Process: 258/2014-T

Date: December 15, 2014

Tax Type: IRS

Source: Original CAAD Decision

Summary

Process 258/2014-T addresses the procedural and cost implications when a taxpayer voluntarily withdraws an IRS arbitration claim before the Portuguese Tax Arbitration Center (CAAD). The claimant, represented by legal counsel, filed a petition on December 2, 2014, to withdraw the claim against the Tax and Customs Authority (Autoridade Tributária e Aduaneira). The dispute involved a tax liability valued at €72,663.70. The Arbitral Tribunal, composed of three arbitrators, examined whether the withdrawal met the legal requirements for validity and effectiveness. The tribunal applied Articles 283, 285-1, 289-1, and 290-1 of the Civil Procedure Code (Código de Processo Civil), in conjunction with Article 2(e) of the Tax Procedure Code and Article 29-1(e) of the RJAT (Legal Regime of Tax Arbitration). The court emphasized that withdrawal is permissible when the dispute involves freely disposable rights and the withdrawing party is legitimate, capable, and adequately represented. Critically, the decision clarified that withdrawal of a claim does not require acceptance by the opposing party—the Tax Authority's non-opposition was noted but not legally necessary for the withdrawal's validity. The tribunal approved the withdrawal and declared the claim extinguished by arbitral award. Regarding costs, pursuant to Article 22(4) of RJAT and Table I of the Rules on Costs in Tax Arbitration Proceedings, the tribunal fixed arbitration costs at €2,448.00, to be borne entirely by the claimant as the withdrawing party. This decision establishes important precedent that taxpayers who voluntarily withdraw IRS arbitration claims must bear the associated procedural costs, regardless of the merits of their original claim, and that such withdrawals can be unilaterally effectuated without requiring the Tax Authority's consent.

Full Decision

ARBITRAL DECISION

In the present proceedings instituted by A, Tax Identification Number ..., resident in ... Matosinhos, by petition filed by his distinguished legal representative, with special powers for this action, filed with the Court on 2 December 2014, the claimant came to withdraw the claim filed in this case against the respondent, Tax and Customs Authority.

Having heard the respondent, it did not oppose the termination of the case by withdrawal (it being understood that the withdrawal of the claim does not require acceptance by the opposing party).

Having considered and decided:

Both by its object - freely disposable rights - and by the quality of the withdrawing party – which is a legitimate, capable and adequately represented party -, having regard to the provisions of Articles 283, 285-1, 289-1 and 290-1 and 3 (a contrario) of the Civil Procedure Code, pursuant to Articles 2(e) of the Code of Procedure and Tax Process and 29-1(e) of the RJAT, this Arbitral Tribunal finds valid and effective the withdrawal made, which it hereby approves by this award, declaring the claim filed by the claimant in this case extinguished.

Value of the Dispute

In accordance with the provisions of Article 315, paragraph 2, of the Civil Procedure Code and Article 97-A, paragraph 1, letter a), of the Tax Procedure Code and Article 3, paragraph 2, of the Rules on Costs in Tax Arbitration Proceedings, the case is assigned a value of € 72,663.70.

Costs

Pursuant to Article 22, paragraph 4, of the RJAT, the amount of costs is fixed at € 2.448,00,00, in accordance with Table I appended to the Rules on Costs in Tax Arbitration Proceedings, to be borne by the claimant and withdrawing party.

Lisbon, 15 December 2014

The Collective Arbitral Tribunal

José Poças Falcão
(arbitrator-president)

Maria do Rosário Anjos

Manuel Pires

Frequently Asked Questions

Automatically Created

What happens when a taxpayer voluntarily withdraws an IRS tax arbitration claim in Portugal?
When a taxpayer voluntarily withdraws an IRS tax arbitration claim in Portugal, the tribunal issues an arbitral decision (acórdão arbitral) declaring the claim extinguished. The withdrawal terminates the proceedings definitively, and the taxpayer must bear the full arbitration costs. In Process 258/2014-T, the CAAD tribunal approved the withdrawal and fixed costs at €2,448.00 to be paid by the claimant. The withdrawal is processed through a formal petition filed by the taxpayer's legal representative, and once approved, no further proceedings on the merits occur.
What is the legal basis for dismissal by withdrawal (desistência do pedido) in Portuguese tax arbitration?
The legal basis for dismissal by withdrawal (desistência do pedido) in Portuguese tax arbitration is found in Article 29(1)(e) of the RJAT (Legal Regime of Tax Arbitration), which incorporates the general procedural rules from the Civil Procedure Code. Specifically, Articles 283, 285-1, 289-1, and 290-1 and 3 (a contrario) of the CPC govern withdrawal requirements, along with Article 2(e) of the Tax Procedure Code. The tribunal must verify that the dispute involves freely disposable rights and that the withdrawing party is legitimate, capable, and adequately represented before approving the withdrawal.
Who bears the arbitration costs when a claimant withdraws from an IRS dispute at CAAD?
When a claimant withdraws from an IRS dispute at CAAD, the withdrawing party (taxpayer) bears all arbitration costs. Article 22(4) of the RJAT explicitly assigns costs to the party who withdraws the claim. In Process 258/2014-T, the tribunal fixed costs at €2,448.00 based on Table I of the Rules on Costs in Tax Arbitration Proceedings, applicable to a dispute valued at €72,663.70. This cost allocation applies regardless of whether the withdrawal occurs early or late in the proceedings.
Does the opposing party (Autoridade Tributária) need to accept a withdrawal request in tax arbitration?
No, the opposing party (Autoridade Tributária e Aduaneira) does not need to accept a withdrawal request in tax arbitration. Process 258/2014-T explicitly states that 'withdrawal of the claim does not require acceptance by the opposing party' (a desistência do pedido não carece de aceitação da contraparte). While the Tax Authority was given an opportunity to be heard and did not oppose the withdrawal, this non-opposition was not legally necessary for the withdrawal's validity. The tribunal can approve the withdrawal unilaterally based on verification of procedural requirements.
What procedural rules under RJAT and CPC govern the termination of tax arbitration proceedings by withdrawal?
Under RJAT and CPC, termination of tax arbitration proceedings by withdrawal is governed by Article 29(1)(e) of the RJAT, which establishes withdrawal as a ground for case extinction. The procedural framework incorporates CPC Articles 283 (withdrawal requirements), 285-1 (legitimacy to withdraw), 289-1 (form and effects), and 290-1 and 3 (acceptance requirements). Article 22(4) of RJAT governs cost allocation, requiring the withdrawing party to bear expenses. Article 2(e) of the Tax Procedure Code (CPPT) also applies subsidiarily. The tribunal must issue a formal arbitral decision approving the withdrawal and declaring the claim extinguished.