Process: 372/2016-T

Date: October 27, 2016

Tax Type: Selo

Source: Original CAAD Decision

Summary

This CAAD arbitration decision (Process 372/2016-T) addresses the procedural aspects of withdrawing from stamp tax arbitration proceedings in Portugal. The case involved A…, S.A., which initially challenged four Stamp Duty assessment acts totaling €1,217,837.73, seeking their annulment and compensatory interest for providing a bank guarantee. After the arbitral tribunal was constituted on September 21, 2016, and the Tax Administration was notified to respond on October 7, 2016, the Applicant exercised its right to withdraw from the proceedings on October 18, 2016—before the Tax Authority filed its response. The arbitral tribunal applied Article 286(1) of the Portuguese Code of Civil Procedure (CPC), which governs tax arbitration through Article 29(1)(e) of the Legal System of Arbitration in Tax Matters (RJAT). The tribunal held that withdrawal from proceedings is a unilateral procedural right that does not require acceptance or consent from the opposing party, provided it is exercised by someone with proper legal authority. The Applicant's counsel had the necessary powers of attorney, making the withdrawal procedurally valid. Following Articles 290(1) and (3) and 537(1) of the CPC, the tribunal homologated the withdrawal and declared the proceedings extinct. Regarding costs, the decision established that the withdrawing party bears the arbitration costs, which were computed at €16,524.00 according to Table I of the Regulation of Costs in Tax Arbitration Proceedings. This case demonstrates that Portuguese tax law allows claimants significant procedural flexibility to withdraw from arbitration even after proceedings have advanced, including after the tax authority has been notified. However, this flexibility comes with financial consequences, as the withdrawing party must bear all arbitration costs incurred up to the point of withdrawal, regardless of the stage of proceedings.

Full Decision

ARBITRAL DECISION

A…, S.A., with the NIF … and registered office in Lisbon, came, on 6 July 2016, to request the constitution of an arbitral tribunal, with a view to the annulment of four Stamp Duty assessment acts, which it identified, and which were carried out following an inspection procedure, pointing out substantial defects of violation of law.

It further requested the condemnation of the Tax and Customs Administration to pay compensatory interest which it considers to be owed to it for the provision of bank guarantee.

Having not designated an arbitrator, the signatories were appointed by the Deontological Council of the CAAD. The appointment having been accepted and without the parties having raised any objection, the arbitral tribunal was constituted on 21 September 2016.

The Tax Administration having been notified to respond on 7 October 2016, the Applicant came, on the 18th following – still within the time limit for response, and without the latter having come to the proceedings – with a motion, subscribed by its Illustrious Counsel, to withdraw from the instance.

Such withdrawal is valid, not requiring acceptance by the opposing party, (article 286º no. 1 of the Code of Civil Procedure, applicable by force of article 29º no. 1 paragraph e) of the Legal System of Arbitration in Tax Matters) and was presented by one who has the necessary powers, as shown by the power of attorney attached to the proceedings with the initial request.

Thus, and given the provisions of articles 290º nos. 1 and 3 and 537º no. 1 of the Code of Civil Procedure, the withdrawal from the instance is homologated, which is declared extinct.

The value of the case is fixed at €1,217,837.73, and the costs, which are borne by the Applicant, for being the withdrawing party, are computed at €16,524.00, in accordance with Table I attached to the Regulation of Costs in Tax Arbitration Proceedings.

Let it be notified.

Lisbon, 27 October 2016

José Baeta de Queiroz

Nuno Cunha Rodrigues

Maria Cristina Aragão Seia

(Document prepared by computer, in accordance with article 138º, no. 5, of the Code of Civil Procedure, applicable by reference of article 29º, no. 1, paragraph e), of the Legal System of Arbitration in Tax Matters, with blank lines and revised by us, and respecting the former spelling).

Frequently Asked Questions

Automatically Created

What happens when a claimant withdraws from tax arbitration proceedings at CAAD?
When a claimant withdraws from CAAD tax arbitration proceedings, the tribunal homologates (approves) the withdrawal and declares the proceedings extinct. The withdrawal terminates the arbitration case entirely, and no decision is rendered on the merits of the tax dispute. According to Articles 290 and 537 of the Portuguese Code of Civil Procedure, which apply to tax arbitration, the proceedings are closed, and the withdrawing party must bear all arbitration costs incurred up to that point.
Is acceptance by the tax authority required for a valid withdrawal of proceedings in Portuguese tax arbitration?
No, acceptance by the tax authority is not required for a valid withdrawal from Portuguese tax arbitration proceedings. Article 286(1) of the Code of Civil Procedure, applicable to tax arbitration through Article 29(1)(e) of the Legal System of Arbitration in Tax Matters, establishes that withdrawal is a unilateral procedural right. The claimant can withdraw without the consent or acceptance of the Tax and Customs Administration, provided the withdrawal is presented by someone with proper legal authority, such as legal counsel with valid powers of attorney.
What are the cost implications of withdrawing from a stamp tax arbitration case in Portugal?
The cost implications of withdrawing from a stamp tax arbitration case in Portugal are significant. The withdrawing party bears all arbitration costs, calculated according to Table I of the Regulation of Costs in Tax Arbitration Proceedings based on the case value. In this decision, with a case value of €1,217,837.73, the costs amounted to €16,524.00. These costs are entirely borne by the Applicant regardless of when the withdrawal occurs or the potential merits of the underlying tax dispute.
How does Article 286 of the Portuguese Civil Procedure Code apply to tax arbitration withdrawals?
Article 286 of the Portuguese Civil Procedure Code establishes the framework for withdrawal from proceedings in tax arbitration cases. It is incorporated into tax arbitration through Article 29(1)(e) of the Legal System of Arbitration in Tax Matters. Article 286(1) provides that withdrawal from proceedings is valid without requiring acceptance by the opposing party, making it a unilateral procedural right. This means taxpayers can withdraw from CAAD arbitration at their discretion, though they must have proper legal representation and bear the associated costs under Article 290.
Can a claimant withdraw from CAAD proceedings after the tax authority has been notified to respond?
Yes, a claimant can withdraw from CAAD proceedings after the tax authority has been notified to respond. In this case, the Applicant withdrew on October 18, 2016, after the Tax Administration had been notified to respond on October 7, 2016, but before the Tax Authority actually filed its response. The withdrawal was valid and homologated by the tribunal. The timing shows that withdrawal is permitted even after the proceedings have advanced beyond the initial filing stage, though the withdrawing party still bears all costs incurred.