Francisca Marabuto Tavares signs the opinion article "The increase in compensatory interest under GAAR: an unconstitutional penalty?", recently published in ITR (International Tax Review).
The lawyer reviews Portugal’s controversial application of GAAR rules, and considers whether compensatory interest application could be unconstitutional.
"The application of the general anti-abuse rule (GAAR) to transactions considered abusive from a tax point of view, provided for in article 38, paragraph 6, of the General Tax Law, entails three tax consequences:
- The evident payment of the omitted tax;
- The consideration as a tax offence for lack of assessment and timely payment of the tax due, whose fine is variable. In case of fraud, it is between the value of the missing instalment and its double, and in case of negligence, between 15% and half of the missing tax; and
- The application of compensatory interest calculated at the rate of 19% per annum (the current legal rate of 4% plus 15%), from the moment of default (failure by the taxpayer to pay the tax spontaneously) until the date on which the additional assessment is issued.
This last point raises several doubts of constitutional nature, as well as of conformity with EU law. [...]".
Click here to read the article.
