Process: 15/2014-T

Date: July 31, 2014

Tax Type: Valor do pedido:

Source: Original CAAD Decision

Summary

This CAAD arbitral decision (Process 15/2014-T) addresses a Stamp Tax dispute involving €332,815.61 assessed on alleged credit granting operations under Verba 17.1 of the General Stamp Tax Table for August-October 2009. The claimant A... S.A., as the incorporating company of B... S.A., challenged the Tax Authority's liquidation arguing both substantive illegality and procedural expiry of the assessment right for August 2009 under Article 45 of the General Tax Law (4-year limitation period). The factual background involved a 2002 share purchase promissory contract where B... paid €277 million upfront to A... for shares, with successive contract extensions requiring 'immobilization commission' payments calculated as interest on the deferred price. The Tax Authority assessed Stamp Tax on these commission payments as credit operations under Verba 17.1 TGIS. During proceedings, the Tax Authority partially revoked the August 2009 assessment (€112,461.13), recognizing the expiry claim, leaving €220,354.48 in dispute. The arbitral tribunal, constituted under Decree-Law 10/2011 (RJAT), deemed itself competent and dispensed with oral arguments and testimonial evidence since both parties agreed the dispute involved purely legal questions regarding whether the immobilization commissions constituted taxable credit granting operations. The case turned on interpreting whether deferred payment obligations under a promissory share purchase contract, generating interest-like commissions, fall within the Stamp Tax scope for credit operations, particularly when the merger of promisee into promisor made the underlying transaction impossible to complete as originally contemplated.

Full Decision

ARBITRAL DECISION

I - REPORT

  1. "A... S.A" (hereinafter referred to as "Claimant" or "A..."), in its capacity as incorporating company of "B... S.A." (hereinafter "U..."), submitted on 6 January 2014 a request for the constitution of an arbitral tribunal, pursuant to the provisions of articles 2, no. 1, para. a), and 10 of Decree-Law no. 10/2011, of 20 January (Legal Framework for Arbitration in Tax Matters, hereinafter "RJAT").

  2. The Claimant requests a pronouncement with a view to declaring the illegality of the Stamp Duty assessment (hereinafter "SD") issued by the Tax and Customs Authority (hereinafter "TCA" or "Respondent"), on 29 August 2013, with number 2013..., relating to the tax period of August, September and October 2009, in the total amount of €332,815.61.

  3. Additionally, the Claimant invokes the expiry of the right to assess relating to the month of August 2009, by expiration of the 4-year period provided for in article 45 of the LGT.

  4. On 7 March 2014 the present Collective Arbitral Tribunal was constituted.

  5. The Arbitral Tribunal was duly constituted and is materially competent, in light of the provisions of articles 2, no. 1, para. a), 5, 6, no. 1, and 11, no. 1, of the RJAT (as amended by article 228 of Law no. 66-B/2012, of 31 December).

  6. Pursuant to article 17, no. 1 of the RJAT, the TCA was notified on 7 March 2014, as the respondent party, to submit a response, under the terms and for the purposes of the aforementioned article. The TCA submitted its response on 8 April 2014, attaching the administrative file, arguing for the termination of the proceedings as to the part revoked of the assessment acts, by recognition of the existence of an expiry of the right to assess relating to the month of August 2009 (pursuant to article 277, para. e), of the Code of Civil Procedure, ex vi article 29, no. 1, para. e), of the RJAT) and, as to the remainder, arguing, in summary, the total lack of merit of the Claimant's request. The Claimant requested oral arguments, but the Tribunal, in Orders of 18 and 21 April 2014, determined that it did not see the necessity for such arguments, dispensing, therefore, with the holding of the meeting provided for in article 18 of the RJAT, which was replaced by the submission, by the parties, of written arguments.

  7. The Claimant requested oral arguments, but the Tribunal, in Orders of 18 and 21 April 2014, determined that it did not see the necessity for such arguments, dispensing, therefore, with the holding of the meeting provided for in article 18 of the RJAT, which was replaced by the submission, by the parties, of written arguments.

  8. The written arguments were submitted on 5 May 2014 by the Claimant and on 13 May 2014 by the Respondent.

  9. The date of 31 July 2014 was set for the rendering of the arbitral decision.

  10. The proceedings do not suffer from nullities and no prior or subsequent issues were raised that prevent the consideration of the merits of the case, showing that the conditions are met for a final decision to be rendered.

  11. The Respondent proceeded with the appointment of its Representatives in the case and the Claimant attached a power of attorney with ratification of the proceedings, the Parties being thus duly represented.

  12. The Parties have legal personality and capacity and have standing, pursuant to articles 4 and 10, no. 2, of the RJAT and article 1 of Order no. 112-A/2011 of 22 March.

II - GROUNDS: FACTUAL MATTER

II.A. Facts Considered to be Proven

a) A... held, at the date of the relevant facts, the totality of the capital stock of B...

b) On 9 December 2002 a contract-promise of purchase and sale of 10,000,000 shares representing the capital stock of the Claimant was celebrated between A... and B..., and respective supplements.

c) Notwithstanding the promised contract could be celebrated until 31 December 2003, the total price of the shares (€277,230,000.00) was paid at the moment of the celebration of the contract-promise, with payment of the value of the supplements being deferred for the moment of the celebration of the promised contract.

d) It was agreed that breach of the contract-promise would entail, beyond the restitution of the price paid, the payment of an additional "immobilization commission", calculated as interest.

e) In successive amendments to the contract-promise it was agreed to defer the deadline for celebration of the promised contract and, in one of the amendments, its object was reduced (from 10,000,000 to 8,500,000 shares, which involved the immediate restitution, by A... to B..., of €41,584,500.00).

f) These deferrals extended until 2009, and in each year determined the payment, by A... to B..., of the "immobilization commission", now calculated on the remaining €235,645,500.00 of the value of the promised contract.

g) On 31 October 2009 B... was incorporated, by merger, into the company now the Claimant.

h) The definitive transfer of shares representing the capital stock of the Claimant, which would occur by virtue of the promised contract between A... and B..., could no longer take place, since the promisee/acquirer was now the Claimant itself, this being a matter of acquisition of own shares, prohibited by law.

i) A... did not pay B... the "immobilization commission" corresponding to the months of January to October 2009, until the moment of the incorporation by merger of B... into the company now the Claimant - and this notwithstanding the failure to return, in that same period, the aforementioned remaining €235,645,500.00 still due by the first to the second party to the contract-promise.

j) Already during the pendency of the present proceedings, the TCA proceeded to partially revoke the act of assessment of SD and the respective assessment of compensatory interest, all relating to August 2009, in the amount of €112,461.13, with the amount of €220,354.48 remaining.

II.B. Facts Considered not to be Proven

There are no facts not proven with interest for the decision of the case.

II.C. Grounds for the Factual Matter Proven

a) The facts given as proven result from the matter proven by documents in the case, whose authenticity and correspondence to reality were not questioned.

b) Given that it was the Claimant itself who asserted that "the discussion centers only on questions of law" and denied that there existed "any divergence (at least explicit) between the Claimant and the Tax Authority about the factual matters relevant to the proper decision of the present challenge" (article 6 of the Initial Request, hereinafter "I.R."), an understanding which the Respondent equally adopted (articles 118 to 120 of the Response of the Respondent, hereinafter "Response TCA"), the Tribunal decided to dispense with the production of testimonial evidence, requested by the Claimant, as it was not apparent that matters could be clarified with such evidence, which did not already result from the documentary evidence.

c) In the arguments presented on 5 May 2014 by the Claimant (hereinafter, "Arguments of the Claimant"), reference is made that the testimonial evidence would concern "the intent underlying the celebration of the contract-promise" and would concern "accounting", sustaining that such testimonial evidence would be "essential to the discovery of material truth" (points 1 to 3 of the Arguments of the Claimant).

d) However, neither questions of accounting nor questions of intent underlying the celebration of the contract-promise appear to be controversial - as is confirmed by the Respondent itself (point 6 of the Arguments of the Respondent, hereinafter "Arguments of the TCA") - the controversy being concentrated exclusively on questions of law and on legal arguments, reported, of course, to the plane of material truth of the facts.

III - GROUNDS: LEGAL MATTER

III.A. Position of the Claimant

a) The Claimant argues that the assessment act is illegal, by the non-verification of the fact upon which the SD would fall, namely the use of credit by A..., allegedly granted by B... during the reference period, and this for three reasons:

  1. A payment of an advanced price does not convert into "use of credit" for the purposes of the application of item 17.1 of the General Table of SD (hereinafter, "GTSD");

  2. Nor was any anti-abuse provision invoked that would allow such conversion between legal figures:

  3. If there were "use of credit", it would have occurred as early as the end of 2003, with the right to assess thus being time-barred (articles 39 et seq. of the I.R.).

b) The Claimant rejects that there was any "tax intent" underlying the contractual design established between A... and B... because, it alleges, it would be sufficient, for the purposes of exemption from SD, that it celebrate "treasury management contracts" of validity less than one year, with return of the loaned capital at the end of the year and contraction of a new loan on the following day (article 44 of the I.R.).

c) The Claimant argues that there is not an essential element of the credit granting contract, which is the promise of restitution of the loaned capital, something that was not stipulated in the contract-promise celebrated between A... and B..., having instead been stipulated the delivery of shares upon payment of the respective price (articles 60 et seq. of the I.R.). Thus, if there had been a financing, it does not fall within the specific category of credit granting, which requires the restitutive intent that presides over the entire conceptual family of the loan, in which "credit granting" is integrated (articles 69-73 of the I.R.).

d) On the other hand, the Claimant rejects any allegation that there existed "disguised" financing, if such allegation were to come initially unaccompanied by the invocation of the anti-abuse rule provided for in article 38, no. 2 of the General Tax Law (LGT) (and in article 63 of the Code of Tax Procedure and Process - CTPP). It further alleges that there was never breach of the contract-promise, but rather consensual extensions and, in the end, an extinction by objective impossibility (articles 74 et seq. of the I.R., points 25 et seq. of the Arguments of the Claimant).

e) In Arguments, the Claimant argues that the Respondent incurs in a confusion of planes in referring indiscriminately to the moment of the celebration of the contract-promise, a moment at which the intent of the parties could indeed have configured an abuse, with the moment at which, with the passage of time, the bond allegedly became distorted (apparently as a loan) before being extinguished, a moment at which it would be inappropriate to invoke the existence of abuse (points 36 to 54, conclusions H to J of the Arguments of the Claimant).

f) The Claimant argues that the "immobilization commission" was paid annually until the end of 2008, it being at the end of each year that the extension of the contract-promise occurred, and not before, for which reason the "immobilization commission" was not paid in 2009, because before the end of the year the contract was extinguished (articles 95 et seq. of the I.R.).

g) It further argues that the deadline of the operation in question was clearly established in each extension, including in the amendment of the end of 2008 which determined a new deadline for 31 December 2009, for which reason it believes inapplicable the second part of para. g) of no. 1 of article 5 of the Code of SD, and that, as a result, it believes the right to assess SD regarding the operations in question is time-barred, to which item 17.1.2 and not item 17.1.4 of the GTSD would be applicable (articles 93-94, and 102 et seq. of the I.R.).

III.B. Position of the Respondent

a) By challenge, the Respondent argues that, since the contract-promise did not achieve its effects, in practice the promissor A... benefited from credit granted by the promisee B... in the reference period.

b) The Respondent alleges that not only was the obligation of restitution always stipulated, but it was partially activated as a result of the reduction in the number of shares subject to the contract (articles 38-45 of the Response TCA).

c) The Respondent denies that the absence of "tax intent" of the parties in the contract is proven by the existence of alternatives available to the parties in the contract-promise, arguing that such legal alternatives did not exist, by illegitimacy (articles 48-60 of the Response TCA, points 7 and 8 of the Arguments of the TCA).

d) The Respondent alleges that the enumeration of Item 17.1 of the GTSD is merely exemplary, in that it encompasses credit concessions for any reason, seeking the economic substance without adhering to an underlying contractual typicality, and it thus falls to conclude that credit was granted on account of the non-celebration of the promised contract and the non-restitution of the credited amount, in breach of what was stipulated in the contract-promise and in violation of what is legally provided regarding the consequences of objective impossibility of performance (articles 61-82 of the Response TCA, points 24 to 30 of the Arguments of the TCA).

e) Given the understanding that it adopts regarding Item 17.1 of the GTSD, and also taking into account the principle of the prevalence of substance over form that presided over the 2000 Reform of the Code of SD, the Respondent rejects the argument that it would have to resort to the general anti-abuse rule to reach the economic essence of what was stipulated in the contract-promise (articles 83-98 of the Response TCA, points 9 to 15, and 51 et seq. of the Arguments of the TCA).

f) The Respondent further argues that the application of Item 17.1.4 of the GTSD is not illegitimate, contrary to what the Claimant alleges, but rather results from the verification that the extensions themselves made increasingly uncertain the deadline for the celebration of the promised contract and for the production of the corresponding effects, for which reason it was necessary to resort to monthly averages to determine the value of the credit made available (articles 99-110 of the Response TCA, points 36 to 42 of the Arguments of the TCA).

g) Finally, the Respondent does not fail to point to the circumstance that in the various contractual instruments deadlines were established with provision for the benefit of the deadline to favor the debtor(s), allowing them performance before the date of maturity, to reinforce the idea that the "immobilization commission" would be due at any moment in which such performance occurred or ceased to occur definitely, without dependence on any annual deadline (articles 111-114 of the Response TCA).

III.C. Issues to be Decided

III.C.1. On the Partial Revocation of the Challenged Act

As has already been noted, the Claimant requests in the present proceedings that the illegality be declared of the SD assessment issued by the TCA on 29 August 2013, with number 2013..., relating to the tax period of August, September and October 2009, in the amount of €289,058.48, to which are added the corresponding assessments of compensatory interest in the total amount of €43,757.13, all totaling €332,815.61.

However, already during the pendency of the present proceedings, the TCA proceeded to partially revoke the act of assessment of SD and the respective assessment of compensatory interest relating to August 2009, in the total amount of €112,461.13, with the amount of €220,354.48 remaining.

Consequently, in its Response the TCA requests that, by virtue of the aforementioned partial revocation of the challenged assessment act, termination of the proceedings be declared as to the part revoked of the act and, also, that the Tribunal decree the nonexistence of payment of costs in accordance with articles 536 of the Code of Civil Procedure (CCP) and 3-A of the Regulation of Costs in Tax Arbitration Proceedings.

Now, given that the partial revocation of the challenged assessment act was effected in accordance with the provision of article 13 of the RJAT, it is indubitable that the proceedings were terminated as to the part revoked of the act, there now being to decide the request as to the part of the act that remains in the legal order. With respect to the consequences regarding costs, they will be considered, finally, when a decision is made on such matter.

III.C.2. On the Subsumption of the Facts to Item 17.1 of the GTSD
III.C.2.1.

The central question that arises in the present proceedings is whether the facts given as proven configure a situation of credit granting for purposes of Item 17.1 of the GTSD.

Let us see, in light of the elements in the case, it is beyond doubt that the TCA did not base the challenged assessment on the application of the general anti-abuse clause provided for in article 38, no. 2 of the General Tax Law (LGT), approved by Decree-Law no. 298/96 of 12 December, which states as follows: "Acts or legal transactions essentially or mainly aimed, by artificial or fraudulent means and by abuse of legal forms, at the reduction, elimination or temporal deferral of taxes that would be due as a result of facts, acts or legal transactions of identical economic purpose, or at the obtaining of tax advantages that would not be achieved, in whole or in part, without the use of such means, are ineffective in the tax sphere, taxation being then effected in accordance with the rules applicable in their absence and the aforementioned tax advantages not being produced."

In fact, as refers both in its Response (cf. articles 83 to 98) and in its arguments (articles 32 to 58), the TCA considers that the facts in question constitute a situation of subjection to stamp duty by way of the combined application of article 1, no. 1 of the respective code and of Item 17.1 of the GTSD, for which reason resort to the figure of the general anti-abuse clause is not justified.

Accordingly, the discussion of the presuppositions of the application of the aforementioned clause is of no interest to the case at hand for the simple reason that it was not applied and, naturally, courts do not consider academic hypotheses.

On the other hand, the question of the expiry of the right to assess, in the part in which the assessment act was not revoked, which the Claimant invokes, will only need to be considered if the answer to the central question is affirmative, that is, if it is concluded that the facts in question effectively configure a situation of credit granting.

III.C.2.2.

Article 1, no. 1 of the Code of Stamp Duty (SD) states that "stamp duty applies to all acts, contracts, documents, titles, papers and other facts or legal situations provided for in the General Table, including gratuitous transfers of property".

In turn, under the heading "Financial Operations", Item 17.1 of the GTSD states as follows: "For the use of credit, in the form of funds, goods and other values, by virtue of the grant of credit for any reason, except in the cases referred to in item 17.2, including the assignment of credit, factoring and treasury operations when they involve any type of financing to the assignee, adherent or debtor, credit granting always being considered as a new granting of credit for the extension of the contract term - on the respective value, according to the term".

The tax rates are fixed by nos. 17.1.1, 17.1.2 and 17.1.3 according to the terms of the credit granting, and no. 17.1.4 fixes the rate applicable in cases where the term of use is not determined or determinable.

It thus becomes clear from the wording of Item 17.1 that the legislator intended to tax the use of credit resulting from the grant of credit for any reason. That is, the tax applies, in this way, to the uses of credit and not to the celebration of the contracts that give rise to it. It begins to apply on the date of the use of the credit and to the extent of its use. The tax fact is not, therefore, contrary to what occurred before the 2000 reform, the celebration of the contract but rather the production of its effects, that is, the use of the credit granted.

There are no doubts, either, that the enumeration contained in Item 17.1 is merely exemplary: the use of credit is taxed by virtue of its grant for any reason.

III.C.2.3.

Credit granting consists of the exchange of a present good for a future good, frequently having as consideration a remuneration. In that generic sense, in modern society, examples of credit relationships and situations are almost endless.

Often it is the legislator itself who comes to delimit, for certain effects, what should be understood as credit granting. Thus, for example, article 9, no. 2 of the General Framework of Credit Institutions and Financial Companies (GFCIF), approved by Decree-Law no. 298/92, of 31 December, excludes various realities from the concept of credit granting for the purpose of the application of its provisions.

Now, the scope of the expression "credit granting for any reason" contained in Item 17.1 of the GTSD cannot be separated, from the outset, from the very heading "Financial Operations". Such reference does not encompass, indeed, every kind of materially credit situation or that has the equivalent effect of a credit granting.

For the tax fact provided for in Item 17.1 of the GTSD to be verified, it is indispensable that there exist an operation of credit granting. Now, an essential element of credit granting is the existence of a duty of future restitution of the credited amount. Without that element we are not dealing with a credit operation, in particular for purposes of the provision in Item 17.1 of the GTSD. Consequently, credit situations resulting, for example, from the mere deferral in time of the payment of goods or services are not at all encompassed by the aforementioned rule, that is, they do not meet the presuppositions of the objective scope of the tax.

In that sense pronounce themselves, for example, J. Silvério Mateus and L. Corvelo de Freitas when they write that the tax fact typified in the item of the GTSD now in question is "the use of credit based on a legal transaction of credit granting, whose essential elements translate into the provision of a present good against the promise of future restitution. It is not, therefore, encompassed by the scope of the tax every financing but only that which, gathering the aforementioned characteristics, can be qualified as credit granting"'.

And in the Arbitral Decision of CAAD rendered in the proceedings no. 107/2013-T, although in a factual framework completely distinct - it was then a matter of considering in light of Item 17.1 of the GTSD a situation of a gratuitous loan contract - the orientation that is sustained here is also accepted, as results unequivocally from the respective grounds and, also, from the doctrine on which it relies.

In truth, although in that specific case the Tribunal rejected the claim of the Claimant, for reasons which for what now concerns us do not matter, there it is written as follows:

"In fact, regardless of the purpose aimed at for the funds transferred, there occurred a use of credit by part of the customers of the Claimant (...) based on a legal transaction typical of credit granting (loan contract, under the terms provided for in articles 1142 and following of the Civil Code) which is not equivalent to another type of situations that fall outside the scope of the rule and that consist of the mere deferral in time of the payment of goods or services granted by the respective supplier or service provider (italics ours).

In fact, in the case under consideration there occurred an effective transfer of funds, it not being a matter of the mere grant of an extended payment period by the Claimant in its capacity as service provider. Beyond that, there was a financial expenditure by the Claimant which had to resort to its own and others' (bank) funds to meet the obligations assumed by it in the loan contracts celebrated with the customers" (italics ours).

"This loan of funds (...) does not cease to configure an autonomous credit granting from the commercial relationship with the customers, capable of meeting the presuppositions of the fact that generates taxation in Stamp Duty, which is not prejudiced by the fact that there exists a connection with the activity of the Claimant and with that of its customers".

In the case under discussion in these proceedings we do not have, it is certain - a credit situation resulting from deferred payments, hypothesis to which the aforementioned Arbitral Decision alludes, but, on the contrary, a situation in which there is verified an anticipated payment. However, the concrete factual circumstance is irrelevant to the fundamental principle that one wishes to put into evidence: for the presuppositions of taxation in stamp duty via Item 17.1 of the GTSD to be shown to be met it is necessary that there exist a use of credit resulting from an operation of credit granting, in no way being sufficient for that purpose to show verified some situation that, economically, may have effects equivalent to that of a credit granting.

III.C.2.4.

What has been established above is the factual matter given as proven. And it is on the basis of it that the TCA intends to base a taxation in stamp duty via item 17.1 of the GTSD. Recalling the facts, we can summarize what is at issue to the following essential data:

  • A... and B... celebrated a contract-promise of purchase and sale of 10,000,000 shares representing the capital stock of the Claimant, and respective supplements.

  • Notwithstanding the promised contract could be celebrated until 31 December 2003, the total price of the shares (€277,230,000.00) was paid at the moment of the celebration of the contract-promise, with payment of the value of the supplements being deferred for the moment of the celebration of the promised contract.

  • It was agreed that breach of the contract-promise would entail, beyond the restitution of the price paid, the payment of an additional "immobilization commission", calculated as interest.

  • In successive amendments to the contract-promise it was agreed to defer the deadline for celebration of the promised contract and, in one of the amendments, its object was reduced (from 10,000,000 to 8,500,000 shares, which involved the immediate restitution, by A... to B..., of €41,584,500.00).

  • These deferrals extended until 2009, and in each year determined the payment, by A... to B..., of the "immobilization commission", now calculated on the remaining €235,645,500.00 of the value of the promised contract.

  • On 31 October 2009 B... was incorporated, by merger, into the company now the Claimant.

  • The definitive transfer of shares representing the capital stock of the Claimant, which would occur by virtue of the promised contract between A... and B..., could no longer take place, since the promisee/acquirer was now the Claimant itself, and, therefore, the object of the promised contract would imply the acquisition of own shares, prohibited by law.

That is, in summary, we have a contract-promise of purchase and sale of shares whose price was paid in advance, whose object was subsequently reduced, and in which, through amendments to the contract, the deadline initially set for the celebration of the promised contract was extended, which, moreover, would never come to be realized by virtue of the extinction of the promissor buyer by incorporation into the promissor seller.

We are thus in the presence of operations and legal transactions with a legal and contractual framework that is very concrete and quite distinct from what would be minimally required to configure such acts as revelatory of a legal operation of credit granting.

Before such factuality, whatever the economic effects resulting from it may have been, it is the understanding of the Tribunal that the same cannot be configured as corresponding to a "use of credit by virtue of the grant of credit", the tax fact not being verified that could base taxation in stamp duty under Item 17.1 of the GTSD.

It is true that in the situation of these proceedings there are less usual aspects, in particular the advance payment of the price and the non-realization of the promised contract nor the return of the price. But all of them are anchored in law. The advance payment is a stipulation that is understood in the principle of contractual autonomy and freedom of stipulation. The promised contract did not come to be realized because the positions of promissor-seller and promissor-buyer came, at a given moment, to coincide in the same legal entity by force of the merger, by incorporation, of the second into the first, thus coming to be confused in the same entity the rights and duties inherent to those two legal positions.

It is a fact that, as the Respondent alleges, article 36, no. 4 of the LGT states that "the qualification of the legal transaction effected by the parties, even in an authentic document, does not bind the tax administration". But the scope of such provision is much more restricted than the TCA intends and, in any case, in no way does it allow, for the reasons already pointed out, to base the qualification of the factuality described as constituting a "use of credit by virtue of the grant of credit", as would always be necessary for there to be taxation under Item 17.1 of the GTSD.

Independently of the relevance of its application to the specific case of these proceedings, that potential would exist, in the abstract, in the resort to the figure of the general anti-abuse clause, provided for in no. 2 of article 38 of the LGT. But, as has already been emphasized, it was not the subject of application by the TCA, for which reason nothing is competent to be considered regarding that matter.

III.C.3. On the Question of the Expiry of the Right to Assess

In light of what has been set out above, the necessity of consideration of the question of the expiry of the right to assess invoked by the Claimant is prejudiced, priority having been given to the knowledge of the vices whose merit determines a more stable and effective protection of the interests of the Claimant, in compliance with the provision of para. a) of no. 2 of article 124 of the CTPP.

IV. DECISION

In light of all the foregoing, it is decided:

a) To declare the partial termination of the proceedings, by virtue of the revocation by the TCA of the challenged assessment act, in the part relating to August 2009, in the amount of €97,400.14, and the revocation of the respective assessment of compensatory interest no. 2013... in the amount of €15,060.99, all totaling €112,461.13, in accordance with the provision of article 277, para. c), of the CCP, applicable ex vi article 29, no. 1, para. e), of the RJAT.

b) To adjudge well-founded, by proven, the request and, in consequence, to annul, on the ground of breach of law, the assessment of Stamp Duty no. 2013..., of 29 August 2013, relating to September and October 2009, in the amount of €191,658.34, and the assessments of the corresponding compensatory interest, in the amount of €28,696.14, totaling the overall amount of €220,354.48.

V. VALUE OF THE CASE

The value of the case is fixed at €332,815.61, in accordance with the provision of article 97-A of the CTPP, applicable ex vi article 29, no. 1, para. a), of the RJAT and article 3, no. 2, of the Regulation of Costs in Tax Arbitration Proceedings (RCTAP).

VI. COSTS

Costs at the charge of the Respondent, in the amount of €5,814.00, in accordance with Table I of the RCTAP, and in compliance with the provision of articles 12, no. 2, and 22, no. 4, both of the RJAT, given that the request was adjudged well-founded and the partial revocation of the challenged act, being an act that is attributable to it, does not confer, in accordance with the law, any right to reduction.

Lisbon, 31 July 2014

The Arbitrators

Jorge Lino Alves de Sousa (President)

Fernando Borges de Araújo

Luís Máximo dos Santos

The writing of the Decision was governed by the orthography prior to the Orthographic Agreement of 1990.

Frequently Asked Questions

Automatically Created

What is the Stamp Tax (Imposto do Selo) applicable to credit granting operations under Verba 17.1 of the General Stamp Tax Table in Portugal?
Stamp Tax (Imposto do Selo) under Verba 17.1 of the General Stamp Tax Table (Tabela Geral do Imposto do Selo) applies to credit granting operations in Portugal. This provision taxes the act of granting credit, whether through loans, financing arrangements, or other operations that constitute making funds available to third parties. The tax is calculated on the credit amount granted and the applicable rate depends on the specific characteristics and duration of the credit operation. Verba 17.1 encompasses various forms of credit provision, including traditional bank loans, commercial credit, and potentially other financial arrangements where one party provides capital or deferred payment terms to another, subject to interpretation of whether the specific operation constitutes 'credit granting' under Portuguese tax law.
Can the right to issue a Stamp Tax assessment expire after 4 years under Article 45 of the Portuguese General Tax Law (LGT)?
Yes, under Article 45 of the Portuguese General Tax Law (Lei Geral Tributária - LGT), the Tax Authority's right to issue Stamp Tax assessments expires after 4 years from the end of the year in which the taxable event occurred, unless the limitation period is interrupted or suspended. This means for a taxable event occurring in August 2009, the assessment right would normally expire on December 31, 2013. If the Tax Authority issues an assessment after this deadline without valid interruption of the limitation period, the taxpayer can invoke expiry (caducidade) of the assessment right, leading to annulment of the tax assessment for being issued outside the legally permitted timeframe. The TCA recognized this principle in the present case by partially revoking the August 2009 assessment during the arbitration proceedings.
How does the CAAD arbitral tribunal handle disputes over Stamp Tax liquidation by the Portuguese Tax Authority (AT)?
The CAAD (Centro de Arbitragem Administrativa) arbitral tribunal handles Stamp Tax disputes through arbitration proceedings governed by Decree-Law 10/2011 (RJAT - Legal Framework for Arbitration in Tax Matters). Taxpayers can request constitution of an arbitral tribunal to challenge Stamp Tax liquidations issued by the Portuguese Tax Authority (Autoridade Tributária e Aduaneira - AT). The tribunal verifies its material competence, notifies the AT to submit a response with the administrative file, and decides based on written submissions and evidence. The tribunal can dispense with oral hearings if parties agree the dispute involves only legal questions. Proceedings follow principles similar to judicial tax litigation but offer faster resolution. The tribunal examines both substantive legality of the tax assessment and procedural compliance, including limitation periods, and can annul illegal assessments in whole or in part.
What are the legal grounds for declaring the illegality of a Stamp Tax assessment in Portuguese tax arbitration proceedings?
Legal grounds for declaring illegality of a Stamp Tax assessment in Portuguese tax arbitration include: (1) non-verification of the taxable event - the factual situation does not meet the legal requirements for Stamp Tax liability under the applicable provision of the General Stamp Tax Table; (2) incorrect legal qualification of the operation - the Tax Authority mischaracterized the transaction; (3) procedural defects including expiry of the assessment right under Article 45 LGT when the 4-year limitation period expired; (4) calculation errors in determining the tax base or applicable rate; (5) violation of legal principles governing taxation such as legality, tax capacity, or prohibition of analogical interpretation of tax incidence norms; and (6) substantive errors in applying Stamp Tax legislation to the specific facts. The claimant bears the burden of proving illegality unless invoking expiry or other formal defects.
What procedural steps are involved in challenging a Stamp Tax liquidation before the CAAD under Decree-Law 10/2011 (RJAT)?
The procedural steps for challenging a Stamp Tax liquidation before CAAD under Decree-Law 10/2011 (RJAT) include: (1) submitting a request for constitution of an arbitral tribunal within the legal deadline, identifying the contested act and grounds for challenge; (2) payment of the initial arbitration fee; (3) appointment of arbitrators and constitution of the tribunal (collective or singular); (4) notification of the Tax Authority to submit a response with the administrative file (typically 30 days); (5) exchange of written submissions including reply and rejoinder if permitted; (6) production of evidence (documentary, testimonial, or expert) unless dispensed with; (7) optional oral hearing under Article 18 RJAT, which may be replaced by written arguments if the tribunal deems it unnecessary; (8) submission of final written arguments by both parties; and (9) rendering of the arbitral decision within the statutory deadline, which has binding effect equivalent to a court judgment and is subject to limited appeal grounds.