Summary
Full Decision
ARBITRAL DECISION (consult full version in PDF)
The arbitrators Fernanda Maçãs (president arbitrator), Nuno Cunha Rodrigues and António Pragal Colaço (assistant arbitrators), appointed by the Ethics Council of the Administrative Arbitration Centre to form the Arbitral Tribunal, agree as follows:
I. Report
1. The Claimant A..., S.A., legal entity no. ..., with registered office at Rua ..., no. ..., ..., ...-... Lisbon (hereinafter "Claimant"), submitted on 16/8/2018 a request for arbitral pronouncement with a view to declaring illegal the corrections to the taxable income of Corporate Income Tax (IRC) for the 2014 fiscal year in the amount of EUR 100,257.06 and the consequent annulment of the additional IRC assessment no. 2018..., of 21 May 2018, relating to such fiscal year, in the amount of EUR 0.84, this being the claim that is the subject of the request for arbitral pronouncement.
2. The request for constitution of the Arbitral Tribunal was accepted by the President of CAAD and automatically notified to the Tax and Customs Authority on 16/8/2018.
2.1 The Claimant did not proceed with the appointment of an arbitrator, therefore, pursuant to the provisions of item a) of no. 2 of article 6 and item b) of no. 1 of article 11 of the RJAT, the President of the Ethics Council appointed as arbitrators Dr. Alexandre Coelho, Dr. António Pragal Colaço and Counselor Fernanda Maças, of the Collective Arbitral Tribunal, presided over by Counselor Fernanda Maçãs, who communicated their acceptance of the appointment within the deadline.
2.2 On 1/10/2018, the parties were notified of the appointment of arbitrators and raised no objections.
2.3 In accordance with the provisions of item c) of no. 11 of the RJAT, the Collective Arbitral Tribunal was constituted on 22/10/2018.
2.4 By order of the Honorable President of the Ethics Council, the substitution of Assistant Arbitrator Dr. Alexandre Andrade by Prof. Doctor Nuno Cunha Rodrigues was determined, and the parties were notified of the arbitral order of such substitution and its possible consequences on 14/1/2019, raising no opposition.
2.5 In these terms, the Arbitral Tribunal is regularly constituted to assess and decide on the subject matter of the case.
3. To support the request for arbitral pronouncement, the Claimant alleges, in summary, the following:
3.1 The corrections to the taxable income of Corporate Income Tax (IRC) for fiscal year 2014 in the amount of EUR 100,257.06 (EUR 60,260.75 + EUR 39,996.31), which gave rise to the additional IRC assessment no. 2018..., of 21 May 2018, resulted from a tax inspection action for fiscal year 2014 of the Claimant, covered by service order no. OI2017...;
3.2 The Claimant is an anonymous commercial company, with registered office and effective management in national territory, classified under the general taxation regime for IRC purposes, which is engaged in the development of projects, such as promotion and business assembly, and in the provision of consulting and auditing services to public and/or private companies and entities, such as provision of professional training services, and may promote the conclusion of contracts on account of third parties;
3.3 The inspection services determined corrections to the taxable profit of the Claimant by disregarding as a deductible expense the amount of EUR 60,260.75, recorded in the accounting records in "Account ... – Other Penalties", based on article 23-A, no. 1, item e), of the IRC Code (CIRC), correcting field 728 of the periodic income statement IRC Form 22 for fiscal year 2014, referring to "Fines, penalties and other charges", including compensatory and moratory interest, for the practice of infractions;
3.4 The Claimant recorded as an expense the amount of EUR 60,260.75 (art. 73 of p.i., later amended to EUR 59,672.28 in art. 139 of p.i.) because it had concluded with company B..., S.A. ("B..."), on 04.01.2011, a promise contract for assignment of contractual position in a real estate financial leasing contract, relating to the autonomous fraction identified by the letter AF, of the urban property located at Rua ..., ..., ... – ..., parish of ..., municipality of Lisbon, having come to bear a contractual penalty in that amount due to breach of contract;
3.5 It alleges that these expenses are duly proven and related to the economic activity of the Claimant, with the materiality and effectiveness of the same not being in question;
3.6 It further alleges the illegality due to non-existence, in light of articles 77, no. 2, of the LGT; 36 of the CPPT; 62 of the RCPITA; 152 of the CPA and 268, no. 3, of the CRP, of grounds for the position sustained by the AT, of the corrections in the amount of EUR 60,260.75;
3.7 It alleges in light of articles 74 of the LGT and 100 of the CPPT, that the annulment of the corrections sub judice, in the amount of EUR 60,260.75, and likewise the resulting tax act, is imposed;
3.8 It further alleges the illegality of the corrections in question, regarding the amount of EUR 59,672.28, because the requirements of article 23-A, no. 1, item e), of the CIRC are not met;
3.9 It alleges the contractual nature of the penalties in "crisis";
3.10 It challenges the understanding that there was no deviation from the normal pursuit of the corporate object;
3.11 It further alleges that, should it be understood that article 23-A, no. 1, item e), of the CIRC contemplates the rule of non-deductibility of contractual charges and without granting, always the interpretation of said rule will suffer from unconstitutionality by violation of the constitutional principle of taxation by real income and contributory capacity provided for in articles 13 and 104, no. 2, of the CRP, which it hereby invokes for purposes of article 70, no. 1, item b), and 72, no. 2, of Law no. 28/82, of 15 November and cannot fail to be reviewed by this Tribunal, regarding the corrections in the amount of EUR 59,672.28, and
3.12 The inspection services also proceeded to a correction of the taxable profit of the Claimant in the sense of adding to the taxable result of IRC for fiscal year 2014 the amount of EUR 39,996.31 to field 710 of the periodic income statement IRC Form 22, referring to "Corrections relating to prior taxation periods" (art. 18, no. 2);
3.13 Such amount resulted from, in fiscal year 2010, the Claimant having recorded in the accounting records and subjected to taxation, in account 72114 "Invoicing to issue – normal rate.MN" a set of amounts relating to operations that it estimated it would carry out and invoice, namely:
i. C…: EUR 13,178.50;
ii. D…: EUR 13,178.50;
iii. E…: EUR 26,036.00.
Which totaled EUR 52,393.00, having only invoiced the amount of EUR 12,396.69;
3.14 In view of the development of its commercial activity and the temporal gap in question, the Claimant concluded that it would not be probable to obtain the remaining amount, in the value of EUR 39,996.31 (EUR 52,393.00 - EUR 12,396.69), having proceeded to reverse the increase in its tax declaration in fiscal year 2014;
3.15 It further alleges regarding this segment that in light of articles 74 of the LGT and 100 of the CPPT, the position sustained by the AT suffers from illegality regarding the corrections imposed by the inspection services, in the amount of EUR 39,996.31, and likewise the respective tax assessment;
3.16 It further alleges the non-existence, in light of the principle of justice enshrined in articles 266, no. 2, of the CRP and 55 of the LGT, of grounds for the position sustained by the AT, with the illegality of the corrections imposed by the inspection services, in the amount of EUR 39,996.31, and likewise the respective tax assessment, being evident;
3.17 Requesting the annulment of such corrections, respective assessment with the due legal consequences.
4. The Tax and Customs Authority submitted a response and attached the instruction file, alleging in summary the following:
4.1 The corrections placed in question here result from an internal inspection procedure, of partial scope, aimed at IRC for fiscal year 2014;
4.2 The AT made several contacts with the taxpayer, and following these the certified accountant sent a photocopy of a promise contract for assignment of contractual position in a real estate financial leasing contract;
4.3 However, no mention of any penalties in the amount of 60,260.75 Euros or otherwise results from that promise contract, nor does any other document supporting R's (sic) accounting result in any other justification/causal nexus that leads us to that amount of penalties;
4.4 Therefore, if R. (sic) wishes to see contractual penalties, or of another type, recognized in its accounting, it would have to have, at least, a document supporting that expense/cost;
4.5 The payment of any amount even approximately equal to 60,260.75 euros does not result from the contract, just as the capital transfers (and to whom) are not proven, etc., that is, R does not provide any proof that that amount corresponds to one or more contractual penalties or even served to pay some contractual penalty;
4.6 Because without the financial leasing contract, as well as proof that the amounts transferred are effectively related to the promise contract, one cannot say that the amount in question is or is not the result of the application of a penalty clause;
4.7 In the present case, being a cost integrated in the "other penalties" category and there being no contract establishing penalties of the amplitude here under discussion, we must necessarily consider that they are not provided for therein and that they are not practiced in the interest of the company itself, nor subsumable to its profit-making purpose, resulting instead from deviations from what would be its normal development;
4.8 Because it is important to ascertain the nature of the "penalties" that gave rise to the expense whose deductibility was refused by the AT, the AT requested, on several occasions, that R attach documents supporting the entry of that amount in that accounting category;
4.9 Indemnifications (cf. articles 562 to 564 of the Civil Code) and contractual penalties are juridically distinct and have different tax treatment;
4.10 The AT can thus disregard costs that have not been proven in the terms established in no. 3 of article 23, that is, in the following manner: "The deductible expenses in accordance with the preceding numbers must be proven documentarily, regardless of the nature or support of the documents used for that purpose";
4.11 In the case of penalties, they refer, in principle, to conduct that is ethically and socially reprehensible, since it is not socially acceptable to breach contracts;
4.12 There being thus no insufficiency of grounds, or obscurity, nor doubt about the tax act, or insufficiency of proof on the part of the AT;
4.13 The proof (document supporting the realization of that cost and the purpose to which it is directed) was the responsibility of R., (sic) if nothing else, within the scope of the duty of cooperation and as the duty to support the entry in accounting with external documents, proof that was clearly not made;
4.15 The amount here under discussion does not fall within the definition of deductible cost because it also results from a deviation from the normal pursuit of the corporate object.
4.16 The principles of taxation of real profit and contributory capacity were not violated;
4.17 As for the non-acceptance of the amount of 39,996.31€, reflected in the account ... Corrections relating to prior periods, this is "... reversal of income increase in the amount of € 39,996.31, value which is part of the amount of income increase recorded in 2010 in the amount of € 88,993), ...", in this sense, even considering the hypothesis that in fiscal year 2010, it influenced the calculation of the net result, however, through consultation of the computer system, we find that DLR MOD 22, of fiscal year 2010, identified..., in Q.07 Calculation of taxable profit, the taxpayer did not fill in the item in question, which would imply the possible correction in the calculation of taxable profit for the fiscal year under analysis;
4.18 Article 18, no. 1 of the CIRC establishes the principle of specialization of fiscal periods: "Income and expenses, as well as other positive or negative components of taxable profit, are attributable to the taxation period in which they are obtained or supported, regardless of their receipt or payment, in accordance with the economic accrual regime;
4.19 No. 2 of that provision establishes the exception to that no. 1 by saying the following:
"The positive or negative components considered as relating to prior periods are only attributable to the taxation period when on the date of closing the accounts of the one to which they should have been attributed they were unforeseeable or manifestly unknown";
4.20 It is not explained from where the gain recorded in 2010 resulted that only four years later (2014) the company found out that it would not be realized;
4.21 Thus, in a global weighing of the interests at stake, measured by the principle of proportionality, prevalence should be given to the protection of the public interest in
combating tax evasion and avoidance, underlying the rule inherent in no. 1 of article 18 of the CIRC and the lack of proof on R's part to carry out the reversal in question;
4.22 The Arbitral Tribunal cannot judge according to the principle of justice to the specific case, as this would violate the principle of indisponibility of tax credits and in the context of the preliminary ruling process no. C-377/13 (Ascendi case), the CJEU decided, on 12 June 2014, for the qualification of Portuguese tax arbitral tribunals as judicial bodies of a Member State, in the sense of article 276 of the TFEU, and this qualification was contributed to in large part by the fact that they are forbidden to judge according to equity;
4.23 The present request for arbitral pronouncement must be considered wholly unfounded.
5. Since there were no reasons justifying it, the tribunal waived the holding of the first meeting provided for in art. 18 of the RJAT, which it did pursuant to the principles of the Tribunal's autonomy in conducting the case, and in order to promote speed, simplification and informality of the proceedings (See arts. 19, no. 2 and 29, no. 2 of the RJAT), having designated 22 April 2019 as the deadline for issuance of the arbitral decision.
6. The Claimant and the Defendant submitted submissions, reiterating the arguments presented in the previous procedural documents.
7. An arbitral order was issued on 13/3/2019, whereby it was determined in the name of the inquisitorial principle and the discovery of material truth, that the Defendant attach to the file "All Trial Balances, whether synthetic or analytical, for the year 2014, including those before and after the calculation of results that it has in its possession" and "All documents that were sent by the taxpayer according to point 2, of the email contained in p. 76 of the PA", which was complied with on 22/3/2019.
It was also determined that the Claimant attach to the file "Extracts from current account for the entire year 2014, of the accounts (Account Code) ..., ... and ....", which was complied with on 26/3/2019.
An arbitral order was issued on 26/3/2019 to comply with the principle of contradiction, for Claimant and Defendant.
By arbitral order of 17/4/2019, pursuant to the provisions of no. 2, of art. 21 of the RJAT, the arbitration deadline was extended by two months, having indicated as the deadline for issuing the decision 22 June 2019.
II. Case Management
8.1 The parties have legal personality and capacity, are shown to be legitimate and are regularly represented (articles 4 and 10, no. 2, of the RJAT and article 1 of Ordinance no. 112-A/2011, of 22 March).
8.2 The tribunal is competent and is regularly constituted.
8.3 The case does not suffer from any nullities.
8.4 No exceptions were raised.
8.5 There are no other circumstances that prevent knowledge of the merits of the case.
III. Merits
III.1. Factual Matters
9. Proven Facts
9.1 With relevance for the assessment and decision of the questions raised, preliminary and on the merits, the following facts are established and proven:
9.1.1 The Claimant is named A..., S.A., legal entity no. ..., has its registered office at Rua..., no. ..., ...-... Lisbon, being an anonymous commercial company, with registered office and effective management in national territory, classified under the general taxation regime for IRC purposes, which is engaged in the development of projects, such as promotion and business assembly, and in the provision of consulting and auditing services to public and/or private companies and entities, such as provision of professional training services, and may promote the conclusion of contracts on account of third parties;
9.1.2 The Claimant filed a request for arbitral pronouncement with a view to declaring illegal the corrections to the taxable income of Corporate Income Tax (IRC) for fiscal year 2014 in the amount of EUR 100,257.06 and the consequent annulment of the additional IRC assessment no. 2018..., of 21 May 2018, relating to such fiscal year, in the amount of EUR 0.84, this being the claim that is the subject of the request for arbitral pronouncement;
9.1.3 The corrections to the taxable income of Corporate Income Tax (IRC) for fiscal year 2014 in the amount of EUR 100,257.06 (EUR 60,260.75 + EUR 39,996.31) gave rise to the additional IRC assessment no. 2018..., of 21 May 2018, resulting from a tax inspection action for fiscal year 2014 of the Claimant covered by service order no. OI2017...;
9.1.4 The inspection services determined corrections to the taxable profit of the Claimant by disregarding as a deductible expense the amount of EUR 60,260.75, recorded in the accounting records in "Account ... – Other Penalties", based on article 23-A, no. 1, item e), of the IRC Code (CIRC), correcting field 728 of the periodic income statement IRC Form 22 for fiscal year 2014, referring to "Fines, penalties and other charges, including compensatory and moratory interest, for the practice of infractions";
9.1.5 The Claimant recorded as an expense the amount of EUR 59,672.28, because it had concluded with company B..., S.A. ("B..."), on 04.01.2011, a promise contract for assignment of contractual position in a real estate financial leasing contract, relating to the autonomous fraction identified by the letter AF, of the urban property located at Rua..., ..., ..., parish of..., municipality of Lisbon, having come to bear a contractual penalty in that amount due to breach of contract;
9.1.6 The Claimant recorded in the account ... Other Penalties, various entries relating to the identified operation, as follows:
[Table structure preserved in original]
9.1.7 The documents supporting the accounting records for these movements are broken down as follows:
28-02-2014 – Diary 03 Entry 302,044, description Payment in the amount of 283.82€, corresponding to court costs in a tax enforcement proceeding for IRC debt;
30-04-2014 – Diary 04 Entry 404002 Invoice in the amount of 18,384.79€, corresponds to Invoice 1/2014 issued by B... to the Claimant, 14,946.98€ + VAT 3,437.81€, Total 18,384.79€, with descriptions Compensations and other charges and Compensatory Penalty;
31-05-2014 – Diary 03 Entry 305,019, description Payment in the amount of 89.54€, corresponding to court costs in a social security enforcement proceeding;
31-05-2014 – Diary 03 Entry 305,019, description Payment in the amount of 0.50€, corresponding to administration and management expenses in a proceeding motivated by delay in payment to the Work Compensation Fund;
30-06-2014 – Diary 03 Entry 306,031, description Payment in the amount of 116.53€, corresponding to court costs in tax enforcement proceedings;
31-07-2014 - Diary 04 Entry 407002 Invoice in the amount of 18,445.66€, corresponds to Invoice 2/2014 issued by B... to the Claimant, 14,996.47€ + VAT 3,449.19€, Total 18,445.66€, with descriptions Compensations and other charges and Compensatory Penalty;
31-10-2014 - Diary 03 Entry 310,047, description Payment in the amount of 59.83€, corresponding to court costs in tax enforcement proceedings;
31-10-2014 - Diary 03 Entry 310,079, description Payment in the amount of 38.25€, corresponding to court costs in tax non-compliance proceedings;
31-10-2014 - Diary 04 Entry 410,002, Invoice in the amount of 18,361.75€, corresponds to Invoice 3/2014 issued by B... to the Claimant, 14,928.25€ + VAT 3,433.50€, Total 18,361.75€, with descriptions Compensations and other charges and Compensatory Penalty;
31-12-2014 – Diary 09, Entry 912,026, Internal Document of Miscellaneous Operations, where account ... is debited and account 27228 is credited, both for the amount of 14,800.58€;
9.1.8 All documents described in 9.1.8 were sent by the Claimant to the AT via email dated 3 November 2017, at 16:54;
9.1.9 The inspection services also proceeded to a correction of the taxable profit of the Claimant adding to the taxable result of IRC for fiscal year 2014 the amount of EUR 39,996.31 to field 710 of the periodic income statement IRC Form 22, referring to "Corrections relating to prior taxation periods (art. 18, no. 2);
9.1.10 In fiscal year 2010, the Claimant recorded in the accounting records and subjected to taxation, in account 72114 "Invoicing to issue – normal rate.MN" a set of amounts relating to operations that it estimated it would carry out and invoice, namely:
i. C…: EUR 13,178.50;
ii. D…: EUR 13,178.50;
iii. E…: EUR 26,036.00.
Which totaled EUR 52,393.00, having only invoiced the amount of EUR 12,396.69;
9.1.11 The Claimant understood that it would not be probable to obtain the remaining amount, in the value of EUR 39,996.31 (EUR 52,393.00 - EUR 12,396.69), proceeding to reverse the income increase in its tax declaration for fiscal year 2014, recording that amount in account ..., corrections relating to prior fiscal years, without adding such value in section 07 of Form 22 for the year 2014.
9.2. Facts Given as Not Proven
With relevance to the decision, there are no facts that should be considered as not proven.
9.3. Reasoning on Factual Matters
With regard to factual matters, the Tribunal does not have to pronounce itself on everything that was alleged by the parties, instead it is incumbent upon it to have the duty to select the facts that matter for the proper decision of the case and to differentiate proven and unproven matters (cf. art. 123, no. 2, of the CPPT and article 607, no. 3 of the CPC, applicable ex vi article 29, no. 1, items a) and e), of the RJAT).
In this way, the facts pertinent to the judgment of the case are chosen and defined according to their legal relevance, which is established in light of the various plausible solutions of the question(s) of Law (cf. previous article 511, no. 1, of the CPC, corresponding to current article 596, applicable ex vi of article 29, no. 1, item e), of the RJAT).
Thus, taking into account the positions assumed by the parties, the documentary evidence attached to the file, the facts listed above were considered proven, with relevance to the decision.
III.2. Matters of Law
III.2.1. The two central questions to be decided in the present arbitration case consist of knowing whether:
i) The disregarding as a deductible expense of the amount of EUR 60,260.75 recorded in the accounting records in account ... – Other Penalties, based on article 23-A, no. 1, item e) of the CIRC, is illegal and
ii) Whether the increase to the IRC result of the amount of EUR 39,996.31 in field 710 of the periodic income statement IRC Form 22, referring to "Corrections relating to prior taxation periods (cf. article 18, no. 2 CIRC), is illegal?
i) As to the illegality of the disregarding as a deductible expense of the amount of EUR 60,260.75 recorded in the accounting records in account ... – Other Penalties, based on article 23-A, no. 1, item e) of the CIRC
The Claimant alleges that there is insufficiency of grounds. In fact, it writes that, "The Claimant understands that the correction in question suffers from illegality because the grounds underlying it are manifestly obscure and insufficient, not clearly making it possible to perceive the cognitive and evaluative process followed by the tax inspection services leading to the disregarding of the amounts borne with the penalties sub judice."
It is well known that the right to grounds, regarding acts that affect rights or legally protected interests, today has constitutional consecration of a nature similar to rights, freedoms and guarantees, with its constitutional principle having been densified in arts. 124 and 125 of the CPA and, subsequently, in arts. 77 nos. 1 and 2 of the LGT (tax administrative act).
"This legal duty of grounds for the administrative act serves a dual function: endogenous, by requiring the decision-maker to express the motives and criteria determining the decision, thus contributing to its consideration and transparency; exogenous, by allowing the addressee of the act an informed choice between compliance and gracious or contentious challenge (cf. the judgment STA, of 2/2/2006, case no. 1114/05). Thus, such grounds must be contextual and integrated in the act itself (although it may be done in a remissive manner), expressed and accessible (through a brief exposition of the factual and legal grounds of the decision), clear (so as to allow the terms of the decision to be understood precisely the facts and law on which it is based), sufficient (allowing the addressee of the act concrete knowledge of the motivation for it) and congruent (the decision should constitute the logical and necessary conclusion of the motives invoked as its justification), being equivalent to the lack of grounds the adoption of grounds that, due to obscurity, contradiction or insufficiency, do not concretely clarify the motivation of the act. That is, the formal grounds of the tax act are distinct from the so-called substantive grounds, the latter should express the actual verification of the factual prerequisites invoked and the correct interpretation and application of the rules indicated as legal grounds.
Specifically, also the decision in tax procedure matters requires a brief exposition of the factual and legal reasons motivating it, and such grounds may consist of mere declaration of agreement with the grounds of earlier opinions, information or proposals, including those comprising the tax inspection report, and should always contain the applicable legal provisions, the qualification and quantification of the tax facts and the operations for determining the taxable matter and the tax (cf. art. 77 of the LGT), being constitutionally appropriate the grounds that respect the mentioned principles of sufficiency, clarity, and congruence and that, on the other hand, is contextual or contemporaneous with the act, not being relevant grounds made afterwards (cf. the judgments of the STA, of 26/3/2014, case no. 01674/13 and of 23/4/2014, case no. 01690/13). It should be noted, however, that, for the sufficiency of the legal grounds of the decision of the tax procedure or the tax act, it is not always necessary to indicate the applicable legal provisions, the reference to legal principles or a legal regime that define a legal framework that is perfectly known or cognizable by a normal addressee, placed in the position of the actual addressee, being sufficient (cf. judgment of the STA, of 17/11/2010, case no. 1051/09 and jurisprudence cited therein).
It should not be forgotten either that the characteristics required regarding the formal grounds of the tax act are distinct from those required for the so-called substantive grounds, the latter must express the actual verification of the factual prerequisites invoked and the correct interpretation and application of the rules indicated as legal grounds. For, in this field of grounds of the act, it is relevant the distinction between formal and material grounds: formal grounds concern the statement of the motives that determined the author to issue the decision with a specific content; material grounds concern the correspondence of the stated motives with reality, as well as their sufficiency to legitimize administrative action in the specific case.
As taught by Vieira de Andrade, (The duty of express grounds for administrative acts, Almedina, 2003, p. 231.) the formal duty is fulfilled "... by the presentation of possible prerequisites or coherent and credible motives; while material grounds require the existence of real prerequisites and correct motives capable of supporting a legitimate decision on the substance" (end of quote). (1)
Now, in the specific case what the Claimant argues is "... In fact, in light of the understanding expressed in the tax inspection report, it is not possible for the Claimant to discern, with sufficient clarity, the interpretation that the AT makes of the legal rule that supports the correction in question, which, from the outset, prevents rigorous control of the legality of the interpretation of the correction underlying the tax act and the exercise by the Claimant of the means of defense assured to it by law."
The argument of obscure grounds thus concerns an "alleged wrong" interpretation of the normative block and not any component of the tax act and so much is it that it argues "at length" the hypothetical normative content that was applied by the Defendant.
As our jurisprudence "establishes" "If the grounds for the corrections operated by the AT and which determined the additional assessments impugned, expresses, in clear, sufficient, congruent and intelligible terms, the legal criterion and the motivation for them, the dual function of endogenous and exogenous control of the legality of such tax acts is fulfilled and there is no insufficiency of grounds."
The Defendant entity as indicated in 4.3, 4.4., 4.5. and 4.6, describes very well its line of argument which is that contained in the tax inspection report, having understood it perfectly.
In fact, "The AT made several contacts with the taxpayer, and following these the certified accountant sent a photocopy of a promise contract for assignment of contractual position in a real estate financial leasing contract;
- However, no mention of any penalties in the amount of 60,260.75 Euros or otherwise results from that promise contract, nor does any other document supporting R's (sic) accounting result in any other justification/causal nexus that leads us to that amount of penalties;
- Therefore, if R. (sic) wishes to see contractual penalties, or of another type, recognized in its accounting, it would have to have, at least, a document supporting that expense/cost;
- The payment of any amount even approximately equal to 60,260.75 euros does not result from the contract, just as the capital transfers (and to whom) are not proven, etc., that is, R does not provide any proof that that amount corresponds to one or more contractual penalties or even served to pay some contractual penalty;
Thus, it seems safe to conclude that these were the grounds for the non-acceptance of said amount as a fiscal cost and that it should have been added to section 07 of form 22, as it falls within the normative provision of art. 23-A, item e) of the CIRC.
The act is thus duly grounded and is perfectly cognizable and intelligible.
Thus, there is no alleged lack of grounds in light of articles 77, no. 2, of the LGT, 36 of the CPPT, 62 of the RCPITA, 152 of the CPA and 268, no. 3, of the CRP, of the corrections imposed by the inspection services, in the amount of EUR 60,260.75, and likewise the respective tax assessment.
A separate question is the assessment that may be made of the quality of such grounds.
It is true that the AT made several contacts with the taxpayer, but it does not entirely coincide with reality, that only a promise contract was attached, because the entries of the mentioned amounts are based on duly issued invoices, with the exception of the one we mentioned.
The Claimant has documents supporting, passed in legal form, issued by a commercial entity, where all formal and substantive requirements provided for in art. 23 of the CIRC appear.
It is not understood at all, therefore, why the "omission" of the reference to the existence of such documents, it being certain that there is a presumption of veracity of declarations and that "in casu" the same even exceeds such presumption as it is based on documents legally issued. As it appears unequivocally from the file that the very AT had the invoices in its possession.
Thus, any assessment of the legal nature of the mentioned amounts is compromised, since the AT proceeded to the correction resulting from the non-existence of supporting document. As the AT writes in its response, "Therefore, if R. (sic) wishes to see contractual penalties, or of another type, recognized in its accounting, it would have to have, at least, a document supporting that expense/cost;", the truth is that the very AT had it (invoice) and the Claimant presented them, combining the two documents (invoices and promise contract) regarding the existence of the amounts in question.
But, having reached this point, it would seem that the question would be resolved, but it cannot be so.
Strangely or perhaps not, as per the proven factual matters, especially points 9.1.6 and 9.1.7, despite the discussion established between the Claimant and the AT considering that such amount emerges entirely from a "penalty", the truth is that it does not.
Neither Claimant nor Defendant "took" the labor of examining the accounting documentation in depth.
As stated in the tax inspection report, the certified accountant sends the promise contract for assignment of contractual position in a real estate financial leasing contract executed on 4 January 2011, as being the document justifying the amount of 60,260.75€, emerging from breach of that contract by the claimant.
In fact, from the start, as per point 9.1.7 of the proven factual matters, the accounting entries in the amounts of 283.82€, 89.54€, 0.50€, 116.53€, 59.83€ and 38.25€, which total 588.47€, correspond to court costs and charges resulting from tax enforcement proceedings and non-compliance proceedings, which are not deductible in accordance with art. 23-A, no. 1, item e), of the CIRC.
Certainly it is for that reason that at point 139 of p.i. and xi) of the submissions, the Claimant mentions the amount of 59,672.28€ (60,260.75€-588.47€), as this is what concerns the breach of contract described at point 9.1.5 of the proven factual matters.
Now, continuing to appeal to the proven factual matters, part of that amount of 59,672.28€ is supported by properly issued and uncontested invoices by the Defendant entity and the amount of 14,800.58€ is supported documentarily in an internal document, which is inadequate in terms of the tax regulatory perspective, cf. point 9.1.7 of the proven factual matters.
Thus, from the outset, only the amount of 44,871.70€ is at issue as being capable of being properly documented.
Article 23 of the CIRC had the following version in force until
Article 23
Expenses
1 – Expenses are considered those that are demonstrably indispensable for the realization of income subject to tax or for the maintenance of the income-producing source, namely:
Law no. 2/2014, of 16 January, gave the following wording:
Article 23 (*)
Expenses and Losses
1 - For the determination of taxable profit, all expenses and losses incurred or borne by the taxpayer to obtain or secure income subject to IRC are deductible.
…
3 – The deductible expenses in accordance with the preceding numbers must be proven documentarily, regardless of the nature or support of the documents used for that purpose.
4 - In the case of expenses incurred or borne by the taxpayer with the acquisition of goods or services, the supporting document referred to in the preceding number must contain, at least, the following elements:
a) Name or company name of the supplier of goods or service provider and of the purchaser or recipient;
b) Tax identification numbers of the supplier of goods or service provider and of the purchaser or recipient, whenever these are entities with residence or stable establishment in national territory;
c) Quantity and usual name of the goods acquired or services provided;
d) Value of the consideration, namely the price;
e) Date on which the goods were acquired or the services were provided.
5 - (Repealed)
6 - When the supplier of goods or service provider is obliged to issue an invoice or legally equivalent document in accordance with the VAT Code, the supporting document for the acquisition of goods or services provided for in no. 4 must necessarily assume that form.
Law 82-C/2014, of 31 December made an amendment to art. 23, but not connected with the matter we are analyzing.
As to article 23-A, it always had the following normative regime, added by Law 2/2014, of 16 January which republished the CIRC:
Article 23-A (*)
Charges Not Deductible for Tax Purposes
1 - The following charges are not deductible for purposes of determining taxable profit, even when recorded as expenses of the taxation period:
…
e) Fines, penalties and other charges, including compensatory and moratory interest, for the practice of infractions of any nature that do not have a contractual origin, as well as for conduct contrary to any regulation on the exercise of the activity;
Now, as the taxation period in question in the present case is IRC relating to the year 2014, the version given by Law 2/2014 applies, despite the fact that the AT at pages 12 of the RIT made recourse to the previous version of art. 23 of the CIRC, which was no longer applicable.
This is the applicable normative framework.
Applying all the above, we have that:
- 588.47€ - concern court costs and charges resulting from tax enforcement proceedings and non-compliance proceedings, which are not deductible in accordance with art. 23-A, no. 1, item e), of the CIRC;
- 14,800.58€ - concern an amount supported documentarily in an internal document, which is inadequate in terms of the tax regulatory perspective;
- 44,871.70€, concern an amount supported by properly issued invoices and classified in accounting in conjunction with the promise contract, therefore this amount must be accepted as a properly documented and relevant cost;
Thus, the first question under consideration must necessarily proceed in favor of the Claimant, regarding the legality of the deduction of the expense of 44,871.70€.
However, as the success is partial, foreseeing the eventual raising of an omission of pronouncement regarding the alleged insufficiency of proof on the part of the AT, regarding the difference between the amount of 59,672.28€ and 44,871.70€, it does not exist.
Properly organized accounting records constitute evidence, or rather, a presumption of veracity until it is "shaken" by the AT. If the latter considers that certain accounting entries are not properly documented, proceeding to arithmetic corrections to taxable profit, due to lack of documentation of such entries, we are not, nor could we ever be faced with any insufficiency of proof on the part of the Defendant entity, we are rather faced with insufficiency of proof on the part of the Claimant. The same reasoning applies regarding any doubt about the existence and quantification of the tax fact, which does not occur.
The Claimant further alleges in subsidiary grounds the violation "Of the rule of non-deductibility of fines, penalties and other charges for the practice of infractions". But neither does it have reason here.
In fact, as mentioned above, the amounts of 588.47€ correspond to court costs and charges resulting from tax enforcement proceedings and non-compliance proceedings, which are not deductible in accordance with art. 23-A, no. 1, item e), of the CIRC, expressly designated as such by the Claimant, and the amount of 14,800.58€ is supported documentarily in an internal document, which is inadequate in terms of the tax regulatory perspective, cf. point 9.1.7 of the proven factual matters.
There is thus no possible relationship with any potential violation of the rule of non-deductibility of fines, penalties and other charges for the practice of infractions.
For all these reasons, we are not faced with the need to assess any deviation from the Claimant's corporate object, nor any violation of the principle of taxation by real profit.
In fact, the non-success of the amounts of 588.47€, concerning court costs and charges resulting from tax enforcement proceedings and non-compliance proceedings, which are not deductible in accordance with art. 23-A, no. 1, item e), of the CIRC and 14,800.58€, concerning an amount supported documentarily in an internal document, which is inadequate in terms of the tax regulatory perspective, has nothing to do with the application of this constitutional principle, being all of them, with due respect, biased approaches to the issue.
It suffices to reproduce what is even exemplarily written in art. 189 of the request for arbitral pronouncement, 189 "In this same sense the Constitutional Court decided in the already cited judgment no. 142/2004, of 19.04.2004: «The principle of taxation by net income may, however, suffer limitations, through the total or partial non-acceptance of certain expenses incurred by the taxpayer, it being worth noting, moreover, that in the very consecration of the principle of taxation according to the real income by the Constitution of the Republic, it did not fail to include an important "sense moderator" "fundamentally according to its real income". The objective exceptions or deviations to the taxation of net income are justified by combinations of complementation and reciprocal restriction with other requirements, more evident in the case of the limitations inherent to the requirement or principle of practicability» [our emphasis]."
Now, we are exactly faced with these exceptions, and neither can there be an assessment of any manifest unconstitutionality of article 23-A, no. 1, item e), of the CIRC, in the interpretation advanced by the AT in the tax inspection report, due to violation of the principles of taxation by real profit and contributory capacity provided for in articles 104, no. 2, and 13 of the CRP.
For all the above, thus the first question under consideration must necessarily proceed in favor of the Claimant, but only regarding the legality of the deduction of the expense of 44,871.70€.
A separate question will be the assessment of the possibility of partial annulment of the tax act by judicial decision to be assessed below.
ii) As to the illegality of the increase to the IRC result of the amount of EUR 39,996.31 in field 710 of the periodic income statement IRC Form 22, referring to "Corrections relating to prior taxation periods" (cf. article 18, no. 2 CIRC).
The second question under analysis concerns the deductibility of a reversal and possibly the principle of specialization of fiscal periods.
The system of taxation of corporate income is based on a partial dependence on accounting, with the taxable profit of entities that engage, as their principal activity, in an activity of a commercial, industrial or agricultural nature, corresponding to the "algebraic sum of the net result of the period and the positive and negative patrimonial variations verified in the same period and not reflected in that result, determined on the basis of accounting and possibly corrected in accordance with this Code", as per no. 1 of article 17 of the IRC Code, with the collectable matter being determined by deducting from the taxable profit the reportable tax losses, in accordance with article 52, and the tax benefits that constitute deduction to taxable profit (article 15, no. 1, of the IRC Code).
Although it is true that companies tend to have an indefinite duration and the same proceeds in a continuous flow and, strictly speaking, profit or loss should only be calculable at the end of its activity, the periodization of taxable profit, by fiscal periods, generally coinciding with the calendar year, is one of the structural pillars of the IRC, reflected in the principle of specialization of fiscal periods, a principle mitigated by the "solidarity of periods", embodied in the carrying forward of losses from prior years (cf. point 7 of the preamble to the IRC Code), although temporally limited.
This principle of specialization of fiscal periods is also an accounting principle, in accordance with § 22 of the Conceptual Framework of the System of Accounting Standardization – Accrual Basis, "the effects of transactions and other events are recognized when they occur (…), being recorded in accounting records and reported in the financial statements of the periods to which they relate", is expressed, in a somewhat rigid manner, in no. 2 of article 18 of the IRC Code, in accordance with which "The positive or negative components considered as relating to prior periods are only attributable to the taxation period when on the date of closing the accounts of the one to which they should have been attributed they were unforeseeable or manifestly unknown". (3)
Jurisprudence and Doctrine have understood that such principle cannot be applied blindly if its application results in a flagrant injustice for the taxpayer, especially when the tax administration fails to make "symmetrical corrections", that is, when, upon disregarding an expense wrongly recorded and deducted in a given fiscal period, adding its value to the taxable profit declared by the taxpayer, it does not make the correction of contrary sign, adding it to the expenses of the fiscal period in which it should have been recorded.
And that, where symmetrical correction is not possible, e.g., for reasons of timeliness, the cost, even though wrongly recorded, should be accepted, for otherwise the taxpayer would be, for reasons of a formal nature, subject to taxation on a profit it did not actually obtain. (4)
But the truth is that decisions cannot be analyzed solely from the abstract perspective of correct or incorrect, but need to be articulated with the facts subsumed to them. Indeed, facts should even be what should condition decisions, as these are subsequent to them.
This was noted in a recent Judgment on (Non-)Uniformization of Jurisprudence from our highest judicial instance, in which in summary it was written:
On the other hand, in the judgment cited as the foundation regarding this matter linked to the principle of specialization of fiscal periods (the judgment of the STA, of 25/06/2006, in case no. 0291/08), a decision of the TT of Lisbon was reconsidered which had decided unfavorably on a judicial challenge filed against an additional IRC assessment of 1999, regarding the correction of the collectable matter relating to interest on a credit due (and to be deducted from fiscal years 1994 and 1995) but which were only regularized/attributed to fiscal year 1999.
The occurrence of such costs was not controversial (they were duly proven, based on the evidence produced in the case) and their non-attribution to the respective fiscal periods (1994 and 1995) resulted from accounting error by the taxpayer.
And as it was equally not proven that there was voluntary and intentional omission aimed at transferring results between fiscal periods, nor was the Public Treasury considered to be harmed (in fact, it was shown that the taxpayer was harmed, since it only came to use such tax costs much later than would normally be, in principle), the STA considered that, notwithstanding the principle of specialization of fiscal periods established in art. 18 of the CIRC not being complied with, in light of the concrete circumstances, the correction to the collectable matter made by the AT should be annulled, for that purpose invoking the principle of justice established in arts. 266/2 of the CRP and 55 of the LGT.
As to the Appealed Judgment and, therefore, on the other hand, it was written in the Judgment of the STA we have been describing:
"Thus, neither the so-called exceptional circumstances invoked by the appellant (those resulting from the transfer operation that occurred at the end of 1999) can be framed in the exceptions provided for by law, nor does the appellant's procedure find justification under the principle of substance over form; and as it is not proven that the alleged neutrality of the operation carried out, it is also not possible to see the invoked violation of the principles of justice and of taxation of the real income of companies, especially since the AT, already in the context of hierarchical appeal, regarding costs relating to 1999 recorded in 2000, ordered the correlative correction in 1999, then there is no other adjustment to be made.
In sum, the appealed judgment, assessing the factuality it judged proven, considered, on the one hand, that therefrom result discrepancies and other circumstances that require the inherent factual inference that neither the manner in which the said operation allegedly occurred is entirely shown, nor that the tax impact of that operation had been neutral (that is, that the income annulled in 2000 would have already been taxed in 1999) and considered, on the other hand, that the circumstances alleged by the appellant cannot be framed in the legally admissible exceptions to derogate from the principle of specialization of fiscal periods (arts. 18/2 and 19/5 of the CIRC), with the principle of justice not being shown to be violated since the neutrality of the operation is not proven."
And we believe it is from this perspective that the present case should be decided.
It was proven that "In fiscal year 2010, the Claimant recorded in the accounting records and subjected to taxation, in account 72114 "Invoicing to issue – normal rate.MN" a set of amounts relating to operations that it estimated it would carry out and invoice, namely:
i. C…: EUR 13,178.50;
ii. D…: EUR 13,178.50;
iii. E…: EUR 26,036.00.
Which totaled EUR 52,393.00, having only invoiced the amount of EUR 12,396.69.
This means that in fiscal year 2010 the aforementioned amounts were taken to income not supported by any supporting document, and there was no invoice issued until 2014, or equivalent document of such amounts.
However, the Claimant recorded the mentioned amounts directly in an income account (72114 – invoicing to issue), rather than having recorded it in the SNC account 271 - Accrual of income.
In fact, this account serves as the counterpart to income to be recognized in the same fiscal period, even if they do not have binding documentation, the revenue for which will only be obtained in a later period or periods. (5)
On the other hand, regarding de-recognition:
7.15 – The carrying amount of an item of tangible fixed assets must be de-recognized:
a) At the time of disposal; or
b) When no future economic benefits are expected from its use or disposal.
7.16 – The gain or loss resulting from the de-recognition of an item of tangible fixed assets must be included in results when the item is de-recognized. Gains should not be classified as revenue.
7.17 – On the date of disposal of an item of tangible fixed assets an entity must apply the criteria referred to in chapter 12 for recognition of revenue.
7.18 – The gain or loss resulting from the de-recognition of an item of tangible fixed assets must be determined as the difference between the net proceeds of the disposal, if any, and the carrying amount of the item.(6)
However, the Claimant did not record the mentioned patrimonial facts in an Asset account, but directly in revenue, in the year 2010, having decided in 2014 to de-recognize them, without any supporting documentation, because it also lacked supporting documentation for the original recording it made in 2010.
In a Judgment of CAAD, drawn from case CAAD 367/2014 (Councilor Jorge Lopes de Sousa), the prevalence of the principle of justice was decided, but in which there had been proper invoicing and proper annulment through the competent credit notes.
Now, this is not the case with the file.
As written in the tax inspection report contained in the PA, "For its part, the respective attribution to fiscal year 2014, should be duly justified, upon reflecting the amount of 39,996.31, in the calculation of the net result for fiscal year 2014, an amount relating to fiscal year 2010, limiting itself to the explanation "reversal of income increase in the amount of 39,996.31, value which is part of the amount of income increase recorded in 2010 in the amount of €88,993."
In fact, the Claimant does not justify the why, when and how of the mentioned reversal of income increase. Being certain that in the Tribunal's understanding the mentioned amount could not, given its nature, appear in section 07 of Form 22 for the year 2010, it is absolutely certain, as also stated in the same report, that "It is, therefore, forbidden for taxpayers to define as they see fit or according to criteria of opportunity or, moreover, in accordance with their commercial strategy or management, the timing for declaring income and expenses arising from their commercial or industrial activity, as they are legally imposed limits and rules for that purpose, namely in the sense of requiring them to attribute such income and expenses to the fiscal period to which they pertain."
And that is what happens in the present case.
If there were discretion regarding the possibility of tax attribution of a certain expense, or the attribution of a certain income, it would not make sense for there to be exceptions to the principle of specialization of fiscal periods, since it would never be possible to assess and appreciate when the same "were unforeseeable or manifestly unknown." One can only appreciate something as unforeseeable, or manifestly unknown, by analyzing the reason why such operation occurred that way and is attributed to a certain moment. In the case of the file, this was not even demonstrated by the Claimant as it was incumbent upon it. Neither in tax inspection, nor in arbitration.
Even document number 7 attached by the Claimant, the so-called internal miscellaneous operations documents, is signed, numbered, nor even has the accounts debited and credited, being worthless as a document of accounting classification.
And neither should the Claimant argue as it states in art. 23 of its request for arbitral pronouncement that, "The aforementioned gains were subjected to taxation in fiscal year 2010 – cf. copies of the balance sheet, the statement of results by nature and the periodic income statement IRC Form 22, for fiscal year 2010, attached as document no. 8" because, it suffices to note in the Balance Sheet in the Asset Deferrals category, that the gross amount of 89,687.88€ appears, which is not discriminated or justified and which does not even coincide with the amount of the "so-called" miscellaneous operations document attached as document number 7, which has a total of 76,393.00€, when the deferrals category in 2009 was zero.
The same reasoning applies "mutatis mutandis", if an analysis is made of document number 9 attached by the Claimant, which is a General Analytical Trial Balance of December 2010, before closing adjustments, where it is clear that the SNC account, 27212, called Invoicing to issue 2010, has a balance value of 88,993.00€ with no breakdown by entity.
In any event, even then it was necessary to produce minimum proof justifying the existence of the attribution to fiscal year 2014 of patrimonial facts through the negative that the Claimant itself created in 2010 through the positive.
Before all the above, we are not faced with any alleged insufficiency of proof on the part of the AT.
Properly organized accounting records constitute evidence, or rather, a presumption of veracity until it is "shaken" by the AT. If the latter considers that certain accounting entries are not properly documented, proceeding to arithmetic corrections to taxable profit, due to lack of documentation of such entries, we are not, nor could we ever be faced with any insufficiency of proof on the part of the Defendant entity, we are rather faced with insufficiency of proof on the part of the Claimant. The same reasoning applies regarding any doubt about the existence and quantification of the tax fact, which does not occur.
In fact, as exemplarily written by the Claimant in art. 227 of its request for arbitral pronouncement, "Indeed, article 75, no. 1, of the LGT states: «The declarations of taxpayers presented in accordance with the provisions of law are presumed to be true and made in good faith, as well as the data and calculations recorded in their accounting or records, when these are organized in accordance with commercial and fiscal legislation, without prejudice to the other requirements on which the deductibility of expenses depends». "organization is a fundamental imperative and we cannot exclude from this imperative the documentary justification and (or) other means of proof of the accounting entries made. Certainly it will not be up to that injunction to choose randomly the fiscal period in which to reverse without there being clear, concise and duly proven grounds for it.
The proof of the how, when, why, is incumbent upon the Claimant and if the same does not prove any of these elements in terms of justifiability, we are upstream of any assessment of the principle of specialization of fiscal periods, legal, accounting or tax.
We are thus not faced with any violation of the principle of justice, present in articles 55 of the LGT and 266 of the CRP.
In fact, what is at issue in the present case is not any condemnation of the AT to correct the income declared in 2010, (cf. art. 260 of the initial application) even if that were the case, but rather the acceptance of the deduction of the mentioned reversal.
The impugnation by the Claimant regarding this part should thus be dismissed.
III.2.2. Of the Partial Annulment of the Tax Act
It is the understanding of the highest judicial instance that partial annulment of assessments is possible with reference to the judgment of the Plenary of the SCT of 10.04.2013 drawn from case no. 298/12, when we are faced with irregular arithmetic accounts, easily determinable and quantifiable, merely generating a legal nonconformity incapable of invalidating the whole act.
In the concrete case, the AT proceeded to the arithmetic correction to the taxable profit of the Claimant for the year 2014, not accepting as a cost the amount of 100,257.06€. Now, it so happens that "in casu", if the non-acceptance of the cost in the value of 44,871.70€ was considered to be successful, the value of the additional assessment that corrected the taxable profit by the non-deductibility of 55,385.36€ should be maintained, since we are faced with mere arithmetic quantification that is perfectly determinable and determined.
IV. Decision
In these terms, the present Tribunal agrees:
a) To judge the request for declaration of illegality of the impugned corrections partially successful, regarding the non-acceptance of the cost in the value of EUR 44,871.70€; with the consequent;
b) Annulment of the tax act of additional assessment of Corporate Income Tax (IRC) for fiscal year 2014 in the amount proportional to such annulment;
c) To maintain the impugned act regarding the rest.
V. Value of the Case
In accordance with the provisions of articles 306, no. 2, and 297, no. 2 of the C.P.C., article 97-A, no. 1, item a) of the C.P.P.T. and article 3, no. 2, of the Regulation of Costs in Tax Arbitration Proceedings, the case is assigned the value of 100,257.06€.
VI. Costs
In accordance with the provisions of articles 22, no. 4, and 12, no. 2, of the Legal Regime of Arbitration, article 2, no. 1 of article 3 and nos. 1 to 4 of article 4 of the Regulation of Costs in Tax Arbitration Proceedings, and the Table I attached to this rule, the global value of costs is fixed at 3,060.00€, proportional to success and failure, with the Claimant thus bearing the amount of 1,690.34€ and the Defendant the amount of 1,369.66€.
Text produced by computer, in accordance with the provisions of article 131 of the Code of Civil Procedure, applicable by reference from item e) of no. 1 of article 29 of the Legal Regime of Tax Arbitration, with blank lines, and revised by the arbitrator.
The wording of the present decision is governed by the spelling prior to the Orthographic Agreement of 1990, except as regards transcriptions made.
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Lisbon, 20 June 2019
The arbitrators,
Fernanda Maçãs (president)
Nuno Cunha Rodrigues (member)
António Pragal Colaço (member)
(1) And as already written in other judgments (cf., e.g. the judgment of 14/3/2018, in case no. 0512/17, whose text we will follow);
(2) Judgment of the Supreme Administrative Court, Case: 0572/17, 09-05-2018, CASIMIRO GONÇALVES;
(3) To know what is in concrete "unforeseeable or manifestly unknown" is unequivocally a task of the interpreter who has to apply the law. To attempt to make an approximation to the densification of that concept "unforeseen", see the case of the Judgment of the STA, case no. 0963/12, of 03-04-2013, DULCE NETO, which considered " "V - Before the approval of a subsidy application by the competent official entities, there cannot be certainty or sure foreseeability that they will be granted, with unforeseeable conditions regarding their approval and the credit that will be granted, which prevents their attribution in the economic fiscal period of the application. Such attribution is required in the fiscal period in which the application is approved, regardless of the receipt of the subsidy in this fiscal period.";
(4) Cf. CAAD Judgment, 30/11/2017, of 30/11/2017, case number 423/2017, Marina Vargas;
(5) Cf. Accounting Standardization Commission, framework notes, in. http://www.cnc.min-financas.pt/pdf/snc/normas/Notas%20enquadramento.pdf which reproduces the respective SNC account:
272 – Debtors and creditors for accruals these accounts record the counterpart of income and expenses that should be recognized in the same period, even if they do not have binding documentation, the revenue or expense of which will only occur in a later period or periods.
(6) Cf. Accounting Standard for Micro Entities, Notice 6726-A/2011, published in the DR II Series, of 14 March 2011, applicable until fiscal year 2015, which was amended by Notice 8257/2015, published in the DR II Series, of 29/7/2015, which created the NCRF for PE; applicable to fiscal years 2016 and et seq. Even if the NCRF for PE, contained in Notice 15654/2009, published in the DR II Series of 7 December 2009 were applicable, the wording was identical;
(7) Note the various rules of the CIRC namely when in the context of acceptance of deduction of impairment losses in non-current assets, it is required:
Article 31-B (*) Impairment losses in non-current assets
1 - Impairment losses in non-current assets may be accepted as tax expenses when they result from abnormal causes proven, namely disasters, natural phenomena, exceptionally rapid technical innovations or significant changes, with adverse effect, in the legal context.
2 - For the purposes of the preceding number, the taxpayer must obtain the acceptance of the Tax and Customs Authority, by means of a duly substantiated exposure, to be presented by the end of the 1st month of the taxation period following the occurrence of the facts that determined the exceptional devaluations, accompanied by documentation proving the same, namely the decision of the competent management body confirming those facts, justification of the respective amount, as well as the indication of the destination to be given to the assets, when the physical disposal, dismantling, abandonment or disuse of these does not occur in the same taxation period.
3 - When the facts that determined the exceptional devaluations of assets and the physical disposal, dismantling, abandonment or disuse occur in the same taxation period, the net fiscal value of the assets, corrected for any recoverable amounts, may be accepted as an expense of the period, provided that:
a) The physical disposal, dismantling, abandonment or disuse of the goods is proven, through the respective record, signed by two witnesses, and the facts that originated the exceptional devaluations are identified and proven;
b) The record is accompanied by a discriminative list of the elements in question, containing, regarding each asset, the description, the year and the cost of acquisition, as well as the net carrying amount and the net fiscal value;
c) It is communicated to the tax office of the area where such assets are located, with a minimum of 15 days notice, the location, date and time of the physical
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