Supreme Administrative Court

Judgment of 8 October 2014

Case No 0957/13

Copyright – Tax Benefit – Personal Income Tax

The Supreme Administrative Court was requested to rule on the possible inclusion of the intervention as commentator, interviewer or in a debate in TV or radio programmes, in the concept of literary works, for the purpose of the  application of the tax benefit established for income from literary, artistic or scientific property , to their remuneration.

The Court began by observing that the purpose of the tax benefit in question – which, for the purposes of the calculation of Personal Income Tax, establishes the aggregation of only 50%  of the income from literary, artistic or scientific work –  is meant as an incentive to the artistic or literary creation, to improve the country’s cultural development, which purpose is important and is in the public interest and which can only be pursued through works recognised as falling within the qualification of literary works .

The Supreme Administrative Court goes on observing that the opinions issued by commentators amount to a subjective judgment concerning the various events of the national or international society, of an economic, political, social or other type, but do not constitute “literary work”.

Without questioning the fact that the intervention as commentator, interviewer or in a debate in TV or radio programmes translate into manifestations of creativity of their author (who in those interventions expresses his or her outlook of daily events , his or her personal understanding of the events around him or her, conveying to the viewer his or her view of a given matter or daily fact), the Supreme Administrative Court considered that those interventions are not created or savoured as art , nor do they have any purpose other than commenting on daily events and give viewers a critical view of the facts commented on or debated.

Accordingly, the Supreme Administrative Court concludes that the interpretation that is in line with the letter and spirit of the above mentioned tax benefit is the one th at excludes from its scope the income from the intervention as commentator, interviewer or in a debate in TV or radio programmes.

South Central Administrative Court

Judgment of 16 October 2014

Case No 07724/14

Limitation Period – Fine for unpaid toll

In this decision, the South Central Administrative Court examined the effect of bringing enforcement proceedings for the recovery of the amount of a fine within the relevant limitation period, in the context of the legal framework of the time -barring of tax debt resulting from a fine for improperly driving through a “Via Verde” electronic toll payment system.

In particular, the Court concludes that, as the limitation period for fines applied under the sanctions scheme for infringements relating to road infrastr uctures where tolls are charged (Article 16-B of Law No 25/2006, of 30 June) is two years, simply brining enforcement proceedings does not interrupt the running limitation period.

Indeed, based on case law previously fixed by the Supreme Court of Justice with regard to the penalty and of the interrupting effect of its time -barring arising from enforcement, the Court observes that the enforcement of the fine and the acts aimed to the enforcement are different realities. In this connection, bringing enforcement proceedings amounts to the performance of an act that is part of a given procedural activity , but does not in itself amount to the enforcement of the fine, for the purposes of the interruption of the limitation period applying to the fine, pursuant to Article 30-A of the General Regulatory Framework of Administrative Offences, which applies by default.

Accordingly, in the actual case, considering that the date of notification of the final decision in the scope of the misdemeanour proceedings was 2009 a nd as no other cause of suspension or interruption of the limitation period was found , there resulted that, on the date the judgment was delivered in the first instance (2013), the two-year term had already expired, for which reason the debt was time-barred, which is a cause of termination of the enforcement.

The Court warns that the same reasoning, however, is not valid with regard to tolls and administrative expenses, which are subject to common rules of limitation period, for which reason, in this case, those debts were not time barred.

Administrative and Tax Arbitration Centre

Decision of 15 September 2014

Case No 63/2014-T

IUC (Road Tax) – Subjects – Legal Presumption – Proof

The Tax Arbitration Court ruled on the legality of a number of assessments for the Road Tax (“IUC”) relating to a company engaged in the trade of vehicles.

In the actual case, the company claimed that it had transferred the ownership of all vehicles to which the challenged assessments related before the date to which those assessments related, despite being the holder of the title of those vehicles on the date of the tax facts.

The Tax Arbitration Court, confirming the view already fixed in previous  arbitr ation rulings, considered that, by setting out that “the tax subjects are the vehicles’ owners, which are deemed to be the natural or legal persons governed by public or private law, in the name of which those vehicles are registered”, this rule on the subjective scope of the IUC is establishing a legal presumption, rather than expressly and absolutely establishing that the persons in the name of whom the vehicles are registered are the tax subjects .

Accordingly, such presumption is rebuttable, which means that proof to the contrary is admitted: proof that despite appearing as owner in the vehicles’ registration, the company in question was no longer the owner of the vehicles at the time to which the assessments relate and, consequently, was not the tax subject of the tax assessed.

However, the Tax Arbitration Court sustained that the presumption of ownership arising from the vehicles registration could not be rebutted simply through the vehicles’ sales invoices and the entries in the accounts regarding the receipt of the sales price. Indeed, the Tax Arbitration Court considered that the information in question amounted to unilateral private documents of a commercial nature, which meant that the buyer could deny that the invoice corresponded to any transaction actually concluded. In fact, the

Tax Arbitration Court considered that the evidential value of  those  documents  was limited to the declarations of its signatory, contained in the same .

Accordingly, the Tax Arbitration Court concluded that to neutralize the proof of the registration by submitting unilateral documents, which have a reduced material evidential value, would be tantamount to make it impossible for the Tax Authority to administrate the IUC.

As such, the understanding that best reconciled the principle of the legality of taxation, the taxpayers’ rights, the taxpayers’ duties and the principle of the effectiveness of taxation was to consider that the presumption of ownership arising from the vehicles registration cannot be eliminated simply by resorting to unilateral documents, as the Tax Arbitration Court concluded in the actual case.