Supreme Administrative Court 

Judgment of 17 June 2015, published on 2 July 2015

Case no. 0535/14

In the judgment in question, the Supreme Administrative Court claims that Tax Authorities only resorts to indirect assessment of the taxable income when it believes that there are discrepancies between the taxpayer’s declaration and the tax situation, thus correcting the taxable income based on other evidences.

For this reason, if the Tax Authorities only disregards costs set out in invoices believing that they are irregular and do not correspond to actual payments, it is not using indirect methods of assessment of taxable income, even if it claims it has used this expedient.

Thus, the fact that the taxpayer did not present a request for a review of the taxable income does not his right to judicial contest the IRC assessment.

South Central Administrative Court 

Judgment of 18 June 2015, published on 3 July 2015

Case no. 07452/14

In the judgment in question, the South Central Administrative Court claims that, since the relationship established between a taxpayer and the expert it appoints in the context of a review of taxable income procedure is a relationship of representation, the taxpayer cannot be considered bound by the agreement obtained in this context if it is demonstrated that the expert did not act within the limits of its powers of representation, or that acted contrary to those powers.

However, it is incumbent on the taxable person to provide proof of the excess mandate by the expert it has chosen in the context of the taxable income review procedure. This proof is not satisfied if the only elements provided to this end are the terms of the agreement, according to which the expert, while assuming the agreement, regrets that some data/information were not taken into consideration.

South Central Administrative Court

Judgment of 10 July 2015 

Case no. 02261/08

In the judgment in question, the South Central Administrative Court claims that the decision of the Tax Authorities to ascertain the taxable income of a taxpayer by indirect methods is not sufficiently justified when it only mentions that the assumptions t hat had also led to the application of indirect methods in previous years still apply. 

The South Central Administrative Court makes it clear that, even if the assumptions that determined the assessment of the taxable income by indirect methods in previous years are the same, they would need to be specified in the decision in question, this being the only way for the taxpayer to understand the decision and consequently accept it or react against it.

Judgment of the North Central Administrative Court

Judgment of 30 April 2015, published on 14 July 2015

Case no. 00039/03 – Porto

In the judgment in question, the Central Administrative Court North clarifies that, if taxpayers are married – constituting a household – either one of them can be validly notified to pay the tax.

Consequently, on the assumption that the habitual residence of the hous ehold comprising the spouses is the same, the notification for payment to any one of them within the applicable statute of limitation precludes the other from, within the reply to tax enforcement proceedings, relying on a lack of notification as  grounds fo r such defence.

Administrative and Tax Arbitration Centre

Tax Arbitration Court 

Arbitration Decision of 15 September 2014, published on 20 July 2015 

Case no. 101/2014-T

In the Arbitration Decision in question, the Court of Arbitration gave its opinion on the application of the transfer pricing rules to a share purchase agreement entered into by related entities.

In this Arbitration Decision, the Court of Arbitration decided that it is not possible to fragment the share purchase agreement to apply transfer pricing to only one of its components – the postponement of payment of the agreed price. It also added that there are other mechanisms that enable the Tax Authorities to disregard the sale agreement and consider the free loan underlying the transaction.