Stamp Tax on Construction Land for Tourism Use: CAAD Arbitration on Verba 28.1 TGIS Exemption

ARBITRAL DECISION

I - Report

1. A…, S.A. - formerly denominated B…, S.A. – tax payer …, with registered office in …, …, …-…, in …, requested the constitution of the arbitral tribunal in tax matters raising a request for arbitral pronouncement with a view to the declaration of illegality of the Stamp Duty assessment - Item 28.1, of the General Table - relating to the year 2014 and to the urban property registered in the respective property matrix under article … of the Union of Freguesias of … and …, municipality of … (corresponding to the extinct article … of the freguesia of …), in the amount of € 22,921.30. As a consequence of said declaration of illegality of the act, the Claimant also petitions the condemnation of the Tax and Customs Authority to payment to the Claimant of the sum of € 1,072.11, corresponding to reimbursement of costs incurred thereby, plus indemnity interest at the legal rate, accrued and to accrue until actual payment.

2. As the basis of the claim, the Claimant alleges, in summary, that the taxation provided for in the cited provision of the General Table of Stamp Duty, as worded by Law No. 83-C/2013, of 31/12, has as its object "land for construction whose building, authorized or intended, is for housing, under the terms provided in the Real Estate Transfer Tax Code", a circumstance which does not occur in the case of the land in question, intended for Tourist Development, as results from the respective subdivision permit. Not being subsumed, thus, in the provision of Item 28.1 of the General Table of Stamp Duty, given that according to said permit and by legal requirement the plot of land in question shall have tourist services use, the Claimant considers that the assessment in question is affected by illegality due to error regarding the factual and legal prerequisites.

3. For its part, the Defendant - Tax and Customs Administration (AT) - in response to what was alleged contested the Claimant's claim, presenting a defense by exception, invoking the untimeliness of the request for arbitral pronouncement as well as the material incompetence of the Arbitral Tribunal, thus pronouncing itself for the dismissal of the claim and, consequently, for the maintenance of the questioned assessment act.

4. The request for constitution of the arbitral tribunal, presented on 29-02-2016, was accepted by the President of CAAD and automatically notified to the Defendant (AT) on 11-03-2016.

5. Under the terms provided in subparagraph a) of paragraph 2 of article 6 and subparagraph b) of paragraph 1 of article 11 of Decree-Law No. 10/2011, of 20/01, as worded by article 228 of Law No. 66-B/2012, of 31/12, the Deontological Council designated as arbitrator of the singular arbitral tribunal the undersigned, who communicated acceptance of the assignment within the applicable period, and notified the parties of such designation on 27-04-2016.

6. Duly notified of such designation, the parties manifested no will to refuse the designation of the arbitrator, under the combined terms of article 11, paragraph 1, subparagraphs a) and b) of RJAT and articles 6 and 7 of the Deontological Code.

7. Thus, in accordance with the provision laid down in subparagraph c) of paragraph 1 of article 11 of RJAT, as worded by article 228 of Law No. 66-B/2012, of 31/12, the singular arbitral tribunal was constituted on 12-05-2016.

8. Regularly constituted, the arbitral tribunal is materially competent in light of the provision laid down in articles 2, paragraph 1, subparagraph a), of RJAT.

9. The parties have legal personality and capacity and have legitimacy (arts. 4 and 10, paragraph 2, of RJAT, and art. 1 of Ordinance No. 112-A/2011, of 22/03).

10. Considering the knowledge deriving from the procedural documents, judged sufficient, the Tribunal decided to dispense with the meeting provided for in article 18 of RJAT.

II - Matters of Fact

11. With relevance for the assessment of the question raised, the following factual elements stand out:

11.1. As of the date to which the questioned tax act relates, the Claimant was owner and legitimate possessor of the urban property situated in …, in …, denominated lot …, originated by subdivision permit No. …/…, issued by the Municipal Council of … on 08-11-1988.

11.2. Said property, of the type land for construction, is described in the … Land Registry Office of ... under file No. …, and registered in the property matrix of the Union of Freguesias of … and …, municipality of ..., under article …, corresponding to the extinct article … of the freguesia of … (Annex I, Doc.2).

11.3. As results from the subdivision permit mentioned above, the plot of land in question is intended for tourist development, denominated "C…", as such being identified in the land registry (Annex I.Doc.4).

11.4. For tax purposes, the property in question was subject to valuation, carried out on 11-03-2013, being assigned the tax value of € 2,292,130.

11.5. In determining said tax value, a use coefficient corresponding to housing was considered, among other relevant elements, as appears from the valuation form attached to the file.

11.6. This element appearing in the respective matrix registration, as extracted from the corresponding property notebook (Annex I, Doc. 3), and the tax value of the property being greater than € 1,000,000 (one million euros), the AT proceeded with the competent assessment of Stamp Duty, relating to the year 2014, under Item 28.1, of the General Table of Stamp Duty.

11.7. Notified of the assessment, the now Claimant timely filed a gracious appeal with the Tax Office of ...-…, which was assigned case number …2015… .

11.8. In summary, the Appellant grounds the request for annulment of the assessment on the circumstance that, in the case at issue, the objective prerequisites for the incidence of the tax in question are not met, insofar as it is a plot of land for construction intended for tourist development, as results from the respective subdivision permit issued by the competent entity.

11.9. By order of 25-11-2015, the appeal was dismissed, based on the following reasoning:

"III. Analysis of the Claim

Having analyzed all the documentation of the file and, after consultation with the computer system database, it was verified that:

III.1. In the case under analysis, on 2014.12.31, the property is described in the matrix as urban property composed of a plot of land intended for construction.

III.2. Similarly, the total tax value of the property is € 2,292,130.00, appearing in the property notebook that the property is intended for housing.

III.3. Urban properties may be, among others, residential or services, under subparagraphs a) and b) of paragraph 1 of article 6 of CIMI.

III.4. Residential, commercial, industrial or for services are buildings or constructions licensed for such purposes or, in the absence of a license, that have as their normal destination each of these purposes.

III.5. The property in question was valued taking into account the residential use.

III.6. For the calculation of TVI, the coefficient varies depending on its use. For this reason, the use coefficient applied was 1.00, that is, the coefficient applied to properties used for housing.

III.7. What may be in question is the existence of error in the use given to the property.

III.8. If that is the case, gracious appeal under article 68 of CPPT is not the proper means for this purpose.

III.9. The taxpayer may, if so inclined, appeal under paragraph 3 (sic) of the Real Estate Transfer Tax Code."

11.10. The decision dismissing the gracious appeal was notified to the Claimant on 30-11-2015.

12. There are no material facts for the decision that have not been proven.

III - Matters of Law

13. Having summarized the object of the present request for arbitral pronouncement as well as the factual elements relevant to its assessment on the merits, it is important, first and foremost, to analyze and decide the exceptions invoked by the Defendant regarding the expiration of the right of action and material incompetence of the Arbitral Tribunal.

III.1. - On the Expiration of the Right of Action

13. Having summarized the object of the present request for arbitral pronouncement as well as the factual elements relevant to its assessment on the merits, it is important, first and foremost, to analyze and decide the exception invoked by the Defendant regarding the expiration of the right of action.

14. As to this invoked exception, the Defendant alleges that the exclusive object of the request for arbitral pronouncement is the "assessment of Stamp Duty for 2014, made on 20mar2015, in the amount of 22,921.30€, issued by the Tax and Customs Authority under item 28.1 of the General Table of the Real Estate Transfer Tax Code ("TGIS") with reference to the urban property, corresponding to a plot of land for construction registered in the property matrix of the Union of Freguesias of … and …, municipality of ..., district of Lisbon under article matrix … (extinct article … of the freguesia of …)"

15. Thus, according to what the Defendant alleges, the Claimant petitions solely that the judgment be rendered in favor of the request for declaration of illegality of the tax assessment act.

16. However, continues the Defendant, the deadline legally defined for the challenge of this specific tax assessment act in arbitral proceedings is clearly exceeded. Being this period 90 days, counted according to article 10 of RJAT, it is found that the date of the deadline for payment of the tax in question in the case was 30-04-2015 and the request for constitution of the arbitral tribunal being presented on 29-02-2016, it is found that the same is untimely and the tribunal cannot take cognizance thereof.

17. Developing the basis of the exception it invokes, the Defendant states: "Indeed, in this context, having the deadline for direct challenge (that is, of the primary act) been exceeded, the "timeliness" of the request could only be based on the existence of any means of gracious challenge of the assessment act where a decision had been rendered denying/dismissing, totally or partially, the claims made there by the tax subject (in what would constitute an act of second degree)."

18. Thus it finds that the circumstances described above are verified in the situation to which the present case refers, insofar as the Claimant administratively challenged the assessment act, with the Tax Administration dismissing the appeal in the dimension that had been requested.

19. However, "... notwithstanding having made reference to and identified those circumstances, the Claimant did not formulate/specify to the Tribunal any request aimed at annulment of what was decided in that forum." and "Not having done so, there is no support that could establish the timeliness of the request and, consequently, the possibility of the Tribunal assessing the request formulated regarding the assessment act."

20. With the grounds summarized above, the Defendant concludes that "In sum, resulting clearly and unequivocally from the learned initial request, the direct challenge of the Stamp Duty assessment act, the request formulated (leading to the declaration of illegality of the act and, consequently its annulment) should be declared without merit, for being untimely and, consequently, the Defendant Entity should be absolved of the instance – cf. subparagraph e), of paragraph 1, of article 278 of the Civil Procedure Code in force, applicable ex vi article 29, paragraph 1, subparagraph e) of Decree-Law No. 10/2011, of 20 January."

21. The Defendant thus considers that the present request is manifestly untimely, in light of what is provided in article 10 of RJAT, insofar as the same has as its object the Stamp Duty assessment act, being completely silent as to the annulment of the act dismissing the gracious appeal timely notified to the Claimant. According to what is extracted from the reasoning in which the invoked exception is based, the request should have as its immediate object the decision dismissing the appeal, in which case the deadline for challenging would then be counted from the date of its notification.

22. With due respect, such understanding is not shared. Indeed, it is clear from the cited rule that, in situations, such as the one evident in the present case, where there has been gracious appeal and or hierarchical appeal, the deadline for presenting a request for arbitral pronouncement is counted from the notification of the decision rendered therein.

23. It is emphasized that this matter has been the subject of various arbitral decisions, recalling in this regard the Arbitral Decision rendered in case 419/2014-T, of which the following is transcribed:

"As results from the competence attributed to the arbitral tribunals functioning in CAAD to assess the legality of assessment acts, and not of decisions dismissing hierarchical appeals or gracious appeals, when there is administrative challenge of assessment acts, these assessment acts are always challengeable within a deadline counted from the notification of the dismissal decision, as article 10, paragraph 1, indicates them as initial terms. Therefore, the requesting party to arbitration does not have to challenge the acts of second or third degree and, even when it does challenge these, it is considered that the object of the arbitral process is always the mediate object that the acts of assessment constitute, maintained by acts of second or third degree, whenever the Claimant does not attribute to these defects of their own. But, obviously, if the requesting party to arbitration merely intends to have declared the illegality of assessment acts, which are those that, being susceptible to coercive execution, affect its legal sphere, it does not have to challenge the acts of second or third degree, which lack autonomous harmfulness.

Moreover, a hypothetical deficiency in the formulation of the request would not have as its corollary the absolution of the instance, only giving rise, if necessary, but always when necessary, to a correction, as imposed by subparagraph c) of paragraph 1 of article 18 of RJAT, in harmony with the constitutional right to contentious challenge of all acts of the Administration that harm the rights of taxpayers (articles 20, paragraph 1, and 268, paragraph 4, of the Constitution)."

24. In the same sense, one may read, in Arbitral Decision, of 27-10-2015, in case 124/2015-T:

"We are once again in that case where it seems there is confusion between the material scope of arbitration (article 2, of RJAT) with the date from which a request for arbitral pronouncement may be filed (article 10, of RJAT) and also, once more, this is about the approach to the question of recourse, through arbitration, of acts of second or third degrees. The problematic of acts of second and third degree in tax arbitration relates, as is understood, to at least two distinct questions: a first, to know whether, having had recourse to an administrative gracious means, the object of the arbitral process will be the decision to be rendered by the Tax Administration – in a gracious appeal, hierarchical appeal or official revision request – or, on the contrary, the assessment act, self-assessment, withholding or payment on account; a second, which interlinks questions of competence and questions of deadline, and which is to know whether the tribunal will have competence – and, if so, to what extent – to assess an act of first degree when the request is presented as a result of a tacit dismissal of gracious appeal, hierarchical appeal or official revision request previously filed.

With respect to the first question, already within the scope of judicial challenge, it was arguable whether, before an express decision of gracious appeal, hierarchical appeal or official revision request, the taxpayer directly challenged the assessment act previously appealed, appealed or revised (the act of first degree) or the very decision (dismissal) of appeal, hierarchical appeal or official revision request which, in turn, assessed the (il)legality of the challenged act - the act of second degree. The Superior Administrative Court (STA) pronounced itself on the question, in a ruling dated 18 May 2011, rendered in case No. 0156/11[1], admitting that "(…) the real object of the challenge is the assessment act and not the act that decided the appeal, so that it are the defects of that and not of this order that are truly at issue(…)."

"(…) the challenge is not, therefore, limited by the grounds invoked in the gracious appeal, being able to have as its basis any illegality of the tax act.(…)"

This is the first question that must be clear: the object of the arbitral process is the assessment act.

A different question from this is whether the request for arbitral pronouncement was presented within the deadline. Here the Tribunal understands that the arbitration legislator was clear in compartmentalizing questions of competence and questions of deadlines.

Thus it is that as to competence or material scope where the object of arbitration is, as concluded, the assessment of the illegality of assessment acts.

As to the deadline, the taxpayer may have recourse to arbitration as soon as notification of the assessment acts of taxes, self-assessment, withholding at source and payment on account, or, having had recourse to the administrative route, after notification of the decision dismissing or the formation of tacit dismissal. This answer is found, in turn, in article 10. From this rule should not, however, be derived the competence for direct assessment of acts of second degree. This is a rule that relates solely and exclusively to the dies a quo of the deadline for presenting the request for arbitral pronouncement. It is a rule that relates therefore to the moment from which the countdown for requesting the request for constitution of the arbitral tribunal begins.

Indeed, article 2, paragraph 1, subparagraph a), determines that the arbitral tribunals have competence to assess "the declaration of illegality of acts of assessment of taxes, self-assessment, withholding at source and payment on account". There is, therefore, no reference to the acts dismissing gracious appeal, hierarchical appeal or official revision request, i.e., there is no mention of the arbitrability of dismissal decisions, express or tacit, of the prior administrative routes used. There is no mention nor needed there be.

It is understood in this regard that acts of second or third degree may always be arbitrable, insofar as they themselves involve, and only to this extent, the (il)legality of the assessment acts in question. At the basis of this understanding will be, for part of the Doctrine, a teleological interpretation, namely because subparagraph a) of paragraph 1, article 10 expressly refers to the "decision of hierarchical appeal" and it is also, as is understood, the fact that the act of second or third degree is assessing the act of assessment, self-assessment, withholding at source or payment on account object of the arbitration.

It is thus argued here, therefore, for an interpretation according to which not arbitrable are the defects of their own of the acts dismissing gracious appeals, hierarchical appeals or revision requests of the tax act because they escape the material scope of tax arbitration. In other words, those dismissal acts may only be "brought" to arbitral jurisdiction, under the strict condition that they themselves have assessed the (il)legality of the tax act that the taxpayer, truly and effectively, intends to challenge through the arbitration route.

In this sense, see the arbitral decision rendered in case No. 272/2014-T]:

"65 - The dismissal of gracious appeal embodies, in the context of judicial challenge, the case provided for in paragraph 2 of art. 102 of CPPT, raising the question of whether, given the competences legally entrusted to arbitral tribunals, they will be competent to, in any circumstances, assess the acts dismissing gracious appeals.

66 - Being the competence of the arbitral tribunals, functioning alongside CAAD, circumscribed and limited, as already mentioned above, to the declaration of illegality of acts of assessment of taxes, self-assessment, withholding at source and payment on account, the assessment of acts dismissing gracious appeals, by said tribunals, must be conditioned to the effective knowledge that such acts had of the legality of the assessment acts with which they are related.

67 - The decision dismissing the gracious appeal, rendered in the above-mentioned circumstances, reaffirms the legality of the assessment act in question and reconfirms it, as it had initially been configured.

68 - The dismissal of gracious appeal is a harmful act susceptible to challenge by the interested party, which, insofar as it proceeds to the reaffirmation of the primary underlying assessment act and of which it is inseparable, cannot fail to have its assessment entrusted to the arbitral tribunals, which, as already mentioned, have their competences fundamentally centered on the declaration of illegality of acts of assessment of taxes."

25. Following the position expressed in the arbitral decisions in the segments transcribed above, to which without reservation it adheres, it is found, in the present case, that notification of the decision dismissing the gracious appeal occurred on 30-11-2015 and the request for arbitral pronouncement was presented on 29-02-2016, therefore within the deadline provided for in article 10, paragraph 1, of RJAT.

26. In these terms, the exception invoked by the Defendant (AT) regarding the expiration of the right of action is deemed without merit.

III.2 - On the Material Incompetence of the Arbitral Tribunal

27. Along with the exception of expiration of the right of action, the Defendant also invokes another, this one relating to the material incompetence of the Arbitral Tribunal, in the following terms:

"With regard to the incompetence of this learned Tribunal to pronounce itself under the terms and for the purposes that the Claimant intends, when what the Claimant intends is that in light of the assessment the valuation of the property in question which embodies the tax fact that is subsumed to the assessment of stamp duty in question be reviewed, it is important to make the following considerations from the start:

- In the first place (1) – the nature of a property (which is what mediately or immediately the Claimant intends to see questioned here) is not susceptible to being discussed in arbitral proceedings, there are proper procedures for this contained in the tax legal framework, furthermore, and as has already been mentioned, the nature of the property is fixed documentally in the case.

In the second (2) and final place – the facts on which the Claimant now intends to question, without having done so in a timely manner and in the proper forum, allowing all the deadlines at her disposal to lapse, are settled in the legal order.

It is not consonant with RJAT, nor with any tax procedural rules, that the Claimant propose and attempt to contradict that which is contained in official documents and whose periods of reaction have all lapsed.

Indeed, even if it were considered, by mere duty of representation, that we were before a fact susceptible to review in CAAD, the same would have to, under the terms and for the purposes of paragraph 7 of art. 134 of CPPT, have exhausted all the gracious means provided for in the valuation procedure, which did not happen, whereupon results clearly the MATERIAL INCOMPETENCE OF THE ARBITRAL TRIBUNAL."

28. Indeed, the Defendant comes to argue that it results from the documentary elements that form part of the present case - property notebook, standard form 1 of IMI and valuation sheet - that the property in question was valued and registered in the respective property matrix as land for construction with residential use.

29. According to the Defendant, the now Claimant, as taxpayer did not challenge that valuation, being able to have done so through the legal means at her disposal, namely through second valuation, under article 76 of CIMI or through challenge of the matrix, under article 130 of the same Code or, furthermore, through judicial challenge of the act setting the tax value, under article 134 of the Code of Tax Procedure and Process.

30. Whereby it concludes that "any eventual decision that purges these elements that were never contested will have the effect of eliminating from the legal order the valuations made by the AT and that were never challenged by the taxpayer and in doing so, clearly extravasate the material competence of this Tribunal". ... "That is, outside the material competences of the Arbitral Tribunal, is the review and/or analysis of valuation acts and property matrix registration."

31. It is verified, thus, that, according to the Defendant, the present request for arbitral pronouncement has as its object the assessment by the Arbitral Tribunal of the valuation carried out on the property in question, a matter that, manifestly, is excluded from its material competence.

32. However, differently from what is alleged as the basis of the invoked exception, what the Claimant intends is that the illegality of the act of assessment of stamp duty relating to a plot of land for construction and to the year 2014 be declared, as is moreover clearly expressed in the request for arbitral pronouncement presented by her.

33. Being unequivocal that the request formulated consists of the declaration of illegality and consequent annulment of a tax act, one is before a matter that, without room for doubt, falls within the scope of the material competence of arbitral tribunals, as results from article 2, paragraph 1, subparagraph a), of RJAT and article 2 of Ordinance No. 112-A/2011, of 22/03.

34. According to what was requested, the decision to be rendered by the Arbitral Tribunal shall thus be limited to the assessment of the legality of the questioned stamp duty assessment, not implying any alteration to the property matrix registration of the property in question, in particular as regards its use and tax value.

35. In these terms, it is thus deemed that the exception of incompetence of the Arbitral Tribunal raised by the Defendant (AT) is without merit.

III.3 - On the Merits of the Claim

36. Basing its claim, the Claimant alleges that the property to which the assessment whose annulment is requested relates is a plot of land for construction whose authorized construction is not intended for housing, not thus being included in the provision of Item 28.1, of the General Table of Stamp Duty.

37. According to, thus, what is alleged by the Claimant and proven by the elements attached to the case that form the facts accepted as documentally proven, it is verified that the property in question is indeed a plot of land intended for construction and that its property matrix registration records as having residential use. However, from the subdivision permit, issued by the competent entity, it appears that the land in question is intended for the installation of a tourist enterprise (tourist development).

38. Said document, whose authenticity is not contested by the Defendant, thus constitutes sufficient proof that on the land in question only buildings intended for the tourist industry may be constructed.

39. The rule of tax incidence on which the challenged assessment is based appears in Item 28.1, of the General Table of Stamp Duty, as worded by article 194 of Law No. 83-C/2013, of 31/12, in force as of the date of the tax fact, is as follows:

"28 - Ownership, usufruct or right of surface of urban properties whose tax value appearing in the matrix, under the terms of the Real Estate Transfer Tax Code (CIMI), is equal to or greater than € 1,000,000 - on the tax value used for IMI purposes:

28.1 - For residential property or for land for construction whose construction, authorized or intended, is for housing, under the terms provided in the Real Estate Transfer Tax Code - 1%."

40. From the elements of the case, in particular in light of the content of the subdivision permit, it is unequivocal that on the plot of land for construction to which the impugned assessment relates the authorized construction thereon does not have residential use.

41. Not verifying, thus, the provision of the rule of incidence, it cannot but be recognized that the Claimant's reasoning is sound when it alleges that the factual and legal prerequisites on which the tax act impugned are not shown to be met, the property identified in the present case not being subsumed therein.

42. By the foregoing, and without need for further development, it cannot but be concluded that the assessment whose declaration of illegality is requested is affected by the vice of violation of that rule of incidence, due to error in its respective factual and legal prerequisites, whereby it must be subject to annulment, with the legal consequences.

IV - Indemnification for Undue Guarantee

43. The Claimant also petitions indemnification for costs incurred with the provision of guarantee with a view to obtaining, under the terms of article 169 of CPPT, the suspension of fiscal execution proceedings, relating to the collection of tax debts to which the present arbitral pronouncement refers, plus indemnity interest at the legal rate.

44. This matter is provided for by express legal provision in article 53 of LGT under the terms and conditions provided therein and in accordance with the regulation provided in article 171 of CPPT.

45. In accordance with the provision of paragraph 1 of article 53 of LGT, the debtor who, to suspend execution, offers bank guarantee or equivalent will be indemnified totally or partially for the damage resulting from its provision, should he have maintained it for a period greater than three years in proportion to the success in administrative recourse, challenge or opposition to execution having as their object the guaranteed debt.

46. As results from paragraph 2 of the cited article, all damage incurred with the provision of guarantees provided to suspend execution is indemnified, without dependence on said deadline, in the case of total success in an action where it is verified there has been error attributable to the services in the assessment of the tax.[i]

47. For its part, article 171 of CPPT establishes that "indemnification in case of bank guarantee or equivalent unduely provided shall be requested in the process in which the legality of the enforceable debt is controvert" and that "indemnification must be requested in the appeal, challenge or recourse or in case its ground is supervenient within 30 days after its occurrence"

48. The judicial challenge process, in which decision is made on the legality of the tax act, thus constitutes adequate procedural means to formulate the request for indemnification for undue guarantee.

49. In accordance with repeated arbitral case law, "The request for constitution of the arbitral tribunal has as its corollary the arbitral process to be the one in which the "legality of the enforceable debt" will be discussed, whereby, as results from the express tenor of that paragraph 1 of said article 171 of CPPT, it is also the arbitral process that is adequate to assess the request for indemnification for undue guarantee." [ii]

50. In the case at issue, although the error underlying the acts of assessment of stamp duty is attributable to the Tax Administration, it is verified, from the tenor of the request, that the indemnification requested relates to "costs relating to mortgage".

51. Now, in accordance with the rules cited above, indemnification for undue guarantee does not encompass, in tax disputes, other types of guarantees beyond bank guarantee or equivalent, being excluded therefrom, in particular, guarantees provided through voluntary mortgage,[iii] whereby, being this the case of the present process, the request is deemed without merit.

V - Indemnification for Other Patrimonial Damage

52. In addition to indemnification for undue guarantee, the Claimant also petitions the condemnation of AT to payment of indemnification relating to costs incurred with the presentation of defense means against the challenged assessment, specifically for attorney's fees.

53. This is, however, a matter that, although it falls within the scope of the extracontractual civil liability of the State, is beyond the scope of competence of this Tribunal, as defined in article 2 of RJAT, approved by Decree-Law No. 10/2011, of 20/01, whereby it cannot take cognizance thereof.

VI - Decision

In these terms, and with the grounds exposed, the Arbitral Tribunal decides:

a) To render without merit the exceptions invoked by the Defendant (AT) regarding the expiration of the right of action and the material incompetence of the Arbitral Tribunal;

b) To render with merit the request for arbitral pronouncement, declaring the illegality of the questioned assessment and determining its consequent annulment;

c) To render without merit the request for indemnification for undue guarantee;

d) Not to take cognizance of the request for indemnification relating to costs incurred with attorney's fees.

Value of the case: € 22,921.30.

Costs: Under article 22, paragraph 4, of RJAT, and in accordance with Table I attached to the Regulation of Costs in Tax Arbitration Proceedings, I fix the amount of costs at € 1,224.00, to be borne by the Defendant (AT).

Lisbon, 30 September 2016,

The Arbitrator,

Álvaro Caneira.

[i] The concept of error attributable to the services is clarified in paragraph 2 of article 43 of LGT, regarding indemnity interest.

[ii] See, among others, Arbitral Decisions of 14.5.2013, Case 1/2013 and of 2.4.2014, Case 224/2013-T

[iii] See in this sense, STA, Ruling of 24.10.2012, Case 0528/12 and Arbitral Decision of 9.10.2013, Case 48/2013-T.