Stamp Tax Verba 28.1 TGIS on Independent Housing Units: CAAD Arbitration 152/2015-T

CAAD – Tax Arbitration Centre

ARBITRAL PROCESS NO. 152/2015-T

Subject: Stamp Tax. Item 28.1 of the TGIS.

ARBITRAL DECISION

1. REPORT

A, a public limited company with registered office at …, n.º …, in Lisbon (area of the Lisbon Tax Office …), and with the Tax Identification Number ... (hereinafter referred to as the Claimant), comes, under the combined provisions of Articles 2.º, n.º 1, paragraph a), 3.º, n.º 1, 5.º, n.º 2, paragraph a), and 10.º, n.ºs 1, paragraph a), and 2, of Decree-Law n.º 10/2011, of 20 January, which approved the Legal Regime for Tax Arbitration ("RJAT"), to request the constitution of an Arbitral Tribunal, with the intervention of a sole arbitrator, against which the Tax and Customs Authority (AT) is the Respondent, with a view to the declaration of illegality and consequent annulment of the assessments of Stamp Tax (Item 28.1, of the TGIS) n.ºs 2013 ...6, in the amount of € 670.10, 2013 ...9, in the amount of € 754.80, 2013 ...2, in the amount of € 670.10, 2013 ...5, in the amount of € 754.80, 2013 ...8, in the amount of € 670.10, 2013 ...1, in the amount of € 754.80, 2013 ...4, in the amount of € 670.10, 2013 ...7, in the amount of € 754.80, 2013 ...0, in the amount of € 670.10, 2013 ...3, in the amount of € 754.80, 2013 ...6, in the amount of € 670.10, 2013 ...9, in the amount of € 754.80, 2013 ...2, in the amount of € 670.10, 2013 ...5, in the amount of € 754.80, 2013 ...8, in the amount of € 670.10, 2013 ...1, in the amount of € 754.80, relating to the year 2012 and all issued on 22 March 2013, for payment in three annual instalments, in the total amount of € 11,399.20 (eleven thousand, three hundred and ninety-nine euros and twenty cents).

Cumulatively, the Claimant seeks a judgment against the Respondent for restitution of the amounts unduly paid on 7 May 2014, in the context of the tax enforcement proceedings n.º … and attachments (including costs and default interest, in the amount of € 691.10), as well as payment of compensatory interest at the legal rate, from the date of payment of the undue tax, until the date of its effective restitution.

The following are the grounds for the requests for annulment of the Stamp Tax assessments for the year 2012:

a. The sixteen tax acts assessing Stamp Tax (item 28.1, of the TGIS) are illegal, as they suffer from the defect of breach of law, due to erroneous interpretation and application of the rule of incidence;

b. The AT assessed Stamp Tax (ST) on the sixteen flats or units of independent use with residential purpose of the urban property of which it is owner, located at …, registered in the land register of the parish of ... under article ...;

c. The aforementioned assessments for the year 2012, at the rate of 1%, were based on the tax values of the sixteen flats or units of independent use with residential purpose, the sum of which totals € 1,139,920.00;

d. In the Claimant's understanding, these sixteen tax acts assessing Stamp Tax are illegal due to error in the factual and legal presuppositions, given that none of the flats or independent units of this property has a TPC higher than € 1,000,000.00, if considered individually;

e. The Claimant understands that the subjection to ST of item 28.1, of the TGIS, is determined by the combination of two facts: residential purpose and the TPC recorded in the land register equal to or greater than € 1,000,000.00;

f. That, in the case of urban properties not constituted in a horizontal ownership regime, composed of various flats or units with independent use and residential purpose, the subjection to ST is determined not by the total TPC of the property, but by the TPC attributed to each of its flats or units;

g. Indeed, the collection of IMI in the case of units covered by the recent rent update regime provided for in Law n.º 31/2012, of 14 August, is limited to the amount resulting from the capitalization of the annual rent by applying the factor 15, once the other presuppositions provided for in Article 15.º-N, of the transitional regime of the IMI Code, are met, including among which the treatment of rents by reference to the units individually considered;

h. Unlike the AT's understanding, in the taxation of properties there is no distinction based on the type of ownership – vertical or horizontal –, but only based on use – residential, commercial, services or other –, with the tax treatment always being carried out unit by unit, with or without autonomous nature;

i. The subjection to ST of urban properties with residential purpose resulted from the amendment to item 28, of the TGIS, by Article 4.º, of Law n.º 55-A/2012, which entered into force on 30 October 2012;

j. From the transitional rules contained in its Article 6.º, it results that the taxable event is deemed to have occurred on 31 October 2012 and that the TPC to be used in the ST assessment corresponds to that resulting from the IMI Code rules, by reference to the year 2011;

k. The aforementioned Law did not proceed to qualify the concepts contained in the aforementioned item 28, in particular, the concept of "property with residential purpose"; however, Article 67.º, n.º 2, of the Stamp Tax Code, amended by the same Law, provides that "to matters not regulated in the present Code relating to item 28 of the General Table, the IMI Code applies subsidiarily";

l. The rule of incidence refers to urban properties (whose concept is contained in Article 2.º, of the IMI Code), with the TPC determined in accordance with Articles 38.º and following, of the same Code;

m. Article 6.º, n.º 1, of the IMI Code merely indicates the different types of urban properties, clarifying in its n.º 2 that "residential, commercial, industrial or service buildings or constructions are those licensed for such purpose or, in the absence of a license, that have as their normal destination one of these purposes";

n. From this it results that, in the view of the tax legislator, the situation of the property – in vertical or horizontal ownership – was not relevant, as no distinction is made between the taxation of one and the other;

o. Now, considering that the registration in the land register of properties in vertical ownership, composed of different parts, flats or units with independent use, in accordance with the IMI Code, follows the same registration rules as properties constituted in horizontal ownership, and the respective IMI, as well as the new ST, are assessed individually with respect to each of the parts, it offers no doubt that the legal criterion for defining the incidence of the new tax must be the same;

p. If the legal criterion requires the issuance of individualized assessments for the autonomous parts of properties in vertical ownership, there can only be an incidence of item 28.1, of the TGIS, if one of the parts, flats or units with independent use presented a TPC greater than € 1,000,000.00;

q. The AT cannot consider as the reference value for the incidence of item 28.1, of the TGIS, the total value of 16 of the 20 units of the urban property in question, when the final part of item 28, of the TGIS, establishes that ST is levied "on the tax value used for the purpose of IMI";

r. The criterion defined by the AT violates the principles of legality and tax equality, as well as the prevalence of material truth over legal-formal reality;

s. The AT's interpretation of the rule of incidence, starting from the taxation of the property as a whole, ends up taxing individually, since it divided the property into units of commercial purpose and residential purpose, to partially tax the residential part;

t. It is the Claimant's understanding that, in situations such as the present one, there is no place for the application of item 28.1, of the TGIS, not only because the nature of part commercial-part residential removes it, by virtue of the prohibition on analogy, but above all because defending its application to properties in vertical ownership, composed of units whose total TPC is equal to or greater than € 1,000,000.00, violates the principles of equality, of the prevalence of material truth over legal-formal reality and of tax capacity;

u. This property, like many others, has some old leases and item 28, of the TGIS, considered as a determining element of tax capacity urban properties with residential purpose, of luxury, on which a "special tax on urban properties of higher value" was then levied, on "properties valued at equal to or greater than 1 million euros" (as can be concluded from the analysis of Bill n.º 96/XII, in the Parliament);

v. Since the presuppositions on which the application of item 28, of the TGIS depends are not met, the Respondent violated, through erroneous interpretation and application of that rule, the principles of tax legality, justice, equality and the prevalence of material truth over legal-formal reality, and the identified assessment acts are illegal and must be annulled;

w. The AT should be condemned to restitute the tax paid by the Claimant, in the total amount of € 11,399.20, as well as the sum of € 691.10, charged as costs and default interest relating to payment in tax enforcement of that tax;

x. It should further be acknowledged to the Claimant the right to compensatory interest, calculated on the amount of stamp tax (item 28.1 of the TGIS) for the year 2012, in accordance with n.º 1 of Article 43.º, of the LGT, from 5 May 2014 until full reimbursement, at the rate provided for in n.º 4 of the same article.

Notified in accordance with the terms and for the purposes provided for in Article 17.º, of the RJAT, the AT submitted a reply, in which it states that it does not agree with the Claimant and argues that the assessment acts subject to the present request for arbitral decision should be maintained, as they embody a correct interpretation of Item 28.1, of the TGIS, on the following grounds:

a. The Claimant is the owner of the urban property registered in the respective land register of the parish of ..., municipality of ..., under article ..., constituted in a regime of full ownership, also referred to as vertical;

b. Item 28 of the General Table provides that stamp tax is levied on the ownership, usufruct or right of superficies of urban properties whose tax value recorded in the register, in accordance with the IMI Code, is equal to or greater than € 1,000,000.00;

c. According to item 28.1, in the case of urban properties with residential purpose, the tax is levied on the tax value used for the purposes of IMI;

d. According to Article 2.º, n.º 4, of the Stamp Tax Code, the passive subjects of the tax are the passive subjects of IMI; in accordance with Article 8.º of the IMI Code;

e. It results from these legal provisions [that] (…) the tax value for the purpose of the incidence of the tax is, thus, the total tax value of the urban property and not the tax value of each of the parts that compose it, even when susceptible to independent use;

f. Article 80.º, n.º 2, of the IMI Code declares that, except as provided in Articles 84.º and 92.º, each property corresponds to a single article registered in the land register, a principle that is only excepted with respect to mixed properties in which each one of the parts is registered in the land register with respect to the part that corresponds to it and with respect to properties constituted in horizontal ownership in which, although, in accordance with Article 2.º, n.º 4, of the IMI Code, each autonomous unit is regarded as constituting a property, each building in a regime of horizontal ownership corresponds to only one land register entry;

g. Although the Claimant's property was not constituted in horizontal ownership, on 31 October 2012, it had, as appears from its land register entry, flats or independent units, assessed in accordance with Article 12.º, n.º 3, of the IMI Code, which states that each flat or property susceptible to independent use is considered separately in the land register entry, which also specifies the respective tax value on which IMI is assessed;

h. This rule is not unprecedented, as already within the scope of the previous income tax regime the taxable income had necessarily to correspond to the sum of the rent or rental value of each of the components of the property with economic autonomy;

i. The rule of n.º 3 of Article 12.º, of the IMI Code, is relevant for the purposes of registration in the land register, the autonomy which, within the same property, can be attributed to each of its parts, economically and functionally independent;

j. In that case, the land register entry must make reference to each of the parts and also to the tax value corresponding to each of them, calculated separately in accordance with Articles 37.º and following, of the IMI Code;

k. The unity of the urban property in vertical ownership composed of various flats or units is, however, not affected by the fact that all or some of these flats or units are susceptible to independent economic use;

l. In the present case, the tax value on which the incidence of the stamp tax of item 28.1 of the General Table depends had to be the total tax value of the property and not that of each part of property with independent economic use, as results from the fact that the determining factor for the application of this item of the General Table is the total tax value of the property and not separately that of each of its parcels;

m. Any other interpretation would violate the letter and spirit of item 28.1 of the General Table and the principle of legality of the essential elements of the tax provided for in Article 103.º, n.º 2, of the Constitution of the Portuguese Republic;

n. A type of incidence according to which the tax value of urban properties on which the application of item 28.1 of the General Table depends is the tax value of each flat or unit susceptible to independent use and not the total tax value of the urban property with residential purpose certainly has no expression in law;

o. Horizontal and vertical ownership are differentiated legal institutions (…) the legislator can subject to a different tax legal framework, and therefore discriminatory, properties in horizontal and vertical ownership regimes, without such discrimination having to be regarded as necessarily arbitrary;

p. With regard to the request for payment of the amount of € 691.30 paid as interest and costs in the context of the tax enforcement proceedings instituted due to failure to voluntarily pay the stamp tax assessments in question, as it does not fall within the scope of the present jurisdiction by force of the provision set forth in Article 2.º, n.º 1, paragraph a) of the RJAT, with the enforcement proceedings ended in accordance with Article 176.º, n.º 1, paragraph a) of the CPPT, nothing prevents the Claimant from being able to obtain its payment by way of the civil extracontractual liability of the State, in accordance with Law n.º 67/2007, of 31 December, with subsequent amendments;

q. Given that the controversial issue in the present proceedings is exclusively one of law, that there are no exceptions and that the position of the Parties is fully defined and supported by the means of proof submitted by the Claimant, it is requested that the presentation of the Administrative File be waived, as well as the waiver of the holding of the meeting provided for in Article 18.º of the RJAT and the submission of pleadings.

The request for constitution of the Arbitral Tribunal was filed with the CAAD on 3 March 2015, having been accepted by His Excellency the President of the CAAD and notified to the AT the following day.

The Claimant informed that it did not intend to use the power to appoint an arbitrator, therefore, under the provisions of n.º 1 of Article 6.º, of the RJAT, the undersigned was appointed arbitrator by His Excellency the President of the Deontological Council of the CAAD, a position which he accepted within the legally provided period, without opposition from the Parties.

The Singular Arbitral Tribunal was duly constituted on 11 May 2015 and is materially competent to appreciate and decide the dispute which is the subject of the present proceedings.

The Parties have legal personality and capacity, are legitimate and are duly represented (Articles 4.º and 10.º, n.º 2, of the RJAT and Article 1.º of Ordinance n.º 112-A/2011, of 22 March).

The proceedings do not suffer from nullities and no exceptions were raised.

The Parties waived the holding of the meeting referred to in Article 18.º of the RJAT, as well as the production of pleadings, whether oral or written.

1. STATEMENT OF FACTS

2.1. Facts which are considered proven:

2.1.1. Whether at the date of the occurrence of the taxable event (31 October 2012) or at the date of the request for constitution of the arbitral tribunal, the Claimant was the owner of the urban property registered under article ... of the parish of ..., municipality of ..., corresponding to the previous article … of the extinct parish of ..., composed of 20 flats or units susceptible to independent use, with the total tax value of € 1,427,180.00, of which 16 of the said flats, of residential purpose;

2.1.2. The sum of the TPC attributed to the flats or units susceptible to independent use and residential purpose is the amount of € 1,139,920.00, this being the value indicated in each of the collection notices of the ST as "Tax value of the property – total subject to tax";

2.1.3. The TPC attributed to each flat or unit susceptible to separate rental and residential purpose, as appears from the collection notices issued, varies between € 67,010.00 and € 75,480.00;

2.1.4. In the name of the Claimant, on 22 March 2013, for voluntary payment in three annual instalments, until 30 April 2013, 31 July 2013 and 30 November 2013, respectively, the ST assessments for the year 2012 were issued, the first instalments of which appear in the collection notices identified in the table below, based on the TPC of each of the units susceptible to independent use and the rate of 1%:

2.1.6. In accordance with the payment guide Model 50 with the n.º …, the Stamp Tax assessments which are the subject of the present request for arbitral decision were paid on 7 May 2014, in the context of the tax enforcement proceedings n.º …, plus costs and default interest in the amount of € 691.10 (six hundred and ninety-one euros and ten cents);

2.1.7. Dissatisfied with the aforementioned assessments, the Claimant filed a gracious claim which, registered under n.º 3..., was dismissed by order of 10 October 2013;

2.1.8. By letter n.º..., from the Finance Directorate of Lisbon – Administrative Justice Division, dated 1 December 2014, the Claimant was notified, through its Legal Representative, of the order dismissing the Hierarchical Appeal n.º ..., filed on 5 November 2013, following the dismissal of the gracious claim;

2.1.9. The notification of the decision dismissing the Hierarchical Appeal n.º ..., sent by registered mail with acknowledgement of receipt, took effect on 3 December 2014.

2.2. Grounds for the proven statement of facts:

The Tribunal's conviction as to the statement of facts given as proven resulted from the analysis of the documentary evidence attached to the request for arbitral decision (copies of the property register of the identified property, proof of payment of the collection notices issued in the name of the Claimant, plus costs and default interest, as well as the decision of the Hierarchical Appeal and notification of its dismissal – 19 documents), expressly accepted by the Respondent.

2.3. Facts not proven

There are no facts relevant to the decision of the case that should be considered unproven.

1. STATEMENT OF LAW – GROUNDS

3.1. Order of appreciation of defects

The main question brought before the proceedings by the Claimant is whether the subjection to Stamp Tax, in accordance with item n.º 28 of the TGIS, of an urban property not constituted in horizontal ownership, is determined by the Tax Value (TPC) that corresponds to each of the parts of the property, economically independent and with residential purpose, as it argues, or whether it is determined by the overall TPC of the property, which would correspond to the sum of all the TPC of the flats or units of independent use and with residential purpose that compose it, in accordance with the interpretation given by the AT to the aforementioned rule.

In accordance with the provision of n.º 1 of Article 124.º, of the CPPT, of subsidiary application to the arbitral tax proceedings, in accordance with Article 29.º, n.º 1, paragraph a), of the RJAT, where there are no defects that lead to the declaration of non-existence or nullity of the impugned act(s), the tribunal should appreciate the defects alleged which determine its voidability, providing n.º 2, paragraph b), of the same article that, as to these latter, the order of its knowledge will be that indicated by the impugner, whenever a relationship of subsidiarity is established between them, without prejudice to defects whose merits ensure more stable or effective protection of the offended interests being known with priority.

Given that, from the merits of the defect of breach of law, due to error in the application of the law resulting from the erroneous interpretation of the rules provided for in item n.º 28.1, of the TGIS and in Article 12.º, n.º 3, of the IMI Code, applicable by force of Article 67.º, n.º 2, of the Stamp Tax Code, there will result an effective protection of the offended interests, we will proceed to its appreciation.

3.2. On the concept of urban property with residential purpose

In its initial wording, applicable to the situation under analysis, item 28, of the TGIS, provided that the following situations were subject to stamp tax:

"28 — Ownership, usufruct or right of superficies of urban properties whose tax value recorded in the register, in accordance with the Municipal Property Tax Code (IMI Code), is equal to or greater than € 1,000,000 — on the tax value used for the purpose of IMI:

28.1 — For property with residential purpose — 1%;

28.2 — For property, when the passive subjects that are not natural persons are residents in a country, territory or region subject to a clearly more favourable tax regime, listed in the list approved by ordinance of the Minister of Finance — 7.5%."

The cumulative requirements for the application of the rule contained in Item 28.1, of the TGIS, are that the property to be taxed is an urban property "with residential purpose", whose tax value, for the purpose of IMI, is equal to or greater than € 1,000,000.00.

It is long established in legal doctrine that tax rules are interpreted like any other legal rules, a solution which is now expressly contained in n.º 1 of Article 11.º, of the General Tax Law (LGT), by establishing that "1 - In determining the meaning of tax rules and in qualifying the facts to which they apply, the general rules and principles of interpretation and application of laws are observed".

Among the elements of interpretation, the one from which the rule's applicator must start is, precisely, the grammatical element, or that is, the text of the law, it being important to point out that, in determining the meaning and value of the rule, the interpreter cannot fail to consider the logical element or, in accordance with n.º 1 of Article 9.º, of the Civil Code, fail to "reconstruct (…) the legislative thought, especially taking into account the unity of the legal system, the circumstances in which the law was elaborated and the specific conditions of the time in which it is applied".

The rule of incidence contained in item 28.1, of the TGIS, uses the expression "property of residential purpose", the concept of which is not defined in the Code in which it is inserted, nor in any other tax legislation.

Being a polysemic expression, which may bear more than one meaning and, in order to determine its exact meaning and scope, in respect of the unity of the system, the interpreter should have recourse to the so-called "parallel places", that is, there should be consideration of the "legal provisions that regulate parallel normative problems or related institutes"[1].

Such "parallel places" will necessarily be found, in the case in question, in the rules of the IMI Code, to whose subsidiary application is referred, en bloc, n.º 2 of Article 67.º, of the Stamp Tax Code, added by the same Law n.º 55-A/2012, of 29 October, by providing that "2 - To matters not regulated in the present Code relating to item n.º 28 of the General Table, the provisions of the IMI Code apply, subsidiarily."

However, notwithstanding the express reference to the IMI Code, which the legislator intended to establish in n.º 2 of Article 67.º, of the Stamp Tax Code, by reference to matters relating to Item 28, of the TGIS, it also does not give us the concept of "properties with residential purpose".

Indeed, its Article 6.º, inserted in Chapter I, under the heading "Incidence", does not use that expression when enumerating, in n.º 1, the types of urban properties, which may be classified as: a) Residential; b) Commercial, industrial or service; c) Land for construction; d) Other, with n.ºs 2, 3 and 4, of the same article, delimiting what should be understood by each of those designations.

The type of urban property that best corresponds to the concept of "property with residential purpose" is that of residential properties, as buildings or constructions licensed for residential use or which, in the absence of a license, have as their normal destination residential use (residential purposes).

However, the urban property of which the Claimant is the owner, integrating flats or units susceptible to independent use, some intended for commerce and others intended for residential use, cannot, globally, be considered an urban property with residential purpose, because it has a purpose that can be classified in more than one of the classifications established by n.º 1 of Article 6.º, of the IMI Code.

Nor does it appear that the flats or units intended for residential use that compose it can be segregated from the whole, in order that, taken together, they integrate the notion of property with residential purpose provided for in the rule of incidence of item 28.1, of the TGIS.

3.3. On the distinction between flats or units susceptible to independent use and autonomous units, for tax purposes

Although the rule of n.º 3 of Article 12.º, of the IMI Code provides that "Each flat or part of property susceptible to independent use is considered separately in the land register entry, which also specifies the respective tax value", which is also specified in the collection document (see n.º 1, of Article 119.º of the IMI Code), the AT argues that the TPC relevant for the purposes of the rule of incidence of item 28.1, of the TGIS, is the overall tax value of the property and not the value of each of the units of independent use.

And it does so by arguing that, if the TPC relevant for the application of that rule of incidence were that of each unit of independent use, one would be applying, by analogy, to properties in vertical ownership the regime of horizontal ownership, in which, in accordance with n.º 4 of Article 2.º, of the IMI Code, each autonomous unit is regarded as constituting a property.

It is to be noted that, indeed, from a formal point of view, the AT is correct in stating that a property constituted in horizontal ownership is a distinct legal-tax reality from an urban property in "full ownership" or "vertical ownership".

However, if n.º 4 of Article 2.º, of the IMI Code, establishes the legal fiction that each of the autonomous units of a property constituted in horizontal ownership embodies a property, the fact is that a part of independent use of an urban property not constituted in horizontal ownership remains only that – a part of a property and not a property.

On the other hand, using the rule of item 28.1, of the TGIS, the expression "urban property with residential purpose", it does not appear legitimate that the AT intends to include in it the flats or units of independent use of urban properties not constituted in horizontal ownership which, as the AT itself acknowledges, are not properties, and therefore cannot be equated to the autonomous units of properties constituted in a regime of horizontal ownership.

3.4. On the tax value of urban properties in full ownership

With respect to the determination of the tax value of properties not constituted in horizontal ownership, Article 7.º, n.º 2, of the IMI Code applies, but only as regards "urban properties with parts classifiable in more than one of the classifications of n.º 1 of the preceding article", in which case, in accordance with its paragraph b) "(…) each part is assessed by application of the corresponding rules, with the value of the property being the sum of the values of its parts".

And this is the only provision of the IMI Code in which reference is made to the "value [overall] of the property", without this, however, having any relevance at the level of the assessment of the tax.

From the combination of the rules of n.º 2 of Article 7.º and n.º 1 of Article 6.º, both of the IMI Code, it results that, if an urban property not constituted in horizontal ownership integrates exclusively parts or units of residential purpose, the value of the property does not equal the sum of its parts.

3.5. On the TPC relevant for the purposes of item 28.1, of the TGIS

As was mentioned in the preceding point, the TPC of an urban property not constituted in horizontal ownership, which integrates exclusively parts or units of residential purpose, does not equal the sum of the TPC attributed individually to each of those parts or units.

Which is to say that each of those parts is autonomous and that, not having been attributed a TPC equal to or greater than € 1,000,000.00, will be excluded from the incidence of Stamp Tax – item 28.1, of the TGIS.

Having reached here, it will be appropriate to question the subjection to Stamp Tax of a part or unit of independent use, with residential purpose, of a property not constituted in horizontal ownership, in which are integrated parts or units of independent use, classifiable in more than one of the classifications of n.º 1 of Article 6.º, of the IMI Code, for example, units intended for commerce, as is the case in question.

Now, the answer must be negative, notwithstanding the provision of paragraph b) of n.º 2, of Article 7.º, of the IMI Code, according to which the value of the property is the sum of the values of its parts or units of independent use, classifiable in more than one of the classifications of n.º 1, of Article 6.º, of the same Code.

This is because, here, we are not comparing, as the AT intends, two legally distinct realities, such as the parts or units of independent use of an urban property not constituted in horizontal ownership, on one hand, and the autonomous units of properties submitted to that regime, which, for IMI purposes, are themselves properties, on the other.

What is being compared here are realities that are entirely identical, that is, parts or units of independent use and residential purpose, integrated in urban properties not constituted in horizontal ownership.

And the answer to the question must be negative, because nothing would justify that the legislator intended to tax parts or units of independent use and residential purpose of an urban property not constituted in horizontal ownership, integrated by other parts or units of independent use intended for other purposes and not tax parts or units of independent use and residential purpose of another urban property in full ownership, integrated exclusively by parts or units of independent use, intended for residential use. If the legislator intended to treat unequally realities that are entirely identical, one would have to conclude by a blatant violation of the principle of equality.

Not appearing to be that the legislative intention, one cannot accept that the AT formulates a rule of incidence ex novo, different from that created by the legislator, intending to tax parts of properties, even if economically and functionally independent and, as such, separately registered in the land register, for the law is clear in subjecting to stamp tax of item 28.1, of the TGIS, urban properties with residential purpose, whose TPC, for IMI purposes, is greater than € 1,000,000.00.

Indeed, as the Claimant refers in its pleadings and already served as grounds for other arbitral decisions, in particular that rendered in proceedings n.º 50/2013-T, "The ratio legis underlying the rule of item 28 of the TGIS, introduced by Law no. 55-A/2012 of 29 October, in compliance with Article 9 of the Civil Code, according to which the interpretation of the legal rule should not be confined to the letter of the law, but should reconstruct from the texts and other elements of interpretation the legislative thought, taking into account the unity of the legal system, the circumstances in which it was elaborated and the specific conditions of the time in which it is applied.

The legislator, in introducing this legislative innovation, considered as a determining element of tax capacity urban properties, with residential purpose, of high value, more precisely, of value equal to or greater than € 1,000,000.00, on which a special rate of stamp tax was then levied, intending to introduce a principle of taxation on the wealth expressed in the ownership, usufruct or right of superficies of luxury urban properties with residential purpose. The criterion was the application of the new rate to urban properties with residential purpose, whose TPC is equal to or greater than € 1,000,000.00.

Such logic seems to make sense when applied to "residential use", whether it be "house", "autonomous unit" or "part of property with independent use" "autonomous unit", because it assumes a tax capacity above average and, to that extent, justifies the need to make an additional tax effort, it would make little sense to then disregard the determinations "unit by unit" when only through the sum of the TPCs of the same, because held by the same individual, would the million euros threshold be exceeded.

This is concluded from the analysis of the discussion of Bill n.º 96/XII in the Parliament, available for consultation in the Official Journal of the Parliament, I series, no. 9/XII/2.ª, of 11 October 2012.".

We have therefore that, in addition to the grammatical and systematic elements of interpretation of the rule of incidence contained in item 28.1, of the TGIS, also the rational or teleological element, the ratio legis or purpose intended by the legislator in elaborating that rule, points to the fact that taxation should be levied on urban properties and not on parts of urban properties, even if of independent use and with residential purpose.

For the reasons stated above, having verified the defect of breach of law, due to error in the application of the law, resulting from the erroneous interpretation of the rules provided for in item n.º 28.1, of the TGIS and in Article 12.º, n.º 3, of the IMI Code, applicable by force of Article 67.º, n.º 2, of the Stamp Tax Code, the impugned assessments cannot be maintained in the legal order.

3.6. Effects of arbitral decision not subject to appeal or challenge

3.6.1. On the request for compensatory interest

With regard to the request for payment of compensatory interest, it is clear that the arbitral tax proceedings were conceived as an alternative means to the judicial impugn proceedings (see the legislative authority granted to the Government by Article 124.º, n.º 2 (first part) of Law n.º 3-B/2010, of 28 April – State Budget Law for 2010).

Thus, although Article 2.º, n.º 1, paragraph a), of the RJAT, uses the expression "declaration of illegality" as a delimitation of the competence of the arbitral tribunals functioning in the CAAD, it should be understood that this includes the powers which in judicial impugn proceedings are attributed to the tax tribunals, such as the power to appreciate the error attributable to the services.

On the other hand, n.º 1 paragraph b) of Article 24.º, of the RJAT, determines that the arbitral decision on the merits of the claim which is not subject to appeal or challenge binds the tax administration from the end of the period provided for appeals or challenges, and the latter must, in the precise terms of the merits of the arbitral decision in favour of the passive subject and until the end of the period provided for the spontaneous execution of sentences of the tax judicial tribunals, "restore the situation that would exist if the tax act which is the subject of the arbitral decision had not been performed, adopting the acts and operations necessary for that purpose", which includes "the payment of interest, regardless of its nature, in the terms provided for in the General Tax Law and the Tax Procedure and Procedure Code.".

Similarly, Article 100.º of the LGT, applicable to arbitral tax proceedings by force of the provision in paragraph a) of n.º 1 of Article 29.º of the RJAT, establishes that "The tax administration is obliged, in the event of total or partial merits of gracious claims or administrative appeals, or of judicial proceedings in favour of the passive subject, to the immediate and full restoration of the situation that would exist if the illegality had not been committed, including the payment of compensatory interest, in the terms and conditions provided for by law.".

Providing n.º 1 of Article 43.º, of the LGT, that "Compensatory interest is due when it is determined, in a gracious claim or judicial impugn, that there was error attributable to the services resulting in the payment of the tax liability in an amount greater than that legally due.".

The error attributable to the services may consist of error on the factual presuppositions, which occurs whenever there is "a divergence between reality and the statement of facts used as a presupposition in the performance of the act"[2] or error on the legal presuppositions, when "in the performance of the act there has been erroneous interpretation or application of legal rules, such as the rules of objective and subjective incidence (…)"[3] and "is demonstrated when the gracious claim or judicial impugn of that same assessment proceeds and the error is not attributable to the taxpayer"[4].

In the case in question, it appears manifest that, having declared the illegality of the Stamp Tax assessments, due to the erroneous application of the rule of objective incidence contained in item 28.1, of the TGIS being demonstrated, which justifies its annulment, the Claimant's right to compensatory interest on the amounts unduly paid must be recognized, from the date of the respective payment, as provided for in n.º 5 of Article 61.º, of the CPPT, since such illegality is exclusively attributable to the Tax Administration, which performed those tax acts without the necessary legal support.

3.6.2. Restitution of amounts paid as default interest and costs in tax enforcement proceedings

The Claimant petitions for restitution of amounts paid as default interest and costs in the tax enforcement proceedings n.º ... and attachments, instituted due to failure to pay, within the voluntary collection period, the impugned assessments.

To which the Respondent counters with the impossibility of its "appreciation within the scope of the present jurisdiction by force of the provision set forth in Article 2.º, n.º 1, paragraph a) of the RJAT", and that, "with the enforcement proceedings ended in accordance with Article 176.º, n.º 1, paragraph a) of the CPPT, nothing prevents the Claimant from being able to obtain its payment by way of the civil extracontractual liability of the State, in accordance with Law n.º 67/2007, of 31 December, with subsequent amendments".

But the Respondent is not correct, taking into account the provision in paragraph b) of n.º 1 of Article 24.º, of the RJAT and, subsidiarily, in Article 100.º, of the LGT, given that the collection of the accrual of tax enforcement is configured as a subsequent act of the assessment of the tax, being accessory in relation to it, and the tax nature of such accrual merits no doubts.

As to default interest, n.º 1 of Article 44.º, of the LGT provides that only "Interest is due […] when the passive subject does not pay the due tax within the legal period"; now, the unduly payment of the tax makes undue the default interest paid in tax enforcement.

With regard to the costs of tax enforcement, in its administrative phase, which include the court fee and charges, the respective revenue reverts to the AT (as successor of the former DGCI), in accordance with n.º 1 of Article 4.º, of Decree-Law n.º 29/98, of 11 February, which approved the Regulation of Costs in Tax Proceedings, in the wording given to it by Decree-Law n.º 324/2003, of 27 December.

It could, possibly, be argued that, in arbitral tax proceedings, only the cumulation is permitted, with the request for annulment of the act of assessment of the tax, of the requests for compensatory interest and for indemnification for unduly provided guarantee, as the appreciation of the error which constitutes the AT in the duty to indemnify is expressly provided for, in the cases cited (see Articles 43.º, n.º 1 and 53.º, n.º 2, of the LGT).

However, according to Counsellor Jorge Lopes de Sousa, the content of the duty to execute encompasses the restitution of the amounts that the passive subject will have spent by way of costs, connected with the payment of the amount to be executed; once the tax enforcement proceedings is ended by payment, in that proceedings there was no place for reimbursement of the accrual, on a date prior to the annulment of the executed assessment.

The Author writes that "If, following a tax act deemed illegal, tax enforcement proceedings were instituted for collection of the assessed amount and the taxpayer had to bear expenses in the tax enforcement proceedings, the payment of the amounts paid is encompassed in the broad scope of the execution of the judgment provided for in the CPTA, if for such payment there is no other especially adequate procedural means (…) the execution of an annulling judgment relates to a judicial impugn proceedings and not to tax enforcement proceedings (…)"[5].

Adhering to the aforementioned understanding, this Singular Arbitral Tribunal considers itself competent to appreciate the request for restitution of the accrual of tax enforcement.

3.7. Issues of prejudiced knowledge

In the sentence, the judge must pronounce on all issues which he must appreciate, abstaining from pronouncing on issues which he must not know (final segment of n.º 1 of Article 125.º, of the CPPT), and the issues on which the tribunal's powers of cognition fall are, in accordance with n.º 2 of Article 608.º, of the Civil Procedure Code, applicable subsidiarily to arbitral tax proceedings, by remission of Article 29.º, n.º 1, paragraph e), of the RJAT, "the issues which the parties have submitted for its appreciation, except those whose decision is prejudiced by the solution given to others (…)".

In view of the solution given to the issues relating to the determination of the TPC relevant for the application of the rule of incidence contained in item 28.1, of the TGIS, to the payment of compensatory interest in favour of the Claimant and to the restitution of the accrual of tax enforcement, knowledge of the remaining issues is prejudiced, in particular those of the unconstitutionality of the aforementioned rule, because it is not susceptible to the interpretation which, in the case, was made by the AT.

1. DECISION

On the basis of the facts and law grounds set out above and, in accordance with Article 2.º of the RJAT, it is decided, judging the present request for arbitral decision entirely well-founded:

4.1. To declare the illegality of the Stamp Tax assessments impugned, due to error in the legal presuppositions, determining their annulment;

4.2. To condemn the AT to restitution of the amount unduly paid by the Claimant as Stamp Tax for 2012, plus compensatory interest, from the date of unduly payment until the date of issuance of the respective credit note;

4.3. To condemn the AT to restitute the amount of € 691.10, paid by the Claimant as accrual of the tax enforcement proceedings in which the undue tax was paid.

VALUE OF THE CASE: In accordance with the provision of Article 306.º, n.ºs 1 and 2, of the Civil Procedure Code, 97.º-A, n.º 1, paragraph a), of the Tax Procedure and Procedure Code and 3.º, n.º 2, of the Regulation of Costs in Tax Arbitration Proceedings, the case is assigned the value of € 11,399.20 (eleven thousand, three hundred and ninety-nine euros and twenty cents).

COSTS: Calculated in accordance with Article 4.º of the Regulation of Costs in Tax Arbitration Proceedings and Table I attached thereto, in the amount of € 918.00 (nine hundred and eighteen euros), to be borne by the Tax and Customs Authority.

Lisbon, 15 July 2015.

The Arbitrator,

/Mariana Vargas/

Text prepared by computer, in accordance with n.º 5 of Article 131.º of the Civil Procedure Code, applicable by remission of paragraph e) of n.º 1 of Article 29.º of Decree-Law 10/2011, of 20 January.

The wording of the present decision is governed by the 1990 spelling agreement.

[1] MACHADO, J. Baptista, "Introduction to Law and Legitimizing Discourse", Almedina, Coimbra, 1995, p. 183.

[2] SOUSA, Jorge Lopes de, "Tax Procedure and Process Code – annotated and commented", II Volume, Áreas Editora, 6.ª Edition, 2011, p. 115.

[3] Idem, ibidem.

[4] CAMPOS, Diogo Leite de, RODRIGUES, Benjamim Silva, SOUSA, Jorge Lopes de, "General Tax Law – Annotated and Commented", Encontro da Escrita, 4.ª Edition, p. 342.

[5] SOUSA, Jorge Lopes de, "Tax Procedure and Process Code – annotated and commented", II Volume, Áreas Editora, 6.ª Edition, 2011, pp. 526 and 527, in particular note 2 of the latter page.