Process: 592/2015-T

Date: July 8, 2016

Tax Type: IRS

Source: Original CAAD Decision

Summary

Process 592/2015-T addresses whether the CAAD arbitral tribunal has jurisdiction to review the Tax Authority's dismissal of a tax revision request concerning IRS deductions for disability. The claimant, diagnosed with advanced prostate cancer in June 2011, filed his 2011 tax return without claiming disability benefits under Article 87 of CIRS, only obtaining the multi-purpose disability certificate (atestado médico de incapacidade multiuso) in November 2013. He subsequently requested revision of the 2011 assessment to apply both the tax deduction (four times the minimum wage) and the 90% income consideration under Article 98 of Law 55-A/2010. The Tax Authority dismissed the revision request, prompting arbitral proceedings. The central legal controversy involves whether CAAD has material competence to review procedural decisions about revision admissibility versus substantive tax assessments. The claimant argues that revision constitutes a complementary impugnation mechanism and that denial violates equality and material justice principles when the Tax Authority acknowledges the disability requirements are met. Alternatively, he requests conversion to an administrative complaint, arguing the medical certificate could only be obtained retroactively. The Tax Authority contends CAAD lacks jurisdiction because the dispute concerns admissibility of the revision procedure itself, not the legality of the underlying tax act. The case highlights critical issues regarding timing of disability documentation, retroactive application of tax benefits for health conditions diagnosed during the tax year, and the scope of arbitral tribunal competence in Portuguese tax procedure.

Full Decision

ARBITRAL AWARD

1. REPORT

1.1

A…, taxpayer no. …, resident at Rua…, no. …, …-… …, hereinafter referred to as the Claimant, filed on 11/09/2015 a request for arbitral pronouncement, in which he seeks the annulment of the act dismissing his request for review of the income tax assessment act for 2011.

1.2

His Excellency the President of the Deontological Council of the Administrative Arbitration Centre (CAAD) appointed Francisco Nicolau Domingos as arbitrator on 05/11/2015.

1.3

On 24/11/2015 the arbitral tribunal was constituted.

1.4

In compliance with the provision of art. 17, nos. 1 and 2 of Decree-Law no. 10/2011 of 20 January (RJAT), the Respondent was notified on 25/11/2015 to, if it so wished, present a response, request the production of additional evidence, and to remit the administrative proceedings (PA).

1.5

On 06/01/2016 the Respondent presented its response, in which it invokes the material incompetence of the tribunal, contends that the request should be judged as unfounded, and attached the PA to the record.

1.6

By order of 12/01/2016 the Claimant was invited to pronounce itself regarding the dilatory exception invoked by the Respondent and to indicate the facts of its request for arbitral pronouncement on which it intended to produce evidence in order to ascertain their relevance.

1.7

The Claimant on 26/01/2016 pronounced itself regarding the dilatory exception and indicated the factual matter on which it intended to produce evidence.

1.8

The tribunal on 19/04/2016 dismissed the Claimant's request for production of testimonial evidence, given its futility, and decided to dispense with the holding of the meeting to which art. 18, no. 1 of the RJAT refers, on the grounds of the principle of the arbitral tribunal's autonomy in conducting the proceedings and in determining the rules to be observed with a view to obtaining, within a reasonable timeframe, a pronouncement on the merits of the claims formulated, cf. art. 16, para. c) of the RJAT. The tribunal granted a period for the parties, if they so wished, to present final written submissions and fixed a deadline for rendering the arbitral award.

1.9

The Claimant presented its final written submissions on 16/05/2016, arguing for the unfoundedness of the dilatory exception of material incompetence of the arbitral tribunal invoked by the Respondent and requesting the annulment of the act dismissing the request for review.

1.10

The Respondent attached to the record on 27/05/2016 its final submissions, arguing for the foundedness of the dilatory exception and the unfoundedness of the request for arbitral pronouncement.

1.11

The tribunal, by order dated 23/05/2016 and with the grounds described therein, decided to extend by two months the deadline for rendering the arbitral award.

2. SUBJECT MATTER OF THE PROCEEDINGS

The Claimant alleges, in summary, the following factual matter: i) that he was diagnosed on 24/06/2011 with advanced adenocarcinoma of the prostate with a severity grade of 8 (4+4) on the Gleason scale, having initiated total hormonal blockade; ii) that he initiated three-dimensional external radiotherapy in March 2012; iii) that between August 2012 and October 2012 he was admitted to emergency care on several occasions and that throughout 2012 he was catheterized; and iv) that he only became aware that his pathology could have tax relevance in mid-2013.

Thus, on 01/06/2012, he submitted electronically the tax return Form 3 concerning the year 2011, without the certificate of tax-relevant incapacity which he only obtained on 21 November 2013.

As to the legal matters, he begins by arguing that he used the appropriate means to defend his claim, inasmuch as the review of the tax act does not constitute an exceptional means of reaction to the consequences of the assessment act, but rather a complementary impugnation means to the administrative and contentious remedies.

He adds that the Tax Authority (AT) made an error of fact and law when, the requirements for the application of the deduction contained in art. 87 of the Personal Income Tax Code (CIRS) being fulfilled, the same was not used, dismissing the request for official review of the act. He argues that if this error of fact and law could have been corrected in an administrative complaint or judicial impugnation as the AT admits, then by greater reason it can be corrected by means of a request for review of the tax act, since such request constitutes a complementary mechanism for annulment of the tax act.

In this context, the Claimant observes that if the AT's services came to acknowledge in the draft dismissal and in the decision at issue that the requirements for the application of the scheme contained in art. 87 of the CIRS for the year 2011 are fulfilled, but do not apply it because they understand that we are not dealing with an administrative complaint, there is a violation of the principles of equality and material justice provided for in art. 5, no. 2 of the General Tax Law (LGT) and in art. 13 of the Constitution of the Portuguese Republic (CRP).

In the alternative, the Claimant argues that the review of the act would be admissible on the grounds of grave or notorious injustice, inasmuch as the AT itself admitted this in the administrative proceedings and, secondly, the error is not attributable to negligent conduct by the Claimant, given that his state of health was rather precarious during the entirety of 2012.

In the third place, the Claimant contends that the request for review of the tax act should be converted into an administrative complaint, inasmuch as the medical certificate of multi-purpose incapacity must be considered a document whose obtaining was only possible on 21/11/2013 and, consequently, the income tax return for 2011 should be corrected, considering the deduction to the tax collection and 90% of income, as provided for in art. 87 of the CIRS and art. 98, no. 2 of Law 55-A/2010 of 31 December.

The Claimant further argues that, with regard to the income tax assessment for 2011, the AT's position that it would not be possible to apply the deduction to the tax collection contained in art. 87 of the CIRS, corresponding to four times the value of the National Minimum Wage, but to consider only the Claimant's income at 90%, pursuant to art. 98, no. 2 of Law no. 55-A/2010 of 31 December constitutes an error in the legal presuppositions. He further states that the amount of the surtax should be recalculated, since art. 98, nos. 2 and 3 of Law no. 55-A/2010 of 31 December determines, in the present case, the non-consideration of €2,500 of his gross income from category A, which implies a reduction of equal value in the taxable income for income tax purposes resulting from the aggregation, pursuant to art. 22, and the reduction of the amount to be paid as extraordinary surtax.

He concludes by requesting the payment of compensatory interest, given that the delay in the decision on the request for review of the tax act and its dismissal are clearly attributable to the AT.

For its part, the Respondent contends that the present request for arbitral pronouncement concerns the dismissal of the request for official review of the income tax assessment for 2011, in which a permanent overall incapacity of 60% is not reflected. It invokes the dilatory exception of unsuitability of the procedural means used, inasmuch as, in its view, the legality of any tax act was not appreciated, given that the AT considered that the necessary procedural requirements for its appreciation were not met. Consequently, it asserts that what is being discussed in the present action is whether the request for official review should have been admitted and whether there was, or was not, a duty to convert it into an administrative complaint. It concludes on the ground of such dilatory exception by stating that, if the dismissal of the request for official review which does not address the legality of the assessment does not fall within the scope of matters susceptible to judicial impugnation, it also cannot be appreciated in the arbitral context, and therefore the tribunal should declare itself materially incompetent.

Subsidiarily, it states that there is no error attributable to the services, inasmuch as the medical certificate of multi-purpose incapacity is not, for tax purposes regarding the right to exemption, a supervening document, but rather a constitutive document of the exemption granted by art. 16 of the Tax Benefits Statute (EBF). Along these lines, it contends that it is not apparent how the non-indication of the degree of incapacity in the tax return could be attributable to the AT's services as a failure, inasmuch as the legal status of a person with a disability, for income tax purposes, only arises when the constitutive element of its formation process is verified, which is the act of assessment that the medical certificate certifies and whose content is unknown until its obtaining by the taxpayer.

Furthermore, it contends that the possibility of requesting official review on the grounds of grave or notorious injustice is only admissible when the error is not attributable to negligent conduct by the taxpayer, and in the present case, in its view, the taxpayer has not proven that the late obtaining of the medical certificate was not due to its own fault. The Respondent's conclusion is also grounded on the fact that the Claimant acknowledges that only in mid-2013 did he become aware that he could obtain tax benefits based on the pathology from which he suffered.

Finally, regarding the conversion of the request for official review into an administrative complaint, it asserts that it is not sufficient to merely allege the supervening nature of the document; it is also necessary to prove its actual effectiveness. That is, for this purpose there is a need to prove the diligence of the interested party in obtaining the document which he lacked, in order to prove the situation alleged, which, it repeats, the Respondent understands does not exist in this record.

3. PRELIMINARY QUESTION AND CASE MANAGEMENT

The Respondent invokes a dilatory exception, the material incompetence of this tribunal, inasmuch as, in its view, the request for review does not address the legality of the income tax assessment act for 2011.

Is the Respondent correct?

In this regard, JORGE LOPES DE SOUSA states: "...as far as acts rendered in the process of official review or hierarchical appeal of an administrative complaint decision are concerned, judicial impugnation will only be the appropriate procedural means when the act to be impugned effectively contains an appreciation of the legality of an assessment act. If in the act practiced in such processes there was no appreciation of the legality of the assessment act due to any obstacle to such knowledge (such as lack of timeliness or lack of standing of the applicant or appellant), the appropriate means of impugnation will be the special administrative action, as flows from the provision of no. 2 of this art. 97, since it will be a matter of an act which does not address the legality of an assessment act. Although it is not customary to determine the appropriate judicial means through the content of the act and not its nature or the administrative or tax procedure in which it was rendered, it is clear that para. d) of no. 1 and no. 2 of this art. 97 make the choice between impugnation or special administrative action (contentious appeal) dependent on the content of the act and not any other factor."

Now, if it is true that such words respect judicial impugnation, is it legitimate to ask whether the same will also be true regarding tax arbitral proceedings? To this question we answer unequivocally that yes, given that the legislator, in Law no. 3-B/2010 of 28 April authorized the Government to institute arbitration in the domain of taxes, and it is certain that art. 124, no. 2 of such act stated that: "The tax arbitral process must constitute an alternative procedural means to the judicial impugnation process..."

Consequently it must be verified whether in the decision dismissing the request for review, the AT addressed the legality of the assessment act or not.

Now, from the content of the dismissal decision the following excerpts stand out: "Given that the income tax assessment for 2011 was carried out on 2012-06-18 and notified by ordinary letter on 2012-07-30, and there was no alteration to the elements recorded in the tax return up to that date, it is not legitimate to invoke error of fact and law regarding the same, based on a presupposition which only subsequently came to be invoked, and in that manner it would be possible to derogate the requirement..."; and "...given that the diagnosis was made in June 2011, it was only on 21 November 2013 that the certificate of incapacity was issued, without finding proof of the date on which it was requested, there being no legal limitations, as has been stated, for its granting to be conditioned by movement limitations of the interested party, and therefore the decision to reject the request under no. 4 of art. 78 of the LGT is to be maintained."

In this manner, there is no doubt that the legality of the Claimant's income tax assessment was appreciated in the decision dismissing the request for review, and, if this is so, the dilatory exception of material incompetence is unfounded.

For this sum of reasons, the proceedings do not suffer from nullities, the arbitral tribunal is regularly constituted and is materially competent to know and decide the request, with the conditions consequently being met for the final award to be rendered.

4. FACTUAL MATTERS

4.1 Facts Considered as Proven

4.1.1. On 24/06/2011 the Claimant was diagnosed with extensive adenocarcinoma of the prostate.

4.1.2. Such carcinoma had a severity grade of 8 (4+4) on the Gleason Scale.

4.1.3. The Claimant initiated complete androgen blockade in July 2011.

4.1.4. Complementarily, he underwent three-dimensional external radiotherapy during the period from 06/03/2012 to 07/05/2012.

4.1.5. From such treatment resulted the following secondary effects: i) diarrhea; ii) abdominal pain; iii) fever; and iv) dehydration.

4.1.6. The Claimant had an episode of hematuria with clots, accompanied by hypogastric and lumbar pain reported on 07/05/2012 and on 04/09/2012.

4.1.7. He underwent clinical examinations, consultations, and emergency admissions during the period from July to November 2012.

4.1.8. In 2012 the Claimant was catheterized on several occasions.

4.1.9. On 21/11/2013 a Multi-purpose Medical Certificate of Incapacity was issued, in which an incapacity of 60% is recorded and which has been established since 2011.

4.1.10. On 01/06/2012 the Claimant submitted, electronically, the tax return Form 3 concerning the year 2011, without indication of the disability.

4.1.11. From such return resulted a net income tax collection, before withholding tax of €17,451.41 and an extraordinary surtax in the amount of €1,224.36.

4.1.12. Consequently, assessment no. 2012… of 18/06/2012 determined an amount to be paid of €724.77.

4.1.13. The assessed amount was paid during the voluntary payment period.

4.1.14. The Claimant, on 19/12/2013, made a request for official review of the income tax assessment for 2011 with the Tax Service of…, petitioning that in the tax return Form 3 concerning the period of 2011 the degree of incapacity of 60% be considered.

4.1.15. By official letter dated 27/04/2015 the Claimant was notified of the draft dismissal of the request for official review.

4.1.16. The Claimant on 15/05/2015 exercised the right of hearing.

4.1.17. By order of the Head of the Income Tax Services Division, dated 27/05/2015, the request for review formulated by the Claimant was definitively dismissed.

4.2 Facts Not Considered as Proven

There are no other facts with relevance to the arbitral award which have not been given as proven.

4.3 Grounds for the Factual Matters Considered as Proven

The factual matters given as proven originate in the documents used for each of the alleged facts and whose authenticity was not called into question.

5. LEGAL MATTERS

The first question which the tribunal must address consists in determining whether the Respondent should have reviewed the act on the grounds of error attributable to the services or on grounds of grave or notorious injustice.

For this purpose it is necessary to identify, first and foremost, the applicable rule, that is, art. 78 of the LGT, which provides as follows:

"1. The review of tax acts by the entity which rendered them may be carried out at the initiative of the taxpayer, within the administrative complaint period and on the grounds of any illegality, or at the initiative of the tax authority, within four years following the assessment or at any time if the tax has not yet been paid, on the grounds of error attributable to the services.

  1. Without prejudice to the legal burden of administrative complaint or impugnation by the taxpayer, the error in self-assessment is considered attributable to the services for purposes of the preceding number.

  2. The review of tax acts in accordance with no. 1, regardless of whether it is a matter of material or substantive error, implies the respective recognition duly grounded in accordance with no. 1 of the preceding article.

  3. The head of the service may exceptionally authorize, in the three years following the year of the tax act, the review of the taxable matter determined on the grounds of grave or notorious injustice, provided that the error is not attributable to negligent conduct by the taxpayer.

  4. For purposes of the preceding number, only ostensible and unequivocal injustice is considered notorious, and grave is that resulting from manifestly excessive and disproportionate taxation in relation to reality or which has resulted in high loss for the National Treasury.

  5. The review of the tax act due to duplication of collection may be carried out, regardless of the grounds, within a period of 4 years.

  6. The period for official review of the tax act or taxable matter is interrupted by the taxpayer's request directed to the competent organ of the tax authority for its performance."

The institute of review constitutes a realization of the duty to revoke unlawful acts, and as such, the AT must proceed in this manner in the hypotheses where errors in assessments occur which embody the collection of taxes in an amount exceeding that legally foreseen. The principles of justice, equality, and legality which inform the activity of the AT impose such correction ex officio.

Thus, if on the one hand the review of the act is admissible at the initiative of the taxpayer within the period of administrative impugnation, on the other hand, the AT, at the instigation of the taxpayer, may also promote the so-called "official review."

In this sense the case law affirms that: "It flows from the law and constitutes consistent case law of this Supreme Court that the official review of tax acts to which the latter part of no. 1 of art. 78 of the LGT refers 'at the initiative of the tax authority' may be carried out at the request of the taxpayer (art. 78, no. 7 of the LGT), and the dismissal, express or implied, of such request for review is susceptible to contentious impugnation, pursuant to art. 95, nos. 1 and 2, para. d) of the LGT and art. 97, no. 1, para. d) of the CPPT, when the appreciation of the legality of the assessment act is at issue, and this possibility is not prejudiced by the circumstance that the request for official review was presented long after the administrative impugnation periods were exhausted, but within 4 years for the review of the assessment act 'at the initiative of the tax authority'."

It happens that such a request for review must be grounded in "error attributable to the services" and be presented within the period of 4 years. Now, this error encompasses the lapse, the material or factual error, as well as the error of law.

In support of the latter conclusion the case law equally states that: "...this Supreme Court has for a long time consistently understood that where there is an error of law in an assessment effected by the services of the tax authority, and this erroneous application of the law does not result from any information or statement by the taxpayer, the error in question is attributable to the services, since both no. 2 of art. 266 of the Constitution and art. 55 of the General Tax Law establish the generic obligation for the tax authority to act in full conformity with the law, reason why any illegality not resulting from an action of the taxpayer will be attributable to the Administration itself, and this attribution to the services is independent of the demonstration of fault of any of the officials involved in the issuance of the act affected by the error..."

Thus, "official review" requires that, cumulatively, the following requirements be met: i) the request be formulated within the period of 4 years counted from the act whose review is requested or at any time when the tax has not been paid; ii) it originates from "error attributable to the services"; and iii) it proceeds from the initiative of the taxpayer or is carried out ex officio by the AT.

On the other hand, no. 4 of art. 78 of the LGT provides for the possibility of exceptional review of the taxable matter within the period of 3 years following the year in which the tax act was rendered, always on the condition that its grounds are found in grave or notorious injustice and provided that the error is not attributable to negligent conduct by the taxpayer. That is, there is required not only the occurrence of flagrant injustice in the determination of the taxable matter, but also that this error not originate from conduct of the taxpayer susceptible to legal censure.

The concept of grave or notorious injustice must be interpreted from the degree of deviation from reality, although always on the condition of the unequivocal nature of the injustice, given that it is in this sense that we should interpret art. 78, nos. 4 and 5 of the LGT.

Thus, this exceptional review depends on the following requirements: i) the formulation of the request within the period of 3 years from the rendering of the act whose review is intended; ii) the injustice be grave or notorious; and iii) the error not originate from negligent conduct by the taxpayer.

In the present case, the Claimant contends, in its request for pronouncement, that the request for review is grounded in art. 78, no. 1 of the LGT and in no. 4 of such article, inasmuch as there is error attributable to the AT and, secondly, the request was timely presented.

It happens that, if on the one hand, the AT effected the income tax assessment for 2011 on the basis of the elements declared in June 2012, on the other hand, the Claimant's incapacity of 60% was recognized in 2013, but with the express mention that the same has been established since 2011. Thus, if such incapacity had appeared in 2012 in the income tax return it would have been considered in the assessment.

Now, as it has been said, the error to which the law refers in art. 78, nos. 1 and 4 of the LGT may be of fact or law. It happens that, if the grounds for review are the verification of error, no. 1 requires, in addition, that the same be attributable to the AT and, in no. 4 of the same provision, that such error which justifies the injustice not be due to negligent conduct by the taxpayer.

Thus, if in theory it is possible to conceive of review on the grounds of art. 78, no. 1 of the LGT, given that 4 years had not yet elapsed from the date of the act whose review is requested, it is also legitimate to admit error in the definition of the Claimant's income tax situation regarding 2011, following the obtaining of the certificate in which an incapacity of 60% is recorded, inasmuch as the assessment did not consider the tax benefit. Such circumstance would result in the existence of an error regarding the factual and legal presuppositions, inasmuch as art. 87 of the CIRS was not observed, which determines the deduction to the collection of an amount. It happens that the disability was not known to the AT at the time of the assessment in 2012, consequently, not all the necessary requirements for review on the above-described grounds are met. The referred conclusion, in theory, could only be different if the document attesting the disability were to be considered as superveniently obtained, however, before such analysis it is necessary to know if the Claimant's request proceeds on grounds of grave or notorious injustice.

In truth, the error regarding the factual presuppositions which justifies the illegality of the assessment is also possible to be acknowledged with recourse to art. 78, no. 4 of the LGT and because 3 years had not elapsed counted from the act whose review is requested. However, such article establishes an additional requirement, that the error not be attributable to negligent conduct by the taxpayer, and it falls to him to prove this.

In the present case, the Claimant alleged and succeeded in proving that throughout 2012 he underwent radiotherapy, from which resulted as secondary effects diarrhea, abdominal pain, fever, and dehydration. During that year, in addition to submitting to various clinical examinations, consultations, and emergency admissions, he was also catheterized on several occasions. Moreover, two episodes of hematuria with clots, accompanied by gastric and lumbar pain, were clinically reported. In summary, the worsening in 2012 of his clinical and physical health condition justifies that no responsibility can be attributed to him for its non-obtaining in the said year, it not being thus possible to formulate a judgment of legal censure. Or, stated differently, there is no negligence on the part of the Claimant.

Thus, given that the requirements upon which the review provided for in art. 78, no. 4 of the LGT depends are met, the Claimant's incapacity should be considered in the income tax assessment above identified and, as such, art. 87 of the CIRS in the version in force at the date of the taxable event should be applied.

The Claimant further formulates a request for compensatory interest, so there is a need to ascertain whether he is entitled to the same.

Art. 43, no. 1 of the LGT provides that: "Compensatory interest is due when it is determined, in an administrative complaint or judicial impugnation, that there was error attributable to the services which resulted in payment of the tax debt in an amount exceeding that legally due." In other words, there are three requirements for the right to such interest: i) the existence of an error in a tax assessment act attributable to the services; ii) the determination of such error in a process of administrative complaint or judicial impugnation; and iii) payment of a tax debt in an amount exceeding that legally due.

Thus, it is immediately possible to formulate a question: is it admissible to determine the payment of compensatory interest in tax arbitral proceedings? The answer to the question is affirmative. Indeed, art. 24, no. 5 of the RJAT provides that: "The payment of interest, regardless of its nature, is due in accordance with the terms provided for in the General Tax Law and in the Tax Procedure and Process Code."

It happens that, in the present hypothesis, the tribunal's cognizance activity concerns a decision dismissing a request for review of a tax act and art. 43, no. 1 of the LGT determines that compensatory interest for improper collection is only due when the taxpayer impugns or complains. However, "official review" constitutes an institute distinct from administrative complaint and judicial impugnation.

In this respect art. 43, no. 3 of the LGT provides that: "Compensatory interest is also due in the following circumstances: (...) c) When the review of the tax act at the initiative of the taxpayer is carried out more than one year after his request, except if the delay is not attributable to the tax authority."

Thus, where "official review" of the tax act is requested by the taxpayer, if the AT exceeds the period of one year to carry out such review and decides it favorably, compensatory interest is only due after the lapse of one year. And if the taxpayer has need to resort to the judicial means? The question is answered by the case law stating: "...if the taxpayer is obliged to resort to the tribunal to obtain a decision, because the Administration, within or outside that period, did not review the act, this taxpayer is not treated differently from one who obtained the same favorable decision by the administrative means after one year had elapsed. Similar to the interested party whose request for review had a favorable outcome dictated by the Administration after more than one year, also he to whom reason was only given in the tribunal after that time are due the same interest." That is, art. 43, no. 3, para. c) of the LGT applies to a reality distinct from the refund to the taxpayer as a result of "error attributable to the services," that is, the delay of the AT in concluding the procedure of "official review."

Reverting such interpretation to the present case, if the request for review was formulated on 19/12/2013, compensatory interest is only due from 20/12/2014, which is determined.

6. DECISION

In these terms and with the grounds described above, it is decided to judge the request well-founded, condemning the Respondent to recognize, for income tax purposes, the disability of the Claimant in the year 2011 and to the payment of compensatory interest from 20/12/2014, with all legal consequences.

7. VALUE OF THE PROCEEDINGS

The value of the proceedings is fixed at €2,875, pursuant to art. 97-A of the CPPT, applicable by force of the provision contained in art. 29, no. 1, para. a) of the RJAT and art. 3, no. 2 of the Costs Regulation in Tax Arbitration Proceedings (RCPAT).

8. COSTS

Costs to be borne entirely by the Respondent in the amount of €612, cf. art. 22, no. 4 of the RJAT and Table I annexed to the RCPAT.

Notify.

Lisbon, 8 July 2016

The Arbitrator,

(Francisco Nicolau Domingos)

[1] Tax Procedure and Process Code – volume II, Annotated and Commented, 6th edition, Áreas Publishing, 2011, p. 54.

[2] Judgment of the Administrative Supreme Court rendered in the context of proceedings no. 0886/14, of 19/11/2014, reported by Counsellor ISABEL MARQUES DA SILVA.

[3] Judgment of the Administrative Supreme Court rendered in the context of proceedings no. 0886/14, of 19/11/2014, reported by Counsellor ISABEL MARQUES DA SILVA.

[4] Judgment of the Administrative Supreme Court rendered in the context of proceedings no. 0918/06, of 12/12/2006, reported by Counsellor BAETA DE QUEIROZ.

Frequently Asked Questions

Automatically Created

Can the CAAD arbitral tribunal review a tax authority's refusal of a tax act revision request under Portuguese IRS law?
Yes, the CAAD arbitral tribunal generally has competence to review tax acts under the RJAT (Decree-Law 10/2011), but jurisdiction over dismissals of revision requests is contested. The Tax Authority argued that CAAD lacks material competence when the dispute concerns procedural admissibility of a revision request rather than the substantive legality of a tax assessment act. However, the claimant contended that revision constitutes a complementary impugnation mechanism, and when the Tax Authority acknowledges substantive requirements are met but refuses application on procedural grounds, CAAD can review whether this violates principles of equality and material justice under Article 5(2) of the General Tax Law.
How does a multi-use medical disability certificate (atestado de incapacidade multiuso) affect IRS tax deductions in Portugal?
A multi-use medical disability certificate (atestado médico de incapacidade multiuso) certifying permanent incapacity of 60% or more triggers significant IRS benefits under Article 87 of CIRS. Taxpayers are entitled to: (1) a tax deduction equivalent to four times the national minimum wage value; and (2) consideration of only 90% of certain income categories under Article 98(2) of the State Budget Law. The certificate must demonstrate fiscally relevant disability. The timing issue arises when diagnosis occurs during a tax year but certification is obtained later, raising questions about retroactive application and whether taxpayers can revise prior returns when documentation becomes available after filing deadlines.
What is the procedure for requesting a revision of an IRS tax assessment based on a fiscally relevant disability?
To request revision of an IRS assessment based on fiscally relevant disability, taxpayers must file a pedido de revisão do ato tributário (request for revision of the tax act) within the legal deadlines established in Article 78 of the LGT. The request should include the multi-purpose medical disability certificate proving permanent incapacity of 60% or higher. Grounds for revision include: (1) errors of fact or law in the assessment; (2) grave or notorious injustice; or (3) discovery of new documents. If filed outside normal impugnation deadlines, taxpayers may argue the certificate constitutes a document whose obtaining was only possible after the original filing, potentially justifying late revision or conversion to an administrative complaint.
Does a retroactive medical disability diagnosis entitle a taxpayer to a revision of prior IRS tax returns in Portugal?
Retroactive medical disability diagnosis presents complex procedural challenges. While a disability diagnosed during a tax year may substantively qualify for that year's benefits under Article 87 CIRS and Article 98 of the Budget Law, obtaining the multi-purpose certificate after filing creates timing issues. The claimant argued that his precarious health condition during 2012 and unawareness until mid-2013 that the pathology had tax relevance constituted non-negligent grounds for late application. The Tax Authority's position requires distinguishing between: (1) when the medical condition existed; (2) when formal certification occurred; and (3) whether revision or administrative complaint procedures allow retroactive correction. The case suggests revision may be denied on procedural grounds even when substantive disability requirements are acknowledged.
What are the legal grounds for challenging the rejection of an IRS tax revision request before the CAAD arbitral tribunal?
Legal grounds for challenging rejection of an IRS revision request before CAAD include: (1) arguing revision constitutes a complementary impugnation mechanism with CAAD jurisdiction over its denial; (2) asserting the Tax Authority committed errors of fact and law by acknowledging disability requirements are met but refusing application; (3) invoking principles of equality and material justice under Article 5(2) LGT and Article 13 of the Constitution when procedural formalism prevents substantive justice; (4) claiming grave or notorious injustice as revision grounds; (5) requesting conversion of the revision request into an administrative complaint when new documentation becomes available; and (6) demonstrating non-negligence in late filing due to health conditions. The central jurisdictional question is whether CAAD reviews only substantive tax act legality or also procedural decisions about revision admissibility.