Summary
Full Decision
ARBITRAL DECISION
I – REPORT
A… S.A. – Branch in Portugal, with NIPC … and address at Avenida …, nº … –…, …, … - …, in Lisbon, hereinafter designated as "Claimant", filed a request for constitution of a singular Arbitral Tribunal, under the provisions of article 2, no. 1, paragraph a), of Decree-Law no. 10/2011, of 20 January (RJAT) and Ordinance no. 112-A/2011, of 22 March, to challenge the dismissal of the Gracious Complaint and declare the illegality of the self-assessment of the Contribution on the Banking Sector (hereinafter CSB) relating to the year 2015, in the total amount of €11,221.50.
The present case involves the acts of dismissal of the Gracious Complaint and self-assessment of the Contribution on the Banking Sector (CSB), issued by the Claimant in 2016 (the year to which the contribution relates) but determined on the basis of the average balances of Liabilities calculated during the year 2015.
The request for constitution of the Arbitral Tribunal was filed by the Claimant on 27-02-2017, and on the same date it was accepted by the Illustrious President of CAAD and automatically notified to the Tax Authority, in the terms and for the purposes legally provided.
The Claimant opted not to appoint an arbitrator, whereby, by order of 11-04-2017, the undersigned was appointed as arbitrator for constitution of the singular Arbitral Tribunal, which was constituted on 28-04-2017.
On 28-04-2017 an arbitral order was issued for the Tax and Customs Authority (AT) to present a response within the legal period, in the terms and for the purposes of the provisions in nos. 1 and 2 of article 17 of the RJAT. The Respondent submitted the Administrative File and its Response, respectively, on 05-06-2017 and 06-06-2017, the content of which is hereby fully reproduced.
On 23-06-2017, in light of the position of the parties evidenced in the file, in order to determine the need to hold the meeting provided for in article 18 of the RJAT, an arbitral order was issued inviting the Claimant to state its position on the interest in producing the testimonial evidence indicated in the arbitral request and, in the event of maintaining such interest, to indicate the factual matters for the said examination, the date of which, notwithstanding, was set for 07-07-2017, at 10 o'clock.
By application filed on 03-06-2017, the Claimant stated that it maintained an interest in producing testimonial evidence, indicated the factual matters for examination, requested a party statement and postponement of the proceeding to a date after 01-09-2017, due to an impediment of the constituted representative.
On 04-07-2017 an arbitral order was issued that admitted the request and notified the AT to request, if it so wished, whatever it deemed appropriate. In the same arbitral order, a new date was set for holding the meeting provided for in article 18 of the RJAT, on 04-09-2017, at 10 o'clock.
On the designated date, the meeting provided for in article 18 of the RJAT was held, and the witnesses were heard, as is clearly shown in the minutes of the meeting, which are hereby fully reproduced. The Respondent AT, in the exercise of its right to speak, declared its opposition to conducting the examination on the ground that it constituted a useless act. After hearing the parties, the Tribunal partially granted the request filed by the Respondent, maintaining the examination of witnesses with respect to articles 204 and 243 of the corresponding arbitral request, relating to the accounting question concerning the determination of the tax base of the contribution.
On 29-09-2017 the parties submitted their written arguments to the file.
B) THE REQUEST FORMULATED BY THE CLAIMANT:
In summary, the Claimant formulates its request for declaration of illegality of the order dismissing the gracious complaint and, mediately, of the self-assessment of the CSB, on the ground that said contribution was not due with reference to the year 2015, and that the requirement for its issuance and payment in the year 2016 implies that the tax base of the CSB must necessarily be determined by the values calculated in 2015, the year in which such contribution was not legally provided for branches. It invokes the defect of violation of law, due to error regarding the presuppositions of the assessment, in that, although issued in the year 2016, it relates to facts occurring in 2015. Thus, it alleges violation of the principle of non-retroactivity of taxes, resulting from the provisions of article 103 of the Constitution of the Portuguese Republic, and also violation of the principles of equivalence and parliamentary reserve of law.
Finally, subsidiarily, it invokes violation of European Union law. Whereby, despite considering that the matter under discussion is settled, should this arbitral tribunal take a different view or should any doubt persist regarding the legality of the self-assessment of the CSB, the Claimant understands that a preliminary ruling should be referred to the CJEU, in accordance with the provisions of article 277 of the TFEU, to rule on the following questions:
"1st Does article 56 of the TFEU preclude national legislation, such as that at issue in the regime of the Contribution on the Banking Sector, which taxes branches of non-resident financial institutions on the entirety of their liabilities, without giving them the possibility of deducting equity, whereas this possibility is granted to resident financial institutions, placing the former in a disadvantageous position vis-à-vis the latter?
2nd Does Directive 2014/59/EU preclude the application of the regime of the Contribution on the Banking Sector to financial institutions (resident or non-resident) operating in Portugal, such regime should have been eliminated and replaced, upon transposition into the Portuguese legal order of the said Directive, by the contributions provided for in that Directive?
3rd Does Directive 2014/59/EU specifically preclude the application of the regime of the Contribution on the Banking Sector to branches in Portugal of financial institutions resident in another Member State of the European Union?"
It concludes by arguing for the success of the arbitral request, with the consequent annulment of the challenged acts, with all legal consequences.
It further requests the condemnation of the AT to payment of indemnity interest, in accordance with the provisions of article 43 of the LGT.
C – THE RESPONSE OF THE RESPONDENT
In its response, the Respondent argued that the CSB at issue in this case relates to the year 2016 and that, accepting the thesis defended by the Claimant, according to which the CSB in question refers to 2015, the present arbitral proceedings would be without subject matter, in that the same was not due in 2015, which would imply the immediate absolution of the instance. According to the Respondent, the CSB in question concerns 2016 and not 2015 as asserted by the Claimant.
Subsequently, the Respondent invokes the material incompetence of the Arbitral Tribunal, understanding that the Claimant seeks to attack the legality of the very norm that provides for the CSB and not the respective self-assessment. It is prohibited to the AT, as well as to the Arbitral Tribunal itself, the knowledge of the unconstitutionality of norms, whereby, in the Respondent's view, the Arbitral Tribunal has no competence to know the matter in question, which prevents it from knowing the merits. According to the AT's reasoning, the binding of arbitral tribunals is limited to the legality of tax assessments, and not to the legality of norms that permit assessment acts. It further invokes the material incompetence of the tribunal on the ground that this is a contribution and not a tax.
Notwithstanding the exceptions invoked, the AT further argues that the Claimant's thesis regarding the alleged lack of basis of the challenged acts has no foundation whatsoever, as does the alleged unconstitutionality due to retroactive application of the CSB, the violation of parliamentary reserve of law, the principle of equivalence. It also considers, finally, that there is no violation of European Union law, as stated in the Response, which is hereby reproduced. It contests the request for indemnity interest on the ground that there is no error attributable to the services in the self-assessment challenged. It concludes by arguing for the legality of the challenged acts and their maintenance in the legal order with the consequent dismissal of the requests.
II - PROCEDURAL REQUIREMENTS
The Arbitral Tribunal is duly constituted.
The Parties have legal personality and capacity, are legitimate and are legally represented (cf. articles 4 and 10, no. 2 of RJAT and article 1 of Ordinance no. 112/2011, of 22 March).
The proceedings do not suffer from defects that invalidate them, whereby all procedural requirements are met for the arbitral tribunal to know the request.
Taking into account the documentary evidence submitted to the file and what is alleged by the parties, it is necessary to establish the factual matters relevant to the decision on the alleged exceptions and on the merits of the question.
III – FACTUAL MATTERS
A) Established Facts
As relevant factual matters, the present tribunal considers the following facts established:
a. The Claimant is the branch in Portugal of A…, S.A., a credit institution under Luxembourg law, with registered office and actual management in Luxembourg, which began operating in Portugal in 2013;
b. On 26-06-2016 the Claimant submitted the Model 26 declaration, relating to the Contribution on the Banking Sector, through Guide no. …, in the amount of €11,221.50;
c. In the declaration submitted, it appears as "Year of Contribution: 2016", as the year of presentation;
d. The incidence of the CSB was determined from the annual average of the closing balances of Liabilities, calculated monthly, throughout the year 2015;
e. The Claimant paid the respective calculated amount on 30-06-2017;
f. On 26-07-2017 the Claimant filed a Gracious Complaint, which was processed under no. …2016…;
g. In the course of the Gracious Complaint process, a proposal for an order of dismissal was drafted, notified to the taxpayer for exercise of its right to prior hearing, and the taxpayer responded, as shown in the Administrative File submitted to the case;
h. On 28-11-2016 the Claimant was notified of the dismissal of the Gracious Complaint;
i. On 27-02-2017 the Claimant filed the request for constitution of a singular arbitral tribunal.
B) UNESTABLISHED FACTS
There are no facts relevant to the decision that should be considered as unestablished.
C) BASIS FOR THE ESTABLISHED FACTS
The facts described were established on the basis of documentary evidence submitted to the file by the Claimant (documents nos. 1 to 5 in annex to the arbitral request), confirmed by the administrative file submitted to the case by the AT.
The facts contained in paragraphs a) to c) and e) to i) are demonstrated by documents nos. 1 to 5 submitted by the Claimant to the arbitral request and by the Administrative File (PA) submitted to the case by the Respondent. The fact contained in paragraph d) is proven by the documentary evidence submitted to the case, in particular Doc. 1 and 5 in annex to the arbitral request, in addition to which there is the testimonial evidence produced, respective depositions and party declarations made at the meeting of 04-09-2017.
The facts listed in a), b), c) and e) to i) are further accepted by the parties, a conclusion which is drawn from the respective procedural documents submitted to the file.
Thus, taking into account all of the above, the positions assumed by the parties and the documentary evidence submitted to the file, all of the facts listed are considered established as being relevant to the decision.
IV – DECISION
A) Question to be Decided:
Given all of the above, the question that truly divides the parties in the present dispute is whether the CSB self-assessed by the Claimant in 2016 was or was not legally due, given that its tax base is referred back to facts occurring during the year 2015, namely: average balances of Liabilities, calculated monthly during the fiscal year 2015.
The question arises because the tax obligation to assess and pay the CSB began to apply also to branches of non-resident banking entities as a result of the amendment introduced in the State Budget Law for 2016 (Law 7-A/2016) which came into force on 31 March 2016.
In these terms, it is necessary to decide first on the exceptions invoked by the Respondent and, if applicable, to decide on the merits of the question.
B) Preliminary Issues: on the Exceptions Invoked by the Respondent
Having established the relevant factual matters and the contours of the question to be decided, it is now necessary to address the exceptions alleged by the AT. In its response, the Respondent alleged that there is no subject matter to the present arbitral proceedings, the material incompetence of the Arbitral Tribunal, understanding that the Claimant seeks to attack the legality of the very norm that provides for the CSB and not the respective self-assessment and, finally, on the ground that this is a "contribution" and not a "tax", the AT understanding that it is prohibited for the arbitral tribunal to know this matter.
If so, the Arbitral Tribunal, by not having material competence to know the matter in question, would not be able to know the merits. According to the AT's reasoning, the binding of arbitral tribunals is limited to the legality of tax assessments, and not to the legality of norms that permit assessment acts. It further invokes the material incompetence of the tribunal on the ground that this is a contribution and not a tax.
Let us see, therefore, whether it is right regarding the alleged exceptions.
On the Lack of Subject Matter of the Arbitral Request
As to the lack of subject matter that is alleged, there is no doubt that it rests on an equivocal interpretation of the factual description contained in the arbitral request and of the contours of the fundamental question under analysis.
In light of the content of the arbitral request filed and all of the arguments developed by the Claimant, it is clear that the year to which the self-assessment relates is, formally, the year 2016. This same results from document no. 1 attached in annex to the arbitral request, as well as from what is stated in articles 3 to 16 and 33 to 40 of the arbitral request.
Thus, the delimitation of the subject matter of the present arbitral proceedings is absolutely clear: to determine the legality of the CSB self-assessed in 2016, in that it relates to facts occurring in 2015.
The Claimant does not contest, at least as a principal matter, in the present case the CSB on branches which was introduced by the Budget Law for 2016, but rather the requirement for self-assessment in the year 2016, when it is certain that the real incidence of this contribution is based on tax facts that occurred in the year 2015. Now, in 2015 the personal incidence of the CSB did not cover branches of non-resident credit entities. The configuration of the subject matter of the proceedings appears, therefore, clear and objectively has as reference the CSB of 2016, however, its tax base refers back to facts occurring in 2015. This same results from the Model submitted and from the fields contained therein and completed by the Claimant.
What is relevant to assess the subject matter of the arbitral request is the formulation of the question that divides the parties, centered on the tax base of the self-assessment, which, as alleged and proven by the Claimant, has as reference the average balances of Liabilities (determined monthly), calculated during the year 2015, which appear in the accounting documents that served as the basis for the self-assessment. For that matter, the Respondent acknowledges this to be the case, as results from what is alleged in articles 16 and 17 of the Response.
Thus, as is obvious and accepted both by the AT and by the Claimant, in 2015 the CSB was not even due by branches, whereby the problem did not arise. What is being discussed is whether the CSB on branches of banking institutions resident in the European Union, introduced by the Budget Law for 2016, can immediately be assessed in 2016, knowing that its tax base is necessarily referred back to the average of the Liability balances by reference to the previous year (2015) and whether this represents or not a retroactive application incompatible with the provisions of article 103 of the CRP.
This is the subject matter of the arbitral request, that is, the substantive question that divides the parties in the present proceedings.
Thus, and without need for further substantiation, the alleged exception of lack of subject matter of the arbitral request must fail.
b. On the Material Incompetence of the Arbitral Tribunal to Assess the Illegality and Unconstitutionality of Norms
On the material incompetence of the tribunal on the ground that it is not materially enabled to assess the question of the illegality of norms or their unconstitutionality. In its response, the Respondent alleged that the Claimant seeks to attack the legality and unconstitutionality of the very norm that provides for the CSB and not the respective self-assessment. It further argues that it is prohibited to the AT, as well as to the Arbitral Tribunal itself, the knowledge of the unconstitutionality of norms, whereby, in the Respondent's view, the Arbitral Tribunal has no competence to know the matter in question, which prevents it from knowing the merits.
According to the AT's reasoning, the binding of arbitral tribunals is limited to the legality of tax assessments, and not to the legality of norms that permit assessment acts. Now, in the first place, it should be recalled that contention regarding the legality of tax acts necessarily implies knowledge of the underlying norms and their correct interpretation on pain of total emptying of the scope of competence of arbitral tribunals and beyond. The control of the legality of tax acts presupposes assessing whether a particular concrete act, practiced by the administration, respected or not the binding to the law and whether the latter was correctly applied. In this function, necessarily, is included the control of concrete constitutionality, since in our system there is no other way to raise the concrete unconstitutionality of a given norm.
Because it is so, arbitral tribunals have competence, under the terms of articles 209 and 204 of the C.R.P., to proceed, within the scope of the proceedings, to the concrete control of constitutionality of the norms that sustain the challenged tax assessment acts. This same is drawn, also, from the provisions of article 25 of the RJAT.
Now, in the case at hand, the Claimant is clear as to its intention to challenge the tax acts of dismissal of the gracious complaint and, concomitantly, of the self-assessment of the CSB. With the subject matter of the proceedings defined in these terms, the conclusion intended by the AT is not reached, as we are precisely in the heart of the material competence of the Arbitral Tribunal.
It further happens that, contrary to what is alleged by the AT, the Claimant invokes in the first place the defect of violation of law due to error regarding the factual and legal presuppositions that led to the challenged acts. It is a different matter to know whether it is right as to the merits of the question, but let it not be said that we are outside the scope of the competence of the Arbitral Tribunal.
The scope of discussion centers on the assessment of tax acts (dismissal of gracious complaint and underlying self-assessment), whose challenge is intended. Whereby we are at the core of the competence attributed to arbitral tribunals in tax matters. Any other understanding would be to empty, without criterion or legal foundation, the scope of the competence of these tribunals. The same applies to the concrete control of constitutionality of legal norms within the scope of the assessment of the legality of tax acts in arbitral proceedings.
For all that has been stated, the exception of material incompetence of the tribunal invoked by the Respondent also fails.
c. Material Incompetence on the Ground that this is a Contribution and not a Tax
Finally, the AT alleged the material incompetence of the arbitral tribunal on the ground that it understands that the AT is only formally bound by arbitral tribunals constituted to assess questions related to "taxes" and not "contributions". In the AT's view, the arbitral tribunal is only enabled to know of questions related to taxes, in the strict sense, which does not encompass "contributions". And should the tribunal come to a different conclusion, its decision would not be binding on the AT, in that this, by effect of the provisions of article 2 of Ordinance no. 112-A/2011, of 22 March, is only bound to "the jurisdiction of arbitral tribunals operating at CAAD which have as subject matter the assessment of claims relating to taxes whose administration is entrusted to them referred to in no. 1 of article 2 [of the RJAT]".
Let us see.
The RJAT expressly refers, in paragraph a) of no. 1 of article 2, that the material scope of arbitration covers "the declaration of illegality of tax assessment acts" (emphasis ours). But the AT understands that the fact that article 2 of Ordinance no. 112-A/2011 has used the expression "taxes" instead of maintaining that of "taxes" means that the Government wished to restrict the disputes to which the AT is bound to those relating to taxes.
We do not support such position, in that such interpretation does not appear legally correct in light of the literal wording and systematic articulation of the provisions in question. If any meaning can be attributed to the literal-systematic interpretation of the provisions is that the reference to "taxes" instead of "taxes" in article 2 of Ordinance no. 112-A/2011, followed by the express reference to no. 1 of article 2 of the RJAT and the express enumeration of a set of exceptions, indicates that the 'legislator' of the Ordinance did not have the restrictive intention that the AT invokes, for if so it would have made express reference to that restriction in the range of paragraphs that contemplate the exceptions. (In this sense see, inter alia, Arbitral Decision rendered in case no. 312/2015-T, on analogous matter)
We agree with the understanding set forth in the aforementioned Arbitral Decision, also because it is understood that, "in calling upon the teleological and rational elements of legal interpretation also point not in the direction of such a restriction, but only to the "limitation of the scope of the AT's binding through the ownership of powers to administer the taxes", being that, moreover, the logical limit of the binding – not including the restriction thus the related ones with "contributions" also administered by it."
The fact is that, in the present case, the procedure of assessment and collection of the CSB, even if we consider it inserted in the legal category of "contributions" in no way differs, in its nature and structure, from that of "taxes", since the AT acts as if these were taxes, as is evident from the availability in the self-assessment portal. To which is added the clearly unilateral nature of the contribution in question, in all respects similar to that which typically characterizes the tax. Hence, there is no valid reason to exclude the binding of the AT, in such cases, to arbitrability. The absence of an express reference in the text of article 2 of Ordinance no. 112-A/2011 to this type of taxes should be due only to the fact that, at that date, the administration of the AT was not yet assigned any tax with such characteristics.
In this regard, the doctrine agrees with our understanding. Thus, as stated by SÉRGIO VASQUES and CARLA CASTELO TRINDADE[1] that "the services and entities referred to in the previous article [now the AT] bound themselves to the jurisdiction of arbitral tribunals operating at CAAD which have as subject matter the assessment of claims relating to taxes whose administration is entrusted to them referred to in article 2, no. 1, of Decree-Law no. 10/2011, of 20 January.
Under article 2 of DL no. 118/2011, of 15/12, which approved the Organic Law of the Tax and Customs Authority, this entity thus has under its aegis the administration of customs duties, income taxes, property taxes and consumption taxes and, as well, of other taxes that are legally assigned to it such as, for example, special contributions".
It is thus considered that the scope of arbitrability encompasses, as results from the joint interpretation of articles 2 of the RJAT and Ordinance no. 112-A/2011, the assessment of claims relating to taxes whose administration is entrusted to the AT, with the exception of the cases listed in the paragraphs of article 2 of Ordinance no. 112-A/2011 ̶ thus encompassing also the claims relating to "contributions" administered by it. Consequently, and once the CSB is a tax administered by the AT, whose procedure of assessment and collection is structurally identical to that of taxes, the arbitral tribunal is competent to settle the present dispute, regardless of whether this tax comes to be qualified as a contribution or as a tax.
In this conformity, the exception of material incompetence, now in question, fails.
In conformity with what has been stated, the proceedings are proper and timely, the parties are legitimate and duly represented, there are no nullities or further exceptions that must be addressed, whereby the tribunal is in a position to address the merits of the question raised in the case.
C) ON THE DECISION ON THE MERITS
Returning to the subject matter of the present arbitral request, it is necessary to address the question to be decided, which boils down to knowing whether in 2016 the Claimant, as a branch of a non-resident credit institution, with registered office in a state of the European Union, is or is not subject to the incidence of CSB and, should it be concluded that it is, when and how the same should be calculated and assessed. That is to say, what is in question is whether in making the CSB of the year 2016 apply to facts occurring during the year 2015, the self-assessment is tainted or not with illegality due to violation of the factual and legal presuppositions and of possible unconstitutionality due to retroactive application of the normative that institutes the CSB on branches, contained in the Budget Law of 2016.
Before entering more specifically into the question, it is important to consider the provisions of article 124 of the CPPT, namely:
"1 - In the judgment, the court will assess primarily the defects that lead to the declaration of non-existence or nullity of the act challenged and, then, the defects argued that lead to its annulment.
2 - In the said groups the assessment of defects is made in the following order:
a) In the first group, that of defects whose success determines, according to the prudent criterion of the judge, more stable or effective protection of the interests violated;
b) In the second group, that indicated by the challenger, whenever the latter establishes between them a relationship of subsidiarity and no other defects are argued by the Public Prosecutor or, in the other cases, that fixed in the previous paragraph.".
As was written in the Decision of the Supreme Administrative Court of 18-05-2016, rendered in case 0100/16:
"Under the terms of the provisions in no. 2 of article 124 of the CPPT, one must first address the defects of violation of law strictly speaking (except in cases where the content of the act cannot be grasped), thus ensuring more effective protection of the rights of the taxpayer.".
Article 124 of the CPPT, applicable ex vi article 29, no. 1, al. a), of the RJAT, thus provides that the court must assess primarily the defects that lead to the declaration of non-existence or nullity of the challenged act and, following, the defects that lead to its annulment (no. 1). Concerning the defects that constitute non-existence or nullity, the judge must assess primarily the defects whose success determines, according to his prudent criterion, more stable or effective protection of the interests violated. Regarding the defects that constitute annulability, the same criterion is established, which will only not be applicable if the challenger has established a relationship of subsidiarity between the defects attributed to the act – which is permitted by article 101 of the CPPT – for in that case priority is given to its will (as long as the Public Prosecutor has not argued other defects) (no. 2).
The rules emanating from this legal norm regarding the order of assessment of defects are intended to protect the interest of the challenger with maximum procedural economy, omitting pronouncement on defects invoked when the defect or defects already recognized prevent the renewal of the act with the same meaning. In fact, the establishment of this order of assessment of defects presupposes that, addressing a defect that leads to the legal elimination of the challenged act, the court will cease to address the others, for if the judge had to address all defects attributed to the act, it would be indifferent what order of assessment.
On the other hand, the protection of the interests violated is more stable when the decision prevents the renewal of the act that violates the interests of the challenger and will be more effective when it allows the interested party, in execution of the judgment, to obtain better satisfaction of its interests, violated by the annulled act.
Thus, if it is, for example, a defect of violation of law, the annulment of the act will prevent the practice of a new tax act, in which the same norm that was at issue in the previous act is applied or not applied, which will result in the impossibility of practicing a new act that imposes taxation on the challenger.
As can be inferred from what has been said, it is taking into account the execution of the annulling judgment and the influence that the type of defect that founded the annulment has on it that the establishment of an order of assessment of the defects of the challenged act is justified.
In this conformity, returning to the concrete case, it is therefore necessary to begin by assessing the defect of violation of law, for, should it be verified, it will definitively preclude the possibility of imposing on the Claimant a new tax assessment act, thus achieving more stable and effective protection of its interests.
The CSB was created by the Budget Law for 2011, but only with the Budget Law for 2016 (Law 7-A/2016) was its personal incidence expanded to also cover branches of non-resident credit institutions, that is, with registered office in other States, namely, in Member States of the European Union. The Budget Law for 2016 came into force in March 2016.
The factual tax base of the CSB, applied to branches, as stated above, is the taxable matter determined by the average balances of liabilities calculated by the accounting records, with reference to all months of the year. In turn, these average balances can only be determined with exactitude after the approval of accounts, in that until then, adjustments or corrections may be made, determined by account audits and by consequent corporate deliberation. Thus, being, there is no doubt that the tax designated by CSB applies to taxable facts occurring throughout the fiscal year, provided that fully verified and consolidated on 31 December of each year.
The legal regime of the Banking Sector Contribution (CSB) introduced by the Budget Law for 2016 is contained in its article 185, which integrates chapter XVI of the Budget Law, under the heading "Other fiscal provisions".
This article provides as follows:
"Article 185
Amendment to the regime of the contribution on the banking sector
The articles 2, 3 and 4 of the regime which creates the contribution on the banking sector, approved by article 141 of Law no. 55-A/2010, of 31 December, shall henceforth read as follows:
"Article 2
(…)
1 – (…)
a) …
b) …
c) Branches in Portugal of credit institutions with principal and actual registered office outside Portuguese territory.
2 - For the purposes of the foregoing number, credit institutions, branches and subsidiaries are considered those defined, respectively, in paragraphs w), u) and ll) of article 2-A of the General Regime for Credit Institutions and Financial Entities, approved by Decree-Law no. 298/92, of 31 December.
Article 3
[...]
a) Liabilities calculated and approved by taxpayers, less, where applicable, the elements of liabilities that form part of equity capital, deposits covered by the guarantee of the Deposit Guarantee Fund, the Agricultural Mutual Credit Guarantee Fund or by an officially recognized deposit guarantee system under the terms of article 4 of Directive 2014/49/EU of the European Parliament and of the Council, of 16 April 2014, or deemed equivalent under the terms of the provisions of paragraph b) of no. 1 of article 156 of the General Regime for Credit Institutions and Financial Entities, approved by Decree-Law no. 298/92, of 31 December, within the limits provided in applicable legislation, and deposits in the Central Fund constituted by agricultural mutual credit cooperatives belonging to the integrated system of agricultural mutual credit, under article 72 of the Legal Regime of Agricultural Mutual Credit and Agricultural Credit Cooperatives, approved by Decree-Law no. 24/91, of 11 January, and republished by Decree-Law no. 142/2009, of 16 June.
b) …
Article 4
[...]
1 - The rate applicable to the tax base defined by paragraph a) of the previous article varies between 0.01% and 0.110% depending on the value calculated.
2 - ..."
For its part, Ordinance no. 165-A/2016, of 14 June, provides as follows:
"Law no. 7-A/2016, of 30 March, which approves the State Budget Law for 2016, amended the regime of the contribution on the banking sector, in particular concerning the scope of the subjective and objective incidence, as well as the interval of rates applicable to the tax base defined by paragraph a) of article 3 of such regime, approved by article 141 of Law no. 55-A/2010, of 31 December (State Budget Law for 2011).
As a consequence, Ordinance no. 121/2011, of 30 March, which regulates the said contribution, as well as the official declaration model no. 26, through which taxpayers carry out the corresponding assessment of the contribution, must be amended. The Bank of Portugal was heard.
Thus:
The Government hereby commands, by the Minister of Finance, under the provisions of article 8 of the regime of the contribution on the banking sector, approved by article 141 of Law no. 55-A/2010, of 31 December, as follows: Article 1. Amendment to Ordinance no. 121/2011, of 30 March Articles 2, 3, 4 and 5 of Ordinance no. 121/2011, of 30 March, amended by Ordinances nos. 77/2012, of 26 March, 64/2014, of 12 March, and 176-A/2015, of 12 June, shall henceforth read as follows:
Article 1
Amendment to Ordinance no. 121/2011, of 30 March Articles 2, 3, 4 and 5 of Ordinance no. 121/2011, of 30 March, amended by Ordinances nos. 77/2012, of 26 March, 64/2014, of 12 March, and 176-A/2015, of 12 June, shall henceforth read as follows:
"Article 2
1 - [...]
a) [...]
b) [...]
c) Branches in Portugal of credit institutions with principal and actual registered office outside Portuguese territory.
2 - For the purposes of the foregoing number, credit institutions, branches and subsidiaries are considered those defined, respectively, in paragraphs w), u) and ll) of article 2-A of the General Regime for Credit Institutions and Financial Entities, approved by Decree-Law no. 298/92, of 31 December.
Article 3
[...]
a) Liabilities calculated and approved by taxpayers, less, where applicable, the elements of liabilities that form part of equity capital, deposits covered by the guarantee of the Deposit Guarantee Fund, the Agricultural Mutual Credit Guarantee Fund or by an officially recognized deposit guarantee system under the terms of article 4 of Directive 2014/49/EU of the European Parliament and of the Council, of 16 April 2014, or deemed equivalent under the terms of the provisions of paragraph b) of no. 1 of article 156 of the General Regime for Credit Institutions and Financial Entities, approved by Decree-Law no. 298/92, of 31 December, within the limits provided in applicable legislation, and deposits in the Central Fund constituted by agricultural mutual credit cooperatives belonging to the integrated system of agricultural mutual credit, under article 72 of the Legal Regime of Agricultural Mutual Credit and Agricultural Credit Cooperatives, approved by Decree-Law no. 24/91, of 11 January, and republished by Decree-Law no. 142/2009, of 16 June;
Article 5
[...]
1 - The rate applicable to the tax base defined by paragraph a) of article 3 is 0.110% on the amount calculated.
2 - [...]"
Still with relevance to the present decision, note the provisions of articles 2 and 3 of the said Ordinance:
"Article 2
Declaration model
The new official declaration model no. 26 and its instructions are approved, in annex to the present ordinance, of which it forms an integral part and which replaces that in the annex to Ordinance no. 121/2011, of 30 March, amended by Ordinance no. 77/2012, of 26 March.
Article 3
Entry into force and effectiveness
The present ordinance comes into force on the day following its publication, taking effect from 1 January 2016." (emphasis ours)
Given this, disregarding for now the questions raised by the Claimant regarding the violation of the principles of fiscal legality and parliamentary reserve of law, considering only and solely the legal regime resulting from these legal norms, we easily conclude without "need for great legal constructions that the legislator was clear as to the entry into force of the amendments introduced concerning the CSB, which can only apply to facts occurring in 2016, with the final note that the effects are retroactive from 1 January 2016.
Given this, limiting our analysis to the question enunciated as a priority, there is no doubt that nothing in the legal regime applicable to the CSB, instituted by the Budget Law for 2016 and regulated by the Ordinance mentioned above, allows us to conclude, as the AT did in the challenged acts, that immediately in 2016 this contribution had to apply to facts occurring in 2015.
Quite the contrary, the legislator was clear when it defined the scope of the factual incidence of this contribution, to apply, from 2016, also to branches. Moreover, it was very clear when, in article 3 of the Ordinance, it provides on the entry into force and effects of the new regime, delimited to the year 2016.
Now, we do not see what other criterion we should apply to the case, other than the one that constitutes a rule in all taxes, imposed or contributions of a fiscal nature, such as the one we are now analyzing, which is that the new law applies for the future and only for the future. But, if there were any doubts, the letter of the law is absolutely clear in declaring expressly that it applies only and solely from the year (fiscal year) of 2016.
For that matter, the concrete situation under examination could be compared, by absurdity, to the attempt to apply the new rules instituted by the Budget Law of 2016 regarding income tax to the income tax declarations submitted in the year 2016.
To which is added, as is clearly evident from article 12 of the General Tax Law, that tax norms apply to facts subsequent to their entry into force (no. 1) and when they are of successive formation (as is the case) the new law only applies to the period elapsed from its entry into force (no. 2).
Finally, it should be stated that the question raised by the Respondent regarding the legal qualification of the CSB, as a contribution or tax, is irrelevant, both for the reasons stated above regarding the alleged exception of material incompetence, and because the unilateral and mandatory nature of this contribution are by themselves clear as to its nature. But even if the understanding were otherwise, it would still be said that the regime instituted by the Budget Law for 2016 is in force, by virtue of the text of the regulatory law itself, only for the future, that is, for tax facts occurring in the period of 2016.
The concrete application of this new regime, carried out by the AT, expressly contradicts the legal regime itself instituted by the Budget Law for 2016 in attempting to tax immediately in this same year the contribution by reference to tax facts occurring in 2015. It may be said that this is a glaring error in the application of the law, exclusively the responsibility of the AT and without any legal support to do so, violating the very letter of the law from the outset.
In this context, it is not even necessary to invoke the possible violation of the constitutional principles invoked by the Claimant, for it is certain that if so, it is not even necessary to go that route to annul the challenged acts given the ostensible violation of the legal regime instituted.
It may be said that, as is obvious, the application of the CSB to branches, created by the Budget Law for 2016, applying it to tax facts occurring in the past (in 2015), when such obligation did not exist, violates the constitutional principles invoked by the Claimant, particularly the principle of non-retroactivity of taxes. But this question does not even merit the assessment of this Tribunal in the case at hand, for being unnecessary, since the legal norms introduced by the Budget Law for 2016 are clear as to their applicability, only and solely to tax facts occurring in the very year 2016 and thereafter. The interpretation and concrete application carried out by the AT is, therefore, illegal, without need to discourse on possible unconstitutionalities which, at least as regards the year in question and the case in hand, are not even necessary to support the annulment of the challenged acts.
There is, thus, no doubt that the new regime of the CSB instituted applies to the year 2016, which amounts to saying that the first self-assessment of CSB should occur in 2017, by reference to tax facts formed during the year 2016.
The self-assessment now challenged was issued by the Claimant in compliance with the guidelines issued by the AT, since, in order to issue a self-assessment, it is presumed that the same was generated by the AT's computer system, made available in the portal of the taxpayer, generating the duty of the latter to comply with the self-assessment obligation on pain of generating a tax debt and possible enforcement.
The interpretation and application of this regime by the AT violated the law and its temporal scope, relating to past facts occurring before its entry into force, in disconformity with the presuppositions instituted by the legislator, whereby this is sufficient to taint the challenged acts with illegality due to violation of law due to error regarding the factual and legal presuppositions applicable.
Having arrived here, it is important to note that all other questions raised by the Claimant, in particular the unconstitutionalities and the disconformity with European Union law, are prejudiced by the response to the first illegality invoked, founded on the defect of violation of law due to error regarding the presuppositions, which is verified and which requires the annulment of the tax acts challenged.
Reviewing the facts established, it is verified that the AT acted voluntarily and consciously, giving an understanding to the new law that goes beyond what the legislator itself imposed on it, without any foundation for doing so.
Moreover, the AT itself argues that the CSB in question relates to the year 2016 and, despite this, promoted its incidence on facts occurring in 2015. Such error, for being manifest, could only have been conscious and to that extent imputable to the services.
Thus, and given the foregoing, the challenged acts being subject to error in the factual presuppositions and consequent error of law, they must be annulled, the arbitral request succeeding and the assessment of the remaining questions being prejudiced.
As to the request for indemnity interest formulated by the Claimant:
Article 43, no. 1, of the LGT provides that indemnity interest is due when it is determined that there was error attributable to the services which results in payment of the tax debt in an amount greater than legally due.
In the case at hand, the errors that affect the acts now annulled are attributable to the Tax and Customs Authority, which practiced them on its own initiative and in contravention of what is set forth in the law.
The Claimant thus has the right to be reimbursed for the amount it paid unduly (under the terms of the provisions of article 100 of the LGT and no. 1 of article 24 of the RJAT) and, further, to be indemnified for the undue payment through the payment of indemnity interest by the Respondent, from the date of payment of the amount until reimbursement, at the legal suppletive rate, in accordance with nos. 1 and 4 of article 43 and no. 10 of article 35 of the LGT, article 559 of the Civil Code and Ordinance no. 291/2003, of 8 April.
V - DECISION
In these terms, this Arbitral Tribunal decides:
a) To find unsubstantiated all exceptions alleged by the Respondent AT;
b) To find well-founded the arbitral request formulated and, in consequence, to annul the tax acts of dismissal of the gracious complaint and underlying self-assessment of contribution on the banking sector, object of this action and identified above, in the total amount of €11,221.50.
c) To condemn the Respondent to restitution of the amount unduly paid by the Claimant in compliance with the acts now annulled, plus indemnity interest, in accordance with the terms set out above, as well as to the payment of the costs of the proceedings.
VALUE OF THE PROCEEDINGS
The value of the proceedings is set at €11,221.50 in accordance with article 97-A, no. 1, a), of the CPPT, applicable by virtue of paragraphs a) and b) of no. 1 of article 29 of the RJAT and no. 2 of article 3 of the Regulation of Costs in Tax Arbitration Proceedings.
COSTS
The arbitration fee is set at €918.00 in accordance with Table II of the Regulation of Costs in Tax Arbitration Proceedings, to be paid in accordance with articles 12, no. 2, and 22, no. 4, both of the RJAT, and article 5 of the said Regulation.
Notify.
Lisbon, 28 December 2017
The Singular Arbitral Tribunal,
(Maria do Rosário Anjos)
[1] SÉRGIO VASQUES and CARLA CASTELO TRINDADE (2013) "The material scope of tax arbitration", Tax Justice Notebooks, no. 00 (April/June 2013), p. 24.
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