IRC Impairment Losses on Credits and Period Specialization: CAAD Arbitration 423/2017-T

ARBITRAL DECISION

I. REPORT

On 11 July 2017, A…, Ltd., with NIPC … and with registered office at Rua … No. …, …, …-…, … (hereinafter referred to as Claimant), came, pursuant to the combined provisions of Article 10 of Decree-Law No. 10/2011 of 20 January, which approved the Legal Regime for Tax Arbitration (RJAT) and Articles 1 and 2 of Ministerial Order No. 112-A/2011 of 22 March, to request the constitution of a Sole Arbitral Tribunal, in which the Tax and Customs Authority (hereinafter AT or Respondent) is the Respondent, with a view to the declaration of illegality and consequent annulment of the Corporate Income Tax Assessment (IRC) No. 2017…, of 29 March 2017 and of the Interest Calculation Statement No. 2017…, relating to the tax year 2014, in the total amount of € 9,206.91 (nine thousand, two hundred and six euros and ninety-one cents), a value which the Claimant attributes to the claim.

Further, the Claimant requests that the Respondent be condemned to the restitution of the amount unduly paid, plus compensatory interest, in accordance with the law.

Summary of the Parties' Positions

a. Of the Claimant:

As grounds for the request for annulment of the Corporate Income Tax assessments for the year 2014 and compensatory interest, the Claimant alleges the following:

The Claimant is a company whose business object is "purchase and sale of real property, construction of houses for sale, urban developments and subdivisions".

In the course of its activity, the Claimant entered into, in 2010, four promise-to-purchase contracts with the company "B…, Ltd.", pursuant to which it promised to purchase, and the latter promised to sell, four single-family houses to be built on four plots of land, having paid to the promise-to-sell party, as a deposit and part payment, the sum of € 500,000.00.

In November 2012, the company "B…, Ltd." was declared insolvent and the Claimant was summoned to claim its debts, which it duly did.

In 2014, the Claimant was notified of the list of assets seized for the insolvency estate and of the approval of the list of recognised creditors and amounts of their respective debts, only then becoming aware of the potential uncollectibility of its debt.

It then recorded in its accounting an impairment provision for the amount of € 500,000.00, which it deducted for tax purposes.

The AT did not agree with this, and in the course of an inspection procedure, did not accept the tax deductibility of the impairment loss, in accordance with the provisions of Article 18 of the CIRC, which resulted in a correction to the taxable income of € 500,000.00, which was the basis of the contested assessment.

The Claimant disagrees with the Respondent's decision because, in 2012, the promise-to-sell party was not in default, as it had been agreed that the definitive contracts would only be concluded in 2013; for this reason, the loss could not be deducted in 2012, in particular because no impairment provision was recorded in that tax year.

And it did not record an impairment provision in 2012 because it believed in the good collectibility of its debt, understanding that the requirement provided for in paragraph (a) of paragraph 1 of Article 28-A of the CIRC was not met, notwithstanding the provision of paragraph 1 of Article 28-B of the CIRC.

The principle of specialization of tax years is not an absolute principle and cannot be applied blindly, as has been understood by doctrine and case law, but must yield to the principle of justice, enshrined in Articles 266(2) of the Constitution and 55 of the General Tax Law.

Thus, even if the Claimant's understanding in recording the impairment provision only in 2014 and not in 2012 is considered incorrect, such an omission cannot have as a consequence the disregard of the loss actually sustained, all the more so since it is no longer possible to correct the 2012 tax year and the tax disregard of a loss of € 500,000.00 constitutes an enormous injustice, violating the principle of material truth.

There was no voluntary or intentional omission in the Claimant's conduct, nor any deliberate strategy to circumvent the principle of specialization of tax years.

In deducting the impairment loss only in 2014, instead of doing so in 2012, as the AT contends, the Claimant delayed the entry into its legal sphere of a patrimonial advantage, and no prejudice resulted to the AT.

The AT's understanding in the inspection report results instead in intolerable prejudice to the Claimant, since it will no longer be able to record as a cost the loss it actually sustained, as the time limit for correcting the 2012 tax year has passed.

The Claimant concludes by formulating a request for the annulment of the correction to the 2014 tax year made by the tax inspection, as well as the annulment of the contested Corporate Income Tax assessments and compensatory interest and the condemnation of the Respondent to the restitution of the tax unduly paid, plus compensatory interest, in accordance with Article 43 of the General Tax Law.

b. Of the Respondent:

Having been notified in accordance with the provisions of Article 17 of the RJAT, the AT presented its response and attached the administrative file, in which it defended the legality and maintenance of the Corporate Income Tax assessment for 2014, subject to this request for arbitral decision, with the following grounds:

In the course of the external and partial tax inspection procedure – Corporate Income Tax for 2014, the tax inspection services verified that the present Claimant recorded an impairment loss provision in the amount of € 500,000.00, corresponding to a debt of the same amount from the company "B…, Ltd.", declared insolvent on 5 November 2012.

They further verified that the debt relates to advance payments (deposits) made by the Claimant in the conclusion, in 2010, of 4 promise-to-purchase contracts for real property between the two companies, which provided for the execution of the deeds within a period of 3 years.

It follows from the tax regime applicable to the case in the files, in particular Articles 18, 23, 35 and 36, all of the CIRC, as amended in 2012 (current Articles 18, 23, 28-A and 28-B), that the taxpayer does not have the discretion to recognize losses whenever and in the proportion it wishes, but in accordance with what the law requires.

Therefore, impairment losses may only cease to be considered in the taxation period to which they relate when, on the date of closure of the accounts to which they should have been imputed, they are unforeseeable or clearly unknown, as provided for in paragraphs 1 and 2 of Article 18 of the Corporate Income Tax Code.

Paragraph 1 of Article 35 of the CIRC, as amended in 2012 (current Article 28-A) provides that impairment losses may be tax deducted "related to debts resulting from normal activity that, at the end of the taxation period, can be considered doubtful and are evidenced as such in the accounts", the amount being associated with how the risk of uncollectibility is considered to be justified, which according to paragraph 1 of Article 36 of the CIRC, as amended in 2012 (current Article 28-B) is verified when "a) The debtor has pending insolvency and business recovery proceedings or execution proceedings;".

In light of the legal provisions cited, as well as the accounting rules in force, the taxpayer cannot determine the moment to recognize costs and losses arising from its commercial or industrial activity.

Neither can it be said that the deferral of costs sought by the Claimant is absolutely neutral from a tax perspective and will not bring harm to the tax administration, since the fact that the cost is considered in 2014 and not in 2012 projects two years ahead the eventual deductibility of tax losses.

The AT is obliged to restore the truth regarding the determination of the taxable income of the tax years in question, giving effect to the principle of specialization, even though this restoration brings it no benefit.

In the present case, although the AT added to the 2014 tax year the income corresponding to the improper deduction of the impairment loss relating to 2012, it did take into account the tax losses carried forward from prior tax years, in accordance with Article 52 of the CIRC, and therefore there is no violation of the principle of justice, a principle which cannot, by itself and in light of all the circumstances of the situation under analysis, be sufficient to consider the additional Corporate Income Tax assessment for 2014 to be illegal.

Furthermore, the Claimant recorded the impairment provision in 2014, the only year in which it would have shown a profit, in the amount of € 103,497.63, if it had not recorded as an expense the impairment loss in question, in the amount of € 500,000.00.

Thus, the arguments invoked by the Claimant find no support in the existing accounting and tax framework, and are expressly contested in their entirety.

As well as all allegations in the learned Claimant's brief which contradict the above are contested, as unfounded, as well as the documents submitted by the Claimant, as they do not correspond to the truth or from them cannot be drawn the legal effects sought by the Claimant, and its claim should be considered unfounded and the Respondent absolved of all requests, with the legal consequences thereof.

By arbitral order of 20 October 2017, given that no exceptions were raised and taking into account the documentary evidence in the file, the taking of evidence by party statements was dispensed with as well as the holding of the meeting referred to in Article 18 of the RJAT, determining that the proceedings continue with successive written submissions within 10 days and fixing 30 November 2017 as the date for rendering the arbitral decision, with a warning to the Claimant for payment, by that date, of the remaining arbitral fee.

In its written submissions, the Claimant reiterated its initial arguments, emphasizing the injustice represented by the contested Corporate Income Tax assessment, resulting from the correction to the costs declared in 2014, without there having been a correction in the opposite direction in 2012.

The Respondent submitted a counter-reply, referring entirely to the arguments made in its Response.

II. PRELIMINARY RULING

1. The sole arbitral tribunal is competent and was regularly constituted on 18 September 2017, in accordance with Articles 2(1)(a), 5 and 6, all of the RJAT.

2. The parties have legal personality and capacity, are legitimate and are duly represented, in accordance with Articles 4 and 10 of the RJAT and Article 1 of Ministerial Order No. 112-A/2011 of 22 March.

3. The proceedings do not suffer from defects that would render it invalid.

4. No exceptions were raised that require consideration.

III. REASONING

III.1 FACTUAL MATTERS

a. Established Facts

The factual matter relevant to the understanding and decision of the case is based on the critical examination of the documentary evidence attached to the Inspection Process and the Administrative File, as follows:

1. On 13.04.2010, there were concluded between the Claimant, in the capacity of promise-to-purchase party, and the company B…, Ltd., in the capacity of promise-to-sell party, four promise-to-purchase contracts for four plots of land registered in the urban property register of the parish of …, municipality of Oeiras, under articles …, …, … and … (plots …, …, … and …, located in …), on each of which a single-family house was to be built by the promise-to-sell party, to be transferred to the Claimant free of liens or encumbrances – Doc. 1, attached to the Inspection Process;

2. In accordance with the third clause of each of the promise-to-purchase contracts, payment of a deposit of the sum of € 125,000.00 was provided for, of which € 25,000.00 were paid by cheque on the date of its conclusion, with the remaining € 100,000.00 corresponding to the conversion of the Claimant's credit against the promise-to-sell party;

3. Pursuant to the fourth clause of each of the promise-to-purchase contracts, the definitive deed would take place within thirty days following the expiry of the period of 3 years from the date of its conclusion;

4. Between 11.01.2017 and 17.02.2017, the inspection acts were carried out, in the course of the proceedings opened by Service Order No. OI2016…, of 28.09.2016, of the Directorate of Finance of Lisbon (cf. the Tax Inspection Report, hereinafter RIT, attached as Doc. 2 to the Inspection Process and the Administrative File);

5. The tax inspection procedure, of an external nature, as provided for in the notification previously sent to the taxpayer, was of partial scope (Corporate Income Tax for 2014);

6. The RIT contains, in particular, the following:

a. The Claimant's business purpose is the activity of purchase and sale of real property, construction of houses for sale, urban developments and subdivisions, and has exercised, since 02.01.2008, the main activity of real estate promotion (Building Project Development), with CAE 041100 and the secondary activity of purchase and sale of real property, CAE 068100, included in the general corporate income tax regime;

b. In 2014, the Claimant recorded an impairment loss provision in the amount of € 500,000.00, corresponding to a debt of the company B…, Ltd., declared insolvent on 5.11.2012 (Annex III to the RIT);

c. Having examined the insolvency proceedings (…/12… TYLSB) of B…, Ltd., it is concluded that the debt relates to advance payments (deposits) made by A…, Ltd. in the conclusion, in 2010, of 4 property purchase contracts between the two companies, which provided for the deeds to be executed within a period of 3 years; as the deeds were never executed due to the insolvency of the promise-to-sell party, the debt of € 500,000.00 was constituted;

d. The debt is recorded in account …;

e. However, Article 18(2) of the CIRC provides that "Positive or negative components considered to relate to prior periods are only attributable to the taxation period when, on the date of closure of the accounts of the period to which they should have been attributed, they were unforeseeable or clearly unknown";

f. In the case under analysis, the company was clearly aware of the fact originating the impairment – the risk of uncollectibility of the debt, due to the insolvency of the debtor – in periods prior to the 2014 tax year, and therefore, in accordance with the principle of specialization of tax years, adopted by Article 18 of the CIRC, the impairment loss provision recorded in 2014 cannot be accepted as a cost for that year;

g. The following corrections are proposed to the result calculated by the Claimant for 2014, resulting from the non-acceptance of the tax impairment loss in the amount of € 500,000.00:

However, it is verified that the company has tax losses from prior tax years, deductible in accordance with paragraph 1 of Article 52 of the CIRC, in the following amounts:

In accordance with paragraph 2 of the cited Article 52 of the CIRC "The deduction to be made in each taxation period cannot exceed the amount corresponding to 70% of the respective taxable profit …" and in accordance with paragraph 15 of the same article, "…tax losses calculated earlier must be deducted".

In light of the above, the taxable income for Corporate Income Tax purposes, to be considered for 2014, is € 31,049.29, in accordance with the following calculations:

h. Attached to the RIT are copies of procedural documents extracted from the insolvency proceedings of a legal entity which took place before the 3rd Court of the Commercial Court of Lisbon under No. …/12… TYLSB, in which B…, Ltd. is the insolvent:

i. From the citation letter of the declaration of insolvency, addressed to the Claimant, through official letter No. …, of 6 November 2012 (postal registration No. RJ…PT);

ii. From the Order approving the list of recognised creditors and their respective debts, of 11 March 2014;

1. The RIT, in its final version, after the time period for exercising the right to hearing had elapsed, which was not exercised, was notified to the Claimant by official letter of 21.03.2017, from the Directorate of Finance of Lisbon (postal registration No. RD … PT);

2. On 29.03.2017, the Corporate Income Tax assessment No. 2017… (set-off No. 2017…, of 31.03.2017) was issued, contested in these proceedings, for the total amount of € 9,206.91, with a due date for voluntary payment on 29.05.2017;

3. The Claimant proceeded to pay the contested assessment on 4.05.2017.

b. Unproven Facts

There are no facts relevant to the decision of the case that should be considered unproven.

III.2 ON THE LAW

1. The Issue to be Decided

The issue that falls to this arbitral tribunal to decide is whether, in the present case, the Corporate Income Tax assessment for 2014 should be annulled, for violation of law, for not having considered in that year the tax deductibility of an impairment loss demonstrably suffered by the Claimant in the course of its activity, but relating to 2012, taking into account the impossibility of correcting the losses recorded and declared by it in that other tax year.

As is well known, the corporate income tax system is based on a partial dependence on accounting, with the taxable profit of entities that exercise, as their main activity, a commercial, industrial or agricultural activity, 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 provided in paragraph 1 of Article 17 of the Corporate Income Tax Code, with the taxable income being determined by deducting from the taxable profit the carried forward tax losses in accordance with Article 52, and the tax benefits that constitute a deduction from taxable profit (Article 15(1) of the Corporate Income Tax Code).

Although the life of companies proceeds in a continuous flow and, strictly speaking, profit or loss is only calculable at the end of its activity, the periodization of taxable profit by tax years, generally coinciding with the calendar year, is one of the structural pillars of the Corporate Income Tax, translated by the principle of specialization of tax years, a principle which is mitigated by the "solidarity of tax years", embodied in the carrying forward of losses from prior years (cf. point 7 of the preamble to the Corporate Income Tax Code), albeit temporally limited.

Such principle of specialization of tax years, which is also an accounting principle, in accordance with § 22 of the Conceptual Framework of the Portuguese System of Accounting Normalization – Accrual Basis, "the effects of transactions and other events are recognized when they occur (…), being recorded in the accounts and reported in the financial statements of the periods with which they relate", is expressed, in somewhat rigid terms, in paragraph 2 of Article 18 of the Corporate Income Tax Code, pursuant to which "Positive or negative components considered to relate to prior periods are only attributable to the taxation period when, on the date of closure of the accounts of the period to which they should have been attributed, they were unforeseeable or clearly unknown".

Case law and doctrine have understood that such a principle cannot be applied blindly if its application results in flagrant injustice to the taxpayer, especially when the tax administration fails to make "symmetrical corrections", that is, when, in disregarding a cost wrongly recorded and deducted in a given tax year, adding its value to the taxable profit declared by the taxpayer, it does not make the correction in the opposite sense, adding it to the costs of the year in which it should have been recorded.

And that, if symmetrical correction is not possible, e.g., for reasons of timeliness, the cost, even though wrongly recorded, should be accepted, as otherwise the taxpayer would, for reasons of a formal nature, be subject to taxation on a profit it did not actually obtain.

In this regard, we cite Diogo Leite de Campos, Benjamim Silva Rodrigues and Jorge Lopes de Sousa, in "General Tax Law – Annotated and Commented", 4th Edition, 2012, pp. 452 et seq., also cited by the Claimant. The illustrious authors write:

"The activity of the tax administration cannot be limited to a mechanical application of the laws to factual situations; it must always have in mind the objective that justifies it, which is the pursuit of the public interest (articles 266(1) of the Constitution and 5 and 55 of the General Tax Law).

Therefore, the tax administration should refrain from acting in situations in which, although the formal requirements of the abstract legal provisions for its action are met, this action is not relevant to the pursuit of the public interest.

Some examples drawn from the practice of the courts illustrate these situations and can serve to demonstrate the convenience of not giving absolute precedence to the norms that define the tax administration's action in certain situations, restricting their scope in order to ensure their compatibility with those principles.

a) In both Industrial Contribution and Corporate Income Tax, the principle of specialization of tax years applies, which determines, as far as is relevant here, that each tax year of the company's activity must be attributed the income and costs generated or incurred in it (articles 22, 23 and 26 of the Industrial Contribution Code and article 18 of the Corporate Income Tax Code).

When there is disagreement between the taxpayer's criterion and the tax administration's regarding the attribution of a particular gain or loss to a particular tax year, the latter must proceed with the correction of the taxable income, increasing the income or cost in the year to which it understands it should relate and, correspondingly, should reduce such income or cost from the taxable income of the year to which the taxpayer attributed it.

With this procedure, there will be no situation of injustice, as the increase in tax in a particular year will correspond to a similar decrease in another, thus avoiding the taxation of the same income in two tax years or the non-deduction in either of them of a cost that should be considered.

(…) The same occurs when, although at the time when the tax administration made the change to the taxable income it would have been possible to make the corresponding correction in the year to which the costs are understood to be attributable, it does not do so and, with the passage of time, it becomes impossible to do so.

In these circumstances, if the tax administration was correct in the correction it made, the taxpayer would, in principle, have been prejudiced by its own error in declaring the taxable income, for, by deducting a cost in the year following that in which it should have deducted it, it failed to see the tax amount corresponding to that year reduced, to only see such reduction occur in the following year and, in parallel, the tax administration had suffered no prejudice, as it had received the tax in the previous year without taking into account this cost which should have reduced it.

Thus, in the case where the correction cannot now be made regarding the prior year, the taxpayer, which was already the only party prejudiced by its error, would see its situation even more aggravated, being prevented from making the deduction of this cost in either of the years. The tax administration would thus retain in its possession a tax to which it manifestly had no right.

This is a situation in which the exercise of a bound power (correction of taxable income in light of the violation of the principle of specialization of tax years) leads to a flagrantly unjust situation and in which, therefore, the question arises of whether to apply the principle of justice, enshrined in articles 266(2) and 50 of the General Tax Law, to prevent the possibility of making said correction.

There are, in this situation, two duties to weigh, both with legal backing: one is to restore the truth regarding the determination of taxable income of the tax years in question, giving effect to the principle of specialization, a restoration that the tax administration must effect even if it brings it no benefit; another is to prevent administrative activity from resulting in the creation of an unjust situation.

Between these two values, particularly in cases in which the tax administration suffered no prejudice from the error committed by the taxpayer, the choice should be to not make the correction, limiting that duty of correction by force of the principle of justice.

On the other hand, it should be noted that in such a situation there is not even any public interest in the action of the tax administration, since what is at stake is not the obtaining of a tax due, and therefore, as all administrative activity must be guided by the pursuit of this interest, the administration should refrain from acting.

Consequently, acts of correction of taxable income that lead to situations of injustice of this type should be considered voidable, for violation of law".

Returning to the case at hand, the question arises as to whether we are facing a situation of injustice that justifies the annulment of the correction made by the AT to the 2014 tax year, as well as of the subsequent Corporate Income Tax assessment now contested, without the symmetrical correction to 2012 having been made which, according to the Claimant, would no longer be possible.

It must first be said that, although the intentionality of the error in recording, in 2014, the impairment loss not accepted by the AT, motivated by the Claimant's conviction that it would be reimbursed for its debt in the course of the promise-to-sell party's insolvency proceedings, is not proven, the correction made was warranted, given the wording of Articles 28-A(1)(a) and 28-B(1)(a), both of the Corporate Income Tax Code, as amended for 2014 (former articles 35(1)(a) and 36(1)(a), as amended in 2012), a concretization of the accounting principle of prudence (§ 37 of the Conceptual Framework of the Portuguese System of Accounting Normalization), according to which, in the preparation of financial statements, "a degree of caution (…) must be used so that assets or income are not overstated and liabilities or expenses are not understated".

On the other hand, the excerpt quoted above refers to those situations in which, as a symmetrical correction in the opposite direction is not possible, the one that was at the origin of the tax assessment for a given tax year, there was a double disadvantage for the taxpayer: it did not see the taxable income and, consequently, the tax reduced for the year in which it could have deducted the cost, while, on the other hand, the sacrifice of its patrimony relating to the year in which the correction occurred increased, as the tax loss wrongly deducted was not accepted.

Now, as pointed out in the RIT and is not contested by the Claimant, in 2012, the year to which the impairment loss recorded in 2014 related, the taxable income was nil, as a tax loss of -€ 161,511.84 was recorded, and, consequently, there was no tax payment. There was not, therefore, for the Claimant, the deferral of any advantage that could have been provided to it by the acceptance of the cost that it failed to record in 2012, for the reason that there was no tax to pay in that year.

It is not that the omission of the "symmetrical correction" of the results for 2012 by the AT is completely inconsequential for the taxpayer.

Such omission may, possibly, eventually be reflected in the possibility of carrying forward losses from prior years, should the Claimant come to obtain taxable profit within the time period in which such carrying forward would be possible. But it had no consequence at the level of the 2014 tax assessment now contested.

In fact, pursuant to paragraphs 1 and 2 of Article 52 of the Corporate Income Tax Code, as amended for 2012, the tax losses calculated in a particular taxation period were deductible from taxable profits, if there were any, from one or more of the five subsequent taxation periods, that is, until 2017.

However, in the corrected year, the deductibility of accumulated losses was restricted to 70% of the respective taxable profit. And the AT, in determining the taxable income for 2014, did not fail to take into account the deductibility of the tax loss recorded by the Claimant in prior years.

Indeed, having the Claimant declared, in 2014, a tax loss of -€ 398,502.37 which, increased by the correction of € 500,000.00 corresponding to the impairment loss not accepted, as it relates to 2012, was transformed into a taxable profit of € 103,497.63, against this were deducted the tax losses recorded in 2012, at the rate of 70% of the taxable profit calculated for 2014, that is, in the amount of € 72,448.34.

Would the tax payable in 2014 have been different if the AT had corrected the tax losses for 2012?

The answer can only be negative, as, the Claimant having recorded in 2012 a loss of -€ 161,511.84, its correction by adding the value of the impairment loss, which would result in a loss of -€ 661,511.84, would have no influence on the assessment now contested, given the restriction on the deductibility of losses, referred to in paragraph 2 of Article 52 of the Corporate Income Tax Code.

Any eventual prejudice to the Claimant would only occur if, in the years 2015 to 2017, it came to record profits that would allow it to deduct the remaining part of the corrected and undeducted losses in 2014. Prejudice which the Claimant neither invokes nor proves with respect to 2015 and 2016, the taxable income of which had already been determined on the date of the claim. Moreover, to those losses for 2012, would still have to be added the tax loss declared in 2013, of -€ 61,411.23, as was calculated in the RIT.

However, the Claimant neither requests that the tax losses for 2012 be corrected, as in its view this is no longer possible, and, furthermore, what is at issue in the present proceedings is the Corporate Income Tax assessment for 2014 and not that of any other tax year.

Given what has been said, let us see the consequences of the annulment of the correction made by the AT to 2014, which resulted in the assessment that is the subject of these proceedings.

The annulment of the said correction, as well as of the contested assessment, would result in a double advantage for the Claimant, which would thus benefit from its own error: a real and immediate advantage, as it would no longer have to pay the tax actually due for 2014, in obedience to the principle of specialization of tax years; and a possible future advantage, as the consideration of the impairment loss, of the sum of € 500,000.00, in 2014, would allow it, as the Respondent well notes, to project two years ahead the eventual deductibility of tax losses (had there been no legislative change to the cited Article 52 of the CIRC).

For the reasons set out and, anticipating the decision, we will say that the Corporate Income Tax assessment for 2014, as well as the corrections that underlie it, do not conflict with the invoked principles of justice and the pursuit of the public interest to which the AT is legally and constitutionally bound, and are not liable to the requested annulment.

IV. DECISION

Based on the factual and legal grounds set out above, it is decided, finding the present request for arbitral decision unfounded, as not proven, to maintain in the legal order the Corporate Income Tax assessment No. 2017…, of 29 March 2017 and the Interest Calculation Statement No. 2017…, relating to the tax year 2014, in the total amount of € 9,206.91, absconding the Tax and Customs Authority of all requests.

VALUE OF THE CASE: In accordance with Articles 306(1) and (2) of the Code of Civil Procedure, 97-A(1)(a) of the Code of Tax Procedure and paragraph 2 of Article 3 of the Regulation of Costs in Tax Arbitration Proceedings, the value of the case is set at € 9,206.91 (nine thousand, two hundred and six euros and ninety-one cents).

COSTS: Calculated in accordance with Article 4 of the Regulation of Costs in Tax Arbitration Proceedings and Table I attached thereto, in the amount of € 918.00 (nine hundred and eighteen euros), to be borne by the Claimant.

Let it be notified.

Lisbon, 30 November 2017.

The Arbitrator,

/Mariana Vargas/

Document prepared by computer, in accordance with paragraph 5 of Article 131 of the Code of Civil Procedure, applicable by reference to paragraph (e) of paragraph 1 of Article 29 of Decree-Law 10/2011 of 20 January.

The drafting of this decision is governed by the 1990 spelling agreement.