CAAD 542/2017-T: IRC Tax Benefits Deduction Against Autonomous Taxation – SIFIDE, RFAI & CFEI Credits

ARBITRAL DECISION

The arbitrators Dr. Judge José Poças Falcão (arbitrator president), Dr. Sofia Ricardo Borges (arbitrator rapporteur) and Dr. Raquel Franco (arbitrator) appointed by the Ethics Council of the Administrative Arbitration Center to form the Arbitral Tribunal, constituted on 20.12.2017, hereby agree on the following:

1. Report

The company "A..., SGPS, S.A.", collective person no. ..., with registered office at Rua ..., no. ..., ...-..., municipality of Braga, with share capital of € 500,000.00 (five hundred thousand euros), dominant company of "Fiscal Group B...", hereinafter also the "Claimant", filed a petition for the constitution of a collective Arbitral Tribunal, in accordance with the combined provisions of articles 2, no. 1 paragraph a) and 10, no. 1 paragraph a) and no. 2 of Decree-Law no. 10/2011, of 20 January (Legal Regime of Arbitration in Tax Matters, hereinafter "RJAT"), in which the Tax and Customs Authority is Respondent, hereinafter "Respondent" or "TA".

It thus petitions and in summary: (i) that the illegality of the rejection of the administrative claim filed by it be declared, in which it requested the annulment of the self-assessments of CIT of the Fiscal Group of which it is the dominant company, relating to the tax years 2014 and 2015, in the parts concerning the autonomous taxation rates, for non-deduction from the collection resulting therefrom of available credits under Tax Benefits, (ii) that the illegality of the first-instance act consisting of said self-assessments be declared, with the consequent annulment in its parts corresponding to the amounts resulting from the autonomous taxation rates, respectively of € 108,928.39 (tax year 2014) and € 110,905.19 (tax year 2015), for "improper exclusion of deduction from collection" (expression of the Claimant) and to condemn the Respondent to refund these amounts, in the total of € 219,833.58; (iii) to condemn the Respondent to payment of compensatory interest calculated from 1 September 2015 with respect to the amount of € 108,928.39, and from 1 September 2016 with respect to the amount of € 110,905.19, until full refund.

Subsidiarily, in the event that the Tribunal understands that article 90 of the Corporate Income Tax Code (hereinafter "CIRC") does not apply to Autonomous Taxation, the Claimant further requests that the illegality of the respective assessments be declared, with the consequent annulment of the identified self-assessments in the parts corresponding to them for, as it invokes, absence of legal basis for their implementation and having regard to the provisions of articles 8, no. 2, paragraph a), of the General Tax Law and 103, no. 3, of the Constitution (hereinafter also "CRP"). It hereby also petitions the consequent refund of the same amounts above and, further, compensatory interest calculated, respectively, from the same dates above.

The petition for the constitution of the Arbitral Tribunal was accepted by the President of CAAD and notified to the TA on 13.10.2017.

In accordance with the provisions of paragraph a) of no. 2 of article 6 and paragraph b) of no. 1 of article 11 of the RJAT, the Ethics Council appointed as arbitrators of the collective Arbitral Tribunal the signatories, who timely communicated acceptance of the assignment.

On 28.11.2017 the Parties were notified of such appointment and did not manifest intention to refuse it (cf. article 11, no. 1, paragraphs a) and b) of the RJAT and articles 6 and 7 of the Ethics Code).

In accordance with the provision of paragraph c) of no. 1 of article 11 of the RJAT, the Arbitral Tribunal was constituted on 20.12.2017.

Notified to do so, the TA did not submit a response within the legal deadline, but only after such deadline had expired.

On 09.03.2018 the Tribunal notified the Parties of the waiver of the meeting provided for in article 18 of the RJAT and of the deadline for submission of written pleadings.

On 15.03.2018 the Claimant submitted a motion arguing the untimeliness of the TA's Response and the consequent unnecessary nature of producing written pleadings. In response, the TA argued for maintenance of the Response in the proceedings and, if not so understood, at least for maintenance of the deadline for submission of written pleadings.

On 26.03.2018 the Tribunal issued an Order to disregard the contents of the Response submitted and to order its removal from the file, to maintain the waiver of the meeting provided for in article 18 of the RJAT, to maintain the copy of the administrative file (hereinafter also "AF") in the proceedings and, finally, notifying the Parties to submit final pleadings on facts and law within twenty days.

Both Parties submitted written pleadings. The positions assumed in the proceedings may be summarized as follows.

The Claimant's Position

The case has as its object the rejection of the administrative claim filed by the Claimant against the identified self-assessments and, in final terms, the acts of self-assessment of CIT of Fiscal Group B... relating to the tax years 2014 and 2015, to the extent corresponding to the non-deduction from the part of the collection produced by the autonomous taxation rates of the tax credits for fiscal incentives in CIT of which it is the holder, namely calculated within the framework of the System of Tax Incentives for Business Research and Development ("SIFIDE"), Tax Benefits Regime for Investment ("RFAI"), and Extraordinary Tax Credit for Investment ("CFEI").

Succinctly, the Fiscal Group in question has credits, within the framework of Tax Benefits (hereinafter also "TBs" and, when singular, "TB"), for deduction from the collection of CIT, in an amount exceeding the amounts of Autonomous Taxation (hereinafter also "ATs") calculated in CIT, all in the tax years 2014 and 2015. Credits that may be used in said years, which are those at issue in the proceedings, in an amount greater than the amounts of ATs calculated there. In fact, the collections resulting from the autonomous taxation rates amounted in those years, respectively, to € 108,928.39 and € 110,905.19, and the available credits usable in each of said years greatly exceed these amounts.

The Claimant argues that the intended deduction – which the TA's computer system does not allow – should be permitted to make. Let us clarify: it is sought to permit the deduction of said credits, which are intended to be deducted from the CIT collection, from the amounts of Autonomous Taxation calculated in CIT.

And it argues that the same deduction should be permitted and processed starting with the Tax Benefits granted longest ago, following the order of deduction provided for in law.

Thus, the question which is primarily requested to be decided by this Tribunal concerns the intended possibility for the Claimant – as dominant company of Fiscal Group B... and responsible for its self-assessment in CIT – to deduct the available credits within the framework of the Tax Benefits referred to (also) from the collection resulting from the application of the autonomous taxation rates.

Put by us another way, this Tribunal is asked to decide whether the Claimant has – or does not have – the right to deduct (as it understands, in the amount calculated pursuant to no. 1 of article 90 of the CIRC relating to the Group) such credits from the amounts of tax to be paid as a result of the application of said autonomous taxation rates.

The Claimant argues that "the overwhelming arbitral jurisprudence (...) qualifies autonomous taxation as CIT" and has understood "in a practically unanimous manner" that "the CIT collection provided for in article 45, no. 1, paragraph a), of the CIRC" (in force until 31.12.2013) "comprises, without need for any additional specification, the collection of autonomous taxation in CIT", therefore argues that it should also be understood that the CIT collection provided for "a few meters further ahead", in article 90, no. 1 of the CIRC, and the deduction provided for in no. 2, paragraph c) of the same article (cf. wording in force from 01.01.2014), also encompasses the collection of ATs in CIT.

And thus argues that, by being denied the right to deduct the credits within the framework of SIFIDE, RFAI and CFEI from the collection of ATs in CIT, there is a violation of paragraph c) of no. 2 of article 90 of the CIRC.

The Claimant also notes that there is no reason to conclude "contrary to what has already been stated by the TA" that the reasoning and rationale of the decision in Arbitral Case no. 769/2014-T "(and the arbitral jurisprudence that followed it)" would apply only to SIFIDE, and not also necessarily to other credits from TBs, or to other deductions from the CIT collection. In fact, it explains, if it is a fact that the SIFIDE regime itself regarding the provision of the TB for deduction from the CIT collection mentions "the amount calculated pursuant to article 90 of the Corporate Income Tax Code", the RFAI regime does exactly the same thing in its article 3, no. 1, paragraph a), and the same occurs with the CFEI regime, in its article 3, no. 5, paragraph a). The different form of expression, in the RFAI and CFEI regimes, is not, says the Claimant, relevant, because even if the tax credit in these is provided as "deduction from the CIT collection", as opposed to "deduction from the amount calculated pursuant to article 90 of the CIRC" (in SIFIDE), the final practical result "is the same, since the amount calculated pursuant to article 90 of the CIRC is none other than the CIT".

The Claimant continues, then, making an extensive foray through Arbitral Decisions, which it notes adopt a position like its own, commenting on it and insisting that this is majority jurisprudence and that it has systematically decided that ATs are CIT.

It also notes that, if articles 89 and 90 (and following) of the Corporate Income Tax Code were not understood to apply also to autonomous taxation, we would be facing an insurmountable legal gap that can be filled neither by jurisprudence nor by doctrine, since (...) this is a matter of constitutional reservation of law, pursuant to article 103, no. 3 of the Constitution (...)".

Finally, and before addressing the request for compensatory interest, the Claimant also refers to the amendment introduced by the State Budget Law 2016 (cf. its article 135) to article 88 of the CIRC, with the addition of no. 21. Arguing, among other things, that this is a new provision and not a true interpretive rule. And concluding "(...) that there is then a material unconstitutionality of said article 135 of the State Budget Law 2016, for violation of the prohibition of retroactivity in tax matters provided for in article 103, no. 3 of the Constitution, whether or not it has been concluded (and it is understood that it has not), that it is a materially interpretive law (...), and for violation, also, of the principle of separation of powers and the principle of independence of the judicial power. Violation, therefore, also, of article 2 (...), of article 111, no. 1 (...) and of article 203 (...), all of the Constitution."

The Respondent's Position

The TA, for its part, argues that, although it is a collection in the context of CIT, the collection of Autonomous Taxation is distinguished by the fact that it does not apply to profits but to expenses incurred by the Taxpayer or by third parties who relate to it. Since they are an anti-abuse tax instrument, the thesis defended by the Claimant would empty them of any practical-tax content, it refers.

Whence it results that "the amount calculated pursuant to paragraph a), no. 1, of article 90 does not have a unitary character", as it contains values calculated according to different rules, to which different purposes are also associated, such that the deductions provided for in the paragraphs of no. 2 of the same article can only be made to the part of the calculation of collection in CIT with which there is a direct correspondence, in order to maintain the coherence of the conceptual structure of the normal regime of the tax.

The Respondent argues that an interpretive exercise is necessary "in order to determine whether the regime of deductions from the CIT collection, as an integral part of the normal system of this tax and pre-existing the incorporation into its [Code] of autonomous taxation, also applies to the (multiple) collections of this taxation".

The common feature to all realities reflected in the deductions referred to in no. 2 of article 90 of the CIRC resides, it clarifies, in the fact that they concern income or expenses incorporated in the taxable matter determined on the basis of the Taxpayer's profit, or advance payments of tax, being therefore entirely extraneous to the realities that make up the tax bases of Autonomous Taxation. And also for deductions from the collection as Tax Benefits, the amount to which they are made can only concern the tax assessed on the basis of taxable matter, determined according to the rules of Chapter III and the rates provided for in article 87, all of the CIRC.

According to the Respondent, admissibility of an interpretation such as that defended by the Claimant would permit an inadmissible limitation of the freedom of conformity of the legislative initiative, which when creating ATs did so with evident purposes, namely (i) fight against tax evasion, (ii) taxation of third-party income whose income increase would otherwise be exempt from taxation, (iii) penalization, through taxation, of payment of income considered excessive in light of the economic crisis situation of which traces still exist today.

Consequently, and in the view of the Respondent, there is not a single assessment of CIT but rather two calculations, two distinct assessments which, although processed pursuant to paragraph a) of no. 1 of article 90 of the CIRC, in the declarations referred to in articles 120 and 122 of the same Code, are made on the basis of different parameters, as each is materialized in the application of its own rates, provided for in either article 87 or article 88 of the CIRC, to their respective taxable matters, determined equally according to their own rules.

According to the Respondent, the autonomy that characterizes ATs in CIT is reflected in liquidation processes that are distinct and in the separate calculation of collections: "on the one hand, that which concerns CIT calculated on the basis of taxable matter defined in no. 1 of article 15 of the CIRC and, on the other, the various collections calculated on the basis of the rates and the taxable values stated in article 88 of the same Code, these having an autonomous character in relation to the first."

It argues that the collection referred to in article 90, when the assessment is to be made by the taxpayer, is calculated on the basis of the taxable matter that appears in such assessment/self-assessment – cf. article 90, no. 1 paragraph a) – and that the credit consisting of SIFIDE must be deducted only from the collection thus calculated, i.e., calculated on the basis of taxable matter.

It also refers to arbitral jurisprudence in which the non-unitary character of the CIT collection is recognized, and likewise arbitral jurisprudence in which the non-deductibility of SIFIDE credits from the collection of ATs was decided.

In defense of the interpretation it makes of the pertinent legal norms – and in the sense that an interpretive effort is due as to what should be understood to be the collection contained in no. 1 of article 90 in the reference made there by no. 2 of the same article – it invokes, among others, article 105, no. 1 in conjunction with article 90, no. 1 (reference to Advance Payments) and, further, article 90, no. 5 also in conjunction with no. 2 of the same provision (reference to imputation of income to partners in entities subject to the transparent tax regime), all of the CIRC.

It clarifies, with respect to the deduction relating to TBs (article 90, no. 2, paragraph c)), when it comes to investment benefits – as is the case with SIFIDE, RFAI and CFEI – there being an underlying philosophy that the benefit constitutes a prize whose amplitude varies with the profitability of the investments, for the higher the profit/taxable matter of CIT the greater the capacity to effect the deduction from the collection. It argues for the impossibility of proceeding with any deduction of the credits resulting therefrom from the collection produced by the autonomous taxation rates, lest the entire teleology present at its genesis be subverted.

It argues, therefore, that the assessment to which the legislator intended to refer in article 90, no. 2 of the CIRC is the one that is processed on the basis of taxable matter contained in article 15 of the same Code.

And addresses, finally and to conclude always in the same sense, the regime of the TBs at issue with respect to their operation of attribution of tax credit in relation to the profitability of the investment.

It concludes that the case should be dismissed.

The Arbitral Tribunal was properly constituted, in accordance with articles 2, no. 1, paragraph a) and 10, no. 1 of the RJAT, and is competent.

On 18.06.2018 the Tribunal issued an Order of extension, precautionarily, as it was about to reach the deadline of article 21, no. 1 of the RJAT (which would end on June 20).

The Parties have legal personality and legal capacity, are entitled and are duly represented (articles 4 and 10, no. 2, of the RJAT and article 1 of Ordinance no. 112-A/2011, of 22 March).

The proceedings do not suffer from any nullities, nor is there any matter of exception.

2. Facts

2.1. Proved Facts

The following facts are considered proved:

a) The Claimant is a Portuguese law company that, in the tax years 2014 and 2015, was the dominant company of Fiscal Group B...

b) In the tax years 2014 and 2015 Fiscal Group B... was covered by the special taxation regime for groups of companies ("ERTGS") in CIT.

c) On 28 May 2015 the now Claimant submitted the CIT income return Form 22 of its Fiscal Group relating to the tax year 2014, identified with code 0361-C1280-10, attached to the proceedings with the case and whose contents are reproduced.

d) In Form 22 Declaration identified in c) the Claimant self-assessed autonomous taxation in CIT for the year 2014 in the amount of € 108,928.39.

e) On 31 May 2016, the Claimant filed CIT income return Form 22 of the Fiscal Group, with reference to the tax year 2015, identified with code ..., attached to the proceedings with the case and whose contents are reproduced.

f) In Form 22 Declaration identified in e) the Claimant self-assessed autonomous taxation in CIT for the year 2015 in the amount of € 110,905.19.

g) On 30 May 2016 and 31 May 2017 the Claimant submitted Amended Declarations relating, respectively, to the tax years 2014 and 2015, which do not affect what is discussed in the proceedings, attached with the case and whose contents are reproduced.

h) In Box 10 - TAX CALCULATION - of Form 22 Declaration relating to the tax year 2014, after submission of an Amended Declaration, CIT PAYABLE – cf. Field 361 - is zero; CIT TO RECOVER – cf. Field 362 – is € 411,030.33; TOTAL PAYABLE - cf. Field 367- is zero; TOTAL TO RECOVER - cf. Field 368 - is € 260,633.53.

i) In Box 10 – TAX CALCULATION - of Form 22 Declaration relating to the tax year 2015, after submission of an Amended Declaration, CIT PAYABLE – cf. Field 361 - is zero; CIT TO RECOVER – cf. Field 362 - is € 579,435.00; TOTAL PAYABLE - cf. Field 367 - is zero; TOTAL TO RECOVER - cf. Field 368 - is € 432,124.19.

j) The values of TOTAL TO RECOVER in accordance with the Form 22 Declarations of the tax years 2014 and 2015, in the amounts stated therein - Field 368, were refunded to the taxpayer.

k) In the tax year 2014 the amount of € 108,928.39 - calculated as Autonomous Taxation in said tax period - was not included in the collection value considered for purposes of the deductions provided for in no. 2 of article 90 for purposes of the deduction limits of available credits of SIFIDE, RFAI and CFEI.

l) In the tax year 2015 the amount of € 110,905.19 - calculated as Autonomous Taxation in said tax period - was not included in the collection value considered for purposes of the deductions provided for in no. 2 of article 90 for purposes of the deduction limits of available credits of SIFIDE, RFAI and CFEI.

m) The amount of SIFIDE available for use at the end of the tax years 2014 and 2015 amounted to respectively € 1,304,667.98 (2014) and € 1,078,421.83 (2015), cf. certifications accompanied by Declarations of the SIFIDE Certifying Commission attached to the proceedings.

n) Under RFAI there was an accumulated amount to be deducted from the CIT collection that amounted, in the tax years 2014 and 2015, to € 338,417.80.

o) The amount of CFEI available in the tax years 2014 and 2015 amounted to a total of € 555,657.36.

p) The taxable profit of Fiscal Group B... and its constituent companies was not determined by indirect methods.

q) The companies that are part of the Fiscal Group at the origin of SIFIDE, RFAI and CFEI did not owe the State or Social Security any taxes or contributions on the dates to which the Certificates attached to the proceedings with the case refer (doc. 14), whose contents are reproduced.

r) The TA's computer system does not allow recording the value relating to autonomous taxation rates in CIT deducted from amounts of Tax Benefits credits (SIFIDE, RFAI and CFEI) for deduction from the CIT collection.

s) The Claimant filed an administrative claim of said self-assessments of CIT for 2014 and 2015 on 09.01.2017, alleging in support that it should have been possible to deduct additional amounts, corresponding to the values of Autonomous Taxation self-assessed in the tax years in question, by use of tax benefits under SIFIDE, and requesting that (i) the self-assessments be corrected in the part corresponding to Autonomous Taxation, (ii) it be refunded the amounts corresponding to said Autonomous Taxation, in the total of € 219,833.58 and (iii) it be paid compensatory interest calculated on the insufficient refund of tax with reference to the tax periods in question.

t) The administrative claim was the subject of an Order of Rejection dated 07.07.2017.

u) On 11.07.2017 the Claimant was notified of the Order of Rejection of the administrative claim, in which the Draft Decision contained in the proceedings as doc. 8 attached with the case is adopted, whose contents are reproduced, and which states, among other things:

"(...) the essential issue and subject matter of this tax procedure is perhaps to know whether "part" of the tax credits referred to above – and which, in the tax periods of 2014 and 2015 were available for deduction, as title of SIFIDE – may be deducted from the amounts of autonomous taxation calculated in the respective Income Return Declarations of the fiscal group of which the Claimant is the dominant company. / In fact, A... SGPS comes requesting deduction from the Total Collection of CIT of said fiscal group (including autonomous taxation) of the tax periods of 2014 and 2015, of "part" of the fiscal benefits associated with SIFIDE and which "were still to be deducted, for insufficient collection", because in the value of such (collection) "it is not possible to include the amounts of € 108,928.39 and € 110,905.19, calculated as autonomous taxation in the respective tax periods, for purposes of the deduction limit of the credits referred to above.(...)";

"(...) In fact, it is understood that such Autonomous Taxation should not be considered for purposes of the deductions provided for in paragraph c) of no. 2 of article 90 of the CIRC (by reference to the tax benefits at issue here), which should be deducted only from the amount calculated pursuant to no. 1 of article 90 of the CIRC, in which regulation autonomous taxation is not understood to be included, which moreover is calculated "autonomously", in relation to the calculation of CIT."

"(...) Consequently, contrary to what the Claimant argues, it is understood that the "collection of autonomous taxation" should not be considered collection of CIT, therefore, should not (itself) be relevant for purposes of deduction of SIFIDE tax credits."

v) On 09.10.2017 the Claimant filed the case that gave rise to the present proceedings.

2.2. Unproved Facts

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

2.3. Grounds for the Facts

The facts were given as proved on the basis of the documents attached with the Petition and in the Administrative File – which are all reproduced – as well as the positions expressed by the Parties in the pleadings contained in the proceedings, with no controversy regarding them.

It is for the Tribunal to select the facts that matter for the assessment and decision of the case, according to their legal relevance determined in light of the various possible solutions for it, and to discriminate the proved and unproved matter (cf. article 16, paragraph e) and article 19 of the RJAT and, further, article 123, no. 2 of the Administrative Tax Procedure Code and articles 596 and 607, no. 3 of the Code of Civil Procedure).

The principle of discovery of material truth prevails in tax proceedings, and the Tribunal may consider instrumental facts relating to alleged facts and questions of law raised, considered necessary for the determination of truth and facts not alleged relating to questions raised (cf. articles 13 of the Administrative Tax Procedure Code, 99 of the General Tax Law and 411 of the Code of Civil Procedure).

3. Matters of Law

3.1. Issues to be Decided

The following are essentially the issues to be decided:

A) Is it or is it not possible to deduct from the collection produced by the autonomous taxation rates in CIT available Tax Benefits credits for deduction from the CIT collection. In the case, credits calculated within the framework of SIFIDE, RFAI and CFEI.

B) In case of a negative answer to issue A) on the grounds that the assessment of Autonomous Taxation is not provided for in no. 1 of article 90 of the CIRC, is such assessment, or is it not, devoid of legal basis.

C) With reference to the constitutional issues raised by the Claimant:

• If a negative answer is given to issue A) (consequently dismissing the Main Requests) by applying article 135 of the State Budget Law 2016, is there or is there no violation of the Constitution (i.e., if this Tribunal applies article 135 of the State Budget Law 2016, and because the Claimant invokes its material unconstitutionality, we will assess such issue);
• If issue B) is addressed (Secondary Request), and if a negative answer is given (i.e., if we answer in the sense that, despite not being provided for in no. 1 of article 90, the assessment of ATs is not devoid of legal basis), is there or is there no violation of the Constitution.

Finally, depending on the decision to be taken on issues A) and/or B), there may or may not be a need to decide on refund of sums and compensatory interest.

3.2. Grounds

3.2.1. Framework

Given the relevance of the matter of Law under consideration here, we consider it particularly important to provide a prior framework for the same and, thus also, of our decision-making reasoning.

Whether due to the potential repercussions that a decision on matters such as this may have, whether due to the dissonance between decisions that have been issued, whether due to the confusion that is, in our view unjustifiably, being created, we consider we must start, then, from the beginning. As follows.

Let us see the various elements that are called for this framework.

(i) First and foremost, a principle of System Unity.

It is the Constitutional legislator himself who uses the concept of "Tax System" – cf. article 103 of the CRP (framed in Title IV, in turn titled "Financial and Fiscal System"). The expression used by the Constitutional legislator contains in it, in our view, an idea of necessary coherence of the tax system as a whole.

Note how in article 165, no. 1 paragraph i) the same legislator did not fail to use the expression again, referring to the competence to legislate on the creation not only of taxes and other duties but also, expressly, on the competence for the creation of the Tax System ("i) Creation of taxes and fiscal system (...)").

The Tax System must, therefore, be conceived as a whole, one, even though, well we know, the task is not, by nature, easy. Necessary coherence of the System must, in any case, also be present when performing the task of interpreting the law.

In the words of Ana Paula Dourado, "(...) such coherence should be an objective to be achieved through the interpretation of the tax legal order in light of the Constitution and European Law. The dogmatic construction, as far as possible coherent, of our tax system implies the interpretation of the General Tax Law, Administrative Tax Procedure Code and other tax legislation taking into account the principles developed in this legislative set, insofar as they are not contrary to the Constitution and European Law."

In harmony with the understanding that is also ours, José Casalta Nabais expresses himself thus: "(...) once the Constitution, when speaking of fiscal system, certainly had in mind what that term means. (...)."

Or, further, Saldanha Sanches, thus: "(…) We should interpret the concept of systematicity presupposing 'it is natural that each section of a law emerges as a moment of a logical unfolding of a plan' and also appeal to the reinforcement of elements of systematicity and rationality within Tax Law."

(ii) Then, the hermeneutical rules applicable in general and in Tax Law and, in particular, in the interpretation of anti-abuse norms and norms creating Tax Benefits.

It says to us, insofar as it matters here, no. 1 of article 11 of the General Tax Law thus: "In determining the meaning of tax norms and in qualifying the facts to which they apply, the general rules and principles of interpretation and application of laws are observed."

We are therefore, from the outset, referred to the general criteria for interpretation of laws and, here, in particular to the provision of the Civil Code (hereinafter also "CC"), article 9. Now, pursuant to no. 1 of this article "Interpretation shall not be confined to the letter of the law, but shall reconstruct from the texts the legislative thought, taking especially into account the unity of the legal system, the circumstances in which the law was elaborated and the specific conditions of the time in which it is applied."

In the following numbers of the same article 9 it is provided thus: "2. However, the interpreter cannot consider the legislative thought that does not have in the letter of the law a minimum of verbal correspondence, even if imperfectly expressed. / 3. In fixing the meaning and scope of the law, the interpreter shall presume that the legislator enshrined the most proper solutions and knew how to express his thought in adequate terms."

We know how these rules and principles of general interpretation and application of laws, also in force in Tax Law, operate. Still, let us make a brief reference to them.

The underlying issue will always be that of, in fixing the meaning and scope with which the normative text should apply, choosing a meaning from among various possible ones. A meaning that will have to be one that ensures a minimum uniformity of solutions. And for that purpose, guidance criteria are then established.

The criteria or interpretive factors are essentially two: (i) grammatical element, corresponding to the letter of the law, the text, and (ii) logical element, subdivided this, in turn, into three others, namely, rational or teleological element, systematic element, and historical element. Being that, the letter and spirit of the law (grammatical element/logical element) must necessarily be used together.

Hermeneutical currents apart, Manuel de Andrade told us: "(...) the interpreter (…) has to start from the assumption that the law emanates from a reasonable legislator; and, therefore, will have to ask himself how such a legislator would have thought and wished the law when legislating in the conditionality of the time of its publication and in the historical environment in which the law was sanctioned.(...)."

And, as Baptista Machado notes: "(...) last factor or point of reference of interpretation: the unity of the legal system. Of the three interpretive factors referred to in no. 1 of article 9, this is undoubtedly the most important.(...)."

Specifically regarding the interpretation of laws in Tax Law, Saldanha Sanches referred to thus: "(…) Teleological interpretation can thus lead to greater systematicity in Tax Law, as a necessarily structuring technique and one that attributes meaning to what, otherwise, will be a mere conglomerate of laws, each obeying a conjunctural purpose, in potential conflict with all other objectives and purposes that led to the publication of other equally marked laws by the pursuit of conjunctural interests. Obtaining that systemic unity, which is an indispensable condition for avoiding arbitrariness in the application of tax law, necessarily requires an interpretation that ensures coherence, as a postulate to be achieved, in the ordering of the consequences of Law, the same not happening with mere literal interpretation – in the current situation, this will necessarily lead to a systemic insecurity, which is the true negation of legal security. Therefore, together with literal interpretation, other techniques or canons of interpretation long used by Law may be used in Tax Law."

Further regarding the interpretation of tax norms, and the specificities applicable, on par with the general criteria, to their interpretation, "(...) tax norms have more similarities with criminal norms, although the requirement of typicality does not go so far, being tempered with a clearly anti-abuse orientation. So it is, insofar as the protection of the rights and interests of taxpayers individually considered must be properly weighed against the constitutional public interest, which is also that of the generality of citizens, of ensuring the observance of the principles of universality, equality, justice and tax necessity and of public policy orientations.(…)."

And "(...) The consequences of literal or strict interpretation are even worse when interpreting in this way norms that were introduced into the system with the specific objective of preventing abusive behavior by the taxpayer in a certain sector."

With respect to the interpretation of norms creating Tax Benefits, and in accordance with the provision of the Civil Code regarding the interpretation of exceptional norms, article 10 of the Tax Benefits Statute (hereinafter also "TBS") provides that "Norms establishing tax benefits are not susceptible to analogical integration, but admit extensive interpretation."

On this point Saldanha Sanches explained that "(...) the tendency for the creation of specific rules for the interpretation of tax laws has as its axis one of two ideas: (i) either a conception of prevalent public interest over the interest of individuals (…); (ii) or a false opposition between public and private interest, (…). This apparent opposition is still revealed today in the principle of extensive interpretation of norms granting benefits, contained in article 9 of the TBS, without regard to the fact that any tax benefit will always imply the reduction of the tax base and the consequent burden on other taxpayers." And continued: "(...) admit extensive interpretation – not so much from the need to benefit the taxpayer, as the tax legislator naively seemed to think, but rather because, consisting the tax benefit of an economic law norm intended to obtain a certain economic effect, it should be applied taking into account the substantial teleology of the economic policy it embodies. This is because the public interest that justifies the exemption – that of stimulating a certain behavior by the taxpayer – overrides, here, that of proper distribution of tax burdens according to tax capacity. In this case, the rules of interpretation to be used are those that can contribute to achieving one of these purposes."

(iii) The Constitutional "framework" of Tax Law should also necessarily always be present.

Careful consideration of the constitutional legal interests at stake becomes fundamental. Including as regards constitutional tax law principles and, likewise - being involved Tax Benefits - regarding economic and budgetary policy.

"The appeal to the Constitution and its principles in a domain as constitutionally determined as that of Tax Law cannot fail to constitute a way of saving certain norms from unconstitutionality that, applied literally and without recourse to the ethical-juridical principles received from the Constitution, should suffer the censure of the Constitutional Court (…)."; (…) The constitutional principles of taxation constitute the ordering values that structure tax laws and provide them with an internal system. (...)"

We also permit ourselves to make a reference to the Constitutional command set forth in article 81, paragraph f) of the CRP: "It is primarily incumbent on the State in the economic and social sphere: (…) f) To ensure the efficient functioning of markets, so as to guarantee balanced competition among companies, (…) and to suppress (…) other practices harmful to the general interest."

(iv) The Principle of Legality in Tax Law and its Aspects in Assessment.

It is unanimously understood that the principle of legality, which governs Tax Law, is subdivided into (i) formal law reservation and (ii) material or substantive law reservation (also principle of typicality).

Pursuant to article 103, no. 2 of the CRP: "2. Taxes are created by law, which determines the basis, the rate, tax benefits and the guarantees of taxpayers."

That is, not only is their creation by formal law required – cf. article 165, no. 1 paragraph i) – but it is also required that the essential elements of taxes be determined by it (formal law). And it is in this latter aspect of the principle of tax legality (material reservation), that it is important, in the case, to pay particular attention, as to what should be understood here to be included. In fact, although subsequently, in no. 3 of the same article 103, the Constitutional legislator established "No one may be required to pay taxes that have not been created pursuant to the Constitution, that have a retroactive nature or whose assessment and collection are not made pursuant to law.", the truth is that it treated the different situations (those contained in no. 2 and those in no. 3) distinctly and separately.

For its part, the ordinary legislator in addressing the principle of tax legality in the General Tax Law – cf. article 8, nos 1 and 2 - placed assessment alongside other realities, which not together with the essential elements (which it placed in no. 1).

It seems to us questionable whether the legislator, in particular the Constitutional legislator, intended to grant to the act of assessment the same requirement of formal law that it granted to the essential elements of taxes.

Casalta Nabais, on this point, writes: "(...) In return, the law reservation resulting from the principle of tax legality does not cover any other tax matter. In particular, it does not cover the assessment and collection of taxes, moments whose discipline is not thus subject to the principle of tax legality, but only to the general principle of legality of public administration. This means we do not adhere to the position of significant part of the doctrine, which, based on no. 3 of article 103 of the Constitution, in which it is provided (…), argues that the discipline of such moments in the life of the tax is constitutionally subject to the reservation of a legislative diploma, that is, of law, decree-law or regional legislative decree. In fact, nothing leads us to believe that the word law, used in the constitutional provision in question, has the meaning of legislative diploma and not of legal norm". "(…) However, having regard to the provision of paragraph a) of no. 2 of article 8 of the General Tax Law, which extended the principle of tax legality to the assessment and collection of duties, including the periods of prescription and expiration, we must conclude that, by virtue of this legal requirement, the assessment and collection of taxes (as a species of duties) cannot have their legal discipline in regulations, with the exception, of course, of local government regulations (...)".

(v) Autonomous Taxation.

Autonomous Taxation was introduced by our legislator in 1990, in separate legislation, being confined, at that time, to "confidential or undocumented expenses", which were thus "taxed autonomously in IRS or CIT, as the case may be, at a rate of 10%".

The rate initially stipulated there was increased by successive legislative interventions: to 25%; to 30%, with the 1997 State Budget introducing a higher rate of 40% for the case of taxpayers wholly or partially exempt from CIT; to 32% and 60% (normal and higher rates, respectively). Only in 2000 (with effective date of 01.01.2001), with the reform of income taxation, the legislator, repealing the Decree-Law that then governed them, "brought" them into the CIRC and, note, also into the Personal Income Tax Code. They then came to also be covered – in CIT, as in IRS – expenses for representation and vehicle expenses. And successively others were added.

If it is true that the situations covered are today multiple and diverse, it is still true that we are always in the presence of taxation on expenses, which is not on income. It was so before systematically inserted into the Codes of CIT and IRS. As it continued to be so after. Otherwise, review, regarding CIT, the numbers and paragraphs of article 88 of the respective Code to conclude that. Note that even in situations where there is a relationship with income, it is third-party income, which are expenses of the Taxpayer ("hereinafter also "TP").

And taxation that functions autonomously, also just as before insertion in CIT and IRS. We are, therefore, in the presence of taxation distinct from taxation on income. Starting with its objective basis. But also with its operation.

"(...) the Administrative Supreme Court took a different position (…) considering that it is a question of taxation on expenses (this tax is calculated independently from the quantification of the taxable matter of income taxes, there being an obligation of its payment even if there is no positive income), with each expense constituting an autonomous, instantaneous tax fact and a unique obligation, to which the law in force at the moment of its realization should be applied. Which seems correct!"

And, on this point, Saldanha Sanches wrote thus: "(...) The taxation of income of individuals or legal entities according to the principle of net income or actual income (…) has the so-called "autonomous taxation" as its main exception. (…) In this type of taxation, the legislator seeks to respond to the admittedly difficult question of the tax regime of expenses that are found in the zone of intersection of the personal sphere and the business sphere(...); (...) the system shows its dual nature, with a higher rate of autonomous taxation for certain special situations that one seeks to discourage, such as the acquisition of vehicles for business purposes or vehicles in principle too expensive when there are losses. A kind of presumption is created here that these costs do not have a business cause, and, therefore, are subject to autonomous taxation. In summary, the cost is deductible, but autonomous taxation reduces its tax advantage, since here the basis of incidence is not a net income, but rather a cost transformed – exceptionally – into an object of taxation.(...)";"(…) the common principle in these disparate regimes: the autonomous taxation rate always rises when the non-deductibility of the cost (because the taxpayer is exempt, because it has not had profits) does not increase the taxation of the taxpayer (...)."

The legislator thus intended to discourage the TP from incurring in this type of expense, given the characteristics that it (the legislator) associates with them.

(vi) Tax Benefits.

Tax Benefits are exceptional measures within the tax system, which the legislator adopts because, and insofar as, through them, it is sought to achieve certain objectives of economic and social policy, thus encouraging certain behaviors by taxpayers.

Their legitimation derives from this extra-fiscal foundation, which must be properly justified, and which translates the protection of constitutionally relevant public interests. As article 2 of the Tax Benefits Statute establishes, "Tax benefits are considered exceptional character measures instituted for the protection of relevant extra-fiscal public interests that are superior to those of taxation itself that they prevent."

They are included in formal law reservation - cf. article 103, no 2 of the CRP and article 8, no. 1 of the General Tax Law - and constitute tax reliefs, opening exceptions to the incidence norms, with the objective of achieving certain extra-fiscal purposes.

They are considered tax expenditure (cf. also in article 2, no. 3 of the TBS) and their creation is, therefore, subject to a series of conditions. Among which is included the need for a forecast of the tax expenditure they originate. Already, the Constitution requires that the State Budget Proposal include a report on Tax Benefits and the corresponding estimate of foregone revenue (v. article 106, no. 3, paragraph g) of the CRP). The General Tax Law provides (v. article 14, no. 3) that "The creation of tax benefits depends on the clear definition of its objectives and the prior quantification of tax expenditure".

When addressing the subject of economic and social justification of tax expenditure, Guilherme d' Oliveira Martins delimits the concept of tax expenditure thus: "(...) tax expenditure only subsists insofar as it represents situations that, from the perspective of the taxpayer, are assumed to be exceptional reductions of the tax amount to which it is subject and that, from the perspective of public entities, represent renunciation of revenues that under normal conditions would be taxed (…)."

"The matter of tax benefits is one of the most delicate and, in large measure, responsible for the complexity of taxation. Some attentive observers note a general tendency, in this domain, that passes through the introduction, by the legislator, of a certain fiscal incentive, followed by the attempt, by taxpayers, to adjust and manipulate their behaviors so as to use and abuse that incentive, followed by the adoption by the legislator of still more complex and extensive norms to define the tax benefits created with greater precision. And so on successively. The end result is greater complexity of the tax system, accompanied by greater creativity and sophistication of the techniques developed to circumvent its provisions and maximize the benefits they may provide."

(vii) CIT

Pursuant to article 1 of the CIRC (Tax Basis): "Income tax on legal entities (CIT) applies to income obtained, even when stemming from unlawful acts, in the tax period, by taxpayers, pursuant to this Code."

The Code defines its personal or subjective basis of incidence in article 2 (Taxpayers) and its real or objective basis of incidence in article 3 (Tax Base).

Insofar as relevant to the proceedings, as to the real basis of incidence and with respect to companies and other legal entities whose main activity is of a business nature, article 3 provides thus: "1. CIT applies to: a) The profit of commercial companies (…); "2. For purposes of the provision in the preceding number, profit consists of the difference between the values of net assets at the end and at the beginning of the tax period, with the corrections established in this Code".

The basis of taxation in CIT is therefore, in cases such as those of the proceedings (i.e., commercial companies as TP), profit. Being that the Code adopts for the purpose, cf. article 3, no. 2 above, a broad concept of net income.

Article 17 of the CIRC then provides that taxable profit "is constituted by the algebraic sum of the net result of the period and the positive and negative patrimonial variations verified in the same period and not reflected in such result, determined on the basis of accounting and eventually corrected pursuant to this Code".

That is, CIT applies to profit – to the net result of the fiscal year calculated in accounting and eventually corrected for tax purposes (corrected pursuant to the CIRC and other applicable legal provisions).

Reference should be made here, opening a parenthesis, that the calculation of Taxable Profit (and Taxable Matter) obeys a complexity of rules and procedures, which the legislator enshrined throughout Chapter III of the CIRC (articles 15 to 86-B). And, when it comes to self-assessment (as is normally the case in CIT), such calculation should be reflected in Declarations of official form approved by order of the Government member responsible for the finance area (cf. article 117, no. 2), especially in the periodic income return Declaration referred to in articles 117, no. 1, paragraph b) and 120. This Declaration is the "Declaration – Form 22" (to which we refer throughout the present Decision whenever we refer to the designation or numbering of any "Box" or "Field"), approved thus, also, by the same legislator. All in coherence with the principle of actual income taxation, a constitutional imperative in the context of taxation of legal entities (cf. article 104, no. 2 of the CRP), at the origin of the principle of approximation of taxation to accounting.

At a later moment, once Taxable Profit is calculated - if it exists – certain amounts will then be deducted from it. Thus reaching Taxable Matter (cf. article 15, no. 1 paragraph a) and article 52 of the CIRC and Box 09 of Form 22).

It is here, from that moment on, that the conditions are met to calculate the tax. That is, once Taxable Matter is calculated, the CIT rate is applied to it (cf. article 87 of the CIRC), thus obtaining the respective Collection. To this may still, finally, be added state levy (cf. article 87-A of the CIRC) and, there then, Total Collection is calculated.

It is to this Collection that deductions are then made, if applicable – the Deductions of article 90, no. 2 of the CIRC (among them, the Deduction at issue in the present proceedings – that of paragraph c)). The TOTAL OF DEDUCTIONS is to be recorded in an appropriate field in Box 10 – Field 357.

Once these Deductions are processed we then arrive at the TOTAL CIT LIQUIDATED (Box 10 - Field 358), or "net collection", in the expression of Casalta Nabais.

To this TOTAL CIT LIQUIDATED will finally be deducted the payments that have been advance made on account of the tax (withholding at source, advance payments and additional advance payments on account).

And thus we reach CIT PAYABLE - cf. of Box 10 - Field 361. Or, if applicable, CIT TO RECOVER (as in the present proceedings).

At no point up to here are ATs involved.

Having provided the framework, let us proceed to assess.

Not without first noting that, regardless of the position of the judge on the options taken by the legislator, and on the legislative technique followed, it is the responsibility of the judge, as an interpreting judge, to interpret the applicable law in force relating to the case and, applying it, to decide.

3.2.2. The Deductibility or Not from the Collection Produced by Autonomous Taxation Rates in CIT of Available Tax Benefits Credits for Deduction from the CIT Collection. In the Case, Credits Calculated Within the Framework of SIFIDE, RFAI and CFEI.

The Claimant understands that the self-assessments under review are partially burdened with illegality because – it argues – it has not been recognized (when it should have been) the right to also deduct from the collection derived from autonomous taxation rates, in the years 2014 and 2015, the tax credits resulting from Tax Benefits of which in the tax years 2014 and 2015 the Fiscal Group (of which, in the relevant period, it was the dominant company) had available for deduction from the CIT collection.

Which, according to it invokes, it only did not do because it saw itself prevented from doing so by the TA's computer system, which did not permit it to be done.

It should be noted that the Claimant fulfilled the condition of contestability that impended on it of previously resorting to the administrative remedy, cf. article 131 of the Administrative Tax Procedure Code, having the administrative claim it filed been dismissed and now petitioning, in this forum, for the declaration of illegality of the rejection of the administrative claim (immediate subject matter of the case) and, likewise, the declaration of illegality (partial) of the self-assessments (mediate subject matter). It should also be noted that in the administrative claim the now Claimant had only invoked recognition of the right to deduction of credits resulting from SIFIDE, whereas in the present proceedings it invokes, in addition to those, credits resulting from RFAI and CFEI.

The entire claim of the Claimant is presented and grounded based on article 90 of the CIRC. Specifically on its no. 2 and on what, in its view, should be understood to mean (meaning and scope with which it should be understood) the expression contained there "amount calculated pursuant to the preceding number".

And, simultaneously, based on the understanding, which it defends, that no. 1 of the same article, to which no. 2 refers, should be interpreted as containing in itself the operation of assessment of Autonomous Taxation.

An understanding this that makes rely, in turn, on another previous understanding of its in the sense that - thus it argues - it follows from the provision of article 23-A (and, before, article 45, no. 1, paragraph a)) that ATs are CIT, that the CIT collection includes ATs. And that if in that article the legislator thus enshrined it (as it argues), then (it concludes) likewise the same should be understood the legislator to have enshrined in article 90.

Whence, when in no. 2 of article 90 it refers to the "amount calculated pursuant to the preceding number" it is referring (it argues) to the CIT Collection considering included therein the amounts of ATs.

Let us see.

Article 90 provides, cf. version in force in the relevant periods, i.e., 2014 and 2015, thus:

"Article 90 - Procedure and form of assessment

1 – The assessment of CIT proceeds as follows:
a) When the assessment is to be made by the taxpayer in the declarations referred to in articles 120 and 122, it is based on the taxable matter that appears in them;
b) In the absence of presentation of the declaration referred to in article 120, the assessment is made by 30 November of the year following the one to which it refers or, in the case provided for in no. 2 of that article, by the end of the 6th month following that in which the deadline for presentation of the declaration mentioned there expires and is based on the value of the annual minimum monthly salary or, when greater, the totality of the taxable matter of the fiscal year closest to which is determined.

c) In the absence of assessment pursuant to the preceding paragraphs, it is based on the elements of which the tax administration disposes.

2 – To the amount calculated pursuant to the preceding number the following deductions are made, in the order indicated:

a) The corresponding to international legal double taxation;
b) The corresponding to international economic double taxation;
c) The relating to tax benefits;

d) The relating to the special payment on account referred to in article 106;
e) The relating to withholding at source not susceptible to compensation or refund pursuant to applicable legislation.

3 – (Revoked)

4 – To the amount calculated pursuant to no. 1, with respect to the entities mentioned in no. 4 of article 120, only is the deduction relating to withholding at source when it has the nature of tax on account of CIT to be made.
5 – The deductions referred to in no. 2 relating to entities to which the transparent tax regime established in article 6 applies are imputed to their respective partners or members pursuant to the terms established in no. 3 of that article and deducted from the amount calculated on the basis of taxable matter that took into account the imputation provided for in the same article.

6 – When the special taxation regime for groups of companies applies, the deductions referred to in no. 2 relating to each of the companies are made from the amount calculated with respect to the group, pursuant to no. 1.

7 – (Revoked)

8 – With respect to taxpayers covered by the simplified regime for determining taxable matter, to the amount calculated pursuant to no. 1 only the deductions provided for in paragraphs a) and e) of no. 2 are to be made.

9 – From the deductions made pursuant to paragraphs a) to d) of no. 2 no negative value can result.
10 –To the amount calculated pursuant to paragraphs b) and c) of no. 1 only the deductions of which the tax administration is aware and which can be made pursuant to nos 2 to 4 are to be made.

11 – In cases in which the provision of paragraph b) of no. 2 of article 79 applies, assessments are made annually on the basis of taxable matter determined on a provisional basis, such that, in light of the assessment corresponding to taxable matter relating to the entire assessment period, the difference calculated is to be collected or canceled.
12 – The assessment provided for in no. 1 may be corrected, if applicable, within the deadline referred to in article 101, the differences calculated being collected or canceled"

The Claimant relies on a literal interpretation, as we shall see. And literal in the sense in which it departs from the other hermeneutical criteria owed to apply, clearly confining its interpretation to the letter of the law. Which, as we have seen above, not only is not in conformity with the applicable hermeneutical rules, but leads to results that contain in themselves the potential to distort – in our view – the Unity of the Legal-Tax System.

We shall not, however, fail to note here that, in truth, even if we were to rely exclusively on a literal criterion (which, as is evident, we would not) it would be possible to draw a conclusion opposite to that which the Claimant draws in the proceedings (being certain that there must always be found a minimum of correspondence in the letter of the law).

Otherwise, let us see (without pretension of being exhaustive) what is stated in the text of the following provisions, all of the CIRC (except when referring to the regime of each of the Tax Benefits):

1. Articles following article 90 (and which successively address each of the deductions established in the paragraphs of no. 2 of article 90):

(i) in article 91, when referring in no. 1 to the deduction from the collection of paragraph a) of no. 2 of article 90, the legislator refers that the deduction "is only applicable when in the taxable matter income obtained abroad has been included (...)";

(ii) in article 91-A, referring to the deduction from the collection of paragraph b) of no. 2 of article 90, the legislator refers that the deduction "applies (…) when in the taxable matter thereof profits and reserves distributed by entities resident outside Portuguese territory have been included (...)";

(iii) in article 92, when referring in no. 1 to the deduction from the collection of paragraph c) (Tax Benefits) of no. 2 of article 90, the legislator refers that "the tax assessed pursuant to no. 1 of article 90, net of the deductions provided for in paragraphs a) to c) of no. 2 of the same article, cannot be less than 90% of the amount that would be calculated if the taxpayer did not benefit from tax benefits (...)". Being that – cf. just reviewed - it follows from the text of articles 91 and 91-A, nos 1, that "the amount calculated" pursuant to no. 1 of article 90 - to which the first two paragraphs of its no. 2 (of article 90) refer – concerns income, profits and reserves, and calculation of taxable matter. The legislator expressly identifies, therefore, the reality that is susceptible to these deductions: a reality that results from a calculation that does not contain, nor could contain, in itself, ATs. Thus referring to such provision (to exclude them from the calculation of the 90% limit) the deductions resulting from the Tax Benefits it then identifies. The legislator was clear in placing paragraph c) of no. 2 of article 90 (Tax Benefits) "in the same package" as paragraphs a) and b), all for purposes of the calculation to be made pursuant to article 92, a calculation whose result the legislator denominates "Result of the assessment". Assessment, therefore, which will be the same assessment that article 90, no. 1 addresses. At least when no 2 of the same refers to there.

And as for the articles that thereafter refer to paragraphs d) and e) of no. 2 of article 90 (article 93 with respect to Special Payments on Account, and the following articles with respect to withholding at source), we refrain from developing arguments here, even because also with respect to these two latter realities it is evident, at least for us, that the amount calculated pursuant to no. 1 of article 90 - to which the respective no. 2 refers (or, at least, when this refers to it) - contains only CIT (and not also ATs).

1. Article 120, no. 6, paragraphs a) and b), in conjunction with articles 70 and 90, no. 2 paragraph c).

It is provided in no. 6 of article 120 (under the heading "Periodic income return declaration"), with respect to companies covered by ERTGS, as is the case in the proceedings:

"6. When the special taxation regime for groups of companies applies:

a) The dominant company must send the periodic income return declaration relating to the taxable profit of the group calculated pursuant to article 70.

And in article 70, to which it refers:

"With respect to each of the tax periods covered by the application of the special regime, the taxable profit of the group is calculated by the dominant company, through the algebraic sum of the taxable profits and tax losses calculated in the periodic individual return declarations of each of the companies belonging to the group, corrected, if applicable, (…)."

It seems to us that from this it is also to be drawn that the calculation to which the dominant company proceeds relates to CIT, without inclusion of the collection of ATs. The legislator treating it distinctly (such calculation) will be because it is thereof that one cares, for all purposes, also in this context.

1. Article 105, no. 1 of the CIRC, when determining the basis of calculation of advance payments on account by reference to article 90, no. 1: "Advance payments on account are calculated on the basis of the tax assessed pursuant to no. 1 of article 90 (…)", well known as the calculation in question cannot but have as reference the calculation of CIT based on the rules for determining taxable profit and taxable matter (Chapter III of the CIRC) and never the calculation made on the basis of the rules of incidence of autonomous taxation rates (article 88 of the CIRC).

2. Relevant articles of the Diplomas regulating the Tax Benefits at issue in the proceedings. Thus:

(i) ref. SIFIDE – the letter of the article dealing with deduction (under the heading "Scope of deduction"), in its initial version (Law no. 40/2/2005, article 4) referred "(...) may deduct from the amount calculated pursuant to article 83 of the Corporate Income Tax Code (…); meanwhile, in the version currently in force and, moreover, already as of the date of the relevant period in the proceedings (cf. Tax Incentive Code, hereinafter "TIC", article 38) refers: "(...) may deduct from the amount of CIT collection calculated pursuant to no. 1 of article 90 (...)";

(ii) ref. RFAI – the letter of the article dealing with deduction, in its initial version (Law no. 10/2009, article 3) referred: "(...) Deduction from CIT collection, and up to the limit of (...)"; in the current version and, moreover, already as of the date of the relevant period in the proceedings (TIC, article 23) refers: "(...) Deduction from CIT collection calculated pursuant to paragraph a) of no. 1 of article 90 of the CIRC (...)";

(iii) ref. CFEI – the letter of the article dealing with deduction (Law no. 49/2013, article 3) refers: "(...) deduction from CIT collection in the amount of (...)".

1. Further with reference to the Diplomas regulating the Tax Benefits in question: in any of them we find an article establishing specific accounting obligations for the TP ("Accessory obligations" / "Accounting obligations") as a result of the Tax Benefit. It is required, in particular, that the accounting of the TPs shows "the tax that ceases to be paid as a result of the deduction (…) by mentioning the corresponding value in the note to the balance sheet and statement of results (…)". Now, in this Note that should appear in the Note to the Financial Statements, and unless we are mistaken, will appear, "simply", the calculations of calculation - calculation of Taxable Profit and Taxable Matter - multiplied by the CIT rate (article 87). Thus calculating the "X" in tax savings achieved by use of the Tax Benefit credit. It seems to us evident, also from what is stated in the text of these articles, to deal with reality to which ATs are extraneous.

2. In the regime of Tax Benefit CFEI – article 3, no. 5 of Law no. 49/2013 – it is expressly determined that, if ERTGS is applicable, the deduction from the collection to be granted: "a) Is made from the amount calculated pursuant to paragraph a) of no. 1 of article 90 of the Corporate Income Tax Code, on the basis of the taxable matter of the group;"

We shall not, however, limit ourselves to a literal interpretation, whether of the provision on which the Claimant bases the entire issue (article 90, no. 2), or of the other legal provisions involved.

Let us proceed.

The Claimant invokes that article 45, no. 1 paragraph a) of the Corporate Income Tax Code encompasses the collection of ATs in CIT. It claims that Jurisprudence has thus understood it "in a practically unanimous manner". To then advance that, in the same way should it also be understood that the C