Summary
Full Decision
ARBITRAL DECISION
Arbitrators in agreement
I – Report
1. A..., SPGS, S.A., legal entity no. ..., with registered office at Rua ..., no. ..., R/C, ...-... Porto, hereby requests the constitution of an arbitral tribunal, under the provisions of articles 2.º, no. 1, paragraph a), and 10.º of Decree-Law no. 10/2011, of 20 January, to assess the legality of the act of tacit dismissal of the request for ex officio revision of the corporate income tax (IRC) assessment for the year 2014, as well as the declaration of illegality of that taxation act.
The request is grounded as follows.
The Claimant is a commercial company subject to the Special Tax Regime for Groups of Companies, and, in its capacity as the holding company, submitted, for the fiscal year 2014, the IRC income declaration Form 22, in which an aggregate fiscal loss was determined in the amount of € 5,645,348.41.
Having followed the instructions contained in Circular no. 7/2004, the Claimant proceeded to add financial charges in an amount that, between fiscal years 2007 and 2012, amounted to € 31,387,736.55, and subsequently concluded that such charges were deductible with respect to the year 2014, by virtue of the revocation of article 32.º, no. 2, of the Tax Benefits Statute (EBF).
This understanding is based on the fact that the aforementioned provision of the EBF had established an exclusion from taxation of capital gains obtained by companies managing shareholdings, with respect to capital shares they held, which had as its counterpart the non-deductibility of financial charges associated therewith, so that the elimination of that tax benefit should result in the deductibility of financial charges relating to shareholdings that were not transferred during the validity of article 32.º of the EBF and, consequently, did not give rise to any capital gains or losses that could be excluded from taxation.
In this context, recognizing that there was an error in the self-assessment of the tax, the Claimant submitted a request for revision of the tax act, with reference to the 2014 assessment, which was the subject of tacit dismissal by the lapse of the legal period for rendering a decision.
Furthermore, Circular no. 7/2004, issued by the Tax Authority, which, in application of the provision of article 32.º, no. 2, of the EBF, determined the disregard of financial charges incurred with loans obtained for the purpose of acquiring capital shares, provided in point 6 that "should it be concluded, at the moment of disposal of the shareholdings, that not all the requirements for application of that regime are met, such financial charges that were not considered as a tax cost in earlier fiscal years shall be considered as a tax cost in that fiscal year." It must be understood that the conditional circumstances provided therein are met when, by virtue of the revocation of article 32.º, no. 2, of the EBF, the requirements that would permit non-taxation of capital gains upon disposal of capital shares no longer exist.
In this manner, at the date of revocation of the aforementioned provision, carried out by Law no. 83-C/2013, of 31 December, effective as of 1 January 2014, all financial charges accumulated and associated with capital shares remaining in the ownership of the taxpayer on that date must be recognized as tax-accepted expenses, because the regime provided for in article 32.º, no. 2 of the EBF proved inapplicable, by virtue of its revocation.
That is, given that the norm of article 32.º, no. 2, was revoked before the moment of disposal of the shareholdings, it must be concluded that the regime provided therein can no longer be applied, and therefore, in 2014, there must be deduction as a tax cost of the financial charges that were not considered as a cost in earlier fiscal years, by virtue of the final part of point 6 of Circular no. 7/2004, to which the Tax Authority is bound.
Furthermore, within the framework of the regime defined in article 32.º, no. 2, of the EBF, companies managing shareholdings, although they could not deduct for tax purposes the charges with the acquisition of capital shares, had the legitimate expectation of benefiting from the exemption from taxation in IRC with respect to the disposal of the shareholdings – as was provided therein – so that the revocation of the norm without any counterpart implies a violation of the constitutional principle of legitimate expectations.
In these terms, it must be understood that the financial charges previously accumulated in the determination of taxable income, in the amount of € 31,387,736.55, with reference to fiscal years 2007 to 2012, should be accepted and, consequently, the corresponding tax assessment should be partially annulled.
The Tax Authority, in its response, raises the preliminary exception of lack of jurisdiction of the tribunal, to the extent that the arbitral request aims at condemning the Tax Authority to correct the fiscal loss for 2014, and the preliminary exception of lack of jurisdiction of the tribunal ratione valoris.
Regarding the first aspect, the Tax Authority argues that the jurisdiction of the tribunal, being delimited by the declaration of illegality of tax assessment acts, cannot encompass the fixing of the amount of losses that should be relevant in a given fiscal year, since this is a matter that can only be resolved within the scope of the process of execution of judgments, also understanding that a different interpretation is unconstitutional by virtue of violation of the principle of legal certainty, the principle of effective judicial protection, and the principle of legality.
With respect to the second issue, the Tax Authority contends that the Claimant, although it indicated as the value of the claim the amount of € 6,591,424.68, by virtue of the request for declaration of illegality of the impugned tax act, intends to deduct financial charges for the determination of taxable income in the amount of € 31,387,736.55, being that the economic value of the arbitral request, therefore, there exists lack of jurisdiction ratione valoris, given that, under no. 1 of article 3.º of Ordinance no. 112-A/2011 of 22 March, the binding of the services and organisms of the Tax Authority to arbitral jurisdiction is limited to disputes with a value not exceeding € 10,000,000.
In its opposition to the exceptions, the Tax Authority begins by referring to the final part of point 6 of Circular no. 7/2004, which, in permitting the deduction of financial charges when the requirements for application of the special tax regime for capital gains of companies managing shareholdings are not met, intended to refer to the moment of disposal of the shareholdings, so that this directive would only become applicable when the transfer occurred still during the validity of the regime of article 32.º, no. 2.
On the other hand, by proposal of the Commission for IRC Reform, the revocation of article 32.º, no. 2, of the EBF was accompanied by the new participation exemption regime, which, in substance, continues to preserve the possibility of exemption from taxation of capital gains from the for-value transfer of shareholdings, by virtue of the provision of article 51.º-C of the IRC Code.
And with that regime, which became applicable to all companies, eliminating the special tax regime of article 32.º, no. 2, applicable to companies managing shareholdings, the legislator intended to restore formal equality in the tax treatment of capital gains and losses generated from the transfer of capital shares.
In these terms, the revocation of the special tax regime for SGPS and its replacement by the participation exemption regime aimed at the pursuit of the public interest of attracting investors and strengthening the business sector, not calling into question the principles of legal certainty and protection of legitimate expectations or the principle of equality.
Being that the normative interpretation proposed by the Claimant, in the sense of the deduction of financial charges incurred between 2007 and 2012 from the taxable income of 2014, is unconstitutional by violation of the principle of tax legality and, also, by violation of the principle of the democratic rule of law, the tax law reserve, and the separation of powers.
It concludes by supporting the preliminary exceptions and, if not so understood, by supporting the dismissal of the arbitral request.
In its response to the matter of exceptions, the Claimant pronounced itself only on the alleged lack of jurisdiction of the arbitral tribunal ratione valoris, stating that the value of the claim, corresponding to the economic utility of the request, was determined through the application of the IRC rate of 21% to the amount of deductible financial charges, totaling € 31,387,736.55, and, being in question the fixing of the taxable matter without there being any occasion for tax assessment, the value of the claim should correspond to the tax that would cease to be collected as a result of the alteration of the taxable matter that has been contested.
Otherwise, the Tax Authority would be bound to arbitral jurisdiction in a dispute that had as its object the determination of taxable matter in the value of € 31,387,736.55 when it had generated a tax assessment of € 6,591,424.68, and not already when it is in question the same amount of taxable matter, but there is no tax to be assessed because of the carry-forward of fiscal losses.
It concludes that the norm of article 10.º, no. 2, paragraph e), of the RJAT, interpreted in the sense advocated by the Respondent, is unconstitutional by violation of the principle of equality.
2. Following the process, the meeting referred to in article 18.º of the RJAT was dispensed with and the process was ordered to proceed to arguments by successive period.
The parties did not argue.
3. The request for constitution of the arbitral tribunal was accepted by the President of CAAD and notified to the Tax and Customs Authority in accordance with regulatory requirements.
Under the provision of paragraph b) of no. 2 of article 6.º of the RJAT, as amended by article 228.º of Law no. 66-B/2012, of 31 December, the arbitrators were designated by the parties, with the Deontological Council being responsible for the designation of the third arbitrator.
The collective arbitral tribunal was, accordingly, constituted by the undersigned hereto, who communicated their acceptance of the appointment within the applicable period.
The parties were duly notified of that designation and did not manifest an intention to refuse it, in accordance with the combined provisions of article 11.º, nos. 4 and 5, of the RJAT and articles 6.º and 7.º of the Deontological Code.
Thus, in compliance with the provision of no. 7 of article 11.º of the RJAT, as amended by article 228.º of Law no. 66-B/2012, of 31 December, the collective arbitral tribunal was constituted on 12 February 2019.
The arbitral tribunal was regularly constituted and is materially competent, in accordance with the provision of article 2.º, no. 1, paragraph b), of Decree-Law no. 10/2011, of 20 January.
The parties enjoy legal personality and capacity, are legitimate, and are represented (articles 4.º and 10.º, no. 2, of the same decree and 1.º of Ordinance no. 112-A/2011, of 22 March).
The process has no defects and exceptions have been raised.
It is incumbent upon us to assess and decide.
II – Reasoning
Factual Matters
4. The facts relevant to the decision of the case that may be deemed established are as follows:
A) The Claimant is a commercial company whose activity is the management of shareholdings and was subject to the Special Tax Regime for Groups of Companies;
B) In its capacity as the holding company of the Group, it submitted, for the fiscal year 2014, the IRC income declaration Form 22, in which an aggregate fiscal loss was determined in the amount of € 5,645,348.41 and an individual fiscal loss in the amount of € 15,704,481.42;
C) In the self-assessment, following the generic guidance resulting from Circular no. 7/2004, of 30 March, the Claimant proceeded to add financial charges for the acquisition of capital shares in an amount that, between fiscal years 2007 and 2012, amounted to € 31,387,736.55;
D) Considering that it had erred in not deducting as tax expenses, with respect to the fiscal year 2014, the financial charges incurred in fiscal years 2007 to 2012, by virtue of the revocation of article 32.º, no. 2, of the EBF by the State Budget Law for 2014, the Claimant submitted on 23 April 2018 a request for revision of the tax act, under the terms of articles 78.º, no. 1 of the LGT, and article 10.º, no. 1, paragraph b) of the CPPT;
E) The ex officio revision request was not decided within the legally provided period, and was therefore tacitly dismissed;
F) The tacit dismissal of the ex officio revision request and the self-assessment act resulting from the submission of IRC Form 22 constitute the object of the present arbitral request;
G) The Claimant indicated as the value of the claim the amount of € 6,591,424.68, corresponding to the application of the IRC rate of 21% to the Group's fiscal loss in the amount of € 31,387,736.55.
The Tribunal formed its conviction as to the established facts based on the documents attached to the petition and the administrative process submitted by the Tax Authority with its response.
Legal Matters
Lack of jurisdiction of the arbitral tribunal by reference to the scope of cognition
5. The Tax Authority raised the preliminary exception of lack of jurisdiction of the arbitral tribunal where the arbitral request aims, in addition to the declaration of illegality of the act of tacit dismissal of the ex officio revision request and the IRC assessment act, at the fixing of the fiscal losses to be relevant in the fiscal year 2014, considering that the arbitral decision to be rendered, in that respect, would correspond to a condemnation in the practice of the acts and operations that should constitute the execution of the judgment, which does not fall within the tribunal's jurisdiction.
The argument, if correctly understood, results from the fact that in the narration of the grounds of the request, in the part specifically directed at the determination of the amounts of deductible financial charges, the Claimant drew the following conclusion in article 110.º:
In summary:
With the annulment of the administrative decision and the assessment in question, the TA must draw the due consequences in the legal-tax sphere – which includes, namely:
a) The correction of the individual DM22 of A... previously submitted, relating to fiscal year 2014, to a fiscal loss in the amount of Euro 47,092,217.97;
b) The correction of the Group A... DM22, for the same fiscal year, to an aggregate fiscal loss of Euro 37,033,084.96.
However, that proposition does not appear described in the request finally formulated, in which the Claimant merely states:
In these terms, in accordance with the law and with the kind assistance of Your Excellency, the present challenge should be judged to succeed and, in consequence:
a) The administrative decision being challenged shall be annulled and, consequently:
b) The IRC assessment for fiscal year 2014 shall be partially annulled – with legal effects.
c) The Public Treasury shall be condemned to pay costs and other expenses of the process, as it caused the same.
As is well known, the request is one of the elements identifying the action, being through the request that the legal effect sought to be obtained by means of the action is indicated and thereby the object of the process is defined. It is, in turn, the object of the process that shapes the tribunal's powers of cognition: the judge must resolve all questions that the parties have submitted for its consideration, except those whose decision is prejudiced by the solution given to others, and may not concern itself except with questions raised by the parties, unless the law permits or requires it to address other matters ex officio (article 608.º of the CPC). On the other hand, the judgment cannot condemn in a sum greater than or in an object different from that which is requested (article 609.º, no. 1, of the CPC).
Given that the fixing of fiscal losses was not included in the request, the tribunal does not need to pronounce itself on that question and, consequently, the question of rendering any decision that would involve a condemnation to the practice of the acts and operations that must be produced in the execution of judgment proceedings and that do not fall within its jurisdiction does not arise.
Interpreting the initial petition in accordance with the above-mentioned terms, the alleged lack of jurisdiction of the arbitral tribunal does not exist, nor is there reason to assess the invoked constitutional questions.
Lack of jurisdiction ratione valoris
6. The Tax Authority contends that the value of the claim should be fixed at € 31,387,736.55, which corresponds to the amount of financial charges that the Claimant intends to deduct for tax purposes, and therefore there exists lack of jurisdiction ratione valoris, given the provision of article 3.º, no. 1, of Ordinance no. 112-A/2011, of 22 March, which limits the binding of the Tax Authority to arbitral jurisdiction to disputes with a value not exceeding € 10,000,000.
The Claimant clarifies, in response to the exception, that the amount of € 6,591,424.68 indicated as the value of the claim was determined by the application of the IRC rate of 21% to the amount of deductible financial charges, and it must be understood that the economic utility of the request when there is no occasion for tax assessment is the amount of tax that would cease to be collected as a result of the alteration of the taxable matter that has been contested by means of the arbitral request.
Otherwise, the Tax Authority would be bound to arbitral jurisdiction in a dispute that had as its object the determination of taxable matter in the value of € 31,387,736.55 when it had generated a tax assessment, and not already when, being in question a correction of the taxable matter of the same amount, there is no tax to be assessed by virtue of the carry-forward of fiscal losses.
It further argues that the norm of article 10.º, no. 2, paragraph e), of the RJAT, interpreted in the sense advocated by the Respondent, is unconstitutional by violation of the principle of equality.
The matter is therefore concerned with the determination of the value of the claim in tax proceedings brought before arbitral jurisdiction.
The norms that, at a first approach, merit consideration are those of articles 10.º, no. 2, of the RJAT and 3.º, nos. 2 and 3, of the Regulation of Costs in Tax Arbitration Proceedings, with it being certain that this Regulation, in execution of the provision of article 12.º, no. 1, of the RJAT, has as its "scope and object" the establishment of "the arbitration fees applicable in tax arbitration proceedings organized within the framework of CAAD" (article 1.º). The first of these provisions, referring to the request for constitution of the arbitral tribunal, provides that the request must contain, as one of its requirements, the "indication of the value of the economic utility of the request." Article 3.º of the Regulation of Costs in Tax Arbitration Proceedings provides, in its no. 2, that the "value of the claim is determined under article 97.°-A of the Code of Tax Procedure and Process" and adds, in no. 3, that the value of the claim in the cases provided for in paragraphs b) and c) of no. 1 of article 2.º of the RJAT is that of the assessment which the taxpayer, in whole or in part, seeks to contest."
Article 2.º, no. 1, of the RJAT, to which that regulatory provision refers, defines the jurisdiction of arbitral tribunals in tax matters, with paragraph a) referring to the declaration of illegality of tax assessment and self-assessment acts and paragraph b) contemplating the declaration of illegality of acts fixing the taxable matter when it does not give rise to tax assessment, acts of determination of the taxable matter, and acts fixing property values. Paragraph c) has since been revoked.
Article 3.º of the Regulation of Costs in Tax Arbitration Proceedings thus contains two distinct rules: one that effects a general referral to the criteria for fixing the value of the claim provided for in article 97.°-A of the CPPT (no. 2) and another that, restricting the general rule, defines a specific criterion for the value of the claim, namely when it is in question the fixing of the taxable matter and no tax is assessed.
Apparently, the aforementioned provision of article 3.º of the Regulation defines a criterion distinct from that provided for in article 97.º-A of the CPPT, given that, even when the fixing of the taxable matter is in question, the proposed solution is reported to the tax assessment that the party seeks to contest, which – as shall be seen more fully below – raises difficulties in quantitative implementation.
In any case, the Regulation, in all that goes beyond the establishment of the arbitration fee, that is, the costs of the arbitral process (see articles 1.º and 2.º of the Regulation and 12.º, no. 1, of the RJAT), has no normative basis to regulate the value of the claim of disputes subject to arbitral jurisdiction and contradicts the provision of article 97.º-A, no. 1, paragraph b), of the CPPT, which is subsidiarily applicable, by virtue of article 29.º, no. 1, paragraph a), of the RJAT, in the absence of specific provisions in that statute regarding the value of the claim.
It is therefore important to bear in mind the content of article 97.°-A of the Code of Tax Procedure and Process.
Under the heading "value of the claim," the provision, in the part that most merit consideration, provides as follows:
The values to be considered for the purposes of costs or others provided for in law, for actions proceeding in tax courts, are as follows:
a) When the assessment is impugned, the amount whose annulment is sought;
b) When the act fixing the taxable matter is impugned, the contested value;
c) When the act fixing property values is impugned, the contested value;
d) In contentious proceedings regarding the total or partial dismissal or revocation of tax exemptions or other benefits, the value of the exemption or benefit.
e) In contentious proceedings related to tax execution, the amount corresponding to the amount of the debt subject to execution or the remaining part, when there is partial annulment, except in cases of offset, attachment, or sale of assets or rights, in which it corresponds to the value thereof, if lower.
Disregarding the commands contained in paragraphs c), d), and e), which have no direct relation to the case at hand, it is possible to discern that the first hypothesis, that of paragraph a), applies to situations where the illegality of an assessment is in question, in which case the value of the claim corresponds to the value of the assessment or the value of the part impugned, and presupposes, consequently, that, following the fixing of the taxable matter, tax has been assessed. The second hypothesis, that of paragraph b), refers to cases where acts fixing the taxable matter are impugned without tax assessment, in which case the value of the claim is the contested value, that is, it is the value of the correction to the taxable matter itself that has been fixed by the Tax Authority.
The question that has been discussed concerning article 97.º-A of the CPPT is the discrepancy that may result from the strict application of the criteria defined in the aforementioned paragraphs a) and b). An identical correction in economic terms may give rise to a different value of the claim depending on whether or not tax is assessed. Where tax is assessed, the value of the claim is that of the amount whose annulment is sought to be obtained, reported to the tax assessed; where no tax is assessed, notably because the taxpayer carries forward fiscal losses relating to the taxation period in question, the value of the claim is corresponding to the amount of the corrected taxable matter itself, which is necessarily greater than the tax that would be determined if there were to be an assessment.
This differentiation of criteria has, on the other hand, a direct impact both on the calculation of costs, which are fixed according to the value of the claim, and on the jurisdiction of the tribunal itself, given that the binding of the Tax Authority to arbitral jurisdiction is dependent on a maximum value limit referenced by the value of the claim.
For this reason it has been suggested in legal literature that there may be raised here "problems of compatibility of this criterion with the constitutional principle of equality, since the judicial challenge of acts fixing the taxable matter in which the question concerns the challenge of an identical amount shall have a different value for the purposes of taxation of costs, depending on whether or not an act of assessment is practiced, and it may even happen that a broader challenge corresponds a lesser value of the action" (JORGE LOPES DE SOUSA, Code of Tax Procedure and Process Annotated and Commented, vol. II, 6th edition, 2011, Áreas Editora, page 73).
In that line of understanding, the same Author proposes, de jure condendo, the following alternative criterion, which was subsequently adopted in the arbitral decision rendered in Process no. 322/2017-T:
"In cases where the act fixing the taxable matter is directly impugned, referred to in paragraph b) of no. 1 of article 97º-A, the benefit sought to be obtained is not equivalent to the 'contested value,' adopted as the criterion for fixing the value, but rather the tax that would cease to be collected with the alteration of the contested value of the taxable matter, which will always be much less than that.
Therefore, in coherence with the legislative option underlying the fixing of value provided for in paragraph a), in these situations of challenge to acts fixing the taxable matter, one should opt for fixing the value of the action based on the value of the tax that would be connected with the contested taxable matter."
(JORGE LOPES DE SOUSA, Code of Tax Procedure and Process Annotated and Commented, vol. II, 6th edition, 2011, Áreas Editora, page 73).
However, this point of view was recently refuted by the judgment of the TCA Sul of 17 January 2019 (Process 62/18), in which it is noted that paragraphs a) and b) of no. 1 of article 97.º-A of the CPPT are based on objective criteria for the determination of the value of the claim, with a view to defining the economic utility of the request.
In the case of paragraph a), the economic utility of the request corresponds to the amount of tax impugned and already assessed, that is, the certain and liquid sum that, in the event of success of the challenge, the taxpayer will cease to pay or will be refunded. Whereas in the case of paragraph b), the legislator intended to establish as the value of the claim a reality with monetary expression that may be regarded as indisputable: the contested value of the taxable matter. Which is, moreover, in accordance with that established in paragraph c) for the challenge to the act fixing property values, in which case the value of the claim is not the amount of the tax to be paid, but rather the property value contested, that being the value that should serve for the calculation of the tax.
The use of these different criteria also has its reason for being.
If in the hypothesis of paragraph a) the question concerns the challenge of an assessment in force in the legal order and based on concrete tax facts, it is thus understood why the immediate economic utility of the request is translated in the amount of the assessment that is sought to be contested, in the case of paragraph b) the determination of the value of the claim by reference to the tax that would cease to be collected with the success of the action – by analogy with the criterion established for the case where tax has been assessed – would correspond to a presumptive future assessment based on eventual and uncertain tax facts.
It suffices to note – as results from the provision of article 52.º of the IRC Code – that, where fiscal losses are determined in a given taxation period, the regime of carry-forward by way of deduction in taxable income in subsequent periods is subject to quantitative and temporal limits that hinder or make impossible the measurement of the benefit or economic utility that may result from the annulment of the correction to the taxable matter. On the one hand, losses are deducted from the taxable income of one or more of the 12 subsequent taxation periods (no. 1); then, the deduction to be made may not exceed the amount corresponding to 70% of the taxable income determined in that same fiscal period, with any excess being carried forward to subsequent taxation periods under the general terms (no. 2); furthermore, when corrections are made to declared fiscal losses, the deductions made must be altered accordingly, with no annulment or additional assessment taking place, even if more than four years have elapsed with respect to the period to which the taxable income relates (no. 4). In addition, the tax relevance of losses will depend on no change in the ownership of 50% of the share capital or the majority of voting rights taking place, unless authorized by the Minister of Finance (nos. 8 and 12) (see, on all these aspects, ANTÓNIO ROCHA MENDES, IRC and Business Reorganizations, Catholic University Publisher, Lisbon, 2016, pages 118-120).
Therefore, in situations where the taxable matter is negative, the determination of the economic utility of the dispute by reference to the tax that ceases to be collected becomes unviable, since the losses determined may never be relevant for the practice of any assessment act, which will always depend on, in some or some of the taxation periods in which it is admissible to carry forward losses, taxable income being determined and no losses from prior taxation periods existing that exceed that taxable income. Beyond which the measurement of that relevance also depends on the rate applicable in IRC, which may be different from that which was in force in the years in which the fiscal losses occurred, and is connected with other taxes, such as municipal surtax and state surtax, and any others that may subsequently be fixed for reasons of legislative policy (see JORGE LOPES DE SOUSA, "Commentary on the Legal Regime of Tax Arbitration," in Guide to Tax Arbitration, 3rd edition, Coimbra, pages 154-155).
As may be concluded, the hypothetical amount of tax that the taxpayer would cease to pay in the future does not correspond to the economic benefit that it may immediately derive from the annulment of the correction of the taxable matter, in the event of success of the arbitral request, and, on the contrary, the immediate economic utility of the request can only be gauged by the value of the corrections that have been challenged, to the extent that it is the advantage resulting from the declaration of illegality of the tax act consisting of the fixing of the taxable matter that enters the legal sphere of the taxpayer, and it is to that advantage that may be attributed a certain value (corresponding to the taxable matter challenged) that can serve as a basis for the determination of the value of the claim.
There is therefore no reason, for the purposes of article 3.º, no. 1, of Ordinance no. 112-A/2011, of 22 March, which limits the binding of the tax authority services and organisms to arbitral jurisdiction to disputes with a value not exceeding € 10,000,000, to depart from the criterion for determining the value of the claim contained in paragraph b) of no. 1 of article 97.º-A of the CPPT, being clear that the legislator, in ordering that the contested value be considered, intends precisely to refer to the value that has been fixed by the tax act with respect to the taxable matter, distinguishing that situation from the other, regulated in paragraph a), in which it becomes possible to determine the value of the claim by reference to the tax assessed.
7. On the other hand, the alleged violation of the principle of equality is not present.
The violation of the principle of equality reduces to unequal treatment of one group of addressees of the norm in relation to another group of addressees, notwithstanding the absence of any difference justifying the unequal treatment. The central problem is translated into the choice and justification of the distinguishing criterion that is to serve as the basis for comparing the situations to be treated by law. And, in this specific aspect, the principle of equality identifies with the prohibition of arbitrariness, that is, the legislator is forbidden from introducing discriminations between taxpayers that are devoid of rational foundation or for which no evident objective foundation is found or where a minimum coherence between the objectives pursued and the foreseeable results is not detected (see judgments of the Constitutional Court nos. 306/2010 and 695/2014, and, in legal literature, SÉRGIO VASQUES, Manual of Tax Law, Coimbra, 2015, pages 290-291; REIS NOVAIS, Constitutional Principles Structuring the Portuguese Republic, Coimbra, 2004, page 111).
Arbitrary differentiation is, in summary, that which cannot be grounded in light of an intelligible or rationally apprehensible criterion, congruent with constitutionally relevant values (judgment of the Constitutional Court no. 166/2010).
Now, in the case under analysis, the legislator adopted diverse criteria for the determination of the value of the claim, but which are justified in function of the requirement to assign a certain value to the process (article 308.º, no. 1, of the CPC). And as has been seen, the legislator sought to be guided by objective criteria with the horizon of the immediate economic utility of the request. When an assessment is impugned, the value of the claim corresponds to the amount of the assessed tax that, in the event of success of the action, will be subject to annulment. When the act fixing the taxable matter is impugned because no tax has been assessed – as has been extensively demonstrated – it is not possible to gauge the value of the claim by way of the impact that the alteration of the taxable matter may come to have on the tax to be assessed. And in that sense it is understood that the law has used as its criterion the value of the taxable matter that is contested through the judicial action.
It is an objective criterion that is justified by the stated impossibility of reaching a secure result through a hypothetical future assessment that would always be dependent on uncertain factors.
It is true that the application of different criteria may result in distinct outcomes, both with respect to the calculation of costs and with respect to the tribunal's own jurisdiction, in this case, because a maximum value limit is defined for the binding of the Tax Authority to arbitral jurisdiction. However, arbitration as an alternative means of judicial resolution of disputes in tax matters is voluntary and the parties, in submitting a dispute to arbitral jurisdiction, cannot fail to consider the effects that result from the application of the legal criteria for determining the value of the claim.
There therefore is no violation of the principle of equality, as was also considered in the aforementioned judgment of the TCA Sul of 17 January 2019.
For all the above, the arbitral tribunal lacks jurisdiction ratione valoris to hear the present action, the assessment of the merits of the case being necessarily prejudiced.
III – Decision
In these terms, it is decided to judge the preliminary exception of lack of jurisdiction ratione valoris to be well-founded and to dismiss the Tax Authority from the proceedings.
Value of the Claim
The value of the claim is fixed, having regard to article 3.º, no. 1, of Ordinance no. 112-A/2011, of 22 March, in the amount of € 31,387,736.55, which corresponds to the contested value under the provision of paragraph b) of no. 1 of article 97.º-A of the CPPT, applicable subsidiarily by virtue of article 29.º, no. 1, paragraphs a) and c), of the RJAT.
Costs
Under articles 12.º, no. 3, of the RJAT, and 5.º, no. 2, of the Regulation of Costs in Tax Arbitration Proceedings and Table II annexed to that Regulation, the amount of costs is fixed at € 100,000.00, being that the amount corresponding to the value of the claim indicated in the arbitral request, which remains chargeable to the Claimant (see arbitral decision rendered in Process no. 151/2013).
Notify accordingly.
Lisbon, 18 July 2019
The President of the Arbitral Tribunal
Carlos Fernandes Cadilha
The Arbitrator Member
João Menezes Leitão
The Arbitrator Member
João Taborda da Gama
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