Binding Information is a mechanism of the Portuguese tax system that allows taxpayers to question the Tax Administration (AT) about the best interpretation and application of tax rules, aiming to mitigate the risk of error in the self-assessment of taxes. Created in the context of the massification of self-assessment, the mechanism was intended to unify the AT's thinking and prevent disputes with taxpayers.
However, recent practice has shown that using Binding Information often results in more problems than solutions. The massive issuance of positions by the AT on the same topics has revealed that there is no uniform thinking within the administration itself, and the mandatory disclosure of all rulings has exposed contradictory interpretations. Arbitral case law has frequently annulled assessments based on Binding Information, siding with taxpayers, although not always with those who directly requested the AT's opinion.
The mechanism also presents significant asymmetries in taxpayer protection. While those corrected by the AT can appeal to tax arbitration with decisions in 9 to 12 months, recipients of an illegal Binding Information face limited options: conform to the AT's position, bring action in administrative courts with years of waiting, or only challenge future assessments running the risk of preclusion of rights.
The impact extends to the market in general, as the publicity of Binding Information guides the actions of all economic agents, even without legal binding effect. The article warns that the mass interpretation of issues such as the 6% VAT rate on urban rehabilitation or exemptions in investment funds has paralyzed entire sectors, forcing companies to react against charges that may not have existed. It concludes that companies and tax advisors should carefully analyze the real need to use this mechanism.
