Summary
Full Decision
ARBITRAL DECISION
I – REPORT
On 06 July 2018, A... SGPS, S.A., legal entity no. ..., with registered office in ..., ..., ..., ...-... Lisbon, hereinafter referred to as "claimant", as the dominant company of a Group (the A... Tax Group) subject to the Special Regime for Group of Companies Taxation ("RETGS"), composed of the companies which it lists and identifies in the heading of its petition, filed a request for the constitution of an arbitral tribunal, pursuant to the combined provisions of articles 2º and 10º of Decree-Law no. 10/2011, of 20 January, which approved the Legal Regime of Tax Arbitration, as amended by article 228º of Law no. 66-B/2012, of 31 December (hereinafter, briefly designated as RJAT), as well as articles 1º and 2º of Ordinance no. 112-A/2011 of 22 March, seeking: the declaration of illegality and annulment of the rejection of the administrative claim presented by it on 25 May 2017; the declaration of illegality and partial annulment of the self-assessment of Corporate Income Tax (IRC) of the A... Tax Group for the financial year 2014, to the extent corresponding to the failure to deduct from the IRC collection produced by the autonomous taxation rates of the tax benefit ascertained under the System of Tax Incentives for Business Research and Development ("SIFIDE"), in the amount of € 742,211.39; that it be recognised the right to the reimbursement of this amount and, likewise, the right to compensatory interest for the payment of tax unduly assessed, counted, until full reimbursement, as from 29 May 2015 in respect of € 490,405.40, and as from 1 September 2015 in respect of the remaining € 251,805.99; subsidiarily, in case it is considered that article 90º of the IRC Code does not apply to autonomous taxation, then the illegality of the assessment of autonomous taxation should be declared (and consequently annulled) due to absence of legal basis for its implementation, with the consequent reimbursement of the same amount and payment of compensatory interest counted from the same date.
On 09-07-2018, the request for constitution of the arbitral tribunal was accepted and automatically notified to the Tax Authority (AT).
The Claimant did not appoint an arbitrator, whereby, pursuant to the provisions of subparagraph a) of paragraph 2 of article 6º and subparagraph a) of paragraph 1 of article 11º of the RJAT, the President of the Ethics Council of CAAD designated the signatories as arbitrators of the collective arbitral tribunal, who communicated acceptance of the duty within the applicable time period.
On 28-08-2018, the parties were notified of these designations and did not manifest any intention to challenge any of them.
In accordance with the provisions of subparagraph c) of paragraph 1 of article 11º of the RJAT, the collective Arbitral Tribunal was constituted on 17-09-2018.
On 16-10-2018, the Respondent, duly notified for that purpose, submitted its defence defending itself solely by way of objection.
On 08-11-2018, an order was issued dispensing with the holding of the meeting referred to in article 18º of the RJAT, given that no evidence production beyond documentary evidence already included in the case file was requested, there was no matter of exception, and the general procedural principles of procedural economy and prohibition of pointless acts applied in the arbitral process.
Having been granted a period for the presentation of written arguments, these were presented by the parties, commenting on the evidence produced and reiterating and developing their respective legal positions.
It was indicated that the final decision would be delivered by the deadline set by article 21º/1.
The Arbitral Tribunal is materially competent and is regularly constituted, in accordance with articles 2º, paragraph 1, subparagraph a), 5º and 6º, paragraph 1, of the RJAT.
The parties have legal personality and capacity, are legitimate and are legally represented, in accordance with articles 4º and 10º of the RJAT and article 1º of Ordinance no. 112-A/2011, of 22 March.
The proceedings are not affected by any nullities.
Thus, there is no obstacle to the examination of the case.
Everything considered, the following decision must be delivered:
II. DECISION
A. MATTER OF FACT
A.1. Facts Given as Proved
On 29 May 2015, the claimant herein submitted the income statement Model 22 of IRC for its Tax Group relating to the financial year 2014, having proceeded to self-assess autonomous taxation in IRC for that same year of 2014, in the amount of € 742,211.39 (Doc. no. 3, attached with the initial petition).
In calculating the tax resulting from the application of autonomous taxation rates in IRC, the AT's computer system indicates divergences ("errors") that prevent the claimant from entering the value relating to the said autonomous taxation rates in IRC deducted, within the limits of the IRC collection resulting from the application of these rates, of the amounts of tax benefit recognised to the companies of the tax group under SIFIDE II.
The amount of SIFIDE available in the financial year 2014 for use at the end of financial year 2014, after subtracting all consumption effected up to that date (until the last Model 22 submitted) amounted to € 6,056,394.71, as certified by accompanying Declarations from the SIFIDE Certifying Commission (Doc. no. 6, attached with the Initial Petition).
An amount that remained available at the end of the financial years 2015, 2016 and 2017, as is known to the AT, according to the Model 22 declarations of the A... Tax Group relating to the years of those financial years (Doc. no. 7, attached with the Initial Petition and loose Doc. attached by request, on 19-11-2018).
The individual Model 22 declarations of the companies of the claimant's Tax Group are filed (Doc. no. 8, attached with the Initial Petition).
The AT did not ascertain or ascertain the taxable profit in the A... Tax Group and respective companies by indirect methods, the same having been ascertained via the submission of the Model 22 declaration (Doc. no. 3, attached with the Initial Petition).
The companies comprising the tax group at the origin of SIFIDE were not then (or now) entities owing to the State and social security any taxes or contributions (Doc. no. 9, attached with the Initial Petition).
The income statement Model 22 of IRC and its articulation with the programming of the AT's computer system prevents deduction from the collection related to the autonomous taxation rates in IRC, entered in field 365 of table 10 of the income statement Model 22 (cf. Doc. no. 3), of the SIFIDE still to be deducted from the IRC collection.
On 25 May 2017, the claimant submitted an administrative claim against the said self-assessment relating to the financial year 2014 (Doc no. 4, attached with the Initial Petition).
The claimant was legally notified of the rejection of such claim on 30 April 2018, by order of the Assistant Director of the Finance Department of Lisbon, dated 20 April 2018 (Doc. no. 5, attached with the Initial Petition).
The claimant paid tax of € 490,405.40 on 29 May 2015 (doc. 15 attached with the Initial Petition), having in that financial year 2014 made advance payments of 304,389.00, as found in field 360 of the Model 22 declaration (doc. 3 attached with the Initial Petition), and has not been reimbursed any sum from these payments.
On 06 July 2018, the claimant submitted the present request for constitution of the arbitral tribunal, with the AT being requested.
A.2. Facts Given as Not Proved
With relevance to the decision, there are no facts that should be considered as not proved.
A.3. Grounds of the Proved and Not Proved Matter of Fact
With respect to the matter of fact, the Tribunal does not have to pronounce on everything that was alleged by the parties, but rather has the duty to select the facts that matter for the decision and to distinguish the proved matter from the not proved (cf. article 123º, paragraph 2, of the Tax Procedural Code and article 607º, paragraph 3 of the Civil Procedure Code, applicable ex vi article 29º, paragraph 1, subparagraphs a) and e), of the RJAT).
Thus, the pertinent facts for the judgment of the case are chosen and selected according to their legal relevance, which is established in light of the various plausible solutions of the legal question(s) (cf. previous article 511º, paragraph 1, of the Civil Procedure Code, corresponding to the current article 596º, applicable ex vi article 29º, paragraph 1, subparagraph e), of the RJAT).
Thus, having regard to the positions taken by the parties, in light of article 110º/7 of the Tax Procedural Code, the documentary evidence and the proceedings file attached to the record, the facts listed above were considered proved, with relevance to the decision.
Allegations made by the parties, presented as facts and consisting of statements that are strictly conclusive, not susceptible of proof, and whose truth must be assessed in relation to the concrete matter of fact above consolidated, were not considered either as proved or as not proved.
B. ON THE LAW
B.1. – The Positions of the Parties
- The Claimant holds that article 90º, paragraph 2 of the IRC Code (which provides for deductions from IRC collection) encompasses the IRC collection of autonomous taxation, seeking recognition of the right to deduct the values of the benefit under SIFIDE from the collection produced by autonomous taxation rates. Thus, it argues that the administrative claim identified above should have been granted and, consequently, the illegality of the self-assessment act identified above recognised, which should be annulled in the part that reflects the failure to deduct from the IRC collection produced by autonomous taxation rates of the benefit under SIFIDE, which resulted in an amount of tax unduly assessed in the value of € 742,211.39.
To that end, it alleges, in summary:
a) The conclusion that the IRC Code norm providing for deductions from IRC collection (article 90º, paragraph 2) encompasses the IRC collection of autonomous taxation is, firstly, a requirement of the very letter of the law, as understood by the AT itself and by overwhelming tax case law: both the AT and arbitral tribunals in dozens of arbitral decisions that agreed with the AT understand that the autonomous taxation collection in IRC is IRC, including in the purposes or function it serves (combating, through compensatory taxation, expenses and charges of questionable business nature, at least in their entirety, but nevertheless deducted by the companies in determining their taxable profit in IRC);
b) And it is also a requirement of the principle of coherence and systematic interpretation: one cannot simultaneously conclude (without law that previously creates the dissonance) that when the IRC Code refers to IRC collection in its article 45º, paragraph 1, subparagraph a) (in the wording and numbering in force until 2013), it includes the autonomous taxation collection in IRC and in some articles further ahead (article 90º, paragraph 2, of the IRC Code) conclude, in opposition, that the IRC collection does not encompass the autonomous taxation collection in IRC;
c) The anti-abuse nature of autonomous taxation in IRC is in no way capable of altering this conclusion. One cannot, in particular, uncritically seize upon the cliché "anti-abuse function of autonomous taxation in IRC" to deny the deduction of tax credits in IRC from this collection, without being able to explain why the substitute for the base IRC (autonomous taxation) would have a different regime for its collection;
d) Since autonomous taxation is IRC, because it aims to substitute for real income, it is not because a credit for a tax benefit (or an advance payment of IRC) is deducted from this autonomous taxation collection that autonomous taxation ceased to be borne. The tax is borne, what there is is simultaneously a tax credit, acquired for reasons embraced by the tax system, which operates by deduction from IRC collection. The autonomous taxation collection, always due, is paid by settlement of accounts with the tax credit;
e) Whence the denial of the deduction of SIFIDE from the autonomous taxation IRC collection violates subparagraphs b) and c) of paragraph 2 of article 90º of the IRC Code (previously to 2010, article 83º; and since 2014 became subparagraphs c) and d) of the said paragraph 2 of article 90º of the IRC Code);
f) The SIFIDE regime itself, regarding the provision of the tax benefit of deduction from IRC collection, mentions "the amount ascertained in accordance with article 90º of the IRC Code";
g) The identification is recalled of (at least) thirty-nine (39) arbitral decisions issued to date concluding on the nature of IRC of autonomous taxation: processes nos. 187/2013-T, 209/2013-T, 210/2013-T, 246/2013-T, 255/2013-T, 260/2013-T, 282/2013-T, 292/2013-T, 298/13-T, 6/2014-T, 36/2014-T, 37/2014-T, 59/2014-T, 79/2014-T, 80/2014-T, 93/2014-T, 94/2014-T, 163/2014-T, 166/2014-T, 167/2014-T and 211/2014-T, 659/2014-T, 697/2014-T and 769/2014-T, 113/2015-T, 219/2015-T, 369/2015-T, 370/2015-T, 535/2015-T, 637/2015-T, 673/2015-T, 740/2015-T, 744/2015-T, 749/2015-T, 781/2015-T, 784/2015-T, 775/2015-T, 5/2016-T and 578/2016-T;
h) After the 2016 State Budget Law, in the matter of tax benefits, jurisprudence remains overwhelmingly majority in rejecting the purported interpretative imposition (rightly, retroactive) of the 2016 State Budget Law and continues to withdraw (for tax facts up to 2015) what it previously withdrew from the norms subject to its interpretation;
i) From no part of the 2016 State Budget Law is identified the norm that part 2 of the new paragraph 21 of article 88º of the IRC Code would aim to interpret. Which constitutes yet another strong symptom that one is dealing with a normative novelty, as opposed to an interpretative view of an old norm;
j) Both article 89º and article 90º, paragraphs 1 and 2, of the IRC Code refer to IRC, all IRC (they make no exceptions or did), and both are inserted in the same logical phase of the regulation of IRC assessment, post-obtainment of primary collection (ascertained in accordance with the preceding eighty-eight articles, which includes that of autonomous taxation);
k) In this context (which is the real one), how can both parts 1 and 2 of the new paragraph 21 of article 88º of the IRC Code (introduced by the 2016 State Budget Law) be simultaneously interpretative of what articles 89º and 90º of the IRC Code provide, in opposite directions? How can they be simultaneously interpretative (in the words of article 135º of the 2016 State Budget Law) in the sense that the IRC of article 89º also includes autonomous taxation (part 1 of paragraph 21 of article 88º), and in the opposite direction that the IRC of article 90º, at least of its paragraph 2, does not include autonomous taxation? They cannot, one of the two prescriptions, either that of part 1 or that of part 2 of the new paragraph 21 of article 88º of the IRC Code, does not have, and does not necessarily have, by logical impossibility, interpretative character;
l) Knowing of the overwhelming case law, accompanied by the AT, to the effect of qualifying the autonomous taxation collection in IRC as having the nature of IRC, it is easy to conclude that in this duality of prescriptions of opposite direction which has interpretative nature is part 1. And that therefore, and necessarily, part 2 of the new paragraph 21 of article 88º of the IRC Code has an innovative character (counter-current, in the case against the inclusion of the primary autonomous taxation collection in the IRC collection);
m) It should also be noted that a norm such as that introduced by the 2016 State Budget Law (the new paragraph 21 of article 88º of the IRC Code), which prevents there being deductions from the collection on the autonomous taxation collection in IRC, is one of the types of norm that interferes with the quantum of tax to be paid by reference to the tax fact/financial year in question. Whereby, causing an increase in tax to be paid, as occurs, it is subject to the prohibition of retroactivity provided for in article 103º, paragraph 3, of the Constitution;
n) It is considered to be right to reject that the 2016 State Budget Law dictates to the adjudicator how it should judge/interpret the law in force on the date of facts prior to 2016. This is because where the Fundamental Law prohibits the legislator from altering the past normative, it is not constitutionally permitted to alter it by dictating to the sovereign function of judging how that past normative should be understood. The constitutional prohibition in question does not distinguish between more tax applicable to the past by force of law said to be interpretative, and more tax applicable by force of law that does not claim such;
o) By excluding the opposite interpretation of the old law by those entitled to it (the courts, in the end) that did not generate this tax, the new law necessarily generates, originating, necessarily (and that is its objective), tax. With which the claim for its application to the past also violates, necessarily, the constitutional prohibition of retroactivity in tax matters. The applier of the Constitution will be opening the window to that (prohibition of retroactivity in tax matters) which the Constitution closed the door;
p) In matters protected by the constitutional prohibition of retroactivity of law, the determination of the scope of the law must necessarily remain exclusively reserved to the organ of sovereign power that the courts are. Put another way, in these matters that benefit from enhanced constitutional protection against the legislative power that is the prohibition of retroactivity of laws, it is co-natural to that protection that the principle of separation of legislative power from judicial power must be taken to the extreme of preventing the first from telling the second how it must interpret the law;
q) In summary, as expressed in Constitutional Court judgment no. 172/00, the constitutional reinforcement of protection against legislative power contained in the prohibition of retroactivity of its laws is a reinforcement of legal certainty and protection of the safeguard of trust that is not compatible with interference in the process of application of law by the organs invested in it, which excludes the admissibility of interpretative laws in matters under that constitutional protection;
r) In conclusion, the claimant holds that the attribution by article 135º of the 2016 State Budget Law (Law no. 7-A/2016, of 30 March) of interpretative nature also to part 2 of the new paragraph 21 of article 88º of the IRC Code, that is, also to the normative segment "not being effected any deductions to the global amount [of autonomous taxation in IRC] ascertained", constitutes a material unconstitutionality of the said article 135º of the 2016 State Budget Law, by violation of the prohibition of retroactivity in tax matters provided for in article 103º, paragraph 3, of the Constitution, whether or not one has concluded (and it is understood that one has not), to be dealing with a materially interpretative law;
s) And by violation, also, of the principle of separation between legislative and judicial powers and of the principle of independence of the judicial power, reinforced whenever one is dealing with matter subject to the constitutional prohibition of retroactivity of new laws, in articulation with articles 2º, 111º, paragraph 1, 203º and 288º, subparagraphs j) and m), all of the Constitution;
t) On this, Constitutional Court judgment no. 267/2017, of 31 May 2017, has already ruled, which found unconstitutional the norm in question here, and this judgment of unconstitutionality has already been reaffirmed in another proceeding, in Constitutional Court summary decision no. 11/2018, confirmed by Constitutional Court judgment no. 107/2018;
u) The same unconstitutionality is suffered by the attribution by article 233º of the 2018 State Budget Law (Law no. 114/2017, of 29 December) of interpretative nature, strictly retroactive, to the addition to paragraph 21 of article 88º of the IRC Code, of the normative segment "even if such deductions result from special legislation", introduced by the same 2018 State Budget Law (by its article 231º);
v) In a scenario in which, despite all the arguments set out above, it is considered not to be possible to effect the deduction of tax benefits to the amounts due by way of autonomous taxation, arguing that, despite autonomous taxation being in essence IRC, its assessment does not have a framework in the IRC assessment norm enshrined in article 90º of the IRC Code (which only as a mere theoretical hypothesis is conceived), the claimant then requests, on a subsidiary basis, that the self-assessment of the claimant for the tax period of 2014 and respective Tax Group be annulled, in the portion corresponding to autonomous taxation, on the ground that the same was assessed and collected without legal basis for doing so;
w) The claimant paid tax in an amount higher than legally due, whereby, the illegality of the (self-)assessment being declared in the part here petitioned, the claimant has the right not only to the respective reimbursement, but also, under article 43º of the General Tax Law and article 137º, paragraph 6 of the IRC Code, to compensatory interest calculated on the following amounts and from the following dates, until full reimbursement of the amount of tax (autonomous taxation in IRC) unduly paid: interest on € 490,405.40 unduly paid on 29 May 2015 (Doc. no. 15), counted from this date, and interest on the remaining € 251,805.99, which should have been reimbursed by 31 August 2015 (Doc. no. 3 and article 104º, paragraph 6, of the IRC Code), counted from 1 September 2015, in a total basis of incidence of interest of € 742,211.39;
x) Add to this that the error affecting the (self-)assessment against which recourse is had results from error by the Services regarding the legal assumptions that conditionally determined the computer completion of the declaration (Model 22) of self-assessment, as stated above, aggravated by the rejection of the administrative claim (Doc. no. 5).
- In a diametrically opposite position, the AT maintains that to permit interpretative indulgences that would result in the admissibility of deduction of tax benefits or special advance payment from the autonomous taxation collection – similar to what the law allows from the IRC collection – as the Claimant seeks, inevitably amputates autonomous taxation in that which were the principles and purposes on which its creation by the legislator rested.
It sustains its position alleging, in summary:
a) The integration of autonomous taxation in the IRC Code (and IRS), conferred a dualistic nature, in certain respects, on the normative system of this tax, which was embodied, in particular, in the framework of subparagraph a) of paragraph 1 of article 90º of the IRC Code, in separate calculations of their respective collections, because they were required to obey different rules. In one case, it is a matter of application of the rate(s) of article 87º of the IRC Code to the taxable matter determined according to the rules contained in Chapter III of the Code, i.e., having as its basis profit, and in another case, it is a matter of application of the rates to the values of taxable matters relating to the different realities contemplated in article 88º of the IRC Code;
b) Whence it results that the amount ascertained in accordance with subparagraph a) of paragraph 1 of article 90º does not have a unitary character, since it includes values calculated according to different rules, to which different purposes are also associated, whereby the deductions provided for in the subparagraphs of paragraph 2 can only be made to the part of the IRC collection with which there exists a direct correspondence, in order for the coherence of the conceptual structure of the regular scheme of the tax to be maintained;
c) The common trait to all the realities reflected in the deductions referred to in paragraph 2 of article 90º of the IRC Code resides in the fact that they respect incomes or expenses incorporated in the taxable matter determined on the basis of the profit of the taxpayer or anticipated payments of the tax, being therefore entirely alien to the realities that constitute the taxable events of autonomous taxation;
d) The position defended by the AT has explicit support in the provision of paragraph 5 of article 90º of the IRC Code – through which the legislator provides clear indication that the amount of tax assessed, to which the deductions referred to in paragraph 2 of the same article are made, does not include the amount corresponding to autonomous taxation –, by stipulating that the deductions that are imputed to partners or members of entities covered by the fiscal transparency regime established in article 6º (entities that are subject to payment of autonomous taxation, by force of article 12º) are "deducted from the amount ascertained on the basis of the taxable matter that took into account the imputation provided for in the same article";
e) As regards the deduction relating to tax benefits (subparagraph b) of paragraph 2 of article 90º), when it comes to investment benefits – as is the case with SIFIDE – there is an underlying philosophy that the benefit constitutes a prize whose amplitude varies with the profitability of investments, since the higher the profit/taxable matter of IRC the greater will be the capacity to effect the deduction. Not being so, the necessary articulation that, materially, should exist between the objectives pursued by tax benefits and their impact on the very magnitude that serves as the basis for calculating taxable matter and collection – profit – would be subverted;
f) Examining the norms that governed the system of tax incentives in business research and development (Law no. 55-A/2010, of 31 December (article 133º) in force between 2011 and 2015), commonly called SIFIDE, in the circumstances of time that are relevant to the present proceedings, we find that, according to article 4º, the values that translate the tax benefit in SIFIDE are deducted "to the amounts ascertained in accordance with article 90º of the IRC Code, and up to its extent" and in the assessment relating to the tax period in which the expenses eligible for that purpose are made and that in the absence or insufficiency of collection ascertained in those terms, the expenses that cannot be deducted in the year in which they were made "may be deducted up to the 6th immediately following year";
g) Well then, the collection to which article 90º refers when assessment is to be made by the taxpayer (the situation that occurs in the present proceedings), is ascertained on the basis of the taxable matter that appears in that assessment/self-assessment [cf. article 90º, paragraph 1, subparagraph a) of the IRC Code];
h) Regarding autonomous taxation, reiterating that these are ascertained in an autonomous and distinct manner from the assessment carried out in accordance with article 90º of the IRC Code, it pertains to the obvious that the autonomous taxation mechanism of the set of realities provided for in article 88º of the IRC Code aims to prevent that through the significant relief of charges as provided for in article 88º, distortions affecting the system are not introduced and the expectation regarding what should be the "normal" revenue of the tax is not disappointed;
i) From a teleological and systematic interpretation of the law it clearly results that paragraph 1 of article 90º – which concludes the assessment procedure – applies both to IRC and to autonomous taxation. However, paragraph 2 of the same article – which concludes the form of assessment – refers to the cases of the taxable matter referred to in article 15º of the IRC Code, that is to IRC;
j) The legislator of the SIFIDE regime, when making that express reference to the amount ascertained in accordance with article 90º of the IRC Code, is referring to the IRC collection proper for whose ascertainment autonomous taxation does not concur precisely because they do not enter in the ascertainment nor of taxable profit, nor of taxable matter, and, as a consequence, do not concur for the assessed IRC;
l) The result of autonomous taxation, ascertained in an autonomous/independent/separate manner does not concur for the IRC collection, on the contrary, it must be added to the assessed IRC for purposes of ascertainment of the amount to be paid or recovered. Note in this regard that enhanced autonomous taxation is due immediately in the case of taxpayers who present tax losses;
m) It is not possible to admit the deduction of tax benefits from the autonomous taxation collection, under penalty of violation of the principle of tax equality. Admitting this possibility leads to a taxpayer being able to effect the deduction under SIFIDE or other tax benefits to the amount of autonomous taxation incurred on undocumented expenses, completely subverting the function of these taxation in the prevention or avoidance of fiscally and socially undesirable behaviour;
n) Tax benefits are absolutely exceptional norms in the tax system, in that they contain a derogation from the principle of tax equality, resulting from article 13º of the Constitution of the Portuguese Republic. They can only survive therefore a judgment of unconstitutionality if the derogation they bring to the principle of equality proves necessary, adequate and proportionate to the protection of the extrafiscal purposes at stake;
o) Admitting that IRC taxpayers may neutralise the autonomous taxation rates of which they are debtors by mobilising tax benefits such as SIFIDE would result in recognising that the promotion of investment in science by companies should prevail over the principle of tax equality even when it is a question of payments and operations that indicate the most serious practices of abusive planning and tax evasion;
p) The interpretation of the law on which the Claimant relies degrades the principle of tax equality to a lesser principle of the system and allows companies that make confidential expenses, evasive remuneration practices or operations with offshore territories to escape entirely the consequences that the law associates with them, as long as their activity involves significant research and development (R&D) expenses;
q) The legislator, by adding this paragraph 21 to article 88º of the IRC Code with the content mentioned limited itself to embracing and reinforcing the interpretative sense that already resulted from the applicable norms. It therefore embraced the only possible reading in the face of the constitutional whole applicable to the realities here at issue:
i. distinction between the figures of autonomous taxation and IRC;
ii. application of paragraph 1 of article 90º to both realities;
iii. application of article 90º paragraph 2 solely to IRC;
iv. referral of the SIFIDE regime and remaining tax benefits to article 90º refers to the amounts ascertained in article 90º paragraph 2.
r) Whereby, to permit interpretative indulgences that would result in the admissibility of deduction of tax benefits (or special advance payment) cf. already exhaustively decided by the arbitral tribunal, among others in processes nos. 113/2015-T; 535/2015-T; 639/2015-T; 535/2015-T; 670/2015-T; 722/2015-T; 736/2015-T; 745/2015-T; 746/2015-T; 750/2015-T; 751/2015-T; 752/2015-T; 767/2015-T; 769/2015-T; 780/2015-T; 781/2015-T; 784/2015-T; 784/2015-T; 174/2016-T all of them corroborating the thesis advocated by the Respondent, from the autonomous taxation collection – similar to what the law allows from the IRC collection – as the Claimant seeks, inevitably amputates autonomous taxation in that which were the principles and purposes on which its creation by the legislator rested;
s) Considering the learned arbitral case law invoked by the Claimant, to interpret the applicable norm for autonomous taxation in the sense that is advocated in the fallacy embraced and defended by the latter is nothing more than, reiterate, an ab-rogating interpretation disguised as a legislative impulse, and may constitute, ultimately, a violation of the principle of separation of powers;
t) The 2016 State Budget added paragraph 21 to article 88º of the IRC Code, attributing to it with interpretative character, where:
"The assessment of autonomous taxation in IRC is carried out in accordance with the provisions of article 89º and is based on the values and rates that result from the provision in the preceding paragraphs, with no deductions being made to the global amount ascertained."
u) As regards the interpretative effect conferred by article 135º contained in the State Budget Law for 2016, let us turn to the good jurisprudence issued, among countless others, in arbitral processes nos. 722/2015 – T CAAD; 727/2015 – T CAAD; 785/2016 T CAAD and, likewise, in the dissenting vote recorded by the distinguished Adviser Fernanda Maçãs in process no. 5/2016 T CAAD;
v) In light of the above, it results that the very interpretative effect conferred by that Law would be, per se, unnecessary, given that, as has been demonstrated, no other interpretation would be capable of being made having regard to the teleology and legal hermeneutics of the norms in question, as indeed clearly results from the above-cited judgments, which gives total legality, constitutionality and, above all, authenticity to that interpretative character;
w) In face of what has been set out, and to settle once and for all the divergent interpretations that have been made by the case law, the Law no. 114/2017 of 29 December (State Budget for 2018), in particular its article 233º, which amended paragraph 21 of article 88º of the IRC Code and which provides that "The assessment of autonomous taxation in IRC is carried out in accordance with the provisions of article 89º and is based on the values and rates that result from the provision in the preceding paragraphs, with no deductions being made to the global amount ascertained, even if such deductions result from special legislation.", reaffirming the interpretative nature of that precept;
x) Autonomous taxation, backed by what has been supported in the learned arbitral case law and in the AT's argument, despite being a collection in IRC, is distinguished by being incurred not on profits but, rather, on expenses incurred by the taxpayer or by third parties with whom it has relations;
y) Autonomous taxation, as an anti-abusive fiscal instrument, would be emptied of any practical-tax content in the event of embracing the thesis defended by the Claimant;
z) The admissibility of an interpretation of this kind would permit an inadmissible limitation of the freedom of legislative initiative to conform, which in creating autonomous taxation did so with a purpose that belongs to the obvious, i.e.,
a) the fight against tax evasion;
b) the intention to tax income of third parties whose income increase would otherwise escape taxation;
c) the penalisation, by way of taxation, of the payment of income considered excessive in the context of the economic crisis of which, even today, remnants exist.
aa) It is equally unfounded the argument that has come to be used (V., Decision in proc. 740/2015-T) to the effect that referring the content of the expression, contained in the regulation of SIFIDE II approved by article 133º of Law no. 55-A/2010, of 31 December (paragraph 1 of Article 4º): "… amount of the IRC collection ascertained in accordance with subparagraph a) of paragraph 1 of article 90º of the IRC Code and up to its extent…", solely to the IRC collection ascertained on the basis of the taxable matter that originates from profit would mean making a restrictive interpretation of norms on tax benefits and that article 10º of the Statute of Tax Benefits does not expressly foresee the possibility of restrictive interpretation;
bb) Even if article 10º of the Statute of Tax Benefits admits extensive interpretation and prohibits analogy in the interpretation of norms on tax benefits, it does not prohibit recourse to restrictive interpretation and, for that very reason, in objectively founded situations, its use is not excluded, as happens in this case, given that restrictive interpretation would even find backing and full justification in the preservation of the objectives and philosophy underlying investment tax benefits in general and SIFIDE, RFAI and CFEI in particular, given the perverse effects that can be achieved with the possibility of deducting the tax credit from autonomous taxation collections in IRC;
cc) Also refuted is the argument developed in the Arbitral Decision issued in proc. no. 740/2015-T, according to which the interpretative norm of paragraph 21 of article 88º of the IRC Code, in the part in which it refers to "being effected no deductions to the global amount ascertained", "despite the purported interpretative nature attributed to it" cannot have relevance in the matter of deduction of SIFIDE, RFAI and CFEI because such would constitute a restrictive interpretation of article 4º of the respective regime contained in a special provision of a separate diploma, as is that of SIFIDE II, and that "And, in the absence of an unequivocal intention to the contrary, the rule applies that general law does not alter special law (article 7º, paragraph 3, of the Civil Code)…", firstly, because the norm (article 135º of Law no. 7-A/2016, of 30 March) that attributes interpretative character merely fixes an understanding that already had support in the letter and ratio of the law and, secondly, as pointed out by NUNO SÁ GOMES, the norms that regulate tax benefits have exceptional nature and not special nature;
dd) It is also to be rejected the argument that the application of the provision of paragraph 21 of article 88º to SIFIDE, RFAI and CFEI would not be compatible with the constitutional principle of protection of trust, in that this tax benefit instrument aimed to encourage IRC taxpayers to make investments in the period between 01-01-2011 and 31-12-2015, the benefit obtained as a consideration for desired and encouraged behaviour, and it is certain that the legislator merely embraced, clarifying it, an understanding that always had application by the generality of taxpayers and that was extracted from the applicable legal provisions;
ee) This would be the case indeed if the provision of paragraph 21 of article 88º had innovative character, which as has been seen it does not;
ff) The assessment in question does not result from any error by the Services but flows directly from the application of the law, whereby the Claimant should not be recognised any right to compensatory interest.
B.2 ASSESSMENT
For one to understand how exhaustively the parties discussed the question now under analysis through the profusion of arguments they wielded, the full exposition of the arguments of one and the other was made.
The time has come to make a decision.
We begin by transcribing the applicable norms of the System of Tax Incentives for Business Research and Development (SIFIDE) II, approved by article 133º of Law no. 55-A/2010, of 31 December:
Article 4
Scope of deduction
1 – IRC taxpayers resident in Portuguese territory who exercise, as main activity or otherwise, an activity of agricultural, industrial, commercial and services nature and non-residents with a permanent establishment in that territory may deduct from the amount ascertained in accordance with Article 90º of the IRC Code, and up to its extent, the value corresponding to expenses with research and development, in the part that has not been the object of financial contribution by the State on a non-refundable basis, made in tax periods from 1 January 2011 to 31 December 2015, in a dual percentage:
a) Base rate – 32.5% of expenses made in that period;
b) Incremental rate – 50% of the increase in expenses made in that period in relation to the simple arithmetic mean of the two preceding years, up to the limit of € 1,500,000.
2 – For IRC taxpayers that are SMEs in accordance with the definition contained in Article 2º of Decree-Law no. 372/2007, of 6 November, that have not yet completed two years of activity and that have not benefited from the incremental rate fixed in subparagraph b) of the preceding paragraph, a 10% increase applies to the base rate fixed in subparagraph a) of the preceding paragraph.
3 – The deduction is made, in accordance with Article 90º of the IRC Code, in the assessment relating to the tax period mentioned in the preceding paragraph.
4 – Expenses that, due to insufficiency of collection, cannot be deducted in the year in which they were incurred may be deducted up to the sixth immediately following year.
5 – For purposes of the provision in the preceding paragraphs, when a change of tax period occurs in the year of commencement of benefit, the annual period that begins in that year shall be considered.
6 – The incremental rate provided for in subparagraph b) of paragraph 1 is increased by 20 percentage points for expenses relating to the recruitment of holders of doctorates by companies for research and development activities, with the limit provided for in the same subparagraph to become € 1,800,000.
7 – To taxpayers that reorganise as a result of acts of concentration as defined in Article 73º of the IRC Code, the provision of paragraph 3 of Article 15º of the Statute of Tax Benefits applies.
Article 5
Conditions
Only IRC taxpayers meeting cumulatively the following conditions may benefit from the deduction referred to in Article 4º:
a) Their taxable profit is not determined by indirect methods;
b) They are not debtors to the State and to social security of any taxes or contributions, or have their payment duly secured.
Now, summarising the positions of the parties, we can say that for the claimant, the expression "may deduct from the amount ascertained in accordance with Article 90º of the IRC Code, and up to its extent", means the amount of IRC ascertained on the basis of taxable profit added to the amount of IRC ascertained on the basis of autonomous taxation, both being paid at the same time and at the same time; for the respondent the same expression means only the amount of IRC ascertained on the basis of taxable profit.
With the introduction in 2011 of the System of Tax Incentives for Business Research and Development II (SIFIDE II) which was approved by the cited article 133º of Law no. 55-A/2010, of 31 December (State Budget Law of 2011), it was intended, as stated in its article 2º, to appeal to companies so that they would carry out 'research expenses', with a view to acquiring new scientific or technical knowledge and 'development expenses' through the exploitation of results of research work or other scientific or technical knowledge with a view to the discovery or substantial improvement of raw materials, products, services or manufacturing processes, thus providing to the business community and also to themselves services that would allow them to increase their profitability.
In the present proceedings, the respondent understands that, with these grounds, the legislator intended that only SIFIDE costs would be deducted if and when those expenses originated taxable profits and only in that measure could the tax credits for those fiscal incentives be deducted.
However, an initial point to be borne in mind is that the autonomous taxation provided for in article 88º of the IRC Code is tax under IRC, because it is inserted as regards its assessment and form of payment in this tax, in its respective collection, only having specific bases of incidence and specific applicable rates, which do not distort its incidence under IRC.
The Tax Authority maintains that the amounts in which SIFIDE translates should be deducted only from the amounts ascertained in accordance with article 90º of the IRC Code, and up to its extent and that, in the absence or insufficiency of collection ascertained in those terms, the expenses that cannot be deducted in the year in which they were made may be deducted up to the 6th immediately following year and that the collection to which article 90º refers when assessment is to be made by the taxpayer (the situation that occurs in the present proceedings), is ascertained on the basis of the taxable matter that appears in that assessment/self-assessment, that is, in the self-assessment, in accordance with article 90º, paragraph 1, subparagraph a) of the IRC Code. But this restrictive interpretation has no minimum verbal correspondence in the text of the law.
From the outset, the argument wielded by the AT that SIFIDE is deducted, and solely, from the collection thus ascertained on the basis of taxable matter, given the provision of article 5º, subparagraph a), of the law regulating SIFIDE, since autonomous taxation is determined in an autonomous and distinct manner from the assessment carried out in accordance with article 90º of the IRC Code, resulting in there being no possible deduction. This understanding is based on the circumstance that, contrary to the provision in article 12º and in subparagraph a) of paragraph 1 of article 23º-A of the IRC Code, in paragraphs 1 and 2 of article 90º there is no reference to autonomous taxation, which, from the outset, given the dual nature of the system, raises well-founded objections regarding the consideration of the value of autonomous taxation for purposes of the deductions provided for in paragraph 2 of the cited article 90º. For that reason, the respondent concludes that it would be contrary to the spirit of the system to allow that, by force of the deductions referred to in paragraph 2 of article 90º of the IRC Code, autonomous taxation be stripped of, or at least distorted, the anti-abuse character that presided over its implementation in the IRC system.
Thus, the essential question that is the object of the present proceedings is whether the tax credits that, in the year 2014, were recognised to the Claimant, under SIFIDE, can be deducted from the collection produced by autonomous taxation that burdened it in that financial year, in the part in which they cannot be deducted from the remaining IRC collection.
It is worth noting from the outset that the autonomous taxation provided for in the IRC Code (article 88º of the IRC Code) and the collection it provides constitutes collection of the respective tax, and is subject to the generality of norms provided for in the IRC Code that applies to it.
That is, as regards IRC, in addition to the unanimity of the case law, article 23º-A paragraph 1, subparagraph a), of the IRC Code, in the wording of Law no. 2/2014, of 16 January, leaves no room for any reasonable doubt, corroborating what previously already resulted from the literal tenor of article 12º of the same Code.
But the solution of this conceptual question of the nature of the collection from the autonomous taxation provided for in the IRC Code does not make it possible to resolve the question of whether the credits from SIFIDE can be deducted from that same collection.
In fact, the statute that approved SIFIDE and whose essential part we transcribe above does not state that the credits arising from it are deductible from all and any IRC collection, but rather defines the scope of deduction by alluding, in its paragraph 1 of article 4º, to "the amount ascertained in accordance with Article 90º of the IRC Code, and up to its extent". Paragraph 3 of the same article confirms that it is to the amount ascertained in accordance with article 90º of the IRC Code that is relevant for effecting the deduction by saying that "the deduction is made, in accordance with article 90º of the IRC Code, in the assessment relating to the tax period mentioned in the preceding paragraph".
Thus, the question sub judice is, regardless of the nature of the tax to which autonomous taxation refers, whether the amount of autonomous taxation is "ascertained in accordance with article 90º of the IRC Code", because if it is, then it must be concluded that, to determine the limit of deduction, regard is had to the collection from autonomous taxation.
Now, article 90º of the IRC Code refers to the forms of assessment of IRC, by the taxpayer or by the Tax Administration, and applies to the ascertainment of the tax due in all the situations provided for in the Code.
Consequently, it also applies to the assessment of the amount of autonomous taxation, which is ascertained by the taxpayer or by the Tax Administration in accordance with article 90º of the IRC Code, there being no other provision that foresees different terms for its assessment. Its autonomy is restricted to the applicable rates and the respective taxable matter, but the ascertainment of its amount is effected in accordance with article 90º. The differences between the determination of the amount resulting from autonomous taxation and that resulting from taxable profit rest on the determination of the taxable matter and the rates, provided for in Chapters III and IV of the IRC Code, but not on the forms of assessment, which are provided for in Chapter V of the same Code and which are of common application to autonomous taxation and the remaining IRC taxable matter.
For that reason, since it is to article 90º, inserted in this Chapter V, that is referred to in article 4º, paragraph 1, of SIFIDE, there is no legal support for making a distinction between the collection from autonomous taxation and the remaining IRC collection, by the fact that the rates and the forms of determination of the taxable matter are distinct.
The fact that article 5º of SIFIDE excludes the benefit when taxable profit is determined by indirect methods and autonomous taxation includes situations in which indirect taxation of profit is aimed (in particular, by not giving relevance or demotivating facts susceptible to reducing them) has no relevance for this purpose, since the concept of "indirect methods" has a precise scope in tax law, which is concretised in article 90º of the General Tax Law (in addition to special norms), referring to means of determining taxable profit whose use is not foreseen for calculation of the taxable matter of autonomous taxation provided for in article 88º of the IRC Code, since the need to make use of indirect methods that excludes the possibility of benefit cannot justify that exclusion in relation to the autonomous taxation collection determined by direct methods.
Moreover, it cannot be seen in the eventual anti-abuse nature assumed by some autonomous taxation an explanation for its exclusion from the respective IRC collection from within the scope of the deductibility of SIFIDE benefit, since there is no legal support for excluding deductibility from the collection provided by corrections based on norms of an indisputably anti-abuse nature, such as those relating to transfer pricing or undercapitalisation. For it cannot be considered the deduction of tax credits derived from incentives such as SIFIDE II as any way of neutralising those norms relating to autonomous taxation, in violation of any purported principle of tax equality, but rather as a way of giving full and effective realisation to the fiscal incentives underlying SIFIDE II.
Especially since investments in research and development may take many years to produce profits and the AT's restrictive interpretation is demotivating for companies to adhere to these tax incentives, due to the uncertainty of whether or not they will be able to take advantage of such investments.
Neither can it be seen as relevant, for excluding the deductibility of the benefit from the global IRC collection, the historical evolution of the IRC Code, since at the time SIFIDE was drafted, autonomous taxation already existed as it exists today and nevertheless article 4º of this statute which defines the collection relevant for application of the deduction of the tax benefit merely provided for the possibility of "deducting from the amount ascertained in accordance with article 90º of the IRC Code, and up to its extent", without excluding autonomous taxation.
Finally, neither can it be seen how, from the fact referred to by the Tax Authority in its reply, that the deductibility of the tax benefit of SIFIDE is "expressly limited to the collection of article 90º of the IRC Code, up to its extent" it can be concluded that "the tax credit will only be deductible if there is taxable profit", since what that fact requires is that there is IRC collection, which can exist even without taxable profit, namely by force of autonomous taxation. It is certain that, as the Tax Authority refers, autonomous taxation aims to discourage certain behaviour by taxpayers susceptible to affecting taxable profit and its discouraging force will be attenuated with the possibility of the respective collection being the object of deductions. But it is also certain that, as is inherent in that statement, these autonomous taxation merely aim to protect or increase tax revenue and the tax benefits granted are, by definition, "measures of an exceptional character instituted for the protection of relevant extrafiscal public interests that are superior to those of taxation itself that they prevent" (article 2º, paragraph 1, of the Statute of Tax Benefits).
And, in the case of SIFIDE tax benefits, the reasons of an extrafiscal nature that justify their prevalence over those of increasing tax revenue are, in the legislative perspective and as has been stated, of enormous importance, as is inferred from the fact that these benefits are indicated as being especially excluded from the general limit to the relevance of tax benefits in IRC, which is indicated in article 92º of the IRC Code, a norm that clearly aims to attract companies to research and development that the country so much needs.
For that reason, it is clear that one is dealing with tax benefits whose justification is legislatively considered more relevant than the obtaining of tax revenue, being inferred from that article 92º that the legislative intention to encourage investments in research and development provided for in SIFIDE is so firm that it goes to the point of not even establishing any limit to the deductibility from IRC collection, despite this tax regime having been created and applied in a period of notorious difficulties in public finances, considering the agreement with the IMF that determined its intervention in the context of public finances.
For that reason, no legal basis is perceived, in particular in light of the legislative intention that it is possible to detect, for excluding the deductibility of the tax benefit of SIFIDE from the autonomous taxation collection that directly results from the letter of article 4º, paragraph 1, of the respective statute, combined with article 90º of the IRC Code.
In this sense, all the arbitral decisions referred to by the claimant and also the decisions issued in arbitral processes 769/2014-T and 490/2017-T may be cited.
A final argument wielded by the respondent was the addition of paragraph 21 to article 88º of the IRC Code, by Law no. 7-A/2016, of 30 March (State Budget Law for 2016), which provides the following:
"21 – The assessment of autonomous taxation in IRC is carried out in accordance with the provisions of article 89º and is based on the values and rates that result from the provision in the preceding paragraphs, with no deductions being made to the global amount ascertained".
In turn, article 135º of the same Law established that "the wording given by this law to paragraph 6 of article 51º, to paragraph 15 of article 83º, to paragraph 1 of article 84º, to paragraphs 20 and 21 of article 88º and to paragraph 8 of article 117º of the IRC Code has an interpretative nature".
However, although it is a law that proclaims itself as having an interpretative nature, its application to the case in question would imply the retroactive collection of taxes, which is prohibited by article 103º, paragraph 3, of the Constitution of the Portuguese Republic. Indeed, in accordance with article 13º of the Civil Code, interpretative law is retroactive, applying to past facts (facta praeterita) and only sparing disputes already terminated (causae finitae). Now, tax laws can only be applied for the future, in view of the constitutional establishment of the prohibition of retroactivity of tax law (article 103º, paragraph 3, of the Constitution). Article 12º, paragraph 1, of the General Tax Law consequently determines that "tax norms apply to facts occurring after their entry into force, and no retroactive taxes can be created".
It should also be underlined, with regard to the application of this norm, what is referred to in the CAAD Judgment no. 5/2016-T:
"Law no. 7-A/2016, of 30 March (State Budget Law for 2016), added to the IRC Code paragraphs 20 and 21 of article 88º, and the legislator recognised an interpretative nature to the norms contained therein.
Paragraph 21 of article 88º of the IRC Code provides the following:
'The assessment of autonomous taxation in IRC is carried out in accordance with the provisions of article 89º and is based on the values and rates that result from the provision in the preceding paragraphs, with no deductions being made to the global amount ascertained'.
From the analysis of this norm we can draw the following conclusions:
i) It does not alter the legal regime of SIFIDE or RFAI;
ii) It does not have as its object the authentic interpretation of norms contained in SIFIDE or RFAI;
iii) The provision contained in SIFIDE of deductions 'to the amount ascertained in accordance with Article 90º of the IRC Code' remains valid;
iv) The provision contained in RFAI of deductions 'from the IRC collection' remains valid;
v) The nature of 'autonomous taxation rates' is not altered;
vi) The procedure and form of assessment are not altered;
vii) Deductions to the amount of autonomous taxation ascertained are now expressly prohibited, which does not prevent deductions from being made to the IRC collection (which includes the result of autonomous taxation) provided for in SIFIDE and RFAI.
(…)
Thus, the norm contained in paragraph 21 of article 88º of the IRC Code, to which an interpretative nature was attributed, does not prevent deductions to the IRC collection (that is, to the entirety of the collection ascertained by application of article 90º of the IRC Code) of amounts under SIFIDE and RFAI. Indeed, the interpreter and applicator of the law may disagree with the choices of the legislator, what he cannot do is alter the legislative solutions adopted. Now the legislator refers in RFAI to the deduction 'from the IRC collection' and in SIFIDE refers to the deduction 'from the amount ascertained in accordance with Article 90º of the IRC Code', which in both cases is manifestly distinct from 'deduction from the taxable matter of IRC'. The legislator could, both in RFAI and in SIFIDE, have adopted this solution; the truth is that it did not, and it is not for the interpreter to correct the legislator's hand. As José de Oliveira Ascensão states, '[h]owever desirable an alteration of the normative system may appear, such alteration belongs to the sources of law, not to the interpreter. This one captures the sense of the source as it objectively presents itself at the present moment, not some other sense placed before it. Reasoned reasons of security and defence against arbitrariness ground this conclusion'. Thus, for the deductions provided for in RFAI and SIFIDE to cease to be made from the IRC collection (to which autonomous taxation also contributes) the legislator, should it see fit, must alter the special legal regimes that provide for them."
This is also our understanding, whereby everything we have stated above regarding the deductibility of tax credits emerging from SIFIDE remains, since the statute that governs these investment incentives was left untouched by Law no. 7-A/2016, of 30 March (State Budget Law for 2016).
In light of what has been set out, it is concluded that the self-assessment of IRC of the claimant's tax group relating to the financial year 2014, in the part in which the deduction of the amounts referring to SIFIDE from the amount of autonomous taxation rates was not effected, is affected by a defect of violation of law, which justifies its annulment, the same applying to the decision of the administrative claim, in the part in which it did not recognise this illegality.
B.3 RIGHT TO COMPENSATORY INTEREST
In this regard, article 43º, paragraph 1 of the General Tax Law states that compensatory interest is due "when it is determined, in an administrative claim or judicial objection, that there was an error attributable to the services that resulted in payment of the tax debt in an amount higher than legally due."
This right being recognised in an arbitral process, by force of article 24º, paragraph 5 of the RJAT.
Let us see then whether it is possible to understand that there is an error attributable to the Tax Authority Services.
It is verified, in the case at issue, that the self-assessment declaration was formulated by the Claimant itself and not directly by the Tax Authority, now Respondent.
However, it must be taken into account that the Claimant, in formulating the said declaration, found itself limited by the computer services through which the declaration is formulated, services that are made available by the Tax Authority, and in relation to which the Claimant cannot effect any alteration.
On the other hand, it is also clear that, with there being prior recourse by way of administration, and the Claimant having already presented the respective explanation regarding the computer impossibility of presenting the declaration in the correct terms, the Tax Authority should have corrected the error in question, which it did not do, persisting in the same grounds.
We are, in this case, facing negligence on the part of the Tax Authority, negligence that translates into an "error attributable to the services", as stated in article 43º of the General Tax Law.
Having regard to what is established in article 61º of the Tax Procedural Code and having verified the existence of an error attributable to the Services of the Tax Administration, from which resulted payment of the tax debt that is not legally due, it is understood that the Claimant has the right to compensatory interest at the legal rate, calculated on the value of € 742,211.39, which will be counted as from 29-05-2015, as regards the € 490,405.40 paid by the claimant and as from 1/9/2015, as regards the remaining € 251,805.99, which should have been reimbursed by 31 August 2015, in accordance with article 104º, paragraph 6 of the IRC Code, in both cases until full reimbursement of those same amounts.
C. DECISION
In these terms, and with the grounds set out, the Arbitral Tribunal decides:
a) To grant in full the application for the declaration of illegality of the self-assessment of IRC, including autonomous taxation rates, of the A... Tax Group, relating to the financial year 2014, as regards the amount of autonomous taxation rates in IRC of € 742,211.39, with its consequent annulment in this part, due to illegal exclusion of the deduction from the collection of investment expenses made under the SIFIDE II programme, with all the legal consequences.
b) Consequently, to annul the decision rejecting the administrative claim submitted by the claimant, on the ground of illegality given the decision in a).
c) To order the Tax Authority to reimburse to the claimant the amounts of tax unduly paid, all reimbursed amounts being increased by compensatory interest, calculated on the value of € 742,211.39, which will be counted as from 29-05-2015, as regards € 490,405.40 and as from 1/9/2015, as regards the remaining € 251,805.99, until full reimbursement of those same amounts.
d) To condemn the Respondent in the costs of the present proceedings, as the defeated party.
D. Value of the Proceedings
The value of the proceedings is fixed at € 742,211.39 (seven hundred and forty-two thousand, two hundred and eleven euros and thirty-nine cents), in accordance with article 97º-A, paragraph 1, a), of the Tax Procedural Code, applicable by force of subparagraphs a) and b) of paragraph 1 of article 29º of the RJAT and paragraph 2 of article 3º of the Costs Regulation in Tax Arbitration Proceedings.
E. Costs
The value of the arbitration fee is fixed at € 10,710.00, in accordance with Table I of the Costs Regulation of Tax Arbitration Proceedings.
Notify accordingly.
Lisbon, 21 January 2019
The Arbitrator President
(José Pedro Carvalho)
dissenting as per attached declaration
The Arbitrator Vogal
(José Joaquim Monteiro Sampaio Nora)
The Arbitrator Vogal
(A. Sérgio de Matos)
DISSENTING OPINION
I voted in the minority in the present decision because, for the reasons set out, inter alia, in the decisions that were in the majority in arbitral processes 34/2016T, 174/2016T, 122/2016T, 567/2016T, 587/2016T and 192/2017T, I consider that article 90º/2 of the IRC Code, in the wording prior to the entry into force of the wording given by Law 7-A/2016, of 30 March, should be subject to a corrective interpretation, limiting its scope to IRC stricto sensu, thus excluding autonomous taxation and maintaining thus its original meaning, which was what it had before the introduction of autonomous taxation in the IRC Code.
There is not, therefore, from the outset, any question of retroactive interpretation of the wording given by Law 7-A/2016, of 30 March to article 88º/21 of the IRC Code.
The understanding set out is not contended with, nor is the nature of IRC recognised to autonomous taxation in the decision that was in the majority (as stated in various places, autonomous taxation should be understood as being part of IRC in a broad sense, implying nonetheless its own nature a relevant distinction with traditional, or strict sense, IRC, including in the matter sub iudice), nor considerations regarding corrective interpretation, given that, on the one hand, that is generally admissible in tax law (where, as is understood to be the case, the respective requirements are met), and, on the other hand, it is not a matter of application of the same to tax benefits matter, but to the applicable norm of paragraph 2 of article 90º of the IRC Code.
The question that is being raised results – exclusively – from the lack of foresight by the legislator when introducing autonomous taxation in the IRC Code, which did not allow it to become aware of all the implications of such an operation, which led to, inter alia, article 90º/2 of the IRC Code remaining unchanged and that it is necessary for the case law to, case by case, be determining the parts of the IRC regime that apply to autonomous taxation.
Moreover, the position that was in the majority supports the conclusion – totally contrary to the presumption of a reasonable legislator – that it will be possible to make the deductions provided for in article 90º/2 of the IRC Code to the autonomous taxation collection relating to undocumented expenses or to payments to entities subject to privileged tax regime, among others.
To these two questions, which the position embraced in the majority decision does not answer, there is added another – equally disregarded in that – which is that, among the various purposes underlying autonomous taxation, resulting, moreover, from its essential heterogeneity,
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