Summary
Full Decision
ARBITRAL DECISION
The arbitrators Dr. Fernanda Maçãs (presiding arbitrator), Dr. Suzana Fernandes da Costa and Dr. Ana Pedrosa Augusto (associate arbitrators), designated by the Deontological Council of the Centre for Administrative Arbitration (CAAD) to form the Arbitral Tribunal, constituted 27/5/2016, hereby agree to the following:
1. REPORT
On 15-03-2016, the company A... – REAL ESTATE INVESTMENT MANAGEMENT COMPANY, S.A., legal entity no. ..., with registered office at ..., no. ..., ..., ...-..., in its capacity as managing company and representing B... – CLOSED REAL ESTATE INVESTMENT FUND, legal entity no. ..., C... – CLOSED REAL ESTATE INVESTMENT FUND, legal entity no. ..., and D... – CLOSED REAL ESTATE INVESTMENT FUND, legal entity no. ..., all with registered office at ..., no. ..., ... ...-..., hereinafter referred to as the Claimant, submitted to the Centre for Administrative Arbitration (CAAD) a request for constitution of an arbitral tribunal, in which it requests that item 28.1 of the General Table of Stamp Duty (TGIS) be disapplied, for error in the factual and legal grounds that determined its application and, subsidiarily, for violation of the constitutional principle of equality, and the consequent declaration of illegality of the Stamp Duty assessment acts in the total amount of €378,189.24, relating to the year 2014. Said assessments relate to the following construction land:
a) urban property registered under article ... of the union of parishes of ... and ..., municipality of ...;
b) urban properties registered under articles ... and ..., both of the parish of ..., municipality of ...;
c) urban properties registered under articles ..., ..., ..., ..., ..., ..., ..., ..., ..., ..., ..., ... and ..., all of the parish of ..., municipality of ....
The Honorable President of the Deontological Council of CAAD designated, on 10-05-2016, as presiding arbitrator, Counselor Maria Fernanda dos Santos Maçãs, and as co-arbitrators Dr. Ana Pedrosa Augusto and Suzana Fernandes da Costa.
On 27-05-2016 the arbitral tribunal was constituted.
The Claimant sustains its request, in summary, in the following terms:
The "taxation under analysis shall only be applicable in situations where the construction of 'construction land' has been authorized or provided for and such construction is intended for 'housing'". And it states that none of the properties in question had, in 2014, "an effective potential for construction for housing, not having the same 'authorized or foreseeable construction' for 'housing'".
Given the situation of the properties, item 28 of the TGIS cannot apply in the present case, and the Stamp Duty assessments are manifestly illegal, for error in the factual and legal grounds, and must be annulled. The Claimant references the CAAD decision in case no. 467/2015-T.
Subsidiarily, the Claimant also alleges that the normative that is the basis for the assessment acts in question, "by subjecting to Stamp Duty the properties registered as 'construction land', manifestly and intolerably contradicts the basic principles of Law, violating the Constitution of the Portuguese Republic, namely the principle of legality, expressly enshrined therein" and states, on the other hand, that item 28 of the TGIS violates the principle of equality constitutionally enshrined in article 13 of the CRP.
According to the Claimant, the principle of equality, basic in a rule of law state, translates to the prohibition of any discrimination in the treatment of equal situations (equalizing dimension) and the admission of unequal treatment of unequal situations (differentiating dimension).
According to the Claimant, in the matter of tax equality, contributory capacity would thus be assumed as an essential element to consider, since the effective equality of tax treatment of taxpayers would depend on the existence of identical taxation for identical contributory capacities. This principle of contributory capacity would rest thus, according to the Claimant, directly on the material principle of equality, constitutionally enshrined, having support in the remaining fiscal norms of the CRP and in tax legislation.
In the matter of taxation of assets, the CRP provides an essential rule: "taxation of assets must contribute to equality among citizens" – cf. article 104, no. 3 of the CRP.
It is constitutionally prohibited for the ordinary legislator to create norms in an arbitrary manner; such norms must be submitted to the principles of equalization and positive discrimination, as appropriate.
The Claimant understands that "item 28 of the General Table of Stamp Duty and the special taxation resulting therefrom promote differentiated treatment and unjustified inequality among taxpayers, in manifest violation of the principle of equality enshrined in article 13 of the CRP."
For the Claimant, "the violation of the constitutional principle of equality arises, first and foremost, from the fact that the relevant tax fact is restricted only to a portion of real estate assets of value exceeding €1,000,000.00 – i.e. over real estate assets affected or intended for housing –, being excluded from the scope of taxation all the remaining assets of high (or very high) value that are affected or intended for other purposes." And it understands that under the principle of tax equality, founded on the principle of contributory capacity, the legislator cannot arbitrarily select certain properties that should be subject to taxation and fail to tax others.
The Claimant also alleges that the special taxation of item 28 of the TGIS, in the manner in which it was implemented – by applying to urban properties, considered individually – fails to effectively "penalize" or "aggravate" all owners who have high-value real estate assets and who, as such, demonstrate superior "contributory capacity".
And concludes by stating that taxation by item 28.1 thus generates manifest inequity, not being applied, inexplicably, to real property – property of a single taxpayer – affected to residential purposes that, despite individually considered having a taxable property value less than 1,000,000, together make up a taxable property value exceeding (and, at times, even substantially exceeding) €1,000,000.
The Claimant also alleges that item 28 of the TGIS further clashes with the constitutional principle of tax equality by determining a manifest situation of double taxation, since "item 28 came to determine the double taxation of the same tax fact – holding of a real right." The Claimant states that the holding of a real right is simultaneously taxed under Municipal Property Tax ("IMI") – cf. article 1 of the IMI Code – and under Stamp Duty.
The Claimant further adds that the Funds here represented by the Claimant, as real estate investment funds, develop, as their main activity, the purchase and sale of real estate, wherefore the holding of the right of ownership of real properties – namely, "construction land" –, which are intended to carry out their corporate purpose, cannot ever represent superior contributory capacity.
It alleges that construction land cannot be considered luxury goods, but rather constitutes investment assets, which are affected by real estate operations, commonly developed by the Funds within the scope of their activities.
And concludes that Stamp Duty provided for in item 28 cannot apply to the ownership of real properties that constitute "investment assets" of a company whose activity consists, exactly, in the purchase and sale of real property, insofar as in these factual situations the basic principles underlying the taxation here under analysis are not verified.
Finally, the Claimant states that the decisions of the Constitutional Court no. 590/2015 and 692/2015 do not apply to the concrete case, since these concern the assessment of the (un)constitutionality of the norm when applied to "residential properties", and not when applied to "construction land", as the properties here under analysis.
In conclusion, the Claimant states that it proceeded to pay all Stamp Duty assessments in question in these proceedings, and requests that the Tax Authority be condemned to proceed with payment of compensatory interest for unduly paid tax obligations, pursuant to article 43 of the General Tax Law.
In the Response, the Respondent alleges that the construction land in question is subject to Stamp Duty, because "urban properties that are construction land and to which residential use has been attributed within the scope of their respective valuations, with such use appearing in the respective land registers, are subject to Stamp Duty".
According to the Respondent, the fact that the tax incidence norm has included the property with residential use rather than residential property makes reference to the use coefficient, contained in article 41 of the IMI Code, which applies indistinctly to all urban properties.
Therefore, for tax purposes, the real properties are construction land; in that capacity they were acquired and thus are property-classified, and therefore they are undoubtedly lots of construction land, more precisely urban properties with residential potential. Thus, the Claimant could not have been unaware that the registers are crystal clear in defining for the lots of construction land in question their respective building footprint area and construction area, with residential use of the buildings being evident. Such use can be determined and established well before the actual construction of the property.
The Respondent further states that the tax acts in question in these proceedings do not violate any legal principle, since item 28 of the TGIS is applied indistinctly to all holders of real properties with residential use of value exceeding €1,000,000.00.
Regarding the alleged violation of the constitutional principle of equality by the Claimant, the Respondent states that, on one hand, administrative bodies and agents do not have competence to decide on the non-application of norms regarding which doubts of constitutionality are raised, and on the other hand, the Courts are prevented from applying unconstitutional norms, pursuant to article 204 of the CRP, with competence being attributed to them for diffuse and concrete review of constitutional conformity.
The Respondent concludes by stating that "the Tax Authority cannot/could not refuse the application of a norm or fail to comply with the law invoking or questioning its constitutionality, as it is subject to the principle of legality, as established in articles 266, no. 2 of the CRP, 3, no. 1 of the Administrative Procedure Code and 55 of the General Tax Law".
Regarding the request for compensatory interest, the Respondent states that the Claimant is not entitled thereto, since there was no error attributable to the services under article 43 of the General Tax Law, in particular due to the fact that the Tax Authority, bound as it is to the principle of legality, cannot fail to apply any norm in effect. Consequently, as the Respondent made the application of the law in the terms in which, as an executive body, it is constitutionally bound, one cannot speak of error by the services.
On 07-07-2016, the arbitral tribunal dispensed with the holding of the meeting provided for in article 18 of the Rules of Arbitration in Tax Matters, under the principles of tribunal autonomy in conducting the process, and in order to promote speed, simplification and informality. In the same order, the tribunal set 27-11-2016 as the deadline for issuance of the arbitral decision.
On 08-07-2016, the Claimant informed that it did not intend to present oral or written arguments. The Respondent did not present arguments.
2. DISMISSAL OF DEFECTS
The Claimant requests that the illegality of the Stamp Duty assessments of the year 2014, relating to various construction land, be declared in cumulation of claims as the requirements set out in article 3, no. 1 of the Rules of Arbitration in Tax Matters are met. The Claimant states that the request for ruling depends on the application of the same factual circumstances and the interpretation and application of the same principles and rules of law, wherefore the prerequisites for joinder of claimants provided for in article 3, no. 1 of the Rules of Arbitration in Tax Matters are also met.
Article 3, no. 1 of the Rules of Arbitration in Tax Matters determines that "cumulation of claims even if relating to different acts and joinder of claimants are admissible when the merits of the claims depend essentially on the assessment of the same factual circumstances and the interpretation and application of the same principles or rules of law".
In the present case, cumulation of claims and joinder of claimants are admissible, since the arbitral claim concerns assessment acts of the same tax, there is identity between the factual matters and the merits of the claim depends on the interpretation of the same principles and rules of law.
The case does not suffer from nullities, no questions have been raised that prevent the assessment of the merits of the case, the arbitral tribunal is regularly constituted and is materially competent to know and decide the claim.
3. QUESTIONS TO BE DECIDED
Considering the facts and legal matters contained in the request for arbitral ruling presented by the Claimant and the response of the Respondent, the disputed question to be decided by the Arbitral Tribunal is whether the Stamp Duty assessments in question were or were not correctly issued for the properties owned by the Funds managed and represented by the Claimant, construction land, meeting the respective factual and legal grounds.
Subsidiarily, if it is understood that such factual and legal grounds are met, the Arbitral Tribunal is requested to disapply item 28 of the TGIS to the case, for unconstitutionality, based on violation of the constitutional principle of equality, with the consequent annulment of the same tax assessments.
4. FACTUAL MATTERS
4.1. Facts considered proven
With relevance to the assessment of the Claimant's claim, the following facts are considered proven, based on what was alleged by the Parties and not contested, and on the documents attached to the proceedings:
i. C... – Closed Real Estate Investment Fund is the owner of the property registered in the land register under article ..., of the union of parishes of ... and ..., municipality of ..., property-classified as construction land, with taxable property value exceeding €1,000,000.00;
ii. Regarding the property referred to in the previous point, C... – Closed Real Estate Investment Fund was notified of tax acts of Stamp Duty assessment, relating to the year 2014, with nos. 2015..., 2015... and 2015...;
iii. B... – Closed Real Estate Investment Fund is the owner of properties registered in the land register under articles ... and ..., of the parish of ..., municipality of ..., property-classified as construction land, each with taxable property value exceeding €1,000,000.00;
iv. Regarding the properties referred to in the previous point, B... – Closed Real Estate Investment Fund was notified of tax acts of Stamp Duty assessment, relating to the year 2014, with nos. 2015..., no. 2015..., no. 2015..., no. 2015..., no. 2015... and no. 2015...;
v. D... – Closed Real Estate Investment Fund is the owner of properties registered in the land register under articles ..., ..., ..., ..., ..., ..., ..., ..., ..., ..., ..., ... and ..., all of the parish of ..., municipality of ..., property-classified as construction land, each with taxable property value exceeding €1,000,000.00;
vi. Regarding the properties referred to in the previous point, D... – Closed Real Estate Investment Fund was notified of tax acts of Stamp Duty assessment, relating to the year 2014, with nos. 2015..., no. 2015..., no. 2015..., no. 2015..., no. 2015..., no. 2015..., no. 2015..., no. 2015..., no. 2015..., no. 2015..., no. 2015..., no. 2015..., no. 2015..., no. 2015..., no. 2015..., no. 2015..., no. 2015..., no. 2015..., no. 2015..., no. 2015..., no. 2015..., no. 2015..., no. 2015..., no. 2015..., no. 2015..., no. 2015..., no. 2015..., no. 2015..., no. 2015..., no. 2015..., no. 2015..., no. 2015..., no. 2015..., no. 2015..., no. 2015..., no. 2015... and no. 2015...;
vii. The Stamp Duty thus assessed was paid by the Claimant, in the total amount of €378,189.24;
viii. The Claimant filed requests for administrative review of those assessments, which were rejected.
There are no other facts with relevance to the arbitral decision that have not been considered proven.
4.2. Justification of factual matters
The factual matters considered proven have their genesis in the documents attached to the proceedings and whose authenticity was not called into question.
4.3. Facts not considered proven
No documentary evidence is attached to the proceedings that attests that the acts in question were taken with respect to properties with approved construction projects or any other titles establishing the right to build for housing purposes.
5. LEGAL MATTERS
A. Error in factual or legal grounds
Following what has been set out, it is necessary, first and foremost, to determine whether the tax assessment acts of Stamp Duty that are the object of this Arbitral Claim are, or are not, in conformity with the immediate parameter to which the Tax Authority is subject, in the case of the present proceedings: item 28.1 of the TGIS, according to the wording given by Law no. 83-C/2013, of 31 December.
As indicated, the Claimant hereby first alleges, in summary, that the Stamp Duty assessments in question are illegal for error in the factual and legal grounds.
It is necessary to assess this.
For this purpose, it is necessary to cite the learned arbitral decision issued in the course of arbitral process no. 467/2015-T, which is accompanied in full, as it pronounces on a case identical in all respects to the present one, with complete and substantiated justification that does not merit, in light of its quality, any addition:
"For the resolution of the question identified above, it is important to bear in mind, above all, the evolution and framework of said item 28, both before and after the amendment determined by article 194 of Law no. 83-C/2013, of 31 December (which is, as stated, the wording applicable to the present case).
In that sense, it becomes useful to reference the Decision of the Supreme Administrative Court of 9/4/2014 (proc. no. 1870/13), which, like other decisions of the Supreme Administrative Court – e.g.: Decision of 9/4/2014 (proc. no. 48/14), Decisions of 23/4/2014 (proc. nos. 270/14, 271/14 and 272/14), Decision of 25/11/2015 (proc. 1338/15) – makes a detailed historical and chronological analysis of the evolution and framework of item 28, now under analysis:
'The concept of «urban property with residential use» was not defined by the legislator. Neither in Law no. 55-A/2012, which introduced it, nor in the IMI Code, to which no. 2 of article 67 of the Stamp Duty Code (also introduced by that Law) refers, on a subsidiary basis. And it is a concept that, probably due to its imprecision – a fact all the more serious as it is as a function of it that the scope of objective incidence of the new taxation is defined –, had a short life, as it was abandoned upon the entry into force of the State Budget Law for 2014 (Law no. 83-C/2013, of 31 December), which gave new wording to that item no. 28 of the General Table, and which now defines its scope of objective incidence through the use of concepts that are legally defined in article 6 of the IMI Code.
This amendment – to which the legislator did not attribute interpretative character, nor does it seem to us that it did –, merely makes unambiguous for the future that construction land whose construction, authorized or foreseeable, is for housing, is covered by the scope of item 28.1 of the General Table of Stamp Duty (provided that its taxable property value is equal to or exceeding 1 million euros).' (End of quotation.)
Before the legislative amendment that innovatively came to include the said construction land, it was necessary to determine, making use of various interpretative elements, whether, in the absence of that literal reference, such land could, nevertheless, be included in the scope of objective incidence of item 28. It is for this reason that it can be understood that the said decision continued, saying:
'[Nothing] clarifying [the legislator] regarding past situations [i.e., assessments before 2014], such as the one at hand in the present proceedings, it does not seem possible to adopt [regarding these] the interpretation of the appellant, since it does not result unambiguously, either from the letter or from the spirit of the law, that the intention of the latter was, ab initio, to cover in its scope of objective incidence construction land for which the construction of residential buildings has been authorized or foreseeable, as results unambiguously today from item 28.1 of the General Table of Stamp Duty.
From the letter of the law nothing unambiguous results, in fact, as it itself, when using a concept that it did not define and that was also not defined in the diploma to which it referred on a subsidiary basis, unnecessarily lent itself to equivocations in a matter – of tax incidence – in which certainty and legal security should also be overriding concerns of the legislator.
And from its "spirit", ascertainable in the statement of reasons of the bill proposal that is the origin of Law no. 55-A/2012 (Bill Proposal no. 96/XII – 2nd, Journal of the Portuguese Parliament, series A, no. 3, 21/09/2012, p. 44 [...]) nothing more arises than the concern to raise new tax revenue, on sources of wealth "less spared" in the past from the Tax Authority's reach than labor income, in particular income from capital, securities gains and property, reasons that bring no relevant contribution to clarifying the concept of "urban properties with residential use", as they take it for granted, without any concern to clarify it. Such clarification was, however, to arise – as reported in the Arbitral Decision issued on 12 December 2013, in process no. 144/2013-T, available in the CAAD database –, upon the presentation and discussion in the Portuguese Parliament of that bill proposal, in the words of the State Secretary for Tax Affairs, which is reported to have stated expressly, as is gathered from the Journal of the Portuguese Parliament (DAR I Series no. 9/XII – 2, of 11 October, p. 32) that: "The Government proposes the creation of a special rate on high-value urban residential properties. It is the first time that in Portugal a special taxation has been created on high-value properties intended for housing. This rate will be 0.5% to 0.8% in 2012 and 1% in 2013, and will apply to houses of value equal to or exceeding 1 million euros" (emphasis ours), from which it follows that the reality to be taxed envisaged are, after all, and notwithstanding the terminological imprecision of the law, "urban residential properties", in common language "houses", and not other realities.
[...]. [...] referring to the tax incidence norm of stamp duty to urban properties with "residential use", without any specific concept being established for this purpose, cannot be extracted from it that it contains a future potential, inherent to a distinct property that might possibly be built on the land.
It is concluded therefore, in accordance with what was decided in the judgment under appeal that, as results from article 6 of the IMI Code a clear distinction between urban properties "residential" and "construction land", these cannot be considered as "properties with residential use" for the purposes of the provision in item no. 28.1 of the General Table of Stamp Duty, in its original wording, which was given to it by Law no. 55-A/2012, of 29 October.' (End of quotation.)
In summary, it is understood from the jurisprudence of the Venerable Supreme Administrative Court that, with the new wording of item 28.1 of the TGIS, given by article 194 of Law no. 83-C/2013, of 31/12 (and applicable to the present proceedings), the scope of objective incidence of the norm was broadened, in an innovative manner, by explicitly including construction land for which construction for housing has been authorized or foreseeable.
Having made the indispensable historical-legal framework, it is now important, in a second moment, to analyze the terms of the said broadening of the scope of objective incidence of the norm in question and to assess the legality of its application to the case of the present proceedings.
The new wording of item 28.1 of the TGIS (given, as stated, by art. 194 of Law no. 83-C/2013, of 31/12) states as follows: "By residential property or by construction land whose construction, authorized or foreseeable, is for housing, in accordance with the provisions of the IMI Code".
The essential question that, in this context, arises, is whether, making use of the words of the Claimant hereby, "without [...] that provision or expectation of 'construction for housing' [...] materialized", one can accept the application of Stamp Duty here under analysis (vd. articles 83 to 86 of the Claim).
To answer the said question, it appears as particularly useful to consider the following:
"With regard to construction land, whether or not located within an urban agglomeration, as defined in art. 3/4 of this statute [IMI Code], must, as such, be considered those lands regarding which has been granted: - authorization for subdivision operation; - construction license; - authorization for subdivision operation; - construction authorization; - favorable prior communication for subdivision operation or construction admitted; favorable prior information issued for subdivision operation or construction, as well as; - those that have been so declared in the acquisition title, it being necessary to bear in mind that, also for that purpose, only the acquisition title with the form required by law should be relevant, that is, the public deed or the authenticated private document referred to in article 875 of the Civil Code.' [see ANTÓNIO SANTOS ROCHA / EDUARDO JOSÉ MARTINS BRÁS – Taxation of Assets. IMI-IMT and Stamp Duty (Annotated and Commented). Coimbra, Almedina, 2015, p. 44]".
In light of the requirements cited above – with which this Tribunal agrees, as they express and clarify what the legal and administrative requirements are necessary for the consideration of any construction land as land covered by item 28.1 of the TGIS – it appears that, in the case now under analysis, the construction land in question does not meet any of them.
Indeed, and as stated during the evidentiary phase, no documentary evidence was attached to the present proceedings that attests that the acts in question were taken with respect to properties with approved construction projects (whether or not yet having or already having the said construction licenses and authorizations), or properties located in an area where construction for housing is foreseeable (with the mentioned favorable prior communications or prior information in effect favorable to the execution of subdivision or construction operations). Not having made that demonstration, one cannot consider that the construction land now in question has construction, authorized or foreseeable, for housing, in accordance with the IMI Code.
Returning to the decision that we have been following, "It is important to also note that, although the properties here in question are property-classified as being 'construction land', this does not legitimize the automatic application of item 28.1 of the TGIS, since, as it seems obvious, the mere property classification does not, by itself, constitute proof that a property has foreseeable construction for housing.
Proof of what has just been stated is the fact that, as also stated by ANTÓNIO SANTOS ROCHA and EDUARDO JOSÉ MARTINS BRÁS (ob. cit., p. 46), "real property located in urbanized areas or included in areas covered by already approved urban development plans [...] should only be considered as construction land when, through action undertaken by the respective owner, there is verification, alternatively, of the issuance of any of those documents ['granting of licenses, construction or subdivision authorizations, favorable communications or prior information for the same purpose']".
"The same authors add (see ibidem) – reinforcing the understanding, already expressed herein, that without construction licenses or authorizations, the mere property classification of real property as construction land does not legitimize, by itself, the application of item 28.1 of the TGIS –, in support of their position, the following:
"Real property already described in the land register as construction land, regarding which there is lapse of the subdivision, license or construction authorization, and in which no construction operation has even been initiated, must, through the institute of lapse, recover the prior nature".
"In the same sense, see also, JOSÉ MANUEL FERNANDES PIRES, (Lessons of Taxes on Assets and Stamp Duty. Coimbra, Almedina, 3rd ed., 2015, pages 110 to 112): "The right to build is not inherent in the right of ownership, but only arises ex novo in the owner's patrimony when an administrative act of the competent public entity recognizes and authorizes the owner to build or subdivide. [...] only when that right is constituted in the legal sphere of the owner does the IMI Code establish that we are faced with construction land. Being that constitutive act carried out by the public entity at the request of the owner, then the classification of a property as construction land always depends on the will of the owner."
"In summary, it appears clear, in the case being treated, that the incidence of the tax on construction land cannot be materialized with the mere property classification of the same as such in the land register, but rather, and decisively, by the verification of the actual potential for construction on said land (which must be determined in the concrete case and revealed through the existence of the documents described above). The same is to say, in other words, that the incidence of the tax, for the purposes of the provision in item 28.1, is only materialized with the verification of "effective use", using the felicitous expression of JOSÉ MANUEL FERNANDES PIRES (ob. cit., p. 507).
"Without that demonstration of the actual potential for construction – which, as stated, did not occur in the case here under analysis –, the purposes underlying the new wording of the text of law of item 28.1 of the TGIS are not met, reason for which it is concluded that the assessments in question incur the error invoked by the Claimant (see article 92 of the Claim)."
Accompanying this Arbitral Tribunal, integrally and without reservation, such understanding, there is nothing left but to show the procedence of the Claimant's understanding regarding the question referred to, and to preclude, in light of the provision in article 124 of the Code of Tax Procedure, ex vi article 29, no. 1, al. c), of the Rules of Arbitration in Tax Matters, the consideration of other allegations of the Claimant (there being, in light of this decision, no prejudice to the more stable or effective protection of the interests of the same).
B. Compensatory Interest
Pursuant to article 43 of the General Tax Law, compensatory interest is due when it is determined, in an administrative review or judicial challenge, that there was error attributable to the services resulting in payment of the tax debt in an amount exceeding that legally due.
As results from what was concluded previously, there was, in the case, error attributable to the services, in that the assessments in question, contrary to what was alleged by the Respondent, were not issued in simple application of the law. In fact, the Respondent did not take care to verify and prove whether, in the case in question, there were elements that would allow, in accordance with the law, the determination of the effective residential use of the properties in question. Consequently, without sustaining and justifying its action, it could not have issued the tax assessments which, as concluded, are illegal.
With there being, manifestly, error attributable to the services, it is also, and without further ado, procedent the request for payment of compensatory interest to the Claimant, in an amount to be determined in execution of judgment.
6. DECISION
In light of the above, it is decided:
a. The request for arbitral ruling is found to be well-founded and, in consequence, the Stamp Duty assessments in question are annulled, with the determination that the amounts improperly charged be refunded;
b. The request for payment of compensatory interest to the Claimant is found to be well-founded.
Amount in dispute: €378,189.24 (three hundred seventy-eight thousand one hundred eighty-nine euros and twenty-four cents)
Costs: Under the provision of article 22, no. 4 of the Rules of Arbitration in Tax Matters, and in accordance with Table I annexed to the Costs Regulation in Tax Arbitration Proceedings, the value of costs is fixed at €6,426.00 (six thousand four hundred twenty-six euros), charged to the Respondent.
Notify.
Lisbon, 7 September 2016.
The Arbitrators,
(Fernanda Maçãs)
(Ana Pedrosa Augusto)
(Suzana Fernandes da Costa)
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