Process: 463/2017-T

Date: March 27, 2018

Tax Type: IRS

Source: Original CAAD Decision

Summary

This CAAD arbitral decision (Process 463/2017-T) addressed whether a taxpayer could retroactively claim IRS disability benefits based on a medical certificate issued after tax returns were filed. The claimant, with 80% permanent disability certified in 2015 but dated from 2011, sought annulment of IRS assessments for 2011-2013 that did not reflect disability deductions. The Tax Authority argued that under Article 13(7) of CIRS, the taxpayer's personal situation is determined on the last day of the tax year, and the claimant failed to prove the supervening nature of the certificate as required by Article 70(4) TCPP. The TA also contended that revision under Article 78 LGT for grave and notorious injustice requires proof that the error was not attributable to taxpayer negligence. The claimant's request for official revision based on grave injustice was denied because he could not demonstrate that obtaining the certificate earlier was impossible. The core legal issue centered on whether late-issued disability documentation constitutes a supervening document justifying retroactive revision of tax assessments, and whether the taxpayer exercised due diligence in obtaining certification timely. The decision examines the tension between substantive tax justice (recognizing actual disability status) and procedural requirements (timely documentation and proof of supervening circumstances). This case illustrates critical compliance requirements for disability tax benefits and the strict standards applied to revision requests based on post-filing documentation.

Full Decision

ARBITRAL DECISION

1. REPORT

On 3 August 2017, A…, deceased and represented by his son and head of household B…, Taxpayer no.…, hereinafter abbreviated as the Claimant, filed 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 Regime of Arbitration in Tax Matters, as amended by Article 228 of Law no. 66-B/2012 of 31 December (hereinafter, abbreviated as LRAT), in which he requested the declaration of illegality of the tax assessment acts for Personal Income Tax (IRS) no. 2012…, for the year 2011, with tax payable in the amount of € 493.40; no. 2013…, for the year 2012, with tax refundable in the amount of € 729.97 and no. 2014…, for the year 2013, with tax refundable in the amount of € 1,349.12, requesting the annulment of the assessment for the year 2011 and the refunds of the overpaid tax for the years 2013 and 2014.

The Claimant did not appoint an arbitrator, therefore, pursuant to the provisions of subparagraph a) of section 2 of Article 6 and subparagraph b) of section 1 of Article 11 of the LRAT, the Chairman of the CAAD Deontological Council appointed the undersigned as arbitrator, who notified acceptance of the appointment within the applicable period.

On 17-10-2017, the parties were notified of this appointment and did not express a wish to refuse it.

In accordance with the provisions of subparagraph c) of section 1 of Article 11 of the LRAT, the Arbitral Tribunal was constituted on 09-11-2017.

On 19-12-2017, the Tax Authority, hereinafter designated as the Respondent or TA, duly notified for this purpose, submitted its reply defending itself by means of opposition and requested the dispensation with the holding of the meeting provided for in Article 18 of the LRAT.

By order of 08-01-2018 the Tribunal dispensed with the holding of the meeting mentioned in the preceding section and notified the parties to submit written submissions, if they so wish, in succession.

Only the TA submitted submissions maintaining the position set forth in its reply.

2. SUBJECT MATTER OF THE PROCEEDINGS

2.1 Position of the Claimant

The Claimant alleges, in summary, the following:

  • The Claimant had a permanent global incapacity of 80%, since the year 2011, as evidenced by the "Medical Certificate of Incapacity" issued on 02-09-2015;

  • As the IRS assessments for 2011, 2012 and 2013 did not consider the permanent incapacity, they resulted in the payment of tax higher than due in the year 2011, and the refund lower than due in the years 2012 and 2013, which constitutes a situation of grave and notorious injustice;

  • Indeed, as the Claimant had a deficiency of 80% since the year 2011, the prerequisites were met to benefit from the benefits provided for by law at the time he filed such declarations;

  • The Claimant submitted a request for revision pursuant to Article 78 of the General Tax Law (LGT), based on grave and notorious injustice, which was rejected by order because the TA disregarded the reference made by the authority that issued the incapacity certificate where it stated that the Taxpayer had the deficiency since 2011;

  • Given that the TA has the duty to proceed with the official revision of tax assessment acts within the time limits provided for in Article 78 of the LGT, in particular, when the errors of the TA have resulted in the collection of tax amounts that are not due under the law.

2.2. Position of the Respondent

In reply to the Claimant's request, the TA defends itself by means of opposition, sustaining that:

  • Pursuant to the provisions of Article 13, section 7 of the CIRS, the personal situation of taxpayers relevant for tax purposes is that which exists on the last day of the year to which the tax relates, therefore, with regard to the years 2011, 2012 and 2013, the personal situation of the Claimant was that of a person without deficiency;

  • In order for the medical certificate of incapacity to be relevant, it is necessary that the taxpayer demonstrate the supervening nature of the document, that is, that he allege and prove that he could not obtain it, or have it, before the date that appears as the date of issuance of the document;

  • The Claimant did not prove the supervening nature of the medical certificate of incapacity for the purposes provided for in Article 70, section 4 of the TCPP;

  • On the other hand, pursuant to Article 78, section 4 of the LGT, one of the requirements for the revision of taxable matter to be possible is that the error not be attributable to negligent conduct of the taxpayer, and there are no elements on record that allow the conclusion that the Claimant did everything in his power to obtain the medical certificate at a date earlier than that in which he obtained it;

  • Revision based on grave or notorious injustice, provided for in section 4, shall be raised within 3 years following the year of the tax act, as it is a mechanism of exceptional application and requires, in addition to the verification of such injustice, that the error not be attributable to negligent conduct of the taxpayer;

  • It is not enough to invoke grave or notorious injustice; the taxpayer must prove not only the gravity and notoriety of the injustice, but also must prove that the error is not attributable to negligent conduct on his part.

3. CLARIFICATION

The Arbitral Tribunal is materially competent and is duly constituted pursuant to Articles 2, section 1, subparagraph a), 5 and 6, section 1 of the LRAT.

The parties have legal personality and capacity, show themselves to be entitled to participate and are duly represented (cf. Articles 4 and 10, section 2 of the LRAT and Article 1 of Regulation no. 112-A/2011 of 22 March).

The proceedings do not suffer from nullities.

Accordingly, there is no obstacle to consideration of the merits of the case.

Having considered all the above, it is incumbent to render

4. DECISION

4.1 Factual Matters

4.1.a. Facts Found to be Proven

With relevance for the decision on the merits, the Tribunal considers the following facts to be proven:

  • The IRS Form 3 Declarations for the years 2011, 2012 and 2013 were filed, respectively, on 17.07.2012 (the amended version), on 14.05.2013 and on 21.05.2014, without any indication of any degree of permanent incapacity of the taxpayer A… (pages 15/99 to 40/99 of the Record);

  • For the year 2011, the assessment was issued on 04.06.2012, which resulted in a tax charge of € 14,898.53 and tax payable in the amount of € 493.40 (cf. Document no. 2 submitted by the Claimant);

  • For the year 2012, the assessment was issued on 15.06.2013, which resulted in a tax charge of € 12,603.98 and tax refund in the amount of € 729.97 (cf. Document no. 3 submitted by the Claimant);

  • For the year 2013, the assessment was issued on 07.06.2014, which resulted in a tax charge of € 15,471.49 and tax refund in the amount of € 1,349.12 (cf. Document no. 4 submitted by the Claimant);

  • On 02.09.2015 a Multi-purpose Medical Certificate of Incapacity was issued to the taxpayer by the Medical Board of ARS …, with an allocation of 80% permanent and definitive global incapacity, dating from 2011 (cf. Document no. 5 submitted by the Claimant);

  • On 08.10.2015, a request for official revision of the IRS assessments relating to the years 2011, 2012 and 2013 was filed with the Lisbon Tax Office …, based on grave and notorious injustice in the calculation of IRS of these declarations, as the 80% incapacity was considered as dating from 2011 (cf. Page 3/99 of the Record);

  • The Head of Division of the Administration Division of the Personal Income Tax Service Directorate (DSIRS), using delegated powers, denied the revision request no. …2015…, in accordance with Opinions no. …/17 of 10.05.2017 and no. …/17 of 10.02.2017, on the ground that grave and notorious injustice was not verified, as well as the absence of proof of the supervening nature of the medical certificate of incapacity, for the purposes provided for in section 4 of Article 70 of the TCPP, nor, for the purposes of exceptional revision under section 4 of Article 78 of the LGT, that the error was not attributable to negligent conduct of the taxpayer (cf. Record submitted with the reply);

  • The order, pursuant to Opinion no. …/17 of 10.05.2017, which converted into final the draft denial of the revision request with the grounds contained in Opinion no. …/17, is essentially based on the following reasoning:

"Now, Article 13, section 7 of the CIRS provides that 'The personal and family situation of taxpayers relevant for tax purposes is that which exists on the last day of the year to which the tax relates'.

13-This means that, regarding the years 2011, 2012 and 2013, the personal situation of the claimant that existed on 31 December of each of those years was that of a person without deficiency, since there was no element at that time that would demonstrate otherwise.

  1. However, in order for the retroactive effect of the incapacity certificate to assume tax relevance, it is necessary that the taxpayer demonstrate the so-called supervening nature of the document, that is, that he allege and prove that he could not obtain it, or have it available, before the date that appears as the date of issuance of the document, despite having made efforts and due diligence in that regard.

  2. It is the understanding that has been followed by the services, and which results from the combination of the following norms:

a) administrative doctrine set forth in Circular no. 15 of 14/09/1992 of the Personal Income Tax Service Directorate, in particular in sections 2 'The documents proving fiscally relevant deficiency only produce effects from the date of their issuance, although for purposes of assessment, the personal situation of the taxpayer is considered as of 31 December of each year, without prejudice to the provisions of the following section.' and 3, 'If the documents proving fiscally relevant deficiency state that such deficiency expressly relates to a date prior to their issuance, they may form the basis for the filing of a grace objection or judicial challenge against IRS assessments relating to prior years, provided that the legal period for doing so is still running.'

b) Article 70, section 4 of the TCPP, 'In case of a supervening document or judgment, as well as any other fact that could not have been invoked within the period provided for in section 1, this period is counted from the date on which it became possible for the complainant to obtain the document or learn of the fact.'; and

c) Article 74, section 1 of the LGT, which provides that 'The burden of proof of the facts constituting the rights of the tax authority or taxpayers falls on whoever invokes them.'

  1. However, from the allegations of the claimant, it cannot be concluded that it was impossible for him to obtain the medical certificate of incapacity at a date earlier than when he obtained it. In fact, nothing was alleged on this matter at all.

  2. Consequently, we consider that proof of the supervening nature of the medical certificate of incapacity has not been provided, for the purposes provided for in Article 70, section 4 of the TCPP.

  3. As this proof is an obligation or burden of the taxpayer, as we have already stated.

Regarding revision based on grave or notorious injustice provided for in section 4 of Article 78 of the LGT, the order in question further states:

'20. Returning to Article 78, section 4 of the LGT and the requirements provided therein for the exceptional revision of taxable matter to operate, we note that one of them is that the error not be attributable to negligent conduct of the taxpayer.

  1. Now, as has been explained, the record does not contain elements that allow the conclusion, without any doubt, that the claimant did everything within his power to obtain the said medical certificate at a date earlier than when he obtained it.

  2. Therefore, it becomes necessary to conclude, for the reasons stated above, that the failure to obtain it under such circumstances is due to negligent conduct on his part. (…)

  3. It should be emphasized, finally, that neither through any of the other tax revision mechanisms provided for in Article 78 of the LGT would it be possible to promote the modification of the IRS assessment for the years in question of the claimant by, in particular, the period for grace objection having already expired as of the date of the present request, there being no error or illegality in the assessment made by the services, nor is it a case of duplication of tax charge.' (cf. Record submitted with the proceedings)

4.1.b. Facts Found Not to be Proven

It was not proven that the certificate was obtained only on 02-09-2015 due to reasons beyond the Claimant's control.

4.2. Reasoning Regarding Proven and Unproven Factual Matters

Regarding the factual matters, the Tribunal does not need to pronounce on everything alleged by the parties; rather, it is its duty to select the facts that matter for the decision and to distinguish proven from unproven matters (cf. Article 123, section 2 of the TCPP and Article 607, section 3 of the CPC, applicable pursuant to Article 29, section 1, subparagraphs a) and e) of the LRAT).

Accordingly, the facts relevant to the adjudication of the case are selected and defined based on their legal relevance, which is established in view of the various plausible solutions to the legal question(s) (cf. former Article 511, section 1 of the CPC, corresponding to current Article 596, applicable pursuant to Article 29, section 1, subparagraph e) of the LRAT).

Thus, having regard to the positions assumed by the parties and the documentary evidence submitted, the facts listed above were considered proven, with relevance for the decision, and were moreover not contested by the parties.

5. ISSUE TO BE DECIDED

The issue in the present tax arbitration proceedings consists in determining whether the medical certificate with the notation of 80% incapacity dating from the year 2011 constitutes or does not constitute a supervening document for the purposes of Article 70, section 4 of the TCPP, and on the other hand, whether the IRS assessments made correspond to a situation of grave and notorious injustice.

For the purpose of determining whether the IRS assessments for the years 2011, 2012 and 2013, by not considering the permanent incapacity of 80% since the year 2011, in accordance with the medical certificate issued on 08.10.2015, are illegal.

6. LEGAL REASONING

6.1. Tax Benefit

Briefly and preliminarily, it is necessary to address the regime of tax benefits inasmuch as the deduction from the tax charge in question in the present proceedings constitutes a tax benefit provided for in the Code of Personal Income Tax (CIRS).

In the matter of tax benefits, the principle of legality applies in its formal and material aspects (section 2 of Article 106 of the Constitution of the Portuguese Republic), which means that it is the law that must define the prerequisites for the granting of such benefits, and the understanding of administrative entities in this matter is irrelevant.

Pursuant to section 2 of Article 2 of the Tax Benefits Statute (TBS), "tax benefits are exemptions, reductions of rates, deductions from taxable matter and tax charge, accelerated amortizations and reinstatements and other tax measures (…)"

The tax benefits concretized in deductions from the tax charge are, therefore, structural reliefs that derive from the principle of contributory capacity and are provided for and regulated in the CIRS itself.

For its part, Article 12 of the TBS provides that "The right to tax benefits must be related to the date of verification of the respective prerequisites, although it may be dependent on declaratory recognition by the tax authority or agreement with it and the beneficiary, unless the law provides otherwise."

In the present situation, the Taxpayer's right to the tax benefit does not depend on its recognition by the TA; rather, it results automatically from the law, provided that the competent entity certifies the degree of incapacity that the law considers relevant for tax purposes.

Pursuant to section 5 of Article 87 of the CIRS, a person with a deficiency is considered to be one who presents a degree of permanent incapacity duly certified by means of a multi-purpose medical certificate of incapacity issued in accordance with applicable legislation, equal to or greater than 60%.

From this it can be concluded that the right to the tax benefit is effectuated at the time of the medical evaluation, from which point it becomes able to be exercised, since, in truth, the Taxpayer can only exercise his rights from the date of the evaluation and respective communication.

6.2. Supervening Nature of the Medical Certificate

Given that the tax benefit results directly from the law and is effectuated with the evaluation and communication to the Taxpayer of his degree of invalidity, it is important to ascertain the supervening nature of the medical certificate.

It is today both jurisprudential and doctrinally accepted that the medical certificate certifying the result of the medical evaluation is a supervening document, in itself, without need for allegation and proof of its supervening nature.

In this sense, the judgment of the Supreme Administrative Court, rendered in the context of case no. 115/04.6 BEBRG, decided by the Central Administrative Court North on 11-09-2008, which decided for the supervening nature of the medical certificate certifying the result of the medical evaluation for the following reasons: inasmuch as it is certain that the right to the said tax benefit in question here (that provided for in Article 44 of the TBS) is acquired when the factuality described in the legal hypothesis is found to be proven (cited articles of the CIRS and the TBS), by means of the said medical certificate issued by the competent authority, within the scope of the law that is in force and in accordance with it, evidencing a degree of incapacity relevant for this purpose (because, although the right to the benefit in question has as its source or cause the law and not the said evaluation act, this is still part of the process constitutive of the said right -- the constitutive fattispecie --, as it constitutes an expert pronouncement that is indispensable and determinant of the verification of the constitutive fact, without which the right-holder is not constituted therein and cannot exercise it).

Thus, the legal situation of being deficient only arises when the final element is verified - the conclusive element of its process of formation - which, in this case, is the aforementioned evaluation act, which the medical certificate will certify.

The evaluation is therefore not a mere instrumental act, without its own valuation, but an act of expert appraisal, with the particularity of being a necessary act of expert appraisal, not only because of its obligatory nature in the process, but also because it does not consist of a mere opinion, from which the TA may depart, but rather one that binds the TA and which the TA must therefore conform to, having exhausted the legal means of reaction against this act. This evaluation act in question enjoys, indeed, a certain autonomy in relation to the tax assessment act, due to the distinct nature of the normative elements that it aims to implement, which does not exclude a relationship of prejudiciality, due to the modifying effects that it may produce therein. The activity subsequently required of the right-holder for him to become effective is one that clearly no longer situates itself in the field of constitution of the right, but rather in the field of its exercise.

The right to this tax benefit does not depend on its recognition by the TA; rather, it results automatically from the law, provided that the competent entity certifies the degree of incapacity that the law considers relevant for tax purposes, in this case "a degree of permanent invalidity equal to or greater than 60%" (cf. section 3 of the cited Article 25 and section 6 of the cited Article 80 of the CIRS and also section 5 of Article 44 of the TBS). This is moreover recognized by the DGCI in Circular no. 22/90 of 22/6.

It is thus found that it is at the moment of the medical evaluation that the right to the benefit is effectuated and that only from that point on can it be exercised.

The medical certificate certifying the result of the medical evaluation must be considered for the reasons set forth as a supervening document (…) underlining ours.

In summary, the recognition of the incapacity of the taxpayer in a medical certificate is not a constitutive fact of the right of the Claimant, but rather a fact that is merely declaratory of that right, although it is a condition of the exercise thereof, since the right to the claimed benefit depends on the obtaining of the certificate if the justification for its obtaining is duly demonstrated.

Considering the foregoing, it is necessary to conclude that, for purposes of beginning the counting of the period for the exercise of his rights, the subjective supervening nature of the document is sufficient.

That is, it is by reference to the date of the evaluation and its communication to the Taxpayer, which in this case occurred on 02-09-2015, that the possibility for the exercise of the right to the benefit arises.

Indeed, the taxpayer can only react from the date on which the incapacity certificate was obtained, since without the certification of incapacity, neither the right to the tax benefit nor the possibility of challenging, administratively or judicially, the assessments in question could be recognized.

Therefore, the objection or revision request presented at a time after the initial period is not untimely, provided that proof is made that the document could only be obtained at a later time, due to reasons beyond the taxpayer's control.

However, no allegation was made, and much less proof presented, that the document could only be obtained on that date (02-09-2015).

6.3 Burden of Proof

A different, but not insignificant question for the analysis of the present proceedings concerns the burden of proof that falls on the Claimant to prove the absence of fault in obtaining the medical certificate late pursuant to the combined provisions of Article 70, section 4 of the TCPP and Article 74, section 1 of the LGT.

And in this regard, the Claimant states in Article 6 of his Initial Request that the assessments occurred without consideration of the "incapacity" due to the fault of the Claimant alone.

Now, such an assumption of responsibility and the absence of allegation and proof of facts capable of demonstrating the contrary cannot but decisively affect his procedural position, particularly since it was incumbent upon the Claimant to produce facts and provide proof of the objective supervening nature of the document so that he could avail himself of the new period.

Since the Claimant could have requested the official revision of the assessments relating to the years 2011, 2012 and 2013, provided that it had not been possible for him to obtain the medical certificate before the expiration of the period.

The Respondent is correct when it invokes that "in order for the retroactive effect of the incapacity certificate to assume tax relevance, it is necessary that the taxpayer demonstrate the so-called supervening nature of the document, that is, that he allege and prove that he could not obtain it, or have it available, before the date that appears as the date of issuance of the document, despite having made efforts and due diligence in that regard."

6.4 On the Duty to Revise Illegal Acts

The Claimant filed a request for revision due to incapacity pursuant to Article 78 of the LGT, invoking grave and notorious injustice in the calculation of IRS, given that the incapacity was considered as dating from 2011.

In cases provided for in the norm of official revision initiative, taxpayers can request the revision to be carried out by the TA, all the more so as it is today well-settled understanding that the TA has the duty to carry out the revision of tax assessment acts in favor of the taxpayer when it detects a situation of illegality, in relation to all taxes, in view of the principles of justice, equality and legality that the TA must observe in its activity, arising from Articles 266, section 2 of the CRP and 55 of the LGT.

This is also the understanding of the doctrine, according to which "(…) These principles require that the TA officially correct all assessment errors that have resulted in the collection of tax in an amount greater than that which would be due under the law. (…)"

There is thus a recognition, within the framework of tax law, of the duty to revoke illegal acts.

Indeed, this is the opinion held by the TA services and contained in the opinion of the Tax Justice Services Directorate (DSJT) submitted with the Record, in which text it can be read: "(…) There are no timely or untimely official revision requests; there are only those whose grounds configure a situation that obliges the TA to carry out the revision requested or not. (…)"

The TA is, therefore, obliged to eliminate from the legal system all illegal assessment acts, as indeed results from the jurisprudence of our superior courts, but such a duty depends on the existence of a tax act that is manifestly illegal.

The position of the Claimant is based on the invocation of this power and duty to which the TA is bound, therefore, in his defense, given that permanent incapacity from 2011 is demonstrated, which results from a medical certificate issued in 2015, the Claimant met the conditions to benefit from tax benefits at the time he filed the declarations and, consequently, the TA should, given the circumstances of the case, proceed to correct the assessment acts.

However, although the TA has the duty to revoke the tax assessment acts that are illegal and that have resulted in the collection of tax amounts that are not due under the law, all in fulfillment of the duties that inform its activity, we cannot but agree with and support what is stated by Jesuíno Alcântara Martins, when he states that this possibility only occurs provided that the error is not attributable to the Taxpayer.

And, in truth, the TA considered the revision request filed by the Claimant here, concluding that it is without merit, given the manifest lack of allegation and proof of the impossibility of obtaining the incapacity certificate before 02-09-2015.

It is also the understanding of the TA that, for purposes of exceptional revision of taxable matter, the error cannot be attributable to the Taxpayer, and as nothing has been demonstrated to the contrary, it concludes that the failure to obtain the medical certificate at a date earlier is due to negligent conduct on his part.

Negligence that the Claimant confessed in the present arbitral proceedings.

6.5 Grave and Notorious Injustice

The concepts of gravity and notoriety of injustice are elaborated in sections 3 and 4 of Article 78 of the LGT, considering injustice to be notorious when it is patent and unequivocal, and grave when it results from taxation that is manifestly excessive and disproportionate to reality or has resulted in substantial loss to the National Treasury.

This duty to revise unjust acts is a true power-duty based on the duty of the TA to act according to the principle of justice, constitutionally enshrined, and this duty to act in harmony with the principle of justice requires that the duty of revision be extended to situations where there is excessive assessment and the error is not attributable to the services, provided that such assessments have resulted in the collection of tax in an amount greater than that which would be due under the law.

But also in this particular case, it does not appear to be sufficient to invoke the verification of a situation of grave and notorious injustice, since pursuant to section 5 of Article 78 of the LGT, the error cannot be attributable to negligent conduct of the Taxpayer.

That is, it falls on the Taxpayer to prove not only the gravity and notoriety of the injustice, but also that the error in the determination of the tax is not attributable to him (is not a consequence of an error on his part).

If on the one hand it can be said that there is notorious injustice when tax higher than due under the law is assessed, whose gravity we believe should be measured based on the income earned by the Taxpayer, which of itself would still constitute sufficient ground for the TA to proceed with official revision, given the power-duty to eliminate from the legal system illegal or excessive assessment acts.

On the other hand, the negligence of the taxpayer, in contributing to the formation of the error in the assessment, prevents revision, an error that the Claimant expressly assumes in Article 6 of the arbitration request: "It being clear and evident, as it indeed is, the grave and notorious injustice. The Tax Administration, although the assessments occurred without consideration of the incapacity, due to the fault of the claimant alone, did not thereby cease to exist a grave and notorious injustice (…). (underlining ours)

Acting with fault means acting in such a way that the conduct of the agent deserves disapproval or censure under the law, whether we are speaking of fault in the broad sense, which necessarily encompasses intent, or fault in the strict sense or Aquilian, synonymous with imprudence, negligence and lack of skill; violation of a duty that the agent could have known and observed.

6.7 Conclusions:

The Claimant did not allege nor did he bring to the proceedings any fact or document that proves the date of the request for the certificate, nor is there in the arbitral or procedural record any evidence that it was not due to lack of initiative on the Claimant's part or any reason beyond his will and diligence that it was not possible for him to obtain the medical certificate at a date earlier than its issuance on 02.09.2015.

Furthermore, even if it were understood that the official revision request was timely, strictly speaking, the Claimant, in his submission, merely alleged the existence of grave and notorious injustice but did not substantiate it nor made even minimal effort to demonstrate and prove this allegation.

In any event, the legal prerequisite would still be lacking that the error does not derive from negligent conduct of the Claimant, given the express assumption of fault and responsibility in the assessment of tax higher than due.

Reasons that are deemed sufficient to find the requests made by the Claimant to be without merit.

7. DECISION

In light of the arguments set forth above, the arbitral request for declaration of illegality of the IRS assessment acts relating to 2011, 2012 and 2013, made by the Claimant, is therefore without merit, and the tax assessment acts whose illegality was questioned remain in the legal order.

8. Value of the Proceedings

The value of the proceedings is fixed at € 9,580.61 pursuant to Article 97-A, section 1, a) of the Code of Tax Procedure and Process, applicable by virtue of subparagraphs a) and b) of section 1 of Article 29 of the LRAT and section 2 of Article 3 of the Regulation of Costs in Tax Arbitration Proceedings.

9. Costs

Pursuant to Table I of the Regulation of Costs of Tax Arbitration Proceedings, the amount of costs of the Arbitral Proceedings is fixed at € 918.00, to be borne by the Claimant, since the request was entirely without merit, in accordance with Article 22, section 4 of the LRAT and Article 4, section 4.

Let notification be made.

Lisbon, 27 March 2018

The Arbitrator

(Cristina Coisinha)

Text prepared by computer pursuant to the provisions of Article 131, section 5 of the CPC, applicable by reference of Article 29 of the LRAT.

The drafting of this decision follows the spelling prior to the Orthographic Agreement of 1990.

[1] Articles 78, section 1, subparagraph h) and 87 of the CIRS

[2] Available at http://www.dgsi.pt/jtcn.nsf/89d1c0288c2dd49c802575c8003279c7/b075a1b77dbd479e802574cf00563b64?OpenDocument

[3] In this sense, the arbitral judgment rendered in case 82/2015-T, available at https://caad.org.pt/tributario/decisoes/

[4] Article 78, section 4 of the LGT

[5] in Legal Guarantees of Taxpayers, in Lessons on Taxation, João Ricardo Catarino and Vasco Branco Guimarães, Almedina, 2012, page 445

[6] Article 266, section 2 of the CRP

Frequently Asked Questions

Automatically Created

Can a disability certificate issued after IRS tax returns were filed be used to retroactively claim disability tax benefits in Portugal?
A disability certificate issued after IRS tax returns were filed can potentially be used to retroactively claim benefits only if the taxpayer proves its supervening nature under Article 70(4) TCPP. This requires demonstrating that the certificate could not have been obtained earlier despite reasonable diligence. In Process 463/2017-T, CAAD rejected the claim because the taxpayer failed to prove impossibility of earlier certification. The Tax Authority correctly applied Article 13(7) CIRS, which establishes that personal situations relevant for tax purposes are those existing on December 31 of the tax year. Merely obtaining late certification is insufficient; taxpayers must show they exercised all reasonable efforts to obtain documentation timely and that administrative or medical delays prevented earlier issuance.
What IRS tax benefits are available for taxpayers with a permanent disability of 80% or more under Portuguese tax law?
Taxpayers with permanent disability of 80% or more qualify for significant IRS benefits under Portuguese tax law, including increased personal deductions under Article 87 CIRS and special treatment of disability-related income. The disability status must be certified by competent medical boards (ARS Medical Boards) through a Multi-purpose Medical Certificate of Incapacity (Atestado Médico de Incapacidade Multiuso). These benefits apply when disability exists on December 31 of the relevant tax year per Article 13(7) CIRS. Taxpayers must declare disability status on Form 3 declarations to benefit. Failure to timely document disability, even if the condition existed, may result in loss of benefits unless supervening circumstances justify late documentation and revision procedures under Article 78 LGT are successfully invoked.
How can taxpayers request correction of IRS assessments when a supervening disability document proves entitlement to tax benefits?
Taxpayers can request correction of IRS assessments based on supervening disability documents through official revision under Article 78 LGT, claiming grave and notorious injustice. The request must be filed within three years following the tax year and requires proof that: (1) the error resulted in collection of undue tax; (2) the error was not attributable to taxpayer negligence; and (3) the document is truly supervening, meaning it could not have been obtained earlier. In Process 463/2017-T, CAAD emphasized that taxpayers must demonstrate active efforts to obtain certification timely. Merely obtaining a certificate dated retroactively is insufficient. Administrative appeals to the Tax Authority precede CAAD arbitration, and taxpayers should document all efforts to obtain medical certification to establish non-negligence.
What is the legal basis for challenging IRS tax assessments at CAAD when disability status was not considered in the original tax return?
The legal basis for challenging IRS assessments at CAAD when disability status was not considered includes Article 2 LRAT (jurisdiction over IRS disputes) and Article 78 LGT (revision for grave and notorious injustice). Taxpayers must prove that disability existed during the tax year (Article 13(7) CIRS determines status as of December 31), that failure to claim benefits constitutes grave injustice, and that late documentation qualifies as supervening evidence under Article 70(4) TCPP. In Process 463/2017-T, the arbitral tribunal had jurisdiction under Article 2(1)(a) LRAT, but the substantive claim failed because the taxpayer could not prove the supervening nature of the certificate or absence of negligence. CAAD arbitration is available after unsuccessful administrative revision requests.
Does the late issuance of a medical disability certificate constitute grounds for annulment of IRS tax assessments under Portuguese law?
Late issuance of a medical disability certificate does not automatically constitute grounds for annulment of IRS assessments under Portuguese law. Process 463/2017-T establishes that taxpayers must prove the certificate's supervening nature under Article 70(4) TCPP, demonstrating impossibility of earlier obtainment despite diligent efforts. Article 78(4) LGT requires that errors not be attributable to taxpayer negligence for revision based on grave and notorious injustice. The three-year limitation period applies. The Tax Authority correctly argued that retroactive dating by the medical board (certifying disability 'from 2011' in a 2015 certificate) is insufficient without proof that administrative or medical circumstances prevented earlier certification. Taxpayers should pursue disability certification immediately upon qualifying conditions and document all efforts to obtain timely certification to preserve revision rights.