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  • Service: Tax, Global Indirect Tax
  • Type: Business and industry issue
  • Date: 8/5/2012

New tax arbitration regime in Portugal 

New tax arbitration

Recently, the Portuguese government enacted Decree-Law no. 10/2011, introducing an alternative dispute resolution between taxpayers and the tax authorities – the Tax Arbitration Regime (TAR).

Tax arbitration represents an alternative method for resolving tax disputes through a neutral and impartial third party – one or more arbitrators – chosen by the parties or nominated by an Administrative Arbitration Board. Their rulings have the same legal force as a decision issued by a tax court.


This new regime results from the urgent need to deal with an increasing number of cases pending before the tax authorities and tax courts. It is also aimed at preventing judicial litigation. Taxpayers should consider using this regime to solve VAT disputes.


To guarantee the necessary procedural promptness, a process not requiring special formalities was adopted, according to the principle of independency of the arbitrators. Simultaneously, a six month time limit was imposed on resolving cases, extendable up to a maximum of six months.


Taxpayers may request arbitration on several types of claims, such as the legality of tax assessments and self-assessments, property taxes, and others.


Notwithstanding this, tax authorities are not bound to arbitral proceeding in disputes, if they relate to:

  • assessments of taxable income or tax made by indirect methods
  • tax litigation with an amount higher than €10 million.

Generally, a tax arbitration decision cannot be appealed. Nevertheless, in specific situations, it is possible to appeal to the Constitutional Court, to the Supreme Administration Court, or the Central Administrative Court.


Whenever the Arbitration Court is the last appeal, the decision should refer to a preliminary ruling from the Court of Justice of the European Union. This is because the entire arbitration procedure is equivalent to the state court, and is entirely carried out by a body (the Arbitration Centre) created by the Ministry of Justice.


Considering all of this, the tax arbitration is a new, valuable and efficient option in case of tax disputes.

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