Summary
Full Decision
TAX ARBITRATION JURISPRUDENCE
Case No. 121/2019-T
Decision Date: 2019-09-23
IMI
Value of Claim: € 8,867.10
Subject Matter: IMI – Declaration of Vacant Properties and Rate Increase.
ARBITRAL DECISION
I – REPORT
A..., a canonical juridical person, holder of collective person identification card no. ..., with registered office at ..., ...-... ..., presented on 22/02/2019 a request for constitution of tribunal and arbitral decision, in which it requests the assessment of the legality of the dismissal of the administrative reclamation no. ...2019... and, in final terms, of the Municipal Property Tax (IMI) assessments numbers 2014..., 2015..., 2016... and 2017..., on the grounds that it considers such assessments to be illegal due to lack of reasoning and error regarding the factual and legal assumptions, in the segment concerning rate increase.
The Honorable President of the Deontological Council of the Administrative Arbitration Centre (CAAD) appointed on 16/04/2019 as arbitrator, Francisco Nicolau Domingos.
On 08/05/2019 the arbitral tribunal was constituted.
In compliance with the provision of article 17, no. 1 of Decree-Law no. 10/2011, of 20 January (RJAT), the Respondent was notified on 08/05/2019 to, if it so wished, present a response, request the production of additional evidence and attach the Administrative File (PA) to the proceedings.
On 11/06/2019 the Respondent presented its response, in which it invokes the lack of judicial capacity and the lack of standing of the Claimant; the untimeliness of the request for arbitral decision; the impropriety of the procedural means and the incompetence of the arbitral tribunal as to: the lack of prior hearing in the procedure for declaration of vacant properties and the lack of reasoning of the act dismissing the administrative reclamation, seeking, in conclusion, the maintenance of the assessments in the legal order.
The Claimant on 24/06/2019 responded to the matters of exception alleged by the Respondent, following an order to that effect.
Considering that no production of evidence was requested, it was not deemed necessary to invite the parties to refine their procedural filings and the matters of exception may be addressed in the arbitral decision, the tribunal on 09/07/2019, determined, pursuant to the principle of the autonomy of the arbitral tribunal in conducting the process and in determining the rules to be observed with a view to obtaining, within a reasonable time, a decision on the merits of the claims formulated (article 16, paragraph c of the RJAT), the waiver of holding the meeting referred to in article 18 of the RJAT, granted a time period for the parties to submit written final arguments and set a deadline for pronouncing the arbitral decision.
The Respondent, in the written final arguments presented on 05/09/2019, maintained the position set forth in its response.
POSITION OF THE PARTIES
The Claimant presents the request for arbitral decision on the grounds that, in its view, the IMI assessments, in the segment concerning rate increase, suffer from the defect of lack of reasoning and error regarding the factual and legal assumptions.
Firstly, it argues that only in the decision of the administrative reclamation did the Tax and Customs Authority (AT) state that the rate increase of 200% of IMI resulted from the status of "vacant" of the properties and, therefore, this constituted a true retroactive reasoning.
To support this conclusion, it observes that it was not notified of any draft decision or final decision declaring its properties as "vacant," nor of the reasons and grounds therefor, when Decree-Law no. 159/2006, of 8 August, provides for an administrative procedure for the declaration of properties as vacant and a decision by the municipality (administrative act) declaring them as such.
For this reason, it alleges that: if it was not notified of the act declaring the property as "vacant," in accordance with the procedure established by law, it was prevented from scrutinizing the final decision of the municipality and, thus, its right to effective judicial protection is affected.
It further adds that the burden of proof of the assumptions upon which the assessments are based rests with the AT, such as the demonstration that the increases were decided by the competent organs of the municipality and with observance of the applicable procedure, with emphasis on notification to the taxpayer, article 74 of the General Tax Law (LGT).
In summary, it argues that, having not been notified of the draft decision and the final decision issued in the context of the hypothetical procedure aimed at declaring the properties as "vacant," the challenged acts are illegal, due to non-existence of the tax fact and lack of legal basis, due to error in the assumptions and violation of the rights of defense and effective judicial protection.
Secondly, the challenged acts are not accompanied by sufficient reasoning capable of clarifying a normal recipient as to the reasons underlying the IMI increase, a circumstance that cannot be remedied by any subsequent explanation and, therefore, they are illegal.
The Respondent, in its response, begins by defending itself by exception, first invoking that there is a lack of judicial capacity of the Claimant, as it does not have prior authorization from the Ordinary of the diocese to appear in court, and, therefore, this constitutes a dilatory exception that should prevent the continuation of the proceedings.
Second, it argues that there is untimeliness of the request for constitution and arbitral decision, insofar as the deadline for voluntary payment of the tax assessed in the assessments was 31/10/2018 and the arbitral action was only presented on 22/02/2019, that is, 114 days later and the Claimant did not formulate any request aimed at annulling what was decided in the administrative reclamation procedure.
Third, it contends that there is lack of standing of the Respondent, insofar as the cause of action is structured on defects relating to the procedure for declaration of vacant properties, a procedure that was not initiated by the Respondent and the object of the claim affects the personal and direct interests of an entity that is not bound by the CAAD, nor is represented in proceedings. That is, the Respondent has no direct interest herein, nor from the possible success of the request for arbitral decision does any prejudice emerge to the legal sphere of the Respondent.
Fourth, and still by exception, it contends that the arbitral tribunal is incompetent to assess the alleged lack of prior hearing in the procedure for declaration of vacant properties, as this would mean exceeding the competencies attributed by law.
In this regard, it further adds that the Claimant, by challenging the decisions declaring the property vacant due to alleged lack of prior hearing, wants the tribunal to issue a decision on the prior and autonomous procedure for declaration of vacant properties. However, the final decisions issued in the context of the prior and autonomous procedures for declaration of vacant properties constitute acts immediately harmful to the rights of the taxpayer and, thus, capable of being challenged through an administrative action.
In this way, in its view, the arbitral tribunal is incompetent to assess any matters arising from the prior and autonomous procedure.
On this line it concludes that the impropriety of the procedural means and the incompetence of the arbitral tribunal to assess the legality of the final decision of the procedure for declaration of vacant properties constitute dilatory exceptions that prevent consideration of the claim – articles 278, no. 1, 576, nos. 1 and 2, and 577, paragraph a), all of the Code of Civil Procedure (CPC).
Still by exception it argues that the arbitral tribunal is incompetent to assess the alleged lack of reasoning of the decision dismissing the administrative reclamation, insofar as the assessment of such matter exceeds the competencies that the law attributes to it. In this regard it argues that lack of reasoning results in a defect proper to the administrative reclamation and not to the IMI assessments, such as acts of first instance.
The Respondent also defends itself by challenge, when it argues that regarding the lack of prior hearing in the procedure for IMI rate increase, this does not correspond to the truth, as the evidence in the file leads to a different conclusion.
Thus, with regard to the property registered in the property matrix under article U-... (located in Rua..., no....), the Claimant was notified of the draft decision for declaration of vacant property (administrative procedure no. .../... /2015 of the municipality of Lisbon) and of the final decision, having not exercised the right to hearing or instituted the competent administrative action.
With respect to the property registered in the matrix under article U-... (derived from article...) – located in Rua..., no...., the Claimant was notified of the draft decision for declaration of vacant property (administrative procedure no. .../... /... /2007) and of the final decision, having not exercised the right to hearing or presented the competent administrative action.
With respect to the property registered in the matrix under article U-... (derived from article...) – located in Rua..., no...., the Claimant was notified of the draft decision for declaration of vacant property (administrative procedure no. .../... /.../2007) and of the final decision, having not exercised the right to hearing or presented the competent administrative action.
For this reason, it argues that the Claimant is litigating in bad faith, as all draft decisions and final decisions were sent to its address, which should, in its view, lead to its conviction as a litigant in bad faith.
Subsidiarily, as to the allegation of lack of reasoning of the IMI assessments, it observes that this ground only appeared in the request for arbitral decision, as it does not appear in the administrative reclamation petition. It makes no sense to invoke the defect in this proceeding, when in the procedural stage there was no doubt on the part of the Claimant as to the reasoning of the acts in question.
The assessments issued by the Respondent's computer system do not have to reproduce the content of decisions resulting from the prior and autonomous procedures for declaration of vacant properties. The IMI assessments were issued in the precise terms of the law, as well as the reasoning evident in the IMI assessments is clear and sufficient.
It further adds that, if the Claimant demonstrates knowledge in its request for arbitral decision (as well as in the administrative reclamation petition) of the logical and cognitive pathway followed to carry out the assessment acts, its annulment claim based on the defect of lack of reasoning must fail.
It concludes by noting that, even if this were not the case, the Claimant should have used the mechanism provided in article 37 of the Code of Procedure and Tax Process (CPPT) to gain access to the respective reasoning.
Finally, again in a subsidiary manner, because the Claimant alleges that the decision dismissing the administrative reclamation also suffers from the defect of lack of reasoning, it argues that, if warranted, it would never extend to acts of first instance, that is, it would only have the effect of annulling the administrative decision of the administrative reclamation.
However, it also argues that the defect is also not present with respect to the decision dismissing the administrative reclamation, insofar as the recipient of the acts came to know the reasons of fact and law that led the Respondent to take the decision in question.
Notified, the Claimant was called upon to comment on the aforementioned matters of exception and stated the following:
i) Lack of Judicial Capacity of the Claimant
The Claimant is a juridical person that enjoys rights similarly to any subject of law, possessing juridical personality and judicial capacity for the protection of its rights, being duly represented.
Second, it argues that it obtained prior authorization from the Ordinary of the Diocese to appear in court, either in person at a hearing or by written document, all as Canon 1288 of the Code of Canon Law requires.
In any case, it observes that the lack of authorization or resolution to appear in court would always be capable of being cured – article 29 of the Code of Civil Procedure (CPC), applicable by virtue of article 29, no. 1, paragraph e) of the RJAT.
ii) Untimeliness of the Request for Arbitral Decision
Although the Respondent argues that the Claimant's request was presented 114 days after the deadline for voluntary payment of the IMI assessments, it observes that in the request for arbitral decision it challenges the assessment acts underlying the decision dismissing the administrative reclamation presented, all well identified in the aforementioned request.
iii) Lack of Standing of the Respondent
It argues that in the present arbitral proceeding the acts at issue are acts of assessment of taxes and the dismissal with respect to the administrative reclamation presented, and the cause of action is formed by the illegality of such tax acts.
Thus, it observes that only the illegalities attributed by the Claimant to such acts are at issue in these proceedings - even if resulting from procedural defects occurring in the respective tax procedure (or lack thereof), therefore, the Respondent has standing.
iv) Impropriety of the Procedural Means and Incompetence of the Arbitral Tribunal Regarding the Lack of Prior Hearing in the Procedure for Declaration of Vacant Properties
It argues that by fictionalizing an object of the dispute and a cause of action different from the litigation brought to the proceedings by the Claimant, there would be lack of standing. However, there is no doubt that the tribunal is competent to judge judicial challenges in which it assesses the legality of acts dismissing administrative reclamations and, in final terms, of IMI assessments.
v) Impropriety of the Procedural Means and Incompetence of the Arbitral Tribunal Regarding the Lack of Reasoning of the Act Dismissing the Administrative Reclamation
If the arbitral challenge of the dismissal of the administrative reclamation has as its immediate object the decision of the reclamation and as its mediate object the defects attributed to the assessment acts, the tribunal is competent to know of the dismissal of the reclamation and the defects attributed to the tax acts, with no verification of the alleged impropriety of the procedural means or incompetence of the arbitral tribunal.
Thus, these are the questions that the tribunal must address:
a) Whether the Claimant has judicial capacity;
b) Whether the request for arbitral decision is timely;
c) Whether the Respondent lacks standing;
d) Whether the arbitral tribunal is incompetent and whether there is impropriety of the procedural means;
e) Whether the act of express dismissal of administrative reclamation no. ...2019... which, in final terms, concerns the IMI assessments, in the portion relating to the rate increase, numbers 2014...; 2015..., 2016... and 2017... suffers from the defect of error regarding the factual and legal assumptions;
f) Whether the Claimant should be convicted as a litigant in bad faith;
g) Whether the Claimant is entitled to reimbursement;
h) Whether the AT should be convicted to pay compensatory interest.
PRELIMINARY MATTERS AND RESOLUTION
i) Question of Judicial Capacity
In general, judicial personality consists in the susceptibility of being a party in judicial proceedings and judicial capacity constitutes the susceptibility of appearing, independently, in court, as articles 11, no. 1 and 15, no. 1 of the CPC provide.
Tax personality consists in the susceptibility of being a subject of relationships of a tax nature, encompassing not only the active side but also the passive side – article 15 of the LGT. Although juridical personality is not a requirement for tax personality, entities with juridical personality have tax personality.
Article 3 of the CPPT provides that: "1 - Tax judicial personality results from tax personality. 2 - Judicial capacity and the capacity to exercise any rights in tax procedures are based on and measured by the capacity to exercise tax rights".
Tax judicial capacity consists in the susceptibility of appearing, independently, in judicial proceedings of a tax nature and only those with tax personality have tax judicial capacity. Or, in other words, tax judicial capacity depends on tax personality.
Canon 1288 of the Code of Canon Law provides that: "Administrators shall not propose or defend any action in the civil forum in the name of a public juridical person without prior written permission from their own Ordinary".
The Respondent does not question the fact that the Claimant is a religious juridical person and, therefore, the holder of juridical personality, but rather the lack of prior authorization from the Ordinary of the diocese.
The Claimant, with the response to exceptions dated 24/06/2019, attached the aforementioned document.
Article 6, no. 2 of the CPC, applicable by virtue of article 29, no. 1, paragraph e) of the RJAT, provides that: "The judge shall ensure the supply of the lack of procedural assumptions capable of being cured, determining the performance of the acts necessary to regularize the instance or, when the cure depends on an act that must be performed by the parties, inviting them to perform it". That is, the tribunal must take steps to supply dilatory exceptions that are capable of being cured.
In the present case, the Claimant attached the aforementioned document to the proceedings, such that the dilatory exception invoked by the Respondent is not verified.
ii) Question of Untimeliness
The Respondent contends that the Claimant presented the request for constitution of tribunal and arbitral decision 114 days after the deadline for voluntary payment of the IMI assessments.
The Claimant presented the aforementioned request concerning the act of express dismissal of administrative reclamation no. ...2019... and, in final terms, of the IMI assessments numbers 2014..., 2015..., 2016... and 2017..., as such act involved the assessment of the legality of assessment acts.
Doctrine teaches, regarding the scope of application of the judicial challenge procedure: "…in cases where the act to be challenged is an assessment act or an act that involves the assessment of the legality of an assessment act (act dismissing administrative reclamation or hierarchical appeal from the decision that assesses it or act assessing a request for official review, pursuant to article 78 of the LGT) the appropriate means is the challenge procedure." Or, in other words, in the relevant part for the present proceedings, judicial challenge is the appropriate procedural means when the act of express dismissal of the administrative reclamation assesses the legality of an assessment.
On the other hand, in arbitral proceedings one may question: is the conclusion set forth in the preceding paragraph also valid?
The answer is affirmative, that is, the object of the request for arbitral decision is the assessment act and not the act that decided the administrative reclamation. Therefore, second-instance acts are arbitrable when they involve the assessment of the legality of the assessment act.
Consequently, the object of the present arbitral proceedings are the IMI assessments.
The reference in article 10, no. 1, paragraph a) of the RJAT to the facts provided in article 102, no. 1 of the CPPT allows for the assertion that a request for arbitral decision may be presented within 90 days following the other acts that may be the object of autonomous challenge pursuant to the CPPT – article 102, no. 1, paragraph e) of the CPPT.
Thus, if the act of express dismissal was notified to the Claimant by official notice dated 21/01/2019 and the request was received by the CAAD computer system on 22/02/2019, the alleged untimeliness is not verified.
iii) Question of Lack of Standing of the Respondent
The Respondent argues that it did not promote the declaration of the properties at issue herein as vacant, and therefore it lacks standing.
The concept of standing is defined in article 30 of the CPC, establishing that the plaintiff has standing when it has an interest in bringing the action, the defendant has standing when it has an interest in defending, with the interest in bringing the action being expressed by the utility derived from the success of the action and the interest in defending by the prejudice that would result from such success.
When the law does not provide otherwise, those considered to be holders of the relevant interest for the purpose of the present study are the subjects of the relationship as configured by the plaintiff, article 30, no. 3 of the CPC.
Thus, the burden falls on the interested party to allege facts that constitute its standing, which in the challenge of assessment acts is limited to its identification in the act as the passive subject of the assessed tax.
Article 9 of the CPPT provides that: "1 - Those with standing in tax procedures, in addition to the tax administration, are taxpayers, including substitutes and responsible parties, other tax-obligated parties, parties to tax contracts and any other persons who prove a legally protected interest. 2 - The standing of joint and several liable parties results from the demand against them for the fulfillment of the tax obligation or any tax duties, even if jointly with the principal debtor. 3 - The standing of subsidiary liable parties results from the execution having been reversed against them or any precautionary measure having been requested to guarantee tax credits. 4 - Those with standing in judicial tax proceedings, in addition to the entities referred to in the preceding numbers, are the Public Prosecution Service and the representative of the Public Treasury".
Tax judicial standing is, by virtue of the aforementioned article 9, no. 4, attributed to the "tax administration," with its concept being defined by article 1, no. 3 of the LGT, which provides as follows: "The following are integrated into the tax administration, for the purposes of the preceding number, the Directorate General of Taxes, the Directorate General of Customs and Excise Taxes, the Directorate General of Informatics and Support for Tax and Customs Services and other public entities legally entrusted with the assessment and collection of taxes, the Minister of Finance or other member of the Government competent to exercise administrative powers in the tax domain, and the equally competent organs of Regional Governments and local authorities". Thus, the "tax administration" has standing to occupy the passive side of the procedural relationship.
The aforementioned provisions are applicable to arbitral proceedings, in view of the provision of article 29, nos. 1, paragraphs a) and e) of the RJAT.
Article 1 of Order no. 112-A/2011, of 22 March, provides that: "By the present order, the following services of the Ministry of Finance and Public Administration are bound to the jurisdiction of the arbitral tribunals operating, pursuant to Decree-Law no. 10/2011, of 20 January, in the CAAD — Administrative Arbitration Centre: a) The Directorate General of Taxes (DGCI); and b) The Directorate General of Customs and Excise Taxes (DGAIEC)".
The binding order establishes limitations regarding the types of disputes that may be submitted to arbitration, as the AT only bound itself to the jurisdiction of tribunals established under the CAAD when the claim concerns taxes and, second, that these are administered by the current AT, successor to the DGCI and DGAIEC.
What is at issue in these proceedings consists in determining whether the IMI assessments, carried out by the Director General of the AT, in the segment concerning increase, should be expunged from the legal order due to defect of error regarding the factual and legal assumptions.
Thus, if this is so, the dilatory exception of lack of standing is not verified.
iv) Question of Impropriety of the Procedural Means and Incompetence of the Arbitral Tribunal Regarding the Lack of Prior Hearing in the Procedure for Declaration of Vacant Properties and Regarding the Lack of Reasoning of the Act Dismissing the Administrative Reclamation
The Respondent, it bears repeating, contends that the arbitral tribunal is incompetent to assess the alleged lack of prior hearing in the procedure for declaration of vacant properties, as this would mean exceeding the competencies attributed by law to the judicial body. It also contends that the final decisions issued in the context of the prior and autonomous procedures for declaration of vacant properties constitute acts immediately harmful to the rights of the taxpayer and, thus, capable of being challenged through an administrative action.
Incompetence ratione materiae shall be verified when a matter is submitted for assessment to a tribunal of the tax jurisdiction that does not fall within the competencies attributed to it, insofar as knowledge of it is within the competency of the ordinary or administrative courts.
As stated above, the request for arbitral decision of the Claimant has as its object the act of express dismissal of administrative reclamation no. ...2019... which assesses the (il)legality of IMI assessments numbers 2014..., 2015..., 2016... and 2017... in the segment concerning increase.
The legislator, already in the legislative authorization granted to the Government to establish tax arbitration as an alternative (complementary) means of jurisdictional resolution of disputes in tax matters, established that: "The tax arbitral procedure should constitute an alternative procedural means to the judicial challenge procedure and to the action for recognition of a right or legitimate interest in tax matters".
The judicial challenge procedure is normatively outlined as the procedural means that has as its object an act in tax matters, in which its legality is determined and it is decided whether it should be annulled or its non-existence declared - article 124 of the CPPT.
Thus arbitrable, as they fall within the competencies of the arbitral tribunals functioning at the CAAD, are questions concerning the legality of assessment acts or acts fixing the taxable matter and second-instance acts that have as their object the assessment of the legality of acts of such nature, acts whose assessment also falls within the scope of the procedural species – judicial challenge – articles 2 and 10 of the RJAT and article 97, no. 1, paragraphs a) and d) of the CPPT.
Constituting second-instance acts those that have as their object the assessment of the legality of assessments and the Claimant intending, with the presentation of the request for arbitral decision, the recognition of the non-existence of any tax fact and the annulment of the assessments, it is necessarily to be concluded that this arbitral tribunal is competent to assess the merits of its claim.
In this sense jurisprudence argues: "The real object of the challenge is the assessment act and not the act that decided the administrative reclamation, such that it is the defects of the latter and not of such order that are truly in question".
Thus, the dilatory exception of absolute incompetence of this arbitral tribunal is without foundation and, in consequence, the requests formulated by the Claimant should be assessed.
RESOLUTION
The proceedings do not suffer from nullities, the arbitral tribunal is regularly constituted and is materially competent to know and decide the claims, such that the conditions are met for the final decision to be pronounced.
II – REASONING
FACTUAL MATTER
1. Facts Considered Proven
1.1. The Claimant was, on 31 December 2014, 2015, 2016 and 2017, the owner of the urban properties registered in the property matrix under numbers ..., ... and ..., all of the parish of ..., municipality of Lisbon (PA).
1.2. The Claimant was notified on 20/02/2015 to exercise the right to hearing within the scope of procedure no. .../... /2015 (concerning the property located in Rua... no... and registered in the property matrix under article no. ...) of the municipality of Lisbon which, pursuant to Decree-Law no. 159/2006, of 8 August, manifests the intention to declare it vacant (PA).
1.3. The Claimant on 30/03/2015 was notified of the administrative act declaring vacant the property located in Rua..., pursuant to the provisions of Decree-Law no. 159/2006, of 8 August (PA).
1.4. The Claimant was notified, by official notice dated 02/11/2007, to exercise the right to hearing within the scope of procedure no. .../... /IMI/2007 (concerning the property located in Rua... no... and registered in the property matrix under article no. ...) of the municipality of Lisbon which, pursuant to Decree-Law no. 159/2006, of 8 August, manifests the intention to declare it vacant (PA).
1.5. The Claimant, by official notice dated 26/11/2007, was notified of the administrative act declaring vacant the property located in Rua... no...., pursuant to the provisions of Decree-Law no. 159/2006, of 8 August (PA).
1.6. The Claimant was notified, by official notice dated 02/11/2007 to exercise the right to hearing within the scope of procedure no. .../... /... /2007 (concerning the property located in Rua... no... and registered in the property matrix under article...) of the municipality of Lisbon which, pursuant to Decree-Law no. 159/2006, of 8 August, manifests the intention to declare it vacant (PA).
1.7. The Claimant, by official notice dated 26/11/2007, was notified of the administrative act declaring vacant the property located in Rua... no...., pursuant to the provisions of Decree-Law no. 159/2006, of 8 August (PA).
1.8. Assessment no. 2014... of the year 2014 increased by 200% the tax rate, with respect to urban properties registered under articles... and ..., calculating a tax liability of 811.71 euros and 811.71 euros, respectively (PA).
1.9. Assessment no. 2015... of the year 2015 increased by 200% the tax rate, with respect to urban properties registered under articles..., ... and ..., calculating a tax liability of 755.46 euros, 811.71 euros and 811.71 euros, respectively (PA).
1.10. Assessment no. 2016... of the year 2016 increased by 200% the tax rate, with respect to urban properties registered under articles..., ... and ..., calculating a tax liability of 772.46 euros, 829.97 euros and 829.97 euros, respectively (PA).
1.11. Assessment no. 2017... of the year 2017 increased by 200% the tax rate, with respect to urban properties registered under articles..., ... and ..., calculating a tax liability of 772.46 euros, 829.97 euros and 829.97 euros, respectively (PA).
1.12. The Claimant presented, on 11/01/2019, an administrative reclamation of the aforementioned assessments (document attached by the Claimant under number five).
1.13. By letter dated 21/01/2019 the Claimant was notified of the decision dismissing the administrative reclamation (document attached by the Claimant under number six).
1.14. The request for arbitral decision was presented on 22/02/2019 (CAAD computer system).
2. Facts Not Considered Proven
There are no other facts with relevance to the arbitral decision that have not been proven.
3. Reasoning Regarding Factual Matters Considered Proven
The facts pertinent to the judgment of the case were selected and delimited according to their legal relevance, in light of the plausible solutions of legal questions, pursuant to the combined application of articles 123, no. 2 of the CPPT, 596, no. 1 and 607, no. 3 of the CPC, applicable by virtue of article 29, nos. 1, paragraphs a) and e) of the RJAT.
With respect to the facts proven, the tribunal's conviction was based on the positions assumed by the parties and on the critical analysis of documentary evidence attached to the proceedings, whose authenticity was not called into question.
LEGAL MATTER
The central question in these proceedings consists in determining whether the IMI assessments, in the segment concerning rate increase, are illegal and, therefore, should lead to the partial annulment of the assessments in question.
The Claimant alleges, in its request for arbitral decision, that the fact of not having been notified of the declaration of the properties as vacant by the municipality of Lisbon determines the illegality of the assessments.
The legislator defines the concept of vacant property through Decree-Law no. 159/2006, of 8 August, further elaborating in it the regulation of the procedure for declaration of vacant property and the assumptions for such declaration to take place.
Thus, pursuant to article 2 of Decree-Law no. 159/2006, of 8 August, a property is considered vacant, for purposes of application of the IMI rate: the urban property or autonomous unit that for a period of one year is unoccupied, with indicators thereof including: the non-existence of contracts in force with telecommunication companies and suppliers of water, gas and electricity, although with the exceptions provided in article 3 of the same instrument.
The declaration of a property as vacant must be preceded by a procedure within the competence of the municipalities in which the urban properties or autonomous units are located, such municipalities notifying the IMI passive subject at the tax address, of the draft declaration, to exercise the right to prior hearing and of the final decision of the procedure (administrative act) – article 4 of Decree-Law no. 159/2006, of 8 August.
Said formality permits the interested party to have the possibility of participating in the administrative decision and, if not accepting it, to file an administrative action.
Thus, in order for the classification of a property as vacant to produce effects in the context of IMI, notably, increase in the rate, it is imperative that the municipality, preliminarily to the assessment, notify the owner so that, if it so wishes, it may exercise its right to hearing and, subsequently, of the final decision. That is, compliance with legal formalities is fundamental to determining the tax rate to be applied to the concrete property, as such formalities constitute necessary assumptions for the increase in the IMI rate.
The tax power of local authorities, regarding the creation of taxes and the fixing of their essential elements is realized in the fixing of rates, within the intervals set by law, including their increase, although they may not create taxes, they are holders of the revenue from the tax at issue herein – IMI.
The concept of Tax Administration set forth in article 1, no. 3 of the LGT includes not only the AT, but also the organs of local authorities that exercise administrative competencies in the tax domain, as occurs in the present proceedings.
Thus, the procedure aimed at declaring an urban property as vacant is part of the tax procedure, as an activity of the Tax Administration for the declaration of tax rights.
The matter assumes a nuclear role in the proceedings, as the Claimant sustains in its request for arbitral decision that it was not notified by the municipality of Lisbon to exercise the right to hearing and of the subsequent decision, on the other hand, the Respondent defends itself, affirming that the notifications were carried out.
And, in fact, the Respondent is correct, as the evidence shows that the Claimant was notified pursuant to the provisions of article 4 of Decree-Law no. 159/2006, of 8 August of the administrative acts declaring the properties at issue herein as vacant. Or, in other words, on 31 December 2014, 31 December 2015, 31 December 2016 and 31 December 2017, the declaration of the properties as vacant was already producing the full effects in the tax domain.
If this is the case, the Claimant's claim on this matter is without foundation.
It happens that the Claimant further imputes to the assessment acts the defect of lack of reasoning.
Article 268, no. 3 of the Constitution of the Portuguese Republic (CRP) provides that administrative acts require express and accessible reasoning when they affect rights and legally protected interests. The provision in the Fundamental Law of the duty in question is justified, as a way of knowing the reasons that determined the administrative decision, that is, it must provide to the recipient of the act the possibility of reconstructing the logical and cognitive pathway followed by the entity that performed it so as to understand the reasons that led to the decision in a certain direction and not differently.
The ordinary legislator, in the realization of the constitutional injunction, has positively established in article 77 of the LGT, the duty of reasoning in the tax procedure, through the exposition of the reasons of fact and law, which reasoning may consist in the declaration of mere agreement with the grounds of prior opinions, information or proposals.
Furthermore, article 77, no. 2 of the LGT legitimizes the summary reasoning of tax acts, which must always contain the applicable legal provisions, the characterization and quantification of the tax facts and the operations for determining the taxable matter and the tax.
This requirement of a constitutional and infra-constitutional nature permits interested parties, knowingly, as they know the grounds for the administration's actions, to opt between acceptance of the legality of the act and its judicial challenge. That is, reasoning constitutes the foundation or support of the assessment act.
Thus, in theory, the passive subject of IMI must be notified of the reasons of fact and law that led to the declaration of the property as vacant, thereby coming to know the ground for the assessment, in such a way that, knowingly, the act may be accepted or administrative/judicial challenge may be pursued.
In the case sub judice, there is no doubt that the Claimant was notified of the acts that classified the properties as vacant, having accepted them, as it did not present administrative actions to challenge their legality.
Moreover, it is possible to discern in the assessments/collection documents, reference to the identification of the property registered in the matrix, to its patrimonial value, to the years of the tax, to the date of assessment, to the rate used to determine the amount of tax, to the increased rate and, lastly, to the amount of tax liability.
For which reason, the tribunal is of the view that the acts are sufficiently reasoned, as they contain the minimal references to the factual and legal matter used by the Tax Administration for their performance.
Since, the lack of reasoning imputed to the acts did not constitute any obstacle to the Claimant requesting their annulment in a written submission in which it imputes to the assessments a list of defects. In summary, the acts do not suffer from the defect of lack of reasoning that the Claimant attributes to them.
The Respondent further requests the conviction of the Claimant as a litigant in bad faith, insofar as it alleges that it was not notified to exercise hearing in the procedure for declaration of vacant properties or of the administrative acts, when, in fact, it was, as may be gathered from the attachment of the PA.
Regarding the question of conviction of the Claimant as a litigant in bad faith:
Article 542, no. 1, of the CPC provides that: "If the party has litigated in bad faith, it is convicted in a fine and in an indemnification to the opposing party, if it requests it".
For a party to be considered to have litigated in bad faith, as provided in article 542, no. 2, of the CPC, it must be proven that it acted with intent or gross negligence and one of the following circumstances is verified: "a) it has deduced a claim or defense whose lack of merit it should not have ignored; b) it has altered the truth of the facts or omitted facts relevant to the decision of the case; c) it has committed a serious omission of the duty of cooperation; d) it has made of the proceedings or the procedural means a manifestly reprehensible use, with the aim of achieving an illegal objective, preventing the discovery of truth, hindering the action of justice or delaying, without serious grounds, the finality of the decision".
In the case sub judice, even though it may be admitted that the Claimant, in its request for arbitral decision, produced statements that do not correspond to the facts proven documentarily, it was not established that it did so with intent or gross negligence.
Thus, the request for conviction of the Claimant as a litigant in bad faith is without foundation.
In light of the above, the remaining claims formulated in the request for arbitral decision are necessarily prejudiced, such as the right to reimbursement and conviction of the AT to pay compensatory interest.
III – DECISION
For these reasons and with the reasoning described above, it is decided that the request for arbitral decision is completely without foundation and, in consequence, the Respondent is absolved of all claims formulated, with the due legal consequences.
VALUE OF PROCEEDINGS
The value of the proceedings is set at 8,867.10 euros, pursuant to article 97-A of the CPPT, applicable by virtue of the provision of article 29, no. 1, paragraph a) of the RJAT and article 3, no. 2 of the Regulations of Costs in Tax Arbitration Proceedings (RCPAT).
COSTS
Costs to be borne entirely by the Claimant, in the amount of 918 euros, pursuant to article 22, no. 4 of the RJAT and Table I attached to the RCPAT.
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Lisbon, 23 September 2019
The Arbitrator,
(Francisco Nicolau Domingos)
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