CAAD Case 500/2018-T: IRC Autonomous Taxation on Light Passenger Vehicle Expenses – Arbitral Decision Reform

ARBITRAL DECISION

(delivered following the judgment of TCAS of 18 March 2025, Case No. 116/19.0BCLSB)

I - STATEMENT OF FACTS

A... SGPS, S.A., with registered office at ..., No. ..., ..., ...-... ... (hereinafter, the "Claimant" or "A..."), with tax identification number ("NIF")..., came on 08/10/2018, pursuant to subsection (a) of No. 1 of Article 2 and Articles 10 et seq. of Decree-Law No. 10/2011, of 20 January (Legal Framework for Arbitration in Tax Matters - RJAT), in conjunction with subsection (a) of Article 99 and subsection (e) of No. 1 of Article 102 of the Code of Tax Procedure and Process (hereinafter, "CPPT"), applicable by virtue of the provision in subsection (a) of No. 1 of Article 10 of the RJAT, and Articles 1 and 2 of Regulation No. 112-A/2011, of 22 March, to request the establishment of a collective arbitral tribunal with a view to declaring the illegality and consequent annulment of the following acts:

• self-assessment of Corporate Income Tax (hereinafter, "IRC") for the year 2015 No. ..., of 27/05/2016, from which resulted a sum payable of € 1,627,434.57;

• IRC assessment No. 2016..., of 02/08/2016, relating to the same year, from which resulted a sum payable of € 4,436.23, and respective statement of interest accrual No. 2016...;

• IRC assessment No. 2018..., of 30/07/2018, from which resulted tax to recover in the sum of € 99,618.29, and respective statement of account settlement No. 2018...;

• partial dismissal of the gracious complaint No. ...2018..., relating to the year 2015, issued by the Head of Division of the Management and Tax Assistance Division of the Large Taxpayers Unit on 09/07/2018,

with restitution of the sums assessed and paid, plus indemnitory interest calculated from such payments.

The Tax and Customs Authority (hereinafter, "AT") is the Respondent, being the author of the acts challenged.

The request for establishment of the collective arbitral tribunal was accepted by the President of the Administrative Arbitration Centre (hereinafter, "CAAD") and notified to the Respondent on 09/10/2018.

On 23/11/2018, the Claimant requested the expansion of the request to cover, in addition to the acts initially challenged, the self-assessment of IRC for 2015 No. ..., from which resulted tax payable in the sum of € 22,050.00.

In accordance with and for the purposes of the provision in subsection (a) of No. 2 of Article 6 of the RJAT, by decision of the President of the Deontological Council of the CAAD, duly notified to the parties within the prescribed timeframes, the undersigned were designated as arbitrators, and communicated to that Council the acceptance of the appointment within the period established in Article 4 of the Deontological Code of the CAAD.

On 30/11/2018, the parties were notified of such designation, having manifested no wish to refuse it, in accordance with the combined provisions of subsections (a) and (b) of No. 1 of Article 11 of the RJAT and Articles 6 and 7 of the Deontological Code of the CAAD.

The collective arbitral tribunal was constituted on 20/12/2018, in accordance with the provision of subsection (c) of No. 1 of Article 11 of the RJAT, as amended by Article 22 of Law No. 66-B/2012, of 31 December.

Notified to respond on 20/12/2018, the Respondent did so on 04/02/2019 and attached the administrative file the following day.

It defended itself by means of exception, invoking (partial) lack of jurisdiction of the tribunal; opposed the expansion of the request; objected to the claim on the merits by arguing for the dismissal of the Claimant's contention; and, in the event the expansion were to be admitted, requested an additional period to present its position.

Meanwhile, on 15/01/2019, the Claimant had requested a further expansion of the request, this time concerning the additional assessment No. 2018..., of 05/11/2018, the assessment of compensatory interest No. 2018..., and the statement of account settlement No. 2018..., from which resulted € 217.47 payable.

On 16/01/2019, the Respondent was notified to present its position on the request for expansion of the subject matter of the case, which it did on 30/01/2019, opposing it.

On 28/02/2019, the following order was issued:

"The Claimant presented its initial request on 08/10/2018, directed against the following acts, all relating to IRC for the year 2015:

• self-assessment No. ..., of 27/05/2016 and order of partial dismissal of the gracious complaint raised against it;

• assessment No. 2016..., of 02/08/2016 and

• assessment No. 2018..., of 30/07/2018.

On 23/11/2018, before the constitution of the arbitral tribunal, it came to expand the request, so as to cover the self-assessment No. ..., relating to the same tax and year.

Finally, on 15/01/2019, in the course of the period for the AT's response, it came with a new request for expansion, this time relating to the additional assessment No. 2018..., of 05/11/2018, as well as compensatory interest, always relating to the IRC of 2015.

The AT opposed the expansion of the request.

It stated, in summary, that having the Claimant presented a replacement declaration on 29/10/2018, and effected self-assessment, it was in consequence that the AT proceeded, on 05/11/2018 to assessment No. 2018... . Thus, the Claimant should, by force of the provision in Article 131, No. 1 of the Code of Tax Procedure and Process (CPPT), have filed a gracious complaint against the said self-assessment, as a condition for being able to challenge it contentiously.

Under Article 131, No. 1 of the CPPT, acts of self-assessment are not immediately subject to contentious challenge, their challengeability depending on prior gracious complaint.

It is understandable that this is so: self-assessment is not an act of initiative by the Tax Authority, and therefore its correction should not be submitted to judgment before it is able to pronounce itself in the context of a gracious complaint. Only with the dismissal of such complaint can it be said that the Administration makes its own the act of (self-)assessment carried out by someone other than itself.

The present case involves two acts of self-assessment:

• No. ..., of 27/05/2016, subject to gracious complaint partially dismissed, challenged at the time of presentation of the initial request;

• No. ..., of 29/10/2018, regarding which there is no notice nor is alleged the filing of a gracious complaint, and which was challenged by means of the request for expansion of the request of 23/11/2018.

Now, if, as to the first, nothing prevents its contentious challenge, inasmuch as the Claimant filed a gracious complaint, satisfying the requirement of Article 131, No. 1 of the CPPT, as to the second, without there having been a gracious complaint, its judicial challenge cannot be admitted.

Nor is this understanding opposed, as the case law of the STA has been clarifying – see, in all, the most recent judgment, of 28/11/2018, in case No. 367/2018 – by the fact that the self-assessment is preceded by a taking of position on the part of the AT, either through inspection action, or by it itself proceeding to an assessment relating to the situation of the self-assessing party – in the case, as to IRC for 2015.

The truth is that the Claimant presented, on 29/10/2018, a replacement declaration relating to the IRC for 2015, and proceeded to the corresponding self-assessment. Self-assessment which could only be said to be made the AT's own after it had had the opportunity to examine it in the context of a gracious complaint, in accordance with the cited Article 131 of the CPPT. Before that, there is not, truly, an administrative act, carried out by the competent authority, but an act of a taxpayer, which the AT may make its own, or not. Indeed, in the case, it is alleged that, after self-assessment, the AT took the initiative to proceed to a new assessment, which suggests it will not have accepted (not made its own) the self-assessment.

It cannot, therefore, be admitted that the expansion of the request, insofar as it concerns the self-assessment No. ..., of 29/10/2018, in the absence of a prerequisite – gracious complaint – for its contentious challenge.

We are, however, faced with two requests for expansion of the subject matter of the case. We have dealt so far with that of 23/11/2018.

It is important to address that of 15/01/2019, by which the Claimant seeks to have the legality examined of the additional assessment No. 2018..., of 05/11/2018, as well as that of compensatory interest, always relating to the IRC for 2015.

As to these assessments, the impediment of Article 131 of the CPPT does not apply, as these are acts of initiative of the AT, carried out by it and not by the taxpayer.

On the other hand, the examination of the legality of this assessment can be understood as constituting a development of the initial request: what matters to the Claimant is to have the legality of the definition of its contributory situation in the context of IRC, relating to the year 2015, examined. And, since the AT carried out various acts tending towards this definition, each of these acts is directed towards this same purpose, inserted in the same sequence, and it is advantageous that all of them be examined together, so as to better ensure the judicial protection sought by the Claimant.

It appears, therefore, that the expansion requested is admissible in light of Article 265, No. 2 of the Code of Civil Procedure, here applicable ex vi Article 29, No. 1, subsection (e) of the Legal Framework for Arbitration in Tax Matters (RJAT).

Article 3 of the said RJAT also does not constitute an obstacle: once the expansion of the request is admitted, we find ourselves (as, moreover, we already were) faced with a cumulation of requests that does not repugnate that provision, since the factual circumstances to be considered and the legal norms to be observed in the decision are the same.

It remains to examine the Respondent's contention that, in the event the expansion of the request is authorised, it requested the extension of the period for response, by thirty days, by invoking Article 569, No. 1 of the CPC, applicable in this case on a subsidiary basis.

Meanwhile, the Respondent has already responded to the request initially formulated by the Claimant.

And given that the act of additional assessment No. 2018..., of 05/11/2018, as well as that of compensatory interest, relate, like the other acts examined here, to the IRC for 2015, as to which the AT had previously already assessed,

there is no need perceived to grant a new, full period for response, which only needs to be extended, so as to cover also the assessment(s) of 05/11/2018.

Thus, and in conclusion:

The request formulated by the Claimant on 23/11/2018, relating to the self-assessment No. ..., of 29/10/2018, is dismissed;

The request formulated by the Claimant on 15/01/2019, relating to the additional assessment No. 2018..., of 05/11/2018, as well as that of compensatory interest, is granted;

A period of fifteen days, counted from notification of this order, is set as the period for the Respondent to extend its response, relating to the new request now admitted".

By arbitral order of 06/03/2019, the date of 25/03/2019 was set for the holding of the hearing referred to in Article 18 of the RJAT.

On the date set, the witnesses presented by the Claimant were heard, it was decided to use the testimony of H..., given in case No. 649/2016-T, a successive period of ten days was set for written argument, and the date of 31/05/2019 was appointed for the decision.

Claimant and Respondent argued, respectively on 4 and 29 April.

II - VICISSITUDES AFTER THE ARBITRAL DECISION

The Tribunal issued its final decision on 30 May 2019[1].

II.1 - RECTIFICATION OF THE JUDGMENT OF 30 MAY 2019

The Claimant returned to the case in order, by means of a request of 18 June 2019, to note that the decision of 30 May 2019 did not address the totality of what was requested, "in not expressly annulling the act of IRC assessment No. 2016..., of 2 August 2016, from which resulted a sum payable of € 4,436.23 and respective statement of interest accrual No. 2016 ... (2nd Act - IRC 2015), the act of IRC assessment No. 2018..., of 30 July 2018, from which resulted tax to recover in the sum of € 99,618.29 (3rd Act — IRC 2015), the act of additional assessment No. 2018..., of 5 November 2018, from which results a sum to recover in the sum of € 99,400.82 and, likewise, the respective assessment of compensatory interest No. 2018 ... from which results a value payable of €217.47 (5th act - IRC 2015)", and by disregarding the "request for expansion of the subject matter, presented by the CLAIMANT on the past 3 April 2019, so as to cover the 'Statement of Financial Re-settlement of IRC Assessment' notified most recently (6th Act — IRC 2015)".

Requesting that these lapses and material errors be corrected, so as to avoid an impugnation of the arbitral decision, on the basis of omission of pronouncement.

On 25 June 2019, the Tribunal decided, on the one hand, not to examine the request for expansion of the subject matter, as its jurisdictional power had been exhausted. And justified it as follows:

"As was seen, the Claimant's contention presented on 04/04/2019, and relating to the expansion of the subject matter, was not examined by the arbitral tribunal, which should be attributed to having gone unnoticed, perhaps because on the same date documents were also attached and final written arguments were presented.

Arguments in whose conclusions, as was also seen, the Claimant does not allude to the expanded request, but only to what was already consolidated; that is, it reiterated that it requested the annulment of the acts of self-assessment No. ..., of 27/05/2016; of assessment No. 2016..., of 02/08/2016, and respective statement of interest accrual No. 2016...; of assessment No. 2018 ..., of 30/07/2018, and respective statement of account settlement No. 2018...; of additional assessment No. 2018..., of 05/11/2018, of compensatory interest No. 2018..., of statement of account settlement No. 2018..., and of partial dismissal of the gracious complaint No. ...2018..., issued on 09/07/2018.

In this manner, the AT did not have the opportunity to exercise the right to be heard regarding this last request for expansion of the subject matter, and the tribunal, having not pronounced itself on it in the final decision, cannot now resume the matter, with its jurisdictional power exhausted – see Article 613, No. 1 of the Code of Civil Procedure, applicable ex vi Article 29, No. 1, subsection (e) of the RJAT."

But, in the same decision of 25 June 2019, the Tribunal decided to rectify the decisional segment of the judgment of 30 May 2019, with the following wording:

"a) Find the request for arbitral pronouncement well-founded and, in consequence, annul the corporate income tax act of self-assessment relating to the 2015 financial year of the Claimant, in the part corresponding to the autonomous taxation on the charges relating to vehicles, in the amount of €172,433.69, as well as the act of decision on the gracious complaint that concerned it, in the part relating to the autonomous taxation on the charges relating to light passenger vehicles; and also, in that same part, the assessment acts No. 2016..., of 02/08/2016, and respective statement of interest accrual No. 2016..., of assessment No. 2018..., of 30/07/2018, of additional assessment No. 2018..., of 05/11/2018, and of compensatory interest No. 2018... .

b) Condemn the AT to the payment of indemnitory interest to the Claimant".

And justified it by the circumstance that it was clear, throughout the entire judgment, that the Tribunal considered as not due the autonomous taxation contested, concluding:

"The reference to a single assessment act, and not to the set of challenged acts, is due to a transcription lapse, which can and should be corrected, pursuant to the provisions of Articles 613, No. 2 and 614, No. 1 of the Code of Civil Procedure, applicable ex vi Article 29, No. 1, subsection (e) of the RJAT so that the decision also covers the assessment acts No. 2016..., of 02/08/2016, and respective statement of interest accrual No. 2016 ..., of assessment No. 2018..., of 30/07/2018, of additional assessment No. 2018..., of 05/11/2018, and of compensatory interest No. 2018... ."

II.2 - APPEAL TO THE CONSTITUTIONAL COURT

From the decision of 30 May 2019, the Respondent filed, on 17 June 2019, an appeal to the Constitutional Court, pursuant to Art. 25, 1 of the RJAT and in accordance with Art. 76, 1 of the LTC, on the grounds of both subsection (a) and subsection (b) of No. 1 of Art. 70 of the LCT; an appeal accompanied by a Favorable Order of the Tribunal, of 18 June 2019, and which would lead to Summary Decision No. 575/2019 of the CC (Case No. 685/2019).

In that Summary Decision No. 575/2019, the CC proceeded on the basis that these were 2 appeals, given the grounding in two distinct subsections of No. 1 of Art. 70 of the LCT.

As to the appeal filed pursuant to Art. 70, 1, (a), of the LTC, the CC understood that "the argument of unconstitutionality was only supplementary to the ruling made by way of mere interpretation of infra-constitutional law, an interpretation that independently led to the conclusion of the well-foundedness of the request for arbitral pronouncement", by arguing that the provision establishing autonomous taxation, contained in Art. 88 of the CIRC, contains a rebuttable presumption, adding that an interpretation in the sense of the impossibility of disregarding the presumption would violate the Constitution – thus being a mere obiter dictum designed to serve, in the economy of the judgment, as an argumentative reinforcement for the adoption of an interpretation that does not appear conflicting with the Fundamental Law.

Therefore, the CC concludes by refusing to know the subject matter of the appeal filed by the AT pursuant to Art. 70, 1, (a), of the LTC.

As to the appeal filed pursuant to Art. 70, 1, (b), of the LTC, the CC likewise understood that it did not relate to a serviceable formulation for modelling the subject matter of the concrete review appeal, since it does not correspond to the ratio decidendi of the appealed decision – because in the arbitral judgment what was concluded is that the provision invoked did not materialize. The invocation of the provision being a collateral issue, since the central question is that of the nature, rebuttable or non-rebuttable, of the presumption.

Therefore, the CC concludes by the impracticability of the appeal filed by the AT pursuant to Art. 70, 1, (b), of the LTC.

Thus deciding not to know the subject matter of the appeals filed by the AT.

II.3 - APPEAL FOR UNIFORMITY OF CASE LAW IN THE STA

On 18 October 2019, the AT communicated that, after becoming aware of Summary Decision No. 575/2019 of the CC, it had filed an Appeal for Uniformity of Case Law, pursuant to Art. 25, 2 of the RJAT, invoking opposition, regarding the same fundamental legal issue, with the arbitral decision issued in Case No. 433/2018-T; an appeal that was admitted in the STA on 30 October 2019, and to which was assigned the number 75/19.9BALSB.

In a decision of 20 May 2020, the STA did not admit the appeal, on the following grounds:

"the arbitral decision appealed was delivered on 30.05.2019, that is, before the entry into force of the new wording given to No. 2 of Art. 25 of the RJAT (new law), for which reason the appeal is not admissible, since, as we stated, the initial wording of that provision did not admit an appeal to the Supreme Administrative Court on the grounds of the opposition of two decisions of the arbitral tribunal constituted under the aegis of the CAAD.

Note finally that the fact that the new law was already in force at the date the appeal was filed is not relevant, nor is the filing of the appeal directed to the Constitutional Court and the effects it may have produced on the course of the period provided for in article 25, No. 2 of the RJAT.

The appeal addressed to us is thus not admissible."

II.4 - CHALLENGE OF THE DECISION IN THE TCAS

A challenge of the arbitral decision of 30 May 2019 was filed with the TCAS by the Claimant, pursuant to Arts. 27 and 28 of the RJAT, with the case number 116/19.0BCLSB assigned to that challenge.

In it, the challenging party noted the omission of pronouncement by the Arbitral Tribunal regarding the expansion of the subject matter of the request for arbitral pronouncement, which was the subject of its request of 3 April 2019, relating to the inclusion of the "Statement of Financial Re-settlement of IRC Assessment" (6th Act – IRC 2015), notified to the Claimant pending the arbitral case.

As the impugned party, the AT contended that there was no omission of pronouncement – and that the failure to respond to a request would constitute, at most, a mere procedural nullity (Art. 195 of the CPC), not constituting a ground for nullity of the Arbitral Judgment. Furthermore, it considered that there was no legal basis for re-examination of errors or lapses committed by the arbitral judiciary, and only examinations of merit, pursuant to Arts. 27 and 28, 1, (c) of the RJAT and 615, 1 of the CPC.

The TCAS understood that there was an omission of pronouncement, which implies nullity of judgment (Art. 615 of the CPC), "by not knowing the issues raised in the challenging party's request for modification of the claim and the cause of action, nor advancing the reasons for such failure to know". Not a mere procedural nullity as provided for in Art. 195 of the CPC, but a nullity of judgment by omission of pronouncement that constitutes a denial of justice – and which must be remedied through pronouncement on the issues omitted arising from the request for modification of the claim and the cause of action,

"after completion of the procedural steps deemed necessary and appropriate and without prejudice to being able to conclude that such request does not meet the legal requirements of admissibility, which prevents its examination in the arbitral judgment.".

For this reason, the TCAS decided on 18 March 2025,

"to find well-founded this present challenge of the arbitral decision and to order the remission of the case to the CAAD to remedy the alleged nullity by omission of pronouncement".

II.5 - RECONSTRUCTION OF THE TRIBUNAL

By Orders of 9 and 16 May 2023 of the President of the Deontological Council of the CAAD, the arbitrator-president and one of the arbitrators-adjunct of the collective arbitral tribunal were replaced, with the new arbitrators communicating their acceptance.

It is thus incumbent on the arbitral tribunal, reconstituted in its new composition, to comply with the judgment delivered by the TCAS on 18 March 2025, in Case No. 116/19.0BCLSB, examining the issues regarding which the pronouncement was omitted in the Arbitral Decision of 30 May 2019, namely those relating to the expansion of the subject matter of the request for arbitral pronouncement, requested in its request of 3 April 2019, relating to the inclusion of the "Statement of Financial Re-settlement of IRC Assessment", notified to the Claimant pending the arbitral case.

The following text constitutes a partial re-edition of the arbitral judgment previously delivered in this case, with the necessary alterations to comply with what was decided in the judgment of the TCAS of 18 March 2025, Case No. 116/19.0BCLSB.

III – PRELIMINARY MATTERS

The arbitral tribunal is duly constituted.

The Respondent seeks to have declared the lack of jurisdiction of the tribunal regarding the part of the annulment request that was already granted in the context of the gracious complaint.

It recalls "(...) that the gracious complaint was subject to partial granting". And, "In this manner, the Arbitral Tribunal cannot substitute itself for the Tax and Customs Authority as to the execution of the judgment in the context of gracious complaint proceedings, in particular, regarding the part in which there was a partial granting of the request by the services themselves. Now, similarly to what occurs in impugnation proceedings, we are faced with a clear lack of material jurisdiction of the arbitral tribunal to substitute itself for the AT in the execution of what it decided in a manner favorable to the taxpayer or, at the limit, to order execution insofar as it was granted by the services in the Claimant's request in the context of gracious complaint proceedings".

The Respondent is correct if it intends to affirm that this tribunal is not competent for the execution of judgments.

But, in our view, this is not the issue that arises here.

Firstly, because there is no judgment to execute. What is at issue is, at most, for the AT to comply with its own decision issued in the context of gracious complaint proceedings. Now, that decision, insofar as it failed to satisfy the Claimant's claim, is challenged by it, and the AT does not question the tribunal's jurisdiction to examine it.

Additionally, in order to comply with its decision issued in the gracious complaint, the AT undertook an act of assessment. And, to evaluate the legality of this tax act, the tribunal's jurisdiction is also not questioned.

But, moreover, it is important to note that, as is clear from the Claimant's initial pleadings, particularly from Articles 31 et seq. and 50 et seq., it only challenges the decision on the gracious complaint insofar as it was dismissed, "(...) which amounts to corrections relating to autonomous taxation on the charges relating to light passenger vehicles". It has clearly excluded, the autonomous taxation on representation expenses, because, in this part, the AT had already satisfied its claim (see, specifically, Article 31 of the initial request).

The same applies to the assessment acts, regarding which it explains that it only challenges them all because it does not know whether they overlap or if the later one substitutes the earlier one.

In any case, it does not follow, either from the Claimant's pleadings or from the claim with which it concludes them, that it seeks to challenge the segment of the decision on the gracious complaint that was favorable to it (the one concerning representation expenses, from which resulted the annulment of € 96,475.27), nor the assessment act insofar as it executes that decision.

Nor would this make sense, as the Claimant had no interest in obtaining the judicial annulment of what had already been eliminated by the administrative route; nor would it be possible for the tribunal to annul something that did not already exist in the legal order, by virtue of the decision on the gracious complaint.

In conclusion, the invoked exception of lack of jurisdiction of the tribunal is unfounded, the tribunal being shown to be competent to decide the Claimant's claim.

The parties enjoy legal personality and capacity, are legitimate and are duly represented.

No nullities were invoked nor were other exceptions or preliminary issues deduced that would prevent examination of the merits.

IV – FACTUAL MATTERS

The following facts are considered proven:

a) A... is a joint stock company under Portuguese law, whose corporate purpose is the management of shareholdings in other companies, as an indirect form of engaging in economic activities, operating as a Holding Company for Management of Shareholdings ("SGPS").

b) In the year 2015, the Claimant's group included, among others, the following companies: B..., S.A.; C..., S.A.: D..., Lda.; E..., S.A.; F..., S.A.; and G..., S.A..

c) To the group of companies dominated by the Claimant is applied the Special Regime for Taxation of Groups of Companies ("RETGS").

d) On 27/05/2016, the Claimant delivered the corporate income tax return Form 22, relating to the tax period 2015, of the group of companies subject to RETGS dominated by it, proceeding to self-assessment No. ..., and payment of the self-assessed tax in the sum of € 1,627,434.57, on 31/05/2016.

e) On 02/08/2016, the AT proceeded to IRC assessment No. 2016..., relating to the year 2015, from which resulted a sum payable of € 4,436.23, and respective statement of interest accrual No. 2016... .

f) On 21/05/2018, the Claimant filed a gracious complaint against the act of IRC self-assessment No. ..., of 27/05/2016, from which resulted a sum payable of € 1,627,434.57, and the act of assessment No. 2016..., of 02/08/2016, from which resulted a sum payable of € 4,436.23, and respective statement of interest accrual No. 2016... .

g) Such complaint was based on the fact that the assessment of tax suffered from errors, particularly as to the calculations of autonomous taxation on the charges relating to light passenger vehicles and on representation expenses.

h) That complaint was partially granted by order of 09/07/2018, which granted the Claimant's claim regarding the autonomous taxation on representation expenses, annulling € 96,475.27, and dismissed it regarding the autonomous taxation on the charges relating to light passenger vehicles.

i) On 30/07/2018, the AT issued the IRC assessment relating to 2015 numbered 2018..., from which resulted tax to recover in the sum of € 99,618.29, and respective statement of account settlement No. 2018... .

j) From the content of the IRC assessment No. 2018..., of 30/07/2018, it appears that the assessment results "from the decision issued in the Gracious Complaint process with No. ...2018...", by which the Claimant's claim was partially granted, with the sum of € 96,475.27, relating to autonomous taxation on representation expenses, being annulled.

k) On 05/11/2018, the AT issued the additional assessment No. 2018..., from which resulted tax payable of € 217.47, as well as compensatory interest No. 2018... and statement of account settlement No. 2018... .

l) The companies identified in the preceding subsection (b) have, for their normal activity, a fleet of motor vehicles, which includes, in addition to others, approximately one hundred and twenty light passenger vehicles, which are used in the tasks necessary for the exercise of those companies' activity.

m) Those vehicles have their own characteristics (in particular regarding luggage capacity and volume), adequate for their respective use, and are, in their majority, identified externally with the logo of those companies, with the exception of some, unmarked, for convenience of the service in which they are used.

n) They are parked in their own lot, from which they only leave for service, under control of entries and exits, with a delivery record and the driver's responsibility.

o) These vehicles are subject to centralized management, in terms of logistics, usage, control of consumption and mileage, as well as safety.

p) Use for purposes other than exclusively for service is permitted on an exceptional basis, by authorization which, in the year 2015, was never granted nor even requested.

q) Considering the companies' needs, particularly those of readiness (for instance, for news coverage services), long permanence in outdoor spaces (for instance, for the production of TV series), assistance to equipment (for instance, radio retransmission antennas), simultaneous movement of technical staff, reporters, production members, commentators, interviewees, actors, etc., and technical equipment, the Claimant concluded, after economic consideration of the available alternatives (public transport, rental, two-seater vehicles), that the ownership of light passenger vehicles was the best choice.

r) In the 2015 financial year, expenditure on all light passenger vehicles of the business group headed by the Claimant, including those assigned to managers and senior personnel, amounted to € 2,483,328.51, with the respective autonomous taxation in the amount of € 490,667.20.

s) In the same year, expenditure on the approximately one hundred and twenty light passenger vehicles of the business group headed by the Claimant that are used exclusively in the tasks necessary for the companies' activities amounted to € 1,015,723.00.

The facts determined to be proven result from the conviction of the tribunal, based on critical examination of the documents in the case, not challenged, and the consideration of the testimony of the witnesses presented at the hearing and the use of the recorded testimony, collected from prior questioning in another case, with all witnesses testifying with impartiality and demonstrating knowledge of the facts.

Nothing else of interest for the decision of the case was proven, considering that the issue to be decided is restricted to the autonomous taxation on the charges relating to light passenger vehicles.

V – LEGAL MATTERS

A. On the autonomous taxation of charges relating to light passenger vehicles

1. Regarding the substantial issue of autonomous taxation on charges incurred with light passenger vehicles, we will follow closely the content of the judgments delivered in Cases Nos. 628/2014-T, 649/2016-T and 285/2017-T of the CAAD, with which we identify.

2. Now, in this regard, the Claimant alleges, in summary, that the autonomous taxation assessment relating to charges connected with light passenger vehicles, provided for in No. 3 of Article 88 of the CIRC is illegal, since, in its opinion, autonomous taxation is a norm of tax incidence based on presumptions, which in its view, and in accordance with the provision in Article 73 of the LGT, are rebuttable, with the burden on the taxpayer to prove the business nature of the expense.

3. To the contrary, the Respondent alleges, in summary, that Article 88 does not establish legal presumptions (that is, inferences that the law draws from a known fact to establish an unknown fact, as provided for in Art. 349 of the Civil Code).

4. Let us settle that it is essentially a matter of opting for one of two lines of interpretation of the applicable legal regime:

a) That which understands that the letter of the law and the ratio legis itself preclude any exclusion of autonomous taxation regarding charges relating to vehicles of that type that is not provided for literally in Article 88 of the IRC Code, and in particular, any exclusion based on the exclusive business use of those vehicles;

b) That which understands that the exclusive business use of vehicles, once proven, removes autonomous taxation, because this is intended to apply only to situations of "mixed" use of vehicles; or to situations in which, in the absence of proof of such exclusive business use, it can be presumed (and should be presumed, to prevent and deter abuses) that, given the nature of such vehicles, they are susceptible to "mixed" use, that is, both business and personal.

1. Let us begin by considering the relevant numbers of Article 88 of the IRC Code, in the wording in force during the period in question. Now, during the 2015 financial year, Article 88 had two wordings. One until 4 January 2015 and another from 5 January 2015, which remained in force until the end of the financial year. In the part that now concerns us, that is, Nos. 3 to 6 of Article 88, the changes between the two wordings in force in 2015 are not very relevant to the decision of the present case and are confined to the body of No. 3. In any case, we transcribe below both wordings:

No. 3 of Article 88 of the IRC Code, in force between 21 January 2014 and 4 January 2015, provided that:

"Charges incurred or borne by taxpayers not benefiting from subjective exemptions and engaging in commercial, industrial or agricultural activity as their principal activity, relating to light passenger vehicles, motorcycles or mopeds, excluding vehicles powered exclusively by electricity, are subject to autonomous taxation at the following rates:".

Nos. 3 to 6 of Article 88 of the IRC Code, in force from 5 January 2015, established that:

"Charges incurred or borne by taxpayers not benefiting from subjective exemptions and engaging in commercial, industrial or agricultural activity as their principal activity, relating to light passenger vehicles, light goods vehicles referred to in subsection (b) of No. 1 of Article 7 of the Vehicle Tax Code, motorcycles or mopeds, excluding vehicles powered exclusively by electricity, are subject to autonomous taxation at the following rates:

a) 10% in the case of vehicles with an acquisition cost of less than € 25,000;

b) 27.5% in the case of vehicles with an acquisition cost equal to or greater than € 25,000 and less than € 35,000;

c) 35% in the case of vehicles with an acquisition cost equal to or greater than € 35,000.

4 - ...

5 - Charges relating to light passenger vehicles, motorcycles and mopeds shall include, in particular, depreciation allowances, rents or leases, insurance, maintenance and upkeep expenses, fuel and taxes relating to their possession or use.

6 - The following are excluded from the provision in No. 3: charges relating to:

a) Light passenger vehicles, motorcycles and mopeds, allocated to the operation of public transport services, intended to be rented in the exercise of the taxpayer's normal activity; and

b) Motor vehicles regarding which the agreement provided for in No. 9) of subsection (b) of No. 3 of Article 2 of the Personal Income Tax Code has been concluded".

1. Point 9) of subsection (b) of No. 3 of Article 2 of the Personal Income Tax Code (hereinafter, "Personal Income Tax Code"), in the wording in force from 2015, establishes:

"3 - The following are also considered income from dependent work: b) Accessory remuneration, comprising all rights, benefits or advantages not included in principal remuneration that are obtained due to the provision of work or in connection with it and constitute for their beneficiary an economic advantage, in particular: 9) Those resulting from the personal use by the worker or member of the corporate body of a motor vehicle that causes charges for the employer, when there is a written agreement between the worker or member of the corporate body and the employer on the allocation of such motor vehicle to the worker or member of the corporate body;".

1. This is, in this provision of the Personal Income Tax Code, a matter of taxation of what is designated as "fringe benefits" ("employee benefits").

2. Now, when discussing autonomous taxation, as in this case, it is convenient to immediately bear in mind that there are a diverse set of situations, which will encompass, at least, three distinct types, namely:

a) Autonomous taxation of certain income (e.g., No. 6 of Article 73 of the Personal Income Tax Code);

b) Autonomous taxation of certain deductible charges (e.g., No. 3 of Article 88 of the IRC Code);

c) Autonomous taxation of other charges regardless of their deductibility (e.g., Nos. 1 and 2 of Article 88 of the IRC Code).

1. This precision becomes important because it is understood that, given the disparity and heterogeneity of situations subject to autonomous taxation, it will be in this context not only unnecessary, but even counterproductive, the effort to synthesize and seek a common, unitary legal nature, common to all those situations.

2. The nature of the specific autonomous taxation in question in these proceedings has been the subject of extensive discussion in recent doctrine and case law.

3. While one current has viewed them as a tax on expenditure, which would tax certain types of spending, in a manner completely disconnected from income, to the point that there are even those who argue that they constitute their own tax, which would only casually be integrated into the Personal Income Tax and IRC Codes.

4. Nevertheless, there has been recurring acceptance in the case law of the CAAD (e.g., decisions in cases Nos. 187/2013-T, 209/2013-T, 246/2013-T, 260/2013-T, 292-2013-T, 37/2014-T, 94/2014-T and 242/2014-T), the understanding that autonomous taxation on deductible charges, as are those in question in these proceedings, are still part of the regime of taxes governed by the codes in which they are integrated, aiming, albeit in a convoluted manner, at the income taxed by those.

5. Naturally, those who consider the autonomous taxation that now concerns us a tax directly directed at expenditure will conclude that the provision under interpretation, in the wording in force on the date of the taxable event, will not integrate any presumption or fiction, formulating directly, the object of its incidence – the expenditure.

6. It is not considered, however, that this is the most correct understanding, but rather that autonomous taxation impacts on the income of natural and legal persons, and not on consumption or expenditure, as they do not present the main characteristics of this form of taxation, and fitting into a problematic of income taxation regarding which the legislator understood to act at two levels (separately or simultaneously): not accepting the deductibility of some expenses, in whole or in part and/or subjecting them to autonomous taxation.

7. In this framework, the autonomous taxation now in question in these proceedings will, among other things, integrate the list of specific anti-abuse norms.

8. That is, in the cases to which the autonomous taxation borne by the Claimant in these proceedings relates, the legislator could have opted to simply prohibit the deductibility of the expenses, or conditioning it as it deemed appropriate.

9. Instead, the legislator opted not to go that far, allowing the deductibility of the charges in question, against immediate payment of a portion of taxable profit that, present or future, will be affected by such deduction.

10. What has just been stated thus has implicit the finding that autonomous taxation, including that in question in these proceedings, owes much of its reason for being to the circumstance that it will be objectively unfeasible to tax fully on a rigorous basis, in the context of personal income tax, in the potential beneficiaries of the expenses subject to that taxation (which would be equivalent to taxation of fringe benefits as conceived and applied in Australia and New Zealand).

11. It is not overlooked that autonomous taxation of the type that now concerns us has a facet directed directly to the income of natural persons. Just as they have, moreover, a punitive facet – in the sense of imposing unfavorable treatment – regarding the type of expenses that trigger them. However, these facets do not empty, much less preclude, another facet, equally (if not more) relevant, indissolubly linked to income, in the case, of legal persons.

12. It is understood, then, that, by way of the impositions in question, it is also intended, at least to the same extent, to regulate the use by companies of expenses that may be necessary, in part, to the pursuit of normal activity, but that – based on a standard of normality – can also generate benefits to natural persons who end up enjoying them on a personal, not professional, basis.

13. Thus:

a) autonomous taxation only makes sense because the costs/expenses are components of the negative lucrum of the IRC. That is what motivates IRC taxpayers to reflect such high a value as possible of such expenses to diminish the taxable matter of IRC, the collection, and consequently, the tax payable;

b) it is, in general, a matter of modelling the tax system so that it reveals a certain equilibrium with a view to better distribution of the effective tax burden among taxpayers and types of income;

c) certain expenses are regarded unfavorably in which, admittedly, it is not easy to determine the exact measure of the component corresponding to private consumption, and regarding which the general practice of abuse in their reflection is known.

1. Better or worse, the autonomous taxation now in question should thus be understood as a form of preventing certain abusive conduct that the "normal" functioning of the tax system was unable to prevent, given that other forms of combating such conduct, including forms more onerous for the taxpayer, were possible.

2. This anti-abuse character of the autonomous taxation now in question will be not only consistent with its "anti-systemic" nature (as with all norms of the genre), but with a presumptive nature, pointed out both by Professor Saldanha Sanches and by the case law that often cites him.

3. Under the prism that has been expounded, the autonomous taxation in question will then have substantially underlying a presumption of "partial" business nature of the expenses on which they impact, in function of the above-noted circumstance that such expenses lie on a gray line that separates what is business spending, productive, from what is private spending, consumption, it being noted that, in many cases, the expense will actually have in reality a dual nature (in part business, in part private).

4. Faced with such difficulty, the legislator, instead of simply disregarding its deductibility, or reversing the burden of proof of business nature of the expenses in question (by imposing, for instance, the demonstration that "they do not have an abnormal character or an exaggerated amount", as it does, for instance, in No. 8 of Article 88 of the IRC Code), opted to establish the regime currently in force, which, nevertheless, has precisely the same foundation, the same purpose, and the same type of result, as other forms used in other typical situations of the regime (in the case) of the IRC.

5. Thus, from the known fact that is the performance of certain types of expenditures, the legislator draws or fictionalizes the unknown fact, which is the assessment of the degree of business allocation of the product of such expenses.

6. And it is this unknown fact that triggers and justifies the autonomous taxation in question in the present case.

7. Indeed, it was by assuming that the expenses on which that autonomous taxation impacts have, as a norm, a mixed allocation, there being, therefore, unjustified benefit in their full deduction, that the legislator began, in an initial phase, to limit the percentage of those that it admitted as deductible.

8. Subsequently, for reasons that will matter little to the case, but which may pass through budgetary constraints, on the one hand, and the need to ensure the taxation of possible benefits that individuals might derive from those expenses, the legislator adopted the current model of autonomous taxation of the expenses that now concern us.

9. But that did not exclude, rather complemented, that primitive motivation to tax, appropriately, the income of legal persons, distorted by the deduction of expenses, which the legislator presumes to have allocation not entirely business.

10. That is, the budgetary purposes and, possibly, taxation of fringe benefits, which may assist the current regime of autonomous taxation that concerns us, do not exclude, rather are based on, the said presumption of "partial business nature" of the expenses on which they fall (and, complementarily, the distortion of the taxation of the income of legal persons arising therefrom).

11. It is important to clarify that, without prejudice to our not being faced with a true presumption, in the technical-legal sense, under Article 349 of the Civil Code, the reality that we now address does not merit different treatment.

12. Given the conclusion that has just been reached, it is now necessary to determine whether the fiction that has been identified is, or is not, susceptible to being rebutted.

13. In this respect, No. 2 of Article 350 of the Civil Code provides that:

"2 - Legal presumptions may, however, be rebutted by proof to the contrary, except in cases where the law prohibits it.".

1. In coherence, Article 73 of the General Tax Law (hereinafter, "GTL") provides:

"Presumptions established in tax incidence provisions always admit proof to the contrary.".

1. Given the legal framework indicated, it is to be concluded that the fiction of "partial business nature" in question should, in coherence, be considered as covered by the possibility of being rebutted generically established in No. 2 of Article 350 of the Civil Code and Article 73 of the GTL, whether by the taxpayer or by the Tax and Customs Authority, which appears, moreover, to conform to a proper and adequate distribution of the burden of proof, to the extent that, impacting the autonomous taxation in question on expenses of not prima facie evident business nature, it will be the taxpayer who will be better positioned to demonstrate that this requirement verifies concretely.

2. For its part, the Tax and Customs Authority itself, if it so understands and considers that the case justifies the inherent expenditure of resources, can always demonstrate that, regarding the expenses in question, and even though autonomous taxation has impacted on them, the general requirement of Article 23 of the IRC Code is not met, namely its indispensability for the realization of income subject to tax or for the maintenance of the productive source.

3. Thus, and in summary, the autonomous taxation whose charges the Claimant seeks to withdraw from its taxable profit may be regarded as an anti-abuse norm, in which the legislator proposes to the taxpayer one of three alternatives, namely:

a) not to deduct the expense;

b) to deduct, but to pay the autonomous taxation, dispensing both itself and the Tax and Customs Authority from discussing the issue of the business nature of the expense;

c) to prove the full business nature of the expense and to deduct it fully, not bearing the autonomous taxation.

1. The Central South Administrative Court has similarly pronounced itself, in case 1294/14.0BELRS, of 03/08/2018, stating that:

"(...) 3) Through the provisions on autonomous taxation, the legislator proposes to the taxpayer one of three alternatives, namely:

a) not to deduct the expense;

b) to deduct but to pay the autonomous taxation, dispensing both itself and the Tax Authority from discussing the issue of the business nature of the expense;

c) to prove the full business nature of the expense, and to deduct it fully, not bearing the autonomous taxation.

1. The recognition of the presumptive nature of the provisions in question constitutes a safeguard of the non-unconstitutionality thereof".

1. The recognition of this presumptive or quasi-presumptive nature of the autonomous taxation in question in these proceedings, in accordance with the above exposition, will, beyond all else, be a safeguard of its constitutionality, to the extent that it will be guaranteed both the possibility of its full deduction by the taxpayer, and its non-deduction, depending on the side to which the presumption on which it is based is concretely, and in each case, overturned, thus properly ensuring the conformity of the legal regime in question with the principles of tax equality and contributory capacity, which would be unnecessarily (and, occasionally, as in this case, disproportionately) truncated, by the establishment of a non-rebuttable presumption of the partiality of the business allocation of the expenses in question.

2. Article 88 of the IRC Code will thus serve to cut the "Gordian knot" of those undefined situations, or not documented, in which private use may occur in a manner so relevant that it comes to constitute situations partially equivalent to "fringe benefits" of company collaborators, without sufficient proof being possible, whether of that situation, or of the opposite situation – the situation in which such private use is excluded by the circumstances of use of the vehicles or by the characteristics of those vehicles.

3. This is equivalent to saying that proof of the existence of exclusively business use, that is, a use neither "mixed" nor "exclusively private", particularly proof that the vehicles were not, by their nature nor by the circumstances of their actual use, susceptible to such "mixed" or "exclusively private" use, will suffice to preclude the autonomous taxation of the charges relating to that type of use.

4. That proof must be subordinated to the tax objective of income taxes, in whose Codes the regime of autonomous taxation is fully integrated (there being today no doubt that such taxation is not a distinct tax from IRC, but a mere supplement to it).

5. That is, the "exclusively business use", whose existence should be determined, must consist in the unequivocal allocation of the vehicles, by their characteristics or by their actual use, to the activities that constitute the object of the taxpayer, i.e., to the activities that generate its taxable income.

6. Having arrived here, it becomes necessary to determine whether, concretely, the fiction of the provision in No. 3 of Article 88 of the IRC Code in force on the date of the taxable event, as above determined, was, or was not, rebutted.

7. Everything is a matter of determining whether there were criteria for assessment, by the company itself, of such "exclusively business use" of the vehicles – and, in the event such criteria exist, whether compliance with them is proven in terms that can instill in the judge the conviction that such criteria were genuine, and that there existed a prominent and unequivocal interest of the company, in constraining the conduct of its agents to such "exclusively business use".

8. An observance that, in the case, will be translated in the evidence that certain characteristics of the vehicles made a use not "exclusively business" difficult (their external identification with business logos, for instance), or that a system of multidimensional monitoring of the regular and appropriate use of the vehicles was in place (for instance, central fleet management, movement records, expense invoicing, coordinated displacements of groups of vehicles claiming temporal synchronization, usage schedules indicative of short and frequent displacements in daily routine, that is, an "intensive" employment of those production factors).

9. If perchance such criteria do not exist – or, existing, there is no reasonable proof of their compliance in terms of the company's operation tending toward optimization and maximization – then nothing remains but to admit, notwithstanding the business ownership of those assets, the possibility of "mixed" use, both private and business, in competition with each other in the use of each vehicle, given the aptitudes for such use that derive from its nature as a light passenger vehicle "in the low range".

10. And it is in that case, and only in that case, that the cutting of the "Gordian knot" of indefinition (with its potential for abuse) through the use of the "ad hoc" sword of autonomous taxation will be justified.

11. Autonomous taxation will thus apply supplementarily, in the absence of proof, whether of "exclusively private" use, or of "exclusively business" use – although it cannot be ruled out that the taxpayer itself takes the initiative to provide proof of "mixed" or "non-exclusive" use, directly invoking the application of autonomous taxation.

12. But the possibility of proof that precludes the supplementary regime is essential for taxation that is not – nor could be without harm to the system, without illegality or without unconstitutionality – taxation of expenditure, to be reconcilable with the principles of tax equality and contributory capacity.

13. On the other hand, because it is from that indefinition of actual use that the reasoning for resorting to autonomous taxation stems, the corresponding proof of "exclusive business nature" cannot, nor should it be confused with another proof, that of the "essentiality" of expenses and losses that is demanded by Article 23 of the IRC Code, and which concerns, in another broader dimension, the determination of the taxable profit of the taxpayer.

14. From all the above, and from confrontation with the factual matters we have found proven, it follows the conclusion that the Claimant has provided sufficient proof that the charges relating to the light passenger vehicles that are in question in these proceedings should not have been subject to autonomous taxation, because those vehicles were, within the most stringent reasonably exigible criteria, object of exclusively business use.

15. What has been proven, and is relevant here, is that, regarding the group of vehicles that the Claimant chose as suitable to illustrate that "exclusively business use", they were subject to various conditions that made private use that conflicted with business use unfeasible: whether by their identification, or by their characteristics, or by their joint use in coordinated activities, or even by their relative scarcity in the face of operational demands, or even by a combination, in different proportions, of various of these conditions.

16. It was proven, in the case, that these were genuine "service vehicles", indispensable for the efficient operation of the companies – and that, therefore, by direct implication, any use that was not "exclusively business" would significantly interfere with that efficiency, in the optimization of the operation of the companies, in the maximization of their income and profit.

17. It follows from this, in the most elementary logic, that private use of vehicles intended for exclusively business use, to the extent it competed with such use, interfered with it, limited it, would result in losses for the companies themselves that would always far exceed any value that, with such employment, was sought to be recovered in terms of "tax planning".

18. Nothing, in what has been proven, demonstrates that, in the view of the Claimant itself, the system actually set up for monitoring and surveillance of "exclusively business" use of the vehicles in question has brought harm to its operation – without excluding that this may have occurred with other vehicles that were not these, among those that the Claimant chose to leave out of these proceedings.

19. It does not appear proper that, to the contrary, a company can be required to a type of monitoring that exceeds normal business criteria, and even less that it be required to provide a "standard" of proof that, being so onerous, would convert such proof into impossible or "diabolic".

20. It is concluded that the Claimant has provided the possible proof, and thus the proof required given the very "anti-abuse" normative scope, as to the "exclusively business" use of the vehicles in question; and that, once such proof is provided, it follows, in accordance with the dominant line of interpretation (and, we believe, the only one compatible with legality and with the non-unconstitutionality of autonomous taxation), that the corresponding charges should not be subject to the regime of autonomous taxation provided, on the date of the facts, in Article 88 of the IRC Code.

21. In this context, it is concluded, then, that the fiction of Article 81, No. 3 of the IRC Code in the wording in force on the date of the taxable event should be considered as rebutted, so that, demonstrating that the vehicles to which the charges on which autonomous taxation impacted in the present arbitral case relate have 100% business allocation, these should not be subject to the incidence of that taxation.

B. On the request of 3 April 2019

1. On 3 April 2019, pending the case, the Claimant was notified of a "Statement of Financial Re-settlement of IRC Assessment", reported to the act of additional assessment No. 2018..., indicating an amount to recover, and being accompanied by:

· Statement of Assessment of Compensatory Interest No. 2018...

· Statement of Account Settlement No. 2019... .

1. It happens, however, that, as the Claimant notes, that "Statement of Financial Re-settlement of IRC Assessment" is in every respect identical to the "Statement of Assessment relating to the act of additional assessment No. 2018...", as can easily be verified from the comparison of both, attached as annexes (documents 1 and 2) to the request of 3 April 2019.

2. Hence, the request, conveying some perplexity, petitioned, as a safeguard, the expansion of the claim, because it was not evident to the Claimant whether or not there was a new assessment.

3. And given that the only difference between the two aforementioned documents is the reference to a new assessment of compensatory interest – or, at least, a new numbering of such compensatory interest (No. 2019 ..., when previously it was No. 2018...), since its value does not change, it specifically petitions the recognition of the illegality of such compensatory interest.

4. This tribunal understands that the absolute coincidence of values allows only the conclusion that the "Statement of Financial Re-settlement of IRC Assessment" is completely redundant in relation to the "Statement of Assessment relating to the act of additional assessment No. 2018...", no additional clarifications being necessary, such as those which, also as a safeguard, the Claimant requested.

5. And the only practical consequence is that, to the annulment of compensatory interest No. 2018..., will be added the annulment of compensatory interest No. 2019... – thus undoing any effective consequence of some confusion that might subsist.

6. Thus, in compliance with what was decided in the judgment of the TCAS of 18 March 2025, Case No. 116/19.0BCLSB, the defect of omission of pronouncement that had made the challenge to the arbitral decision well-founded, in that judgment, is remedied.

C. Conclusion

1. Given the above, the present arbitral action should be found well-founded and, consequently, the assessments subject to these proceedings should be annulled, as requested.

2. Taking into account that it appears in the AT's answer a tabulated allegation that "the Claimant should not be admitted the desired proof of alleged full business nature, under penalty of violation of the principle of tax legality, in the facet of generality and abstraction that permit and enhance the equality of taxpayers before tax law, and therefore, under penalty of violation of the principle of tax equality, which follow from Article 13 and Article 103 of the CRP", it is hereby noted that it is considered that the same does not formulate any concrete issue of constitutionality that creates an obligation to pronounce for this Tribunal, to the extent that it is a mere generic formulation of a supposed non-concretized understanding, where it is not indicated, furthermore, which specific norm or normative segment the reference is to (being that the systematic insertion appears to suggest it is the norm on which the Claimant founds its request for indemnitory interest), nor how, to what extent and why the supposed interpretation presented by the Claimant violates each of the constitutional norms it lists.

D. On the reimbursement of sums paid and indemnitory interest

1. Beyond the above, the Claimant also petitions the reimbursement of the sum paid with indemnitory interest from the date of payment until full reimbursement of said sum.

2. Pursuant to the provision in subsection (b) of No. 1 of Article 24 of the RJAT, the arbitral decision on the merits of the claim from which no appeal or challenge may lie binds the AT from the end of the period provided for the appeal or challenge, and this authority, in the exact terms of the well-foundedness of the arbitral decision in favor of the taxpayer and until the end of the period provided for the spontaneous execution of judgments of tax judicial tribunals, must "restore the situation that existed if the tax act subject to the arbitral decision had not been carried out, adopting the acts and operations necessary for that purpose".

3. Consequently, and in accordance with what is established in Article 100 of the GTL applicable ex vi subsection (a) of No. 1 of Article 29 of the RJAT, "the tax authority is obliged, in case of total or partial well-foundedness of complaint, judicial challenge or appeal in favor of the taxpayer, to the immediate and full restoration of the legality of the act or situation subject to the litigation, comprising the payment of indemnitory interest, if applicable, from the end of the period of execution of the decision".

4. Thus, and notwithstanding the fact that subsections (a) and (b) of No. 1 of Article 2 of the RJAT use the expression "declaration of illegality" to delineate the material scope of jurisdiction of arbitral tribunals, making no reference to condemnatory decisions, it should be understood that it comprises the powers that in contentious challenge proceedings are attributed to tax tribunals.

5. Indeed, this is the interpretation that best accords with the purpose underlying the creation of arbitral tribunals in tax matters, i.e., that these constitute an alternative means of dispute resolution and, consequently, an alternative to contentious challenge proceedings and to action for the recognition of a right or legitimate interest in tax matters.

6. It should be noted that, although contentious challenge proceedings constitute contentious proceedings of mere annulment of tax acts, the condemnation of the AT to the payment of indemnitory interest is permissible, as provided in No. 1 of Article 43 of the GTL.

7. Pursuant to the aforementioned article: "[i]ndemnitory interest is due when it is determined, in gracious complaint or judicial challenge, that there was error attributable to the services from which resulted payment of the tax debt in an amount higher than legally due" (emphasis and underlines).

8. Moreover, it follows from No. 5 of Article 24 of the RJAT itself that "[i]ndemnitory interest is due, regardless of its nature, in accordance with the terms provided in the general tax law and in the Code of Tax Procedure and Process".

9. In this sense, Counselor JORGE LOPES DE SOUSA states that: "[n]ow, although contentious challenge proceedings are essentially proceedings of mere annulment (Articles 99 and 124 of the CPPT), condemnation of the Tax Authority to the payment of indemnitory interest and compensation for undue guarantee may be delivered therein. In fact, although there is no express provision to that effect, it has been pacifically understood in tax tribunals, since the entry into force of the codes of the fiscal reform of 1958-1965, that in contentious challenge proceedings the request for condemnation in the payment of indemnitory interest