CAAD Rules SIFIDE, RFAI & CFEI Tax Credits Can Offset IRC Autonomous Taxation (490/2017-T)

ARBITRAL DECISION

The arbitrators José Pedro Carvalho (arbitrator president), José Joaquim Monteiro Sampaio e Nora and Luís Menezes Leitão, appointed as arbitrators at the Administrative Arbitration Centre, to form the Arbitral Tribunal agree as follows:

I. Report

1. On 1 September 2017, the company A… – S.G.P.S., S.A. filed a request for constitution of the collective arbitral tribunal in accordance with the combined provisions of articles 2 and 10 of Decree-Law no. 10/2011 of 20 January (Legal Regime for Arbitration in Tax Matters, hereinafter referred to only as RJAT), with a view to the declaration of illegality of the self-assessment of Corporate Income Tax (IRC), including autonomous taxation rates in IRC of €104,369.01, of the B… SGPS fiscal group, relating to the fiscal year 2015.

2. Pursuant to no. 2 of article 6 of RJAT, the Deontological Council of the Arbitration Centre appointed the arbitrators herein signing, notifying the parties.

3. The tribunal is regularly constituted to consider and decide the matter of the case.

4. The allegations that support the request for arbitral pronouncement by the Claimant are, in summary, as follows:

4.1. The Claimant delivered on 30 May 2016 the income statement Form 22 of IRC relating to fiscal year 2015 of its Fiscal Group, having determined an amount of autonomous taxation in IRC of €104,369.01.

4.2. It happens that, in what is at issue here, in the calculation of tax resulting from the application of autonomous taxation rates in IRC the tax authority's computer system reveals anomalies embodied in the flagging of divergences ("errors") that prevent the Claimant from entering the value relating to the said autonomous taxation rates in IRC, deducted within the scope of the IRC collection resulting from the application of these rates, nor the amounts of tax benefit recognized to companies of the fiscal group under SIFIDE, in the form of an IRC collection tax credit deductible to the IRC collection, (ii) nor the amounts of tax benefit recognized to companies of the fiscal group under RFAI, (iii) nor the amounts of tax benefit recognized to companies of the fiscal group under the Extraordinary Tax Credit for Investment (CFEI), which resulted in an excess tax paid by reference to the fiscal year 2015 at issue here.

4.3. The amount of SIFIDE, allocated/obtained, available for use at the end of fiscal year 2015 amounted to €1,693,653.38.

4.4. On the other hand, under RFAI there remains an accumulated amount to be deducted from the IRC collection that amounted in fiscal year 2015 to €1,505,057.48.

4.5. The amount of CFEI available in fiscal year 2015 amounted in turn to a total of €158,540.36.

4.6. In summary, the fiscal group has IRC credits for deduction from its respective collection in an amount far superior to the collection of autonomous taxation in IRC of fiscal year 2015, this collection which, as mentioned above, amounted to €104,369.01, and this deduction (which the tax authority's computer system does not allow) should be made starting with tax benefits acquired longest ago, followed by the order of deduction provided for in the law.

4.7. It is to be noted that the tax authority has not determined nor did it determine the taxable profit of the fiscal group B… SGPS and respective companies by indirect methods: it was determined in normal terms, via submission of form 22.

4.8. Furthermore, the companies making up the fiscal group at the origin of SIFIDE, RFAI and CFEI are not and were not then entities owing the State and social security any taxes or contributions.

4.9. It happens that with respect to tax resulting from the application of autonomous taxation rates in IRC, the tax authority's computer system prevents the Claimant from entering the value relating to the said autonomous taxation rates in IRC, purged, i.e., deducted, within the scope of the IRC collection resulting from the application of these rates, from the amounts of tax benefit deduction from the IRC collection which are SIFIDE, RFAI and CFEI (starting with the oldest) for deduction from the IRC collection, which resulted in an excess tax paid by reference to the fiscal year 2015 at issue here.

4.10. The refusal by the tax authority, which has been observed, of these deductions of SIFIDE, RFAI and CFEI from the collection of autonomous taxation in IRC is all the more surprising in that recently the tax authority took a position on this matter having only excluded the deduction from the collection of autonomous taxation in IRC of tax credits for international double taxation, which is contradicted now by this decision of the gracious claim presented by A… SGPS.

4.11. Now, given the overwhelming arbitral jurisprudence that today qualifies autonomous taxation as IRC, the Claimant absolutely sees nothing in the law that precludes the deduction of these IRC credits for SIFIDE, for RFAI and for CFEI, also to the part of the IRC collection produced by autonomous taxation.

4.12. In this respect, it is also important to highlight that both by reference to fiscal year 2012, and by joint reference to fiscal years 2013 and 2014, the fiscal group (which in 2012 was led by the company C… SGPS) obtained in the context of two processes entirely similar to the present one, allowance as regards the deduction of tax benefits from the collection of autonomous taxation (arbitral cases nos. 5/2016-T and 578/2016-T).

4.13. The benefits relating to SIFIDE and RFAI thus suffer reductions (through use against the collection of autonomous taxation of 2012 and 2013/14) in the amounts of €63,599.28 and €104,334.39, respectively, as a result of this favorable outcome regarding fiscal years 2012 and 2013/14, it being important to note that, even so, the remaining benefits for deduction in fiscal year 2015, will continue to far exceed the amounts necessary for the respective deductions to the autonomous taxation determined in the said fiscal years.

4.14. In the same way that jurisprudence has understood, in an almost unanimous manner, that the IRC collection provided for in (in force until 2013) article 45, no. 1, paragraph a), of the IRC Code, comprises, without need for any additional specification, the collection of autonomous taxation in IRC if one must also understand that the IRC collection provided for in the same Code a few meters further on (article 90, no. 1, and no. 2, paragraph c), of the IRC Code, in the numbering in force since 2014) also encompasses the collection of autonomous taxation in IRC.

4.15. Whence the denial of the deduction of SIFIDE, CFEI and RFAI from the IRC collection of autonomous taxation violates paragraph c) of no. 2 of article 90 of the IRC Code (prior to 2014 and until 2010, paragraph b), and prior to 2010 article 83 of the same Code).

4.16. In effect, if it is a fact that the very SIFIDE regime with respect to the provision of tax benefit of deduction from the IRC collection mentions "the amount determined in accordance with article 90 of the IRC Code", it is to be emphasized that the regime of the Tax Regime for Investment Support (RFAI) does exactly the same thing in its article 3, no. 1, paragraph a), and the same applies to the regime of the Extraordinary Tax Credit for Investment (CFEI), in its article 3, no. 5, paragraph a).

4.17. In effect, even if the provision of tax credit is expressed in terms of "deduction from the IRC collection", as opposed to "deduction from the amount determined in accordance with article 90 of the CIRC", the final practical result is the same, because the amount determined in accordance with article 90 of the IRC Code is nothing other than IRC.

4.18. Whence, being understood by all those who matter (tax authority and courts) that autonomous taxation is IRC (and it is because it is that article 90 of the IRC Code applies to it, directed exclusively to IRC and to no other tax), it is immaterial whether the benefit provision refers to what is determined in application of article 90 of the IRC Code (and therefore indirectly, but necessarily, to IRC), as is the case with SIFIDE, RFAI and CFEI (in part).

4.19. Arbitral jurisprudence based its conclusion on the thesis that autonomous taxation with respect, at least, to expenses with vehicles, travel allowances and representation expenses, are a substitute for (or complement to) the non-deductibility of costs in IRC, whence the nature of IRC of the collection produced by these autonomous taxation.

4.20. And it is on the basis of this conclusion, thus reasoned, that jurisprudence concluded that because it is IRC collection the collection produced by these autonomous taxation was, for that very reason, subject to the regime provided for the IRC collection in paragraph a) of no. 1 of article 45 of the IRC Code (in the wording in force until 2013): non-deductibility of this collection in the operation of calculating taxable profit.

4.21. For the very same reason, the Claimant requests that, consistently, it be concluded that the IRC collection constituted by these autonomous taxation be available, on par with the rest of the IRC collection, in the operation of deductions from collection provided for in article 90 of the IRC Code, among which are found the deduction of SIFIDE, CFEI and RFAI.

4.22. If the tax authority and the courts have had no doubts that where one spoke of IRC in article 45 of the IRC Code (in the wording in force until 2013), more specifically in paragraph a) of its number 1, one was also speaking of autonomous taxation (because these are also IRC), it makes no sense that the same expression in the same Code has been understood by the tax authority in a divergent manner.

4.23. Regardless of whether one agrees or not with the epithet of "combating tax evasion" that the tax authority has been indiscriminately associating with autonomous taxation, such association should in no way modify the conclusion that the collection of this part of IRC directed (in this thesis) against abuses is available for purposes of IRC tax benefits that operate, precisely, at the level of collection, or for purposes of special payment on account.

4.24. In effect, nowhere in the law is the exclusion of these tax benefits or of special payment on account the collection or parts of the IRC collection resulting from legislative measures to combat tax evasion.

4.25. In a scenario where one understands it is not possible to effect the deduction of tax benefits to the amounts owing by way of autonomous taxation, then the Claimant requests, in the alternative, that the self-assessment of the taxation period 2015 of the Claimant and respective Fiscal Group be annulled, in the portion corresponding to autonomous taxation, on the ground that the same have been assessed and collected without legal basis for the purpose.

4.26. Jurisprudence understood in an overwhelming manner that when the IRC Code makes reference to IRC collection, nothing more needs to be there for it to be imposed the legal conclusion that such provision also applies to the collection of autonomous taxation.

4.27. And on the basis of the same premise ("the tax 'autonomous taxation' is IRC") the reference to IRC contained in article 89 and following of the IRC Code constituted the legal basis used by all, starting with the tax authority itself, for autonomous taxation to be assessed.

4.28. In that article 88 of the IRC Code only refers to the basis for assessment and the rates to be applied so as to determine the IRC collection by autonomous taxation, in exactly the same way as article 87 does with respect to the IRC collection resulting from taxable profit determined.

4.29. In the absence of application of those provisions directed to IRC, articles 89 and 90 (and following) of the IRC Code, also to autonomous taxation, we would be faced with an insurmountable legal gap that can neither be filled by jurisprudence nor by doctrine, because, as several arbitral decision-makers already referred to above have also rightly seen, we are faced with a matter reserved to law, in accordance with article 103, no. 3, of the Constitution.

4.30. With the State Budget Law for 2016 (Law no. 7-A/2016 of 30 March, hereinafter referred to as "2016 Budget Law"), Parliament intervened in this matter at the request of the tax authority, and reiterated that article 89 of the IRC Code also applied to the assessment of autonomous taxation (part 1 of the new no. 21 of article 88 of the IRC Code), but inexplicably did not expressly reiterate that article 90 of the IRC Code also applies to the assessment of autonomous taxation.

4.31. Against the current with what resulted from the peaceful case law qualification and by the tax authority, of autonomous taxation collection as IRC collection, the legislator in the 2016 Budget Law opted to exclude the application of part of the provision of article 90 of the IRC Code for the IRC collection to the collection of autonomous taxation in IRC (part 2 of the new no. 21 of article 88 of the IRC Code).

4.32. All of this is found in the new no. 21, added by article 133 of the 2016 Budget Law to article 88 of the IRC Code.

4.33. It can and should be concluded that article 135 of the 2016 Budget Law refers only to part 1 of the new no. 21 of article 88 of the IRC Code, an interpretation which by the negative is authorized by the manifest incorrectness of the wording of that article 135 (as developed above), revealing the little care the legislator had in being precise, and which by the positive is authorized by the presumption that the legislator adopted the most correct solutions and by the directive of interpretation in accordance with the Constitution.

4.34. Furthermore, as developed above, the attribution of interpretative nature to a fiscal norm does not by itself trigger the application of the regime for application of laws over time provided for in the Civil Code.

4.35. Concretizing, and summarizing, the regime for application of laws over time provided for in the Civil Code (where article 13 rightfully belongs), does not apply with respect to matters that have a specific regime for that purpose, in obedience to distinct principles, such is the case (currently) of taxes: cfr. article 12 of the General Tax Law and article 103, no. 3, of the Constitution.

4.36. In any case article 13 of the Civil Code and the prohibition of retroactivity contained therein only applies to interpretative norms, as opposed to false interpretative norms, and part 2 of the new no. 21 of article 88 of the IRC Code is, assuming that it was really the legislator's intention to attribute interpretative character to it, a false interpretative norm.

4.37. By logical impossibility and antinomy the attribution of interpretative nature to the new no. 21 of article 88 of the IRC Code, by article 135 of the 2016 Budget Law, can only be interpreted as intending to refer to part 1, and not to part 2, of the said no. 21.

4.38. If, notwithstanding all the reasons listed above, it is still understood that article 135 of the 2016 Budget Law (Law no. 7-A/2016 of 30 March) attributed interpretative nature also to part 2 of the new no. 21 of article 88 of the IRC Code, that is, also to the normative segment "without any deductions being made to the global amount [of autonomous taxation in IRC] determined", introduced by the same 2016 Budget Law (by its article 133), then we would be faced with a material unconstitutionality of the said article 135 of the 2016 Budget Law, by violation of the prohibition of retroactivity in tax matters provided for in article 103, no. 3 of the Constitution, whether or not the conclusion has been reached (and it is understood that it has not), that we are faced with a materially interpretative law, and by violation, also, of the principle of separation of powers and the principle of independence of the judiciary.

4.39. Violation, therefore, also, of article 2 (democratic rule of law state, and separation and interdependence of powers, and as to this latter aspect in the case at hand is at issue the perspective of interdependence – and consequently negation of excesses and occupation of space that does not belong to it – of legislative political power in relation to judicial power), of article 111, no. 1 (separation and interdependence of bodies of sovereignty, which is also a material limit of revision – article 288, paragraph j), of the Constitution), and of article 203 (independence of the courts, another material limit of revision – article 288, paragraph m), of the Constitution), all of the Constitution.

4.40. The Claimant paid tax in an amount superior to that legally due, so, the illegality of the (self-)assessment declared in the portion here petitioned, the Claimant has the right not only to the respective reimbursement, but, also, under article 43 of the General Tax Law, to indemnity interest.

4.41. This interest calculated on €104,369.01 which should have been reimbursed by 31 August 2016, counted from 1 September 2016 until full reimbursement of this amount of tax (autonomous taxation in IRC) unduly paid.

4.42. Furthermore, the error from which the (self-)assessment against which complaint is made suffers results from error of the Services on the assumptions of law that conditionally affected the completion of the self-assessment declaration (Form 22), as mentioned above, further aggravated by the rejection of the gracious claim.

4.43. In these circumstances – error attributable to the Services – recognition should be given to the Claimant of the right to indemnification for the losses resulting from the Claimant's payment of excess tax in the amount mentioned above.

1. In turn, the Respondent Tax and Customs Authority presented a response, in which it defended itself, in summary, in the following terms:

5.1. Autonomous taxation, backed by what is supported in the learned arbitral jurisprudence and in the argument of the tax authority, although it is a collection in IRC, is distinguished by the fact that it is levied not on profits but, rather, on expenses incurred by the taxpayer or by third parties who have relations with it.

5.2. Given its teleology, autonomous taxation, as an anti-abuse fiscal instrument, would be emptied of any practical tax content in the event of acceptance of the thesis defended by the Claimant – which would only be conceded by mere academic exercise.

5.3. Under penalty of subverting the purposes of autonomous taxation, by conferring upon it, with this interpretation, a null effect, in accordance with what the tax authority has exhaustively fought for.

5.4. Now, the law and its interpretation do not accord with mere appearances or evaluative judgments constructed around the conveniences of the theses of those who defend them, without regard being had to the hermeneutics of the teleology of the normative at hand.

5.5. Again, let it be reiterated, that the admissibility of an interpretation of this kind would allow an inadmissible limitation of the freedom of configuration of the legislator's initiative, which in creating autonomous taxation did so with a purpose that belongs to the plane of evidence, i.e.,

a) the fight against tax evasion;

b) the intention to tax third-party income whose income increase, otherwise, would be removed from taxation;

c) the penalization, by way of tax, of the payment of income considered excessive in light of the economic crisis situation of which, even today, there are remnants.

5.6. For which reason, allowing interpretative fantasies that would result in the admissibility of deduction of tax benefits (or special payment on account, cfr. already decided exhaustively by the arbitral tribunal, among others in cases nos. 113/2015-T; 535/2015-T; 639/2015-T; 535/2015-T; 670/2015-T; 722/2015-T; 736/2015-T; 745/2015-T; 746/2015-T; 750/2015-T; 751/2015-T; 752/2015-T; 767/2015-T; 769/2015-T; 780/2015-T; 781/2015-T; 784/2015-T; 784/2015-T; 174/2016-T all of them corroborating the thesis fought for by the Respondent), to the collection of autonomous taxation – similar to what the law allows for IRC collection – as the Claimant claims, inevitably amputates autonomous taxation in what were the principles and purposes on which its creation by the legislator was based.

5.7. Accordingly, the claims made rest on a construction with no legal support whatsoever, relying on some forced attempt at interpretation that abrogates the existing normative, terms in which the arguments wielded by the Claimant fail entirely.

5.8. For which reason, respectfully considering the learned arbitral jurisprudence invoked by the Claimant, to interpret the normative in force for autonomous taxation in the sense proposed in the fallacy accepted and defended by it, is nothing more than, let it be reiterated to satiety, an abrogating interpretation disguised as a legislative impulse, and may constitute, in the final analysis, a violation of the principle of separation of powers.

5.9. The State Budget for 2016 added number 21 to article 88 of the CIRC, attributing to it an interpretative character, so that if there were doubts, the same would be dispelled by that normative.

5.10. In effect, as to the interpretative effect conferred by article 135 contained in the State Budget Law for 2016, let us appeal to the good jurisprudence uttered, among countless others, in arbitral cases nos. 722/2015 – T CAAD; 727/2015 – T CAAD; 785/2016 T CAAD and, as well, in the dissenting vote handed down by the distinguished Councillor Fernanda Maçãs in case no. 5/2016 T CAAD.

5.11. Given this, it follows that the very interpretative effect conferred by that Law would be, per se, unnecessary, because, as has been demonstrated, no other interpretation would be capable of being carried out having regard to the teleology and legal hermeneutics of the norms at hand, which gives total legality, constitutionality and, above all, authenticity to that interpretative character.

5.12. Also to be cited is the equally improcedent argument, which has continued to be wielded (V., Decision in case 740/2015-T) to the effect that referring the content of the expression, contained in the regulation of SIFIDE II approved by art. 133 of Law no. 55-A/2010 of 31 December (no. 1 of Art. 4): «… amount of IRC collection determined in accordance with paragraph a) of no. 1 of article 90 of the IRC Code and up to its extent…», only to the IRC collection determined on the basis of the tax matter that originates from profit would mean making a restrictive interpretation of the norms on tax benefits and that art. 10 of the Tax Benefits Statute does not explicitly provide for the possibility of restrictive interpretation.

5.13. Well, although art. 10 of the Tax Benefits Statute admits of extensive interpretation and prohibits analogy in the interpretation of norms on tax benefits, it does not prohibit recourse to restrictive interpretation and, for that very reason, in objectively justified situations its use is not precluded.

5.14. And, precisely, in this case, restrictive interpretation would even find support and full justification in the preservation of the objectives and philosophy underlying tax benefits for investment in general and SIFIDE in particular, given the perverse effects that can be achieved with the possibility of deduction of the tax credit to collections of autonomous taxation in IRC.

5.15. Restrictive interpretation being permitted whenever there exist weighty reasons to conclude that the meaning and scope that would result from considering that the deductions referred to in no. 2 of art. 90, where SIFIDE is included, could be made to the sum of collections of autonomous taxation, determined in accordance with paragraph a) of no. 1 of the same article, would betray the ratio legis or that it becomes necessary to reconcile the conflicting interests that two norms aim to protect.

5.16. The argument developed in the Arbitral Decision handed down in case no. 740/2015-T is equally refuted, according to which the interpretative norm of no. 21 of art. 88 of the IRC Code, in the part in which it refers to "made any deductions to the global amount determined", "despite the purported interpretative nature attributed to it" cannot be relevant as to the matter of deduction of SIFIDE because such would constitute a restrictive interpretation of art. 4 of its regime contained in a special provision of a separate statute, as is that of SIFIDE II, and that "in the absence of an unequivocal intention to the contrary, the rule applies that the general law does not alter the special law (article 7, no. 3, of the Civil Code)…", first, because the norm (art. 135 of Law no. 7-A/2016 of 30 March) that attributes interpretative character merely fixes an understanding that already had support in the letter and in the ratio of the law and, second, the norms that regulate tax benefits have an exceptional nature and not a special nature.

5.17. The argument is also to be rejected that the application of the provision of no. 21 of art. 88 to SIFIDE II would not be compatible with the constitutional principle of protection of confidence, to the extent that this tax benefit instrument was aimed at encouraging IRC taxpayers to make investments in the period between 01-01-2011 and 31-12-2015, the benefit obtained the counterpart of the desired and encouraged behavior, and it is certain that the legislator merely accepted, clarifying it, an understanding that always had application by the generality of taxpayers and that was extracted from the existing legal provisions.

5.18. Thus it would be, indeed, if the provision of no. 21 of art. 88 had an innovative character, which as has been seen it does not have and, moreover, no taxpayer, in the period mentioned above had the expectation of deducting the SIFIDE II tax credit from the amount of collections of autonomous taxation, because, as the Claimant rightly states, that expectation resulted from recent arbitral decisions on autonomous taxation that led it to file a gracious challenge of the self-assessment.

5.19. Therefore, one cannot argue that it can be concluded that the norm of no. 21 of art. 88, in the part in which it clarifies the impossibility of any deductions being made to the amount of collections of autonomous taxation, has the purpose of fixing the understanding that always prevailed as to deductions from the IRC collection and which was only brought into question by some recent arbitral jurisprudence.

5.20. Such an extensive interpretation (extremely extensive, in fact) of the norms that establish tax benefits does not seem to us to be able to lead to such assertion, i.e., to the deduction of the mentioned tax benefits from the collection of Autonomous Taxation.

5.21. Furthermore, the favorable fiscal effects that SIFIDE II promised to taxpayers are directed as in any investment incentive instrument, aimed at improving its performance, reflected through profits and not maximizing the realization of expenses subject to autonomous taxation.

5.22. Now, pushing the argument defended in those decisions to the limit, it could lead to the absurdity that SIFIDE encourages not the achievement of profit but, rather, the maximization of the realization of expenses (not documented or relating to transactions that configure practices of tax evasion), diluting its notoriously anti-abuse character.

5.23. For which reason, arriving here, let it be reiterated that the tax segments are distinct, although inserted in the same Code, and for that reason autonomous taxation is interwoven in IRC, but does not merge with it, better, does not dilute in its purposes.

5.24. It would not be logical to permit the deduction of the value determined by autonomous taxation to taxable profit - given its dissuasive effect in terms of combating tax evasion, then, a similar omission of sense would exist if, in theory, it were permitted to the Claimant to deduct from its collection (of taxation) the amounts paid by SIFIDE.

5.25. That is, because also the subtraction of the SIFIDE value as a tax benefit from the collection of those taxation would result in the reduction, or even, in the elimination of tax to be paid by taxpayers.

5.26. Which, it should be said, is at odds with the spirit of the Code, with that of the figure of autonomous taxation, with the spirit that supported its creation, as well as with the reasons why the same were introduced in the legal system and, as well, at odds with the purpose of attenuating (or even eliminating) the imbalances and inequalities existing between taxpayers.

5.27. However, in light of the foregoing, and to settle once and for all the divergent interpretations that have been made by jurisprudence, Law no. 114/2017 of 29 December (State Budget for 2018), in particular its art. 233, which amended no. 21 of art. 88 of the CIRC, reaffirming the interpretative nature of that provision, in accordance with article 233 of the aforementioned Law.

1. On 15 January 2018, an arbitral order was handed down, in the following terms:

"Within 10 days, the Claimant should inform whether, given the positions of the parties assumed in the pleadings, it maintains interest in questioning the witness rolled by it, or if it waives the same.

Maintaining the Claimant's interest in such questioning, it should, in the same period, indicate which concrete points of the initial request will be subject to that type of evidence."

1. The Claimant waived the questioning of the witnesses rolled by it.

2. On 25 January 2018, an arbitral order was handed down, dispensing with the holding of the meeting to which article 18 of RJAT alludes and inviting the parties to present written submissions.

3. The parties presented written submissions, where they reaffirmed the positions alleged.

4. On 12 March 2018, an arbitral order was handed down, extending the date initially set for the decision for purposes of the final part of article 18/2 of RJAT, until the end of the period set in article 21/1, also of RJAT.

II – Proven Facts

The following are the facts proven with interest for the decision of the case.

1. On 30 May 2016, the Claimant herein proceeded to submit the income statement Form 22 of Corporate Income Tax ("IRC") of its Fiscal Group relating to fiscal year 2015, having proceeded to the self-assessment of autonomous taxation in IRC in that same year 2015, in the amount of €104,369.01.

2. Following the submission of a gracious claim against the said self-assessment relating to fiscal year 2015, the Claimant was notified of its rejection on 12 June 2017, by order of the Chief of the Tax Justice Division – Litigation, of the Finance Department of … (acting under subdelegation of powers) dated 9 June 2017.

3. The Claimant sought administrative review, without success.

4. The amount of SIFIDE, allocated/obtained, available for use at the end of fiscal year 2015 amounted to €1,693,653.38.

5. Under RFAI there remains an accumulated amount to be deducted from the IRC collection that amounted in fiscal year 2015 to €1,505,057.48.

6. The amount of CFEI available in fiscal year 2015 amounted in turn to a total of €158,540.36.

7. The companies making up the fiscal group at the origin of SIFIDE, RFAI and CFEI are not and were not then entities owing the State and social security any taxes or contributions.

III – Unproven Facts

No unproven facts were found with interest for the decision of the case.

IV – On the Law

The following are the issues to be considered in this case:

A) On the illegality of the declaration of self-assessment of IRS and respective autonomous taxation rates

B) On the right to indemnity interest

A) ON THE ILLEGALITY OF THE DECLARATION OF SELF-ASSESSMENT OF IRS AND RESPECTIVE AUTONOMOUS TAXATION RATES

It is at issue whether SIFIDE could be deducted.

Article 90 of the CIRC states, in the wording in force at the date:

1 — The assessment of IRC is carried out in the following terms:

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

b) In the absence of submission of the declaration referred to in article 120, the assessment is made by 30 November of the year following that to which it relates or, in the case provided for in no. 2 of that article, until the end of the 6th month following the end of the deadline for submission of the declaration mentioned therein, and is based on the annual amount of the minimum monthly remuneration or, when higher, the totality of the taxable matter of the nearest fiscal year which is found to be determined;

c) In the absence of assessment in the terms of the previous paragraphs, it is based on the elements available to the tax administration.

2 — To the amount determined in accordance with the preceding number the following deductions are made, 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 special payment on account referred to in article 106;

e) That relating to withholding at source not capable of compensation or reimbursement under applicable legislation.

3 — (Revoked).

4 — To the amount determined in accordance with no. 1, relating to the entities mentioned in no. 4 of article 120, only the deduction relating to withholding at source is to be made when such has the nature of a tax on account of IRC.

5 — The deductions referred to in no. 2 relating to entities to which the tax transparency 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 on the basis of the taxable matter that has taken into account the imputation provided for in the same article.

6 — Where the special regime for taxation of groups of companies is applicable, the deductions referred to in no. 2 relating to each of the companies are made to the amount determined relating to the group, in accordance with no. 1.

7 — (Revoked by Law no. 82-C/2014 of 31 December)

8 — Regarding taxpayers covered by the simplified regime for determining taxable matter, to the amount determined in accordance with no. 1, only the deductions provided for in paragraphs a) and e) of no. 2 are to be made.

9 — From the deductions made in accordance with paragraphs a) to d) of no. 2, no negative value can result.

10 — To the amount determined in accordance with paragraphs b) and c) of no. 1 only are made the deductions of which the tax administration has knowledge and which can be made in accordance with nos. 2 to 4.

11 — In cases where the provision of paragraph b) of no. 2 of article 79 is applicable, assessments are made annually on the basis of taxable matter determined on a provisional basis, and, given the assessment corresponding to the taxable matter relating to the entire assessment period, the difference found is to be collected or cancelled.

12 — The assessment provided for in no. 1 can be corrected, if necessary, within the period referred to in article 101, the differences found being then collected or cancelled.

The System of Incentives for Research and Business Development II (SIFIDE II), approved by article 133 of Law no. 55-A/2010 of 31 December, establishes the following, in its articles 4 and 5:

Article 4

Scope of deduction

1 - IRC taxpayers resident in Portuguese territory who exercise, as main activity or otherwise, an activity of agricultural, industrial, commercial or service nature and non-residents with permanent establishment in that territory may deduct to the amount determined in accordance with article 90 of the IRC Code, and up to its extent, the value corresponding to expenses with research and development, in the part that has not been subject to financial assistance from the State with no return, made in the taxation periods of 1 January 2011 to 31 December 2015, in a double percentage:

a) Base rate - 32.5% of expenses made in that period;

b) Incremental rate - 50% of the increase in expenses made in that period compared to the simple arithmetic average of the two previous fiscal years, up to the limit of (euro) 1,500,000.

2 - For IRC taxpayers that are SMEs in accordance with the definition contained in article 2 of Decree-Law no. 372/2007 of 6 November, which have not yet completed two fiscal years and which have not benefited from the incremental rate set in paragraph b) of the preceding number, an increase of 10% applies to the base rate set in paragraph a) of the preceding number.

3 - The deduction is made, in accordance with article 90 of the IRC Code, in the assessment relating to the taxation period mentioned in the preceding number.

4 - Expenses that, due to insufficient collection, cannot be deducted in the fiscal year in which they were incurred, may be deducted up to the sixth immediate following fiscal year.

5 - For purposes of the foregoing, when in the year of commencement of enjoyment of the benefit there is a change in the taxation period, the annual period that begins in that year should be considered.

6 - The incremental rate provided for in paragraph b) of no. 1 is increased by 20 percentage points for expenses relating to the hiring of doctorates by companies for research and development activities, the limit provided for in the same paragraph becoming (euro) 1,800,000.

7 - To taxpayers that reorganize, as a result of concentration acts as defined in article 73 of the IRC Code, the provisions of no. 3 of article 15 of the Tax Benefits Statute apply.

Article 5

Conditions

Only taxpayers that cumulatively meet the following conditions may benefit from the deduction referred to in article 4:

a) Its taxable profit is not determined by indirect methods;

b) They are not owing the State and social security any taxes or contributions, or have their payment duly assured.

Article 3 of Law 49/2013 of 16 July (CFEI) states:

Article 3

Tax Incentive

1 - The tax benefit to be granted to the taxpayers referred to in the preceding article corresponds to a deduction from the IRC collection in the amount of 20% of the expenses of investment in assets used in the operation, which are made between 1 June 2013 and 31 December 2013.

2 - For purposes of the deduction provided for in the preceding number, the maximum amount of eligible investment expenses is 5,000,000.00 EUR, per taxpayer.

3 - The deduction provided for in the preceding numbers is made in the assessment of IRC relating to the taxation period that begins in 2013, up to 70% of the collection of this tax.

4 - In the case of taxpayers that adopt a taxation period not coinciding with the calendar year and with beginning after 1 June 2013, the relevant expenses for purposes of the deduction provided for in the preceding numbers are those made in eligible assets from the beginning of the said period until the end of the seventh following month.

5 - Where the special regime for taxation of groups of companies applies, the deduction provided for in no. 1:

a) Is made to the amount determined in accordance with paragraph a) of no. 1 of article 90 of the IRC Code, on the basis of the taxable matter of the group;

b) Is made up to 70% of the amount mentioned in the preceding paragraph and cannot exceed, in relation to each company and per each fiscal year, the limit of 70% of the collection that would be determined by the company that made the eligible expenses, had the special regime for taxation of groups of companies not applied.

6 - The amount that cannot be deducted under the preceding terms can be so under the same conditions, in the five following taxation periods.

7 - To taxpayers that reorganize, as a result of any operations provided for in article 73 of the IRC Code, the provisions of no. 3 of article 15 of the Tax Benefits Statute apply.

As provided in article 3 of the Tax Regime for Investment Support (approved by article 13 of Law 10/2009 of 10 March):

Article 3

Tax Incentives

1 - To IRC taxpayers resident in Portuguese territory or who have permanent establishment therein, who exercise as main activity a commercial, industrial or agricultural activity covered by no. 1 of the preceding article that make, in 2009, investments considered relevant, the following tax benefits are granted:

a) Deduction from the IRC collection, and up to 25% of the same, of the following amounts, for investments made in regions eligible for support within the scope of incentives with regional purpose:

i) 20% of the relevant investment, relating to the investment up to the amount of (euro) 5,000,000;

ii) 10% of the relevant investment, relating to investments of value superior to (euro) 5,000,000;

b) Exemption from municipal property tax, for a period up to five years, relating to real property in its ownership that constitute relevant investment;

c) Exemption from municipal tax on onerous transfers of real property relating to the acquisition of real property that constitute relevant investment;

d) Exemption from stamp duty relating to the acquisition of real property that constitute relevant investment.

(…)

Through the entry into force of Law no. 7-A/2016 of 30 March, number 21 was added to article 88 of the CIRC, which provides as follows:

"21 - The assessment of autonomous taxation in IRC is carried out in accordance with the terms provided for in article 89 and is based on the values and rates that result from the provision in the preceding numbers, with no deductions being made to the global amount determined."

For its part, art. 135 of the same Law established that "the wording given by the present law to no. 6 of article 51, to no. 15 of article 83, to no. 1 of article 84, to nos. 20 and 21 of article 88 and to no. 8 of article 117 of the IRC Code has an interpretative nature."

However, notwithstanding that it is a law that proclaimed itself as having an interpretative nature, its application to the specific case would imply the retroactive collection of taxes, which is prohibited by article 103, no. 3, of the Constitution of the Portuguese Republic. Indeed, pursuant to art. 13 of the CC, interpretative law is retroactive, applying to past facts (facta preterita) and only excepting already terminated disputes (causae finitae). Now, fiscal laws can only apply prospectively, given the constitutional establishment of the prohibition of retroactivity of fiscal law (art. 103, no. 3, of the Constitution). Art. 12, no. 1, of the General Tax Law therefore provides that "tax norms apply to facts occurring after their entry into force, and no retroactive taxes can be created."

It should also be noted, as to the application of this norm, what is stated in the Decision of CAAD no. 5/2016-T:

"Law no. 7-A/2016 of 30 March (Budget Law for 2016), added nos. 20 and 21 of article 88 to the CIRC, the legislator having recognized the interpretative nature of the norms contained therein.

No. 21 of article 88 of the CIRC, provides as follows:

«The assessment of autonomous taxation in IRC is carried out in accordance with the terms provided for in article 89 and is based on the values and rates that result from the provision in the preceding numbers, with no deductions being made to the global amount determined».

From the analysis of this norm we can draw the following conclusions:

i) It does not alter the legal regime of SIFIDE nor of RFAI;

ii) It does not have the purpose of authentic interpretation of norms contained in SIFIDE nor in RFAI;

iii) The provision contained in SIFIDE, of deductions "to the amount determined in accordance with Article 90 of the IRC Code" remains valid;

iv) The provision contained in RFAI, of deductions "from the IRC collection" remains valid;

v) The nature of "autonomous taxation rates" is not altered;

vi) The procedure and form of assessment are not altered;

vii) Deductions to the amount of autonomous taxation determined are now expressly prohibited, which does not prevent deductions from being made to the IRC collection (which includes the result of autonomous taxation) provided for in SIFIDE and RFAI.

(…)

Thus, the norm contained in no. 21 of article 88 of the CIRC, to which an interpretative nature was attributed, does not prevent the deduction from IRC collection (that is, from the entirety of the collection determined by application of article 90 of the CIRC) of amounts under SIFIDE and RFAI. In effect, the interpreter and applicator of law can disagree with the legislator's choices, what it cannot do is alter the legislative solutions adopted. Now the legislator refers in RFAI to the deduction "from the IRC collection" and in SIFIDE refers to the deduction "to the amount determined in accordance with Article 90 of the IRC Code", which, in both cases, is manifestly distinct from "deduction from the taxable matter of IRC". The legislator could, both in RFAI and in SIFIDE, have adopted this solution; the truth is that it did not, and it is not for the interpreter to correct the legislator's hand. As José de Oliveira Ascensão states, «[h]owever desirable an alteration of the normative system may appear, that alteration belongs to the sources of law, not to the interpreter. This captures the meaning of the source as it objectively presents itself at the present moment, not any other meaning antecedent to it. Weighty reasons of security and defense against arbitrariness ground this conclusion». Thus, for the deductions provided for in RFAI and SIFIDE to cease to be made from the IRC collection (to which autonomous taxation also contributes) the legislator, should it so wish, must alter the special legal regimes that provide for them."

Moreover, it should be noted that the possibility of deductions to the amount determined by way of autonomous taxation in IRC is defended by the majority of arbitral jurisprudence.

See, for example, the Decision of CAAD no. 784/2015-T:

"The statute approving SIFIDE does not state that the credits arising from it are deductible from any and all IRC collection, rather it defines the scope of the deduction alluding, in its no. 1 of article 4, «to the amount determined in accordance with article 90 of the IRC Code, and up to its extent». No. 3 of the same article 4 confirms that it is to the amount that is determined in accordance with article 90 of the CIRC that is relevant to concretize the deduction by stating that «the deduction is made, in accordance with article 90 of the IRC Code, in the assessment relating to the taxation period mentioned in the preceding number». Thus, by mere declarative interpretation, it is concluded that article 4, no. 1, of SIFIDE II, in establishing the deduction «to the amount determined in accordance with article 90 of the IRC Code, and up to its extent», implies the deduction to the amount of autonomous taxation that are determined in accordance with that article 90. The fact that article 5 of SIFIDE II excludes the benefit when taxable profit is determined by indirect methods and in autonomous taxation are included situations in which indirect taxation of profits is aimed at (namely, not giving relevance or discouraging facts capable of reducing them) has no relevance to this effect, because the concept of «indirect methods» has precise scope in tax law, which is concretized in article 90 of the General Tax Law (in addition to special norms), referring to means of determining taxable profit whose use is not provided for in calculating the taxable matter of autonomous taxation provided for in article 88 of the CIRC. On the other hand, if it is the need to make use of indirect methods that excludes the possibility of enjoying the benefit, one cannot justify that exclusion in relation to the collection of autonomous taxation, which is determined by direct methods. Furthermore, one cannot see, in the possible anti-abuse nature that some autonomous taxation assume, an explanation for its exclusion from the respective collection from the scope of deductibility of the SIFIDE II benefit, because there is no legal support for excluding deductibility from collection provided by corrections based on provisions of an indisputably anti-abuse nature, such as those relating to transfer pricing or undercapitalization. On the other hand, the fact that the deductibility of the SIFIDE II tax benefit is limited to the collection of article 90 of the CIRC, up to its extent, does not allow it to be concluded that the tax credit is only deductible if there is taxable profit, because what that fact requires is that there is IRC collection, which can exist even without taxable profit, in particular due to autonomous taxation. Thus, pointing to the literal content of article 4 of SIFIDE II to the effect that the deduction applies also to IRC collection derived from autonomous taxation determined in accordance with article 90 of the CIRC, only through a restrictive interpretation can the application of the tax benefit be excluded from IRC collection provided by autonomous taxation. The viability of a restrictive interpretation encounters, from the outset, an obstacle of a general nature, which is that the norms creating tax benefits have the nature of exceptional norms, as follows from the express content of article 2, no. 1, of the Tax Benefits Statute, so that, in the absence of a special rule, they should be interpreted in their precise terms, as is settled jurisprudence. In the case of tax benefits, extensive interpretation is explicitly provided for (article 10 of the Tax Benefits Statute), but not restrictive interpretation, so that, as a rule, the tax benefit should not be interpreted with lesser amplitude than that which, in a declarative interpretation, results from the content of the norm that provides for it. In any case, restrictive interpretation is only justified when «the interpreter reaches the conclusion that the legislator adopted text that betrays his thought, to the extent that it says more than what he intended to say. Also here the ratio legis will have a decisive word. The interpreter should not be drawn by the apparent scope of the text, but should restrict this so as to make it compatible with legislative thought, that is, with that ratio. The argument on which this type of interpretation usually rests is thus expressed: cessante ratione legis cessat eius dispositio (where the reason for the law ends its scope ends)». As basis for restrictive interpretation one can venture that some autonomous taxation aim to discourage certain taxpayer behavior capable of affecting taxable profit, and consequently reducing tax revenue, and its dissuasive force will be attenuated with the possibility of the respective collection being subject to deductions. But, the discouragement of those behaviors is justified only by concerns for protection of tax revenue and the tax benefits granted, by definition, are «measures of an exceptional character instituted for protection of relevant extrafiscal public interests that are superior to those of the taxation itself that they prevent» (article 2, no. 1, of the Tax Benefits Statute). And, in the case of tax benefits of SIFIDE II, the reasons of an extrafiscal nature that justify their overriding of tax revenue are, from the legislative perspective, of enormous importance, as can be inferred from the grounds in the Report of the State Budget for 2011:

II.2.2.4.4. System of Incentives for Research and Business Development II (SIFIDE)

Given that one of the strengths of competitiveness in Portugal passes through investment in technological capacity, in scientific employment and in conditions of affirmation in European space, the Proposed State Budget for 2011 proposes to renew SIFIDE (System of Incentives for Research and Business Development), now in the SIFIDE II version, to be in force in the periods 2011 to 2015, enabling the deduction from the IRC collection for companies that invest in R&D (research and development capacity). Given the positive balance of tax incentives for business R&D, and also considering the evolution of the support system in other countries, it was decided to review and reintroduce for a further five taxation periods this support system. Business R&D is a decisive factor not only of its own affirmation as competitive structures, but of productivity and long-term economic growth, a fact, moreover, expressly recognized in the Program of the XVIII Government, as well as in several recent international reports. It is in this context that, in the international landscape, the OECD has considered Portugal since 2001 as one of the three countries with the most significant advance in business R&D. The current national system, compared to other systems that use the deduction from collection and the distinction between base rate and incremental rate, is one of the most attractive and competitive.

Given that research and development in companies is «a decisive factor not only of its own affirmation as competitive structures, but of productivity and long-term economic growth», it is understood that preference was given to the incentive for investment in technological capacity, in scientific employment and in conditions of affirmation in European space, which, in the long run, are conducive to obtaining higher tax revenues. The importance that, from the legislative perspective, was recognized for this tax benefit provided for in SIFIDE II, is decisively confirmed by the fact that it is indicated as being especially excluded from the general limit to the relevance of tax benefits in IRC, which is indicated in article 92 of the CIRC. Therefore, it is certain that we are dealing with tax benefits whose justification is legislatively considered more relevant than the obtaining of tax revenue, it being inferred from that article 92 that the legislative intention to encourage investments in research and development provided for in SIFIDE II is so firm that it goes to the point of not even establishing any limit to the deductibility of IRC collection, despite this tax regime having been created and applied during a period of notorious difficulties for public finances. Thus, no legal ground is seen, in particular in light of the legislative intention that is possible to detect, for, on the basis of a restrictive interpretation, excluding the deductibility of the tax benefit of SIFIDE II from the collection of autonomous taxation that directly results from the letter of article 4, no. 1, of its statute, combined with article 90 of the CIRC".

See also, in this respect, what is stated in the Decision of CAAD no. 769-2014-T:

"Thus, the essential question that is the subject of the present case is whether the tax credits that, in the year 2011, were recognized to the Claimant, under SIFIDE, can be deducted from the collection produced by the autonomous taxation that burdened it in that fiscal year, in the part in which they cannot be deducted from the remainder of the IRC collection. There is autonomous taxation provided for in the CIRC (article 88 of the CIRC) and autonomous taxation provided for in the CIRS (article 73 of the CIRS). The collection they provide constitutes collection of the respective tax, being subject to the generality of provisions provided for in the codes referred to, potentially applicable. As for IRC, in addition to the unanimity of jurisprudence, article 23-A no. 1, paragraph a), of the CIRC, in the wording of Law no. 2/2014 of 16 January, leaves no room for any reasonable doubt, corroborating what previously resulted from the literal content of article 12 of the same Code. But, the solution of this conceptual question on the nature of the collection arising from autonomous taxation provided for in the CIRC does not permit resolving the question of whether credits arising from SIFIDE can be deducted from that same collection. In fact, the statute approving SIFIDE does not state that the credits arising from it are deductible from any and all IRC collection, rather it defines the scope of the deduction alluding, in its no. 1 of article 4, «to the amount determined in accordance with article 90 of the IRC Code, and up to its extent». No. 3 of the same article confirms that it is to the amount determined in accordance with article 90 of the CIRC that is relevant to concretize the deduction by stating that «the deduction is made, in accordance with article 90 of the IRC Code, in the assessment relating to the taxation period mentioned in the preceding number». Thus, the question that is of interest to resolve, is, regardless of the nature of the tax to which autonomous taxation refers, whether the amount of autonomous taxation is «determined in accordance with article 90 of the CIRC», because, if it is, the conclusion must be that, to determine the limit of the deduction, the collection arising from autonomous taxation is heeded. Article 90 of the CIRC refers to the forms of assessment of IRC, by the taxpayer or by the Tax Administration, applying to the determination of the tax owing in all situations provided for in the Code, including additional assessment (no. 10). Therefore, it also applies to the assessment of the amount of autonomous taxation, which is determined by the taxpayer or by the Tax Administration under article 90 of the CIRC, there being no other provision that provides for different terms for its assessment. Its autonomy is restricted to the applicable rates and the respective tax matter, but the determination of its amount is made under article 90. The differences between the determination of the amount resulting from autonomous taxation and that resulting from taxable profit, rests on the determination of taxable matter and rates, provided for in Chapters III and IV of the CIRC, but not on the forms of assessment, which are provided for in Chapter V of the same Code and are of common application to autonomous taxation and to the remainder of the taxable matter of IRC. Therefore, since it is to article 90, inserted in this Chapter V, that is referred in article 4, no. 1, of SIFIDE, no legal support is seen for making a distinction between the collection arising from autonomous taxation and the remainder of IRC collection, due to the fact that the rates and the forms of the determination of taxable matter are distinct."

As can be seen, also the Decision of CAAD no. 219/2015-T presents an identical position:

"It is certain that, as the Tax and Customs Authority states, autonomous taxation aims to discourage certain taxpayer behavior susceptible of affecting taxable profit and its dissuasive force will be attenuated with the possibility of the respective collection being subject to deductions. But, it is also certain that, as is inherent in that statement, those autonomous taxation only aim to protect or increase tax revenue, and the tax benefits granted, by definition, are «measures of an exceptional character instituted for protection of relevant extrafiscal public interests that are superior to those of the taxation itself that they prevent» (article 2, no. 1, of the Tax Benefits Statute). And, in the case of SIFIDE tax benefits, the reasons of an extrafiscal nature that justify their overriding of tax revenue are, from the legislative perspective, of enormous importance, as can be inferred from the fact that these benefits are indicated as being especially excluded from the general limit to the relevance of tax benefits in IRC, which is indicated in article 92 of the CIRC. Therefore, it is certain that we are dealing with tax benefits whose justification is legislatively considered more relevant than the obtaining of tax revenue, it being inferred from that article 92 that the legislative intention to encourage investments in research and development provided for in SIFIDE is so firm that it goes to the point of not even establishing any limit to the deductibility of IRC collection, despite this tax regime having been created and applied during a period of notorious difficulties for public finances. Thus, no legal ground is seen, in particular in light of the legislative intention that is possible to detect, for excluding the deductibility of the tax benefit of SIFIDE from the collection of autonomous taxation that directly results from the letter of article 4, no. 1, of its statute, combined with article 90 of the CIRC. As to the allegation of the Tax and Customs Authority on the unconstitutionality of this interpretation by incompatibility «with the constitutional principles of tax legality, equality in the distribution of the tax burden, the pursuit of satisfaction of the financial needs of the State and other public entities and taxation on real profit, in accordance with the provisions of articles 13 and 103, no. 1 and 2 of the CRP», it is not made explicit by the Tax and Customs Authority why it understands that such incompatibility exists, nor is it possible to see how it can exist. In fact, as to the principle of tax legality, the legal interpretation is that defended by the Claimant, for what has been said, it being illegal the interpretation defended by the Tax and Customs Authority. On the other hand, the principle of legality encompasses the form of assessment of taxes, with its assessment only capable of being made «in accordance with the law» [articles 103, no. 3, of the CRP and 8, no. 2, paragraph a) of the General Tax Law], so that, if article 90 of the CIRC were not applicable to the assessment of autonomous taxation, it would have to be concluded that in the CIRC there would be no provision on the form of assessment of these taxation, which would be reconduced to the assessment thereof being affected by unconstitutionality, by offense of the principle of legality, which does not accord with assessment of taxes without the terms in which it is made being provided for in the law. As to the principles of equality in the distribution of the tax burden, the pursuit of satisfaction of the financial needs of the State and other public entities, and taxation on real profit, it is also not seen that they collide with the interpretation of the Claimant, because this is applicable to the generality of taxpayers in the same situation and the tax benefits, if it is certain that they diminish the tax burden, have justification in reasons of public interest that override the interests of taxation, as was referred to."

It is therefore clear, both from the provisions contained in the legal statutes, and from the majority understanding of jurisprudence, that the deduction of tax benefits from the collection of autonomous taxation of the Claimant would have to be admitted by the Tax Authority, so the request for declaration of illegality of the Claimant's IRC self-assessment is well-founded.

B) ON THE RIGHT TO INDEMNITY INTEREST

In this respect, article 43, no. 1 of the General Tax Law states that indemnity interest is due "when it is determined, in a gracious claim or judicial challenge, that there was error attributable to the services that resulted in payment of the tax debt in an amount superior to that legally due."

This right being recognized in arbitral proceedings, by force of article 24, no. 5 of RJAT.

Let us then see whether it is possible to understand the existence of error attributable to the services of the Tax Authority.

It is verified, in the case at hand, that the self-assessment declaration was formulated by the Claimant itself and not directly by the Tax Authority, now the Respondent.

However, it must be taken into account that the Claimant, in the formulation of the said declaration, found itself limited by the computer services through which the declaration is formulated, services which are made available by the Tax Authority, and in relation to which the Claimant cannot make any alteration.

On the other hand, it is also clear that, the existence of prior recourse through administrative channels, and the Claimant having already presented the respective explanation as to the informatics impossibility of presenting the declaration in the correct terms, the Tax Authority should have corrected the error in question, which it did not do, persisting in the same grounds.

We are, in this case, faced with negligence on the part of the Tax Authority, negligence which translates to an "error attributable to the services", as stated in art. 43 of the General Tax Law.

Having regard to the provision of article 61 of the CPPT and the verification of the existence of error attributable to the services of the Tax Administration, from which resulted payment of the tax debt in an amount superior to that legally due, it is understood that the Claimant has the right to indemnity interest at the legal rate, calculated on the value of €104,369.01, which will be counted from 01-09-2016, until the full reimbursement of that same amount.

V – Decision

The request for declaration of the illegality of the self-assessment of IRC, including autonomous taxation rates, of the fiscal group B… SGPS, relating to fiscal year 2015, in the amount of €104,369.01, is granted, with the legal consequences resulting therefrom, that is, the reimbursement to the claimant of the amount unduly paid, increased by indemnity interest at the legal rate counted, until full reimbursement, from 1 September 2016.

The value of €104,369.01 is fixed to the case (value stated and not contested) and the value of the corresponding arbitration fee of €3,060.00 in accordance with Table I of the Regulation of Costs of Tax Arbitration Proceedings.

Costs by the respondent entity.

Notify.

Lisbon, 20/04/2018

The Arbitrator President

José Pedro Carvalho

(dissenting in accordance with the attached dissenting opinion)

The Adjunct Arbitrator

José Joaquim Monteiro Sampaio e Nora

The Adjunct Arbitrator

Luís Menezes Leitão - Reporter

DISSENTING OPINION

I voted in dissent in the present decision because, on the grounds contained, among others, in the decisions that prevailed in arbitral cases 34/2016T, 174/2016T, 122/2016T, 567/2016T, 587/2016T and 192/2017T, I consider that article 90, no. 2 of the CIRC, in the wording prior to the entry into force of the wording given by Law 7-A/2016 of 30 March, should be the subject of a corrective interpretation, limiting its scope to IRC in the strict sense, thus excluding autonomous taxation and thus maintaining its original meaning, which was that which it had before the introduction of autonomous taxation in the CIRC.

This is not to contend with the understanding set out, nor the nature of IRC recognized to autonomous taxation in the decision that prevailed (as referred to in various places, autonomous taxation should be understood as forming part of IRC in the broad sense, implying, however, its own nature a relevant distinction with traditional IRC, or strict sense, including in the matter sub iudice), nor the considerations regarding corrective interpretation, given that, on the one hand, such is admissible generically in tax law (verified, as it is understood to be the case, the respective prerequisites), and, on the other, it is not at issue the application of the same to a matter of tax benefits, but to the applicable no. 2 of article 90 of the CIRC.

The question being raised stems – exclusively – from the lack of perspective of the legislator upon the introduction of autonomous taxation in the CIRC, which did not permit it to become aware of all the implications of such an operation, which led to the fact that, among others, article 90, no. 2 of the