Summary
Full Decision
ARBITRAL DECISION
1. REPORT
1.1. A…, S.A. (Claimant), legal entity no. …, with registered office at Rua …, no. …, in …, submitted on 21/01/2016 a request for arbitral pronouncement, in which it petitions for the annulment of the Corporate Income Tax (CIT) assessment notice no. 2014 … (subsequently corrected following the decision of partial grant of the hierarchical appeal by assessment notices no. 2015 … and 2015 … and the compensatory interest assessment notice no. 2014 …, relating to the 2009 tax year, and likewise, a declaration of illegality of the said decision of partial grant of the hierarchical appeal, insofar as it denies the petition.
1.2. The Esteemed President of the Deontological Council of the Administrative Arbitration Center (CAAD) designated, on 03/03/2016, the undersigned as sole arbitrator of this decision.
1.3. On 31/03/2016 the arbitral tribunal was constituted.
1.4. In compliance with the provisions of Article 17, paragraph 1, of the Legal Regime of Tax Arbitration (LRTA), the Tax and Customs Authority (TCA) was notified on 31/03/2016 to, if it so wished, submit a response and request the production of additional evidence.
1.5. On 29/04/2016 the TCA submitted its response, enclosing the administrative reclamation and the respective inspection report.
1.6. On 17/05/2016 the meeting referred to in Article 18, paragraph 1, of the LRTA took place, having been examined the witness previously designated by the Claimant. The TCA declined to examine the witness designated by itself and likewise to cross-examine the witness designated by the Claimant. The arbitral tribunal further invited both parties to, if they so wished, submit optional written arguments and scheduled the date for delivery of the final decision.
1.7. On 02/06/2016 the Claimant submitted optional written arguments.
1.8. On 17/06/2016 the TCA submitted optional written arguments.
2. PROCEDURAL MATTERS
The arbitral tribunal was duly constituted and is materially competent.
The parties have legal personality and capacity and are entitled to bring proceedings, with no defects in representation.
There are no nullities, exceptions, or preliminary issues that preclude knowledge of the merits and of which it is necessary to take cognizance ex officio.
The request for constitution of the arbitral tribunal was submitted within the period of 90 days counted from notification of the decision of the hierarchical appeal (see Article 10, paragraph 1, letter a), of the LRTA), and is therefore timely.
Consequently, the conditions exist for the final decision to be delivered.
3. POSITIONS OF THE PARTIES
There are two positions in confrontation: that of the Claimant, set out in the request for arbitral pronouncement, and that of the TCA in its response and respective subsequent arguments.
As grounds, the Claimant alleges, in summary, that the assessment notices are affected by the defects of pretermission of essential formalities and, further, are based on an incorrect interpretation of the provisions of the Corporate Income Tax Code.
In this sense, it advances the following arguments:
a) Statute of Limitations on the Right to Assess
The Claimant maintains that in accordance with the provisions of Article 45, paragraph 1, of the General Tax Code (GTC) "the right to assess taxes is barred if the assessment is not validly notified to the taxpayer within four years, unless the law provides otherwise", counted, for periodic taxes, from the end of the year in which the tax event occurred.
The Claimant understands that in the case at hand, the original Corporate Income Tax assessment notices and the respective compensatory interest were only issued on 08/01/2014 and 13/01/2014, respectively, having only been notified thereof on 27/03/2014.
In this measure, the TCA's right to proceed with the assessment of the Corporate Income Tax allegedly in default would have been barred on 31/12/2013.
However, having into account that the assessment notices were preceded by an inspection procedure, the said period of limitation was suspended between 16/09/2013 (date of signature of the respective service order) and 06/12/2013 (date of signature of the inspection note).
According to the Claimant, it thus appears that the limitation period ran uninterruptedly between 01/01/2010, the initial counting date of the limitation period for purposes of Article 45, paragraphs 1 and 4, of the GTC, until 16/09/2013, the date on which the inspection acts began, with the signature of the service order.
Thus, on the date on which the inspection procedure began, 3 years, 8 months and 16 days had already elapsed since the initial counting date of the limitation period (01/01/2009), with 3 months and 15 days still remaining to complete the 4-year period.
On the other hand, continues the Claimant, with the limitation period resuming its counting on 06/12/2012, it should be concluded that the period remaining to complete the limitation period (3 months and 14 days) ended on 21/03/2014, that is, before notification of the Corporate Income Tax and compensatory interest assessment notices relating to the year 2009.
It should thus be concluded that with the expiry of the limitation period provided for in Article 45, paragraphs 1 and 4, of the GTC, the assessment notices in question are illegal and should consequently be annulled.
b) Violation of the Inquisitorial Principle and Pursuit of Substantive Truth
According to the Claimant, in accordance with the inquisitorial principle enshrined in Article 58 of the GTC, the TCA must, in the inspection procedure, carry out all necessary steps to satisfy the public interest and to discover the substantive truth.
In the same sense, Article 6 of the Supplementary Regime of Tax Inspection Procedure (SRTIP) provides that the inspection procedure aims at the discovery of substantive truth, with the TCA adopting ex officio all necessary steps to achieve this objective.
It thus follows from the provisions in question that the TCA is subject, in its actions, to the pursuit of the public interest, and should, within the scope of its inspection activities, always seek to achieve the substantive truth underlying the facts inspected.
The Claimant maintains that the TCA failed to demonstrate (limiting itself instead to speculation) that the Claimant had incorrectly accounted for any costs or had failed to comply with any tax or accounting duty from which it obtained any financial advantage to the detriment of the State treasury.
In fact, as has been recognized by the generality of legal doctrine, the failure to investigate the elements necessary to discover the substantive truth, with the consequent violation of the inquisitorial principle, taints the tax act issued on the basis of the conclusions of the inspection procedure with illegality.
c) Lack of Reasoning and Illegality of the Compensatory Interest Assessment
The Claimant further maintains that the prerequisites upon which the law makes the assessment of compensatory interest depend are not met.
First and foremost, in particular, the Claimant's culpability is not even invoked, and much less demonstrated by the TCA.
On the other hand, the Claimant understands that the assessment of compensatory interest in question is illegal, also due to lack of reasoning and violation of Article 77 of the GTC and pretermission of an essential legal formality, and should be declared illegal and annulled accordingly.
d) Illegality of the Decision of Partial Grant of the Hierarchical Appeal
The Claimant understands that by maintaining in the legal order, albeit partially, the contested assessment notices, the Director of Corporate Income Tax Services acted in error regarding the factual and legal premises, and that the defects imputed to the assessment notices are transmitted to the decision itself that maintains them, which is hereby invoked for all legal purposes.
On the other hand, the decision of the hierarchical appeal was delivered without the Claimant having had the opportunity to pronounce itself on the premises thereof in a prior moment, violating the provisions of Article 60 of the GTC.
The decision of the Director of Corporate Income Tax Services should therefore also be annulled as it was issued in violation of the applicable legal norms and principles (see Article 135 of the Administrative Procedure Code).
e) Illegality of Some of the Corrections Contained in the Inspection Report, Relating to Non-Deductible Costs, Provisions, Autonomous Taxation, and Depreciation
The TCA alleges, in summary, that:
a) Regarding the Alleged Statute of Limitations on the Right to Assess
The suspension of the limitation period on the right to assess ceases only with the end of the inspection procedure, materialized in the notification of the final report to the Claimant.
b) Regarding the Alleged Lack of Reasoning of the Assessments
The case law of the Supreme Administrative Court has come to understand uniformly that the reasoning of an act is a relative concept that varies according to the type of act and the circumstances of the specific case, and that reasoning is sufficient when it enables a normal recipient to understand the cognitive and evaluative path followed by the author of the act, that is, when the recipient may know the reasons that led the author of the act to decide in that manner and not otherwise.
c) With respect to the allegation that an essential formality was pretermitted by violation of Article 60, paragraph 1, of the GTC, the Claimant is likewise not correct to the extent that the intervention of taxpayers in TCA decisions that concern them is covered by the legal basis in the principle of participation inherent in Article 60 of the GTC, which indeed provides in its paragraph 1, letter b), the right to hearing before total or partial rejection of appeals.
d) Relevant to the present case is the provision in paragraph 3, which exempts hearing before assessment in situations where the taxpayer was previously heard in any of the phases, e.g., that of the inspection procedure, as was the case.
e) With respect to the same allegation, but regarding the assessment of compensatory interest, it expressly results from the typification in Article 35 of the GTC that compensatory interest shall be due when, by a fact attributable to the taxpayer, the assessment of part or all of the tax owed is delayed, or if it receives a refund greater than owed, which shall accrue to the amount of tax owed.
f) With respect to the alleged violation of the inquisitorial principle and pursuit of substantive truth, considering the specific corrections analyzed herein and the basis on which they rest, it is concluded that the TCA clearly invoked the factual and legal grounds underlying them.
g) Regarding the request for compensation for indebtedly provided guarantee, the pretension was not reasoned as the request is made in a vague and generic manner, not listing the facts or the law by which it understands it is owed this compensation.
h) The TCA concludes that there is, throughout the entire procedure, no error attributable to the services in the assessment of the tax, capable of justifying the duty to compensate as requested by the Claimant, and therefore the same cannot be upheld.
4. FACTS
4.1. FACTS CONSIDERED PROVEN
In view of the documents brought into the proceedings, the following is held as proven:
4.1.1. The Claimant's business is the operation and commercialization of services provided in the area of special road haulage of goods.
4.1.2. Under service order no. OI2013…, issued by the Tax Inspection Service of the Finance Department of …, an external inspection action of partial scope was carried out, which focused on the 2009 tax year.
4.1.3. Within the scope of the said procedure, the following corrections to taxable income were made, which formed the basis of the additional Corporate Income Tax assessment no. 2014 …, from which resulted a total amount payable of € 91,873.31:
[Table of corrections omitted for brevity]
4.1.4. On 29/07/2012 the Claimant filed, with the Finance Department of …, an administrative reclamation against the said assessment notices of Corporate Income Tax and compensatory interest.
4.1.5. By Office no. …, dated 12/11/2014, from the Administrative Justice Division of the Finance Department of …, the Claimant was notified to, within 15 days counted from notification, pronounce itself, pursuant to the right of prior hearing, on the draft decision of partial grant of the administrative reclamation filed against the assessment notices identified above.
4.1.6. On 28/11/2014 the Claimant exercised, with the Finance Department of …, its right of hearing on the draft decision, petitioning for its annulment and likewise for the annulment of the Corporate Income Tax and compensatory interest assessment notices issued by the TCA with reference to the 2009 tax year.
4.1.7. On 22/12/2014 the Claimant filed a request to supplement the right of hearing submitted, enclosing for that purpose additional evidentiary elements to demonstrate the illegality of the corrections ascertained by the TCA and consequently of the Corporate Income Tax and compensatory interest assessment notices.
4.1.8. By Office no. …, dated 29/12/2014, from the Administrative Justice Division of the Finance Department of …, the Claimant was notified of the partial grant of the administrative reclamation filed against the Corporate Income Tax assessment notice no. 2014 … in the amount of € 91,873.31 and likewise against the compensatory interest assessment notice no. 2014 … in the amount of € 11,502.88, relating to the 2009 tax year.
4.1.9. In the course of the said administrative reclamation documentary evidence was offered that allowed for the conclusion of annulment of the correction made with reference to accounting gain, in the amount of € 4,217.51, in the acceptance of a provision in the amount of € 3,810.00, and expenses in the amount of € 11,561.63.
4.1.10. Following the said decision, the Claimant further filed a hierarchical appeal on 28/01/2015, which was likewise partially granted, with part of the values of the provisions relating to doubtful debts being accepted in the amount of € 194,792.57.
4.1.11. This latter decision was notified to the Claimant on 23/10/2015 and gave rise to the additional Corporate Income Tax assessment no. 2015 … and the compensatory interest assessment notice no. 2015 …, which adapt the original acts to the decisions rendered in the administrative proceedings.
4.1.12. Since the Claimant did not proceed, timely, to payment of the assessments in question, tax execution proceedings no. … were instituted, which are suspended with a guarantee having been provided, in the form of voluntary mortgage on two real properties of which it is owner.
4.2. FACTS NOT CONSIDERED PROVEN
There are no facts relevant to the decision that have not been held as proven.
5. THE LAW
5.1. ORDER OF EXAMINATION OF DEFECTS
In accordance with the provisions of Article 124 of the Tax Procedure and Process Code (TPPC), subsidiarily applicable by force of the provision of Article 29, paragraph 1, of the LRTA, with defects not being imputed to the challenged acts that lead to a declaration of non-existence or nullity, nor a relationship of subsidiarity being indicated, the order of examination of the defects should be that which, according to the prudent discretion of the judge, is most stable or effective in protecting the interests offended.
In the case at hand, we shall examine first the defects of a procedural nature invoked by the Claimant (statute of limitations on the right to assess, lack of reasoning and illegality of the assessment of compensatory interest, pretermission of right to hearing before issuance of the decision of partial grant, violation of the inquisitorial principle and pursuit of substantive truth, and thereafter the substantive issue: the illegality of some of the corrections contained in the inspection report.
5.1.1. STATUTE OF LIMITATIONS ON THE RIGHT TO ASSESS
In accordance with the provisions of Article 45, paragraph 1, of the GTC, "the right to assess taxes is barred if the assessment is not validly notified to the taxpayer within four years, unless the law provides otherwise."
Article 46, paragraph 1, of the GTC further provides that "the limitation period is suspended with the notification to the taxpayer, in accordance with the law, of the service order or decision at the beginning of the external inspection action, ceasing, however, this suspension effect, counting the limitation period from its beginning, should the duration of the external inspection exceed the period of six months after the notification."
Article 61, paragraph 1, of the SRTIP establishes that "inspection acts are considered concluded on the date of notification of the inspection note issued by the official responsible for the procedure."
On the other hand, Article 62, paragraphs 1 and 2, of the SRTIP establishes the following:
"1 – For conclusion of the procedure a final report is prepared with a view to identifying and systematizing the facts detected and their legal-tax qualification.
2 – The report referred to in the preceding number shall be notified to the taxpayer by registered mail within 10 days following the end of the period referred to in paragraph 4 of Article 60, being considered the procedure concluded on the date of notification."
Finally, Article 36, paragraphs 1 and 2, of the SRTIP, under the heading "Beginning and Period of the Tax Inspection Procedure", provides the following:
"1 – The tax inspection procedure may begin up to the end of the limitation period on the right to assess taxes or the sanctioning procedure, without prejudice to the right of examination of documents relating to tax situations already covered by that period, which taxpayers and other tax obligors have the obligation to retain.
2 – The inspection procedure is continuous and must be concluded within a maximum period of six months from notification of its beginning."
Now, from the joint reading of all these provisions, it is not possible to conclude in favor of the Claimant's pretension.
Let us examine this:
In fact, although these norms express some terminological imprecision in the use of the expressions "inspection action" and "inspection procedure," these are expressions that designate concepts with different contents, but without it being possible to extract from that distinction the legal consequence sought by the Claimant: that the suspension of the limitation period on assessment ceases with notification to the person inspected of the conclusion of the inspection acts and not with the preparation of the final inspection report.
Now, proceeding the final inspection report with the identification and systematization of the facts detected and their legal-tax qualification, in particular, describing the tax-relevant facts that alter the declared or to be declared values subject to taxation, the TCA is prevented, before the preparation of that final report, from exercising the right to assess by lack of knowledge of the factual premises on which it should be based.
According to José Maria Fernandes Pires (Coordinator), Gonçalo Bulcão, José Ramos Vidal and Maria João Menezes, in annotation to Article 46 of the GTC, "During this period, the tax administration is prevented from issuing assessment acts, as it finds itself in a phase of collecting evidence and verifying the existence of factual and legal prerequisites capable of justifying, or not, tax corrections, and the consequent assessment." [emphasis in original].
Still according to the authors, "(...) the inspection procedure is only considered finalized with the notification of the final inspection report, with a view to identifying and systematizing the facts detected and their legal-tax qualification (paragraph 2 of Article 62 of the SRTIP), which is the culmination of a complex intricacy of steps and acts that the law obliges the Tax Inspection to develop, after the conclusion of the inspection procedure itself." [emphasis in original].
"Thus, the inspection action is only considered concluded with the notification of the final report of the inspection action, duly sanctioned by decision of the competent entity."
See in this respect the established case law in the Decision of the Supreme Administrative Court (SAC) of 16/09/2009, Case no. 0473/09, to the effect that, with respect to the statute of limitations on the right to assess the tax and the manner of counting the period of suspension of that limitation period as a consequence of a determined inspection action notified during the course of that first limitation period, the provisions of Articles 45° and 46° of the GTC, and 60° and 61° of the SRTIP are clear.
Transcribing, partially, its reasoning, "(...) nothing in the letter or spirit of those provisions allows one to distinguish, with relevance to counting the period of suspension of the limitation period on the right to assess, internal inspection acts and external inspection acts, and much less does it allow conferring only to the latter the suspensive efficacy.
From the joint interpretation of the said legal provisions there results only and solely (...) that the limitation period on the right to assess periodic taxes, which is four years and is counted from the end of the year in which the tax event occurred – Article 45° of the GTC –, is suspended with the notification to the taxpayer of the beginning of an external inspection action, ceasing this suspensive effect, counting that limitation period from its beginning, should the inspection exceed six months counted from that notification.
In the other cases, that is, when the inspection action is concluded before those six months, the suspensive effect of the limitation period is maintained until notification to the taxpayer of the conclusion of the inspection procedure, by preparation of the final report, notification which, thus, the legislator chose as the end of the period of suspension of the limitation period on the right to assess the respective tax, all as provided in Article 60° paragraphs 1 and 2 of the SRTIP."
Attention should also be paid to the case law contained in the Decisions of the SAC of 07/12/2005 and 02/02/2006, Cases no. 993/05 and no. 769/05, respectively, in accordance with which the norm contained in Article 46, paragraph 1, of the GTC should be interpreted to the effect that the suspension of the limitation period is maintained until the date of notification of the final inspection report (corresponding to the conclusion of the inspection procedure), if this occurs before the end of the six-month period, counted from notification to the taxpayer of the beginning of the external inspection action.
It is thus to be concluded that the Claimant's argument based on Article 46, paragraph 1, of the GTC, as well as Articles 36, 61, paragraph 1, and 62, paragraph 1, of the SRTIP is not well-founded.
In the case at hand, the limitation period on the right to assess (4 years) began on 01/01/2010 (see Article 45, paragraphs 1 and 4 of the GTC), a fact which the Claimant itself recognizes.
Had no cause of suspension occurred, that period would have ended on 01/01/2014.
However, the inspection acts began on 16/09/2013, with the signature of the service order and credential identifying the officials appointed to carry out the inspection procedure, having been concluded on 06/12/2013, with the signature of the inspection note.
However, the draft report was personally notified to the Claimant, by Office no. … of 06/12/2013, with no hearing right having been exercised, whereby the corrections to taxable income contained in the draft report were maintained in the final report, notified on 31/12/2013.
On the other hand, the additional Corporate Income Tax assessment and the respective compensatory interest assessment were notified to the Claimant on 27/03/2014.
That is, the limitation period was suspended for 108 days (16/09/2013, date of notification to the Claimant of the beginning of the external inspection action, and 02/01/2014, date of notification of the final inspection report, which is, contrary to what was maintained by the Claimant, the date relevant for purposes of cessation of the suspensive effect).
In this measure, with the assessment having been notified to the taxpayer on 27/03/2014, the said limitation period (4 years) was still running, as those 108 days during which suspension occurred should be deducted.
See in this sense the Decision of the SAC of 20/10/2010, delivered in Case no. 0112/10.
Consequently, by force of the provision of Article 51, paragraph 2, of the SRTIP, the external inspection procedure must be considered initiated on 16/09/2013 and the limitation period suspended from this date, in accordance with Article 46, paragraph 1, of the GTC, as the inspection procedure ended on 02/01/2014, that is, within the six-month legally provided period.
Now, with the elimination of the period elapsed between 16/09/2013 and 02/01/2014, for purposes of counting the limitation period, it is possible to conclude that the four-year period counted from 01/01/2010 had not yet been completed on 27/03/2014, the date on which the additional assessment was notified.
See also the Decision of the SAC of 21/11/2012, delivered in Case no. 0594/12 and, more recently, of 03/04/2013, delivered in Case no. 0103/12, confirming the position that the TCA has come to defend in this matter:
"I – The limitation period on the right to assess is, as a rule, four years counted, for periodic taxes, from the end of the year in which the tax event occurred.
Such period is suspended with the notification to the taxpayer of the beginning of an external inspection action, but this suspensive effect ceases should it exceed the period of six months counted from that notification.
II – If the inspection action is concluded before those six months have elapsed, the suspensive effect of the limitation period is maintained until notification to the taxpayer of the conclusion of the inspection procedure, by preparation of the final report."
By all of the foregoing, it is clear that the termination of suspension of the limitation period occurs with notification of the final report of the inspection procedure (see Article 62, paragraph 2, of the SRTIP), provided the duration of the external inspection has not exceeded the period of six months after notification to the person inspected of the service order or decision at the beginning of the external inspection action (see Article 46, paragraph 1, of the GTC).
Therefore, the petition for arbitral pronouncement is without merit as to this defect.
5.1.2. LACK OF REASONING AND ILLEGALITY OF THE ASSESSMENT OF COMPENSATORY INTEREST
The requirement of reasoning of lesive administrative acts is contained in Article 268, paragraph 3, of the Constitution of the Portuguese Republic (CPR), in accordance with which "administrative acts are subject to notification to the interested parties, in the manner provided by law, and require express and accessible reasoning when they affect legally protected rights or interests."
Especially for the reasoning of tax acts, Article 77, paragraphs 1 and 2, of the GTC establish that "the procedural decision is always reasoned by means of a brief statement of the factual and legal reasons that motivated it, and the reasoning may consist in mere declaration of concordance with the grounds of earlier opinions, information or proposals, including those forming part of the tax inspection report" and that "the reasoning of tax acts may be carried out in summary form, but shall always contain the applicable legal provisions, the qualification and quantification of tax facts and the operations of determination of taxable income and the tax."
Now, the SAC has come to understand uniformly that the reasoning of an administrative or tax act is a relative concept that varies according to the type of act and the circumstances of the specific case, but reasoning is sufficient when it enables a normal recipient to realize the cognitive and evaluative path followed by the author of the act to deliver the decision, that is, when the recipient may know the reasons why the author of the act decided as it did and not differently, so as to be able to trigger the administrative or contentious mechanisms of challenge.
Although it is to be distinguished between the assessment act and the notification act through which it is communicated to the recipient, in the case at hand it has not been proven that there is any other document relating to the assessment act other than the one reproduced in the case file together with the request for arbitral pronouncement (Document no. 2), whereby one must proceed on the presumption that it is a copy of the act that was issued, which will have no other content beyond what is contained therein.
According to the said document, it is found that it contains only, as to compensatory interest, the indication of the manner in which they were calculated, namely, the base value, the period to which it relates, the applicable rate and the corresponding value.
There is no reference whatsoever to any inspection act, or to the tax inspection report or any other document that may be considered reasoning for the assessment act.
It is thus manifest that the assessment act is not reasoned in the terms required by Article 77, paragraphs 1 and 2, of the GTC, as, in addition to not containing the "statement of factual and legal reasons" on which it is based, it does not even contain any declaration of concordance with the grounds of any other act, in particular, the tax inspection report referred to in the case file.
Furthermore, the tax inspection report itself is completely silent as to the reasons of fact and law by which the TCA understood that compensatory interest was owed, and the mere indication of the period and rate that were used in its calculation, although it clarifies some of the factual premises, reveals nothing about the legal grounds.
Now, the requirement of compensatory interest does not necessarily follow from the finding of the existence of a correction to be made.
In truth, Article 35, paragraph 1, of the GTC establishes that "compensatory interest is due when, by a fact attributable to the taxpayer, the assessment of part or all of the tax owed is delayed or the delivery of tax to be paid in advance, or withheld or to be withheld under the scope of tax substitution."
In fact, objective liability is exceptional, only occurring in cases specified by law (see Article 483, paragraph 2, of the Civil Code) and therefore should be understood that, for purposes of liability for compensatory interest, one is only dealing with a "fact attributable to the taxpayer" when it is possible to formulate a judgment of censure against its conduct.
In this line, the SAC has come to understand uniformly that the attributability required for liability for payment of compensatory interest depends on the existence of culpability on the part of the taxpayer.
Faced with the lack of indication in the assessment and in the tax inspection report of the reason why it was understood that compensatory interest is owed, one is left not knowing whether the TCA understood that the liability for compensatory interest is automatic, resulting from the very fact that corrections have been made, or whether it concluded that a judgment of censure can be formulated against the Claimant's actions, capable of meeting the attributability requirement, a situation in which the reasoning should contain indication of the facts underlying that judgment of censure.
On the other hand, the argument invoked by the TCA, to the effect that "(...) throughout the administrative process, in particular in the administrative reclamation and hierarchical appeal proceedings submitted by the now Claimant, the reasons justifying the TCA's taking of position are latent and explicit (...)", without any indication that allows one to conclude that they were considered by the entity that carried out the assessment, is a posteriori reasoning, which is settled to be irrelevant for purposes of assessing the legality of tax acts.
In any event, there is a lack of reasoning regarding the verification of all the requirements provided for in Article 35, paragraph 1, of the GTC, whereby the assessment of compensatory interest is affected by the defect of lack of reasoning.
The Claimant imputes, furthermore, to the challenged act another procedural defect, for not having been afforded prior hearing, in accordance with Article 60, paragraph 1, letter a), of the GTC.
The TCA understands that the Claimant is not correct, invoking, in summary, the dispensation that results from Article 60, paragraph 3, of the GTC, as the Claimant "(...) was personally notified (...) to exercise the right of hearing when notified of the draft inspection report and did not do so (...)"
Article 60 of the GTC, under the heading "Principle of Participation," provides the following:
"1 – The participation of taxpayers in the formation of decisions that concern them may take place, unless the law prescribes otherwise, by any of the following means:
a) Right to hearing before assessment;
b) Right to hearing before total or partial rejection of requests, reclamations, appeals or petitions;
c) Right to hearing before revocation of any benefit or administrative act on tax matters;
d) Right to hearing before the decision to apply indirect methods, when there is no tax inspection report;
e) Right to hearing before conclusion of the tax inspection report.
2 – Hearing is dispensed with:
a) In case the assessment is effected on the basis of the taxpayer's statement or the decision on the request, reclamation, appeal or petition is favorable to it;
b) In case the assessment is effected ex officio, on the basis of objective values provided for by law, provided the taxpayer was notified to submit the missing statement, without having done so.
3 – Having the taxpayer been previously heard in any of the phases of the procedure referred to in letters b) to e) of paragraph 1, hearing before assessment is dispensed with, except in case of invocation of new facts on which it has not yet pronounced itself.
4 – The right to hearing must be exercised within the period to be set by the tax administration by registered mail sent for that purpose to the taxpayer's tax domicile.
5 – In any of the circumstances referred to in paragraph 1, for purposes of exercising the right to hearing, the tax administration shall communicate to the taxpayer the draft decision and its reasoning.
6 – The period for exercising the right to hearing orally or in writing is 15 days, and the tax administration may extend this period to a maximum of 25 days depending on the complexity of the matter.
7 – New elements raised in the hearing of taxpayers are mandatorily taken into account in the reasoning of the decision."
The right to hearing has constitutional roots, being postulated by Article 267, paragraph 5, of the CPR, which establishes that "the processing of administrative activity shall be subject to special law, which shall ensure the rationalization of the means to be used by the services and the participation of citizens in the formation of decisions or deliberations that concern them" [emphasis added].
But, as follows from this provision, the CPR does not regulate the regime of the right to hearing, relegating to "special law" the definition of the terms in which such a right will be exercised, terms in which various factors may be taken into account, including economic and practicability factors.
It is in this context that Article 60, paragraph 3, of the GTC, invoked by the TCA, provides for situations in which prior hearing before assessment is dispensed with.
In the case at hand, it is not disputed that Article 60, paragraph 1, letter a) of the GTC guarantees taxpayers the right to hearing before assessment, which results from the express tenor of this provision, whereby the question to be examined is reduced to knowing whether one is in a situation in which hearing before assessment is dispensed with by paragraph 3 of the same article.
In fact, this paragraph 3 dispenses with the right to hearing before assessment if the taxpayer was previously heard in any of the phases of the procedure referred to in letters b) to e) of paragraph 1, except in case of invocation of new facts on which it has not yet pronounced itself.
In the case at hand, the Claimant had the opportunity to exercise the right to hearing on the basis of the draft tax inspection report, which is a situation that may be encompassed within letter e) of paragraph 1 of Article 60 of the GTC, whereby, in principle, one is in a potential situation of application of the dispensation of the right to hearing before assessment.
Therefore, the necessity to ensure the right to hearing before assessment can only result from the exception provided in the final part of paragraph 3, that is, that new facts have been invoked on which the taxpayer has not yet had the opportunity to pronounce itself.
Examining the assessment and the draft tax inspection report that served as the basis for the exercise of the right to hearing, it is found that no reference whatsoever is made to compensatory interest.
As the TCA clarifies "(...) the corrections made by the tax inspection services are the result of a conduct of the taxpayer that had as a result the non-delivery in part of the tax to be ascertained in accordance with the law, materialized in an (auto) assessment lower than owed by non-compliance with the rules established in the Corporate Income Tax Code (...)", whereby it must be concluded that in the assessment of compensatory interest the TCA took into consideration new facts, inherent to the formulation of judgments on the existence of the nexus of causality and of culpability.
Therefore, it must be concluded that, as to the assessment of compensatory interest, one is not in a situation of dispensation of hearing before assessment, whereby its pretermission constitutes pretermission of a legal formality, as the Claimant maintains.
It should be noted that, although the consideration of new facts inhering in the imposition of compensatory interest is what justifies the departure from the dispensation of the right to hearing before assessment, as it is a procedural formality of the assessment procedure that should precede the final act, its pretermission implies the invalidity of the final act itself of the assessment procedure, and the possibility of division of the act does not arise with respect to this defect, for purposes of annulment.
That is, as it is not a case of dispensation, the right to hearing had to be ensured before the assessment act, by force of Article 60, paragraph 1, letter a) of the GTC and therefore the issuance of this act is globally illegal.
The petition for arbitral pronouncement is therefore well-founded as to this defect.
5.1.3. PRETERMISSION OF RIGHT TO HEARING BEFORE ISSUANCE OF THE DECISION OF PARTIAL GRANT OF THE HIERARCHICAL APPEAL
The decision of partial grant of the hierarchical appeal, insofar as it maintained the assessment notices of Corporate Income Tax and compensatory interest, is affected by the same defects of which those are burdened, whereby its annulment is also justified.
5.1.4. VIOLATION OF THE INQUISITORIAL PRINCIPLE AND PURSUIT OF SUBSTANTIVE TRUTH
The Claimant further alleges that in the decision of partial grant of the hierarchical appeal, the TCA maintains that this specific defect does not occur, and that the inspection services conducted themselves in accordance with collaboration, and further that it was the Claimant who erred in some of the accounting entries.
In fact, in light of the contradictory principle enshrined in Article 58 of the GTC, the TCA must, in the procedure, carry out all necessary steps to satisfy the public interest and to discover the substantive truth.
In the same sense, Article 6 of the SRTIP provides that the inspection procedure aims at the discovery of substantive truth, with the TCA adopting ex officio all necessary steps to achieve this objective.
It thus follows from the provisions in question that the TCA is subject, in its actions, to the pursuit of the public interest, and should, within the scope of the inspection activity carried out by it, always seek to achieve the substantive truth underlying the facts.
As José Maria Fernandes Pires (Coordinator), Gonçalo Bulcão, José Ramos Vidal and Maria João Menezes point out, in annotation to Article 58 of the GTC, "In the tax procedure, the initiative of the pursuit of substantive truth belongs to the tax administration itself, even in cases where the requests of taxpayers fall short of the necessary steps for the real ascertainment of facts and application of law. This principle is grounded in the obligation of the administration to pursue the public interest (paragraph 1 of Article 266 of the CPR and Article 55 of the GTC), as well as in the duty of impartiality of administrative action (paragraph 2 of Article 266 of the CPR and Article 55 of the GTC)."
In the same sense teach Diogo Leite de Campos, Benjamim Silva Rodrigues and Jorge Lopes de Sousa that "(...) the inquisitorial principle is justified by the obligation to pursue the public interest imposed on the activity of the tax administration, and is a corollary of the duty of impartiality that should guide its activity (...). On the other hand, that duty of impartiality requires that the tax administration seek to bring to the procedure all evidence relating to the factual situation on which the decision will rest, even if they are intended to demonstrate facts whose proof is contrary to the patrimonial interests of the Administration."
Now, as has been recognized by the generality of legal doctrine, the failure to investigate the elements necessary to discover the substantive truth, with the consequent violation of the inquisitorial principle, taints the tax act issued on the basis of the conclusions of the inspection procedure with illegality.
Without prejudice to the foregoing, the efforts undertaken – it is true that with one or another shortcoming – are plainly evident in the administrative procedure that preceded it, by the TCA in the sense of ascertaining the legal conformity of the values entered in the accounts and respective Model 22 Form Corporate Income Tax statement.
On the other hand, absent the indication of concrete examples by the Claimant, it is not evident in what manner the TCA violated the inquisitorial principle and pursuit of substantive truth.
The petition for arbitral pronouncement is therefore without merit as to this defect.
Regarding the substantive issue,
5.1.5. ILLEGALITY OF THE ASSESSMENT ACTS
I - Costs Non-Deductible for Tax Purposes
a) Debit Notes
The TCA determined in the inspection report that the amount of € 3,525.96 should not be accepted as costs for tax purposes – corresponding to the sum of Debit Notes no. 94 and no. 98 of 31/07/2009, relating to supplier "B… …", legal entity no. …, relating to the service contract …-…-…/…/…/…, reference May/09 and June/09, recorded in the accounting in July, in account #62111 – Supplies and Services – Subcontracts – standard rate (see daily entries no. … and …), as follows:
[Details omitted for brevity]
The Claimant maintains that the correction in question is not reasoned, as it is based on "mere conclusory judgments which, as is unanimously held in case law and legal doctrine, are not capable of motivating assessment acts."
In accordance with Article 23, paragraph 1, of the Corporate Income Tax Code (in the version in force at the time of the facts) are considered "costs or losses those which are demonstrably necessary for the achievement of profits or gains subject to tax or for the maintenance of the producing source (…)," exemplifying in the following letters some examples with legal recognition in such concept.
That is, what is required for the accounting entry of a certain expenditure as a cost or loss is that it be demonstrated.
On the other hand, mindful of the provision of Article 75, paragraph 1, of the GTC, "the statements of taxpayers presented in accordance with the law are presumed true and of good faith, as are the data and calculations recorded in their accounts or books, when these are organized in accordance with commercial and tax legislation."
However, this presumption is immediately disapplied by paragraph 2 of the same article should the taxpayer not have complied with its tax obligations, in particular, the duties of clarification of its respective tax situation.
In fact, the Claimant failed to demonstrate the indispensability of these expenditures for the maintenance of the producing source, notwithstanding what the provision requires, as beyond the mere accounting of the debit notes it did not present, despite being called upon to do so, any supporting documentation that would legitimize them.
Once doubt is created, it would be incumbent on the Claimant to demonstrate, in particular, through the exhibition of documentation supporting the accounting entry made, that the expenditure was correctly recorded, which did not occur.
See in this respect the Decision of the Central Administrative Court of the North (CACN) of 12/01/2012, Case no. 00624/05.0BEPRT, where it is concluded:
"It is incumbent on the Tax Administration to demonstrate the legal prerequisites (binding) of its action, in particular if aggressive (positive and unfavorable), impending, in turn, on the administered to present sufficient proof of the illegality of the act, when those prerequisites are shown to be verified.
3 – The rules of burden of proof coexist with the inquisitorial principle, in accordance with which the tax administration is required to ex officio order the evidentiary steps necessary to ascertain substantive truth.
4 – However, the inquisitorial principle does not oblige the administration to investigate pretensions without the minimum probative support in cases where the burden of proof falls on the taxpayer.
5 – In accordance with the provision of Article 23, paragraph 1 of the Corporate Income Tax Code, are considered costs or losses those which are demonstrably necessary for the achievement of profits or gains subject to tax or for the maintenance of the producing source.
6 – In the consideration and fulfillment of this indeterminate concept – indispensability – it is required that the analysis of a specific cost be done in function of the corporate activity, that is, in function of its objective within the scope of the company's activity; the indispensable costs would be equivalent to expenditures incurred in the company's interest." [emphasis added].
The petition for arbitral pronouncement is therefore without merit as to this defect.
b) Adjustments in Amounts Due from Debtors
In accordance with the conclusions of the inspection report the Claimant constituted, in the 2009 tax year, provisions that were subject to correction in the values indicated hereinafter:
[Details omitted for brevity]
The corrected value, in the amount of € 251,506.46, resulted from the fact that the Claimant had constituted provisions relating to doubtful debts in percentages higher than those legally admissible for that purpose, in accordance with the provision of Article 36, paragraph 2 of the Corporate Income Tax Code (in the version in force at the time of the facts), relative to various customers.
Now, following the decision of partial grant of the hierarchical appeal, the TCA annulled the correction in question in the amount of € 194,792.57, to which is added the annulment of € 3,810.00 carried out in the administrative reclamation.
Thus, as the initial correction amounted to € 251,506.46, the correction remains in the amount of € 52,903.89 (and not 52,943.89, as indicated by the Claimant in the request for arbitral pronouncement).
In accordance with the provision of Article 35, paragraph 1, of the Corporate Income Tax Code in the version in force in 2009, "The following losses from impairment accounted for in the same tax period or in earlier tax periods may be deducted for tax purposes:
a) Those related to credits resulting from normal activity which, at the end of the tax period, may be considered doubtful of collection and are evidenced as such in the accounts;
b) Those relating to receivables recognized by insurance companies;
c) Those consisting of exceptional depreciations verified in tangible fixed assets, intangible assets, non-consumable biological assets and investment properties." [emphasis added].
Still in accordance with the provision of Article 36, paragraph 1, of the Corporate Income Tax Code, in the version in force in 2009, "For purposes of determining the losses from impairment provided for in letter a) of paragraph 1 of the preceding article, are considered doubtful debts those in which the risk of uncollectibility is duly justified, which occurs in the following cases:
a) The debtor has pending insolvency and company recovery proceedings or execution proceedings (...)" [emphasis added].
With relevance to the situation at hand, are considered losses from impairment those related to credits resulting from normal activity which, at the end of the tax period, may be considered doubtful of collection and are evidenced as such in the accounts.
Being certain that are considered doubtful debts those in relation to which the debtor has pending insolvency proceedings.
With respect to the debts of the companies C…, Ltd., D… – Single-Member, Ltd., E… – …, Ltd. and F… – …, Ltd., confronting the documentation presented by the Claimant we verify that the evidence regarding the declaration of insolvency of these debtors is sufficient.
In fact, although the insolvency declarations date, as final, from 2008, the Claimant does not present the constitution of any provision relating to these debtors in that year, being constituted only in 2009, and should thus be accepted in the tax year in question, like the criterion adopted by the TCA with reference to the debts of the companies G…, S.A. and H… – …, S.A.
Now, absent duplication of costs, the amount in question should be accepted in 2009, under penalty of the Claimant not being able to record an element negative to the taxable result to which it is entitled.
Identical reasoning should be applied to credits relating to customers I… – …, Ltd., and J…, Ltd., whose insolvency was only known in 2010, as neither was there any duplication of costs, nor was the corresponding movement promoted in the said tax year.
Being, as has been demonstrated, insolvency proceedings pending at the date of constitution of the provisions in question, all the requirements provided for in the Corporate Income Tax Code are met on which recognition of 100% impairment depends (see Articles 35, paragraph 1, and 36, paragraph 1, both of the Corporate Income Tax Code).
It thus results, evident, the error regarding the premises on which the TCA acted, which motivated an incorrect application of law and consequently the illegality of the correction in question.
The petition for arbitral pronouncement is therefore well-founded as to this defect.
II – Autonomous Taxation
a) Light Vehicles - Maintenance and Repair Expenses
According to the TCA, "From the analysis of the depreciation and reinvestment schedules, we ascertained that, notwithstanding the taxpayer possesses light passenger vehicles, the same are not duly evidenced in the said schedules, as provided in paragraph 2 of Article 22 of Decree-Regulation 2/90. However, from the registration we ascertained that the light vehicles were subjected to depreciation of the period, but the same were not considered for purposes of autonomous taxation, as provided in paragraph 3 of Article 88 (formerly 81) of the Corporate Income Tax Code
(...)
In accordance with paragraph 3 of Article 88 (formerly 81) of the Corporate Income Tax Code, the amounts of costs subject to autonomous taxation are identified below;":
[Details omitted for brevity]
In accordance with the provision of Article 88, paragraph 3, of the Corporate Income Tax Code, "Are subject to autonomous taxation at the rate of 10% the expenses incurred or borne by taxpayers not exempt on a subjective basis and that exercise, as a main activity, an activity of a commercial, industrial or agricultural nature, related to light passenger or mixed vehicles whose acquisition cost is equal to or below the amount fixed pursuant to letter e) of paragraph 1 of Article 34, motorcycles or motorbikes, excluding vehicles powered exclusively by electrical energy."
Specifically, with respect to maintenance and repair expenses for light vehicles, the Claimant recorded in account #622322 the amount of € 18,437.16, but did not subject the said amount to autonomous taxation, reason for which the TCA promoted the correction in question.
First of all, it is important to note that through consultation of the extract of account #622322 (Document no. 9) it is possible to conclude that the amount in question includes the sums of € 11,561.63 and € 8,296.20, relating to vehicle repair.
Now, the amount of € 11,561.63 was already the subject of annulment by the TCA in the administrative reclamation, whereby it is not in dispute the remainder.
As invoked by the Claimant, in the administrative procedure that preceded it, the amount of € 8,296.20 relates to damage caused during the transport of goods belonging to one of its clients (K…, S.A.), which does not fall within an expenditure susceptible to autonomous taxation.
In fact, in accordance with Invoice no. …, dated 20/07/2009, it is thus a "cargo loss" occurring during the transport of the goods that were under the custody of the Claimant, erroneously accounted for as maintenance and repair expense.
However, the TCA maintains that the said invoice "(...) cannot have any correspondence with the values analyzed in the inspection."
It thus results evident from the analysis of the said account extract that the difference in values to which the TCA alludes results from the fact that the account balance is in credit which reduced the value to be corrected.
The petition for arbitral pronouncement is therefore well-founded as to the annulment of the correction in question.
b) Light Vehicles - Depreciation
With respect to depreciation of light vehicles, the Claimant understands that the depreciation in question does not relate to vehicles that can be classified in the category of light passenger vehicles, but rather "pilot cars" used by legal requirement for the accompaniment of the transport of large-scale goods.
In fact, no doubts persist regarding the fact that the Claimant, in the development of its activity, is obliged to utilize light vehicles with certain characteristics for the functions of "pilot car" when large-dimension transports are involved.
Attention should be paid, further, to the testimony of the traffic manager examined.
In fact, as the witness well explained, the use of these vehicles is not only imposed by law, but it is essential that they be passenger vehicles, that is, with at least five seats.
Let us examine this:
First and foremost, as large-dimension transports cannot remain standing on the public road it is always necessary that each journey be accompanied by a "substitute" driver.
To this are added the vehicle handlers – for unloading operations, among others – and the respective mechanic.
In this measure, and as explained by the witness, accompanying each transport is necessary an auxiliary team of at least four persons, to which is added the driver of the "pilot car" itself, who is a professional especially qualified for that purpose.
It thus results evident that this is a vehicle used by legal requirement, equipped with specific characteristics such as the marking of large-dimension transports and yellow "pirilampo" lights in order to signal the existence of a dangerous situation on the public road, whereby they have an exclusively professional use.
Neither are there doubts regarding the fact that these vehicles are indispensable to the exercise of the economic activity of the Claimant – transport of large-dimension goods – and consequently essential to the maintenance of its producing source (see Article 23, paragraph 1, of the Corporate Income Tax Code).
As to the interpretation of Article 88 of the Corporate Income Tax Code proposed by the Claimant, let it be said, first of all, that it follows from the joint reading of Articles 266, paragraph 2, of the CPR and 55 of the GTC that the TCA is subject to a duty of obedience to the law, with particular emphasis on compliance with the principle of legality, which guides and legitimizes all of its actions.
In this context, mindful of the provision of Article 88, paragraph 3, of the Corporate Income Tax Code, are subject to autonomous taxation at the rate of 10% the deductible expenses related to light passenger or mixed vehicles incurred or borne by taxpayers not exempt on a subjective basis and that exercise as a main activity an activity of a commercial, industrial or agricultural nature, with exclusion only provided for in paragraph 6, in a taxative manner, of expenses related to light passenger vehicles dedicated to the exploitation of public transport service or intended to be leased in the exercise of the normal activity of the taxpayer.
It is not incumbent on the TCA to decide on the exclusion from taxation of other types of vehicles, save those that are legally provided therein.
The petition for arbitral pronouncement is therefore without merit as to the annulment of the correction in question.
c) Tolls and Parking
Still in accordance with the inspection report, the TCA maintains that the costs borne by the Claimant, with diesel and tolls recorded in accounts #... and #..., respectively, should be subject to autonomous taxation at the rate of 10%, by force of the provision of Article 88, paragraph 3, of the Corporate Income Tax Code.
In fact, the provision in question is only applicable to expenses with light passenger or mixed vehicles.
Now, in accordance with the documentation brought into the proceedings (accounting extracts, invoices issued by L…, certificates evidencing payment of the Single Circulation Tax, among others) it is possible to identify each of the vehicles in question and conclude that the same have a gross weight in excess of 2,500 kg, whereby they cannot be classified in the category of light passenger vehicles.
The petition for arbitral pronouncement is therefore well-founded as to the annulment of the correction in question.
5.2. COMPENSATION FOR INDEBTEDLY PROVIDED GUARANTEE
The Claimant makes a request for recognition of a right to compensation for indebtedly provided guarantee.
As results from the factual matter fixed, the Claimant provided a voluntary mortgage, to obtain suspension of the tax execution proceedings relating to collection of the debt of Corporate Income Tax and compensatory interest assessed.
In accordance with the provision of Article 24, letter b), of the LRTA, the arbitral decision on the merits of the pretension for which no appeal or challenge lies is binding on the TCA from the end of the period provided for appeal or challenge, and the TCA must, in the exact terms of the proceeding of the arbitral decision in favor of the taxpayer and until the end of the period provided for voluntary execution of judgments of the tax courts, "restore the situation that would exist if the tax act subject of the arbitral decision had not been issued, adopting the acts and operations necessary for that purpose."
With respect to the request for condemnation to payment of compensation for indebtedly provided guarantee, Article 171 of the TPPC establishes that "compensation in case of guarantee indebtedly provided shall be requested in the proceeding in which the legality of the executable debt is disputed" and that "compensation should be requested in the reclamation, challenge or appeal or in case its ground is subsequent within 30 days after its occurrence."
Thus, it is unequivocal that the judicial challenge proceedings encompasses the possibility of condemnation to payment of guarantee indebtedly provided and is even, in principle, the appropriate procedural means to formulate such a request, which is justified by obvious reasons of procedural economy, as the right to compensation for guarantee indebtedly provided depends on what is decided on the legality or illegality of the assessment act.
Now, the request for constitution of the arbitral tribunal and for arbitral pronouncement has as corollary that it will be in the arbitral proceeding that the "legality of the executable debt" will be discussed, whereby, as results from the express tenor of Article 171, paragraph 1, of the TPPC, it is also the arbitral proceeding that is appropriate to examine the request for compensation for guarantee indebtedly provided.
As to the regime of the right to compensation for guarantee indebtedly provided, point out José Maria Fernandes Pires (Coordinator), Gonçalo Bulcão, José Ramos Vidal, Maria João Menezes, in annotation to Article 53 of the GTC, "There are three constitutive elements of the right to compensation for guarantee indebtedly provided:
a. First, guarantee to have been provided in the form of a bank or equivalent guarantee in tax execution proceedings;
b. Second, for the taxpayer to have borne costs with the provision or maintenance of the guarantee. The objective of this provision is exactly the reimbursement to the taxpayer of all costs borne with the provision or maintenance of the guarantee that proved to be indebtedly provided, whereby it is essential to the constitution of the right that those costs have been effectively borne;
c. Third, for it to have been ascertained that the tax owed is indebtedly provided, by having been annulled totally or partially the assessment that gave rise to it. In this case, two distinct circumstances may still occur:
i. In cases in which the annulment of the assessment results from error of the tax administration itself, the right to compensation is constituted from the date of provision of the guarantee indebtedly provided;
ii. In the remaining cases, in particular when the error is the responsibility of the taxpayer, the right to compensation is only constituted after three years have elapsed on the constitution of the guarantee."
In the case at hand, it is manifest that the defects affecting the assessment acts of Corporate Income Tax and compensatory interest are attributable to the TCA, as the corrections were of its initiative and the Claimant in no way contributed to those errors being committed.
Therefore, the Claimant has a right to compensation for the guarantee provided.
Absent, however, elements that allow for determination of the amount of compensation, the condemnation shall have to be effected with reference to what comes to be ascertained in execution of the present decision (see Articles 609, paragraph 2, of the Code of Civil Procedure and 565 of the Civil Code).
6. DECISION
In these terms and with the reasoning described above, the arbitral tribunal decides:
a) To judge the petition for arbitral pronouncement partially well-founded, maintaining in the legal order the corrections that are judged to be without merit;
b) To partially annul the Corporate Income Tax assessment notice (IRC) no. 2014 … (subsequently corrected following the decision of partial grant of the hierarchical appeal by assessment notices no. 2015 … and 2015 … and the compensatory interest assessment notice no. 2014 …, relating to the 2009 tax year;
c) To judge well-founded the petition for arbitral pronouncement as to recognition of the right to compensation for guarantee indebtedly provided and to condemn the TCA to pay the amount to be determined in execution of the present decision; and
d) To condemn the TCA and the Claimant to each bear the costs of the present proceeding.
7. VALUE OF THE PROCEEDING
The value of the proceeding is fixed at € 29,111.85 (twenty-nine thousand, one hundred and eleven euros and eighty-five cents), in accordance with Article 97-A of the Tax Procedure and Process Code (TPPC), applicable by force of letters a) and b) of paragraph 1 of Article 29 of the LRTA and of paragraph 2 of Article 3 of the Regulation of Costs in Tax Arbitration Proceedings (RCPAT).
8. COSTS
Costs to be borne by the TCA and the Claimant, in the amount of € 1,530.00 (one thousand five hundred and thirty euros), in accordance with Table I of the Regulation of Costs in Tax Arbitration Proceedings, in accordance with paragraph 2 of Article 22 of the LRTA, in the proportion of 75% to the TCA and 25% to the Claimant.
Notify.
Lisbon, 30 June 2016
The Arbitrator,
(Hélder Filipe Faustino)
Text prepared by computer, in accordance with the provision of paragraph 5 of Article 131 of the Code of Civil Procedure, applicable by referral from letter e) of paragraph 1 of Article 29 of the LRTA.
The editing of the present decision is governed by the spelling prior to the Orthographic Agreement of 1990.
Frequently Asked Questions
Automatically Created