Process: 513/2017-T

Date: May 2, 2018

Tax Type: IRS

Source: Original CAAD Decision

Summary

This CAAD arbitration case (Process 513/2017-T) addresses whether seniority (antiguidade) for calculating IRS exemptions on severance indemnities should include total banking sector service or only service with the terminating employer. The claimants challenged an additional IRS assessment of €26,780.27 for fiscal year 2013, arguing that Article 2(4) of the IRS Code should recognize their entire banking career under collective labor agreements (ACT) applicable to the banking sector. They invoked Article 11(2) of the General Tax Law (LGT), which requires tax concepts to be interpreted consistently with other legal branches, particularly labor law. The Tax Authority countered that seniority means time served with the specific employer paying the indemnity, not cumulative sector experience, even when labor contracts or collective agreements recognize broader seniority for other purposes. The AT emphasized the anti-abuse purpose of Article 2(4) IRS Code, designed to prevent artificial seniority arrangements for tax avoidance. The claimants also raised constitutional equality concerns, citing instances where the AT accepted broader seniority interpretations in similar cases. This case reflects fundamental tensions between labor law concepts incorporated into collective bargaining and strict tax law interpretation, particularly regarding the scope of IRS exemptions on termination payments. The decision has significant implications for banking sector employees and similar industries where collective agreements recognize cumulative professional experience across multiple employers within the same sector.

Full Decision

ARBITRAL DECISION

The Arbitrator, Dr. Henrique Nogueira Nunes, designated by the Deontological Council of the Center for Administrative Arbitration ("CAAD") to form the Arbitral Tribunal, constituted on 6 December 2017, hereby decides as follows:

1. REPORT

1.1

A... and B..., respectively with individual taxpayer numbers ... and ..., residents at Rua ..., no. ..., ..., hereinafter referred to as the "Claimants," requested on 15 September 2017 the constitution of the Arbitral Tribunal under Articles 2, subsection 1, paragraph a) and 10 of Decree-Law No. 10/2011, of 20 January (hereinafter "RJAT").

1.2

The request for constitution of the arbitral tribunal was accepted by the Esteemed President of CAAD and automatically notified to the Tax and Customs Authority on 28 September 2017.

1.3

The request for arbitral ruling concerns the declaration of illegality of the tax act embodied in the additional assessment of Personal Income Tax ("IRS") No. 2016..., and statement of account No. 2016..., which resulted in a payment value of €26,780.27, concerning the fiscal year 2013, including the amount of €1,967.94 as compensatory interest.

The arbitral tribunal was regularly constituted and is materially competent in accordance with the provisions of Articles 2, subsection 1, paragraph a) and 30, subsection 1 of RJAT.

The parties possess legal personality and capacity and are legitimately interested (Articles 4 and 10, subsection 2 of RJAT and Article 1 of Order No. 112-A/2011, of 22 March).

The process does not suffer from nullities, nor was any matter of exception raised.

1.4

To substantiate their request, the Claimants allege, in summary, the following defects:

(i) That the aforementioned additional IRS assessment and Compensatory Interest suffers from the defect of violation of law, insofar as the concept of seniority is not regulated in tax law, recourse must be had to the regime of Article 11, subsection 2 of the LGT, which determines that concepts must always be interpreted in the identical sense to those they have in other branches of law, including labor law.

(ii) And that since the Labor Code makes no reference to the concept of seniority, recourse must be made to instruments of collective regulation, recognized as sources of law, which may establish or clarify legal concepts.

(iii) Being Claimant A... unionized in unions subscribing to the Collective Labor Agreement, they understand that the corresponding text applicable to the banking sector is applicable to them.

(iv) And that this entails that the worker's seniority encompass all years of work provided in credit institutions headquartered in Portugal, as they understand that seniority should be calculated from the beginning of functions in the banking sector.

(v) And that the seniority to be considered is that corresponding to the totality of the time of service provided by Claimant A... in credit institutions in Portugal, by force of the application of the Collective Labor Agreement of the Banking Sector and the individual labor contracts which always, they say, expressly considered it in this manner.

(vi) And that the AT's interpretation is illegal by being excessively restrictive, ignoring a source of labor law.

(vii) Invoking diverse jurisprudence that has already pronounced on such concept.

(viii) And in previous positions of the responsibility of the Finance Directorates of ... and ... .

(ix) And that the AT cannot alter its orientation without any substantiation of change of circumstances.

(x) They also invoke the unconstitutionality of the additional assessment carried out by the Respondent by violation of the principle of equality, alleging that in cases similar to those in the record the AT acted differently, considering in some cases that the indemnities paid by the Bank in question in the record were not subject to taxation.

(xi) Based on judicial proceedings that followed their course in the Administrative Court of First Instance (TAF) of Leiria, on the basis of the revocation of the act of assessment itself by the Finance Director of ... .

(xii) And that the constitutional structuring principle of equality translates into the prohibition of arbitrariness so that equal situations receive equal treatment and different situations receive disparate treatment, the AT violating with its conduct the constitutional command provided in Articles 13 and 104, subsection 1 of the CRP.

(xiii) Finally, they invoke that the Bank paying the indemnity in question in the record is responsible for the payment of the IRS not withheld, and such Bank should be responsible for the payment of the tax in question in the record.

1.5

The Tax and Customs Authority, hereinafter referred to as the "Respondent" or "AT," responded, in summary, as follows:

It comes to defend itself by challenge.

(ii) It understands that the seniority to be calculated, for purposes of subsection 4 of Article 2 of the IRS Code, is seniority with the entity owing the compensation for termination of the employment contract, and the seniority with a previous employer is not to be considered, in the application of the said legal provision, even if the worker and the new employer have agreed to consider it in any future "indemnities," by labor contract or arising from instruments of collective regulation.

(iii) And that although instruments of collective regulation – but not only these – allege various qualifications of labor seniority, the truth is that the Labor Code does not define what "seniority" is nor presents a univocal qualification of it, being found, however, abundantly, the prevalence of the notion of "seniority with the company," including in matters of termination of employment contract.

(iv) And that by analyzing the content of the collective labor agreements of the banking sector containing clause 17 (under the heading "Determination of Seniority"), it follows that, beyond the indemnifying regime by substitution of reinstatement resulting from the unlawfulness of dismissal, such instruments do not bear on compensations/indemnities for expiration of the employment contract, for dismissal for objective cause, for termination of contract by the worker on grounds of unlawful act of the employer or by mutual agreement of distrait/revocation of the employment contract – matters which, rightly considered, are therefore excluded from the normative effects arising from such clause 17, simply because they do not form part of "all effects provided" in such instruments.

(v) The legal regime of Article 2, subsection 4, of the IRS Code underlies a notorious anti-abuse purpose, characteristic of special clauses preventive of tax evasion – a purpose which has special reason to be, for it would not in any case be acceptable agreements that provided on labor seniority recognizing merely artificial seniorities and imposing such recognition for purposes of negative delimitation of the scope of taxation.

(vi) And that in any case, recourse to subsection 2 of Article 11 of the LGT would always imply the prior assumption of a methodologically valid criterion that would permit choosing one of the multiple qualifications of seniority existing in the labor sphere, to the exclusion of all others, something which the jurisprudence on which the Claimants rely did not express.

(vii) It understands that the central question in the record concerns whether that paragraph b) of subsection 4 of Article 2 of the IRS Code, as holding a proper sense of the concept of "seniority with the company" the existence of which it proves, can be permeable to other qualifications of seniority agreed in legal instruments of a negotiating nature, bilateral or collective, that impose on the entity owing the pecuniary benefit referred to in that norm a seniority greater than that corresponding to the duration of the contractual relationship granted by such entity.

(viii) And that what is at issue in the record is whether such negotiating legal instruments can impose the scope of taxation itself, as if it were voluntary taxation.

(ix) And that the spirit of the law demands an interpretation in literal terms of the expression "number of years or fraction of seniority or exercise of functions with the entity owing" referenced to the "entity owing," not admitting that in "seniority with the entity owing" be considered, beyond the seniority inherent to the effective duration of the contractual relationship granted by that entity, augmentations deriving from negotiating legal instruments.

(x) And that the "entity owing" to which subsection 4 of Article 2 refers must be the "employer entity" mentioned in subsection 10 of the same legal provision, which becomes explicit when in subsection 4 the exclusion from taxation is conditioned on not creating a new professional or business relationship within 24 months with the same "entity."

(xi) Regarding tax substitution, it refers to what was expressly agreed between the bank and the Claimant in subsection 5 of clause 15 with the heading Taxes and Contributions of the agreement for revocation of the employment contract which states "in case of legislative change that modifies the regime set out in this clause, or of jurisprudential orientation, with respect to the decisions mentioned in subsection 2, from which results a different interpretative line of the same regime, the net value of the global pecuniary compensation established in clause two remains unchanged, being in no case required of C... to bear, in whole or in part, the taxes or contributions that are owed by the employee by virtue of the payment of the said compensation, or that, in any other way, compensates them for these facts."

(xii) Wherefore it urges the total rejection of the present request for arbitral ruling, maintaining in the legal order the tax act of additional assessment being challenged and absolving, accordingly, the Respondent of the request, all with the due and legal consequences.

1.6

The Tribunal understood it appropriate to dispense with the holding of the first meeting of the Arbitral Tribunal, in accordance with the provision of Article 18 of RJAT, having notified the parties to, if they so wished, present arguments, the AT having presented Arguments whereby it reinforced its position.

The Claimants were further notified for the payment of the subsequent arbitral fee and its communication to CAAD.

A deadline was set for the pronouncement of the arbitral decision by the end of the legal deadline.

1.7

The Tribunal was regularly constituted and is competent in respect of the subject matter, in accordance with Article 2 of RJAT.

The parties have legal personality and capacity, demonstrate themselves to be legitimately interested and are regularly represented (cf. Articles 4 and 10, subsection 2 of RJAT and Article 1 of Order No. 112-A/2011, of 22 March).

No nullities were identified in the process.

2. ISSUES TO BE DECIDED

In their arbitral petition the Claimants formulate the following essential issues for which they request the appreciation of the Tribunal:

  • They raise the defect of violation of law of the assessment act.
  • They raise the defect of unconstitutionality by violation of the principle of equality.
  • They raise, finally, the responsibility for payment of the tax in issue in the record, which would be that of the Bank paying the indemnity and not of the Claimants under the mechanism of tax substitution.

3. FACTS

With relevance for the appreciation and decision on the merits, the following facts are taken as proven:

A) The Claimants were the subject of an inspection action carried out by the inspection services of the DF of ..., from which resulted corrections, in the context of IRS for the year 2013, through assessment No. 2016... (Document No. 1 attached to the record by the Claimants).

B) Not agreeing with the said assessment, the Claimants filed an administrative complaint, to which was attributed the complaint proceeding No. ...2016... (Document No. 2 attached to the record by the Claimants).

C) Following the rejection of the administrative complaint filed, the Claimants filed a Hierarchical Appeal against such rejection, to which was attributed No. ...2017... (Document No. 4 attached to the record by the Claimants).

D) The Claimants were notified of the rejection of the hierarchical appeal on 23/06/2017 (Document No. 5 attached to the record by the Claimants).

E) Claimant A... worked at Bank C... between 01/09/2009 to 31/05/2013 (Document No. 8 attached to the record by the Claimants).

F) On 29/04/2013, and within the scope of a business restructuring plan of Bank C..., this Bank and the Claimant signed an agreement for revocation of employment contract in which it was established in subsection 2 of the respective Clause 15:

"Having regard to the applicable terms of Clause 17 of the Collective Labor Agreements of the Banking Sector ("CLA") and considering the interpretation sustained in the decisions of the Central Administrative Court South of 11 May 2004 (Proceeding 06002/01) and, in particular, of 21 September 2010 (Proceeding 03478/10), both parties agree on the determination of the Employee's seniority by counting their time of service in banking entities indicated in the said clause of the CLA, for purposes of what is provided in paragraph b) of subsection 4 of Article 2 of the Personal Income Tax Code, as amended by Article 108 of Law No. 64B/2011, of 30 December." (Document No. 6 attached to the record by the Claimants).

G) An indemnity of €79,008.00 was paid to Claimant A..., corresponding to 19 years of seniority, for revocation of the employment contract. (cf. Document No. 6 attached to the record by the Claimants).

H) The said indemnity was calculated on the basis of the Claimant's seniority, not only in Bank C..., (where they were employed for less than 4 years), but also in Bank D... where they had previously worked.

I) Upon payment of the indemnity, Bank C... considered that it was not subject to taxation in IRS, insofar as it did not exceed the limit referred to in subsection 4 of Article 2 of the IRS Code, as worded at the time of the facts.

J) Claimant B... was unionized in the Union of Managers and Technicians of the Banking Sector; Union of Bankers of the North and Union of Bankers of the Center (Documents Nos. 9, 10 and 11 attached to the record by the Claimants).

K) In 2013, Clause 2 of the Collective Labor Agreement of the banking sector established that:

"This Collective Labor Agreement is applicable throughout the national territory, in the scope of the banking sector, and binds the Credit Institutions and Financial Societies that subscribe to it (hereinafter generically referred to as Credit Institutions or Institutions), as well as all workers in their service affiliated with the Unions of Bankers of the Center, North and South and Islands, represented by the signing party FEBASE – Federation of the Financial Sector and hereinafter referred to as Unions, covering 26 employers and estimated at 54,300 covered workers."

Bank C... subscribed to the CLA with the following reservation:

"In counting the time of service for any purposes arising from the CLA, only the time of service provided to the Institutions themselves signing this reservation shall count, plus possibly the time of service provided to other institutions signing this reservation, plus possibly the time of service provided to other entities or companies, but, in this case, only insofar as it results from individual agreement between them and the worker."

L) The individual employment contract of Claimant A... attached to the record by the Claimants has a Clause 7, under the heading 'Seniority,' according to which:

"1. The Bank guarantees to the second Party the seniority arising from the provision of service to other Credit Institutions, from the date appearing in the Statement of Seniority issued by the previous employer, documentarily proven, but only for the following purposes:

a) For purposes of the C... Pension Fund, the First Party shall take into account the time of service provided to other credit institutions, the amount of disability retirement being calculated in accordance with the regime provided for in the ACTV of bankers.

b) The part of retirement corresponding to the time of service provided by the Second to the First Party shall be calculated in accordance with Clause 6 of the C... Pension Plan.

c) The time of service provided to other Credit Institutions prior to the signing of this contract shall also not be taken into account for calculating the number of seniorities."

M) The assessment in issue in the record was paid on 29/07/2016 (Document No. 23 attached to the record by the Claimants).

N) On 15-09-2017 the Claimants filed a request for constitution of the Arbitral Tribunal with CAAD – cf. electronic request in the CAAD system.

4. FACTS NOT PROVEN

There are no facts with relevance for the decision of the case that have not been proven.

5. REASONING ON FACTUAL MATTERS

As to the essential facts, the settled matter is conformed identically by both parties and the Tribunal's conviction was formed on the basis of the documentary (official) elements attached to the record and above itemized whose authenticity and veracity was not questioned by either party.

6. ON THE LAW

In accordance with the issues set out in point 2 of this Decision, and taking into account the facts established in point 3, it is now necessary to determine the applicable law.

On the defect of violation of law

This arbitral proceeding is part of a dispute relating to the tax treatment, in the context of IRS, of indemnities paid to workers by their respective employers.

Within the scope of proceedings that have been conducted under the aegis of CAAD and that have addressed this matter, we may identify, by way of mere example, proceedings 126/2017-T, 158/2017-T; 280/2017-T; 349/2017-T; 353/2017-T, 357/2017-T and more recently proceeding 505/2017-T, the direction of the decision and respective reasoning of which have varied.

In particular, it concerns the exemption of the indemnity received (in this case the totality, but in other cases only partial) and the concept of seniority to which subsection 4 of Article 2 of the IRS Code refers.

The prevailing jurisprudence of the Judicial Courts and Arbitral Tribunals in this matter has tended to accept that the concept of seniority should include previous labor ties provided these have occurred in the same activity and there exist Collective Labor Agreements (CLA) to that effect.

As Nuno Oliveira Garcia says in proceeding 126/2017-T, "That is to say, that all jurisprudence – from the Supreme Administrative Court to CAAD – attributes relevance, for purposes of the cited IRS exemption, to the time of service provided by the worker to entities of the same sector, always provided that the following requirements are met cumulatively; namely:

  • The new employer has subscribed to the CLA of its respective sector;
  • There exists an individual agreement between the worker and the new employer (as a rule, the employment contract) in the sense of the relevance of the time of service provided to entities of the same sector; and,
  • The worker is affiliated with the respective union."

And this Arbitral Tribunal shares the same opinion, all the more so that in this case, as we saw in the facts, the CLA subscribed by Bank C... makes relevant the "time of service provided to other subscribing institutions" of the CLA, but only "provided that it results from individual agreement between them and the worker."

From the facts given as proven in the present record, it is proven that the entity paying the indemnity, Bank C..., subscribed to the CLA of its respective sector, and that Claimant A... was affiliated with the relevant union, two of the essential requirements for recognition of the worker's seniority in the sector with respect to previous employers.

The remaining requirement – imposed by the CLA itself subscribed by Bank C..., relates to the existence of an individual agreement between the worker and the new employer in the sense of the relevance of the time of service provided to entities of the same sector.

As to this last point, it was proven in the record that, as is customary in labor relations, there were two agreements; (i) employment contract which established, in 2009, the beginning of the labor relationship and which would last until May 2013; and (ii) agreement for revocation of employment contract which established, in 2013, precisely the terms of the termination of the first agreement.

It is thus necessary to determine which of the agreements is relevant for the proper application of law to the facts, a circumstance all the more relevant when, as also results from the record, the relevance attributed to seniority in the sector is different depending on the agreement being analyzed. Indeed, while in the employment contract signed in 2009 there is a taxative and exhaustive limitation of the extension of the relevance of the concept of seniority in the sector (that is, there is a clear negative limitation of that extension), already in the agreement for revocation of the employment contract, and for purposes of calculating the value of the indemnity, the seniority of the sector was considered.

Here we follow the position expressed by Carla Trindade in proceeding 616/2015-T, followed by Nuno Oliveira Garcia in proceeding 126/2017-T, in cases similar to the present, in which it was considered that the concept of seniority for purposes of counting the time provided with other employers cannot derive from the execution of an agreement for revocation of the employment contract, since this does not represent any amendment to the individual employment contract. Now, in this case, not resulting from the individual employment contract executed between Bank C... and Claimant A..., nor even from the CLA directly, the time provided with other entities for purposes of calculating indemnity, the only seniority to consider in the calculation of the indemnity for revocation of the employment contract will be that of Claimant A... with Bank C..., which is why not all the indispensable requirements are met to ensure that the concept of seniority encompasses the period of service provided at Bank D....

Therefore, this request does not succeed.

On unconstitutionality by violation of the principle of equality

As to this request, it is necessary to say as follows.

The AT appears to demonstrate a lack of historical coherence in the presentation of its argument which can in no way be understood given the uncertainty it transmits to taxpayers.

However, this Tribunal does not have full possession of all the facts that led to the revocation of the tax acts in the proceedings which the Claimants invoke, which, moreover, were carried out by other Finance Directorates, in this case, ... and ..., nor is it asked that it examine the conduct of the AT as an institution (for which, moreover, it would not have competence) but rather to appreciate the legality of the concrete assessment act in issue in the record.

In any case, since this Arbitral Tribunal is not bound by jurisprudential precedents (Article 2, subsection 2, of RJAT), and much less by administrative guidelines emanated from the Tax and Customs Authority, it understands that the application of law which it made to the facts in issue in the record is correct in light of what is provided in law, being unable this Tribunal to judge with recourse to equity.

By the above, this request does not succeed.

On responsibility for payment of the tax, which would be that of the Bank paying the indemnity and not of the Claimants under the mechanism of tax substitution

As to this request it is important to note that it was agreed between Claimant A... and Bank C..., in clause 15, subsection 5 of the agreement for revocation of the employment contract, according to which "in case of legislative change that modifies the regime set out in this clause, or of jurisprudential orientation, with respect to the decisions mentioned in subsection 2, from which results a different interpretative line of the same regime, the net value of the global pecuniary compensation established in clause two remains unchanged, being in no case required of C... to bear, in whole or in part, the taxes or contributions that are owed by the employee by virtue of the payment of the said compensation, or that, in any other way, compensates them for these facts."

That is, such exclusion of responsibility was expressly agreed by the then parties, and the Claimants cannot now come to claim that Bank C... assumes that responsibility as a tax substitute.

Therefore, this request also does not succeed.

On the request for payment of compensatory interest

Finally, there remains to be considered the request for condemnation of the Respondent in the payment of compensatory interest in accordance with Article 43, subsection 1, of the LGT.

Considering that in accordance with the above, the additional IRS assessment act does not suffer from the defects of violation of law that are attributed to it in the request for arbitral ruling, the request for declaration of its illegality not succeeding, the request for compensatory interest, which is raised as a consequence of the invoked illegalities, necessarily does not succeed.

7. DECISION

In light of the above, this Single Arbitral Tribunal agrees to:

  • Judge the request for arbitral ruling to be wholly without merit.

The value of the proceeding is fixed at Euro 26,780.27, in accordance with the provisions of Articles 3, subsection 2 of the Regulation of Costs in Tax Arbitration Proceedings (RCPAT), 97-A, subsection 1, paragraph a) of CPPT and 297 of CPC.

The amount of costs is fixed at Euro 1,530.00, under Article 22, subsection 4 of RJAT and Table I annexed to RCPAT, to be borne by the Claimants, in accordance with the provisions of Articles 12, subsection 2 of RJAT and 4, subsection 4 of RCPAT.

Let notice be given.

Lisbon, 2 May 2018.

The Arbitrator,

Dr. Henrique Nogueira Nunes

Document prepared by computer, in accordance with Article 131, subsection 5 of the Code of Civil Procedure, applicable by referral from Article 29, subsection 1, paragraph e) of RJAT.

The wording of this arbitral decision is governed by the spelling preceding the Orthographic Agreement of 1990.

Frequently Asked Questions

Automatically Created

How is seniority (antiguidade) calculated for IRS tax purposes on severance indemnities in Portugal?
For IRS tax purposes on severance indemnities in Portugal, seniority (antiguidade) is generally calculated based on the duration of service with the specific employer paying the compensation, not cumulative service across multiple employers. Article 2(4) of the IRS Code provides partial exemptions based on seniority, but the Tax Authority interprets this as referring to service time with the terminating entity. This interpretation prevails even when labor contracts or collective agreements recognize broader seniority definitions for other employment purposes, as the tax law concept serves an anti-abuse function to prevent artificial arrangements.
Can collective labor agreements (ACT) be used to define seniority for Portuguese income tax (IRS) exemption calculations?
The use of collective labor agreements (ACT) to define seniority for IRS exemption calculations is contested. While Article 11(2) of the LGT requires tax concepts to be interpreted consistently with other legal branches, the Tax Authority argues that labor law itself presents multiple definitions of seniority, and collective agreements cannot override the specific tax law purpose of Article 2(4) IRS Code. The AT maintains that ACT provisions recognizing cumulative sector experience apply to specific labor rights but not to tax exemption calculations, which require seniority with the compensating employer. This position has created divergent administrative practices and constitutional equality concerns.
What does Article 11(2) of Portugal's General Tax Law (LGT) say about interpreting concepts from other branches of law?
Article 11(2) of Portugal's General Tax Law (LGT) establishes that tax law concepts used in other legal branches must be interpreted with the same meaning as in those branches of law, unless the legislator defined them differently for tax purposes. However, this interpretive rule becomes complex when the referenced branch of law (such as labor law) contains multiple definitions of the same concept. In tax disputes involving employment termination indemnities, this provision is frequently invoked to argue that labor law definitions of seniority should apply to IRS calculations, though the Tax Authority maintains that the specific anti-abuse purpose of tax provisions justifies autonomous interpretation.
How does CAAD arbitration handle disputes over additional IRS tax assessments on employment termination compensation?
CAAD arbitration handles disputes over additional IRS assessments on employment termination compensation by examining whether the Tax Authority correctly applied Article 2(4) of the IRS Code, which provides partial exemptions based on seniority and compensation amount. The arbitral tribunal reviews whether the AT properly calculated taxable amounts, whether legal interpretations align with Article 11(2) LGT regarding cross-disciplinary concepts, and whether constitutional principles like equality were violated. These cases often involve complex interactions between tax law, labor law, and collective bargaining agreements, with CAAD providing an alternative dispute resolution mechanism to traditional administrative courts for taxpayers challenging assessments.
Is total banking sector service time considered as seniority for calculating IRS-exempt severance pay in Portugal?
Whether total banking sector service time is considered as seniority for calculating IRS-exempt severance pay in Portugal depends on the interpretation of Article 2(4) IRS Code. The Tax Authority's position is that only service time with the specific terminating employer counts, regardless of collective labor agreements in the banking sector that recognize cumulative industry experience. The claimants argue that Clause 17 of banking sector collective agreements, which recognizes total credit institution service in Portugal, should apply to tax calculations per Article 11(2) LGT. This dispute reflects inconsistent administrative practices, with some Finance Directorates accepting broader interpretations while others reject them, creating uncertainty for banking sector employees regarding tax treatment of severance payments.