Summary
Full Decision
ARBITRAL DECISION
The Arbitrators José Pedro Carvalho (Presiding Arbitrator), António Nunes do Reis and Marta Gaudêncio, appointed by the Deontological Council of the Administrative Arbitration Centre to form an Arbitral Tribunal, hereby decide as follows:
ARBITRAL DECISION[1]
I – REPORT
On 5 August 2014, Municipality A, a public law entity no. …, with registered office at Street …, filed a request for constitution of an arbitral tribunal, under the provisions of articles 2 and 10 of Decree-Law no. 10/2011, of 20 January, which approved the Legal Framework for Arbitration in Tax Matters, as amended by article 228 of Law no. 66-B/2012, of 31 December (hereinafter abbreviated as RJAT), seeking the declaration of illegality of the rejection of the request for official revision which it filed with reference to the self-assessment acts for VAT in the years 2009 and 2010 embodied in the 8 periodic quarterly statements submitted, corresponding to an amount of tax which it considered to have been overpaid in the amount of €115,173.06.
To support its request, the Claimant alleges, in summary, that it ascertained that, in the years 2009 and 2010, it had improperly limited the exercise of its right to deduction relating to VAT incurred in resources of "mixed" use, also designated as "common resources", and had therefore borne VAT which, in accordance with the rules of this tax, would have been recoverable, which it now seeks to have corrected.
On 07 August, the request for constitution of the arbitral tribunal was accepted and automatically notified to the Tax Authority (AT).
The Claimant did not appoint an arbitrator, so, under the provisions of article 6(2)(a) and article 11(1)(b) of the RJAT, the President of the Deontological Council of CAAD appointed the signatories as arbitrators of the collective arbitral tribunal, who communicated their acceptance of the task within the applicable period.
On 24 September 2014, the parties were notified of these appointments and did not express any intention to refuse any of them.
In accordance with the provisions of article 11(1)(c) of the RJAT, the collective Arbitral Tribunal was constituted on 04 November 2014.
On 01 December 2014, the Respondent, duly notified for this purpose, filed its response, defending itself by exception and by challenge.
The Claimant, duly notified for this purpose, submitted written observations regarding the exceptions raised by the Respondent in its response, arguing for their rejection.
Subsequently, both parties were notified and informed the tribunal that they waived the holding of the meeting referred to in article 18 of the RJAT, as well as written submissions, so the holding of the first meeting of the Arbitral Tribunal, under the terms and for the purposes of article 18 of the RJAT, was dispensed with, given that in this case there was none of the purposes legally assigned to it, and the arbitral process is governed by the principles of procedural economy and prohibition of useless acts.
On 23-03-2015, the Tribunal, ex officio, taking into account the provisions of article 78(1) of the General Tax Code (LGT), raised the question of the timeliness of the request for official revision submitted by the Claimant on 12.11.2013, and consequently of the present dispute, regarding the self-assessments for periods 1, 2, and possibly 3 of 2009, which is a matter of ex officio knowledge, and invited the parties to, within 10 days, submit observations, if they wished, on this question.
The Arbitral Tribunal is materially competent and regularly constituted in accordance with articles 2(1)(a), 5 and 6(1) of the RJAT.
The parties have legal personality and capacity, are legitimately party to the proceedings, and are legally represented in accordance with articles 4 and 10 of the RJAT and article 1 of Ordinance no. 112-A/2011, of 22 March.
The process is not vitiated by any nullities.
Thus, there is no obstacle to consideration of the merits of the case.
Having reviewed all matters, we proceed to render judgment.
II. DECISION
A. FACTUAL MATTER
A.1. Facts Established as Proven
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The Claimant is a public law entity whose activity consists of pursuing its municipal attributions in the most diverse areas of activity, and it is classified, for Value Added Tax ("VAT") purposes, under the normal monthly regime.
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In pursuit of its attributions, the Claimant performs a vast set of operations within the scope of its powers of authority, which are excluded from VAT liability under the provisions of article 2(2) of the VAT Code.
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The Claimant also performs a set of operations, whether transfers of goods or provision of services, which are not encompassed within the scope of its powers of authority, and are therefore subject to VAT under the general terms of the VAT Code.
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Throughout the periods of 2009 and 2010, the Claimant submitted 8 periodic quarterly VAT statements in which it made no deduction of the amount of VAT relating to goods of mixed use, which are indiscriminately used for the performance of operations that confer and operations that do not confer the right to VAT deduction.
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The first three statements for 2009 were submitted, respectively, on 17/04/2009, 05/08/2009, and 12/11/2009.
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Subsequently, in 2013, after a review of the VAT procedures adopted, the Claimant ascertained that, in view of the non-deduction of VAT with respect to goods of mixed use, it had, in its understanding, delivered excessive tax to the State for the years 2009 and 2010 in the amounts of €50,092.58 and €65,080.48.
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On 12 November 2013, the Claimant submitted two Requests for Official Revision relating to the payment of excessive tax liability, arising from the non-deduction of VAT incurred in the acquisition of goods and services of mixed use, for the years 2009 and 2010, which were rejected in their entirety, and the respective decision was notified to the Claimant through Office Letters no. …, both dated 30 April 2014, on 7 May 2014.
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In the Office Letters no. … mentioned above, the Tax Authority based its decision essentially on two grounds, namely: i) the special nature of the VAT Code in relation to the General Tax Code, to the effect of not accepting the request for VAT deduction for the years 2009 and 2010 through official revision, and ii) in the understanding that the deduction by the Claimant of VAT relating to goods of mixed use throughout the periods of 2009 and 2010 is limited to a period of two years, in accordance with article 78(6) of the VAT Code.
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The said rejection order further provides the following:
"Given that in the case under analysis the deadlines for the exercise of the right to deduction established in articles 22 and 23 of the VAT Code have already been exceeded, and confirming that the supporting documents relating to the passive operations in question were recorded in the Claimant's accounting in due time, only the correction of the deducted tax may be admitted on the basis of article 78(6) of the VAT Code.
Article 78(6) of the VAT Code establishes a special deadline for the exercise of the right to deduction of two years for regularizations in favor of the taxpayer, which after expiry results in the preclusion of that right.
Given that the Claimant submitted in November 2013 the request for official revision in which it requests the 'additional' deduction of tax borne in 2010, the deadline for exercise of that right has been exceeded.
In view of the above, this request should, in our better understanding, be rejected, since the right to deduction of the VAT in question has been precluded."
- The request for constitution of this Arbitral Tribunal was submitted on 05 August 2014.
A.2. Facts Established as Not Proven
With relevance to the decision, there are no facts that should be considered as not proven.
A.3. Justification of the Proven and Unproven Factual Matters
Regarding the factual matters, the Tribunal does not have to pronounce on everything that was alleged by the parties, but rather has the duty to select the facts that are important for the decision and to distinguish between proven and unproven matters (cf. article 123(2) of the Code of Tax Procedure and Process and article 607(3) of the Code of Civil Procedure, applicable by virtue of article 29(1)(a) and (e) of the RJAT).
In this manner, the relevant facts for judgment of the case are chosen and determined according to their legal relevance, which is established in light of the various plausible solutions to the legal question(s) (cf. former article 511(1) of the Code of Civil Procedure, corresponding to current article 596, applicable by virtue of article 29(1)(e) of the RJAT).
Thus, taking into account the positions assumed by the parties, the documentary evidence and the procedural file attached to the record, the facts listed above were considered proven with relevance to the decision.
B. LAW
Before anything else, it must be decided the question, raised ex officio by the Tribunal, and regarding which the parties were afforded due process, concerning the timeliness of the request for official revision regarding the first three self-assessments of 2009.
Taking into account that the mediate object of this arbitral process is comprised of the self-assessment acts identified by the Claimant in its initial request (article 2(1)(a) of the RJAT), it is ascertained that the 90-day period referred to in article 10(1)(a) of the RJAT, calculated from the end of the deadline for voluntary payment, has long since expired.
In this situation, the timeliness of the request can only be founded on the existence of some means of gracious challenge of the self-assessment act in which a decision was rendered denying/rejecting, in whole or in part, the claims therein formulated by the taxpayer (second-instance act).
As such, it becomes relevant to ascertain whether the request for official revision (gracious means of challenge) used in the situation sub judice actually concerned the self-assessment acts challenged, and their legality, which in this case raises no doubts.
Indeed, as will be seen below, the requests for official revision formulated by the Claimant not only concerned the self-assessment acts indicated by it, but also considered their legality.
In this manner, given that there exists a gracious means of challenge of the self-assessment act, in this case the requests for official revision, in which decisions were rendered denying/rejecting, in whole or in part, the claims therein formulated by the taxpayer, the deadline in article 10(1)(a) of the RJAT will apply in this case, calculated from the decision of the requests for official revision submitted.
However, with respect to the self-assessments for the first and second periods of 2009, the requests for official revision were untimely. Indeed, the corresponding self-assessments were submitted, respectively, on 17/04/2009 and 05/08/2009, and the request for official revision covering them was only filed on 12/11/2013, that is, after the deadline referred to in article 78(1) of the General Tax Code had already elapsed.
This being the case, the submission of the request for official revision filed out of time cannot serve as the reference point for calculating the deadline referred to in article 10(1)(a) of the RJAT regarding such self-assessment acts.
Thus, with respect to the self-assessment acts for VAT of the Claimant for the first and second quarters of 2009, performed on 17/04/2009 and 05/08/2009, respectively, the present dispute must be considered untimely, a dilatory exception of ex officio knowledge which should result, in that part, in the Respondent being absolved from the proceeding.
As a preliminary matter to consideration of the merits of the request formulated by the Claimant, the Tax Authority further questions the competence of this Arbitral Tribunal ratione materiae.
In this respect, the Tax Authority argues, first, that, given that "the ground for rejection" of the requests for official revision "was the lack of timeliness of the VAT regularization requested by the Claimant", this will give rise to the incompetence of the constituted arbitral tribunal, insofar as there was no ruling in the second-instance act regarding the legality of the first-instance tax act[2].
While reserving the respect due to other opinions, and although it is conceded that prima facie the reality would be as the Tax Authority describes it, it is understood that, when examined with due depth, a different conclusion will be reached.
Indeed, it is understood that the second-instance act will not consider the legality of the first-instance act when the decision therein is merely a formal decision, and not when such decision relates to the material relationship disputed by the primary act. In other words, the secondary act should be considered as unrelated to the legality of the primary act when this decision is, from the perspective of the secondary act, indifferent, which will be evidenced, moreover, by the non-formation of res judicata regarding the matter of the primary act. This would be the case, for example, when the secondary act does not address the claim of the interested party because the body rendering it considers itself lacking in competence to do so, or because it considers the interested party to lack standing for what is being requested, or because the claim was directed to it outside the procedurally prescribed period. In all these situations, the decision of the secondary act does not contend with the legality of the primary act, does not interfere with the material relationship disputed by it, and therefore does not form res judicata regarding it.
Although in the present case this appears to be what happens, given that the Tax Authority considered that "the deadlines for the exercise of the right to deduction established in articles 22 and 23 of the VAT Code have been exceeded," it is understood that, properly examined, these matters are different.
Indeed, the deadline on which the Tax Authority relies in the decisions that are the subject of this proceeding is not a procedural deadline, but a substantive deadline. The expiry of such a deadline does not have an effect merely limited to a procedural or procedural relationship between the Tax Authority and the taxpayer, but has an effect on the material or substantive relationship between them, determining the extinction of a tax right of the latter, which is evidenced in the decision under review by the repeated reference to the "preclusion" of the right to deduction.
In other words, in summary: the Tax Authority does not, in the instant case, render a decision stating that it does not know the merits of the Claimant's claim because some presupposition legitimating such knowledge is lacking, or because some other preliminary question prevents such knowledge. What the Tax Authority in fact states is that the first legal act's legality should be confirmed because the Claimant's right, which the same act contends is illegal, was extinguished by the passage of time. Note, and this is where the crux of the question lies, that it is not the Claimant's right to react (procedurally or in process) against the first-instance tax act that the Tax Authority considers to have been extinguished, but rather the (substantive) right on which the Claimant bases the illegality of the primary act (which the Tax Authority considered to have a two-year deadline for exercise).
In essence, it is understood that the decision rendered in the secondary act is not merely a formal decision, but a substantive decision on the merits, which takes into account a fact supervening the primary act (the expiry of a deadline), understood as having effects on the level of the tax-legal relationship defined by that act, to affirm its legality.
In other words, the question addressed and decided in the secondary act – relating to the existence of the right to deduction – is only capable of being addressed within the scope of consideration of the merits of the Claimant's claim that was submitted for review in that act (and not previously to that), and this was precisely the question of the illegality of the primary act.
It is thus concluded that, contrary to what the Tax Authority understands, the decisions rendered on the requests for official revision constitute a ruling on the legality of the self-assessment acts whose revision was requested.
Beyond what has been discussed, the Tax Authority further argues that given that the (mediate) object of this procedural dispute is a self-assessment act, and this dispute was preceded by a request for official revision and not a gracious complaint, this Arbitral Tribunal will not be competent to know it.
The Tax Authority bases its understanding on the provisions of article 2(a) of Ordinance 112-A/2011, of 22 March, which excludes from disputes cognizable by arbitral tribunals operating within the CAAD, "Claims relating to the declaration of illegality of self-assessment acts, withholding tax acts and advance payment acts that have not been preceded by resort to the administrative avenue in accordance with articles 131 to 133 of the Code of Tax Procedure and Process."
The Tax Authority considers that, in light of this normative provision, it should be understood in its literal sense, excluding from the scope of tax arbitral jurisdiction claims relating to the declaration of illegality of self-assessment acts that have not been preceded by a complaint in accordance with the aforementioned provisions of the Code of Tax Procedure and Process.
However, all of the Tax Authority's argumentation on this matter ends up reducing to maintaining that it was the legislator's intention to restrict the competence of tax arbitral jurisdiction, regarding knowledge of illegalities of self-assessment acts, only to situations in which there exists a complaint filed in accordance with articles 131 to 133 of the Code of Tax Procedure and Process, because that is what the text of the interpreted rule states.
With all due respect, it is not discerned, among the reasons offered by the Tax Authority, a substantial reason explaining the rationale of the understanding it sustains. Indeed, no substantial reason is discerned – and the Tax Authority offers nothing in this sense – for why, given the conditions and specificities particular to each of the gracious remedies in question, in the same manner that tax tribunals are bound, the legality of self-assessment acts should not be cognizable in arbitral proceedings.
On the other hand, even a literalist reading of the rule in question, when properly contextualized, does not inexorably lead to the result defended by the Tax Authority in this proceeding.
Indeed, the expression used by such a rule parallels the rule itself of article 131(1) of the Code of Tax Procedure and Process, which should be understood as an implementation of the assumed and peacefully recognized legislative intention that the tax arbitral process constitute a procedural remedy alternative to the judicial challenge process.
The provision of article 2(a) of Ordinance 112-A/2011, of 22 March, should also be understood as explained by the circumstance that, in its absence – and given the content of article 2 of the RJAT – it would appear possible to directly challenge self-assessment acts without precedence of prior administrative ruling. That is: taking into account that in light of the RJAT it was not necessary to configure any prior administrative intervention before arbitral challenge of a self-assessment, the content of the ordinance should be interpreted as equating – in this matter – the tax arbitral process with the judicial challenge process, and not, as would result from the position sustained by the Tax Authority, going from 80 to 8, taking an contestability more broad than possible in the Tax Courts and transmuting it into a more restricted one.
Thus, no reason is seen – and, once again, no support the Tax Authority gives in this sense – for interpreting one and the other rule differently, especially since the letter of the rule of Ordinance 112-A/2011, of 22 March, ends up being less restrictive than that of the Code of Tax Procedure and Process, in that it does not integrate the expression "mandatorily" nor does it refer to "gracious complaint" but to "administrative avenue". Therefore, it is possible to read the letter of the law itself in a sense that only those claims relating to the declaration of illegality of self-assessment acts, withholding tax acts and advance payment acts that have not been preceded by resort to the administrative avenue in terms compatible with articles 131 to 133 of the Code of Tax Procedure and Process are excluded from the scope of tax arbitral jurisdiction.
And this is the reading that is subscribed to, in the sequence of the Decision rendered in proceeding 42/2012T of the CAAD, and subsequent arbitral jurisprudence.
The exception of incompetence of the Arbitral Tribunal invoked by the Tax Authority must thus, for all the reasons set forth above, be rejected.
Arriving here, it is now possible to address the substantive question submitted to this Arbitral Tribunal, which concerns ascertaining whether the decision rendered by the Tax Authority regarding the request for official revision submitted by the Claimant is correct or not, with the exception of the part relating to the self-assessment acts for the first and second quarters of 2009, as noted above.
With respect to the remaining self-assessments in question in the record, it must then be ascertained whether, in fact, as the Tax Authority understands, there is a special rule establishing a generic limit of two years for the exercise of the right to deduction, or whether that generic limit is situated in the general deadline of 4 years, except for special cases.
In this regard, article 22 of the VAT Code provides that:
"1 - The right to deduction arises at the moment when the deductible tax becomes due, in accordance with that established by articles 7 and 8, being effected by deducting from the total amount of tax due by the taxpayer for taxable operations during a period of declaration, the amount of deductible tax due during the same period.
2 - Without prejudice to the provisions of article 78, the deduction must be effected in the statement for the period or a later period than the one in which the receipt of invoices or receipt of VAT payment that forms part of import declarations occurred.
3 — If the receipt of the documents referred to in the preceding number takes place in a period of declaration different from that of their issuance, deduction may be made, if still possible, in the period of declaration in which that issuance took place."
Article 98 of the VAT Code provides that:
"1 — When tax superior to what was due has been assessed due to reasons attributable to the services, official revision shall be conducted in accordance with article 78 of the general tax law.
2 — Without prejudice to special provisions, the right to deduction or reimbursement of tax paid in excess may only be exercised up to the expiry of four years after the birth of the right to deduction or payment of excess tax, respectively."
For its part, article 76 of the same Code provides, among other things, that:
"(...) 2 — If, after the recording referred to in article 45 is made, the operation is annulled or its taxable value is reduced as a result of invalidity, termination, cancellation or reduction of the contract, by return of goods or by granting of rebates or discounts, the supplier of the good or provider of the service may effect the deduction of the corresponding tax until the end of the tax period following the one in which the circumstances determining the annulment of the assessment or the reduction of its taxable value occurred.
(...) 6 — The correction of material or calculation errors in the recording referred to in articles 44 to 51 and 65, in the statements mentioned in article 41, and in the certificates or statements mentioned in article 67(1)(b) and (c) is optional when it results in tax in favor of the taxpayer, but may only be effected within a period of two years, which, in the case of exercise of the right to deduction, is calculated from the birth of that right in accordance with article 22(1), being mandatory when it results in tax in favor of the State."
As follows from the aforementioned rules, as a general rule the deduction of tax must be made, in accordance with the provision of article 22 of the VAT Code, in the "statement for the period in which receipt of invoices occurred. However, the right to deduction may be exercised at later moments," with article 98(2) of the VAT Code establishing a maximum limit of four years as to the exercise of the right to deduction, a deadline which is configured as a general deadline, only applicable when a special deadline is not provided, as is the case with that provided in its article 78(6). In this context, it is important to ascertain, in cases where, pursuant to provisions that specifically provide for it, the deduction is not made in the statement for the period in which receipt of invoices occurred, whether or not the presuppositions of application of the aforementioned deadlines are met, and whether in that case, the exercise of the right to deduction can be accepted as lawful.
In other words, in summary, the rule is that VAT deduction must be made in the periodic statement corresponding to the period in which the VAT to be deducted was borne, and not freely in any other subsequent periodic statement, as this is the appropriate way to ensure that VAT is deducted in the same period in which it is borne.
It should not in any case be lost from view that the exercise of the right to VAT deduction is a fundamental right that ensures the neutrality of VAT, and should only be restricted in exceptional situations.
Indeed, as the Court of Justice of the European Union has successively emphasized, and as emerges from the wording of articles 167 and 179(1) of the VAT Directive, the right to deduction is exercised, in principle, during the same period in which it arose, that is, at the moment when the tax becomes due. However, in accordance with the provisions of articles 180 and 182 thereof, the taxpayer may be authorized to effect VAT deduction even if he has not exercised his right during the period in which that right was established, without prejudice to the observance of certain conditions and rules fixed by national regulations (see in this sense, Decision of 8 May 2008, Case C-95/07, Ecotrade Case, Reports, p. I-03457, nos. 42 and 43).
That is, taxpayers may, in situations that justify it, be authorized to effect deduction even if they have not exercised their right during the period in which that right arose. However, in that case, their right to deduction becomes dependent on certain conditions and modalities fixed by the Member States.
In this context, the Court of Justice of the European Union has noted that the possibility of exercising the right to deduction without temporal limits contradicts the principle of legal certainty, which requires that the tax situation of the taxpayer, given their rights and obligations vis-à-vis the Tax Administration, not be indefinitely susceptible to being called into question, so the thesis that the right to deduction, like the right to assessment, cannot be associated with a deadline of expiration does not hold. In this regard, the Court of Justice invokes the principles of effectiveness and equivalence. Regarding the former, it notes that the expiration deadline provided cannot, in itself, make practically impossible or excessively difficult the exercise of the right to deduction; as to the latter, it has analyzed whether in the situations submitted to its consideration there is an equivalence between the expiration deadline granted to taxpayers and the deadline granted to the Tax Administration to effect corrections, having concluded, even, that this principle is not contradicted by the fact that, in accordance with national regulation, the Tax Administration has, for requiring collection of the VAT due, a longer deadline than that granted to taxpayers to request its deduction (cf., Ecotrade Case, above cited, nos. 43 to 49).
As it notes, although Member States have the option to adopt, under the provisions of article 273 of the VAT Directive, measures to ensure exact collection of the tax and prevent fraud, these must not, however, go beyond what is necessary to achieve such objectives and must not call into question the neutrality of VAT (see in particular, Decision of 21 October 2010, Nidera Case, Proc. C-385/09, Reports, p. I-10385, no. 49).
It is in this context that, in national legislation, it is permitted that, in particular, when a material or calculation error occurs that has occurred to the detriment of the taxpayer, it may be corrected within the deadline fixed in article 78(6) of the VAT Code.
Other types of errors may be corrected by means of submission of a replacement statement[3], if this is still possible in accordance with legal terms, or, if not, by means of a request for official revision in accordance with article 78 of the General Tax Code, provided that the corresponding presuppositions are also met, which moreover follows directly from the provisions of article 98 of the VAT Code, above transcribed.
It is thus not subscribed to the thesis sustained by the Tax Authority that the request for official revision, in accordance with article 78 of the General Tax Code, regarding an error of law relating to the right to deduction in self-assessments of VAT, may only be made within the deadline fixed in article 78(6) of the VAT Code[4]. Indeed, in the situation regulated by such a rule – correction of material or calculation errors – it will not be at all necessary to formulate any request for official revision, as that provision of article 78(6) of the VAT Code integrates its own provision for correction of the error, motivating the corresponding procedure, with no relationship existing between this and the request for official revision regulated in article 78 of the General Tax Code, to which article 98 of the VAT Code expressly refers.
In addition to the correction of material or calculation errors, supervening facts will also be admissible in accordance with the terms regulated by article 78(2) of the VAT Code. It must, however, be kept clearly in mind at all times that one thing is an error (a discrepancy between the reality represented in the periodic statement and reality – factual error – or the law) and another thing is the supervening occurrence of a fact (an alteration in reality) that brings about an alteration in the tax to be borne or deducted, and it is to these latter situations that the aforementioned provision of article 78(2) of the VAT Code refers.
This, moreover, was the understanding underlying the decisions rendered in proceedings 185/2014T and 277/2014T of the CAAD[5].
In the present case, manifestly what occurred was not the supervening occurrence of any fact, but rather an error – not material or calculation error, as the Tax Authority qualifies it – but of law, which would have resulted in the qualification as non-deductible of tax which later the Claimant came to realize would in fact be deductible.
Thus, and as is clear to see, between the submission of the periodic statements corresponding to the moment when the expenses, which were later understood as deductible, were borne, and the submission of the statements in which those same expenses were deducted, no alteration in reality occurred (much less any of those described in article 78(2) of the VAT Code). What occurred was that the Claimant became aware, in the meantime, that the legal classification it had made of the expenses it incurred – as to their deductibility – would not have been correct, that is, that it had committed an error.
In this manner, the error in question will not be correctable in accordance with article 78(2) of the VAT Code, already because such a rule is not intended for the correction of errors as such, nor will it be correctable in accordance with article 78(6) of the same rule, since it is not a calculation error (it does not translate into the incorrect articulation of portions forming parts of arithmetic operations) nor a material error in recording (a divergence between what was written and what manifestly was intended to be written at the moment it was written).
The correction of the situation in question in this proceeding (error of law in self-assessment), in light of all the above, would always have to occur by reference to the periodic statement in which the tax to be deducted was borne, if and to the extent that legally the alteration of this – by initiative of the taxpayer or ex officio by the Tax Authority, even if at the request of the latter – may legally occur.
And that was precisely what happened with respect to the self-assessments of the last two quarters of 2009 and 2010, with respect to which a request for official revision was made in the legally admitted terms, as seen above.
Thus, not corroborating the understanding that in the present case there is a special rule generically fixing the limit of two years for the exercise of the right to deduction, but rather that such limit is situated in the general deadline of 4 years prescribed by article 98(2) of the VAT Code, and given that in this case there is no situation of special character (in particular calculation or material error in recording), the decision act on the request for official revision being challenged should be annulled with all the due and legal consequences.
However, the arbitral request cannot be fully granted.
Indeed, upon examination of the facts, no elements are discerned that would allow assessment of the acceptability of the pro rata presented by the Claimant.
Thus, the annulment of the decision on the requests for official revision cannot be accompanied by the annulment of the self-assessments in the terms sought by the Claimant, but may only contain the binding effect resulting from res judicata that forms upon this decision, preventing the Tax Authority from considering the Claimant's right to deduction as precluded regarding the periods in question in the terms in which it did in the decisions now annulled.
C. DECISION
Accordingly, this Arbitral Tribunal decides:
a) To render the request for arbitral ruling partially granted regarding the decisions on the requests for official revision of the Claimant's self-assessment acts for VAT for the third and fourth quarters of 2009 and the 4 quarters of 2010, and consequently to annul them in that respect;
b) To render the remaining requests for arbitral ruling not granted;
c) To condemn the Claimant and the Tax Authority to the costs of the proceeding in the amounts of €665.55 and €2,394.45, respectively, taking into account amounts already paid.
D. Value of the Proceeding
The value of the proceeding is fixed at €115,173.06, in accordance with article 97-A(1)(a) of the Code of Tax Procedure and Process, applicable by virtue of article 29(1)(a) and (b) of the RJAT and article 3(2) of the Regulation of Costs in Tax Arbitration Proceedings.
E. Costs
The arbitration fee is fixed at €3,060.00 in accordance with Table I of the Regulation of Costs in Tax Arbitration Proceedings, to be paid by the Claimant and Tax Authority according to the respective degree of success fixed above, given that the request was only partially granted, in accordance with articles 12(2) and 22(4) of the RJAT, and article 4(4) of the aforementioned Regulation.
Let it be notified.
Lisbon
18 May 2015
The Presiding Arbitrator
(José Pedro Carvalho - Rapporteur)
The Arbitrator Member
(António Nunes do Reis)
The Arbitrator Member
(Marta Gaudêncio)
[1] Decision prepared in accordance with traditional spelling.
[2] Based on the understanding that has become consolidated of a tendential equation between tax arbitral action and the process of judicial challenge.
[3] Cf. in this sense the Decision of the Supreme Administrative Court of 02-10-2010, rendered in proceeding 0256/10, available at www.dgsi.pt.
[4] In this sense, cf. the Decision rendered in proceeding 117/2013T of the CAAD, available at www.caad.org.pt.
[5] Not yet made available.
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