CAAD 668/2016-T: Deduction of CFEI Tax Benefits from Autonomous Taxation in IRC

ARBITRAL DECISION

The arbitrators Maria Fernanda dos Santos Maçãs (Arbitrator-President), Olívio Mota Amador and Luís Miguel Rodrigues Miranda da Rocha, agree as follows:

I. Report

1. A…, SGPS, S.A. (Tax Identification Number/Company Registration Number…, with registered office at Rua…, no.…, …-… Lisbon ("Claimant" or "A…"), came, pursuant to subsection a) of article 2, section 1 and articles 10 and following of Decree-Law no. 10/2011, of 20 January, to file, on 04-11-2016, a request for an arbitral pronouncement regarding the rejection of the request for official revision of the self-assessment act for Corporate Income Tax (IRC) relating to the 2013 tax period – issued on the basis of the income statement declaration ("Form 22") filed on 30/11/2015 and identified with code no. …-… -… - notified on 08/08/2016.

2. The request for the constitution of the arbitral tribunal was accepted by the President of CAAD on 08-11-2016 and notified to the Tax and Customs Authority on 28-11-2016.

2.1. Pursuant to the provisions of subsection a) of article 6, section 2 and subsection b) of article 11, section 1 of the RJAT, the Deontological Council appointed as arbitrators of the collective arbitral tribunal the signatories, who communicated acceptance of the assignment within the applicable period.

2.2. On 11-01-2017, the parties were duly notified of this appointment, and did not manifest any intention to refuse the appointment of the arbitrators, in accordance with the combined provisions of article 11, section 1, subsections a) and b) of the RJAT and articles 6 and 7 of the Deontological Code.

2.3. In compliance with the provision of subsection c) of article 11, section 1 of the RJAT, the collective arbitral tribunal was constituted on 26-01-2017.

2.4. In these terms, the Arbitral Tribunal is regularly constituted to examine and decide on the object of the proceedings.

1. To support the request for arbitral pronouncement, the Claimant alleges, in summary, the following:

a) On 30 November 2015, the final income statement Form 22 for IRC (replacement declaration) was filed, relating to the 2013 fiscal year of the group of companies subject to the Special Regime for Group Taxation (RETGS), in which the claimant had entered, in the respective box 10, the values of IRC strictly speaking (€3,436,468.51), the state surtax (€577,151.28) and autonomous taxation (€12,321,977.45);

b) In light of the alleged (reduced) insufficient collection, only part of the totality of the available tax benefits was deducted, as can be seen from Box 07 of Annex D of Form 22 filed on 30/11/2015.

c) In light of more recent case law, the Claimant understands that the consumption of tax benefits could be greater, given that (i) autonomous taxation has the nature of IRC and (ii) the limit of the Extraordinary Tax Credit for Investment ("CFEI") to be deducted from the collection is presented as lower than the fiscally accepted value;

d) Articles 89 and 90 of the IRC Code are applicable to autonomous taxation, citing Arbitral Awards no. 775/2015-T, no. 744/2015-T, no. 784/2015-T and no. 740/2015-T, all rendered by Arbitral Tribunals promoted within the scope of CAAD;

e) The current section 21 of article 88 of the IRC Code (to which interpretive nature was given) does not prevent the deduction of tax benefits resulting from CFEI from the part of the collection resulting from the application of autonomous taxation rates, since those tax benefits constitute special law and general law does not alter special law;

f) The deduction of tax benefits from the part of the collection resulting from autonomous taxation should be made at the level of the "Group of Companies" (rather than being made individually, in the sphere of each of the constituent companies of that same "Group of Companies" to which RETGS is applicable), invoking Arbitral Award of Process no. 369/2015-T, as well as Information no. 929, of 24/04/2013, from DSIRC;

g) The Claimant has already been granted merit, with respect to the understanding that tax benefits operating by deduction from the collection are deductible from IRC relating to autonomous taxation, for the tax periods of 2010 and 2011, resulting from the decision of Processes no. 369/2015-T and no. 370/2015-T;

h) Law no. 7-A/2016, of 30 March has an innovative interpretive nature with an excessive degree of retroactivity and, consequently, violative of the constitutional principle of legal certainty;

i) The Claimant concludes by requesting the annulment of the order rejecting the request for official revision filed and, likewise, the declaration of complete illegality of the IRC self-assessment act in question, with the consequent reimbursement of the amount unduly paid by the claimant, all with the due legal consequences, namely regarding the payment of compensatory interest.

1. The Tax and Customs Authority presented a response and attached the administrative file, invoking in summary the following:

4.1. Preliminary matters

a) The possible prejudiciality and preclusion of the right to action concerning other tax benefits other than CFEI.

b) According to the Respondent, the inspection services made a series of corrections to the taxable matter of the Group, relating to the 2013 fiscal year, corrections which the Claimant challenged judicially before the Tax Court of Lisbon and which are pending under no. …/16…BELRS (which should imply the suspension of these proceedings).

c) The 2013 self-assessment of the Claimant cannot be examined here unless the merits of the proceedings pending under no. …/16… BELRS are first resolved.

d) That the Arbitral Tribunal is prevented from ruling on any other tax benefits, other than CFEI, given their non-examination in the official revision.

4.2. By exception

a) The Respondent raises the material incompetence of the Arbitral Tribunal resulting from the fact that the request for arbitral pronouncement was formulated following the rejection of a request for official revision, since the competence of arbitral tribunals is, from the outset, limited to matters indicated in section 1 of article 2 of the RJAT, combined with the provisions of Ordinance no. 112-A/2011, of 22 March.

b) Those normative provisions do not contemplate the possibility of examining the requests formulated by the Claimant, since there is an express obligation for prior filing of a gracious complaint as a way to open the arbitral path.

c) It would appear unconstitutional an interpretation that determines that article 2 of the RJAT includes the examination of the arbitral requests formulated by the Claimant, when the letter and spirit of the norm do not permit it.

d) There was always an obligation for the precedence of a gracious complaint in accordance with the provisions of section 1 of article 131 of the CPPT.

e) (...) supra argued, that disputes whose object is the declaration of illegality of withholding acts, as is the case in the situation sub judice, are excluded from the material competence of arbitral tribunals, if not preceded by a gracious complaint in accordance with article 132 of the CPPT, is equally imposed by force of the constitutional principles of the rule of law and separation of powers (cf. articles 2 and 111, both of the CRP), as well as legality (cf. articles 3, section 2, and 266, section 2, both of the CRP), as a corollary of the principle of indisponibility of tax credits inherent in article 30, section 2 of the LGT, which bind the legislator and all activity of the TA.

f) Effectively, the terms in which section 1 of article 4 of the RJAT is worded impose the conclusion that the binding of the TA is dependent and delimited by the express will in Ordinance no. 112-A/2011. And, given the voluntary and conventional nature of arbitral protection, understood here in its broad sense, since the material competence of arbitration courts results from public nature regulation effected in the RJAT, the interpreter cannot amplify the object fixed by the legislator regarding the binding of the TA to that jurisdiction.

g) Effectively, the binding of the TA to necessary arbitral protection, in which the principle of irrevocability of decisions prevails, presupposes a limitation of the situations in which it can fully decide whether or not to appeal a judgment unfavorable to it, that is, the power to choose between permanently abdicating the collection of the tax credit or adopting the potentially adequate behavior to seek to enforce it.

h) Therefore, unless otherwise advised, it is constitutionally prohibited, by force of the constitutional principles of the rule of law and separation of powers (cf. articles 2 and 111, both of the CRP), as well as legality (cf. articles 3, section 2, and 266, section 2, both of the CRP), as a corollary of the principle of indisponibility of tax credits inherent in article 30, section 2 of the LGT, the interpretation, even if extensive, that extends the binding of the TA to arbitral protection legally established, since such necessarily presupposes the consequent expansion of the situations in which it is obligatorily submitted to such a regime, renouncing to that extent recourse to full jurisdictional review [cf. article 124, section 4, subsection h) of Law no. 3-B/2010 and articles 25 and 27 of the RJAT, which imposes a restriction on remedies of the arbitral decision].

4.3. By impugnation

a) The integration of autonomous taxation into the IRC Code conferred a dualistic nature, in certain aspects, to the normative system of this tax, which was embodied in separate assessments of the respective collections, due to obedience to different rules. Thus, when, in the liquidation process, there is an assessment of IRC based on the taxable matter that is based on profit and an assessment of autonomous taxation, the globally assessed amount does not have a unitary character, since it integrates values calculated according to different rules, to which different purposes are also associated, so from such differentiation the necessary consequences must be drawn in the area of deductions from the collection, in the sense that they can only be made to the part of the IRC collection with which there is a direct correspondence, in order to maintain the coherence of the conceptual structure of the general rule regime of the tax;

b) The previous idea is reinforced by the fact that companies covered by the transparent tax regime are not taxed in IRC, except as regards autonomous taxation and it has been established that the obligation to file the periodic income statement covers entities exempt from IRC, when subject to autonomous taxation;

c) The basis for calculating installments on account of IRC, according to the understanding held by the Tax and Customs Authority and peacefully accepted by doctrine and taxpayers in general, is only the IRC collection resulting from the taxable matter that is identified with the profit/income of the taxpayer's fiscal year, excluding the collection of autonomous taxation;

d) The amount to which deductions from the collection are made can only respect the tax assessed on the basis of the taxable matter, determined in accordance with the rules of Chapter III and the rates provided for in article 87 of the IRC Code, because, as regards tax benefits, the tax credit or deduction from the collection constitutes one of the technical methods that has been adopted, especially in measures of tax incentives for investment, fundamentally for two reasons: one, linked to the operability of the benefit, due to the transparency and simplicity of the calculation of the fiscal expenditure associated with it, which, as is known, represents the foregone fiscal revenue; another, which concerns the philosophy underlying the benefits, that is their indexing to the profitability of the investment, according to which the deduction of a certain percentage of an investment from the collection of a tax on profits only takes effect if there is profit, which rewards the profitability of the investment;

e) The deductions that are attributed to the partners or members of entities covered by the transparent tax regime (entities that are subject to the payment of autonomous taxation) are deducted from the amount assessed on the basis of the taxable matter that took into account the attribution provided for in the same article and not to the amount relating to autonomous taxation;

f) The legislator clarified, in cases where the Special Regime for Group Taxation is applied, that the part of the IRC collection to which the deduction of the tax benefit would be made is that calculated on the basis of the taxable matter of the group, and it is hard to understand that, in cases where the company is taxed individually, the deduction of the benefit would be made to the IRC collection that included the part relating to autonomous taxation;

g) The interpretive nature attributed by article 135 of Law no. 7-A/2016, of 30 March to the provisions of section 21 added to article 88 of the IRC Code ("The liquidation of autonomous taxation in IRC is carried out in accordance with the provisions of article 89 and is based on the values and rates resulting from the above provisions, with no deductions being made to the total amount assessed") must be taken into account in the case at hand, although such is unnecessary because no other interpretation would be possible, considering the teleology and legal hermeneutics of the provisions in question;

h) It should always be said that any interpretation that does not apply the norm contained in the 2016 State Budget Law, set forth in article 133, which added section 21 to article 88 of the IRC Code, with the effects provided for in article 135, both contained in the State Budget Law of 2016, published on 30.03.2016, entering into force the following day, in which it is recommended, with an interpretive character, that "The liquidation of autonomous taxation in IRC is carried out in accordance with the provisions of article 89 and is based on the values and rates resulting from the above provisions, with no deductions being made to the total amount assessed," and which, consequently, permits the deduction from the part of the IRC collection produced by autonomous taxation rates of tax benefits made under IRC, in this case, SIFIDE/CFEI/RFAI, that decision is materially unconstitutional, by: i) violation of the principle of legality, inherent in art. 103, section 2 of the CRP; ii) violation of the principle of separation of powers, set out in art. 2 of the CRP; iii) violation of the principle of protection of confidence provided for in art. 2 of the CRP; iv) violation of the principle of equality, in its positive formulation of tax capacity, resulting from art. 13, section 2 and 103, section 2, both of the CRP;

i) The legal requirements that grant the right to compensatory interest are not met, since the main request should fail, but also because the assessment of the tax was made by the Claimant, so the error would only become imputable to the Tax Administration after the possible rejection of the claim presented by the taxpayer, that is, from the moment when, for the first time, the Tax Administration took a position on the taxpayer's situation, having at its disposal the necessary elements to issue a decision with correct assumptions.

1. By arbitral order of 17 May 2017, having heard the Claimant, the tribunal decided the preliminary matter of prejudiciality raised by the Respondent, issuing the following order:

"In the defense, the Respondent invoked, as an exception, the prejudiciality of Process no. …/16… BELRS, pending in the Tax Court of Lisbon, regarding the present action, requesting, on that basis, the suspension of these proceedings.

It argued, for such purpose, that, in the first process, the Claimant judicially challenged corrections made by the Respondent to the taxable matter of the group, also for the 2013 fiscal year, which would determine that the 2013 self-assessment by the Claimant could not be examined without the merits being decided in the action referred to above.

Following an order of the Tribunal, the Respondent attached to the record the pleadings filed in the action pending before the mentioned Tax Court.

Having heard the Claimant regarding the aforementioned exception, it argued for the rejection thereof, sustaining the non-existence of a relationship of dependence between the causes.

It falls to decide.

It is important, first of all, to clarify what is meant by prejudiciality for purposes of suspending the proceedings.

In the words of Alberto dos Reis, there is prejudiciality of one cause in relation to another "when the decision of the first can destroy the foundation or the reason for being of the second," emphasizing that "... the reason for suspending due to pending of a prejudicial cause is the economy and consistency of judgments..." (Commentary, Volume III, page 268).

In the same sense, Manuel de Andrade states that there is prejudiciality "when in the first cause is discussed, in the main proceeding, a question that is essential for deciding the second and that cannot be resolved in this one in an incidental manner, as would have to be, since the second cause is not merely a reproduction of the first. But nothing prevents that the question of prejudiciality be broadened, in such a way as to encompass other cases. Thus it may be considered as prejudicial, in relation to another in which a given question is discussed incidentally, the process in which the same question is discussed in the main proceeding" (Lessons on Civil Procedure, pages 491 and 492).

Also jurisprudence supports this understanding.

In that sense decided the Court of Appeal of Lisbon, in Process no. 0071674, of 16-10-1991, when it pronounced that "A cause is prejudicial in relation to another, when the decision of the first can destroy the foundation or the reason for being of the second. Since the reason for suspending due to pending of a prejudicial cause is the economy and consistency of judgments, what matters is that the decision to be rendered in the prejudicial action should be taken into account in the other action".

An understanding equally supported by the Court of Appeal of Porto when, in Process no. 940/08.9TVPRT.P1, of 07-01-2010, it states that "a cause is dependent on the judgment of another already brought, when the decision of this one can affect and prejudice the judgment of the first, depriving it of its foundation or its reason for being, which happens, namely, when, in the prejudicial cause, is being examined a question whose resolution can modify a legal situation that has to be considered for the decision of the other claim. Thus, it is understood by prejudicial cause that in which is discussed and sought to determine a fact or situation that is an element or presupposition of the claim formulated in the dependent cause, in such a way that the resolution of the question being examined and discussed in the prejudicial cause will interfere with and influence the dependent cause, destroying or modifying the grounds on which this is based. Existing between two actions this nexus of prejudiciality, the proceedings in the dependent cause should be suspended, until the decision of the prejudicial cause".

The Court of Appeal of Lisbon also endorsed this perspective when in an award rendered on 13-12-2001, in Proc. no. 11748/01, emphasized: "Prejudiciality is embodied in the relationship of partial consumption between procedural objects, in terms of the impossibility of examining the dependent procedural object without interfering with the examination of the prejudicial object".

Applying the aforementioned coordinates to the concrete case, it is concluded that, in the present proceedings, the aforementioned presuppositions of prejudiciality between causes do not exist.

In effect, it should be noted, first of all, that the legislator is clear and express when in section 2 of art. 3 of the RJAT (Legal Regime for Arbitration in Tax Matters) it establishes that "It is possible to file a request for judicial impugnation and a request for arbitral pronouncement with respect to a single tax act, provided that the respective facts and grounds are diverse".

That is, even in hypotheses where a single tax act is at issue, it is legally permissible for different aspects of that legal unit to be examined in distinct jurisdictions.

Second, it should be noted that, after examining the pleadings filed in both proceedings, it is verified that problems of law that are not confusable with each other are at issue.

In effect, in Process no. …/16… BELRS is the question of the impugnation of the additional IRC assessment no. 2016…, the respective assessment of compensatory interest no. 2016… and the liquidation statement/notice of collection with no. 2016…, with an amount to pay of €1,210,461.54.

Assessment that has at its origin the correction reflected in the tax payable by the Group made in the individual sphere of the holding company, in the area of IRC, concerning the autonomous taxation of expenses corresponding to a non-compete agreement celebrated with the administrators B…, C…, and D…, as well as the correction relating to the deduction of tax benefits, more precisely of RFAI.

Differently, in the present proceedings, the Claimant impugns the order rejecting the request for official revision of the IRC self-assessment (relating to the year 2013) which it sought to have revised through that procedure, on the grounds that the consumption of the CFEI tax benefit could be greater (corresponding to €589,477.65), given that autonomous taxation has the nature of IRC and the limit of the Extraordinary Tax Credit for Investment (CFEI) to be deducted from the collection is presented as lower than the fiscally accepted value. It thus seeks to deduct the unused CFEI value from the collection produced by autonomous taxation, petitioning for reimbursement of the amount it unduly paid.

Given the foregoing, it is recognized that the object of the present action is not confused with the object of the first, as facts and issues that are distinct are at issue.

It is furthermore verified that the resolution of the problem analyzed in the present proceedings does not presuppose the prior resolution of the problems that are raised in the identified process pending in the Tax Court, there being, therefore, no relationship of dependence between the actions.

In these terms, the exception of prejudiciality argued by the Respondent is without merit and, consequently, the request for suspension of the proceedings formulated by the same is rejected.

Notify."

1. Having had the opportunity to respond regarding the exception and there being no place for witness testimony, the Tribunal, by order of 17 May 2017, dispensed with the meeting provided for in art. 18 of the RJAT, which it did under the principles of autonomy in the conduct of the proceedings. The date of 26 July 2017 was also fixed for the rendition of the arbitral decision.

2. The Claimant dispensed with producing arguments. The Respondent, within the period established by the arbitral order of 17 May 2017, made no declaration regarding the production of arguments and did not file counter-arguments.

II. Cleansing of the Record

1. The parties have legal personality and capacity, show themselves to be legitimate and are regularly represented (articles 4 and 10, section 2, of the RJAT and article 1 of Ordinance no. 112-A/2011, of 22 March).

8.1. The tribunal is competent and is regularly constituted.

8.2. As we have seen, the Respondent raised the exception of material incompetence of the arbitral tribunal resulting from the fact that the request for arbitral pronouncement was formulated following the rejection of a request for official revision, which must be examined.

The TA argues, in sum, that art. 2, subsection a) of ordinance 112-A/2011, of 22/3, by which it became bound to arbitral jurisdiction, excludes claims relating to the declaration of illegality of self-assessment acts that have not been preceded by recourse to the administrative remedy, in accordance with the provisions of art. 131 to 133 of the CPPT. A position that, for the TA, beyond the literal element, is imposed "by force of the constitutional principles of the rule of law and separation of powers (cf. articles 2 and 111, both of the CRP), as well as legality (cf. articles 3, section 2, and 266, section 2, both of the CRP), as a corollary of the principle of indisponibility of tax credits inherent in article 30, section 2 of the LGT, which bind the legislator and all activity of the TA" (point 71 of the Response). "Effectively, the binding of the TA to necessary arbitral protection, in which the principle of irrevocability of decisions prevails, presupposes a limitation of the situations in which it can fully decide whether or not to appeal a judgment unfavorable to it, that is, the power to choose between permanently abdicating the collection of the tax credit or adopting the potentially adequate behavior to seek to enforce it" (point 75 of the Response).

The Claimant, in exercise of the reply granted to it regarding the exception, defended its rejection by invoking CAAD jurisprudence in a sense divergent from that argued by the TA.

Let us see:

The competence of arbitral tribunals functioning in CAAD is, in the first instance, circumscribed by the matters indicated in art. 2, section 1, of decree-law no. 10/2011, of 20/1 (RJAT). In a second instance, the competence of arbitral tribunals functioning in CAAD is also limited by the terms in which the TA was bound to that jurisdiction by ordinance no. 112-A/2011, of 22/3, since art. 4 of the RJAT establishes that "the binding of the tax administration to the jurisdiction of tribunals constituted in accordance with this law depends on an ordinance of the members of the Government responsible for the areas of finance and justice, which establishes, namely, the type and maximum value of disputes covered".

In view of this second limitation of the competence of arbitral tribunals functioning in CAAD, the resolution of the competence issue depends essentially on the terms and nature of this binding, for, even if one is faced with a situation that fits within that art. 2 of the RJAT, if it is not covered by the binding, the possibility of the dispute being judicially decided by this Arbitral Tribunal will be ruled out. That is, "the scope (…) of arbitral proceedings is restricted to questions of the legality of acts of the types referred to in article 2 [of the RJAT] that are covered by the binding that was made in Ordinance no. 112-A/2011 (…)", cf. Award TCAS of 28/4/2016 (proc. 09286/16, reporter: Anabela Russo).

It happens that in subsection a) of art. 2 of ordinance no. 112-A/2011 are expressly excluded from the scope of the binding of the TA to the jurisdiction of arbitral tribunals functioning in CAAD the "claims relating to the declaration of illegality of self-assessment acts, withholding acts and payments on account that have not been preceded by recourse to the administrative remedy in accordance with articles 131 to 133 of the Code of Tax Procedure and Process". That is, comparing the binding ordinance with the RJAT, the former is more demanding than the latter, by adding a requirement to abstractly define the object of the binding of the TA to arbitral jurisdiction.

As was established in the Arbitral Decision, process no. 143/2016-T, "Regarding the nature of the ordinance, there are those who understand that there resides fundamentally an act of decision of the Administration, of manifestation of voluntary consent to the binding to the RJAT, and in the restrictions to the object a 'concrete limitation', albeit 'manifested in terms of generic disposition' (cf. was the majority understanding in Award 236/2013 of 22/4/2014, or 364/2014 of 19/12/2014, both of the CAAD). On the other hand, there are those who let transpire a more regulatory (normative) understanding of the ordinance (majority jurisprudence). "Notwithstanding there being suggestive elements for both positions, we consider that the regulatory character of the ordinance stands out, especially as regards the object of the binding, which projects itself in all disputes to be settled through tax arbitration. And to that extent, that part of the ordinance configures itself as an administrative regulation, which is integrated into the RJAT.

"What was said before serves to parameterize the selection of interpretative criteria. Given the nature of the ordinance, a subjectivist orientation should be adopted, with the meaning of the normative text that best corresponds to the real thinking of the 'legislator' prevailing, in which the teleological element, the purpose of the established disposition, is privileged.

"Now what requires special interpretive labor is the requirement of 'administrative remedy' necessary (prior), 'in accordance with articles 131 to 133 of the Code of Tax Procedure and Process'.

"From the outset, in obedience to those same 'terms' provided for in art. 131 CPPT, the requirement of prior administrative remedy will only be applicable in cases where such recourse is mandatory, through a gracious complaint. In fact, in the case of self-assessments, a gracious complaint is required, but only in cases of errors that are not based exclusively on matters of law, and in which the self-assessments have been made in accordance with generic guidelines issued by the tax administration (cf. section 1 and section 3 of art. 131 CPPT).

"The useful sense of the ordinance, given what was established in the RJAT, the will of the legislator, was to ensure that the taxpayer does not resort to the Tribunal '(...) before any position taken by the administration regarding the situation generated by the act of the taxpayer (...) since no dispute is yet detectable'. Thus it is understood that the cases provided for in art. 131, section 3 CPPT are excluded from the requirement of a complaint, since in those the TA has already pronounced itself, a priori, through 'generic guidelines'."

Returning to the request for arbitral pronouncement, recall that the same emerges as the culmination of a process initiated with a request for official revision, expressly rejected. The Claimant did not resort, therefore, to a "gracious complaint," but rather resorted directly to the request for revision.

However, what truly matters is that, in cases where a request for official revision of a liquidation act is formulated, the TA is equally provided with an opportunity to rule on the merits of the taxpayer's claim, before the latter resorts to judicial remedy. Therefore, "in consistency with the solutions adopted in sections 1 and 3 of art. 131 of the CPPT, it cannot be required that, cumulatively with the possibility of administrative examination in the context of that official revision procedure, a new administrative examination is required through a gracious complaint. On the other hand, it is unequivocal that the legislator did not intend to prevent taxpayers from filing requests for official revision in cases of self-assessment acts, since these are expressly referred to in section 2 of article 78 of the LGT. In this context, permitting the law expressly that taxpayers may opt for a gracious complaint or for official revision of self-assessment acts and with the request for official revision being filed within the period of the gracious complaint being perfectly equivalent to a gracious complaint (...) there can be no reason that can explain that a taxpayer cannot access the arbitral remedy which has opted for revision of the tax act instead of a gracious complaint."

Given the foregoing, it is concluded that ordinance no. 112-A/2011, in expressly referring to article 131 of the CPPT regarding requests for declaration of illegality of self-assessment acts, stated imperfectly what it intended. Wishing to impose the necessary administrative examination for the judicial challenge of self-assessment acts, it ended up making express reference to article 131, forgetting that this remedy does not exhaust the possibilities of administrative examination of those acts. The interpretation supported is the interpretation that best translates the will of the "legislator" and that does not collide with any constitutional principles, nor puts into crisis the "indisponibility of tax credits".

Besides, the invocation of the principle of indisponibility of tax credits will possibly be a lapsus, since when deciding on its competence, relevant only as a procedural presupposition, the Arbitral Tribunal is surely not practicing any act of disposition of a tax credit, in the sense of the invoked art. 30, section 2 LGT.

On the other hand, excluding arbitral jurisdiction merely because the method used should have been a prior gracious complaint would violate the principles of access to law and effective judicial protection.

In effect, the rule, both for judicial impugnation and for arbitration, is that all those acts be submitted to the scrutiny of the TA relative to which this entity has either not yet pronounced itself or has not yet had any intervention, which is why it should be given the opportunity to rule before the judicial or arbitral tribunal pronounces itself regarding its legality.

It is, therefore, manifest the equation between the request for revision of the tax act and the gracious complaint on self-assessment acts, withholding acts and payments on account. In fact, as was established in the Award of the Supreme Administrative Court (Plenary of the Tax section, process no. 0793/2014), of 3 June 2015, "(...) the procedural means of revision of the tax act cannot be considered as an exceptional means to react against the consequences of a liquidation act, but rather as an alternative means of administrative and judicial impugnation remedies (when used at a time when these can still be used) or complementary to them (when the periods for using the impugnation remedies of the liquidation act have already been exhausted)…"

Following the aforementioned Award, the Supreme Administrative Court decided that "the rejection, tacit or express, of the revision request is susceptible to judicial control [cf. art. 95, sections 1 and 2, subsection d), of the LGT]".

It is today consolidated jurisprudence that, being able the TA, on its own initiative, to proceed with the official revision of the tax act, within the period of four years after liquidation or at any time if the tax has not yet been paid, on the grounds of error imputable to the services (art. 78, section 1, of the General Tax Law), the taxpayer can also, within that period for official revision, request this same revision with that ground.

In sum, the request for official revision of the tax act is a mechanism for opening the judicial remedy perfectly equivalent to the necessary gracious complaint, since it serves the purpose of allowing the TA to rule on self-assessment acts.

Based on the grounds set forth, the TA's argument regarding the unconstitutionality of art. 2, subsection a), of Ordinance no. 112-A/2011 in the interpretation supported by this tribunal is without merit. In this sense, see, among others, the Arbitral Decision rendered in process no. 577/2016-T.

Terms in which this exception of incompetence is thus without merit.

8.3. In addition to the exception of material incompetence of this Arbitral Tribunal, raised by the Respondent and adjudged without merit by this Tribunal, no other exceptions that must be examined were raised.

8.4. There are no nullities, so it is necessary next to examine the merits of the request.

III. Merits

III.1. Facts

1. Proven facts

With relevance to the examination and decision of the merits of the question, the following facts are established and proven:

a) In the 2013 tax year, the Group headed by A…, SGPS, SA and to which the Special Regime for Group Taxation (RETGS) was applied consisted of itself and the following companies: "E…, S.A.", Tax ID/Company Reg. No. … (which later merged, by incorporation, with the then "F…, S.A." - Tax ID/Company Reg. No. … - currently named "G…, S.A."); "H… S.A.", Tax ID/Company Reg. No. … (currently designated "I…, S.A."); "J…, S.A.", Tax ID/Company Reg. No. … (which incorporated "K…, SGPS, S.A." and is currently designated "L…, S.A."); "M…, SGPS, S.A.", Tax ID/Company Reg. No…; "N…, S.A.", Tax ID/Company Reg. No. … (currently designated "O…, S.A."); "P…, S.A.", Tax ID/Company Reg. No. … (currently designated "Q…, S.A."); "R…, S.A.", Tax ID/Company Reg. No…; "S…, SGPS, S.A.", Tax ID/Company Reg. No. …(which later merged, by incorporation, with "G…, S.A.", Tax ID/Company Reg. No…); "T…, Lda.", Tax ID/Company Reg. No…; "K…, SGPS, S.A.", Tax ID/Company Reg. No. …(which later merged, by incorporation, with "L…, S.A.", Tax ID/Company Reg. No…); and "U…, SGPS, S.A.", Tax ID/Company Reg. No…;

b) On 29 May 2014, the Claimant filed the first Form 22 income statement for IRC, relating to the 2013 fiscal year of the group of companies subject to RETGS of which it was the holding company. This declaration was identified with code no. …-2 (doc. no. 3, attached to the Request for Official Revision);

c) On 30 November 2015, the final Form 22 income statement for IRC (replacement declaration) was filed, relating to the 2013 fiscal year of the group of companies subject to RETGS of which the Claimant was the holding company. This declaration was identified with code no. …-… -… (document no. 3, attached to the Request for Arbitral Pronouncement);

d) In Box 10 of the Form 22 IRC Declaration with code no. …-… -…contain the values of IRC strictly speaking (€ 3,436,468.51), the state surtax (€ 577,151.28) and autonomous taxation (€ 1,321,977.45) (document no. 3, attached to the Request for Arbitral Pronouncement);

e) The Claimant proceeded with the self-assessment of autonomous taxation owed by each of the Group's companies;

f) According to the income statement filed, the Claimant, in the 2013 fiscal year, with respect to the tax benefit called "Extraordinary Tax Credit for Investment" (CFEI) (box 076 of Annex D of Form 22) recorded the following amounts: € 2,215,805.33 - allocation of the period; € 1,210,043.63 – deduction of the period; - € 1,005,761.70 balance carried forward (document no. 3, attached to the Request for Arbitral Pronouncement);

g) Following the filing of this income statement, referred to in the previous subsection, the statement of account reconciliation no. 2016…, of 2016-04-01 was issued (pages 33 of the administrative file);

h) On 30 May 2016, invoking article 78 of the General Tax Law, the Claimant filed a Request for Official Revision of the IRC self-assessment act filed by itself on 30 November 2015, relating to the 2013 fiscal year (IRC Form 22 declaration no. …-… -…) - Administrative File, pages 1 to 49, requesting that a limit of CFEI to be deducted from the IRC collection be considered, higher than that entered in the income statement;

i) The said request gave rise to the administrative procedure for official revision, filed under no. …2016… (Administrative File, page 1);

j) The services of the Tax and Customs Authority (Large Taxpayers Unit) proposed the rejection of the request in accordance with the grounds contained in Information no. …-AIR1/2016, of 1 July 2016 (Administrative File, pages 48 to 60);

k) The Claimant was notified of the draft rejection, in accordance with article 60 of the LGT (Administrative File, page 61);

l) Having the Claimant not exercised its right, the draft was converted into a final decision, by order of 4 August 2016, set forth in Information no. …-AIR1/2016, of 28 July 2016, and notified to the Claimant (Administrative File, pages 63 to 67).

9.1. There are no other facts relevant to the examination of the merits of the case that have not been proven.

9.2. Reasoning of the facts

With respect to the proven facts, the conviction of the Arbitral Tribunal was based on the free assessment of the positions assumed by the Parties (in matters of fact) and on the content of the documents attached to the record, not contested by the Parties, as well as on the analysis of the administrative file attached by the Respondent.

III.2. Legal Issues

The central question to be decided in the case (as placed by the Claimant in the request filed) is whether the IRC self-assessment relating to the 2013 fiscal year (including that of autonomous taxation) subject to impugnation suffers from the material vice of violation of law. According to the Claimant, since autonomous taxation has the nature of IRC, the limit of the Extraordinary Tax Credit for Investment ("CFEI") to be deducted is presented as lower than the fiscally accepted value.

The Claimant argues, in sum, contrary to the TA's thesis, that the deduction of tax benefits, in particular in this case, the "CFEI," should be made taking into account autonomous taxation since this is IRC.

The response to the problem posed presupposes, from the outset, that the evolution of the figure of autonomous taxation be analyzed with a view to determining whether its legal regime (including nature and reason for being) is compatible with the Claimant's claim or, if on the contrary, the position defended by the Respondent is correct.

Let us see.

III.2.1.1. On the nature of autonomous taxation in national jurisprudence and doctrine

As the position adopted in Arbitral Decision no. 722/2015-T, of 28 June 2016 (reiterated, among others, in Arbitral Decision no. 443/2016-T), an award whose panel was presided over by the Arbitrator-President here present (and to whose tenor we hereby refer), autonomous taxation taxes spending and not income, a position that is assumed by the Esteemed Counselor Vítor Gomes (dissent appended to Award no. 204/2010 of the Constitutional Court), in terms of which he affirms, referring to autonomous taxation, that "although formally inserted in the IRC Code and the amount that permits collection is assessed within its scope and as IRC, the norm in question concerns a fiscal imposition that is materially distinct from taxation in this category (….)".

"With effect, we are faced with autonomous taxation (…) and that makes all the difference. It is not a matter of taxing income at the end of the tax period, but certain types of expenses in themselves, for the understandable reasons of fiscal policy that the award points out".

And he adds that "thus, the fact revealing tax capacity that is sought to be achieved is the simple realization of that expense, at a given moment. Each expense is, for this purpose, an autonomous tax fact, to which the taxpayer is subject, whether or not it has taxable income in IRC at the end of the period, being irrelevant that this portion of tax only comes to be assessed at a later moment and together with IRC" (our emphasis).

In the same sense, it was equally recognized by the jurisprudence of the Supreme Administrative Court (STA) "that under the designation of autonomous taxation are hidden very diverse realities, including, in accordance with section 1 of the (then) art. 81 of the IRC Code, confidential or undocumented expenses, which are taxed autonomously, at the rate of 50%, which will be raised to 70%, in cases of expenses made by taxpayers totally or partially exempt, or that do not exercise, as a principal activity, activities of a commercial, industrial or agricultural nature (section 2 of [then] art. 81) and that are not considered as costs in the calculation of taxable income in IRC. It should be noted, however, that already expenses for representation and those related to light vehicles, in accordance with the provisions of the (then) art. 81, section 3 of the IRC Code and meal allowances are related to business activity and indispensable so are fiscally accepted in some cases although within certain limits".

With respect to the position that was assumed by the Constitutional Court, cite the Award no. 18/11, in terms of which it is stated that "there are facts subject to autonomous taxation, which correspond to charges demonstrably indispensable for the realization of revenues and (…) this means that autonomous taxation also falls on charges that correspond to the core of the concept of actual income, net income and compliance with accounting obligations" (our emphasis).

"This argument of the Constitutional Court (…) interests us only to point out that the Court recognizes that this regime constitutes a limitation on the taxation of actual income (which is guaranteed by art. 104, section 2 of the CRP".

More recently, the Constitutional Court has reformulated the doctrine of Award no. 18/11 (referred to above), approaching the then dissent of Counselor Vítor Gomes and the Award of the STA no. 830/11 (also cited above), in the sense of understanding that "contrary to what happens in the taxation of income in IRS and IRC, where the set of income earned in a given year is taxed (which implies that only at the end of it can the tax rate be ascertained, as well as the bracket in which the taxpayer fits), in this case each expense made is taxed, considered in itself, and subject to a determined rate, with autonomous taxation being assessed independently of the IRC that is owed in each fiscal year, due to not being directly related to the achievement of a positive result, and therefore subject to taxation. Thus, in the case of IRC, we are faced with an annual tax, where each income received is not taxed per se, but rather the aggregation of all income obtained in a given year, with the law considering that the tax generating fact is verified on the last day of the tax period (cf. article 8, section 9, of the IRC Code). However, as regards autonomous taxation in IRC, the tax generating fact is the very realization of the expense, and one is not faced with a complex fact, of successive formation over a year, but with an instantaneous tax fact" (our emphasis).

Now, still according to this Award of the Constitutional Court "this characteristic of autonomous taxation refers us, thus, to the distinction between periodic taxes (whose tax generating fact occurs successively, through the passage of a given period of time, generally annual, and tends to repeat itself over time, generating for the taxpayer the obligation to pay tax with a regular character) and taxes of single obligation (whose tax generating fact occurs instantaneously, appears isolated in time, generating over the taxpayer an obligation of payment with an avulsive character). In autonomous taxation, the tax fact giving rise to the tax is instantaneous: it is exhausted in the act of realization of certain expense that is subject to taxation (although, the assessment of the amount of tax, resulting from the application of the various rates of autonomous taxation to the various acts of realization of expense considered, comes to be made at the end of a given tax period). But the fact that the assessment of the tax is made at the end of a given period does not transform it into a periodic tax, of successive formation or of lasting character. That operation of assessment translates only into the aggregation, for purposes of collection, of the set of operations subject to that autonomous taxation, to which the rate is applied to each expense, with no influence of the volume of expenses made in determining the rate" (our emphasis).

With respect to doctrine, we find that, in essence, the concept and nature of autonomous taxation does not substantially depart from the understanding of jurisprudence produced by the Constitutional Court (above summarily stated).

In fact, as Rui Morais states, "at issue is a taxation that falls on certain expenses of taxpayers, which are considered as constituting tax facts. It is difficult to discern the nature of this form of taxation and, more still, the reason why it appears provided for in the codes of taxes on income".

In the same sense, José Alberto Pinheiro Pinto states that "it is not properly a matter of IRC – which aims to tax the income of legal entities and not expenses made by them –, but the replacement of a taxation of 'implicit' income of natural persons, which is considered not directly enforceable".

In sum, some doctrine and the jurisprudence of the superior national courts and the Constitutional Court consider that autonomous taxation is autonomous tax facts, which fall on spending, so, although formally inserted in the IRC Code, concerns taxation distinct from the tax on income.

Additionally, it should be noted that it is also accepted by the generality of doctrine and jurisprudence that autonomous taxation aims to prevent abusive practices in the remuneration of workers, managers and shareholders/stockholders of the company.

In fact, as Saldanha Sanches states, "in this type of taxation, the legislator seeks to respond to the admittedly difficult question of the fiscal regime of expenses that are in the area of intersection of the personal sphere and the business sphere, in order to avoid remunerations in kind more attractive for exclusively fiscal reasons or hidden distribution of profits. The norm presents a characteristic similar to what we will find in the sanction against undocumented costs, with a higher rate when the situation of the taxpayer does not correspond to a situation of fiscal normalcy".

In these terms, "it is a taxation that is explained by the need to prevent and avoid that, through such expenses, companies proceed to the disguised distribution of profits, especially dividends which would thus be subject to IRC as profits of the company, as well as combating fraud and tax evasion occasioned by such expenses (…)".

"It is well-established that autonomous taxation stems, as has been touched upon, from the necessity of avoiding abuses as to the allowance of certain charges or expenses and that could easily be subject to diversion to private consumption or that, in some way, are susceptible to formally constituting an expense of a legal entity, but that, substantially, represent or could constitute abuses in order to minimize the true measure of the tax.

"Aware of this difficulty of, often, effecting a rigorous separation of these two realities, it was successively 'grafted,' as described above, into the regime of taxation of actual and effective profit established in the IRC Code, as the general standard, an autonomous regime of taxation of certain expenses, in whole or in part undesired and undesirable that contaminate the terms of the tax duty, which thus appears configured below the actual tax capacity of the entity that indicates it as such.

"In these terms, it can be affirmed that autonomous taxation appears integrated in the IRC regime, are assessed and owed within the scope of the legal relationship of tax on the income of legal entities and it is, in this context, that its assessment is made.

"But they are not 'IRC,' pure and simple as the Claimant lapidarily and definitively affirms.

"In effect, for them to be so considered they would, from the start, have to tax income and that, as we have seen, is not what happens, at any moment. In fact, although there is evident instrumentality between IRC and the model of income taxation in Portugal and autonomous taxation (a fact further evidenced in the jurisprudence of the Superior Courts and, in particular, of the Constitutional Court), the prevailing understanding is that autonomous taxation taxes spending.

"In fact, autonomous taxation is an instrument that (distancing itself and introducing some measure of distortion into a system that declares it taxes actual and effective income), after all also taxes expenses, deductible or not in IRC, without this violating the constitutional provisions already since the applicable norm (art. 104, section 2 of the CRP) declares imperative the taxation of companies 'fundamentally' on their actual income, without prejudice either to situations of taxation according to profits or actual income (when assessed by indirect methods), or to situations of taxation of expenses subject to autonomous taxation (by express choice of law), the establishment of technical solutions (such as is the case of special payment on account) and the rules specific to their return.

"In this area, it is worth recalling that, neither fiscal systems, nor models of concrete imposition correspond to pure models, free from elements foreign to the system itself foundational, or values, or to the general regime of any tax abstractly considered. In fact, all taxes possess characteristics or solutions that, when viewed in isolation, can objectively represent a loss of character of the model as in the purity of concepts it was conceived, but that, when articulated with the model, it is verified that contribute to its effectiveness, and grant or strengthen its coherence.

"Those solutions, more pragmatic or specific, do not wound such essential value dictates, whether they are for the protection of revenue or for the densification of general value ideals (of the tax order) or specific to the tax (such as the need to avoid abuse) provided that, they themselves, are not of such relevance that they abandon the model of rule taxation or structurally falsify the values on which it is based.

"In the case at hand, although the choice of fundamental law and ordinary law, consequently, has been clearly in the sense of taxing the income of legal entities and, in the possible forms of assessment of this, the taxation of actual and effective income has been chosen as a manifestation of the highest standard of fiscal justice, the truth is that the system has always known more or less relevant deviations, whether because certain expenses are not considered as such by fiscal law (although objectively they may be imputable to a commercial activity), whether because fiscal law, recognizing this essentiality, fears the occurrence of abuses (as is the case with autonomous taxation, generically speaking).

"In part, this departure from the purity of concepts is an inevitable consequence of the complexity of relations of life, whether because models of pure fiscal imposition are more costly to implement and manage since they require much more refined relevant information, whether because in the field of taxes, as in other fields of life, the ideal of justice established must be tempered with solutions of normative reasonableness in the qualification of relevant facts and technique in the solutions and requirements to be established, with the objective of preventing fiscal models from being excessively complex and costly, ceasing to reach realities and practices that mitigate the tax burden or contribute to a poor distribution of the same.

"Now, from this balancing of the values that support the duty to establish/support tax with the realities of life can result the need to establish limits (fiscal or otherwise) to the behavior of taxpayers, with the objective of maintaining within general standards of equilibrium, the legal solutions of the system.

"On the other hand, it is important to bear in mind (because this is relevant for purposes of the decision to be made) that autonomous taxation configures anti-abuse norms directed at rationalizing specific behaviors of taxpayers (vis-à-vis the tax duty) by which, traditionally, they managed to achieve a measure of tax lower than what evidenced their actual tax capacity revealed, but that, by dint of these abusive behaviors was capable of being mitigated or eliminated, with evident violation or postponement of the principle of justice, of fair distribution of the tax burden by those who reveal tax capacity.

"Consequently, it makes sense to admit that general deductions be made from the collection of the tax, which are permitted by law to give actual sense to the principle of taxation of actual and effective income. However, as regards the collection owed by autonomous taxation, that general deduction ceases to make sense because, not taxing profits, but expenses, the question of justice in the distribution of the general burden of the tax does not arise as regards them, so it would be illogical to permit the deduction of charges when such deduction, in practice, would destroy the anti-abuse sense that impregnates them; the discouragement of deviant behaviors that its institution represses or settles.

"Now, autonomous taxation, as seems clear, does not have a markedly revenue-generating purpose, that is, does not primarily aim at obtaining (more) fiscal revenue, although this may not be an inconsiderable, verifiable aspect.

"In effect, it aims to dissuade behaviors, practices or options of companies rooted in reasons essentially of a nature of fiscal economy, revenue generating and, on the other hand, preserves the balances inherent to the regime of taxation of legal entities, avoiding distortions not only at the level of taxable results, as waves of deviant behaviors, affecting the expectation of revenue, in each economic year.

"And, through these general anti-abuse clauses, they force the maintenance of a healthy correlation between business volumes, taxable profits and the tax ultimately owed by entities subject to IRC, in line with the average levels of effective tax burden that falls on the different groups of taxpayers, within the Portuguese fiscal system and, moreover, comparatively with that of OECD member states or outside it.

Thus, autonomous taxation, including those provided for in subsection b), of section 13, of art. 88 of the IRC Code have, then, a general disciplinary function that is not alien to the systemic purposes of the tax, especially because, as an anti-abuse mechanism, autonomous taxation is not alien to the general purposes of the fiscal system.

"In these terms, the adoption of legal regimes that limit the harmful effects resulting from behaviors affecting the balanced distribution of the tax burden on the different groups of taxpayers does not constitute merely an option of the legislator but is instead a strict obligation, as a result of the obligation to outline and operate the system as a whole in a balanced manner.

"In effect, autonomous taxation introduces taxation mechanisms that, naturally, will displease their recipients, but prevent or limit the harmful effects of abusive practices that would prejudice others and are, therefore, necessary to preserve the balances of the system.

"Now, companies, like natural persons, are equally subject with the same intensity to the general duty to pay taxes and, to that extent, fiscal law cannot fail to establish mechanisms that limit deviant procedures since each person should bear tax according to what they can, that is, according to their revealed tax capacities.

"It is also important to note that, in our days, it has been adopted, as a general rule, the regime of taxation according to actual and effective income for legal entities, not constituting this a mere option of operation of the fiscal system among several other possible.

"In fact, it is, before, a concrete manifestation of the modernity and maturity of a fiscal system that requires of its recipients/beneficiaries a maturity of the same stature since it also represents a new form of ethical and social responsibility before the phenomenon of the tax.

"As appropriately stated by Saldanha Sanches (cited in Arbitral Decision 187/2013-T, pp. 28), autonomous taxation constitutes a form of preventing abusive actions: '(...) that the normal functioning of the taxation system was incapable of preventing, and others, including forms more onerous for the taxpayer, were possible. This anti-abuse character of autonomous taxation, will be not only coherent with its 'anti-systemic' nature (as occurs with all norms of the kind), but with a presumptive nature, pointed out both by Professor Saldanha Sanches and by the jurisprudence citing him. They will then materially underlie a presumption of partial entrepreneurship of the expenses on which they fall, as a function of the above-mentioned circumstance of such expenses being in a gray line that separates what is entrepreneurial expense, productive, from what is private expense, of consumption, and that, notoriously, in many cases, the expense will even in reality have a dual nature (part entrepreneurial, part private)'.

"All these considerations invoke what seems to us to be the true legislative intention, since the discovery of the true sense of law constitutes an imperative, for it is important to ensure that the activity of the interpreter achieves an interpretive sense through which the law exteriorizes its most beneficial, most productive and most salutary sense, in the words of Francesco Ferrara.

"On the other hand, the logical sense of interpretation guides us only in the sense that autonomous taxation is based on a logic according to which the law intends to prevent or discourage such legal entities from indicating (abusively) as costs values relating to bonuses or variable remuneration. Thus, it is the indication as an expense for IRC purposes, in its entirety, that is intended to be discouraged.

"Making recourse to the ratio legis it is clear that autonomous taxation is collected in the context of the IRC assessment process in accordance with its own root and dogmatics that lead to the total collection of the tax not being a unitary reality but composed.

Thus, it is possible to discern the tax collection properly said, resulting from the general mechanics of IRC assessment, which is owed with a constitutional foundation based on the general duty of each (in which legal entities are included) to contribute to public expenditure according to their means (art. 103, section 1 of the CRP). All in respect and compliance with the principles of justice, equality and the duty to pay tax according to the revealed tax capacity. And from which the amounts referred to in article 90 of the IRC Code are deducted and in the terms and manners referenced there.

"To this general collection, based on this foundational basis, is added the specific collection, owed by autonomous taxation, which has, as has been made clear, its own root, sense and foundation, which is to discourage the adoption of behaviors through which it is taxed, listed in art. 88 of the code, which configures an anti-abuse norm, which allows us to invoke here all the proper dogmatics on which it is based.

"In this case, because it is a matter of pursuing purposes that go beyond the purely revenue purposes of the tax, to situate itself in the field of behaviors that the law considers abusive and/or undesired, it seems clear that it does not make sense that deductions be made to it, under penalty of emptying, in practice, any sense the anti-abuse regime created."

Having arrived here, we are in a position to analyze the Claimant's request, regarding the legality of the deduction of "CFEI" from the part of the IRC 2013 collection of the Group, as regards autonomous taxation.

III.2.1.2. On the possible deductibility of "CFEI" from the collection of autonomous taxation

We concluded above, following the aforementioned jurisprudence, that the collection of autonomous taxation has a different root, which cannot, under penalty of subversion of the order of values, permit the deduction of tax benefits, under penalty of loss of character of the principles specifically intended to be pursued.

In fact, having the regime of autonomous taxation a discouraging function of abusive behaviors, there is no apparent logical reason why that discouragement could then vanish, which would happen if it were possible to deduct from the collection of autonomous taxation fiscal incentives, as the Claimant intends, since that possibility would result in a double strange effect, that is, on the one hand it could, in the limit, eliminate the collection resulting from autonomous taxation and, on the other, would permit the deduction of a certain tax benefit (in the concrete case, "CFEI" is at issue, by the fulfillment of the objectives or adoption of the conducts fixed in the norm consecrating the right to the tax benefit) to a tax that has a specifically anti-abuse function, of mitigation of behaviors fiscally and socially undesired.

From the combination of these possibilities would result a contradictory, illegal and unethical result, precisely because the same fiscal law would permit, within the scope of the same fiscal system, to relieve the taxpayer of the burden of paying a tax that is precisely owed by the adoption of abusive, undesired and discouraged conducts (indication as expenses of the expenses provided for in art. 88 of the IRC Code).

Furthermore, as set forth in the dissent, attached to Arbitral Decision no. 5/2016-T, although referring to the regimes of SIFIDE and RFAI, neither does there subsist "any conceptual error nor any contradiction between that which has just been stated and the fact that the regimes of SIFIDE and RFAI establish that these are implemented in deductions from the IRC collection. In making that express reference the legislator is referring to the IRC collection properly said for whose assessment autonomous taxation does not participate, precisely because they do not enter into the assessment either of taxable profit or of taxable matter, and, as a consequence, do not contribute to the IRC collection, not even of assessed IRC or of IRC to be paid/recovered (cf. Casalta Nabais, Idem p. 541). The result of autonomous taxation, it is repeated, assessed autonomously, does not contribute to the IRC collection, on the contrary, it must accrue to the assessed IRC for purposes of determining the amount to be paid or recovered, which embodies a result quite different."

The arbitral understanding now supported, in the direction followed in Arbitral Awards no. 722/2015-T and 443/2016-T, is in harmony with the new section 21 of article 88 of the IRC Code added by Law no. 7-A/2016, of 30 March, by establishing that to the amount assessed of autonomous taxation no 'deductions' are 'made'.

Also in this case, the legislator merely adopted, clarifying it, a solution which the courts, with recourse to the applicable rules and by application of the criteria of legal hermeneutics were in a position to extract from the regime to apply, which is what this panel limited itself to doing, in the case at hand.

Given the above, it is concluded, in this manner, by the illegality of the deductibility of CFEI from the collection of autonomous taxation, without need to make recourse to the interpretive character given by article 135 of Law no. 7-A/2016, of 30 March (State Budget for 2016), to article 21 of article 88 of the IRC Code, in terms of which "the liquidation of autonomous taxation in IRC is carried out in accordance with the provisions of article 89 and is based on the values and rates resulting from the above provisions, with no deductions being made to the total amount assessed."

Thus being, it ceases to make sense the invoked unconstitutionality of section 21 of article 88 of the IRC Code added by Law no. 7-A/2016, of 30 March, by violation of the principle of retroactivity of law, prohibited by article 103, section 3, of the CRP, to the extent that such normative is not even invoked in the resolution of the case at hand.

In these terms, this Arbitral Tribunal understands that the Claimant is not correct, for the grounds invoked above, as regards the possibility of deduction of the tax benefit relating to "CFEI" from the collection of autonomous taxation relating to the 2013 fiscal year.

Terms in which, the Claimant's request is without merit, being the rejection of the official revision now impugned to be maintained.

III.2.2. Other requests

Without merit the request for declaration of illegality of the self-assessment impugned respecting the 2013 fiscal year, the requests made by the Claimant for reimbursement of the amounts paid and respective interest are also prejudiced.

IV. Decision

Terms in which it is decided in this Arbitral Tribunal:

a) Judge the exception of material incompetence of this Arbitral Tribunal, raised by the Respondent, without merit, resulting from the fact that the request for arbitral pronouncement was formulated following the rejection of a request for official revision of the self-assessment act for IRC relating to the 2013 fiscal year;

b) Judge completely without merit the arbitral request for declaration of illegality of the IRC self-assessment of the Claimant, as regards the deduction of the CFEI credit from the collection of autonomous taxation relating to the 2013 fiscal year, subject to impugnation, absolving the Respondent of this request;

c) Maintain the decision rejecting the request for revision of the self-assessed tax act subject to impugnation;

d) Judge without merit the request for reimbursement of the amount of IRC under examination in the record and paid by the Claimant, relating to the 2013 fiscal year plus compensatory interest, as formulated by the Claimant, since this request is prejudiced by the lack of merit of the arbitral request referred to above in b), absolving the Respondent of the respective request and, in consequence,

e) Condemn the Claimant to payment of the costs of the present proceedings.

V. Value of the Dispute

In accordance with the provisions of articles 306, section 2, and 297, section 2 of the CPC, article 97-A, section 1, subsection a) of the CPPT and article 3, section 2, of the Regulation of Costs in Tax Arbitration Proceedings, the value of the dispute is set at €589,477.65.

VI. Costs

Pursuant to article 22, section 4, of the RJAT, the amount of costs is set at €8,874.00, in accordance with Table I attached to the Regulation of Costs in Tax Arbitration Proceedings, to be borne by the Claimant.

Notify.

Lisbon, 7 July 2017

The arbitrators,

Maria Fernanda dos Santos Maçãs (President)

Olívio Mota Amador

Luís Miguel Rodrigues Miranda da Rocha
(Dissent as set forth in the attached declaration)

Declaration of Dissent

I disagree with the decision made by the majority, for the reasons described below:

I consider that the tax benefit called "Extraordinary Tax Credit for Investment" is deductible from the IRC collection, which includes the portion of tax resulting from the achievement of taxable profit, but also the part resulting from "autonomous taxation".

The reasons for this position are those contained in the arbitral decision unanimously made within the context of Process no. 673/2015-T, in which I participated. That arbitral decision is contrary to the majority decision taken in the context of this Process.

In summary, and adapting some text excerpts from that Award of Process no. 673/2015-T, the reasoning is as follows:

• the fact that an IRC self-assessment, made in accordance with section 1 of article 90, can contain various partial calculations based on various rates applicable to certain taxable matters, does not imply that there is more than one assessment, as results from the very terms of that norm in making reference to 'assessment', in the singular, in all cases in which it is 'made by the taxpayer in the declarations referred to in articles 120 and 122', having 'as basis the taxable matter that appears in them' (whether that determined in accordance with the rules of articles 17 and following or that determined in accordance with the various situations provided for in article 88);

• the reference made in article 3, section 1, of Law no. 49/2013 to 'deduction from the IRC collection' as a form of materializing the tax benefit called "Extraordinary Tax Credit for Investment" encompasses the IRC collection resulting from autonomous taxation, which is part of the single IRC collection;

• the norm of section 21 of article 88 of the IRC Code, added by Law no. 7-A/2016, of 30 March, insofar as it refers to 'deductions being made to the total amount assessed', despite the interpretive nature attributed to it, does not alter the understanding set forth in the above subsections. In effect, it is not seen, neither in Law no. 7-A/2016, nor in the Budget Report, nor in its discussion, that with the addition to article 88 of the IRC Code of a general norm prohibiting deductions to the total amount assessed of autonomous taxation, it was intended to interpret restrictively the expression 'deduction from the IRC collection' contained in a special norm of a separate statute, namely article 3, section 1, of Law no. 49/2013. Now, in the absence of an unequivocal intention in the contrary sense, the rule should prevail that general law does not alter special law (article 7, section 3, of the Civil Code).

In more generic terms, I cannot fail to note that, in my opinion, it is not perceptible, to economic agents in general and to businesspeople in particular, that a statute that establishes a tax incentive intended to stimulate the investment of companies (at a time of serious economic crisis), in which a "deduction from the IRC collection" is created, be, a posteriori, interpreted restrictively on the basis of arguments according to which there are two types of IRC and that the legislator only intended to refer to one of them, although it did not state it expressly. Such restrictive interpretation should not be adopted, under penalty of destroying the trust of economic agents in fiscal policies and institutions.

For all that has been stated, I understand that the amounts of "Extraordinary Tax Credit for Investment" are deductible from the IRC collection, whether this results from the assessment of taxable profit or is originated by the so-called "autonomous taxation," and thus I dissent from this arbitral pronouncement.

Luís Miguel Rodrigues Miranda da Rocha