Summary
Full Decision
ARBITRAL DECISION
I. Report
1. On 22 June 2017, the company A..., S.A. submitted a request for the constitution of a collective arbitral tribunal in accordance with the combined provisions of Articles 2 and 10 of Decree-Law no. 10/2011 of 20 January (Legal Regime for Arbitration in Tax Matters, hereinafter referred to only as RJAT), with a view to declaring illegal the self-assessment of IRC, including autonomous taxation rates, of Fiscal Group B..., relating to the financial year 2013.
2. Pursuant to paragraph 2 of Article 6 of the RJAT, the Deontological Council of the Arbitration Centre appointed the undersigned arbitrators, notifying the parties.
3. The tribunal is duly constituted to appreciate and decide on the subject matter of the proceedings.
4. The allegations sustaining the Claimant's request for arbitral pronouncement are, in summary, as follows:
4.1. On 29 May 2014, the Claimant proceeded to submit the IRC declaration Form 22 of its Fiscal Group relating to the financial year 2013, and, with respect to that financial year, submitted, on 29 May 2015, an amended declaration.
4.2. At those times, it proceeded to self-assess autonomous taxation in IRC for that same financial year of 2013 in the amount of €150,508.15, a value that underwent no alteration in the amended declaration.
4.3. The Claimant filed a gracious objection against the said self-assessment of autonomous taxation relating to the financial year 2013.
4.4. On 28 March 2017, the Claimant was notified by electronic means of the partial (dis)approval of the aforementioned gracious objection, with recognition of the right to a deduction of €13,290.95, relating to SIFIDE, to state surtax, but nothing more.
4.5. It occurs that, as to what is now at issue, with respect to the tax resulting from the application of autonomous taxation rates in IRC, the Tax Authority's computer system reveals anomalies embodied in the flagging of divergencies ("errors") that prevent the Claimant from entering the value relating to the said autonomous taxation rates in IRC, expunged, i.e., deducted, within the scope of the IRC collection resulting from the application of these rates, either from the amounts of tax benefit recognized to companies of the fiscal group under SIFIDE, in the modality of tax credit deductible from IRC collection, or from the amounts of tax benefit recognized to companies of the fiscal group under RFAI, or even from the amounts of tax benefit recognized to companies of the fiscal group under Extraordinary Tax Credit for Investment (CFEI), which resulted in an excess tax paid by reference to the financial year 2013, at issue here.
4.6. The amount of SIFIDE assigned, available for use at the beginning and end of the financial year 2013 amounted respectively to €418,845.16 and €212,094.11.
4.7. On the other hand, in respect of RFAI, there remains an accumulated initial and final amount in the taxation period of 2013 to be deducted from IRC collection that amounted to €1,010,766.38 and €764,636.67 respectively.
4.8. The amount of CFEI available in the financial year at the beginning and end of 2013 amounted in turn to a total of €347,249.24 and €119,796.34 respectively.
4.9. In summary, the Claimant's fiscal group has IRC credits for deduction from its respective collection in an amount far superior to the collection of autonomous taxation in IRC for the financial year 2013, a collection which, as mentioned above, amounted to €150,508.15, and this deduction (which the Tax Authority's computer system does not permit) should be made in the following manner, by adding to the other two components of IRC (basic IRC and state surtax) the collection of autonomous taxation in IRC.
4.10. It should be noted that the Tax Authority did not and has not determined the taxable income of fiscal group B… and its respective companies by indirect methods: it was determined in the normal manner, via submission of form 22.
4.11. Furthermore, the companies that are part of the fiscal group at the origin of RFAI, CFEI and SIFIDE were not, at the relevant time, entities owing the State and social security any taxes or contributions.
4.12. It occurs that with respect to the tax resulting from the application of autonomous taxation rates in IRC, the Tax Authority's computer system prevents the Claimant from entering the value relating to the said autonomous taxation rates in IRC, expunged, i.e., deducted, within the scope of IRC collection resulting from the application of these rates, from the amounts of tax benefits of deduction from IRC collection that are RFAI, CFEI and SIFIDE for deduction from IRC collection, which resulted in an excess tax paid by reference to the financial year 2013 at issue here.
4.13. That is, the Tax Authority's computer system, through which IRC is self-assessed, does not permit taxpayers to deduct, for the purposes of determining the IRC owed by them, from IRC resulting from the autonomous taxation assessed, RFAI, CFEI and SIFIDE.
4.14. That system does not therefore permit deducting RFAI, CFEI and SIFIDE credits from a part of final IRC actually determined – the autonomous taxation.
4.15. In other words, intentionally or inadvertently, the IRC declaration Form 22 and its articulation with the programming of the Tax Authority's computer system prevents deduction from the collection related to autonomous taxation rates in IRC, entered in field 365 of table 10 of declaration Form 22, of RFAI, CFEI and SIFIDE still to be deducted from IRC collection.
4.16. It is settled case law (and Tax Authority doctrine, when it suits it) that autonomous taxation in IRC is IRC; and that the norms of IRC liquidation contained in Article 89 et seq. of the CIRC apply to it.
4.17. With respect to the triangle "State Budget Law for 2016, Constitution and tax benefits for investment incentives provided for in separate legislation," of which the tax benefits at issue are examples (RFAI, CFEI and SIFIDE), the following was concluded in the arbitral award of 28 April 2016, delivered in proceedings no. 673/2015-T (JORGE LOPES DE SOUSA, A. SÉRGIO DE MATOS and LUÍS MIRANDA DA ROCHA), at page 32: "(...) as the tax benefit is a counterpart to the adoption of legislatively desired and incentivized conduct, it would be incompatible with the constitutional principle of confidence, inherent in the principle of the democratic rule of law (Article 2 of the CRP), not to recognize to such conduct the favorable tax effects provided for in the law in force at the time they occurred. Therefore, if hypothetically Law no. 7-A/2016 intended to eliminate, wholly or partially, the favorable tax effects that Law no. 49/2013 [in that case CFEI was at issue] established for taxpayers who adopted the conduct provided for therein, it would be materially unconstitutional, by violation of that principle".
4.18. To the same effect, the awards delivered in proceedings nos. 740/2015-T, 749/2015-T, 784/2015-T and 5/2016-T spoke, with respect to the deduction of SIFIDE and RFAI from the collection of Autonomous Taxation.
4.19. It should be noted that it is not true the assertion by the Tax Authority that it does not apply paragraph 2 (deductions from collection) of Article 90 of the CIRC to the collection of autonomous taxation, because it does apply it: withholdings at source are (pacifically) deducted from the collection of autonomous taxation and the same occurs with (normal) payments on account, whose reimbursement is made (cf. Article 104, paragraph 2, of the CIRC) ever since when the aggregate of the collections of basic IRC and autonomous taxation in IRC is insufficient. All of this is done, applies, ever since (see the Tax Authority's calculation formula in fields 367 and 368 of table 10 of declaration Form 22).
4.20. The incongruity lies in the Tax Authority's refusal to apply the same to the collection of autonomous taxation in IRC with respect to other parcels equally deductible from IRC collection. And the logical impossibility lies in the interpretation of the same exact expression in the same exact provision (paragraph 2 of Article 90 of the CIRC: "From the amount determined in accordance with the preceding number the following deductions are made...") with opposite meanings depending on whether the deductible parcel, or clause in question, is one or another.
4.21. Falling equally, apparently, into logical impossibility, the State Budget Law 2016 if, on the one hand, it reaffirmed that Article 89 of the CIRC applies to autonomous taxation (part 1 of the new paragraph 21 of Article 88 of the CIRC), on the other hand excluded autonomous taxation from paragraph 2 of Article 90 following (part 2 of the new paragraph 21 of Article 88 of the CIRC), and to both of these prescriptions, of opposite meaning, attributed, at first sight, and contradictorily, interpretive character.
4.22. It should be emphasized that the prism of counting votes (or weighing the inclination of case law) until 30 March 2016 is a first symptom that one is faced with a law that is innovative as to the exclusion prescribed in part 2 of the new paragraph 21 of Article 88 of the CIRC.
4.23. It may, and should, be concluded that Article 135 of State Budget Law 2016 refers only to part 1 of the new paragraph 21 of Article 88 of the CIRC, an interpretation which is authorized in the negative by the manifest incorrectness of the drafting of that Article 135 (as developed above), revealing the little care the legislator had in being precise, and which is authorized in the positive by the presumption that the legislator adopted the most correct solutions and by the directive of interpretation in accordance with the Constitution (in a more advanced phase of this summary of analysis, further grounds for this interpretation of Article 135 of State Budget Law 2016 will be presented).
4.24. Furthermore, as developed above, the attribution of interpretive nature to a tax norm does not by itself trigger the application of the regime for the application of laws in time provided for in the Civil Code. Specifically, and summarizing, the regime for the application of laws in time provided for in the Civil Code (where its Article 13 is included by its own right), does not apply with respect to matters that have a specific regime for that purpose, in obedience to distinct principles, as is the case (currently) with taxes: cf. Article 12 of the LGT and Article 103, paragraph 3, of the Constitution.
4.25. In any case, Article 13 of the Civil Code and the prescription of retroactivity contained therein only apply to interpretive norms, as opposed to false interpretive norms. And part 2 of the new paragraph 21 of Article 88 of the CIRC is, assuming it was truly the legislator's intention to attribute interpretive character to it (a matter to which we shall return below), a false interpretive norm.
4.26. From no part of State Budget Law 2016 does there result identification of the norm that part 2 of the new paragraph 21 of Article 88 of the CIRC would be intended to interpret, which constitutes yet another symptom that one is faced with a normative novelty, as opposed to an interpretive view of an old norm.
4.27. Admitting, for the sake of argument, that the norm subject to interpretation be paragraph 2 of Article 90 of the CIRC (no other possible candidate is seen), the relevant question then becomes this: what ambiguity is detected in the reference therein to IRC that was not also shared then and to the same extent both by the preceding paragraph 1 of the same Article 90, and by the preceding Article 89?
4.28. Let it be seen, no ambiguity or opacity: all these norms are directed to the liquidation of IRC, without any ambiguity, in the phase following the regulation of primary collection (which is obtained by the application of IRC rates to taxable IRC matters, in accordance with the preceding Articles 1 to 88 of the CIRC).
4.29. Which brings us to yet another strong reason to consider that part 2 of the new paragraph 21 of Article 88 of the CIRC is not interpretive for the purposes of application of law in time, that is, for the purposes of activating the provision of Article 13 of the Civil Code (assuming, for the sake of argument, that this is applicable in matters that have specific regulation in respect of the application of law in time).
4.30. Indeed, both parts, 1 and 2, of the new paragraph 21 of Article 88 of the CIRC cannot, by logical and systemic impossibility, be simultaneously interpretive of what Articles 89 and 90 of the CIRC provide (both inserted in the same phase of IRC liquidation, following attainment of primary collection), in opposite senses.
4.31. And knowing the overwhelming case law, accompanied by the Tax Authority, to the effect of qualifying the collection of autonomous taxation in IRC as having the nature of IRC, it is easy to conclude that in this duality of prescriptions of opposite meaning, the one with interpretive nature is part 1, and that therefore, and necessarily, part 2 of the new paragraph 21 of Article 88 of the CIRC has an innovative character (against the current, in this case against the inclusion of the primary collection of autonomous taxation in IRC collection).
4.32. And with this, the first of the qualitative reasons presented above is reinforced: the logical impossibility detected, the antinomy, is only resolved if the attribution of interpretive nature to the new paragraph 21 of Article 88 of the CIRC, by Article 135 of State Budget Law 2016, is interpreted as meaning to refer to part 1, and not to part 2, of the said paragraph 21.
4.33. If, notwithstanding all the reasons enumerated above, it is still held that (i) Article 135 of State Budget Law 2016 (Law no. 7-A/2016 of 30 March) attributed interpretive nature also to part 2 of the new paragraph 21 of Article 88 of the CIRC, that is, also to the normative segment "no deductions being made from the global amount [of autonomous taxation in IRC] determined," introduced by the same State Budget Law 2016 (by its Article 133), (ii) and that from this would result the application of Article 13 of the Civil Code as it prescribes the retroactive application of interpretive laws, one would be faced with a material unconstitutionality of the said Article 135 of State Budget Law 2016, by violation of the prohibition of retroactivity in tax matters provided for in Article 103, paragraph 3 of the Constitution, whether one has concluded, or not (and it is understood that not), that one is faced with a law materially interpretive, and by violation, also, of the principle of separation of powers and the principle of independence of the judiciary.
4.34. And it would also violate the provision of Article 2 (democratic rule of law, and separation and interdependence of powers, it being that as to this latter aspect in this case the perspective of interdependence – and consequently denial of excesses and occupation of space that does not belong to it – of the political-legislative power in relation to the judicial power is at issue), of Article 111, paragraph 1 (separation and interdependence of organs of sovereignty, which is still a material limit on revision – Article 288, clause j), of the Constitution), and of Article 203 (independence of courts, another material limit on revision – Article 288, clause m), of the Constitution), all of the Constitution.
4.35. The Claimant paid tax in an amount superior to that legally due, therefore, declaring the illegality of the (self-)assessment as petitioned herein, the Claimant has the right not only to its reimbursement, but also, under Article 43 of the General Tax Law ("LGT"), to compensatory interest.
5. For its part, the Respondent Tax Authority and Customs presented its response, in which it defended itself, in summary, in the following terms:
5.1. Both case law and doctrine have already extensively addressed the characterization of the figure "autonomous taxation" in IRC (and in IRS) and the legislative evolution verified from its creation, by Article 4 of Decree-Law no. 192/90 of 09.06, until the present.
5.2. The considerations made in this respect reveal that the figure of autonomous taxation has been instrumental to the pursuit of diverse objectives, ranging from the original purpose of preventing practices of evasion and fraud – through confidential or undocumented expenses, or payments to entities located in jurisdictions with privileged tax regimes, to the substitution of taxation of accessory advantages in the form of representation expenses or allocation of vehicles to workers and members of corporate bodies, in the sphere of their respective beneficiaries – to the aim of preventing the phenomenon designated "dividend washing" (cf. paragraph 11 of Article 88 CIRC) or burdening, through taxation, the payment of income considered excessive (cf. paragraph 13 of the same provision).
5.3. Adding further that, in terms of a common denominator, it could be affirmed that this type of taxation targets "expenses that are found in the zone of intersection of the personal sphere and the business sphere, so as to avoid remuneration in kind more attractive for exclusively fiscal reasons or hidden distribution of profits".
5.4. It is recognized that the autonomous character of these taxation, resulting from the special configuration given to the material and temporal aspects of the taxable events, imposes, in certain domains, the departure from or an adaptation of the general rules for application of IRC.
5.5. In reality, the integration of autonomous taxation into the IRC Code (and IRS), conferred a dualistic nature, in certain aspects, to the normative system of this tax, which materialized, namely, in the scope of clause a) of paragraph 1 of Article 90 of the CIRC, in separate determinations of their respective collections, by force of being subject to different rules.
5.6. That determination in an independent manner implies that, in one case, it is the application of the rate(s) of Article 87 of the CIRC to the taxable matter determined according to the rules contained in Chapter III of the Code, i.e., having as a starting point the entity's profit (cf. paragraph 1 of Article 15 of the CIRC) and, in the other case, it is the application of rates to the values of taxable matters relating to the different realities contemplated in Article 88 of the CIRC.
5.7. There is not a single liquidation of IRC, but rather two types of determinations, that is, two distinct calculations which, although processed, in accordance with the same legal basis – clause a) of paragraph 1 of Article 90 of the CIRC - and in the declarations to which Articles 120 and 122 of the same code refer, are effected on the basis of different parameters, as each materializes itself in the application of its own rates, provided for in Articles 87 or 88 of the CIRC, to their respective taxable matters determined equally in accordance with their own rules.
5.8. Now, when, in the liquidation process, there is determination of IRC on the basis of taxable matter which has profit as its basis and determination of autonomous taxation, the amount globally determined, in accordance with clause a) of paragraph 1 of Article 90, does not have a unitary character, as it integrates values calculated according to different rules, to which are associated also distinct purposes, whereby from such differentiation the necessary consequences must be extracted in the plane of deductions provided for in the clauses of paragraph 2, to the effect that they can only be made to the part of IRC collection with which there exists a direct correspondence, so as to maintain the coherence of the conceptual structure of the standard regime of the tax.
5.9. Following the integration of autonomous taxation into the IRC Code, by Law no. 30-G/2010 of 29/12, the legislator does not appear to have felt the need to explicitly clarify – that is, in all the normative provisions where they manifest themselves – the consequences of the coexistence of two forms of imposition within the IRC system, limiting itself to providing for situations in which IRC exemption did not project onto autonomous taxation.
5.10. This resulted in the addition made to the wording of Article 12 of the CIRC to the effect of clarifying, with interpretive character, that companies and other entities covered by the fiscal transparency regime are not taxed in IRC, except as to autonomous taxation.
5.11. Furthermore, it was also established (cf. the then paragraph 6 of Article 109 of the CIRC, current Article 117) that the obligation to file the periodic income declaration covers entities exempt from IRC, when they are subject to autonomous taxation.
5.12. It was thus left to the care of the interpreter and applier of the law the task of, in the face of the need, for certain effects – namely of the deductions provided for in paragraph 2 of Article 90 of the CIRC or the calculation of payments on account or still of the Liquidation Result (Article 92) – identifying the relevant part of IRC collection, extracting from the applicable normative provisions a useful meaning, literally possible, that permits a solution coherent and in accordance with the nature and functions attributed to each component of the tax.
5.13. Indeed, for the calculation base of payments on account only IRC determined on the basis of taxable matter determined in accordance with the rules of Chapter III and the rates of Article 87 of the respective Code is considered.
5.14. For it is to be emphasized that the coherence and adequacy of this understanding is grounded in the very nature of the payments on account of the tax due finally, which, in accordance with the definition of Article 33 of the LGT are "the pecuniary advances that are made by taxable subjects in the period of formation of the taxable event," constituting a "(…) form of approximating the moment of collection to that of the perception of income so as to fill situations in which that approximation cannot be effected through withholdings at source."
5.15. Thus, the delimitation of the content of the expression used by the legislator in paragraph 2 of Article 90 of the CIRC, "amount determined in accordance with the preceding number," and in paragraph 1 of Article 105 of the CIRC, "tax liquidated in accordance with paragraph 1 of Article 90," must be made in a coherent manner; which is equivalent to saying that it corresponds to the amount of IRC calculated by means of the application of the rates of Article 87 to the taxable matter determined on the basis of profit and the rates of Article 87 of the Code.
5.16. Being the only (and consistent) interpretation of the expression "amount determined in accordance with the preceding number" with the nature of the deductions referred to in the clauses of paragraph 2 of Article 90 of the IRC Code, relating to: tax credits for international legal and economic double taxation (current clauses a) and b)); tax benefits (current clause c)); special payment on account (current clause d)); and withholdings at source (current clause e)).
5.17. In reality, it should be noted that the common trait to all the realities reflected in the deductions referred to in paragraph 2 of Article 90 of the CIRC lies in the fact that they relate to income or expenses incorporated in the taxable matter determined on the basis of the taxable subject's profit or advance payments of the tax, being, therefore, entirely unrelated to the realities that integrate the taxable events of autonomous taxation.
5.18. For its part, as regards tax benefits, the tax credit or deduction from collection constitutes one of the technical modalities, among those provided for in paragraph 2 of Article 2 of the EBF, that have been adopted, especially, in measures of fiscal incentives to investment, fundamentally, for two reasons: One, linked to the operationality of the benefit, by the transparency and simplicity of calculation of the fiscal expenditure associated which, as is known, represents the cessant fiscal revenue (of IRC), and, another, which relates to the philosophy underlying the benefits, that is, their indexation to investment profitability, according to which "the deduction of a certain percentage of an investment from the collection of a tax on profits only takes effect if there is profit, which rewards the profitability of the investment".
5.19. Thus, also, for deductions from collection by title of tax benefits, the amount to which they are made can only relate to the tax liquidated on the basis of the taxable matter, determined on the basis of the rules of Chapter III and the rates provided for in Article 87 of the CIRC.
5.20. This, on pain of an incongruity resulting from the subversion of the necessary interconnection that, in the material plane, must exist between the objectives pursued by the benefits and the very magnitude represented by profit.
5.21. Moreover, the position defended by the Tax Authority has explicit support in the provision of paragraph 5 of Article 90 of the CIRC – through which the legislator provides a clear indication that the amount of tax liquidated, to which the deductions referred to in paragraph 2 of the same article are made, does not include the amount corresponding to autonomous taxation – by stipulating that the deductions that are imputed to partners or members of entities covered by the fiscal transparency regime established in Article 6 (entities that are subject to payment of autonomous taxation, by force of Article 12) are "deducted from the amount determined on the basis of the taxable matter that took into account the imputation provided for in the same article".
5.22. Given that the command of this normative provision is directed to the partners or members of transparent entities – which, in the process of determining their respective taxable income, must integrate in the same the values (relating to taxable income/fiscal loss or taxable matter, as the case may be) that are imputed to them – what the legislator indicates, in a completely clear manner, is that the deductions provided for in paragraph 2 of Article 90 of the CIRC, which are equally imputed to the partners or members, must be made to the amount of tax determined on the basis of the taxable matter in which the imputation provided for in Article 6 of the CIRC is reflected, and, not already, note and emphasize, to the amount relating to autonomous taxation.
5.23. Now, if this is the procedure to be adopted by IRC subjects who are partners or members of transparent entities, with respect to deductions concerning the transparent entity in which they participate, it would be entirely incongruous, furthermore without any support in law, to defend the thesis that, for the deductions referred to in paragraph 2 of Article 90 of the CIRC, which directly concern those taxable subjects, the same could be made to the amount determined with autonomous taxation.
5.24. Beginning with the deduction relating to tax benefits (clause b) of paragraph 2 of Article 90), when it comes to investment benefits, which has underlying the philosophy that the benefit constitutes an award whose amplitude varies with the profitability of investments, for, the higher the profit/taxable matter of IRC the greater will be the capacity to make the deduction.
5.25. There is verified, therefore, an indissoluble connection between the amount of the tax credit for investment and the part of IRC collection calculated on the taxable matter based on profit and, if this were not the case, the necessary articulation that, in the material plane, must exist – between the objectives pursued by tax benefits and their impact on the very magnitude that serves as the basis for calculating taxable matter and collection - profit - would be subverted.
5.26. The defense of the Claimant's thesis relies on the similarity existing between, on the one hand, the expression used in the SIFIDE regime with respect to deduction from IRC collection (cf. paragraph 1 of Article 36 of the Investment Tax Code, added by Decree-Law no. 82/2013 of 17/06) "amount determined in accordance with Article 90 of the IRC Code, and to its extent", and, on the other, in the CFEI regime (clause a) of Article 3 of Law no. 49/2013 of 16 July), which refers to "amount determined in accordance with clause a) of paragraph 1 of Article 90 of the IRC Code", although, in paragraph 1 of the same provision, reference is made to "deduction from collection".
5.27. Notwithstanding the drafting variants used in different normative provisions of the Investment Tax Code, of the Statute of Tax Benefits and of extraordinary legislation, which regulate tax benefits aim to achieve the same result – deduction from IRC liquidated in accordance with clause a) of paragraph 1 of Article 90 of the respective Code – and, therefore, do not introduce any difference in the delimitation of their real content.
5.28. Let it be said, moreover, that to designate the same magnitude, both paragraph 1 of Article 92 and paragraph 1 of Article 105 of the IRC Code refer to "tax liquidated in accordance with paragraph 1 of Article 90" and on its content, both the Tax Authority and taxpayers in general have always reported the calculations provided for in those provisions – result of liquidation and payments on account, respectively - to the part of IRC collection that has as its basis the taxable matter determined as based on profit, which reveals that no different scope can be attributed to identical expressions, depending on whether it is intended that the effect be favorable or unfavorable to the taxpayer.
5.29. See that, regarding the deduction of CFEI, Article 3 itself, paragraph 5, clause a), of Law no. 49/2013 provided a clarifying answer, by prescribing that "Applying the special regime for taxation of groups of companies, the deduction provided for in paragraph 1: a) Is made to the amount determined in accordance with clause a) of paragraph 1 of Article 90 of the IRC Code, on the basis of the taxable matter of the group;".
5.30. Now, the taxable matter of the group can only be the one referred to in paragraph 1 of Article 69 "Where there is a group of companies, the parent company may opt for the application of the special regime for determination of taxable matter in relation to all companies of the group.", whose calculation obeys, among others, the special rules provided for in Articles 70 and 71, where no interference of autonomous taxation is detected, which, moreover, are determined autonomously by each company belonging to the group.
5.31. Whence it follows that if the legislator clarified, in cases where the special regime for taxation of groups of companies is applied, that the part of IRC collection to which the deduction of the tax benefit would be made was that calculated on the basis of the taxable matter of the group, it would be poorly understood that in cases where the company is taxed on an individual basis the deduction of the benefit would be made to IRC collection that included the part relating to autonomous taxation.
5.32. Thus it is demonstrated that the norms regulating the deduction of investment tax benefits integrate themselves, by the manner in which they operate and by the aims attached to the benefits, in the structure of the standard regime of IRC, whereby they are not reconcilable with the ratio legis of autonomous taxation nor with their respective taxable events, and the proof is that the legislator itself took care to mark that dividing line in Article 3, paragraph 5, clause a), of Law no. 49/2013.
5.33. SIFIDE 2009 and 2010, as well as SIFIDE II, allow companies to obtain a tax benefit, in the context of IRC, proportional to the investment expense in research and development (at the level of processes, products and organizational) that they can demonstrate, in the part that has not been the subject of financial participation of the State on a non-refundable basis (Cf. Law no. 55-A/2010 of 31 December, Decree-Law no. 82/2013 of 17 June and Law no. 83-C/2013 of 31 December).
5.34. The benefit to be obtained with SIFIDE II is translated into the possibility of deducting from the IRC collection determined in the financial year, an amount of tax credit that results from the sum of the following items: Base rate: 32.5% of expenses incurred in the financial year; Incremental rate: 50% of the increase in expenses incurred in the financial year over the simple arithmetic average of expenses incurred in the two preceding financial years, up to the limit of €1,500,000.
5.35. Consequently, in the regime provided for, expenses which, due to insufficient collection, cannot be deducted in the financial year in which they were incurred can be deducted until the eighth immediately following financial year.
5.36. The essential prior question, which is necessary here, is in knowing how to identify the "amount determined in accordance with the preceding number" to which the preamble of paragraph 2 of Article 90 of the CIRC alludes, to which the value corresponding to research and development expenses should then be deducted, in the part that has not been the subject of financial participation of the State on a non-refundable basis, in a dual percentage: a) Base rate - 32.5% of expenses incurred in the taxation period, and b) Incremental rate - 50% of the increase in expenses incurred in the taxation period in relation to the simple arithmetic average of the two preceding financial years, up to the limit of €1,500,000.
5.37. The values that translate the tax benefit in the context of SIFIDE are deducted "from the amounts determined in accordance with Article 90 of the IRC Code, and to its extent" and in the liquidation relating to the taxation period in which the expenses are incurred for that purpose eligible and that, in the absence or insufficiency of collection determined in those terms, the expenses that cannot be deducted in the financial year in which they are incurred "may be deducted until the 6th immediately following financial year".
5.38. Now then, the "amount determined in accordance with the preceding number" to which paragraph 2 of Article 90 refers, when the liquidation is to be made by the taxpayer (situation that occurs in this case), is determined on the basis of taxable matter based on profit, which appears in that liquidation/self-assessment [cf. Article 90, paragraph 1, clause a) of the CIRC].
5.39. Being the tax credit in which SIFIDE is translated deducted only from the amount so determined, that is, on the basis of the taxable matter [it is what is provided for in Article 5, clause a), of the Law governing SIFIDE, preventing this expressly that the credits arising from it are deducted when taxable income is determined by indirect methods].
5.40. Having regard to the nature and reason for the autonomous taxation, it is not possible to admit, on pain of subversion of the order of values, the deduction of SIFIDE (or other tax benefits), on pain of mischaracterization of the principles that are specifically intended to be pursued, both with such incentives and with autonomous taxation.
5.41. Admitting this possibility would lead, in the limit, to a taxable subject being able to make the deduction by title of SIFIDE (or other tax benefits – see RFAI, CFEI) from the amount of autonomous taxation inciding on undocumented expenses, completely subverting the function of these taxation in the prevention or avoidance of unwanted fiscal and social conduct.
5.42. Therefore, if any doubt remained about the controversial question, it was dissipated with the interpretive nature attributed by Article 135 of Law no. 7-A/2016 of 30 March to the provision of paragraph 21 added to Article 88 of the IRC Code, by Article 133 of the same Law, with the following wording: "The liquidation of Autonomous Taxation in IRC is effected in accordance with the terms provided for in Article 89 and is based on the values and rates that result from the provision of the preceding numbers, no deductions being made from the global amount determined".
5.43. The mere evidence of contradictory decisions is demonstrative per se of what the Claimant intends to conceal, that is, that the question was not controversial, and thus to dismiss the necessity of the interpretive character attributed to paragraph 21 of Article 88 of the CIRC, transforming it into a retroactive interpretation of the law, which, all agree, is constitutionally prohibited.
5.44. Stated thus, it follows that the very interpretive effect conferred by that Law would be, per se, unnecessary, as, as demonstrated, no other interpretation would be capable of being effected having regard to the teleology and legal hermeneutics of the norms in question.
5.45. Always let it be said that any interpretation that does not apply the norm contained in the State Budget Law for 2016, embodied in Article 133, which added number 21 to Article 88 of the CIRC, with the effects provided for in Article 135, both contained in the State Budget Law for 2016, published on 30.03.2016, coming into force the following day, which recommends, with interpretive character, that "The liquidation of autonomous taxation in IRC is effected in accordance with the terms provided for in Article 89 and is based on the values and rates that result from the provision of the preceding numbers, no deductions being made from the global amount determined" and that, consequently, permits deduction from the part of IRC collection produced by the rates of autonomous taxation of tax benefits effected in the context of IRC, in this case, SIFIDE/CFEI/RFAI, such decision is materially unconstitutional, by a) violation of the principle of legality, inherent in Article 103, paragraph 2 of the CRP, b) violation of the principle of separation of powers, embodied in Article 2 of the CRP, c) violation of the principle of protection of confidence provided for in Article 2 of the CRP, d) violation of the principle of equality, in its positive formulation of taxable capacity, resulting from Article 13, paragraph 2 and 103, paragraph 2, both of the CRP.
5.46. In the situation of the case at hand, the determination of the tax was effected by the Claimant, the Respondent being unaware of any generic guidance and/or indications published that would lead the Claimant to act in that manner.
6. On 5 October 2017, an arbitral order was issued, in which the meeting provided for in Article 18 of the RJAT was dispensed with and, given the provision of Articles 16-c) of the RJAT and 130 of the CPC, applicable ex vi Article 29-1/e) of the RJAT, the production of testimonial evidence was dispensed with, the parties being notified to submit written allegations.
7. The parties did not request that the meeting provided for in Article 18 of the RJAT be held, having submitted written allegations, in which they reaffirmed what was previously alleged.
II – Findings of Fact
8. With interest for the decision of the case, the following facts are judged to be proven:
8.1. On 29 May 2014, the Claimant proceeded to submit the IRC declaration Form 22 of its Fiscal Group relating to the financial year 2013.
8.2. The Claimant proceeded to self-assess autonomous taxation in IRC for that same financial year of 2013 in the amount of €150,508.15 (this value underwent no alteration in the amended declaration).
8.3. The Claimant filed a gracious objection against the said self-assessment of autonomous taxation relating to the financial year 2013.
8.4. On 28 March 2017, the Claimant was notified (electronic notification) of the partial (dis)approval of the aforementioned gracious objection, with recognition of the right to deduction of €13,290.95, relating to SIFIDE, to state surtax.
8.5. The amount of SIFIDE, assigned/obtained, available for use at the beginning and end of the financial year 2013 amounted to €418,845.16 and €212,094.11, respectively.
8.6. On the other hand, in respect of RFAI, there remains an accumulated initial and final amount in the taxation period of 2013 to be deducted from IRC collection that amounted to €1,010,766.38 and €764,636.67 respectively.
8.7. The amount of CFEI available in the financial year at the beginning and end of 2013 amounted in turn to a total of €347,249.24 and €119,796.34 respectively.
8.8. The taxable income of fiscal group B… and its respective companies was determined in the normal manner, via submission of form 22.
8.9. The Tax Authority's computer system, through which IRC is self-assessed, does not permit taxpayers to deduct, for the purposes of determining the IRC owed by them, from IRC resulting from the autonomous taxation assessed, RFAI, CFEI and SIFIDE.
8.10. The companies that are part of the fiscal group at the origin of RFAI, CFEI and SIFIDE were not, at the relevant time, entities owing the State and social security any taxes or contributions.
III – Facts Not Proven
9. No facts not proven with interest for the decision of the case were determined.
IV – On the Law
10. The following questions are for examination:
A) On the illegality of the declaration of self-assessment of IRS and respective autonomous taxation rates
B) On the right to compensatory interest
A) ON THE ILLEGALITY OF THE DECLARATION OF SELF-ASSESSMENT OF IRS AND RESPECTIVE AUTONOMOUS TAXATION RATES
The System of Fiscal Incentives for Research and Business Development II (SIFIDE II), approved by Article 133 of Law no. 55-A/2010 of 31 December, establishes the following, in its Articles 4 and 5:
Article 4
Scope of deduction
1 - IRC taxable subjects resident in Portuguese territory who exercise, as main activity or not, an activity of agricultural, industrial, commercial and services nature and non-residents with permanent establishment in that territory may deduct from the amount determined in accordance with Article 90 of the IRC Code, and to its extent, the value corresponding to research and development expenses, in the part that has not been the subject of financial participation of the State on a non-refundable basis, realized in the taxation periods of 1 January 2011 to 31 December 2015, in a dual percentage:
a) Base rate - 32.5% of expenses incurred in that period;
b) Incremental rate - 50% of the increase in expenses incurred in that period in relation to the simple arithmetic average of the two preceding financial years, up to the limit of €1,500,000.
2 - For IRC taxable subjects who are SMEs in accordance with the definition contained in Article 2 of Decree-Law no. 372/2007 of 6 November, who have not yet completed two financial years and who have not benefited from the incremental rate fixed in clause b) of the preceding number, a 10% increase is applied to the base rate fixed in clause a) of the preceding number.
3 - The deduction is made, in accordance with Article 90 of the IRC Code, in the liquidation relating to the taxation period mentioned in the preceding number.
4 - Expenses which, due to insufficient collection, cannot be deducted in the financial year in which they were incurred can be deducted until the sixth immediately following financial year.
5 - For the purposes of the preceding numbers, when in the year of beginning enjoyment of the benefit a change of taxation period occurs, the annual period that begins in that year should be considered.
6 - The incremental rate provided for in clause b) of paragraph 1 is increased by 20 percentage points for expenses relating to the recruitment of doctorate holders by companies for research and development activities, the limit provided for in the same clause becoming €1,800,000.
7 - To taxable subjects who undergo reorganization, as a result of concentration acts as defined in Article 73 of the IRC Code, the provisions of paragraph 3 of Article 15 of the Statute of Tax Benefits apply.
Article 5
Conditions
Only taxable subjects of IRC who cumulatively meet the following conditions may benefit from the deduction referred to in Article 4:
a) Their taxable income is not determined by indirect methods;
b) They are not debtors to the State and social security of any taxes or contributions, or have their payment duly assured.
Article 3 of Law 49/2013 of 16 July (CFEI) states:
Article 3
Fiscal incentive
1 - The tax benefit to be granted to the taxable subjects referred to in the preceding article corresponds to a deduction from IRC collection in the amount of 20% of investment expenses in assets dedicated to exploitation, that are made between 1 June 2013 and 31 December 2013.
2 - For the purposes of the deduction provided for in the preceding number, the maximum amount of eligible investment expenses is €5,000,000, per taxable subject.
3 - The deduction provided for in the preceding numbers is made in the liquidation of IRC relating to the taxation period that begins in 2013, up to the extent of 70% of the collection of this tax.
4 - In the case of taxable subjects who adopt a taxation period not coinciding with the calendar year and beginning after 1 June 2013, the expenses relevant for the purposes of the deduction provided for in the preceding numbers are those made in eligible assets from the beginning of the said period until the end of the seventh following month.
5 - Applying the special regime for taxation of groups of companies, the deduction provided for in paragraph 1:
a) Is made to the amount determined in accordance with clause a) of paragraph 1 of Article 90 of the IRC Code, on the basis of the taxable matter of the group;
b) Is made up to 70% of the amount mentioned in the preceding clause and cannot exceed, in relation to each company and by each financial year, the limit of 70% of the collection that would be determined by the company that carried out the eligible expenses, if the special regime for taxation of groups of companies were not applied.
6 - The importance that cannot be deducted in accordance with the preceding numbers may be so, under the same conditions, in the five immediately following taxation periods.
7 - To taxable subjects who undergo reorganization, as a result of any operations provided for in Article 73 of the IRC Code, the provisions of paragraph 3 of Article 15 of the Statute of Tax Benefits apply.
As provided for in Article 3 of the Fiscal Regime for Support to Investment (approved by Article 13 of Law 10/2009 of 10 March):
Article 3
Fiscal incentives
1 - To IRC taxable subjects resident in Portuguese territory or who have permanent establishment therein, who exercise as main activity a commercial, industrial or agricultural activity covered by paragraph 1 of the preceding article who make, in 2009, investments considered relevant, the following tax benefits are granted:
a) Deduction from IRC collection, and up to 25% of the same, of the following amounts, for investments made in regions eligible for support under the scope of incentives with regional purpose:
i) 20% of the relevant investment, relating to investment up to the amount of €5,000,000;
ii) 10% of the relevant investment, relating to investment of value exceeding €5,000,000;
b) Exemption from municipal property tax, for a period up to five years, with respect to real property of its ownership that constitutes relevant investment;
c) Exemption from municipal tax on onerous transfer of real property with respect to acquisitions of real property that constitutes relevant investment;
d) Exemption from stamp tax with respect to acquisitions of real property that constitutes relevant investment.
(…)
Article 90 of the CIRC, in the wording in force until 31 December 2013, states:
1 — The liquidation of IRC is effected in the following manner: (Amended by Law no. 3-B/2010-28/04)
a) When the liquidation is to be made by the taxable subject in the declarations referred to in Articles 120 and 122, it is based on the taxable matter contained therein;
b) In the absence of presentation of the declaration referred to in Article 120, the liquidation is effected until 30 November of the following year to which it relates or, in the case provided for in paragraph 2 of the said article, until the end of the 6th month following the end of the deadline for presentation of the declaration mentioned therein and is based on the annual value of the minimum monthly remuneration or, when higher, the entirety of the taxable matter of the closest financial year which is determined; (Amended by Law no. 3-B/2010-28/04, taking effect as of January 2011, as regards the simplified regime - paragraph 2 of Article 92 of the law referred to).
c) In the absence of liquidation in accordance with the preceding clauses, it is based on the elements available to the tax administration.
2 — From the amount determined in accordance with the preceding number the following deductions are made, in the order indicated:
a) The one corresponding to international double taxation;
b) The one relating to tax benefits;
c) The one relating to special payment on account referred to in Article 106;
d) The one relating to withholdings at source not susceptible to compensation or reimbursement in accordance with applicable legislation.
3 — (Repealed by Law no. 3-B/2010-28/04, taking effect as of January 2011, as regards the simplified regime - paragraph 2 of Article 92 of the law referred to).
4 — From the amount determined in accordance with paragraph 1, with respect to the entities mentioned in paragraph 4 of Article 120, the deduction relating to withholdings at source is only to be made when these have the nature of tax on account of IRC.
5 — The deductions referred to in paragraph 2 concerning entities to which the fiscal transparency regime established in Article 6 is applicable are imputed to their respective partners or members in accordance with the terms established in paragraph 3 of that article and deducted from the amount determined on the basis of the taxable matter that took into account the imputation provided for in the same article.
6 — When the special regime for taxation of groups of companies is applicable, the deductions referred to in paragraph 2 relating to each of the companies are made from the amount determined with respect to the group, in accordance with paragraph 1.
7 — From the deductions made in accordance with clauses a), b) and c) of paragraph 2 no negative value can result.
8 — From the amount determined in accordance with clauses b) and c) of paragraph 1 only are made the deductions of which the tax administration has knowledge and that can be made in accordance with paragraphs 2 to 4.
9 — In cases where the provision of clause b) of paragraph 2 of Article 79 is applicable, liquidations are made annually on the basis of the taxable matter determined provisionally, and, with respect to the liquidation corresponding to the taxable matter relating to the entire liquidation period, the difference determined is to be collected or cancelled.
10 — The liquidation provided for in paragraph 1 can be corrected, if necessary, within the deadline referred to in Article 101, the differences determined being then collected or cancelled.
Article 88 of the same statute further states (in the same wording):
1 — Undocumented expenses are taxed autonomously at the rate of 50%, without prejudice to their non-consideration as expenses in accordance with Article 23.
2 — The rate referred to in the preceding number is raised to 70% in cases where such expenses are made by taxable subjects totally or partially exempt, or who do not exercise as main activity commercial, industrial or agricultural activities and also by taxable subjects who derive income encompassed in Article 7. (Amended by Article 113 of Law no. 64-B/2011 of 30 December)
3 - Charges made or borne by non-exempt taxable subjects subjectively and who exercise as main activity commercial, industrial or agricultural activities, relating to light passenger vehicles or mixed vehicles whose acquisition cost is equal to or less than the amount fixed in accordance with clause e) of paragraph 1 of Article 34, motorcycles or motorbikes, excluding vehicles powered exclusively by electrical energy, are taxed autonomously at the rate of 10%. (Amended by Law no. 55-A/2010 of 31 December)
4 - Charges made or borne by the taxable subjects mentioned in the preceding number, relating to light passenger vehicles or mixed vehicles whose acquisition cost exceeds the amount fixed in accordance with clause e) of paragraph 1 of Article 34, are taxed autonomously at the rate of 20%. (Amended by Law no. 55-A/2010-31/12)
5 — Charges relating to light passenger vehicles, motorcycles and motorbikes are considered to be, namely, depreciation, rents or leases, insurance, maintenance and conservation, fuel and taxes inciding on their possession or use.
6 — Excluded from the provision of paragraph 3 are charges relating to light passenger vehicles, motorcycles and motorbikes, dedicated to the exploitation of public transport service, intended to be rented in the exercise of the normal activity of the taxable subject, as well as depreciation relating to vehicles as to which the agreement provided for in paragraph 9) of clause b) of paragraph 3 of Article 2 of the IRS Code has been concluded.
7 - Charges deductible relating to representation expenses are taxed autonomously at the rate of 10%, considering as such, namely, expenses borne with receptions, meals, trips, outings and entertainment offered in the Country or abroad to clients or suppliers or even to any other persons or entities. (Amended by Law no. 55-A/2010 of 31 December)
8 — Subject to the regime of paragraph 1 or paragraph 2, as the case may be, the applicable rates being respectively 35% or 55%, expenses corresponding to amounts paid or owed, for any reason, to natural or legal persons resident outside Portuguese territory and there subject to a clearly more favorable tax regime, such as defined in accordance with the Code, unless the taxable subject can prove that they correspond to transactions actually made and do not have an abnormal character or an exaggerated amount.
9 — Also taxed autonomously, at the rate of 5%, are deductible charges relating to travel allowances and compensation for travel in own vehicle of the worker, in service of the employer entity, not invoiced to clients, recorded for any reason, except in the part where there is taxation in the context of IRS in the sphere of the respective beneficiary, as well as non-deductible charges in accordance with clause f) of paragraph 1 of Article 45 borne by taxable subjects that present fiscal loss in the taxation period to which the same relate.
10 — (Repealed by Law no. 3-B/2010-28/04, taking effect as of January 2011, as regards the simplified regime - paragraph 2 of Article 92 of the law referred to)
11 — Profits distributed by entities subject to IRC to taxable subjects who benefit from total or partial exemption, encompassing, in this case, capital income, when the equity shares to which the profits relate have not remained in the ownership of the same taxable subject, uninterruptedly, during the year prior to the date of their placement at disposal and are not to be maintained for the time necessary to complete that period, are taxed autonomously at the rate of 25%. (Amended by Article 113 of Law no. 64-B/2011 of 30 December)
12 — From the amount of the tax determined, in accordance with the provision of the preceding number, is deducted the tax that may have been retained at source, and in that case the tax retained cannot be deducted under paragraph 2 of Article 90.
13 — The following are taxed autonomously, at the rate of 35%: (Paragraph 13 added by Law no. 3-B/2010-28/04)
a) Charges or expenses relating to indemnifications or any compensation owed not related to the achievement of productivity objectives previously defined in the contractual relationship, when the cessation of functions of manager, administrator or manager occurs, as well as charges relating to the part exceeding the value of the remuneration that would be earned by the exercise of those offices until the end of the contract, when there is rescission of a contract before the term, regardless of the payment modality, whether this is made directly by the taxable subject or there is transfer of the inherent responsibilities to another entity;
b) Charges or expenses relating to bonuses and other variable remuneration paid to managers, administrators or managers when these represent a portion exceeding 25% of annual remuneration and have a value exceeding €27,500, unless its payment is subject to deferment of at least 50% for a minimum period of three years and conditioned to the positive performance of the company over that period.
14 - The autonomous taxation rates provided for in this article are increased by 10 percentage points as to taxable subjects that present fiscal loss in the taxation period to which any of the taxable events referred to in the preceding numbers relate. (Added by Law no. 55-A/2010 of 31 December).
There was an addition to Article 88 of the CIRC, which resulted from the entry into force of Law no. 7-A/2016 of 30 March, regarding this aspect (paragraph 21), whereby in the currently in force wording the following is stated:
"21 - The liquidation of autonomous taxation in IRC is effected in accordance with the terms provided for in Article 89 and is based on the values and rates that result from the provision of the preceding numbers, no deductions being made from the global amount determined".
However, this legislative amendment in no way alters the situation in the case at hand. Notwithstanding the law stating that it is a law of interpretive nature, what occurs is that interpretive laws have retroactive nature and such situation would be unconstitutional in tax matters, by violation of the provision of Article 103, paragraph 3 of the Constitution of the Portuguese Republic: "No one can be obliged to pay taxes that have not been created in accordance with the Constitution, that have retroactive nature or whose liquidation and collection are not made in accordance with the law."
On the other hand, the majority of arbitral case law considers that there should exist the possibility of deductions from the amount determined by title of autonomous taxation in IRC, which, at the date when the facts occurred, was not contrary to the law.
See, for example, the Award of CAAD no. 769/2014-T:
"Thus, the essential question that is the subject matter of the present proceedings is whether the tax credits that, in 2011, were recognized to the Claimant, in the context of SIFIDE, can be deducted from the collection produced by the autonomous taxation that burdened her in that financial year, in the part in which they cannot be deducted from the remaining IRC collection. There is autonomous taxation provided for in the CIRC (Article 88 of the CIRC) and autonomous taxation provided for in the CIRS (Article 73 of the CIRS). The collection provided by them constitutes collection of the respective tax, being subject to the generality of norms provided for in the codes referred to, potentially applicable. As to IRC, in addition to the unanimity of case law, Article 23-A paragraph 1, clause a), of the CIRC, in the wording of Law no. 2/2014 of 16 January, leaves no margin for any reasonable doubt, corroborating what already previously resulted from the literal tenor of Article 12 of the same Code. But the solution to this conceptual question of the nature of the collection coming from the autonomous taxation provided for in the CIRC does not permit resolution of the question of whether the credits from SIFIDE can be deducted from that same collection. In fact, the diploma that approved SIFIDE does not state that credits from it are deductible from all and any IRC collection, rather defines the scope of the deduction alluding, in its paragraph 1 of Article 4, "to the amount determined in accordance with Article 90 of the IRC Code, and to its extent". Paragraph 3 of the same article confirms that it is to the amount that is determined in accordance with Article 90 of the CIRC that is relevant to effect the deduction when it says that "the deduction is made, in accordance with Article 90 of the IRC Code, in the liquidation relating to the taxation period mentioned in the preceding number". Thus, the question that is important to resolve is, independently of the nature of the tax to which autonomous taxation relates, whether the amount of autonomous taxation is "determined in accordance with Article 90 of the CIRC," for, if it is, it must be concluded that, to determine the limit of the deduction, the collection coming from autonomous taxation is taken into account. Article 90 of the CIRC refers to the forms of liquidation of IRC, by the taxable subject or by the Tax Administration, applying to the determination of the tax owed in all situations provided for in the Code, including additional liquidation (paragraph 10). Therefore, it also applies to the liquidation of the amount of autonomous taxation, which is determined by the taxable subject or by the Tax Administration in accordance with Article 90 of the CIRC, there being no any other provision that provides for different terms for its liquidation. Its autonomy is restricted to the applicable rates and their respective taxable matter, but the determination of its amount is effected in accordance with Article 90. The differences between the determination of the amount resulting from autonomous taxation and that resulting from taxable income, rests on the determination of taxable matter and the rates, provided for in Chapters III and IV of the CIRC, but not on the forms of liquidation, which are provided for in Chapter V of the same Code and are of common application to autonomous taxation and to the remaining taxable matter of IRC. Therefore, being to Article 90, inserted in this Chapter V, that reference is made in Article 4, paragraph 1, of SIFIDE, no legal support is seen for making a distinction between the collection coming from autonomous taxation and the remaining IRC collection, by the fact that the rates and the forms of determination of taxable matter are distinct."
Identical position is presented by the Award of CAAD no. 219/2015-T, which underlines:
"It is certain that, as the Tax Authority and Customs states, autonomous taxation aims to discourage certain conduct of taxpayers susceptible to affecting taxable income and its deterrent force will be attenuated with the possibility of their respective collection being the subject matter of deductions. But it is also certain that, as is inherent in that assertion, such autonomous taxation only aims to protect or increase fiscal revenue, and tax benefits granted, by definition, are "measures of exceptional character instituted for the protection of public interests extra-fiscal relevant that are superior to those of taxation itself which they prevent" (Article 2, paragraph 1, of the EBF). And, in the case of the tax benefits of SIFIDE, the reasons of extra-fiscal nature that justify their overlay on fiscal revenue are, in the legislative perspective, of enormous importance, as is inferred from the fact that these benefits are indicated as being especially excluded from the general limit to the relevance of tax benefits in IRC, which is indicated in Article 92 of the CIRC. Therefore, it is safe to state that one is faced with tax benefits whose justification is legislatively considered more relevant than the obtaining of fiscal revenue, from which Article 92 it is inferred that the legislative intention to encourage investments in research and development provided for in SIFIDE is so firm that it even reaches the point of not establishing any limit to the deductibility of IRC collection, despite this fiscal regime having been created and applied in a period of notorious difficulties of public finances. Thus, no legal ground is seen, namely in light of the legislative intention that can be detected, for dismissing the deductibility of the tax benefit of SIFIDE from the collection of autonomous taxation that results directly from the letter of Article 4, paragraph 1, of the respective diploma, combined with Article 90 of the CIRC. As regards the allegation by the Tax Authority and Customs on the unconstitutionality of this interpretation by incompatibility "with the constitutional principles of tax legality, of equality in the distribution of tax burden, of the pursuit of satisfaction of the financial needs of the State and other public entities and of taxation by real profit, in accordance with the provision of Articles 13 and 103, paragraph 1 and 2 of the CRP", it is not explained by the Tax Authority and Customs why it understands that this incompatibility exists, nor is it perceived how it can exist. In fact, as to the principle of tax legality, the legal interpretation is the one defended by the Claimant, by what was said, the interpretation defended by the Tax Authority and Customs being illegal. Furthermore, the principle of legality encompasses the form of liquidation of taxes, being able its liquidation to be effected only "in accordance with the law" [Articles 103, paragraph 3, of the CRP and 8, paragraph 2, clause a) of the LGT, so that, if Article 90 of the CIRC were not applicable to the liquidation of autonomous taxation, one would have to conclude that there would be no norm in the CIRC about the form of liquidation of these taxation, which would reduce to that it would suffer from unconstitutionality in its liquidation, by offense of the principle of legality, which is not compatible with liquidation of taxes without the terms in which it is effected being provided for in law. As to the principles of equality in the distribution of tax burden, of the pursuit of satisfaction of the financial needs of the State and other public entities and of taxation by real profit also it is not seen that they collide with the interpretation of the Claimant, as this is applicable to the generality of taxpayers who are in the same situation and tax benefits, if it is certain that they diminish tax burden, have justification in reasons of public interest that overlap the interests of taxation, as was referred."
Also the Award of CAAD no. 369/2015-T, as regards RFAI, presents similar understanding:
"An interpretation of the law, not expressly imposed by the legal text, that restricts the "use" of the tax benefits in question would wound the credibility of the "legislative promises" in tax matters, it would be, in short, contrary to the principle of confidence, inherent in the idea of Rule of Law. Accepting the deductibility from the collection of autonomous taxation of credits resulting from RFAI, the question arises: regarding a group of companies subject to the RETGS, should the deduction be made to the collection of autonomous taxation relating to the aggregate of companies of the group or only to that of each of the companies that benefited from such tax benefit? We believe that the answer results directly from the law, as paragraph 6 of Article 90 of the CIRC provided that when the special regime for taxation of groups of companies is applicable, the deductions referred to in paragraph 2 relating to each of the companies are made from the amount determined with respect to the group, in accordance with paragraph 1".
That understanding is reinforced by the Award of CAAD no. 370/2015-T, which decided in the same terms.
Having regard to the provisions of the legal diplomas at the date, and in accordance with the understanding of the majority of arbitral case law, it must, therefore, be understood that the Tax Authority should have admitted the deduction of tax benefits by the Claimant from the collection of autonomous taxation, whereby the IRC self-assessment declaration must be considered as illegal.
B) ON THE RIGHT TO COMPENSATORY INTEREST
As states paragraph 1 of Article 43 of the General Tax Law, compensatory interest is due "when it is determined, in gracious objection or judicial contestation, that there was error attributable to the services as a result of which payment of the tax debt in an amount superior to that legally due is made."
As further follows from paragraph 5 of Article 24 of the RJAT, the right to compensatory interest can be recognized in arbitral proceedings.
It must, however, be determined whether or not there was error attributable to the services.
In the case at hand, we are faced with a self-assessment declaration, which was formulated in accordance with the system made available through the computer system.
It occurs then that the declaration was formulated by the Claimant, with the limitations that the computer system imposed on it and not directly by the Respondent.
However, in the situation at hand, the Respondent, following the presentation of the gracious objection, could have corrected the error in question, which it did not do, disallowing the same.
We are, in this case, faced with a decision by the Tax Authority, a decision that translates into "error attributable to the services," as stated in Article 43 of the LGT.
Having regard to what is established in Article 61 of the CPPT and having verified the existence of error attributable to the services of the Tax Administration, from which resulted payment of the tax debt in an amount superior to that legally due (see Article 43/1 of the LGT), we can understand that the Claimant has the right to compensatory interest at the legal rate, calculated on the value of €150,508.15, which will be counted from 01-09-2014, until complete reimbursement of that same amount.
V – Decision
The petition for declaration of the illegality of the self-assessment of IRC, including autonomous taxation rates, of Fiscal Group B..., relating to the financial year 2013, in the amount of €150,508.15, is hereby deemed granted, ordering the restitution of that amount plus compensatory interest from 1-9-2014, until complete reimbursement of that amount.
The value of €150,508.15 (value indicated and not contested) is fixed for the proceedings and the value of the corresponding arbitration fee is €3,672.00 in accordance with Table I of the Regulation of Costs of Tax Arbitration Proceedings.
Costs by the respondent entity.
Lisbon, 7-2-2018
The President Arbitrator,
(Dissenting. I would have judged the petition ungrounded for the reasons and grounds put forward in earlier decisions published on the CAAD website (See, e.g., the arbitral award delivered, unanimously, by the Collective to which I presided in proceedings CAAD no. 727/2015-T and the dissenting opinion I issued in the decision delivered in proceedings CAAD no. 60/2017-T).
(José Poças Falcão)
The Arbitrator Member
(Luís Menezes Leitão)
The Arbitrator Member
(Maria Antónia Torres)
Frequently Asked Questions
Automatically Created