015-T, 79/2014-T, 95/2014-T, 603/2014-T, 697/2014-T of this CAAD. It argues, fundamentally, as follows:

• "(…) the autonomous character of these taxes, resulting from the special configuration given to the material and temporal aspects of the taxable events, requires, in certain areas, the departure from or an adaptation of the general rules of application of CIT." (see Article 14 of the Defence);

• "In reality, the integration of autonomous taxes into the CIT Code (and the PIT Code), conferred a dualistic nature, in certain aspects, to the normative system of this tax, which was embodied, notably, in the framework of paragraph a) of No. 1 of Article 90 of the CIT Code, in separate determinations of their respective collections, because they must follow different rules." (see Article 15 of the Defence);

• "(…) there is not a single assessment of CIT, but rather two determinations; that is, two distinct calculations which, although processed, in accordance with paragraph a) of No. 1 of Article 90 of the CIT Code, in the returns referred to in Articles 120 and 122 of the same code, are made on the basis of different parameters, since each is embodied in the application of its own rates, provided for in Articles 87 or 88 of the CIT Code, to the respective taxable matters determined equally in accordance with specific rules." (see Articles 17 and 18 of the Defence);

• "(…) the assessment of autonomous taxes is carried out on the basis of Articles 89 and 90, No. 1 of the CIT Code but, applying different rules for the calculation of the tax: (1) in one case the assessment operates by means of the application of the rates in Article 87 to the taxable matter determined in accordance with the rules of Chapter III of the Code and (2) in the other case, several collections are determined according to the diversity of facts giving rise to autonomous taxation." (see Article 29 of the Defence);

• "Following the integration of autonomous taxes into the CIT Code, through Law No. 30-G/2010, of 29/12, the legislator does not appear to have felt the need to explicitly explain, in a comprehensive manner – i.e. in all the normative provisions where they manifest – the consequences of the coexistence of two forms of taxation within the CIT system, limiting itself to safeguarding situations in which the exemption from CIT did not extend to autonomous taxes." (see Article 30 of the Defence);

• "This resulted in the amendment made to the wording of Article 12 of the CIT Code in order to clarify, with an interpretative character, that the companies and other entities covered by the transparent taxation regime are not taxed in CIT, except as regards autonomous taxes. Furthermore, it was also established (see the then No. 6 of Article 109 of the CIT Code, now Article 117) that the obligation to submit the periodic tax return covers entities exempt from CIT, when they are subject to autonomous taxation." (see Articles 31 and 32 of the Defence);

• "(…) for the basis of calculation of advance payments only the CIT determined on the basis of the taxable matter determined according to the rules of Chapter III and the rates in Article 87 of the respective Code is considered. As, moreover, is the understanding professed by the Tax Authority and peacefully accepted by doctrine and taxpayers in general." (see Articles 36 and 37 of the Defence);

• "(…) it should be noted that the common feature to all the realities reflected in the deductions referred to in No. 2 of Article 90 of the CIT Code lies in the fact that they relate to income or expenses incorporated in the taxable matter determined on the basis of the taxpayer's profit or anticipated payments of the tax, and are therefore completely alien to the realities that make up the taxable events of autonomous taxes." (see Article 45 of the Defence);

• "(…) the position defended by the Tax Authority has explicit support in the provisions of No. 5 of Article 90 of the CIT Code – through which the legislator provides a clear indication that the amount of tax assessed, to which the deductions referred to in No. 2 of the same article are made, does not include the amount corresponding to autonomous taxes –, by establishing that the deductions which are imputed to partners or members of entities covered by the transparent taxation regime established in Article 6 (entities that are subject to payment of autonomous taxes, by virtue of Article 12) are "deducted from the amount determined on the basis of the taxable matter which has taken into account the imputation provided in the same article". Given that the command of this normative provision is directed at partners or members of transparent entities – who, in the process of determining their taxable income, must include in it the values (relating to taxable income/tax loss or taxable matter, as the case may be) imputed to them – what the legislator indicates, in an entirely clear manner, is that the deductions provided for in No. 2 of Article 90 of the CIT Code, which are also imputed to partners or members, must be made to the amount of tax determined on the basis of the taxable matter in which the imputation provided in Article 6 of the CIT Code is reflected." (see Articles 50 and 51 of the Defence);

• "Now, if this is the procedure to be adopted by CIT taxpayers who are partners or members of transparent entities, with respect to the deductions relating to the transparent entity in which they participate, it would be entirely incongruous, and have no support in law whatsoever, to defend the thesis that, for the deductions referred to in No. 2 of Article 90 of the CIT Code, which directly relate to these taxpayers, they could be made to the amount determined with autonomous taxes." (see Article 53 of the Defence);

• "(…) the interpretation of No. 2 of Article 90 in coherence with the nature and content of the deductions provided for in its paragraphs, among which the SAP features, must be made in light of the general objectives of CIT which are essentially reduced to the taxation of the income of legal entities, determined in accordance with the rules of Chapter III of the respective code. It is therefore manifestly without any basis the claim of the Claimant regarding deduction of the amount incurred in respect of special advance payment from the collection produced by autonomous taxes." (see Articles 68 and 69 of the Defence);

• "The Respondent is not unaware of the Constitutional Court judgment cited by the Claimant [judgment No. 267/2017, of 31 May 2017], however, the same has no general binding force, nor does the Tax Authority agree with the content of the decision. Moreover, strictly speaking, Article 88, No. 21 of the CIT Code, inserted by the 2016 Budget Law, which was declared unconstitutional in that judgment, is not necessary to resolve this dispute. It is, moreover, dispensable." (see Articles 74 and 75 of the Defence);

• "(…) for the Tax Authority to incur the obligation to pay compensatory interest, let it be verified that there is some illegality that denotes the improper character of the tax liability in light of substantive norms, an illegality that must necessarily be attributable to error of the services. Now, the assessment in question does not result from any error of the Services but results directly from the application of the law. The Tax Authority merely applied the legal consequences which, from a fiscal perspective, were imposed in view of the occurrence of the factual requirements underlying the correction made, so the challenge regarding the requested interest should also be judged inadmissible." (see Articles 100, 101 and 102 of the Defence).

The Respondent concludes by arguing for the complete inadmissibility of the present request for arbitral pronouncement, with the legal consequences.

II – PRELIMINARY EXAMINATION

a) The Tribunal is competent.

b) The parties have legal personality and capacity and benefit from procedural legitimacy, pursuant to Articles 4 and 10, No. 2 of the LFATM and Article 1 of Regulation No. 112-A/2011, of 22 March, as well as No. 5 of Articles 22 of the General Tax Law, 70, No. 1 and 99 of the Tax Code.

c) The Tax Authority appointed its Representatives in the proceedings and the Claimant attached a power of attorney, the parties being therefore properly represented.

d) The proceedings are not affected by any nullities.

e) No preliminary or subsequent questions, prejudicial or of exception, that would prevent consideration of the merits of the case have been raised, with the conditions being satisfied for a final decision to be rendered.

III. MERITS

III.1. MATTERS OF FACT

1§. FACTS FOUND PROVEN

With respect to the facts with relevance for the decision of the case, the following facts are deemed proven:

From the evidence produced in the present proceedings, whether by acceptance of the parties or by documentary means (evidence produced by the Claimant and contained in the Tax Administrative Record), the Tribunal understands that the following factual matters should be established:

• The Claimant is a legal entity under Portuguese law constituted in the form of a joint-stock company, with unique registration and tax identification number..., and has as its business purpose the importation and distribution of fruit in Portugal;

• In the tax years 2013 and 2014, the Claimant proceeded with the self-assessment of CIT, having submitted the respective Model 22 returns, on 30 May 2014 and 28 May 2015 respectively, in which it determined a tax loss (Annexes 5 and 6 to Document II);

• The Claimant incurred expenses subject to autonomous taxation, pursuant to Article 88 of the CIT Code ("CIT Code"), in the amounts of €17,862.09 and €23,015.13, which were included in the Model 22 returns for 2013 and 2014 respectively, generating, therefore, tax payable in those amounts (Annexes 5 and 6 to Document II);

• Payment of the CIT self-assessments No. 2014... and 2015..., relating to the tax years 2013 and 2014 respectively, was made by the Claimant (Annexes 7 and 8 to Document II);

• Being in a situation of tax loss from previous tax years, the Claimant made Special Advance Payments ("SAP") of CIT in the amount of €70,000 in the tax year 2013 and in the same amount for the tax year 2014 (Annexes 9 to 12 of Document II);

• The Tax Authority's computer system, through which the Model 22 return is mandatorily filed, did not allow the Claimant to deduct the SAP values from the values of autonomous taxation determined in the tax years 2013 and 2014, which corresponded to the CIT collection of those same years;

• On 28 March 2016, the Claimant submitted an administrative complaint regarding the CIT self-assessments for 2013 and 2014 with the Tax Authority on the grounds of violation of law (Annex 1 to Document II);

• Pursuant to this Administrative Complaint, the Tax Authority acknowledges that the Claimant filed the CIT Model 22 return for 2013 on 30/05/2014 and the return for 2014 was filed on 28/05/2015;

• The values declared and contained in the Model 22 CIT returns were as follows:

The SAP amounts paid were as follows:

• The SAP amount declared in the Model 22 CIT return for 2013 corresponds to the payment of all SAPs for the years 2010 and 2013; although it paid SAP in 2014, it did not declare it in the Model 22 CIT return for that respective year;

• An Administrative Complaint was submitted requesting such deductibility.

• From the tacit dismissal of this procedure, the Claimant sent a Hierarchical Appeal petition in order to have its request satisfied;

• On 27-09-2016 (letter No. ... of 26-09-2016) the said Hierarchical Appeal reached the CIT Management Division for purposes of information, coming from the Finance Office of Lisbon;

• In the proposal to dismiss the Administrative Complaint the Services considered that:

• One thing is to consider that SAPs are CIT and not deductible for purposes of determining taxable income, another thing will be the rules for their deduction from the CIT collection;

• The law is clear (No. 2 of Article 90 of the CIT Code) when it determines that from the amount of the CIT collection calculated on the basis of taxable matter, deductions corresponding to international double taxation, benefits, special advance payment and source withholdings not susceptible to compensation or reimbursement be made, in the order indicated, in accordance with applicable law.

• Now, autonomous taxes, being functionally embedded in CIT, are tax that affects certain expenses or charges; the legislator wished nothing more than to prevent abusive use of certain expenses and distribution of dividends in fraud of norms aimed at reaching the contributive capacity revealed by actual income.

• If the legislator intended that tax benefits and the balance of SAPs be also deducted from the value of autonomous taxes, certainly that fact would have been contemplated in the law, notably with a wording of Article 90 of the CIT Code different from the one in force.

• If deduction of the SAP from the collection resulting from autonomous taxation were permitted, the purposes of the system in which the norm of No. 2 of Article 93 of the CIT Code is inserted would be frustrated, as the value of the special advance payment would be allocated to the extinction of the taxpayer's debt resulting from autonomous taxes. In practice, the possibility of deducting the SAP from autonomous taxes would imply that a taxpayer who was permanently in a situation of loss would not have to bear any tax on its income, and besides, autonomous taxes would lose their anti-abuse character.

• The Claimant, in its hierarchical appeal petition, comes to disagree with the tacit dismissal of the administrative complaint.

• It considers that the amount paid as autonomous taxes constitutes CIT, and should be considered as the collection of that tax for purposes of calculating the limit of the deductions provided for in Article 90 of the CIT Code.

• It adds that the understanding defended by it has been sanctioned by the Constitutional Court and by the Administrative Arbitration Centre, in accordance with the decisions it cites.

• In this way, the right to reimbursement of tax would result in the amount of €40,875.80.

• It further requests payment of compensatory interest at the legal rate.

• The Tax Authority, in its assessment of the Hierarchical Appeal concludes as follows:

• Although autonomous taxes have the same nature as CIT, this does not mean that they can be eligible as deductions, which was not accepted in view of the anti-abuse character of these taxes, which aim to discourage recourse to the type of expenses they tax. Through deduction from taxable income, the basis for the existence of autonomous taxes would be eliminated.

• The current wording of paragraph a) of No. 1 of Article 23-A of the CIT Code expressly states that the following are not deductible for purposes of determining taxable income: "CIT, including autonomous taxes, and any other taxes that directly or indirectly affect profits".

• The legislator took a position on this issue, not only regarding the non-consideration of autonomous taxes as expenses, but also regarding their legal-tax nature.

• On the other hand, given the abundant doctrine and jurisprudence existing, there was a need to clarify that autonomous taxes cannot be considered as expenses.

• It is undeniable that autonomous taxes tax expenses and not income, being taxes that penalize certain charges incurred by companies.

• Autonomous taxes affect the expense, with each act of expense constituting an autonomous taxable event to which the taxpayer is subject, independently of whether or not there is taxable income in the CIT context at the end of the respective taxation period.

• Thus did the Administrative Supreme Court judge it (Award 0281/2011 of 06-07-2011 and Award 0830/2011 of 21-03-2012), understanding that to each act of expense the rate in force on the date of its performance must be applied.

• The Constitutional Court came to pronounce on the question of autonomous taxes in recourse to the Plenary, in accordance with No. 1 of Article 79-D of its respective Law, establishing jurisprudence, in view of the divergence between two awards of the same Court that decided divergently.

• Despite making reference to the difference existing between the taxation of income in the context of PIT or CIT (in which the aggregate income earned in a given year is taxed) and autonomous taxation (in which the expense performed is taxed, considered in itself, independently of the CIT that is due in each taxation period), the Constitutional Court does not fail to draw attention to the circumstance that taxes on income contemplate elements of single obligation (such as liberatory rates of PIT or rates of autonomous taxation of CIT).

• At the end of the Award it is possible to read: "…the existence of the tax in question (autonomous taxation) in each does not affect the amount of CIT, acting in a perfectly autonomous manner relative to this, so its operation should be regarded only according to the elements that characterize it".

• The particularities and difficulties of the autonomous tax regime were well demonstrated in the different positions defended in the cited Awards of the Constitutional Court and CAAD, adding that the Constitutional Court Award is the result of recourse to the Plenary requesting the establishment of jurisprudence in view of the divergence between two awards of the same Court that decided divergently on this matter.

• For this reason, it seems to us that, notwithstanding they have the same nature as CIT, the rules applicable to autonomous taxes should not be contrary to the spirit that determined them. And, in order to respect that purpose which sanctioned them, it is necessary to evaluate the legislator's intention taking into account all factors.

• Contrary to what is provided for in Article 12 and paragraph a) of No. 1 of Article 23-A of the CIT Code, in Nos. 1 and 2 of Article 90 there is no reference to autonomous taxes, which given the dual nature of the system, may raise doubts as to the consideration of the value of autonomous taxes for purposes of the referred deductions.

• In this sense, it seems to us that it would be contrary to the spirit of the system to permit that by virtue of the deductions referred to in No. 2 of Article 90 of the CIT Code the anti-abuse character that presided over the implementation of autonomous taxes in the CIT system be removed.

• Thus, autonomous taxes should not be considered for purposes of the deductions referred to in No. 2 of Article 90 of the CIT Code.

2.º § FACTS NOT PROVEN

There are no other facts with relevance for the assessment of the merits of the case that have not been proven.

3.º § SUBSTANTIATION OF THE DETERMINATION OF FACTS

The facts found proven are based on documents submitted by the Claimant and which are also contained in the administrative file.

As for the facts relating to the Tax and Customs Authority's computer system and the impossibility of deducting the SAP amounts from the collection deriving from autonomous taxes, the Tax Authority itself confirms that this is the case.

The matters of fact are not disputed.

III.2 – MATTERS OF LAW

The question that is the subject of these proceedings is whether the payment of the SAPs for 2013 and 2014 can be deducted from the amounts due as autonomous taxes, assessed and qualified as CIT, for the respective tax years.

2.1. The Classification of Autonomous Taxes as CIT

Before proceeding let us take a step back and remind ourselves that the numerous cases that have come before the courts seeking a decision on the deduction from the collection, specifically the collection of autonomous taxation in the context of CIT, of the values provided for in No. 2 of Article 90 of the CIT Code are in a sense a logical consequence of the interpreter's doubts about the legal possibility of deducting autonomous taxes themselves from CIT, which were at the genesis of abundant arbitral and judicial jurisprudence that addressed and decided in multiple awards whether and to what extent autonomous taxes should or should not be classified as CIT for purposes of the application of paragraph a) of No. 1 of Article 45 of the CIT Code.

The doubt about the deductibility of autonomous taxes in the context of the previous wording of the CIT Code arose as a consequence of the interpretative margin created by the combination of two norms: on the one hand, the general principle of deductibility of charges proven to be indispensable for the realization of income subject to tax or for the maintenance of the source of production, notably those of a fiscal and parafiscal nature, which resulted from Article 23, No. 1, paragraph f) of the CIT Code and, on the other hand, the rule of non-deductibility provided for in paragraph a) of No. 1 of Article 45 of the same Code, pursuant to which CIT and any other taxes that directly or indirectly affect profits were not deductible for purposes of determining taxable income.

Specifically, the doubts arose because the norm provided for in paragraph a) of No. 1 of Article 45 of the CIT Code (with the wording in force in 2010) did not expressly mention autonomous taxes and because the general principle in the context of CIT was that of deductibility of charges indispensable for the realization of income subject to tax or for the maintenance of the source of production. Thus, faced with a general principle of deductibility of charges and the absence of express reference to autonomous taxes, the doubt arises as to whether the legislator intended to include them or not in the exception of non-deductibility provided for in paragraph a) of No. 1 of Article 45.

The doubts that arose regarding the deductibility of autonomous taxes in the context of CIT were therefore perfectly justifiable in view of the uncertainty created by the literal element of the enunciated norms and the very technical nature of the type of tax that autonomous taxation is, which does not have the typical characteristics of a tax like CIT.

Autonomous taxes were introduced into the Portuguese legal system through Article 4 of Decree-Law No. 192/90, of 9 June, which provided for autonomous taxation, at the rate of 10%, of confidential expenses, with subsequent and progressive advancement to autonomously tax such a diverse set of realities as representation expenses, charges with vehicles, indemnifications and variable remuneration of members of management bodies.

As CASALTA NABAIS observes, the taxation rates in question initially referred to situations of high risk of fraud and tax evasion. However, with the passage of time, the function of these autonomous taxes, which in the meantime became extraordinarily diversified and increased in value, changed profoundly, becoming progressively that of obtaining (more) tax revenue, being assumed, thus, as effective taxes on expenses, although engrafted, in terms totally anomalous, in the taxation of business income" (see cited Author, "Investir e tributar no atual sistema fiscal português" in O Memorando da Troika e as Empresas, Almedina, Coimbra, 2012, p. 27).

Currently, autonomous taxes are set out in Article 88 of the CIT Code.

That article has undergone various amendments, due to the relevance of this figure, since it is, on the one hand, a norm with an anti-abuse character, on the other, the revenue collected with this figure is increasingly significant and relevant for the consolidation of public accounts, as will be better detailed. Indeed, the figure of autonomous taxes has been instrumentalized for the pursuit of diverse objectives, which range from the original purpose of preventing evasion and fraud practices – through confidential or undocumented expenses, or payments to entities located in jurisdictions with privileged tax regimes, to the substitution of the taxation of ancillary benefits in the form of representation expenses or attribution of vehicles to workers and members of management bodies, in the sphere of the respective beneficiaries – to the purpose of preventing the phenomenon designated as "dividend washing" or of burdening, by way of tax, the payment of income considered excessive (in "As Tributações Autónomas em IRC (artigo 88.º do Código do IRC): o sentido, alcance da ratio e os (diversos) efeitos no apuramento do lucro tributável das sociedades de Nuno Miguel Santos Vieira, Dissertation presented at the Superior Management Institute for obtaining the Master's Degree in Tax Management).

Despite the conceptual difficulties in classifying this taxation and its relationship and integration with CIT, it ultimately became settled, following numerous arbitral jurisprudence and the positions assumed by the Tax and Customs Authority, that the tax collected on the basis of autonomous taxes provided for in the CIT Code has the nature of CIT.

See, for example, the conclusion of case No. 209/2013 – T, in which CAAD understood that "(…) the legal regime of the autonomous taxes in question only makes sense in the context of taxation in the context of CIT.", adding further that "Its existence, its purpose, its explanation, in short, its legality, is only comprehensible and acceptable within the legal framework of the CIT regime.".

Still in the same award, CAAD mentions that "(…) the autonomous taxes now under analysis belong, systematically, to CIT (…)", and that "(…) from the legislator's perspective, autonomous taxes will integrate, effective and unequivocally, the CIT regime, being owed by virtue of this tax (…)".

See also the Award of the Administrative Supreme Court in case 0146/16 dated 09/27/2017:

First, because, although, as we said, autonomous taxes constitute a tax different from CIT, the truth is that, at least since 1 January 2001, with the entry into force of Law No. 30-G/2000, of 29 December – which, in its own terms, reforms the taxation of income and adopts measures aimed at combating tax evasion and fraud, amending, among other things, the CIT Code – autonomous taxes have always been included in this Code. That is, formally, autonomous taxes have always been treated within the scope of CIT, within the Code that regulates this tax, being assessed simultaneously with it.

This situation alone may have convinced the legislator of the unnecessary to expressly enshrine autonomous taxes in paragraph a) of No. 1 of Article 45 of the CIT Code (The inclusion of autonomous taxes in that concept of CIT, moreover, was never the subject of controversy until the jurisprudence of this Supreme Administrative Court, following the minority opinion rendered in award No. 18/2011 of the Constitutional Court, came to emphasize the distinct nature of autonomous taxes relative to the PIT.).

In this regard, see also, among others, the provisions in the arbitral decisions rendered in cases No. 79/2014-T and 95/2014-T where it is stated that: "the tribunal is not unaware of the problems regarding the nature and characteristics of autonomous taxes, when put in contrast with tax on the income of legal entities. But the truth is that, if the sense desired by the legislator was different from including them in the referred paragraph a) it would have provided for such. What it effectively did not do, assimilating autonomous taxes with tax on the income of legal entities for purposes of procedure and form of assessment and payment rules (Articles 89 et seq. and 104 of the CIT Code). And, if effectively not constituting autonomous taxes CIT in the strict sense, they are intertwined with it, and must be contained, for the question that underlies, in the "other taxes" of which we are aware in the final part of paragraph a) of No. 1 of Article 45 of the CIT Code."

In light of the above, the question of the deductibility of autonomous taxes from taxable income was then settled: - in the taxation periods up to 2013, by jurisprudence, insofar as the dominant position concluded in the sense of non-deductibility of autonomous taxes from the CIT collection; - from 2014 onwards, by legislative means, by including autonomous taxes in paragraph a) of No. 1 of Article 23-A of the CIT Code.

In fact, Article 23-A, No. 1, paragraph a) of the CIT Code, in the wording of Law No. 2/2014, of 16 January, today leaves no room for any reasonable doubt, corroborating what already previously resulted from the literal content of Article 12 of the same Code.

In this way, despite the remarkable and well-founded effort made by some, there are today no longer reasons to reverse the almost unanimous jurisprudence of the Arbitral Tribunals constituted within the framework of CAAD and the Judicial Courts on this matter of the deductibility or non-deductibility of autonomous taxes for purposes of CIT, so we adhere to this thesis.

2.2 Applicability of Articles 89 and 90 of the CIT Code to the Calculation of Autonomous Taxes

Articles 89 and 90 of the CIT Code establish the following, in the wording in force until 31.12.2013 and in the subsequent wording given by Law No. 2/2014, of 16 January, in force during the year 2014:

Article 89

Competence for Assessment

The assessment of CIT is carried out:

a) By the taxpayer itself, in the returns referred to in Articles 120 and 122;

b) By the Directorate-General of Taxes, in the remaining cases.

Article 90

Procedure and Form of Assessment

1 - The assessment of CIT proceeds as follows:

a) When the assessment is to be made by the taxpayer in the returns referred to in Articles 120 and 122, it is based on the taxable matter contained therein;

b) In the absence of submission of the return referred to in Article 120, the assessment is carried out by 30 November of the following year to which it relates or, in the case provided for in No. 2 of said article, by the end of the 6th month following the end of the period for submission of the return mentioned therein and is based on the annual minimum monthly remuneration or, when greater, the entire taxable matter of the nearest financial year for which it is determined;

c) In the absence of assessment in accordance with the preceding paragraphs, it is based on the elements available to the tax administration.

2 – To the amount determined in accordance with the preceding number the following deductions are made, in the order indicated:

a) That corresponding to international double taxation;

b) That relating to tax benefits;

c) That relating to the special advance payment referred to in Article 106;

d) That relating to source withholdings not susceptible to compensation or reimbursement in accordance with applicable law.

3 – (Repealed by Law No. 3-B/2010)

4 - To the amount determined in accordance with No. 1, with respect to the entities mentioned in No. 4 of Article 120, only the deduction relating to source withholdings when they have the nature of advance payment of CIT is to be made.

5 - The deductions referred to in No. 2 relating to entities to which the transparent taxation regime established in Article 6 is applicable are imputed to the respective partners or members in accordance with the terms established in No. 3 of that article and deducted from the amount determined on the basis of the taxable matter which has taken into account the imputation provided in the same article.

6 - When the special taxation regime for groups of companies is applicable, the deductions referred to in No. 2 relating to each of the companies are made in the amount determined with respect to the group, in accordance with No. 1.

7 – From the deductions made in accordance with paragraphs a), b) and c) of No. 2 no negative value may result.

8 - With respect to taxpayers covered by the simplified regime for determining taxable matter, to the amount determined in accordance with No. 1 only the deductions provided for in paragraphs a) and e) of No. 2 are to be made (wording in force from 01.01.2014).

9 - From the deductions made in accordance with paragraphs a) to d) of No. 2 no negative value may result. (wording in force from 01.01.2014)

10 - To the amount determined in accordance with paragraphs b) and c) of No. 1 only deductions of which the tax administration is aware and which can be made in accordance with Nos. 2 to 4 (previous No. 8) are to be made.

11 - In cases where the provision of paragraph b) of No. 2 of Article 79 is applicable, annual assessments are made based on taxable matter provisionally determined, and, with respect to the assessment corresponding to the taxable matter relating to the entire taxation period, the difference found is to be collected or cancelled.

The referred Articles 89 and 90 of the CIT Code, as well as other provisions of this Code, such as those relating to the returns provided for in Articles 120 and 122, are applicable to autonomous taxes.

Now, Article 90 of the CIT Code refers to the forms of assessment of CIT, by the taxpayer or by the Tax Administration, applying to the determination of the tax due in all situations provided for in the Code, including additional assessment (No. 10).

Following the interpretation defended in case No. 59/2017-T:

For this reason, that Article 90 also applies to the assessment of the amount of autonomous taxes, which is determined by the taxpayer or by the Tax Administration, following the submission or not of returns, with no other provision providing for different terms for its assessment.

Thus, the differences between the determination of the amount resulting from autonomous taxes and that resulting from taxable income are restricted to the determination of the taxable matter and the applicable rates, which are those provided for in Chapters III and IV of the CIT Code for CIT based on taxable income and in Article 88 of the CIT Code for CIT based on the taxable matter of autonomous taxes and their respective rates.

However, the forms of assessment provided for in Chapter V of the same Code are of common application to autonomous taxes and to the remaining taxable matter of CIT.

Nevertheless, the circumstance that a self-assessment of CIT, made in accordance with No. 1 of Article 90, may contain several partial calculations based on several applicable rates to certain taxable matters does not imply that there is more than one assessment, as results from the very terms of that norm when referring to "assessment", in the singular, in all cases in which it is "made by the taxpayer in the returns referred to in Articles 120 and 122", having "as its basis the taxable matter contained therein" (whether that determined on the basis of the rules of Articles 17 et seq. or that determined on the basis of the various situations provided for in Article 88).

Moreover, it is not only the assessments provided for in Article 88 that may encompass several calculations of the application of rates to certain taxable matters, as the same may occur in the situations provided for in Nos. 4 to 6 of Article 87. ( [1] )

In any case, whatever the calculations to be made, it is the unitary self-assessment that the taxpayer or the Tax and Customs Authority must make in accordance with Articles 89, paragraph a), 90, No. 1, paragraphs a), b) and c), and 120 or 122, and on the basis of it that the global CIT is calculated, whatever the taxable matters relating to each of the types of taxation that underlies it. ( [2] )

Moreover, if this Article 90 were not applicable to the assessment of autonomous taxes provided for in the CIT Code, we would have to conclude that there would be no norm providing for their assessment, which would be an illegality due to violation of Article 103, No. 3 of the Constitution, which requires that the assessment of taxes be made "in accordance with the law".

It should also be noted that the new provision of No. 21 added to Article 88 of the CIT Code by Law No. 7-A/2016, of 30 March, regardless of whether or not it is truly interpretative, does not alter this conclusion in any way, as it establishes, with regard to the form of assessment of autonomous taxes, that it "is carried out in accordance with the terms provided for in Article 89 and is based on the values and rates resulting from the provisions of the preceding numbers".

Indeed, if it is certain that this new provision makes it explicit how the amounts of autonomous taxes are calculated (which already resulted from the very text of the various provisions of Article 88) and that competence lies with the taxpayer or the Tax Administration, in accordance with Article 89, it is also clear that the need to use the procedure provided for in No. 1 of Article 90 is not removed, namely in the cases provided for in its paragraph c) in which assessment is the responsibility of the Tax and Customs Authority, with "basis on the elements available to the tax administration", which will include the possibility of assessing on the basis of autonomous taxes, if the Tax and Customs Authority has elements that prove their requirements.

For this reason, whether before or after Law No. 7-A/2016, of 30 March, Article 90, No. 1 of the CIT Code is applicable to the assessment of autonomous taxes.

2.3 Special Advance Payment

The figure of the SAP is characterized using the study published by José João de Avillez Ogando "A constitucionalidade do Regime do Pagamento Especial por Conta – com a as alterações introduzidas pela Lei nº32-B/2002, de 30 de Dezembro" published in Revista da Ordem dos Advogados, year 2002, year 62 – vol. iii.

Thus, it is understood that also in the case of SAPs, not only the reasons that are at the genesis of its creation and objectives have varied but also its nature as an instrument to combat fraud and tax evasion, guarantee of minimum collection or mechanism for anticipation of CIT due by the annual exercise has varied.

The special advance payment was introduced among us by Decree-Law No. 44/98 of 3 March and consists of an advance payment of the Tax on the Income of Legal Entities (CIT) that is to be assessed, to be made during the year to which the income subject to taxation relates, being measured by the income of the preceding year, also being configured as a special payment, that is, with the purpose of ensuring in the State's favour a quantity of tax calculated on the basis of the expected collection from companies that observe profitability ratios considered normal.

It is thus an advance payment mandatorily made to the State by legal entities that exercise, as their principal activity, a commercial, industrial or agricultural activity, as well as by non-residents with a permanent establishment in Portuguese territory, provided that in any case they are not covered by the simplified regime for taxation of income.

The genesis and development of this figure, which seeks to be a form of payment of the tax assessed finally, was wrapped in controversy as its characteristics pointed to the institution of a minimum collection of companies, as a way to provide the State with an additional mechanism to combat the practices of tax evasion, essentially materialized in the context of CIT by the concealment of income and or the overstatement of costs. With its introduction into the Portuguese tax legal system the Legislator sought to combat the serious distortions in matters of tax equity and justice, while increasing the effectiveness of the State economically.

Pursuant to the preamble of the said Decree-Law — which curiously begins with the proclamation "this decree reduces the CIT rate by 2 percentage points…" — one of the virtues of the special advance payment consists in the fact that it allows approaching the moment of production of income to its taxation, which is also curious, since when making this payment, in March, three-quarters of the taxation period have not yet elapsed, it being rather a form of taxation of companies in advance, charged before even the formation of the elements on which the taxable matter that may eventually be found will be determined.

In these terms, the special advance payment regime as it was originally conceived pointed, at least formally, to a true advance payment of tax ultimately due, since the law provided for the possibility of requesting its return, whenever the collection actually assessed was insufficient for the full absorption of the excess amount delivered.

With the entry into force of Law No. 30-G/2000 of 29 December, the period for deduction from collection was extended to the fourth following exercise, having damaged the original configuration of the special advance payment as an advance payment, with the reduction of the possibility of reimbursement of the non-absorbed amount from collections of subsequent years, limited only to situations of cessation of activity. In this case, the taxpayer could only recover the excess amount of special advance payments made in the three years prior to cessation, by request to be submitted within 90 days of the date of cessation of activity.

Thus, the reform then introduced and which was in force between us during the exercises of 2001 and 2002, allowed that – outside the situations of cessation of activity – the only form of recovery of special advance payment paid in excess would be that of deduction from the collection of the exercise itself and up to the fourth following exercise, which is not merely an apparent advantage, since although the taxpayer could now impute the special advance payment in four exercises, the truth is that in each of them it will make substantial deliveries of special advance payment, which will also be associated with the collections of the exercises to which they relate(1).

From an advance payment, the special advance payment configured in this way presented itself as a true minimum collection, disregarding the constitutional principle of taxation of companies fundamentally on the basis of actual profit obtained, penalizing especially companies that presented reduced or zero tax results.

Subsequently to these amendments the article applicable to the SAP underwent various legislative amendments, notably as regards the possibility of reimbursement, which was again enshrined, subject to various conditions, notably the need to be justified through confirmation of the insufficiency of collection, made by means of a tax inspection action performed at the request of the taxpayer within 90 days following the end of the period for submission of the periodic tax return relating to the same exercise.

The wording of Article 93 of the CIT Code, after the entry into force of Law No. 2/2014, of 16 January, which republished the CIT Code, is as follows:

Article 93

Special Advance Payment

1 - The deduction referred to in paragraph d) of No. 2 of Article 90 is made to the amount determined in the return referred to in Article 120 of the respective taxation period to which it relates or, if insufficient, up to the 6th following taxation period, after the deductions referred to in paragraphs a) to c) of No. 2 have been made and in compliance with No. 9, both of Article 90.

2 - In case of cessation of activity in the respective taxation period or up to the 6th taxation period following that to which the special advance payment relates, the part that could not be deducted in accordance with the preceding number, when it exists, is reimbursed by request of the taxpayer, addressed to the head of the tax service of the area of the head office, actual management or permanent establishment where the accounting is centralized, submitted within 90 days from the date of cessation of activity.

3 - Taxpayers may further, without prejudice to the provisions of No. 1, be reimbursed for the part that was not deducted under that provision at the end of the period established therein, by request of the taxpayer, addressed to the head of the tax service of the area of the head office, actual management or permanent establishment where the accounting is centralized, submitted within 90 days from the end of that period.

The wording of the same article, in the version in force in 2013, was as follows:

Article 93

Special Advance Payment

— The deduction referred to in paragraph c) of No. 2 of Article 90 is made to the amount determined in the return referred to in Article 120 of the respective taxation period to which it relates or, if insufficient, up to the fourth following taxation period, after the deductions referred to in paragraphs a) and b) of No. 2 have been made and in compliance with No. 7, both of Article 90.

2 — In case of cessation of activity in the respective taxation period or up to the third taxation period following that to which the special advance payment relates, the part that could not be deducted in accordance with the preceding number, when it exists, is reimbursed by request of the taxpayer, addressed to the head of the tax service of the area of the head office, actual management or permanent establishment where the accounting is centralized, submitted within 90 days of the date of cessation of activity.

3 — Taxpayers may further, without prejudice to the provisions of No. 1, be reimbursed for the part that was not deducted under that provision provided that the following requirements are met:

• They do not deviate, with respect to the taxation period to which the special advance payment to be reimbursed relates, by more than 10%, downwards, from the average of the profitability ratios of companies in the sector of activity in which they are engaged, to be published in a regulation of the Minister of Finance;

• The situation that gave rise to the reimbursement is considered justified by a tax inspection action performed at the request of the taxpayer made within 90 days following the end of the period for submission of the periodic tax return relating to the same taxation period.

It thus appears that the current regime for reimbursement of SAP has lost, for more than a decade, the nature of "minimum collection."

And it should also be said that, already in 2019, the 2019 Budget Law eliminated the mandatory obligation to deliver the Special Advance Payment, a measure much claimed by companies and which is directed at those that have their contribution situation regularized.

The 2017 Budget Law already provided that the minimum limit of the SAP should be "reduced progressively until 2019, being replaced by an adequate regime for determining the taxable matter (...) through the application of technical-economic coefficients by economic activity to be published in a regulation"

Now then, given so many oscillations in the design of the legal framework of this instrument and the instability associated with the same from a tax-legal perspective, one cannot effectively conclude that the SAP is primarily a mechanism to combat fraud and tax evasion and that, by this route, its deduction from the CIT collection can be ruled out, in accordance with the wording in force in 2013 and 2014, namely the wording of Articles 89 and 90 of the CIT Code.

As far as the taxation of legal entities is particularly concerned, the Constitution of the Portuguese Republic adopted, as a criterion for assessing the contributive capacity of companies, their actual profit, by proclaiming that "the taxation of companies incides fundamentally on their actual income", which clearly demonstrates that the taxation of companies should be fundamentally based on their accounting, which was moreover adopted by the ordinary legislator by establishing that "taxable income (...) is constituted by the algebraic sum of the net result of the exercise and of the positive and negative variations verified in the same period and not reflected in that result, determined on the basis of accounting and possibly corrected in accordance with this Code."

The determination of profit on the basis of accounting was adopted as a criterion for assessing the actual income of companies because it is the most rigorous way to determine a true and fair view of the assets, financial situation and results of companies, and thereby to determine, in view of their contributive capacity, their measure of tax burden. This is moreover a corollary of the option taken by our tax Legislator, that the taxation of income is implemented at the level of companies as a prior taxation of the personal income of individuals.

For the decision of this award all the rules of interpretation of tax law are followed. Account is taken of the principle of equality in the distribution of public burdens, which requires that the taxation of the generality of taxpayers, whenever possible, be based on the economic reality underlying the taxable events and is not compatible with the existence of special cases of taxation based on fictional values in situations in which the actual value of the taxable events is known or can be determined: as the taxation of non-existent income would lead to those who did not have it being taxed as those who did and such violates the principle of equality, it is "always" possible to demonstrate the reality of income, rebutting what is presumed in the norms relevant for fixing values for its calculation.

It must be decided.

The conclusion that the norm of the CIT Code that provides for deductions from CIT collection (Article 90, No. 2) encompasses the CIT collection of autonomous taxes is a requirement, first and foremost, of the very letter of the law, as understood by the Tax Authority itself and by overwhelming tax jurisprudence.

As referred to above, both the Tax Authority and the arbitral tribunals in dozens of arbitral awards that sided with the Tax Authority understand that the collection of autonomous taxation in CIT is CIT, including in the purposes or function it serves (combating, through compensatory taxation, expenses and charges of doubtful business character, at least in their entirety, but notwithstanding deducted by companies in determining their taxable income in CIT).

This conclusion is also a requirement of the principle of coherence and systematic interpretation: one cannot simultaneously conclude (without a law that previously creates the dissonance) that when the CIT Code refers to the collection of CIT in its Article 45, No. 1, paragraph a) (in the wording and numbering in force until 2013), autonomous taxation collection in CIT is included, without need for its own naming, there (and thus concluded overwhelming tax jurisprudence, at the request of the Tax Authority and in some articles further on (Article 90, No. 2 of the CIT Code) conclude, in opposition, that the collection of CIT does not encompass the collection of autonomous taxation in CIT.

This conclusion is also defended in several arbitral awards. See the provisions in Award in case No. 223/2018-T which we support:

There is no other article in the CIT Code, apart from Article 90, which distinguishes the process of assessment of autonomous taxes from the remaining CIT. And, in these terms, the assessment of both - autonomous taxes and remaining CIT - is unique and has the same legal support.

Autonomous taxes do not result from a distinct assessment process of the tax.

It being understood that autonomous taxes are (part of) CIT, it is understood that the assessment of CIT is unique, including the part that comes from autonomous taxes.

There is a unique CIT assessment that comprises two parts: the assessment of autonomous taxes and that of the remaining CIT, each with taxable matter determined in its own way and with its own taxation rates, but both assessed in accordance with Article 90 of the CIT Code. There being a unique assessment, it is concluded that the part of the collection that comes from autonomous taxes is an integral part of the CIT collection.

Conversely, no reference to the assessment of autonomous taxes as a distinct process is found in any other article of the CIT Code. To accept that the collection of autonomous taxes is not included in Article 90 of the CIT Code would be to accept that there is a gap in the law and, being this a tax law, it does not allow for supplementation. And thus, the Tax and Customs Authority may have erred in not allowing the deduction of the amounts relating to the SAP which the Claimant had the right to deduct from the collection.

To accept that the assessment of autonomous taxes is outside Article 90, No. 1 of the CIT Code and, therefore, to exclude from its collection the deductibility of the SAP provided for in paragraph c) of No. 2, would be to oblige the taxpayer to pay a tax whose assessment is not made in accordance with the law, contrary to No. 3 of Article 103 of the Constitution and the principle of tax legality which the General Tax Law, in its Article 8, No. 2, paragraph a), establishes.

If the Tax and Customs Authority assumed that the collection of autonomous taxes is calculated outside Article 90 of the CIT Code, it should indicate the norm on the basis of which it made the assessment.

There being no separate provision on the assessment of autonomous taxes, it seems that one must accept that the CIT collection encompasses it, being included in Article 90, No. 1 of the CIT Code, and therefore the special advance payment referred to in paragraph c) of No. 2 is deductible. Note that in the following numbers of that Article 90 the legislator was concerned with enumerating various exceptions and limits to the rules of the deductibility of number 2. In number 4, when it provides that "only the deduction relating to source withholdings when they have the nature of advance payment of CIT is to be made", this is revealing: it is understood that thus it be, because it is in the CIT collection that it is intended to deduct them, or, in number 7, when it prescribes that from the deductions in the collection a), b) and c) of No. 2 no negative value may result, without distinguishing the collection resulting from the application of autonomous taxation rates.

In none of them - and this would undoubtedly be the right place – and in no other provision is there any reference to any limitation on the deductibility of special advance payments to the part of CIT collection that results from autonomous taxes, it being therefore inevitable to conclude that it did not wish to do so.

Note that, although Article 90 was amended by Law No. 2/2014, of 16 January, which republished the CIT Code, what was said here not only persists but, from an interpretative point of view, is even reinforced, as the legislator added some limitations and exceptions to the deductions from the collection provided for in number 2 and again did not refer to the part of the collection that results from the application of autonomous taxation rates.

It is verified, however, that the computer system does not allow the deduction of the SAP to the part of the CIT collection coming from autonomous taxes. The fact that the forms of determination of taxable matter and the rates of autonomous taxation in CIT are established separately and are different from those of the remaining CIT does not seem to be a sufficient reason, nor does it have legal support, for the existing computer solution.

……….

To consider that the assessment of autonomous taxes is outside the collection calculated by Article 90, No. 1 of the CIT Code is to accept that such understanding would be provided for in another legal provision and, as this does not exist, the assessment cannot but be carried out within the scope of Article 90 of the CIT Code.

Thus, the deduction of SAP to the CIT collection must be accepted, necessarily including in it the portion coming from autonomous taxes".

Thus, and as was well decided in this award, it should be understood that from the norms of Articles 90, No. 2, paragraph d), and 93, No. 1 of the CIT Code it results that the deductions relating to the special advance payment affect the amount of tax directly assessed on the declared income, naturally including costs that are subject to autonomous taxation.

IV. REQUEST FOR COMPENSATORY INTEREST

Article 43, No. 1 of the General Tax Law establishes that compensatory interest is due "when it is determined, in administrative complaint or judicial challenge, that there was error attributable to the services from which results payment of the tax liability in an amount greater than legally due".

Since this right is recognized in arbitral proceedings, by virtue of Article 24, No. 5 of the LFATM.

In the case at hand, the self-assessment declaration was formulated by the Claimant itself and not directly by the Tax Authority, now the Respondent.

However, it must be taken into account that the Claimant, in formulating the said declaration, found itself limited by the computer services through which the declaration is formulated, services that are made available by the Tax Authority, and in relation to which the Claimant cannot make any alterations.

Moreover, there was a prior complaint by way of administrative procedure as well as a Hierarchical Appeal, in which the Claimant already explained all its reasons, the Tax Authority could have already corrected the error in question, which it did not do, persisting in the same grounds.

We are, in this case, faced with negligence on the part of the Tax Authority, negligence that translates into an "error attributable to the services", as stated in Article 43 of the General Tax Law.

Taking into account what is established in Article 61 of the Tax Code and having verified the existence of error attributable to the services of the Tax Administration, from which resulted payment of the tax liability in an amount greater than legally due, it is understood that the Claimant has the right