Process: 669/2015-T

Date: March 28, 2016

Tax Type: IRC

Source: Original CAAD Decision

Summary

This arbitral decision addresses a jurisdictional challenge in tax arbitration proceedings concerning the deduction of special advance payments on account (pagamento especial por conta - PEC) from Corporate Income Tax (IRC) collection arising from autonomous taxation rates. The taxpayer, A… (Portugal) S.A., challenged the dismissal of an ex officio review request and the underlying IRC self-assessment for 2010, arguing that Article 90(2)(c) of the CIRC allows deduction of PEC from all IRC collection, including autonomous taxation. The Tax Authority raised a preliminary objection based on lack of material jurisdiction, arguing that arbitral tribunals can only hear disputes involving self-assessment acts when preceded by an administrative complaint under Articles 131-133 of the CPPT, as required by Order 112-A/2011. Since the taxpayer only filed an ex officio review under Article 78 of the LGT rather than a timely administrative complaint, the AT contended the arbitral tribunal lacked competence to decide the case. The substantive issue concerns whether the term 'IRC collection' in Article 45(1)(a) and Article 90 of the CIRC encompasses both standard tax and autonomous taxation rates, thereby permitting PEC deduction from autonomous taxation amounts. The taxpayer alternatively argued that if Article 90 does not apply to autonomous taxation, then such taxation would lack proper legal basis under Article 8(2)(a) of the LGT and Article 103(3) of the Constitution. This case highlights the procedural requirements for accessing tax arbitration and the interpretation of PEC deduction rules in the context of autonomous taxation rates.

Full Decision

ARBITRAL DECISION

I. REPORT

A… (Portugal), S.A., a legal person number … with headquarters at Estrada…, …, in Coimbra, with share capital of €16,750,000.00 (sixteen million, seven hundred and fifty thousand euros), filed an application for the constitution of a singular Arbitral Tribunal, in accordance with the combined provisions of articles 2nd and 10th of Decree-Law No. 10/2011, of 20 January (Legal Regime for Arbitration in Tax Matters, hereinafter referred to only as RJAT), in which the Tax and Customs Authority (hereinafter AT or Respondent) is the respondent, with the objective of obtaining a declaration of illegality of the act of dismissal of the request for ex officio review presented and, consequently, of the Corporate Income Tax (IRC) self-assessment act relating to the year 2010, insofar as it corresponds to the non-deduction from the IRC collection of the amount resulting from autonomous taxation rates of the special advance payment on account made in IRC proceedings, in the amount of €45,871.67.

The Applicant bases its request on the following arguments:

a) The IRC collection provided for in article 45, no. 1, subparagraph a), of the Corporate Income Tax Code comprises the collection of autonomous taxations in IRC, whereby it must also be understood that the IRC collection provided for in article 90, no. 1, and no. 2, subparagraph c), of the Corporate Income Tax Code, in the wording in force in 2013, also encompasses the collection of autonomous taxations in IRC;

b) Whereby the denial of deduction of the special advance payment on account from the IRC collection of autonomous taxations violates subparagraph c) of no. 2 of article 90 of the CIRC (prior to 2010, article 83; and since 2014 it became subparagraph d) of the aforementioned no. 2 of article 90 of the CIRC);

c) In consequence, both the dismissal of the request for ex officio review presented and the IRC self-assessment (including its autonomous taxation rates) relating to the year 2010, suffer from a material defect of violation of law, insofar as the deduction of the special advance payment on account from the portion of the IRC collection corresponding to autonomous taxation rates should not be prohibited. Or, alternatively, insofar as the assessment of the autonomous taxations itself would be illegal should it be understood that article 90 of the CIRC is not applicable thereto (absence of the legal basis required for the purposes of the assessment and collection procedure – article 8, no. 2, subparagraph a) of the LGT, and article 103, no. 3, of the Constitution).

The application for the constitution of the Arbitral Tribunal was accepted by the Excellent President of CAAD on 13.11.2015 and automatically notified to the AT.

In accordance with the provision in subparagraph c) of no. 1 of article 11 of the RJAT, the singular Arbitral Tribunal was constituted on 15.01.2016.

The AT responded, defending its discharge from the proceedings, in light of the verification of the exception of lack of jurisdiction of the tribunal or, if not so understood, the unfoundedness of the request, given, in summary, the following grounds:

a) The request for arbitral decision sub judice has as its immediate object the decision dismissing the request for ex officio review and as its mediate object the IRC self-assessment act, including autonomous taxation rates, relating to the year 2010;

b) In light of the provision in articles 2, no. 1, subparagraph a) and 4, no. 1, both of the RJAT, and in articles 1 and 2, subparagraph a), both of Order No. 112-A/2011, of 22.03.11, the exception of material lack of jurisdiction of this Arbitral Tribunal to appreciate and decide the foregoing request is verified;

c) In accordance with subparagraph a) of no. 1 of article 2 of the RJAT, it is determined that the jurisdiction of arbitral tribunals comprises the appreciation of the declaration of illegality of acts of tax assessment, self-assessment, withholding at source and advance payments on account;

d) By virtue of the referral in no. 1 of article 4 of the RJAT, the binding of the AT to the jurisdiction of arbitral tribunals established under this statute depends on what is provided in Order No. 112-A/2011, namely regarding the type and maximum value of the disputes covered;

e) It is provided in article 2, subparagraph a) of Order 112-A/2011 that the binding of the AT to the aforementioned jurisdiction has as its object the appreciation of claims relating to taxes whose administration is entrusted to it, referred to in no. 1 of article 2 of the RJAT, "with the exception of claims relating to the declaration of illegality of acts of self-assessment, withholding at source and advance payments on account that have not been preceded by recourse to administrative remedy in accordance with articles 131 to 133 of the Code of Tax Procedure and Process";

f) In the situation sub judice, it was always mandatory to have prior recourse to administrative complaint, in accordance with the provision in no. 1 of article 131 of the Code of Tax Procedure and Process (CPPT), which the Applicant failed to file;

g) This, even though, without prejudice to what was concluded in the decision dismissing the request for ex officio review sub judice, it is still abstractly possible to raise the illegality of the self-assessment acts in accordance with no. 1 and 2 of article 78 of the LGT;

h) Indeed, jurisprudence has upheld the understanding – which is not questioned – that, given the administrative nature of the ex officio review procedure, it is capable of being equated to what is provided in article 131, no. 1 of the CPPT, for purposes of subsequent challenge of the respective dismissal decision.

i) However, such equation is legally prohibited in arbitral proceedings, and excluded from the material jurisdiction of arbitral tribunals is the appreciation of claims relating to the declaration of illegality of self-assessment acts that have not been preceded by recourse to administrative remedy in accordance with articles 131 of the CPPT, but only of ex officio review in accordance with article 78 of the LGT;

j) Indeed, article 2, subparagraph a) of Order No. 112-A/2011 excludes, literally, from the scope of the binding of the AT to arbitral jurisdiction, "(…) claims relating to the declaration of illegality of self-assessment acts (…) that have not been preceded by recourse to administrative remedy in accordance with articles 131 to 133 of the CPPT.", therein not referring to ex officio review provided for in article 78 of the LGT.

k) In this way, if it is true that the taxpayer who has not timely filed an administrative complaint is not, ipso facto, prevented from requesting the review of the act under article 78 of the LGT, within the conditionality provided therein, and judicially challenge the decision dismissing the review request (see article 95, no. 2, subparagraph d), of the LGT), it is also unquestionable the understanding that the AT has only bound itself, in accordance with Order No. 112-A/2011, to the jurisdiction of arbitral tribunals if the request for declaration of illegality of a self-assessment act was preceded by recourse to the administrative remedy of administrative complaint.

l) Furthermore, it is verified that in the situation sub judice the alleged "self-assessment act" was not carried out in accordance with generic instructions issued by the AT, being necessary to conclude that it was always mandatory to have prior administrative complaint in accordance with the provision in no. 1 of article 131 of the CPPT.

m) Whereby access to arbitral judicial protection is, with even greater reason, prohibited, since here the administrative complaint would always be mandatory in accordance with article 131 of the CPPT, as required in article 2, subparagraph a) of Order No. 112-A/2011.

n) By way of defense the Respondent maintains that there is not a single IRC assessment, but rather two calculations, that is, two distinct determinations which, although processed in accordance with subparagraph a) of no. 1 of article 90 of the Corporate Income Tax Code, in the returns referred to in articles 120 and 122 of the same code, are carried out on the basis of different parameters, since each is materialized in the application of its own rates, provided for in articles 87 or 88 of the CIRC, to the respective taxable matters determined equally in accordance with own rules.

o) Advance payments on account of the tax due finally, in accordance with the definition in article 33 of the LGT, are "the anticipatory pecuniary payments made by taxpayers in the period of formation of the taxable event", constituting a "(…) form of approximating the moment of collection to that of the perception of income so as to remedy situations in which such approximation cannot be effected through withholding at source."

p) Therefore, in sound logic, it only makes sense to conclude that the respective calculation base corresponds to the amount of the IRC collection resulting from the taxable matter that is identified with the profit/income of the taxable period of the taxpayer.

q) Thus, the delimitation of the content of the expression used by the legislator in no. 2 of article 90 of the CIRC, "amount determined in accordance with the preceding number", and in no. 1 of article 105 of the CIRC, "tax assessed in accordance with no. 1 of article 90", must be done coherently, that is, being consequently attributed to it, in both provisions, a univocal sense.

r) Which is equivalent to saying that it corresponds to the amount of IRC calculated by applying the rates of article 87 to the taxable matter determined on the basis of profit and the rates of article 87 of the Code.

s) As a simple consequence of the preceding considerations that led to the conclusion that the deductions referred to in subparagraphs a) and b) of no. 2 of article 90 of the Corporate Income Tax Code are made from the "amount determined in accordance with the preceding number", understood as the amount of IRC determined on the basis of taxable matter determined in accordance with the rules contained in chapter III and the rates of article 87 of the same Code, and descending to the specific case, it is possible to extend such conclusion to the deduction relating to special advance payments on account.

t) In sum: the legal nature of the special advance payment on account, revealed by its configuration as an "instrument or guarantee of payment of the tax for which it is required, and not as a tax in itself" (cf. Court of Auditors Decision cited above), as well as by the function associated therewith in combating tax evasion and fraud, inextricably links this payment to the amount of IRC determined on the basis of taxable matter determined in accordance with profit (chapter III of the Code).

u) Being, therefore, manifestly devoid of any basis the Applicant's claim for deduction of the amount borne under the special advance payment on account from the collection produced by autonomous taxations in the year 2010.

v) Even if indemnificatory interest could be configured in the situation at hand in the case file, its calculation would always have as its starting date the date on which the notification of the decision dismissing the ex officio review procedure occurred, that is, 14.08.2015 and never, the moment indicated by the Applicant in its request.

The meeting referred to in article 18 of the RJAT was dispensed with, in light of the nature of the matter contained in the case file, with the consideration of the exception invoked by the Respondent in its response being postponed to the final decision to be rendered.

II. MATTER OF FACT

Based on the elements contained in the proceedings and in the administrative file attached to the case file, the following facts are considered proven:

A) The Applicant filed on 31 May 2011 its IRC Form 22 return for the year 2010, having entered, in field 365 dedicated to autonomous taxations, the amount of €45,297.38;

B) In accordance with the returns filed, in the year in question A… determined a tax loss in the amount of €1,098,627.78, having nevertheless determined a total amount of tax payable of €574.29, which tax is paid, and which resulted from the determination of autonomous taxations in IRC proceedings in the amount of €45,871.67, reduced by the amount of €45,297.38 in withholdings at source suffered, to the refund of which A… was entitled;

C) The AT's information system prevents the entry of the value relating to the aforementioned autonomous taxation rates in IRC, deducted, within the scope of the IRC collection resulting from the application of these rates, from the amounts of special advance payments on account still available (starting with the oldest) for application to the IRC collection;

D) The AT's information system, through which IRC is self-assessed, does not allow taxpayers to deduct, for purposes of determining the IRC owed by them, special advance payments on account for the IRC resulting from the autonomous taxations determined;

E) The assessment act (self-assessment) sub judice was not carried out in accordance with any generic instructions issued by the AT;

F) On 4 February 2015, the Applicant filed a request for ex officio review against the IRC self-assessment act identified above, seeking the acceptance of the deduction of the amount borne as special advance payment on account in IRC proceedings (€124,278) from the amount of collection determined in autonomous taxations proceedings;

G) On the request for ex officio review referred to fell a draft dismissal decision, rendered by the Excellent Director of Services of the IRC Services Directorate, of 29.06.2015, supported by Information No. I2015…, where the right of the taxpayer to deduct the amount of the special advance payment on account from the collection produced by autonomous taxations was denied;

H) On 2.07.2015, by means of order no. …, of 30.06.2015, the Applicant was notified to, if it so wished, within 15 days, exercise its respective right to be heard, in accordance with the provision in article 60, no. 1, subparagraph b) of the LGT;

I) The Applicant did not express itself on the draft dismissal of the request for ex officio review, the draft decision being transformed into a final one, by order of the Excellent Director of Services of the IRC Services Directorate, of 31.07.2015, based on Information No. I2015…;

Having regard to the positions assumed by the parties, in light of article 110, no. 7 of the CPPT and the documentary evidence attached to the case file, the facts listed above are considered proven, with relevance to the decision.

This Tribunal formed its conviction in consideration of the documents presented to the case file by the Parties.

III. MATTER OF LAW

In the response presented, the AT invokes the exception of lack of material jurisdiction which, if verified, will lead to the discharge of the proceedings. Thus we see:

The request for arbitral decision sub judice has as its immediate object the decision dismissing the ex officio review presented by the Applicant and as its mediate object the IRC self-assessment act, including autonomous taxation rates, relating to the year 2010.

In accordance with the provision in articles 16 of the CPPT, 13 of the CPTA and 101 of the CPC, subsidiarily applicable ex vi of no. 1 of article 29 of the RJAT, the determination of the material jurisdiction of the tribunals is of public order and its consideration precedes that of any other matter.

In consequence, bearing in mind that the merits of the exception invoked by the AT, if verified, bars consideration of the other issues raised, it is important to delimit the scope of jurisdiction of tax arbitral jurisdiction and to ascertain whether the tribunal's jurisdiction encompasses, or does not encompass, the decision dismissing the ex officio review presented by the Applicant and the IRC self-assessment act.

The question of the lack of material jurisdiction of arbitral tribunals has been addressed in various arbitral proceedings judged within the scope of CAAD. See in this regard the decisions rendered in the context of proceedings Nos. 236/2013, of 22 April 2014, 48/2012, of 06.07.2012, 73/2012, of 23.10.2012 and 76/2012, of 29.10.2012, whose decisions we follow.

Thus, first and foremost, it is important to heed the provision in no. 1 of article 124 of Law No. 3-B/2010, of 28 April, according to which the Government was authorized "to legislate in order to establish arbitration as an alternative form of jurisdictional resolution of conflicts in tax matters", and should, according to its no. 2, "constitute an alternative procedural means to the process of judicial challenge and to the action for the recognition of a right or legitimate interest in tax matters."

Implementing the aforementioned legislative authorization, Decree-Law No. 10/2011, of 20 January, "established tax arbitration limited to certain matters, listed in its article 2" making "the binding of the tax administration depend on an order of the members of the Government responsible for the areas of finance and justice" (see the reasoning of the arbitral decision rendered in Proceedings No. 76/2012 mentioned above).

The scope of tax arbitral jurisdiction was thus delimited, in the first instance, by the provision in article 2 of the RJAT which sets out, in its no. 1, the criteria for material division, encompassing the appreciation of claims directed at the declaration of illegality of acts of tax assessment (subparagraph a)).

Through Order No. 112-A/2011, of 20 April (hereinafter Order), the Government, by the Ministers of State and Finance and Justice, bound the services of the Directorate General of Taxes and the Directorate General of Customs and Special Consumption Taxes to the jurisdiction of arbitral tribunals functioning in CAAD, with these services now corresponding to the Tax and Customs Authority, in accordance with Decree-Law No. 118/2011, of 15 December, which approves the organic structure of this Authority, resulting from the merger of various bodies.

In this Order, additional conditions and limits of binding are established taking into account the specificity of the matters and the value involved.

Article 2 of the Order provides as follows:

"Article 2
Object of Binding

The services and bodies referred to in the preceding article bind themselves to the jurisdiction of the arbitral tribunals functioning in CAAD that have as their object the appreciation of claims relating to taxes whose administration is entrusted to them referred to in no. 1 of article 2 of Decree-Law No. 10/2011, of 20 January, with the exception of the following:

a) Claims relating to the declaration of illegality of acts of self-assessment, withholding at source and advance payments on account that have not been preceded by recourse to administrative remedy in accordance with articles 131 to 133 of the Code of Tax Procedure and Process;

b) Claims relating to acts of determination of taxable matter and acts of determination of taxable matter, both by indirect methods, including decision of the review procedure;

c) Claims relating to customs duties on importation and other indirect taxes that apply to goods subject to import duties; and

d) Claims relating to customs classification, origin and customs value of goods and customs tariff quotas, or whose resolution depends on laboratory analysis or on measures to be carried out by another Member State in the context of administrative cooperation in customs matters."

In accordance with the aforementioned article 2, subparagraph a) of the Order, it is clear that all claims related to "self-assessment, withholding at source or advance payments on account" acts are excluded from arbitration, unless such claims have been preceded by recourse to administrative remedy, in accordance with articles 131 to 133 of the Code of Tax Procedure and Process (CPPT).

Now, the request presented by the Applicant concerns the declaration of illegality of the dismissal of the request for ex officio review presented regarding the IRC self-assessment act relating to the year 2010.

The situation under analysis thus falls within the first part of the norm provided in subparagraph a) of article 2 of the Order, insofar as it concerns the declaration of illegality of a self-assessment act.

Notwithstanding, it is provided that only claims relating to the declaration of illegality of acts of self-assessment, withholding at source and advance payments on account that have not been preceded by recourse to administrative remedy in accordance with articles 131 to 133 of the Code of Tax Procedure and Process are excluded from the scope of jurisdiction of CAAD.

In this way, it is important to verify whether the self-assessment act sub judice was preceded by recourse to administrative remedy in accordance with article 131 of the CPPT, which applies to cases of self-assessment.

Thus, article 131 of the CPPT provides as follows:

"Article 131
Challenge in Case of Self-Assessment

1 – In case of error in the self-assessment, the challenge shall be necessarily preceded by administrative complaint addressed to the head of the regional peripheral body of the tax administration, within the period of two years after the filing of the return.

2 - In case of express or tacit dismissal of the complaint, the taxpayer may challenge, within 30 days, the assessment that it made, counted respectively from the notification of the dismissal or from the formation of the presumption of tacit dismissal.

3– Without prejudice to the provisions of the preceding numbers, when its ground is exclusively a matter of law and the self-assessment has been made in accordance with generic guidance issued by the tax administration, the period for challenge does not depend on prior complaint, the challenge being submitted within the period of no. 1 of article 102."

Now, from the matter of fact brought to the case file, it results that the self-assessment act in question was the subject of a request for ex officio review and not of a prior administrative complaint, as provided in no. 1 of article 131 described above.

Being thus, it is to be concluded, by mere declarative interpretation, that the possibility of requesting from arbitral tribunals the declaration of illegality of acts of self-assessment, withholding at source and advance payments on account provided in article 2, no. 1 a), of the RJAT, must be understood in harmony with the regime provided in nos. 1 and 3 of article 131 of the CPPT, with prior administrative complaint being necessary in cases in which it is also necessary in tax tribunals.[1]

In this sense, several decisions of CAAD have already been rendered,[2] all in the sense that the express reference to the precedent "recourse to administrative remedy in accordance with articles 131 to 133 of the CPPT", must be interpreted as reporting to cases in which such recourse is mandatory, through administrative complaint which is the administrative means indicated there.

In this way, bearing in mind that the Applicant filed a request for ex officio review regarding the IRC self-assessment act and not administrative complaint, it cannot but be understood that, by virtue of the provision in article 4 of the RJAT, the AT is not bound to the arbitral tribunal in the case under analysis.

Whereby, "(…) the lack of binding of the Tax and Customs Authority to the arbitral tribunal translates into the immediate impossibility of subjective effectiveness of a judgment which, if rendered by this tribunal on the matters excluded, would produce no effects on the party that would have to execute it, embodying, therefore, lack of jurisdiction, which is delimited in function of the matter and therefore embodies the lack of material jurisdiction of this tribunal (…) and the lack of jurisdiction of the tribunal to settle the dispute effectively configures the dilatory exception of lack of jurisdiction of the tribunal for any other, making, given the arbitral nature of the tribunal, an integrated reading of no. 1 of article 2 of the RJAT, with no. 1 of its article 4 and, still, with the mentioned article 2 of the Binding Order."[3]

In sum: it is understood that article 2 of the Order can only be subject to a literal interpretation, since it is configured as a unilateral declaration of will on the part of the AT.

Taking into account the general principles of interpretation contained in article 9 of the Civil Code, it does not seem possible to interpret article 2 of the Order in such a way as to include article 78 of the LGT.

Although the request for ex officio review may be procedurally alternative or complementary to administrative complaint, from the point of view of the rights and guarantees of taxpayers, but considering the voluntary nature of arbitration, the interpretation of the provision in article 2 of the Order should not, in any case, result in a restriction of the sphere of freedom of the AT, as a party, to establish the limits of its binding.

Thus, this Arbitral Tribunal is materially incompetent to appreciate and decide the request object of the dispute sub judice, in accordance with articles 2, no. 1, subparagraph a) and 4, no. 1, both of the RJAT and articles 1 and 2, subparagraph a), of Order No. 112-A/2011, which embodies a dilatory exception preventing consideration of the merits of the case, in accordance with the provision in article 576, nos. 1 and 2 of the Code of Civil Procedure ex vi article 2, subparagraph e) of the CPPT and article 29, no. 1, subparagraphs a) and e) of the RJAT, which bars consideration of the request and the discharge of the AT from the proceedings, in accordance with articles 576, no. 2 and 577, subparagraph a) of the CPC, ex vi article 29, no. 1, subparagraphs a) and e) of the RJAT.

For which reason the dilatory exception of lack of jurisdiction of this Tribunal by reason of the matter invoked by the Respondent is judged to be well-founded, and the Respondent is discharged from the proceedings.

The consideration of the merit issue is thus prejudiced.

IV. DECISION

Terms in which this Arbitral Tribunal decides:

A) To judge well-founded the dilatory exception of lack of jurisdiction of this Tribunal by reason of the matter invoked by the Respondent and, in consequence, to discharge the Respondent from the proceedings;

B) To condemn the Applicant to pay the costs of the present proceedings, as the losing party.

V. VALUE OF THE PROCEEDINGS

In accordance with the provision in article 306, no. 2 of the Code of Civil Procedure, 97-A, no. 1 a) of the CPPT and article 3, no. 2 of the Regulation of Costs in Tax Arbitration Proceedings, the value of the request is €45,871.67.

VI. COSTS

In accordance with the provision in articles 12, no. 2 and 22, no. 4, both of the RJAT, and in article 4, no. 4 of the Regulation of Costs of Tax Arbitration Proceedings, the value of the arbitration fee is set at €2,142.00, in accordance with Table I of the aforementioned Regulation, at the charge of the Applicant.

Let notification be made.

Lisbon, 28 March 2016

The Arbitrator,

Magda Feliciano

(The text of this decision was prepared by computer, in accordance with article 131, no. 5, of the Code of Civil Procedure, applicable by referral of article 29, no. 1, subparagraph e) of Decree-Law No. 10/2011, of 20 January (RJAT), being governed in its drafting by the orthography prior to the Orthographic Agreement of 1990.)

[1] Guide to Tax Arbitration, Almedina, 2013, pp. 131.

[2] Decision No. 48/2012-T, of 6.07.2012, Decision No. 236/2013-T, of 22.04.2014.

[3] Decision No. 17/2012-T, of 14.05.2012.

Frequently Asked Questions

Automatically Created

Can the CAAD Arbitral Tribunal rule on disputes involving the deduction of special payment on account (PEC) from IRC autonomous taxation?
The jurisdiction of CAAD arbitral tribunals over disputes involving deduction of special payment on account (PEC) from IRC autonomous taxation depends on whether proper administrative remedies were first exhausted. According to Order 112-A/2011, Article 2(a), the Tax Authority is only bound to arbitral jurisdiction for self-assessment disputes when preceded by administrative complaint under Articles 131-133 of the CPPT. If the taxpayer only filed an ex officio review request under Article 78 of the LGT without a prior timely administrative complaint, the Tax Authority argues that the arbitral tribunal lacks material jurisdiction to hear the case, even though the substantive issue concerns PEC deductibility from autonomous taxation.
Is the special payment on account (PEC) deductible from the IRC tax collection generated by autonomous taxation rates under Article 90 of the CIRC?
The deductibility of special payment on account (PEC) from IRC collection arising from autonomous taxation rates under Article 90 of the CIRC is the core substantive dispute. The taxpayer argues that since Article 45(1)(a) defines 'IRC collection' as including autonomous taxation, Article 90(2)(c) CIRC (which allows PEC deduction from IRC collection) must also encompass autonomous taxation amounts. The Tax Authority's denial of this deduction allegedly violates the law. Alternatively, if Article 90 does not apply to autonomous taxation, the taxpayer contends that autonomous taxation itself would be illegal due to lacking the required legal basis for assessment and collection procedures under Article 8(2)(a) of the LGT and Article 103(3) of the Portuguese Constitution.
What happens when a taxpayer challenges an IRC self-assessment through an official review request (revisão oficiosa) that is denied?
When a taxpayer challenges an IRC self-assessment through an ex officio review request (revisão oficiosa under Article 78 of the LGT) that is denied, the dismissal decision can be judicially challenged under Article 95(2)(d) of the LGT. However, for arbitral proceedings, Order 112-A/2011 specifically requires that self-assessment disputes be preceded by administrative complaint under Articles 131-133 of the CPPT, not merely ex officio review. While jurisprudence recognizes that ex officio review, given its administrative nature, can be equated to administrative complaint for purposes of subsequent judicial challenge in administrative courts, this equation is not accepted for arbitral jurisdiction purposes. Therefore, taxpayers who only filed ex officio review without prior timely administrative complaint may be barred from accessing tax arbitration.
Does the IRC tax collection under Article 45(1)(a) of the CIRC include the collection arising from autonomous taxation rates?
The interpretation of whether IRC tax collection under Article 45(1)(a) of the CIRC includes collection arising from autonomous taxation rates is central to this dispute. The taxpayer argues that Article 45(1)(a) explicitly defines IRC collection as encompassing autonomous taxation in IRC, and therefore the same interpretation must apply to Article 90(1) and (2)(c) regarding PEC deduction. This systematic interpretation would mean that all references to 'IRC collection' throughout the CIRC should consistently include both standard IRC and autonomous taxation amounts. If this interpretation is accepted, denying PEC deduction from autonomous taxation amounts would constitute a violation of Article 90(2)(c) of the CIRC.
What are the legal consequences if autonomous taxation under IRC lacks a proper legal basis for its liquidation and collection procedure?
If autonomous taxation under IRC lacks a proper legal basis for its liquidation and collection procedure, serious constitutional and legality issues arise. The taxpayer argues that if Article 90 of the CIRC is interpreted as not applying to autonomous taxation, then the assessment of autonomous taxation itself would be illegal due to absence of the legal basis required under Article 8(2)(a) of the LGT (General Tax Law) and Article 103(3) of the Portuguese Constitution, which requires legality in taxation. This alternative argument suggests that autonomous taxation cannot exist in a legal vacuum—either Article 90 applies to it (permitting PEC deduction), or autonomous taxation lacks constitutional and legal foundation for assessment and collection.