Process: 14/2017-T

Date: September 15, 2017

Tax Type: Selo

Source: Original CAAD Decision

Summary

In Process 14/2017-T, a company challenged the Tax Authority's Stamp Duty assessment on property acquired through insolvency proceedings. The claimant acquired urban property from an insolvent estate and argued exemption under Article 269(e) of the Portuguese Insolvency Code (CIRE). The core legal issue centered on whether Stamp Duty exemptions apply to individual property transfers in insolvency liquidation, not just transfers within company or establishment sales. The claimant contended that Article 270(2) CIRE, which exempts IMT on sales in insolvency contexts, reflects legislative intent to maximize creditor recovery by reducing acquisition costs. The argument invoked principles of social solidarity and equity embedded in CIRE, maintaining that tax exemptions prevent the State from gaining privileged revenue status over other creditors. The claimant referenced the CPEREF predecessor regime, citing Decree-Law 53/2004's preamble confirming continuity of tax benefits. A critical constitutional argument emerged: interpreting exemptions narrowly violates Article 165(2) of the Portuguese Constitution regarding tax legislative competence. The Supreme Administrative Court precedent from May 2012 supported broader interpretation of CIRE exemptions. The claimant sought annulment of the Stamp Duty assessment, reimbursement of amounts paid, and compensatory interest. This case exemplifies tensions between fiscal revenue collection and insolvency law's social solidarity objectives, highlighting the interpretive challenges in coordinating IMT and Stamp Duty exemptions within insolvency frameworks.

Full Decision

ARBITRAL DECISION

I – REPORT

Petition

A…, S.A., Tax ID…, with registered office at …, n.º…, parish of …, …-… Porto, hereinafter designated as the Claimant, filed, on 04-01-2017, pursuant to the provisions of subsection a) of paragraph 1 of article 2 and article 10 of Decree-Law no. 10/2011, of 20 January, which approves the Legal Framework for Tax Arbitration (RJAMT), a request for arbitral decision, wherein the Respondent is the AT - TAX AND CUSTOMS AUTHORITY, hereinafter designated as the Respondent, with a view to:

  •      The declaration of illegality of the act of rejection of the administrative recourse filed by the Claimant against the assessment of Stamp Duty contained in document no.…;

  •      The annulment of the same assessment act;

  •      The condemnation of the respondent to repay to the Claimant the amount of tax illegally paid, plus the corresponding indemnification interest.

The Claimant alleges, in essence and with relevance to the decision of the case, the following:

  •      Having acquired the urban property, located at Rua …, …, parish of …, …, described in the Land Registry under no. … and registered in the matrix of the said parish under article …, in the context of an insolvency proceeding, the Claimant considers that the acquisition was exempt from Stamp Duty pursuant to article 269, subsection e) of the Insolvency and Business Recovery Code (CIRE).

  •      Paragraph 2 of article 270 of the CIRE provides that "are equally exempt from IMT the acts of sale, exchange, or transfer of the company or of its establishments integrated within the scope of the insolvency or payment plan or practiced in the context of the liquidation of the insolvent mass".

  •      The concept of common sacrifice and social solidarity in the protection of the position of those who, as a result of the insolvency of their debtors, see lost or greatly reduced the probability of receipt of their credits and threatened their own solvency, is what led the legislator to create incentives for the recovery of revenues for those creditors, namely through the granting of tax benefits to those who acquire assets integrated in insolvent masses.

  •      Among those benefits stands out the exemption from SISA (now IMT) in the transfer of immovable property.

  •      In fact, immovable property, like everything in general, is sold for the value that someone accepts to pay for it.

  •      This value necessarily encompasses the price and all accessories of the price (for this purpose, "accessories of the price" means all costs, namely fiscal, fee-related or others that the acquirer must bear in order to acquire the asset).

  •      The higher the "accessory" costs, the lower the price will be, that is, the value destined for the creditors or, alternatively, the longer the period of time needed for the sale.

  •      It was, in order to try to optimize, in value and in term, (in the context of an insolvency or payment plan or the liquidation of the insolvent mass) the obtaining of revenues destined for the creditors (including the State) of the insolvent mass, that the legislator already provided in the CPEREF (in subsection c) of paragraph 2 of its article 121) the exemption of Sisa for situations equivalent to the one now claimed.

  •      A solution which, for the same substantive reasons, he intended to maintain in the CIRE through paragraph 2 of its article 270.

  •      Reflecting these provisions, in the systemic analysis of these legal instruments, the principles of equity and social solidarity that, in this matter, guided both instruments.

  •      In summary, we can state that, in the relationship with the State, the principles of social solidarity, underlying the CIRE, find their legal consecration i) with respect to the chapter on claim of credits, in the loss (albeit partial) of the privileges of State credits and, ii) with respect to the chapter on revenues or rather, in the promotion of the maximization of revenues destined for creditors, in the exemptions of stamp duty and IMT enshrined.

  •      Otherwise, the State would have in IMT a kind of privilege, which would ensure it an alternative and exclusive source of revenue, benefiting it against other creditors (secured, ordinary or even privileged), contrary to the principles of social solidarity that guided this legal regime and, in particular, as we shall see better below, to the meaning and scope of the legislative authorization that legitimizes the CIRE.

  •      But it should be emphasized that, in the context of IMT exemption, despite the less felicitous wording of article 270 of the CIRE, the legislator intended only to enshrine for the CIRE a regime equivalent to that which already resulted from subsection c) of paragraph 2 of article 121 of the CPEREF.

  •      As expressly stated in paragraph 49 of the Preamble of Decree-Law no. 53/2004, of 18 March, where it states that "the regimes existing in the CPEREF are maintained in essence as regards the exemption of fees and tax benefits".

  •      In fact, if we were to interpret paragraph 2 of article 270 of the CIRE in the sense that the transfer of immovable property in the context of the liquidation of the insolvent mass or in insolvency or payment plans is subject to IMT, then the proposition contained in said paragraph 49 of the said Preamble would, without more, become false.

  •      Now, it is also not to be presumed that the legislator, in the preamble of the instruments, affirms the opposite of what he will later enshrine.

  •      In fact, what is not permissible is the interpretation that the Tax Administration seeks to impose, perhaps ignoring how much more penalizing it is for the State to hinder the re-entry into the market of the assets of insolvent masses, in particular, because of their economic significance, of immovable property, and to delay the satisfaction (possible) of creditors, themselves, as a rule, with serious liquidity problems.

  •      On the other hand, as rightly noted by the learned ruling of the Supreme Administrative Court, of 30 May 2012, interpreting paragraph 2 of article 270 of the CIRE in the sense that only the transfers of immovable property inserted in the transfer of company or its establishment are exempt from IMT, is not an interpretation in conformity with the Constitution.

  •      In not proceeding in this way, and in deciding for the assessment of IMT, the action of the Tax Administration is defective with the vice of violation of law, since the assessment is then based on a norm which, when interpreted in a way to support the assessed liquidation claimed, becomes itself, at that moment, unconstitutional, by violation of paragraph 2 of article 165 of the CRP.

  •      Being, consequently, also for this reason, voidable the tax act in question.

  •      In summary, and all things considered, the various interpretative elements of the norm in question converge to a single conclusion: that, in the context of an insolvency or payment plan or the liquidation of the insolvent mass, the IMT exemption enshrined in paragraph 2 of article 270 of the CIRE encompasses immovable property transferred by sale or exchange, even when that transfer does not arise integrated in the transfer of company or establishment.

  •      Furthermore, the conditions are also met for the Claimant to benefit from the Stamp Duty exemption provided for in subsection e) of article 269 of the CIRE, since this rule encompasses (uncontestably) both the transfer of immovable property effected together with the company or the establishment of which they form part, as well as the isolated transfer of immovable property, separate from the company or establishment that they integrate.

  •      Being plainly evident that the act of additional Stamp Duty assessment that is now claimed, flows, as we have demonstrated, from an erroneous interpretation of the provision of subsection e) of article 269 of the CIRE, suffering, therefore, from the vice of error regarding the legal prerequisites.

  •      And the legal consequence established for this legal vice is the voidability of the assessment act now being challenged.

  •      Moreover, since in this case it was not proven that the prerequisites upon which, according to law, the exigibility of the tax in question depends exist, it is manifest that no tax fact was constituted, whereby the payment demanded from the Claimant is illegal and non-exigible.

  •      If this were not understood, one would have to conclude that the Tax Authority could demand the payment of the amounts in question regardless of the demonstration and verification of the legally established prerequisites, as occurs in the present case, freely creating taxes, which is inadmissible.

  •      In this regard, the assessment act sub judice constitutes the creation of a true tax or special contribution not permitted by law.

  •      The act in question is thus null and void for lack of authority and for having created taxes or special contributions not permitted by law (article 133/2/a) and d) of the CPA and articles 103/2 and 165/1/i) of the CRP).

  •      In effect, the act in question does not indicate and there is no applicable legal provision that bases and legitimizes the quantification of the amounts determined and the assessment of the tax in question, nor were any reasons given to justify the assessment now being challenged.

  •      The act challenged thus suffers from manifest lack of statement of reasons on fact and law, or, at least, this is insufficient, obscure and incongruous, whereby the provisions of article 268/3 of the CRP, articles 124 and 125 of the CPA and article 77 of the LGT were blatantly violated.

  •      The assessment act in question is thus null and void, since the amount required has no legal or factual basis whatsoever (article 77 of the LGT and article 99/c of the CPPT; cf. article 133 of the CPA).

  •      The quantification of the tax fact in question raises well-founded doubts, whereby the act challenged should always be annulled, by virtue of articles 99/1/a) and 100 of the CPPT.

  •      The Tax Administration violated the legitimate expectations and guarantees previously constituted for the Claimant, and the principle of confidence and legal certainty inherent to the principle of the Rule of Law, in addition to having violated the principles of tax legality, prohibition of retroactivity of tax law and certainty and legal security provided, among others, in articles 12 of the LGT, 12 of the CC and 103, paragraph 3 of the CRP.

  •      In effect, the interpretation of the Tax Administration applied to a past tax fact, entirely conducted under the aegis of the old law, constitutes a violation of the principle of protection of trust, in the aspect of legal security.

  •      As José Casalta Nabais rightly emphasizes "a consideration that will still have to be made in the event that the administration or the legislator itself, through the retroactive imposition of a correct interpretation of tax law, seek to recover taxes not collected because the previous illegal interpretation of the administration excluded them from the area of incidence or threw them into the tax benefits. Also to such a venire contra factum proprium the principle of trust imposes limits".

  •      In this regard, there is clearly an error of law on the part of the Tax Authority, since it induced the Claimant into error when it recognized the exemption of Stamp Duty to be assessed prior to the execution of the public deed.

  •      Furthermore, the principle of good faith enshrined in paragraph 2 of article 59 of the General Tax Law presupposes on the part of the Tax Administration a duty to act in accordance with good faith.

  •      In truth, the presumption of action in good faith is a corollary of that duty to act in accordance with the principle of good faith, which is constitutionally imposed on all Public Administration, pursuant to the provision of paragraph 2 of article 266 of the C.R.P.

  •      Whereby, the assessment in question should be annulled for omission of legal formality, violation of the principles of cooperation and good faith as referred to above (article 62).

  •      Furthermore, the revocation of the exemption could only be carried out within the period of 1 year after it had been granted, being an act constitutive of rights, by the combined application of the provisions of articles 141, paragraph 1, of the CPA and 58 of the CPPT.

  •      Thus, the revocation of such administrative act was carried out beyond the period of one year in which it was legally possible, pursuant to articles 136 and 141 of the CPA applicable by virtue of article 2, subsection c), of the LGT and article 2, subsection d), of the CPPT.

  •      In support of this understanding, consider the Ruling of the Supreme Administrative Court, of 15.05.2013, where the following was decided:

I – In determining the legal consequences of the invalidity of an administrative act in tax matters concerning the granting of a tax benefit, in light of the legal possibility of its revocation, the rules of the CPA must be applied in accordance with what article 2 of the CPPT provides.

II - In the context of administrative activity, the prerequisites of the protection of trust are a conduct generating trust, the existence of a situation of trust, the effectuation of an investment of trust and the frustration of trust by whoever generated it.

III - The violation by the tax administration of procedural duties of cooperation and of acting according to the rules of good faith may consist in an autonomous vice of violation of law".

  •      In this regard, there is the illegality of the revocation, since the revoking act, with ex tunc effects, occurred more than one year after the act granting the Stamp Duty exemption, in clear violation of the provision of article 141 of the CPA.

Response of the Respondent

In its Response, the Respondent alleges, in summary, the following:

  •      The principal question that arises in the present proceedings comes down to knowing whether the purchase of immovable property within the context of the liquidation proceeding of the insolvent company is (or is not) exempt from Stamp Duty, as provided for in article 269, subsection e) of the CIRE, specifically, in situations where we are faced with the acquisition of an immovable property, albeit in an insolvency proceeding, but which does not belong to a company, nor was intended for the exercise of any business activity whatsoever, but was the property of a natural person intended for housing, as is the case in the present proceedings.

  •      The tax exemption under consideration stems from the provision of article 269, subsection e), combined with article 16, paragraph 2 (a contrario sensu), both of the CIRE.

  •      Now, the said precepts establish the following:

Article 269, subsection e) of the CIRE - "Benefit relating to stamp duty"

"The following acts are exempt from stamp duty, when subject thereto, provided they are foreseen in insolvency plans, payment plans or recovery plans or practiced within the scope of the liquidation of the insolvent mass:

(...)

e) The carrying out of financing operations, the transfer or transfer of the operation of company establishments, the formation of companies and the transfer of commercial establishments, the sale, exchange or transfer of elements of the company's assets, as well as the leasing of property;

Article 16, paragraph 2 of the CIRE

2 - The tax benefits contained in articles 268 to 270 depend on prior recognition by the Tax and Customs Authority, when applied within the framework of Decree-Law no. 178/2012, of 3 August.

(Decree-Law no. 178/2012, of 3 August, establishes the System for Business Recovery via Extrajudicial Means – SIREVE)

  •      That is, it is clear and expressly stated from the wording of the law that the Stamp Duty exemption applies to the "sale, exchange or transfer of elements of the company's assets" and does not provide that the exemption of Stamp Duty applies to the sale, exchange or transfer of elements held by natural persons.

  •      Given that where the legislator does not distinguish, the interpreter should not distinguish, the Stamp Duty exemption provided for in subsection e) of article 269 of the CIRE applies only to immovable property that integrates the assets of a company and not to immovable property of natural persons.

  •      In these terms, in the case under consideration in the present arbitral proceedings, the Claimant did not meet the requirements to be able to benefit from this exemption, because, as appears from the Administrative Process (PA) now attached, the Claimant acquired an autonomous unit in an insolvency proceeding, but in which the insolvent party is a natural person.

  •      We are faced with the acquisition of immovable property, albeit in an insolvency proceeding, but which

  •      does not belong to a company nor was intended for the exercise of any business activity whatsoever, but was the property of a natural person intended for housing.

  •      Whereby the legal prerequisites for the Stamp Duty exemption are not met because of its transfer having been effected in an insolvency proceeding of a natural person.

  •      On the other hand, with regard to the alleged unconstitutionality invoked by the Claimant, it is necessary to explain the following.

  •      Pursuant to the Ruling of the Supreme Administrative Court, of 12 February 1997, appeal no. 20733, an interpretation of the law cannot be considered valid that, even if in accordance with the Constitution, violates the rules that are imperatively applicable to it, exceeding the literal tenor of the norm to be applied.

  •      Compliance with the Constitution of the solution reached does not therefore guarantee the validity of the interpretation of tax norms – it is indispensable that the general principles of interpretation and application of tax laws are equally observed in the interpretative activity.

  •      "Interpretation in conformity with the Constitution" is only illegal when it violates the fundamental principles of interpretation and application of legal norms developed in this norm and in the Civil Code, which is not demonstrably the case.

  •      In short, the assessment challenged is legal and in accordance with the Constitution, with the multiple constitutional principles that the Claimant merely limited itself to invoking in its learned petition not being violated, without, however, having managed to demonstrate any unconstitutionality.

Regarding the alleged lack of statement of reasons:

  •      It is manifest and unquestionable that the Claimant perfectly understood the logical and legal process that led to the taxation decision in question, and what were the legal criteria and methods that led to the values inherent in the assessment now in dispute, the statement of reasons presented by the Claimant in the present request for arbitral decision, as well as in the previous administrative recourse, being proof of this very thing.

  •      In this regard, it is not apparent that the assessment in question in the present proceeding lacks legal statement of reasons, whereby it is considered that the burden of statement of reasons was fulfilled and that the Claimant's request is necessarily without merit.

  •      Lastly, the Claimant alleges that the revocation of the tax benefit is illegal by violation of the provisions of articles 141, paragraph 1, of the CPA and 58 of the CPPT, because there would have existed an act of granting the exemption, that act being constitutive of rights, by the combined application of these same articles.

  •      Thus, the Claimant understands that the revocation of such administrative act was carried out beyond the period of one year in which it was legally possible, pursuant to articles 136 and 141 of the CPA applicable by virtue of article 2, subsection c), of the LGT and article 2, subsection d), of the CPPT.

  •      In this case, given that the legal prerequisites for the Claimant to be able to benefit from the Stamp Duty exemption are not met, pursuant to subsection e) of article 269 of the CIRE, the tax administration could not refrain from assessing the tax owed, provided that the statute of limitations period was respected, which, pursuant to article 39 of the Tax Code on Stamp Duty, combined with article 45, paragraph 1, in fine, of the LGT, is eight years from the transfer or from the date the exemption ceased to have effect.

  •      But, contrary to what is invoked by the Claimant, there was no constitutive act of rights, because the benefit here in question is an automatic benefit pursuant to article 5 of the Tax Benefits Statute (EBF).

  •      The article cited above of the EBF determines that automatic tax benefits are those which result directly and immediately from the law, as opposed to benefits dependent on recognition, which presuppose one or more subsequent acts of recognition.

  •      In turn, subsection d) of paragraph 8 of article 10 of the Tax Code on Immovable Property Transfer (CIMT), on Recognition of exemptions, provides:

«The following exemptions are of automatic recognition, the responsibility for their verification and declaration falling to the tax service where the declaration provided for in paragraph 1 of article 19 is presented: (Wording given by article 97 of Law 64-A/2008, of 31 December).

(...)

d) The exemptions of automatic recognition contained in legislation extraneous to this code. (Wording given by article 97 of Law 64-A/2008, of 31 December).»

  •      Now, from the analysis of these legal provisions, it is verified that the recognition of the exemption in question in this proceeding is automatic, it flows directly from the law and there is no prior analysis or prior verification of its prerequisites.

  •      What happens is that the taxpayer presents a declaration provided for in paragraph 1 of article 19 of the CIMT, and only subsequently does the Tax Authority verify the verification of the prerequisites as provided for in article 7 of the EBF.

  •      This normative provision determines that the recognition of the benefits is subject to control and after that control is that the verification of the prerequisites of the exemption is assessed.

  •      Whereby, strictly speaking, there was no constitution of a right to the tax benefit.

  •      Now, this tax assessment cannot be considered a revocation of an exemption, as was also noted in the ruling of 21/08/2015, in Case 834/2014 – T CAAD, a thesis to which we adhere, in which, being at issue also an automatic benefit, albeit of Stamp Duty exemption, it was concluded:

«that the procedure occurring after the actual verification of the prerequisites indicated in the declaration as the basis for the benefit is configured as an assessment and not as an administrative act revoking a prior act granting a tax benefit.»

Subsequent Proceedings

By order of 22 May 2017, the Tribunal invited the Parties to pronounce themselves on the procedural steps to be followed.

The Parties agreed to waive both the holding of the meeting provided for in article 18 of the RJAMT and the submission of further arguments.

II – CASE MANAGEMENT

The singular Arbitral Tribunal was duly constituted on 14-03-2017, with the arbitrator being designated by the Deontological Council of the CAAD, with the respective legal and regulatory formalities fulfilled (articles 11, paragraph 1, subsections a) and b) of the RJAMT and 6 and 7 of the Deontological Code of the CAAD).

The Parties have legal personality and capacity, are legitimate and are regularly represented, pursuant to articles 4 and 10 of the RJAMT and article 1 of Ordinance no. 112-A/2011, of 22 March.

No defects in the proceedings were identified.

III – QUESTIONS TO BE DECIDED

The following are the questions to be analyzed and decided in these proceedings:

¾ The applicability of the Stamp Duty exemption provided for in article 269, subsection e) of the CIRE to the acquisition of immovable property integrated in an insolvent mass but not integrated in the assets of a company;

¾ Nullity of the act for lack of authority and for resulting in the creation of a tax not provided for in law;

¾ Lack of statement of reasons for the assessment act;

¾ The possibility in time of carrying out the assessment in question.

IV – PROVEN FACTS

The following are the proven facts considered relevant to the decision:

  •      The Claimant acquired, on 16-06-2006, the urban property located at Rua …, …, parish of …, Municipality of …, described in the Land Registry under no. … and registered in the urban property matrix of the respective parish with the property registration article …;

  •      The acquisition was effected within the scope of an insolvency proceeding of B…, Tax ID … and C…, Tax ID…, which proceeded under no. …/11… TBCLD;

  •      The insolvent mass did not belong to a company;

  •      The immovable property acquired was not integrated in the assets of a company or of a stable establishment;

  •      On 26-12-2012, declarations were submitted for assessment of IMT and Stamp Duty relating to the acquisition of the said property, as per document 2 attached with the initial petition;

  •      As a consequence of these declarations, an IMT assessment – Tax on Onerous Transfers of Immovable Property, with no.…, in the amount of 00.00 euros was issued.

  •      On 4-12-2015, the Tax Authority notified the Claimant that it would initiate a procedure for assessment of IMT and Stamp Duty on the acquisition in question.

  •      In that notification, the amounts of taxes to be paid were indicated:

¾ IMT: 1,858.84 euros

¾ Stamp Duty: 1,052.00 euros

  •      On 21-07-2016, an assessment and corresponding notification of Stamp Duty in the amount of 1,052.00 euros was issued, this assessment having no number but contained in document no. ….

  •      On 22-07-2016, the Claimant proceeded to payment of the Stamp Duty.

  •      On a date that is unknown, an IMT assessment was issued, in the amount of 1,858.84 euros.

  •      On 16-08-2016, an administrative recourse challenging the IMT and Stamp Duty assessment was filed at the Tax Service … of Leiria.

  •      This administrative recourse, although being only one and referring to both taxes in question – IMT and Stamp Duty – gave rise to two administrative recourse proceedings:

¾ Proceeding no. …2016… relating to the IMT assessment

¾ Proceeding no. …2016… relating to the Stamp Duty assessment

  •      On 25-10-2016, the Claimant was notified to exercise the right to prior hearing with respect to both proceedings.

  •      On 23-11-2016, the Claimant was notified of the decision rejecting the administrative recourse.

V – STATEMENT OF REASONS

Applicability of the Stamp Duty exemption provided for in article 269, subsection e) of the CIRE to the acquisition of immovable property integrated in an insolvent mass but not integrated in the assets of a company

Article 121 of the Code of Special Procedures for Business Recovery and Bankruptcy, approved by Decree-Law no. 132/93, of 23 April, provided, regarding tax exemptions:

(...)

2 - The transfers of immovable property, integrated in any of the company recovery measures, which result from:

(...)

c) The legal separation of commercial or industrial establishments, the sale, exchange or transfer of elements of the company's assets, as well as long-term leases, respectively provided for in subsections e), f) and g) of paragraph 1 of article 101, are also exempt from municipal sisa tax.

In 2004, the said code was replaced by the current Insolvency and Business Recovery Code, approved by Decree-Law no. 53/2004, of 18 March.

In the preamble of this instrument, it reads:

49 - The regimes existing in the CPEREF are maintained in essence regarding the exemption of fees and tax benefits, as well as the indication of criminal violation.

This instrument was approved pursuant to a legislative authorization law (Law no. 39/2003, of 22 August) which stated:

Article 9

(...)

2 — The Government is furthermore authorized to exempt from stamp duty, when subject thereto, the following acts, provided they are foreseen in an insolvency plan or payment plan or practiced within the scope of the liquidation of the insolvent mass:

(...)

f) The carrying out of financing operations, the transfer or transfer of the operation of company establishments, the formation of companies and the transfer of commercial establishments, the sale, exchange or transfer of elements of the company's assets, as well as the leasing of property.

In the original version of the instrument, article 269 stated the following:

Article 269

Benefit relating to stamp duty

The following acts are exempt from stamp duty, when subject thereto, provided they are foreseen in insolvency plans, payment plans or liquidation of the insolvent mass:

e) The carrying out of financing operations, the transfer or transfer of the operation of company establishments, the formation of companies and the transfer of commercial establishments, the sale, exchange or transfer of elements of the company's assets, as well as the leasing of property;

Currently, following the amendment introduced by Law no. 66-B/2012, of 31/12, article 270 of the CIRE states the following:

Article 269

Benefit relating to stamp duty

The following acts are exempt from stamp duty, when subject thereto, provided they are foreseen in insolvency plans, payment plans or recovery plans or practiced within the scope of the liquidation of the insolvent mass:

(...)

e) The carrying out of financing operations, the transfer or transfer of the operation of company establishments, the formation of companies and the transfer of commercial establishments, the sale, exchange or transfer of elements of the company's assets, as well as the leasing of property;

Given the wording of the rule, there can be no doubt that the exemption established in subsection e) of article 269 of the CIRE is not applicable to the acquisition of an immovable property integrated in the insolvent mass arising from the personal assets, non-business, of an insolvent natural person, as is the case here.

This very matter was already confirmed in the ruling of the Supreme Administrative Court of 25-09-2013 (case no. 866/13), in whose summary it states: "I. Pursuant to the provision of article 269, subsection e), of the CIRE, are exempt from Stamp Duty the sales of «elements of the company's assets». II – Therefore, the said exemption does not encompass the sale of urban property intended for housing that belongs to a natural person, it not being sufficient to benefit from that exemption the fact that it concerns acts of sale practiced within the scope of the liquidation of the insolvent mass, but rather it being necessary to demonstrate that the property sold integrates the assets of a company."

Therefore, the Claimant is not correct in stating that "the conditions are met to benefit from the Stamp Duty exemption provided for in subsection e) of article 269 of the CIRE".

Consequently, it is also not true, as the Claimant states, that "the act of additional Stamp Duty assessment that is now claimed flows from an erroneous interpretation of the provision of subsection e) of article 269 of the CIRE, suffering, therefore, from the vice of error regarding the legal prerequisites.

The act challenged – Stamp Duty assessment – does not suffer from error regarding the legal prerequisites with respect to the non-applicability of the exemption provided for in subsection e) of article 269 to the case in question.

Nullity of the act for lack of authority and for resulting in the creation of a tax not provided for in law

In articles 47 and 48 of the initial petition, the Claimant alleges that the assessment act sub judice constitutes the creation of a true tax or special contribution not permitted by law, being consequently null and void for lack of authority and for having created taxes or special contributions not permitted by law (article 133/2/a) and d) of the CPA and articles 103/2 and 165/1/i) of the CRP).

The tax is provided for in article 1, paragraph 1 of the Stamp Duty Code, combined with the item 1.1 of its General Table.

Therefore, the said vice of creation of a tax not provided for in law does not exist.

Lack of statement of reasons for the assessment act

The legal and constitutional requirement for statement of reasons for the tax act, resulting from articles 268 of the CRP, 77 of the LGT and 152 of the CPA, is primarily aimed at allowing the interested parties to know the reasons that led the Administration to act, in order to enable them a conscious choice between accepting the legality of the act and contesting it in court.

With respect to tax assessment acts, paragraph 2 of article 77 of the LGT establishes the minimum parameters for statement of reasons. These acts may contain a summary statement of reasons, which, however, cannot fail to contain the applicable legal provisions, the classification and quantification of the tax facts and the operations for determining the taxable amount and the tax.

On the other hand, the act will be sufficiently reasoned when the administrated party, placed in the position of a normal recipient – the bonus pater familias of which article 487, paragraph 2 of the Civil Code speaks – may become aware of the factual and legal reasons that lie at its genesis, in order to enable him to choose, in an informed manner, whether or not to accept the act (ruling of STA of 02-07-2014, case no. 1074/13).

Now, the statement of reasons for the act, on fact and law, was explicitly communicated to the Claimant in the notification by which it was made known to him that a liquidation procedure would be initiated.

In that statement of reasons, reference is made to article 269, subsection e) of the CIRE, it is stated that, in order for the exemption provided therein to apply, the immovable property acquired must come from a company, it is stated that not covered by that exemption are "insolvent parties who are natural persons and do not exercise an industrial, commercial or agricultural activity".

In the same communication, the classification and quantification of the tax fact is carried out.

In the assessment itself, it is indicated that it is being effected under item 1.1 of the General Table of Stamp Duty. And the determination of the tax is demonstrated.

The statement of reasons is, therefore, sufficient, in accordance with article 77 of the LGT.

This statement of reasons was communicated through notification effected by registered mail with proof of receipt.

Whereby it must be concluded that there is no, with respect to the assessment challenged, lack of statement of reasons, the allegation of such vice being without merit.

Possibility in time of carrying out the assessment in question

Paragraph 2 of article 16 of the Insolvency and Business Recovery Code states:

Special Procedures

2 - The tax benefits contained in articles 268 to 270 depend on prior recognition by the Tax and Customs Authority, when applied within the framework of Decree-Law no. 178/2012, of 3 August.

Decree-Law no. 178/2012 establishes the SIREVE - System for Business Recovery via Extrajudicial Means.

In the case in question, the application of the tax benefit provided for in article 269 of the CIRE is not at issue within the framework of Decree-Law no. 178/2012.

In turn, article 5 of the EBF states:

1 - Tax benefits are automatic or dependent on recognition; the former result directly and immediately from the law, the latter presuppose one or more subsequent acts of recognition.

From the two precepts combined it results that the tax benefits provided for in the CIRE, including the one provided for in article 269, which is at issue here, when not applied within the framework of Decree-Law no. 178/2012, are of automatic application.

Being of automatic application, it is the taxpayer who declares the existence of its prerequisites and brings about the assessment based on the tax benefit, the assessment effected in these terms not implying the recognition of a right, pursuant to article 168, paragraph 2 of the CPA.

And being thus, the provision of that same precept will not apply to the case in question: "Except in the cases provided for in the following paragraphs, acts constitutive of rights may only be subject to administrative annulment within the period of one year, counting from the date of their issuance."

In these terms, the vice alleged by the Claimant of violation of the prohibition on revocation of an administrative act constitutive of rights does not apply.

VI – DECISION

We are of the opinion that the Tribunal decides not to declare the illegality of the Stamp Duty assessment challenged, denying the claim of the Claimant.

Value of the economic utility of the proceeding: The value of the economic utility of the proceeding is set at 1,052.00 euros.

Costs: Pursuant to article 22, paragraph 4, of the RJAMT, the amount of costs is set at 306.00 euros, in accordance with Table I annexed to the Costs Regulation in Tax Arbitration Proceedings, to be borne by the Claimant.

Let this arbitral decision be registered and notified to the parties.

Lisbon, Administrative Arbitration Centre, 15 September 2017

The Arbitrator

(Nina Aguiar)

Frequently Asked Questions

Automatically Created

Is the acquisition of property in insolvency proceedings exempt from Stamp Duty (Imposto do Selo) in Portugal?
Under Article 269(e) of the Portuguese Insolvency Code (CIRE), property acquisitions in insolvency proceedings can be exempt from Stamp Duty. The claimant argued this exemption applies to individual property transfers from insolvent estates, not only transfers integrated within company or establishment sales. The legislative intent, rooted in social solidarity principles, aims to maximize creditor recovery by reducing acquisition costs, thereby encouraging market re-entry of insolvency assets.
How does Article 269(e) of the Portuguese Insolvency Code (CIRE) apply to Stamp Duty on real estate transfers?
Article 269(e) CIRE provides Stamp Duty exemption for property transfers in insolvency contexts. The provision encompasses both integrated transfers (as part of company/establishment sales) and isolated property transfers. This interpretation aligns with CIRE's objective to incentivize asset liquidation and creditor satisfaction by eliminating fiscal barriers. The Tax Authority's narrower reading contradicts the legislative framework's continuity from CPEREF, as confirmed in Decree-Law 53/2004's preamble.
Does the IMT exemption under Article 270(2) of CIRE extend to Stamp Duty on property acquisitions in insolvency liquidation?
Article 270(2) CIRE explicitly exempts IMT on sales and exchanges within insolvency or payment plans. While the provision directly addresses IMT, the claimant argued parallel application to Stamp Duty based on systemic interpretation and legislative continuity. The exemption regime treats both taxes consistently to avoid the State gaining privileged creditor status through alternative revenue streams, which would undermine CIRE's equitable distribution principles and potentially violate constitutional tax competence requirements under Article 165(2) CRP.
What is the procedure for challenging a Stamp Duty assessment on property acquired from an insolvent estate through tax arbitration (CAAD)?
To challenge a Stamp Duty assessment via CAAD (tax arbitration), the taxpayer files a request for arbitral decision under Article 2(1)(a) and Article 10 of Decree-Law 10/2011 (RJAMT). The procedure includes: submitting a petition identifying the contested assessment act, presenting legal grounds (e.g., exemption under CIRE provisions), requesting annulment and reimbursement. The claimant may also claim compensatory interest on illegally collected amounts. Tax arbitration provides an alternative to administrative and judicial court proceedings for resolving tax disputes.
Can a creditor claim reimbursement and compensatory interest after an unlawful Stamp Duty charge on an insolvency asset purchase?
Yes, taxpayers can claim reimbursement of unlawfully charged Stamp Duty plus compensatory interest. In this case, the claimant requested: (1) declaration of illegality of the administrative recourse rejection; (2) annulment of the Stamp Duty assessment; and (3) condemnation of the Tax Authority to repay the amount with corresponding indemnification interest. Portuguese tax law provides remedies for illegally collected taxes, including interest compensation for the period the State held funds without legal basis, protecting taxpayers' property rights and ensuring restoration of their financial position.