In an extraordinary interpretation of fiscal law, Porto Appeal Court judges are reported to have opened the doors to a viper’s nest of tax fraud. The Public Prosecutor is naturally contesting their recent ruling, but so far it has seen at least 10 businessmen who used false receipts to claim back IVA skip off without any criminal blots on their copybooks. They had been facing charges of “qualified fraud”.
Explaining the chaos that has resulted from the Porto judges’ ruling, newspaper Correio da Manhã writes: “If the benefit obtained by a fiscal fraud is less than €15,000, then it is not a crime.
“If a businessman hands in regular three month expenses to claim back IVA, using false receipts to do so, and if the fraud is always below the legal limit, it is a mere administrative offence. Who says this is the Porto Appeal Court.”
With this interpretation, the court has contradicted the Public Prosecutor and “absolved more than 10 businessmen and businesses that used false receipts every three months to receive IVA reimbursements to which they were not entitled”.
The judges explained their controversial decision saying: “You cannot have qualified murder without a murder. Therefore you cannot have qualified fraud, without fraud.”
Lay people will find this confusing at best – and intriguing if cunningly inclined – but the root of the muddle lies in the “Regime Geral de Infrações Tributárias”, a kind of official table laying out fines for tax infractions.
CM explains: infractions used to be considered to have started if evasion reached €7,500. This figure doubled during the José Sócrates’ government – hence the cool €15,000 window. How long it will remain open, however, is uncertain. CM reports that the Appeal Court’s ruling was not unanimous and that one of the judges, José Vaz Carreto, said it made no sense at all to differentiate between types of fiscal fraud.
The Public Prosecutor agrees, saying: “This situation could easily lead to legalised fraud by fraudulent taxpayers who could start presenting several declarations that don’t exceed €15,000.”
Intriguingly, other news services have been slow to pick up on this politically hot potato – particularly following recent news that tax receipts in Portugal have actually dipped in relation to GDP this year, when elsewhere in Europe the opposite is happening.
