Approximately one year after controversy broke out over the tax implications of the largest operation carried out in Portugal in recent years, it is feared that the process to determine the possible payment of taxes by EDP may expire.
This risk is expressed by the Movimento Terras de Miranda, the civic organization that defends the obligation to pay various taxes after the sale of the six dams on the Duero River (including Baixo Sabor) by EDP to a consortium led by Engie. And the suspension of the electricity tax inspection continues, which was awaiting the results of the criminal investigation that was also opened by the DCIAP (Central Directorate of Investigation and Criminal Action).
Sale of dams. EDP tax inspection suspended pending the outcome of the criminal investigation
In accordance with the general tax law, the TA has four years to determine (and settle) the taxes owed, after which the right to collect them expires. In the accounts of the Terras de Miranda Movement, more than a third of the “time that the TA has to carry out the inspection procedures and demand payment of the taxes owed has already passed, so there are increasingly serious risks of loss of the right to payment”. taxes”.
The €2.2 billion transaction was completed in December 2020, after authorization was granted by the Environment Agency and the General Directorate of Energy and Geology of Portugal, without the Ministry of Finance and, in particular, the Tax Authority. pronounce on the operation. But over time, local authorities in the Trás-os-Montes region, where the dams are located, realized that the revenue they hoped to obtain through the taxes that would be collected as part of the operation was far from insured.
Only later, and after finding out about the doubts and listening to several of the protagonists in Parliament, did the Tax Agency begin to collect information on the operation to assess whether EDP had complied with its tax obligations and, more specifically, whether the model as it was The creation of the business (through the creation of instrumental companies) was conceived with the aim of avoiding the payment of the tax on Documented Legal Acts, which in this case would be 120 million euros. Which, if confirmed, could lead to the activation of the anti-aggressive tax planning clause.
The TA’s inspection of EDP began in May of last year, but at the end of the year it was suspended, according to information transmitted to the Miranda do Douro Chamber, after the Tax Authority was designated by the DCIAP as criminal investigation police. process.
Without commenting on the specific case, an official source from the General Directorate of Taxation explained to the Observer the legal bases for the suspension in these cases, arguing that “if there is any indication of a crime, as a general rule, the criminal investigation in the of the investigation of the crime has priority, pending the administrative procedure (tax inspection) the conclusions at the criminal level”. In other words, while the case is being criminally investigated -and until a presentation or a final judgment is produced-, the Tax Administration cannot act as a mere Tax Authority that investigates the possible obligation to pay taxes (which may exist without there having been crime). This raises the temporal uncertainty about EDP’s inspection in this case and the risk of prescription.
The Observer questioned the Attorney General’s Office about the status of this investigation, but received no response.
The understanding of the TA on the consequences of a criminal investigation on the same operation refers to the general tax law and the complementary regime of the tax and customs inspection procedure. But this interpretation is refuted by legal sources heard by the Observer who invoke the general regime of tax violations. According to numeral 4 of article 42, and in the cases in which the jurisdiction of criminal investigation is delegated to the TA, “the investigations will not conclude until the tax or contributory situation on which the criminal classification of the facts depends, whose procedure have priority over others of the same nature.
Source: Observadora
