By Decree Law Nr. 10/2011 of 20 January 2011, Portugal created a new regime which regulates tax arbitration, a mechanism aiming to bring efficiency and speediness to the resolution of tax disputes, preserving at the same time the protection of the rights and interests of taxpayers.
The major innovation of this regime is that taxpayers are granted the opportunity to request that their disputes with Treasury be solved through arbitration. The sole institution with jurisdiction to direct tax arbitration in Portugal is the Administrative Arbitration Center (CAAD), and each case will be decided by one or three arbitrators - depending on the case value and on the taxpayer’s decision. The arbitration procedure and arbitrators’ choice methodology ensures impartiality and technical quality of the final decision. Namely, arbitrators must be lawyers with at least ten years experience in this area; experts in management and economy may also be appointed; in either case, arbitrators may not have had, in the two previous years, any professional relationship, directly or indirectly, with the taxpayer or the Treasury. As a rule, there is no appeal against awards rendered by the tax arbitration tribunals.
This regime has represented an important contribution in reducing administrative costs of operating companies in Portugal. Hence, one may ask why this system could not be successfully implemented in Spain, where the resolution of disputes in tax matters is also inefficient, ineffective and expensive both for the taxpayer and for the Treasury.
Iurgium [previously Spain Arbitration Review]