CAAD 474/2017-T: Autonomous Taxation, SIFIDE Credit Deduction from IRC Tax Liability – Reversal of Case Law

ENGLISH TRANSLATION

Tax Arbitration Case Law

Case No. 474/2017-T

Decision Date: 2023-07-10

Corporate Income Tax (IRC)

Value of the Claim: € 95,962.09

Subject Matter: Autonomous taxation. SIFIDE. Tax benefit. Deduction from the tax liability. Interpretive rule. Reversal of case law. Responsibility for costs – Reform of the arbitral decision (attached to the decision).

ARBITRAL DECISION

The arbitrators Counsellor Jorge Lopes de Sousa (presiding arbitrator), Dr. A. Sérgio de Matos and Dr. José Nunes Barata (member arbitrators) appointed by the Deontological Council of the Administrative Arbitration Centre to form the Arbitral Tribunal, constituted on 15-11-2017, hereby agree on the following:

1. REPORT

A..., S.A. (hereinafter designated as "Claimant" or "A..."), corporate entity number ..., with registered office at ..., no. ..., ..., ...-... Algés, came, in accordance with the provisions of Articles 2, No. 1, paragraph a), 10, No. 1, paragraph a) and No. 2, all of Decree-Law No. 10/2011, of January 20 (hereinafter "RJAT"), to request the constitution of an Arbitral Tribunal.

The Claimant requested the declaration of illegality of the decision dismissing the request for official revision and, likewise, the illegality of the self-assessment of Corporate Income Tax, including autonomous taxation rates, of A..., relating to the fiscal year 2012, with respect to the amounts of autonomous taxation rates in Corporate Income Tax of € 95,962.09, with its consequent annulment in this part due to undue exclusion of deductions from the tax liability, with all legal consequences, namely the reimbursement to the Claimant of this amount, plus compensatory interest at the legal rate calculated, until full reimbursement, from September 1, 2013.

Subsidiarily, should it be understood that Article 90 of the Corporate Income Tax Code does not apply to autonomous taxation, the Claimant requests that the illegality of the autonomous taxation assessment be declared (and consequently annulled) due to absence of legal basis for its implementation, with the consequent reimbursement of the same amount and the payment of compensatory interest calculated from the same date.

The Defendant is the TAX AND CUSTOMS AUTHORITY.

The request for constitution of the arbitral tribunal was accepted by the President of CAAD and automatically notified to the Tax and Customs Authority on 14-08-2017.

In accordance with the provisions of paragraph a) of No. 2 of Article 6 and paragraph b) of No. 1 of Article 11 of RJAT, in the wording introduced by Article 228 of Law No. 66-B/2012, of December 31, the Deontological Council appointed as arbitrators of the collective arbitral tribunal the undersigned, who communicated acceptance of the assignment within the applicable period.

On 24-10-2017, the parties were duly notified of this appointment and did not manifest any intention to refuse the appointment of the arbitrators, in accordance with the combined provisions of Article 11, No. 1, paragraphs a) and b) of RJAT and Articles 6 and 7 of the Deontological Code.

Thus, in accordance with the provision in paragraph c) of No. 1 of Article 11 of RJAT, in the wording introduced by Article 228 of Law No. 66-B/2012, of December 31, the collective arbitral tribunal was constituted on 15-11-2017.

The Tax and Customs Administration filed a Response in which it raised the exception of material incompetence of the Arbitral Tribunal and defended the inadmissibility of the claims.

By order of 19-12-2017, the meeting provided for in Article 18 of RJAT was dispensed with and it was decided that the case would proceed with written submissions.

The Parties presented submissions.

Subsequently, in view of the entry into force of Law No. 114/2017, of December 29, which gave new wording to No. 21 of Article 88 of CIRC, granting this wording an interpretive nature, the Parties were notified to comment "on the issues that may arise regarding the possible application of this rule to the situation that is the subject of this proceeding, including, beyond other matters that the Parties deem pertinent, on the constitutional issues that may be raised in light of the rules on the retroactivity of taxes and on the scope and consequences of the expression 'even if such deductions result from special legislation', added to the previous wording".

Only the Claimant commented, arguing, in short, that the attribution of retroactive effect to the new wording is unconstitutional.

The arbitral tribunal was regularly constituted, in accordance with the provisions of Articles 2, No. 1, paragraph a), and 10, No. 1, of Decree-Law No. 10/2011, of January 20.

The Parties are duly represented and enjoy legal personality and capacity, are legitimate and are represented (Articles 4 and 10, No. 2, of the same instrument and Article 1 of Regulation No. 112-A/2011, of March 22).

The case does not suffer from nullities.

By decision of 05-03-2018, the exception of incompetence raised by the Tax Administration was judged inadmissible.

In the same decision it was decided:

• To uphold the request for arbitral ruling regarding the declaration of illegality of the non-deduction of the SIFIDE amount from the tax liability resulting from autonomous taxation and to annul the self-assessment, in the respective part, as well as the dismissal of the request for official revision;

• To uphold the request for arbitral ruling regarding the reimbursement to the Claimant of the amount of € 95,962.09 and to condemn the Tax and Customs Authority to effect the respective payment;

• To partially uphold the request for compensatory interest and to condemn the Tax and Customs Authority to pay interest to the Claimant, from 23-02-2017 until reimbursement of the amount of € 95,962.09.

The Public Prosecutor's Office appealed to the Constitutional Court, which, by summary decision No. 274/2020, decided:

a) Not to declare unconstitutional Articles 135 of Law No. 7-A/2016, of March 30, and 233 of Law No. 114/2017, of December 29, to the extent that, in granting an interpretive nature to the amendments introduced in Article 88, No. 21, of the Corporate Income Tax Code (by Articles 133 of Law No. 7-A/2016, of March 30, and 231 of Law No. 114/2017, of December 29), they provide that tax benefits calculated within the scope of SIFIDE, in fiscal years prior to 2016, cannot be deducted from the tax liability resulting from the application of autonomous taxation rates in the context of Corporate Income Tax;

and, as a consequence,

b) To allow the appeal, ordering the reform of the decision under review in accordance with the previous judgment of non-unconstitutionality.

This summary decision was upheld by Decision No. 121/2023 of the Plenary of the Constitutional Court, issued on 21-03-2023.

By email of 07-07-2023, the Constitutional Court informed that the decision of its case 224/18, which concerns the appeal of the arbitral decision issued in this proceeding, became final.

Although the Arbitral Tribunal was dissolved with the notification of the filing made on 05-03-2018, by force of the provision in Article 23 of RJAT, No. 2 of Article 80 of the Organization, Functioning and Procedure of the Constitutional Court establishes that "if the Constitutional Court allows the appeal, whether entirely or only partially, the case shall be returned to the court from which it originated, so that it, as the case may be, reforms the decision or has it reformed in accordance with the ruling on the issue of unconstitutionality or illegality", which implies that the arbitral tribunal be reconstituted for this purpose.

2. FACTS

In the arbitral decision of 05-03-2018, the following facts were established.

2.1. Established Facts

The following facts are considered established:

• On 28-05-2013, the Claimant delivered the Corporate Income Tax Return Form 22 for the fiscal year 2012, having calculated an amount of autonomous taxation in Corporate Income Tax of € 95,962.09 (document No. 1 attached with the request for arbitral ruling, the contents of which are hereby reproduced);

• The information system of the Tax and Customs Authority does not allow the deduction of amounts of tax benefits from the Corporate Income Tax liability resulting from autonomous taxation;

• The amount of SIFIDE, attributed/obtained, available for use by the Claimant at the end of fiscal year 2012 amounted to € 5,985,075.28 in accordance with certification accompanied by Statements of the SIFIDE Certification Commission (document No. 3 attached with the request for arbitral ruling, the contents of which are hereby reproduced);

• The Claimant presented the Form 22 Corporate Income Tax returns contained in documents No. 4 and 5 attached with the request for arbitral ruling, the contents of which are hereby reproduced;

• The Claimant had no debts in coercive collection through tax enforcement proceedings on the dates referred to in the certificates contained in document No. 6 attached with the request for arbitral ruling, the contents of which are hereby reproduced;

• The amount of € 95,962.09 of autonomous taxation relates to those indicated in document No. 7 attached with the request for arbitral ruling, the contents of which are hereby reproduced;

• On 22-02-2016, the Claimant presented a request for official revision of the self-assessment relating to fiscal year 2012, requesting that the amount of SIFIDE be deducted from the Corporate Income Tax liability resulting from autonomous taxation (document No. 2 attached with the request for arbitral ruling, the contents of which are hereby reproduced);

• The request for official revision was dismissed by order of 31-05-2017, which manifests agreement with information contained in document No. 2 attached with the request for arbitral ruling, the contents of which are hereby reproduced, stating, among other things, the following:

III. Official Revision:

1. Facts:

The petitioner requests the revision of the Corporate Income Tax assessment relating to Form 22 declaration of 2012 in which it carried out the self-assessment.

It submitted the Form 22 declaration of the said fiscal year, calculating taxable income, to which it deducted up to the amount of the tax liability (167,579.03) tax benefits.

It incurred expenses that were subject to autonomous taxation, in the amount of 95,562.09 for 2012 and 10,054.74 in municipal surtax for the same fiscal year.

It had available in the same fiscal year, tax credits available, which due to alleged insufficiency of tax liability were not utilized, relating to SIFIDE, in the amount of 5,988,163.28.

2. Opinion:

The petitioner requests in its petition, revision of the tax situation in accordance with Article 78 of the General Tax Law.

It alleges the following grounds:

• It presented taxable income with respect to fiscal year 2012

• It deducted part of the value relating to tax benefits, reducing the tax liability to zero

• It calculated tax to be paid relating to autonomous taxation

• It presents a municipal surtax amount

• It develops an entire argument to the effect that the tax liability relating to autonomous taxation should be considered for purposes of deduction, in accordance with Article 90 of CIRC, namely to deduct the SIFIDE benefit

• It demonstrates its thesis based on tax classification, case law and the various existing doctrine, to the extent that autonomous taxation constitutes Corporate Income Tax

• Due to the facts alleged substantiating errors attributable to the services, it requests the payment of compensatory interest, in accordance with Article 43 of the General Tax Law

From No. 1 of Article 78 of the General Tax Law, distinct periods result for the submission of the request for Official Revision:

• In accordance with what is provided in the first part of No. 1 of Article 78, the request for official revision may be submitted by the taxpayer, on the basis of any illegality, within the period for filing an administrative complaint, that is, within two years after the assessment.

The assessment was carried out by the taxpayer itself with the delivery of the income declaration on 28-05-2013.

The present request for official revision was submitted on 22-02-2016.

Therefore, in accordance with the first part of Article 78 of the General Tax Law, the request submitted is clearly out of time.

• In accordance with the provision in the final part of No. 1 of Article 78, the period for requesting official revision is four years after the assessment, or at any time if the tax has not yet been paid, on the basis of error attributable to the services.

• In accordance with the initial part of No. 2 of the legal provision in question, the fact that the error in the self-assessment is considered attributable to the services does not prejudice the legal burdens of complaint or challenge.

Therefore, the taxpayer wishing to request revision of the self-assessment on the basis of any illegality must present the request within two years after the presentation of the income declaration, in accordance with Article 131 of the Code of Tax Procedure and Process and the first part of No. 2 of Article 78 of the General Tax Law.

• By equating the error in the self-assessment to error attributable to the services, the revision of the tax act constitutes a power and duty of the Tax Authority within the period provided in the final part of No. 1 of Article 78 of the General Tax Law, that is, within four years after the assessment or at any time if the tax has not yet been paid.

Taking into account that the self-assessment dates from 28-5-2013 and the present request was submitted on 22-02-2016, the four-year period mentioned was not exceeded, concluding that it is timely.

Regarding the issue of deduction of the SIFIDE benefit from the tax liability of autonomous taxation, in accordance with No. 2 of Article 90 of CIRC, it is appropriate to refer to the following situation:

• It is necessary to discuss this matter, which has already been addressed by the Corporate Income Tax Department.

Autonomous taxation is based on, in its genesis, the non-acceptance for tax purposes of a percentage of certain expenses, constituting an alternative and more effective form of cost correction whenever it is an area prone to tax evasion (travel allowances, representation expenses, vehicles, etc.).

Although autonomous taxation has the same nature as Corporate Income Tax, this does not mean that it can be eligible as a tax-deductible expense; such deduction was not accepted in light of the anti-abuse nature of these taxation measures, which aim to discourage recourse to the type of expenses they tax. Through its deduction from taxable income, the basis for the existence of autonomous taxation would be eliminated.

The current wording of paragraph a) of No. 1 of Article 23-A of CIRC expressly states that the following are not deductible for purposes of determining taxable income: "Corporate Income Tax, including autonomous taxation, and any other taxes that directly or indirectly affect profits"

The legislator took a position on this issue, not only with respect to the non-consideration of autonomous taxation as expenses, but also with respect to its legal and tax nature.

On the other hand, in light of the considerable doctrine and case law existing, there was a need to clarify that autonomous taxation cannot be considered as expenses.

It is undeniable that autonomous taxation taxes expenses and not income; they are taxes that penalize certain charges incurred by companies and are calculated in a completely independent manner from Corporate Income Tax.

Autonomous taxation applies to expenses, with each act of expense constituting an autonomous taxable event, to which the taxpayer is subject, regardless of whether or not there is taxable income in respect of Corporate Income Tax at the end of the respective tax period.

This is how the Supreme Administrative Court judged it (Decision 0281/2011 of 06-07-2011 and Decision 0830/2011 of 21-03-2012), understanding that each act of expense should have the rate in effect on the date of its realization applied to it.

The Constitutional Court addressed the issue of autonomous taxation in the context of an appeal to the Plenary, in accordance with No. 1 of Article 79-D of its Law, establishing case law in light of the divergence between two decisions of the same Court that decided differently.

Although it made reference to the difference existing between the taxation of income in the context of Personal Income Tax or Corporate Income Tax (in which the aggregate of income earned in a given year is taxed) and autonomous taxation (in which the expense incurred, considered in itself independently of the Corporate Income Tax that is due in each tax period, is taxed).

The Constitutional Court did not fail to draw attention to the fact that income taxes include elements of single obligation (such as the liberatory rates of Personal Income Tax or the autonomous taxation rates of Corporate Income Tax).

At the end of the Decision it is possible to read: "...the existence of the tax in question (autonomous taxation) has no effect whatsoever on the amount of Corporate Income Tax, operating in a completely autonomous manner in relation to it, so its functioning should be viewed solely according to the elements that characterize it"

The Administrative Arbitration Centre (CAAD), in its case 209/2013T, has already expressed its understanding that the Constitutional Court, in the said decision, did not address the legal and tax nature of autonomous taxation, but solely the determination of the nature of the taxable event underlying them.

The question to be decided concerned whether the amounts paid in the context of autonomous taxation by a Corporate Income Tax subject should be considered a charge deductible for purposes of determining taxable income in light of the previous wording of paragraph a) of No. 1 of Article 45 of CIRC. The decision was negative.

The particularities and difficulties of the autonomous taxation regime were well demonstrated in the different positions defended in the cited Constitutional Court and CAAD Decisions, and it should be noted that the Constitutional Court Decision is the result of an appeal to the Plenary requesting the establishment of case law in light of the divergence between two decisions of the same Court that decided differently on this matter.

The very designation of autonomous taxation evidences the autonomy that they possess in relation to Corporate Income Tax.

For this reason, it seems to us that, despite having the same nature as Corporate Income Tax, the rules applicable to autonomous taxation should not be contrary to the spirit that determines them. And, in order to respect that purpose that established them, it is necessary to evaluate the intention of the legislator taking into account all factors.

Contrary to the provision in Article 12 and paragraph a) of No. 1 of Article 23-A of CIRC, in Nos. 1 and 2 of Article 90 there is no reference whatsoever to autonomous taxation, which in light of the dual nature of the system, may raise doubts as to the consideration of the value of autonomous taxation for purposes of the deductions provided in No. 2 of the said Article 90 of CIRC.

To the extent that autonomous taxation is a way to prevent certain abusive situations, we must inquire into its consideration for purposes of the aforementioned deductions.

In that sense, it seems to us that it would be contrary to the spirit of the system to allow that, through the deductions referred to in No. 2 of Article 90 of CIRC, autonomous taxation be deprived of the anti-abuse character that presided over its implementation in the Corporate Income Tax system.

Furthermore, this issue lost relevance in light of the introduction of No. 21 of Article 88 of CIRC, added by Law No. 7-A/2016, of March 30, whose wording is interpretive in nature.

This provision states that "The assessment of autonomous taxation in Corporate Income Tax is carried out in accordance with the provisions of Article 89 and is based on the values and rates resulting from the provisions of the preceding numbers, with no deductions being made from the overall amount calculated"

Thus, autonomous taxation should not be considered for purposes of the deductions referred to in No. 2 of Article 90 of CIRC.

IV. Conclusions:

Thus, we understand that the present request for official revision should not be granted, for the reasons set out above, since the requirements required for the admissibility of revision of tax acts have not been met, in accordance with Article 78 of the General Tax Law. The amount corresponding to autonomous taxation will not be granted, since the requirements for deduction from the tax liability provided for in Article 90 of CIRC have not been met.

The issue raised regarding the payment of compensatory interest in accordance with Article 43 of the General Tax Law ceases to have substance, since it was established that there was no error attributable to the services, given the dismissal proposed.

• On 12-08-2017, the Claimant submitted the request for arbitral ruling that gave rise to this proceeding.

2.2. Unproven Facts

There are no facts relevant to the decision of the case that have not been proven.

2.3. Reasoning for the Establishment of the Facts

The established facts are based on documents submitted by the Claimant and which are part of the administrative proceeding.

There is no controversy regarding the facts.

3. MERITS

3.1. Question of the Incompetence of the Arbitral Tribunal to Consider Requests for Declaration of Illegality of Self-Assessment Acts Preceded by Official Revision without Prior Administrative Complaint

The Tax and Customs Authority argues, in short, that Article 2, paragraph a) of Regulation 112-A/2011, of March 22, through which the Tax and Customs Authority became bound to arbitral jurisdiction, excludes claims relating to the declaration of illegality of self-assessment acts that have not been preceded by recourse to the administrative procedure in accordance with Articles 131 to 133 of the Code of Tax Procedure and Process.

The competence of arbitral tribunals operating in CAAD is, in the first place, limited to the matters indicated in Article 2, No. 1, of Decree-Law No. 10/2011, of January 20 (RJAT).

In a second line, the competence of arbitral tribunals operating in CAAD is also limited by the terms in which the Tax Administration was bound to that jurisdiction by Regulation No. 112-A/2011, of March 22, since Article 4 of RJAT establishes that "the binding of the tax administration to the jurisdiction of the tribunals established under this law depends on a regulation of the members of Government responsible for the areas of finance and justice, which establishes, in particular, the type and maximum value of disputes covered".

In light of this second limitation on the competence of arbitral tribunals operating in CAAD, the resolution of the competence issue depends essentially on the terms of this binding, since, even if one is dealing with a situation falling under Article 2 of RJAT, if it is not covered by the binding, the possibility of the dispute being judicially decided by this Arbitral Tribunal will be ruled out.

In paragraph a) of Article 2 of this Regulation No. 112-A/2011, the following are expressly excluded from the scope of the binding of the Tax Administration to arbitral jurisdiction operating in CAAD: "claims relating to the declaration of illegality of self-assessment acts, withholding at source and payment on account that have not been preceded by recourse to the administrative procedure in accordance with Articles 131 to 133 of the Code of Tax Procedure and Process".

The express reference to prior "recourse to the administrative procedure in accordance with Articles 131 to 133 of the Code of Tax Procedure and Process" should be interpreted as referring to cases in which such recourse is mandatory, through administrative complaint, which is the administrative means indicated in those Articles 131 to 133 of CPPT, to which reference is made. In truth, firstly, it would not be understood that, administrative challenge not being necessary "when its basis is exclusively a matter of law and the self-assessment was carried out in accordance with generic guidelines issued by the tax administration" (Article 131, No. 3 of CPPT, applicable to withholding at source cases, by force of the provision in No. 6 of Article 132 of the same Code), arbitral jurisdiction would be excluded because that administrative challenge, which is understood to be unnecessary, was not carried out.

In the case in question, a declaration of illegality of self-assessment acts is requested, following the dismissal of a request for revision of tax acts made after the expiration of the two-year period provided in Article 131 of CPPT.

Thus, it is important, first and foremost, to clarify whether the declaration of illegality of acts dismissing requests for revision of the tax act, provided for in Article 78 of the General Tax Law, is included in the competencies attributed to arbitral tribunals operating in CAAD by Article 2 of RJAT.

In truth, in this Article 2 there is no express reference to these acts, in contrast to what occurs with the legislative authorization on which the Government based itself to approve RJAT, which refers to "requests for revision of tax acts" and "administrative acts that entail the consideration of the legality of tax assessment, self-assessment, withholding at source and payment on account acts".

However, the formula "declaration of illegality of tax assessment, self-assessment, withholding at source and payment on account acts", used in paragraph a) of No. 1 of Article 2 of RJAT does not restrict, in a mere declarative interpretation, the scope of arbitral jurisdiction to cases in which an act of one of those types is directly challenged. In truth, the illegality of assessment acts may be declared judicially as a corollary of the illegality of a second-instance act, which confirms an assessment act, incorporating its illegality.

The inclusion in the competencies of arbitral tribunals operating in CAAD of cases in which the declaration of illegality of the acts indicated therein is effected through the declaration of illegality of second-instance acts, which are the immediate subject of the challenging claim, results with certainty from the reference made in that norm to self-assessment, withholding at source and payment on account acts, which are expressly referred to as included among the competencies of arbitral tribunals. Indeed, with respect to these acts, administrative complaint is imposed as a rule, in Articles 131 to 133 of CPPT, so that, in these cases, the immediate subject of the challenging proceeding is, as a rule, the second-instance act that considers the legality of the assessment act, an act which, if it upholds it, must be annulled in order to obtain the declaration of illegality of the assessment act. The reference made in paragraph a) of No. 1 of Article 10 of RJAT to No. 2 (repealed) of Article 102 of CPPT, in which the challenge of acts dismissing administrative complaints is provided for, dispels any doubts that the competencies of arbitral tribunals operating in CAAD include cases in which the declaration of illegality of the acts referred to in paragraph a) of that Article 2 of RJAT must be obtained as a consequence of the declaration of the illegality of second-instance acts.

Moreover, it was precisely in this sense that the Government, in Regulation No. 112-A/2011, of March 22, interpreted these competencies of arbitral tribunals operating in CAAD, by excluding from the scope of those competencies "claims relating to the declaration of illegality of self-assessment, withholding at source and payment on account acts that have not been preceded by recourse to the administrative procedure in accordance with Articles 131 to 133 of the Code of Tax Procedure and Process", which has the effect of restricting its binding to cases in which that recourse to the administrative procedure was utilized.

Having reached the conclusion that the formula used in paragraph a) of No. 1 of Article 2 of RJAT does not exclude cases in which the declaration of illegality results from the illegality of a second-instance act, it will also include cases in which the second-instance act is that of dismissal of a request for revision of the tax act, since there is no apparent reason to restrict it, especially since, in cases in which the request for revision is made within the period for administrative complaint, it should be equated to an administrative complaint.

The same applies to the decision of hierarchical appeal, expressly indicated in paragraph a) of No. 1 of Article 10 of RJAT as the initial term of the period for presenting a request for constitution of an arbitral tribunal.

The express reference to Articles 131 to 133 of CPPT made in Article 2 of Regulation No. 112-A/2011 cannot have the decisive effect of ruling out the possibility of consideration of requests for illegality of acts dismissing requests for official revision of acts of the types referred to therein.

In truth, the interpretation exclusively based on the literal wording that the Tax and Customs Authority advocates in this proceeding cannot be accepted, since in the interpretation of tax rules, the general rules and principles of interpretation and application of laws are observed (Article 11, No. 1, of the General Tax Law) and Article 9, No. 1, expressly prohibits interpretations exclusively based on the literal wording of the rules, by establishing that "interpretation should not be limited to the letter of the law", but rather should "reconstruct from the texts the legislative thought, having above all in account the unity of the legal system, the circumstances in which the law was drafted and the specific conditions of the time in which it is applied".

As for the correspondence between interpretation and the letter of the law, "a minimum of verbal correspondence, even if imperfectly expressed" suffices (Article 9, No. 3, of the Civil Code) which will only prevent interpretations that cannot in any way be reconciled with the letter of the law, even recognizing in it imperfection in the expression of the legislative intention.

Therefore, the letter of the law is not an obstacle to making declarative interpretation, which clarifies the scope of the literal wording, nor even extensive interpretation, when it can be concluded that the legislator said less than what, in consistency, it would intend to say, that is, when it imperfectly said what it intended to say. In extensive interpretation "it is the valuation of the rule itself (its 'spirit') that leads to the discovery of the need to extend the text of this to the hypothesis that it does not cover", "the expansive force of the legal valuation itself is capable of leading the provision of the rule to cover hypotheses of the same type not covered by the text".

Extensive interpretation, thus, is imposed by the valuative and axiological coherence of the legal system, erected by Article 9, No. 1, of the Civil Code as a primary interpretive criterion through the imposition of observance of the principle of unity of the legal system.

It is manifest that the scope of the requirement of prior administrative complaint, necessary to open the contentious avenue of challenge of acts of the types referred to in Articles 131 to 133 of CPPT, has as its only justification the fact that with respect to that type of acts there is no pronouncement by the Tax Administration on the legality of the legal situation created with the act, a pronouncement that could even turn out to be favorable to the taxpayer, avoiding the need for recourse to the contentious avenue.

In truth, beyond not envisioning any other justification for this requirement, the fact that mandatory administrative complaint is provided for in challenging contentious disputes of withholding at source and payment on account acts (in Articles 132, No. 3, and 133, No. 2, of CPPT), which have in common with self-assessment acts the circumstance that there is also no pronouncement by the Tax Administration on the legality of the acts, confirms that this is the reason for being of that mandatory administrative complaint.

Another unequivocal confirmation that this is the reason for being of the requirement of mandatory administrative complaint is found in No. 3 of Article 131 of CPPT, by establishing that "without prejudice to the provisions of the preceding numbers, when its basis is exclusively a matter of law and the self-assessment was carried out in accordance with generic guidelines issued by the tax administration, the period for the challenge does not depend on prior complaint, and the challenge must be presented within the period of No. 1 of Article 102", a regime which is applicable to withholding at source acts by referral of No. 6 of Article 132 of CPPT. In truth, in situations of this type, there was a prior generic pronouncement by the Tax Administration on the legality of the legal situation created with the self-assessment or withholding at source act and it is this fact that explains why mandatory administrative complaint ceases to be required.

Now, in cases in which a request for official revision of a self-assessment or withholding at source act is formulated, the Tax Administration is provided, with this request, an opportunity to rule on the merits of the taxpayer's claim before the latter resorts to the judicial avenue, so that, in consistency with the solutions adopted in Nos. 1 and 3 of Article 131 and 3 and 6 of Article 132 of CPPT, it cannot be required that, cumulatively with the possibility of administrative consideration within the framework of that official revision procedure, a new administrative consideration be required through administrative complaint.

On the other hand, it is unequivocal that the legislator did not intend to prevent taxpayers from formulating requests for official revision in cases of self-assessment acts, since these were expressly referred to in No. 2 (repealed) of Article 78 of the General Tax Law. And the self-assessment acts, practiced by the taxpayer, are comparable, by mere declarative interpretation, to withholding at source acts which are practiced by the withholding agent, who is considered a taxpayer (Article 18, No. 3, of the General Tax Law).

In this context, the law allowing taxpayers to opt for administrative complaint or official revision of self-assessment and withholding at source acts and the request for official revision being formulated within the period for administrative complaint being perfectly comparable to an administrative complaint, as referred to, there cannot be any reason that can explain that a taxpayer who chose to have the tax act revised instead of an administrative complaint cannot access the arbitral avenue.

For this reason, it must be concluded that the members of Government who issued Regulation No. 112-A/2011, in making reference to Articles 131 to 133 of CPPT, said imperfectly what they intended, since, intending to impose prior administrative consideration to contentious challenge of acts of the types referred to, they ended up including reference to Articles 131 to 133 which do not exhaust the possibilities of administrative consideration of those acts.

Moreover, it should be noted that this interpretation, not limiting itself to the literal wording, is particularly justified in the case of paragraph a) of Article 2 of Regulation No. 112-A/2011, due to the evident imperfections: one is to associate the comprehensive formula "recourse to the administrative procedure" (which references, in addition to administrative complaint, hierarchical appeal and revision of the tax act) with the "expression in accordance with Articles 131 to 133 of the Code of Tax Procedure and Process", which has potential restrictive scope to administrative complaint; another is to use the formula "preceded" by recourse to the administrative procedure, referring to "claims relating to the declaration of illegality of acts", which obviously would be much better with the feminine word "preceded".

For this reason, in addition to the general prohibition of interpretations limited to the letter of the law contained in Article 9, No. 1, of the Civil Code, in the specific case of paragraph a) of Article 2 of Regulation No. 112-A/2011 there is a special reason not to justify great enthusiasm for a literal interpretation, which is the fact and the wording of that norm being manifestly defective.

Moreover, by ensuring that revision of the tax act provides the possibility of consideration of the taxpayer's claim before access to the contentious avenue that is intended to be achieved with the necessary administrative challenge, the most correct solution, because it is the most coherent with the legislative purpose of "reinforcing the effective and actual protection of the rights and legally protected interests of taxpayers" manifested in No. 2 of Article 124 of Law No. 3-B/2010, of April 28, is the admissibility of the arbitral avenue to consider the legality of assessment acts previously considered in a revision proceeding.

And, because it is the most correct solution, it must be presumed to have been normatively adopted (Article 9, No. 3, of the Civil Code).

On the other hand, since that paragraph a) of Article 2 of Regulation No. 112-A/2011 contains an imperfect formula, but which contains a comprehensive expression "recourse to the administrative procedure", which potentially also references revision of the tax act, there is found in the text the minimum of verbal correspondence, although imperfectly expressed, required by that No. 3 of Article 9 for the viability of the adoption of the interpretation that establishes the most correct solution.

It must be concluded, thus, that Article 2, paragraph a) of Regulation No. 112-A/2011, properly interpreted on the basis of the criteria of interpretation of law provided in Article 9 of the Civil Code and applicable to substantive and procedural tax rules, by force of the provision in Article 11, No. 1, of the General Tax Law, enables the submission of requests for arbitral ruling regarding self-assessment or withholding at source acts that have been preceded by a request for official revision.

As for the allegation of the Tax and Customs Authority that "the understanding (...) that disputes having as their subject the declaration of illegality of self-assessment acts, as occurs in the situation sub judice, are excluded from the material competence of arbitral tribunals, if not preceded by administrative complaint in accordance with Article 131 of CPPT, is imposed by force of the constitutional principles of the rule of law and separation of powers (cf. Articles 2 and 111, both of the Constitution), as well as the right of access to justice (Article 20 of the Constitution) and legality [cf. Articles 3, No. 2, 202 and 203 of the Constitution and also Article 266, No. 2, of the Constitution, in its corollary of the principle of indisposability of tax credits inherent in Article 30, No. 2 of the General Tax Law, which bind the legislator and all activity of the Tax Authority".

In truth, the Constitution does not require that the interpretation of normative instruments be limited to the literal wording, and in the case in question, as explained, properly interpreted the provisions of Article 2, No. 1, of RJAT and Article 2 of Regulation No. 112-A/2011, of March 22, it is concluded that the binding of the Tax and Customs Authority to arbitral tribunals operating in CAAD covers cases in which self-assessment acts have been preceded by requests for official revision. For this reason, the interpretation made did not increase the binding of the Tax and Customs Authority in relation to what is regulated, but rather defined exactly its terms, which result from the regulatory instrument.

On the other hand, in interpreting and applying legal rules, this Arbitral Tribunal is performing the function constitutionally attributed to it (Articles 202, No. 1, 203 and 209, No. 2, of the Constitution), so it is not apparent how there can be any violation of the principles of separation of powers, the rule of law and legality, since what has been decided by this tribunal evidences, precisely, the perfect implementation of those principles: the Assembly of the Republic authorized the Government to legislate (Article 124 of Law No. 3-B/2010, of April 28); the Government, in the exercise of legislative powers, issued RJAT; the Administration, through two members of Government, issued Regulation No. 112-A/2011, of March 22; the Arbitral Tribunal interpreted and applied the aforementioned normative instruments.

As regards the principle of the right of access, it is perplexing that the allegation of its violation is made before an Arbitral Tribunal, a body absolutely independent of both Parties, which gave them the opportunity to argue what they deemed appropriate for defense of their positions on the competence issue, which weighed their reasons and applied its interpretation of the applicable legal regime in a profusely reasoned decision: it is precisely in this that the essence of the right of access to justice consists, the possibility of obtaining a decision from an independent body which, through a fair process, weighs the arguments of the Parties and applies to the issues raised its interpretation of the applicable legal regime.

As to the invocation of the principle of indisposability of tax credits, defined in Article 30, No. 2, of the General Tax Law, in which it is stated that "the tax credit is indisposable, being able to fix conditions for its reduction or extinction only with respect for the principle of equality and tax legality", it will certainly be an oversight, since in deciding on its competence the Arbitral Tribunal is not practicing any act of disposition of credit. Moreover, it is not apparent to which credit the Tax and Customs Authority will be referring, since in this proceeding, which concerns self-assessment acts of tax that has been paid and the collection of any tax credit is not at issue.

Furthermore, the principle of indisposability of tax credits applies to the Administration and not to Courts, as the Constitutional Court understood, following the vast majority of doctrine.

This exception of incompetence, derived from the failure to submit an administrative complaint on the self-assessment, is thus inadmissible.

Essentially in this sense, with respect to self-assessment acts, reference can be made to the decision of the Central Administrative Court of the South of 27-04-2017, delivered in case No. 08599/15.

4. FACTS

4.1. Established Facts

The following facts are considered established:

• On 28-05-2013, the Claimant delivered the Corporate Income Tax Return Form 22 for the fiscal year 2012, having calculated an amount of autonomous taxation in Corporate Income Tax of € 95,962.09 (document No. 1 attached with the request for arbitral ruling, the contents of which are hereby reproduced);

• The information system of the Tax and Customs Authority does not allow the deduction of amounts of tax benefits from the Corporate Income Tax liability resulting from autonomous taxation;

• The amount of SIFIDE, attributed/obtained, available for use by the Claimant at the end of fiscal year 2012 amounted to € 5,985,075.28 in accordance with certification accompanied by Statements of the SIFIDE Certification Commission (document No. 3 attached with the request for arbitral ruling, the contents of which are hereby reproduced);

• The Claimant presented the Form 22 Corporate Income Tax returns contained in documents No. 4 and 5 attached with the request for arbitral ruling, the contents of which are hereby reproduced;

• The Claimant had no debts in coercive collection through tax enforcement proceedings on the dates referred to in the certificates contained in document No. 6 attached with the request for arbitral ruling, the contents of which are hereby reproduced;

• The amount of € 95,962.09 of autonomous taxation relates to those indicated in document No. 7 attached with the request for arbitral ruling, the contents of which are hereby reproduced;

• On 22-02-2016, the Claimant presented a request for official revision of the self-assessment relating to fiscal year 2012, requesting that the amount of SIFIDE be deducted from the Corporate Income Tax liability resulting from autonomous taxation (document No. 2 attached with the request for arbitral ruling, the contents of which are hereby reproduced);

• The request for official revision was dismissed by order of 31-05-2017, which manifests agreement with information contained in document No. 2 attached with the request for arbitral ruling, the contents of which are hereby reproduced, stating, among other things, the following:

III. Official Revision:

1. Facts:

The petitioner requests the revision of the Corporate Income Tax assessment relating to Form 22 declaration of 2012 in which it carried out the self-assessment.

It submitted the Form 22 declaration of the said fiscal year, calculating taxable income, to which it deducted up to the amount of the tax liability (167,579.03) tax benefits.

It incurred expenses that were subject to autonomous taxation, in the amount of 95,562.09 for 2012 and 10,054.74 in municipal surtax for the same fiscal year.

It had available in the same fiscal year, tax credits available, which due to alleged insufficiency of tax liability were not utilized, relating to SIFIDE, in the amount of 5,988,163.28.

2. Opinion:

The petitioner requests in its petition, revision of the tax situation in accordance with Article 78 of the General Tax Law.

It alleges the following grounds:

• It presented taxable income with respect to fiscal year 2012

• It deducted part of the value relating to tax benefits, reducing the tax liability to zero

• It calculated tax to be paid relating to autonomous taxation

• It presents a municipal surtax amount

• It develops an entire argument to the effect that the tax liability relating to autonomous taxation should be considered for purposes of deduction, in accordance with Article 90 of CIRC, namely to deduct the SIFIDE benefit

• It demonstrates its thesis based on tax classification, case law and the various existing doctrine, to the extent that autonomous taxation constitutes Corporate Income Tax

• Due to the facts alleged substantiating errors attributable to the services, it requests the payment of compensatory interest, in accordance with Article 43 of the General Tax Law

From No. 1 of Article 78 of the General Tax Law, distinct periods result for the submission of the request for Official Revision:

• In accordance with what is provided in the first part of No. 1 of Article 78, the request for official revision may be submitted by the taxpayer, on the basis of any illegality, within the period for filing an administrative complaint, that is, within two years after the assessment.

The assessment was carried out by the taxpayer itself with the delivery of the income declaration on 28-05-2013.

The present request for official revision was submitted on 22-02-2016.

Therefore, in accordance with the first part of Article 78 of the General Tax Law, the request submitted is clearly out of time.

• In accordance with the provision in the final part of No. 1 of Article 78, the period for requesting official revision is four years after the assessment, or at any time if the tax has not yet been paid, on the basis of error attributable to the services.

• In accordance with the initial part of No. 2 of the legal provision in question, the fact that the error in the self-assessment is considered attributable to the services does not prejudice the legal burdens of complaint or challenge.

Therefore, the taxpayer wishing to request revision of the self-assessment on the basis of any illegality must present the request within two years after the presentation of the income declaration, in accordance with Article 131 of the Code of Tax Procedure and Process and the first part of No. 2 of Article 78 of the General Tax Law.

• By equating the error in the self-assessment to error attributable to the services, the revision of the tax act constitutes a power and duty of the Tax Authority within the period provided in the final part of No. 1 of Article 78 of the General Tax Law, that is, within four years after the assessment or at any time if the tax has not yet been paid.

Taking into account that the self-assessment dates from 28-5-2013 and the present request was submitted on 22-02-2016, the four-year period mentioned was not exceeded, concluding that it is timely.

Regarding the issue of deduction of the SIFIDE benefit from the tax liability of autonomous taxation, in accordance with No. 2 of Article 90 of CIRC, it is appropriate to refer to the following situation:

• It is necessary to discuss this matter, which has already been addressed by the Corporate Income Tax Department.

Autonomous taxation is based on, in its genesis, the non-acceptance for tax purposes of a percentage of certain expenses, constituting an alternative and more effective form of cost correction whenever it is an area prone to tax evasion (travel allowances, representation expenses, vehicles, etc.).

Although autonomous taxation has the same nature as Corporate Income Tax, this does not mean that it can be eligible as a tax-deductible expense; such deduction was not accepted in light of the anti-abuse nature of these taxation measures, which aim to discourage recourse to the type of expenses they tax. Through its deduction from taxable income, the basis for the existence of autonomous taxation would be eliminated.

The current wording of paragraph a) of No. 1 of Article 23-A of CIRC expressly states that the following are not deductible for purposes of determining taxable income: "Corporate Income Tax, including autonomous taxation, and any other taxes that directly or indirectly affect profits"

The legislator took a position on this issue, not only with respect to the non-consideration of autonomous taxation as expenses, but also with respect to its legal and tax nature.

On the other hand, in light of the considerable doctrine and case law existing, there was a need to clarify that autonomous taxation cannot be considered as expenses.

It is undeniable that autonomous taxation taxes expenses and not income; they are taxes that penalize certain charges incurred by companies and are calculated in a completely independent manner from Corporate Income Tax.

Autonomous taxation applies to expenses, with each act of expense constituting an autonomous taxable event, to which the taxpayer is subject, regardless of whether or not there is taxable income in respect of Corporate Income Tax at the end of the respective tax period.

This is how the Supreme Administrative Court judged it (Decision 0281/2011 of 06-07-2011 and Decision 0830/2011 of 21-03-2012), understanding that each act of expense should have the rate in effect on the date of its realization applied to it.

The Constitutional Court addressed the issue of autonomous taxation in the context of an appeal to the Plenary, in accordance with No. 1 of Article 79-D of its Law, establishing case law in light of the divergence between two decisions of the same Court that decided differently.

Although it made reference to the difference existing between the taxation of income in the context of Personal Income Tax or Corporate Income Tax (in which the aggregate of income earned in a given year is taxed) and autonomous taxation (in which the expense incurred, considered in itself independently of the Corporate Income Tax that is due in each tax period, is taxed).

The Constitutional Court did not fail to draw attention to the fact that income taxes include elements of single obligation (such as the liberatory rates of Personal Income Tax or the autonomous taxation rates of Corporate Income Tax).

At the end of the Decision it is possible to read: "...the existence of the tax in question (autonomous taxation) has no effect whatsoever on the amount of Corporate Income Tax, operating in a completely autonomous manner in relation to it, so its functioning should be viewed solely according to the elements that characterize it"

The Administrative Arbitration Centre (CAAD), in its case 209/2013T, has already expressed its understanding that the Constitutional Court, in the said decision, did not address the legal and tax nature of autonomous taxation, but solely the determination of the nature of the taxable event underlying them.

The question to be decided concerned whether the amounts paid in the context of autonomous taxation by a Corporate Income Tax subject should be considered a charge deductible for purposes of determining taxable income in light of the previous wording of paragraph a) of No. 1 of Article 45 of CIRC. The decision was negative.

The particularities and difficulties of the autonomous taxation regime were well demonstrated in the different positions defended in the cited Constitutional Court and CAAD Decisions, and it should be noted that the Constitutional Court Decision is the result of an appeal to the Plenary requesting the establishment of case law in light of the divergence between two decisions of the same Court that decided differently on this matter.

The very designation of autonomous taxation evidences the autonomy that they possess in relation to Corporate Income Tax.

For this reason, it seems to us that, despite having the same nature as Corporate Income Tax, the rules applicable to autonomous taxation should not be contrary to the spirit that determines them. And, in order to respect that purpose that established them, it is necessary to evaluate the intention of the legislator taking into account all factors.

Contrary to the provision in Article 12 and paragraph a) of No. 1 of Article 23-A of CIRC, in Nos. 1 and 2 of Article 90 there is no reference whatsoever to autonomous taxation, which in light of the dual nature of the system, may raise doubts as to the consideration of the value of autonomous taxation for purposes of the deductions provided in No. 2 of the said Article 90 of CIRC.

To the extent that autonomous taxation is a way to prevent certain abusive situations, we must inquire into its consideration for purposes of the aforementioned deductions.

In that sense, it seems to us that it would be contrary to the spirit of the system to allow that, through the deductions referred to in No. 2 of Article 90 of CIRC, autonomous taxation be deprived of the anti-abuse character that presided over its implementation in the Corporate Income Tax system.

Furthermore, this issue lost relevance in light of the introduction of No. 21 of Article 88 of CIRC, added by Law No. 7-A/2016, of March 30, whose wording is interpretive in nature.

This provision states that "The assessment of autonomous taxation in Corporate Income Tax is carried out in accordance with the provisions of Article 89 and is based on the values and rates resulting from the provisions of the preceding numbers, with no deductions being made from the overall amount calculated"

Thus, autonomous taxation should not be considered for purposes of the deductions referred to in No. 2 of Article 90 of CIRC.

IV. Conclusions:

Thus, we understand that the present request for official revision should not be granted, for the reasons set out above, since the requirements required for the admissibility of revision of tax acts have not been met, in accordance with Article 78 of the General Tax Law. The amount corresponding to autonomous taxation will not be granted, since the requirements for deduction from the tax liability provided for in Article 90 of CIRC have not been met.

The issue raised regarding the payment of compensatory interest in accordance with Article 43 of the General Tax Law ceases to have substance, since it was established that there was no error attributable to the services, given the dismissal proposed.

• On 12-08-2017, the Claimant submitted the request for arbitral ruling that gave rise to this proceeding.

4.2. Unproven Facts

There are no facts relevant to the decision of the case that have not been proven.

4.3. Reasoning for the Establishment of the Facts

The established facts are based on documents submitted by the Claimant and which are part of the administrative proceeding.

There is no controversy regarding the facts.

5. QUESTIONS OF LAW

5.1. Applicability of Articles 89 and 90 of CIRC to the Calculation of Autonomous Taxation

Articles 89 and 90 of CIRC establish the following, in the wording of Law No. 2/2014, of January 16, in effect in the year 2012:

Article 89

Competence for Assessment

The assessment of Corporate Income Tax is carried out:

a) By the taxpayer himself, in the returns referred to in Articles 120 and 122;

b) By the Tax and Customs Authority, in the remaining cases.

Article 90

Procedure and Form of Assessment

1 - The assessment of Corporate Income Tax proceeds as follows:

a) When the assessment is to be made by the taxpayer in the returns referred to in Articles 120 and 122, it is based on the taxable matter contained therein;

b) In the event of failure to submit the return referred to in Article 120, the assessment is carried out by November 30 of the following year or, in the case provided for in No. 2 of that article, by the end of the 6th month following the end of the period for submission of the return mentioned therein and is based on the minimum annual remuneration or, when greater, the entirety of the taxable matter of the nearest fiscal year that has been determined;

c) In the event of failure to assess in accordance with the preceding paragraphs, it is based on the elements available to the tax administration.

2 - The following deductions are made from the amount determined in accordance with the preceding number, in the order indicated:

a) That corresponding to international legal double taxation;

b) That corresponding to international economic double taxation;

c) That relating to tax benefits;

d) That relating to the special payment on account referred to in Article 106;

e) That relating to withholdings at source not susceptible to compensation or reimbursement in accordance with applicable legislation.

3 – (Repealed)

4 - From the amount determined in accordance with No. 1, with respect to the entities mentioned in No. 4 of Article 120, only the deduction relating to withholdings at source when these have the nature of tax on account of Corporate Income Tax is to be made.

5 - The deductions referred to in No. 2 relating to entities to which the transparent tax regime established in Article 6 applies are imputed to the respective partners or members in accordance with the terms established in No. 3 of that article and deducted from the amount determined based on the taxable matter that took into account the imputation provided for in the same article.

6 - When the special regime of taxation of groups of companies is applicable, the deductions referred to in No. 2 relating to each of the companies are made in the amount determined with respect to the group, in accordance with No. 1.

7 - From the deductions made in accordance with paragraphs a), b) and c) of No. 2 no negative value can result.

8 – From the amount determined in accordance with paragraphs b) and c) of No. 1 only those deductions are made of which the tax administration is aware and which can be made in accordance with Nos. 2 to 4.

9 – In cases in which the provision of paragraph b) of No. 2 of Article 79 applies, assessments are made annually based on the taxable matter determined on a provisional basis, and, with respect to the assessment corresponding to the taxable matter relating to the entire assessment period, the difference ascertained shall be collected or annulled.

10 – The assessment provided for in No. 1 may be corrected, if necessary, within the period referred to in Article 101, and the differences ascertained shall then be collected or annulled.

The aforementioned Articles 89 and 90 of CIRC, as well as other provisions of this Code, such as those relating to the returns provided for in Articles 120 and 122, are applicable to autonomous taxation.

In truth, it is now settled, following numerous arbitral decisions and the positions assumed by the Tax and Customs Authority, that the tax collected on the basis of autonomous taxation provided for in CIRC has the nature of Corporate Income Tax. Moreover, in addition to case law, Article 23-A, No. 1, paragraph a), of CIRC, in the wording of Law No. 2/2014, of January 16, leaves no room for any reasonable doubt today, corroborating what had already previously resulted from the literal wording of Article 12 of the same Code.

Now, Article 90 of CIRC refers to the forms of assessment of Corporate Income Tax, by the taxpayer or by the Tax Administration, and applies to the calculation of the tax due in all situations provided for in the Code.

For this reason, that Article 90 also applies to the assessment of the amount of autonomous taxation, which is calculated by the taxpayer or by the Tax Administration, following the submission or non-submission of returns, and there is, with effect in the year 2014, no other provision that provides for different terms for its assessment.

Thus, in the year 2014, the differences between the determination of the amount resulting from autonomous taxation and that resulting from taxable income are limited to the determination of the taxable matter and the rates applicable, which are those provided for in Chapters III and IV of CIRC for Corporate Income Tax based on taxable income and in Article 88 of CIRC for Corporate Income Tax based on the taxable matter of autonomous taxation and the respective rates.

But the forms of assessment provided for in Chapter V of the same Code are of common application to autonomous taxation and to the remaining taxable matter of Corporate Income Tax.

However, the circumstance that a Corporate Income Tax self-assessment, carried out in accordance with No. 1 of Article 90, may contain several partial calculations, based on various rates applicable to certain taxable matters, does not imply that there is more than one assessment, as results from the very terms of that provision by making reference to "assessment", in the singular, in all cases in which it is "made by the taxpayer in the returns referred to in Articles 120 and 122", being "based on the taxable matter contained therein" (whether that determined based on the rules of Articles 17 et seq. or that determined based on the various situations provided for in Article 88).

Moreover, it is not only the assessments provided for in Article 88 that may encompass various calculations of application of rates to certain taxable matters, since the same may occur in the situations provided for in Nos. 4 to 6 of Article 87.

In any case, whatever calculations are to be made, it is the unitary assessment that the taxpayer or the Tax and Customs Authority must carry out in accordance with Articles 89, paragraph a), 90, No. 1, paragraphs a), b) and c), and 120 or 122, and based on it that the overall Corporate Income Tax is calculated, whatever the taxable matters relating to each of the types of taxation underlying it.

Moreover, if this Article 90 were not applicable to the assessment of autonomous taxation provided for in CIRC, we would have to conclude that there would be no provision that, in 2012, provided for its assessment, which would amount to illegality, by violation of Article 103, No. 3, of the Constitution, which requires that the assessment of taxes be made "in accordance with the law".

Reference is also made to the new provision of No. 21 added to Article 88 of CIRC by Law No. 7-A/2016, of March 30, which regardless of whether or not it can be qualified as truly interpretive, in no way alters this conclusion, since there it is established, with respect to the form of assessment of autonomous taxation, that it "is carried out in accordance with the provisions of Article 89 and is based on the values and rates resulting from the provisions of the preceding numbers". Indeed, if it is true that this new provision comes to clarify how the amounts of autonomous taxation are calculated (which already resulted from the text of the various provisions of Article 88 itself) and that competence falls on the taxpayer or the Tax Administration, in accordance with Article 89, it is also clear that the need to use the procedure provided for in No. 1 of Article 90 is not ruled out, notably in the cases provided for in paragraph c) thereof in which assessment falls to the Tax and Customs Authority, on the basis of "elements available to the tax administration", which will include the possibility of assessing on the basis of autonomous taxation, if the Tax and Customs Authority has elements that prove its requirements.

The same applies to the wording given to that No. 21 of Article 88 by Law No. 114/2017, of December 29.

For this reason, both before and after Law No. 7-A/2016, of March 30, and Law No. 114/2017, of December 29, Article 90, No. 1, of CIRC is applicable to the assessment of autonomous taxation.

5.2. Applicability of the Deductions Provided for in No. 2 of Article 90 of CIRC to the Tax Liability Resulting from Autonomous Taxation

For what has been stated, at least until Law No. 7-A/2016, of March 30, there was no legal provision that indicated any special assessment procedure for Corporate Income Tax resulting from autonomous taxation, so that, under penalty of unconstitutionality by violation of No. 3 of Article 103, for assessment not being carried out "in accordance with the law", the procedure provided for in Article 90 of CIRC had to be applied.

Since the Corporate Income Tax liability, whether resulting from taxable income or from autonomous taxation, is determined through the assessment procedure provided for in Article 90 of CIRC, the deductions provided for in No. 2 of the same article are potentially applicable to such liability, which refer to "the amount determined in accordance with the preceding number", without any distinction as to the nature of the types of Corporate Income Tax liability included in that amount.

For this reason, from the literal wording of No. 2 of Article 90 of CIRC, no obstacle results to the application of deductions to the part of the amount determined in accordance with No. 1 derived from autonomous taxation.

As stated in the decision of the Constitutional Court No. 267/2017, of 31-05-2017, delivered in case No. 466/16, "the autonomy of the taxation in question as to its base of incidence, as to the rates applicable and even as to the moment of payment, by itself, does not determine – neither logically nor legally – the irrelevance of the liability obtained with autonomous taxation within the framework of the determination of the liability of Corporate Income Tax itself – a question regulated, in general, in Article 90, No. 1, of CIRC –, in particular as to the integration of that in this latter and, consequently, as to the admissibility of consideration of the value of the said liability for the purpose of carrying out the legally provided deductions in Article 90, No. 2, of CIRC. Such question, in the absence of a specific rule to the contrary – such as that which, for example, came to be established in Article 88, No. 21, of CIRC – concerns the legislative configuration of Corporate Income Tax itself, including the relevance or irrelevance, for purposes of determining the final Corporate Income Tax liability, of the amounts paid as autonomous taxation".

In truth, only with Law No. 7-A/2016, of March 30, which added to Article 88 of CIRC a No. 21, did a provision providing that autonomous taxation should not be considered for purposes of the deductions referred to in No. 2 of Article 90 of CIRC come into existence.

5.3. Reform of the Arbitral Decision

The Claimant requested the declaration of illegality of the decision dismissing the request for official revision and, likewise, the illegality of the self-assessment of Corporate Income Tax, including autonomous taxation rates, of A..., relating to fiscal year 2012, with respect to the amounts of autonomous taxation rates in Corporate Income Tax of € 95,962.09, with its consequent annulment in this part due to undue exclusion of deductions from the tax liability, with all legal consequences, namely the reimbursement to the Claimant of this amount, plus compensatory interest at the legal rate calculated, until full reimbursement, from September 1, 2013.

Subsidiarily, should it be understood that Article 90 of the Corporate Income Tax Code does not apply to autonomous taxation, the Claimant requests that the illegality of the autonomous taxation assessment be declared (and consequently annulled) due to absence of legal basis for its implementation, with the consequent reimbursement of the same amount and the payment of compensatory interest calculated from the same date.

The question on which an appeal was made and a decision was issued by the Constitutional Court was that of the unconstitutionality of "Articles 135 of Law No. 7-A/2016, of March 30, and 233 of Law No. 114/2017, of December 29, to the extent that, in granting an interpretive nature to the amendments introduced in Article 88, No. 21, of the Corporate Income Tax Code (by Articles 133 of Law No. 7-A/2016, of March 30, and 231 of Law No. 114/2017, of December 29), they provide that tax benefits calculated within the scope of SIFIDE, in fiscal years prior to 2016, cannot be deducted from the tax liability resulting from the application of autonomous taxation rates in the context of Corporate Income Tax".

Law No. 7-A/2016, of March 30, added to Article 88 of CIRC a No. 21 with the following wording:

21 - The assessment of autonomous taxation in Corporate Income Tax is carried out in accordance with the provisions of Article 89 and is based on the values and rates resulting from the provisions of the preceding numbers, with no deductions being made from the overall amount calculated

Law No. 114/2017, of December 29, amended this provision which was worded as follows:

21 - The assessment of autonomous taxation in Corporate Income Tax is carried out in accordance with the provisions of Article 89 and is based on the values and rates resulting from the provisions of the preceding numbers, with no deductions being made from the overall amount calculated, even if such deductions result from special legislation.

The interpretation of Article 88, No. 21 (which currently corresponds to No. 22), of CIRC and its retroactive application to situations prior to 2016, with respect to "tax benefits calculated within the scope of SIFIDE, in fiscal years prior to 2016", has already been decided by the Constitutional Court in the aforementioned summary decision, which was confirmed by the Plenary decision, so that, having the decision become final, it must be considered established, by force of the provision in No. 2 of Article 205 of the Constitution, that "tax benefits calculated within the scope of SIFIDE, in fiscal years prior to 2016, cannot be deducted from the tax liability resulting from the application of autonomous taxation rates in the context of Corporate Income Tax".

Thus, the request for arbitral ruling on that issue is inadmissible.

5.4. Subsidiary Question

The subsidiary question raised by the Claimant is that "should it be understood that Article 90 of the Corporate Income Tax Code does not apply to autonomous taxation, the Claimant requests that the illegality of the autonomous taxation assessment be declared (and consequently annulled) due to absence of legal basis for its implementation, with the consequent reimbursement of the same amount and the payment of compensatory interest calculated from the same date".

The question of the applicability of Article 90 of CIRC to autonomous taxation was decided in the affirmative in points 4.1 and 4.2 of the arbitral decision of 05-03-2018, since it was understood that it was necessary to consider it in order to decide the question of "Deductibility of investment expenses provided for in SIFIDE from the Corporate Income Tax liability resulting from autonomous taxation", considered in point 4.3.

It was understood in the said arbitral decision that "both before and after Law No. 7-A/2016, of March 30, and Law No. 114/2017, of December 29, Article 90, No. 1, of CIRC is applicable to the assessment of autonomous taxation".

For this reason, the requirement on which the Claimant made the subsidiary question depend is not met, which is to understand that "Article 90 of the Corporate Income Tax Code does not apply to autonomous taxation".

Thus, the referred subsidiary question need not be considered here.

5.5. Reimbursement of Amounts Paid and Compensatory Interest

In light of what was decided by the Constitutional Court, the request for arbitral ruling must be judged inadmissible, so that, with the challenged assessment remaining in the legal order, there is no basis for reimbursement, nor for recognition of the right to compensatory interest, which depends on the existence of undue payment (Article 43, No. 1, of the General Tax Law).

6. RESPONSIBILITY FOR COSTS

With regard to responsibility for costs, it must be taken into account that the request for arbitral ruling was submitted on 12-08-2017, after the Constitutional Court, in decision No. 267/2017, of 31-05-2017, had declared "unconstitutional, by violation of the prohibition on the creation of taxes with a retroactive nature established in Article 103, No. 3, of the Constitution, the provision of Article 135 of Law No. 7-A/2016, of March 30, to the extent that, due to the effect of the merely interpretive character attributed to it, it provides that the provision of Article 88, No. 21, second part, of the Corporate Income Tax Code – a number added by Article 133 of the said Law – according to which, from the overall amount resulting from autonomous taxation assessed in a given year in the context of Corporate Income Tax, the values paid as special payment on account in that same year cannot be deducted, applies to fiscal years prior to 2016", a decision which was confirmed, as to the inadmissibility of interpretive rules in tax matters, by the Constitutional Court decision No. 395/2017, of 12-07-2017 (and, after the request for arbitral ruling had been submitted, confirmed in other Constitutional Court decisions, such as No. 644/2017, 92/2018, 107/2018 and 52/2019).

That is to say, although, as stated in the summary decision of the Constitutional Court, one could understand that there was a "floating world of arbitral case law" on the essential question that is the subject of the proceeding (which is normal when one takes into account that the decisions were delivered by many tens of Arbitrators), which prevented taxpayers from establishing consistent expectations of success of their claims, there is also detected a "floating world" in constitutional case law (despite the small number of Judges that comprise it), since the case law of those decisions No. 267/2017 and 395/2017 (and others that were indicated) is absolutely contrary to that which was adopted in the summary decision issued in the case of these proceedings.

For this reason, one is facing a situation in which there has been a reversal of settled Constitutional Court case law on the admissibility of interpretive laws in tax matters, for purposes of paragraph b) of No. 2 of Article 536 of the Code of Civil Procedure, subsidiarily applicable by force of the provision in Article 29, No. 1, paragraph e), of RJAT.

Therefore, since the Claimant's claim was well-founded in light of the applicable legal regime when the request for arbitral ruling was submitted, in the interpretation established by the Constitutional Court, and ceased to be so due to a reversal of case law, there is a situation that can be framed in No. 1 of Article 536 of the Code of Civil Procedure, which requires the allocation of costs in equal parts.

7. DECISION

In accordance with the foregoing, this Arbitral Tribunal agrees:

– To judge the request for arbitral ruling completely inadmissible;

– To absolve the Tax and Customs Authority from the claims;

– To condemn the Claimant to pay 50% of the costs of the proceeding;

– To condemn the Tax and Customs Authority to pay 50% of the costs of the proceeding.

8. VALUE OF THE PROCEEDING

In accordance with the provisions of Article 296, No. 1, of the Code of Civil Procedure and Article 97-A, No. 1, paragraph a), of the Code of Tax Procedure and Process and No. 3, No. 2, of the Regulation of Costs in Tax Arbitration Proceedings, the value of the proceeding is set at € 95,962.09.

9. COSTS

In accordance with Article 22, No. 4, of RJAT, the amount of costs is set at € 2,754.00, in accordance with Table I attached to the Regulation of Costs in Tax Arbitration Proceedings.

Lisbon, 10-07-2023

The Arbitrators

(Jorge Lopes de Sousa)

(A. Sérgio de Matos)

(José Nunes Barata)

CAAD: Tax Arbitration

Case No.: 474/2017-T

Subject Matter: Corporate Income Tax - Autonomous taxation – SIFIDE - Tax benefit - Deduction from the tax liability.

Replaced by the arbitral decision of July 10, 2023.