Stamp Tax on Vertical Property: CAAD Ruling on Verba 28.1 TGIS Liquidation Legality

ARBITRAL DECISION

I – REPORT

A – PARTIES

A…, tax taxpayer no. …, resident at Rua …, …, …º Esqº, … - … Lisbon, hereinafter referred to as the Claimant or taxable person.

THE TAX AND CUSTOMS AUTHORITY (which succeeded the General Directorate of Taxes by means of Decree-Law No. 118/2011, of 15 December) hereinafter referred to as the Respondent or TA.

The request for constitution of the arbitral tribunal was accepted by the Head of CAAD, and the Arbitral Tribunal was duly constituted, on 19-02-2015, to consider and decide on the subject matter of this proceeding, and was automatically notified to the Tax and Customs Authority on 19-02-2015.

The Claimant did not proceed to appoint an arbitrator, wherefore, pursuant to Article 6, Section 1 and Article 11, Section 1, subparagraph b) of Decree-Law No. 10/2011, of 20 January, as amended by Article 228 of Law No. 66-B/2012, of 31 December, the Deontological Council appointed His Excellency Dr. Paulo Ferreira Alves, the appointment being accepted in accordance with legal provisions.

On 12-03-2015 both parties were duly notified of this appointment, and did not express any intention to challenge the appointment of the arbitrators, pursuant to Article 11, Section 1, subparagraphs a) and b) of the RJAT and Articles 6 and 7 of the Deontological Code.

In accordance with the provision set forth in Article 11, Section 1, subparagraph c) of Decree-Law No. 10/2011, of 20 January, as amended by Article 228 of Law No. 66-B/2012, of 31 December, the sole arbitral tribunal is duly constituted on 24-03-2014.

Both parties agree to the waiver of the meeting provided for in Article 18 of the RJAT.

The arbitral tribunal is duly constituted. It is materially competent, pursuant to Articles 2, Section 1, subparagraph a), and 30, Section 1 of Decree-Law No. 10/2011, of 20 January.

The parties possess legal personality and capacity, are legitimated and are legally represented (Articles 4 and 10, Section 2 of the same statute and Article 1 of Ordinance No. 112-A/2011, of 22 March).

The proceeding is not affected by vices that would invalidate it.

B – CLAIM

1. The Claimant hereby seeks a declaration of illegality of the tax assessment acts for Stamp Duty purposes, numbered 2013 …; no. 2014 …; no. 2014 …; no. 2014 …; no. 2014 …; no. 2014 …; no. 2014 … and no. 2014 …, 20140 …; no. 20140 …; no. 20140 …; no. 20140 …; no. 20140 …; no. 20140 …; no. 20140 …; no. 20140 …; no. 20140 …; no. 20140 …; no. 20140 …; no. 20140 …; no. 20140 …; no. 20140 …, which set a total tax liability of €11,538.30 (eleven thousand five hundred and thirty-eight euros and thirty cents).

C – GROUNDS FOR CLAIM

1. To support its request for arbitral pronouncement, the Claimant alleged, with a view to obtaining a declaration of illegality of the tax assessment acts for Stamp Duty purposes, numbered 2013 …; no. 2014 …; no. 2014 …; no. 2014 …; no. 2014 …; no. 2014 …; no. 2014 … and no. 2014 …, 20140 …; no. 20140 …; no. 20140 …; no. 20140 …; no. 20140 …; no. 2014 …; no. 2014 …; no. 2014 …; no. 2014 …; no. 2014 …; no. 2014 …; no. 2014 …; no. 2014 …; no. 2014 …, in summary, the following:

2. It is the legitimate owner of an urban property consisting of 7 (seven) floors and separate divisions with independent uses, located at Rua …, no. …, parish of … (extinct parish of …), described in the Land Registry of Lisbon under deed ….

3. The floors and separate divisions with independent uses, whose tax patrimonial value (TPV) was determined separately, pursuant to Article 7, Section 2, subparagraph b) of the Municipal Tax on Real Property Code.

4. It further states that its property, despite being composed of several floors with entirely independent use, was never subjected to the horizontal property regime.

5. It further maintains that each of the independent floors has a tax patrimonial value assigned to it, calculated in accordance with the Municipal Tax on Real Property Code, ranging between €98,640.00 and €194,050.00, distributed as follows:

a. The left basement has a TPV of €98,640.00;

b. The right basement has a TPV of €104,190.00;

c. The ground floor has a TPV of €182,430.00;

d. The first floor has a TPV of €190,240.00;

e. The second floor has a TPV of €192,140.00;

f. The third floor has a TPV of €192,140.00;

g. The fourth floor has a TPV of €194,050.00.

1. The Claimant alleges that the property is in vertical property ownership and comprises a total of 7 floors with independent use, all allocated to residential purposes, and its total TPV amounts to €1,153,830.00.

2. The stamp duty assessments relate to:

a. €328.80 relating to the left basement (no. 2014 …);

b. €347.30 relating to the right basement (no. 2014 …);

c. €608.10 relating to the ground floor (no. 2014 …);

d. €634.13 relating to the first floor (no. 2014 …);

e. €640.46 relating to the second floor (no. 2014 …);

f. €640.46 relating to the third floor (no. 2014 …);

g. €646.83 relating to the fourth floor (no. 2014 …).

1. The Claimant alleges that the TA assessed stamp duty on each of those floors, with reference to the year 2013, in accordance with Articles 6, Section 1, subparagraph f), the stamp duty in item 28.1 of the TGIS, as amended by Article 4 of Law No. 55-A/2012, at the rate of 0.5%, on the ground that stamp duty applies, because the sum of the TPV of the various floors comprising the property totals €1,153,830.00, given that the property is in vertical property ownership, the criterion for determining the incidence of stamp duty is the overall TPV of the floors and divisions intended for residential use.

2. In the view of the Claimant, this position of the TA is manifestly illegal and even unconstitutional.

3. The Claimant argues that subjection to stamp duty contained in item No. 28.1 of the TGIS is determined by the combination of two criteria: residential allocation and TPV recorded in the property register equal to or greater than €1,000,000.00.

4. And in the case of an urban property with characteristics identical to that of the Claimant, subjection to stamp duty is determined not by the TPV of the property, but by the TPV attributed to each of the floors or separate divisions.

5. The Claimant alleges that stamp duty would only be assessable if any of the parts or floors with independent use had a TPV exceeding €1,000,000.00.

6. The Claimant maintains, as a subsidiary argument, that the stamp duty assessment acts for the year 2013 on the said urban property be challenged, respectively:

a. €328.80 relating to the left basement (deed no. 2014 …);

b. €328.80 relating to the left basement (deed no. 2014 …);

c. €328.80 relating to the left basement (deed no. 2014 …);

d. €347.30 relating to the right basement (deeds no. 2014 …)

e. €347.30 relating to the right basement (deeds no. 2014 …)

f. €347.30 relating to the right basement (deeds no. 2014 …)

g. €608.10 relating to the ground floor (deeds no. 2014 …);

h. €608.10 relating to the ground floor (deeds no. 2014 …);

i. €608.10 relating to the ground floor (deeds no. 2014 …);

j. €634.15 relating to the first floor (deeds no. 2014 …);

k. €634.15 relating to the first floor (deeds no. 2014 …);

l. €634.15 relating to the first floor (deeds no. 2014 …);

m. €640.46 relating to the second floor (deeds no. 2014 …);

n. €640.46 relating to the second floor (deeds no. 2014 …);

o. €640.46 relating to the second floor (deeds no. 2014 …);

p. €640.46 relating to the third floor (deeds no. 2014 …);

q. €640.46 relating to the third floor (deeds no. 2014 …);

r. €640.46 relating to the third floor (deeds no. 2014 …);

s. €646.83 relating to the fourth floor (deeds no. 2014 …);

t. €646.83 relating to the fourth floor (deeds no. 2014 …);

u. €646.83 relating to the fourth floor (deeds no. 2014 …);

1. The Claimant concludes by arguing for the voidability of the stamp duty assessment acts relating to the third instalment of the year 2013, or for the voidability of the stamp duty assessment acts relating to the year 2013.

D – RESPONSE OF THE RESPONDENT

1. The Respondent, having been duly notified for this purpose, timely filed its response in which, in abbreviated summary, it alleged as follows:

2. The situation of the Claimant's property falls literally within the provision of item 28.1 of the TGIS, and it further maintains that subjection to stamp duty in item 28.1 of the General Table attached to the Stamp Duty Code results from the combination of two facts: residential allocation and the tax patrimonial value of the urban property recorded in the property register being equal to or greater than €1,000,000.00.

3. The Respondent alleges that the Claimant is, therefore, the owner of a property under a regime of full or vertical property ownership, whereby there are no autonomous units to which tax law can assign the qualification of a property.

4. The Respondent argues that this follows from the notion of property in Article 2 of the CIMI, according to which only autonomous units of property under horizontal property ownership are considered as properties.

5. Thus, the Claimant, for purposes of IMI and stamp duty, by virtue of the wording of the said item, is not the owner of 12 autonomous units, but rather of a single property.

6. The Respondent maintains that the Claimant is seeking for the TA to consider, for purposes of assessing this tax, that there is an analogy between the regime of full property ownership and that of horizontal property ownership, on the grounds that it is illegal for there to be discrimination in the fiscal-legal treatment of the two property ownership regimes.

7. The Respondent further argues that horizontal property ownership is a specific legal regime of property ownership provided for in Article 1414 and following of the Civil Code, which provides for and regulates the manner of constitution as well as other rules concerning the rights and obligations of co-owners, recognizing it as a more evolved form of property ownership. These two property ownership regimes are civil law regimes, which have been imported into tax law, specifically under Article 2 of the CIMI.

8. Supporting its position, the Respondent argues that, taking into account that in determining the meaning of tax norms and in qualifying the facts to which they apply, the general rules and principles of interpretation and application of laws are observed, as provided in Article 11, Section 1 of the LGT, which refers to the Civil Code which, in Article 10 on the application of analogy, determines that this shall only be applicable in case of gaps in the law, a gap that tax law does not contain.

9. It further states that, according to the CIMI, to which item 28.1 of the TGIS refers, that under the horizontal property ownership regime, the units constitute properties. Where the property is not subjected to this regime, legally the units are parts susceptible to independent use, without there being common parts.

10. Thus, it cannot be accepted that, for purposes of item 28.1 of the General Table attached to the Stamp Duty Code, the parts susceptible to independent use have the same tax regime as the autonomous units of the horizontal property ownership regime, under penalty of open violation of the principle of legality.

11. Wherefore, finding that the property is subjected to the regime of full property ownership, but being physically composed of parts susceptible to independent use, the tax law has attributed relevance to such materiality, assessing individually, in accordance with Article 12, Section 3 of the CIMI, each floor or part of property susceptible to independent use - considered separately in the property register entry, but forming part of the same register -, proceeding to assess the IMI having regard to the tax patrimonial value of each part.

12. The floors or separate divisions, assessed in accordance with Article 12, Section 3 of the CIMI, are considered separately in the property register entry, which equally sets out the respective tax patrimonial value against which the IMI is assessed.

13. And by virtue of the fact that IMI has been calculated based on the tax patrimonial value of each part of property with independent economic use, this does not affect the application of item 28, Section 1 of the General Table.

14. The Respondent argues that it follows from the fact that the determining factor for the application of that item of the General Table is the total tax patrimonial value of the property and not separately that of each of its portions.

15. In this sense, it maintains that any other interpretation would violate, on the contrary, the letter and spirit of item 28.1 of the General Table and the principle of legality of the essential elements of the tax provided for in Article 103, Section 2 of the Constitution of the Portuguese Republic (CRP).

16. The Respondent bases its position by noting that the property register entry of each part susceptible to independent use is not autonomous by register, but consists of a description in the property register of the property in its entirety - see the property deed of this property which represents the owner's document containing the property register elements of the property.

17. The Respondent seeks to conclude that these procedural norms of assessment, property register entry and assessment of the parts susceptible to independent use do not permit the assertion that there is an equation of property under full property ownership regime with the vertical property ownership regime.

18. The taxable event of stamp duty in item 28.1 consisting of the ownership of urban properties whose tax patrimonial value recorded in the property register, in accordance with the CIMI, is equal to or greater than €1,000,000, the tax patrimonial value relevant for purposes of the incidence of the tax is, thus, the total tax patrimonial value of the urban property and not the tax patrimonial value of each of the parts comprising it, even when susceptible to independent use.

19. The Respondent argues that this interpretation of the incidence norm for stamp duty results from the combination with another incidence norm for IMI which is Article 1, according to which the IMI is levied on the tax patrimonial value of urban properties, having regard to the notion of property in Article 2 and of urban property contained in Article 4 and also the types of urban properties described in Article 6.

20. The Respondent concludes that the challenged tax assessment acts, in substance, did not violate any legal or constitutional provision, and should be maintained in the legal order.

E – FACTUAL FOUNDATION

1. Before addressing these issues, it is necessary to present the factual matter relevant to its proper understanding and decision, which has been based on documentary evidence and taking into account the facts alleged.

2. As to the relevant factual matter, this tribunal finds the following facts to be established:

3. The Claimant is the legitimate owner of an urban property composed of 7 (seven) floors and separate divisions with independent uses allocated to residential purposes, located at Rua …, no. …, parish of … (extinct parish of …), described in the Land Registry of Lisbon under deed ….

4. The assessment notes for the respective property relate to the following floors and divisions, whose tax patrimonial value of the said divisions with independent use comprising the urban property was determined separately, pursuant to Article 7, Section 2, subparagraph b) of the Municipal Tax on Real Property Code (CIMI), with a tax patrimonial value being assigned to each, respectively:

1- Floor/Division: Left Basement, intended for residential use, with the tax patrimonial value, in accordance with the assessment made under the rules of the CIMI, the value of €98,640.00 was assigned, relating to assessment note 2014 …; 2014 …; 2014 …, with a tax assessment of €948.90 and tax to be assessed of €948.90;

2- Floor/Division: Right Basement, intended for residential use, with the tax patrimonial value, in accordance with the assessment made under the rules of the CIMI, the value of €104,190.00 was assigned, relating to assessment note 2014 …; 2014 …; 2014 …, with a tax assessment of €1,041.90 and tax to be assessed of €1,041.90;

3- Floor/Division: Ground Floor, intended for residential use, with the tax patrimonial value, in accordance with the assessment made under the rules of the CIMI, the value of €182,430.00 was assigned, relating to assessment note 2014 …; 2014 …; 2014 …, with a tax assessment of €1,824.30 and tax to be assessed of €1,824.30;

4- Floor/Division: 1st Floor, intended for residential use, with the tax patrimonial value, in accordance with the assessment made under the rules of the CIMI, the value of €190,240.00 was assigned, relating to assessment note 2013 2014 …; 2014 …; 2014 …, with a tax assessment of €1,902.39 and tax to be assessed of €1,902.39;

5- Floor/Division: 2nd Floor, intended for residential use, with the tax patrimonial value, in accordance with the assessment made under the rules of the CIMI, the value of €192,140.00 was assigned, relating to assessment note 2014 …; 2014 …; 2014 …, with a tax assessment of €1,921.38 and tax to be assessed of €1,921.38;

6- Floor/Division: 3rd Floor, intended for residential use, with the tax patrimonial value, in accordance with the assessment made under the rules of the CIMI, the value of €192,140.00 was assigned, relating to assessment note 2014 …; 2014 …; 2014 …, with a tax assessment of €1,921.38 and tax to be assessed of €1,921.38;

7- Floor/Division: 4th Floor, intended for residential use, with the tax patrimonial value, in accordance with the assessment made under the rules of the CIMI, the value of €194,050.00 was assigned, relating to assessment note 2014 …; 2014 …; 2014 …, with a tax assessment of €1,940.49 and tax to be assessed of €1,940.49;

1. The property is in vertical property ownership and comprises a total of 15 floors with independent use, each of the floors susceptible to independent use has a TPV below €1,000,000.00, the tax patrimonial value of the building being €1,153,830.00, and the sum of the value of the units intended for residential use is €1,153,830.00, with none of the parts or floors with residential allocation having a tax patrimonial value exceeding €1,000,000.00.

2. The Claimant proceeded to pay assessment notes 2014 …; no. 2014 …; no. 2014 …; no. 2014 …; no. 2014 …; no. 2014 … and no. 2014 ….

F – UNPROVEN FACTS

1. Of the facts relevant to the decision of the case, contained in the challenge, all of which were subject to concrete analysis, those facts not contained in the factual description above were not proven.

G – QUESTIONS TO BE DECIDED

1. Having regard to the positions of the parties assumed in the arguments presented, the following constitute central questions to be determined, which must therefore be considered and decided:

i. The exception of lis pendens or res judicata alleged by the Respondent.

ii. The declaration of illegality of the tax assessment acts for Stamp Duty purposes, no. 2014 …; no. 2014 …; no. 2014 …; no. 2014 …; no. 2014 …; no. 2014 … and no. 2014 …, 2014 …; no. 20140 …; no. 2014 …; no. 2014 …; no. 2014 …; no. 2014 …; no. 2014 …; no. 2014 …; no. 2014 …; no. 2014 …; no. 2014 …; no. 2014 …; no. 2014 …; no. 2014 …, alleged by the Claimant.

ON THE EXCEPTION OF LIS PENDENS OR RES JUDICATA

1. The Respondent invokes, pursuant to Articles 577 and 580 of the CPC and Article 89, Section 1, subparagraph i) of the CPTA, a dilatory exception of lis pendens or res judicata, on the basis that there is a repetition of a cause already considered in another proceeding.

2. As to this question raised by the Respondent, it invokes that the arbitral proceeding No. 408/2014-T, absolved the TA from the instant on the grounds that "in summary, the 'assessment of Stamp Duty, item 28 of the TGIS, is indivisible, and each of its instalments cannot be independently challenged, reducing to the 'unimpeachability of the challenged act', [which] prevents the continuation of the proceeding and the consideration of the merits of the case".

3. And equally in the course of proceeding 648/2014-T which declared "illegal the stamp duty assessment acts expressed in those collection documents, with an economic value of €3,846.08, ordering their respective annulment, with other legal consequences, as requested."

4. It follows from Article 13, Section 1 of the RJAMT that the TA has 30 days from the date of the request for constitution of the arbitral tribunal to revoke, rectify, reform or convert the tax act.

5. From the request of the present arbitral tribunal, the Claimant seeks the declaration of illegality of the additional stamp duty assessment act No. 2014 …; no. 2014 …; no. 2014 …; no. 2014 …; no. 2014...; no. 2014 … and no. 2014 …, and subsidiarily of the remaining related stamp duty assessment acts no. 2014 ….; no. 2014 …; no. 2014 …; no. 2014 …; no. 2014 …; no. 2014 …; no. 2014 …; no. 2014 …; no. 2014 …; no. 2014 …; no. 2014 …; no. 2014 …; no. 2014 …; no. 2014 ….

6. The Claimant requested the annulment of the stamp duty assessment acts relating to its three instalments, in three separate arbitral proceedings, each relating to each instalment of the stamp duty.

7. In light of the foregoing, it falls to the present tribunal to decide on the preliminary issue of the dilatory exception.

8. The current regime for stamp duty assessment on real property under item 28.1 means that a tax assessment is calculated and three assessment acts are issued corresponding to three instalments.

9. The taxable person requested the annulment of the tax assessment acts, in three separate arbitral proceedings, concerning the same property and concerning the same Stamp Duty and tax assessment.

10. As to the cumulation of claims, Article 3, Section 1 of the Legal Framework for Arbitration in Tax Matters tells us that it is permissible: "The cumulation of claims, even if relating to different acts, and the joinder of claimants are admissible when the success of the claims depends essentially on the consideration of the same factual circumstances and on the interpretation and application of the same principles or rules of law."

11. The arbitral tribunals, pursuant to Article 2, Section 1 of the Legal Framework for Arbitration in Tax Matters, are competent to decide on tax assessment acts, and on acts of determination of taxable income.

12. The acts in question here relate to stamp duty assessment on an urban property under a property ownership regime that is not horizontal or vertical, in which the tax is calculated on the basis of the overall TPV of the property by means of the sum of all the TPV of all its units, and to this end a tax assessment is calculated which, in accordance with the Legal Framework for Stamp Duty, is paid and issued in 3 instalments.

13. On the basis of any of the stamp duty assessment acts issued by the Tax Authority on the said property on the basis of item 28.1 of the TGIS, in which, as can be verified from the assessment act issued, the same proceeds to three acts, which are the determination of the tax assessment, the determination of the tax patrimonial value of the property, and determines the assessment of a tax albeit in instalments.

14. Wherefore the taxable person may resort to the arbitral tribunals operating in CAAD to request the consideration of acts of the assessment act, of any one of the three aforementioned acts, since they are covered by Article 2, Section 1 of the Legal Framework for Arbitration in Tax Matters.

15. In the present case, the taxable person, in requesting the annulment of the 3rd instalment of stamp duty payment, on the basis of error of law, the same implies the annulment of the remaining instalments, since the object of the challenge is the stamp duty assessment act.

16. This is because what the present tribunal, in declaring the illegality of a tax assessment act, and its voidability, has retroactive effects on all directly related acts, in this case the 1st and 2nd instalments, is what Article 289 of the Civil Code tells us: "Both the declaration of nullity and the avoidance of the legal act have retroactive effect, and everything that has been performed must be restored or, if restitution in kind is not possible, its corresponding value."

17. As to the counting of time limits, for the taxable person to lodge a claim in accordance with Article 10 of the Legal Framework for Arbitration in Tax Matters, it is 90 days, counted from the facts provided for in Sections 1 and 2 of Article 102 of the Code of Tax Procedure and Process.

18. This time limit begins after each notification of each instalment by means of the Stamp Duty assessment act.

19. The fact that 90 days have already elapsed from the notification of the 1st and 2nd instalments of Stamp Duty, the consideration of the same by the present arbitral tribunal is not precluded on the grounds of untimeliness, since as has already been stated, what is sought is the object of the challenge is the stamp duty assessment act, and the same may be considered if requested within 90 days after notification of the 3rd instalment, since voidability extends to the remaining acts.

20. The taxable person repeated the claim, as to the 1st instalment, and the decision of the arbitral tribunal in proceeding 408/2014-T, decided on the "unimpeachability of an instalment of Stamp Duty assessment", item 28.1 of the TGIS annulment of the assessment act relating to the first instalment.

21. But the TA was not absolved of the claim, but rather of the instant, which allows the Claimant to file a new action based on the same facts.

22. The Respondent proceeded to assess the 1st, 2nd and 3rd instalments of Stamp Duty in the amount of €11,538.30.

23. In light of the foregoing, as there is no decision as to the 3rd instalment, and the Respondent was absolved of the instant in proceeding 408/2014-T, the Claimant may file a new action concerning the Stamp Duty relating to the 1st instalment.

24. The Claimant, in order to enforce its right, and in light of the claim filed in proceedings 408/2014-T and 676/2014-T, would always have to file a new judicial or arbitral action to enforce its defense as to the assessment acts relating to the 3rd Instalment.

25. But in light of the formulation of the claim, the exception of lis pendens or res judicata is partially upheld, since proceeding 648/2014-T considered the assessment act relating to the 2nd instalment.

26. However, since the Claimant appealed the decision in proceedings 408/2014-T, it is thus prevented for the present tribunal to decide on the assessment acts relating to the 1st Instalment, with the exception of lis pendens or res judicata being verified.

27. The present tribunal is only competent to consider the assessment act relating to the 3rd Instalment, respectively: 2014 …; no. 2014 …; no. 2014 …; no. 2014 …; no. 2014 …; no. 2014 … and no. 2014 ….

H – MATTER OF LAW

1. Having regard to the positions of the parties assumed in the pleadings filed, the central question to be resolved by the present arbitral tribunal consists in considering the legality of the stamp duty assessment acts, in the total amount of €3,846.10 (three thousand eight hundred and forty-six euros and ten cents), which affected the residential units of the Claimant in the urban property described above, by violation of law, by erroneous interpretation and application of item 28.1 of the TGIS in the amendments introduced by Article 4 of Law No. 55-A/2012, of 29 October.

2. In the case sub judice, it is necessary to determine whether the units subject to the tax are covered by the incidence criteria for stamp duty, under item No. 28 of the TGIS, in the amendments introduced by Article 4 of Law No. 55-A/2012, of 29 October.

3. It is necessary to verify, in the first place, whether the units are allocated to residential use, and in the second place whether the TPV of the units recorded in the property register is equal to or greater than €1,000,000.00, for this purpose it is necessary to consider the fundamental question, of what the TPV of a property under vertical property ownership (that is to say not horizontal property ownership) is to be considered for purposes of the said item. Whether the TPV corresponding to each of the parts of the property with residential allocation individually, or whether, on the contrary, it is determined by the overall TPV of the property, which would correspond to the sum of all the TPVs of the residential units comprising it.

4. The TA's position understands that the units with independent use of residential allocation is the sum total of the respective TPVs (overall) totalling the value of €1,153,830.00, there is thus room for stamp duty incidence, since for a property in vertical property ownership the criterion for determining the incidence of stamp duty is the TPV corresponding to the sum of the TPVs of the floors and divisions intended for residential use.

5. The Respondent's position understands that the property under vertical property or full ownership regime is equated for purposes of CIMI to a property under horizontal property ownership regime, whereby the TPV for purposes of item 28 is the individual TPV of each unit and not the TPV of the sum of all the units.

6. The factual matter is established and proven, for which reason we will now determine the law applicable to the disputed facts, giving priority, in compliance with Article 124, Section 2, subparagraph a) of the CPPT, to the vices whose merit determines a more stable and effective protection of the interests of the Claimant, as to the vice of law by error as to the assumptions of the right to assess, as to the question of the classification of urban properties under full property or vertical property ownership regime, within the scope of incidence of Article 28, Section 1 of the TGIS, introduced by Law No. 55-A/2012, of 29 October.

7. The amendment of the regime concerning subjection to stamp duty of properties with residential allocation by the addition of item 28 of the General Table of Stamp Duty, made by Article 4 of Law 55-A/2012, of 29/10, came to typify the following taxable events, through the following wording:

"28 – Ownership, usufruct or right of superficies of urban properties whose tax patrimonial value recorded in the property register, in accordance with the Municipal Tax on Real Property Code (CIMI), is equal to or greater than €1,000,000 – on the tax patrimonial value used for purposes of IMI:

28.1 – For property with residential allocation – 1%;

28.2 – For property, when the taxable persons who are not natural persons are residents in a country, territory or region subject to a clearly more favourable tax regime, contained in the list approved by ordinance of the Minister of Finance – 7.5%."

1. The transitional provisions are contained in Article 6 of Law No. 55-A/2012, which established the rules pertaining to the assessment of the tax provided for in that item:

"1 – In 2012, the following rules must be observed with reference to the assessment of stamp duty provided for in item No. 28 of the respective General Table:

a) The taxable event occurs on 31 October 2012;

b) The taxable person of the tax is that mentioned in Section 4 of Article 2 of the Stamp Duty Code on the date referred to in the preceding subparagraph;

c) The tax patrimonial value to be used in the assessment of the tax corresponds to that resulting from the rules provided for in the Municipal Tax on Real Property Code with reference to the year 2011;

d) The assessment of the tax by the Tax and Customs Authority must be carried out by the end of November 2012;

e) The tax must be paid, in a single instalment, by the taxable persons by 20 December 2012;

f) The applicable rates are as follows:

i) Properties with residential allocation assessed in accordance with the IMI Code: 0.5%;

ii) Properties with residential allocation not yet assessed in accordance with the IMI Code: 0.8%;

iii) Urban properties when the taxable persons who are not natural persons are residents in a country, territory or region subject to a clearly more favourable tax regime, contained in the list approved by ordinance of the Minister of Finance: 7.5%.

2 – In 2013, the assessment of stamp duty provided for in item No. 28 of the respective General Table must be based on the same tax patrimonial value used for purposes of municipal tax on real property to be assessed in that year.

3 – The failure to deliver, in whole or in part, within the stipulated time limit, of the sums assessed as stamp duty constitutes a tax infraction, punished in accordance with the law."

1. On the interpretation of this statute, the decision 53/2013-T[1] has already pronounced itself, which states:

"The term used in item 28.1 and in sub-items i) and ii) of subparagraph f) of Section 1 of Article 6 of Law 55-A/2012, a concept that is not used in any other tax legislation in these precise terms, is 'property with residential allocation'. Specifically, in the CIMI, which in several provisions of the Tax Code introduced by that Law is indicated as diploma of subsidiary application with respect to the tax provided for in the said item No. 28 [Articles 2, Section 4, 3, Section 3, subparagraph u), 5, subparagraph u), 23, Section 7, and 46 and 67 of the Tax Code], is not used a concept defined in those terms."

1. As to the concept of property, for this purpose it is necessary to resort to the concepts of property used in the CIMI, in which the types of properties are enumerated in its Articles 2 to 6, which is transcribed:

"Article 2
Concept of Property

1– For purposes of this Code, property is every fraction of land, including waters, plantations, buildings and constructions of any nature incorporated therein or based thereon, with a character of permanence, provided that it forms part of the assets of a natural or legal person and, in normal circumstances, has economic value, as well as waters, plantations, buildings or constructions, in the above-mentioned circumstances, endowed with economic autonomy in relation to the land on which they are located, even though located in a fraction of land that constitutes an integral part of a different asset or does not have a patrimonial nature.

2 – Buildings or constructions, although movable by nature, are deemed to have a character of permanence when dedicated to non-transitory purposes.

3 – The character of permanence is presumed when the buildings or constructions have been in place in the same location for a period exceeding one year.

4 – For purposes of this tax, each autonomous unit, in the horizontal property ownership regime, is deemed to constitute a property.

Article 3
Rural Property

1 – Rural properties are lands situated outside an urban agglomeration that are not to be classified as building land, under Section 3 of Article 6, provided that:

They are dedicated or, in the absence of concrete dedication, have as their normal destination a use generating agricultural income, such as are considered for purposes of tax on the income of natural persons (IRS);

Not having the dedication indicated in the preceding subparagraph, they are not constructed or have only buildings or constructions of an accessory character, without economic autonomy and of reduced value.

2 – Also rural properties are lands situated within an urban agglomeration, provided that, by virtue of legally approved provision, they cannot have a use generating any income or can only have a use generating agricultural income, and are in fact having this dedication.

3 – Also rural properties are:

Buildings and constructions directly dedicated to the production of agricultural income, when located on the lands referred to in the preceding sections;

Waters and plantations in the situations referred to in Section 1 of Article 2.

4 – For purposes of this Code, urban agglomerations are considered, in addition to those situated within legally fixed perimeters, nuclei with a minimum of 10 dwellings served by public-use roads, with their perimeter delimited by points distanced 50 m from the axis of the roads, in the transversal sense, and 20 m from the last building, in the direction of the roads.

Article 4
Urban Property

Urban properties are all those that should not be classified as rural, without prejudice to the provisions of the following article.

Article 5
Mixed Property

1. Whenever a property has rural and urban parts, it is classified, in its entirety, in accordance with the main part.

2. If neither of the parts can be classified as main, the property is deemed to be mixed.

Article 6
Types of Urban Properties

1 - Urban properties are divided into:

Residential;

Commercial, industrial or for services;

Building land;

Other.

2 – Residential, commercial, industrial or for services are buildings or constructions licensed for such purposes, or, in the absence of licensing, which have as their normal destination each of these purposes.

3 – Building lands are considered to be lands situated within or outside an urban agglomeration for which a license or authorization has been granted, or prior communication or favorable prior information of a development or construction operation has been issued, and also those declared as such in the acquisition title, excepting lands in which the competent entities prohibit any of those operations, designedly those located in green areas, protected areas or which, in accordance with the municipal land planning plans, are dedicated to spaces, infrastructure or public facilities. (Wording of Law No. 64-A/08, of 31-12)

4 – Encompassed in the provision of subparagraph d) of Section 1 are lands situated within an urban agglomeration that are not building land nor fall within the provision of Section 2 of Article 3, as well as buildings and constructions licensed or, in the absence of licensing, which have as their normal destination purposes other than those referred to in Section 2, and also those of the exception of Section 3."

1. On the interpretation of Tax Norms, for the case sub judice, Article 11 of the General Tax Law tells us, which establishes the essential rules of interpretation of tax laws, which does so in the following terms:

"Article 11
Interpretation

In determining the meaning of tax norms and in qualifying the facts to which they apply, the general rules and principles of interpretation and application of laws are observed.

Whenever tax norms employ terms peculiar to other branches of law, the same must be interpreted in the same sense as they have there, unless another follows directly from the law.

Where doubt persists as to the meaning of the incidence norms to be applied, regard shall be had to the economic substance of the taxable events.

Gaps resulting from tax norms covered by the reservation of law of the Assembly of the Republic are not susceptible to analogical integration."

1. To this provision, it is also necessary to resort to the general principles of interpretation of laws, to which Section 1 of Article 11 of the LGT refers, which are established in Article 9 of the Civil Code, which establishes the following:

"Article 9
Interpretation of Law

1- Interpretation should not be confined to the letter of the law, but should reconstruct from the texts the legislative thought, taking especially into account the unity of the legal system, the circumstances in which the law was elaborated and the specific conditions of the time in which it is applied.

2- However, the interpreter cannot disregard the legislative thought that does not have in the letter of the law a minimum of verbal correspondence, albeit imperfectly expressed.

3- In fixing the meaning and scope of the law, the interpreter will presume that the legislator adopted the most correct solutions and knew how to express his thought in adequate terms."

1. In light of the legal foundation already set forth, and having regard to the articles transcribed and enumerated, the following interpretive hypotheses arise regarding the concept of "property with residential allocation", as it reporting to residential properties, and as to the concept of "property with residential allocation" as a distinct concept from "residential properties".

2. It follows from Articles 2 to 6 of the CIMI transcribed above, that the legislator does not use, in the classification of properties, the concept of "property with residential allocation", nor is this concept found, with this terminology, in any other statute.

3. The lack of exact terminological correspondence of the concept of "property with residential allocation" with any other used in other statutes, may give rise to various interpretive hypotheses.

4. The text of the law, being the starting point for the interpretation of the expression "properties with residential allocation", it is on the basis of it that the "legislative thought" must be reconstructed, as required by Section 1 of Article 9 of the Civil Code, applicable by virtue of the provision in Article 11, Section 1 of the LGT, already transcribed.

5. On the interpretation of the concept of "property with residential allocation", it is important to cite decision 53/2013-T[2] which has already pronounced itself on this matter. A decision which likewise sustains two interpretive hypotheses as to the concept of "property with residential allocation", respectively in the same sense as the present decision, as to the concept of "property with residential allocation" as reporting to residential properties, and as to the Concept of "property with residential allocation" as a distinct concept from "residential properties".

6. Decision 53/2013-T states, on the concept of "property with residential allocation" as reporting to residential properties:

"The concept most closely resembling the literal tenor of this expression used is manifestly that of 'residential properties', defined in Section 2 of Article 6 of the CIMI as encompassing 'buildings or constructions' licensed for residential purposes or, in the absence of licensing, which have as their normal destination residential purposes.

If it is understood that the expression 'property with residential allocation' coincides with that of 'residential properties', it is manifest that the assessments will be affected by error as to the factual and legal assumptions, for all properties in relation to which Stamp Duty has been assessed under the said item No. 28.1 are building land, with no building or construction, required to satisfy that concept of 'residential properties'.

For this reason, if the interpretation is adopted that 'property with residential allocation' means 'residential property', the assessments whose declaration of illegality is requested will be illegal, as there is no building or construction on any of the lands.

However, the non-coincidence of the terms of the expression used in item No. 28.1 of the TGIS with that extracted from Section 2 of Article 6 of the CIMI, points toward the fact that it was not intended to use the same concept."

1. On the interpretation of the second hypothesis: Concept of "property with residential allocation" as a distinct concept from "residential properties", decision 53/2013-T is again cited, in which it states:

"The word 'allocation', in this context of the use of a property, has the meaning of 'action of assigning something to a determined use'. ( [3] )

'When, as is the rule, the norms (legislative formulas) have more than one meaning, then the positive function of the text is expressed in giving stronger support to or more strongly suggesting one of the possible meanings. That is, from among the possible meanings, some will correspond to the more natural and direct meaning of the expressions used, while others will only fit within the verbal framework of the norm in a forced, artificial manner. Now, in the absence of other elements that lead to the choice of the less immediate sense of the text, the interpreter should opt in principle for that sense which best and most directly corresponds to the natural meaning of the verbal expressions used, and designedly to its technical-legal meaning, on the assumption (not always correct) that the legislator knew how to express his thought correctly'. ( [4] )

The relevance of the text of the law is especially emphasized in matters of interpretation of incidence norms of Stamp Duty, which are recduced to an amalgam, under a common denomination, of an incongruous set of taxes of completely different natures (on income, on expenditure, on assets, on acts, etc.), which leaves little room for application of the primary interpretive criterion, which is the unity of the legal system, which requires its overall coherence.

The recognized lack of coherence of Stamp Duty is particularly exuberant in the case of this item No. 28.1, hastily included outside the General State Budget, by a tax legislator without perceivable overall fiscal orientation, which is successively implementing norms of fiscal aggravation as the vicissitudes of budget execution, the impositions of international institutional creditors (represented by the 'troika') and the supervision of the Constitutional Court demand.

In truth, although in the 'Statement of Grounds' of the Proposal of Law No. 96/XII/2nd ( [5] ), on which Law No. 55-A/2012 is based, reference is made to the government's praiseworthy concern to 'strengthen the principle of social equity in austerity, ensuring an effective distribution of the sacrifices necessary for compliance with the adjustment programme' and its commitment 'to ensure that the distribution of such sacrifices will be made by all and not just by those who live on the income of their work', it is manifest, on the one hand, that such reasons of equity, certainly existing, did not begin to apply in mid-2012, already existing at the beginning of the year, when the General State Budget came into force, and on the other hand, that the scope of item No. 28.1, by taxing additionally properties with residential allocation and not also properties that do not have it, lets it be seen that the concerns of social equity and the proclaimed intention of distribution of sacrifices to all, affects far more some than it does all.

In this context, as there are no secure interpretive elements that permit detection of legislative coherence in the solution adopted in the said item No. 28.1 or the correctness or incorrectness of the solution adopted (relevant for interpretive purposes in light of Section 3 of Article 9 of the Civil Code), the tenor of the legal text must be the primary element of interpretation, in accordance with the presumption, imposed by the same Section 3 of Article 9, that the legislator knew how to express his thought in adequate terms.

In light of those meanings of the words 'allocation' and 'allocate', which are 'to assign the destination' or 'to apply', the formula used in that item No. 28.1 of the TGIS, manifestly encompasses, the properties that are already applied to residential purposes, whereby it is important to inquire whether it will also encompass properties that, although not yet applied to residential purposes, are destined to these and those whose destination is unknown. (…)

For this reason, it is necessary to clarify when it can be understood that a property is allocated to residential purposes, specifically whether it is when such destination is fixed for it in a licensing act or similar, or only when the effective assignment of that destination is concretized.

From the outset, the confrontation of item No. 28.1 of the TGIS with Section 2 of Article 6 of the CIMI, which defines the concept of residential properties, points manifestly, in the direction of an actual allocation being necessary.

In truth, a building or construction licensed for residential use, or, even without licensing, but which has residential use as its normal destination, is, in light of Section 2 of that Article 6, a residential property.

For this reason, in the assumption that the legislator of Law No. 55-A/2012 knew how to express his thought in adequate terms (as required by Article 9, Section 3 of the Civil Code to be presumed), if it was intended to refer to those properties already licensed for residential use or that have residential use as their normal destination, it would certainly have used the concept of 'residential properties', which would express perfectly and clearly his thought, in light of the definition given by that Section 2 of Article 6 of the CIMI.

Consequently, it must be presumed that the use of a different expression is intended to address a different reality, whereby, in good hermeneutics, 'property with residential allocation', cannot be only a property licensed for residential use or intended for that purpose (that is, it will not suffice that it be a 'residential property'), having to be a property that already has effective allocation to that purpose.

That this is the sense of the expression 'allocation', in the same context of classification of properties as made by the CIMI, is confirmed by Article 3 in which, concerning rural properties, reference is made to those that 'are allocated or, in the absence of concrete allocation, have as their normal destination a use generating agricultural income', which shows that allocation is concrete, effective. In truth, as can be seen from the final part of this text, a property may have a determined use as its destination and be or not allocated to it, which shows that allocation is, at the level of the linking of a property to a determined use, something more intense than mere destination and which may or may not occur, downstream of this and not upstream. ( [6] )

The correctness of this interpretation in the sense that only properties that are effectively allocated to residential use, are within the scope of incidence of item No. 28.1 of the TGIS is also confirmed by the ratio legis perceptible from the restriction of the field of application of the norm to properties with residential allocation, in the context of the 'circumstances in which the law was elaborated and the specific conditions of the time in which it is applied', which Article 9, Section 1 of the Civil Code also establishes as interpretive elements. ( [7] ).

From the outset, the limitation of Stamp Duty taxation to 'properties with residential allocation' lets it be perceived that it was not intended to encompass within the scope of incidence of the tax properties allocated to services, industry or commerce, that is, properties allocated to economic activity, which is understood in a context in which, as is evident, the economy is in a recessionary spiral, publicly proclaimed at the highest level, with unemployment rates reaching historically maximum levels, with a flood of business closures deriving from economic unsustainability. (emphasis added)

With this situation in mind, and being known and public that the revitalization of economic activity and the increase in exports are the gates of exit from the crisis, it is understood that legislative measures would not be taken that would hinder economic activity, designedly the aggravation of the fiscal burden that hinders it and affects competitiveness in international terms.

For this reason, it must be concluded that the available interpretive elements, including the 'circumstances in which the law was elaborated and the specific conditions of the time in which it is applied', clearly point toward the fact that it was not intended to encompass within the scope of incidence of item No. 28.1 the situations of properties that are not yet allocated to residential use, specifically building lands held by companies. ( [8] )"~

1. In light of the foregoing, it appears that the 39 units intended for residential use, are encompassed by the incidence norm of item 28.1, as they are urban properties and properties with residential allocation, the concept of which follows from Article 2 of the CIMI.

2. It is, however, now necessary to decide, for purposes of application of item No. 28 of the TGIS, what TPV is to be considered in properties under vertical regime (that is to say not horizontal property ownership) whether individually determined by the TPV corresponding to each of the parts of the property with residential allocation, or whether determined by the overall TPV of the property, which would correspond to the sum of all the TPVs of the residential units comprising it.

3. On this issue, the Arbitral Tribunal of CAAD has already decided through decision No. 50/2013-T, and 132/2013 - T.

4. It is important for purposes of the case sub judice to state, as to decision 50/2013-T, what it tells us, regarding the treatment to be given for purposes of item 28.1 of the TGIS to properties in vertical property ownership and cumulatively what TPV (individual or overall) is to be considered:

"From this we can conclude that, in the legislator's view, the legal-formal rigor of the concrete situation of the property is not what matters but rather its normal use, the purpose to which the property is destined. We further conclude that for the legislator the situation of the property in vertical ownership or horizontal property ownership did not matter, since no reference or distinction is made between one and the other. What matters is the material truth underlying its existence as an urban property and its use."

1. It is also important to state from the respective decision:

"Using the criterion which the law itself introduced in Article 67, Section 2 of the Stamp Duty Code, 'to matters not regulated in the present code pertaining to item 28 of the General Table shall be subsidiarily applied' .

Now, being so, considering that the entry in the property register of immovable property in vertical property ownership, composed of different parts, floors or divisions with independent use, in accordance with the CIMI, follows the same registration rules of immovable property composed in horizontal property ownership, and the respective IMI, as well as the new Stamp Duty, are assessed individually in relation to each of the parts, there is no doubt whatsoever that the legal criterion for defining the incidence of the new tax must be the same. (…)

Therefore, if the legal criterion requires the issuance of individualized assessments for the autonomous parts of properties in vertical ownership, in the same manner as it establishes for properties in horizontal ownership, it clearly established the criterion, which must be unique and unambiguous, for defining the rule of incidence of the new tax.

Thus, stamp duty would only apply if any of the parts, floors or divisions with independent use presented a TPV exceeding €1,000,000.00.

The TA cannot, therefore, consider as the reference value for the incidence of the new tax the total value of the property, when the legislator itself established a different rule in the context of IMI, and this is the code applicable to matters not regulated as to item 28 of the TGIS.

The criterion sought by the TA, of considering the value of the sum of the TPV attributed to the parts, floors or divisions with independent use, with the argument that the property is not constituted under horizontal property ownership regime, finds no legal support and is contrary to the criterion that is applicable in the context of IMI and, by referral, in the context of Stamp Duty.

To which it is added the fact that the law itself expressly provides, in the final part of item 28 of the TGIS, that the Stamp Duty to apply to urban properties of value equal to or exceeding €1,000,000.00 – 'on the tax patrimonial value used for purposes of IMI.'.

Thus, the adoption of the criterion defended by the TA violates the principles of legality and fiscal equality, as well as the prevalence of material truth over legal-formal reality.

The tax legislator in Article 12, Section 3 of the CIMI says that 'each floor or part of property susceptible to independent use is considered separately in the property register entry, which equally discriminates the respective tax patrimonial value', does not make any distinction as to the regime of properties that are in horizontal or vertical ownership, if the property were in horizontal ownership regime, none of its residential units would be subject to the incidence of the new tax, wherefore the TA cannot treat equal situations differently.

1. In the same sense decided the decision of the arbitral tribunal of CAAD, No.132/2013-T:

"Moreover, it is also true that admitting the differentiation of treatment could produce results incomprehensible from the legal standpoint and inimical to the objectives that the legislator said he had for adding item No. 28. By way of example, suppose the following hypothesis, which seems plausible in light of the interpretation made by the above Respondent: a citizen who is the owner of a property constituted in full ownership destined for residential use, with the overall value of the autonomous units equal to or greater than €1,000,000.00 and the TPV of each one below €1,000,000.00, is subject to an annual taxation of 1% of that value (as occurred in the situation being analyzed); yet another citizen who holds a property with the same exact characteristics as the former but which has been constituted in horizontal ownership, with equally, the overall value of the autonomous units equal to or greater than €1,000,000.00 and the TPV of each one below €1,000,000.00, will not be subject to taxation under the mentioned item No. 28...

On the other hand, one could ask: if such units have the same owner, why would it not make sense to aggregate, for purposes of taxation, the respective TPVs? The answer can be illustrated through another hypothesis: a citizen who is the owner of a property in horizontal ownership, in which each of its 20 units has a TPV below €1,000,000.00, would be subject to taxation if – should such aggregation be admitted – the overall TPV exceeded that value; yet another citizen with identical 20 units distributed across 5, 10 or 20 properties would not be subject to any taxation under the mentioned item No. 28...

If this line of reasoning makes sense – thereby justifying, therefore, the non-aggregation of the TPVs of units of properties in horizontal ownership –, we see no plausible reason why the same should not be applied to the autonomous units of properties under full ownership.

Observing now the case being analyzed, it is noted that the TPVs of the floors (autonomous units) of the property with residential allocation vary between €104,140.00 and €113,780.00, whereby any of them is below €1,000,000.00. From this it is concluded, as a result of what was stated, that stamp duty referred to in item No. 28 of the TGIS cannot be levied on the same, and the challenged assessment acts are therefore illegal."

1. In light of the foregoing, and applying what the above-mentioned decisions tell us to the present case, it follows that for purposes of application of item 28 of the TGIS to properties in vertical property ownership, the same rules of the CIMI apply as to properties in horizontal property ownership, and in the same sense the TPV for purposes of application of the item is the individual TPV of each independent unit with residential allocation, and in the present case none of the units exceeds the incidence criterion of €1,000,000.00.

2. The material truth is that which imposes itself as the determining criterion of tax capacity and not the mere legal-formal reality of the property, given that the constitution of horizontal property ownership implies merely a legal alteration of the property not even imposing a new assessment which now, such observation does not appear coherent with the decision of the TA to tax the residential units of a property in vertical property ownership, on the basis of the overall TPV of the property and not of what is effectively attributed to each unit.

3. The current legal framework does not impose the obligation of constitution of horizontal property ownership, whereby the action of the TA translates itself into arbitrary and illegal discrimination. The TA cannot distinguish where the legislator itself understood not to do so, under penalty of violating the coherence of the fiscal system, as well as the principle of fiscal legality provided for in Article 103, Section 2 of the CRP, and also the principles of fiscal justice, equality and proportionality.

4. As none of the units intended for residential use has a tax patrimonial value equal to or exceeding €1,000,000.00, as follows from the documents appended to the record, it is concluded by the non-fulfillment of the legal assumption of incidence of Stamp Duty provided for in Item 28 of the TGIS.

5. In this manner, the present tribunal concludes by declaring the illegality of the assessments sub judice, as they are affected by the vice of violation of that item No. 28.1, by error as to the legal assumptions, which justifies the declaration of its illegality and annulment (Article 135 of the Administrative Procedure Code).

I - DECISION

Therefore, having regard to all the foregoing, the present Arbitral Tribunal decides:

a. To render partially grounded the exception of lis pendens or res judicata, as to the tax assessment acts for Stamp Duty purposes, No. 2014 …; no. 2014 …; no. 2014 …; no. 2014 …; no. 2014 …; no. 20140 …; no. 2014 …; no. 2014 …; no. 2014 …; no. 2014 …; no. 2014 …; no. 2014 …; no. 2014 …; no. 2014….

b. To render grounded the claim for declaration of illegality of the tax assessment acts for Stamp Duty purposes, 2014 …; no. 2014 …; no. 2014 …; no. 2014 …; no. 2014 …; no. 2014 …. and no. 2014 …, which set a total tax liability of €3,846.10 (three thousand eight hundred and forty-six euros and ten cents), for the vice of violation of law as to the norm contained in item 28, Section 1, by error as to the legal assumptions, which justifies the declaration of its illegality and annulment.

c. To condemn the Respondent to restore to the Claimant that sum improperly assessed and paid.

d. The value of the proceeding is fixed at €11,538.30 (eleven thousand five hundred and thirty-one euros and thirty cents), having regard to the value of the Claimant's claim, taking into account the economic value of the proceeding as measured by the value of the tax assessments challenged, and in accordance with it the costs are fixed, in the respective amount of €918.00 (nine hundred and eighteen euros), at the charge of the Respondent (in the part condemned) in the amount of €306 in accordance with Article 12, Section 2 of the Legal Framework for Tax Arbitration, Article 4 of the Rules of Procedure and Costs for Tax Arbitration and Table I attached thereto. – Section 10 of Article 35, and Sections 1, 4 and 5 of Article 43 of the LGT, Articles 5, Section 1, subparagraph a) of the Rules of Procedure and Costs for Tax Arbitration, 97-A, Section 1, subparagraph a) of the Code of Tax Procedure and Process and 559 of the Code of Civil Procedure), and at the charge of the Respondent in the amount of €612.00.

Notify.

Lisbon, 23 June 2015.

The Arbitrator

Paulo Renato Ferreira Alves