Summary
Full Decision
ARBITRAL DECISION (consult full version in PDF)
1. Report
A..., LDA., hereinafter referred to as "A..., Lda.", "Claimant" or "TP" (Taxpayer), with the tax identification number... and registered office at..., no...., parish of..., municipality of Vila Nova de Famalicão, has, pursuant to articles 2, paragraph 1 sub-paragraph a) and 10, paragraph 1 sub-paragraph a) of the Legal Regime of Tax Arbitration (Decree-Law no. 10/2011, of 20 January, hereinafter "LRTA"), submitted to CAAD a request for examination of its claim for a declaration of illegality of acts of tax assessments and, thus, a request for the constitution of the Arbitral Tribunal.
Accordingly, it petitions for a declaration of illegality of acts of tax assessments, more specifically additional Corporate Income Tax (IRC) levied and default interest, cf. Assessment No. 2018..., of 2018.04.16, relating to the 2015 tax year.
The Assessment in dispute was carried out by the Tax and Customs Authority (hereinafter "TA" or "Respondent") following the correction made by the TA to the self-assessment of Corporate Income Tax of the now Claimant in Form 22 Declaration for the 2015 tax year.
The correction in question refers specifically to the amount of tax losses deducted by the now Claimant in the 2015 tax year, and the TA carried it out due to lack of correspondence between that amount and the elements in its database.
More specifically, the correction was carried out because, in the amount of tax losses deducted in the 2015 tax year, there were included, according to the TA, tax losses determined by the Claimant in 2010. Tax losses which, according to the Respondent, were no longer deductible at that time (i.e., in the 2015 tax year).
The Claimant does not accept the corrections made by the TA, which led to the Assessment in dispute.
It invokes, firstly, omission of legal formalities. Namely, the nullity of the notification for the exercise of the right to be heard and, moreover, the absence or defect of the legally required substantiation. With the consequent nullity of the Assessment by this means.
Furthermore, the positions of the Parties differ regarding the applicability or non-applicability to the case of a hierarchical rule of chronological precedence to be observed in the use of accumulated tax losses (based on the year in which they were generated). The Claimant submits that, as paragraph 15 of article 52 of the CIRC was introduced only in 2014 (by Law no. 2/2014, of 16 January), the rule that the legislator expressly established there – of the obligation to deduce, in the first place, the losses determined long ago – did not apply until then. And that, thus, nothing obliged it to follow that rule in the deduction of the tax losses in question in the proceedings.
The Claimant contends that such a rule cannot be applied to this case. Consequently, it argues that the TA, in proceeding thus, incurred in a breach of law and erroneous quantification of tax facts "due to non-existence of the assessed tax".
Notwithstanding its non-conformity with the Assessment, the Claimant proceeded to pay. It therefore now petitions: (i) a declaration of nullity of the Assessment and the reimbursement of amounts paid, and (ii) compensatory interest.
The respondent is the Tax and Customs Authority (hereinafter "TA" or "Respondent").
The request for constitution of the Arbitral Tribunal was accepted by the President of CAAD and notified to the TA on 10.07.2018.
Pursuant to sub-paragraph b) of paragraph 1 of article 11 of the LRTA, the Deontological Council appointed as arbitrator of the singular Arbitral Tribunal the undersigned, who duly accepted the appointment.
On 30.08.2018, the Parties were notified of the appointment of arbitrator and did not express an intention to challenge it, cf. article 11, paragraph 1, sub-paragraphs a) and b) of the LRTA and articles 6 and 7 of the Deontological Code.
Pursuant to sub-paragraph c) of paragraph 1 of article 11 of the LRTA, the singular Arbitral Tribunal was constituted on 19.09.2018.
Notified for that purpose, the TA submitted its Response, arguing for the total dismissal of the Request for Arbitral Pronouncement (hereinafter "RAP"), and for the consequent maintenance of the Assessment in dispute in the Legal Order.
The Respondent understands, in summary, that it complied with the applicable legal formalities and that the rule of deduction of tax losses by order of chronological precedence applies to this case, firstly for compliance with the principle of specialization of tax years and independently of its express introduction, in 2014, through the addition of paragraph 15 to article 52 of the CIRC. To corroborate its understanding regarding the aforementioned rule of precedence, it invokes, among other things, the existence of a Circular Letter and a Binding Ruling.
By order of 26.10.2018, this Tribunal decided to dispense with the meeting provided for in article 18 of the LRTA and to notify the Parties to submit optional written submissions.
The Claimant submitted its submissions, reiterating what was stated in the RAP. It corroborates its understanding (i.e., that the aforementioned rule of precedence only applies from the entry into force of paragraph 15 of article 52 of the CIRC) with the alleged non-existence of external binding force of Circular Letters and Binding Rulings of the TA, under penalty of violation of the principle of legality.
Notified of the Claimant's submissions, the Respondent presented its own, in which it reiterated what was stated in the Response, stating, among other things, that the rule of precedence in the deduction of losses has always applied and was always peacefully accepted by Legal Doctrine and Case Law since the entry into force of the CIRC. And, likewise, that this same understanding was made explicit by it, TA, from early on.
The Arbitral Tribunal was duly constituted and is competent (cf. article 2, paragraph 1 sub-paragraph a) and 10, paragraph 1 of the LRTA).
The Parties are legitimate and have legal personality (cf. articles 4 and 10, paragraph 2 of the LRTA and article 1 of Regulation no. 112-A/2011, of 22 March).
There is also judicial capacity and adequate representation of the Parties in court, with no procedural nullities and exceptions existing, as we shall examine shortly after addressing the factual matter.
2. Factual Matter
2.1. Proven Facts
The following facts are considered proven:
a) The Claimant is a limited liability company established under Portuguese law that carries out a commercial activity as its main activity.
b) The Claimant has as managers B... and C..., obligating itself by their joint signature, cf. Permanent Certificate with access code..., attached with the RAP.
c) The Claimant had organized accounting at the time of the facts and had 31 December as the date of closure of the tax year.
d) In the 2008 tax year, the Claimant did not declare tax losses nor had accumulated tax losses, cf. p. 5 of the Administrative Proceedings (hereinafter "AP"), attached by the Respondent.
e) In the 2009 tax year, the Claimant determined tax losses in the amount of € 143,253.70 (one hundred and forty-three thousand, two hundred and fifty-three euros and seventy cents), cf. Form 22 Declaration attached as Doc. 4 with the RAP, and AP - pp. 4 and 5.
f) In the 2010 tax year, the Claimant determined tax losses in the amount of € 42,375.99 (forty-two thousand, three hundred and seventy-five euros and ninety-nine cents), cf. Form 22 Declaration attached as Doc. 5 with the RAP, and AP - pp. 4 and 5.
g) In the 2011 tax year, the Claimant deducted tax losses in the amount of € 6,196.28 (six thousand, one hundred and ninety-six euros and twenty-eight cents), cf. Form 22 Declaration attached as Doc. 6 with the RAP, and AP - pp. 4 and 5.
h) In the 2012 tax year, the Claimant deducted tax losses in the amount of € 1,453.67 (one thousand, four hundred and fifty-three euros and sixty-seven cents), cf. Form 22 Declaration attached as Doc. 7 with the RAP, and AP - pp. 4 and 5.
i) In the 2013 tax year, the Claimant deducted tax losses in the amount of € 69,141.75 (sixty-nine thousand, one hundred and forty-one euros and sixty-five cents), cf. Form 22 Declaration attached as Doc. 8 with the RAP, and AP - pp. 4 and 5.
j) In the 2014 tax year, the Claimant deducted tax losses in the amount of € 59,628.18 (fifty-nine thousand, six hundred and twenty-eight euros and eighteen cents), cf. Form 22 Declaration attached as Doc. 9 with the RAP, and AP - pp. 4 and 5.
k) In the 2015 tax year, the Claimant deducted tax losses in the amount of € 49,209.81 (forty-nine thousand, two hundred and nine euros and eighty-one cents), cf. Form 22 Declaration attached as Doc. 10 with the RAP, and AP - pp. 4 and 5.
l) The Form 22 Declaration of the Claimant for the 2015 tax year was subject to control by the Respondent regarding tax losses.
m) By registered letter no. RY...T, the Claimant was notified of an order from the Respondent dated 03.10.2017 (attached with RAP as Doc. 2), which contains, with reference to the period of 2015, the amount of € 6,833.82 as adjusted tax loss, which order is hereby reproduced and which reads:
[document content]
n) The Claimant did not exercise the right to be heard beforehand.
o) The Claimant did not proceed to replace the Form 22 Declaration.
p) By registered letter No. RF...PT, the Claimant was notified, by Circular Letter from the Respondent with No..., dated 18.04.2018 (attached with AP as Doc. 3), of the conversion of the draft decision into a final decision, and of the consequent correction of the tax loss deducted in the 2015 tax year, which Circular Letter is hereby reproduced and reads:
[document content]
q) Form 22 Declaration did not contain, at the time of the facts, a field to identify the year of origin of the tax losses being deducted.
r) On 16.04.2018, the Respondent issued the additional Assessment No. 2018..., of which the Claimant was notified, with a total amount payable of € 9,740.77, cf. Doc. 1 attached with the RAP.
s) The Claimant was notified of the Statement of Account corresponding to the additional Assessment, cf. Doc. 11 attached with the RAP, with a voluntary payment deadline until 30.05.2018.
t) On 30.05.2018, the Claimant proceeded to pay, cf. Doc. 11 attached with the RAP.
u) On 10.07.2018, the Claimant submitted to the CAAD system the Request that gives rise to the present proceedings.
2.2. Unproven Facts
Regarding facts relevant to the decision of the case, there are no facts that have not been proven.
2.3. Substantiation of the Factual Matter
The facts deemed proven were so based on the documents attached with the RAP and on the AP, all documents which are hereby deemed fully reproduced, as well as on the positions expressed by the Parties in the Pleadings.
It falls to the Tribunal to select, from among those alleged by the Parties, the facts that are relevant to the examination and decision of the case (cf. article 16, sub-paragraph e) and article 19 of the LRTA and, furthermore, article 123, paragraph 2 of the TCPP and article 596 of the CPC[1]), encompassing its powers of cognition instrumental facts and facts that complement or specify those which the Parties alleged (cf. articles 13 of the TCPP, 99 of the LGT, 90 of the CPTA and articles 5, paragraph 2 and 411 of the CPC[2]).
3. Preliminary Matters
We shall examine, preliminarily, the regularity of procedural formalism, judicial capacity and representation of the Claimant in court. Only thereafter shall we address the issues to be decided. As follows.
The non-curable nullities in tax proceedings are listed in article 98 of the TCPP, and articles 186 et seq. of the CPC[3] identify nullities cognizable ex officio. Article 577 of the CPC, in turn, establishes that "The following exceptions are dilatory, among others: (…) b) The nullity of the entire proceedings; c) The lack of personality or judicial capacity of any of the parties; (…)". Dilatory exceptions preclude the examination of the merits of the case, and the Tribunal must examine them ex officio in the order identified by the legislator – cf., respectively, articles 578, 576, paragraph 2 and 278[4], all of the CPC.
Beginning, then, with matters concerning the initial petition, form of proceedings and qualification of the procedural means[5].
In accordance with its initial Pleading, although under the heading "CAAD – Administrative Arbitration Centre", the Claimant states that it is making a "Judicial Challenge" in accordance with and for the purposes of the articles of the TCPP and the Corporate Income Tax Code that it identifies[6]. It makes no mention of the LRTA, refers to itself as "Challenger" and directs itself to the "Honorable Judge of Law". At the end of the Pleading, in the last point (point 44.), it thus requests: "And if the Challenger's claim is to be upheld, it requests the same, the payment of compensatory interest due on the amount of tax and compensatory interest paid, (...)". At an earlier moment in the Pleading (point 39.), it expresses itself thus: "It has been demonstrated that legal formalities have been omitted, which immediately invalidate and render null the assessment no. 2018 ... made by the TA."
Let us examine this.
Regarding the possible ineptitude of the initial petition, which if verified would constitute non-curable nullity (cf. article 98, paragraph 1, sub-paragraph a) of the TCPP), article 186, paragraph 1 of the CPC tells us that any proceedings are null when the initial petition is inept. And among the causes of ineptitude - in paragraph 2 - we find (i) the lack or unintelligibility in the indication of the claim or cause of action and (ii) the contradiction between the claim and the cause of action[7].
Regarding the claim, we shall say that, from what we have just transcribed, and notwithstanding some imprecision, it must be understood that it is intelligible, namely, it is a claim for declaration of illegality of the act, reimbursement of amounts paid, and compensatory interest. Particularly since, being we within the scope of representation in court without a judicial representative (cf. article 6 of the TCPP)[8], the normal requirement of formal rigor should be adapted to the situation[9].
The RAP is, thus, to be utilized as it was presented, without need for further formalities. Considering, also, the procedural principles of arbitration in tax matters, in particular the principle of autonomy of the Arbitral Tribunal in the conduct of proceedings and in the determination of rules to be observed in order to obtain a substantive pronouncement within a reasonable timeframe (cf. article 16, sub-paragraph c) of the LRTA).
And between this claim and its respective causes of action (already touched upon in the Report section) there is no contradiction.
Accordingly, no ineptitude of the petition is verified.
We shall, accordingly, consider the Claimant's Pleading as having been regularized by us, corrected to "Request for Arbitral Pronouncement" (instead of "Judicial Challenge"), understand the respective request for constitution of the Arbitral Tribunal as directed to the President of CAAD, as well as the Request for Arbitral Pronouncement as directed to the Arbitrator (and not to the "Honorable Judge of Law")[10].
Regarding the adequacy or non-adequacy of the procedural means to the claim for legal protection formulated by the Claimant (and note the reference it makes in the Pleading to "Judicial Challenge" and, also, to "non-existence of the assessed tax"), an error would only be verified - in the form of proceedings - if we understood that the procedural means used (the Request for Arbitral Pronouncement - "RAP") would not be adequate.
Such error must be assessed by reference to the claim[11], a claim which we cannot fail to interpret as we have[12]. Now, the procedural means used - RAP - is adequate. Indeed, the Arbitral Tribunals functioning under the aegis of CAAD have precisely, among other things, competence to examine the declaration of illegality of acts of tax assessments (cf. article 2, paragraph 1, sub-paragraph a) of the LRTA). Just as it is understood that, as happens with tax tribunals, it falls within their competence to order the reimbursement of amounts unduly paid as a consequence of the impugned act and to order the payment of interest. For the object of tax arbitral proceedings and the object of tax judicial challenge proceedings must be understood to be identical, taking into account the purpose contained in the Legislative Authorization Law on which the LRTA is based[13] to grant the latter the nature of "alternative procedural means to judicial challenge proceedings and to action for recognition of a right or legitimate interest in tax matters"[14].
And the LRTA, by referring (cf. its article 10, paragraph 1, sub-paragraph a)) to article 102 of the TCPP, determines that the request for constitution of the Arbitral Tribunal must be made "(…) by means of a request sent electronically to the president of the Administrative Arbitration Centre (...)" and that the request for constitution of the Tribunal must contain "(…) sub-paragraph c) The identification of the request for arbitral pronouncement, constituting the grounds of this request those provided for in article 99 of the Code of Tax Procedure and Proceedings (...)"[15]. The latter article relating to the process of Judicial Challenge and, specifically, to the possible grounds of the respective claim. Among them being included, precisely, the grounds of the Claimant in the present proceedings.
Well. Both "Judicial Challenge" as a procedural means and "RAP" as a procedural means would be adequate to the claim in this case. The Claimant having submitted its Request in the CAAD system, with the grounds and claim we have seen, and having paid the respective arbitration fee, the procedural means used was the RAP, which is adequate to the claim formulated.
As such, no error in the form of proceedings is verified.
Regarding the judicial capacity and regularity of representation in court of the Claimant.
A..., Lda., which is represented organically by the management[16], has judicial capacity - susceptibility of being a party in court - since, and to the extent that, it has the capacity to exercise tax rights.[17] However, it pleads directly. Let us examine whether it does so in a regular manner. That is, let us examine whether it has tax judicial capacity to be in court by itself, in this case, or whether it holds it only to be in court through a representative.
Pursuant to the combined articles 6, paragraph 1 of the TCPP and 105 of the LGT, the appointment of a lawyer is mandatory in tax judicial proceedings of value exceeding € 10,000.00.[18] Now, the value of the case in the present proceedings being € 9,740.77[19], it must be concluded that the Claimant may be in court by itself, without the need to appoint a representative.
Article 6, paragraph 2 of the TCPP further provides that, in cases where no judicial representative is involved, the signature of the interested party must be accompanied by the indication - by the signatory itself - of the number, date and issuing entity of the respective identification document.
Let us examine this last point. The Claimant obliges itself by the joint signature of its two managers. The Claimant's Pleadings are signed by both managers but without the addition of identification elements. Nevertheless, the Claimant attached to the RAP photocopies of the respective identification documents. Accordingly, no irregularity should be found here either, since the objectives sought by the legislator through this paragraph 2 of article 6 are thus safeguarded.[20]
No procedural irregularities or exceptions that preclude the examination of the merits of the case subsist.
4. Law
4.1. Issues to be Decided
The issues to be decided in the present case are essentially matters of Law, namely:
A) Was there or was there not an omission of legal formalities, specifically: (i) is the notification for the exercise of the right to be heard affected by nullity?, and (ii) is the assessment act in dispute affected by a lack or defect of substantiation?
B) Was the Claimant obliged to observe the rule of chronological precedence in the deduction of tax losses (originating in 2009 and 2010 and deducted over the following years)?
Finally, it will be necessary to decide regarding the reimbursement of amounts paid and compensatory interest.
4.1. A) Omission of Legal Formalities - (i) Is the Notification for the Exercise of the Right to be Heard Affected by Nullity?
The Claimant invokes nullity of the notification for exercise of the right to be heard because the Respondent's Order identified above (cf. proven facts, m)) did not indicate the deadline for the exercise thereof.
The Claimant understands that, although the TA intended to grant it the right to be heard, the notification for that purpose is nonetheless null because it did not indicate the deadline for the exercise thereof.
It states that the only deadline mentioned in the notification is the deadline of 15 days, in the last paragraph of the Order, referring to voluntary correction.
It thus argues that article 60, paragraph 4 of the LGT has been violated.
The Respondent, on the other hand, argues that it follows from the context of the notification in question that the deadline of 15 days for the Taxpayer to voluntarily correct the situation, by correcting the Form 22 Declaration, and the deadline for, instead, pronouncing against such correction, is the same.
Let us examine.
Article 60 of the LGT, under the heading "Principle of participation", in its paragraph 4, provides: "The right to be heard must be exercised within the deadline to be set by the tax administration in registered letter to be sent for that purpose to the taxpayer's tax address".
And, in paragraph 6: "The deadline for exercising orally or in writing the right to be heard is 15 days, and the tax administration may extend this deadline to a maximum of 25 days depending on the complexity of the matter."
It thus happens that the law, despite referring to "deadline to be set", establishes, from the outset, a subsidiarily applicable deadline: paragraph 6 of article 60 of the LGT (above) is clear in the sense that the deadline will be 15 days - unless the TA extends it (to a maximum of 25 days).
From the combined interpretation of those two paragraphs of article 60 of the LGT, it follows that the deadline for the exercise of the right to be heard - should the TA not extend it - will be 15 days.
Until 31 December 2012, differently, the same article 60, paragraph 6 provided that the deadline would be set between 8 and 15 days, in these terms: "The deadline for exercising orally or in writing the right to be heard may not be less than 8 or more than 15 days."
In the current wording (above p. 15), introduced by the 2013 State Budget Law[21], applicable to this case, it thus began to indicate the deadline for implementation of the exercise of this right - "(…) the deadline (…) is (…)"[22]. Without dependence, then, on it being set (by competent authority) between a minimum and a maximum.
In this case, the TA called the Claimant to the tax procedure, as was its duty. What the Claimant does not question.
In the heading ("Subject") of the Order in question, the TA expressly stated "Notification for compliance with the provisions of article 60 of the General Tax Law". Article 60 contains, in a clear manner, and contained in the wording in force at the date of notification, the indication of the deadline for exercise of the right to be heard. The Claimant thus came into possession of the elements necessary to know the deadline it had for that purpose.
The Claimant cannot benefit from ignorance of the law (if that were the case, which is not even alleged).
It must therefore be concluded that the notification is not null. No omission of legal formality is verified by this means.
4.1. A) Omission of Legal Formalities - (ii) Is the Assessment Act in Dispute Affected by Lack or Defect of Substantiation?
The Claimant argues that the TA incurred in a breach of law by not explicitly indicating, in the notification of the assessment act now in dispute (cf. Order in proven facts, p)), which paragraph or paragraphs of article 52 of the CIRC it specifically applied.
That is, in the Claimant's understanding, it is not sufficient for the TA, in order to substantiate its decision, to indicate, as it did, article 52 of the CIRC as being at the basis of the correction it made. The lack of explicit indication by the TA of the paragraphs which, among the several contained in article 52, it specifically applied, taints with nullity the substantiation of the act in dispute.
Let us examine.
Article 77 of the LGT, under the heading "Substantiation and Effect", and to the extent relevant for the present case, provides: "1. The decision of a procedure is always substantiated by means of a brief statement of the reasons of fact and law that motivated it, and the substantiation may consist of a mere declaration of agreement with the grounds of previous opinions, information or proposals, including those that are part of the tax inspection report. 2. The substantiation of tax acts may be carried out in summary form, and must always contain the applicable legal provisions, the qualification and quantification of tax facts and the operations for determining taxable matter and tax."
As provided, in turn, in the TCPP, article 37, paragraph 1: "If the communication of the decision in tax matters does not contain the legally required substantiation, indication of the means of reaction against the notified act or other requirements required by tax laws, the interested party may, within 30 days or within the deadline for appeal, appeal or challenge or other legal means available against this decision, if shorter, request notification of the requirements that have been omitted or passage of a certified copy containing them, free of charge."
Our Constitution also establishes, in its article 268 ("Rights and guarantees of individuals"), paragraph 3, that: "Administrative acts are subject to notification to interested parties, in the form provided by law, and require express and accessible substantiation when they affect rights or legally protected interests."
Now, it results from the combined provisions of the norms we have examined that, on one hand, the Claimant had the possibility of, if it wished, requesting notification of the requirements it understood to have been omitted by the TA, or a certified copy containing them (cf. article 37, paragraph 1 of the TCPP).
On the other hand, regarding the content of what must be understood as legally required substantiation, it becomes clear, from the provisions examined, that the reasons motivating the act must be explained to the recipient. Reasons of fact and law. What is relevant is not the extent (or detail) of that explanation, but rather its clarity and its suitability for comprehension by the recipient. With a view to providing it with the tools necessary to take a founded position on the act and to be in a position to, should it so wish, react against it.
Furthermore, it is generally understood by Legal Doctrine, and uniformly by Case Law, that even in cases where substantiation suffers from some defect, this is to be understood as cured if it is shown that, nonetheless, the objective sought by the legal requirement of substantiation was achieved. That is, if it is shown that the recipient correctly understood the reasons underlying the decision, that it was clear to it the cognitive and evaluative path followed by the TA in deciding as it did.[23]
Returning to the case, the TA expressly referred, in its decision, alongside article 52 of the CIRC ("Deduction of tax losses"), to the reasons that motivated it. As stated in the respective Order, regarding the lack of correspondence that gave rise to the correction: "(…) The amount of tax loss deducted under article 52 of the Corporate Income Tax Code, shown in form 22 declaration for the period of 2015, does not correspond to the elements contained in the database of the Tax and Customs Authority (since they include tax losses determined in 2010, which are deductible until the fourth subsequent tax period, that is, until the period of 2014) (...)" (cf. Order in proven facts, p)).
On the other hand, the Claimant clearly demonstrates, throughout its exposition, knowledge of the reasons underlying the correction. That is, the Claimant shows that it knows that the TA understands - and for that reason proceeded with the correction - that the tax losses remaining to be deducted are those determined in 2010 and that, given that we were then already in the 2015 tax year, those losses could no longer be deducted, because the deadline for carry-forward applicable to them under the law had been exceeded. This deadline is four years, cf. article 52, paragraph 1 of the CIRC in the applicable wording.
The Claimant does not question that losses generated in 2010, and reported by it, could only be deducted until the fourth subsequent year (inclusive), that is, at the latest in the 2015 tax year. On the contrary. Recognizing this, the Claimant comes to state in the proceedings that what happened was that, knowing that losses generated in 2010 could only be deducted until 2014, and yet having still to deduce losses generated in 2009 (whose permitted deduction period is longer, namely six years, instead of four), it began by deducting not the latter (from 2009) but those losses (generated in 2010). And that, thus, in the 2015 tax year, the losses it was deducting (cf. Form 22 Declaration) were losses from 2009.
That is, and for what is relevant in this issue to be decided, the Claimant demonstrates having fully understood the reasons of fact and law underlying the TA's decision to proceed with the additional Assessment that it now brings in dispute.
It thus revealed perfect knowledge, among other things, of the legal provisions that led the TA to decide as it did.
For all the foregoing, no lack of substantiation of the act is verified by this means.
The Claimant then invokes, still as a defect of substantiation, the fact that the TA referred to losses after correction as "adjusted tax loss" (cf. Order in proven facts, p)). Arguing that from this expression results "confusion" and that it reflects lack of clarity in the factual substantiation. Thereby verifying, once again, it argues, an omission of legal formalities.
According to its exposition, it raises the question of whether the "adjusted tax loss" of € 6,833.82 diminishes, in the respective amount, the "declared tax loss" of € 49,209.81 (i.e., whether the former is still an amount to be deducted from the latter, so as then to determine the tax loss to be ultimately considered), or whether, differently, the "declared tax loss" is to be replaced by the "adjusted tax loss".
We shall say only that the confusion, should it exist, on the part of the Claimant, is not created by the expression used by the TA. Indeed, the expression "adjusted tax loss" is used there, in a table, in contrast to the expression "declared tax loss". Contextualized, as it was, no confusion follows from it regarding the respective meaning. Not even for a non-accountant. Nor does it seem to us that it could follow from the expression alone.
Furthermore - should doubts remain - the Claimant could always (i) have been clarified by its respective accountant and (ii) once again have made use of the mechanism provided by the legislator in article 37, paragraph 1 of the TCPP (cf. above, pp. 17-18).
For all the foregoing, equally by this means no defect of substantiation is verified.
4.1. B) Was the Claimant Obliged to Observe the Rule of Chronological Precedence in the Deduction of Tax Losses (Originating in 2009 and 2010 and Deducted Over the Following Years)?
According to the Claimant, the Assessment act in dispute is affected by an error of law because it alleges that the TA incorrectly applied the law (article 52 of the CIRC) by considering the rule of deduction of tax losses (hereinafter also "TL") by order of chronological precedence/seniority to be applicable.
At the origin of the additional Assessment in dispute, we have the correction by the TA of a TL deduction. Deduction processed by the Taxpayer in the 2015 tax year.
We have already seen, throughout this decision, that, in summary, Claimant and Respondent disagree regarding the legal rules applicable to that deduction.
The Claimant understands that, to TL determined in 2009 and 2010 (and until the entry into force of paragraph 15 of article 52), the rule of use by order of chronological precedence in deduction against taxable profit in the following years does not apply.
The Respondent has the opposite position, arguing that the rule of use by order of chronological precedence should be understood to apply to this case. Hence its decision to correct the TL deducted by the Claimant in Form 22 Declaration of the 2015 tax year, with the consequent additional Assessment in dispute here.
It should be noted that the rule in question, which is based on an ordering criterion commonly referred to as "First In First Out" ("FIFO", and hereinafter also so here), when referring to TL, translates the obligation for the first losses to be determined to also be the first losses to be deducted.
It thus requires deduction in the first place of losses determined long ago. And always by that same order. That is, always thus successively throughout the maximum period of deduction permissible for the TL in question, while any remain to be deducted.[24]
It should also be noted from the outset that, as the Claimant states, such rule did not appear expressly in article 52 of the CIRC until the legislative amendment made by Law no. 2/2014, of 16 January, which reformed the Corporate Income Tax and, among other amendments to article 52, added thereto a paragraph 15, with the following wording: "For the purposes of paragraph 1, losses determined long ago must be deducted in the 1st place."
From this the Claimant derives the non-applicability of such rule before the entry into force of this paragraph 15[25]. And, thus, arguing for its non-application to this case.
As it exposes, it will have proceeded, in accordance with this, to deduct the losses determined second in place first. That is, it will have deducted the TL determined in 2010 first, and only after these were exhausted will it have begun the deduction of TL determined in 2009. Which means, as we shall see further ahead, that it would have begun the deduction of TL from 2010 in the immediately following year, 2011, and continued the respective deduction in the 2012 and 2013 tax years. Only in the latter year (2013) having begun the deduction of TL from 2009.
The Respondent, on the other hand, argues that the FIFO rule has always applied in the matter of TL. That the same is a consequence, among other things, of the principle of specialization of tax years, and that a different understanding would grant the Taxpayer a margin of tax management that contradicts the principle of legality.
Examining.
Under the presupposition (which is that of the Claimant) of the non-applicability of the FIFO rule, losses from 2010 could have been deducted first (i.e., immediately in 2011 and in the following years), leaving losses from 2009 to be deducted after full deduction of the former. Adding to this that losses from 2009 could, indeed, still be deducted in 2015.
And this because, by virtue of successive legislative amendments made to the permissible deadline for deduction of TL, while losses determined in 2010 are subject to a maximum deduction deadline of four years, those determined in 2009 are subject to an applicable deadline of six years. Let us examine.
In 2009, regarding this, the CIRC provided, in its article 47, paragraph 1, as follows: "The tax losses determined in any given year, according to the previous provisions, are deducted against taxable profits, if any, from one or more of the six subsequent years."
This wording (of article 47, paragraph 1) was amended by the 2010 State Budget Law[26], with article 52, paragraph 1 (corresponding to the previous article 47, paragraph 1) now providing: "The tax losses determined in any given year, according to the previous provisions, are deducted against taxable profits, if any, from one or more of the four subsequent years."
That is, the legislator came to reduce the period during which it permits the Taxpayer to deduct tax losses, determined during a given year, in the years following that year. Deduction came to be permitted for the period, maximum, no longer of six, but of four subsequent years following the "source" year of the losses. And the deadline in force in the year in which the losses were generated applies for this purpose.
The maximum deadlines for deduction, in our case, are thus as follows (cf. e) and f) of proven facts):
- losses from 2009 - € 143,253.70 - six years - that is, until 2015 (inclusive).
- losses from 2010 - € 42,375.99 - four years – that is, until 2014 (inclusive).
Making it concrete.
In the 2009 tax year, the Claimant, not presenting at that time any accumulated tax losses, determined tax losses in the amount of € 143,253.70. And in the following year, 2010, the Claimant, then with accumulated tax losses in that amount of € 143,253.70, determined tax losses in the amount of € 42,375.99.
Thus, in the 2011 tax year, the Claimant presented an accumulated value of tax losses of 185,629.69 (one hundred and eighty-five thousand, six hundred and twenty-nine euros and sixty-nine cents): € 143,253.70 (from 2009) + € 42,375.99 (from 2010).
In that same 2011 tax year and in the following years, having determined taxable profits, it proceeded to the deduction of TL from 2009 and 2010. As follows:
In the 2011 tax year, it began the deduction of accumulated TL by deducting the amount of € 6,196.28. Thus, it was left with TL to be deducted in the amount of € 179,433.41 (one hundred and seventy-nine thousand, four hundred and thirty-three euros and forty-one cents).
In the 2012 tax year, it deducted TL in the amount of € 1,453.67. It was left with TL to be deducted in the amount of € 177,979.74.
In the 2013 tax year, it deducted TL in the amount of € 69,141.75. It was left with TL to be deducted in the amount of € 108,837.99.
In total, it deducted, until then, TL in the total amount of € 76,791.70 (= € 6,196.28 + € 1,453.67 + € 69,141.75).
In the 2014 tax year, it deducted TL in the amount of € 59,628.18. It was left with TL to be deducted in the amount of € 49,209.81.
In total, it deducted, until then, TL in the amount of € 136,419.88 (= € 6,196.28 + € 1,453.67 + € 69,141.75 + € 59,628.18).
In the 2015 tax year, it deducted the remaining TL, in the amount of € 49,209.81.
Comparing this latter amount with the amounts of TL initially determined, we shall conclude, depending on whether or not we understand the FIFO rule to be applicable:
I. Should the FIFO rule be understood to be applicable
That in the last amount deducted by the Claimant in 2015, of € 49,209.81, are included:
(i) the remaining amount of TL determined in 2009, i.e., € 6,833.82 [€ 185,629.69 (total TL of 2009) - € 136,419.88 (total deducted until 2014 inclusive)]; plus
(ii) TL determined in 2010 in their entirety, i.e., € 42,375.99.
That is, that the deduction made by the Claimant in 2015 corresponds to the sum of remaining TL from 2009 (€ 6,833.82) with total TL from 2010 (€ 42,375.99).
Which, combined with the maximum deduction deadlines applicable (cf. above, p. 23), leads us to conclude that only the part of this deduction corresponding to TL from 2009 could, still, be made in the 2015 tax year. I.e., that only the amount of € 6,833.82 was capable of deduction. Which was what led to the correction made by the Respondent.
II. Should the FIFO rule be understood not to be applicable
That it would be admissible to allow full deduction. The Claimant would have, in this case, deducted TL from 2010 first, and exhausted the respective deduction in the 2013 tax year. Thus leaving it with in 2015, only TL from 2009 to be deducted.
The deductions made by it through 2013 (inclusive), in the total amount of € 76,791.70, had already entirely consumed TL from 2010 (€ 42,375.99). And given that the FIFO rule came into force (as the Claimant understands) only at the time of the addition of paragraph 15, in 2014, there would no longer be anything remaining to be deducted by that date save TL from 2009. Whereby the rule would not come to apply.
Note that, as the Claimant well states, Form 22 Declaration at that time did not contain, in the respective table (Table 9), a field to identify the source year of the TL being deducted. Which, it should be said, would have enabled the Claimant to deduce TL from 2010 first without it being evident in the Declaration.
Let us, then, examine whether, before Law no. 2/2014 (i.e., before the addition of paragraph 15 of article 52), the FIFO rule was already in force.
We may state in advance that, consistently, Legal Doctrine and Case Law were unanimous in considering that the FIFO rule applied in the matter of TL carry-forward.
Beginning with Legal Doctrine, this was already the case at the time of the TL carry-forward regime under the Industrial Contribution Code[27]. And, thereafter, the same from the entry into force of the CIRC, to which the regime was transposed. With reference to that first moment, cf. FERREIRA, Rogério Fernandes: "(…) The deductions of losses are made from the most remote year forward and deductions shall only be accepted within the three years following."[28]
Under the force of the CIRC, cf., among all, MORAIS, Rui Duarte: "(…) Hence, article 47, paragraph 1, enshrines the principle of deduction of tax losses (carry-forward of losses): the negative (tax) result of a given year may be subtracted from the taxable profit of the following year or years, up to a maximum of six. / That is, if the loss of a certain year may be offset by the profit of the following period, the "offset" will be made entirely in that year. If not, in the course of the subsequent years, within the said time limit, after which losses still not "offset" may no longer be deducted."[29]
Or, still, PEREIRA, M. H. de Freitas: "(…) On the other hand, given there are losses from several years to be carried forward, it is natural – and is in accordance with the law – that deduction be made starting with those that occurred long ago, transferring to the immediately following years, by chronological order of occurrence, losses that cannot be deducted due to insufficient taxable profit. All, however, within the limit of the five years following the year in which the loss occurred."[30]
In Case Law, among others, cf. the Supreme Administrative Court Decision of 16/12/2015 in proc. 1184/14-30, in which the factual situation relates to TL generated in 2004:"(…) The provision of article 47, paragraph 1 of the CIRC, referred to above, does not grant the taxpayer any discretion in choosing the moment in which it will proceed to deduction. It is certain that the deduction of tax losses may occur in one of the six subsequent years, but such deduction must occur immediately in the following year from when taxable profits exist to which such losses may be deducted. If the loss to be deducted exceeds taxable profit, the part by which it exceeds may be deducted in the following year and so successively, with the limit of 6 years following that in which the tax loss occurred. (…) Thus, without prejudice to the prominence that in the income tax on collective persons has assumed the principle of specialization of tax years, with the establishment of annual periods of result determination for tax purposes and definition of which year is to be imputed a certain fact or legal relationship or economic relationship that has elements of connection with various tax years, it is long established that the law has been accepting more flexible criteria for temporal imputation in result determination and permitting the offset of losses in subsequent years that show positive results. But nothing permits concluding, as the applicant claims, that the legislator accepts that it be the taxpayer, following exclusively its interest, that defines when it will proceed to the deduction of a tax loss, as if it could "keep it in reserve" for use in one of the six subsequent years. The letter of the law points to it being only the non-existence of taxable profit that permits the non-deduction of a tax loss in the immediately following year, excluding any other reason for such non-deduction(…)." And, in crystalline form, in the Dissenting Opinion[31], Counselor Dulce Neto, in this same Decision: "(…) it must be taken into account that both doctrine and case law consider that deduction must be effected as rapidly as possible, not being in its discretion the choice of years in which carry-forward is made and that this becomes obligatory from the moment the company shows profit, it being necessary, however, in the case of losses from various years to be carried forward, deduction be carried out in obedience to a chronological order of seniority;(...)" (the underlining is by the author of the Opinion).
And the unanimity we have just referred to is not surprising. Indeed, we cannot fail to understand the TL carry-forward regime in the light of the principles enshrined in our income taxation system on Corporate Income Tax.
A systematic interpretation, the consideration of the principles that govern the taxation of income on companies, especially the principle of taxation on real profit[32] and, likewise, the principle of taxpaying capacity, in its manifestation of taxation of real income, point in the direction of carry-forward of TL by order of precedence.
In the same direction, pointing to deduction of TL as rapidly as possible after its respective determination, are the objectives of bringing taxation as close as possible to the economic and accounting reality of companies.
In this context, despite recourse being made to the fiction of periodization of tax years, for reasons of a practical and fiscal revenue nature, given that business life is continuous, this division into periods, so as to determine a result in each, must be brought close to reality. As stated in the Preamble of the CIRC, point 7., "(…) The periodization of profit is the source of other complex problems, the principal one being related to the fact that each year is independent of the others for tax purposes. This independence is, however, attenuated through certain rules for determining taxable matter, especially through carry-forward of losses."
The principle of solidarity among tax years thus attenuates the fictitious independence between them, thus allowing greater approximation to taxation on real profit and taxpaying capacity. Being TL the consequence of, in a given year, costs having exceeded revenues, it must be permitted for them to be carried over among tax years so that the tax respects the effective taxpaying capacity of taxpayers, translates into a taxation on real effective income. And – and in the framework of accretion income taxation[33] – taxpaying capacity should be assessed at a determined moment. The moment in which income is net.
Hence, the greater the temporal approximation between the carry-forward and the moment in which the losses had been generated, the greater, tendentially, will be the approximation to the taxpaying capacity of the Taxpayer.
Cf. Decision of the Supreme Administrative Court of 12/17/2014, proc. 0612/14: "(…) For this purpose, according to legal terms, profits and costs must be determined, applicant, "the difference between the values of net assets at the end and at the beginning of the taxation period", since that is but a resultant of these.
As are equally losses.
Indeed, from the consideration of profits and costs results profits or losses (not here considering the neutral hypothesis of zero result). And this, both in the respective year and, as it regards losses, as to those mentioned in article 46. Thus, in order to obtain profit, profits must be greater than costs. However, losses referred to in article 46 are but costs from prior years, lacking corresponding revenues.
Having, then, to be considered them in parity with costs of the year.
And we must therefore diminish against the taxable profit of the year, losses provided in article 46 - be it, carry out the so-called carry-forward of losses - article 15, paragraph 1, sub-paragraph a) - since, as stated, they are on the same level as costs of the year.(...)"
"(…) Therefore, it is the identity of costs relative to all years that permits the existence of carry-forward of losses, achieving thereby greater equity of tax borne by companies, but which shall only be achieved if such losses are deducted immediately and mandatorily in the first year in which profits arise.
And this understanding already existed under the force of the ICC, it could not be otherwise, that the Director-General of Contributions and Taxes, regarding the deduction of losses and tax benefits, communicated a Service Order, with reference to articles 43, 44 and 45 of the ICC, via Circular Letter C-3/82, of 30/03/1982, to the effect that the deduction of losses and tax benefits should obey the order indicated in Table 25 of the form 2 declaration, so that losses be deducted in the year immediately following that to which they relate, only transitioning to the following ones, due to lack or insufficiency of taxable matter, the part of such losses that cannot be deducted in the previous year. (...)"
Having arrived here, let it be said finally that, as the Respondent exposes, its understanding had also been made public from early on to the effect of the application of the FIFO rule to carry-forward of TL. In similarity to what was made public in the Circular Letter indicated in the last Decision we have just referred to, and as the Respondent mentions, also Circular Letter 000009/97, SAIR and, likewise, the Binding Ruling in proceeding 962/2008, were always clear in the same sense of deduction of TL "by chronological order of seniority and respecting the time limit defined legally" (cf. this latter Ruling).
The Claimant comes to argue that no binding force, other than internal, can be recognized for such Circular Letters and Rulings.
Let us examine.
Pursuant to article 68-A, paragraph 1, of the LGT: "The tax administration is bound by generic orientations of circulars, regulations or instruments of similar nature, regardless of their form of communication, aiming at the uniformization of interpretation and application of tax norms."
Regarding binding rulings, in turn, article 68, paragraph 14, of the same Legal Instrument provides that "The tax administration, regarding the object of the request, may not subsequently proceed in a manner different from the ruling given, except in compliance with a judicial decision", and its article 68-A, paragraph 3: "The tax administration must proceed to the conversion of binding rulings or another type of understanding provided to taxpayers into administrative circulars, when a question of relevant law has been raised and this has been appreciated in the same sense in three requests for information or it is foreseeable that it will be."
In the TCPP, article 55, paragraph 2 provides that "Only the generic orientations issued by the entities referred to in the preceding paragraph bind the tax administration."
Well. We are referring to generic orientations emanated by the TA (whatever their form) that fall within the scope of the principle/duty of cooperation that could not but be incumbent on it[34], and which, among other things, publicly reveal its interpretation of the tax norms.
As is plain to see, in view of the complexity of tax legislation, it is reasonable, and desirable, both for respective officials and for individuals, and ultimately to contribute to the uniformization of procedures and uniform application of tax law, that the TA reveal the interpretation it makes of the text of the law. Which it should do in obedience to the principles of pursuit of public interest, in respect for rights and legitimate interests of citizens and according to applicable rules of interpretation of the law.
Constituting no source of law, being thus binding only internally, it must still be recognized that they produce effects that are not negligible also externally. In truth, with the TA self-bound by them, it becomes known to taxpayers the understanding, the interpretation that the TA is obliged to follow of the norms in question. The TA becomes, by this means, bound before taxpayers.
It thus cannot fail to be relevant for decision in our case, also and beyond all else that is stated, the existence, always consistent since then, of interpretative orientations of the Respondent that clarified taxpayers its understanding regarding TL carry-forward.
Finally, let it be said further, on the one hand, that it is not without significance, in being consistent with the same understanding, the fact that Law no. 2/2014, which introduces the Corporate Income Tax reform and which amends various paragraphs of article 52, does not contain, in its transitional provisions (cf. article 12 of Law no. 2/2014), reference to paragraph 15. By contrast with amendments in paragraphs 1, 2 and 4, in which the production of effects is delimited for TL determined on or after 1 January 2014.
And, on the other hand, that it is equally not without coherence with all that precedes that Form 22 Declaration did not contain space destined to indicate the source year of the TL that the Taxpayer deducts. This can only be understood as coherent with the obligation that fell on Taxpayers to follow the order of precedence in carry-forward.
In preparation of the decision, we state that the FIFO rule always applied in the matter of TL carry-forward from the time the regime was created in the ICC and then with its transposition in the CIRC, as thus remained at the date of the facts in the case. The Claimant could not, then, choose as it found most convenient the order of deduction of TL. It was obliged to deduce in the first place the TL determined long ago, i.e. the TL from 2009. And only thereafter those from 2010.
With the consequence, cf. above, that in 2015 there were still to be deducted in their entirety the TL from 2010 but could only be deducted the TL from 2009. Being the remaining amount of these latter then of € 6,833.82. And thus the correction made by the Respondent, at the base of the Assessment act brought in dispute by the Claimant, being in accordance with the law. The same occurring with the Assessment act.
5. Reimbursement of Amounts Paid and Compensatory Interest
It follows from the foregoing that there is no verification of any of the defects imputed by the Claimant to the Assessment brought in dispute. There is no need to annul the Assessment, whereby there was no unduly paid amount.
Thus, the prerequisites for success are not met, either of the request for reimbursement of amounts unduly paid, or of the request for compensatory interest (cf. article 43, paragraph 1 of the LGT), which are dismissed.
6. Decision
Accordingly, this Arbitral Tribunal decides to judge the Request for Arbitral Pronouncement totally dismissed, and thus:
a) Judge the request for annulment of the additional Assessment and Statement of Interest Assessment better identified in the proceedings and relating to the 2015 tax year as dismissed;
b) Judge the requests for return of amounts paid and compensatory interest as dismissed;
c) Absolve the Respondent from the requests.
6. Value of the Case
Pursuant to the combined provisions of articles 3, paragraph 2 of the Regulations of Costs in Tax Arbitration Proceedings, 97-A, paragraph 1, sub-paragraph a) of the TCPP, and 306, paragraph 2 of the CPC, the value of the case is fixed at € 9,740.77.
7. Costs
As provided in article 22, paragraph 4 of the LRTA, article 4, paragraph 4 of the aforementioned Regulation and Table I attached hereto, the amount of costs is fixed at € 918.00, to be borne by the Claimant.
Lisbon, 21 December 2018
The Arbitrator
(Sofia Ricardo Borges)
[1] These latter Legal Instruments applicable to our case by virtue of article 29, paragraph 1 of the LRTA (and thus whenever they are referred to in this Decision).
[2] All Legal Instruments applicable by virtue of article 29, paragraph 1 of the LRTA (and thus whenever any of them is referred to in this Decision).
[3] Whose regime is subsidiarily applicable.
[4] Article 278 - Cases of absolution from the instance
1 - The judge must refrain from examining the claim and absolve the respondent from the instance: a) When it judges the exception of absolute incompetence of the tribunal as well-founded; b) When it annuls the entire proceedings; c) When it understands that any of the parties is devoid of legal personality or that, being incapable, is not duly represented or authorized; d) When it considers any of the parties illegitimate; e) When it judges any other dilatory exception as well-founded. / 2 - (…). / 3 - (…)."
[5] Cf., in this regard, article 98, paragraphs 4 and 5 of the TCPP and articles 186, 193, 196 and 200, paragraph 2 of the CPC.
[6] (Articles 137, paragraph 1 of the CIRC, article 102, paragraph 1, sub-paragraph a) of the TCPP and articles 97, paragraph 1, sub-paragraph a) and 99 of the TCPP).
[7] (as well as the cumulation of causes of action or substantively incompatible claims).
[8] Which we shall examine further ahead.
[9] Cf. SOUSA, Jorge Lopes de, "Code of Tax Procedure and Proceedings", 6th Edition, 2011, Vol. I, p. 88, note 5.
[10] Cf. article 19 of the TCPP and article 193, paragraph 3, of the CPC.
[11] (The cause of action being able to assist in the interpretation thereof).
[12] In this regard, Case Law from our Superior Courts may be seen, among many others, Supreme Administrative Court Decisions of 10/12/2016, proc. 0425/16 and of 05/11/2016, proc. 034/14.
[13] Law no. 3-B/2010, of 28.04.2010.
[14] Article 124, paragraph 2 of Law no. 3-B/2010.
[15] Cf. LRTA, article 10, paragraph 1, sub-paragraph a) and paragraph 2.
[16] Cf. articles 25, paragraph 1 of the CPC and 260, paragraph 1 of the Code of Commercial Companies.
[17] Cf. article 8-A, paragraphs 1 and 2 of the CPTA and article 3, paragraph 2 of the TCPP.
[18] (and in proceedings under the jurisdiction of Superior Courts).
[19] Cf. article 97-A, paragraph 1, sub-paragraph a) of the TCPP.
[20] Cf. Supreme Administrative Court Decision of 28.01.2004, proc. 1195/03: "If the respondent attached to the petition a photocopy of the identity card and other documents which the same respondent had signed and the signature of these is similar to that contained in the opposition petition, the purpose of article 6, paragraph 2 of the TCPP was achieved, which is to confirm the signature contained in the opposition petition in comparison with that contained in the identity card or equivalent document to which that normative precept refers." - Summary in Jorge Lopes de Sousa, op. cit., p. 99.
[21] Law no. 66-B/2012, of 31 December.
[22] In this regard, reference may be made to: [coordination] PIRES, José Maria Fernandes, "General Tax Law: Commented and Annotated", Almedina, 2015, p. 619, note 15.
[23] Cf., among all, CAMPOS, Diogo Leite de, RODRIGUES, Benjamim Silva and SOUSA, Jorge Lopes de, "General Tax Law: Annotated and Commented", Encounter of Writing, 4th Ed., 2012, pp. 674-675.
[24] Cf. also paragraph 2 of article 52.
[25] Cf. article 14 of Law no. 2/2014: "(…) this law applies to taxation periods that begin, or to tax facts that occur, on or after 1 January 2014".
[26] Law no. 3-B/2010, of 28 April.
[27] Article 43 of the ICC provided, under the heading "Solidarity of tax years": "Losses verified in a given year shall be deducted against taxable profits, if any, from one or more of the three subsequent years."
[28] FERREIRA, Rogério Fernandes, "The Taxation of Real Profit", 2nd Ed., Petrony Bookstore, Lisbon, 1972, p. 223.
[29] MORAIS, Rui Duarte, "Notes on the Income Tax on Collective Persons", Almedina, Coimbra, 2007, p. 165.
[30] PEREIRA, M. H. de Freitas, "Legal Regime of Carry-forward of Losses – Fundamental Principles", in "Studies in Tribute to Dr. Maria de Lourdes Órfão de Matos Correia e Vale", Cadernos de Ciência e Técnica Fiscal (171), Center for Tax Studies, DGCI, Lisbon, 1995, p. 226.
[31] (essentially for reasons relating to the competence of the Supreme Administrative Court, knowledge of factual matter and pending of preliminary ruling)
[32] Cf. article 104, paragraph 2 of the CRP.
[33] Cf. article 3, paragraph 2 of the CIRC.
[34] Cf. article 59 of the LGT.
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