Summary
Full Decision
ARBITRAL DECISION
I – REPORT
1. On 21 September 2018, A..., Lda, Tax ID..., with registered office at..., ...-... ..., filed a petition 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, briefly referred to as RJAT), seeking the declaration of illegality of the acts of assessment of Corporate Income Tax (IRC) for the financial year 2014 with number 2018... and the consequent acts of assessment of interest with numbers 2018... and 2018..., embodied in the statements of account reconciliation with number 2018..., and for the financial year 2015 with number 2018... and the consequent act of assessment of interest with number 2018..., embodied in the statement of account reconciliation with number 2018..., in the total amount of € 422,839.81 (four hundred and twenty-two thousand eight hundred and thirty-nine euros and eighty-one cents).
2. To substantiate its petition, the Applicant alleges, in summary, that the correction made by the said tax acts, expressed in the disregard of financial charges borne by the applicant, suffers from procedural defects due to lack of substantiation of the corrections determined, and of violation of law, due to error in the assumptions for application of Article 23 of the Corporate Income Tax Code (CIRC) and for violation of the constitutional principle of taxation on actual profit.
3. On 24-09-2018, the petition for constitution of the arbitral tribunal was accepted and automatically notified to the Tax Authority (AT).
4. The Applicant did not appoint an arbitrator, whereby, pursuant to the provisions of paragraph a) of item 2 of Article 6 and paragraph a) of item 1 of Article 11 of the RJAT, the President of the Deontological Council of CAAD designated the undersigned as arbitrators of the collective arbitral tribunal, who communicated their acceptance of the office within the applicable period.
5. On 12-11-2018, the parties were notified of these designations and did not manifest any intention to refuse any of them.
6. In accordance with the provisions of paragraph c) of item 1 of Article 11 of the RJAT, the Collective Arbitral Tribunal was constituted on 03-12-2018.
7. On 21-01-2019, the Respondent, duly notified for this purpose, filed its reply defending itself by way of challenge.
8. On 19-03-2019, the hearing referred to in Article 18 of the RJAT took place, at which the witnesses presented by the Applicant and by the Respondent were examined.
9. Having been granted a period for the submission of written arguments, these were submitted by the parties, pronouncing themselves on the evidence produced and reiterating and developing their respective legal positions.
10. It was indicated that the final decision would be notified by the deadline set forth in Article 21(1) of the RJAT.
11. The Arbitral Tribunal is materially competent and is duly constituted, pursuant to Articles 2, item 1, paragraph a), 5 and 6, item 2, paragraph a), of the RJAT.
The parties have legal personality and capacity, are legitimate and are duly 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 nullities.
Thus, there is no obstacle to the hearing of the case.
Having considered everything, it is hereby decided:
II. DECISION
A. FACTUAL MATTER
A.1. Facts Established as Proven
1. The Applicant is a family enterprise, established in October 1981, by the following shareholders:
2. Shareholders C... and D... transferred their shareholdings to companies B..., SA and E... in 2007 and 2012, respectively.
3. The Applicant constructed the industrial facilities in 1982 and commenced production in January 1983.
4. The principal activity of the Applicant has consisted, since its creation, in the sintering of raw materials in powder form to produce tungsten pieces.
5. From the Applicant's bylaws in force on the date of the tax facts sub iudice, its corporate purpose consists of "the manufacturing and trading of hard metal tools and similar tools and machine tools. Manufacturing and machining of various metal products".
6. From the same Bylaws, it further states that "The company may participate in the capital of other companies, even with a purpose different from its own and in companies regulated by special laws or complementary groupings of enterprises".
7. The applicant has a specific and highly mature production process and has a major customer, F..., GMBH, which acquires approximately 80% of the outputs of the Applicant's activity.
8. At the date of the tax facts sub iudice, the Applicant held shareholdings in the following companies:
9. From the Applicant's Transfer Pricing Dossier, the following is stated, among other things:
"A... LDA.
A... was established as a limited liability company in October 1981, constructed the industrial facilities in 1982 and commenced production in January 1983. Its main activity is the production of Hard Metal with which it manufactures high precision pieces and tools for a multiplicity of industries, such as: automotive industry, metallurgy and metalworking, pharmaceutical, chemical, ceramic, petroleum and gas and others. Having adequate technical, financial and human resources to achieve its objectives, A... has managed to maintain a sustained position in both domestic and foreign markets. It has made successive investments in various domains, namely: in the improvement of the quality assurance system; in innovation and modernization; in research and development; in increasing capacity and productivity; in professional training and information and communication systems, in improving hygiene, health and safety conditions and in environmental protection.
The main activity of A... is the production of Hard Metal (the designation by which the metal product is known that is obtained by sintering of pressed powders of tungsten carbide and cobalt, to which are added, in certain cases and in varying percentages, titanium and tantalum carbides), with which high precision pieces and tools are manufactured. Among many other ranges of pieces and tools manufactured, we highlight: wear and corrosion resistant pieces for chemical and ceramic industries; extrusion dies and mandrels for the production of tubes and bars; pressing tools for chemical, pharmaceutical, automotive and powder metallurgy industries; stamping dies for the production of screws, rivets and metal packaging, pieces for petroleum and gas industry valves.
The applications of hard metal extend to a multiplicity of industries: automotive, electronics, chemical, metalworking, ceramic, wood and many others. Hard metal used for cutting other metals is fundamentally composed of tools for turning and milling products of difficult machining with steel tools and used in the form of "inserts", which are applied to supports designed for this purpose, by welding and mechanical fastening.
G..., SL
Based in ..., G..., is present in the Spanish market, having as its main objective the administrative and technical support for the marketing of high precision hard metal pieces and tools carried out directly by A....
H..., LTDA.
H... Brasil, Ltda was founded in December 1990 and has its head office and manufacturing facilities in ..., in the metropolitan region of ... (Brazil). In commercial terms it also has an office in ....
The Brazilian unit is responsible for serving Latin America namely Brazil, Argentina, Chile, Ecuador and Mexico. Offering a wide range of steel and hard metal pieces and tools of great precision (according to drawings or samples from its customers), the company is certified in accordance with ISO 9001/2000 standard by BVQI. It operates in a vast line of products that are used in the sectors of iron and steel, ceramics, auto parts, mining, petroleum and gas, among others.
I... SA
I... was established on 7 August 1990. The company is located in the municipality of ....
The corporate purpose of the company is the manufacturing of metal molds as well as the manufacturing of plastic articles. The materials used in the manufacturing of molds are steel, electrolytic copper, graphite, among others. In addition to these materials, some components such as guides, bushings, injection system, extractors, etc. are still necessary.
J..., SA
J... is a company of the A... Group, established on 28 August 2008, with head office and facilities in ....
It acquired by transfer the establishment of K... with the existing equipment and workers on 1 September 2008.
The principal activity consists in the production of precision machined pieces in steel, cast iron, non-ferrous alloys and technical plastics. It provides a final product to its customers that includes the provision of a machining service by chip removal according to the customer's drawing, the acquisition of raw materials, coating, heat treatment, assembly and testing.
L..., SA
L..., SA was established on 15 November 2006 within the A... group.
L... has the capacity to produce pieces in steel or cast iron, between 1 kg and 4000 kg, custom-made, with or without heat treatment, with high quality and great speed.
The entire manufacturing process and the product itself is guaranteed by means of control, appropriate to foundry technology. It has the capacity to, from the customer's drawing, design the gating and feeding systems, using "Quickcast" simulation software, which guarantees it obtains defect-free pieces, delivered faithfully within the required timeframes.
M... LDA.
M..., Lda, was founded on 31 July 1984, its establishment resulted from the need to fill a gap observed in the field of equipment for mines, quarries and public works, concentrating its main activity there.
N..., AS
N... is a joint stock company located in the city of ..., whose founding dates back to 2000. The corporate purpose of the company includes: the production of coatings by technical projection, development of advanced product engineering applications and the production of pieces by shaping using ceramics, metals and other composites.
B..., SA
Based in ..., B..., was established on 29 December 2003, with the following corporate purpose: purchase and sale of real estate, resale of real estate acquired for that purpose and provision of management and business consultancy services.
O..., LDA.
O..., Lda is an SME, located in ... (District of ...), with exclusively national capital. Its founding dates to 1982, having been acquired in 1992 by A.... Its principal activity is the trading and production of tubes manufactured in plastic materials (PVC, PU, EVA, EPDM, PE, etc.).
P..., LDA.
P..., Lda, is a limited liability company belonging to the A... group with its registered office in .... The company's purpose is to maintain a strong presence in the market for the production of Glasses and Compositions for Pavements and Ceramic and Artistic Pottery Coverings.
F..., GMBH
F... represents the Group in Germany, where it markets high precision hard metal pieces and tools.
Q..., LTDA.
The Brazilian branch of I... Portugal and is a producer of molds for plastic injection with the capacity to manufacture molds of up to 30 tons."
10. In the financial year 2016, the companies R... and S... SGPS Lda were created and J... was extinguished by merger and incorporation into A....
11. The companies in which the Applicant held shareholdings, referred to above, had the following composition of their share capital:
12. In the Applicant's accounting, in the item of Interest, Dividends and Other Similar Income, the following appeared:
13. With regard to expenses and financial losses of the Applicant, the following appeared:
14. In 2014, 2015 and 2016, the value recorded in Shareholders/Partners and Other Financial Assets corresponds to approximately 39%, 38% and 40% of total Assets.
15. The item of Shareholders/Partners represents 13%, 12% and 13% of the Assets of A... in the financial years 2014, 2015 and 2016 and contains loans granted to Shareholders – B... and to companies in which A... has an interest.
16. The item of Other Financial Assets encompasses account 41 - Financial Investments in associates and represents the financing made to associated companies, corresponding to 26% of the total Assets of the company in the financial years 2014 and 2015 and 27% in 2016.
17. From the Applicant's accounting, it further contained the following:
18. In 2014, 2015 and 2016, the Borrowings Obtained corresponded to approximately 81%, 76% and 73% respectively of the Applicant's Liabilities.
19. The total borrowings obtained by the Applicant which accrued interest is as follows:
20. In Account SNC 69 (expenses and losses from financing relating to interest borne with bank loans) of the Applicant's accounting, the expenses associated with indebtedness were recorded in the financial years 2014, 2015 and 2016, corresponding to the amounts identified in the following table:
21. In Account SNC 26 (loans granted to subsidiary companies) and in Account SNC 41 (Financial Investments) of the financial years 2014, 2015 and 2016, the Applicant recorded the following amounts of loans granted to companies with which it has an interest:
22. In Account SNC 791 (Interest Obtained) in the financial years 2014, 2015 and 2016, the following amounts of interest invoiced by the Applicant to related companies were recorded:
23. The Applicant, as at 31 December of the financial years 2014, 2015 and 2016, held in its assets loans and other financing facilities to unrelated related third parties, unremunerated, in the amounts as per the table below:
24. During the year 2018, based on an inspection procedure initiated in 2017, the Tax Inspection Services Directorate of the Tax Authority and Customs (AT) made corrections to the taxable profit declared by the Applicant for the financial years 2014, 2015 and 2016.
25. In that procedure, the AT concluded that the deduction of financial charges in the following amounts was incorrect, because their indispensability was not demonstrated, pursuant to Article 23 of the CIRC applicable:
26. Subsequently, the AT added the following values in each of the financial years:
27. The Tax Inspection Report further states, among other things, the following:
"It is observed that the necessity of an interest proper to the company as a requirement for the tax deductibility of expenses is a consequence of its respective legal and tax personality which is based on the patrimonial autonomy of the company, that is, on the circumstance that the company has its own assets, different and independent from the assets of the respective shareholders or of other companies in the economic group in which it may be inserted, and provides it with its own contributory capacity that is not confused with that of the shareholders nor with that of those other companies.
In summary, legal autonomy requires a personal and selfish benefit of each entity that cannot be confused with the interest of the economic group in which the company operates or, even, with those of its shareholders.
One of the pillars supporting this argument is the fact that taxpayers are not free to shape the results of the enterprises, through the location of profits and losses where they see fit.
It is important to note that this situation remains even in the context of application of the special regime for taxation of groups of companies, because even in that situation, the acceptance of a cost always depends on the verification of the requirements provided for in Article 23 of the CIRC within the scope of determining its respective taxable profit, so the tax deductibility thereof depends on the existence of a link between that cost and the income or gains subject to tax or the maintenance of the source producing that entity.
Now, subsuming the facts described in point 111.1.1 of this report to the legal and interpretative framework that has just been set out, it must be concluded that the financial charges (interest) borne by the company A... with the funds obtained to grant advances or unremunerated loans do not meet the requirement of indispensability in that company, and therefore cannot be tax deductible for determining profit. (...)
By obtaining, in the financial years 2014, 2015 and 2016, remuneratedfinanciings from banks and maintaining unremunerated financings in its assets to its subsidiaries, the company is bearing expenses that do not fit within its activity and its corporate purpose.
To frame the materiality of the amounts recorded as loans to its subsidiaries, we can observe that:
- in the financial year 2014, A... had income of € 17,109,276.92, holding in its assets € 13,323,975.79 of unremunerated loans to associates, or approximately 78% of its business volume.
- in the financial year 2015, A... had income of € 16,698,473.82, holding in its assets € 13,539,472.09 of unremunerated loans to associates, or approximately 81% of its business volume.
- in the financial year 2016, A... had income of € 15,376,610.14, holding in its assets € 14,304,701.89 of unremunerated loans to associates, or approximately 93% of its business volume.
The corporate purpose of A... is the manufacturing and trading of hard metal tools and similar tools and machine tools and manufacturing and machining of various metal products. The financing of its subsidiaries is not part of the corporate purpose of A....
If we observe, in the financial years subject to these inspection procedures, the percentage of the value that the company holds with the unremunerated financing of its subsidiaries in relation to its business volume, we can conclude that there is a clear mismatch between the corporate purpose of A... and its allocation of resources.
The financial charges borne with financing obtained and with the performance and maintenance of supplementary considerations, supplementary services and supplementary considerations, under the same legal regime and advances in favor of subsidiary companies, are not tax deductible under item 1 and paragraph c) of item 2 of Article 23 of the CIRC, insofar as those charges are not applied in the activity of operating A... but rather to the exclusive benefit of the subsidiary companies.
We consider, therefore, accompanying the doctrine and jurisprudence that has already pronounced itself in that sense, that the expression "to obtain or guarantee income subject to IRC" should be interpreted in the sense that expenses incurred by the company are tax deductible, provided that these are capable of generating income that contributes to determining the taxable profit of the company that performs supplementary considerations, supplementary services or supplementary considerations, under the regime of supplementary services."
As a result of the notes previously referred to, there is no doubt that when A... uses remuneratedthird-party capital and makes loans to related companies, it is not, either directly or indirectly, pursuing its corporate purpose.
We consider, therefore, that we should follow the understanding that the financial charges borne by A... with the performance of advances, supplementary considerations, supplementary and supplementary services under the regime of supplementary services are not indispensable for the maintenance of the productive source, since these loans do not fall within the corporate purpose of the company and it does not derive from them any counterparts for purposes of determining taxable profit.
Only the interest borne with recourse to financing from third parties will be deductible if those resources are applied, directly, in the activity of the company that resorts to that financing.
In light of the above, we can conclude that the part of the financial charges (interest) corresponding to the financings obtained from credit entities, from shareholders and from others do not constitute an expense with tax relevance in the sphere of company A..., under Article 23 of the CIRC, and should therefore be added to the taxable result declared in the financial years 2014, 2015 and 2016 in the amount of € 806,887.99, € 704,393.59 and € 604,506.93 respectively, as per the following table:"
28. The corrections made gave rise to the tax assessment acts now being challenged, with numbers 2018... and 2018... (additional IRC assessments) and 2018..., 2018... and 2018... (compensatory interest assessments), embodied in the statements of account reconciliation with numbers 2018... and 2018....
29. The total of the said corrections resulted in an adjustment, at the level of the Applicant's taxable base, which amounted to € 2,115,788.51, which in turn gave rise to a balance of tax and interest payable in the amount of € 422,839.81, for whose voluntary payment the deadline dates of 6 and 8 August 2018 were determined, respectively.
30. For collection of the said assessments, tax enforcement proceedings Nos. ...2018... and ...2018... were instituted.
31. In order to obtain the suspension of the same, the Respondent constituted a mortgage over the urban property registered in the matrix under Article ... of the parish of ... and ....
A.2. Facts Established as Not Proven
1. That the expenses with financial charges (interest) recorded by the Applicant in account SNC 69 of the years 2014, 2015 and 2016, relating to financing loans contracted, have served, in whole or in part, to finance/maintain unremunerated loans/advances/supplementary considerations granted by it to its subsidiaries.
A.3. Substantiation of the Factual Matter Proven and Not Proven
As regards the factual matter, the Tribunal does not have to pronounce itself on everything that was alleged by the parties, rather, it has the duty to select the facts that matter for the decision and distinguish the proven matter from the unproven matter (cfr. Article 123, item 2, of the Tax Procedural Code (CPPT) and Article 607, item 3 of the Civil Procedure Code (CPC), applicable ex vi Article 29, item 1, paragraphs a) and e), of the RJAT).
Thus, the facts relevant to the hearing of the case are chosen and defined according to their legal relevance, which is established in attention to the various plausible solutions of the legal issue(s) (cfr. former Article 511, item 1, of the CPC, corresponding to current Article 596, applicable ex vi Article 29, item 1, paragraph e), of the RJAT).
Thus, having regard to the positions taken by the parties, in light of Article 110/7 of the CPPT, the documentary evidence and the procedural file attached to the case, the facts listed above were considered proven, with relevance for the decision, taking into account that, as written in the Judgment of the South Administrative Court of 26-06-2014, handed down in case 07148/13, "the probative value of the tax inspection report (...) may have probative force if the assertions contained therein are not challenged".
The fact established as not proven is based on evidence to the contrary that was produced.
The fact in question underlies the corrections made, as set out in the Tax Inspection Report and the Respondent's Reply (cfr. Article 41), and is disputed by the Applicant (cfr. Articles 168 et seq. of the Initial Petition).
From the testimony produced, however, it results that the Applicant would have approximately 20 million euros in incorporated reserves.
This circumstance, in particular, was affirmed by the witness T..., presented by the Applicant, and confirmed by the witness U..., presented by the AT, this witness being the author of the Tax Inspection Report.
Having regard to that referred circumstance, that the Applicant possessed, at the relevant dates, approximately 20 million euros in incorporated reserves, it cannot be established, beyond any reasonable doubt, that the unremunerated loans/advances/supplementary considerations granted by it to its subsidiaries, at issue in the case, were financed or maintained at the expense of the financings contracted by the same Applicant, since the latter had its own financial means, in sufficient volume, to make the unremunerated loans/advances/supplementary considerations that it granted, and to which the facts established as proven refer.
The allegations made by the parties, presented as facts, consisting of strictly conclusive statements, incapable of proof, and whose truthfulness must be assessed in relation to the concrete factual matter consolidated above, were not established as proven nor are proven.
B. LAW
The Applicant begins (point IV, paragraph a), of its Initial Petition [RI]) by arguing the illegality of the assessments challenged due to error as to the factual assumptions.
In this regard, and insofar as relevant here, the Applicant alleges that the making of the financings to its subsidiaries "was never dependent on the immediately prior contracting of a bank financing" (Article 171 of the RI), and that there were reasons for the financings contracted by the Applicant that did not pass "directly or indirectly, through the necessity of capitalizing its subsidiaries" (Article 172 of the RI), concluding that the "AT is not capable of individualizing the performance of supplementary and supplementary considerations as one of the purposes of the loans contracted" (Article 174 of the RI).
The Respondent, in its Reply, for its part, alleges that the financial charges (interest) that the applicant recorded in account SNC 691 of the year 2014, 2015 and 2016, relating to financing loans contracted, "according to the evidence collected and reported above, part of them will have served to finance/maintain unremunerated loans/advances/supplementary considerations" (Article 41 of the Reply).
The Respondent maintains that "the method adopted by the AT to determine the financial charges allegedly related to supplementary and supplementary considerations made by the applicant (...) is evident (...) in the Tax Inspection Report in the substantiation at page 23 of the Report and various demonstrative tables presented" (Article 59 of the Reply), and that "It is clear from the Tax Inspection Report, cfr. calculations summarized on page 23 of the same, that the applicant resorts to such financing to provide funds to the subsidiaries" (Article 110 of the Reply).
This understanding of the Respondent cannot, however, be ratified.
Indeed, having reviewed both the Tax Inspection Report and the Respondent's pleadings in the arbitral proceedings, nothing more can be derived than that it was considered that the financings were contracted to "finance/maintain unremunerated loans/advances/supplementary considerations", because these and those existed.
Now, the causal relationship between two facts cannot be inferred, merely, from the existence of the same, but should instead be based on a substantiating judgment which, in light of the normality of things, permits the conclusion that such causality exists.
In the present case, and having regard to the fact that the Applicant would have incorporated reserves in an amount superior to the "unremunerated loans/advances/supplementary considerations" granted to its subsidiaries, it cannot be concluded, for lack of more (as is the case), that these were made at the expense of the financings contracted by the Applicant, and not, for example, at the expense of the incorporated reserves that it possessed.
In this way, it cannot be considered demonstrated, beyond any reasonable doubt, that the expenses with financings disregarded by the AT were incurred in the "individual interest of the shareholder, of a group of shareholders, of third parties or their whole", as per the consistent jurisprudence cited by the Respondent itself.
It is certainly true, and will be inescapable, that the factual situation established by the AT indicates the occurrence of fiscally questionable operations, embodied in the free financings granted by the Applicant to its subsidiaries.
Hence, both the Tax Inspection Report and the Respondent, in the arbitral proceedings, point out that "If the applicant had passed on the expenses associated with the loans granted, it would be generating gains in its sphere that would be taxed in IRC, increasing tax revenue (via IRC and Municipal Levy). In turn, some of the related companies would be in a position to recognize the expenses with the financing obtained, but such expenses would have no impact on tax revenue, since it would only increase or generate losses in those related companies, given that they do not present taxable profit or have reduced profit and have high balances of tax losses." (Article 116 of the Reply).
Nonetheless, it is equally clear that the legal regime intended to address pathologies such as the one pointed out is the transfer pricing regime, and not the general regime of necessity of expenses, set forth in Article 23 of the CIRC, and this Tribunal cannot substitute the AT in the application of the legal regime that might perchance be applicable to the case.
On the other hand, the necessity of the expenses with charges arising from the financings contracted by the Applicant could eventually also be questioned, having regard to the circumstance that the latter has sufficient financial means to conduct its activity, in particular the incorporated reserves referred to.
Nonetheless, and on the one hand, as the Respondent itself recognizes (cfr. Article 75 of the Reply), it is on the substantiation set forth in the Tax Inspection Report, and no other, that the Tribunal's judgment can focus.
On the other hand, it further appears that from the discussion of the case it resulted that the financings contracted by the Applicant may, indeed, have a business-justified explanation, arising, in particular, from undertakings resulting from public support programs (such as CREN).
In any event, and having regard to the fact established as not proven, it not being demonstrated that, indeed, as is assumed by the corrections made by the AT and now contested by the Applicant, the financings whose financial charges were disregarded were contracted to "finance/maintain unremunerated loans/advances/supplementary considerations", it must be concluded that, as argued by the Applicant, those corrections suffer from error in the factual assumptions, and consequent error of law, and must therefore be annulled.
The arbitral petition formulated must therefore succeed, rendering unnecessary the examination of the other issues raised by the Applicant, with the exception of the ancillary petition for damages for improper guarantee provision, which will be analyzed below.
*
With the principal annulment petition formulated, the Applicant combines the ancillary petition for damages for improper guarantee provision, having regard to the mortgage over the urban property registered in the matrix under Article ... of the parish of ... and ..., which it constituted, to suspend the tax enforcement proceedings Nos. ...2018... and ...2018..., instituted for collection of the assessments subject to the present arbitral action.
As was written in the Judgment of the Supreme Administrative Court of 10-10-2018, handed down in case 0469/14.6BELRS 033/18:
"I - In the concrete case at issue, in which the guarantee provided to suspend enforcement was a mortgage, this real guarantee cannot be understood as a guarantee equivalent to the bank guarantee for purposes of Articles 53, item 1 of the General Tax Law (LGT) and 171 of the Tax Procedural Code (CPPT).
II - Indeed, this voluntary mortgage will, in principle, only have notarial fees, establishment and registration costs. Thus, it cannot be said that we are faced with a guarantee equivalent to a bank guarantee.
III - It is nonetheless true that the respondent may have other damages beyond the losses arising from the payment of notarial fees. Thus, it is admissible that the damages petition be made in a separate proceeding where the damages that the interested party may have suffered can be verified with greater accuracy (the interested party must specify the concrete losses) in a similar manner to what is stipulated in Article 53, item 3 of the LGT for bank guarantee and surety insurance."
Having regard to the doctrine of the cited judgment, the ancillary petition now at issue must be judged as not well-founded.
*
C. DECISION
Accordingly, this Arbitral Tribunal decides to judge the principal petition formulated as wholly well-founded and, in consequence:
a) To annul the acts of assessment of Corporate Income Tax for the financial year 2014 with number 2018... and the consequent acts of assessment of interest with numbers 2018... and 2018..., embodied in the statement of account reconciliation with number 2018..., and for the financial year 2015 with number 2018... and the consequent act of assessment of interest with number 2018..., embodied in the statement of account reconciliation with number 2018...;
b) To judge as not well-founded the petition for condemnation of the Respondent to pay damages for improper guarantee provision;
c) To condemn the Respondent for the costs of the proceedings as fixed below.
D. Value of the Proceedings
The value of the proceedings is fixed at € 422,839.81 (four hundred and twenty-two thousand eight hundred and thirty-nine euros and eighty-one cents), pursuant to Article 97-A, item 1, paragraph a), of the Tax Procedural and Process Code, applicable by virtue of paragraphs a) and b) of item 1 of Article 29 of the RJAT and item 3 of Article 3 of the Regulation of Costs in Tax Arbitration Proceedings.
E. Costs
The arbitration fee is fixed at € 6,732.00, pursuant to Table I of the Regulation of Costs in Tax Arbitration Proceedings, to be paid by the Respondent, since the principal petition was wholly well-founded, pursuant to Articles 12, item 2, and 22, item 4, both of the RJAT, and Article 4, item 5, of the said Regulation.
Notification to be effected.
Lisbon, 21 May 2019
The Presiding Arbitrator
(José Pedro Carvalho)
The Member Arbitrator
(Marisa Isabel Almeida Araújo)
The Member Arbitrator
(José Joaquim Monteiro Sampaio e Nora)
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