Process: 151/2015-T

Date: November 10, 2015

Tax Type: Selo

Source: Original CAAD Decision

Summary

This arbitration case (151/2015-T) addresses the controversial application of Stamp Tax under item 28.1 of the General Table of Stamp Duty (TGIS) to vertical property buildings in Portugal. The dispute involved €17,991.80 in stamp duty assessed for 2012 on a building owned by a company in Lisbon comprising multiple floors with independent economic use. The central legal question was whether the Tax Authority could aggregate the patrimonial values of all floors within a single cadastral article to trigger stamp tax liability, or whether each independently used unit should be assessed separately. The Claimant challenged the assessment on three grounds: (1) procedural violation for failure to notify before liquidation, violating the right to prior hearing; (2) substantive error in legal and factual premises, breaching principles of legality, justice, equality, and fiscal proportionality; and (3) erroneous interpretation of item 28.1 TGIS, arguing that stamp duty should apply based on the Taxable Patrimonial Value (VPT) of each independent property unit, not the sum of areas within one cadastral registration. The Tax Authority defended that vertical property, despite containing multiple floors with independent economic use, remains a single legal unit distinct from horizontal property regime (condominium), where autonomous fractions exist. The arbitral tribunal confirmed its jurisdiction over refund claims, including amounts paid as tax, interest, and enforcement costs, rejecting the Tax Authority's incompetence exception. The tribunal held that under Article 24 RJAT and Article 100 of the General Tax Law, successful annulment requires complete restitution to restore the taxpayer's position as if the unlawful assessment never occurred. This case highlights the critical distinction between vertical property ownership and horizontal property (condominium) for stamp tax purposes, with significant implications for property owners holding buildings with multiple independent units under single cadastral registration.

Full Decision

ARBITRAL DECISION

CAAD: Tax Arbitration

Case no. 151/2015-T

Subject: Stamp Duty, item 28.1 of the GDIT

Claimant: A…, S.A., (hereinafter "Claimant")

Respondent: TAX AND CUSTOMS AUTHORITY (hereinafter "TA" and "Respondent")

  1. Report

A…, S.A., legal entity no. …, with headquarters at Rua …, no. …, …, … Lisbon, hereinafter referred to as the Claimant, submitted to the Administrative Arbitration Centre (CAAD) a request for constitution of an arbitral tribunal with a view to annulling the tax act of assessment of item no. 28.1 of the General Table of Stamp Duty (GDIT) for the year 2012, in the total amount of € 17,991.80, which is broken down into collection notes relating to the 1st, 2nd and 3rd instalment.

The Claimant grounds the illegality and consequent annulment of the tax assessment on the following defects:

a) Breach of essential formality by omission of notification to the Claimant to state its position before the notification of the Assessment;

b) Error as to the legal and factual premises, whereby the Tax and Customs Authority violated, through erroneous interpretation and application of this rule, the principles of legality, justice, equality, fiscal proportionality and the prevalence of material truth over legal-formal reality, being illegal the six tax acts of assessment of Stamp Duty relating to the year 2012, which concern 9 of the 12 floors of the building property owned by the Claimant in question; these 6 tax acts of assessment of Stamp Duty (item 28.1 of the GDIT) are affected by a defect of violation of law, due to error as to the premises, and should therefore be annulled pursuant to Article 135 of the Administrative Procedure Code;

c) Erroneous interpretation by the TA of item 28.1 of the General Table of Stamp Duty (GDIT), insofar as the subjection to Stamp Duty (SD) is determined by the Taxable Patrimonial Value (TPV) of each of the properties and not by the sum of all areas of independent use of a single cadastral article;

Also petitioning for the refund of the Stamp Duty paid relating to the assessments of 2012 in question, as well as the payment of compensatory interest.

The Tax and Customs Authority, for its part, defended that there is no illegality whatsoever, since the unit of an urban property in vertical ownership composed of several floors or divisions is, nevertheless, not affected by the fact that all or part of those floors or divisions are susceptible to independent economic use. Such property remains a single one, and therefore its distinct parts are not legally equated to autonomous fractions under a horizontal ownership scheme, concluding on the dismissal of the annulment request formulated by the Claimant.

The sole arbitrator was designated and appointed on 23.04.2015.

In accordance with the provisions of Article 11 no. 1 letter c) of the RJAT, the sole arbitral tribunal was constituted on 11.05.2015.

Both the Claimant and the Respondent waived the holding of the first arbitral hearing and likewise the formulation of arguments.

  1. Sanitation

The sole arbitral tribunal is materially competent, in accordance with the provisions of Articles 2, no. 1, letter a) of the Legal Framework of Arbitration in Tax Matters.

The parties have legal personality and capacity and have standing in accordance with Article 4 and no. 2 of Article 10 of the Legal Framework of Arbitration in Tax Matters (RJAT), and Article 1 of Ordinance no. 112-A/2011, of 22 March.

The Respondent raised an exception of incompetence of this arbitral tribunal for the purpose of reviewing the question relating to the refund of the amount of € 936.17 that the Respondent paid as interest and costs within the scope of the tax enforcement proceedings instituted due to failure to pay voluntarily the stamp duty assessments in question, it being noted that, as the enforcement proceedings are concluded pursuant to Article 176, no. 1, letter a) of the CPPT, and as its review does not fall within the scope of arbitral jurisdiction by virtue of the provision of Article 2, no. 1, letter a) of the RJAT, this does not prevent the possibility of obtaining its payment through the extracontractual civil liability of the State, in accordance with Law 67/2007, of 31 December, with subsequent amendments.

The Claimant responded, arguing for the procedural admissibility of the refund request formulated ab initio.

Upon reviewing the exception invoked by the Respondent, it follows from the concatenation of the norms contained in Article 100 of the General Tax Law and Article 24 of the RJAT that the exception of incompetence of this tribunal to hear the request relating to the refund of interest and costs within the scope of the enforcement proceedings that originated from the non-voluntary payment of the tax act in question is not justified.

This is because, in accordance with Article 24 of the RJAT:

"1 – The arbitral decision on the merits of the claim that is not subject to appeal or challenge binds the tax administration from the end of the period provided for appeal or challenge, and the latter must, in the exact terms of the procedence of the arbitral decision in favour of the taxpayer and until the end of the period provided for the voluntary execution of the decisions of the tax courts, alternatively or cumulatively, as the case may be:

a) practise the tax act legally due in substitution of the act subject to the arbitral decision;

b) reestablish the situation that would exist if the tax act subject to the arbitral decision had not been practised, adopting the necessary acts and operations for that purpose;"

Now, in the hypothesis of eventual acceptance of the main request relating to the annulment of the tax act subject to these proceedings, such request could not fail to enclose, in order to reestablish the situation, the return of all amounts that the wrongful payment of the tax act had generated in the legal sphere of the taxpayer in the tax legal relationship, as follows from letter b) of no. 1 of Article 24 of the RJAT cited above.

Which in the case of these proceedings would be equivalent to proceeding with the refund of the amounts paid by the Claimant, for example, as title of tax, default interest and costs of the tax enforcement proceedings that originated from the tax act subject to these arbitral proceedings, and such refund obligation also follows from the provisions of Article 100 of the General Tax Law.

Since nothing within the scope of the arbitral tribunal's competence, stipulated in Article 2 of the RJAT, prevents or limits the review of such request, as the legislator precisely intends that the decision permits the reestablishment of the situation that would exist if the annulled tax act had not even taken place, for which reason, in accordance with the combined provisions of Article 24 of the RJAT and Article 100 of the General Tax Law, it cannot fail to be concluded that such refund request finds legal accommodation within the competence established in Article 2 of the RJAT already discussed.

The exception raised by the Respondent will therefore not merit acceptance, and therefore, taking into account what has been stated, the merits of such request should be reviewed, should the request for annulment of the tax act be successful.

The proceedings do not suffer from any nullity nor were any exceptions raised by the parties (not decided) that would preclude the review of the merits of the case, and therefore the conditions are met for the pronouncement of the arbitral decision.

  1. Factual Matters

3.1. Proven Facts:

Having analysed the documentary evidence produced and the positioning of the parties, the following facts are considered proven and of interest for the decision of the case:

  1. The Claimant is the owner for tax purposes of the urban property registered in the urban property register of the parish of ..., under article …, located at Rua …, … … Lisbon, municipality of Lisbon;

  2. The identified urban property is in a scheme of full/vertical ownership, with floors or divisions susceptible to independent use, as per the property record attached to the proceedings;

  3. With respect to the urban article supra identified and more specifically with regard to each of the floors or divisions susceptible to independent use, the Claimant was notified to proceed with the payment of the 3 instalments of the assessment of Stamp Duty of 2012, in the amount of € 17,991.80 relating to item 28.1 of the GDIT,

  4. The article … already identified is composed of 6 floors or divisions of independent use with residential allocation, with the following TPVs:

  • 1st - € 215,790.00
  • 2nd-3rd - € 399,310.00
  • 4th - € 215,790.00
  • 5th - € 215,790.00
  • 6th - € 215,790.00
  • 7th to 9th - € 536,710.00;

  1. The taxable patrimonial value of the urban article property … of the parish of ..., municipality of Lisbon only reaches or exceeds the amount of € 1,000,000.00 when the TPVs relating to the floors or divisions susceptible to independent use and with residential allocation that compose this same cadastral article are summed;

  2. No floor or division susceptible to independent use with residential allocation of the article … has a taxable patrimonial value equal to or greater than € 1,000,000.00;

  3. The collection notes indicated in 3 were notified to the Claimant;

  4. The Claimant paid in tax enforcement proceedings the full amounts contained in the collection notes referred to in 3;

  5. The Claimant filed a Gracious Claim, which after being subject to dismissal, gave rise to a Hierarchical Appeal, which was also dismissed by official letter of 12.12.2014;

  6. On 03.03.2015 the now Claimant submitted, via electronic platform, the request for constitution of an arbitral tribunal;

  7. The Claimant proceeded on 02.03.2015 to transfer the bank payment for the initial court fee;

No other facts with relevance to the decision of the case were proven.

3.2. Grounds for the Proven Factual Matters:

As regards the proven facts, the arbitrator's conviction was based on the documentary evidence attached to the proceedings, as well as on the acceptance by the parties of the factual matters brought to these proceedings.

  1. Legal Matters:

4.1. Object and Scope of the Present Proceedings

The request for arbitral pronouncement has as its object the declaration of illegality of the acts of assessment of Stamp Duty, under the provisions of item 28.1 of the GDIT, relating to the year 2012 embodied in the collection notes already supra identified, in the total amount of € 17,991.80, the review of the alleged violations of the Portuguese Constitution, as well as the existence of omission of notification for the purposes of prior hearing before the assessment.

Additionally, the Claimant petitions for the refund of the tax paid as allegedly wrongfully due and the payment of compensatory interest.

4.2. On the Alleged Illegality of the Stamp Duty Assessments, Item 28.1 of the GDIT

In summary, it is a question of examining whether the interpretation made by the Tax and Customs Authority of using, as a legal criterion for the purposes of subjection to Item 28.1 of the GDIT, the sum of the TPVs of all floors or divisions of independent use with residential allocation relating to the same cadastral article is consistent with the applicable legal framework.

In this regard, it is important to note that the tax act in question occurred during the validity of the wording given by Law no. 55-A/2012, of 29 October, and therefore the current wording given to it by Article 194 of Law no. 83-C/2013, of 31 December (State Budget for 2014) is not applicable here, since it only came into force on 1 January 2014.

And it is without losing sight of the legislative context of this innovation in the field of taxation in Stamp Duty that the question relating to the valuation of the breadth of the rule of incidence contained in Article 28.1 of the GDIT should also be reviewed.

Let us therefore see, first and foremost, the legal framework of the Stamp Duty assessment in question:

Law no. 55-A/2012, of 29 October, added item 28.1 to the General Table of Stamp Duty (GDIT), with the following wording:

"28 – Ownership, usufruct or right of superficies of urban properties whose taxable patrimonial value contained in the register, in accordance with the Code of the Municipal Tax on Real Estate (CMTRE), is equal to or greater than € 1,000,000 – on the taxable patrimonial value used for the purpose of IMRE:

28.1 – Per property with residential allocation – 1% (…);"

In turn, Article 67, no. 2 of the Stamp Duty Code, added by said Law, provides that "to the matters not regulated in the present code relating to item 28 of the General Table, the CMTRE applies subsidiarily."

The rule of incidence refers to urban properties, whose basic concept of property is based on the provisions of Article 2 of the CMTRE, the determination of the TPV being in accordance with the provisions of Article 38 and following of the same code.

Being that, in accordance with that legal provision:

"1 - For the purposes of this Code, property is any fraction of territory, including water, plantations, buildings and constructions of any kind incorporated therein or placed thereon, with a character of permanence, as long as it is part of the assets of an individual or legal person and, under normal circumstances, has economic value, as well as water, plantations, buildings or constructions, in the circumstances above, endowed with economic autonomy in relation to the land where they are located, although situated in a fraction of territory that constitutes an integral part of a different asset or does not have a patrimonial nature." (emphasis ours)

Being that Article 6 of the CMTRE clarifies that:

"1 - Urban properties are divided into:

a) Residential;

2 - Residential, commercial, industrial or service properties are buildings or constructions licensed for that purpose or, in the absence of a licence, that have as their normal destination each of these purposes." (emphasis ours)

The legislator's concept regarding properties and the subsequent division into urban is, for tax purposes, undoubtedly a criterion based on economic value and functional autonomy due to purpose.

That is, we are faced with a concept of material or substantive nature and not a concept of legal-formalistic demarcation, as the Respondent TA seems to intend.

Now, in the case of these proceedings the Respondent TA does not even call into question that the floors or divisions with independent use and with residential allocation relating to the cadastral articles do not have these same characteristics (functional autonomy and economic value) highlighted by the legislator, nor could it do so since it is the TA itself that deemed this information to be correct and caused it to be registered in the respective property records of the cadastral articles to which the floors or divisions susceptible to independent use relate.

Added to this, precisely because such floors or divisions have such characteristics of autonomy, both in functional terms and in terms of economic value, it is understandable that the legislator provided for the allocation of taxable patrimonial values for each of those floors, areas or divisions susceptible to independent use.

Which contradicts the TA's thesis that, given that it does not expressly state in no. 4 of Article 2 of the CMTRE the floors or divisions susceptible to independent use, the legislator intended to exclude such figure from the concept of property.

Therefore, as the residential allocation and also the functional autonomy and economic value are indisputable, moreover fiscally expressed in the TPV of those same independent areas or divisions, characteristics that are transposed in the respective property records of the cadastral article under the designation of floors or divisions susceptible to independent use, we cannot fail to conclude that in material and substantive terms those same floors or divisions are covered by the notion of property contained in no. 1 Article 2 of the CMTRE and of urban property contained in letter a) of no. 1 and no. 2 of Article 6, both of the CMTRE.

The introduction into the tax legal order of the present Item 28.1 of the GDIT had as a relevant and determining factor the incidence on urban properties with residential allocation, of high value, also usually designated as luxury housing, more precisely, of value equal to or greater than € 1,000,000.00, on which Stamp Duty began to be levied.

The legislator thus intended to introduce a principle of taxation on wealth displayed in the ownership, usufruct or right of superficies over any and all urban properties with residential allocation, the legislative criterion having applied such stamp duty to urban properties with residential allocation, whose TPV is equal to or greater than € 1,000,000.00.

This conclusion can be drawn from the analysis of the discussion of Bill no. 96/XII in the Portuguese Parliament, available for consultation in the Parliamentary Diary, Series I, no. 9/XII/2, of 11 October 2012.

The justification for the measure designated as "special tax on urban residential properties of the highest value" is based on the invocation of the principles of social equity and fiscal justice, calling to contribute more intensely those who hold properties of high value intended for housing, making the new special tax apply to "houses with value equal to or greater than 1 million euros."

In this way, it seems clear that the legislator understood that houses possessing certain characteristics assessed quantitatively through the TPV should determine a special contribution to ensure just distribution of the fiscal burden.

But no less evident, it reflects a line of legislative choice that intended to burden specifically urban properties with residential allocation of the high segment, premium or also commonly called luxury properties.

Note that, regardless of more or less subjective conceptions about the concept of luxury housing, high segment or expressions of equivalent meaning, it is certain that taxable patrimonial value has been, since the 2003 reform of taxation on heritage, measured on the basis of objective elements, such as area, location, level of comfort, among others.

Which means to affirm that and regardless of the ideological considerations that may be made about such political choice, the legislator had a concrete and defined objective: to subject to taxation in Stamp Duty urban properties with residential allocation of the highest value, which in practice translated into the fixing of a threshold measurable through the TPV: value equal to or greater than € 1,000,000.00.

Adding that the legislator ensured through various coefficients (minorative and majorative) the objectivity in the calculation of that same TPV.

Now, none of the floors or divisions susceptible to independent use here in question and on which the assessments subject of the present request for arbitral pronouncement fell, reach, individually, the value of € 1,000,000.00, being that each of those floors or independent divisions represents in the tax system a property per se, reason for which the TA made an error as to the premises in making subject to item 28.1 of the GDIT by disregarding that each of those same areas or divisions represents in accordance with the CMTRE Code and consequently in Stamp Duty, a property, reason for which those areas or divisions relating to the same cadastral article could not be object of summation for the calculation of the TPV of that cadastral article.

What the same means to affirm that having regard to the ratio legis just stated, the floors or divisions susceptible to independent use do not meet the premise relating to taxation within the rule of incidence provided in item 28.1 of the GDIT, reason for which, also in light of what has been stated, it cannot fail to be concluded that there is legal non-conformity of the interpretation of the TA in subjecting Item 28.1 of the GDIT to the floors or divisions susceptible to independent use, since the same do not individually reach the minimum quantitative criterion for such subjection.

Thus, with regard to the collection notes issued and notified to the Claimant and the assessments underlying them, a judgment of censure cannot fail to be made and, consequently, the annulment of the tax acts subject of the present proceedings determined.

4.3. Prejudiced Questions:

As the sole arbitral tribunal accepted the understanding of the inapplicability, as illegal, of item 28.1 of the GDIT to the case at hand, the review of the remaining defects alleged and from which the contested assessments may suffer is precluded as procedurally moot.

The review of the question of unconstitutionality is thus precluded, as is the existence of breach of essential formality due to lack of prior hearing.

4.4. On the Refund to the Claimant of the Stamp Duty Paid, Plus the Payment of Default Interest, Costs of the Enforcement Proceedings and Compensatory Interest:

In light of all that has been stated and concluded in section 4.2, a judgment of illegality that fell on the tax acts subject of the present arbitral pronouncement, it is important to note the request also formulated by the Claimant for the payment of compensatory interest.

In accordance with no. 1 of Article 43 of the GTL, "Compensatory interest is due when it is determined, in a gracious claim or judicial challenge, that there was error attributable to the services resulting from payment of the tax debt in an amount greater than that legally due."

Article 2 of the GTL further provides that "Error attributable to the services is also considered to exist in cases where, although the assessment is made on the basis of the taxpayer's statement, the latter has followed, in its preparation, the generic guidance of the tax administration, duly published."

Now, in the specific case, the legitimacy of the aforementioned request for payment of compensatory interest in favour of the Claimant is unequivocally demonstrated, since the assessments sub judice are shown to be affected by illegality, and therefore, in addition to the reversal of the amount paid as title of Stamp Duty, default interest and costs paid within the scope of the tax enforcement proceedings, compensatory interest is also due to the Claimant from the day following payment of the wrongful amount until the date of issuance of the respective credit note, in accordance with the provisions of Article 43 of the GTL and Article 61 of the CPPT.

It is, therefore, the Claimant creditor of the Respondent TA in the amount corresponding to the Stamp Duty wrongfully paid, in the amount of € 17,991.80 and also to refund to the Claimant the other amounts paid (default interest and costs) in the tax enforcement proceedings aimed at satisfying payment in enforcement of the debt originated by the assessment of Stamp Duty of 2012 in question, of all of the tax enforcement proceedings, with the further right of the Claimant to the respective compensatory interest due and to accrue to be calculated until the issuance of the respective credit note.

  1. DECISION:

In these terms and with the grounds stated above, this arbitral tribunal decides:

  1. To accept the request for declaration of illegality of the tax act of assessment of Stamp Duty of 2012 to which correspond the collection notes relating to the three instalments relating to the property identified by the urban cadastral article referred to in 1., due to defect of violation of law as to the norm contained in item 28.1 of the GDIT, due to error as to the legal premises and consequent refund by the Respondent of the amounts paid by the Claimant relating to the tax act which by the present decision is annulled (tax, default interest and costs);

  2. To accept the request for payment of compensatory interest by the Respondent to the Claimant from the date of wrongful payment until the date of issuance of the credit note, in accordance with the provisions of Article 43 of the GTL and Article 61 of the Code of Tax Procedure and Process;

  3. To condemn the Respondent to payment of costs, in accordance with Table I of the RCPTA, calculated according to the value of the case, at the charge of the Respondent - Articles 4-1 of the RCPTA and 6, no. 2, letter a) and 22, no. 4, of the RJAT;

Value of the Case: € 17,991.80 – Articles 97-A of the CPPT, 12 of the RJAT (DL 10/2011), 3-2 of the Rules of Costs in Tax Arbitration Proceedings (RCPAT).

Notify this arbitral decision to the parties and, in due course, file the proceedings.

Lisbon, 10 November 2015.

The Sole Arbitrator

(Luís Ricardo Farinha Sequeira)

Frequently Asked Questions

Automatically Created

How is Stamp Tax under Verba 28.1 of the TGIS applied to vertical property buildings with multiple independent units?
Stamp Tax under Verba 28.1 TGIS applies to real estate property rights with high patrimonial value. For vertical property buildings containing multiple floors or independent units, the crucial issue is whether each unit constitutes a separate taxable property or whether the entire building is treated as one unit. The Tax Authority's position is that vertical property remains a single legal and fiscal unit regardless of internal divisions with independent economic use. Unlike horizontal property (condominium regime), where autonomous fractions are legally distinct properties, vertical property maintains unity for cadastral and tax purposes. Therefore, the Tax Authority aggregates all areas within the single cadastral article to determine if the total VPT (Taxable Patrimonial Value) exceeds the threshold triggering stamp tax liability under item 28.1 TGIS.
Can the Tax Authority aggregate the patrimonial value (VPT) of all floors in a vertical property to trigger Stamp Tax liability?
The Tax Authority's practice has been to aggregate the VPT of all floors within a vertical property registered under a single cadastral article to determine stamp tax liability. However, taxpayers have challenged this aggregation method, arguing that item 28.1 TGIS should apply to each independently used unit based on its individual VPT rather than the collective value. The legal dispute centers on whether the cadastral registration unit (single article) or the economic reality (independent use) should govern taxation. The Tax Authority maintains that vertical property's legal structure as a single property justifies aggregation, distinguishing it from horizontal property where each fraction has separate cadastral registration and legal autonomy. This interpretation has significant fiscal impact, as aggregation can push properties over the VPT threshold that individual units would not reach separately.
What is the legal distinction between vertical property and horizontal property for Stamp Tax purposes under Portuguese law?
The fundamental legal distinction lies in the ownership structure and legal autonomy of units. Horizontal property (propriedade horizontal) under the Portuguese Legal Regime of Horizontal Property creates autonomous fractions that are legally independent properties with separate cadastral registration, individual VPT assessment, and distinct ownership rights. Each fraction can be independently transferred, mortgaged, and taxed. Vertical property (propriedade vertical), conversely, remains a unified legal entity even when containing multiple floors or divisions with independent economic use. These divisions lack the legal autonomy of horizontal property fractions and share a single cadastral article. For Stamp Tax purposes under item 28.1 TGIS, this distinction is crucial: horizontal property fractions are individually assessed based on each fraction's VPT, while vertical property is assessed as a single unit with aggregated value, even if internal divisions function independently.
Is prior notification required before issuing a Stamp Tax liquidation on high-value properties under Verba 28.1 TGIS?
Portuguese tax law requires compliance with the right to prior hearing (direito de audição prévia) before final administrative decisions adversely affecting taxpayers, as established in administrative procedure law and the Portuguese Constitution. The Claimant argued that the Tax Authority violated essential formalities by failing to notify them before issuing the stamp tax liquidation, denying the opportunity to present their position. This procedural guarantee is particularly important for complex assessments involving interpretation of property classification and valuation aggregation. While the excerpt does not reveal the tribunal's final ruling on this procedural issue, such notification failures can constitute grounds for annulment independent of substantive merits. The right to prior hearing ensures taxpayers can contest factual premises and legal interpretations before assessment becomes definitive, especially in cases involving significant amounts and complex legal questions regarding vertical versus horizontal property classification.
Are taxpayers entitled to a refund and compensatory interest when Stamp Tax is unlawfully assessed on vertical property units?
When stamp tax is unlawfully assessed, Portuguese tax law provides comprehensive restitution rights. Article 100 of the General Tax Law establishes taxpayers' right to refund of unduly paid taxes plus compensatory interest. Article 24 of the Legal Regime of Tax Arbitration (RJAT) requires the Tax Administration, following successful arbitral decisions, to reestablish the situation as if the unlawful tax act never occurred. This includes refunding: (1) the principal tax amount wrongfully collected; (2) compensatory interest (juros indemnizatórios) calculated from payment date until refund; and (3) any costs incurred, including enforcement proceedings costs and default interest paid due to the unlawful assessment. The arbitral tribunal confirmed jurisdiction over these refund claims, rejecting the Tax Authority's argument that enforcement-related amounts fall outside arbitral competence. Complete restitution ensures taxpayers suffer no economic prejudice from unlawful administrative action, restoring their patrimonial position integrally.