Process: 106/2016-T

Date: November 22, 2016

Tax Type: Selo

Source: Original CAAD Decision

Summary

CAAD Process 106/2016-T addresses critical procedural and substantive issues in Portuguese stamp tax litigation. The case involves €36,353.28 in additional stamp duty assessments under verba 1.1 of the General Stamp Tax Table (TGIS) levied on a corporate taxpayer. The Tax Authority raised a statute of limitations defense, arguing the arbitration request was untimely because it exceeded 90 days from the voluntary payment deadline of the tax assessments. The tribunal rejected this defense, establishing that when a taxpayer files an administrative appeal, the 90-day period for initiating CAAD arbitration runs from notification of the appeal decision, not from the original assessment payment deadline. This ruling clarifies Article 10(1) of the RJAT and Article 102 of the CPPT, protecting taxpayers' procedural rights to exhaust administrative remedies before arbitration. The substantive dispute concerns whether Article 269(e) of the Portuguese Insolvency Code (CIRE) exempts property transactions in insolvency proceedings from stamp tax. The decision demonstrates that CAAD arbitration provides an effective judicial remedy for contesting stamp tax liquidations, with successful claims entitling taxpayers to refunds plus compensatory interest calculated from the undue payment date under Article 43(1) of the General Tax Law (LGT) and Article 61 of the CPPT. The case underscores the importance of understanding procedural deadlines in Portuguese tax arbitration, particularly the interaction between administrative appeals and subsequent arbitration requests, ensuring taxpayers do not forfeit substantive rights through premature or delayed filing.

Full Decision

Arbitral Decision

Report

1.1 "A…, SA", hereinafter referred to as the "Claimant", Tax Identification Number …, with registered office at Avenue…, no.…, in …, requested the constitution of a single arbitral tribunal, under the combined provisions of Article 2, paragraph 1, subsection a) and Article 10, both of Decree-Law No. 10/2011, of January 20 (Legal Regime for Arbitration in Tax Matters, hereinafter referred to only as "RJAT") and Articles 1 and 2 of Regulation No. 112-A/2011, of March 22, in which the Tax and Customs Authority (AT) is the Respondent.

1.2 The request for arbitral pronouncement, submitted on February 24, 2016, concerns the decision to reject the administrative appeal, issued by the head of the Tax Service of ...…, on November 30, 2015, in Case No. …2013… et seq., relating to the additional stamp duty tax assessments listed below, provided for in item 1.1 of the respective General Table of Stamp Duty (TGIS), in the amount of €36,353.28 (thirty-six thousand, three hundred and fifty-three euros and twenty-eight cents).

1.3 The Claimant further requests the condemnation of the Respondent to restitution of the said amount, plus the respective compensatory interest, in accordance with Articles 43, paragraph 1 of the General Tax Law (LGT) and 61 of the Tax Procedure and Process Code (CPPT), calculated from the date of undue payment of the tax to the date of processing of the respective credit note.

1.4 The Claimant chose not to appoint an arbitrator.

1.5 The request for constitution of the arbitral tribunal was accepted by the President of the CAAD and notified to the AT on March 7, 2016.

1.6 The undersigned was designated by the President of the Deontological Council of the CAAD as arbitrator of the single arbitral tribunal, in accordance with the provisions of Article 6 of the RJAT, and acceptance of the appointment was communicated within the applicable period.

1.7 On May 16, 2016, the Parties were notified of such designation and did not object to it, in accordance with Articles 11, paragraph 1, subsections a) and b) of the RJAT and Articles 6 and 7 of the Code of Deontology of the CAAD.

1.8 Thus, in accordance with the provisions of subsection c) of paragraph 1 of Article 11 of the RJAT, the single arbitral tribunal was constituted on June 1, 2016.

1.9 The Respondent was notified, by arbitral award of June 6, 2016, to, in accordance with Article 17, paragraph 1 of the RJAT and within a period of 30 days, submit a response and, if it so wished, request the production of additional evidence.

1.10 It was further notified to, within the same period, submit the administrative file (PA) referred to in Article 111 of the CPPT.

1.11 On July 1, 2016, the Respondent submitted its Response, defending itself by exception (extinction of the right of action) and impugnation, arguing, respectively, for the dismissal of the claim, or, subsidiarily, for the rejection of the request for arbitral pronouncement.

1.12 On July 1, 2016 the Claimant was notified to respond to the invoked exception.

1.13 Considering that the Parties did not request the production of any evidence beyond that which the Claimant attached to the request for arbitral pronouncement, the Arbitral Tribunal, taking into account the principles of autonomy in conducting the proceedings, celerity, simplification and procedural informality, inherent in paragraph 2 of Articles 19 and 29 of the RJAT, by award of September 8, 2016, dispensed with the holding of the meeting provided for in Article 18 of the same legislation, and further decided that the proceedings continue with written allegations, optional, in successive form for the Respondent.

1.14 On the same date the Parties were notified of this award, with the Claimant submitting, on September 16, 2016, its allegations and respective conclusions and responding to the exception invoked by the Respondent.

1.15 The latter counter-alleged on September 21, 2016, maintaining the position assumed in its Response to the request for arbitral pronouncement.

1.16 The PA was joined to the record on October 4, 2016 (ff. 1 to 198) and on the 24th of the same month (ff. 199 to end), being notified to the Claimant on the day following the latter.

1.17 The date of October 31, 2016 was set for the issuance of the respective final arbitral decision, subsequently changed to November 22, 2016, due to the late submission of the PA.

2. Preliminary Matters

2.1 Because the peremptory exception invoked may result in the total dismissal of the claim, see Article 576, paragraph 3 of the Code of Civil Procedure (CPC), the same should be decided ex officio and as a priority matter (Article 579 of the CPC).

Thus:

For the AT, the Claimant should have submitted the request for arbitral pronouncement within 90 days counted from the date of the deadline for voluntary payment of the assessments, in light of the provisions of Articles 10, paragraph 1 of the RJAT and 102, paragraphs 1 and 2 of the CPPT.

Therefore, having the last day of the period for voluntary payment occurred on December 16, 2014, see doc. 3 attached by the Claimant, the request for arbitral pronouncement is manifestly untimely as it was submitted on February 24, 2016.

Verifying, in this manner, "the extinction of the right of action, which constitutes a dilatory exception that determines the absolution of the Respondent from the suit under subsection h) of paragraph 1 of Article 89 of the Administrative Procedure Code (CPTA) and subsection e) of paragraph 1 of Article 287 of the CPC, applicable by virtue of Article 2 of the RJAT which is hereby requested".

It should be noted, at the outset, that the extinction of the right of action due to untimeliness of the request for arbitral pronouncement constitutes a peremptory exception and not a dilatory one, which results in the total or partial dismissal of the claim, see decisions of the Supreme Administrative Court (STA) of June 17, 2015 (Case 0194/15) and May 22, 2013 (Case 0340/13).

In response to the exception, the Claimant, agreeing with the AT when it states that the object of any proceedings is fixed by the scope of the respective claim and cause of action, disagrees, however, that the object of the present case is the assessments, but rather the decision to reject the administrative appeal.

In fact, from both the claim and the introduction of the request for arbitral pronouncement, it is clear that the cause of action, that is, the basis of the claim, is the illegality of the rejection of the administrative appeal No. …2013… et seq., and the claim consists of the revocation of the respective decision, with the legal consequences arising therefrom, such as the reimbursement of the amount paid and the payment of compensatory interest.

Thus, considering:

That the said decision, in which the substantive issue was addressed, was notified to the Claimant on December 15, 2015, through office No. … of the Tax Service of ...…, of the 7th of the same month, registered with receipt confirmation "RF…PT", in accordance with Article 38, paragraph 1 of the CPPT (ff. 236 to 239 of the PA); and

That the request for arbitral pronouncement was submitted on February 24, 2016, the same is timely, as the period of 90 days provided for in subsection a), paragraph 1, of Article 10 of Decree-Law No. 10/2011, of January 20, was observed, calculated in accordance with subsection e), paragraph 1 of Article 102 of the CPPT, it is held that the exception of extinction of the right of action invoked by the Respondent, due to untimeliness in the submission of the request for arbitral pronouncement, is groundless.

2.2 The Parties have legal personality and judicial capacity, are legitimate and are regularly represented (Articles 4 and 10, paragraph 2 of the RJAT and Article 1 of Regulation No. 112-A/2011, of March 22).

2.3 The proceedings do not suffer from any nullities.

2.4 There are no other circumstances that prevent the consideration of the merits of the case.

3. Position of the Parties

3.1 Of the Claimant

  • Under Article 164 of the Insolvency and Business Recovery Code (CIRE), it acquired, by means of sealed bids, the real properties listed in doc. 2.

  • In the declaration model 1 provided for in Article 19 of the Real Estate Transfer Tax Code (CIMT), submitted for purposes of assessment of IMT/IS, it identified the taxable event with code "31", relating to the acquisition of real property by the State, Autonomous Regions and local authorities or under legal regimes for financial support for housing, since, being a privileged creditor, it would declare in the adjudication titles that the claimed credits would be fully satisfied.

  • The sales were made by the insolvency administrator, in the insolvency proceedings themselves, in the exercise of the powers conferred in Articles 158 et seq. of the CIRE, it being the responsibility of the administrator to confirm the prerequisites of the exemption from IMT and stamp duty, since the same is automatic.

  • That the AT made additional assessments of stamp duty under item 1.1 of the General Table, on the ground that the said exemptions were improperly considered by the insolvency administrator.

  • That contrary to what the AT erroneously understands, the acquisitions in question are exempt from stamp duty in light of the historical and systematic interpretation of Article 269 of the CIRE.

  • That Article 120 of the Code of Special Proceedings for Business Recovery and Insolvency (CPEREF) only exempted from stamp duty, when subject to it, inter alia, the following business recovery measures: cession in fulfillment of assets of the business and cession of assets to creditors; and the carrying out of financing operations, the transfer or cession of the operation of an establishment of the business, the establishment of partnerships and the transfer of commercial establishments, the sale, exchange or cession of elements of the assets of the business, as well as the leasing of assets, provided for, respectively, in subsections b), c), e), f) and g) of paragraph 1 of Article 101.

  • That Article 9, paragraph 2 of Law No. 39/2003, of August 22, authorized the Government to exempt from stamp duty, provided they are provided for in the insolvency or payment plan or practiced within the liquidation of the insolvent estate, inter alia, the following acts: cession in fulfillment of assets of the business and cession of assets to creditors; and the carrying out of financing operations, the transfer or cession of the operation of establishments of the business, the establishment of partnerships and the transfer of commercial establishments, the sale, exchange or cession of elements of the assets of the business, as well as the leasing of assets.

  • That, fully respecting the enabling standard, Article 269 of the CIRE exempts from stamp duty the cession in fulfillment of assets of the business and the cession of assets to creditors, provided it is provided for in insolvency, payment or recovery plans or carried out within the liquidation of the insolvent estate.

  • Thus, to benefit from the exemption, it suffices that the cession of assets is made for the benefit of the creditors and the other prerequisites mentioned above are observed.

  • That it is not a requirement of the exemption that the assets, prior to the transfer, form part of the assets of any establishment or business, and thus may form part of the assets of the individual insolvent without such fact prejudicing the exemption from stamp duty.

  • That Title XIII of the CIRE, which contains the tax benefits of insolvency and recovery proceedings, is of common application to the insolvency of both legal entities and individuals, even if the latter are not holders of any establishment or business.

  • That, in accordance with Article 250 of the CIRE, Titles IX and X are not applicable to insolvency proceedings of non-entrepreneurs or business holders, from which the conclusion is drawn that the entire remainder of the code is applicable to the insolvency of these persons.

  • That Article 269, contained in Chapter XIII, encompasses insolvency proceedings of non-entrepreneurs or business holders, under penalty of violation of the principle of equality in relation to individual entrepreneurs.

  • That, in any case, Article 269, subsection d) of the CIRE exempts from stamp duty the cession of assets of the debtor to the creditors, not distinguishing whether the asset ceded is from the business or the personal assets of the individual insolvent or business holder.

  • That it falls to the insolvency administrator to verify the prerequisites of the exemption, by virtue of the same being of automatic recognition, not depending on prior intervention by the AT.

On September 16, 2016, it came to allege in writing, reproducing in substance what was previously stated in the request for arbitral pronouncement.

3.2 Of the Respondent

Defending itself, by impugnation, the AT invokes the following arguments:

  • That the question at issue consists of determining whether the requirements of the exemption from stamp duty provided for in Article 269, subsection e) of the CIRE are met.

  • That the insolvent persons are natural persons, not engaged in any commercial or agricultural activity.

  • That in that provision are included, inter alia, the sale of elements of the assets of the business.

  • That this is defined in Article 5 of the CIRE as any organization of capital and labor intended for the exercise of any economic activity.

  • That it results from the law that the exemption from stamp duty provided for in the said provision depends on the real properties being acquired from a business or individual entrepreneur engaged in industrial, commercial or agricultural activity and these real properties being part of the assets of the business.

  • Therefore, there is no exemption when the acquisition is made from a natural person who is not an entrepreneur.

It concludes, arguing for the total rejection of the request for arbitral pronouncement and absolution of the Respondent, since the contested assessments do not suffer from any defect, as the AT merely applied the legal norms in force to the facts at issue, fully complying with the legal discipline defined by the legislature.

On September 28, 2016, it submitted allegations, reiterating everything it stated in its Response to the request for arbitral pronouncement, arguing for the complete rejection of the requests for arbitral pronouncement with the consequent absolution of the suit.

4. Object of the Dispute

The main question which constitutes the thema decidendum amounts to determining whether the purchase of real property, within the scope of insolvency proceedings, owned by natural persons who are neither entrepreneurs nor business holders, is or is not exempt from stamp duty, provided for in item 1.1 of the TGIS, by virtue of the provisions of subsection e) of Article 269 of the Insolvency and Business Recovery Code (CIRE).

5. Grounds for Decision

5.1 Established Facts

With relevance to the consideration and decision of the substantive issues raised, the following facts are deemed established and proven:

5.1.1 As shown in the summary table below, the Claimant, within the scope of insolvency proceedings, provided for in Article 1 of the Insolvency and Business Recovery Code (CIRE), acquired, or more accurately, purchased, by means of sealed bids, in accordance with Article 164 of the same legislation, certain real properties owned by the insolvent persons and which comprised the respective insolvent estate, see doc. 2 attached to the request for arbitral pronouncement, the contents of which are hereby fully reproduced herein.

5.1.2 The insolvent persons are natural persons, not entrepreneurs, therefore the real properties transferred do not constitute an element of the assets of any business, which does not effectively exist.

5.1.3 The said acquisitions are subject to stamp duty, in accordance with Article 1, paragraph 1 of the Stamp Duty Code (CIS) and item 1.1 of the General Table of Stamp Duty (TGIS), at the rate of 0.8% on the respective values.

5.1.4 However, the same improperly benefited from exemption, since the Tax Service of ...…, as stated at f. 220 of the PA, "when filling in declaration model 1 of the IMT, the code '31' – Acquisition of real property of the State, Autonomous Regions and Local Authorities; acquisition of real property by judicial or administrative seizure or under legal regimes for financial support for housing – was improperly mentioned in box 3".

5.1.5 On November 4, 2014, the same tax service made corrective additional assessments that, legally, were due, in accordance with Article 31, paragraph 2 of the Real Estate Transfer Tax Code (CIMT), by express referral of Article 23, paragraph 4 of the CIS, which were notified to the Claimant in accordance with Article 31, paragraph 4 of the CIMT, see doc. 1 attached to the request for arbitral pronouncement, the contents of which are hereby fully reproduced herein.

5.1.6 The said additional assessments, in the total amount of €36,353.28, were paid on the dates shown in the summary table below, see doc. 3 attached to the request for arbitral pronouncement, the contents of which are hereby fully reproduced herein.

5.1.7 On March 4, 2015, the Claimant, in accordance with Articles 68 et seq. of the CPPT, submitted various administrative appeals, having as their object the legality of the above assessments, with the same being consolidated with the one submitted first, resulting in Case No. …2013… et seq., see ff. 12 to 27 of the PA.

5.1.8 By office No. … (registration: RF … PT) of the Tax Service of ...…, dated October 28, 2015, the Claimant was notified, through its authorized representative, of the draft decision to reject the said appeal, dated October 19, 2015 as well as to, if it so wished, exercise the right to prior hearing provided for in Article 60 of the LGT, see ff. 218/222 of the PA.

5.1.9 On November 30, 2015 a decision to reject the administrative appeal was issued, which was notified to the Claimant, through its authorized representative, by means of office No. … (registration: RD … PT) of the same tax service, dated December 7, 2015, see ff. 225/227 of the PA).

SUMMARY TABLE OF ADDITIONAL ASSESSMENTS

Name Insolvency Case Article Fractions Parish Assessment Amount (€) Payment Due Date
B … AD … … 864.00 11-05-2014
C … L … … 384.00 11-05-2014
D … AM FX GO GR … … 665.60 11-05-2014
E … AO … … 586.80 11-05-2014
F … --- … … 896.00 11-05-2014
G … F … … 584.00 11-05-2014
H … F … … 360.00 11-05-2014
I … --- … … 936.00 11-05-2014
J … A M … … 480.00 11-05-2014
K … AI IS … … 435.20 11-05-2014
L … --- … … 1,160.00 11-05-2014
M … --- … … 928.00 11-05-2014
N … D … … 544.00 11-05-2014
O … AB … … 850.00 11-05-2014
P … J … … 504.00 11-05-2014
Q … --- … … 490.00 11-11-2014
R … --- … … 490.00 11-11-2014
S … AV … … 680.00 11-11-2014
T … N … … 430.00 14-11-2014
U … R … … 488.00 14-11-2014
V … M … … 376.00 14-11-2014
W … --- … … 1,400.00 14-11-2014
X … I … … 816.00 14-11-2014
Y … --- … … 880.00 18-11-2014
Z … D … … 560.00 19-11-2014
AA … AI … … 544.00 20-11-2014
BB … I … … 528.00 20-11-2014
CC … F … … 600.00 20-11-2014
DD … AE … … 840.00 20-11-2014
EE … AK J … … 910.00 20-11-2014
FF … R … … 312.00 20-11-2014
GG … Z … … 324.80 20-11-2014
HH … AZ … … 444.00 21-11-2014
II … J … … 480.00 24-11-2014
JJ … --- … … 528.00 24-11-2014
KK … --- … … 960.00 26-11-2014
LL … --- … … 660.00 26-11-2014
MM … --- … … 2,240.00 26-11-2014
NN … I … … 510.00 26-11-2014
OO … H … … 600.00 26-11-2014
PP … AG … … 320.00 26-11-2014
QQ … D E FJ FL … … 1,306.88 26-11-2014
RR … L AN … … 656.00 11-12-2014
SS … N … … 576.00 11-12-2014
TT … AP … … 704.00 11-12-2014
UU … E … … 400.00 12-12-2014
VV … DJ … … 504.00 12-12-2014
WW … E … … 570.00 16-12-2014
XX … BE … … 640.00 16-12-2014
YY … P … … 440.00 16-12-2014
ZZ … B … … 400.00 16-12-2014
AAA … AI … … 512.00 16-12-2014
BBB … --- … … 1,480.00 16-12-2014
CCC … D … … 576.00 16-12-2014
TOTAL 36,353.28

5.2 Unproven Facts

There are no facts relevant to the decision of the case that have not been proven.

5.3 Evidentiary Matters

With respect to the factual matters, the Tribunal does not have the duty to pronounce on all the allegations made, but rather has the duty to select those that matter for the decision, taking into account the cause (or causes) of action which forms the basis of the claim filed by the claimant [(see Articles 596, paragraph 1 and 607, paragraphs 2 to 4 of the CPC, applicable by virtue of Article 29, paragraph 1, subsections a) and e) of the RJAT)] and to establish whether it considers it proven or unproven (see Article 123, paragraph 2 of the CPPT).

According to the principle of free evaluation of evidence, the Tribunal bases its decision, in relation to the evidence produced, on its intimate conviction, formed from the examination and evaluation it makes of the means of proof brought to the proceedings and in accordance with its experience of life and knowledge of persons (see Article 607, paragraph 5 of the CPC). Only when the probative force of certain means is pre-established in law (e.g., full probative force of authentic documents, see Article 371 of the Civil Code) does the principle of free evaluation of evidence not apply to the evaluation of the evidence produced.

Thus, the Tribunal's conviction was based on the documentary record in the file as well as on the positions assumed by the parties.

5.4 Legal Grounds (Justification)

Issues to be decided:

  • On the illegality of the decision to reject the administrative appeal No. …2013… et seq.; and

  • On the request for payment of compensatory interest.

On the illegality of the decision to reject the administrative appeal No. …2013… et seq.

It should be stated, first and foremost, that the references made by the Claimant to Article 270, paragraph 2 of the CIRE, that is, to the exemption from IMT relating to the sale of the business in its entirety or of each of the real properties that constitute its assets, stated in the request for arbitral pronouncement, deserve no relevance whatsoever for the question at issue, as this is restricted to stamp duty.

The Claimant states that, under Article 164 of the CIRE, it acquired by means of sealed bids within the scope of insolvency proceedings, the real properties listed in document No. 2, which were owned by natural persons who are neither entrepreneurs nor business holders.

And that "In fact, all the sales in question were made by the insolvency administrator, in the insolvency proceedings themselves, in the exercise of the powers conferred in Articles 158 et seq. of the CIRE (…)", see Article 5 of the request for arbitral pronouncement (underlining and bold, ours).

Indeed, the following is the wording of paragraph 1 of Article 158 of the CIRE:

"Once the judgment declaring insolvency has become final and the assembly for consideration of the report has been held, the insolvency administrator proceeds promptly to the sale of all assets seized for the insolvent estate, independently of the verification of liabilities, insofar as the deliberations taken by the creditors in the said assembly do not oppose it".

Having analyzed the documents that evidence the acquisition of the said real properties by the Claimant, contained in document No. 2 (notarial instruments of purchase and sale and titles of transfer issued in accordance with Article 900, paragraph 1 of the Code of Civil Procedure of 1961), it is verified that the said real properties were sold to the Claimant within the scope of the insolvency proceedings.

The cession of assets to the Claimant as a creditor did not occur, therefore it makes no sense to state:

"In any case, Article 269, subsection d) of the CPEREF (this code was mentioned by mistake instead of the CIRE) exempts from stamp duty the cession of assets of the debtor to the creditors", see Article 53 of the request for arbitral pronouncement;

"It does not distinguish whether the asset ceded is from the business or the assets of the individual insolvent or business holder", see Article 54; and

"Nor does it distinguish the title by which the cession must be made", see Article 55.

The cession of assets to the creditors, referred to in subsection d) of Article 269 of the CIRE, is the one provided for in Article 831 of the Civil Code, and occurs when the creditors, or some of them, are entrusted by the debtor with liquidating the assets of the latter, or part thereof, and distributing the product among themselves, for the satisfaction of their credits.

This figure with the legal nature of "mandate", also known as cessio bonorum, avoids forced execution, limiting itself to the debtor handing over the assets, or part of the assets, to the creditors, or to some of them, for liquidation and payment of debts. It is not, however, a cession in the strict sense of the term, since the assets continue to belong to the debtor while they have not been transferred (see Fernando Andrade PIRES de LIMA and João de Matos ANTUNES VARELA, in "Civil Code", annotated, Volume III, 3rd edition revised and updated, Coimbra Editora, Limited, p. 119).

Thus the exemption which the sales acts could potentially benefit from is subsumed under subsection e) of the said Article 269 of the CIRE, the wording of which is as follows:

"The following acts are exempt from stamp duty, when they are subject to it, provided they are provided for in insolvency, payment or recovery plans or practiced within the liquidation of the insolvent estate:

e) The carrying out of financing operations, the transfer or cession of the operation of establishments of the business, the establishment of partnerships and the transfer of commercial establishments, the sale, exchange or cession of elements of the assets of the business, as well as the leasing of assets" (bold ours).

This exemption constitutes an automatic benefit as it results directly and immediately from the law, see Article 5, paragraph 1 of the Status of Tax Benefits, being the responsibility of its verification and declaration to the tax service where the declaration provided for in paragraph 1 of Article 19 of the CIMT was submitted, that is, to the Tax Service of ...…, see Article subsection d) of the CIMT, applicable by virtue of Article 23, paragraph 4 of the Stamp Duty Code.

Having arrived at this point, it falls to us to decide whether, in the present case, the necessary prerequisites for the verification of the said exemption provided for in Article 269, subsection e) of the CIRE are met.

We can state apodiictically that the owners of the real properties transferred to the Claimant and debtors of the latter are natural persons, not entrepreneurs, who do not engage in an activity of an industrial, commercial or agricultural nature, see 5.1.2 of the findings.

Thus such real properties do not constitute elements of the assets of any business, which, as is obvious, does not exist, and which Article 5 of the CIRE defines as "any organization of capital and labor intended for the exercise of any economic activity".

Considering the literal wording of the rule in question, it results that those exempt from stamp duty are the sales of elements of the assets of the business, provided it is provided for in insolvency, payment or recovery plans or practiced within the liquidation of the insolvent estate.

For the Claimant it is irrelevant that the real properties sold constitute elements of the assets of a business.

Thus it becomes necessary to invoke Article 11, paragraph 1, of the LGT which provides:

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

These principles are set forth in Article 9 of the Civil Code, as follows:

"1. Interpretation must not be limited to the letter of the law, but must reconstruct from the texts the legislative intent, taking especially into account the unity of the legal system, the circumstances under which the law was drawn up and the specific conditions of the time in which it is applied.

  1. However, the interpreter cannot consider the legislative intent that does not have a minimum verbal correspondence in the letter of the law, even if imperfectly expressed.

  2. In establishing the meaning and scope of the law, the interpreter shall presume that the legislature adopted the best solutions and knew how to express its intent in appropriate terms".

As is known, the first element of interpretation is the letter of the law, the so-called grammatical element. However, the verbal wording of the law may not be sufficient, not only because the words and expressions used may be polysemic, offering a plurality of meanings, but, above all, because it is well known that there is frequently a distance, greater or lesser, between the legislative intent and its written expression.

Therefore, in addition to the verbal wording of the law, the interpreter must resort to other means available in the hermeneutical arsenal: the logical, rational or teleological element (which assumes that a rule has a function to fulfill, an end or telos, it being the responsibility of its interpreter to grasp its meaning in correlation with the aim pursued by the law) and the historical element (according to which the interpreter must resort to the history of the provision, the regulation of certain matters, certain dogmatic institutions, in the search for the meaning of the rule), see João BAPTISTA MACHADO, in "Introduction to Law and to Legitimating Discourse", 12th Reprint, Almedina, pp. 175 et seq.

The ratio of the rule could, in principle, encompass acts of sale that had their origin in insolvency of natural persons, not entrepreneurs or business holders, since, the objective of the rule being to facilitate the realization of those operations in situations of insolvency or recovery, no impediment to such legal provision is envisaged as regards natural persons.

Nevertheless, the rule under analysis clearly and expressly provides that the exemption from stamp duty applies to the "sale, exchange or cession of elements of the assets of the business" and does not provide that the exemption from stamp duty applies to the sale, exchange or cession of elements held by natural persons that are part of their personal assets. Thus, ubi lex non distinguit nec nos distinguere debemus (where the law does not distinguish, neither should the interpreter distinguish).

In this sense, see the decision of the STA of September 25, 2013 (Case 0866/13), summarized as follows:

I – In accordance with Article 269, subsection e), of the CIRE, stamp duty is exempt from the sales of "elements of the assets of the business".

II – Therefore, the said exemption does not encompass the sale of urban real property intended for housing that belongs to a natural person, it being insufficient to benefit from such exemption the fact that it concerns sales acts carried out within the liquidation of the insolvent estate, rather it must be demonstrated that the asset sold is part of the assets of a business.

As well as Case No. 649/2015-T of September 26, 2016, of the CAAD:

"(...) And also as regards the Stamp Duty, in relation to which the application of subsection e) of Article 269 of the CIRE is invoked, although this provision covers acts of transfer of real property of a business, there is no place, in this case, for the application of the exemption, because what is at issue is not the sale of real property belonging to a business or intended for the exercise of business activity (...)".

And also Cases Nos. 139/2016-T of September 28, 2016 and 13/2016-T of June 22, 2016, among others.

Thus, considering that the Claimant acquired, by purchase, within the scope of insolvency proceedings, real properties owned by natural persons, not entrepreneurs nor business holders, the situation to be decided is not subsumed under the provision contained in subsection e) of Article 269 of the CIRE, which refers exclusively to the sale of "elements of the assets of the business".

Based on all of the above, we understand that the decision to reject the administrative appeal issued by the head of the Tax Service of …, on November 30, 2015, in Case No. …2013… et seq., relating to the additional stamp duty assessments referred to above, provided for in item 1.1 of the respective General Table of Stamp Duty (TGIS), in the amount of €36,353.28 (thirty-six thousand, three hundred and fifty-three euros and twenty-eight cents), does not suffer from any defect and is to be upheld in the legal order.

On the request for compensatory interest

This claim being dependent on the success of the previous claim, and that claim failing, this claim also fails, there being no condemnation of the AT for the payment of compensatory interest.

6. Decision

Based on the foregoing, it is decided:

a) To reject the peremptory exception of extinction of the right of action invoked by the Respondent;

b) To reject the request for annulment of the decision of the Head of the Tax Service of ...…, of November 30, 2015, issued in the administrative appeal proceedings No. …2013… et seq.;

c) To reject the request for annulment of the additional stamp duty assessments (item No. 1.1 of the TGIS), referred to above, in the amount of €36,353.28;

d) To reject the request for payment of any compensatory interest; and

e) To condemn the Claimant to pay the costs of the arbitral proceedings, in the amount of €1,836.00, see paragraph 1 of Article 527 of the CPC and Article 4 of the Regulation on Costs in Tax Arbitration Proceedings (RCPAT).

7. Value of the Proceedings

In accordance with the provisions of Articles 306, paragraph 2, of the CPC, 97-A, paragraph 1, subsection a) of the CPPT and 3, paragraph 2 of the RCPAT, the value of the proceedings is fixed at €36,353.28.

8. Costs

In accordance with Article 22, paragraph 3 of the RJAT, the amount of costs is fixed at €1,836.00, in accordance with Table I, annexed to the Regulation on Costs in Tax Arbitration Proceedings.

Notify.

Lisbon, November 22, 2016.

The Arbitrator,

(Rui Ferreira Rodrigues)

Text prepared by computer, in accordance with the provisions of Article 131, paragraph 5, of the CPC, applicable by referral of Article 29, paragraph 1, subsection e), of the RJAT.

Frequently Asked Questions

Automatically Created

What is the stamp tax (Imposto do Selo) liability under verba 1.1 of the Portuguese General Stamp Tax Table (TGIS)?
Verba 1.1 of the TGIS imposes stamp tax on gratuitous transfers of property, including real estate and other assets. The tax base is typically the patrimonial value of the transferred property, with rates varying depending on the relationship between parties. Additional stamp tax assessments under this provision often arise when the Tax Authority identifies unreported or undervalued transfers, leading to corrective liquidations as seen in Process 106/2016-T.
Does the insolvency exemption under Article 269(e) of the CIRE apply to additional stamp tax assessments on property?
Article 269(e) of the CIRE provides an exemption from stamp tax for acts and contracts directly related to insolvency proceedings, including judicial sales and transfers of assets. The application to additional stamp tax assessments depends on whether the underlying transaction qualifies as an insolvency-related act. In Process 106/2016-T, the taxpayer invoked this exemption to challenge €36,353.28 in assessments, arguing the property transactions fell within the insolvency framework and should be tax-exempt.
How can taxpayers challenge stamp tax liquidations through CAAD arbitration proceedings in Portugal?
Taxpayers can challenge stamp tax liquidations through CAAD arbitration by filing a request within 90 days of notification of the final administrative decision. If an administrative appeal is filed first under Article 102 of the CPPT, the 90-day deadline runs from notification of the appeal decision, not the original assessment. The request must identify the contested act, state grounds for illegality, and can seek tax refunds with compensatory interest under Articles 43 of the LGT and 61 of the CPPT.
What are the grounds for claiming a refund of stamp tax with compensatory interest under Article 43 of the LGT?
Article 43(1) of the LGT entitles taxpayers to compensatory interest on tax refunds when the Tax Authority collected taxes unlawfully or in excess. Claims require proving the tax was unduly paid and calculating interest from the payment date to the credit note issuance date. The CPPT Article 61 establishes the interest rate and calculation methodology. In stamp tax cases, successful challenges to assessments trigger automatic refund rights with interest, as requested in Process 106/2016-T.
Can the statute of limitations (caducidade) defense bar arbitration claims against stamp tax assessments in Portugal?
The statute of limitations defense (caducidade) can bar arbitration claims if the request is filed beyond the 90-day deadline established in Article 10(1) of the RJAT. However, Process 106/2016-T established that when taxpayers file administrative appeals, the deadline runs from notification of the appeal decision, not the original assessment date. The tribunal rejected the Tax Authority's caducidade defense, ruling that filing on February 24, 2016 was timely when counted from the December 15, 2015 appeal decision notification, protecting taxpayers who exhaust administrative remedies before seeking arbitration.