Supreme Administrative Court

Judgment of 7 January 2016

Case No. 0162/14

In the Judgment in question, the Supreme Administrative Court states that, notwithstanding the special preferential right of credits arising from Property Tax (ability to be invoked against third parties who acquired the ownership right or any other right in rem over the real estate), if the transfer of real estate’s ownership occurs before the seizure’s registration (even if the transfer is not registered in the Real Estate Registry), the seizure can only proceed after the order of reversion of the tax foreclosure procedure against the current owner.

Otherwise, and since the seizure of assets belonging to a third party (other than the debtor) is not possible, the current owner can file a “third party opposition”, in order to be recognized that his ownership’ s right prevails over the seizure within a tax foreclosure procedure that was not reversed against him.

Administrative Arbitration Centre

Tax Arbitration Court

Arbitration Decision of 7 January 2016

Case No. 312/2015-T

In the Arbitration Decision in question, the Tax Arbitration Court was asked to give a ruling on the legality of an Extraordinary Contribution on the Energy Sector (CESE)’s assessment, in light of the principles of proportionality and equity, as well as if the legal conditions for the assessment were met.

Notwithstanding the qualification of the CESE as a “financial contribution”, the Tax Arbitration Court considered itself competent to assess this matter because, although the CESE is not a tax, it is managed by the Tax Authorities.

Subsequently, the Tax Arbitration Court concluded that the CESE does not breach the principles of proportionality and equity as there is a sufficient causality link between the criteria adopted by the legislator to determine the taxable basis of the CESE and its purpose.

Administrative Arbitration Centre

Tax Arbitration Court

Arbitration Decision of 11 November 2015, published on January 2016

Case No. 292/2015-T

In the Arbitration Decision in question, the Tax Arbitration Court concluded that point 7 of Circular No. 7/2004, of 30 March, breaches the principle of legality because it establishes a method - to determine the allocation of the financial costs related to the acquisition of participations-, which is not foreseen in law. Therefore, such provision has an innovative nature regarding the determination of the taxable basis of Corporate Income Tax and the scope of application of the tax benefit foreseen in Article 32, paragraph 2, of the Statute of Tax Benefits.

Moreover, the Tax Arbitration Court concluded that when the Tax Authorities opt for an indirect method to determine the taxable basis - namely to determine the non-deductibility of financial costs –, it has the burden of proof that at least one of the legal conditions, stated in Article 87 of LGT, is met.

Finally, the Tax Arbitration Court concluded that per diem allowances and amounts due for the use of private car for business purposes can be deduced even if those expenses are not autonomously mentioned in the invoices issued to the clients, because the only condition required is that there is a map which enables the respective control.

Administrative Arbitration Centre

Tax Arbitration Court

Arbitration Decision of 2 December of 2015, published on January 2016

Case No. 245/2015-T

In the Arbitration Decision in question, the Tax Arbitration Court concluded that income obtained by a resident for tax purposes in Portugal from the reimbursement of a Life Insurance subscribed in France is covered within Article 23 of the Convention between the Republic of Portugal and France to avoid double taxation and prevent tax evasion. Therefore, said income is subject to tax in the State of Residence (Portugal) and it is up to the Source State (France) to eliminate the double taxation, to whom the reimbursement must be requested.

On the other hand, the Tax Arbitration Court concluded that if there are doubts regarding the qualification of the income or the amounts withheld abroad, the Tax Authorities must use the mechanism for the exchange of information to clarify them.

Finally, the Tax Arbitration Court declared itself competent to assess the claim asking for a compensation for an undue guarantee.