Process: 378/2014-T

Date: December 9, 2014

Tax Type: IRC

Source: Original CAAD Decision

Summary

This tax arbitration decision (Process 378/2014-T) addresses a duplicate collection (duplicação de coleta) dispute in Corporate Income Tax (IRC) involving fiscal year 2010. The taxpayer, A, S.A., initially filed its Model 22 IRC declaration and paid €155,733.96 in tax. Following a November 2013 tax inspection that proposed corrections totaling €294,658.38, the company voluntarily accepted partial corrections of €63,836.32 related to wind farm dismantling expenses. On December 17, 2013, the taxpayer filed a voluntary replacement Model 22 declaration, which automatically generated a new assessment of €172,650.58. The company promptly paid the difference of €16,916.62 on December 19, 2013, along with applicable interest. However, the Tax Authority subsequently issued assessment no. 2013 demanding payment of €18,995.11, including the same €16,916.62 already paid, plus compensatory and late payment interest. The taxpayer challenged this as illegal duplicate collection under Article 205 of the Tax Procedure Code (CPPT), arguing the same tax was demanded twice for the same period. When the amount remained unpaid, tax enforcement proceedings were initiated. The Tax Authority defended by arguing three distinct assessments were properly issued: the 2011 original self-assessment, the 2013 assessment from the replacement declaration, and the 2014 post-inspection assessment. The AT claimed both payments were properly accounted for across these assessments. The Respondent also raised significant procedural objections: incompatibility between cumulative requests for annulment of both the assessment and enforcement proceedings under Article 186 CPC; lack of CAAD jurisdiction over direct challenges to enforcement proceedings; and partial supervening uselessness due to subsequent payment. This case presents critical questions about when duplicate collection occurs in IRC contexts, the effects of voluntary replacement declarations triggering successive assessments, CAAD's jurisdictional limits, and the legal requirements under Article 205 CPPT for proving duplicate collection when multiple assessment notices are issued following tax inspections and voluntary corrections.

Full Decision

ARBITRAL DECISION

  1. Report

1.1. A, S.A., with headquarters in … Lisbon, legal entity no. …, filed a Request for Arbitral Pronouncement, in accordance with the provisions of article 10 of Decree-Law no. 10/2011, of 20 January, which approved the Legal Framework for Tax Arbitration ('RJAT'), with the Respondent being the Tax and Customs Authority ('AT').

1.2. The Applicant petitions "that assessment no. 2013 … be annulled, the respective assessment of interest and the account reconciliation statement no. 2013 …, as well as the tax enforcement proceedings under no. …, on the grounds of its illegality, due to duplicate collection, or, should this not be found to be the case, that the nullity of assessment no. 2013 … be declared, the respective statement of interest assessment and the account reconciliation statement no. 2013 …, due to the absence of a taxable event."

As grounds for the claim, the Applicant alleges, in summary:

1.3. She submitted, on 23/05/2011, the Model 22 Declaration for Corporate Income Tax (IRC), relating to the fiscal year 2010, having determined a taxable profit in the amount of €789,680.36, a tax collection in the amount of €195,857.59, and a total tax to pay (IRC and Municipal Surcharge), in the total amount of €155,733.96;

1.4. Between 16 and 26 November 2013, she was subject to a tax inspection action concerning the fiscal year 2010, with the Tax Inspection proposing corrections to the taxable base in the total amount of €294,658.38, which resulted in the taxable profit being corrected to €1,084,338.74;

1.5. As a consequence of the tax inspection procedure, she recognized the validity of part of the corrections made, relating to expenses for the dismantling of the wind farm (account 642 – Tangible Fixed Assets), in the amount of €63,836.32, whereby she voluntarily submitted, on 17/12/2013, a replacement Model 22 Declaration, having increased the taxable base in Table 07, field 721, by the aforementioned amount of €63,836.32;

1.6. As a result of the submission of the Replacement Declaration, the computer system generated a new assessment notice in the amount of €172,650.58;

1.7. Given that she had previously paid €155,733.96 as tax and €332.87 as compensatory interest, on 19/12/2013, the Applicant made payment of the difference in the amount of €16,916.62;

1.8. Subsequently, she also made payment of the compensatory and late payment interest due, in the total amount of €1,742.79;

1.9. However, by assessment no. 2013 …, relating to the offset no. 2013 … and the respective statement of interest assessment, she was notified to pay €18,995.11, by 17/02/2014, an amount that comprised:

a) €16,916.62 as assessment adjustment;
b) €10.93 in late payment interest;
c) €1,720.39 in compensatory interest;
d) €347.17 in compensatory interest on advance payment.

1.10. In the Applicant's understanding, the AT's demand for payment of an amount already paid constitutes duplicate collection, in accordance with art. 205 of the Code of Tax Procedure and Process ('CPPT'), in that the same tax was demanded of the taxpayer twice.

1.11. Non-payment of the tax within the respective voluntary payment period resulted in the institution of tax enforcement proceedings no. …, for the compulsory collection of the debt.

1.12. Still in the Applicant's understanding, the AT recognized the duplicate collection when, weeks later, it notified the company of the assessment note no. 2014 … and the account reconciliation statement no. 2014 ….

The Respondent AT, in turn, responded, alleging the lack of merit of the Request for Arbitral Pronouncement for the reasons set out below, briefly:

1.13. The Respondent raised objections, invoking the dilatory exceptions of incompetence of the initial petition and lack of jurisdiction of the Tribunal, as well as the peremptory exception of partial supervening uselessness of the dispute.

1.14. In this context, it defended that the Applicant formulated cumulative requests for "annulment of assessment no. 2013 … of the fiscal year 2010, the respective account reconciliation statement no. 2013 …, and offset no. 2013 …, as well as the tax enforcement proceedings under number …, on the grounds of its illegality due to duplicate collection", and subsidiarily, that the "nullity of assessment no. 2013 …, the respective account reconciliation statement no. 2013 … be declared due to the absence of a taxable event".

1.15. According to the Respondent's understanding, the requests for annulment of the assessment, as well as of the tax enforcement proceedings are absolutely incompatible principal requests, in accordance with art. 186 of the Code of Civil Procedure ('CPC'), which constitutes a dilatory exception of incompetence of the initial petition, provided for in art. 186, no. 1, and no. 2 paragraph c) of the CPC, which subsists even if one of the requests becomes without effect due to lack of jurisdiction of the Tribunal, in accordance with no. 4 of the same article.

Thus, it concluded that the incompatibility of the principal requests prejudices the examination of the merits of the case, whereby the Respondent should be absolved of the instance in view of the provisions of arts. 278, no. 1 para. b), 576, no. 1 and 577, para. b) of the CPC, applicable ex vi art. 29, no. 1, para. e) of the RJAT.

1.16. Without conceding, the Respondent defended that, should the exception invoked fail, the Tribunal's lack of jurisdiction to rule on the request for 'annulment of the enforcement proceedings' should be judged well-founded, with the consequent partial absolution of the instance of the Respondent, in view of the provisions of arts. 278, no. 1, paragraph a), 576, no. 1 and 577, paragraph a) of the CPC, applicable ex vi art. 29, no. 1, paragraph e) of the RJAT.

1.17. Still without conceding, the Respondent argues that, given the extinction of the tax enforcement proceedings by payment, the present action lost part of its object (annulment of the enforcement proceedings), whereby the peremptory exception of partial uselessness of the dispute is verified, in accordance with articles 277, para. e), and 576, no. 3 of the CPC, applicable ex vi art. 29, no. 1, para. e) of the RJAT.

1.18. By way of response, the Respondent alleged that there is no duplicate collection, as the legal requirements provided for in art. 205 of the CPPT are not met.

According to the Respondent, the AT Services proceeded with the issuance of three IRC assessments for the fiscal year 2010:

i. The first assessment no. 2011…, following the self-assessment of tax relating to the period 2010;

ii. The second assessment no. 2013 … resulting from the presentation of the replacement declaration Model 22, on 17/12/2013, which determined a taxable profit in the amount of €853,516.68, for the fiscal year 2010;

iii. The third assessment no. 2014 … issued following the inspection action, which determined IRC to pay in the total amount of €212,421.67, and an amount to be paid to the State in the amount of €63,477.52.

1.19. The Respondent alleges that, in fact, the Applicant paid the amount of €16,916.62 twice, on 20/12/2013 and 14/05/2014, but both payments are due and were considered by the Services in the assessments, in the account reconciliation statements and in the collection notes, because the self-assessment payment considered in assessment no. 2014 … corresponds to the payments of the amounts of €16,916.62, made on 20/12/2013, and €155,733.96, made on 28/05/2011.

1.20. On the other hand, the collection note no. 2014 …, relating to assessment no. 2014 …, determines tax to be paid to the State in the amount of €44,482.41 (which results from the deduction of €16,916.62, paid by the Applicant in the enforcement proceedings from the amount previously determined of tax to pay in the amount of €63,477.52).

1.21. On 21/10/2014 the First Meeting of the Arbitral Tribunal took place, which was chaired by the undersigned, and secretaried by Dr. Tânia Carvalhais Pereira, legal advisor of the Administrative Arbitration Centre.

At the Meeting, the representatives of the Applicant, the Honourable Messrs. Doctors … and Doctor …, were present, as well as, in representation of the Respondent, the Honourable Ladies Doctor … and Doctor ….

1.22. At the First Meeting the Parties pronounced themselves orally on the exceptions alleged by the Respondent in its Response.

Also during the Meeting, and in exercising the right to speak, the Applicant's representative declared that she was dispensing with the witness arrayed, which met with the agreement of the Respondent and the Tribunal.

Finally, and for what is relevant here, the parties were notified to submit Pleadings within a period of 20 days, which were submitted within the granted period.

1.23. In Pleadings, the Applicant reiterated the allegations made at the beginning of the First Meeting of the Arbitral Tribunal, to the effect of the lack of merit of the exceptions alleged by the Respondent in its Response, namely, incompetence of the initial petition due to cumulation of substantially incompatible requests, material lack of jurisdiction of the Arbitral Tribunal and partial uselessness of the dispute due to lack of object.

In this context, it clarifies that she did not formulate any cumulative request, but rather only subsidiary requests for annullability and nullity of the assessment, and that the expression "as well as" used in the request "amounts to no more than a mere legal consequence of the request for annulment of the assessment (….) although it does not fall to the Arbitral Tribunal to order the annulment of the enforcement, from the decision of the Tribunal to the effect of ordering the annulment of the assessment that forms the basis of the enforcement, one cannot simply fail to draw a conclusion: that the enforcement should be terminated!", whereby the invoked exceptions cannot proceed.

Specifically regarding the uselessness of the dispute due to alleged lack of object, it defends, briefly, that notwithstanding not having filed opposition to the enforcement, this does not prevent the requested examination of the underlying assessment.

1.24. As to the merits of the case – verification of duplicate collection – the Applicant reiterated what was already alleged at the Request for Arbitral Pronouncement, requesting the annullability of assessment no. 2013 …, and the respective statement of interest assessment and the Account Reconciliation Statement no. 2013 …, on the grounds of illegality.

1.25. Subsidiarily, the Applicant reiterated that should the assessment in question not be annulled, it should be declared null due to violation of the essential content of the right to private property and of the constitutional principles of prohibition of excess and fiscal equality, alleging that this nullity may be invoked at any time, in accordance with art. 133, no. 2, para. d) of the Code of Administrative Procedure, ex vi art. 2, para. d) of the CPPT.

1.26. Equally, the Respondent contended in Pleadings for the verification of the exceptions previously invoked in the Response, alleging that the Applicant's grounds contain "some contradictions and confusion of concepts, particularly with regard to the distinction and different scope of application of the means of defense of opposition to enforcement, of judicial challenge and of tax arbitration proceedings", whereby it concludes that, not only should the exceptions invoked by it proceed, but "the IRC assessment for the fiscal year 2010 whose annulment or declaration of nullity is petitioned in the present action (…) is an assessment that no longer exists in the legal order because it was replaced by assessment no. 2014 … (…)" and it is certain that "the Applicant states and proves that she filed a challenge against the current assessment" which removes the object from the present action and determines the impossibility of the arbitral dispute.

1.27. Should this not be found to be the case, it contends for the lack of merit of the Request for Arbitral Pronouncement regarding the invoked duplicate collection, having alleged, at the level of response defense, no substantial matter of fact or law.

  1. Preliminary Issues

2.1. The present Tribunal being regularly constituted, it is important to verify that the procedural requirements legally required are met.

The Parties have legal personality and capacity, as well as legitimacy and standing to sue, in accordance with art. 65 of the General Tax Law ('LGT'), and 26 of the CPC, being duly represented.

In accordance with art. 10, no. 1 paragraph a) of the RJAT the Request for Arbitral Pronouncement was timely filed.

The Respondent raised the exception of 'partial' lack of material jurisdiction of the present Arbitral Tribunal, which will be assessed below.

2.2. Preliminary Questions:

2.2.1. On the alleged exception of lack of jurisdiction of the Tribunal

The Respondent AT alleged that the verification of the exception of lack of jurisdiction of the present Tribunal should be declared for the purpose of ruling on the request for 'annulment of the enforcement proceedings', with the consequent partial absolution of the entity Respondent of the instance, in view of the provisions of arts. 278, no. 1 para. a), 576, no. 1 and 577, para. a) of the CPC, applicable ex vi art. 29, no. 1, para. e) of the RJAT.

To this end, the Applicant alleged, already in Pleadings, that she did not formulate any request with such content, given that the aforementioned extinction of the underlying enforcement is nothing more than the necessary legal consequence of the petitioned annullability of the additional assessment under analysis.

It is incumbent on this Tribunal to assess and decide:

This Tribunal considers that, regardless of the Applicant's intention, in fact, in the textual formulation of the request presented, a request for annullability of the enforcement proceedings is unquestionably formulated, in the following terms:

"It is requested that assessment no. (…), the respective statement of interest assessment and the account reconciliation statement (…) as well as the tax enforcement proceedings (…), be annulled, on the grounds of its illegality, due to duplicate collection" (emphasis ours).

Whereby it is appropriate to analyze the exception invoked by the Respondent:

In accordance with art. 2 of the RJAT, the material jurisdiction of the Arbitral Tribunal is limited to the assessment of the following claims:

"a) The declaration of illegality of acts of assessment of taxes, of self-assessment, of withholding at source and of advance payment;

b) The declaration of illegality of acts of determination of the taxable base when they do not give rise to the assessment of any tax, of acts of determination of the taxable base and of acts of determination of property values;"

The jurisdiction of the Arbitral Tribunal is further (even more) limited by the Binding Order of the AT, i.e., by Ordinance no. 112-A/2011, of 22 March, which excludes from the AT's binding the following claims:

"a) Claims relating to the declaration of illegality of acts of self-assessment, of withholding at source and of advance payment that have not been preceded by recourse to the administrative procedure in accordance with articles 131 to 133 of the Code of Tax Procedure and Process;

b) Claims relating to acts of determination of the taxable base and acts of determination of the taxable base, both by indirect methods, including the decision of the review procedure;

c) Claims relating to customs duties on imports and other indirect taxes on goods subject to import duties; and

d) Claims relating to the customs classification, origin and customs value of goods and customs contingents, or whose resolution depends on laboratory analysis or measures to be carried out by another member State under administrative cooperation in customs matters."

Effectively, in accordance with the combined provisions referred to above, it falls outside the decision-making power of this Tribunal the assessment of any matter relating to tax enforcement proceedings.

In these terms, the entire matter alleged relating to the tax enforcement proceedings under no. …, will not be subject to assessment, whereby the dilatory exception of lack of material jurisdiction of the present Tribunal, for ruling on the request relating to the 'annulment of the enforcement proceedings', with the necessary partial absolution of the instance, is well-founded, in accordance with the provisions of arts. 278, no. 1; 576, no. 1, paragraph a) and 577, paragraph a), all of the CPC, ex vi art. 29, no. 1, paragraph e) of the RJAT.

Notwithstanding the foregoing,

The present proceedings continue for assessment of the remaining requests formulated, for which the present Tribunal considers itself competent, namely, the assessment of the request for annulment of assessment no. 2013 …, on the grounds of illegality due to duplicate collection, as well as the subsidiary request for nullity of this assessment, on the same grounds.

2.2.2. On the exception of incompetence of the Initial Petition

The Respondent contended for the verification of the dilatory exception of incompetence of the initial petition on the grounds of absolute incompatibility of the cumulative requests formulated for:

i) annulment of assessment no. 2013 … of the fiscal year 2010, the respective Account Reconciliation Statement no. 2013 …, and offset no. 2013 …; and

ii) annulment of the tax enforcement proceedings under number …;

A request which requires that it be assessed by the Tribunal given that it constitutes an exception, which will subsist even if one of the requests becomes without effect due to lack of jurisdiction of the Tribunal, in accordance with article 186 no. 4 of the CPC, leading to absolution of the instance.

Effectively, and notwithstanding the Tribunal having previously declared itself materially incompetent for the analysis and assessment of the matter alleged by the Applicant relating to the tax enforcement proceedings, this does not prevent the verification of a cumulation of incompatible requests and the consequent verification of the respective dilatory exception of incompetence of the initial petition, as petitioned by the Respondent. This understanding is supported, for example, by the learned Decision of the Court of Appeal of Coimbra, of 14/12/2010 (Case no. 2604/084TBAGD.C1), when it states in this regard that "where such substantial opposition exists between the requests, the incompetence of the initial petition subsists even if one of the requests in opposition becomes without effect due to lack of jurisdiction of the Tribunal or due to error in the form of the proceedings (article 193 no. 4 of the Code of Civil Procedure)" (current article 186 of the CPC invoked by the Respondent).

However, and contrary to what the Respondent alleges, the Tribunal considers that the requests formulated are not incompatible, given that the incompetence of the initial petition provided for in art. 186, no. 1, paragraph c) of the CPC relates to the cumulation of substantially incompatible requests, that is, to cases where the legal effects sought are irreconcilable.

In this context, see, by way of example, the learned Decision of the Court of Appeal of Porto, of 12.10.1998, in accordance with which the Tribunal decided that:

"I- There is incompatibility of requests, determining incompetence of the initial petition, only when there exists a confusion of the plaintiff's position, making it impossible for the tribunal to take a decision on any of the requests formulated."

Now, in abstracto, the annulment of the tax enforcement proceedings is a direct and necessary consequence of the annulment of the respective underlying assessment, whereby, contrary to what the Respondent alleges, the extinction of the tax enforcement proceedings does not entail the material incompatibility of the requests formulated.

This extinction would, at most, lead to partial supervening uselessness of the present dispute, because the effect sought – extinction of the enforcement proceedings – has already been achieved, by payment made by the Applicant.

In light of the foregoing, and verifying that, in abstracto, the requests for annulment of the assessment, and extinction of the corresponding tax enforcement proceedings, are not substantially incompatible or irreconcilable – being, on the contrary, perfectly harmonizable and correlative – and without prejudice to the material incompetence of this Tribunal to assess all matters relating to the tax enforcement proceedings, the dilatory exception of incompetence of the initial petition due to incompatibility of requests, alleged by the Respondent, is not well-founded.

2.2.3. On the partial uselessness of the dispute

Finally, the Respondent alleged the verification of the peremptory exception of partial uselessness of the dispute, because, with payment of the debt liable to enforcement (assessment in question), and with the tax enforcement being terminated, the present action lost part of its object, in accordance with and for the purposes of arts. 277, paragraph e) and 576, no. 3 of the CPC, ex vi art. 29, 1, paragraph e) of the RJAT, with the consequent partial absolution of the request.

However, and as assessed previously, with the exception of lack of material jurisdiction verified with regard to the matter of the tax enforcement proceedings, this Tribunal cannot pronounce itself on the exception invoked.

  1. Substantive Analysis

3.1. Proven Facts

With relevance to the assessment of the Applicant's claim, the following facts must be taken as proven:

A. A, S.A., is a company with the principal activity of electricity production from renewable sources (wind energy), being registered with CAE … – cf. pp. 5 and 6 of the Inspection Report (OI …) which forms part of the instructing administrative file;

B. The Applicant submitted, on 23/05/2011, the Model 22 Declaration for IRC, with Identification …, relating to the fiscal year 2010, which determined a taxable profit in the amount of €789,680.36, tax collection in the amount of €195,857.59, and a total tax to pay of €155,733.96 – cf. Model 22 Declaration attached to the Request for Arbitral Pronouncement as Doc. no. 1;

C. The self-assessed tax, in the amount of €155,733.96, was paid on 23/05/2011 – cf. proof of payment attached as Doc. no. 3 of the Request for Arbitral Pronouncement;

D. Following the self-assessment, assessment no. 2011 …, of 23/06/2011, was issued, which determined the amount of €332.67 to pay, relating to compensatory interest (€331.31) and late payment interest (€1.56) - cf. copy of assessment attached as Doc. no. 2 to the Request for Arbitral Pronouncement;

E. The above interest was paid - cf. proof attached as Doc. no. 4 to the Request for Arbitral Pronouncement;

F. Between 18/11/2013 and 26/11/2013, the Applicant was subject to an inspection action (OI…), concerning the fiscal year 2010 - cf. p. 4 of the Inspection Report (OI …) which forms part of the instructing administrative file;

G. In the course of the inspection action, the 'declared result' by the Applicant was corrected, having in this context the taxable base been changed from €789,680.36 to €1,063,812.08 – cf. p. 20 of the Inspection Report (OI …) which forms part of the instructing administrative file;

H. Of the corrections proposed by the Tax Inspection, the Applicant accepted the corrections relating to the depreciation of expenses for dismantling the wind farm, in the amount of €63,836.32 – cf. p. 19 of the Inspection Report (OI …) which forms part of the instructing administrative file;

I. In that sequence, the Applicant voluntarily proceeded to correct the aforementioned amount, having submitted the competent replacement Model 22 Declaration for IRC, - Declaration with the identifier … -, on 17/12/2013, increasing the taxable base in Table 07, field 721, by the amount of €63,836.32 - cf. Declaration attached as Doc. no. 6 to the Request for Arbitral Pronouncement;

J. The remaining corrections made by the Tax Inspection, in the total amount of €210,295.37, were contested in court by the Applicant, with the Judicial Challenge proceedings running in the Tax Court of Lisbon - cf. the copy of the Initial Petition presented to the Financial Services of Lisbon-6, on 06/06/2014, attached to the present proceedings at the First Meeting of the Arbitral Tribunal;

K. Following the presentation of the replacement Declaration mentioned in I., the Self-Assessment Payment Guide for IRC no. …, was issued, which determined the amount to pay of €172,650.58 – cf. Doc. 7 to the Request for Arbitral Pronouncement;

L. Given that, on 23/05/2011, she had paid the tax resulting from the self-assessment, in the amount of €155,733.96, on 19/12/2013, the Applicant proceeded to pay the difference between the self-assessed amounts, in the total of €16,916.62 – cf. proof of payment attached as Doc. no. 8 to the Request for Arbitral Pronouncement;

M. Interest was also paid, on 7 February 2014, in the amount of €1,742.79 - cf. Doc. no. 9 attached to the Request for Arbitral Pronouncement;

N. Following the presentation of the replacement Declaration referred to in I., the corresponding assessment no. 2013 …, of 17/12/2013, was issued, which determined a total amount to pay of €18,995.11 - cf. Doc. no. 10 attached to the Request for Arbitral Pronouncement;

O. In accordance with the respective Account Reconciliation Statement no. 2013 …, dated 20 December 2013, the amount to pay, in the total of €18,662.24, was broken down as follows - cf. Doc. no. 11 attached to the Request for Arbitral Pronouncement:

  • Assessment Adjustment for 2010 - €16,916.62;
  • Late payment interest - €10.93;
  • Compensatory interest - €1,720.39;
  • Compensatory interest for advance payment - €347.17

P. The deadline for voluntary payment of the Assessment ended on 17/02/2014 - cf. Doc. no. 11 attached to the Request for Arbitral Pronouncement;

Q. Tax enforcement proceedings no. …, were instituted by the Financial Services of Lisbon-6, for payment of the amount determined in the Account Reconciliation Statement identified in O., in the amount of €18,662.24 - cf. Doc. no. 12 attached to the Request for Arbitral Pronouncement;

R. Assessment no. 2013 … was paid on 14/05/2014, already in the context of tax enforcement proceedings no. … (fact which results from the Response of the Respondent and was not contested by the Applicant);

S. Following the total of corrections made by the Tax Inspection, assessment no. 2014 …, of 03/01/2014, was issued, resulting from the corrections of the inspection action, relating to the fiscal year 2010, which determined a taxable base of €1,063,812.05, a tax (IRC and Municipal Surcharge) in the total amount of €228,378.85 and which assessed the amount of €63,477.52 – cf. Doc. no. 13 attached to the Request for Arbitral Pronouncement;

T. The respective Account Reconciliation Statement no. 2014 …, was also issued, which determined the tax to pay in the total amount of €44,482.41 - cf. Doc. no. 14 attached to the Request for Arbitral Pronouncement;

U. The aforementioned amount of tax due/to pay of €44,482.41 was determined as follows:

i. Total IRC for the fiscal year 2010 (after Tax Inspection corrections): €212,421.67 – cf. Doc. no. 13 attached to the Request for Arbitral Pronouncement;

ii. Municipal Surcharge: €15,957.18 - cf. Doc. no. 13 attached to the Request for Arbitral Pronouncement;

iii. Compensatory interest: €7,741.15 - cf. Doc. no. 13 attached to the Request for Arbitral Pronouncement;

iv. Late payment interest: €8.10 - cf. Doc. no. 13 attached to the Request for Arbitral Pronouncement;

In a total assessed of €236,128.10.

v. To the total amount assessed for the fiscal year 2010, the AT considered paid in self-assessment €172,650.58 (see line 28 of Assessment), namely:

a. the amount paid at the time of self-assessment of the tax, in the amount of €155,733.96 - cf. Docs. nos. 3 and 13 attached to the Request for Arbitral Pronouncement (aforementioned proven fact C);

b. the amount of €16,916.62, paid voluntarily by the Applicant following the presentation of the replacement Declaration -cf. Docs. nos. 8 and 13 attached to the Request for Arbitral Pronouncement (aforementioned proven fact L));

vi. To the total amount to pay for the fiscal year 2010, the AT also deducted the amount determined by the second assessment no. 2013 …, and paid in enforcement proceedings, in the amount of €18,995.11 -cf. Doc. no. 14 attached to the Request for Arbitral Pronouncement.

Whereby the tax to pay finally amounted to €44,482.41.

3.2. On Duplicate Collection

3.2.1. On the principal request

Having reached this point, it is finally incumbent to assess the merits of the request for annulment of assessment no. 2013 …, relating to offset no. 2013 …, and the respective statement of interest assessment, in the total amount of €18,995.11, composed of:

a. €16,916.62, as assessment adjustment;
b. €10.93 in late payment interest;
c. €1,720.39 in compensatory interest;
d. €347.17 in compensatory interest for advance payment.

According to the Applicant, the aforementioned assessment is illegal due to duplicate collection, because the same tax was demanded of the same taxpayer twice.

Effectively, and as alleged by the Applicant, notwithstanding the figure of duplicate collection being a tax law institute with the contours delineated in article 205 of the CPPT, in the context of the grounds for opposition to enforcement, it is settled that it may constitute grounds for judicial challenge or gracious petition – see, by way of example, the learned Decision of the Central Administrative Court of the North of 12.10.2006 (Case no. 313/04) and, in doctrine, Jorge Lopes de Sousa – in Code of Tax Procedure and Process, 5th Edition, 2007, Volume II, pp. 396 - and, in that sequence, of arbitral pronouncement, whereby it is appropriate to verify what are the requirements necessary for its verification.

In accordance with art. 205 of the CPPT, which delineates the contours of the figure:

"1 - There shall be duplicate collection for the purposes of the preceding article when, with an entire tax paid, the same or a different person shall be demanded another of equal nature, relating to the same taxable event and the same period of time.

2 - Duplicate collection may only be alleged once, except where it is based on a subsequent document demonstrating payment or a new assessment."

Now, from the foregoing, and following the doctrine of João António Valente Torrão, Code of Tax Procedure and Process Annotated and Commented, Almedina, 2005, p. 818, in annotation to art. 205 of the CPPT:

"Duplicate collection depends on the cumulative verification of the following requirements:

a) Previous and entire payment of a tax;

b) Demand from the same or a different person of tax of equal nature;

c) The tax must relate to the same taxable event and the same period of time;

In the same sense, see the learned Decision of the Central Administrative Court of the North, of 8/11/2012, (Case no. 01128/05.6BEPRT), which decided that the cumulative requirements for the verification of duplicate collection are:

"a) – unity of taxable events;

b) – identity of nature between the contribution or tax and what is newly required;

c) – temporal coincidence of the tax paid and what is to be newly collected.(…)"

Thus, duplicate collection is verified whenever, with a tax payment, another of the same nature is assessed and demanded, in relation to the same taxable event and the same period of time.

It is appropriate to assess, more concretely:

The AT Services proceeded with the issuance of three tax assessments, relating to the fiscal year 2010, namely:

i. The first assessment no. 2011 …, resulting from self-assessment of the tax relating to the fiscal year 2010, which determined a taxable base of €789,680.36 and a tax (IRC and Municipal Surcharge), in the total amount of €155,733.96, in accordance with Proven Fact B) above;

ii. The second assessment no. 2013 …, resulting from the presentation of the replacement Model 22 declaration, on 17/12/2013, which determined a taxable base of €853,516.68 (€789,680.36 initial amount increased by the €63,836.32 of taxable base corrected/increased voluntarily by the Applicant) and a tax (IRC and Municipal Surcharge) in the total amount of €172,650.58 - in accordance with Proven Facts H), I), K) and L) above - and which corresponds to an increase in tax of €16,916.62 compared to the previous assessment;

iii. The third assessment no. 2014 …, resulting from the corrections of the inspection action, relating to the fiscal year 2010, which determined a taxable base of €1,063,812.05 and a tax (IRC and Municipal Surcharge), in the total amount of €228,378.85 - in accordance with Proven Facts S) and U) above - and which corresponds to an increase in tax of €55,728.27 compared to the previous assessment;

From the foregoing it results that the factual reality underlying each of the three assessments above identified is different, because the first refers to the Model 22 Declaration submitted by the Applicant on 23/05/2011 (self-assessment), the second is a consequence of the submission of the replacement Model 22 Declaration, by the Applicant, on 17/12/2013 (self-assessment), and the last is a consequence of the corrections made by the Tax Inspection, and which were subject to judicial challenge, as referred to in these proceedings (proceedings running in the Tax Court of Lisbon).

One could raise the question of whether, with the third additional assessment above referred to, duplicate collection was verified in relation to the expenses for dismantling the wind farm (account 642 – Tangible Fixed Assets), in the amount of €63,836.32, which were voluntarily increased in the taxable base in the second assessment above (and whose legality is assessed here).

However, this is not what was alleged, nor is it the case.

As results from the analysis of the aforementioned assessments, notwithstanding only with the last (third) tax assessment being determined the total amount of IRC and Municipal Surcharge relating to the fiscal year 2010, to be paid by the Applicant, after the tax inspection, in the total amount of €228,378.8, it is verified that this amount of tax determined does not contain any duplicate collection, but rather results from the sum of the taxes individually determined as a consequence of in each one of the assessments (€155,733.96 + €16,916.62 + €55,728.27).

That is, it is proven that all the tax payments made by the Applicant that preceded the last assessment were entirely considered and accounted for by the AT as 'payment on account of the tax due finally after the formation of the taxable event', in accordance with and for the purposes of the provisions of art. 33 of the General Tax Law, and art. 86, nos. 4 to 6 of the CPPT.

Regarding the aforementioned legal provisions, Diogo Leite Campos, Benjamim Silva Rodrigues and Jorge Lopes de Sousa note, General Tax Law Annotated and Commented, 4th Edition, 2012, Encontro da Escrita Editora, p. 276, in annotation to art. 33 of the LGT, that:

"Besides these payments on account, made during the period of formation of the taxable event [art. 33 of the LGT], the CPPT provides, in nos. 4 to 6 of art. 86, the possibility of other payments on account, made after the formation of this event, but before the extraction of the certificate of debt, or in the course of tax enforcement proceedings (arts. 262, no. 4, and 264, no. 2)."

Now, as well noted by the Illustrious Counseling Judge Jorge Lopes de Sousa, Code of Tax Procedure and Process Annotated and Commented, 2007, Áreas Editora, 5th Edition, Vol. II, p. 394 et seq:

"It becomes necessary that the factual reality underlying the plurality of assessments be the same, which will not be the case, for example, in the case of additional assessments, in which it is intended to collect a tax which, wrongly, was not initially assessed. In these situations of additional assessment, the second assessment does not relate to the same taxable event (the same portion of income or property value or expense, for example), to which the first related.

(…)

The reference to the payment of the entire tax has inherent the requirement that the tax due be entirely paid, which rules out the possibility of invoking duplicate collection when the tax is only partly paid, as a consequence of the first assessment, whether because only part of the installments were paid, whether because the first assessment, despite being entirely paid, does not reach the amount to be collected in the face of the second assessment."

The doctrine of the Illustrious Counseling Judge was accepted in the learned Decision of the Central Administrative Court of the North, of 8/11/2012 (Case no. 01128/05.6BEPRT), in whose abstract one can read:

"V. For duplicate collection to occur it is necessary that the factual reality underlying the plurality of assessments be the same, which will not be the case, for example, in the case of additional assessments, in which it is intended to collect a tax which, wrongly, was not initially assessed."

In this manner, and in light of the foregoing, it must be noted that one of the essential legal requirements for the verification of duplicate collection is not met, namely, the unity of the taxable event, and it is certain that such requirements are cumulative.

But not only:

From the analysis of the documentation attached to the proceedings, namely of Docs. 8 to 13 of the Request for Arbitral Pronouncement and of the Facts taken as proven in the proceedings, it further results that:

i. Given that the replacement Model 22 Declaration was submitted on 17/12/2013 (self-assessment);

ii. Given that the additional payment, in the amount of €16,916.62, was made on 19/12/2013;

iii. Given that the corresponding assessment no. 2013 … was issued with the date of 17/12/2013;

iv. Given that the respective Account Reconciliation Statement no. 2013 … was issued on 20/12/2013, with an amount to pay, in the total of €18,662.24.

It happened that the AT's computer system, despite having issued, automatically the assessment no. 2013 … (second Assessment), at the time of the respective Account Reconciliation Statement, did not assume the 'payment on account' of the tax due finally realized voluntarily on the previous day.

However, if this fact is a matter for criticism, it is not sufficient for this Tribunal to conclude that duplicate collection exists, given that the second assessment no. 2013 … whose legality is questioned is nothing more than the legal consolidation/validation of the replacement declaration submitted by the Applicant herself; that is, in this case, it is verified that the same legal rule (…) was not applied more than once to the same taxable event" in the expression, regarding this matter, contained in the learned Decision of the Central Administrative Court of the North, of 08/11/2012 (case no. 01128/05.6BEPRT), already cited.

In the Tribunal's view, what occurred - and for a short period of time, between 20/12/2013 and 07/01/2014 (i.e., between the dates of the Account Reconciliation Statements relating to the second and third tax assessments), as will be explained below - was that an amount paid on account of the tax due finally was not properly and timely considered.

Thus, even if in theory, in the aforementioned period (and only in this), it could be possible to argue that there was true duplicate collection, by the fact that an amount already paid in self-assessment was collected, the truth is that the AT, by assuming and accounting for all payments made by the Applicant and by deducting them from the tax due finally upon issuing the third tax assessment no. 2014 … and respective Account Reconciliation Statement no. 2014 …, ended up curing any eventual defect of the assessment on the grounds of duplicate collection, since all payments were considered as 'payments on account' of the tax (IRC) due finally.

It is understandable, in a first simplistic analysis, that it is frustrating for the Applicant to intend to pay a specific tax and subsequently see enforcement proceedings instituted on the basis of a tax which, allegedly, she already paid.

However, this does not correspond to the truth of the facts, given that, upon issuing assessment no. 2014 … (third assessment of the AT), with corrections to the taxable base resulting from the tax inspection, as well as the respective Account Reconciliation Statement, the AT technically compensated (and considered paid) the amounts of tax assessed previously, a fact to which the Applicant did not object, when finally she was notified to pay "only" €44,482.41

Let us see more particularly,

From the analysis of the last assessment statement issued by the AT, i.e., from the analysis of assessment no. 2014 … (third assessment of the AT), a total self-assessed (and paid) amount is considered in the amount of €172,650.58 (which results from the sum of the payments of assessments no. 2011 … in the amount of €155,733.09, and the amount of €16,916.62).

From the analysis of the respective Account Reconciliation Statement no. 2014 …, of 07/01/2014, in turn, it further appears that, notwithstanding assessment no. 2013 … (second assessment of the AT), in the total amount of €18,995.11, still not being paid (which only happened on 14/05/2014, already in the context of enforcement proceedings), the AT considered this amount as a 'credit' in the context of the Account Reconciliation Statement.

That is, despite the issued assessment determining a final amount to pay of €63,477.52 (where it already considers, on its terms, as self-assessed and paid the €16,916.62 of tax), in the respective Account Reconciliation Statement the total amount to pay amounted to €44,482.41, given that the amount of €18,995.11 corresponding to the total value of the (second) assessment no. 2013 … is deducted.

In summary:

[table in original - showing reconciliation of payments and assessments]

In a still simpler manner, and if doubts remain whether the Applicant paid in the end twice the amount petitioned, to the effect of ascertaining whether duplicate collection was verified, it is important to verify:

With the last (third) tax assessment no. 2014 … the total amount of tax relating to the fiscal year 2010, to be paid by the Applicant, after the tax inspection, was determined in the total amount of €228,378.8, amount to which was added €7,741.15 in compensatory interest and €8.10 in late payment interest, all in a total of €236,128.10.

From the proceedings it is proven, in summary:

Tax and Interest amounts paid by the Applicant:
Self-assessment paid on 23/05/2011 - €155,733.96
1st Assessment Interest paid - €332.87
2nd Assessment paid in enforcement proceedings - €18,662.24
3rd Assessment paid - €44,482.41
Payment on account 19/12/2013 - €16,916.62
Total - €236,128.10

Total 3rd Assessment (IRC + Municipal Surcharge + Interest) - €236,128.10

Interest voluntarily paid on 07/02/2014 - €1,742.79

That is, it results that only the €1,742.79, relating to compensatory and late payment interest voluntarily paid by the Applicant on 7 February 2014, were not considered in the AT's compensations, which should be subject to reimbursement.

In summary, in the Tribunal's view, there are not two assessments relating to the same factual reality and, even if this were not the case - and it is considered that, between the self-assessment of 17/12/2013 and the respective assessment no. 2013 …, issued by the system on the same date, duplicate collection is verified - the defect is cured upon issuing the third assessment no. 2014 … and respective Account Reconciliation Statement no. 2014 …, given that the payments made by the Applicant were not intended by the AT to pay the same 'taxable event', with no existence of a 'double payment', as the legal requirement necessary for verification of the institute.

For all that has been set out, it results that, given that the alleged duplicate collection is not verified in the case sub judice – whose requirements are, in accordance with the law, cumulative with each other -, this Tribunal decides that no illegality on the grounds of duplicate collection can be attributed to the assessment under analysis, whereby, in this part, the Applicant's request is not well-founded.

3.2.2. On the subsidiary request

Subsidiarily, the Applicant petitions in the Request for Arbitral Pronouncement the declaration of nullity of assessment no. 2013 …, the respective statement of interest assessment, and the Account Reconciliation Statement no. 2013 …, on the grounds of "the absence of a taxable event".

However, in its Pleadings, the Applicant indicates as grounds for the nullity, no longer the absence of a taxable event, but "a drastic violation of the essential content of the right to private property, enshrined in art. 62., as well as of the principle of prohibition of excess, and of the principle of fiscal equality, embodied in the 2nd and 13th, all enshrined in the Constitution of the Republic."

Now, in the case, the Applicant alleges that there is nullity of the assessment, in accordance with art. 133, no. 2, paragraph d) of the Administrative Procedure Code, which provides that null are acts which offend the essential content of a fundamental right.

It is appropriate to ascertain whether this is the case.

In a first analysis, and with all due respect, it is important to verify that the Applicant has doubts regarding the legal effect of the eventual declaration of illegality of an assessment on the grounds of duplicate collection, namely, whether the assessment is annullable or null, whereby she formulated a first request (principal) for annulment of the assessment on the grounds of duplicate collection, and a second request (subsidiary) for declaration of nullity of the assessment, on the same grounds.

As a rule, and in accordance with settled jurisprudence of the courts of administrative and tax jurisdiction, the defects of the assessment act constitute grounds for its annullability, and only imply its nullity when there is a lack of any of the essential elements of the act or when there is a law that expressly provides for this form of invalidity, in accordance with the provisions of articles 133, no. 1, and 135 of the Administrative Procedure Code [see particularly, the abstracts of the Decision of the Supreme Administrative Court, of 24.10.2014, (Case 0501/12) and the Decision of the Central Administrative Court of the North, of 20.10.2005 (Case no. 000075/02)];

In the case of illegality of a tax act on the grounds of duplicate collection, this Tribunal understands, in follow-up, indeed, of what has been defended by the national courts of administrative and tax jurisdiction, that the illegal assessment on the grounds of duplicate collection is annullable, and not null, not constituting an exception to the general regime set out above.

In this sense, see the Decision of the Supreme Administrative Court, of 08.07.2009, rendered in the course of Case no. 0530/09, in accordance with which:

"Duplicate collection, as a ground for judicial challenge, constitutes a defect generating mere annullability and not nullity."

Corroborating the foregoing, see also the Decision of the Supreme Administrative Court, of 19/04/2012 (Case 0150/12), which decided that:

"Now, duplicate collection occurs (cfr. no. 1 of art. 205° of the CPPT) when, with an entire tax paid, the same or a different person shall be demanded another of equal nature, relating to the same taxable event and the same period of time.
Admitting cases (in addition to situations in which it constitutes grounds for opposition to tax enforcement ― para. g) of no. 1 of art. 204° of the CPPT) in which this illegality (duplicate collection) may be the object of judicial challenge, it is an illegality which, being generative of mere annullability, must be invoked within the general period."

Notwithstanding the foregoing, it must be said as referred to above, that in the situation sub judice the legal requirements for the verification of a situation of duplicate collection are not met.

Decision

In view of all the foregoing, this Arbitral Tribunal judges the principal and subsidiary requests formulated by the Applicant to be not well-founded.

In accordance with the provisions of art. 315, no. 2 of the CPC, 97-A, no. 1 paragraph a) of the CPPT and 3, no. 2 of the Regulation of Costs in tax arbitration proceedings, I fix the value of the proceedings at €18,995.11.

In accordance with art. 22, no. 4 of the RJAT, I fix the amount of costs at €1,224.00, in accordance with Table I attached to the Regulation of Costs in tax arbitration proceedings, being due by the Applicant.

Lisbon, 9 December 2014

Marla Brás

Frequently Asked Questions

Automatically Created

What constitutes double tax collection (duplicação de coleta) under Portuguese IRC law?
Duplicate tax collection (duplicação de coleta) under Portuguese IRC law, governed by Article 205 of the Tax Procedure Code (CPPT), occurs when the Tax Authority demands payment of the same tax twice from the same taxpayer for the same taxable period. The essential elements are: (i) the same tax obligation (IRC), (ii) the same taxpayer, (iii) the same tax period, and (iv) multiple demands for payment without legal justification. In IRC contexts, this typically arises when multiple assessment notices are issued for the same fiscal year, resulting in the taxpayer being required to pay the same amount more than once. However, not all successive assessments constitute duplicate collection—the Tax Authority may legitimately issue corrective or supplementary assessments following inspections, replacement declarations, or error corrections, provided each assessment reflects a distinct legal basis and previously paid amounts are properly credited.
Can a taxpayer challenge a duplicate IRC assessment through tax arbitration at CAAD?
Yes, taxpayers can challenge duplicate IRC assessments through tax arbitration at CAAD (Centro de Arbitragem Administrativa) under the Legal Framework for Tax Arbitration (RJAT - Decree-Law 10/2011 of January 20). Article 10 of RJAT grants CAAD jurisdiction over disputes concerning the legality of tax acts, including IRC assessments, account reconciliation statements, and collection notices. Taxpayers can petition for annulment of assessments based on duplicate collection under Article 205 CPPT. However, CAAD's jurisdiction has limitations—it generally cannot directly annul tax enforcement proceedings (processos de execução fiscal), which fall under the jurisdiction of tax execution courts. Taxpayers may need to formulate their requests carefully to avoid procedural objections regarding incompatible cumulative requests or lack of jurisdiction over certain acts. The arbitration request must be filed within the legal time limits and clearly specify the grounds for challenging the duplicate assessment.
What happens when a voluntary substitute Model 22 declaration triggers a second tax assessment?
When a taxpayer voluntarily files a substitute Model 22 IRC declaration (declaração de substituição), the tax system automatically generates a new assessment notice superseding the previous one. The replacement declaration recalculates the entire tax liability based on corrected figures, not just the incremental change. This triggers a complete reassessment of IRC for that fiscal year. The new assessment shows: (i) the revised taxable profit, (ii) the total tax due based on corrected amounts, and (iii) credits for amounts previously paid. The taxpayer must pay any additional tax resulting from increased taxable base, plus compensatory interest calculated from the original due date. In this case, the replacement declaration increasing the base by €63,836.32 generated a new total assessment of €172,650.58. Since the taxpayer had previously paid €155,733.96, only the difference of €16,916.62 plus interest was due. Problems arise when subsequent assessments from tax inspections create confusion about which amounts have been paid and credited.
How does the Portuguese Tax Authority handle corrections after a tax inspection for IRC purposes?
Following a tax inspection for IRC purposes, the Portuguese Tax Authority follows a structured process: (i) inspectors analyze the taxpayer's accounts and issue an inspection report (relatório de inspeção) detailing proposed corrections to the taxable base; (ii) the taxpayer receives notification and has the right to respond (direito de audição prévia) before final corrections; (iii) if corrections are maintained, the AT issues a corrective assessment notice (liquidação adicional) reflecting the adjusted taxable profit, additional tax, compensatory interest from the original due date, and any applicable penalties; (iv) a collection notice and account reconciliation statement are generated showing amounts due; (v) the taxpayer may voluntarily accept corrections by filing a replacement declaration before the final assessment, or challenge them through administrative review (recurso hierárquico), judicial appeal, or tax arbitration. Multiple assessments may be issued: one from any voluntary replacement declaration filed during inspection, and another final assessment incorporating all inspection corrections. The AT must properly credit all previous payments across successive assessments.
What are the legal grounds for annulling an IRC liquidation based on duplicação de coleta?
The legal ground for annulling an IRC assessment based on duplicate collection is Article 205 of the Tax Procedure Code (CPPT). To succeed in an annulment claim, the taxpayer must prove several cumulative elements: (i) two or more collection acts (assessments or payment demands) for the same tax (IRC), (ii) relating to the same taxable period (fiscal year), (iii) imposed on the same taxpayer, and (iv) no legal justification exists for multiple collections—meaning previously paid amounts were not properly credited. The burden of proof lies with the taxpayer to demonstrate through payment receipts, bank statements, and assessment notices that the same tax amount was effectively demanded and paid twice. Taxpayers can seek annulment through: administrative review (recurso hierárquico), judicial appeal to tax courts, or tax arbitration at CAAD under RJAT. If duplicate collection is proven, the illegal assessment must be annulled, any enforcement proceedings based on it must be extinguished, and amounts paid in excess must be refunded with compensatory interest calculated according to CPPT provisions. The mere issuance of multiple assessments does not automatically constitute duplicate collection if each has a distinct legal basis and proper credits are applied.