Summary
Full Decision
ARBITRAL DECISION
The arbitrators Dr. José Pedro de Carvalho (arbitrator president), Dr. Rui Ferreira Rodrigues and Dr.ª Mariana Vargas (arbitrators members), appointed by the Deontological Council of the Centre for Administrative Arbitration to form the Collective Arbitral Tribunal, constituted on 29 August 2017, agree as follows:
REPORT
On 20 June 2017, A…, SA, with tax identification number … and registered at Rua …, no.…, …-…, Amadora (hereinafter referred to as the Applicant), pursuant to the combined provisions of Articles 95 of the General Tax Law, 99, paragraph a), of the Code of Tax Procedure and Process, 2, no. 1, paragraph a) and 10, of Decree-Law no. 10/2011, of 20 January, which approved the Legal Framework for Arbitration in Tax Matters (RJAT), filed a request for the constitution of an Arbitral Tribunal, with the Tax and Customs Authority (hereinafter AT or Respondent) as the respondent, with a view to the declaration of illegality and consequent partial annulment of tax assessment no.…, relating to withholding of personal income tax (IRS) for the year 2014, in the amount of € 92,388.00 and the extraordinary surcharge, of the sum of € 5,577.00, following the implicit dismissal of the administrative claim filed on 20 January 2017.
The Applicant further requests the restitution of amounts unduly paid, together with the respective compensatory interest.
Summary of the Positions of the Parties
Of the Applicant:
As grounds for the request for annulment of the IRS assessment and extraordinary surcharge relating to withholding at source on employment income for the month of October 2014, the Applicant invokes the following:
- The withholding guides no.s … and …, submitted on 17-10-2014 and 18-11-2014, respectively, relating to income for the months of September and October 2014, were issued in error;
- The guide no. … includes withholding of IRS, of the amount of € 92,388.00 and extraordinary surcharge of the amount of € 5,577.00, relating to dependent employment income for the month of October 2014 which, due to financial difficulties, were not made available to the respective beneficiaries, the declared tax not being due;
- Upon discovering the error made, the guides no.s … and … were replaced by guide no. …, submitted on 20-01-2015, which gave rise to the tax assessment whose partial annulment is petitioned;
- This replacement guide includes the amount of € 158,726.00 of IRS withholding and € 9,562.00 of extraordinary surcharge, relating to remuneration for the months of September and October 2014, partially paid in the months to which they relate and, on the other part, in December 2014;
- However, the replaced guides (relating to remuneration for the months of September and October 2014) were not annulled, giving rise to duplicate payment of withholding for October 2014 on 7 July 2016: guide no.…, in the tax enforcement process no. …2014… and guide no.…, whose partial annulment is requested, in the tax enforcement process no. …2015…;
- The remaining amount of payment guide no.…, relating to withholding for the month of September 2014, in the amount of € 70,413.00, which constituted a duplication of amounts declared in guide no.…, of 17-10-2014, was annulled within the scope of the arbitral process no. 702/2015-T;
- Notwithstanding that salary processing and respective payments are properly accounted for, the amount of withheld IRS having been transferred from account 2421 – IRS payable, to account 2722924 – IRS withholding on remuneration in arrears, which reflects the truth of the facts, the AT continues to refuse the partial annulment of guide no. …;
- Such refusal, with guide no.… being fully paid, in the tax enforcement process no. …2014…, represents a duplication of payment of the same taxes, regarding the same period and the same facts, contrary to the principle of capacity to contribute;
- The AT, by requiring payment of the IRS withholding and extraordinary surcharge relating to remuneration for October in that month and in the month when the salary was actually paid (December 2014), is taxing twice an income that was only received and paid once;
- The AT's action violates the principle of legality, as the law only requires the employer to withhold at source the tax due on remuneration paid to workers at the moment of its payment or making available and not at the moment of its accounting record;
- And even less does it provide that this withholding at source be made twice, at the moment of recording the remuneration and at the moment of its payment to the worker.
Of the Respondent:
Notified pursuant to and for the purposes provided in Article 17 of the RJAT, the AT presented its reply and submitted the administrative file, in which it came to defend the legality and maintenance of the tax assessment that is the subject of this arbitral ruling request, with the following grounds:
- The Applicant is entirely without grounds in requesting the partial annulment of the self-assessment of IRS made through guide no. …, in the part relating to dependent employment income for the month of October 2014, in the amount of € 92,388.00, as well as in the part relating to the extraordinary surcharge on remuneration for October, in the amount of € 5,577.00;
- Withholding at source is made pursuant to Articles 98 to 102 of the IRS Code, which provide that entities owing dependent employment income are obliged, at the moment of payment of wages, even if presumed, of making them available, of their settlement or of ascertaining the respective amount, as the case may be, to deduct from them the amounts corresponding to the application of the rates provided in the law on account of the tax relating to the year in which these acts occur (no. 1 of Article 98 of the IRS Code) and to withhold the tax at the moment of its payment or making available to the respective beneficiaries (no. 1 of Article 99 of the IRS Code);
- Also Article 8 of Decree-Law 42/91, of 22 January, states that withholding at source must be made at the "moment of the respective payment or making available";
- The amounts thus withheld must subsequently be delivered within the periods indicated and at the places referred to in Article 105 of the IRS Code (no. 2 of Article 98 of the IRS Code), Article 103 of the IRS Code establishing that, in case of tax substitution, the entity obliged to withhold is liable for the amounts withheld and not delivered to the State treasury, the substitute being relieved of any liability in its payment;
- The Applicant alleges that it made a withholding of tax higher than that due on wages paid to its employees, to the extent that in the period in question it did not actually pay them;
- However, this fact does not relieve the responsibility that falls upon it to deliver to the State the IRS due, the Applicant being responsible for payment of remuneration and as such, at the moment of its processing, was obliged to deduct from it the tax due, as it indeed did, and to withhold it for subsequent delivery to the State treasury, remaining liable for the amounts withheld and not delivered;
- The AT has already ruled on this matter clarifying that taxpayers are not relieved of the obligation to deliver the tax withheld at source by not paying the salaries to their employees, it being sufficient that they make them available, as the fact generating the tax must be considered to have occurred on the date on which the obligation to withhold at source arises, that is, on the date of payment or making the income available to its beneficiary;
- As follows from Articles 276 and 278 of the Labour Code, remuneration is due periodically to workers and it is on the date on which the obligation to pay arises that the tax-generating fact giving rise to the obligation of the tax occurs, regardless of fulfillment of the obligation by the employer;
- Nor could any other interpretation prevail, as compliance with tax obligations by taxpayers cannot be suspended by virtue of the financial vicissitudes of companies;
- Article 132 of the CPPT is intended to allow correction of errors made in withholding tax return declarations, but the non-payment of salaries for reasons of a financial nature does not constitute an error;
- If the Applicant's argument were accepted, ultimately, companies going through periods of severe financial strain would be relieved of the obligation to pay taxes, whether temporarily or permanently.
Accordingly, the Respondent defends that the request for arbitral ruling should be judged unfounded, absolving the AT of the request.
On 20 November 2017, the meeting referred to in Article 18 of the RJAT took place, in which the witnesses presented by the Applicant were examined, the Parties were invited to produce successive written submissions within a period of 15 days, starting with the Applicant, it was decided that the final decision would be rendered within a period of 30 days from the submission of submissions by the Respondent or the expiration of the respective period, and the Applicant was warned that, by that date, it should proceed with payment of the subsequent arbitration fee.
The Parties submitted successive written submissions, in which they reiterated the positions assumed in the initial procedural pleadings.
By order of 02-02-2018, taking into account that the issue of timeliness of the administrative claim to which process no. …2017… relates was raised during the deliberative process of the arbitral tribunal, to the effect that it must issue a ruling on such issue in the final decision, the parties were granted a period of 10 days to comment, if so wished, on such matter, in compliance with Article 16, paragraph a) of the RJAT, with the Applicant exercising such facility and the Respondent remaining silent.
Taking into account the additional procedure now necessary, the period referred to in Article 21, no. 1 of the RJAT was also extended for 60 days, pursuant to no. 2 of the same rule.
II. SANATION
- The collective arbitral tribunal is competent and was regularly constituted on 29 August 2017, pursuant to Articles 2, no. 1, paragraph a), 5 and 6, all of the RJAT.
- The parties have legal personality and capacity, are entitled to take part, and are legally represented, pursuant to Articles 4 and 10 of the RJAT and Article 1 of Ordinance no. 112-A/2011, of 22 March.
- The proceedings do not suffer from defects that would invalidate it.
- No exceptions were invoked that merit consideration.
III. GROUNDS
III.1 FACTUAL MATTER
A – Proven Facts
With respect to the factual matter, the Tribunal does not need to pronounce on everything that was alleged by the parties; rather, it is incumbent upon it to select the facts that matter for the decision and distinguish between proven and unproven matters (see Article 123, no. 2, of the CPPT and Article 607, no. 3 of the CPC, applicable by virtue of Article 29, no. 1, paragraphs a) and e), of the RJAT).
The factual matter relevant to the understanding and resolution of the case, following critical examination of the documentary evidence and the administrative file joined to the record, as well as analysis of the facts alleged and not contested and the testimonial evidence produced, is established as follows:
- On 17 October 2014, the Applicant submitted the IRS withholding payment guide no.…, in which it declared withholding of tax on dependent employment income (€ 66,338.00) and extraordinary surcharge on IRS (€ 4,075.00) relating to remuneration processed in the month of September 2014 – Doc. 2, attached to the P. I.;
- On 18 November 2014, the Applicant submitted the IRS withholding payment guide no.…, in which it declared withholding of tax on dependent employment income (€ 92,388.00) and extraordinary surcharge on IRS (€ 5,577.00) relating to remuneration processed in the month of October 2014 – Doc. 3, attached to the P. I.;
- On 20 January 2015, the Applicant submitted the withholding payment guide no.…, in which it declared amounts of € 158,726.00 of IRS withholding – dependent employment (€ 66,338.00 relating to September 2014 and € 92,388.00 to October 2014) and € 9,652.00 of extraordinary surcharge (being € 4,075.00 relating to September 2014 and € 5,577.00 to October 2014) – Doc. 41, attached to the P. I.;
- The withholding guide no.…, mentioned in paragraph b) above, was paid by the Applicant on 08-07-2016, in the tax enforcement process no. …2014… – Doc. 54, attached to the P. I.;
- The withholding payment guide no.…, mentioned in paragraph c) above, was paid by the Applicant on 08-07-2016, in the tax enforcement process no. …2015… – Doc. 55, attached to the P. I.;
- In the month of October 2014, the Applicant recorded on the debit of account 2311 – Remuneration due to management bodies, the amount of € 2,324.50 (holiday subsidies) – Doc. 4, attached to the P. I.;
- With reference to the month of October 2014, the Applicant recorded on the debit of account 2312 – Remuneration due to personnel, the amount of € 87,204.22 (holiday subsidies) and € 11,933.79 (salaries) – Doc. 4, attached to the P. I.;
- On account 238 – Other operations with personnel, the Applicant recorded on the debit, with reference to the month of October 2014, the amount of € 12,510.17 – Doc. 5, attached to the P. I.;
- To the remuneration recorded on the debit of accounts 2311, 2312 and 238, in the month of October 2014, and paid to workers in that month, at the total value of € 113,972.68, there corresponded IRS withholding of € 33,842.00 and extraordinary surcharge of € 2,042.87;
- During the months of November and December 2014, 31 workers of the Applicant presented letters of termination of the employment contract due to non-payment of remuneration due since September 2014, pursuant to paragraph a) of no. 2 of Article 394 of the Labour Code – Docs. 8 to 38, attached to the P. I.;
- In the month of December 2014, the Applicant paid, by bank transfer, remuneration relating to October 2014, in the amount of € 168,933.69 – Doc. 47, attached to the P. I.;
- The remuneration for the month of December 2014 is still being paid, within the scope of a Special Revitalization Process and payment agreements concluded with workers – testimonial evidence and Doc. 49, attached to the P. I.;
- The Applicant transferred the balance portion of account 2421 – Dependent employment, to account 2722924 – IRS to be settled on remuneration in arrears, for the amount corresponding to remuneration for December 2014 that was not paid in the month to which it related – Docs. 51 and 52, attached to the P. I.;
- The Applicant filed administrative claim no. …-2015/…, with a view to the annulment of guide no.…, relating to the period of October 2014;
- Administrative claim no. …-2015/… was dismissed by order of the Head of the Administrative Justice Division of the Finance Directorate of Lisbon, of 22-05-2015, notified to the Applicant by letter no. … of the Finance Directorate of Lisbon, of 26-05-2015 – Doc. 56, attached to the P. I.;
- The request for annulment of the tax assessment to which guide no. … refers was the subject of the arbitral decision rendered on 15 July 2016 in process no. 700/2015-T, which judged it unfounded, due to lack of proof of the date on which payment of remuneration corresponding to October 2014 occurred;
- On 20-01-2017, the Applicant filed administrative claim no. …2017…, with a view to the partial annulment of guide no.…, in the part relating to IRS withholding and extraordinary surcharge on remuneration for October 2014 – Doc. 1, attached to the P. I.;
- At the date of the request for arbitral ruling, no decision had yet been rendered on the administrative claim indicated in the preceding paragraph.
B – Unproven Facts
There are no relevant facts for the resolution of the case that should be considered as unproven.
C – Justification of the Establishment of Factual Matter
As mentioned, the establishment of factual matter was based on critical analysis of the documentary evidence attached to the record, the facts alleged and not contested, and on the testimony of the witnesses, which proved to be suitable and convincing.
III.2 ON THE LAW
A – The Question to be Decided
Arising from the internal deliberation process, this arbitral tribunal raised, ex officio, the question of timeliness of the arbitral request, taking into account the date of submission of the administrative claim request that constitutes its immediate object.
In this regard, Article 132 of the CPPT provides as follows:
"1 - Withholding at source is liable to be challenged by the tax substitute in case of error in delivery of tax exceeding the amount withheld.
2 - Tax paid in excess shall be deducted in subsequent deliveries of the same nature to be made in the year of the unduly paid withholding.
3 - Should the correction referred to in the previous number not be possible, the substitute wishing to challenge will file an administrative claim with the competent regional peripheral body of the tax administration within a period of 2 years counting from the expiry of the period referred to therein."
The question at issue concerns the interpretation of no. 3 of the aforementioned rule.
With due respect to other opinions, it is considered that the reference to payment made in no. 2 to which such rule refers, refers to payment of the excessive withholding, as follows from the very letter of the law.
Thus, the period of 2 years referred to in no. 3 of Article 132 is counted from the expiry of the year in which the unduly paid withholding occurred.
As appears from the facts established as proven, such payment occurred on 08-07-2016.
Thus, it is considered that in the perspective of Article 132 of the CPPT, what is relevant is not the date of payment of the salaries to which the withholding relates, nor the date on which the withholding is to be considered to have been made, but the date of the actual unduly paid withholding at source, in excess (as follows from the letter of no. 2).
This understanding is not undermined, it is considered, by the known jurisprudence of the Supreme Administrative Court (decisions of the Supreme Administrative Court of 05-04-2017 (Proc. 0465/15); 01-06-2016 (Proc. 0381/16); 27-01-2016 (Proc. 0569/15); 16-12-2015 (Proc. 0958/14) and 23-09-2015 (Proc. 0403/15)), which, rather, confirms it.
In fact, such jurisprudence refers, in the first place, to the person from whom withholding is made and not to the tax substitute, which is what is at issue in the present arbitral process.
On the other hand, for example, in the decision of 27-01-2016 (Proc. 0569/15), it can be read, among other things, that (emphasis ours):
"The tax substitute can, therefore (see no. 2) deduct the withholding at source and tax paid in excess, when it proceeds to make the following deductions, of the same nature, which it must make in the same year in which the excessive delivery occurred.
But no. 3 provides for the possibility for the substitute to challenge the withholding at source, necessarily preceded by an administrative claim, to be filed "within a period of two years counting from the expiry of the period referred to therein" (that is, in no. 2 of the same article): as the excessive delivery of deductions (withholding at source) may not be followed by any other of the same nature in that same year. Which, in fact, as stated in the appealed judgment, must be understood as establishing that the period is counted from the moment of impossibility of the deduction, and of indication of the consumption of this, at least, at the expiry of the year in which the excessive delivery occurred, under penalty of unpredictability and consequent indefiniteness of the beginning of this two-year period."
That is to say, and in summary, the aforementioned jurisprudence also considers that the period of two years now in question (relating to the tax substitute) begins in the year following the "excessive delivery of deductions (withholding at source)" and not in the year following in which the deduction was made.
Thus, and in view of the foregoing, it is considered that the present arbitral action is timely.
B – The Question to be Decided
The question to be decided within the scope of the present proceedings concerns whether the full payment of the withholding guide no.…, in the tax enforcement process no. …2015…, on 8 July 2016, having, on the same date, guide no. … relating to withholding, in the tax enforcement process no. …2014…, been paid, constitutes a duplication of payment of the taxes due on remuneration due to the workers of the Applicant, relating to the month of October 2014.
The AT maintains that taxpayers are not relieved of the obligation to deliver the tax withheld at source by not paying salaries to their employees, it being sufficient that they make them available, a moment that would coincide with the maturity of the payment obligation, as follows from the rules on withholding at source, namely from paragraph a) of no. 1 of Article 99 of the IRS Code.
And that the Applicant, by processing the wages for October 2014, effectively withheld the tax due, as well as the extraordinary surcharge to which Article 99-A of the IRS Code alluded, being obliged to deliver the respective amounts.
In turn, the Applicant argues that the obligation to withhold at source and to deliver the withheld tax only arises at the moment when remuneration is paid or made available to workers and not when it is processed, if the same is not paid, as happened, due to manifest financial difficulties.
Further it maintains that, having paid twice the withholdings due for income relating to October 2014, as well as the respective extraordinary surcharge, there is a duplication of tax payment (cf. Articles 56 and 57 of the initial request).
In accordance with the rules of legal hermeneutics, one could establish the exact meaning and scope of the rule of Article 99, no. 1, paragraph a), of the IRS Code, in order to determine the moment at which the obligation to withhold at source arises on the part of the employer.
Article 99, no. 1, paragraph a), of the IRS Code provides as follows:
"Article 99 - Withholding on income of categories A and H
1 - Entities owing income are obliged to withhold the tax at the moment of its payment or making available to the respective beneficiaries:
- Dependent employment income (…);"
Taking into account the systematic order of the textual elements of the rule, as a starting point for the interpretive task, the obligation to withhold at source arises, in the first place, with the payment of dependent employment income or at the moment of making it available to the respective beneficiaries.
Making income available means that the entity owing the income has sufficient treasury funds for payment, and that such payment can occur as soon as requested by its beneficiary. This is what typically happens when the entity proceeds to deposit, in the worker's bank account, the amounts relating to remuneration, the latter being able to draw on it by debit when it pleases.
However, the question that arises in these proceedings is not so much to know at what moment the obligation to make withholding at source on dependent employment income relating to October 2014 arose, but rather whether those same withholdings were delivered and paid in duplicate.
According to the accounting elements made available by the Applicant, it is possible to conclude that in the month in question it only paid remuneration in the amount of € 113,972.68, to which there corresponded IRS withholding of € 33,842.00 and extraordinary surcharge of € 2,042.87.
And that the remaining part of the October 2014 wages was only paid in December of that year.
However, both guide no.…, submitted on 18 November 2014, and guide no.…, of 20 January 2015, whose partial annulment is requested, in which IRS withholding in the amount of € 92,388.00 and extraordinary surcharge of € 5,577.00, corresponding to all remuneration that would be due in October 2014, were declared, were paid in full, as appears from the evidence.
At the meeting referred to in Article 18 of the RJAT, the AT questioned whether the IRS and extraordinary surcharge declared in guide no.…, of 20 January 2015, related to remuneration for October 2014, raising the hypothesis that they could correspond to remuneration for December 2014.
This hypothesis finds no support in the proven factual matter: both the Applicant's accounting records and the conclusion of payment agreements for December 2014 remuneration, still in the process of execution within the scope of a Special Revitalization Process of the Applicant, are compatible with the alleged duplication in payment of the amounts of € 92,388.00 and € 5,577.00, relating to IRS withholding and extraordinary surcharge on remuneration for the month of October 2014.
As was written in the Decision of the Court of Administrative Appeals of the South, of 31-10-2016, rendered in process 01247/03:
"XXVII)- Duplication of collection, by reference to a temporal and structural element, occurs when, with a collection being paid, another of the same nature is assessed and demanded, in relation to the same tax-generating fact and the same period of time.
XXVIII)- Duplication of collection is doctrinally known as a heresy within the tax system and in it there is no concourse of claims but only a single claim doubly demanded, a duplication that is prohibited by the principle ne bis in idem and which, unlike what occurs with the concept of double taxation, does not require the identity of the subject but rather only the identity of the object, the period and the tax.
XXIX)- Duplication of collection is a specific ground for opposition to enforcement (art. 204°, no. 1, al. g) CPPT) but is also a ground for judicial challenge, to the extent that the 2nd assessment is illegal, due to unjust enrichment of the AT and constitutes a ground for challenge any illegality (art. 99° CPPT)."
In the decision of the same High Court of 26-02-2013, rendered in process 06195/12, it can be read that:
"Duplication of collection constitutes, moreover, a ground for opposition to tax enforcement (cf. artt. 286, no. 1, al. f), and 287, of the Tax Code; art. 204, no. 1, al. g), and 205, of the CPPT), being factuality equally subject to ex officio knowledge by the Court (cf. art. 287, no. 2, of the Tax Code; art. 175, of the CPPT).
Considered a heresy within the tax system, duplication of collection entails the verification of three identities: of the fact, of the tax and of the period. However, the identity of the taxpayer is not required (cf. A. José de Sousa and J. da Silva Paixão, Code of Tax Procedure annotated and commented, 3rd. edition, 1997, p. 603 et seq.; Pedro Soares Martínez, Tax Law, 8th. edition, Almedina, 1996, p. 450).
In accordance with the law (cf. art. 287, no. 1, of the Tax Code; art. 205, of the CPPT), the legal-tax figure of duplication of collection is characterized by the following vectors:
1- Uniqueness of the tax-generating fact;
2- Identity of nature between the contribution or tax already paid in full and that which is newly sought to be collected;
3- Coincidence in time between the incidence of the tax paid and that which is newly demanded (cf. ac. S.T.A.-2nd. Section, 25/10/78, Acs. Douts., no. 207, p. 391; ac. T.T. 2nd. Instance, 12/10/93, C.T.F. 373, p. 227 et seq.; ac. T.C.A.South, 31/1/2012, proc. 4966/11; A. José de Sousa and J. da Silva Paixão, Code of Tax Procedure annotated and commented, 3rd. edition, 1997, p. 604; Jorge Lopes de Sousa, C.P.P.Tributário annotated and commented, II volume, Áreas Editora, 5th. edition, 2007, p. 394).
Duplication of collection may be configured as the equivalent, in the field of tax law, of the penal principle of the prohibition of "non bis in idem", being a cause of illegality of the tax act.
Duplication of collection results from the application of the same legal precept more than once to the same tax-generating fact or concrete tax situation. However, it becomes necessary that the factual reality that underlies the plurality of assessments be the same, which will not happen, for example, in the case of additional assessments in which it is sought to collect a tax that was unduly not initially assessed. In these situations of additional assessment, the second assessment does not relate to the same tax-generating fact (the same portion of income or patrimonial value or expense, for example) to which the first one related (cf. ac. T.C.A.South, 11/9/2012, proc. 3145/09; Jorge Lopes de Sousa, C.P.P.Tributário annotated and commented, II volume, Áreas Editora, 5th. edition, 2007, p. 394).
Moreover, it will be said that the reference to payment of the tax in full has inherent the requirement that the tax due be fully paid, which precludes the possibility of invoking duplication of collection when the tax is only partially paid, following the first assessment, whether because only part of the installments was paid, or because the first assessment, although paid in full, does not reach the amount to be collected in the face of the second assessment (cf. Jorge Lopes de Sousa, C.P.P.Tributário annotated and commented, II volume, Áreas Editora, 5th. edition, 2007, p. 395)."
The Supreme Administrative Court, for its part, has understood that:
"Similarly to what occurs with abstract illegality and duplication of collection, also the lack of notification of the assessment within the period of expiry constitutes a defect invocable both in opposition to tax enforcement and in judicial challenge."
This understanding is, moreover, compatible with the provision of Article 78, no. 6 of the General Tax Law, which provides that "Revision of the tax act by reason of duplication of collection may be made, whatever the ground, within a period of four years", it being certain that if the AT may revise the assessment in the context of a revision request, for the same reason it may do so in the context of an administrative claim, which, in the case, constitutes the mediate object of the present arbitral process.
Now, having reviewed the facts established as proven, all the prerequisites evidenced by doctrine and jurisprudence as necessary for the occurrence of duplication of collection are verified, namely:
- The tax to which the assessment that is the subject of the present arbitral process relates is based on the uniqueness of the tax-generating fact of another tax equally already paid;
- The tax to which the assessment that is the subject of the present arbitral process relates refers to the same tax already paid in full;
- The tax to which the assessment that is the subject of the present arbitral process relates refers to the same temporal period (October 2014) as the other tax already paid in full.
Thus, in view of the foregoing, it is concluded that the assessment underlying the duplicate payment cannot be maintained, as it is contrary to the legal order.
C – On Compensatory Interest
In accordance with the provision of no. 1 of Article 43 of the General Tax Law (GTL), applicable subsidiarily to the arbitral tax proceedings, pursuant to Article 29, no. 1, paragraph a), of the RJAT, "Compensatory interest is due when it is determined, in an administrative claim or judicial challenge, that there was an error attributable to the administration resulting in payment of the tax debt in an amount greater than legally due."
Thus, the cumulative requirements for the right to compensatory interest are: "– that there be an error in an act assessing a tax; – that it be attributable to the administration; – that the existence of such error be determined in administrative claim or judicial challenge proceedings; – that such error resulted in payment of a tax debt in an amount greater than legally due."
Now, in the case at hand, it is a matter of an assessment made by the taxpayer itself, in its capacity as tax substitute, the Applicant itself admitting the error in the issuance of the withholding guide whose partial annulment it requests.
As was written in the Decision of the Supreme Administrative Court of 18-01-2017, rendered in process 0890/16, "I - In case of withholding at source and there being administrative challenge (administrative claim or hierarchical appeal), the error becomes attributable to the AT after possible dismissal of the claim filed by the taxpayer. (...)
III - From the provisions of nos. 1 to 3 of art. 43 of the GTL it results that, in case of revision, the time difference with respect to the initial term in the payment of compensatory interest (no compensatory interest will be due between the moment of unduly paid withholding and that of revision, despite there being error attributable to the administration) arises from the legislative understanding to the effect of the fault of the taxpayer in the formation of prejudices derived from the illegal act, due to not having been diligent in using, within normal periods, the means of administrative and contentious challenge that the law places at its disposal."
Thus, in view of such understanding, it is considered that compensatory interest is due to the Applicant, from the formation of the implicit dismissal of the administrative claim filed by it.
DECISION
On the basis of the grounds set out above, the Collective Arbitral Tribunal agrees to judge the present request for arbitral ruling as entirely founded, determining:
- The partial annulment of the assessment contained in the withholding guide no.…, in the amount of € 97,965.00;
- The condemnation of the AT to restitution of the amount unduly paid by the Applicant;
- The condemnation of the AT to payment of compensatory interest on the terms established above;
- The condemnation of the AT for costs of the proceedings.
VALUE OF THE PROCEEDINGS: In accordance with the provision of Article 306, nos. 1 and 2, of the Code of Civil Procedure, 97-A, no. 1, paragraph a), of the CPPT and 3, no. 2, of the Regulation of Costs in Tax Arbitration Proceedings, the value of the proceedings is fixed at € 97,965.00 (ninety-seven thousand, nine hundred and sixty-five euros).
COSTS: Calculated in accordance with Article 4 of the Regulation of Costs in Tax Arbitration Proceedings and Table I attached thereto, in the amount of € 2,754.00 (two thousand, seven hundred and fifty-four euros), to be borne by the Tax and Customs Authority.
Lisbon, 7 March 2018.
The Arbitrators,
José Pedro Carvalho (President)
Rui Ferreira Rodrigues (Member – with concurring opinion)
Mariana Vargas (Member)
Document prepared by computer, pursuant to no. 5 of Article 131 of the Code of Civil Procedure, applicable by reference of paragraph e) of no. 1 of Article 29 of Decree-Law 10/2011, of 20 January.
The text of this decision is governed by the spelling agreement of 1990.
CONCURRING OPINION
Notwithstanding that I fully agree with the tenor of the decision, I dissent from the issue relating to the timeliness of the administrative claim to which Process no. …2017… relates, for the reasons I now set out:
The request for arbitral ruling was presented, pursuant to Article 102, no. 1, paragraph d) of the Code of Tax Procedure and Process (CPPT) and Article 10, no. 1, paragraph a) of Decree-Law no. 10/2011, of 20-01 (Legal Framework for Arbitration in Tax Matters – RJAT), following the formation of the presumption of implicit dismissal of the administrative claim to which the above process relates.
However, I consider that the administrative claim was presented outside the time limit.
Indeed:
It appears from the request for arbitral ruling, namely from Articles 27, 42, 122 and 124, as well as from the testimony of the witnesses presented, that the remuneration for the month of October 2014 was paid partially in that month and the remainder in December of that year. And that the respective IRS withholding was made in the said months, in accordance with Article 99, no. 1, of the IRS Code (wording in force at the time of the facts).
In accordance with the provision of Article 132, no. 3 of the CPPT, the period for filing the administrative claim is two years counting from the expiry of the year in which the tax withholding was made and not of its delivery to the State treasury (in this sense, Jorge Lopes de Sousa, in "Code of Tax Procedure and Process", annotated and commented, Áreas Editora, 6th Edition, 2011, II Volume, p. 418; and decisions of the Supreme Administrative Court of 05-04-2017 (Proc. 0465/15); 01-06-2016 (Proc. 0381/16); 27-01-2016 (Proc. 0569/15); 16-12-2015 (Proc. 0958/14) and 23-09-2015 (Proc. 0403/15), among others.
Thus, the initial term of the period occurred on 01-01-2015 and the final term on 31-12-2016.
Therefore, considering that the administrative claim was presented on 20-01-2017, its presentation outside the time limit is evident.
However, the conversion of the administrative claim into a revision request should always have been required, pursuant to Article 78, no. 6 of the General Tax Law, in order to ensure protection of the Applicant's right and the restoration of legality, cf. decisions of the Supreme Administrative Court of 06-07-2016 (Proc. 01203/15) and 27-01-2016 (Proc. 0569/15); 05-11-2014 (Proc. 01474/12) and 14-12-2011 (Proc. 0366/11), among others.
Lisbon, 05-03-2018.
Rui Rodrigues
[1] Cf. Decisions 18/06/2014, rendered in process 0344/13 and 22/04/2015, rendered in process 051/15.
[2] Cf. SOUSA, Jorge Lopes de, Code of Tax Procedure and Process – annotated and commented, I Volume, Áreas Editora, 2006, p. 472.
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