Process: 579/2017-T

Date: September 12, 2018

Tax Type: IRS

Source: Original CAAD Decision

Summary

This CAAD arbitration case (Process 579/2017-T) addresses the determination of Portuguese tax residency for IRS purposes involving a professional football player who challenged an additional assessment of €3,633,851.16 for the 2012 tax year. The Tax Authority assessed the applicant as a Portuguese tax resident under Article 16(1)(a) of the IRS Code, claiming he remained in Portugal for more than 183 days in 2012. The taxpayer argued he was only present for 157 days due to international obligations with his national team, participation in the London Olympic Games, holidays abroad, and his transfer to another club on September 3, 2012. The case examines critical issues including how temporary absences for professional reasons affect the 183-day rule calculation, the burden of proof for establishing permanence in Portuguese territory, and whether living arrangements with a partner (later married in 2015) constitute habitual residence under Article 14 of the IRS Code for joint taxation purposes. The taxpayer also raised procedural challenges, including alleged legal non-existence of the income determination act and incompetence of the authority who issued the assessment under Article 65(5) of the IRS Code. The Tax Authority countered that the taxpayer maintained a professional contract with a Portuguese club until September 2, 2012, and that temporary professional absences do not interrupt the permanence requirement. The tribunal had to determine the correct interpretation of 'permanence' under Portuguese tax law for highly mobile professional athletes and clarify procedural requirements for income determination acts in cross-border taxation scenarios.

Full Decision

ARBITRAL DECISION

They agree in arbitral tribunal

I – Report

A..., taxpayer no. ..., resident in China, ... ..., ... ..., came to request the constitution of an arbitral tribunal, under the provisions of articles 2, no. 1, letter a), and 10 of Decree-Law no. 10/2011, of 20 January, to assess the legality of the rejection of the gracious appeal filed against the act of assessment of Personal Income Tax (IRS) relating to the year 2012, requesting the annulment of that act, as well as the tax acts of assessment of Personal Income Tax no. 2016... and of assessment of interest no. 2016..., in the total amount of €3,633,851.16.

He bases his request on the following grounds.

The Tax Authority made an additional assessment of Personal Income Tax for the year 2012 by considering that the Applicant remained in national territory for more than 183 days in the course of that year, being covered by the provisions of article 16, no. 1, letter a), of the Personal Income Tax Code.

However, the Applicant, by virtue of his movements as a professional football player in service of the ... national team, participation in the Olympic Games in London, enjoyment of holidays in ... and transfer to C..., on 3 September 2012, did not remain in Portugal in that year for more than 157 days.

Furthermore, in 2012, the Applicant was not yet married to B..., which only occurred in 2015, and even if it were understood that they lived in a de facto union, they did not form the same family unit under the law, which did not impose joint taxation (article 14 of the Personal Income Tax Code), whereby the Applicant could not be considered as having habitual residence in Portugal on 31 December 2012.

He invokes the defect of violation of law and, regarding the decision to reject the gracious appeal, the defect of lack of grounds for being based on new grounds.

The Tax Authority, in its response, contends that the Applicant resided in Portugal at least until 3 September 2012, the date on which the cession of sporting rights to C... was announced, having remained in the country for at least 247 days, whereby the Personal Income Tax assessment should consider work income obtained outside the national territory.

The Applicant alleges that, in the course of 2012, he was absent from Portugal during various periods of time in service of D... and the ... national team or while on holiday, but does not provide proof of these movements, whereas the concept of "permanence" to which article 16, no. 1, letter a), of the Personal Income Tax Code refers is not challenged by temporary movements for professional reasons.

It concludes that the request is unfounded.

Following the joining of the administrative file with the response, the Applicant came to request that the joining of a complete copy of the Tax Inspection Report be ordered, including the opinions of the team chief and the division chief and the order of the division chief, the order that sanctioned the conclusions of the Report, the order that set the income under article 65 of the Personal Income Tax Code, the annexes 1 to 4 identified in the Inspection Report and the payment guide relating to withholding taxes on non-resident submitted by D....

Having the joining of the missing elements been determined, the Tax Authority joined to the case the conclusions of the Tax Inspection Report, containing the opinion of the team chief and the order of concordance of the division chief, dated 23 September 2016.

The Applicant then came to file a request for expansion of the cause of action, invoking the defect of legal non-existence of the act of determination and setting of income, given the absence of the document proving its performance, and, if it is understood that this act was the one performed on 23 September 2016 by the division chief with subdelegation of authority, the defect of relative incompetence due to hierarchy, considering that the authority to perform the act, under article 65, no. 5, of the Personal Income Tax Code, belongs to the Director of Finance with delegation powers.

In pronouncing on the expansion of the cause of action, the Tax Authority alleged that the taxpayer's income was determined under article 76, no. 3, of the Personal Income Tax Code, being inapplicable to the case the provisions of article 65, no. 5, of that Code regarding the authority to perform the act.

  1. The case proceeded with the meeting referred to in article 18 of the RJAT, in which it was determined that the Respondent be notified to join to the case, within 30 days, the order that determined and set the income of the Applicant, followed by written arguments within the successive period of 15 days from notification of the joining of the document or the end of that period.

In the arguments, the Applicant maintained the invocation of the defect of legal non-existence of the act of determination and setting of income, considered – responding to the question raised by the Tax Authority in its response – that it is the Administration that bears the burden of proof that the Applicant remained in Portugal, in the course of the year 2012, more than 183 consecutive or interpolated days, and described the matter of fact taken as established based on the documentary and testimonial evidence produced, concluding that the request is well-founded.

The Tax Authority, in the counter-arguments, pronounced that the preliminary issues of non-existence of the act of determination of income and relative incompetence of the author of the act are unfounded, and, regarding the substantive issue, maintained the understanding that the Applicant had a professional contract with D... until 2 September 2012 and maintained permanence in the national territory until that date, which cannot be opposed by situations of temporary absence due to holiday or professional movements, further considering that fiscal residence in Portugal is still determined by the application of the provisions of article 4 of the Convention to avoid double taxation celebrated with Russia.

  1. The request for constitution of the arbitral tribunal was accepted by the President of CAAD and automatically notified to the Tax and Customs Authority in accordance with regulatory terms.

Under the provisions of letter a) of no. 2 of article 6 and letter b) of no. 1 of article 11 of the RJAT, in the wording introduced by article 228 of Law no. 66-B/2012, of 31 December, the Deontological Council designated as arbitrators of the collective arbitral tribunal the signatories, who communicated the acceptance of the appointment within the applicable period.

The parties were timely and properly notified of this appointment, and have not manifested the intention to refuse it, under the combined provisions of article 11, no. 1, letters a) and b), of the RJAT and articles 6 and 7 of the Deontological Code.

Thus, in accordance with the provisions of letter c) of no. 1 of article 11 of the RJAT, in the wording introduced by article 228 of Law no. 66-B/2012, of 31 December, the collective arbitral tribunal was constituted on 14 February 2018.

The arbitral tribunal was regularly constituted and is materially competent, under the provisions of articles 2, no. 1, letter a), and 30, no. 1, of Decree-Law no. 10/2011, of 20 January.

The parties have legal personality and capacity, are legitimate and are represented (articles 4 and 10, no. 2, of the same statute and 1 of Ordinance no. 112-A/2011, of 22 March).

The case does not suffer from nullities and no exceptions were invoked.

It is incumbent to assess and decide.

II – Grounds

Matter of Fact

  1. The matter of fact relevant to the decision of the case is as follows.

a) The Applicant was notified of an additional assessment of Personal Income Tax relating to the tax year 2012 and of an assessment of compensatory interest in the total amount of €3,633,851.16;

b) The Applicant made payment of the amount owing within the period fixed in the voluntary payment document;

c) The Tax Authority carried out an inspection action based on Service Order no. OI2013..., relating to the year 2012, and concluded that the Applicant, in the course of the year 2012, remained in Portugal until at least 3 September 2012, in a total of 247 days, and which determined the correction of taxable income in the amount of €9,625,808.34, by considering the work income obtained outside the national territory;

d) The Tax Inspection Report obtained the concordance of the division chief by order of 23 September 2016, intervening with subdelegation of authority of the Deputy Director of Finance;

e) On 15 February 2017, the Applicant presented a gracious appeal against the assessment act, which was rejected by order of 8 August 2017;

f) The Applicant married B... on 16 December 2015.

g) The Applicant was a professional football player, having been part of the D... team since the 2008/2009 sporting season and under a contract valid for 4 seasons ending on 30 June 2012;

h) On 3 September 2012, D... reported to the Securities Market Commission that it had reached an agreement with C... (C...) for the transfer, by way of final transfer, of sporting registration rights and 85% of the economic rights held by the professional football player A... ("A...");

i) The Applicant traveled to Switzerland on 27 February 2012 to participate in a match representing the ... national team and returned to Portugal on 29 February 2012;

j) On 13 May 2012, the Applicant traveled to ... to follow a preparation plan for a possible call-up to the ... football national team;

l) On 24 May 2012, the Applicant presented himself in the city of Hamburg, Germany, to play a friendly match against Denmark representing the ... national team, a match that took place on 26 May 2012;

m) On 27 May 2012, the Applicant, integrated into the delegation of the ... football national team, departed from Germany for the United States of America, where he would participate in 3 more preparation matches;

n) On 30 May 2012, the Applicant participated in the football match against the United States national team in the city of Washington;

o) On 3 June 2012, the Applicant participated in the football match against the Mexico national team in the city of Dallas;

p) On 9 June 2012, the Applicant participated in the football match against the Argentina national team in the city of New Jersey;

q) On 10 June 2012, the Applicant returned to ..., having participated in various public initiatives;

r) On 9 July 2012, the Applicant presented himself at the service of the ... national football team in the city of Rio de Janeiro to begin participation in the 2012 Olympic Games;

s) On 17 July 2012, the Applicant traveled to London to participate in the Olympic Games;

t) The ... football national team played all matches of the Olympic tournament, having played the final against the Mexico national team on 11 August 2012;

u) On 12 August 2012, the Applicant departed London for Stockholm, Sweden to participate in a private football match against the Sweden national team, which took place on 15 August;

v) On 16 August 2012, the Applicant returned to the city of Porto;

x) On 2 September 2012, the Applicant traveled to ... to participate in 2 private matches for the ... national team;

y) On that same day, the Applicant signed a contract to represent C..., a football club based in Russia;

z) On 12 September 2012, he returned to Portugal to leave on the following day for Russia to join the C... team;

aa) Until the end of 2012, the Applicant participated in various matches in service of C... and the ... national team;

bb) On the return trip to ..., the Applicant arrived at Porto on 11 December 2012 and departed from Lisbon on 14 December;

cc) In the year 2012, the Applicant remained in Portugal 31 days in January, 28 days in February, 31 days in March, 30 days in April, 13 days in May, 16 days in August, 4 days in September and 4 days in December, in a total of 157 days.

dd) The Applicant resided in Russia from September 2012 to June 2016.

The Tribunal formed its conviction regarding the proven facts based on the documents attached to the petition and those contained in the administrative file presented by the Tax Authority with its response and the testimonial evidence produced.

Legal Issues

Expansion of the Cause of Action

  1. Following the submission of the response and sending of the administrative file, the Applicant came to request that the joining of a complete copy of the Tax Inspection Report be ordered, including the opinions of the team chief and the division chief, the order of the division chief, the order that sanctioned the conclusions of the Report, the order that set the income under article 65 of the Personal Income Tax Code, annexes 1 to 4 identified in the Inspection Report and the payment guide relating to source withholding taxes on non-resident.

The request for this last document was intended only to provide evidence that the Applicant had paid the tax due in Portugal, aiming to respond to the argument of the Respondent, raised in the context of impugning, that the Applicant could obtain, by way of equating the concept of permanence to physical presence, the annulment of the tax withheld in Portugal (article 78 of the response).

Having the joining of the missing elements been determined, the Tax Authority joined to the case the conclusions of the Tax Inspection Report containing the opinion of the team chief and the order of concordance of the division chief dated 23 September 2016.

The Applicant then came to file, under the provisions of article 63 of the CPTA, subsidiarily applicable, a request for expansion of the cause of action, invoking the defect of legal non-existence of the act of determination and setting of income, given the absence of the document proving its performance, and, if it is understood that this act was the one performed on 23 September 2016 by the division chief with subdelegation of authority, the defect of relative incompetence due to hierarchy, considering that the authority to perform the act, under article 65, no. 5, of the Personal Income Tax Code, belongs to the Director of Finance with delegation powers.

It must be said at the outset that article 63 of the CPTA has no application to the case, since this provision is intended only to allow expansion of the request when, during the course of the judicial process, new administrative acts are performed within the context of the procedure, so that the interested party may react by expanding the object of the process to supervening facts that influence the definition of the legal situation.

It is also clear that the non-presentation of the document intended to rebut the legal argument invoked by the Respondent regarding the payment of tax in Portugal does not justify the expansion of the cause of action and at most may have procedural consequences regarding evidence.

It could only be admitted that the challenger could invoke new defects of knowledge that are supervening as a result of the joining of documents by the Tax Authority or by the administrative file itself.

What the Applicant is raising, however, is the non-existence of the act of determination and setting of income for not having been presented the order referred to in article 65 of the Personal Income Tax Code.

The fact is that the Tax Authority joined, following the arbitral order, the opinion of the team chief and the order of concordance of the division chief with the conclusions of the Tax Inspection Report, an order dated 23 September 2016 and issued by subdelegation of authority. And having the act of additional assessment of Personal Income Tax and of assessment of compensatory interest been produced, with a payment deadline of 23 November 2016, and based on the values resulting from the correction determined by the Tax Inspection Report, there is no reason to consider the non-existence of the act of tax determination verified.

Furthermore, if it is understood that the legal non-existence of the act occurred, the proper procedural means would not be the judicial impugning of the administrative act – since the act is deemed non-existent – but an action of simple appraisal having as its object the declaration of non-existence of an administrative act, with the burden of proof resting on the Applicant of the appearance of the act, that is, the proof that no assessment act was performed (cf. articles 50, no. 4, and 79, no. 3, letter b), of the CPTA).

The Applicant further raises the issue of relative incompetence due to hierarchy because the act was not performed by an authority or agent having authority, delegated or subdelegated, for its performance.

Now, article 65, no. 5, of the Personal Income Tax Code provides that the authority to perform acts of determination, setting or alteration of income is "exercised by the director of finance in whose area the fiscal domicile of taxpayers is located, and may be delegated to other officials whenever the large number of them justifies it." Furthermore, under article 44, no. 1, of the Code of Administrative Procedure, "administrative authorities normally competent may, whenever they are so authorized by law, allow, through an act of delegation of powers, another authority or agent of the same legal person or another authority of a different legal person to perform administrative acts on the same matter." Article 46, no. 1, of the same Code further permits, unless otherwise provided by law, that the delegating authority may authorize the delegate to subdelegate". According to article 48, the delegated or subdelegated authority "must mention this quality in the use of delegation or subdelegation".

As can be seen, the delegation of authority is legally permitted for the determination of income, without restriction as to the power of subdelegation. And in the present case, the order of the division chief of 23 September 2016 contains mention of subdelegation, with no indication that the subdelegated authority is not equipped with the corresponding delegation of authority.

As results from all the above, the preliminary issues raised by the Applicant are not well-founded.

  1. The Tax Authority determined the additional assessment of Personal Income Tax, following an inspection procedure, based on the finding that the Applicant, in the course of the year 2012, remained in Portugal at least until 3 September 2012, the date on which the sports club of which the Applicant was a member announced the transfer of sporting and economic rights to a foreign entity, thus calculating a total of at least 247 days of permanence in the national territory that year. On that ground, the Administration subjected to Personal Income Tax assessment the dependent work income obtained outside the national territory in the amount of €9,625,808.36.

The Applicant disputes the legality of the tax act by considering that the concept of residence, for purposes of the provision in article 16, no. 1, letter a), of the Personal Income Tax Code, presupposes physical presence for a period exceeding 183 days, regardless of subjective considerations about the reasons for permanence, and should be understood, according to that criterion, that by virtue of various movements during the year 2012 to foreign countries, the Applicant did not remain in the national territory for more than 157 days.

This is the question to be decided.

In the wording in force in 2012, article 16 of the Personal Income Tax Code, insofar as relevant, provided as follows:

1 – Residents in Portuguese territory are persons who, in the year to which the income relates:

a) Have remained there for more than 183 days, consecutive or interpolated;

b) Having remained for less time, there have available, on 31 December of that year, housing in conditions that suggest the intention to maintain it and occupy it as habitual residence;

(...)

Insofar as relevant to the case, the Code adopted two alternative concepts of residence, one translated into permanence in Portuguese territory for more than 183 days of the respective year, the other consisting of the existence of permanent housing in the national territory, which allows associating the concept of resident with a subjective element, the will of the taxpayer to reside in a given State.

According to that first criterion, the determining element of the concept of resident is the physical presence in the national territory during the greater part of the period in question, this connection element expressing the economic relationship between a person and the State and legitimizing the taxation of income regardless of the place where it is obtained (Rui Morais, Sobre o IRS, 2nd edition, Coimbra, pp. 17 and 18).

And this rule is likewise applicable as a result of the "Convention to avoid double taxation and prevent fiscal evasion in matters of income taxes" (DTT), celebrated between the Portuguese Republic and the Russian Federation (approved by Resolution of the Assembly of the Republic no. 10/2012, published in the Diário da República, I Series-A, of 23 February 2002), and which is inspired by the articles of the OECD Model Convention on Income and Property (Model Convention).

Article 15 of the Convention, under the heading "Dependent Activities", is similar to article 15 of the said Model Convention ("Employment Income"), whose no. 2 also makes the attribution of the power to tax income to one of the referred States depend on permanence or not in the territory for a period of 183 days, and the Commentary to this provision, to which neither Portugal nor Russia made reservations, concludes: "...there is a single method compatible with the wording of the present number - the method of days of physical presence"-, and, further on "...any full day spent outside the State where the activity is exercised, on holiday, on a business trip or for any other reason, must not be taken into consideration. Any and all fraction, however brief, of a day during which the taxpayer is present in a State counts as a day of presence in that State for purposes of calculating the 183-day period".

Note that, in relation to the 2012 tax period, the current wording of no. 2 of article 16 of the Personal Income Tax Code was not yet applicable, which in the wording introduced by Law no. 82-E/2014, of 31 December, came to consider "as a day of presence in Portuguese territory any day, full or partial, that includes a night there". Whereby, in the present case, any fraction of a day on which the Applicant is present in the territory, including days of departure or arrival in case of movements to foreign countries, must be taken into account in the counting of days of permanence in Portugal.

Now, the Respondent, in calculating the days of permanence of the Applicant in Portuguese territory, summed the calendar days, without interruption, between 1 January 2012 and 3 September 2012, in a total of 247 days, disregarding the days on which the Applicant had no physical presence in the national territory.

On the other hand, the Applicant proved that between the period of 1 January 2012 and the said day 3 September he spent 94 days outside Portuguese territory, which translates into 153 days of permanence in that period of time, to which 4 days in December 2012 are added, for a total of 157 days. The Applicant may not, therefore, be considered resident in Portuguese territory in light of the criterion defined in article 16, no. 1, letter a), in the wording in force at the time of the facts, based on this criterion of permanence.

Having the Applicant remained in Portuguese territory for less time than the said 183 days, he could still be considered resident in Portugal if here he had on 31 December 2012 "housing in conditions to suppose the intention to maintain it and occupy it as habitual residence", according to letter b) of no. 1 of article 16 of the Personal Income Tax Code.

However, it was proved that on that date the Applicant had residence in Saint Petersburg as a result of his transfer to club C... in that city. And even if the Applicant had in the city of Porto housing available that he could use when he returned there on holiday or in passing, this would not be, in any case under Portuguese law, his "habitual residence".

It should also be noted that double taxation conventions do not contain any definition of "resident in one of the contracting states" – limiting themselves to remit that definition to the respective internal law – and merely establish tiebreaker rules intended to determine in which of the contracting states someone will be deemed a fiscal resident, in cases in which, in light of the internal law of both states, they should be deemed resident therein (cf. article 4, nos. 1 and 2, of the OECD Model).

Now, having it been proved that the Applicant did not satisfy, in the year in question, any of the connection elements typified in the Personal Income Tax Code defining the condition of resident in our country, the Portugal-Russia DTT has no application to the case – differently from what the Respondent understands – whereby the Applicant cannot be considered a fiscal resident in Portugal under that Convention.

As must be concluded, in the year 2012, the Applicant must be considered non-resident in Portugal, and consequently his tax obligation in Personal Income Tax could only relate to income obtained in Portuguese territory.

III – Decision

It is decided as follows:

a) To uphold the request for arbitral pronouncement and annul the assessment of Personal Income Tax no. 2016... and the assessment of interest no. 2016..., in the total amount of €3,633,851.16.

b) As a consequence, to annul the order of 8 August 2017 that rejected the gracious appeal presented against the assessment act.

Value of the Case

The Applicant indicated as the value of the case the amount of €3,633,851.16, which was not contested by the Respondent and corresponds to the value of the assessment that was to be opposed (article 97, no. 1, letter a), of the CPPT).

Notify.

Lisbon, 12 September 2018

The President of the Arbitral Tribunal

Carlos Fernandes Cadilha

The Arbitrator Member

Rui Duarte Morais

The Arbitrator Member

Américo Brás Carlos

Frequently Asked Questions

Automatically Created

What is the 183-day rule for determining tax residency in Portugal under Article 16(1)(a) of the IRS Code?
Under Article 16(1)(a) of the Portuguese IRS Code, an individual is considered a tax resident in Portugal if they remain in Portuguese territory for more than 183 days, whether consecutive or interpolated, during a calendar year. This rule establishes a physical presence test for determining tax residency, which triggers taxation on worldwide income. The 183-day threshold is a bright-line test widely used in international tax law, though its application can be complex for individuals with significant cross-border mobility, such as professional athletes. The critical question is what constitutes 'permanence' (permanência) in Portuguese territory and whether temporary absences interrupt the day count.
Can temporary absences for professional reasons interrupt the count of days for Portuguese tax residency purposes?
The determination of whether temporary professional absences interrupt the 183-day count is a central issue in Portuguese tax residency cases. According to the Tax Authority's position in this case, the concept of 'permanence' under Article 16(1)(a) of the IRS Code is not negated by temporary movements for professional reasons, such as international matches, training camps, or short-term work assignments. The Authority argues that an individual maintains permanence in Portugal despite such absences if they have an ongoing professional contract with a Portuguese entity and a habitual base in the country. This interpretation focuses on the individual's center of vital interests and habitual abode rather than strict physical presence. However, taxpayers can challenge this interpretation by providing detailed evidence of their actual whereabouts throughout the year, including documentation of international travel, work obligations abroad, and establishment of residence in another jurisdiction.
How does Portugal's tax authority determine IRS residency for professional athletes with international travel obligations?
For professional athletes with international travel obligations, Portuguese tax authorities assess IRS residency by examining multiple factors beyond simple day-counting. Key considerations include: (1) the existence and duration of employment contracts with Portuguese sports clubs; (2) the location of the athlete's habitual residence and family ties; (3) documented evidence of international travel for competitions, training, and national team duties; (4) the date of any transfer to foreign clubs; and (5) application of double taxation conventions with other countries under Article 4 provisions. Athletes must maintain comprehensive records of their international movements, including match schedules, training camp attendance, and official travel documentation. The burden of proof can be disputed, but taxpayers challenging residency determinations should provide detailed calendars with supporting documentation. The Tax Authority may apply Article 76(3) of the IRS Code for indirect income determination methods when direct evidence is insufficient.
Does living in a de facto union (união de facto) without marriage establish tax residency in Portugal under Article 14 of the IRS Code?
Living in a de facto union (união de facto) without formal marriage does not automatically establish tax residency in Portugal under Article 14 of the IRS Code. Article 14 addresses joint taxation of married couples and equivalent relationships, but the existence of a de facto union does not by itself determine an individual's habitual residence for tax purposes. In this case, the taxpayer argued that even if he lived with his partner (whom he later married in 2015), they did not form a mandatory joint taxation unit in 2012 because they were not yet married. The concept of habitual residence under Article 16(1)(b) of the IRS Code requires that Portugal be the place where an individual has their habitual abode (habitação) with the circumstances suggesting the intention to maintain it as a permanent residence. A de facto union may be evidence supporting habitual residence, but it is not determinative on its own. Tax authorities consider additional factors such as property ownership, location of economic interests, and where the individual's personal and family ties are centered.
What are the grounds for challenging an additional IRS tax assessment through arbitration at CAAD?
Taxpayers can challenge additional IRS tax assessments through arbitration at CAAD (Centro de Arbitragem Administrativa) under Decree-Law 10/2011. Valid grounds for challenge include: (1) violation of law (vício de violação de lei), such as incorrect application of tax residency rules or income determination provisions; (2) lack of grounds or insufficient reasoning in administrative decisions rejecting gracious appeals; (3) legal non-existence of assessment acts due to procedural failures, such as missing determination and settlement documents; (4) relative incompetence due to hierarchy, where the wrong authority issued the assessment (e.g., when Article 65(5) of the IRS Code requires specific authorization levels); and (5) errors in fact determination or calculation of tax liability. Taxpayers must file their arbitration request under Article 10 of the RJAT (Legal Regime for Tax Arbitration), providing specific grounds and supporting documentation. The process allows for expansion of claims if new procedural defects are discovered during proceedings. CAAD arbitration offers an alternative to judicial courts for resolving tax disputes, with specialized arbitrators deciding on both procedural and substantive tax law issues.