CAAD Process 43/2018-T: IRS Voluntary Arbitration for Legal Entity - Tax Liquidation Illegality and Double Taxation

DECISION OF THE ARBITERS

The Arbiters José Pedro Carvalho (Presiding Arbiter), Rui Duarte Morais and Manuel Pires, appointed to form an Arbitral Tribunal at the Centre for Administrative Arbitration, hereby agree as follows:

ARBITRAL DECISION (consult full version in PDF)

I – REPORT

On 1 April 2018, A..., NIPC..., with tax domicile at Rua..., no. ..., R/C, ...-... Coimbra, submitted a request for constitution of an arbitral tribunal, pursuant to the combined provisions of articles 2 and 10 of Decree-Law no. 10/2011, of 20 January, which approved the Legal Framework for Arbitration in Tax Matters, as amended by article 228 of Law no. 66-B/2012, of 31 December (hereinafter, abbreviated as RJAT), seeking the declaration of illegality of the following acts:

• Tax acts of Personal Income Tax (IRS) assessment no. 2017..., in the amount of € 104,373.54, and of compensatory interest no. 2017..., in the amount of € 14,411.14, relating to the year 2014 and statement of settlement of accounts no. 2017..., with balance determined to be paid of € 85,046.16;

• Tax acts of Personal Income Tax (IRS) assessment no. 2017..., in the amount of € 179,661.46, and of compensatory interest no. 2017..., in the amount of € 7,414.79, relating to the year 2015 and statement of settlement of accounts no. 2017..., with balance determined to be paid of € 166,734.75.

To support its request, the Applicant alleges, in summary, the illegality of the reasoning of the contested tax acts, on the grounds that:

• There exists no violation of law by the Applicant;

• It should be considered legally impossible any eventual violation by the Applicant of the voluntary arbitration regime, presupposed by the reasoning of the contested acts, to determine the tax effects defended by the Tax Authority;

• There is illegality of the contested acts due to double taxation.

On 02-02-2018, the request for constitution of the arbitral tribunal was accepted and automatically notified to the Tax Authority.

The Applicant proceeded to appoint an arbiter, having appointed H.E. Prof. Dr. Rui Morais, pursuant to article 11/2 of the RJAT. Pursuant to paragraph 3 of the same article, the Respondent appointed as arbiter H.E. Prof. Dr. Manuel Pires.

The arbiters appointed by the parties were appointed and accepted their respective assignments.

Following the request presented by the arbiters appointed by the parties, a presiding arbiter was appointed, pursuant to article 6, paragraph 2, subparagraph b), of Decree-Law no. 10/2011, of 20 January, the present Rapporteur, who, within the applicable period, also accepted the assignment.

On 09-04-2018, the parties were notified of these appointments, and manifested no intention to challenge any of them.

In accordance with the provision in subparagraph c) of paragraph 1 of article 11 of the RJAT, the collective Arbitral Tribunal was constituted on 02-05-2018.

On 06-06-2018, the Respondent, duly notified for this purpose, presented its response defending by way of contestation.

Pursuant to the provisions in subparagraphs c) and e) of article 16 and paragraph 2 of article 29, both of the RJAT, the holding of the meeting referred to in article 18 of the RJAT was dispensed with.

By order of 05-07-2018, the Applicant was invited to submit additional documentation, which it did, and subsequently compliance with the right to contradict, which was necessary in this case, was given effect.

Having been granted a period for the presentation of written submissions, the same were presented by the parties, pronouncing themselves on the evidence produced and reiterating and developing their respective legal positions.

It was indicated that the final decision would be notified by the end of the period referred to in article 21/1 of the RJAT, which period, pursuant to paragraph 2 of the same article, was extended twice.

The Arbitral Tribunal is substantively competent and is duly constituted, pursuant to articles 2, paragraph 1, subparagraph a), 5 and 6, paragraph 1, of the RJAT.

The parties have legal personality and capacity, are entitled and are legally represented, pursuant to articles 4 and 10 of the RJAT and article 1 of Ordinance no. 112-A/2011, of 22 March.

The proceedings are not affected by any nullities.

Thus, there is no obstacle to the hearing of the case.

All matters having been considered, it behoves us to pronounce as follows:

II. DECISION

A. FACTS

A.1. Facts Established as Proven

The Applicant is a university professor in the field of Law and exercises a number of other activities related to his legal training, namely those of legal consultant and arbiter in disputes submitted to arbitral jurisdiction, in Portugal and abroad.

This arbitral activity has been exercised since 2008, when the Applicant ceased the functions he previously exercised as judge of the Constitutional Court.

The Applicant is a shareholder of the company B..., Lda., with 1% of the capital, with the remaining 99% belonging to his mother.

In the years 2014 and 2015, the Applicant signed all minutes, invoices and other documents relating to the management and internal life of the company.

B..., Lda. forms a patrimony completely separate and independent from the patrimony of the Applicant.

In the years 2014 and 2015, the company B..., Lda. bore, among other things, the following charges:

• Invoices for services provided by external legal consultants within the scope of issuing opinions and collaborations given to the Applicant in studies;

• Invoice for legal secretarial services in arbitral proceedings;

• Invoice for the acquisition of legal publications related to arbitration;

• Invoices for the acquisition of travel undertaken by the Applicant in the context of arbitral procedures, namely for hearings, meetings.

The Applicant transmitted the identification of the company (name, tax number and collective person number, IBAN), and the invoices corresponding to the services in question were always issued by the company and it was to this company that the arbitration centres always made the respective payments.

It was never understood or presumed, by any party or interested person in the arbitral proceedings or processes, that the appointment to the arbitrations in question fell upon the collective person B..., Lda., with the charges and obligations relating to such appointments being personally assumed by the Applicant.

In none of the arbitrations in which the Applicant participated was the independence, impartiality or compliance with any other deontological requirement of the Applicant questioned, either by any party in the arbitral proceedings or by any third party, nor was any problem of lack of independence and impartiality raised by the Applicant either due to him being a shareholder of the company B..., Lda., or due to the fact that the invoicing of arbitration services occurred in the sphere of B..., Lda.

The Tax and Customs Authority carried out a tax inspection of the Applicant under Service Orders nos. OI2017... and OI2017....

In such inspection, a Tax Inspection Report was prepared, which refers, among other things, to the following:

"II. 2 - Reason, scope and temporal scope

The present inspection action, of general scope and extending to the years 2014 and 2015, arose as a result of inspection proceedings carried out, under service order no. OI2017... and orders nos.... and ...., to two companies of which the taxpayer under analysis is a shareholder, namely A... . Lda. NIF... and B..., Lda, NIF..., in the context of which it was established that the taxpayer did not declare either all of the rental income he received in the year 2015, or all of the business and professional income he obtained in the years 2014 and 2015.

II.3 - Other situations

II.3.1 - Tax classification

The taxpayer is subject to Personal Income Tax and Value Added Tax for the exercise of the following activities:

• main activity with code 6011 - legal consultants.

• secondary activity with code 6012 - teachers under the activity table of article 115 of the Personal Income Tax Code,

• secondary activity under CAE 090030 - artistic and literary creation;

For Personal Income Tax purposes, category B, is subject to the Simplified System for determining taxable income and, under Value Added Tax, is subject to the normal system with quarterly periodicity.

III - Description of facts and grounds for purely arithmetic corrections to taxable matter (...)

III.2 - Business and professional income not declared - 2014 and 2015

From the proceedings conducted with the firm B.... Lda. NIF... it was found that this company recognised as Corporate Income Tax income and Value Added Tax taxable base for the years 2014 and 2015, various invoices issued by it to various customers, in some of which it proceeded to charge Value Added Tax, relating to the provision of arbitration services, as per the following list:

[...]

Invoice no. 9/2015 of 14-05-2015, in the amount of € 184,009.11, is attached by way of example. See annex 2 fls 1.

In the invoices where there was no charging of Value Added Tax, this was due to the fact that they were operations not located in Portugal, and were not subject to Value Added Tax in Portugal in accordance with article 6, paragraph 6, subparagraph a), of the Value Added Tax Code, a contrario.

Called upon, as he was, one of the shareholders of this company, namely the taxpayer who is the subject of the present analysis, to explain the origin of such income, the same referred to these being income arising from the provision of arbitration services in disputes of national and international scope, for which he was appointed as arbiter, by the competent entities, the shareholder A..., NIF..., who is duly registered as an arbiter in the voluntary arbitration lists with the respective national and international supervisory authority, having presented a copy of one such appointment. See Annex 2. fls 2 and 3.

It is thus established that the income arising from the provision of arbitration services carried out by the taxpayer A..., as an arbiter registered in the National Arbitration Committee and following his appointment in various national and international arbitration agreements, was invoiced to the clients, party(ies) in dispute in the arbitral process, and received by the company B..., Lda., of which the taxpayer under analysis is a shareholder, with a quota of only 1% of the capital, with his mother holding a quota of 99%.

Now, in light of the framework law on voluntary arbitration, Law 63 of 14/12/2011, participation in voluntary arbitration processes happens by appointment of one or more arbiters, who make up the arbitral tribunal, who will always be natural persons, as stipulated by article 9, paragraph 1 of this law 63 of 2011, legal framework for voluntary arbitration, the law being explicit in the sense that it is not permissible for collective persons to be appointed as arbiters, with paragraph 3 of this same legal provision imposing that arbiters must be independent and impartial.

This imperative that the arbiter be a natural person will also have justification in the impossibility or difficulty of verifying independence and impartiality, if it is a collective person, as in this specific case, the taxpayer, arbiter, in issuing invoices in the name of the company is acting in representation of this in a corporate relationship in which he has only 1% of decision-making power, as the other shareholder and manager has 99% of this same decision-making power, which appears to us to be incompatible with what is recommended in this legal regime.

Hence arbiters are always appointed in an individual capacity, an example of which is the appointment contained in Annex 2, fls 2 to 3.

Thus it appears to us that the income arising from arbitration service provision is in substance income to be taxed in the personal sphere of the taxpayer and therefore taxable under Personal Income Tax as category B income, in accordance with articles 3 and 18 of the Personal Income Tax Code, and not under Corporate Income Tax, as it was the taxpayer, natural person under analysis, who provided these services, having been appointed for this purpose.

Confronted as the taxpayer was with the fact that he had not included in his annual income return, for the years in question, the income obtained from the provision of arbitration services in which he participated as an arbiter, the same alleged in summary the following:

• That the income in question is profit of the company and not of himself, as even though arbiters must be natural persons he acted in representation of the company and it was the company that received from the clients the amounts for the provision of arbitration services;

• That from this fact, in the end, no damage results to tax revenue, as the profits remain captive in his company and when distributed will be subject to taxation under Personal Income Tax;

• That the fact that he held only 1% of the capital was due to family matters and not any form of avoiding the tax transfer regime of the Corporate Income Tax Code;

• That, in essence, he did nothing more than what companies of insolvency administrators (who are also appointed individually) and law firms do, among others.

As to the first argument, it does not appear to us that the same should be considered since it was the taxpayer, natural person, who was appointed as arbiter, and not the company, collective person, which can never be appointed as arbiter, as we have stated above in light of paragraph 3 of article 9 of law 63/2011, we cannot accept that the arbiter A..., acted, in the specific context of the arbitrations in which he participated, in an individual capacity, in representation of the company B... and it will not be due to the fact that this was the one to issue the invoices relating to those service provisions and even to receive the amount of them, that we should conclude that this shareholder, arbiter, acted here in representation of the company. Indeed, regardless of the form, the fact is that in substance, and in our opinion, these were income within the individual sphere of the shareholder, taxpayer here under analysis, as such income arises from a service provided by him in an individual capacity for which he was appointed individually. See Annex 3, fls 1 to 3 - "declaration of availability, impartiality, independence and banking instructions".

As to the second argument, it equally appears to us that the taxpayer is not entitled to rely upon it, as one fact is certain and indisputable: if the income in question had been included under Personal Income Tax by its beneficiary, the natural person in question, the rate of taxation that would have applied to it would have exceeded 48% (the highest Personal Income Tax rate, cf. article 68 of the Personal Income Tax Code), given the Personal Income Tax surcharge then in force, cf. article 72-A of the Personal Income Tax Code, when, by being included in the income of the collective person B..., a legal person distinct from the one appointed as arbiter and who provided the services in question, they were only taxed at rates of 23% and 21%, respectively, in 2014 and in 2015. And the fact that such income, having remained captive in the company, could in the future be taxed under Personal Income Tax when their eventual distribution occurs is by no means liquid and certain, as at the time it was not known, and it is still not known today, whether there will be distribution of profits by the shareholders, whether there will be profits to distribute, whether there will be eventual division of the company, whether there will be something to share among the shareholders, and if there is whether there will be any taxation. That is, at the moments in question, at the date of the tax event (end of the tax periods of 2014 and 2015) there was in fact a loss to the National Treasury resulting from the abyssal difference between the tax revenue collected via taxation of such income under Corporate Income Tax and that which would have been collected if the same had been, in our opinion, as it should have been, taxed under Personal Income Tax.

As to the third argument, it is certain that, the shareholder in question (the one who derives income from the activities on the list referred to in article 151 of the Personal Income Tax Code) holding only 1% of the capital of company B... (to which he acknowledged the income in question as his own), this company will not, in light of the provisions of article 6, paragraph 4, of the Corporate Income Tax Code, fall within the tax transparency regime, and thus the income in question will not be taxed under Personal Income Tax via the imputation referred to in this legal provision, but rather under Corporate Income Tax. Not questioning the argument raised by the taxpayer for the division of the capital of this company, it has always caused us some perplexity that the "driving force" of the company's activity, given its corporate purpose, the activities for which it is registered and the income it has in fact been receiving, holds merely 1% of the capital of the same, when it is he who in fact exercises the activities carried out by the company.

As to the last argument, it does not appear to us that it will be due to the fact that some companies (of insolvency administrators, of lawyers) assume as their own the income arising from services provided by their shareholders that the company in question, B..., Lda., may equally assume as its own the income arising from the provision of arbitration services carried out by one of its shareholders, the taxpayer under analysis. Indeed, and as we have stated before, if law firms can exercise their activity through their shareholder lawyers, the activity of arbitration is exclusive to natural persons, as, unlike the activity of law practice, it is based on individual appointment. Likewise, while the activity of companies administering insolvency can be exercised through its associates, judicial administrators/insolvency, as the lists of judicial administrators existing in each district admit that a given judicial administrator may appear on them with the indication of shareholder of a given company of insolvency administrators, the activity of arbitration is exclusive of natural persons and is based on purely individual appointment.

Finally, it should also be added that the income in question, being within the personal and individual sphere of the taxpayer under analysis, as it arises from an activity for which it is he who is appointed and mandated, must be assumed by him and not by any collective person, as it arises from an activity of a purely individual character, forming part of the legal sphere of the individual person who carried it out and not of the collective person of whom the same is a shareholder. Indeed, collective persons, once recognised as having legal and tax personality, become centres of their own and autonomous legal sphere relative to the rights and duties intrinsic to their members/shareholders, and thus need not assume, in the strict tax sphere, income that is not their own.

In this manner, given the facts and grounds set out, it is our opinion that the income arising from the provision of arbitration services is to be classified within the individual sphere of the taxpayer under analysis, as category B income of the Personal Income Tax Code, pursuant to articles 3 and 18 of the Personal Income Tax Code, and we accordingly propose its inclusion in the sphere of the same.

III.3- Determination of income not declared under Personal Income Tax - category B

As we have stated above, various invoices were collected in the accounts of company B..., Lda, NIPC..., which, although issued in the name of this company, relate to arbitration services provided in an individual capacity by the taxpayer under analysis, in various arbitration processes in which the same, following appointment for this purpose, participated in the years 2014 and 2015, see Annex 4, fls 1 to 10 and Annex 5, fls 1 to 7, which amounted in 2014 to the net value of € 173,256.48 and in 2015 to the net value of € 384,018.22.

From these gross category B income omitted by the taxpayer, given the fact that the same is subject to the simplified system of taxation of category B of the Personal Income Tax Code, referred to in articles 28 and 31 of the Personal Income Tax Code, the following net income results: [...]

The Applicant did not exercise his right to be heard, which was granted to him in the inspection procedure.

The inspection procedure referred to substantiated, among other things, the following tax acts:

• Tax acts of Personal Income Tax (IRS) assessment no. 2017..., in the amount of € 104,373.54, and of compensatory interest no. 2017..., in the amount of € 14,411.14, relating to the year 2014 and statement of settlement of accounts no. 2017..., with balance determined to be paid of € 85,046.16;

• Tax acts of Personal Income Tax (IRS) assessment no. 2017..., in the amount of € 179,661.46, and of compensatory interest no. 2017..., in the amount of € 7,414.79, relating to the year 2015 and statement of settlement of accounts no. 2017..., with balance determined to be paid of € 166,734.75.

The Applicant did not proceed with voluntary payment of the amounts covered by the assessment acts referred to.

For this reason, the appropriate tax enforcement proceedings were instituted, which are being processed at the Finance Service of Coimbra – ....

The Applicant requested the suspension of those enforcement proceedings, by communicating his intention to contest by judicial or arbitral proceedings the lawfulness of the debts to be enforced and the provision of a bank guarantee.

A.2. Facts Established as Not Proven

Relevant to the decision, there are no facts that should be considered as not proven.

A.3. Substantiation of Proven and Not Proven Facts

Regarding factual matters, the Tribunal need not pronounce on everything alleged by the parties; it is its duty instead to select the facts that matter for the decision and discriminate between proven and not proven matters (cf. article 123, paragraph 2, of the Tax Code of Procedure and Process and article 607, paragraph 3 of the Code of Civil Procedure, applicable by virtue of article 29, paragraph 1, subparagraphs a) and e), of the RJAT).

In this manner, the facts relevant to judgment of the case are chosen and selected according to their legal relevance, which is established in attention to the various plausible solutions of the question(s) of Law (cf. former article 511, paragraph 1, of the Code of Civil Procedure, corresponding to the current article 596, applicable by virtue of article 29, paragraph 1, subparagraph e), of the RJAT).

Thus, having regard to the positions assumed by the parties, in light of article 110/7 of the Tax Code of Procedure and Process, documentary evidence and the proceedings joined to the file, the facts listed above were considered proven, with relevance for the decision, bearing in mind that, as written in the Decision of the Southern Tax Court of 26-06-2014, handed down in case 07148/13[1], "the (...) tax inspection report (...) may have probative force if the assertions contained therein are not impugned".

In particular, the fact as proven in point 4 of the facts section is alleged in points 19 and 20 of the initial request, and is supported by documentation indicated there, which was not impugned by the Tax Authority nor is contradicted by the Tax Inspection Report.

The fact given as proven in point 6 of the facts section is alleged in point 16 of the initial request and supported in the documents indicated there, which was also not impugned by the Tax Authority nor is contradicted by the Tax Inspection Report.

The fact given as proven in point 9 of the facts section is alleged by the Applicant in points 27 et seq. of his initial request, and was not impugned by the Tax Authority, nor is it contradicted by the Tax Inspection Report, being a negative fact.

Allegations made by the parties and presented as facts were not given as proven or not proven, consisting of statements that are strictly conclusive, not susceptible to proof and whose veracity is to be assessed in relation to the concrete factual matter consolidated above.

B. REGARDING THE LAW

i.

At issue in the present arbitral proceeding is the assessment of the lawfulness of the tax acts which constitute its object, in light of the grounds that support them, as externalised in the reasoning provided to them by the Tax Authority, since, as stated in the Decision of the Supreme Administrative Court of 23-09-2015, handed down in case 01034/11, "It is exclusively in light of the reasoning externalised by the Tax Authority at the time of the practice of the additional Value Added Tax assessment that the lawfulness of this tax act must be assessed."

Specifically, at issue is thus determining whether the factual and legal prerequisites are present to consider that the right to the income on which tax was assessed, and which is now contested, was formed in the legal sphere of the Applicant in the years 2014 and 2015.

It is, in sum, to determine whether it is demonstrated, or not, that the Applicant effectively derived the income in question, and, as it is considered settled, the burden of proof, pursuant to article 74/1 of the General Tax Law, shall rest with the Tax Authority, with the consequences derived therefrom.

Indeed, it has been settled jurisprudential understanding that:

• "The burden of proving the facts constitutive of the right to additional assessment rests on the tax administration and the burden of proving the facts constitutive of the right to annulment of that assessment rests on the taxpayer – article 74, paragraph 1 of the General Tax Law." (Decision of the Northern Tax Court of 15-11-2013, handed down in case 00201/06.8BEPNF);

• "It is the tax administration that must prove the prerequisites legitimising its action, and it falls to it to prove the factual nature that led it to disregard a recorded cost (in the case that led it to assert a certain operation as simulated), a factuality that must be capable of undermining the presumption of veracity of the operations recorded in the taxpayer's records and in the respective supporting documents." (Decision of the Southern Tax Court of 30-06-2009, handed down in case 02475/08);

• "By reason of the fact that the impugner in the judicial impugning proceeding appears procedurally in a position in which he alleges defects in a tax act, he does not bear a burden of proof regarding facts that he did not have to prove in the tax procedure." (Decision of the Northern Tax Court of 27-11-2014, handed down in case 00279/09.2BEPRT).

ii.

Before proceeding, and for the sake of clarity of exposition, it is necessary to define the concrete contours of the situation that is presented for judgment.

At issue, as results from the proven factual matter, is the provision of services in voluntary arbitration processes, to entities, national and international, specifically dedicated to the organisation of such activity[2].

As consideration for such services, payments were made, which the Tax Authority considered to have been made in the name and on account of the Applicant, constituting income taxable in his sphere.

From the framework thus drawn, it results immediately the evidence that the income in question has a commercial source (that is, resulted from legal transactions).

It is equally evident that the legal transactions fall within the type of service provision, as defined in article 1154 of the Civil Code.

These two pieces of evidence will allow, it is believed, to consolidate two guiding lines that cannot be lost sight of in the assessment of the case sub iudice.

The first of these is that, as income whose cause lies in legal transactions is at issue, the proof of the imputation of those cannot dispense with the proof of the legal declaration of the subject to whom the income is imputed.

The second is that, as contracts for service provision are at issue, one cannot, at any time, fail to bear in mind, in order to avoid any confusion semantically induced, that there is not necessarily identity between the person who physically executes the services and the person who is legally a party to the service provision contract.

Indeed, it can be said that, in a notorious manner, the bulk of economic activity, including that relating to service provision, exercised by collective persons, it will equally be notorious that these qua tale are incapable of providing anything whatsoever, necessarily relying on, in the expression of article 800 of the Civil Code, "legal representatives and auxiliaries", that is, physical persons who carry out the intellectual or manual work, the result of which the collective person undertook to provide[3] by the binding of the service provision contract.

In this manner, and exemplifying, although a service of plastering may be executed by a given plaster in concrete, the service in question may be the responsibility of another individual or collective person, with whom it has been contracted.

From what has been stated above, the following conclusions will result, which can be held, with due certainty, as already consolidated, and which will be as follows:

• That, in light of the rules on burden of proof, previously enunciated, it shall rest with the Tax Authority the charge of demonstrating, beyond any reasonable doubt, that between the entities paying for the voluntary arbitration services and the Applicant, legal transactions were carried out having as their object the provision of arbitration services by the latter; and

• That such conclusion cannot be drawn from the mere finding that it was the Applicant who executed the services in question.

iii.

Having said this, and returning to the concrete case, it is noted that the evidentiary elements gathered can be summarised as follows:

• By the Applicant were executed, in Portugal and abroad, in the capacity of arbiter in arbitral processes, voluntary arbitration services;

• In the context of the execution of such services, the Applicant signed the forms presented to him by the entities organising the arbitrations, in which various commitments inherent to the appointments as arbiter, assumed personally, are included;

• For invoicing and payment purposes of the services in question, the Applicant indicated the tax and bank data of company B..., of which he was a shareholder in the proportion of 1%;

• The invoices issued by the company referred to were accepted and duly settled by the entities to whom they were presented.

To the said factual data is added a piece of Law, especially highlighted in the reasoning of the acts in question, which is the provision of article 9/1 of the Voluntary Arbitration Law (LAV - Law no. 63/2011, of 14 December) which provides that:

"Arbiters must be natural persons and fully capable".

It is, in sum, faced with these data, and in light of the preceding considerations that it behoves us, unless a better view is held, to assess the lawfulness of the assessments against which the present Applicant revolts.

iv.

Beginning with this last piece of law, it will be noted that the same will not, from any perspective, have the reach that the Tax Authority perfunctorily gives it.

Indeed, and as the reading of the Tax Inspection Report allows to be grasped, the corrections made rested essentially on the tenor of such a provision, based on the following reasoning of a syllogistic nature:

• Voluntary arbitration services can only be provided by natural and capable persons;

• Services of voluntary arbitration are at issue;

• Therefore, they were provided by a natural and capable person, and not by a collective person.

Now, the syllogism in question suffers, already, from an evident defect that results from the circumstance, duly pointed out by the Applicant, that services provided abroad are at issue, to which national law did not apply, including the LAV, so it remained for the applicability of the first premise to such services to be demonstrated.

Notwithstanding, such a deficiency will even end up being irrelevant, to the extent that, even in relation to services provided under national law, the syllogism in question cannot be ratified.

Indeed, and already, it does not result from the provision of the LAV in question that whoever seeks to obtain services of voluntary arbitration must contract them directly from the arbiters who will execute such services.

Thus, and not going further, in the case of this CAAD, the parties in the arbitral processes, including the Tax Authority itself, do not pay for the arbitration services they enjoy to the arbiters who have participation in the processes in which they are parties, including in cases, as in the present, in which the Arbitral Tribunal includes arbiters appointed by the parties themselves.

That is, and putting it another way, notwithstanding contracting and paying for services of arbitration, the parties in the proceedings submitted to arbitral tribunals formed under the aegis of the CAAD do not pay for the services in question to "natural and capable persons", but to the CAAD itself.

This factual finding has support in law and evidences the superficiality of the reading made by the Tax Authority of the provision of the LAV transcribed above.

Indeed, and as explained by Manuel Pereira Barrocas[4], "This provision refers to the requirements that the arbiter should possess. (...) The law rightly ruled out the possibility, provided for in other laws, of a collective entity being indicated to serve as appointing party of a natural person to effectively exercise the functions of arbiter."

That is: the provision in question intends, solely, to refer to the requirements that the arbiter should possess, and to rule out the possibility, provided for in other laws, of a collective entity (which, in the Portuguese case, not a regularly constituted institutionalised arbitration centre), serving as appointing party of a natural person to exercise the functions of arbiter, being in no way at issue the circumstance that the services of a given arbiter – natural and capable person – may be contracted via a collective person, which, in any form, counts on his services.

Thus, and returning to the paradigm of an institutionalised arbitration centre, such as CAAD, nothing, within the framework of our legal order, and certainly, and in concrete, article 9/1 of the LAV, shall condition the manner in which one of such centres contracts and acquires the services of the arbiters it makes available to the parties in the arbitral processes that take place under its aegis, or the manner of remunerating them, obviously, as long as this does not contend with the legal and deontological obligations proper to arbiters.

In this manner, and already, the institutionalised arbitration centre may pay the arbiters who carry out the arbitrations under its aegis more or less than the parties pay to it, or even not pay them[5].

And, paying, it may pay directly to these, or to entities (such as law firms, or, in the case of tax arbitration, of official accountants, accountants, or economists) through which the arbiters in question make their services available.

The case of law firms is, moreover, particularly striking in the matter.

Indeed, pursuant to article 214 of the Statute of the Bar, "Professional partners of industry may only exercise the professional activity of lawyer in a single company, and cannot exercise such activity outside this, unless the company contract provides otherwise or a written agreement is concluded to this effect by all shareholders."

In this connection, a decision was even handed down by the Court of Appeal of Guimarães, in case 808/06-2, dated 17-05-2006, which refers to the principle that "The holder of the credit arising from the professional activity of lawyers, exercised within the scope of a law firm, is the company itself, being this that may claim its satisfaction from the debtor, and not the lawyers, individually considered, regardless of how, subsequently, the distribution of the income obtained is to be effected."

Now, at least in principle, the activity of arbitration exercised by a lawyer should be deemed to be included in the activity of lawyer, as defined in article 1, paragraph 7 of Law no. 49/2004, of 24 August, which provides that "Acts proper to lawyers and solicitors are deemed to be the acts which, pursuant to the preceding paragraphs, are exercised in the interest of third parties and within the scope of professional activity, without prejudice to the competencies proper assigned to other professions or activities whose access to or exercise is regulated by law."

In light of the foregoing, in principle and always subject to anomalous and exceptional occurrences, the income arising from the exercise of the activity of arbiter by lawyer shareholders of law firms should, ex lege, be considered income of the company itself, unless the company contract provides, or there is agreement of all shareholders, to the contrary, thus emptying the argument of the Tax Inspection Report, according to which, because arbitration is an activity that must be exercised by an individual and capable person, the income arising therefrom must be imputed to the natural person who exercises it.

Furthermore, and at the limit, the Tax Authority intends to make of the activity of arbiter a regulated activity, exceptional in relation to the regime of free provision of services enshrined by Decree-Law no. 92/2010, of 26 July, which transposed Directive no. 2006/123/EC, of the European Parliament and of the Council, of 12 December, relating to services in the internal market.

This diploma establishes the principles and rules necessary to simplify, in national territory, free access to and exercise of the activity of services with economic consideration.

In that sense, among other things, there are limited cases in which it is possible to require a licence or authorisation for the provision of services on national territory, so that licences or authorisations become required only in exceptional situations, in which imperative reasons of public interest thus justify.

From a subjective point of view, the decree-law in question "applies to service providers established in national territory or in other Member States of the European Union or the European Economic Area" (article 2/1), understanding by " 'service provider' any natural person national of a Member State or collective person established in national territory or in another Member State that offers or provides a service." (article 2/3).

From an objective point of view, the said decree-law "applies to service activities that are carried out by means of economic consideration and that are offered or provided on national territory" (article 3/1), understanding by " 'service' any economic activity not carried out as an employee, normally provided by remuneration" (article 3/2), which includes, unquestionably, it is believed, the activity of provision of services of voluntary arbitration.

In accordance, the decree-law in question enshrines the principle that "Service providers may freely establish themselves and exercise their activity on national territory, namely through the creation of companies, branches, subsidiaries, agencies or offices without need for any administrative permission or mere prior notification, except in cases where the law provides for such administrative permission and the same may be established, under the terms and conditions provided for in chapter III."

In this chapter III, it is stated that "Administrative permissions are acts or administrative contracts that aim to enable access to or the exercise of a service activity in cases where such activity cannot be provided freely or through mere prior notification and are embodied, namely, in licences, authorisations, validations, authentications, certifications, acts issued following prior notifications with period and registrations." (article 8/1).

It is further established that "The creation of a legal regime that establishes an administrative permission for access to or the exercise of a service activity depends on the following conditions:

a) The objective aimed at with such administrative permission cannot be achieved through a less restrictive administrative means, namely a regime of mere prior notification for the exercise of the activity in question, with the possibility of immediate commencement of that activity upon compliance with such a formality;

b) Its existence and its formalities are provided for in law in a clear and unequivocal manner;

c) It is absolutely indispensable that such administrative permission exist; and

d) Its adoption is found to be justified, proportionally, by an imperative reason of public interest, within the meaning of paragraph 1 of article 30." (article 9).

Now, in our legal order, administrative permission is only reserved for the promotion, with an institutionalised character, of the realisation of voluntary arbitrations, pursuant to Decree-Law no. 425/86, of 27 December, and not, so far as can be understood – and certainly not by force of article 9/1 of the LAV – for the provision of services of voluntary arbitration.

Thus, and in sum, there is in force in our legal order, already by force of community law, a principle of freedom of provision of services, which postulates that "Service providers may freely establish themselves and exercise their activity on national territory, namely through the creation of companies", which can only be exceptionally limited, and which, in the case of services of voluntary arbitration, is not found to have been, being exclusively conditioned the administrative permission to the promotion, with an institutionalised character, of the realisation of voluntary arbitrations, and forbidden the indication of a collective entity (which is not a duly constituted institutionalised arbitration centre) to serve as appointing party of a natural person to exercise the functions of arbiter.

It is certain that, in casu, we are not in the presence of a law firm, nor is it directly drawn from the corporate purpose of company B... that the provision of services of voluntary arbitration integrates the corporate object of the same.

Notwithstanding, and without prejudice to such not integrating, so far as can be understood, the reasoning of the Tax Inspection Report, it will always be said that the freedom of initiative mentioned above will legitimise the exercise of the activity in question by non-lawyers, individually or in corporate form, just as these may do, on the one hand, and that, on the other, article 6/4 of the Commercial Code expressly provides that "Contractual clauses and corporate resolutions that set the company a given corporate purpose or forbid the practice of certain acts do not limit the capacity of the company, but constitute the organs of the company in the duty of not exceeding that corporate purpose or of not practising such acts." from which it follows that the practice by a company of acts of commerce that are not included in its corporate purpose are not forbidden, nor, consequently, and per se, unlawful.

v.

Hereto arrived, it is then necessary to assess whether the facts gathered by the Tax Authority, and which substantiate the corrections made by it, and contested by the Applicant, are apt to demonstrate, beyond any reasonable doubt, that between the entities paying for the services of voluntary arbitration and the Applicant, legal transactions were carried out having as their object the provision of arbitration services by the latter.

As has already been pointed out, it is believed that such a conclusion cannot be drawn either from the circumstance that it was the Applicant who executed the services in question, or from the normative prescription of article 9/1 of the LAV.

Upon review of the factual matter, it is found that there is no proof demonstrating the occurrence, in any of the cases sub iudice, of an express declaration by the parties, to the effect that the arbitration services were contracted directly from the person who executed them (in this case, the Applicant), or from a collective person who had his services available (in this case, B...).

Put another way, there is no written contract that evidences the transaction, or direct testimonial proof, that identifies the service-providing party (which, as has been seen, is not necessarily identified with the executor) of the arbitration services contracted.

In such a situation, article 217/1 of the Civil Code provides, "A legal declaration may be express or implied: it is express when made by words, writing or any other direct means of manifestation of will, and implied, when it is deduced from facts which, with all probability, reveal it."

It shall, therefore, be in light of this criterion that it is necessary to determine whether it is demonstrated that the legal transactions that generated the income which, by the tax acts which are the subject of the present arbitral action, were subject to taxation in the sphere of the Applicant, were formed between him and the entities that paid the price of the services executed by him.

In this framework, and as it is unquestionable and manifest that the said services were contracted, executed and paid for, the identity of the service provider shall have to be deduced "from facts which, with all probability, reveal it".

Relevant, thus, for the assessment of the question now at hand, shall be the documentation signed by the Applicant and the communications exchanged between him and the entities paying for the income in question.

Upon review of such documentation, and as has also been noted, it is found that, on the one hand, the Applicant signed the forms presented to him by the entities organising the arbitrations, in which various commitments inherent to the appointments as arbiter, assumed personally, are included, and, on the other, that for invoicing and payment purposes of the services in question, the Applicant indicated the tax and bank data of company B..., with the invoices issued by this company being accepted and duly settled by the entities to whom they were presented.

In light of the normality of things, if this were the only documentation available, the first group of documentation would be considered apt to reveal, with the necessary probability, that the legal relationship occurred between the Applicant and the entities paying for the income now taxed by the Tax Authority.

Indeed, the Applicant assumes before such entities various commitments on a personal basis, and, notwithstanding – which cannot fail to be highlighted – these are pre-drafted forms, there is evidence of documentation signed by the Applicant, regarding one of the processes on the list of fls. 9 of the Tax Inspection Report, namely regarding the arbitrations carried out under the aegis of the ICC, in which reference is made to "my fees"/"mis honorários".

However, in addition to the documentation referred to – which, note already – does not cover all of the situations generating the income that, in casu, was taxed by the Tax Authority in the sphere of the Applicant, there is other documentation that alters the aptness of the documentation referred to for revealing "with all probability" that the causal legal transactions of the income in question were concluded between the entities paying for it and the Applicant.

Indeed, it is found that the Applicant, for the purpose of payment of the fees relating to the arbitration services that he executed, indicated the tax and bank data of company B..., with the invoices issued by this company being accepted and duly settled by the entities to whom they were presented.

It should also be noted that in the case relating to the ICC, referred to above, the indication of such data occurs not only prior to the realisation of the arbitrations, but also concomitantly with the presentation of the declarations in which the applicant assumes the commitments and personal obligations arising from the function he was to execute.

Also regarding these cases, it cannot fail to be noted that the forms in which the Applicant indicates the data of B... for invoicing and payment purposes contain the notices: "Incomplete or unclear forms may delay or prevent payments by the bank"/"Formularios incompletos o confusos poderan retrasar o impedir pagos efectuados por el banco", suggesting that the elements indicated in the payment forms are subject to some scrutiny, so that, should an irregularity be detected, payment not be made.

Finally, it should also be noted that the entities paying for the income in question are entities dedicated to the provision of high-responsibility and high-technical-level legal services, so that, always in light of a criterion of normality, it will not be credible that the same would accept invoices and pay them that were not issued by entities with whom they had intention to contract.

Put another way, nothing being ascertained to the contrary, particularly that we are in the presence of cases of collusion, simulation or fraud, the acceptance and payment of the invoices by the entities that contracted for the arbitration services in question will be apt to reveal "with all probability" that it was the intention of those entities to contract with the invoicing entity.

Thus, having seen and considered all the factuality that it was possible for this Tribunal to ascertain, it must be concluded that it is not demonstrated, beyond any reasonable doubt, that the voluntary arbitration services executed by the Applicant, and generating the income taxed in his sphere by the tax acts under scrutiny, were contracted to him, and not to the company B..., for which reason, in obedience to the rules regarding the burden of proof, and to the provision of article 100/1 of the Tax Code of Procedure and Process, such tax acts should be annulled.

Hereto arrived, and to the utmost, it could be questioned whether the Applicant had legitimacy to represent B... in the legal transactions in question.

Regarding this matter, it should be noted, already, that such circumstance was not, at any moment, questioned by the Tax Authority, not thus integrating, consequently and subject to a better view, the grounds of the corrections made and now contested by the Applicant, a reason which, per se, and in light of the jurisprudence of the aforesaid Decision of the Supreme Administrative Court of 23-09-2015, would be sufficient for it to not be lawful to validate such corrections, in the face of a possible lack of legitimacy of the Applicant to bind the company.

Indeed, from the Tax Inspection Report, in this matter contains the following:

• "A... (...) is duly registered as an arbiter in the voluntary arbitration lists with the respective national and international supervisory authority, having presented a copy of one such appointment";

• "Hence arbiters are always appointed in an individual capacity";

• "it was the taxpayer, natural person, who was appointed as arbiter, and not the company, collective person";

• "such income arises from a service provided by him in an individual capacity for which he was appointed individually";

• "the income in question, being within the personal and individual sphere of the taxpayer under analysis, as it arises from an activity for which it is he who is appointed and mandated, must be assumed by him and not by any collective person"

From none of these passages of the Tax Inspection Report, or of any others, it is believed, can it be drawn that an objection was formulated there as to the terms and manner in which the Applicant may have acted in representation of the company B....

Moreover, everything that above was transcribed from the Tax Inspection Report is admitted by the Applicant himself, being contained in the Initial Request the following:

• "It was never contested the fact that it was the present Applicant who was appointed and acted as arbiter in the arbitrations underlying the reasoning";

• "It was never understood or presumed, by anyone, that the appointment to the arbitrations in question fell upon the collective person B..., Lda.."

Without prejudice, it will always be noted that article 800 of the Civil Code refers to "The debtor is responsible before the creditor for the acts of his legal representatives or of persons he uses to fulfil the obligation, as if such acts were practised by the debtor himself."

On the other hand, article 260 also of the Civil Code provides that "If a person directs in the name of another a declaration to a third party, the latter may require that the representative, within a reasonable period, furnish proof of his powers, failing which the declaration shall not produce effects."

Finally, article 268 of the same Code states that "A transaction that a person, without powers of representation, concludes in the name of another is ineffectual in relation to this, if not ratified by him".

In light of such provisions, the necessary legal effects would always be assured, it is believed, for the imputation of the income paid by the entities contracting for the services of voluntary arbitration to the entity with whom they contracted them.

Thus, and as regards the production of effects in relation to the said contracting entities, the latter, having doubts about the representativeness of the Applicant to, in indicating company B... as counterparty, providing his tax and bank data and presenting them with invoices issued by it, had the faculty to require proof of the necessary powers, failing which, not doing so, they would produce effects in their legal sphere, as was decided in the Decision of the Court of Appeal of Évora of 27-03-2014, handed down in case 1196/10.9TBALR-A.E1, where it can be read that "If the recipient of the conduct does not require the verification of representation powers, he has accepted the represented to practice the act, which produces effects in his legal sphere."

On the other hand, as regards the production of effects of the Applicant's action in the sphere of the company, it shall have to be considered that, at least upon issuing the invoices for payment, B... shall have, at the least tacitly, ratified the action of the present Applicant in its name, being certain that, having used the person of the Applicant in the fulfilment of the obligation to make available an arbiter for execution of the arbitration services, it undertook responsibility before the acquirers of such services for the acts practised by him, in accordance with the afore-mentioned article 800 of the Civil Code.

The Applicant finally petitions for recognition of the right to compensation for costs incurred with the guarantee provided.

The arbitral decision on the merits of the claim as to which no appeal or challenge is available binds the tax administration from the end of the period laid down for appeal or challenge, and this, in the exact terms of the propriety of the arbitral decision in favour of the taxpayer and until the end of the period laid down for spontaneous execution of the decisions of tax tribunals, shall restore the situation that would have existed if the tax act which is the subject of the arbitral decision had not been practised, adopting the acts and operations necessary for this purpose, as results expressly from subparagraph b) of article 24 of the RJAT.

In the same provision "the legislator made clear that the effects provided for there are 'without prejudice to other effects provided for in the Tax Code of Procedure and Process'. It is considered in this regard that the legislator is here referring to all effects that arise from the Tax Code of Procedure and Process for the taxpayer, and that are applicable after the consolidation in the legal order of a given tax-legal situation, arising from a final decision, whether it be gracious or judicial."[6]

Notwithstanding the fact that the judicial impugning process is essentially a process of mere annulment, it may in it be handed down a judgment condemning the Tax Administration to the payment of compensation for undue guarantee, as results from article 171 of the Tax Code of Procedure and Process.

As was stated in the decision handed down in Case no. 28/2013-T[7] "it is unequivocal that the judicial impugning process covers the possibility of condemnation in the payment of undue guarantee and is even, in principle, the appropriate procedural means to formulate such a request, which is justified by obvious reasons of procedural economy, as the right to compensation for undue guarantee depends on what is decided regarding the lawfulness or unlawfulness of the assessment act. The request for constitution of the arbitral tribunal has as a corollary for it to be in the arbitral process that the 'lawfulness of the debt to be enforced' will be discussed, so that, as results from the express tenor of that paragraph 1 of the said article 171 of the Tax Code of Procedure and Process, it is also the arbitral process that is appropriate for assessing the request for compensation for undue guarantee."

It is thus concluded that this Tribunal is competent to assess the request for compensation for guarantee unduly provided.

The regime of the right to compensation for undue guarantee is contained in article 53 of the General Tax Law, which establishes the following:

"1. The debtor who, in order to suspend enforcement, offers a bank guarantee or equivalent shall be compensated wholly or partly for losses resulting from its provision, if he has maintained it for a period exceeding three years, in proportion to the result in administrative review, impugning or opposition to enforcement that have as their object the guaranteed debt.

1. The period referred to in the preceding paragraph does not apply when it is verified, in gracious reclamation or judicial impugning, that there was error attributable to the services in the assessment of the tax.

2. The compensation referred to in paragraph 1 has as its maximum limit the amount resulting from the application to the guaranteed value of the rate of indemnity interest provided for in the present law and may be requested in the very process of reclamation or judicial impugning, or autonomously.

3. Compensation for provision of undue guarantee shall be paid by deduction from the tax revenue of the year in which payment was made."

In the case at hand, it is manifest that the error that affects the assessment act, above declared, is attributable to the Respondent Entity as the assessments were of its initiative and the Applicant in nothing contributed for such error to be practised.

Thus, the Applicant has the right to compensation for the guarantee provided, with reference to the value whose annulment was determined and is not yet paid.

However, the charges that the Applicant incurred in order to provide the guarantee were neither alleged nor proven, for which reason it is not viable to determine here the compensation to which it is entitled, which may only be effected in execution of this decision.

C. DECISION

In view of the foregoing, this Arbitral Tribunal deems the arbitral request formulated to be entirely well-founded and, in consequence:

• Annuls the following acts:

• Tax acts of Personal Income Tax (IRS) assessment no. 2017..., in the amount of € 104,373.54, and of compensatory interest no. 2017..., in the amount of € 14,411.14, relating to the year 2014 and statement of settlement of accounts no. 2017..., with balance determined to be paid of € 85,046.16;

• Tax acts of Personal Income Tax (IRS) assessment no. 2017..., in the amount of € 179,661.46, and of compensatory interest no. 2017... in the amount of € 7,414.79, relating to the year 2015 and statement of settlement of accounts no. 2017..., with balance determined to be paid of € 166,734.75;

• Condemns the Tax Authority in the payment of compensation for the provision of undue guarantee, to be quantified, if necessary, in execution of judgment, in the terms set out above.

D. Value of the Case

The value of the case is set at € 251,780.91, pursuant to article 97-A, paragraph 1, a), of the Tax Code of Procedure and Process, applicable by virtue of subparagraphs a) and b) of paragraph 1 of article 29 of the RJAT and of paragraph 2 of article 3 of the Regulations on Costs in Tax Arbitration Proceedings.

Notify accordingly.

Lisbon, 15 February 2019

The Presiding Arbiter

(José Pedro Carvalho)

The Member Arbiter

(Rui Duarte Morais)

The Member Arbiter

(Manuel Pires – with a dissenting opinion)

DISSENTING OPINION

For proper judgment in this proceeding, the declarations of "acceptance, availability, impartiality and independence" of the Applicant and the documents containing indication of the company of which he is a shareholder "as the entity that would invoice the arbitration services and should receive the respective payment" are fundamental. Namely, in the case of international arbitrations, considered by the same Applicant "a substantial part of the arbitrations at issue in the proceedings" and "the majority of the arbitrations at issue", the 2012 ICC Arbitrator Rules Statement of Acceptance, Availability and Independence and Banking Instructions matter. In the Statement, at the end of the commitments, signed by the arbiter, there is never any reference to the quality of representative (moreover, as to the other documents of acceptance, it was never revealed that it was in any different manner) and it is subscribed "I accept that my fees and expenses" ("I accept that my fees and expenses"), after "I agree to serve as arbitrator", followed by the declaration of availability - where "my fees" can be read again ("my fees") -, independence and impartiality, in which the verbs are repeated, as in availability, in the first person singular, highlighting the non-existence of relationships contrary to independence and impartiality (if he were a representative, such relationships might exist with the represented, but nothing having been included or alluded to in the document on this possibility), followed by the signature, without any mention of not acting in his own name or of acting in the name of another, which would have been required given the manner in which the document was written. In the second document - "Banking instructions" - Personal Details name (the name of the person who subscribed to the Statement is written) and Account details are requested, if the account holder were different from the one indicated before, and it is there that, for the first time, the Company is mentioned with tax number (for invoicing), with the respective address, as well as bank details. In correspondence sent and subscribed by whoever signed the Statement, reference is made, without more, to "my nomination" and the sending of documentation. Facts not susceptible to doubt, as, 1) declaration in personal name of acceptance of the assignment, reinforced by the express mention that the fees (repeated) and expenses are of the signatory; 2) in another document, on banking instructions, for the first time the indication of a company (of which the person who received the fees is a shareholder with a participation of 1% and to which he provides support services for the exercise of functions) appears to, without any other mention, receive and invoice, which was done. There are no further relevant facts, and it is important to emphasise that the Statement is not an unimportant document, but "Something that someone says or writes officially" (Cambridge English Dictionary) or "a definite and clear expression of something in speech or writing" (Oxford Dictionaries), the importance of which is obviously not diminished by being made "in pre-drafted forms", drawn up, moreover, in such a way as not to raise difficulties and which would certainly not be signed if there were something considered to be non-conforming, or, if possible, signed, but the correction made, by addition or elimination. From the facts indicated and even if reference were not made to the ownership of the fees and expenses, one cannot deduce the "improper representation", as initially invoked in the Initial Request, with only subsequently being mentioned by the Applicant, in the same document, "representation" (by means mediate) and action "on account", as well as, in submissions, action "in the name and on account of the company". The indication of the account was requested within the framework of "banking instructions", in which a warning was given about the need for correct completion because, otherwise, it would be reflected in payment by the bank and not any other consequence (incomplete or nuclear forms may delay or prevent payments by the bank), with the indication having been added by the signatory Applicant, for the invoicing of the name of the mentioned company. That it was the Applicant who actually provided the services is indisputable. What is disputed is whether it was in his own name or if the contract was with the Applicant or with another person, in this case the Company. Now, given the writing above, the quality of representative or that he acted in the name of another is never referred to in the documentation, and the first person singular, without more, was always used, it is even mentioned, at least in available documents, that the fees (with repetition) and the expenses are of the signatory. The provision of tax and bank data, with the addition of the issue of invoices, without more (and even if something else were written, it would undoubtedly create, at least, perplexity, given the content of the other document containing the terms of commitment as personal), does not justify the presentation of the company as the counterparty of the legal transaction relating to arbitration being carried out with it, of it becoming the obligated party to the activity to be carried out. That is, it does not involve, and even more "with all probability", the company as a service provider for the purposes, there being no other circumstances that would lead to this. From the facts "with all probability", more the certainty, results that the relationship was established with the Applicant. In this manner, there is no room for doubt and therefore for proof to the contrary. Otherwise, what is not admissible, the representation of the conclusion of a legal transaction between the service provider and the company issuing the invoice and receiving the fees would be evidenced by a document - although presented simultaneously with the one signed by the arbiter in his own name and prior to the arbitration -, in which the bank account for the deposit of the amount due to the person who arbitrated is only mentioned - because the fees are his, as he affirmed in another document - and with indications about the issue of the respective invoice. To accept this opinion would be to accept the total inversion of what was subscribed. The fact that the service-providing entities accept the invoices and the manner of payment can prove nothing, and even more in the face of the relevant elements that have been mentioned. Indeed, debtors, with the instructions of the service provider and holder of the fees were protected against any dispute over payment and to deduce from the acceptance of such instructions the existence of representation involves an unacceptable logical-legal leap, hence the inapplicability of the possibility of requiring proof of representation powers by the service provider. From what has been written, from which it follows that it was not only because he provided the services, derives the exercise on its own account of arbitration by the Applicant, being consequently impossible for him to transfer the corresponding presumption of taxation, the situation of taxpayer to another entity, even though he is a shareholder and provides it services, in the exercise of the freedom to organise his activity, but which cannot be transformed, on the terms indicated and without more, into the subject of the acts that he practises. It was thus formed, in the sphere of the Applicant, the right to the income whose taxation was the subject of the dispute. In this manner, it does not become necessary to carefully assess the problematic of whether collective persons may provide arbitration services, although obviously exercised by natural persons, a question raised without, however, failing to be highlighted by whoever raised it, in light of the terms of the commitment mentioned above, not omitting it. Indeed, from the Portuguese disciplining of arbitration and the ICC-2012 rules at issue and the same is written of the current ones in 2017 - it is believed that such admissibility cannot be inferred, without prejudice to special cases that law may establish, and the argument magister dixit is not consistent, at least without more, always being important to recall quandoque bonus dormita! Homerus. But, even if the possibility of the commitment being assumed by the collective person were accepted - what is written solely to fully set out the opinion adopted on the decision handed down -, the case under judgment would be resolved in the manner above at length developed and substantiated. And for the same reason the necessity also does not occur as to the assessment of the cases of law firms (article 213, paragraph 5 of Law no. 145/2015) and of companies of insolvency administrators (article 2 of Law no. 54/2004), with which, moreover, the company in question has no similarity whatsoever, and also as to the assessment of the legitimacy of the Applicant's action as shareholder and representative of the company. Contrarily, the decision considered that someone, who should be a taxpayer, may transfer the tax situation to another, namely to a company in which he participates and to which he provides services, by means of mere indication of that other's bank account, adding that the latter will issue the corresponding invoice. Hence our dissent.

15.02.2019

(Manuel Pires)

[1] Available at www.dgsi.pt, as well as the remaining jurisprudence cited without mention of source.

[2] As results from the proceedings, services were provided to the CCI's CAC and the ICC, as well as in the context of arbitrations relating to industrial property of pharmaceutical products, which did not occur under the aegis of either of those two organisations.

[3] It being certain that the use of legal representatives and auxiliaries, as referred to, can also occur in the individual sphere, as even individual entrepreneurs may use other persons to carry out the intellectual or manual work whose result they have undertaken to provide.

[4] "Lei de arbitragem comentada", Almedina 2013.

[5] It being even a notorious fact that certain consumer arbitration centres, or similar, do not pay, or limit themselves to paying a symbolic amount or to reimbursing expenses, to arbiters.

[6] Carla Castelo Trindade – Regime Jurídico da Arbitragem Tributária – Anotado, Coimbra, 2016, p. 122.

[7] Available at www.caad.org.pt.