III. CASE-LAW

III.1. Court of Justice of the European Union

Judgment of the Court (Tenth Chamber), of 02 March 2023, Case no. C-664/21: Reference for a preliminary ruling. Common system of value added tax (VAT). Directive 2006/112/EC. First paragraph of article 138. Exemptions related to intra-Community transactions. Supply of goods. Principles of fiscal neutrality, effectiveness and proportionality. Compliance with the substantial requirements. Time limit for providing evidence.

Summary:

“Article 131 and first paragraph of article 138 of Council Directive 2006/112 of 28 November 2006 on the common system of value added tax, read in conjunction with the principles of fiscal neutrality, effectiveness and proportionality, must be interpreted as not precluding national legislation prohibiting the submission and taking into account of new evidence demonstrating compliance with the substantial requirements laid down in first paragraph of article 138 of that directive during the administrative procedure for the supply of goods. First paragraph of article 138 of that directive during the administrative procedure leading to the adoption of the assessment notice, in particular after the tax inspection operations, but before the adoption of that notice, provided that the principles of equivalence and effectiveness are respected.“.

https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:62021CJ0664

Judgment of the Court (Ninth Chamber) of 09 March 2022, Case no. C-42/22: Reference for a preliminary ruling. Common system of value added tax (VAT). Directive 2006/112/EC. Exemption from VAT. Subparagraph a) of the first paragraph of article 135. Exemption of insurance and reinsurance transactions. Subparagraph a) of article 136. Exemption of supplies of goods used wholly for an exempted activity. Concept of “insurance transactions”. Resale of salvage acquired from insured persons. Principle of tax neutrality.

Summary:

“1) Subparagraph a) of the first paragraph of article 135 of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax must be interpreted as meaning that the transactions of an insurance company consisting in the sale to third parties of salvage arising from claims covered by that company and which it has acquired from its insured persons do not fall within the scope of that provision.

2) Subparagraph a) of article 136 of Directive 2006/112 must be interpreted as meaning that the transactions of an insurance company consisting in the sale to third parties of salvage arising from accidents covered by that company and acquired by it from its insured persons do not fall within the scope of that provision.

3) The principle of fiscal neutrality inherent in the common system of value added tax must be interpreted as not precluding the non-exemption of transactions of an insurance company consisting in the sale to third parties of salvage arising from accidents covered by that company and which it has acquired from its insured persons, where those purchases have not given rise to a right to deduct VAT.”

https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:62022CJ0042

III.2. Constitutional Court

Judgment of the Constitutional Court no. 77/2023 of March 14, Case no. 574/2022:

“III – Decision

3. In view of the above, it is decided

a) deem unconstitutional the rule contained in third paragraph of article 3 of the Civil Procedure Code, interpreted in the sense that it is not mandatory to hear the appellant beforehand in relation to a plea of ex officio knowledge that was only raised by the defendant in the counterclaims, when the appellate court will decide the case on that plea, without the appellant having spontaneously pronounced himself on it; and, consequently,

b) uphold the appeal and order that the case be remanded to the Guimarães Appeal Court, for the appellant to amend the decision appealed against in accordance with the finding of unconstitutionality set out in the preceding paragraph. (…)”.

https://www.tribunalconstitucional.pt/tc/acordaos/20230077.html

Judgment of the Constitutional Court no. 92/2023, of March 16, Case no. 925/2020:

“For all the above reasons, it is decided:

a) To deem unconstitutional, for violation of first paragraph of article 219 of the Constitution, the rule that results from the joint interpretation of articles the first and fourth paragraphs of the articles 11 and 25 of the Procedural Code of the Administrative Courts, approved by Law no. 15/2002, of 22 February, in the wording given by Law no. No. 118/2019, of September 17, according to which, in administrative courts, when the State is sued or in the same action several Ministries are sued, the representation of the State by the Public Prosecution Service is a possibility, being the summons solely addressed to the State Legal Skills Centre, which ensures its transmission to the competent services and coordinates the terms of the respective intervention in court; and, consequently,

b) Grant the appeal, ordering that the contested decision be reformed in accordance with this judgment of unconstitutionality“.

https://www.tribunalconstitucional.pt/tc/acordaos/20230092.html

III.3. Judicial Courts

Judgment of the Supreme Court of Justice, of March 01, Case no. 3090/20.6T8VNF.G1.S1: Amendment to the Articles of Association. Special right to management. Private limited company. Decision of the general meeting. Ineffectiveness. Annulment of corporate decision. Managing partner. Consent.

Summary:

“I – The fact that the management has been attributed, in a clause of the social pact, to all the partners (four) of a private limited company, does not, in itself, remove the nature of a “special right”, provided for in article 24 of the “CSC”.

II – The special right to manage a private limited company, conferred to a partner by stipulation in the memorandum of association, cannot be suppressed without his consent (fifth paragraph of article 24 of the “CSC”).

III – The meeting having deliberated to alter the memorandum of association, suppressing the special management right of one of the partners, without their consent (third paragraph of article 257 of the” CSC”), such deliberation is ineffective, under the terms of article 55 of the “CSC””.

http://www.dgsi.pt/jstj.nsf/954f0ce6ad9dd8b980256b5f003fa814/793d0447143e20528025896600330fe7?OpenDocument

Judgment of the Supreme Court of Justice, of March 01, Case no. 4668/18.3T8OAZ-A.P1.S1: Insolvency. Promissory Contract. Payment in lieu of performance. Imperative rule. Extensive interpretation. Analogy. Interpretation of the negotiating declaration. Insolvency administrator. Potestative right. Claims.

Summary:

“I- First paragraph of the article 106 of the “CIRE” is an imperative and exceptional norm that only applies to bilateral promises of purchase and sale.

II- First paragraph of the article 106 of the “CIRE” may be subject to an interpretative extension to bilateral promises of acts of alienation or encumbrance of goods (article 939 of the Civil Code).

III- First paragraph of the article 106 of the “CIRE”, as an exceptional rule, cannot be applied by analogy (article 11 of the Civil Code.) to promises to pay in lieu of payment (“pro solvendo”: article 840 of the Civil Code), in which it is agreed to hand over property owned by the debtor in order to facilitate satisfaction of the credit to the creditor and, while the obligation remains in force, to promote the deferred extinguishment of that obligation at the expense of the new legal instrument provided to the creditor and provided that it is used for this discharging effect.

IV- Promises of payment in lieu of performance, being “business in progress”, are subject to the general rule of exercise of the potestative right of the insolvency administrator provided for in First and second paragraphs of the article 102 of the “CIRE”.

http://www.dgsi.pt/jstj.nsf/954f0ce6ad9dd8b980256b5f003fa814/19a87c47d5df3f118025896600335779?OpenDocument

Judgment of the Court of Appeal of Porto, March 20, Case no. 479/12.8TTVNG.P1: Work accident compensation. Monetary benefits. Late payment interest. Unavailable rights. Prescription of the interest obligation.

Summary:

“I – Article 135 of the Labour Procedure Code orders the judge to fix interest on late payment if it is due, which is an imperative rule, and therefore interest is payable even if it has not been requested.

II – In the context of inalienable rights, if the agreement reached between the parties in proceedings arising from an accident at work [strictly speaking it is an agreement about facts, not a compromise about rights] does not mention interest on late payment, there is no waiver of interest payment.

III – Thus, if the sentence ratifying the agreement also does not refer to interest, it is possible to reopen the proceedings and, with due regard for the adversarial procedure, issue a decision ordering payment of interest, provided that no limitation period has elapsed.

IV – The statute of limitations for the obligation to pay interest starts as of the moment of enforceability of the obligation, which in this case occurs with the homologation of the agreement that establishes the instalments due to the beneficiaries“.

http://www.dgsi.pt/jtrp.nsf/56a6e7121657f91e80257cda00381fdf/80d575538834df248025897c004ec630?OpenDocument

III.4. Administrative and Tax Courts

Judgment of the South Central Administrative Court, of March 2, Case No. 2359/09.5 BELRS: Corporate Income Tax. Disposal of Own Shares. Holdings’ Shares. Financial Charges with Acquisitions of Shareholdings.

Summary:

“I – The tax benefit provided for in article 32 of the “EBF” must be interpreted with reference to the corporate purpose of holding companies, as defined in article 1 of Decree-Law no. 495/88, of 30 December.

II – “Shareholdings” do not include elements constituting equity; not only does the legislature distinguish between these two realities but they also have a different accounting treatment; it must therefore be concluded that the rule in article 32 of the “EBF” only covers shareholdings held by holding companies in other companies.

III – Point 7 of Circular no. 7/2004 of 30/03 of the “IRC” Services Board, establishing an indirect and presumptive method with regard to the allocation of financial costs for the purposes of calculating taxable profit, affronts the principle of tax lawfulness“.

http://www.dgsi.pt/jtca.nsf/170589492546a7fb802575c3004c6d7d/3acf1b335d9ff0e98025896d005c4022?OpenDocument

Judgment of the Supreme Administrative Court, of March 8, Case No. 03022/19.4BELRS: Free Movement of Capital. Dividends. Non-Resident Taxpayer. Convention for the Avoidance of Double Taxation. Indemnity Interest. Gracious Claim.

Summary:

“I – In view of the primacy of Community law and stemming from the case-law of the CJEU (i) that the unequal treatment permitted by subparagraph a) of first paragraph of the article 58 of the EEC Treaty must be distinguished from the discrimination prohibited by the third paragraph of article 58 of that Treaty and (ii) that in order for a tax rule to be considered compatible with the Treaty provisions on the free movement of capital it is necessary that the difference in treatment concerns situations which are not objectively comparable or which are not of a comparable nature. In order for tax legislation to be regarded as compatible with the Treaty provisions on the free movement of capital, it is necessary that the difference in treatment should relate to situations which are not objectively comparable or should be justified by overriding reasons in the general interest, the withholding tax levied by the tax substitute for the non-resident entity must be set aside if it is established that that restriction, which is based on the higher taxation of a non-resident entity, cannot be counteracted in practice by means of the Convention concluded between the States in order to avoid double taxation.

II – In the case of withholding tax and in the event of an administrative challenge to the tax act in question (e.g. administrative appeal), the error will be attributable to the Tax Authority after the actual or presumed rejection of the same administrative appeal, with this date serving as the starting point for calculating compensatory interest payable to the taxpayer under the terms of the first and third paragraphs of article 43 of the Portuguese Tax Code”.

http://www.dgsi.pt/jsta.nsf/35fbbbf22e1bb1e680256f8e003ea931/6cb0c53efb3e63018025896e0056a6cd?OpenDocument&ExpandSection=1#_Section1

Judgment of the Supreme Administrative Court, of March 9, Case No. 01453/18.6BELRA: Delay in Justice. State Responsibility.

Summary:

“The fulfilment of the assumptions concerning the State’s civil liability for delay in justice is always based on a case-by-case analysis of the factors that have contributed (actually and potentially) to the situation of non-respect of the reasonable time limit for the issuance of the decision, and it is up to the Court to assess and weigh factors such as the complexity of the case, the procedural conduct of the parties, and the interest that the applicant for compensation intends to assert in court.”

http://www.dgsi.pt/jsta.nsf/35fbbbf22e1bb1e680256f8e003ea931/aa1f609686748b16802589760058ca63?OpenDocument&ExpandSection=1#_Section1

Judgment of the North Central Administrative Court, of March 10, Case No. 00344/19.8BEPRT: Salary Guarantee Fund. Second paragraph of Article 9 of the New Wage Guarantee Fund Regime, added by Law no. 71/2018, of 31.12. Wage Credits. Termination of Employment Contract; Sentence. Interruption of Prescription of Wage Credits. Article 309 of the Civil Code. Eighth paragraph of article 2 of the New Wage Guarantee Fund Regime (Decree-Law no. 59/2015, of 21.04). Unconstitutionality.

Summary:

“1. The innovatory legal rule in Second paragraph of article 9 of the New Wage Guarantee Fund Regime, added by Law no. 71/2018, of 31.12, which provides for causes to suspend the deadline provided for in Eighth paragraph of Article 2 of the same diploma, does not apply to a case in which that rule was not in force either when the application addressed to the defendant entity was submitted or when the defendant rejected the application.

2. In the case of salary credits, although arising from termination of the work contract, that were recognised by sentence, the general twenty-year limitation period provided for in article 309 of the Civil Code shall apply.

3. Is the rule contained in Eighth paragraph of article 2 of the New Regime of the Salary Guarantee Fund, approved by Decree-Law no. 59/2015, of 21. 04, in the interpretation according to which the period of one year to request the payment of labour credits, certified with the declaration of insolvency, committed in that legal precept is of forfeiture and insusceptible of any interruption or suspension – judgment of the Constitutional Court no. 328/2018, of 27.06.2018, in case 555/2017 (rectified by Judgment no. 447/2018).“.

http://www.dgsi.pt/jtcn.nsf/89d1c0288c2dd49c802575c8003279c7/ff535d1ac0ac9997802589710043ce4f?OpenDocument