Summary
Full Decision
ARBITRAL DECISION
Report
On 18 January 2017, the company A…, LDA., NIPC …, with headquarters at Avenue …, …-… …, filed a request for the constitution of an arbitral tribunal, pursuant to the combined 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 annulment of the act of dismissal of the request for ex officio review, as well as the act of tacit dismissal of the hierarchical appeal of the request for ex officio review of the self-assessments of Corporate Income Tax (IRC), relating to the tax periods of 2011 and 2012, to which correspond, respectively, assessment No. 2012 … and assessment No. 2013 …, in the total amount of €216,605.95.
To substantiate its request, the Applicant alleges, in summary, that its request for deduction of SIFIDE and PEC amounts from the tax assessment determined in the tax periods of 2011 and 2012 was not granted, and that these relate exclusively to amounts paid as autonomous taxation.
On 19 January 2017, the request for constitution of the arbitral tribunal was accepted and automatically notified to the Tax Authority.
The Applicant did not appoint an arbitrator; therefore, pursuant to the provisions of Article 6(2)(a) and Article 11(1)(a) of the RJAT, the President of the Deontological Board of the CAAD appointed the undersigned arbitrators to the collective arbitral tribunal, who communicated acceptance of the appointment within the applicable period.
On 13-03-2017, the parties were notified of these appointments and did not manifest any desire 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 29-03-2017.
On 15-05-2017, the Respondent, duly notified for that purpose, filed its response defending itself by exception and by impugnation.
On 29-05-2017, notified for that purpose, the Applicant submitted written comments on the matter of exception contained in the Respondent's response.
By order of 05-06-2017, the tribunal dispensed with the meeting provided for in Article 18 of the RJAT.
Notified for that purpose, the parties submitted written pleadings.
A period of 30 days was set for the rendering of the final decision, which period was extended by a further 30 days, for purposes of the final part of Article 18(2) of the RJAT.
The Arbitral Tribunal has material competence and is regularly constituted, in accordance with Articles 2(1)(a), 5, and 6(1) of the RJAT.
The parties have legal personality and capacity, are legitimate, 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 proceedings are free from nullities.
Thus, there is no obstacle to the examination of the merits of the case.
Having considered all of the foregoing, it is fitting to deliver
Decision
Factual Matters
Facts Considered Proven
In these proceedings, the following facts have been established:
The Applicant, in the periods of 2011 and 2012, made the respective IRC self-assessments, having filed Form 22 declarations respectively on 27 August 2012 and 30 August 2013, in which it determined a tax loss.
In the same periods, the Applicant self-assessed and paid, as autonomous taxation, the amount of €106,479.58 in 2011 and €110,126.37 in 2012.
As per documents Nos. 5 to 7 attached to the Application, the Applicant applied for the Tax Incentive System for Research and Development in Business (SIFIDE) in the tax periods of 2009, 2010, and 2011, having been granted tax credits.
In the periods of 2011 and 2012, the Applicant made the following special installment payments on account of IRC:
Period | Installment | Amount (€)
2011 | 1st Installment | 35,000.00
| 2nd Installment | 35,000.00
2012 | 1st Installment | 35,000.00
| 2nd Installment | 35,000.00
In the tax periods in question, the IRC assessment corresponded exclusively to the amounts determined as autonomous taxation.
The Applicant did not deduct the amounts of SIFIDE and PEC from the assessment determined in the periods of 2011 and 2012.
On 28-03-2016 it filed a request for ex officio review of the self-assessments relating to the periods of 2011 and 2012.
On the basis of tacit dismissal, a hierarchical appeal was filed on 22-08-2016.
By Letter No. …, of 11 October 2016, the Applicant was notified of the draft decision to dismiss the request for ex officio review which, by order of the Director of Services of the IRC Directorate, of 7 November 2016, was converted into a final decision.
Facts Considered Not Proven
None.
Substantiation of Factual Matters
With respect to the factual matters, the Tribunal does not have to pronounce itself on everything that was alleged by the parties; rather, it has the duty to select the facts that matter for the decision and to distinguish between proven and unproven matters (see Article 123(2) of the CPPT and Article 607(3) of the CPC, applicable by virtue of Article 29(1)(a) and (e) of the RJAT).
Accordingly, the facts relevant to the judgment of the case are chosen and delineated in accordance with their legal relevance, which is established in light of the various plausible solutions to the legal question(s) (see former Article 511(1) of the CPC, 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, in light of Article 110(7) of the CPPT, the documentary evidence and the administrative proceedings attached to the case, the facts listed above were considered proven, as relevant to the decision.
Legal Matters
On the Matter of the Exception of Material Incompetence of the Arbitral Tribunal
The Respondent begins its defense by raising the question of material incompetence of the arbitral tribunal on the ground that, pursuant to Article 2(a) of Ordinance No. 112-A/2011, disputes concerning the declaration of illegality of self-assessment acts that have not been preceded by a gracious complaint, in accordance with Article 131 of the CPPT, are excluded from the competence of arbitral tribunals. This also results, according to the Respondent, from constitutional principles of the rule of law and separation of powers, as well as the right to access to justice, legality, and furthermore the principle of indisposability of tax claims provided for in Article 30(2) of the LGT.
This question has already been extensively discussed in arbitral case law. We cite, by way of example, Arbitral Award No. 203/2015-T, whose arguments, grounds, and other arbitral case law expressly referenced are adhered to without reservation:
"The Ordinance binding the Tax Authority to the jurisdiction of arbitral tribunals establishes limitations, namely, based on the type and maximum value of disputes covered. In light of this second limitation of the competence of tax arbitral tribunals operating in the CAAD, even if one is faced with a situation that falls within Article 2 of the RJAT, if it is not covered by the binding Ordinance, the possibility of the dispute being jurisdictionally decided by this Arbitral Tribunal will be precluded.
In light of this, it follows from Article 2(a) of the binding Ordinance that it falls within the jurisdiction of arbitral tribunals operating in the CAAD to address 'claims relating to the declaration of illegality of self-assessment acts, withholding at source, and payment on account acts processed administratively in accordance with Articles 131 to 133 of the Code of Tax Procedure and Process'.
The express reference to Articles 131 to 133 of the Code of Tax Procedure and Process refers to the gracious complaint, in cases where it is mandatory and a prerequisite for resorting to judicial impugn. In the cases provided for therein, the gracious complaint is provided as a prior administrative reaction, upon which the future possibility of judicial impugnation will depend. Indeed, it is understandable that, also in cases where the taxpayer opts for recourse to the arbitral instance, this requirement is imposed, but note that only and solely in the exact terms in which the CPPT provides for it as a prerequisite for judicial impugn.
Such prior complaint is not mandatory in all cases. Therefore, also in determining the competence of the arbitral tribunal, administrative prior impugnation or complaint is only required in the same cases provided for in Article 131 of the CPPT, in the same terms as it is a prerequisite for judicial impugnation through recourse to administrative and tax tribunals.
(…)
Article 131 of the CPPT provides, under the heading 'Impugnation in Case of Self-Assessment':
'1 - In case of error in self-assessment, impugnation shall be necessarily preceded by a gracious complaint addressed to the director of the regional peripheral body of the tax authority, within the period of two years after filing the declaration'
2 - (…)
3 - Without prejudice to the foregoing, when its ground is exclusively a matter of law and the self-assessment was carried out in accordance with generic guidelines issued by the tax authority, the period for impugnation does not depend on prior complaint, and the impugnation must be filed within the period of Article 102(1).'
In Article 2(a) of Ordinance No. 112-A/2011, explicitly excluded from the scope of the binding of the Tax Authority to the jurisdiction of arbitral tribunals operating in the CAAD are 'claims relating to the declaration of illegality of self-assessment acts, withholding at source, and payment on account acts that have not been preceded by recourse to the administrative channel in accordance with Articles 131 to 133 of the Code of Tax Procedure and Process'.
However, if it is true that in the present case no prior gracious complaint occurred, the truth is that the Applicant resorted to the mechanism of ex officio review of the self-assessment act. Taking into account that, as we have seen, the binding ordinance explicitly excludes from the scope of tax arbitration acts of self-assessment that have not been preceded by recourse to the administrative channel, referring to cases where such recourse is mandatory, through the prior mandatory gracious complaint, in accordance with the provisions of Articles 131 to 133 of the CPPT, it is important to first analyze whether the dismissal of requests for review of tax acts, provided for in Article 78 of the LGT, are included in the competencies attributed to arbitral tribunals operating in the CAAD.
In fact, Article 2 of the RJAT makes no express reference to these acts, contrary to what occurs in the legislative authorization act on which the Government based itself to approve the RJAT, in which express mention is made of 'requests for review of tax acts' and 'acts that involve the assessment of the legality of assessment acts'.
As stated in the Arbitral Award rendered in case No. 117/2015-T, the formula 'declaration of illegality of assessment acts of taxes, self-assessment, withholding at source, and payment on account' used in Article 2(1)(a) of the RJAT does not restrict, in a mere declarative interpretation, the scope of arbitral jurisdiction to cases in which an act of one of those types is directly impugned. In fact, the illegality of assessment acts can be declared jurisdictionally as a corollary of the illegality of a second-degree act, which confirms an assessment act, incorporating its illegality.
The inclusion in the competencies of arbitral tribunals operating in the CAAD in cases in which the declaration of illegality of the acts indicated therein is made through the illegality of second-degree acts, which are the immediate object of the impugning claim, results with certainty from the reference made in that rule to self-assessment acts, withholding at source, and payment on account, which are expressly stated as being included among the competencies of arbitral tribunals. Indeed, with respect to these acts, the gracious complaint is imposed as a rule, in Articles 131 to 133 of the CPPT; therefore, in these cases, the immediate object of the impugning process is, as a rule, the second-degree act that assesses the legality of the assessment act, an act which, if it confirms it, must be annulled to obtain the declaration of illegality of the assessment act. The reference made in Article 10(1)(a) of the RJAT to Article 102(2) of the CPPT, in which the impugnation of acts dismissing gracious complaints is provided for, removes any doubt that disputes covered by Article 2(a) of the RJAT referred to in Article 2 of the RJAT are within the competencies of arbitral tribunals operating in the CAAD and must be obtained following the declaration of the illegality of second-degree acts.'
The analysis of the question of the competence of arbitral tribunals operating alongside the CAAD is particularly well developed and substantiated in this Arbitral Award, to which we adhere without need for further development.
However, it should still be stated that it was in this sense that the Government, in the binding Ordinance, interpreted the competencies of tax arbitral tribunals, by excluding from their scope of competence claims relating to the declaration of illegality of self-assessment acts, withholding at source, and payment on account acts that have not been preceded by recourse to the administrative channel in accordance with Articles 131 to 133 of the CPPT.
Accordingly, it is to be concluded that the formula used in Article 2(1)(a) of the RJAT does not exclude cases in which the declaration of illegality results from the illegality of a second-degree act. And, being such, it is our understanding that the competence of the arbitral tribunal also encompasses cases in which the second-degree act is, as in the present case, an act of dismissal of the request for review of the tax act, particularly since it is the understanding of the Supreme Administrative Court itself (which, moreover, is recognized by the Tax Authority in the dismissal decision issued) that in cases where the request for review of the tax act is filed within the period for gracious complaint, it should be treated as equivalent to a gracious complaint. We do not see any reason that would justify restricting this competence.
However, the Tax Authority understands that said norm should be understood in its literal terms, 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 complaint in accordance with the referred provisions of the CPPT.
All of the Tax Authority's argumentation on this matter ultimately comes down to the defense of the understanding that it was the legislator's intent to restrict the competence of tax arbitral jurisdiction, with respect to the knowledge of illegalities of self-assessment acts, solely 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 expressly results from the text of the rule being interpreted.
However, examining the arguments invoked by the Tax Authority in this regard, no substantial reason can be discerned that supports this understanding. In fact, it is not clear what reason there would be to exclude this matter from the competence of arbitral tribunals, given the conditions and specificities inherent to each of the gracious remedies in question, in the same terms in which tax tribunals are bound to decide on the legality of self-assessment acts. To which is added that, the letter of the law, provided it is properly contextualized, does not lead to the result defended by the Tax Authority in these proceedings.
As is well stated in Arbitral Award No. 55/2015-T, "in fact, the expression employed by said rule is parallel to the provision of Article 131(1) of the CPPT, which should be understood as a realization of the assumed, and peacefully recognized, legislative intent that the tax arbitral process constitute an alternative procedural means to the judicial impugnation process.
The provision of Article 2(a) of Ordinance 112-A/2011 of 22 March should also be understood as being explained by the circumstance that, in its absence – and given the tenor of Article 2 of the RJAT – direct impugnation of self-assessment acts would appear possible without precedence of prior administrative pronouncement. That is to say: taking into account that given the RJAT, no prior administrative intervention was configured as necessary before arbitral impugnation of a self-assessment, the tenor of the ordinance should be interpreted as equating – in this matter – the tax arbitral process to the judicial impugnation process and not, as would follow from the position sustained by the Tax Authority, pass from 80 to 8, taking on a broader impeachability than what is possible in Tax Courts, and transmuting it into a more restricted one.'
Furthermore, the interpretation based exclusively on the literal tenor that the Tax Authority and Customs Authority defends in this proceeding cannot be accepted, since in the interpretation of tax rules, the general rules and principles of interpretation and application of laws (Article 11(1) of the LGT) and Article 9(1) of the Civil Code are observed. From these legal provisions it follows that the interpretation of legal norms cannot be confined exclusively to their literal tenor. It is fundamental to discern the legislative thinking, taking into account the unity of the legal system, the circumstances in which the law was created, and the specific conditions of the time in which it emerged and the objectives it seeks to pursue.
The Tax Authority's allegation on this matter is therefore not accepted. As for the correspondence between interpretation and the letter of the law, a verbal correspondence suffices, even if imperfectly expressed. Only interpretations that have no correspondence in the letter of the law are prohibited, which is not the case. Therefore, the letter of the law is not an obstacle to carrying out an interpretation that, considering other elements of interpretation, explicitly and rationally clarifies the reach of the literal tenor and the legislative thinking underlying it.
It is manifest that the scope of the requirement for prior gracious complaint, necessary to open the contentious avenue for impugning self-assessment acts, provided for in Article 131(1) of the CPPT, has as its legitimate justification the fact that regarding the matter under consideration, a position-taking by the Tax Authority on the legality of the legal situation created is permitted, avoiding judicial contentiousness if possible, and giving the Tax Authority the opportunity to revoke or correct the act. Such purposes are perfectly achieved in the present case with the request for review of the tax act that gave rise to the second-degree act, which consisted of the dismissal of the request for ex officio review of the self-assessment act.
Thus, it is not defensible to adopt a different interpretation of the norm provided for in the CPPT and of that provided for in tax arbitration, especially since the letter of the norm contained in Ordinance 112-A/2011 of 22 March ends up being less restrictive than that of the CPPT, in that it does not include the word "necessarily" (see Article 131(1) of the CPPT), nor does it refer to "gracious complaint" but rather to the expression "administrative channel". Hence it is possible to read the letter of the law itself in the sense that only excluded from the scope of tax arbitral jurisdiction is the knowledge of claims relating to the declaration of illegality of self-assessment acts, withholding at source, and payment on account that have not been preceded by recourse to the administrative channel. Such interpretation is, moreover, perfectly compatible with the terms provided for in Articles 131 to 133 of the Code of Tax Procedure and Process.
Similar to the case law expressed in Arbitral Awards rendered in cases 48/2012-T, 117/2013-T, and 55/2015-T, among others, cited by the Tax Authority itself, it is the understanding of this arbitral tribunal that it is endowed with material competence to decide on the matter in question and under discussion in these proceedings. In this regard, citing Award 117/2013-T, it is concluded that "the interpretation based exclusively on the literal tenor that the Tax Authority and Customs Authority defends in this proceeding cannot be accepted, since in the interpretation of tax rules, the general rules and principles of interpretation and application of laws (Article 11(1) of the LGT) and Article 9(1) expressly prohibit interpretations based exclusively on the literal tenor of the norms by providing that 'interpretation should not be confined to the letter of the law' but should, rather, reconstitute from the texts the legislative thinking, taking especially into account the unity of the legal system, the circumstances in which the law was created, and the specific conditions of the time in which it is applied"
It is to be concluded, in harmony with the arbitral case law cited above, that Article 2(a) of Ordinance No. 112-A/2011 (binding Ordinance), properly interpreted with the principles of law interpretation set forth above and provided for in Article 9 of the Civil Code, applicable to tax rules by virtue of Article 11(1) of the LGT, makes possible the presentation of requests for arbitral pronouncement regarding self-assessment acts that have been preceded by a request for ex officio review.
For the foregoing, there is no violation of constitutional principles of the rule of law, legality, or separation of powers, as it corresponds to the letter and sense of Article 2(a) of Ordinance No. 112-A/2011, the interpretation here endorsed.
Thus, the exception of incompetence of the Arbitral Tribunal, invoked by the Tax Authority, is without merit.
On the Matter of the Non-Impeachability of IRC Assessment No. 2013 …
The Respondent further alleges that the assessment act No. 2013 … now being impugned by the Applicant was replaced by assessment No. 2015 …, by force of an inspection action in which corrections were made to the taxable matter.
It concludes, therefore, that the non-impeachability of this assessment act constitutes a dilatory exception that prevents the continuation of proceedings and determines the partial absolution of the respondent entity, in accordance with Article 89(4)(i) of the CPTA and Article 576(2) of the CPC, by virtue of Article 29(1)(c) of the RJAT.
In its response, the Applicant argues that the additional assessment is not a new, autonomous, and distinct assessment from the previous one. It further adds that the requisites of the assessments and grounds of the impugnations are distinct, and therefore the reasons underlying the present impugnation remain in effect.
Following what is defended by the Award of the Supreme Administrative Court, of 18 February 2016, relating to Case No. 08712/15, it must be verified whether the elements of the assessment being impugned were already reflected in the original assessment, which should, therefore, be examined by the tribunal; if the grounds of the additional assessment correspond to the object of the present action, it should be this act that is to be impugned.
As stated by the Respondent, the act of additional assessment results from a correction to the determination of taxable profit from which resulted a determination of taxable profit and not of tax loss, and therefore the provisions of Article 88(14) of the IRC Code would not be applicable.
In the present proceedings, the matter in dispute concerns the deduction from autonomous taxation of the tax credit and PEC stated in the self-assessment made.
It is therefore concluded that the exception of non-impeachability of assessment No. 2013 … is without merit.
*
As to the Merits
On Autonomous Taxation and IRC Assessment
The question submitted to the Arbitral Tribunal for examination is whether the Applicant has the right to proceed with the deduction, also from the IRC assessment produced by the application of autonomous taxation rates, of the tax credit arising from the Tax Incentive System for Research and Development in Business (SIFIDE), and if the answer is affirmative, the acts of dismissal of the request for ex officio review shall be annulled, as well as the act of tacit dismissal of the Hierarchical Appeal of the request for ex officio review of the self-assessments of Corporate Income Tax (IRC) relating to the tax periods of 2011 and 2012, respectively being the subject matter of Assessment No. 2012 … and Assessment No. 2013 …, in the part relating to autonomous taxation, on the ground of the non-deduction of SIFIDE, in the amounts of Euro 106,479.58 and Euro 110,126.37, relating to autonomous taxation paid, respectively in the tax periods of 2011 and 2012, on the ground of the non-deduction of SIFIDE.
Submitted to the Tribunal is also, in the alternative, should it render a negative response to the first question, the annulment of the acts of express dismissal of the ex officio review and of tacit dismissal of the Hierarchical Appeal, as well as the annulment of the IRC self-assessments Nos. 2012 … and 2013 …, relating to the tax periods of 2011 and 2012, respectively, in the part relating to autonomous taxation, on the ground of the non-deduction of PEC, through the reimbursement of the amount of €140,000.00, relating to autonomous taxation paid in the tax periods of 2011 and 2012, due to non-deduction of PEC.
The Tribunal is further called upon to pronounce itself on the right to indemnificatory interest on sums paid as a consequence of the self-assessment at issue.
It is therefore incumbent to decide on the merits of the request for arbitral decision of the IRC assessments sub judice and the potential right of the Applicant to indemnificatory interest.
In this decision we will follow very closely what was decided in cases Nos. 673/2015-T of 28 April 2016, 775/2015-T of 28 June 2016, and 672/2016-T of 14 August 2017.
Let us see:
The system of autonomous taxation in effect in the fiscal years 2011 and 2012 is the result of numerous legislative amendments.
The subjection of certain expenses to autonomous taxation first appeared with Decree-Law No. 192/90 of 2 June, in a context of penalizing the taxation of confidential or undocumented expenses incurred by companies.
Subsequently, autonomous taxation was included in the IRC Code, through Law No. 30-G/2000 of 29 December, which integrated the provision of autonomous taxation into the statute governing IRC.
Since then, the system of autonomous taxation has undergone a process of progressive expansion, partly driven by the apparent continuous intention to increase tax revenue through this mechanism.
In light of Article 88 of the IRC Code, autonomous taxation applies, broadly speaking, to the following realities: undocumented expenses; vehicle expenses; representation expenses; allowances; sums paid to non-residents; profits distributed by entities subject to IRC to taxpayers who benefit from exemption; expenses or charges relating to indemnification or any compensation due not related to the contractual relationship; and also expenses or charges relating to bonuses and other variable remuneration paid to managers, administrators, or proprietors.
However, autonomous taxation in the context of IRC is not exhausted by Article 88 of the IRC Code. Indeed, examples of autonomous taxation are equally the realities provided for in Article 43(10) of the IRC Code and in Article 18(2)(b) of the Tax Benefits Statute, with respect to contributions to Pension Funds made by companies on behalf of employees, when the requirements for tax deduction or exemption are not met.
We thus have autonomous taxation provided for in the IRC Code, autonomous taxation provided for in the Income Tax Code, and autonomous taxation provided for in the Tax Benefits Statute.
With respect to the question under analysis, that is, regarding IRC and the nature of autonomous taxation, Article 23-A(1)(a) of the IRC Code, as amended by Law No. 2/2014 of 16 January, leaves no room for any reasonable doubt, corroborating what previously resulted from the literal tenor of Article 12 of the same Code.
The assessment resulting from it constitutes assessment of the respective tax, being subject to the generality of provisions set forth in the referred codes, potentially applicable.
Contrary to what is sometimes argued, autonomous taxation does not constitute, in its genesis, special taxes on consumption; a tax fact corresponds to each expense, with instantaneous formation.
First of all, because such a conception would require, in IRC, that its respective constitutionality be assessed in light of the principle of taxation by actual corporate income, and on the other hand, because there is not here a true manifestation of wealth that should be taxed, beyond the fact that many of the expenses subject are also deductible, recognizing thus that they relate to the activity of the company and not to expenses that manifest taxpaying capacity.
Autonomous taxation is based on the presumption of the existence of income that ceased to be taxed, not only in the context of IRC but also of Income Tax, as explained in the decision of the Arbitral Tribunal rendered No. 209/2013-T, which decided negatively on the question of the deductibility of autonomous taxation as a fiscal cost in the context of IRC, "it is a matter of '(…) an indirect way, through the expense, of taxing income'."
The question that interests us to resolve is, irrespective of the nature of the tax to which autonomous taxation refers, whether the amount of autonomous taxation is "determined in accordance with Article 90 of the IRC Code," because if it is, it must be concluded that, to determine the deduction limit, account is taken of the assessment arising from autonomous taxation.
Article 90 of the IRC Code refers to the forms of assessment of the tax, by the taxpayer or the Tax Authority, applying to the determination of IRC due in all situations provided for in the Code, including additional assessment (No. 10).
Therefore, it also applies to the assessment of the amount of autonomous taxation, which is determined by the taxpayer or the Tax Authority in accordance with Article 90 of the IRC Code, there being no other provision that provides for different terms for its assessment. Its autonomy is restricted, in most situations, to the applicable rates and to the respective taxable matter, but the determination of its amount is effected in accordance with Article 90.
The differences between the determination of the amount resulting from autonomous taxation and that resulting from taxable profit are based on the determination of taxable matter and the rates, provided for in Chapters III and IV of the IRC Code, but not on the forms of assessment, which are provided for in Chapter V of the same Code and are commonly applied to autonomous taxation and to the remaining taxable matter of IRC.
Therefore, since Article 90 is inserted in this Chapter V, no legal basis can be seen for making a distinction between the assessment arising from autonomous taxation and the remaining IRC assessment, on the ground that the rates and/or the forms of determination of taxable matter may be different.
Moreover, it cannot be seen, in the possible nature of anti-abuse rules that some autonomous taxation assumes, an explanation for its exclusion from the respective assessment, since there is no legal basis for excluding the deductibility from assessment resulting from corrections based on rules of an indisputably anti-abuse nature.
It is true that, as the Tax Authority and Customs Authority notes, autonomous taxation aims to discourage certain taxpayer behaviors likely to affect taxable profit, and its discouraging force will be attenuated with the possibility that the respective assessment could be subject to deductions.
The IRC Code refers, in its current version, to autonomous taxation expressly only in five articles. In Article 12 (by excluding autonomous taxation from the IRC exemption applicable to entities covered by the transparent taxation regime), in Article 23-A(1) (by clarifying that autonomous taxation is not deductible for the purposes of determining taxable profit), in Article 88 (by establishing the rates and delimiting the taxable matter of autonomous taxation), in Article 117(6) (regarding the reporting obligation of entities exempt from IRC under Article 9, when autonomous taxation occurs) and in Article 120(9) (regarding the periodic income statement). On the other hand, and notwithstanding its specific nature, Article 43(10) also provides for autonomous taxation – "to the amount of IRC assessed for that tax period shall be added the IRC corresponding to the premiums and contributions considered as an expense in each of the preceding tax periods…" – regarding the restoration of the tax deductibility of contributions delivered to Pension Funds in case of non-compliance with the requirements of tax deductibility. Also here, autonomous taxation will be effected, even if the company shows a tax loss, although at the IRC rate in Article 87. Not existing in the IRC Code any other express reference to autonomous taxation, it is nonetheless true that there is still, in Article 18(2)(b) of the Tax Benefits Statute (EBF), an autonomous taxation of IRC, with direct impact on the assessment of this tax. This provision of the EBF subjects to autonomous taxation of IRC, at a rate of 40%, contributions to Pension Funds delivered by companies on behalf of employees, whenever these employees fail to meet the requirements that allowed them to benefit from Income Tax exemption (deferral of taxation to the moment of receipt of benefits). It is an autonomous taxation of IRC that functions as a partial restoration of the IRC that ceased to be paid at the moment the contributions, fiscally eligible as a tax expense, were delivered to the Pension Fund. In this case, the legislator does not question the deductibility of the expense, only obliging the company to partially restore the IRC assessment that ceased to be paid. We are clearly faced with an IRC assessment, with the specificity of autonomous taxation.
As regards the rules in force at the date of the facts under consideration, the novelty lies only in Article 23-A, introduced by the recent IRC Reform, which establishes that they are not deductible for the purposes of determining taxable profit, even when accounted as expenses of the tax period, certain charges, and the wording of Article (a) is clarifying: "the IRC, including autonomous taxation, and any other taxes that directly or indirectly affect profits." (emphasis ours)
That is to say, not only does the legislator express that IRC includes autonomous taxation, but there are no other express references to autonomous taxation in the IRC Code, notably in the chapters dealing with the scope of application (Chapter I), assessment (Chapter V), and payment (Chapter VI), from which it is necessary to conclude that they are subject, generically, to the other provisions provided for in the IRC Code.
The part of the IRC assessment that proceeds from autonomous taxation is calculated from the elements of the tax defined in Article 88 of the IRC Code inserted in 'Chapter IV – Rates,' in addition to the situations mentioned with respect to Article 43 or Article 18(2)(b) of the Tax Benefits Statute.
These articles delimit the taxable matter of autonomous taxation, on the one hand, and, on the other hand, enumerate the rates of autonomous taxation, which are varied, depending on the nature of the taxable matter to which they apply; because they depend on the type of taxpayer (e.g., entity without profit-making purpose, exempt entities, entity that principally carries on a commercial, industrial, or agricultural activity), and are moreover dependent on the economic performance of the IRC taxpayer itself, as they assume different percentages when taxable profit or tax loss is determined. The assessment arising from autonomous taxation is a function of taxable result, calculated from two expressions which are, in some cases, the product of taxable matter by a rate dependent on taxable result: a higher rate when a tax loss is determined and another, lower, when taxable result is positive.
Thus, the assessment arising from autonomous taxation cannot be determined instantaneously and immediately following the incurrence of the expense, since it depends on the result itself, which is successively formed.
Also some expenses that do not coincide with the expenses that are eliminated and that are subject to autonomous taxation, namely depreciations and contributions delivered to Pension Funds in case of non-compliance with fiscally imposed requirements, are of continuous formation.
As previously stated, in the current wording of Article 23-A(1)(a) of the IRC Code, it is concluded, by literal interpretation, that autonomous taxation is IRC (they are part of IRC).
The same is concluded from the tenor of Article 12, when it provides that "entities and other entities to which, in accordance with Article 6, the transparent taxation regime applies, are not taxed in IRC, except with respect to autonomous taxation," presenting autonomous taxation as a subset of IRC.
The purpose of autonomous taxation is dual. It aims to tax actual income, thereby correcting taxable income to bring it closer to that actual income, and at the same time it seeks to penalize taxpayers who, through the realization of certain expenses or by means of certain non-compliance behaviors, penalize and correct, even in some situations after several years, deductions that were effected and ended up reducing taxable income.
But it is not, however, the purpose, nature, or scope of the tax that is the essential question here. What matters in this case to know, in our opinion, refers exclusively to the manner in which the assessment (of the part of the tax that proceeds) from autonomous taxation is effected and whether they are included in Article 90(1) of the IRC Code or whether they are outside it.
Recognizing the matter in question as unquestionably complex, resulting from a succession of legislative changes in a context of economic degradation, through which the system, as can be read in the Award 617/12 of the Constitutional Court, shows its dual nature, with an aggravated rate of autonomous taxation for certain special situations that are sought to be discouraged, creating a kind of presumption that these costs do not have a business purpose and, therefore, are subject to autonomous taxation. "In summary," says the CC, "the cost is deductible, but autonomous taxation reduces its tax advantage, since, here, the basis of incidence is not net income, but rather a cost transformed – exceptionally – into an object of taxation."
The legal system of autonomous taxation in question only makes sense in the context of taxation in the context of IRC. That is to say, detached from the legal system of this tax, they would completely lack meaning. Their existence, their purpose, their explanation, in short, their legal validity, is only comprehensible and acceptable within the framework of the legal system of IRC. Because, even if it were accepted that the taxable fact is each of the individual legally classified expenses, the fact is that these are not, qua tale, the final object of taxation, the reality that is sought to be aggravated by the tax.
If this were the case, all expenses provided for would have to be taxed, realized by all subjects and not just by some of them.
That is to say, autonomous taxation is inseparable from the subjects of the respective income tax, and, more specifically, from the economic activity carried out by them, which is even more evident when one thinks of the connection that, although it has varied in successive legislative amendments, autonomous taxation had and still has some connection with deductibility – and the actual deduction – of expenses taxed. They are, in essence, special rules for the deductibility of certain costs.
This circumstance, it is believed, is illustrative of the interconnection existing between those and the
IRC (in this case), and justifies not only their inclusion in the CIRC, but equally their
integration, by full right, as part of the legal system of IRC.
The autonomous taxation at issue is, as such, undoubtedly understood
by the legislator as a way of preventing certain abusive actions, which the normal operation of the system of taxation was incapable of preventing or which would be more burdensome or laborious for the tax authority or, indeed, possibly, for the taxpayer.
This anti-abuse character of autonomous taxation will be not only coherent with its "anti-systemic" nature (as happens with all rules of this kind), but also with a presumptive nature.
In this light, as stated in the decision rendered by the Arbitral Tribunal in case No. 187/2013-T, autonomous taxation under analysis will therefore have underlying a presumption of partial business character of the expenses on which it applies, based on the above-mentioned circumstance that such expenses are situated on a gray line separating what is business expense, productive, from what is private expense, consumption, and, notably, in many cases, the expense will even in reality have a dual nature (part business, part private).
Confronted with this difficulty, the legislator, instead of simply excluding
its deductibility, or reversing the burden of proof of the relationship of the expenses in question with business activity, opted for enshrining the currently applicable regime.
This presumption of partial business character should, in coherence, be considered as encompassed by the possibility of relief arising from Article 73 of the LGT, both by the taxpayer and by the Tax Authority, which appears to accord with an adequate distribution of the burden of proof, in that, since autonomous taxation in question applies to expenses whose relationship with the activity pursued may not be, at the outset, evident, it is the taxpayer who will be better positioned to demonstrate that such requirement is met concretely. For its part, the Tax Authority itself, should it see fit and consider that the case justifies the inherent expenditure of resources, may always demonstrate that, with respect to the expenses in question, and even though autonomous taxation has been incurred thereon, the general requirement of Article 23(1) of the CIRC is not met, namely its indispensability for the realization of income subject to tax or for the maintenance of the income-producing source.
In light of all that has been stated above, we consider that autonomous taxation at issue is part of the IRC system and that the respective assessment is effected in accordance with Article 90 of the respective Code.
On the Deductibility of the SIFIDE Tax Credit from the Amount Due as Autonomous Taxation
Having reached this point, let us focus on the question of what is deductible from the assessment resulting from autonomous taxation in IRC. The provision at issue is Article 90 of the IRC Code, Article (a) being the one applicable to assessment made by the taxpayer (self-assessment).
This was the wording of the article resulting from Law No. 3-B/2010 and in force until 31.12.2013:
1 — The assessment of IRC proceeds as follows:
a) When assessment is to be made by the taxpayer in the declarations referred to in Articles 120 and 122, it is based on the taxable matter contained therein;
(...)
2 — To the amount determined in accordance with the preceding number, the following deductions are made, in the order indicated:
a) The corresponding amount to international double taxation;
b) That relating to tax benefits;
c) That relating to the special payment on account referred to in Article 106;
d) That relating to withholding at source not susceptible to compensation or reimbursement in accordance with applicable law.
(…)
7 — The deductions effected in accordance with Articles (a), (b), and (c) of No. 2 cannot result in a negative value.
8 — To the amount determined in accordance with Articles (b) and (c) of No. 1, only deductions of which the tax administration has knowledge and which can be effected in accordance with Nos. 2 to 4 are made.
9 — In cases where the provision of Article 79(2)(b) is applicable, assessments are made annually based on taxable matter provisionally determined, and, in light of the assessment corresponding to taxable matter for the entire assessment period, the difference determined is collected or canceled.
10 — The assessment provided for in No. 1 can be corrected, if necessary, within the period referred to in Article 101, the differences determined being collected or canceled.
There is no article in the IRC Code other than Article 90 that distinguishes the process of assessment of autonomous taxation from the remaining IRC. And, in these terms, the assessment of both – autonomous taxation and remaining IRC – is single and has the same legal basis.
Autonomous taxation does not result from a distinct process of assessment of the tax.
Having regard to the framework and conclusions in the preceding section, the first concrete question that arises in this context is whether the tax credits recognized to the applicant in the years 2011 and 2012, in the context of SIFIDE, can also be deducted from the assessment produced by the autonomous taxation that burdens it in that fiscal year, in the part in which they cannot be deducted from the remaining assessment.
To answer this question, let us analyze the rules that governed SIFIDE in the circumstances of time that are relevant to these proceedings.
SIFIDE was created by Law No. 40/2005 of 3 August. According to its Article 4 (Scope of Deduction) in the wording in force in 2010:
1 — Taxpayers subject to IRC resident in Portuguese territory who exercise, as the principal or secondary activity, an activity of an agricultural, industrial, commercial, and services nature and non-residents with permanent establishment in that territory may deduct from the amount determined in accordance with Article 83 of the IRC Code, and up to its amount, the value corresponding to expenses with research and development, in the part that has not been the subject of non-refundable financial participation of the State, made in the tax period beginning on 1 January 2006, in a dual percentage:
a) Base rate — 20% of expenses made in that period;
b) Incremental rate — 50% of the increase in expenses made in that period compared to the simple arithmetic average of the two preceding fiscal years, up to the limit of €750,000, which may be revised by decree-law.
2 — The deduction is made, in accordance with Article 83(1) of the IRC Code, in the assessment relating to the tax period mentioned in the preceding number.
3 — Expenses that, due to insufficient assessment, cannot be deducted in the year in which they were made may be deducted up to the sixth consecutive year.
4 — For the purposes of the foregoing, when in the year of beginning enjoyment of the benefit a change in the tax period occurs, the annual period beginning in that year should be considered."
Article 133 of Law No. 55-A/2010 of 31 December creates SIFIDE II, to be in force in the tax periods from 2011 to 2015.
In Article 4 (Scope of Deduction), in force in 2011, it is stated:
1 — Taxpayers subject to IRC resident in Portuguese territory who exercise, as principal or secondary activity, an activity of an agricultural, industrial, commercial, and services nature and non-residents with permanent establishment in that territory may deduct from the amount determined in accordance with Article 90 of the IRC Code, and up to its amount, the value corresponding to expenses with research and development, in the part that has not been the subject of non-refundable financial participation of the State, made in the tax periods from 1 January 2011 to 31 December 2015, in a dual percentage:
a) Base rate — 32.5% of expenses made in that period;
b) Incremental rate — 50% of the increase in expenses made in that period compared to the simple arithmetic average of the two preceding fiscal years, up to the limit of €1,500,000.
2 — For taxpayers subject to IRC that are SMEs in accordance with the definition contained in Article 2 of Decree-Law No. 372/2007 of 6 November, which have not yet completed two fiscal years and which have not benefited from the incremental rate fixed in Article (b) of the preceding number, a 10% increase applies to the base rate fixed in Article (a) of the preceding number.
3 — The deduction is made, in accordance with Article 90 of the IRC Code, in the assessment relating to the tax period mentioned in the preceding number.
4 — Expenses that, due to insufficient assessment, cannot be deducted in the year in which they were made can be deducted up to the sixth consecutive year.
5 — For the purposes of the foregoing, when in the year of beginning enjoyment of the benefit a change in the tax period occurs, the annual period beginning in that year should be considered.
6 — The incremental rate provided for in Article (b) of No. 1 is increased by 20 percentage points for expenses relating to the hiring of doctorate holders by companies for research and development activities, with the limit provided for in the same article becoming €1,800,000.
7 — To taxpayers that reorganize, as a result of concentration acts as defined in Article 73 of the IRC Code, the provision of Article 15(3) of the Tax Benefits Statute applies.
Thus, by mere declarative interpretation, it is concluded that the reference made in Article 4 (both of Law No. 40/2005 and of Article 133 of Law No. 55-A/2010) to "deduction (…) in accordance with Article 90 of the IRC Code (…)" as a way of materializing the tax benefit encompasses, literally, also the IRC assessment resulting from autonomous taxation, which is part of the single IRC assessment.
The fact that the deductibility of the tax benefit of SIFIDE is limited to the assessment of Article 90 of the IRC Code – "(…) and up to its amount (…)" – does not allow the conclusion that the tax credit is only deductible in case there is taxable profit, since what that fact requires is that there be IRC assessment, which can exist even without taxable profit, particularly by force of autonomous taxation.
Regarding the deduction of SIFIDE (I and II) being conditioned on the "(…) taxable profit is not determined by indirect methods" does not mean, as the Tax Authority and Customs Authority affirms, that "the credit in which SIFIDE is translated is deducted only from the assessment thus determined, that is, from the assessment determined based on taxable matter."
Only a restrictive interpretation of this rule could prevent the deduction of autonomous taxation by considering that they are not determined based on taxable matter. The legislator only prevented the deduction of the tax credit of SIFIDE in cases in which taxable matter is determined by indirect methods, in accordance with Article 87 of the General Tax Law.
As decided in the Award rendered in Case No. 673/2015-T, "Being this the interpretation that results from the literal tenor, only through a restrictive interpretation could the application of the tax benefit to the IRC assessment provided by autonomous taxation be prevented.
The feasibility of a restrictive interpretation encounters, immediately, an obstacle of a general order, which is that the rules creating tax benefits have the nature of exceptional rules, as follows from the express tenor of Article 2(1) of the EBF, so that, in the absence of a special rule, they should be interpreted in their precise terms, as is settled case law.
Referring further: "In the case of tax benefits, the possibility of extensive interpretation is expressly provided for (Article 10 of the EBF), but not of restrictive interpretation, so that, as a rule, the tax benefit should not be interpreted with less breadth than that which, in a declarative interpretation, results from the tenor of the rule providing for it.
In any case, a restrictive interpretation is justified only when 'the interpreter reaches the conclusion that the legislator adopted a text that betrays his thinking, inasmuch as it says more than what he intended to say. Also here the ratio legis will have a decisive word. The interpreter should not be carried away by the apparent reach of the text, but should restrict it so as to make it compatible with the legislative thinking, that is to say, with that ratio. The argument on which this type of interpretation is based is usually expressed as follows: cessante ratione legis cessat eius dispositio (where the reason for the law ends, its scope ends)."
Having the Applicant attached to the proceedings Documents issued by the Ministry of Economy and Employment proving the tax credits attributed under SIFIDE I and SIFIDE II (Doc. 5, 6, and 7, annexed to the Petition) and, in the case at hand, the Respondent not having questioned the legitimacy thereof, nor the fulfillment of the subjective and objective requirements for the Applicant to benefit from SIFIDE, we understand that the provision of Article 3 of Law No. 40/2005 and Article 6 of Law No. 55-A/2010 has been met.
The fact that the computer system does not allow the deduction of the tax credit of SIFIDE from the IRC assessment arising from autonomous taxation, for all that has been stated, we understand that the existing computer solution lacks legal support.
Having reached this point, it is necessary to analyze the question of No. 21 of Article 88 of the IRC Code, introduced by the Law approving the State Budget for 2016 (Law 7-A/2016 of 30 March).
In fact, several numbers were added to Article 88 of the IRC Code by this Law, which concerns autonomous taxation, including number 21, according to which "The assessment of autonomous taxation in IRC is effected in accordance with the provisions of Article 89 and is based on the values and rates resulting from the foregoing numbers, with no deductions being made to the total amount determined."
And, in Article 135, the legislator provides that "the wording given by this law to No. 6 of Article 51, to No. 15 of Article 83, to No. 1 of Article 84, to Nos. 20 and 21 of Article 88, and to No. 8 of Article 117 of the IRC Code has an interpretative nature."
The Tax Authority understands that the new wording of Article 88 prevents the deduction, in accordance with Article 90, of tax benefits and special payments on account from the assessment resulting from autonomous taxation.
Nevertheless, in our view, this is not evident. Article 90 was not amended, it continues to refer to IRC assessment, and, for all that has been stated above, the assessment resulting from the application of the rules of Article 88 or of other autonomous taxation "miscellaneous" continues to be IRC assessment.
What No. 21 of Article 88 prohibits is that, to this assessment, any deductions be made until the moment when, with the total IRC assessment determined, the deductions of Article 90 are made.
As evidenced in the Award of the CAAD rendered in Case 775/2015, "It is accepted that the legislator wanted, in fact, to prohibit that the deductions of Article 90 be effected to the part of the IRC assessment resulting from autonomous taxation, but if so, it should have said so clearly, in which it would have done better to amend Article 90 and not Article 88."
What leads us to conclude that, if the system was not clear before the publication of Law No. 7-A/2016 of 30 March, it remains so.
It is not our role, however, to analyze more thoroughly here the system that currently results from the provision in No. 21 of Article 88 of the IRC Code, since, even if it were understood that said amendment came to prevent the deduction from the part of the IRC assessment arising from autonomous taxation, the interpretative nature given by Article 135 of Law No. 7-A/2016 of 30 March has already been analyzed by the Constitutional Court.
Thus, in accordance with Award 267/2017 of 31 May 2017 of the Constitutional Court, the provision contained in the State Budget for 2016 that prevents the deduction of amounts paid as special payment on account (or tax benefits) to fiscal years prior to 2016, suffers from unconstitutionality, "insofar as, due to the merely interpretative nature attributed to it, it determines that the provision of Article 88(21), second part, of the IRC Code - said number added by Article 133 of the aforementioned Law - according to which, to the total amount resulting from autonomous taxation assessed in a given year in the context of IRC, the amounts paid as special payment on account in that same year cannot be deducted, applies to fiscal years prior to 2016.
The determination of the application of such solution to fiscal years prior to the fiscal year of entry into force of the State Budget Law for the year 2016 makes it substantially retroactive and, therefore, incompatible with the constitutional prohibition of the imposition of retroactive taxes. In fact, such a provision is innovative and unfavorably aggravates the way of calculating the amount due annually under IRC, being therefore unconstitutional."
In the case sub judice, for all that has been already stated above, it is understood that the text of the law in force at the date of the facts at issue did not allow the conclusion that the deduction of tax benefits, such as SIFIDE, from the part of the IRC assessment resulting from autonomous taxation, was prohibited.
Therefore, it is concluded that the IRC self-assessment acts relating to the fiscal years 2011 and 2012, insofar as they correspond to the non-deduction of SIFIDE from the part of the IRC assessment arising from autonomous taxation, are vitiated by the vice of violation of law, which justifies their annulment, the same being the case with the decision of the dismissal of the request for ex officio review filed by the Applicant.
Thus, the analysis of the subsidiary question raised by the Applicant regarding the deduction of PEC is foreclosed, since the tax credits of SIFIDE must be deducted from the assessment resulting from autonomous taxation.
5. Reimbursement of Sums Paid and Indemnificatory Interest
The Applicant further requests that the Tax Authority be condemned to reimburse it of the sums unduly paid, together with the respective indemnificatory interest in accordance with Article 43 of the LGT.
This same question has been raised in various earlier proceedings in which subject matter identical to that of the case is analyzed, among which Case 303/2015-T of the CAAD, where it was written what now, with due respect, is transcribed:
"In accordance with the provision of Article 24(b) of the RJAT, the arbitral decision on the merits of the claim of which there is no appeal or impugnation binds the tax administration from the end of the period set for appeal or impugnation, and the latter must, in the exact terms of the favorability of the arbitral decision in favor of the taxpayer and until the end of the period provided for the spontaneous execution of decisions of judicial tax tribunals, 'restore the situation that would exist if the tax act subject of the arbitral decision had not been carried out, adopting the acts and operations necessary for that purpose,' which is in harmony with the provision in Article 100 of the LGT [applicable by virtue of the provision in Article (a) of No. 1 of Article 29 of the RJAT] which establishes that 'the tax administration is obliged, in case of total or partial favorability of a complaint, judicial impugnation, or appeal in favor of the taxpayer, to the immediate and complete restoration of the legality of the act or situation subject of the dispute, including the payment of indemnificatory interest, if applicable, from the end of the period of execution of the decision.'
Although Article 2(1)(a) and (b) of the RJAT uses the expression 'declaration of illegality' to define the competence of arbitral tribunals operating in the CAAD, making no reference to condemning decisions, it should be understood that the powers that in judicial impugnation proceedings are attributed to tax tribunals are included in its competencies, and this is the interpretation that is in harmony with the sense of the legislative authorization on which the Government based itself to approve the RJAT, in which it is proclaimed, as the first guideline, that 'the tax arbitral process should constitute an alternative procedural means to the judicial impugnation process and to the action for the recognition of a right or legitimate interest in tax matters.'
The judicial impugnation process, although essentially a process of annulment of tax acts, admits the condemnation of the Tax Authority in the payment of indemnificatory interest, as can be seen from Article 43(1) of the LGT, in which it is established that 'indemnificatory interest is due when it is determined, in a gracious complaint or judicial impugnation, that there was an error attributable to the services from which results payment of the tax debt in an amount higher than legally due' and Article 61(4) of the CPPT (in the wording given by Law No. 55-A/2010 of 31 December, to which corresponds No. 2 in the original wording), which 'if the decision that recognized the right to indemnificatory interest is judicial, the period for payment counts from the beginning of the period for its spontaneous execution.'
Thus, No. 5 of Article 24 of the RJAT, in stating that 'payment of interest is due, regardless of its nature, in the terms provided in the general tax law and in the Code of Tax Procedure and Process,' should be understood as allowing recognition of the right to indemnificatory interest in arbitral proceedings, as well as reimbursement of the sum paid, which is a precondition for the existence of such interest."
Following the illegality of the IRC self-assessment acts of 2011 and 2012 and of compensatory interest, subject of the present proceedings, no doubt subsists that the Tax Authority and Customs Authority should proceed, not only to restitution of the amounts unduly paid by the Applicant in the amount of Euro 216,605.95, giving effect to the mandate of Article 100 of the LGT cited above, but also to the payment of the respective indemnificatory interest that is due from the dates on which the payments were made by the Applicant until the date when the respective reimbursement takes place.
Decision
In these terms, and with the grounds exposed, this Arbitral Tribunal decides to judge the Applicant's main claims entirely well-founded and, consequently:
- to declare the illegality of the self-assessments Nos. 2012 … and 2013 … relating, respectively, to the fiscal years of 2011 and 2012, in the part relating to autonomous taxation, on the ground of the non-deduction of SIFIDE from the amounts of autonomous taxation and to annul them, in the respective parts;
- to annul the acts of express dismissal of the ex officio review and of tacit dismissal of the hierarchical appeal, relating to the tax periods of 2011 and 2012;
- to condemn the Respondent to reimburse the Applicant in the amounts of Euro 106,479.58 and Euro 110,126.37, relating to the deduction of SIFIDE from the autonomous taxation paid, respectively in the tax periods of 2011 and 2012, and, further, to pay it indemnificatory interest counted from the date of payment until the moment when the reimbursement of the amounts corresponding to autonomous taxation takes place.
Value of the Case
In accordance with the provision of Article 305(2) of the CPC and Article 97-A(1)(a) of the CPPT and Article 3(2) of the Regulation of Costs in Tax Arbitration Proceedings, the value of the case is set at Euro 216,605.95.
Costs
In accordance with Article 22(4) of the RJAT, the amount of costs is set at Euro 4,284.00 in accordance with Table I attached to the Regulation of Costs in Tax Arbitration Proceedings, at the charge of the Tax Authority and Customs Authority.
Notify.
Lisbon, 29 September 2017
The Arbitrators,
José Pedro Carvalho (President – dissenting, as per declaration)
Amândio Silva (member)
Filomena Salgado Oliveira (member)
DISSENTING OPINION
I dissented in the present decision because, for the reasons set forth, among others, in the decisions that resulted in dissent in arbitral cases 34/2016T, 174/2016T, 122/2016T, 567/2016T, and 587/2016T, I consider that Article 90(2) of the CIRC, in the wording prior to the entry into force of the wording given by Law 7-A/2016 of 30 March, should be subject to a corrective interpretation, limiting its scope to IRC stricto sensu, thus excluding autonomous taxation, thereby maintaining its original meaning, which was that which it had before the introduction of autonomous taxation into the CIRC.
In fact, the question being raised flows – exclusively – from the lack of foresight of the legislator when introducing autonomous taxation into the CIRC, which did not allow it to become aware of all the implications of such an operation, which led to the fact that, among others, Article 90(2) of the CIRC remained unchanged and that case law must be what, case by case, determines the parts of the IRC system that apply to autonomous taxation.
Moreover, the position that resulted in dissent supports the conclusion – entirely contrary to the presumption of a reasonable legislator – that it would be possible to proceed with the deductions provided for in Article 90(2) of the CIRC to the collection of autonomous taxation relating to undocumented expenses or payments to entities with privileged tax status, among others.
Thus, considering the nature and teleology inherent to autonomous taxation, as developed in the arbitral decisions cited above, as well as the historical evolution of its emergence within the IRC framework, I have no doubt that said rule was not created, nor maintained, with a view to its application to autonomous taxation, lacking, therefore, to have its letter interpreted correctively, in the sense pointed out above.
Lisbon, 29-09-2017
José Pedro Carvalho (President)
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