IRS Tax on De Facto Unions: Fiscal Domicile Requirement Under Article 14 of the IRS Code – CAAD Case 497/2014-T

ARBITRAL DECISION

The arbitrator Ricardo Reigada Pereira, designated by the Ethics Committee of the Administrative Arbitration Center ("CAAD") to form the present Arbitral Tribunal, constituted on 19 September 2014, decides as follows:

I. Report

A. Summary of the Case

1.         A, with tax domicile at …., Pontinha, tax identification number … (the "Applicant") came, pursuant to article 2, no. 1, paragraph a) and article 10, nos. 1 and 2 of Decree-Law no. 10/2011, of 20 January (Legal Framework for Arbitration in Tax Matters – "LFATM"), to present a request for constitution of an arbitral tribunal and for an arbitral award on 17 July 2014.
   

2.         The Applicant requests an award with a view to annulling the assessment of Personal Income Tax ("PIT") no. 2013… relating to the fiscal year 2008, issued by the Tax and Customs Authority ("TCA") – the "Respondent" – in the total amount of €42,061.28 (forty-two thousand, sixty-one euros and twenty-eight cents). The assessment is based on the failure to meet the conditions that enable the exercise of the right provided for in article 14, no. 1 of the PIT Code. The immediate object of the request for an arbitral award consists in the revocation of the express dismissal of the hierarchical appeal filed by the Applicant.
   

3.         The Applicant considers legitimate the option taken to be taxed under the regime then established in law for married taxpayers not judicially separated as to persons and property, since he alleges living in de facto union with B – tax identification number … – since 1991, sharing the same family residence on Avenue …, in Lisbon.
   

4.         The Respondent, for its part, considers that the factual and legal prerequisites necessary for the legitimate exercise of the option enshrined in article 14, no. 1 of the PIT Code are not present. This is inasmuch as the TCA understands the identity of tax domicile as an imperative legal prerequisite to the enjoyment of the right provided for in that article 14, no. 1.
   

5.         At the meeting referred to in article 18 of the LFATM – held on 19 November 2014 and without the same having met opposition on the part of the TCA, notwithstanding the fact that it was not present – it was agreed that no written submissions would be presented. Nevertheless, oral submissions were made at that moment, the content of which underscored the legal grounds already set out in the request for constitution of the arbitral tribunal and request for arbitral award.
   

B. The Applicant's Claim and Grounds

1.         Following the act of PIT assessment no. 2012…, relating to the year 2008, the Applicant decided to lodge a gracious complaint against it.
   

2.         The gracious complaint enclosed the following request: "assess the aforementioned tax [the PIT], considering the real family situation of the taxpayer, the de facto union, as is elementary justice".
   

3.         Essentially, the Applicant intended to be taxed in conformity with the tax regime of taxpayers married and not judicially separated as to persons and property, since he alleged living in de facto union with B since 1991. Furthermore, he intended to be recognized various expenses, taking into account the two dependents for whom he was responsible.
   

4.         In June 2013, a dispatch of partial approval would be issued, accepting the request regarding dependents and health expenses, but not the situation of "de facto union". As a result, the assessment in question was replaced by a new one, assessment no. 2013…, with tax to pay in the amount of €42,061.28.
   

5.     From that decision of partial approval, a hierarchical appeal was then filed in which the now Applicant reiterated the factuality that, in his understanding, would justify the full right to exercise the option conferred on those in de facto union to be taxed as taxpayers married and not judicially separated as to persons and property. The exercise of this option had, moreover, been taking place since 2003.
   

6.     The hierarchical appeal would ultimately be dismissed in May 2014, giving rise to the requests for constitution of an arbitral tribunal and for an arbitral award.
   

7.     As was exposed, the Applicant's grounds refer to the factual situation that he alleges exists between himself and B since 1991. The family residence would be located, since that date, on Avenue …, in Lisbon.
   

8.     For his part, the Applicant alleges that two children were born from this union, namely: C (tax identification number …) and D (tax identification number …). Both resided, at that time, in the aforementioned family residence.
   

9.     In view of this, the Applicant alleges presenting annual PIT declarations jointly, as one in de facto union, with B since the fiscal year 2003, given the option that was set out, at that time, in article 14, no. 1 of the PIT Code.
   

10.     Until the fiscal year 2008, no question had been raised by the TCA regarding those joint declarations in which the taxpayers opted to be taxed in accordance with the tax regime of taxpayers married and not judicially separated as to persons and property.
    

11.     It happened that, in 2013, the TCA detected that the tax domiciles of the Applicant and of B did not coincide. As a result, the TCA called into question the option made by both, alleging that the respective conditions for exercise of the option enshrined in article 14, no. 1 of the PIT Code – and also set out in no. 2 of that same article – were not present. The first year to be affected was, for this purpose, that of 2008.
    

12.     The Applicant admits, in fact, that he had as his tax domicile the address of the commercial establishment – a pharmacy – where he exercises his professional activity, located at …, Pontinha, municipality of Odivelas. In contrast, B had his tax domicile on Avenue …, in Lisbon (the address where the family residence is alleged to be located).
    

13.     The Applicant argues that the registration of his professional address as tax domicile enabled him to "always be able to receive, without loss of time and danger of mislaying, all and any correspondence addressed to him, particularly by the Tax Services". This in addition to, at the same time, this seeming particularly useful to him given that his partner, of Brazilian nationality, traveled regularly to Brazil, "thus verifying her frequent absence from the common domicile".
    

14.     The detection of this asymmetry of tax domiciles – attributable in the Applicant's words to a "new capacity of the TCA's information system" – triggered the issue that underlies the present dispute. Something that surprised him, since he was convinced of fully complying with tax law. A conviction that, in his understanding, was "reinforced by the inertia of the tax administration which, while now considering the identity of tax domiciles between taxpayers A and B [the Applicant and B] to be essential, always accepted his tax declarations, conferring tax effects on the de facto union, collecting and receiving the taxes due, being that only in 2013 (ten years after the 1st declaration filed) did it come to question the declarative situation that it itself had approved".
    

15.     The Applicant even goes so far as to assert that in view of article 19, no. 8 and article 59, both of the General Tax Act, the TCA itself could and should – as a true power-duty – have rectified his tax domicile based on the elements at its disposal or, at least, have warned him to do so during the seven years in which he presented the declarations jointly with B.
    

16.     In the end, the Applicant does not simply accept the position of the TCA which, in summary, alleges that the failure to comply with the obligation of coexistence of the same tax domicile in both those in de facto union prejudices the possibility of exercise of the option, provided for in article 14, no. 1 of the PIT Code.
    

17.     In other words, the Applicant refuses to accept that the condition provided for in article 14, no. 2 of the PIT Code – which makes the possibility of exercise of the option by the tax regime of taxpayers married and not judicially separated as to persons and property dependent on the "identity of tax domicile of the taxpayers during the period required by law for verification of the prerequisites of de facto union and during the tax period" – cannot be considered an "absolute requirement, making impossible the proof that the actual domicile of taxpayers A and B [the Applicant and B] does not contradict the essential nature of civil law and tax law". Such provision could not constitute, in the Applicant's understanding, "a kind of irrebuttable presumption, an all-or-nothing obligation, which overrides the framework of the civil law institute for family protection which is 'de facto union', approved by law of the National Assembly, of which the tax treatment in question is also part".
    

18.     The circumstance that the Applicant has lived for more than 20 years in the family residence with B should, in the taxpayer's view, immediately inhibit the TCA from rejecting the legality of the exercise of the option for taxation as married and not judicially separated as to persons and property provided for in article 14, no. 1 of the PIT Code. The fact of having provided the TCA with a more appropriate location for contact – distinct from his family residence – could not, by itself alone, result in such a serious tax consequence as preventing him from exercising the option established in article 14, no. 1 of the PIT Code.
    

19.     In the Applicant's view "nothing permits the conclusion that tax law does not admit proof that the requirements of this institute [de facto union] are respected even with the indication to the tax administration of a location complementary to the family residence that functions as a contact location in its relationship with the same administration". Otherwise, the Applicant would lose sight of the rationale for the existence of a tax domicile which should, in essence, "avoid situations of uncertainty and insecurity in the mutual relationship between the administration and taxpayers and, above all, prevent situations of escape and tax evasion". The fact that the Applicant had a tax domicile distinct from the location of the family residence would in no way prejudice, in his opinion, the certainty or security in the relationship between the taxpayer and the TCA or even potentiate any situation of tax escape or evasion.
    

20.     To support the position assumed, the Applicant invokes a ruling of the South Central Administrative Court, in case no. 04550/11, of 7 April.
    

C. The Respondent's Grounds

1.     The TCA maintained itself constant throughout the tax procedure, rejecting the possibility of recourse by the Applicant to the option provided for in article 14 of the PIT Code.
   

2.     That is, recall, the motivation underlying the request for constitution of an arbitral tribunal and for an arbitral award that the dismissal of the hierarchical appeal triggered. Unsurprisingly, the TCA would come to reiterate the position previously assumed in the response presented to those requests. In summary, the assessment and, by parity of reasoning, the decision to dismiss the hierarchical appeal should be upheld inasmuch as they both embody a correct application of law to the facts.
   

3.     In the TCA's view, the "option contained in article 14 of the PIT Code elects the identity of tax domicile as a prerequisite of that tax regime, and not as a mere presumption of life in communion, susceptible of being proven otherwise, namely through the presentation of an attestation from the parish council".
   

4.     The TCA adds, eloquently, "that the construction of the tax status of one in de facto union, contained in article 14 of the PIT Code, obeys imperatives of combating tax fraud and evasion, which justify that timely communication of the change of tax domicile, in accordance with the provisions of art. 19 of the General Tax Act, is an acquisitive requirement of that status, albeit of a formal nature". In the TCA's words, "for those in de facto union to be able to exercise the option of art. 14 of the PIT Code, there must be identity of tax domicile for more than 2 years, it not being sufficient to prove that union".
   

5.     Subsidiarily, the TCA further alleges that "it would be incumbent upon the Applicant to prove the living in de facto union with B, sharing the same family residence, on Avenue …, in Lisbon, proof which the Applicant was not able to achieve".
   

II. Procedural Matters

1.     This Arbitral Tribunal was regularly constituted on 19 September 2014, the arbitrator having been designated by the Ethics Committee of the CAAD in conformity with the respective legal and regulatory formalities.
   

2.     The Applicant requests, recall, an award from the arbitral tribunal to the effect that it proceed to annul the PIT assessment no. 2013… relating to the fiscal year 2008 issued by the TCA in the total amount of €42,061.28 (forty-two thousand, sixty-one euros and twenty-eight cents). The immediate object of the request for an arbitral award consists, in any event, of the annulment of the decision to dismiss the hierarchical appeal filed by the Applicant.
   

3.     In summary, the request for constitution of an arbitral tribunal and for an arbitral award has here, necessarily, as its immediate object the decision on the hierarchical appeal – i.e. its express dismissal – and as its mediate object the defects imputed to the assessment act that underlies it. Both are comprised within the scope of the cognitive powers of the Arbitral Tribunal which must know both the aspects relating to the defects proper to the dismissal of the appeal, and the illegalities imputed to the assessment act which the latter considered not to exist. The present Tribunal will necessarily have to decide in one of two ways: a) either it confirms the dismissal, maintaining the tax assessment act or, on the other hand, b) it annuls that dismissal, considering the defects imputed to the assessment act, since the request for an arbitral award must necessarily have as its object both the decision on the hierarchical appeal, and the defects of the assessment act itself.
   

4.     The Arbitral Tribunal is materially competent in view of the provision of article 2, no. 1, paragraph a) and article 30, no. 1 of the LFATM.
   

5.     On 19 November 2014, the meeting provided for in article 18 of the LFATM was held.
   

6.     The parties enjoy legal capacity and standing, are legitimated and are represented (article 4 and article 10, no. 2 of the LFATM and article 1 of Ordinance no. 112-A/2011, of 22 March).
   

7.     No nullities were identified in the case.
   

III. Grounds for Decision

A. Proven Facts

1.     The Applicant had two children with B, namely: C (tax identification number …) and D (tax identification number …).
   

2.     The Applicant presented annual PIT declarations jointly, as one in de facto union, with B before 2008. No questions were ever raised regarding the exercise of the option conferred by article 14, no. 1 of the PIT Code. The first joint declaration filed concerned the fiscal year 2003, as attested by declaration no. …, filed on 21 May 2004. The same occurred in subsequent fiscal years.
   

3.     The Applicant and B did not share identity of tax domicile in the year 2008 – the tax period in question – nor in the previous years.
   

4.     The Parish Council of Pontinha declared on 2 February 2012, based on the declarations of the now Applicant, that the same has resided for twenty years with his family unit on Street … Pontinha. A declaration that contrasts, in those terms, with the grounds presented by the Applicant. Given that it was issued several years after 2008, the Applicant requested on 30 January 2015 that the same be disregarded and withdrawn from the case.
   

5.     The tax domicile registered in the Applicant's cadastral record corresponded, at the date of the facts, to Street … Pontinha.
   

6.     Faced with doubts raised as to the true coincidence of the Pontinha pharmacy with the address that appeared in the Applicant's cadastral record, the latter came to attach a certificate from the Municipal Chamber of Odivelas, issued on 29 January 2015, which attests that the building previously designated …Pontinha is now designated Street …, in the joint parishes of Pontinha and Famões. Accordingly, the difference in addresses does not correspond, in the end, to a real divergence of elements.
   

7.     For his part, the circumstance that there are documents that allude to the address … – i.e. the combined statements of E, attached as document no. 6 to the request for arbitral award – do not correspond, contrary to what the TCA asserts, to a distinct address from those appearing in the case. The … is, in reality, a condominium existing on Avenue …, the location where the Applicant claims to find his family residence since 1991.
   

8.     The dismissal of the hierarchical appeal was notified to the Applicant on 5 May 2014. That dismissal came to give rise to the request for constitution of an arbitral tribunal and for an arbitral award. Requests that would be filed at CAAD on 17 July 2014.
   

9.     Such requests triggered the response of the TCA on 22 October 2014.
   

10.     The arbitral tribunal decided to request additional information from the Applicant on 20 January 2015. Beyond doubts regarding elements of fact brought into the case, the Applicant was asked to present "utilities" invoices from 2008 issued in the name of the Applicant. Following the request, various invoices were then attached to the case on 30 January 2015, including gas and water invoices issued by Lisboagás Comercialização, S.A. and by Empresa Portuguesa das Águas Livres, S.A.. The TCA, when asked to do so, did not comment on the same, nor on the clarifications provided by the Applicant.
    

B. Facts Not Proven

1.     There are no facts relevant to the assessment of the merits of the case that should be considered not proven.
   

C. As to Law

1.     Article 14 of the PIT Code provided, at that time, that:
   

1 - Persons living in de facto union who meet the prerequisites set out in the respective law may opt for the tax regime of taxpayers married and not judicially separated as to persons and property.

2 - The application of the regime referred to in the preceding paragraph depends on the identity of tax domicile of the taxpayers during the period required by law for verification of the prerequisites of de facto union and during the tax period, as well as on the signature, by both, of the respective income declaration.

3 - In the case of exercise of the option provided for in no. 1, the provisions of no. 2 of article 13 shall apply, with both those in de facto union being responsible for compliance with tax obligations.

1.     The enjoyment of the right enshrined here depends, in summary, on the verification of three conditions. On the one hand, the taxpayers had to find themselves in de facto union as provided for in the respective law. On the other hand, both had to have the same tax domicile during the period of two years required by law for the verification of the prerequisites of de facto union and during the tax period in question (with both required to sign the respective periodic income declaration). Finally, it was necessary that the taxpayers exercise the option conferred by law (taxpayers married and not judicially separated as to persons and property did not, at that time, enjoy the option of being taxed separately).
   

§ De facto Union

1.     The documentation in the case record leads this arbitral tribunal to the firm conviction that the Applicant and B lived, in 2008, in conditions analogous to those of spouses. In other words, there was created "an external appearance of marriage in which third parties may rely"[1]. There are medical, school, and insurance invoices from 2008 relating to all members of the family unit, including the two dependents, which allude to the address on Avenue …. The same occurring with various "utilities" invoices from 2008 issued in the name of the Applicant, the person regarding whom doubt was raised as to whether he actually lived "together" with B.
   

2.     It should be underscored that Law no. 7/2001, of 11 May, does not define de facto union, as was similarly the case with Law no. 135/99, of 28 August. In any case, it is characterized as the situation in which persons live in communion of bed, board and dwelling (tori, mensae et habitationes) as if they were married, with the only difference being that they are not. They lack, therefore, the formal bond of marriage. Given the factuality that underlies it, it becomes invariably difficult to conclude, without margin for doubt, for the existence of a de facto union. As it is not subject to civil registration, nor to administrative registration (municipal) – as occurs in some countries – it becomes truly difficult to discern a "de facto union" in the relationship between two persons. It is almost always a sphere in which there exist, as could not but be, elements naturally inscrutable to third parties.
   

3.     In any case, proof of de facto union is of enormous importance. This is so both in situations in which the same is invoked by the subjects of the relationship – as occurs in the present arbitral case – and when it is invoked against them. In reality, only from the date of the constitution of the de facto union are the two years counted that must elapse for the de facto union to produce the effects provided for in article 3 of Law no. 7/2001, of 11 May.
   

4.     Notwithstanding proof of de facto union being normally testimonial[2], documentary proof should not be excluded. Indeed, it is Law no. 7/2001, of 11 May itself that provides – now – in article 2-A, added by Law no. 23/2010, of 30 August. More recently, the Ministry of Finance itself accepted a recommendation from the Ombudsman to the effect of permitting that proof of the de facto union of taxpayers who intended to exercise the option for the tax regime of taxpayers married and not judicially separated as to persons and property be effected by any legally permissible means. At the same time, the TCA also committed itself, in the context of that recommendation, to proceed with the ex officio revision of PIT assessments made in the names of taxpayers who were denied the application of the regime of joint taxation of family income, namely those who timely lodged a gracious complaint against the assessments issued under the regime of separate taxation of family income, presenting proof of their de facto union, that is, proof that they live in conditions analogous to those of spouses for more than two years, regardless of whether they (or not) have common tax domicile, for the same time period (Recommendation no. 13/A/2013, of the Ombudsman).
   

5.     The circumstance of there being a document issued by the Parish Council of Pontinha on 2 February 2012 determining that the Applicant had resided for twenty years with his family unit on Street … Pontinha – a declaration that the Applicant requested be disregarded and withdrawn from the case – is not susceptible of making full proof. In reality, it is not a fact attested "based on the perceptions of the documenting entity" (article 371 of the Civil Code), but rather a document that was, in its time, issued at the request of the interested parties (and which, therefore, does not prove that the assertion is true).
   

6.     The remaining elements of proof brought into the case reveal, in this tribunal's understanding, that the de facto union was verified in the year in question – 2008 – and would likely have been already consolidated years before.
   

§ Identity of Tax Domicile of the Taxpayers During the Period Required by Law for Verification of the Prerequisites of De facto Union and During the Tax Period

1.     A more complex question is that which concerns knowing what consequence to draw from the fact that the Applicant and B did not share in the year 2008 – nor in the previous fiscal years – the same tax domicile.
   

2.     The TCA emphasizes that this identity of tax domicile constitutes an "acquisitive requirement" of the status of one in de facto union for tax purposes. In other words, only in those circumstances would the taxpayers be legally enabled to opt for the tax regime of taxpayers married and not judicially separated as to persons and property.
   

3.     The Applicant thinks this cannot be so, on pain of the same coming to constitute "a kind of irrebuttable presumption, an all-or-nothing obligation, which overrides the framework of the civil law institute for family protection which is 'de facto union'".
   

4.     To support his position the Applicant equally refers to the ratio decidendi underlying ruling no. 4550/11, of 7 April 2011 of the South Central Administrative Court. The facts of that case sharing a glaring parallelism with the situation in question, it was determined in that ruling that "the domicile could and should be rectified ex officio based on the elements at the disposal of the tax administration". For the Central Administrative Court it was, moreover, "a power-duty, intended above all to protect tax truth in realization also of the principle of collaboration enshrined in art. 59 of the General Tax Act", wherefore, added the court, "with complete certainty and confidence that in the concrete case it was possible for the tax administration to rectify ex officio the tax domicile of the taxpayers from the elements at its disposal and which proved the identity of domiciles, moreover constant in what was declared by the taxpayers in the income declaration presented". In those terms, it was without surprise that it was concluded there that "because the appellant and B... lived in de facto union meeting the prerequisites set out in the respective law, they could opt, as they did in the income declaration filed, for the tax regime of taxpayers married and not judicially separated as to persons and property and, given that there was identity of tax domicile of the taxpayers during the period required by law for verification of the prerequisites of de facto union and during the tax period, as well as the signature, by both, of the respective income declaration, everything is in accordance with law (art. 14 nos. 1 and 2 of the PIT Code)".
   

5.     The ruling in question adopts, for this purpose, a particular interpretation of article 14 of the PIT Code. By discerning a power-duty of the TCA to rectify the cadastral elements of the taxpayer, it becomes easier for those in de facto union to claim the effective enjoyment of the right of option to be taxed as taxpayers married and not judicially separated as to persons and property. Such power-duty was, furthermore, relatively easy to carry out in the situation of the Applicant, since as early as 2003 the same had presented his income declaration as one in de facto union with B. A declaration which, it should be underscored, was processed and accepted by the TCA.
   

6.     This interpretation endorsed by the Central Administrative Court came to qualify the strict necessity of the requirement of coincidence of tax domiciles being verified, taking into account the rationale underlying that requirement of a formal nature. The same came to be done by the TCA itself when it committed to proceeding with the ex officio revision of PIT assessments made in the names of taxpayers who were denied the application of the regime of joint taxation of family income, namely those who timely lodged a gracious complaint against assessments issued under the regime of separate taxation of family income, presenting proof of their de facto union, that is, proof that they live in conditions analogous to those of spouses for more than two years, regardless of whether they (or not) have common tax domicile, for the same time period (commitment assumed following Recommendation no. 13/A/2013, of the Ombudsman).
   

7.     If the Applicant is not correct in alleging that the law enshrines here a rebuttable presumption – it is not an inference that the law draws from a known fact to establish an unknown fact (article 355 of the Civil Code) – it also seems that the formalist criterion used by the TCA does not reveal itself coherent with the teleology of the law.
   

8.     As the TCA indicates, the rationale underlying this requirement has to do essentially with imperatives of combating tax fraud and evasion. Such purpose is objective enough, permitting a regulation in the sense of optimized consideration of the interests that are in play. Assuming that to be the legislator's intention, it is then possible to achieve, through interpretation, results that enable an adequate solution of the concrete case. Now, in the case in question it is not apparent in what way the taxpayer could be effectively adopting fraudulent behavior or tax evasion when, in reality, it was established that the existence of a de facto union of the Applicant with B was verified. De facto union from which two children resulted.
   

9.     The teleological criterion should serve here, above all, to permit carrying out a materially adequate regulation of the case, avoiding manifestly absurd results. Article 14 of the PIT Code, in the wording in force at the date of the facts, may thus, in a situation analogous to that of the Applicant, be subject to an interpretation that proves consistent with the "domain of the norm" – that is, coherent with the legislative reach that underlies the provision in question. In that context, the formal requirement of article 14, no. 2 of the PIT Code had a justification – the prevention of tax fraud and evasion – but once the possibility of discerning such justification in the concrete application of the norm was prejudiced, the same should be set aside by the interpreter. This conclusion is rooted in the imperative of justice that consists in treating unequally that which is unequal, or rather, in the necessity of proceeding with differentiations required by normative valuation. It was equally that, it is presumed, the reason why the TCA assumed the commitment to proceed with the ex officio revision of assessments in which they had previously refused the exercise of the option enshrined in article 14, no. 1 of the PIT Code, even in cases in which the taxpayers did not have a common tax domicile (commitment that results from Recommendation no. 13/A/2013, of the Ombudsman).
   

10.     Moreover, this interpretive sense would equally be imposed in an interpretation in conformity with the Constitution of the Portuguese Republic ("CPR"). Although the CPR does not expressly provide on de facto union, the same would be at least comprised in the right "to the development of personality (…) against any forms of discrimination" that the constitutional revision of 1997 came to recognize explicitly (article 26, no. 1 of the CPR). De facto union is surely a manifestation or form of exercise of that right[3], whereby legislation that penalized it without any justification would be for that reason unconstitutional. In these terms, although marriage and de facto union are materially distinct situations – the former necessarily presupposes a commitment to life in common, the latter does not – once the parallelism of tax regimes is established in law, then such regime should not be refused to those in de facto union by virtue of a formal requirement not having been verified whose rationale aims to prevent situations of fraud or abuse that, as was advanced, cannot be discerned in the case of the Applicant.
    

§ Exercise of the Option Conferred by Law

1.     The last requirement enumerated in the law concerned the option, which had to be validly exercised, of taxation by the regime of taxpayers married and not judicially separated as to persons and property.
   

2.     The Applicant and B validly and properly exercised in the fiscal year 2008 the option in question.
   

IV. Decision

1.     In view of the foregoing, the Arbitral Tribunal decides to uphold the request for an arbitral award, with the consequent annulment of the PIT assessment – and all due legal consequences – carried out following the refusal to the Applicant (and to B) to be taxed as taxpayers married and not judicially separated as to persons and property.
   

2.     The TCA requested, as a subsidiary matter, that in case the request for an arbitral award of the same were to be upheld, the result should be a mere partial annulment of the assessment impugned, in the wake of what has been understood by the Supreme Administrative Court. It happens, however, that the Supreme Administrative Court has in cases analogous to that of the Applicant understood that partial annulment of the assessment is not possible in this type of situations[4]. It is what invariably occurs when the partial annulment interferes with the objective and subjective incidence of income and tax rates applicable, which necessarily implies a new assessment.
   

3.     The value of the case is fixed at €42,061.28 (forty-two thousand, sixty-one euros and twenty-eight cents), taking into account the economic value of the case as measured by the value of the tax assessment in question.
   

4.     For its part, the amount of costs is fixed at €2,142.00 (two thousand, one hundred and forty-two euros), to be borne by the Respondent in accordance with article 12, no. 1 of the LFATM, article 4 of the Regulation of Costs of Tax Arbitration Proceedings and Table I attached thereto.
   

Lisbon, 6 March 2015

The Arbitrator

Ricardo Reigada Pereira

[1] FRANCISCO PEREIRA COELHO and GUILHERME DE OLIVEIRA, Course in Family Law, Volume I, 4th Edition, 2008, Coimbra, Coimbra Editora, p. 52.

[2] FRANCISCO PEREIRA COELHO and GUILHERME DE OLIVEIRA, Course in Family Law, Volume I, 4th Edition, 2008, Coimbra, Coimbra Editora, pp. 62-63.

[3] FRANCISCO PEREIRA COELHO and GUILHERME DE OLIVEIRA, Course in Family Law, Volume I, 4th Edition, 2008, Coimbra, Coimbra Editora, p. 56.

[4] Among others, ruling no. 079/13, of 27 November 2013, ruling no. 01146/13 of 9 July 2014 or, a contrario, ruling no. 01374/12 of 30 April 2013.