Summary
Full Decision
ARBITRAL DECISION
They agree in arbitral tribunal
I – Report
1. A..., S.A., with registration number and taxpayer number..., with registered office at Rua ..., ..., ...-... ...– Vila Nova de Famalicão, hereby requests the constitution of an arbitral tribunal, pursuant to the provisions of articles 2, n.º 1, paragraph a), and 10º of Decree-Law n.º 10/2011, of 20 January, to review the legality of the tax acts imposing additional assessments for Corporate Income Tax (IRC) and Value Added Tax (IVA) and the assessment of compensatory interest, in the total amount of € 308,114.06, relating to the years 2014 and 2015.
It bases the request on the following grounds.
The additional assessment acts are based on the tax inspection report initiated in 2018, which replicates the reports from 2016 and 2017, relating to the tax years 2012 and 2013, and the assessments based on them were contested in court before the Administrative and Tax Court of Braga, thereby violating the provision in n.º 4 of article 63º of the General Tax Code (LGT), according to which there may only be more than one external fiscal procedure relating to the same taxpayer or tax obligor, tax and taxation period by means of a decision, substantiated on the basis of new facts, of the head of the service.
It further violates the provision in article 13º of the Complementary Regime of the Tax and Customs Inspection Procedure (RCPITA) regarding the place of the inspection procedure, since the Report qualifies the inspection procedure as "external" when the Tax Authority did not develop real inspection activity at the premises of the taxpayer.
Furthermore, the assessment notices are unintelligible as to content, insofar as the grounds contained therein do not permit a clear justification of the criteria underlying the amounts required for payment, regarding the interest rates applied and the taxation periods considered.
As to the application of the anti-abuse clause, the Tax Authority does not prove that the Applicant is part of a corporate group, when it is certain that there is only a set of companies that represent a "group" in terms of commercial or partnership relations such that all the relations that were established between the company, here contesting, and the companies that are its clients generated tax obligations under IRC and IVA.
The main ground of the Tax Authority for the assessments of IVA and IRC is that the applicant has unlawfully exercised its vehicle rental activity when it is certain that it has carried on its activity in accordance with legal requirements since 16 August 2011, on the basis of an initial "licensing" request according to the legal regime in force and having obtained the license through the competent entity (IMTT), which proceeded to update it on 2 March 2015, as a consequence of the entry into force of Decree-Law n.º 181/2012 of 6 August.
The Applicant, by choice of business organization, entered into normal legal transactions of vehicle rental, embodying such rentals in commercial exploitation operations consistent with its corporate purpose, it being irrelevant whether it did so with strict compliance with the legal regime of vehicle rental provided for in Decree-Law n.º 181/2012.
As a result of the vehicle rental activity it carried out, the Applicant acquired the right to deduct the IVA incurred in the acquisition of vehicles and the deduction as expenses under IRC and its non-subjection to autonomous taxation, from which no tax avoidance resulted.
The general anti-abuse clause being inapplicable due to failure to satisfy the legal prerequisites, in particular regarding the means, result, motive, intellectual and sanctioning elements.
The Tax Authority, in its response, maintains that the inspection action applied all the principles underlying the tax inspection procedure, in compliance with the provisions of articles 266º, n.º 1, of the Constitution and 55º of the LGT, and the decision is sufficiently substantiated by way of an exposition of the reasons of fact and law that enabled the taxpayer to have a complete understanding of the meaning and scope of the act.
With regard to the application of the general anti-abuse clause, it follows from the facts evidenced in the Tax Inspection Report that we are dealing with a group of companies linked by legal and financial ties integrated into the universe of company B..., with common management bodies and with capacity for mutual influence and that share the same registered office.
It is further concluded that there was an investment in tangible fixed assets in the order of one million four hundred thousand euros, including the acquisition of high-end motor vehicles and three pleasure boats and the only clients of the rental activity are the companies of the group.
Which means that, in practice, the Applicant manages the fleet of vehicles used in Portugal by the companies of Group B... to which it belongs, thereby resulting in tax advantages as to the deduction of IVA, insofar as the Applicant is able to avoid the exclusion of the right to deduction in relation to expenses for the acquisition of cars and pleasure boats, on the grounds that these are expenses relating to assets whose exploitation constitutes the object of activity of the taxpayer (article 21º, n.º 1, paragraph a), and n.º 2, paragraph a), of the IVA Code).
As well as allowing advantages to be obtained under IRC through the acceptance of depreciation as tax-deductible expenses and non-subjection to autonomous taxation of expenses incurred or borne with light vehicles because these are vehicles intended for the exercise of the normal vehicle rental activity.
It concludes that the prerequisites of the general anti-abuse clause are satisfied.
2. Following the proceedings, the meeting referred to in article 18º of the RJAT was dispensed with and the proceedings were ordered to continue for successive pleadings.
In their pleadings, the parties maintained their previous positions.
3. The request for constitution of the arbitral tribunal was accepted by the President of CAAD and notified to the Tax and Customs Authority in accordance with applicable regulations.
In accordance with the provision in paragraph a) of n.º 2 of article 6º and paragraph b) of n.º 1 of article 11º of the RJAT, as amended by article 228º of Law n.º 66-B/2012, of 31 December, the Deontological Council appointed as arbitrators of the collective arbitral tribunal the signatories, who communicated acceptance of the role within the applicable period.
The parties were duly and timely notified of this appointment and did not express any wish to reject it, in accordance with the combined provisions of article 11º, n.º 1, paragraphs a) and b), of the RJAT and articles 6º and 7º of the Deontological Code.
Thus, in compliance with the provision in paragraph c) of n.º 1 of article 11º of the RJAT, as amended by article 228º of Law n.º 66-B/2012, of 31 December, the collective arbitral tribunal was constituted on 4 April 2018.
The arbitral tribunal was regularly constituted and is materially competent in light of the provision in articles 2º, n.º 1, paragraph a), and 30º, n.º 1, of Decree-Law n.º 10/2011, of 20 January.
The parties have legal personality and capacity, are legitimate and are duly represented (articles 4º and 10º, n.º 2, of the same statute and 1º of Ordinance n.º 112-A/2011, of 22 March).
The proceedings do not suffer from any defects and no exceptions were raised.
It is within the tribunal's jurisdiction to review and decide.
3. The parties submitted written pleadings, in successive periods, in which they analyzed the factual matters and reiterated their previous positions.
It is within the tribunal's jurisdiction to review and decide.
II - Grounds
Factual Matters
3. The facts relevant to the decision of the case that may be regarded as established are the following.
The Applicant was subject to a procedure of an external nature, with reference to the years 2014 and 2015, authorized by service orders n.º OI2017... and OI2017..., aimed at investigating legal transactions that might be covered by the general anti-abuse clause provided for in article 38º, n.º 2, of the LGT;
The inspection action had as its justification the circumstance that in an inspection procedure relating to the year 2013, legal transactions were detected aimed at eliminating the incidence of taxes, by artificial means and with abuse of legal forms, and that could be replicated in subsequent years;
The Applicant was notified of the draft Tax Inspection Report by letter dated 2 October 2017 to exercise the right to be heard;
The Applicant exercised the right to be heard in accordance with the terms set out in pages 56 of the administrative file and which was reviewed within the Tax Inspection Report (pages 105-108 of the administrative file);
In the Tax Inspection Report, corrections were proposed in IVA, in the total amount of € 27,570.67, for the year 2014, and € 6,963.71, for the year 2015, in IRC, in the amount of € 170,335.38, for the year 2014, and € 166,545.92, for the year 2015, and in autonomous taxation in the amount of € 98,924.34, for the year 2014, and € 95,598.21, for the year 2015;
The conclusions of the Tax Inspection Report were subject to a favorable ruling by the Director of Finance of Braga, dated 4 May 2018;
Assessment acts n.º 2018..., n.º 2018..., n.º 2018..., n.º 2018..., n.º 2018..., n.º 2018..., n.º 2018..., n.º 2018..., n.º 2018..., n.º 2018..., were issued in the total amount of taxes and interest of € 308,114.06;
The Applicant was notified, by letter dated 6 May 2016, of the Tax Inspection Report for the year 2012 within the scope of an inspection action authorized by service order n.º OI2016..., in which corrections were proposed to the taxable matter due to undue IVA deduction, non-acceptance of tax depreciation and in autonomous taxation;
The Applicant was notified, by letter dated 23 March 2017, of the Tax Inspection Report for the year 2013, within the scope of an inspection action authorized by service orders n.º OI2016..., in which corrections were proposed to the taxable matter due to undue IVA deduction, non-acceptance of tax depreciation and in autonomous taxation;
The Applicant challenged in court before the Administrative and Tax Court of Braga the tax assessments in IVA and IRC that were based on the Tax Inspection Report mentioned in the preceding paragraph H);
The Applicant challenged in court before the Administrative and Tax Court of Braga the tax assessments in IVA and IRC that were based on the Tax Inspection Report mentioned in the preceding paragraph I);
On 16 August 2011, the Applicant submitted to the Regional Department of Mobility and Transport of the North a request for licensing for the activity of vehicle rental without driver of passenger and freight motor vehicles;
The Applicant was authorized by license n.º .../2011, issued on 23 September 2011, to carry out the activity of rental of light passenger vehicles without driver;
The Applicant was authorized by license n.º .../2011, issued on 23 September 2011, to carry out the activity of rental of freight vehicles without driver;
The Applicant was notified by the Institute of Mobility and Transport, IP, following the new legal regime for access to the activity of rental of light passenger vehicles established by Decree-Law n.º 181/2012, of 6 August, to submit, in order to regularize the situation, a copy of the model of the standard accession contract containing general contractual clauses, usually delivered to the lessee, and updating of other elements, in particular with regard to the fixed establishment for public service, the vehicles used in rent-a-car activity and the suitability of the applicant or the managers, directors or partners;
Following that notification, the Applicant, by communication dated 24 March 2015, submitted a model contract, permanent certificate of the company, criminal records of the managers and identified the vehicles assigned to the rent-a-car activity, informing that the fixed establishment for public service operates at the company's registered office;
The application of the general anti-abuse clause was authorized by ruling of the Director General of the Tax Authority dated 11 April 2018.
It was not proven that the Applicant had operating hours for making vehicles available to the public within specific service locations.
The Tribunal formed its conviction as to the proven facts based on the documents attached to the petition and on the administrative file attached by the Tax Authority with its response.
Legal Matters
Procedural Defects
5. The Applicant begins by invoking as grounds for the annulment of the assessment acts the abusive resort to successive inspection procedures, with violation of the principles of proportionality, appropriateness and non-repetition, based on the provision in n.º 4 of article 63º of the LGT.
To reach this conclusion, it argues that the Tax Inspection Report of 2018, which covered the tax years 2014 and 2015, replicates the previous reports of 2017, which had as its subject the taxation period of 2013, and of 2016, which covered the taxation period 2012, and that the justification given for launching the inspection action was the circumstance that irregularities had been detected relating to the years 2012 and 2013 that could continue to occur in subsequent years.
As provided in the cited article 63º, n.º 4, of the LGT, "the inspection procedure and the duties of cooperation are the appropriate and proportionate ones to the objectives to be pursued, there being more than one external fiscal procedure relating to the same taxpayer or tax obligor, tax and taxation period only by means of a decision, substantiated on the basis of new facts, of the head of the service, except where the inspection is intended solely to confirm the legal premises that the taxpayer invokes before the tax administration and without prejudice to the determination of the taxpayer's tax situation by means of inspection or inspections directed to third parties with whom it maintains economic relations".
As immediately appears from the provision, the limitation established for the opening of a new inspection procedure relates to situations in which it is intended to investigate the tax situation of the same taxpayer, with reference to the same tax and taxation period, and it is only in this circumstance that the Administration must, in order to renew the procedure, invoke new facts that permit broadening the investigation. Where, in the inspection procedure referred to in this arbitral request, the investigation concerns the taxpayer's tax situation with reference to the years 2014 and 2015, it is immediately apparent that there is no identity as to the taxation period required by the aforementioned rule of article 63º, n.º 4, of the LGT to prevent the opening of a new external fiscal procedure.
It is also clear that it is irrelevant to the case that the taxpayer has, in the meantime, challenged in court before the tax tribunal the additional assessment acts relating to the years 2012 and 2013, which originated from the previous tax inspection reports. The judicial challenge of assessment acts relating to past taxation periods does not prevent the Administration from launching a new inspection procedure to verify compliance with the tax obligations of taxpayers relating to subsequent tax years. And it cannot be overlooked that the general period for exercising the right to assess taxes is four years from the end of the year in which the taxable fact occurred (article 45º, n.ºs 1 and 4, of the LGT), a period that is only suspended "in case of judicial litigation on whose resolution the assessment of the tax depends, from its beginning until the judgment becomes final" (article 46º, n.º 2, paragraph a), of the LGT).
In these terms, there being no relationship of dependence between the challenge proceedings and the taxable facts that are the subject of investigation in the new inspection procedure, the suspension of the limitation period could not occur, so administrative inertia with regard to the inquiry into these other taxable facts – even if based on the preceding judicial challenge – would imply the risk of extinction of the right to assess by the expiration of the limitation period.
There is therefore no violation of the provision in n.º 4 of article 63º of the LGT.
6. The Applicant further invokes the unintelligibility of the assessment notices and the lack of substantiation of the tax acts and the application of the general anti-abuse clause, which should be understood as relating to a defect of lack of substantiation.
However, the argument appears entirely inconsistent.
The substantiation of administrative acts is especially provided for in the General Tax Code, which, in its article 77º, to the extent relevant here, provides:
1 - The decision of the procedure is always substantiated by means of a brief exposition of the reasons of fact and law that motivated it, substantiation being able to consist of a mere declaration of agreement with the grounds of earlier opinions, information or proposals, including those in the tax inspection report.
2 - The substantiation of tax acts may be carried out in summary form, and must always contain the applicable legal provisions, the qualification and quantification of taxable facts and the operations for determining taxable matter and the tax.
(…).
And, as is current jurisprudential understanding, the substantiation of an administrative or tax act is a relative concept that varies depending on the type of act and the circumstances of the particular case, substantiation being sufficient when it enables a normal recipient to understand the cognitive and evaluative path followed by the author of the act to render the decision, that is, when the recipient can know the reasons why the author of the act decided as it did and not differently.
In the case at hand – as emerges from Part III of the Tax Inspection Report – the Administration describes the corporate framework of the taxpayer (III.1.1.1) and its relationship with other entities that are the sole lessees of the vehicles intended for rental (III.1.1.6), as well as referring to the existence of common managers in the various management bodies of the related companies (III.1.1.5.). It further analyzes the taxpayer's activity in the context of vehicle rental without driver (III.1.2.2.), as well as the applicable legal regime (III.1.2.1.), and the registered rental contracts (III.1.2.4.), and notes the dysfunctionality of the exercise of the activity in relation to the legislation that regulates the sector (III.1.2.5.). It furthermore sets forth in considerable detail the reasons justifying the application of the general anti-abuse clause (III.1.3.1.), and finally formulates the correction proposals, both in IVA (III.2.1.1.), in IRC (III.2.2.1.), and in autonomous taxation (III.2.2.2.), mentioning in relation to each of these taxes the applicable provisions, qualifying and quantifying the taxable facts and describing the operations for determining the taxable matter and the tax to be assessed.
In summary, the Tax Inspection Report concluded that the Applicant, despite possessing a license to rent light passenger vehicles without driver, does not exercise that activity but rather the management of a set of high-end vehicles for a business group. And it would be very difficult for a normal recipient not to have understood that conclusion which is based on all the other considerations that are set out in the Report.
And it is certain that the Applicant, although expressing its views in a somewhat verbose manner – which is not attributable to the terms in which the Report is substantiated – did nonetheless come to understand the meaning and scope of the proposed corrections and the consequent assessment acts.
There is no reason, for all that has been stated, to find that the pointed-out defect of lack of substantiation is present.
7. The Applicant further alleges that the Tax Authority classified the inspection procedure as external, but did not develop real inspection activity at the premises of the taxpayer, which represents a violation of the principle of material truth and legality and may lead to the invalidity of the final tax act.
One of the conditions for classifying the procedure as external is that the inspection acts are carried out, in whole or in part, at the premises or facilities of the taxpayer and do not result from the mere formal analysis of documents held or obtained by the Administration in the course of the procedure (article 13º of RCPITA).
In this case, it is recorded in the Tax Inspection Report that the inspection action commenced on 10 July 2017 at the taxpayer's registered office, with the signature of the service order by the certified accountant, and that the inspection acts were considered concluded on 25 September 2017 with the notification of the inspection records to the taxpayer. Nothing permits the conclusion, in light of the elements in the file, that inspection acts were not carried out at the taxpayer's premises, given that the procedure commenced with the inspectors' visit to the registered office, and furthermore there was notification to the Applicant of the records that were drawn up in the course of the procedure, which suggests that the inspection action was not limited to a mere formal analysis of documents already in the Administration's possession.
In any event, the Applicant does not indicate – as was incumbent on it – which instructional actions it was notified of in order to be able to demonstrate that such actions do not go beyond the purely internal scope of the procedure, so it is not possible to conclude that there was non-compliance with the provision in article 13º of RCPITA and the consequent violation of the principle of material truth and legality.
8. In formulating the request, the Applicant also invokes the violation of the right to prior hearing, but not only is this an argument that has no factual basis whatsoever, but the applicant also does not provide any specific development, in the context of the procedural document, regarding this alleged cause of action.
And indeed, the Applicant was notified to exercise the right to prior hearing regarding the draft Tax Inspection Report and exercised that right by indicating as reproduced all that it had previously alleged within the scope of the inspection procedures relating to the years 2012 and 2013 and in the judicial challenges raised against the tax assessment acts rendered following those inspection actions (paragraphs C) and D) of the factual matters).
And the Tax Administration addressed itself to the arguments invoked in relation to the previous inspection procedures and took express position regarding them, so it is entirely contrary to the principle of procedural good faith to assert that prior hearing did not take place.
General Anti-Abuse Clause and Corrections to Taxable Matter
9. In the context of the inspection procedure for application of the general anti-abuse rule, the Tax Authority determined the disregard for tax purposes of the activity of rental of light passenger vehicles without driver, with the consequent correction of IVA improperly deducted in the acquisition of vehicles and in expenses for use, transformation and repair, and the correction of IRC as a result of non-acceptance as a tax expense of depreciation of vehicles to the extent corresponding to the acquisition cost and further the subjection to autonomous taxation of expenses related to such vehicles.
To reach this conclusion, the Administration is based essentially on the premise that the Applicant, despite formally possessing a license for vehicle rental without driver, actually exercises the activity of managing a set of vehicles within a business group. And it is based on various facts that point to the existence of special relations between the Applicant and the companies that are beneficiaries of the vehicle leasing activity, namely: (a) A..., S.A. is held 99% by C..., S.A. and 0.625% by D..., S.A.; (b) the chairman of the board of directors of E..., S.A. is a director of C... and D..., S.A.; (c) a member of the board of directors of A..., S.A. is chairman of C... and a director of D..., S.A.; another member of the board of directors of E..., S.A. is chairman of the board of directors of D..., S.A. and a member of the board of directors of C...; (d) C... is related to D..., S.A., F..., S.A, G..., S.A, H..., S.A. and I..., Lda; (e) these entities, directly or indirectly related to the taxpayer, whether through share ownership or common management and administration, are the lessees of the vehicles that the taxpayer makes available; (f) the taxpayer's registered office is shared with other related companies, it does not have other facilities, nor a specific location for public service.
Contesting this perspective, the Applicant merely states that it is not part of a corporate group but maintains only commercial or partnership relations with the companies that lease the vehicles, holds the licensing license for the vehicle rental activity, and it is irrelevant for the purpose of exercising the corresponding tax rights whether it meets the requirements defined in the legal regime of vehicle rental provided for in Decree-Law n.º 181/2012.
The question to be decided is therefore whether the application of the anti-abuse clause referred to in article 38º, n.º 2, of the LGT takes place in the circumstances of the case, which justifies that one begin with the characterization of this figure as a mechanism for controlling fraud to the tax law.
The cited provision of the LGT declares as "ineffective, within the tax context, acts or legal transactions essentially or principally directed, by artificial or fraudulent means and with abuse of legal forms, to the reduction, elimination or temporal deferment of taxes that would be due as a result of facts, acts or legal transactions of identical economic purpose, or to the obtaining of tax advantages that would not be achieved, in whole or in part, without use of such means". And, in that case, it provides that taxation take place in accordance with the rules that would be applicable if such means had not been used, not producing the tax advantages that were intended to be obtained.
Additionally, article 63º of the Code of Tax and Customs Procedure (CPPT) provides a specific tax procedure for applying the anti-abuse provision and imposes on the Administration a special duty to substantiate that decision which must necessarily include (i) the description of the legal transaction entered into or the legal act performed and of the transactions or acts of identical economic purpose, as well as an indication of the applicable tax rules; and (ii) a demonstration that the entry into the legal transaction or performance of the legal act was essentially or principally directed to the reduction, elimination or temporal deferment of taxes that would be due in case of a transaction or act with identical economic purpose, or to the obtaining of tax advantages.
As Sérgio Vasques notes, the general anti-abuse clause enshrined in the LGT consists of three essential elements. "First, it is required that an artificial or fraudulent act or transaction be performed and that it express abuse of legal forms, in the sense that we are dealing with business schemes that conceal their true purposes and to which a use is given that is manifestly anomalous in relation to common legal practice. Second, it is required that the sole or principal objective through such business schemes be to obtain a tax advantage, whatever its nature, with the clear marginalization of real economic objectives. Third, it is required that the law make clear the intention to tax the assets in question, in the same terms in which they would be taxed had the taxpayer resorted to the more common legal forms and business practices" (Manual of Tax Law, Almedina, 2018, p. 374).
The general sense of the rule is thus to permit the disqualification for tax purposes of any act or legal transaction performed by the taxpayer with the sole or principal objective of obtaining a tax advantage, which may constitute fraud to the tax law. The legal effect that results from the functioning of the anti-abuse clause is to consider the acts as performed in accordance with the normal standard of legal commerce to obtain the same economic result, the tax obligation being determined on the basis of equivalent acts that could be performed.
It is therefore required that an artificial or fraudulent act or transaction has been performed that represents an abuse of legal forms and that had as its sole or principal objective the obtaining of a tax advantage (on these aspects, Serena Cabrita Neto/Carla Castelo Trindade, Tax Contention, vol. I, Coimbra, 2017, pp. 430-433).
The application of the anti-abuse clause depends, furthermore, on a case-by-case assessment, there being a need to weigh the conduct attributable to the taxpayer in light of the circumstances of fact that may be regarded as established (see ruling of the Southern Administrative Court (TCA) of 15 February 2011, Case n.º 04255/10, and arbitral award rendered in Case n.º 377/2014).
In the case at hand, there are sufficient indicative facts – which the Applicant did not contest in its initial petition – of the existence of special relations between the taxpayer and the various companies that are lessees of the vehicles in the fixed assets, whether through share ownership or common administration. It is further noted that the Applicant does not meet the legal requirements for exercising the activity of vehicle rental without driver, especially with regard to the availability of vehicles to the public within operating hours at service locations.
The Applicant argues that it possesses the competent license to exercise the activity, but that is precisely the artificial means intended to obtain tax advantages that would not be achieved if the taxpayer merely limited itself to managing a motor vehicle fleet for the benefit of its shareholders and directors or companies with which it maintains special relations.
Under article 21º, n.º 1, paragraph a), of the IVA Code, there is excluded from the right to deduction the tax contained in "expenses relating to the acquisition, manufacture or importation, leasing, use, transformation and repair of cars, pleasure boats, helicopters, aircraft, motorcycles and mopeds". However, according to paragraph a) of n.º 2 of that same article, the exclusion does not apply to expenses "relating to assets whose sale or exploitation constitutes the object of the taxpayer's activity". Which means that, through the exercise of merely formal activity of rental of light vehicles without driver, through the obtaining of the corresponding license that has no correspondence with reality, the taxpayer, under this latter provision, can improperly deduce the IVA incurred in the acquisition of vehicles when it does not actually exercise the activity that confers this tax advantage upon it.
Likewise, article 34º, n.º 1, paragraph e), of the IRC Code, in exception to the general regime of depreciation of assets subject to deterioration (article 29º), does not accept as tax expenses "the depreciation of light or mixed passenger vehicles (…), provided that such assets are not assigned to public transport service nor are intended to be rented in the exercise of the taxpayer's normal activity". And also through this means, with abuse of legal forms, the taxpayer succeeded in having reflected in the calculation of taxable profit in IRC depreciation that could only be tax-deductible if it actually exercised the activity of rental of light passenger vehicles without driver.
Further in accordance with article 88º, n.º 3 of the IRC Code, "expenses incurred or borne by taxpayers not benefiting from subjective exemptions and who exercise, as their principal activity, a commercial, industrial or agricultural activity are taxed autonomously, relating to light passenger vehicles", with exclusion from taxation, according to the provision in paragraph a) of n.º 6, of expenses relating to "light passenger vehicles, motorcycles and mopeds, assigned to the exploitation of public transport service, intended to be rented in the exercise of the taxpayer's normal activity".
Also in this case the taxpayer obtains an undue tax advantage as a result of the supposed exercise of an activity that has no correspondence with reality.
Verifying, in the terms just set out, the prerequisites for the application of the general anti-abuse clause, there is no reason for the requested declaration of illegality of the tax acts in question.
III – Decision
We therefore decide to hold the arbitral request entirely unfounded.
Value of the Case
The Applicant indicated as the value of the case the amount of € 308,114.06, which was not contested by the respondent and corresponds to the amount of the assessment that was sought to be challenged, and is therefore fixed at that amount as the value of the case.
Costs
In accordance with the provisions of articles 12º, n.º 2, and 24º, n.º 4, of the RJAT, and 3º, n.º 2, of the Regulation of Costs in Tax Arbitration Proceedings and Table I attached to that Regulation, the amount of costs is fixed at € 5,508.00, to be borne by the Applicant.
Notify.
Lisbon, 23 April 2019
The President of the Arbitral Tribunal
Carlos Fernandes Cadilha
Arbitrator Member
Francisco Pessoa Vaz
Arbitrator Member
Olívio Mota Amador
Frequently Asked Questions
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