Contingent liabilities
There are several relevant disputes pending resolution, for which the Board of Directors, supported by the opinion of its lawyers and tax advisors considers that there is enough ground for its appeal in court, assesses the outcome of each proceedings, and for those where the Board estimates that a future cash outflow may occur a provision is taken (note 20). The material cases are detailed below:
- The Portuguese Tax Authorities (PTA) have informed JMH that they do not accept the capital losses associated with a liquidation of one company and the sale of another, in 2007, amounting to €24,660 thousand, which generated a correction on the Company’s tax losses in the estimated amount of €6,800 thousand. Due to favourable decisions to JMH regarding corrections of losses from previous years, the amount currently in dispute is €4,939 thousand. In 2019, the Lisbon Tax Court ruled in favour of JMH, having the Tax Authorities appealed the said decision to a higher court. In 2024, the Central Administrative Court ruled in favour of JMH regarding the entire amount, concluding this process;
- The PTA assessed, regarding 2016 to 2019, JMH (as the head of the Tax Group in which Recheio SGPS is included), in the amount of €30,026 thousand, related to the taxation in CIT of ¼ of the results generated in internal operations of the Tax Group, in each of these years. As explained in the 2018 Group Consolidated Annual Report (and previous years), this assessment results from the application of the transitional rule included in the Portuguese State Budget of 2016 (and then in the next three Budgets). Based on the assessment of our lawyers and tax advisors, we firmly believe that there are sufficient grounds to oppose the said rules;
- The PTA assessed JMH, regarding 2020, the amount of €32 thousand and corrected tax losses in the amount of €3,200 thousand. PTA considered that the amortization of brands and some donations granted would not be accepted for tax purposes. The Management, based on the assessment of our lawyers and tax advisors, believe that there are sufficient grounds to oppose the said rules.