Tax Law is just one of the several Law fields in which our legal system is divided.Although it is considered an independent field of Public Obligation Law, its relation with the other branches of Law should not be ignored.For instance, in Private Law, by means of the principle of lapse, the exercise of rights is limited by time. By transferring this idea into Tax Law, and considering that it is based on a conceptual scheme called legal tax relationship, in general, the Government has a four-year period to validly notify the taxpayer of the tax assessment – Article 45(1)of the Portuguese General Tax Law (LGT). Thus, in the case of the Portuguese Corporate Income Tax (IRC), it is the responsibility of the taxpayer to determine and report the results obtained, to which the Government may, within the lapse period, make any necessary corrections.If a negative result is reported, the taxpayer’s tax obligation is changed for corporate income tax purposes and they are granted the possibility of deducting those losses in subsequent years, through the tax losses carry forward mechanism, when profits are assessed. Article 45(3) of LGT states that, when any tax deduction is made, a special lapse time is applicable which corresponds to the exercise of this right (currently, a five or twelve-year period). The tax losses carry forward situations can be included in this rule.However, the legislator established a special lapse time rule in the Portuguese Corporate Income Tax Code (CIRC) which is applicable to the tax losses carry forward cases, according to which, when the negative result reported by the taxpayer is modified within the general four-year lapse time, the deductions made must be changed accordingly, with any corporate income tax cancellation or payment occurring only if up to four years have lapsed since the year to which the taxable income relates – Article 52 (4) of CIRC. Taking into account the principle of lapse in Tax Law, in accordance with the constitutional principles, as well as the tax losses carry forward mechanism, this thesis is centred in the analysis of Articles 52(4) of CIRC and 45(3) of LGT, leading to the conclusion that, since Article 52(4) of CIRC is a special rule, it repeals the general rule provided in article 45(4) of LGT and furthermore, that the interpretation sometimes given to these articles was incompatible with the principle of lapse, since it was considered not only in respect to years in which the losses are deducted but also to the years in which they are determined. Therefore, the Tax Authority accepts the correction of results obtained in years already lapsed and, for this reason, corrects the results determined in subsequent years.
|Date of Award||30 Jun 2022|
- Universidade Católica Portuguesa
|Supervisor||Sérgio Vasques (Supervisor)|
- Corporate tax income
- Deduction of tax losses