Supreme Court of Justice

Judgment of 28 May 2014, published in the 1 st series of Diário da República of 1  July 2014

Case No. 331/04.0TAFIG-B.C1-A.S1 – 3 rd Chamber

Further to a ruling delivered by the Constitutional Court in appeal, the Supreme Court of  Justice delivered this Judgment settling the case law, and reforming its previous  interpretation of the rule of article 8(7) of the General Regime of Tax Offences (Regime Geral das Infracções Tributárias).

The settled case law will therefore read as follows:

«the part of the rule set out in  article 8(7) of the General Regime of Tax Offences,  relating to the joint and several liability of managers and directors of a company that  have wilfully cooperated in the commitment of an offence for the fines imposed on the  company, is unconstitutional, on the  grounds of the breach of  article 30(3) of the Constitution».

Supreme Administrative Court

Judgment of 4 June 2014, published on 2 July 2014

Case No. 0515/14

In this Judgment the Supreme Administrative Court states that the banking documents of  closed criminal proceedings cannot be used by the Tax and Customs Authority, for tax  purposes, without previously resorting to the process of waiving of banking secrecy  set  out in the General Tax Law, since, in those circumstances, the taxpayer’s right to  challenge the requirements for the waiving of banking secrecy would be precluded.

Supreme Administrative Court

Judgment of 2 July 2014

Case No. 01950/13

In this Judgment the Supreme Administrative Court restates the possibility of the review  of tax acts by initiative of the Tax and Customs Authority being requested by the  taxpayers, adding that the express or tacit rejection of such request may be challenged  in court whenever what is at stake is the appraisal of the legality of the tax assessment.

This understanding is not affected by the fact that the request is submitted by the  taxpayer within the 4-year period for the review of the assessment act “by initiative of  the Tax and Customs Authority” but after the deadline for the administrative complaint.

Supreme Administrative Court

Judgment of 2 July 2014

Case No. 01566/13

In this Judgment the Supreme Administrative Court  restates, in line with a case law  trend already settled, that since the coming into force of Law 97/88, EP  – Estradas de  Portugal, S.A. does not have the power to charge fees for the licensing of the posting of  advertising in national roads’ protection areas, and that its intervention in this procedure  – which is a responsibility of the municipalities  – is limited to the issue of an opinion  that, albeit mandatory, is not binding.

South Central Administrative Court

Judgment of 10 July 2014

Case No. 05876/12

In this Judgment the South Central Administrative Court expresses its views on the  application of the Special Contribution Regulation enacted by Decree-Law No. 43/98 of 3  March, to the effect that the likelihood of valorisation of the properties that justified the  creation of the Special Contribution is not affected by the fact that a law enacted after  the Regulation divides the territory of one of the civil parishes falling within the scope of  application of the Special Contribution.

For that purpose, the properties located in the new civil parish continue to be considered  located in the area of intervention set out in the Special Contribution Regulation and,  therefore, subject to such Contribution, at the time the licence or the building permit is  issued.

In this regard, the court further clarifies that the tax liability rests with whoever is  entitled to build, which does not include the persons merely carrying out allotment  operations.

North Central Administrative Court

Judgment of 14 July 2014

Case No. 01399/10.6BEPRT

In this Judgment, the North Central Administrative Court states that the claim, in the  project of reversion of tax foreclosure proceedings against the subsidiary debtor, that all  known assets of the debtor were executed  in previous tax foreclosure proceedings, is  enough to support the non-existence or insufficiency of the original debtor’s assets for  the purposes of the reversion of the tax foreclosure proceedings.

In the above mentioned scenario, if the person served with the project of the reversal of  the tax foreclosure proceedings does not challenge the claim, the Tax and Customs  Authority is not required to analyse further into original debtor’s accounting to ascertain  the non-existence or insufficiency of their assets in order to execute the subsidiary liability.

South Central Administrative Court

Judgment of 24 July 2014

Case No. 07903/14

In this Judgment, the South Central Administrative Court states that tax foreclosure  proceedings may be suspended as a result of the indirect challenge of the legality or  unenforceability of the debt, if guarantee is provided (or waived).

Therefore, the challenge of corrections made to the taxable income, which impacted the  amount of tax losses assessed in a year, is a valid means for the purpose of suspending  tax foreclosure proceedings that result from the correspondent additional assessments  performed in the subsequent tax years during which the  challenged tax losses had been  carry-forward, since challenging the original tax correction is  an adequate mean to syndicate the legality of the additional assessments in the subsequent years.

Administrative and Tax Arbitration Centre

Tax Arbitration Court

Arbitration Decision of 19 December 2013, published on 2 July 2014

Case No. 139/2013-T

In this arbitration decision, the arbitration court states that the general anti-abuse clause  cannot be applied whenever it is not clear that an unquestionable intention to tax was  eluded by the taxpayer, since the intention to minimize tax costs by taking advantage of  deliberate omissions of the tax legislator cannot be considered abusive. Therefore, it must be noted that, for Personal Income Tax (“IRS”) purposes, the taxation  of capital gains arising from the sale of quotas coexists with the exclusion of taxation on  capital gains arising from the sale of shares, which the Arbitration Court considers a clear  and conscious taxation gap.

Therefore, the transformation of a private limited liability company into public limited  liability company  (“S.A.”),  with the subsequent sale of  shares, which is not subject to  IRS, is not abusive, even if the only motivated by tax reasons.

Administrative and Tax Arbitration Centre

Tax Arbitration Court

Arbitration Decision of 17 December 2013, published on 31 July 2014

Case No. 59/2013-T

In this Arbitration Decision, the Arbitration Court ruled on the right to deduct VAT in  Portugal by non resident entities without a permanent establishment, which are merely  registered for VAT purposes, as well as on the applicability of the reverse-charge rule,  foreseen in article 2(1)(g) of the VAT Code, whenever the supplier albeit being registered  for VAT purposes in Portugal does not have a permanent establishment.

In this regard, besides recognizing,  in casu, the deductibility of VAT, it must be noted  that the Arbitration Court ruled that the reverse charge set out in  article 2(1)(g) of the  VAT Code is applicable to taxpayers that albeit being registered for VAT purposes in  Portugal do not have a permanent establishment, contrary to the what has been  sustained by the Tax and Customs Authority.

Administrative and Tax Arbitration Centre

Tax Arbitration Court

Arbitration Decision of 30 April 2014, published on 31 July de 2014

Case No. 256/2013-T

In this Arbitration Decision, the Arbitration Court  restates that the provision that the  person liable for the Single Tax Road (Imposto Único de Circulação) is the registered  owner of the vehicle is a rebuttable presumption.  Therefore, the registered  owner of the vehicle may rebut the presumption by proving  that the vehicle was sold or that a lease agreement was entered into before the taxable  event occurred. Administrative and Tax Arbitration Centre Tax Arbitration Court Arbitration Decision of 5 May 2014, published on 31 July 2014 Case No. 232/2013-T In this Arbitration Decision, the Arbitration Court ruled about the settlement of  divergence in the classification of income and tax facts between the two jurisdictions  which entered into a Convention to Avoid Double Taxation and Prevent Tax Evasion  (“CDT”).

The Arbitration Court considers that, in the event that the CDT does not foresee any rule  determining the prevailing legislation, the competence to classify the income remains  with the State of the source of the income.

Nevertheless, the authorities of the State of residence may syndicate the interpretation  and classification of income and tax facts, as per the source State law, and are entitled  to require that the taxpayer demonstrates the correct  applicability of the source State  law to the facts in question.