Process: 843/2014-T

Date: May 7, 2015

Tax Type: IRC

Source: Original CAAD Decision

Summary

This arbitration case (Process 843/2014-T) concerns a dispute between Group A SGPS, S.A. and the Portuguese Tax Authority (AT) regarding autonomous taxation under Corporate Income Tax (IRC) for the 2008 tax year. The taxpayer challenged assessment act no. 2009..., seeking reimbursement of €20,557.66 in alleged overpaid taxes. The core issue involves the retroactive application of Law 64/2008, which increased the autonomous taxation rate from 5% to 10% for representation expenses and light passenger vehicle costs, with effect from January 1, 2008. The claimant, a holding company subject to the Special Regime for Group Taxation (RETGS), argued that expenses incurred between January 1 and November 30, 2008 should have been taxed at the 5% rate that was in force during that period, not the 10% rate that only came into effect in December 2008. The case also involved a procedural dispute regarding the deadline for ex officio revision requests. The AT rejected the taxpayer's revision request as untimely, arguing that the 4-year deadline should be counted from when Form 22 was electronically submitted. The claimant contended the deadline should run from the actual assessment date (August 5, 2009) rather than the declaration submission date. The arbitration tribunal was constituted as a sole arbitrator tribunal under CAAD (Administrative Arbitration Centre) on March 10, 2014, with jurisdiction to decide on the legality of the tax assessment. The case raises important questions about the constitutionality of retroactive tax rate increases and the limits of arbitral tribunal competence in addressing constitutional challenges.

Full Decision

ARBITRATION AWARD

I – REPORT

A – PARTIES

Group A..., SGPS, S.A., with Tax Identification Number (NIPC) ..., with registered office at the Building …, hereinafter referred to as the Claimant or taxpayer, requested, pursuant to and for the purposes of Article 2.º and Article 10.º, both of Decree-Law no. 10/2011, of 20 January, the constitution of this Sole Arbitration Tribunal.

THE TAX AND CUSTOMS AUTHORITY (which succeeded the Directorate-General for Tax, through Decree-Law no. 118/2011, of 15 December) hereinafter referred to as the Respondent or AT.

The request for constitution of the arbitration tribunal was accepted by the President of CAAD, and the Arbitration Tribunal was duly constituted on 26-12-2014, to assess and decide on the subject matter of the present proceedings, and automatically notified the Tax and Customs Authority on 26-12-2014, as appears in the respective minutes.

The Claimant did not proceed to appoint an arbitrator, therefore, pursuant to Article 6.º, paragraph 1, and Article 11.º, paragraph 1, sub-paragraph b) of Decree-Law no. 10/2011, of 20 January, as amended by Article 228.º of Law no. 66-B/2012, of 31 December, the Ethics Council appointed Dr. Paulo Ferreira Alves, the appointment having been accepted in accordance with legal provisions.

On 23-02-2014 the parties were duly notified of this appointment and did not express the intention to challenge the appointment of the arbitrators, pursuant to Article 11.º, paragraph 1, sub-paragraphs a) and b) of the Legal Framework for Tax Arbitration (RJAT) and Articles 6.º and 7.º of the Code of Ethics.

In accordance with the provision of Article 11.º, paragraph 1, sub-paragraph c) of Decree-Law no. 10/2011, of 20 January, as amended by Article 228.º of Law no. 66-B/2012, of 31 December, the sole arbitration tribunal is duly constituted on 10-03-2014.

The arbitration tribunal is duly constituted. It is materially competent, pursuant to Articles 2.º, paragraph 1, sub-paragraph a), and 30.º, paragraph 1, of Decree-Law no. 10/2011, of 20 January.

Both parties agree to waive the meeting provided for in Article 18.º of the RJAT.

The parties have legal personality and capacity, are legitimate and are legally represented (Articles 4.º and 10.º, paragraph 2, of the same decree-law and Article 1.º of Ordinance no. 112-A/2011, of 22 March).

The proceedings are not vitiated by defects that would invalidate them.

B – CLAIM

  1. The Claimant seeks a declaration of illegality of the tax assessment act for Corporate Income Tax no. 2009 ..., and the reimbursement of the tax wrongfully assessed in the amount of €20,557.66 (twenty thousand, five hundred and fifty-seven euros and sixty-six cents).

C – GROUNDS FOR THE CLAIM

  1. To support its request for an arbitration award, the Claimant alleged, with a view to the partial declaration of illegality of the tax assessment act no. 2009 ..., in summary, the following:

  2. The Claimant submits that on 26-09-2014, it was notified of the decision to reject the request for ex officio revision it had submitted regarding the self-assessment of Corporate Income Tax (IRC) for the 2008 tax year, a revision request that was submitted on 29-05-2013.

  3. The Respondent alleges that the deadline of 4 years for proceeding with the revision of the tax act should be considered for assessment purposes as that which appears in the Corporate Income Tax assessment statement issued by the Income Tax Collection Department, because it is only on that date that the State truly determines the tax rate that will be applied to the taxable base reported by the Taxpayer, and not as the AT does, the moment when the submission via informatic form occurred of the declaration form 22, and not the date of self-assessment of the IRC for the period of 2008.

  4. The Claimant submits that according to the AT's position, the 4-year deadline would end on 28/05/2013, having elapsed 4 years from the moment when the submission via informatic form of declaration form 22 occurred.

  5. The Claimant alleges that as the revision request was only submitted on 29-05-2013, it was therefore considered as untimely, and the AT's decision in question is based on wrong premises, namely, because it considers as the date of assessment the moment when the submission via informatic form of declaration form 22 occurred.

  6. The Claimant maintains that the assessment relating to the IRC for the 2008 tax year, to which the number 2009 ... was assigned, was made on 05-08-2009, and in turn, the respective offsetting was effected on 07-10-2009, therefore the deadline would be counted from the date of assessment.

  7. The Claimant alleges in its request for partial nullity of the assessment, relating to the 2008 tax year, paid, as deductible charges relating to representation expenses and light passenger vehicles and subject to autonomous taxation under the IRC, the total amount of €88,405.28, corresponds to the sum of the amounts paid by each of the companies held by the claimant and which, for that reason, are included in the Special Regime for Group Taxation (RETGS).

  8. The Claimant maintains that the amount indicated in field 10 of Form 22 (autonomous taxation) corresponds to the sum of deductible charges relating to representation expenses and light passenger vehicles, or mixed vehicles paid by the following companies in the Group A... SGPS, S.A., now claimant,

a) B… - Food Products Trading and Distribution, Ltd., holder of Tax Identification Number ...,

b) C... Poultry S.A., holder of Tax Identification Number ...,

c) D... – Agricultural and Livestock Company of ..., S.A., holder of Tax Identification Number ...,

d) E... – Poultry Slaughter Centre, S.A., holder of Tax Identification Number ...,

e) Feed A..., S.A., holder of Tax Identification Number ...,

f) Agricultural Company of F..., S.A., holder of Tax Identification Number ...,

g) G... – Food Products, Ltd., holder of Tax Identification Number ...,

h) H... – Poultry Company, S.A., holder of Tax Identification Number ....

  1. The Claimant alleges that it was taxed at the rate provided for in Article 81.º, paragraph 3, of the Corporate Income Tax Code (CIRC), which on 31/12/2008 was 10%.

  2. It further argues that this amount did not correspond to what was in force between 1 January and 30 November 2008, as during that period, the rate applied to the aforesaid charges was 5%.

  3. The Claimant maintains that on 5 December 2008, Law 64/2008 was published, by which Article 81.º, paragraph 3, of the CIRC was amended (as amended by Law no. 55-B/2004, of 30 December, amended by Law no. 67-A/2007, of 31 December) which provided, in the relevant part, that were autonomously taxed, at the rate of 5%, deductible charges relating to representation expenses and those related to light passenger vehicles, or mixed, motorcycles or motorbikes incurred or borne by non-exempt taxpayers engaged, as their main activity, in a commercial, industrial or agricultural activity.

  4. And as a direct consequence of the retroactive application to 1 January of the increase to 10% of the rate, the now Claimant proceeded to pay the overpayment of €20,557.66, this amount corresponds to the difference from the amount that would have been paid had the 5% rate been applied, between 1 January and 30 November, as shown in the following table:

[Table content preserved with headings:]

Companies | Vehicle Charges Field 420/421 | Representation Expenses Field 414 | PAID | DUE | EXCESS
Year 2008 | 01-01 to 30-11-2008 | Year 2008 | 01-01 to 30-11-2008 | |

C... Poultry, SA | €38,757.26 | €31,117.61 | €3,471.00 | €3,392.60 | €4,222.83 | €2,497.32 | €1,725.51

E... - Poultry Slaughter Centre, SA | €22,523.55 | €20,934.34 | €1,104.78 | €1,104.78 | €2,362.83 | €1,260.88 | €1,101.96

Distribution - Food Products Trading, Ltd. | €21,615.66 | €20,284.31 | €7,365.71 | €7,014.01 | €2,898.14 | €1,533.22 | €1,364.92

Group A..., SGPS, SA | €23,985.01 | €22,969.28 | €1,120.00 | €1,100.95 | €2,510.50 | €1,306.99 | €1,203.51

D... - Agricultural and Livestock Company of Lombos Farm, SA | €81,135.49 | €75,786.64 | €5,225.31 | €5,098.81 | €8,636.08 | €4,591.81 | €4,044.27

Feed A..., SA | €91,811.71 | €82,579.81 | €35,033.87 | €32,393.64 | €12,684.56 | €6,935.89 | €5,748.67

H... - Poultry Company, SA | €8,479.22 | €8,041.62 | €0.00 | €0.00 | €847.92 | €445.84 | €402.08

Agricultural Company of F..., SA | €75,912.58 | €72,557.90 | €21,760.33 | €21,618.33 | €9,767.29 | €5,058.48 | €4,708.81

G... - Food Products, Ltd. | €5,528.02 | €5,158.64 | €0.00 | €0.00 | €552.80 | €294.87 | €257.93

| | | | | | | €20,557.66

  1. The Claimant was notified of assessment no. 2009 ..., pursuant to which the IRC assessment relating to the 2008 tax year was made according to the amounts indicated.

  2. The Claimant alleges that on 20 June 2012, the Constitutional Court handed down judgment no. 310/2012, by which it decided "to declare unconstitutional, for violation of paragraph 3 of Article 103.º of the Constitution, the norm of Article 5.º, paragraph 1, of Law no. 64/2008, of 5 December, insofar as it makes retroactive to 1 January 2008 the amendment to Article 81.º, paragraph 3, sub-paragraph a) of the Corporate Income Tax Code, enshrined in Article 1.º-A of the aforementioned legal instrument"

  3. For this reason, in determining the illegality of the aforementioned norm, the now claimant is required to request the revision of the IRC assessment act in this matter.

  4. The Claimant submits that in view of the declaration of unconstitutionality, pursuant to Article 78.º, paragraph 1 of the General Tax Law (LGT), it would be the responsibility of the AT to proceed with the revision of the tax act.

  5. And that in the present case the illegality produced is manifest, making it necessary to correct the value of the rate applied until 30 November, reducing it to the initial 5%.

  6. It further states that handed down by the Constitutional Court which declared Article 5.º, paragraph 1, of Law no. 64/2008, of 5 December unconstitutional, for violation of the principle of prohibition of fiscal retroactivity enshrined in Article 103.º, paragraph 3, of the Constitution, and therefore it is incumbent upon the Tax Authority to review the assessment made in light of this provision whenever the Taxpayer requests it.

  7. It further argues that as to the question of whether this situation falls within the scope of "error attributable to the services" the Supreme Administrative Court has uniformly and repeatedly stated, with respect to Article 43.º of the LGT, that this concept covers any illegality not attributable to the taxpayer but to the Administration, with the exception of error in self-assessment which, for this purpose, is equated to those of the first kind.

  8. And it is also settled understanding that the aforementioned error attributable to the services also includes "error of law" which consists in the application of a normative provision declared illegal.

  9. The claimant argues that the Tax Authority has the obligation, under the principle of legality, to promote the revision of the act, should this be requested by the taxpayer.

  10. The Claimant concludes by petitioning that the partial nullity of the assessment relating to the 2008 tax year be declared, in the part relating to autonomous taxation applying to deductible charges relating to representation expenses and light passenger vehicles, or mixed vehicles, motorcycles or motorbikes, borne until 30 November 2008, determining, in consequence, the reimbursement to the Taxpayer of the amount collected in excess.

D - RESPONSE OF THE RESPONDENT

  1. The Respondent, duly notified for this purpose, timely submitted its response in which, in abbreviated summary, it alleged the following:

  2. The Respondent alleges that on the request submitted, a draft decision for summary rejection was handed down by the Director of IRC Services, on 24 January 2014, which, in turn, was based on Notice no. …/2014, from the IRC Services Department, where, having examined the procedural requirement of timeliness, it concludes that the request was untimely.

  3. By order of the Director of IRC Services, of 29 August 2014, issued and based on Notice no. …/2014, from the IRC Services Department, given the fact that the Claimant failed to bring to the proceedings any element capable of altering the proposed decision, the draft for rejection was converted into a final decision.

  4. The Respondent argues the lack of material jurisdiction of the present arbitration tribunal to decide these proceedings, on the grounds that the legality of the request for ex officio revision was not assessed.

  5. The Claimant alleges that the act which constitutes the immediate subject matter of the arbitration request under this dispute is embodied in the decision to reject the ex officio revision request, which was summarily rejected due to its untimeliness.

  6. Thus, the Respondent argues that the legality of any tax assessment act was not assessed inasmuch as it was prejudiced by the lack of a procedural requirement necessary for its effective assessment.

  7. Which, in the Respondent's view, is equivalent to saying that the AT did not rule on the merits of the question, namely, on the temporal application of the autonomous taxation rate, which would, from the outset, also imply the validation of the amount referred to by the Claimant as having been paid in excess based on the respective documents.

  8. Consequently, the Respondent alleges that it is clear that we are dealing with an administrative act in tax matters which, by not assessing or discussing the legality of the assessment act, cannot be challenged through judicial review, pursuant to the provision of sub-paragraph a) of paragraph 1 of Article 97.º of the Tax Procedure Code (CPPT).

  9. The Respondent further submits that there is, in the present case, a dilatory exception embodied in the lack of material jurisdiction of the arbitration tribunal, which prejudices the determination on the merits of the case and should result in the dismissal of the case against the Respondent Entity, in accordance with the provisions of Articles 576.º, paragraph 1 and 577.º, sub-paragraph a) of the Civil Procedure Code (CPC), applicable ex vi Article 29.º, paragraph 1, sub-paragraph e) of the RJAT.

  10. The Respondent argues that on the basis of the provisions of Articles 2.º, paragraph 1, sub-paragraph a), and 4.º, paragraph 1, both of the RJAT, as well as Articles 1.º and 2.º, sub-paragraph a), both of Ordinance no. 112-A/2011, of 22 March, the arbitration tribunal lacks material jurisdiction insofar as the Claimant did not previously lodge a complaint, pursuant to Article 131.º of the CPPT.

  11. It further notes that such equivalence is legally barred in arbitration proceedings, being excluded from the material jurisdiction of arbitration tribunals the assessment of claims relating to the declaration of illegality of self-assessment acts that have not been preceded by recourse to the administrative remedy pursuant to Articles 131.º of the CPPT but, only, of ex officio revision pursuant to Article 78.º of the LGT.

  12. The Respondent concludes by petitioning that it be considered that the Arbitration Tribunal constituted lacks material jurisdiction to assess and decide on the request that is the subject of the dispute under this proceeding, pursuant to Articles 2.º, paragraph 1, sub-paragraph a) and 4.º, paragraph 1, both of the RJAT, and Articles 1.º and 2.º, sub-paragraph a), both of Ordinance no. 112-A/2011, which embodies a dilatory exception preventing determination on the merits of the case, pursuant to the provision of Article 576.º, paragraphs 1 and 2 of the CPC ex vi Article 2.º sub-paragraph e) of the CPPT and Article 29.º, paragraph 1, sub-paragraphs a) and e) of the RJAT.

E - ESTABLISHMENT OF FACTS

  1. Before entering into the assessment of these matters, it is necessary to present the factual matter relevant to its understanding and decision, which was carried out on the basis of documentary evidence, taking into account the alleged facts.

  2. With respect to relevant factual matters, the present tribunal establishes the following as fact:

  3. The Claimant proceeded to submit its Group IRC Declaration by filing Form 22 on 28-05-2009, the date on which the self-assessment of Corporate Income Tax for the 2008 tax year occurred.

  4. The Claimant submitted a substitute declaration on 29-06-2009.

  5. The Claimant was notified of assessment no. 2009 ..., pursuant to which the IRC assessment for the 2008 tax year was made, which was carried out on 05/08/2009, and in turn, the respective offsetting was effected on 07/10/2009.

  6. The Claimant submitted the ex officio Revision Request on 29-05-2013, pursuant to Article 78.º of the General Tax Law (LGT).

  7. On 21/04/2014 it was notified of the draft decision to reject the revision request submitted, for untimeliness, which was converted into a final decision on 29/05/2014.

  8. A draft decision for summary rejection was handed down by the Director of IRC Services, on 24 January 2014, which was based on Notice no. …/2014, from the IRC Services Department, where it concludes that the Claimant's request was untimely.

  9. By order of the Director of IRC Services, of 29 August 2014, issued and based on Notice no. …/2014, from the IRC Services Department, the draft for rejection was converted into a final decision.

  10. The following companies are included in the Special Regime for Group Taxation (RETGS), for which the claimant is responsible for the IRC assessment:

a. Group A... SGPS, S.A.,

b. Distribution - Food Products Trading and Distribution, Ltd., holder of Tax Identification Number ...,

c. C... Poultry S.A., holder of Tax Identification Number ...,

d. D... – Agricultural and Livestock Company of ..., S.A., holder of Tax Identification Number ...,

e. E... – Poultry Slaughter Centre, S.A., holder of Tax Identification Number ...,

f. Feed A..., S.A., holder of Tax Identification Number ...,

g. Agricultural Company of F... S.A., holder of Tax Identification Number ...,

h. G... – Food Products, Ltd., holder of Tax Identification Number ...,

i. H... – Poultry Company, S.A., holder of Tax Identification Number ....

  1. The claimant was subject to autonomous taxation at the rate provided for in Article 81.º, paragraph 3, of the Corporate Income Tax Code, which on 31/12/2008 was 10%.

  2. On 5 December 2008, Law 64/2008 was published, by which Article 81.º, paragraph 3, of the Corporate Income Tax Code was amended (as amended by Law no. 55-B/2004, of 30 December, amended by Law no. 67-A/2007, of 31 December), which changed the rate of 5% on deductible charges relating to representation expenses and those related to light passenger vehicles, or mixed vehicles, motorcycles or motorbikes incurred or borne by non-exempt taxpayers engaged, as their main activity, in commercial, industrial or agricultural activity, to 10%, for the entire 2008 fiscal period, beginning on 1 January 2008.

  3. On 20 June 2012, by decision of the Constitutional Court handed down in judgment no. 310/2012, by which it decided "to declare unconstitutional, for violation of paragraph 3 of Article 103.º of the Constitution, the norm of Article 5.º, paragraph 1, of Law no. 64/2008, of 5 December, insofar as it makes retroactive to 1 January 2008 the amendment to Article 81.º, paragraph 3, sub-paragraph a) of the Corporate Income Tax Code, enshrined in Article 1.º-A of the aforementioned legal instrument".

  4. By force of this decision, the amendment to Article 81.º, paragraph 3, of the Corporate Income Tax Code by Law 64/2008, of 5 December 2008, applies only after its entry into force on 6 December 2008.

F - UNPROVEN FACTS

  1. Of the facts with interest for the decision of the case, contained in the claim, all those that are the subject of concrete analysis, those that do not appear in the factual description above were not proven.

G - QUESTIONS TO BE DECIDED

  1. Given the positions taken by the parties in the arguments presented, the central question to be resolved is the following, which must be assessed and decided:

a. The alleged exception of lack of jurisdiction of the arbitration tribunal to decide the arbitration request, raised by the Respondent and ex officio.

b. The alleged by the Claimant, declaration of partial illegality of the tax assessment act for Corporate Income Tax no. 2009 ....

H - ON THE RAISED EXCEPTION OF LACK OF JURISDICTION OF THE ARBITRATION TRIBUNAL

  1. The questions of determining the jurisdiction of courts of primary jurisdiction and of jurisdiction ex officio, pursuant to Articles 13.º of the Code of Procedure in Administrative Courts (CPTA) and Article 578.º of the Civil Procedure Code (CPC) by subsidiary application of Article 29.º of the Legal Framework for Arbitration in Tax Matters (RJAT), makes it necessary, given the foregoing, to assess the present dilatory exception.

  2. It is raised by the Respondent that the present arbitration tribunal lacks material jurisdiction to assess and decide on the request that is the subject of the dispute under this proceeding, pursuant to Articles 2.º, paragraph 1, sub-paragraph a) and 4.º, paragraph 1, both of the RJAT and Articles 1.º and 2.º, sub-paragraph a) both of Ordinance no. 112-A/2011, which embodies a dilatory exception preventing determination on the merits of the case, pursuant to the provision of Article 576.º, paragraphs 1 and 2 of the CPC ex vi Article 2.º sub-paragraph e) of the CPPT and Article 29.º, paragraph 1, sub-paragraphs a) and e) of the RJAT, which prevents the assessment of the request and results in the dismissal of the proceedings against the AT pursuant to Articles 576.º, paragraph 2 and 577.º, sub-paragraph a) of the CPC, ex vi Article 29.º, paragraph 1, sub-paragraphs a) and e) of the RJAT.

  3. Lack of jurisdiction, whether absolute or relative, of the arbitration tribunal as to its material capacity to assess the acts that are the subject of the arbitration request constitutes a dilatory exception, Article 577.º of the CPC and Article 2.º of the RJAT.

  4. The Respondent raises the question of lack of jurisdiction of the present arbitration tribunal, based on the present arbitration request and documents attached, due to the fact that it has as its immediate subject the decision to reject the ex officio revision request and as its mediate subject the tax act embodied in the self-assessment of IRC for the period of 2008.

  5. In this regard, it is necessary to decide on the jurisdiction of arbitration tribunals operating in CAAD.

  6. In the first instance, the jurisdiction of arbitration tribunals operating in CAAD is limited to the matters indicated in Article 2.º, paragraph 1, of Decree-Law no. 10/2011, of 20 January (RJAT), whose paragraph 1, sub-paragraph a) provides that arbitration tribunals have jurisdiction for assessing the claim for declaration of illegality of assessment and self-assessment acts of taxes.

  7. In the second instance, the jurisdiction of arbitration tribunals operating in CAAD is also limited by the terms in which the Tax Administration bound itself to such jurisdiction, implemented in Ordinance no. 112-A/2011, of 22 March, since Article 4.º of the RJAT establishes that "the binding of the tax administration to the jurisdiction of the tribunals constituted pursuant to this law depends on an ordinance of the members of Government responsible for the areas of finance and justice, which establishes, in particular, the type and maximum value of disputes covered", in which the binding to arbitration jurisdiction of the services - DGCI and DGAIEC - entities merged in the current Tax and Customs Authority, with effect from 1 January 2012, is requested.

  8. It should be understood that the jurisdiction of arbitration tribunals "is restricted to the activity connected with tax assessment acts, being excluded from its jurisdiction the assessment of the legality of administrative acts of total or partial rejection or of revocation of exemptions or other tax benefits, when dependent on recognition by the Tax Administration, as well as other administrative acts relating to tax matters that do not involve assessment of the assessment act, to which sub-paragraph p) of paragraph 1 of Article 97.º of the CPPT refers" (Jorge Lopes de Sousa, Commentary on the Legal Framework for Tax Arbitration in Guide to Tax Arbitration, Almedina, 2013, p. 105).

  9. The assessment of the jurisdiction of the arbitration tribunal involves a judgment on the adequacy for the case under consideration of the procedural means of special administrative action or of judicial review, in light of the provision of Article 97.º of the CPPT, which defines the respective fields of application, distinguishing between "review of administrative acts in tax matters that involve the assessment of the legality of the assessment act" (sub-paragraph d) of paragraph 1) and "contentious review of total or partial rejection or revocation of exemptions or other tax benefits, when dependent on recognition by the tax administration, as well as other administrative acts relating to tax matters that do not involve assessment of the legality of the assessment act" (sub-paragraph p) of paragraph 1), and, pursuant to paragraph 2 of Article 97.º, "contentious review of administrative acts in tax matters, which do not involve assessment of the legality of the assessment act, by the tax administration, comprising the central government, regional governments and their members, even when exercised by delegation, is governed by the norms on procedure in administrative courts".

  10. To implement such a distinction between the scope of application of these procedural means, which, by virtue of sub-paragraph a) of paragraph 1 of Article 2.º of the RJAT, is relevant in defining the jurisdiction of tax arbitration tribunals, it is established jurisprudential guidance that "the use of the judicial review process or contentious review (currently special administrative action, by virtue of the provision of Article 191.º of the CPTA) depends on the content of the challenged act: if it involves the assessment of the legality of an assessment act, the judicial review process shall apply, and if it does not involve such assessment, contentious review/special administrative action shall apply" (cf. the Supreme Administrative Court judgment of 25.6.2009, case no. 0194/09).

  11. In light of this second limitation of the jurisdiction of arbitration tribunals operating in CAAD, the resolution of the jurisdictional question depends essentially on the terms of this binding, since, even if the situation is one that can be classified under Article 2.º of the RJAT, if it is not covered by the binding commitment, the possibility of the dispute being jurisdictionally decided by this Arbitration Tribunal will be excluded.

  12. In sub-paragraph a) of Article 2.º of Ordinance no. 112-A/2011, claims relating to the declaration of illegality of self-assessment, withholding at source and payment on account acts that have not been preceded by recourse to the administrative remedy pursuant to Articles 131.º to 133.º of the Tax Procedure Code are expressly excluded from the scope of the binding of the Tax Administration to the jurisdiction of arbitration tribunals operating in CAAD.

  13. The express reference to the preceding administrative remedy "pursuant to Articles 131.º to 133.º of the Tax Procedure Code" should be interpreted as relating to cases where such remedy is mandatory, through the administrative complaint, which is the administrative means indicated in those Articles 131.º to 133.º of the CPPT, to which it refers.

  14. In fact, it would not be immediately understood that, where prior administrative review is not necessary "when its grounds are exclusively a matter of law and the self-assessment was made in accordance with generic guidelines issued by the tax administration" (Article 131.º, paragraph 3, of the CPPT, applicable to assessment cases), the arbitration jurisdiction would be excluded because such administrative review, which is understood to be unnecessary, was not carried out.

  15. In the case at hand, a declaration of illegality is sought for the tax assessment acts for Corporate Income Tax for the year 2008, on the grounds of unconstitutionality already declared by the Constitutional Court, as well as a declaration of illegality and annulment of the act rejecting the request for ex officio revision, and the consequent refund of the tax wrongfully paid.

  16. Thus, it is necessary, first and foremost, to clarify whether the declaration of illegality of acts rejecting requests for revision of the tax act, provided for in Article 78.º of the General Tax Law, is included in the competencies attributed to arbitration tribunals operating in CAAD by Article 2.º of the RJAT.

  17. In fact, in this Article 2.º there is no express reference to these acts, contrary to what happens with the legislative authorization on which the Government based itself to approve the RJAT, which refers to "requests for revision of tax acts" and "administrative acts that involve the assessment of the legality of assessment acts".

  18. However, the formula "declaration of illegality of tax assessment acts, self-assessment, withholding at source and payment on account", used in sub-paragraph a) of paragraph 1 of Article 2.º of the RJAT does not restrict, in a mere declarative interpretation, the scope of arbitration jurisdiction to cases in which one of those types of acts is directly challenged.

  19. In fact, the illegality of assessment acts may be declared judicially as a corollary of the illegality of a second-level act which confirms an assessment act, incorporating its illegality.

  20. The inclusion in the competencies of arbitration tribunals operating in CAAD of cases in which the declaration of illegality of the acts indicated therein is effected through the declaration of illegality of second-level acts, which are the immediate subject of the challenge, results with certainty from the reference that the norm makes to self-assessment, withholding at source and payment on account acts, which are expressly referred to as being included among the competencies of arbitration tribunals.

  21. In fact, with respect to these acts, a mandatory administrative complaint is imposed as a rule, in Articles 131.º to 133.º of the CPPT, therefore, in these cases, the immediate subject of the review proceedings is, as a rule, the second-level act that assesses the legality of the assessment act, an act which, if it upholds it, must be annulled to obtain the declaration of illegality of the assessment act. The reference made in sub-paragraph a) of paragraph 1 of Article 10.º of the RJAT to paragraph 2 of Article 102.º of the CPPT, which provides for the review of acts rejecting administrative complaints, removes any doubt that cases in which the declaration of illegality of the acts referred to in sub-paragraph a) of Article 2.º of the RJAT must be obtained as a result of the declaration of illegality of second-level acts are covered by the competencies of arbitration tribunals operating in CAAD.

  22. In fact, it was precisely in this sense that the Government, in Ordinance no. 112-A/2011, of 22 March, interpreted these competencies of arbitration tribunals operating in CAAD, by excluding from the scope of these competencies claims relating to the declaration of illegality of self-assessment, withholding at source and payment on account acts that have not been preceded by recourse to the administrative remedy pursuant to Articles 131.º to 133.º of the Tax Procedure Code, which has the scope of restricting its binding to cases in which this recourse to the administrative remedy was used.

  23. Once the conclusion is obtained that the formula used in sub-paragraph a) of paragraph 1 of Article 2.º of the RJAT does not exclude cases in which the declaration of illegality results from the illegality of a second-level act, it will also cover cases in which the second-level act is the act rejecting a request for revision of the tax act, since there is no reason to restrict it, all the more so as, in cases where the revision request is made within the deadline for the administrative complaint, it should be equated to an administrative complaint. ([1])

  24. The express reference to Article 131.º of the CPPT made in Article 2.º of Ordinance no. 112-A/2011 cannot have the decisive effect of excluding the possibility of assessing claims of illegality of acts rejecting ex officio revision requests for self-assessment acts.

  25. In fact, the interpretation exclusively based on the literal wording defended by the Tax and Customs Authority in the present proceedings cannot be accepted, since in the interpretation of tax norms the general rules and principles of interpretation and application of laws are observed (Article 11.º, paragraph 1, of the General Tax Law) and Article 9.º, paragraph 1, expressly prohibits interpretations exclusively based on the literal wording of norms by providing that "interpretation should not be limited to the letter of the law", rather, it should "reconstruct from the texts the legislative intent, taking especially into account the unity of the legal system, the circumstances in which the law was enacted and the specific conditions of the time in which it is applied".

  26. As for correspondence between interpretation and the letter of the law, merely "a minimum of verbal correspondence, even if imperfectly expressed" suffices (Article 9.º, paragraph 3, of the Civil Code) which will only prevent the adoption of interpretations that cannot in any way be reconciled with the letter of the law, even recognizing in it imperfection in the expression of legislative intent.

  27. For this reason, the letter of the law is not an obstacle to declarative interpretation, which clarifies the scope of the literal wording, nor even extensive interpretation, when it can be concluded that the legislator said less than what, in coherence, it would intend to say, that is, when it said imperfectly what it intended to say. In extensive interpretation "it is the very assessment of the norm (its "spirit") that leads to the discovery of the need to extend the text thereof to the hypothesis which it does not cover", "the expansive force of the very legal assessment is capable of leading the provision of the norm to cover hypotheses of the same type not covered by the text".([2])

  28. Extensive interpretation is thus imposed by the value and axiological coherence of the legal system, erected by Article 9.º, paragraph 1, of the Civil Code into a primordial interpretive criterion through the imposition of observance of the principle of unity of the legal system.

  29. It is clear that the scope of the requirement of prior administrative complaint, necessary to open the contentious avenue for review of self-assessment acts, provided for in paragraph 1 of Article 131.º of the CPPT, has as its sole justification the fact that with respect to this type of acts there is no expression of the Tax Administration's position on the legality of the legal situation created by the act, a position that could even turn out to be favorable to the taxpayer, avoiding the necessity of recourse to the contentious avenue.

  30. In fact, besides not seeing any other justification for this requirement, the fact that an identical necessary administrative complaint is also provided for contentious review of withholding at source and payment on account acts (in Articles 132.º, paragraph 3, and 133.º, paragraph 2, of the CPPT), which have in common with self-assessment acts the circumstance that there is also no expression of the Tax Administration's position on the legality of the acts, confirms that this is the reason for being of the said necessary administrative complaint.

  31. Another unequivocal confirmation that this is the reason for the requirement of necessary administrative complaint is found in paragraph 3 of Article 131.º of the CPPT, when it provides that "notwithstanding the provisions of the foregoing paragraphs, when its grounds are exclusively a matter of law and the self-assessment was made in accordance with generic guidelines issued by the tax administration, the deadline for review does not depend on prior complaint, and the review must be presented within the deadline of paragraph 1 of Article 102.º". In fact, in situations of this type, there was a prior generic expression by the Tax Administration on the legality of the legal situation created by the self-assessment act and it is this fact that explains why the necessary administrative complaint ceases to be required.

  32. Now, in cases where an ex officio revision request for a tax assessment act is formulated, the Tax Administration is provided with, through this request, an opportunity to rule on the merits of the taxpayer's claim before the latter resorts to the jurisdictional avenue, therefore, in coherence with the solutions adopted in paragraphs 1 and 3 of Article 131.º of the CPPT, it cannot be required that, cumulatively with the possibility of administrative assessment within the scope of this ex officio revision procedure, another administrative assessment through administrative complaint be required. ([3])

  33. On the other hand, it is unequivocal that the legislator did not intend to prevent taxpayers from formulating ex officio revision requests in cases of self-assessment acts, since these are expressly referred to in paragraph 2 of Article 78.º of the General Tax Law.

  34. In this context, allowing the law expressly that taxpayers choose between administrative complaint or ex officio revision of self-assessment acts and being the ex officio revision request filed within the deadline of the administrative complaint perfectly equatable to an administrative complaint, as stated, there cannot be any reason that can explain why a taxpayer who opted for revision of the tax act instead of administrative complaint cannot access the arbitration avenue.

  35. For this reason, it is to be concluded that the Government members who issued Ordinance no. 112-A/2011, when making reference to Article 131.º of the CPPT with respect to claims for declaration of illegality of self-assessment acts, expressed imperfectly what they intended, since, intending to impose prior administrative assessment to contentious review of self-assessment acts, they ended up including reference to Article 131.º which does not exhaust the possibilities of administrative assessment of these acts.

  36. In fact, it is to be noted that this interpretation, not being confined to the literal wording, is especially justified in the case of sub-paragraph a) of Article 2.º of Ordinance no. 112-A/2011, because its defects are evident: one is to associate the comprehensive formula "recourse to the administrative remedy" (which references, in addition to the administrative complaint, hierarchical review and revision of the tax act) to the "expression pursuant to Articles 131.º to 133.º of the Tax Procedure Code", which has potential restrictive scope to the administrative complaint; another is to use the formula "preceded" by recourse to the administrative remedy, referring to "claims relating to declaration of illegality of acts", which obviously would be much better suited to the feminine word "preceded".

  37. For this reason, beyond the general prohibition of interpretations limited to the letter of the law contained in Article 9.º, paragraph 1, of the Civil Code, in the specific case of sub-paragraph a) of Article 2.º of Ordinance no. 112-A/2011 there is a special reason not to justify great enthusiasm for a literal interpretation, which is the fact that the wording of that norm is manifestly defective.

  38. Moreover, assuring the revision of the tax act the possibility of assessment of the taxpayer's claim before access to the contentious avenue that it is intended to achieve with the necessary administrative review, the most correct solution, because it is the most coherent with the legislative intent to "strengthen effective and actual protection of the rights and legally protected interests of taxpayers" manifested in paragraph 2 of Article 124.º of Law no. 3-B/2010, of 28 April, is the admissibility of the arbitration avenue to assess the legality of assessment acts previously assessed in the revision procedure.

  39. And, as it is the most correct solution, it must be presumed to have been normatively adopted (Article 9.º, paragraph 3, of the Civil Code).

  40. On the other hand, containing that sub-paragraph a) of Article 2.º of Ordinance no. 112-A/2011 an imperfect formula, but which contains a comprehensive expression "recourse to the administrative remedy", which potentially also references revision of the tax act, the minimum verbal correspondence is found in the text, although imperfectly expressed, required by that paragraph 3 of Article 9.º for the viability of the adoption of the interpretation that enshrines the most correct solution.

  41. It is to be concluded, thus, that Article 2.º sub-paragraph a) of Ordinance no. 112-A/2011, duly interpreted on the basis of the criteria for interpretation of law provided for in Article 9.º of the Civil Code and applicable to tax substantive and procedural norms, by virtue of the provision of Article 11.º, paragraph 1, of the General Tax Law, enables the submission of requests for arbitration awards with respect to self-assessment acts that have been preceded by an ex officio revision request.

  42. In view of the foregoing, the conclusion is reached in the sense of the provision of Article 11.º, paragraph 1, of the General Tax Law, enables the submission of requests for arbitration awards with respect to self-assessment acts that have been preceded by an ex officio revision request, in the same sense it has already been decided by judgment no. 117/2013-T.

  43. The question to be assessed is limited to determining whether the case under consideration is included within the competencies of arbitration tribunals operating in CAAD, covered by Article 2.º, paragraph 1, of the RJAT, for the assessment of acts rejecting ex officio revision requests that do not involve the assessment of the legality of assessment acts.

  44. In Article 2.º of the RJAT, which defines the "Jurisdiction of arbitration tribunals", the assessment of claims for declaration of illegality of acts rejecting ex officio revision requests for tax acts is not expressly included, since, in the wording introduced by Law no. 64-B/2011, of 30 December (in force at the time of presentation of the request to constitute this Arbitration Tribunal) only the jurisdiction of arbitration tribunals for "the declaration of illegality of tax assessment acts, self-assessment, withholding at source and payment on account" and "the declaration of illegality of acts determining taxable matter when they do not give rise to the assessment of any tax, acts of determination of taxable base and acts fixing patrimonial values" are indicated.

  45. However, the fact that sub-paragraph a) of paragraph 1 of Article 10.º of the RJAT makes reference to paragraphs 1 and 2 of Article 102.º of the Tax Procedure Code, which indicate the various types of acts that give rise to the deadline for judicial review, including administrative complaint, makes it clear that all types of acts capable of being challenged through judicial review proceedings, covered by those paragraphs 1 and 2, will be encompassed within the jurisdiction of arbitration tribunals operating in CAAD, provided that they have as their subject an act of one of the types indicated in Article 2.º of the RJAT.

  46. In fact, this interpretation in the sense of the identity of the fields of application of the judicial review process and the arbitration process is the one that is in harmony with the legislative authorization on which the Government based itself to approve the RJAT, granted by Article 124.º of Law no. 3-B/2010, of 28 April, which reveals the intent that the tax arbitration process constitute "an alternative procedural means to judicial review and an action for recognition of a right or legitimate interest in tax matters" (paragraph 2).

  47. But this same argument drawn from the legislative authorization leads to the conclusion that the possibility of using the arbitration process will be excluded when in the tax judicial proceedings the judicial review or the action for recognition of a right or legitimate interest is not usable.

  48. In fact, this being the meaning of the aforementioned legislative authorization law and being inserted in the relative legislative competence reserve of the Parliament to legislate on the "tax system", including "guarantees for taxpayers" [Articles 103.º, paragraph 2, and 165.º, paragraph 1, sub-paragraph i), of the CRP] ([4]), and on the "organization and jurisdiction of courts" [Article 165.º, paragraph 1, sub-paragraph p), of the CRP], the aforementioned Article 2.º of the RJAT cannot, on pain of unconstitutionality, for lack of coverage in the legislative authorization law that limits Government power (Article 112.º, paragraph 2, of the CRP), be interpreted as conferring on arbitration tribunals operating in CAAD jurisdiction for assessing the legality of other types of acts, for whose review the judicial review process and the action for recognition of a right or legitimate interest are not appropriate.

  49. Thus, to resolve the preliminary question raised by the Tax and Customs Authority of knowing whether Article 2.º, paragraph 1, of the RJAT covers the assessment of the act rejecting an ex officio revision request for an assessment act in the context of IRC which is in issue in this proceeding it becomes necessary to determine whether the legality of that act rejecting could or not be assessed, in a tax court, through the judicial review process or action for recognition of a right or legitimate interest.

  50. The act rejecting an ex officio revision request of the tax act constitutes an administrative act, in light of the definition provided by Article 120.º of the Administrative Procedure Code [subsidiarily applicable in tax matters, by virtue of the provision of Article 2.º, sub-paragraph d), of the General Tax Law, Article 2.º, sub-paragraph d), of the Tax Procedure Code, and Article 29.º, paragraph 1, sub-paragraph d), of the RJAT], since it constitutes a decision of an Administration body which under public law norms aimed to produce legal effects in an individual and concrete situation.

  51. On the other hand, it is also unquestionable that it is an act in tax matters since it involves the application of tax law norms.

  52. Thus, that act rejecting the ex officio revision request constitutes an "administrative act in tax matters".

  53. From sub-paragraphs d) and p) of paragraph 1 and paragraph 2 of Article 97.º of the Tax Procedure Code (CPPT) it can be inferred that the rule is that review of administrative acts in tax matters is done in judicial tax proceedings through judicial review or special administrative action (which succeeded contentious review, pursuant to Article 191.º of the Code of Procedure in Administrative Courts) according to whether those acts do or do not involve the assessment of the legality of administrative assessment acts ([5]).

  54. Possibly, as an exception to this rule, the cases of review of acts rejecting administrative complaints may be considered, due to the fact that there is a special norm, which is paragraph 2 of Article 102.º of the CPPT, from which it can be deduced that judicial review is always usable. ([6]) Other exceptions to that rule may be found in special norms, subsequent to the CPPT, which expressly provide for the judicial review process as a means to challenge a certain type of acts ([7]).

  55. But, in cases where there are no special norms, the criterion of distribution of the fields of application of the judicial review process and special administrative action is to be applied.

  56. In light of this criterion of distribution of the fields of application of the judicial review process and special administrative action, acts handed down in procedures for ex officio revision of assessment acts in the context of VAT may only be challenged through the judicial review process when they involve the assessment of the legality of these withholding acts. If the act rejecting the ex officio revision request for an assessment act in the context of IRC does not involve the assessment of the legality thereof, the special administrative action shall apply ([8]).

  57. This finding that there is always an adequate procedural means of review to challenge contentiously the act rejecting the ex officio revision request for an assessment act in the context of VAT, immediately leads to the conclusion that it is not a situation where in judicial tax proceedings the action for recognition of a right or legitimate interest could be used, since its application in tax contentious proceedings has a residual nature, since such actions "may only be filed whenever this procedural means is the most appropriate to ensure full, effective and actual protection of the right or legally protected interest" (Article 145.º, paragraph 3, of the CPPT).

  58. Another conclusion that allows the aforementioned delimitation of the fields of application of the judicial review process and special administrative action is that, restricting the jurisdiction of arbitration tribunals operating in CAAD to the field of application of the judicial review process, only the claims for declaration of illegality of acts rejecting ex officio revision requests for assessment acts in the context of IRC that involve the assessment of the legality of these acts are included in this jurisdiction.

  59. The legislative concern to exclude from the competencies of arbitration tribunals operating in CAAD the assessment of the legality of administrative acts that do not involve the assessment of the legality of assessment acts, beyond resulting from the outset from the general directive of creating an alternative means to the judicial review process and the action for recognition of a right or legitimate interest, is made clear from sub-paragraph a) of paragraph 4 of Article 124.º of Law no. 3-B/2010, of 28 April, which indicates among the possible objects of the tax arbitration process "administrative acts that involve the assessment of the legality of assessment acts", since this specification can only be justified by a legislative intent to exclude from the possible objects of the arbitration process the assessment of the legality of acts that do not involve the assessment of the legality of assessment acts.

  60. For this reason, the solution of the question of jurisdiction of this Arbitration Tribunal connected with the content of the act rejecting the ex officio revision request, depends on the analysis of the act rejecting the ex officio revision request.

  61. In this manner, having present these basic principles, to ascertain the jurisdiction of the arbitration tribunal it is necessary to examine the content of the challenged act, so as to verify whether it involved the assessment of a self-assessment act.

  62. For this purpose, as results from the expression "assessment" used in sub-paragraph d) of paragraph 1 of Article 97.º of the CPPT, it suffices that, in the act in question, the "legality of the assessment act" has been evaluated or examined, even if such assessment is not the basis for the administrative decision (Cf., in this sense, the arbitration award of 06/12/2013, handed down in case no. 117/2013-T).

  63. Now, as clearly results from the records, without controversy from the parties, what is at issue here is an act of tacit rejection of an ex officio revision request relating to the (self-)assessment no. ..., of Corporate Income Tax, relating to the year 2008 and that pending this request for an arbitration award, an express act of rejection was handed down on the grounds that, citing the order, "(…) from which it is concluded that the date of submission of the present request already the deadlines established in the normative referred to above had been exhausted, thus showing the present ex officio revision request to be untimely (…)".

I - ON THE LAW

  1. Excluded from arbitration jurisdiction, by not being covered by Article 2.º, paragraph 1 of the RJAT, is the assessment of acts rejecting ex officio revision requests that do not involve the assessment of the legality of assessment acts - Cf. arbitration awards handed down, among others, in cases nos. 73/2012-TCAAD and 210/2013-TCAAD.

  2. In fact there was the legislative concern to exclude from the competencies of arbitration tribunals operating in CAAD the assessment of the legality of administrative acts that do not involve the assessment of the legality of assessment acts, as results from the outset from the general directive of creating an alternative means to the judicial review process and the action for recognition of a right or legitimate interest – Cf. sub-paragraph a) of paragraph 4 of Article 124.º of Law no. 3-B/2010, of 28 April, which indicates among the possible objects of the tax arbitration process "administrative acts that involve the assessment of the legality of assessment acts", a specification that can only be justified by a legislative intent to exclude from the possible objects of the arbitration process the assessment of the legality of acts that do not involve the assessment of the legality of assessment acts.

  3. In the case at hand, as the AT alleges, it is unequivocally extracted that there was no assessment on the merits, as the "(…)untimely nature of the present ex officio revision request (…)" was considered.

  4. In fact, the assessment of matters relating to the ex officio revision request of acts rejecting such request, provided for in Article 78.º of the General Tax Law, are included in the competencies attributed to arbitration tribunals operating in CAAD - Article 2.º of the RJAT.

  5. The act rejecting an ex officio revision request of the tax act constitutes an administrative act in light of the definition provided by Article 120.º of the Administrative Procedure Code [subsidiarily applicable in tax matters, by virtue of the provision of Article 2.º, sub-paragraph d), of the General Tax Law, Article 2.º, sub-paragraph d), of the Tax Procedure Code, and Article 29.º, paragraph 1, sub-paragraph d), of the RJAT], since it constitutes a decision of an Administration body which, under public law norms, aimed to produce legal effects in an individual and concrete situation.

  6. On the other hand, it is also unquestionable that it is an act in tax matters since it involves the application of tax law norms. Thus, that act rejecting the ex officio revision request constitutes an "administrative act in tax matters".

  7. From sub-paragraphs d) and p) of paragraph 1 and paragraph 2 of Article 97.º of the CPPT, it can be inferred that the rule is that review of administrative acts in tax matters can be done, in judicial tax proceedings, through judicial review or special administrative action according to whether those acts do or do not involve the assessment of the legality of administrative assessment acts – and, in the concept of "assessment", in a broad sense, are included all acts that fall under the application of a rate to a certain taxable base and therefore also acts of withholding at source, self-assessment and payment on account.

  8. In light of this criterion for distribution of the fields of application of the judicial review process and special administrative action, acts handed down in procedures for ex officio revision of self-assessment acts may only be challenged through the judicial review process when they involve the assessment of the legality of these same assessment acts. Otherwise, the special administrative action shall apply.

  9. For this reason, the solution of the question of jurisdiction of this Arbitration Tribunal by reference to the content of the act rejecting the ex officio revision request depends on the analysis of the act rejecting the ex officio revision request.

  10. For this reason the request for arbitration award filed is outside the scope of material jurisdiction of CAAD established in the RJAT and in the Ordinance (no. 112-A/2011, of 22-3) of binding the Tax and Customs Authority (AT) to arbitration.

  11. In fact, this request could only be decided within the scope of a special administrative action and not within the scope of the present proceeding.

  12. For this reason it must be considered that the present tribunal lacks jurisdiction to decide as petitioned by the Claimant ([9]).

  13. From the foregoing it results the obvious conclusion that, in case of express rejection, the Tax Administration did not assess the legality of the assessment.

  14. That is, the act which is in issue and which constitutes the immediate subject of the present proceeding is, consequently and indubitably, the decision rejecting the ex officio revision request submitted.

  15. As such, it is considered, in keeping with and on the grounds of previous decisions handed down by the Arbitration Tribunal [10], that it is not within the scope of arbitration competencies to assess the legality or illegality of decisions, tacit or express, rejecting claims formulated under Article 78.º of the General Tax Law.

  16. Therefore and in conclusion: this Arbitration Tribunal lacks material jurisdiction to assess and decide the request that is the subject of the dispute under this proceeding, pursuant to Articles 2.º, paragraph 1, sub-paragraph a) and 4.º, paragraph 1, both of the RJAT and Articles 1.º and 2.º, sub-paragraph a) of Ordinance no. 112-A/2011, which embodies a dilatory exception preventing determination on the merits of the case, pursuant to the provision of Article 576.º, paragraphs 1 and 2 of the CPC ex vi Article 2.º sub-paragraph e) of the CPPT and Article 29.º, paragraph 1, sub-paragraphs a) and e) of the RJAT, which prevents the assessment of the request and results in the dismissal of the proceedings against the AT, pursuant to Articles 576.º, paragraph 2 and 577.º, sub-paragraph a) of the CPC, ex vi Article 29.º, paragraph 1, sub-paragraphs a) and e) of the RJAT.

  17. Which obviously renders the assessment of the remaining issues raised in the record prejudiced.

J - DECISION

Therefore, having regard to all the foregoing, this Arbitration Tribunal decides as follows:

I. To uphold the exception of lack of material jurisdiction raised ex officio and submitted by the Tax and Customs Authority, and consequently, absolves the Respondent from the instance;

II. To consider, as a consequence, the assessment of the remaining exceptions and the substantive issues as prejudiced.

III. To condemn the claimant to payment of costs (Article 22.º-4, of the RJAT), setting the value of the case at €20,557.66 (twenty thousand, five hundred and fifty-seven euros and sixty-six cents) taking into account the economic value of the proceedings assessed by the value of the tax assessments challenged, and accordingly, the costs are set, in the respective amount, at €1,224.00 (one thousand two hundred and twenty-four euros), at the charge of the claimant in accordance with Article 12.º, paragraph 2 and Article 22.º, paragraph 4 of the Legal Framework for Tax Arbitration, Article 4.º of the Rules of Procedure Before the Administrative Arbitration Courts and Table I annexed thereto – paragraph 10 of Article 35.º, and paragraphs 1, 4 and 5 of Article 43.º of the General Tax Law, Articles 5.º, paragraph 1, sub-paragraph a) of the Regulations of Procedure Before the Administrative Arbitration Courts, Article 97.º-A, paragraph 1, sub-paragraph a) of the Tax Procedure Code and Article 559.º of the Civil Procedure Code.

Notify.

Lisbon, 7 May 2015.

The Arbitrator

Paulo Renato Ferreira Alves

Frequently Asked Questions

Automatically Created

What is autonomous taxation (tributação autónoma) under Portuguese IRC and when does it apply?
Autonomous taxation (tributação autónoma) under Portuguese IRC is a special taxation regime that applies fixed rates to specific categories of expenses, regardless of whether the company has taxable profits. Under Article 81(3) of the Corporate Income Tax Code (CIRC), it applies to deductible charges relating to representation expenses and those connected to light passenger vehicles, mixed-use vehicles, motorcycles, or motorbikes. This taxation applies to non-exempt taxpayers whose main activity is commercial, industrial, or agricultural. The autonomous taxation operates independently from the general IRC calculation, meaning these expenses are taxed at predetermined rates (which were 5% before December 2008 and increased to 10% thereafter) even if the company has no taxable income. The purpose is to discourage certain types of expenditure and ensure minimum tax collection on specific expense categories.
Can taxpayers challenge the constitutionality of autonomous taxation provisions before CAAD arbitral tribunals?
The question of whether CAAD arbitral tribunals can rule on constitutionality challenges involves the jurisdictional competence exception (exceção de incompetência). Under the Portuguese legal framework, arbitral tribunals established under CAAD have limited jurisdiction defined by Decree-Law 10/2011. While they can review the legality of tax assessment acts and apply tax law, the exclusive competence to declare laws or regulations unconstitutional belongs to the Constitutional Court (Tribunal Constitucional) under Articles 280-281 of the Portuguese Constitution. However, arbitral tribunals can refuse to apply legal provisions they consider unconstitutional in the specific case before them, without making a formal declaration of unconstitutionality. If a fundamental constitutional question arises that requires definitive ruling, the tribunal may need to suspend proceedings and refer the matter to the Constitutional Court, or recognize its own incompetence regarding that specific constitutional challenge.
What is the jurisdictional competence exception (exceção de incompetência) in Portuguese tax arbitration proceedings?
The jurisdictional competence exception (exceção de incompetência) in Portuguese tax arbitration is a procedural defense that challenges the arbitral tribunal's authority to decide specific matters. Under the Legal Framework for Tax Arbitration (RJAT - Decree-Law 10/2011), arbitral tribunals have material competence to review the legality of tax acts as defined in Article 2(1)(a) and assess matters within their statutory jurisdiction under Article 30(1). However, certain matters fall outside their competence, including: (1) constitutional review, which is reserved for the Constitutional Court; (2) matters requiring criminal law interpretation; (3) disputes not related to tax assessment acts or tax procedure; and (4) issues expressly excluded by law. When a party raises this exception, the tribunal must determine whether it has jurisdiction before proceeding to the merits. If the tribunal finds it lacks competence, it must dismiss the claim without prejudice to the party seeking remedy before the competent authority or court.
How does the CAAD arbitral tribunal process work for corporate income tax (IRC) disputes in Portugal?
The CAAD arbitral tribunal process for IRC disputes follows a structured procedure under Decree-Law 10/2011. First, the taxpayer files a request for arbitration specifying the challenged tax act and grounds for illegality. The CAAD President reviews and accepts the request if requirements are met. The tribunal is then constituted: parties may appoint arbitrators, or if they don't (as in this case), the Ethics Council appoints a sole arbitrator. Parties are notified of appointments and may challenge arbitrators within the legal deadline. Once constituted (in this case, March 10, 2014), the tribunal confirms its material competence, verifies parties' legal standing, and checks for procedural defects. Parties may waive the preliminary hearing under Article 18 RJAT. The tribunal then reviews the claim, examines supporting documentation, considers the Tax Authority's response, and issues a reasoned arbitration award. The process is generally faster than judicial litigation, with strict deadlines. The award is binding and has the same effect as a court judgment, subject to limited appeal grounds.
What are the legal grounds for requesting annulment of an IRC tax assessment through arbitration?
Legal grounds for requesting annulment of an IRC assessment through arbitration include: (1) Illegality of the tax assessment act due to incorrect application or interpretation of tax law; (2) Violation of substantive tax law provisions, such as misapplication of tax rates, incorrect calculation of taxable base, or improper application of tax regimes; (3) Procedural irregularities that affect the validity of the assessment, including failure to respect taxpayers' rights to prior hearing or insufficient grounds in the assessment notice; (4) Mathematical or calculation errors in determining the tax liability; (5) Incorrect factual determinations or failure to consider relevant evidence; (6) Retroactive application of legal provisions in violation of legitimate expectations or legal certainty principles; (7) Violation of constitutional principles, though tribunals have limited competence on constitutional matters; (8) Expiration of limitation periods for assessment; and (9) Errors in determining the applicable tax regime, such as incorrect application of group taxation rules (RETGS). The taxpayer must demonstrate specific illegality and quantify the financial prejudice suffered.