Summary
Full Decision
Case No. 297/2014-T
The Arbitrators Dr. Jorge Lopes de Sousa (arbitrator-president), Dr. Maria Forte Vaz and Dr. Henrique Curado, designated by the Deontological Council of the Centre for Administrative Arbitration to form the Arbitral Tribunal, constituted on 02-04-2014, agree on the following:
1. Report
A..., Tax ID No. ..., filed on 27-03-2014 a request for constitution of a collective arbitral tribunal, in accordance with the combined provisions of Articles 2º and 10º of Decree-Law No. 10/2011, of 20 January (Legal Framework for Arbitration in Tax Matters, hereinafter referred to only as RJAT), in which the Tax and Customs Authority is the Respondent.
The Claimant requests a declaration of illegality and annulment of the additional IRS assessment for 2010 No. 2013 ..., of the compensation interest calculation statement No. 2013 ... and the respective account settlement statement, in which a balance due of € 153,057.36 is determined, and further seeks to condemn the Tax and Customs Authority to pay indemnification for the costs borne or to be borne by the Claimant with the provision of guarantee aimed at suspending the enforcement proceedings.
The request for constitution of the arbitral tribunal was accepted by the Honourable President of CAAD on 31-03-2014 and notified to the Tax and Customs Authority on 02-04-2014.
Pursuant to the provisions of paragraph a) of No. 2 of Article 6º and paragraph b) of No. 1 of Article 11º of the RJAT, the Deontological Council designated as arbitrators of the collective arbitral tribunal the signatories hereof, who communicated acceptance of the office within the applicable period.
On 20-05-2014 the Parties were duly notified of this designation and manifested no will to refuse the designation of the arbitrators, in accordance with the combined terms of Article 11º No. 1, paragraphs a) and b) of the RJAT and Articles 6º and 7º of the Deontological Code.
In compliance with the provisions of paragraph c) of No. 1 of Article 11º of the RJAT, the collective arbitral tribunal was constituted on 02-04-2014.
By order of 07-07-2014 the meeting provided for in Article 18º of the RJAT was dispensed with.
On 21-07-2014 the claimant indicated a witness, requesting their examination, a request granted by order of 25-07-2014 of the Arbitral Tribunal, by virtue of which on 23-09-2014 the examination of a witness was conducted and fifteen days were granted for written submissions by the parties.
The Claimant presented submissions with the following conclusions:
A. The current state of the proceedings now permits the conclusion that the tax and compensation interest assessments are the culmination of an inspection process which, curiously, was not initially directed at the current Claimant, but rather at her former employer entity – company B....
B. That is, that following an external inspection of the aforementioned company, the AT understood it necessary to initiate an inspection – now internal – of the current Claimant (taxpayer).
C. The tax inspection services proposed a correction to the Category A income declared by the Claimant in 2010, to the effect that the indemnification received by her by virtue of the execution of an agreement revoking an employment contract concluded in 2010 would be subject to the provision of the rule contained in paragraph a) of No. 4 of Article 2º of the IRS Code, and accordingly would be subject in its entirety to tax.
D. In the inspection reports – preliminary and final version – the tax inspection services seek to create a scenario in which the taxpayer was still a manager of company B... at the time the agreement revoking the employment contract was executed, and that such agreement was, in this regard, an agreement for the cessation of the functions of manager.
E. There are even passages – false and fallacious – written in these reports in which the inspection services state that the taxpayer maintained herself as manager until the execution of the agreement revoking the employment contract and that she signed that document in that capacity.
F. In reaction to these passages, the taxpayer – first by letter dated 6 September 2013 (doc. No. 12 attached to the initial request), then on 11 October of that same year, in the exercise of the hearing prior to the issuance of the Final Report (doc. No. 14 attached to the initial request) – did not tire of clarifying that she had resigned from the management of the company in 2009, and accordingly did not understand how the AT could allege that in 2010 she was still a manager.
G. And she further explained that she resigned from that management by virtue of a process of emptying her functions in company B..., a reason more than sufficient for the resignation as she did not intend to maintain herself formally as a manager when, in practice, she was not, furthermore, in the face of a "restructuring forced by the parent company that imposed reduction of personnel".
H. This aspect was referred to by the taxpayer in the aforementioned letter dated 6 September 2013 (doc. No. 12 attached to the initial request) and which is developed in the initial request by attaching documents that prove it (docs. Nos. 5 and 6 attached to the initial request) and which emerged reinforced in an unshakeable manner by the testimony of the witness presented by the Claimant (who was a human resources director precisely in company B...).
I. In addition to all this, as noted above, the AT invokes in the inspection reports as the allegedly enabling rule for taxation the provision of paragraph a) of No. 4 of Article 2º of the IRS Code, which rule, however, is only susceptible of application to indemnifications awarded to a public manager, administrator or manager, all of which functions not exercised by the taxpayer and which, accordingly, could never justify the indemnification paid to her in 2010.
J. That is, the additional tax and compensation interest assessments in question, by implementing the aforementioned correction proposed by the inspection services based on the aforementioned legal rule, are in clear violation of law inasmuch as they are based on error, due to non-existence, of the presuppositions for their taxation.
K. In the same manner that such assessments, by not revealing the reasoning itinerary of the AT – namely by not making clear the reason why a rule directed at indemnifications awarded to managers is applied to a situation of a taxpayer who received an indemnification for employment contract termination (doc. No. 10 attached to the initial request) – are in clear violation of law, in this case by defect of form, all the more so that the inspection reports are likewise not clear about what truly motivated the aforementioned correction and respective additional assessments.
L. Already in the response to the initial request for arbitration, the AT sought (without ever referring to any other rule of the IRS Code...) another means of justifying the unjustifiable – that is, to tax an indemnification as having been paid to a manager when that indemnification was not in this case paid to a manager – by choosing to advance the thesis that there was a scheme orchestrated by the taxpayer to reduce the taxation of her indemnification.
M. A thesis, moreover, which runs counter to all facts proven throughout these proceedings inasmuch as the taxpayer maintained a dependent employment contract with B... for twelve years in which only during five (less than half) years she also exercised management functions... that is, nothing more natural – and legal in labor terms! – than to receive an indemnification for the revocation of the employment contract.
N. A thesis also that constitutes unequivocal and inadmissible retroactive reasoning, without any foundation or substance (never even demonstrating the intention to obtain a certain result, nor the resort to an artificial or fraudulent means) being, in this regard, absolutely irrelevant.
O. In sum, everything boils down to the understanding of the AT that where the legislator limits itself to referring to "manager", "administrator" and "manager" – and/or, paragraph a) of No. 4 of Article 2º of the IRS Code – would also intend to mean director, attorney-in-fact or whoever practices any act similar to those which are typical of managers.
P. An understanding that is absolutely innovative (the undersigned counsels had never seen such a thing in almost fifteen years of law practice) and ambiguous inasmuch as, according to that understanding, it would suffice to be a director or attorney-in-fact to be able to be considered a manager in accordance with the aforementioned rule of the IRS Code.
Q. Indeed, the well-known extension of effects of tax rules to the so-called de facto managers provided for in Article 24º, No. 1, of the LGT constitutes a total exception to the legal tax and commercial system, and is only admissible in a specific and fundamental matter for purposes of collection such as tax liability, never being able to such extension to be applicable for purposes of the tax base as the AT intends with the assessments in question.
R. Terms in which such understanding violates the Principle of Legal Certainty and calls into question the determinability required, in the matter of the tax base of taxes, by the Principle of Legality, as was demonstrated in the initial request and which is here given as entirely reproduced.
S. Indeed, the rule in question subjects full IRS to the amounts received and related to the cessation of the functions of manager, administrator or manager, not being susceptible to analogical application, which is prohibited in accordance with No. 4 of Article 11º of the LGT.
T. In this light, the interpretation of paragraph a) of No. 4 of Article 2º of the IRS Code to the effect that, in addition to "managers, administrators and managers," this rule would also apply to "attorneys-in-fact" or "directors" is illegal by violation of No. 4 of Article 11º of the LGT and unconstitutional by violation of the Principle of Legality inherent in Article 103º, No. 2, of the Constitution of the Portuguese Republic.
U. Now, as the tax assessment in question is illegal, equally illegal will be the assessment of the respective compensation interests.
V. But it is further added that the compensation interest assessment is also illegal due to defects proper to the act, namely for not respecting the duty of adequate substantiation which rests upon the generality of tax acts (including the assessment of interest), and since the interpretation given by the Claimant to the relevant provisions of the IRS Code – paragraphs a) and b) of No. 4 of Article 2º – is in complete harmony with the provision of those rules, and is a position in all respects reasonable and grounded in facts proven by documents and solid legal arguments.
In view of the evidence produced and the submissions now presented, the present arbitral action should be judged well-founded and, in consequence and in view of the legal rules cited above, the tax and compensation interest assessments in question should be annulled, for defect of form and defect of violation of ordinary and constitutional law, all in the terms mentioned above and in such other respects as Your Honors deem appropriate, with the due legal consequences.
The Tax and Customs Authority counter-alleged, stating the following:
-
It is hereby given as reproduced everything that was set forth in the response to the request for arbitral opinion.
-
And further stating, by reference to the testimony given, that:
a) notwithstanding the A.'s attempted demonstration that the resignation from the position of manager corresponds to a situation of fact, which is not merely of law,
b) the fact is that, allegedly again becoming merely an employee of the company, which is not conceded, the A. maintained the same remuneration that she was receiving prior to the resignation, that is, in the company, a manager receives, in the A.'s thesis, the same remuneration as a worker – which is not considered possible;
c) Moreover, the formal resignation from management occurs at a moment much later than the sale of the ownership interest that the claimant held in the company (see minutes 00:27:20), a fact which the witness, acknowledging, does not explain; And,
d) Continuing, it also asserts that the alleged reason for the resignation – great tension experienced in the company – occurs after the resignation. Which, manifestly, contributes to prove that the formal resignation from management aimed to prepare the abandonment of the company, without the burden of taxation of the indemnification resulting from the exercise of management functions.
e) It is further added that, when confronted with the question about whether the rescission of contracts would or would not be a mere expedient act, the witness ends up confessing that such rescission involved a negotiation, namely as to the terms of the agreement, which does not constitute an act of mere management.
-
Whence it is concluded, with the grounds contained in the inspection process, and as sustained in the response to the request, that the claimant maintained the continuity of the functions she exercised before the formal resignation from management.
-
For as, contrary to what the A. alleges, the power of attorney grants to her very broad powers, which give her command over the company's affairs, being able, with those powers to pursue absolutely the company's corporate purpose, of B....
-
Otherwise, in open violation of No. 5 of Art. 252º of the CSC.
-
And it is certain that, contrary to what is alleged, No. 6 of that same article does not permit the management the faculty of appointing mandataries or attorneys-in-fact of the company, in an unrestricted manner, as indeed expressly established in No. 5 of the provision "managers cannot be represented in the exercise of their office".
The Arbitral Tribunal was regularly constituted and is competent.
The parties enjoy legal personality and capacity and are legitimate (Articles 4º and 10º, No. 2, of the same diploma and Article 1º of Ordinance No. 112-A/2011, of 22 March).
The proceedings are not affected by nullities and no obstacle arises to the consideration of the merits of the case.
2. Factual Matters
2.1. Proven Facts
The following facts are considered proven:
a) In compliance with service order No. 0I2013... dated 19-07-2013, a partial internal IRS inspection was conducted on the Claimant;
b) The action relates to the year 2010, has the activity code -..., and is characterized as a partial internal IRS action.
c) In 2009, the Claimant exercised the functions of manager of the company B... – Cosmetics Company, Ltd., with Tax ID No. ... (hereinafter "B..., Ltd.");
d) On 17-12-2009, the Claimant resigned from the management of the company, effective 31-12-2009;
e) At the date of resignation, the company was bound by the signature of two managers or that of one manager and one attorney-in-fact;
f) On 13-01-2010 a power of attorney was granted, attached to the file, which grants to the Claimant powers to bind the company together with two other attorneys-in-fact, but never the latter jointly without the intervention of the Claimant;
g) In the Permanent Certificate of B... Ltd., the following is stated: "form of binding/Corporate Bodies: To bind the company in court or out of court, the signatures of (i) two managers, (ii) one manager and one designated mandatary, or (iii) one or more designated mandataries in accordance with their respective powers of attorney are necessary and sufficient. For routine matters the signature of any of the managers shall suffice."
h) The documents that the Tax and Customs Authority found that bound B..., Ltd before third parties, relating to the period between 01-07-2009 and 30-06-2010, were signed by the Claimant, namely, means of payment and banking payment orders, employment contract rescission agreements concluded between B..., Ltd. and workers;
i) On 04-02-2010 the author became registered with the social security as an employee, maintaining the category of general director;
j) After resignation from the functions of manager and until the cessation of functions the Claimant continued to receive the remuneration that she was earning as manager, which was € 10,000.00 monthly;
k) On 04-03-2010, the Claimant concluded with the aforementioned company an agreement for cessation of employment contract, from which resulted the cessation of the Claimant's employment relationship with that company, by means of payment as indemnification of € 296,100.00 and a monetary compensation for the non-compete covenant in the amount of € 140,000.00, for a total of € 436,100.00;
l) B..., Ltd. only considered taxable a portion of the indemnification paid to the manager, of € 20,322.05, having however not effected any source withholdings on the indemnification amount, with that amount being declared in the form 3 declaration of the Claimant for the year 2010;
m) The Tax and Customs Authority understood that the indemnification in the amount of € 296,100.00 is dependent work income, with no exclusion existing to exempt it from taxation, and accordingly made a correction to the Claimant's taxable base in the amount of € 275,777.95 (difference between the amount of € 296,100.00 and the declared amount € 20,322.05);
n) Notified to exercise the right to a hearing regarding the draft of this correction, the Claimant stated, among other things, the following:
In August 2004, the former partners sold their shares to the partner C... Luxembourg, SARL, which sold the A... a 2% share and asked her to be a manager given that the majority of the managers appointed by her were not resident in Portugal;
The motivations that led her to request resignation from management;
That she resigned from the management of B..., Ltd. by letter dated 17-12-2009, effective 31 December 2009, a fact registered in the Certificate of the Commercial Registry;
On 13 January 2010, she sold her 2% share in B..., Ltd., by contractual obligation;
On 13-01-2010, a power of attorney was granted by B..., Ltd. to 3 employees, for routine acts, not enabling her as an attorney-in-fact to perform any act alone and referring without management power in the subsidiary;
On 04-02-2010, she became registered with Social Security as an employee, with the activity of General Director;
o) The Tax and Customs Authority maintained the aforementioned correction by understanding, in summary, the following:
"Regarding the functions exercised by A..., in B..., Ltd., during the course of the inspection procedure for the year 2009, which included analysis of documents that prove and support facts occurring between 01/07/2009 and 30/06/2010, we ascertained that: – The documents observed by us that bound the company before third parties were during that entire period signed by A.... Namely, means of payment and banking payment orders, employment contract rescission agreements concluded between B..., Ltd and workers.
The taxpayer was authorized to represent and bind the company B..., Ltd by means of a power of attorney granted on 13/01/2010, a date which coincides with the date of resignation of D…, From that date 13/01/2010 the managers by law of B..., Ltd are all non-resident.
Now as clarified by A... in the letter sent to us with entry No. 082 828 on 09/09/2013 (see, annex 5 – point 2), the reasons that led C... Luxembourg SARL to sell her the share and to ask her in August 2004 to be a manager were "given that the majority of the managers appointed by her were not resident in Portugal"
The capacity of A... to bind the company is equivalent to that of a manager, see the entry 6, of 22/01/2010 in the Permanent Certificate of B..., Ltd" where it publicizes "form of binding/Corporate Bodies:" To bind the company in court or out of court, the signatures of (i) two managers, (ii) one manager and one designated mandatary, or (iii) one or more designated mandataries in accordance with their respective powers of attorney are necessary and sufficient. For routine matters the signature of any of the managers shall suffice."
Note the powers granted to A... by the power of attorney of 13/01/2010, different from those granted to the remaining attorneys-in-fact, since this provides that any matter that binds the company B..., Ltd by an attorney-in-fact can only occur with the knowledge and subscription of A....
See the power of attorney of 13/01/2010, in annex 10, which appoints attorneys-in-fact:
– A…;
– E…;
– F...;
The company being bound "jointly by A… with any of the other attorneys-in-fact, but never the latter jointly without the intervention of the attorney-in-fact A... "
Finally with reference to the last allegation formulated by the taxpayer He states that he is not a manager as "There are documents that have public credibility – from the commercial registry office – that attest that I ceased to be a manager... how is it possible to overlook these public documents?", it is appropriate to clarify that this was not invoked by us, in this regard we conclude that:
– Until 31/12/2009, A..., was a manager by law and in fact of B..., Ltd., from that date until 30/09/2010, she continued to represent and bind the company, she was a de facto manager.
– In annex 7, we document that after 31/12/2009, A..., carried out the execution of the restructuring plan of B..., Ltd., by granting on behalf of B..., Ltd the rescission agreements that were concluded with workers.
– The cessation of the functions of manager did not end on 31/12/2009, but on 30/09/2010, as is expressly agreed between the B... and A... in the "Agreement Revoking Employment Contract" concluded between them;
p) Following the correction to the Claimant's taxable base in the amount of 275,777.95, the Tax and Customs Authority issued the additional IRS assessment for 2010 No. 2013 ..., dated 22-11-2013, based on the compensation interest calculation statement No. 2013 ... and the respective account settlement statement, in which a balance due of € 153,057.36 is determined, in which is included the amount of € 13,336.63 of compensation interests, with payment deadline of 24-01-2014;
q) The Claimant began to work at B..., Ltd. in 1998 and began to exercise the functions of manager from 2004 (testimony of witness H...);
r) That company in 2009 was part of the group C... COMPANIES, of a multinational nature, with activity in 146 countries, normally through subsidiaries (testimony of witness H...);
s) Following the crisis with LEHMAN BROTHERS Bank, C... decided to recruit a new CEO, the Italian G…, who entered specifically within the company to conduct a restructuring of the entire organization worldwide (testimony of witness H...);
t) Around September 2009, the restructuring began, with an announcement that the Portuguese structure would cluster with the Spanish structure, which meant that the two Iberian subsidiaries would join forces and work as if they were a single subsidiary (testimony of witness H...);
u) The new structure involved a reduction in workers, with an objective of saving 2.4 million euros (testimony of witness H...);
v) From the time the new CEO entered, the management functions in Portugal began to be greatly emptied (testimony of witness H...);
w) C... created a European headquarters in Paris and it was at that headquarters that decisions were made regarding sales objectives and investments (testimony of witness H...);
x) From November onwards, it became known to the Claimant and the witness that the intended savings of 2.4 million euros should be generated solely by Portugal, which created unease and a feeling of dissatisfaction with the restructuring itself (testimony of witness H...);
y) The directions concerning the restructuring translated into cutting various functions, such as those of the Director of Marketing, those of the financial department and those of the logistics department and progressively more sacrifices were requested (testimony of witness H...);
z) The Claimant was highly regarded internationally within the company (testimony of witness H...);
aa) The Claimant although disagreeing with the restructuring continued to work in the company (testimony of witness H...);
bb) From late 2009, when the Claimant resigned from management, this was exercised, in fact, by a Spaniard, called I..., who was in Paris, with all decisions being made in Paris and implemented in Portugal (testimony of witness H...);
cc) In Portugal, from late 2009 there existed only a formal management (testimony of witness H...);
dd) From January 2010 onwards, there existed a manager only in Paris (testimony of witness H...);
ee) The Claimant, although continuing to work after the restructuring had begun, considered the personnel cuts in Portugal unjust and expressed her opinion in writing to the management of B... Ltd., in response to which it reacted by sending to Portugal its Vice-President of Human Resources for Europe, which culminated in the agreement for cessation of the Claimant's employment contract (testimony of witness H...);
ff) On 27-03-2014, the Claimant filed the request for arbitral opinion that gave rise to these proceedings.
2.2. Unproven Facts
It was not proven that the Claimant, between 01-01-2010 and 30-09-2010, in fact exercised the functions of manager of B... Ltd.
2.3. Justification of Factual Matters
The determination of the factual matters is based, in general, on the Tax Inspection Report and, in the points indicated, on the testimony of witness F....
This witness had direct intervention in the restructuring process referred to in the factual matters and appeared to testify with impartiality.
3. Matters of Law
The Claimant attributes several defects to the act of IRS assessment and compensation interests whose annulment she requests.
Article 124º of the CPPT, subsidiarily applicable by force of the provision in Article 29º, No. 1, of the RJAT, establishes an order of examination of defects, which presupposes that, if a defect that ensures effective protection of the rights of the challengers is judged well-founded, there is no need to examine the remaining ones, for, if it were always necessary to consider all defects attributed to the challenged act, the order of their examination would be irrelevant.
Pursuant to paragraph b) of No. 2 of Article 124º, where defects of form and defects of violation of substantive law are attributed to the act, one should begin by examining the defect of error as to the factual presuppositions, for the eventual annulment based on it provides the Claimant stable and effective protection of her interests.
3.1. Defects Relating to the Qualification of the Indemnification for Contract Termination
The thesis underlying the correction made to the Claimant's taxable base is that there is a "scheme constructed in the last months of 2009 and early 2010" aimed at avoiding the taxation that the Tax and Customs Authority understood to apply to indemnifications resulting from the cessation of manager functions, in accordance with No. 4 of Article 2º of the CIRS.
The basis for the Tax and Customs Authority's position consists in the facts:
– on 13-01-2010, a power of attorney was granted that grants to the Claimant powers to bind the company together with two other attorneys-in-fact, but never the latter jointly without the intervention of the Claimant;
– the documents that the Tax and Customs Authority found that bound B..., Ltd before third parties, relating to the period between 01-07-2009 and 30-06-2010, were signed by the Claimant, namely, means of payment and banking payment orders, employment contract rescission agreements concluded between B..., Ltd. and workers (page 7 of the Tax Inspection Report).
However, as is referred to in the Tax Inspection Report in the Permanent Certificate of B..., Ltd., the form of binding is stated as follows: "To bind the company in court or out of court, the signatures of (i) two managers, (ii) one manager and one designated mandatary, or (iii) one or more designated mandataries in accordance with their respective powers of attorney are necessary and sufficient. For routine acts the signature of any of the managers shall suffice."
From this it appears that, to bind the company it was not necessary to have the quality of manager, as the possibility was provided that the company could bind itself through mandataries, even only one, designated in accordance with their respective powers of attorney.
For this reason, the fact that the Claimant signed documents binding the company does not imply that the Claimant was exercising de facto management, as the quality of attorney-in-fact enabled her to perform such acts.
On the other hand, the evidence produced in the examination was to the effect that there was no "scheme constructed in the last months of 2009 and early 2010" to conceal the exercise of management functions in 2010, the Claimant having in fact ceased to exercise the functions of manager in what is its most characteristic aspect, which is the ability to formulate management choices for the company. In fact, as results from the testimony of the sole witness presented, the management of the company in 2010 was conducted from abroad.
Nor is it understood, in this factual context, the invocation of Article 252º, Nos. 5 and 6 of the Code of Commercial Companies, wherein it is established that "managers cannot be represented in the exercise of their office", but this "does not exclude the faculty of the management to appoint mandataries or attorneys-in-fact of the company for the performance of certain acts or categories of acts, without need for an express contractual clause".
In truth, these rules only corroborate the thesis of the Claimant, since there is no doubt that she resigned from management effective 31-12-2009 and, in light of these rules, the person who took over the exercise of management (the Spaniard I...) could not be represented in the exercise of the office by the Claimant, being able only to appoint her as a mandatary or attorney-in-fact. Therefore, the Claimant did not exercise the functions of manager by law nor as an attorney-in-fact, as the law does not permit the exercise of functions in this manner.
As to the fact that she maintained after the resignation the previous remuneration, this does not imply that the functions were the same, signifying only that she continued to exercise remunerated functions in the same manner, whatever the reason, which was not ascertained, but can be even a contractual obligation or agreement of the interested parties. Namely, in this context, one cannot fail to bear in mind that one is dealing with the exercise of special functions, with unusually high remuneration (€ 10,000 monthly), certainly justified by exceptional competences in the area in question, and the concern for the protection of the interests of the company after the cessation of functions even justified an unusually high indemnification for cessation of functions (€ 436,100.00). This indemnification, in which part refers to a non-compete covenant, reveals that the company would have more important concerns regarding the cessation of the Claimant's management functions than to lower her remuneration, as, substantially, it even paid her for inactivity following the exercise of functions, in the area to which the company is engaged.
For this reason, the fact that it did not lower the remuneration cannot be considered an indication that the Claimant continued to exercise the same functions after the resignation.
On the other hand, as the Claimant pertinently notes in Article 127º of the request for arbitral opinion, the Tax and Customs Authority did not activate the special procedure for application of the general anti-abuse clause, provided for in Article 63º of the CPPT, and it would be the application of that clause, which consists of No. 2 of Article 38º of the LGT, that would be the only admissible means to render ineffective, for tax purposes, the act of resignation from management. Not having the Tax and Customs Authority made use of that procedure for application of the general anti-abuse clause, the act of resignation produces the effect that the law attributes to it of extinction of the quality of manager (Article 256º of the Code of Commercial Companies).
In these conditions, it must be concluded that the Claimant did not exercise the functions of manager in 2010, and accordingly the correction made, by being based on the presupposition that such exercise occurred by the Claimant in 2010, is affected by defect of violation of law, by error as to the factual and legal presuppositions, which justifies its annulment [Article 135º of the Code of Administrative Procedure, applicable by force of the provision in Article 2º, paragraph c), of the LGT].
3.2. Defect of Rendered Moot
By concluding on the annulment of the IRS and compensation interest assessments on these grounds, the examination becomes moot, by being futile, of the examination of the defect of lack of substantiation that the Claimant attributes to the act.
4. Request for Indemnification for the Costs Incurred by the Claimant with the Provision of Guarantee for the Suspension of Fiscal Enforcement
The Claimant formulates, at the end of the request for arbitral opinion and of the submissions, a request for indemnification for the costs incurred by the Claimant with the provision of guarantee for the suspension of fiscal enforcement.
It was not proven that fiscal enforcement proceedings had been instituted for the collection of the amount assessed, nor that the Claimant had provided any guarantee.
The arbitral process is an appropriate means for the recognition of the right to indemnification for guarantee wrongfully provided, as Article 171º of the CPPT is subsidiarily applicable, by force of the provision in Article 29º, No. 1, paragraph c), of the RJAT.
However, what is established in that Article 171º is that "indemnification in case of banking guarantee or equivalent wrongfully provided shall be requested in the proceedings in which the legality of the enforceable debt is contested."
Therefore, only when the guarantee is "provided" is the right to indemnification able to be requested, and that provision may occur in the very course of the proceedings, a situation in which it will constitute a supervening fact, invocable in accordance with No. 2 of Article 171º of the CPPT.
Indeed, this is the solution that is compatible with the role of the courts, as a service of justice, for their function is to resolve concrete existing disputes and not merely hypothetical or abstract ones. Therefore, if recognition of the right to indemnification is requested before the provision of the guarantee, the request should be dismissed, without prejudice to that request being able to be formulated in the course of the proceedings, if the provision of the guarantee meanwhile occurs, for, in this case, one is dealing with a supervening ground, invocable within the period of 30 days provided for in No. 2 of Article 171º of the CPPT.
Thus, as it is not alleged and proven that a guarantee was provided, the request for recognition of the right to indemnification must be judged not well-founded, without prejudice to that right being able to come to be recognized even in enforcement of judgment, should such provision occur.
5. Decision
In view of the foregoing, the Arbitral Tribunal agrees on the following:
A) To judge partially well-founded the request for arbitral opinion, as to the request for annulment of the additional IRS assessment for 2010 and compensation interests No. 2013 ..., dated 22-11-2013, in which a balance due of € 153,057.36 is determined;
B) To annul the aforementioned assessment;
C) To judge not well-founded the request for arbitral opinion insofar as indemnification for guarantee is requested, absolving the Tax and Customs Authority of the request in this part.
6. Case Value
In accordance with the provision in Article 306º, No. 2, of the CPC and Article 97º-A, No. 1, paragraph a), of the CPPT and Article 3º, No. 2, of the Regulation of Costs in Arbitration Proceedings in Tax Matters, the case is valued at € 153,057.36.
7. Costs
Pursuant to Article 22º, No. 4, of the RJAT, the amount of costs is fixed at € 6,120.00, in accordance with Table I attached to the Regulation of Costs in Tax Arbitration Proceedings, at the cost of the Tax and Customs Authority.
Lisbon, 30-10-2014
The Arbitrators
(Jorge Lopes de Sousa)
(Maria Forte Vaz)
(Henrique Curado)
Frequently Asked Questions
Automatically Created