Summary
Full Decision
ARBITRAL DECISION
1. REPORT
On 7 December 2016, A… with registration number in the Commercial Registry Office of Lisbon and collective person identification number …, with registered office at Avenue …, n.º…, …-… Lisbon, in its capacity as tax representative of B…, S.A., Taxpayer n.º …, also with registered office at the aforementioned address, hereinafter briefly designated as Claimant, submitted an application for constitution of an arbitral tribunal, pursuant to the combined provisions of articles 2 and 10 of Decree-Law n.º 10/2011, of 20 January, which approved the Legal Framework for Arbitration in Tax Matters, as amended by article 228 of Law n.º 66-B/2012, of 31 December (hereinafter, briefly designated as RJAT), in which it requested the declaration of illegality of the partial dismissal of the hierarchical appeal of the gracious petition for reclamation n.º …2005…, of 2 June 2016, concerning Corporate Income Tax (IRC), relating to the fiscal years 2000, 2001 and 2002;
The Claimant further sought the declaration of illegality of the tax acts of additional assessment of Corporate Income Tax (IRC), with n.ºs 2004 … and 2004 …, relating, respectively, to the years 2000 and 2001, with the consequent recognition of the obligation of the Tax Administration (AT) to refund the amount paid of € 12,779.89 referring to 2000, as well as the amount assessed of € 1,000.00 relating to the year 2001, this not being annulled in the hierarchical appeal.
The Claimant further requested that, for the years 2000, 2001 and 2002, the right to compensatory interest be recognized, calculated from one year after the submission of the gracious petition until the decision rendered is voluntarily executed or the time limit for such voluntary execution is exceeded, whichever occurs first.
The Claimant did not proceed to appoint an arbitrator, therefore, pursuant to the provisions of subparagraph a) of n.º 2 of article 6 and subparagraph b) of n.º 1 of article 11 of the RJAT, the President of the Deontological Council of CAAD appointed the undersigned as arbitrator, who communicated acceptance of the appointment within the applicable time limit.
On 31 January 2017, the parties were notified of this appointment and did not manifest any intention to reject it.
In accordance with the precept in subparagraph c) of n.º 1 of article 11 of the RJAT, the Arbitral Tribunal was constituted on 21-02-2017.
On 30 March 2017, the Tax Authority, hereinafter designated as Respondent or AT, duly notified for this purpose, submitted its response in its defense through opposition.
8. The Tribunal notified the Claimant to attach, within a period of 5 days, documentary evidence of its status as tax representative of B…, S.A., since in the arbitral process files only a power of attorney was attached in favor of the representatives of A…, to which the Claimant responded that such status derived from Document n.º 1 attached with the petition.
The Parties were notified to, within the same period granted in the preceding number, pronounce themselves on the unnecessary holding of the meeting referred to in article 18 of the RJAT, proceeding immediately to the stage of written submissions, and the parties said nothing.
10. Considering that subparagraph c) of article 16 of the RJAT grants autonomy to the arbitral tribunal in determining the rules to be observed in order to obtain, within a reasonable time, a decision on the merits, and further considering that in the arbitral process, the general procedural principles of procedural economy and prohibition of useless acts apply, pursuant to subparagraphs c) and e) of article 16, and n.º 2 of article 29, both of the RJAT, the Tribunal:
i. Accepted as sufficiently proven the status of A… as tax representative of B…, also derived from the PA attached to the file;
ii. Dispensed with the holding of the meeting referred to in article 18 of the RJAT, as none of the purposes legally entrusted to it were present;
iii. Granted the parties the possibility of, if they wished, submitting written submissions.
The Parties opted not to submit written submissions.
In due course, the Tribunal notified the Claimant to pronounce on the absence of powers of decision of the Arbitral Tribunal to know of the assessment relating to the year 2000, pursuant to article 71-A of the CPTA, an issue raised by the AT in its Response.
The Claimant pronounced that article 71 of the CPTA was inapplicable to the arbitral process.
The Tribunal is properly constituted in accordance with articles 5 and 6, n.º 1 of the RJAT.
The parties have legal capacity and standing, are legitimate and are legally represented, in accordance with articles 4 and 10 of the RJAT and article 1 of Ordinance n.º 112-A/2011 of 22 March.
2. Object of the Case
2.1 Position of the Claimant
a. Illegality of the additional IRC assessment n.º 2004…, in the amount of € 12,779.89, relating to the year 2000, as well as of the decision of the hierarchical appeal of the gracious petition for reclamation n.º …2005….
In the Initial Petition, the Claimant bases the illegality of the dismissal order of partial rejection of the gracious petition on the ground of violation of the duty of the AT to convert the gracious petition, presented belatedly, into a request for official revision of the tax act, in accordance with articles 52 of the CPPT and 78, n.º 1 of the General Tax Law (LGT), because the act subject to reclamation is a tax act of additional assessment of IRC, carried out by the AT, and therefore, article 132 of the CPPT is not applicable, which concerns situations of error in the delivery of withholding by the withholding agent exceeding what was due.
Further reviewing the administrative procedure, more specifically the gracious petition, as well as the hierarchical appeal, respectively, at pages 1 to 50 of the PA and pages 1 to 38 of the response and PA, the Claimant bases the illegality of the additional assessments on error attributable to the services, to the extent that they were based on the failure to perform withholding at source of the tax, based on the following arguments adduced by the AT:
i. Because the Claimant did not withhold from a group of companies called artist representatives, non-residents, with income subject to taxation under article 4, n.ºs 2 and 3, subparagraph d) of the Corporate Income Tax Code, without these having previously made proof that such artists did not directly or indirectly control the artist companies, with the AT considering the subsequent demonstration after payment of income as untimely;
ii. Because the Claimant did not comply with the obligation to, before payment or placing at disposal, hold in its possession a certificate proving the residence of the holder in a country covered by an international double taxation convention, an obligation that expressly contradicts the letter of the law and the content of the jurisprudence of superior courts.
The Claimant argues that, accepting the obligation to withhold at source on income earned by artist representative companies domiciled abroad, the AT cannot prevent access to benefits arising from Conventions concluded by Portugal to avoid double taxation, by imposing the requirement of presenting the certificate proving residence of the country before payment or placing at disposal, to demonstrate proof of the conditions for application of the Conventions on international double taxation.
It adds that this obligation, at the date of the fiscal years in question, resulted from Circular Notice n.º 20076, of 31 October, which cannot supersede the Conventions on international double taxation concluded by Portugal, nor the provisions of the Tax Benefits Statute.
However, the AT did not take into account the documentation attached during the inspection action because it contradicted the administrative doctrine to which the AT is bound.
It further states that the tax benefits arising from double taxation agreements are constituted at the moment of payment or placing at disposal of income, with the certificate's effectiveness being merely declarative.
Furthermore, only subsequently to the years in question, more specifically with article 27, n.º 1 of Law n.º 32-B/2002, of 30 December (State Budget for 2003), was article 90, n.ºs 2 to 5 of the CIRC amended, in order to expressly establish the obligation to withhold in all cases in which the substitute taxpayer had not presented to the withholding agent, until the moment of withholding, a certificate proving the residence of the country covered by the Convention.
According to the Claimant, although under the provisions of n.º 2 of article 17 of the Model of Convention the OECD Convention on Fiscal Matters Concerning Income and Capital the source state could tax the income from entertainment activity attributed to a third person, it is not invokable against residents of countries covered by double taxation conventions that provide otherwise, except as an interpretive element of the provisions of such conventions.
As under established law, namely article 8, n.º 1 of the Constitution of the Portuguese Republic and article 1, n.º 1 of the General Tax Law, the provisions of Conventions on international double taxation prevail over domestic law, if the international double taxation convention does not expressly provide for it, the income of artist companies cannot be taxed in the country where the activity is exercised, as personal remuneration of the artist for the provision of his services or as profit, given the absence of a permanent establishment in the country where the activity is exercised.
b. Year 2001, partial annulment of the additional IRC assessment n.º 2004 …
The Claimant invokes that the decision of the hierarchical appeal of the gracious petition for reclamation n.º …2005…, which partially annulled the 2001 IRC, having covered only € 7,670.00 of the € 8,670.09 claimed, is illegal to the extent that it maintained the assessment of this tax in the amount of € 1,000.00, and moreover, the AT did not recognize the right to compensatory interest.
The Claimant sustains, in defense of such illegality, that in the year in question, under the provisions of the Convention to Avoid Double Taxation concluded between the Portuguese Republic and the Kingdom of Belgium, approved by Decree-Law n.º 619/70, of 15 December, the income from the activity exercised personally in either State by non-resident entertainment professionals, attributed to another person, before the entry into force of the Additional Convention, was not taxable in the contracting State in which such entertainment professionals or athletes exercise these activities, which is why the Claimant was not obliged to withhold at source income tax on income from the exercise of such activity.
In summary, for the Claimant, the additional IRC assessments suffer from illegality, to the extent that they were based on the obligation, which it would not have fulfilled, to, before payment or placing at disposal of income, hold in its possession a certificate proving the residence of the holder in a country covered by a double taxation convention, an obligation that expressly contradicts the letter of the law and the content of the jurisprudence of superior courts.
The Claimant further argues that the Additional Convention concluded between Portugal and Belgium was not in force in the fiscal year 2001.
c. Recognition of the right to compensatory interest for the amounts assessed in the years 2000, 2001 and 2002,
According to the Claimant, there was an error attributable to the services in the IRC assessments of 2000, 2001 and 2002, therefore, the failure to recognize the right to compensatory interest is illegal as it violates article 43, n.º 3 of the LGT.
The Claimant argues that, immediately, with the partial annulment of assessment n.º 2004…, relating to 2001, and the full annulment of assessment n.º 2004 … concerning the year 2002, in the amount of € 40,581.09, the AT should have recognized the right to compensatory interest.
It further states that the wording given by Law n.º 67-A/2007, of 31 December (State Budget for 2008), is not innovative, merely establishing the earlier consolidated jurisprudence of superior courts.
2.2. Position of the Respondent
The AT proceeded to the additional assessment of IRC concerning income paid by the Claimant to artist companies, by reference to the years 2000, 2001 and 2002, based on the following arguments[1]:
(i) Because the Claimant did not withhold from a group of companies called non-resident artist representatives, income taxed under article 4, n.ºs 2 and 3, subparagraph d) of the Corporate Income Tax Code, without these having previously made proof that such artists did not directly or indirectly control the artist companies, with the AT considering the subsequent demonstration after payment as untimely (n.º 9 of article 75 of the CIRC year 2002, n.º 7 of article 88 of the CIRC (years 2001 and 2002);
(ii) Because the Claimant did not comply with the obligation to, before payment or placing at disposal, hold in its possession a certificate proving the residence of the holder in a country covered by an international double taxation convention, an obligation that expressly contradicts the letter of the law and the content of the jurisprudence of superior courts;
(iii) Wherefore, such income was subject to withholding at source as a final tax at the rate of 25% (n.ºs 3 and 5 of article 75 of the CIRC combined with article 69 of the CIRC, as to the year 2000, n.ºs 3 and 5 of article 88 of the CIRC combined with n.º 2 of article 80 of the CIRC, years 2001 and 2002.
a. IRC Assessment n.º 2004…, in the amount of € 12,779.89, relating to the year 2000
The AT summarily dismissed the gracious petition concerning the assessment for the year 2000, on the ground of its untimeliness, as it was submitted 100 days after the date of voluntary payment, when, at the date of the facts, such period was 90 days.
The AT argues that the duty to revoke acts of illegal tax assessments is subject to the conditions and time limits of article 78 of the LGT. As, in the AT's understanding, in the present case, the error in the assessment is attributable to the taxpayer, this cannot benefit from the extension of the time limit to 4 years, or at any time, if the tax has not been paid[2]:
It concludes that, as the time limits established by law have been exceeded, the taxpayer's right to revision of the tax act has lapsed.
In this regard, it further states that its duty to remedy injustices is subject to the limits imposed, on the one hand by the principle of certainty and security, and on the other by the principles of justice and tax equality.
The AT further argues that, as the legality of the assessment act for the year 2000 was not reviewed, given the untimeliness of the application submitted by the Claimant, the Arbitral Tribunal cannot know of the assessment but, only, should it find the Claimant's claim well-founded, may impose upon the AT the performance of the materially due act.
b. Year 2001, partial annulment of IRC assessment n.º 2004 …
In the hierarchical appeal, the AT did not accept the correction of € 1,000.00 relating to the company designated "C…", domiciled in Belgium, as it understood that the Resolution of the Republic n.º 82/2000, which approved an Additional Convention between Portugal and Belgium, grants tax jurisdiction to both Contracting States concerning the income from the activity exercised personally by non-resident entertainment professionals when attributed to another person.
Thus, Portugal could tax, in IRC, the income earned as a result of professional activities, when earned by artist representative companies domiciled abroad and without a permanent establishment in Portugal, unless proof was made that the "artists" did not control the artist companies.
Given that such proof was not made, before the payment or placing of income at the disposal of the "artist", the Claimant remains as the original liable party for the payment of the tax, being obliged to withhold the tax at source, as a final tax.
The AT further argues that, under the CDT between Portugal and Belgium, the paying entity, here the Claimant, could not benefit from the benefits arising from that convention, since, at the date of payment, it did not have in its possession the residence certificate issued by the tax authorities of the State of the registered office of the creditor company.
Finally, it argues that the activation of the CDT does not prevent the AT from proceeding to tax the income of artists, as according to what is established in article 17 of the OECD Model Convention on income and expenditure, income obtained by a resident of a contracting State in the capacity of an artist (whether attributed to the artist or to another person) may be taxed in the source State without any limitation.
c. Compensatory Interest
In this regard, the AT argues that the right to compensatory interest depends on the verification of the following requirements:
i. The tax being paid;
ii. Its respective assessment having been annulled, totally or partially, in gracious or judicial process;
iii. Determination in judicial or gracious process, that the annulment is based on error attributable to the services.
In the case under scrutiny, the AT understands that we are not dealing with an error regarding the factual or legal conditions of the assessments placed in crisis, but rather with the alteration of a legal regime, introduced by Law n.º 67-A/2007, of 31 December (State Budget for 2008), therefore, no error attributable to the services occurred, and the legal presuppositions conferring the right to compensatory interest are not met.
3. Sanitation
31. Of the powers of decision (jurisdiction) of the Arbitral Tribunal
As a preliminary matter to the knowledge of the merits, the AT raises that, as the Gracious Petition submitted by the Claimant was dismissed, on the ground of untimeliness, by reference to the year 2000, the arbitral tribunal has no jurisdiction to replace the AT in reviewing the merits of the procedure, therefore, should the Claimant's position be considered well-founded, the powers of decision of the Arbitral Tribunal only allow that the procedure be admitted and the AT bound to proceed with the review of the merits of the application within a determined legal time limit.
Now, as established jurisprudence, whose reasoning is affirmed, the powers of cognition of the Arbitral Tribunal when the opposition is preceded by an administrative phase, are not delimited by the powers of cognition of the Tax Administration, the Tribunal having jurisdiction to know any defect attributable to the tax act, being able to review the legality of the assessment.
In accordance with the provision of subparagraph a) of article 2 of the RJAT, the arbitral tribunal has jurisdiction to declare the illegality of tax assessment acts (...). In turn, article 90 of the CPPT, applicable by virtue of article 29 of the RJAT, provides that "Any illegality (...) constitutes grounds for opposition"
In its petition, the Claimant sought the declaration of the illegality of the tax assessment acts of IRC.
In question is, therefore, indirectly, the legality of the tax assessment act, as, moreover, has been wisely decided in superior courts: "(...) the real object of the opposition is the assessment act and not the act that decided the reclamation, therefore it is the defects of that and not of this order that are truly in question[3].
In the same sense, among others, the judgment of the Supreme Administrative Court dated 18/06/2014, case n.º 01942/13, as well as the judgment of this same Court, issued in the context of case n.º 0306/09, on 08/07/2009, where it states: "(...) In question is, therefore, indirectly, the legality of the tax assessment act: to review the appealed act - to know whether the appellant's claim, that that act be revised, deserved, or not, to be dismissed (albeit presumably) - implies reviewing the legality of the assessment. And, not only can it have as grounds such type of illegality, when invoked by the interested party, but also other illegalities of the same type can be known, when the same are of official knowledge by the judge, or are raised by the Public Prosecutor at the appropriate procedural moment that the legislator reserved for his intervention in the tax judicial process, cfr. article 121 of the CPPT[4].
Also in this sense, see arbitral decision issued in the context of case n.º 689/2015, available at www.caad.org.pt.
Thus, The Arbitral Tribunal is materially competent and is properly constituted, in accordance with articles 2, n.º 1, subparagraph a), 5 and 6, n.º 1, of the RJAT
3.2 Of the Joinder of Claims
Existing identity of the tax – IRC – and the Tribunal competent for decision being the same, it does not prevent the knowledge of the application the fact that it concerns different years and the Claimant has petitioned compensatory interest, as the grounds of fact and law are identical and the validity of the applications depends on the interpretation of the same principles and rules of law[5].
Wherefore, the Tribunal is properly constituted, is competent ratione materiae, in accordance with article 2 of the RJAT.
The process does not suffer from nullities.
Thus, there is no obstacle to the review of the merits of the case.
All considered, it is incumbent to render
4. DECISION
4.1 Matter of Fact
4.1.a. Facts Found to be Proved
With relevance to the decision on the merits, the Tribunal considers the following facts to be proved:
1. At the date of the assessments, the Claimant was framed, for IRC purposes, under the general regime with the taxation period beginning in each calendar year, and exercised the activity of Management of Entertainment Halls and Related Activities – with the CAE n.º 92,320.
2. It ceased its activity for IRC purposes as of 02/12/2010, and its registration was cancelled by official entry … by virtue of the closure and liquidation registered by Ap. …/20…, its tax representative being A…, S.A. (according to PA and information available at https://publicacoes.mj.pt/pesquisa.aspx.).
3. In compliance with service orders n.ºs…, … and … of 26 April 2004, an external inspection procedure was initiated against the Claimant, of partial scope – IRS and IRC - concerning the fiscal years 2000, 2001 and 2002, with the objective of analyzing the income paid to non-residents by the IRC liable party (see inspection report).
4. Following the aforementioned procedure, corrections were determined in the IRC that gave rise to the following additional assessments: (i) assessment n.º 2004 … in the amount of € 29,633.99 of tax and € 6,850.41 of compensatory interest (JC); (ii) assessment n.º 2004 … in the amount of € 65,793.13 of tax and € 12,384.96 of JC and; (iii) assessment n.º 2004… in the amount of € 84,336.00 and € 10,201.04 of JC, respectively for 2000, 2001 and 2002, based on the fact that the Claimant failed to comply with the duty of withholding at source of the tax on income from the exercise of the activity of entertainment professionals concerning a group of non-residents, when paid to artist representative companies, with the following grounds, contained in the inspection report[6]:
"Under n.º 2 of n.º 3 of article 4 of the CIRC, income obtained by non-resident artist representative companies without permanent establishment is subject to IRC, except when proof is made that the artists do not directly or indirectly control the artist company"(…)
"(…) To apply the Conventions to avoid double taxation, the existence of the same is not enough; it is necessary that the debtor entity have in its possession before making the payment the residence certificate of the non-resident artist company issued by the competent tax authorities of the State of residence of the non-resident artist company (…)".
5. The time limit for voluntary payment of the IRC assessment, in the amount of € 29,633.99, relating to the year 2000, ended on 05-01-2005 (document n.º 1 attached with the gracious petition);
6. On 15 April 2005, a gracious petition was filed with the Finance Services of Lisbon …, presented by the here Claimant, against part of the assessments mentioned in point 4 above;
7. In the petition, the Claimant requested the partial annulment of the additional assessments, for the following amounts: (i) € 12,779.89 concerning the fiscal year 2000; (ii) € 8,670.09 concerning fiscal year 2001 and (iii) € 40,581.09 relating to the year 2002, plus their respective compensatory interest;
8. The AT summarily dismissed the petition concerning the year 2000, on the ground of its untimeliness, because it was submitted 100 days after the deadline for voluntary payment, when it should have been submitted 90 days from the end of the time limit for voluntary payment of the tax obligations legally notified to the taxpayer (see pages 565 et seq. of PA);
9. It partially granted the application concerning fiscal year 2001 in the amount of € 7,670.09, taking into account the proof presented by the Claimant (here Claimant), point 35 of the information of the Department of International Relations (DSRI) and the understanding conveyed by Circular Notice n.º 20.131 of 2008/04/07 (see pages 565 et seq. of PA);
10. As for the year 2002, the AT partially granted the application in the amount of € 19,723.35, on the basis of the same arguments (see pages 565 et seq. of PA);
11. As for the years 2001 and 2002, the Claimant had the Model 12-FRI declarations authenticated by the tax authorities of the State of residence (see Information from the Directorate of Finance of Lisbon/decision of the gracious petition, pages 564 et seq. of PA)
12. The Claimant filed a hierarchical appeal of the decision rendered on the gracious petition;
13. By reference to fiscal year 2000, the AT maintained its position as to the untimeliness of the gracious petition;
14. It maintained the correction of € 1,000.00 made to the company designated "C…" domiciled in Belgium, concerning fiscal year 2001;
15. The AT maintained the dismissal of the application for payment of compensatory interest;
16. The AT is in possession of the Model 12-RFI declaration concerning company C… (see pages 23 to 27 and annex 6, pages 136 to 139 of PA);
17. Resolution n.º 82/2000 which approved the Additional Convention to the Convention to Avoid Double Taxation between the Portuguese Republic and the Kingdom of Belgium, entered into force on 5 April 2001;
18. With respect to the 2002 period, the AT considered the proof of the tax residence of the entity resident in France to be made, considered the Convention to avoid double taxation between Portugal and that country to be activated, and granted the correction in the amount of € 20,857.80.
4.1.b. Facts Found Not to be Proved
With relevance to the decision, there are no facts that should be considered as not proved.
4.3. Reasoning of the Proved and Unproved Matter of Fact
With respect to the matter of fact, the Tribunal does not have to pronounce itself on everything alleged by the parties, it being incumbent upon it, yes, the duty to select the facts that matter for the decision and discriminate the proved matter from the unproved (cfr. article 123, n.º 2, of the CPPT and article 607, n.º 3 of the CPC, applicable ex vi article 29, n.º 1, subparagraphs a) and e), of the RJAT).
Thus, the facts relevant to the judgment of the case are chosen and delimited according to their legal relevance, which is established in view of the various plausible solutions of the legal question(s) (cfr. previous article 511, n.º 1, of the CPC, corresponding to current article 596, applicable ex vi article 29, n.º 1, subparagraph e), of the RJAT).
Thus, taking into account the positions assumed by the parties and the documentary evidence attached to the file, the facts listed above were considered proved, with relevance to the decision, being moreover undisputed by the parties.
5. Question to be Decided
The question at issue in the present arbitral tax process consists in determining whether the Claimant, by reference to the years 2000, 2001 and 2002, when paying income to non-resident entertainment professionals in Portugal, but with tax residence in countries with which Portugal had in force a Convention to Avoid Double Taxation (CDT), was obliged to withhold at source IRC.
For analysis of the situation under scrutiny, it is important to determine whether:
- the income from the exercise in Portuguese territory of the activity of entertainment professionals – when obtained by non-resident artist representative companies without permanent establishment – were subject to withholding at source as IRC, except when proof was made that the holder of the income (artist representative company) was not controlled directly or indirectly by entertainment professionals, in a moment prior to payment or placing at disposal.
- the Claimant, before proceeding to payment or placing at disposal of income to a foreign entity, was obliged to have in its possession the certificate proving the residence of the holder of income of the country covered by an international double taxation convention, so as to be able to benefit from the agreements and thus be relieved of the obligation to withhold at source IRC.
Still within the scope of the present case, it is necessary to determine whether the AT was obliged to convert the gracious petition, presented belatedly, into a request for official revision of the tax act, in accordance with article 52 of the CPPT and article 78, n.º 1 of the LGT[7].
Now, the review of the presuppositions of the conversion of the petition into an act of official revision of the tax act leads the Tribunal to evaluate whether it can know of the illegality of the assessment, when the gracious petition is considered untimely.
Finally, it is necessary to know of the Claimant's right to refund of the tax paid and to payment of compensatory interest.
6. Of the Law
It is therefore necessary to evaluate the legality of the IRC assessments.
The question that must be decided in the present case has already been subject to analysis and decision in previous judicial processes, whose reasoning will be followed very closely[8].
For complete analysis of the situation in question, it is important to bear in mind the legal regime of taxation of the income of entertainment professionals – non-resident artist representative companies without permanent establishment – in light of Portuguese law, more specifically the provisions of the Corporate Income Tax Code (CIRC), the Conventions to avoid double taxation concluded by Portugal with the countries of tax residence of the artist companies and article 17 of the OECD Model Tax Convention on income and capital.
In the fiscal years 2000, 2001 and 2002, Portugal considered as obtained in Portuguese territory and, consequently, taxed the income earned by entertainment professionals or athletes, not only when earned directly by these professionals, but also when obtained by non-residents liable to IRC controlled by the same[9].
Subsequently, Law n.º 32-B/2002, of 30 December (State Budget for 2003), came to eliminate the part of subparagraph d) of n.º 3 of article 4 of the CIRC, which permitted to dismiss taxation in Portugal through proof by artists and athletes that they did not control the entity through which income was obtained, whereby, from that point on, the obtaining of such income by non-resident IRC liable parties, became always subject to taxation in Portugal.
At the date of the additional assessments under scrutiny, the regime of taxation of paragraphs 1 and 2 of article 17 of the OECD Model Convention coincided with the Portuguese tax regime, i.e., it provided for the taxation of non-resident entertainment artists or other persons to whom the income was attributed, namely legal entities that obtained income from their activity, in the present case IRC, except when proof was made that the artists did not directly or indirectly control the entity that obtained the income.
However, in raising the question of the application of Conventions for the Elimination of International Double Taxation (CDT) concluded between the Portuguese State and the country of residence of the holder of income, there must be an analysis of the right to tax profits in IRC obtained in Portuguese territory, in light of the provisions of the applicable conventions, i.e., the norms of International Tax Law.
Wherefore, with a CDT in force concluded with Portugal:
i. It is important to assess whether there is an article aimed at the taxation of artists and, if this only contains a reference to the personal activities of the artist, the profit therefrom are aimed at by the article dealing with the profits of enterprises (article 7) or the article on income from independent professions (article 14), with Portugal having no tax jurisdiction, can the complete exemption of withholding at source of the tax operate, once the prior administrative procedure provided for in domestic law is observed;
ii. If the convention contains a second paragraph in the article aimed at taxation of artists, tax jurisdiction is also attributed to the State of exercise with exclusion of the norms on profits of enterprises and income from independent professions (articles 7 and 14).
As regards the taxation of income earned by artists, domiciled in a country with which Portugal had concluded a CDT, the OECD Model Convention did not apply, and as the conventions on double taxation concluded by Portugal, as to the income paid to non-residents referred to in the assessments in question, did not provide for such taxation, the paying entity was not obliged to withhold at source IRC.
As to the prior administrative procedure that permits the exemption from withholding at source by the substitute taxpayer, more specifically as to the obligation of presentation and the form of documents to be presented, the so-called "tax residence certificates", as previously decided by various judgments of the Southern Administrative Court (TCAS)[10], the legal framework in force at the time did not impose the need for prior demonstration to payments of the residence of the recipient entity.
In fact, neither the Conventions to Avoid Double Taxation, nor the domestic legislation applicable to the fiscal years in question, imposed any obligation on the substitute taxpayer to have in its possession the originals of such documents.
The alleged obligation of such presentation derived from a set of rules and forms – residence certificates, formal requirements on the basis of which the CDT mechanism should be activated, in the present case Circular Notice n.º 20076 of 31.10.02, which, as is well known, do not bind the taxpayers, but only the respective services.
In this sense, see the judgment issued by the Southern Administrative Court, on 08-02-2011, in the context of case 0443/11, where it states "(…) VIII) Administrative circulars emanated by the AT are binding only for the respective services because, in light of the law, procedures defined, especially the right circulated by the AF, cannot derogate from the principle of tax legality. XIX) Thus the Circular that imposed prior certification of the seat of the beneficiary, besides being illegal due to lack of legal authorization to interpret extensively norms of tax incidence, would be illegal due to abusive distortion of community norm and its legal transposition.(…)"
Such understanding is followed by the doctrine according to which "(…) the interpretive orders, the instructions and the circulars emanated from the Tax Administration to clarify or standardize the understanding of the law and the procedure of the services, having the peculiarity of developing their effectiveness exclusively within the internal order of the Administration from which they emanate. They do not bind either the taxpayers or the courts, but are mere Administrative resolutions (…)" (Cfr. Alberto Xavier, Manual of Tax Law, I, Lisbon, 1974, pages 193 and 140).
Thus, since these are administrative instructions, even if one of them (circular notice) translates a generic instruction, it produces no effects outside the service from which it emanates, not binding or imposing any duty on taxpayers.
Only with the wording introduced by Law n.º 32-B/2002, of 30 December, in the norm of n.º 3 of article 90 of the CIRC, did the proof of residence of the beneficiary of the payments become mandatory, to be made by the date on which the withholding at source should be made.
Furthermore, the models of forms were approved by Ministerial Order n.º 11701/2003 – Forms Conventions of 17 June, applicable to income paid from 1 August 2003.
Subsequently, with the entry into force of the State Budget Law for 2008, (Law n.º 67-A/2007, of 31.12), article 90-A of the CIRC came to provide for the possibility of dismissal of the responsibility of the substitute taxpayer for the entirety of the tax when, despite not having the residence certificate of the entity beneficiary of the income at the date on which it withheld and delivered the tax to the State coffers, it obtains it later.
And n.º 4 of article 48 of that Law determined the retroactive application of this regime of exclusion of the tax liability of the substitute to all situations prior to the entry into force of the norm, independently of having already been made the assessment of the tax, excepting only the cases in which there has been payment of the tax and (cumulatively) there is no pending petition, hierarchical appeal or opposition, i.e., the cases in which the act has firmly established itself in the legal order.
The presuppositions for the retroactive application of this norm to the situation under scrutiny being met, given that at the date of its entry into force (1/1/2008) the Hierarchical Appeal filed by the here Claimant was pending.
Nevertheless, it is important to clarify that at the date of the facts, it was in the presuppositions fixed in the Conventions to avoid double taxation concluded between Portugal and the countries of tax residence of the artist companies, that the recognition of the right to non-withholding of IRC in relation to entities domiciled in those countries should operate.
As taught in the judgment of the TCAS of 09-05-2006, Case n.º.00436/05, administrative circulars do not bind the taxpayers, but only the respective services and, in the absence of legislation on the obligation to present the original of the residence certificate of the beneficiary of income, in a country party to a Convention to Avoid Double Taxation, or the late presentation of that certificate, did not preclude the application of the exemption mechanism.(…)"
It is, therefore, evident that the Claimant was not obliged to present the forms referred to by the AT, given that there was no legislation requiring them and only the circulars on which the AT relied required them.
Having framed the legal question under scrutiny, it now follows to subsume the contested assessments to the applicable law.
As to the assessment 2004…, relating to 2000, the first question posed by the Claimant in its initial petition pertains to the obligation of the AT to convert the gracious petition, untimely, into official revision of the tax act, having the petition been submitted within the time limits of official revision, pursuant to articles 52 of the CPPT and 78, n.º 1 of the LGT.
At the date of the facts, the time limit for submission of the gracious petition was 90 days from the end of the time limit for payment, wherefore, as this occurred on 05-01-2005, the Claimant should have submitted the Petition on 06-04-2005, however, it was only filed on 15-04-2005.
Despite the untimeliness of the submission of the petition, it is nonetheless incumbent to determine whether the AT was obliged to convert the gracious petition into official revision of the assessment act, as alleged by the Claimant.
Under article 78, n.º 1 of the LGT, revision of the tax act can be effected at the initiative of the liable party, within the period of administrative reclamation and on the ground of any illegality, at the initiative of the AT, within four years after the assessment or at any time if the tax has not yet been paid, on the ground of error attributable to the services. (underlined)
And although the gracious petition for the assessment of the year 2002 was filed in the services after the legal period for doing so, the truth is that four years had not elapsed after the assessment, remaining within the legal period of official revision.
In accordance with the jurisprudence of the Supreme Administrative Court, issued in the context of case n.º 0366/11, of 14-12-2011, available at http://www.dgsi.pt/ "(…) although the petition submitted by the Claimant is untimely, the truth is that it was still within the period of official revision, which is why, taking into account the power-duty attributed to the tax administration to convert the petition into a request for revision of the self-assessment act, and taking into account that on the date on which said petition is submitted, the time limit within which that official revision could be requested and ordered has not yet been exhausted, the application for annulment of the act that the Claimant directed to the Administration could not be dismissed as untimely (…)[11].
Furthermore, it is now well established that the AT has the duty to proceed with the revision of tax acts in favor of the taxpayer, when it detects a situation of illegality, concerning all taxes, bearing in mind the principles of justice, equality and legality that the AT must observe in its activity, arising from articles 266, n.º 2 of the Constitution of the Portuguese Republic (CRP) and 55 of the General Tax Law (LGT).
This is also the understanding of the doctrine, according to which "(…) These principles impose that the AT correct on its own initiative all assessment errors that have led to the collection of tax in an amount greater than what would be due under law. (…)"
There is thus a recognition, within the scope of tax law, of the duty to revoke illegal acts.[12]
Nor does the argument invoked by the AT therefore proceed, to the effect that in the present case, we are not dealing with any error attributable to the Administration committed to the detriment of the taxpayer, which would suggest the extension of the revision period to four years or at any time if the tax has not been paid.
This is because the error attributable to the services referred to in the latter part of n.º 1 of article 78 of the LGT, concretizes any illegality, not attributable to the taxpayer but to the administration, comprising material error or factual error, as well as error of law, with the exception of error in self-assessment, which, for this purpose, is equated to those of the first kind (article 78, n.º 2 of the same diploma)[13].
In fact, analyzing the additional assessments under scrutiny, the AT made an erroneous application of law to the facts, more specifically of the conditions for application of the CDTs.
It further adds that, contrary to what was affirmed by the AT, this is obliged to eliminate from the legal order all acts of illegal assessment, as, moreover, it follows from the jurisprudence of our superior courts, and more specifically from what was decided by the STA in case n.º 0793/14, of 03-06-2015, available at http://www.dgsi.pt/ "(…) it is incumbent upon the Tax Administration a duty to practice all acts necessary so that the tax assessment acts conform to the law in force and applicable to the concrete situation, as long as the time limit legally provided for the taxpayer to deduce a request for revision is not shown to be exceeded, there is no stabilization of these same tax acts, being, therefore, the same subject to being altered or revoked (…)"
Wherefore, it is concluded that, in the present case, being an additional IRC assessment, the AT was obliged to convert the gracious petition, untimely, into official revision of the assessment, as the legal presuppositions for doing so were met, namely, the submission by the Claimant of the gracious petition long before the time limits of article 78 of the LGT expired.
Having failed to do so, the decision of the hierarchical appeal of the gracious petition, which did not proceed to convert the gracious petition into official revision of the assessment, is illegal for being contrary to the law in force.
A different question pertains to the preclusion of the Claimant's right to oppose the assessment act, given the untimeliness of the gracious petition, which shall constitute a peremptory exception which, under n.º 3 of article 576 of the CPC (applicable ex vi article 29, n.º 1, subparagraph e), of the RJAT), consists of the occurrence of facts that prevent the legal effect of the facts alleged by the author, thus resulting in the non-knowledge of the merits and the consequent dismissal of the application.
In the wording of the CPPT in force at the date of submission of the gracious petition, the time limit for submission of the gracious petition (article 70 of the CPPT), as well as judicial opposition was 90 days, counted from the date of the facts provided for in the subparagraphs of n.º 1 of article 102 of the CPPT.
Consequently, at the date of submission of the petition by the Claimant, both aforementioned time limits had already been consumed.
As JORGE LOPES DE SOUSA refers[14], "(…) if the Claimant allowed the time limit of the gracious petition and judicial opposition to expire, it lost definitively the right to opposition on the ground of defects giving rise to annulment, there being no new time limit of judicial opposition as to these defects counting from the decision of dismissal of the gracious petition. In fact, it would be absolutely illogical that a right lost (judicial opposition on the ground of defects giving rise to annulment) could be recovered through the practice of an act that could no longer be practiced in the face of the law.
The Taxpayer could deduce judicial opposition of the dismissal of the gracious petition, within 15 days after notification of the decision, but, in this case, the taxpayer can only oppose the dismissal of the petition as untimely. Naturally, it can also oppose the assessment of the tax, but also in the words of Counselor Jorge Lopes de Sousa, "(…) In these situations, being the direct object of judicial opposition the assessment act, the court should review the question of preclusion of the right to oppose the assessment act (…), should refrain from knowing the merits of the opposition, as untimely, both in the case of having exceeded the 15-day period counting from the decision of dismissal of the gracious petition, but also if having exceeded the period within which the gracious petition could be deduced (..) "
Faced with such an assessment act, the taxpayer can still file hierarchical appeal and/or request the revision of the tax act in accordance with article 78, n.º 1 of the LGT, which it should do within the period of administrative reclamation (an expression that seems to refer to the gracious petition and not to the procedure provided for in article 161 of the CPA).
It further adds that, both the dismissal of the hierarchical appeal and the dismissal of the request for revision are contenciously reviewable through the judicial opposition process (cfr. arts. 97, n.º 1, subparagraph D), 99 and 102, n.º 1, subparagraph e) of the CPPT and 95, n.º 2, subparagraph d), of the LGT).
Wherefore, having the taxpayer allowed the time limits of the gracious petition and judicial opposition, as well as other gracious means, to expire, it lost the right to oppose the assessment on the ground of defects giving rise to its annulment, there being, therefore, that conclude, that in the present case, the Tribunal cannot review the legality of the assessment act. Not because it did not have jurisdiction to do so, but because, given the untimeliness of the petition, it is incumbent upon the AT to convert the untimely gracious petition into official revision of the tax act.
Note, however, that, as the AT is obliged to convert the Gracious Petition into an act of revision of the Tax Act, the decision issued by the AT within the scope of this gracious means is judicially reviewable, opening by that route the way to opposition means.
As to assessment n.º 2004…, concerning the year 2001, more specifically to the correction of € 1,000.00.
At issue is the alleged failure to withhold at source of that amount by the Claimant, on income of artists paid to a company domiciled in Belgium, a country with which Portugal has concluded a Convention to Avoid Double Taxation.
Notwithstanding that domestic tax law taxed such income, whether under the guise of IRS or IRC, where a Convention to Avoid Double Taxation exists, this prevails over domestic law, in accordance with article 8 of the Constitution of the Portuguese Republic (CRP).
Now, at the date of the facts, the CDT approved by Decree-Law n.º 619/70, of 15 December, was in force, under which the income from the activity exercised in either State by entertainment professionals, as well as by athletes, could be taxed in the contracting State in which these activities of entertainment professionals or athletes are exercised[15].
In the original wording of the CDT, nothing was stated as to whether these activities were exercised through a company.
As mentioned in the AT's response, such alteration only came to occur with the Resolution of the Assembly of the Republic n.º 82/2000, of 14 December, which approved the Additional Convention between these two countries.
Whereby n.º 2 of article 17 of the Convention in question came to stipulate that: "Notwithstanding the provisions of articles 7, 14 and 15, income from the activity exercised personally by entertainment professionals or athletes, in that capacity, attributed to another legal person, may be taxed in the contracting State in which such activities of entertainment professionals and athletes are exercised."
In the AT's understanding, being the tax jurisdiction of such income cumulative of the source State and the residence State, in order for the source State not to tax by means of withholding at source, it should have in its possession proof that the holder of the income - artist representative company – is not controlled directly or indirectly by the entertainment professional, under n.º 7 of article 88.
Furthermore, according to the AT, in order for the CDT regime to apply, it was not sufficient for its conclusion between the Member States, it being also necessary that the debtor entity had in its possession, before making the payment, the residence certificate issued by the competent tax authorities of the State of residence of the non-resident artist company, it being incumbent upon the residence State and not the source State to eliminate double taxation.
Let us see:
The Resolution of the Assembly of the Republic n.º 82/2000, of 14 December, which approved the Additional Convention to the CDT concluded between Portugal and Belgium, only entered into force on 5 April 2001, indeed as results from the institutional information of the AT[16].
In fact, the entry into force of international treaties does not occur with their approval by the Assembly of the Republic, nor with their publication in the Diário da República, but with their proper ratification[17].
And the procedure for ratification of the Additional Convention was only completed with Notice n.º 36/2001, of 21 April, of the Ministry of Foreign Affairs, which made public the exchange of instruments of ratification of the Additional Convention between the Portuguese Republic and the Kingdom of Belgium.
Which exchange occurred on 5 April 2001.
It further adds that, under article XV, n.º 2 subparagraph b) of the Convention, as to taxes withheld at source, it would only apply to cases in which the taxable event had occurred from the beginning of the calendar year following the entry into force of the Additional Convention.
Wherefore, it is concluded that, on the date of the taxable event of the withholding in question (2001), the Portuguese State could not tax the income in question, because the Additional Convention had not yet entered into force.
As to the requirement of possession of residence certificates issued by the competent tax authorities of the State of residence of the non-resident artist company, before payment or placing at disposal, as mentioned above, at the date of the facts there was a legal void, which could not be filled by the issuance of circulars or notices, which is why there are no doubts that at the date of the tax facts, the lack of the certificate in question or the late proof of the residence of the beneficiary of the income in the other contracting State, did not preclude, unless for a better opinion, the application of the withholding exemption mechanism.[18]
Even if this were not understood, it results from the PA attached by the AT that such certificate was attached by the Claimant and the original sent to the DSRI on 16/05/2016[19].
Thus, bearing all the above in mind, the assessment of € 1,000.00 suffers from illegality due to violation of law.
Of Compensatory Interest
The right to compensatory interest as a guarantee of taxpayers is provided for in article 43 of the LGT and has, at its origin, the fact that the taxpayer has paid undue taxes due to errors attributable to the services or the failure of these to comply with certain legal time limits.
In this regard, the type of error is not relevant (whether factual or legal) nor the degree of fault, also because what is at issue is an objective liability of the services[20].
It has been considered in countless jurisprudence of the STA on compensatory interest that the expression used in article 43 of the LGT, "error" and not "defect" or "illegality" to refer to the facts that can serve as the basis for the attribution of interest, means that the legislator had in mind error regarding the factual presuppositions and error regarding the legal presuppositions.[21]
Compensatory interest is equally due when the AT proceeds to the revision of the tax act at the initiative of the taxpayer, whether the error serving as its ground is attributable to the services or attributable to the taxpayer, as results from Circular Notice n.º 60 052, of 03.10.2006 of the DGCI, effected more than one year after the request of the same, unless the delay is not attributable to the AT[22].
In this case, the presupposition is that the taxpayer has submitted an application aimed at annulling the assessment of previously paid tax, and the AT does not revise the act within a one-year period in the sense intended by the taxpayer.
However, it is not a matter of indifference for the taxpayer whether or not to oppose the assessment acts within their respective time limits, for in the case of annulment in an opposition process, judicial or administrative, any illegality can be invoked and there is a right to compensatory interest from the date of the undue payment until the issuance of the credit note (articles 43, n.º 1 of the LGT and 61, n.º 3 of the CPPT), whereas in cases of official revision of the assessment (when not made at the request of the taxpayer, within the period of administrative reclamation, situation that is comparable to that of gracious petition) there is only a right to compensatory interest under article 43, n.º 3, of the LGT, and the annulment can only be based on error attributable to the services and duplication of collection (article 78, n.ºs 1 and 6, of the LGT).
In accordance with the jurisprudence of the Supreme Administrative Court, contained in Judgment n.º 0793/14, of 03-06-2015 "(…) Essentially, the regime of article 78, when the request for revision is formulated beyond the periods of administrative and contentious opposition, amounts to a means of restitution of what was unduly paid, with revocation and cessation for the future of the effects of the assessment act, and not to an annulment means, with retroactive destruction of the effects of the act.(…)"[23]
That is, as a general rule, interest should be calculated from the date on which the taxpayer incurred the undue payment (article 61, n.º 5 Code of Procedure and Tax Process (CPPT), except when the taxpayer did not promptly activate the normal means of recourse.
When the annulment of the assessment is impelled by the taxpayer, the counting of interest begins when one year has elapsed from the request of this, unless the delay is not attributable to the AT (article 43, n.º 3, subparagraph c) of the LGT).
The argument of the AT also does not proceed, contained in information from the Department of International Relations, dated 2011, i.e., after more than 10 years had elapsed since the fiscal years in question in the present case, and about 6 years after the gracious petition, to the effect that compensatory interest is not due, because we are not dealing with an error in the factual or legal presuppositions, but rather with an alteration of the legal regime of the liability of the substitute taxpayer, with retroactive effectiveness introduced by Law n.º 67-A/2007, of 31 December, and the understanding contained in Circular Notice n.º 20131 of 2008/04/07, in situations where the substitute taxpayer does not have in its possession and within the legal time limit, proof of the verification of the presuppositions that legitimize the activation of the CDT.
Not only because this was not the argument upheld in the inspection report, dated October 2004, which is based on an erroneous interpretation of the legal regime in force at the date of the facts, but also in that it is manifest that only the delays in the review of the question sub judice, permitted the AT to resort to such grounds.
On the other hand, it is the jurisprudential understanding of the STA[24], that: "(…) n.º 4 of article 48 of Law n.º 67-A/2007, in determining the retroactive application of the regime expressly provided for in n.º 4 of article 90-A, constitutes an explicit recognition that it was illegal to impute responsibility to the substitute taxpayer when it was proven that the presuppositions for the full or partial exemption of withholding, even if the proof only came to be made after the moment at which withholding should be made.
In fact, in light of the aforesaid principle of legality to which the activity of the Tax Administration is subject, only on the ground of illegality can it be understood that, in practice, tax assessment acts already made were annulled by legislative means, as does that norm, in determining the exclusion of the responsibility of the substitute taxpayer «independently of having already been made the assessment of the tax».
And, in fact, in situations in which an assessment was made at a moment that it is already known that the taxable event underlying it does not occur, it cannot but be understood that an illegal act is at issue, immediately in light of the principles of justice, proportionality and equality in the distribution of public burdens, whose observance is imposed upon the Tax Administration by article 55 of the LGT and which are a corollary of the principles of justice, necessity and equality, generically stated in articles 13 and 18, n.º 2, of the CRP and inherent in the principle of the Democratic State of Law.».
Applying this doctrine to the present case, it becomes evident that there was error attributable to the services as regards the IRC assessment concerning the year 2000, as it is not permitted, in light of the legislation then in force, to require that proof of residence be made exclusively in accordance with the terms and manner provided for in n.º 4 of article 14 of the CIRC."
It is incumbent to adopt an identical solution in the present case, given that the AT required from the Claimant the production of proof as to tax residence, which was not imposed by the Conventions in force on the date of the fiscal years under scrutiny, having labored in error as to the annulled IRC assessments.
Finally, it is the pacifically established jurisprudential understanding, citing, by way of mere example, the Judgment of the STA, issued in Case n.º 01052/04, available at http://www.dgsi.pt/, in which it is written: "(…) Compensatory interest is due when it is determined, in gracious petition or judicial opposition, that there was error attributable to the services resulting in payment of the tax debt in an amount greater than what was due».
The disappearance of the tax assessment act, whether by the satisfaction of the gracious petition, or by the success of the judicial opposition, imposes upon the Tax Administration that it reconstitute the hypothetical legal situation that would have existed had the annulled tax act not been practiced. This necessarily includes the refund of the sum that was unduly exacted from the taxpayer and that he satisfied. But the reconstitution of the situation also includes the payment of compensatory interest, as the taxpayer has, from the payment he made, until the reimbursement, been deprived of the use of the corresponding capital.(…)[25]
Thus, bearing all the above in mind, and accepting that the duty to indemnify on the part of the State exists in all situations that have resulted in unlawful prejudice to taxpayers, and that these should be indemnified when they have paid tax obligations to which they were not legally obliged, it is incumbent to conclude that:
i. Assessment n.º 2004 …
Knowledge of the application is foreclosed as to the conviction in compensatory interest, given what was decided as to the matter of merit.
ii. Assessment n.º 2004 …, year 2001
Compensatory interest is owed on the amount of € 7,670.99, annulled in the hierarchical appeal, as well as the € 1,000.00, the assessment of which is annulled by the present decision.
iii. With the full annulment of assessment n.º 2004 … concerning the year 2002, in the amount of € 40,581.09, the AT should have recognized the right to compensatory interest, having proceeded to its voluntary payment, therefore, the AT is condemned to pay compensatory interest in the terms requested by the Claimant.
*
7. DECISION
In these terms, in accordance with the above, it is decided:
a) To find well-founded the application for declaration of illegality of the decision of dismissal of the gracious petition for 2000 IRC, for violation of the obligation of official conversion by the AT, pursuant to the provisions of articles 52 of the CPPT and 78, n.º 1 of the LGT, and, consequently, not to know of the application for declaration of illegality of the additional IRC assessment relating to 2000;
b) To find well-founded the application for declaration of illegality of the partial dismissal of the hierarchical appeal filed of the gracious petition that maintained the assessment of € 1,000.00, relating to fiscal year 2001, on the ground of the erroneous application of the law in force at the date of the facts, and, consequently, annul the respective assessment, condemning the Tax Administration to refund to A… the amount assessed, plus compensatory interest, in the terms requested by the Claimant;
c) To find well-founded the application for recognition of compensatory interest in relation to the amounts assessed concerning fiscal years 2001 and 2002, in the exact terms requested by the Claimant;
d) Condemn the Respondent in the costs of the process in accordance with article 22, n.º 2 of the RJAT.
8. Value of the Case
The value of the case is fixed at € 13,779.89 in accordance with article 97-A, n.º 1, a), of the Code of Procedure and Tax Process, applicable by virtue of subparagraphs a) and b) of n.º 1 of article 29 of the RJAT and n.º 2 of article 3 of the Regulation of Costs in Tax Arbitration Proceedings.
9. Costs
The amount of the arbitration fee is fixed at € 918.00, in accordance with Table I of the Regulation of Costs in Tax Arbitration Proceedings.
Notify.
Lisbon 6 July 2017
The Arbitrator
(Cristina Coisinha)
Text prepared by computer in accordance with the provisions of article 131, n.º 5 of the CPC, applicable by referral of article 29 of the RJAT.
The wording of the present decision is governed by the spelling prior to the Orthographic Agreement of 1990.
[1] Point 4 of the inspection report
[2] N.º 1 of article 78 of the LGT
[3] Judgments of the Supreme Court of Justice issued in the context of cases n.ºs: 0793/14, of 03-06-2015, n.º 01942/13, of 18-06-2014, available at http://www.dgsi.pt/jsta.nsf?OpenDatabase;
[4] Article 2, n.º 1 subparagraph a) of the RJAT
[5] Article 3, n.º 1 of the RJAT
[6] See in this sense the information of the Directorate General of Taxes, 2nd Directorate of Finance of Lisbon, page 245 of PA
[7] In the wording in force at the date of the facts
[8] Decisions n.ºs 398/2015/; 689/2015-T; 709/2015-T; 735/2015-T;133/2016-T; 164-T/2016; 166/2016-T; 231/2016-T; 617/2016-T, available at www.caad.org.pt.
[9] From the entry into force of Decree-Law n.º 37/95, of 14 February
[10] Judgments of 03-11-2004, Case n.º 00151/04; of 05-07-2005 in Case 05675/01; of 09-05-2006, in Case 00436/05; of 16-05-2006 in Case 00504/05; of 14-11-2006 in Case 01424/06; of 24/04/2007 in Case 01707/07 and of 09-05-2007 in Case 01041/06, all available in full at www.dgsi.pt
[11] See also Judgment of the STA issued in case n.º 0402/06, of 12-07-2006
[12] The doctrine has been defending the duty of revocation of illegal acts, for which purpose can be seen: Robin de Andrade, The Revocation of Administrative Acts, 2nd edition, pages 255-268; Maria da Glória Ferreira Pinto, Considerations on the Gracious Petition Prior to Contentious Appeal, pages 12 to 14; Mário Esteves de Oliveira, Administrative Law, Volume I, pages 613-614.
[13] See Judgment of the STA n.º 01474/11, of 05-11-2014, available at http://www.dgsi.pt/
[14] in Code of Procedure and Tax Process, annotated and commented, 6th edition, 2011
[15] Articles 17 and also 7, 14 and 15 of the CDT
[16] http://info.portaldasfinancas.gov.pt/NR/rdonlyres/A9E92685-90D6-46D4-A39F-DEBF3FB51122/0/Tabela_CDTs_2017.pdf
[17] Article 8, n.º 2 of the Constitution of the Portuguese Republic
[18] In this sense, the Judgment of the TCAS of 03/11/2004, Case 00151/04 and of 09-05-2006, Case n.º.00436/05
[19] See handwritten note in the Model, page 136 of PA
[20] Rui Duarte Morais, in Manual of Procedure and Tax Process, 2014 Edition, pages 365 to 376
[21] Judgments issued in cases n.ºs 622/08, of 29.10.2008, 945/08, of 21.01.2009; 347/09 of 25.06.2009 and 665/09 of 04.11.2009.
[22] Jesuíno Alcântara Martins and José Costa Alves, in Procedure and Tax Process, 2015 Edition, pages 66 to 69
[23] In this regard, see also the Judgments of the STA, issued in the context of cases n.ºs: 0402/06 of 12-07-2006; 0329/11 of 02-11-2011; 01474/12, of 05-11-2014, available at http://www.dgsi.pt/
[24] Judgment of the STA issued in Case n.º 01705/09, of 07-12-2010
[25] In this regard, you can also read the judgment of the STA, in case 0893/11, of 06-02-3013, available at http://www.dgsi.pt
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