2-3 minute read
Administrative and Tax Justice Reform: what Draft Law No. 98/XVII proposes
A new reform of Portuguese administrative and tax justice is under way.
Draft Law No. 98/XVII proposes amendments to the Statute of Administrative and Tax Courts, the Code of Tax Procedure and Process and the Legal Framework for Tax Arbitration.
The amendments seek to implement some of the recommendations put forward by the Commission for the Review of Tax Procedure and Process and Taxpayers’ Guarantees.
However, one essential caveat must be made from the outset: this is still a legislative proposal, not legislation in force.
The proposed solutions may be amended during the parliamentary process.
1. Challenges to arbitral decisions will no longer be concentrated in the TCA South
One of the main proposed changes concerns challenges to tax arbitration decisions.
At present, these challenges are heard by the Central Administrative Court South (TCA Sul).
The proposal aims to divide jurisdiction between the TCA North and the TCA South, according to the applicant’s location.
In principle, the competent court will be the Central Administrative Court for the area of the domicile or registered office of the applicant in the arbitration proceedings.
Where there are several applicants, the location of the first one named will be considered.
If there is no residence or registered office in Portugal, jurisdiction will be determined by the place of arbitration.
The change seeks to distribute this type of case more evenly between the two courts.
2. New tools to manage pending cases
The proposal also aims to strengthen the management powers of the High Council of Administrative and Tax Courts.
The proposed measures include:
- setting annual benchmarks for the maximum number of cases per judge;
- establishing priorities for processing older cases;
- the possibility of ordering specific cases to be expedited;
- redistributing cases between judges of the same court;
- creating a supplementary pool of judges per geographical area.
The aim is clear: to increase the courts’ capacity to respond and reduce accumulated backlogs.
3. Specialised courts for immigration and international protection
Another relevant change is the creation of specialised courts for immigration and international protection.
In recent years, the growing number of cases involving immigration, residence and international protection has put additional pressure on the administrative courts.
Creating specialised units may allow greater concentration of technical expertise and more efficient handling of these cases.
It may also help relieve other areas of administrative jurisdiction.
4. Specialisation and management do not solve everything
The direction of the reform is positive in several respects.
Better case distribution, specialisation and stronger management tools can help make administrative and tax justice more efficient.
But there is a key issue: legislative reform alone does not solve structural problems caused by a lack of resources.
The effectiveness of the new measures will depend on having enough judges, court officials, IT systems and administrative structures to implement them.
Creating new mechanisms without providing the means may simply shift the problem elsewhere.
The real test of the reform will therefore be its implementation.
5. What could change for taxpayers?
For individuals and companies involved in tax disputes, the changes may result in a different territorial distribution of cases and, potentially, greater responsiveness from the courts.
The new division of arbitral challenges between the TCA North and the TCA South is particularly relevant.
It may help reduce the current concentration of cases, although it could also initially lead to diverging case law between the two courts.
In this context, mechanisms for harmonising case law will remain especially important.
6. And for tax arbitration?
Over recent years, tax arbitration has become a particularly important tool for resolving tax disputes in Portugal.
The change in jurisdiction for challenges to arbitral decisions may affect taxpayers’ litigation strategy.
The competent court will no longer necessarily be concentrated in the South and will depend on the applicant’s location.
For companies headquartered in the North of the country, this change may be of particular practical relevance.
7. The reform may still change
It is important not to confuse the submission of the proposal with the approval of a new regime.
Draft Law No. 98/XVII is still going through the legislative process.
The text may be amended in the Portuguese Parliament before any final approval.
Only after parliamentary approval, promulgation and publication will the regime that enters into force be definitively known.
Until then, following the legislative process closely is essential.
How can we help?
URB Law Services advises individuals and companies on administrative law, tax law and tax litigation, including proceedings before the Tax Authority, the administrative courts and tax arbitration.
We will continue to follow the progress of the reform and the practical consequences that any approval may have for taxpayers and businesses.
Contact us to find out more
