To be able to have two factually identical situations which raise the same quaestio juris receiving the same treatment by all courts is fundamental to legal security and fairness. The appeal for uniformity of opposing judicial decisions is, therefore, an essential mechanism to implement the principles of equality and legal certainty, in particular in the field of law where its importance is even more notorious, given the complexity and volatility of tax legislation, which often generates divergent interpretations that result in opposite treatment for taxpayers in analogous situations.

However, in Portugal we are witnessing a worrying paradox: the progressive tightening of the conditions for the admissibility of this type of appeal, which undermines the aspiration for an increasingly homogeneous jurisprudence. This time, the relevant law should not take the blame, as it lays down clear requirements for the appeal, namely (i) a contradiction on the same fundamental question of law between judgments of higher courts, (ii) that are not appealable, and (iii) when there is no consolidated jurisprudence on the subject. In a way that we believe is assumed, it is the Supreme Administrative Court (STA) that has been interpretating these requirements in an increasingly restrictive way.

The recent STA Ruling in Case No. 88/24.9BALSB illustrates this trend very well. The court refused to hear an appeal for standardization regarding two cases with different decisions on whether venture capital companies (SCR) should be considered "financial companies" for the purposes of Stamp Duty (IS), when what was at stake were management fees charged by the same SCR to VC Funds, on which IS was assessed at a rate of 4%, based on the same wording of the legal rule of incidence. The only difference was in the tax periods and the tax amounts, which were irrelevant to the legal issue.

The court understood that there was no real opposition between the decisions. While tacitly acknowledging that the same legal issue was at stake, it created, however, two new obstacles: a "different approach" and a "totally different position of principle" in the judgments, which is to say that two courts that reach opposite conclusions on the same issue may not be deciding on the same quaestio decidendi, only because they employ different reasoning. The unsuccessful declarations of vote of three dissenting judges, in which they simply reiterate that "the same question of law was at stake", confirm this restrictive drift.

This approach represents a missed opportunity for improving the tax system. For taxpayers, it translates into legal uncertainty and increased costs. For the Tax Authority, it promotes unnecessary litigation. For investors it adds another layer of uncertainty to a system that is already seen as very slow, bureaucratic and costly. The impact is particularly serious in tax arbitration, since the only way to reach the STA is when there is divergence between decisions. This is, to a certain extent, a reversal of the promise of speed, efficiency and justice that the introduction of the appeal for uniformity opposing judicial decisions has represented for arbitral justice.

Co-authored by:

  • Antonio Braga, Partner in the Tax area (here more information about his profile)
  • Nicole Ribeiro, Associate in the Tax area