IMT Tax Exemption Under Article 270(2) CIRE: Insolvency Asset Sales Ruling

ARBITRAL DECISION

I. REPORT

1. Subject matter of the claim

A... and B... have come to challenge the tax assessments for tax on onerous transfers of immovable property (IMT) numbers ... and ..., in the amounts, respectively, of € 5,184.25 and € 8,856.43, relating to the joint acquisition of an autonomous fraction, designated by the letter G, 3rd floor right, of the urban building located at ..., no. ..., registered under article ... of the urban property register of the parish of ..., municipality of Lisbon, requesting its annulment and restitution plus legal interest.

In accordance with article 6, paragraph 1 of the Legal Framework for Tax Arbitration (RJAT), approved by Decree-Law no. 10/2011, of 20.01, the President of the CAAD Deontological Council appointed the undersigned, Joaquim Silvério Dias Mateus, as single arbitrator, who accepted the assignment within the legally prescribed period without any party having expressed refusal of his appointment.

The single arbitral tribunal was constituted on 28 May 2015.

With the consent of the parties, an order was issued dispensing with the holding of the meeting provided for in article 18 of the RJAT as well as the presentation of pleadings, with 31 October 2015 being set as the deadline for issuing the arbitral decision.

2. Grounds of the claim

The claimants base their claim to have the assessments set aside with the argument which, in summary, is as follows:

First, they invoke the lack of substantiation of the assessments due to the fact that the Tax Authority did not indicate "the reason why the services consider that the tax is due".

Subsequently and in addition to the formal defect invoked, the claimants allege that the IMT assessments should not have been made "as there was an exemption from such tax as provided for in article 270, paragraph 2 of the Insolvency Code".

To support their conclusion that they should benefit from IMT exemption, the claimants invoke the case law of the Supreme Administrative Court (STA) which, according to them, handed down at least two decisions by virtue of which article 270, paragraph 2 of the Insolvency Code covers not only the sale of a business or an establishment thereof, as universalities of assets, but also the isolated sale of elements of its assets, provided that, in either case, such sales are integrated, among other acts, within the context of the liquidation of its insolvent estate.

From their analysis of the decisions invoked, through various transcriptions, the claimants present the arguments and substantiation which those decisions used to conclude by the applicability of the provision in question to transfers identical to theirs, drawing attention, in particular and based on the decision of 30/05/2012, case 0949/11, to the terms of the preamble of the Insolvency Code where it is stated that this new Code maintained in essence the same tax benefits as the previous Code of Special Procedures for Business Recovery and Bankruptcy (CPEREF) where, in an equivalent provision, the exemption from transfer tax (Sisa) for the transfer of elements of the company's assets was provided for, also invoking Legislative Authorization Law no. 39/2003, of 22 August, which authorized the Government to approve the Insolvency Code and to exempt from Sisa the "sale, exchange or transfer of the business, establishment or elements of its assets".

Now, the claimants continue, since the Government restricted the scope of the legislative authorization that had been granted to it violated a law of the Parliament of the Republic, which means that "the interpretation of article 270, paragraph 2 of the Insolvency Code in the sense that it does not exempt from IMT the sale of the company's assets would make this provision unconstitutional, in particular due to violation of article 165 of the Constitution of the Portuguese Republic".

Subsequently, the claimants invoke the decision of 17/12/2014, case 01085/13, from which they transcribe certain passages, in particular one which states that "it cannot be conceived that there are assets which, being part of the insolvent estate of an insolvent company, can be included in a category of assets without any relation to that company or establishment" which allows them to conclude that "it is manifest that the sale of an immovable property belonging to the assets of an insolvent company carried out within the context of the liquidation of its insolvent estate is always exempt from IMT".

3. Response from the required authority

For its part, the Respondent, in its Response, defends the legality of the assessments contested, arguing that article 270, paragraph 2 of the Insolvency Code does not apply to isolated transfers of immovable property even if said immovable property has been part of the assets of an insolvent company.

To support its position, the respondent invokes the literal wording of the provision in question, which expressly refers to "acts of sale, exchange or transfer of the business or of establishments thereof (...)", invokes the comparison with the wording of article 121, paragraph 2, of the previous Code of Special Procedures for Business Recovery and Bankruptcy (CPEREF) which, contrary to the Insolvency Code, made reference both to transfers of immovable property arising from the legal autonomization of the business or establishment and to the sale, exchange or transfer of elements of the company's assets, concluding thus that contrary to what occurred with the CPEREF, the legislator of the Insolvency Code, as clearly results from the literal wording of the provision, intended to benefit only those cases in which the transfer itself made it possible to ensure the continuity of the business activity or part thereof.

As for the argument concerning violation of the legislative authorization law contained in article 9, paragraph 3, letter c), of Law no. 39/2003, of 22 August, the Respondent, while acknowledging that it gave scope to the Government to exempt, among other operations, the isolated sale of company assets, observes that nothing prevented the Government from using only partially that authorization by limiting the exemption to the transfer of the business or of an establishment thereof.

Moreover, the Respondent continues, the issue of the alleged violation of the legislative authorization law is already settled given that article 234 of Law no. 66-B/2012, of 31 December, re-enacted article 270, paragraph 2 of the Insolvency Code reaffirming, as to the matter in question, the wording which the Insolvency Code had given to the same provision within the scope of said authorization, that is to say, that the IMT exemption covers only the sale, exchange and transfer of the business or of establishments thereof, excluding the isolated sale of its assets.

4. Preliminary matters

The arbitral tribunal is materially competent and was regularly constituted, the parties have legal personality and capacity and have standing.

Since the proceedings do not suffer from nullities and no issues have been raised that prevent the consideration of the merits of the case, the conditions are met for the arbitral decision to be issued.

II. REASONING

1. Facts

Upon examination of the documents submitted by both claimants and respondent, the relevant factual matters are established as not contested by any of the parties, namely, that the transfer which gave rise to the assessments challenged was executed by public deed celebrated on 29 January 2015, pages 34 to 37, Book ...-..., Notarial Office ..., which had as its object the joint purchase of the autonomous fraction designated by the letter G, 3rd floor right, of the urban building located at ..., no. ..., registered under article ... of the urban property register of the parish of ..., municipality of Lisbon.

Said autonomous fraction was acquired within the context of the liquidation of the insolvent estate of the company "C..., Lda", declared insolvent as per case no. .../13...., which proceeded in the court of the District of Lisbon, the deed being executed, on the selling side, by the administrator of the insolvency of that commercial company.

The claimants submitted a copy of a written submission, dated 26 January 2015, which they had presented to the Tax Authority services requesting the IMT exemption for the above identified acquisition, invoking the case law of the STA, having ended that submission by stating that "should it be understood that they are not exempt from IMT for this acquisition, they request the assessment of the respective tax, as per model 1 now also delivered, without prejudice to the request for reimbursement of any tax that may be paid".

It was equally established in the proceedings that the model 1 Declarations were presented by the claimants on 2015-01-27, the date on which the IMT assessments now challenged were issued, which were voluntarily paid on that same date by the claimants.

2. Law

In the present proceedings, as well as in the case law invoked, the question at issue is whether the IMT exemption provided for in article 270, paragraph 2 of the Insolvency Code encompasses, under the conditions referred to therein, only the transfer of immovable property integrated in the alienation of the insolvent business itself or of any establishment thereof or whether, in addition to those acts, the mere isolated transfer of any immovable property of such business, as occurs in the situation at issue in the present proceedings, should also be covered by the exemption.

Let us first consider the wording of article 270, paragraph 2 of the Insolvency Code:

"2 — Acts of sale, exchange or transfer of the business or of establishments thereof integrated within the scope of insolvency plans, payment plans or recovery plans or carried out within the context of the liquidation of the insolvent estate are equally exempt from municipal tax on onerous transfers of immovable property."

It is noted from the outset that the current wording just transcribed was introduced by article 234 of Law no. 66-B/2012, of 31 December (Budget Law for 2013), being slightly different the wording in force at the time of the decision of 30/05/2012, invoked by the claimants as support for the claim and which we shall analyze below, which was as follows:

"2 — Acts of sale, exchange or transfer of the business or of establishments thereof integrated within the scope of insolvency plans or payment plans or carried out within the context of the liquidation of the insolvent estate are equally exempt from municipal tax on onerous transfers of immovable property."

As can be seen, the aforementioned article 234 of Law no. 66-B/2012 extended only the application of the IMT exemption to transfers operated in acts of recovery of the business, which the previous wording did not contemplate, maintaining the remainder of the wording of the provision in question.

Notwithstanding, as we shall point out below, this new wording had another significant effect regarding the applicability of article 270, paragraph 2 of the Insolvency Code, in that following its entry into force it came to remedy the alleged constitutional defect attributed to the provision by the claimants, making irrelevant any argument that might be invoked for the case at hand arising from such a defect.

With due respect, it is stated in advance that the present arbitral decision will not follow the interpretation accepted by the learned decisions invoked by the claimants to support their claim.

This is first of all because the very wording of said decisions reveals or even assumes some doubts and hesitations about the best interpretation that should be given to article 270, paragraph 2 of the Insolvency Code under analysis, reason why, in our modest view, a reconsideration of the problem in question can be justified.

Let us examine, to begin with, the reasoning used in the decision of 30-05-2012, case no. 0949/11.

The sentence under appeal which was the subject of the learned decision just cited had decided that although the wording of article 270, paragraph 2 of the Insolvency Code "is ambiguous, allowing for the interpretation that both the sale and the exchange together with the transfer are referred to the business or to an establishment thereof, such interpretation should be rejected for fear of concluding that if it were so there would be an inexplicable tautology, since the transfer of the business (or of the establishment) is nothing other than its sale, judging, therefore, that the only plausible interpretation of said provision is the one that understands it as referring the exemption to acts of sale and exchange of the immovable property itself (...)".

Confirming the sentence under appeal, the STA decision in question, after transcribing the wording of article 270, paragraph 2 of the Insolvency Code then in force, adds that the issue is "whether the provision should be interpreted in the sense that sale, exchange and transfer, though integrated within the scope of insolvency plans or payment plans or carried out within the context of the liquidation of the insolvent estate, in order to be exempt from IMT, must necessarily have as their object the business or establishment thereof or whether, as decided (in the sentence under appeal), the reference to the business or establishment thereof refers only to the transfer, being comprised within the scope of the IMT exemption also the sales and exchanges of immovable property integrated within the scope of insolvency plans or payment plans or carried out within the context of the liquidation of the insolvent estate".

Next, recognizing that the letter of the law may point in a different direction from that which was decided, the decision continues by saying that "in light of the letter of the law, either one or the other of the interpretations are defensible, though grammatically the position sustained by the tax administration appears more correct, since the terms sell, exchange and transfer are all transitive verbs, so that in the phrase the reference to the business or establishments thereof appears as the direct object of all three".

Abandoning the solution that results from the literal wording of the provision, this decision considers other interpretive elements and moves toward a different solution in the following terms: "This interpretation clashes, however – as well observed in the sentence under appeal – with what the legislator enshrined in paragraph 49 of the preamble of the Insolvency Code" where it was provided that the new Code (the aforementioned Insolvency Code) maintained the previous regime of tax benefits, and in light of article 121 of the previous Code, the transfer tax exemption covered the transfers of "elements of the company's assets".

In addition to this argument, the text of the decision also invokes "the meaning and scope of the legislative authorization granted to the Government under which the Insolvency Code was approved" in which was included the possibility of the exemption covering the sale, exchange or transfer of the business, establishment or elements of its assets".

However, before the final decision, the learned decision in question rebutts its own arguments and acknowledges that the preambles of legislative acts do not always reflect with accuracy their respective content and that there need not be coincidence between them and the substantive provisions, accepting, on the other hand, that the Government could have been more parsimonious than Parliament as to the scope of the exemption by recognizing it only to the transfer of the business or of an establishment thereof.

Somewhat contradictorily with the foregoing reflection, the text of this learned decision then again values the argument drawn from the inconsistency between the authorization law and the Insolvency Code by saying that the Government did not respect "the meaning and scope of the legislative authorization that was granted to it, having legislated on a matter reserved to Parliament in disregard of the parliamentary authority that was conferred upon it", and concludes by way of a synthesis conclusion to support the decision to dismiss the appeal saying that "It is for that fundamental reason that it is understood that the decision under appeal (sentence) does not merit censure, since although it is doubtful that the ordinary legislator of the Insolvency Code intended to confer upon the transfer tax/IMT exemption provided for in article 270, paragraph 2 thereof the same scope that the previous transfer tax exemption provided for in article 121, paragraph 2, letter c) of the CPEREF had, the option of the direction of its restriction was not permitted to it, as it legislates in a matter reserved to Parliament, and it must respect the limits that Parliament sets for it, namely those relating to the meaning and scope of the authorization".

As for case 01085/13, in which the STA decision of 17.12.2014 was handed down, also invoked in the petition of the claimants, it had as its object the consideration of a tax situation similar to that which was the subject of the learned decision analyzed above and was instituted on the basis of an appeal brought by the Public Treasury against a sentence which also recognized that the IMT exemption provided for in article 270, paragraph 2 of the Insolvency Code could apply to the isolated transfer of a property alienated within the context of the liquidation of the insolvent estate of a business.

Regarding this learned decision, it must be observed, in the first place, that, contrary to the previous one, this decision was handed down already within the period of validity of the new wording of article 270, paragraph 2 of the Insolvency Code given by article 234 of Law 66-B/2012 to which reference was made above, which would make irrelevant the invocation of disrespect of the content of the legislative authorization law made by reference to the decision of 30 May 2012, in light of the inconsistency between that law and the text of the Insolvency Code published by the Government in the exercise thereof.

However, this was not the essential ground invoked by this decision to find the appeal unfounded and to consider that the IMT exemption provided for in article 270, paragraph 2 of the Insolvency Code is applicable to the transfer of an immovable property carried out in the liquidation phase of an insolvency proceeding, in this case with the particularity of being the only asset that integrated the insolvent estate.

This decision, although it also emphasized the ambiguity of the text of article 270, paragraph 2 of the Insolvency Code, considered that it could be "subject to a clearer and unambiguous reading without recourse to any extensive interpretation", adding, to reach this conclusion, that "it suffices that we ask ourselves whether to achieve the previously defined purpose – to encourage and support the quick sale of assets that are part of the insolvent estate for obvious reasons of creditors' interest, but also of the public interest in the resumption of normal functioning of the business world in which each insolvency proceeding presents itself as a disruptive element by giving a (tax) bonus to whoever acquires the immovable property that is part of the insolvent estate – it makes any difference whether one is selling globally the business with all its assets and liabilities, whether one is selling one or more of the commercial establishments that comprised it, whether one is selling assets that were part of its property but were not used in its business operations, as would be the case of an immovable property received in payment of a debt which the insolvent company was a creditor of, so as to be faced with a sale that is carried out within the context of the liquidation of the insolvent estate?".

The text of the learned decision adds that the answer to that question "cannot but be negative", concluding thereafter that article 270, paragraph 2 of the Insolvency Code should be interpreted respecting its wording, without need for any extensive interpretation, and that relevance should be given to the "purpose it aims to achieve" taking into account "the various variants of the insolvency proceeding".

Thus, it was decided in this decision that the cited legal provision confers IMT exemption on any sale (whatever the asset may be), any exchange (whatever the asset may be), and also on the transfer of the business or of an establishment thereof, provided that any one of those acts is carried out within the context of the liquidation of the insolvent estate.

As we have already indicated above, we do not agree with this "reading" of the provision in question, as we shall now develop.

Article 10 of the Tax Benefits Statute provides that "provisions establishing tax benefits are not susceptible to analogical interpretation, but admit extensive interpretation".

This legal provision, in line with article 11 of the General Tax Law, confirms the position that is now settled in the law itself, in doctrine and in case law that in the interpretation of tax provisions the general rules and principles of interpretation must be observed, with legal foundation in article 9 of the Civil Code, without prejudice to the prohibition of analogy when provisions concerning the essential elements of the tax are at issue.

One of the first general rules of interpretation is concerned with the literal wording of the provision to be interpreted according to which the interpreter cannot consider a legislative intent that does not have in the letter of the law a minimum of verbal correspondence even if imperfectly expressed.

Article 270, paragraph 2 of the Insolvency Code states that "acts of sale, exchange or transfer of the business or of establishments thereof integrated within the scope of insolvency plans, payment plans or recovery plans or carried out within the context of the liquidation of the insolvent estate are equally exempt from municipal tax on onerous transfers of immovable property".

From the outset it must be noted that the content and scope of the expressions that in this provision refer to its tax component, connected with the tax on transfers of immovable property, must be sought in light of the rules of scope of the respective Code (CIMT – Code of Tax on Immovable Property Transfers).

Now, one of the general rules of scope of the CIMT is that where there is an effective, material transfer of a property, in the sense that it is transferred between two legally autonomous assets, by payment of a price, the designation that may be attributed to the operation or to the transferring title becomes less relevant, and it may occur within the scope of a purchase and sale contract formalized in accordance with civil law, through a conditional contract with delivery of the goods, through an irrevocable power of attorney, through assignment of contractual position, through an exchange, through dation in payment, through a corporate split or merger operation, through acquisition of corporate shares or quotas of certain companies holding immovable property when some shareholder comes to hold 75% of the corporate capital, through assignment of corporate shares or quotas of civil companies to the extent that there are shareholders acquiring communal ownership of immovable property, among other transfers provided for in the scope rules of that Code (see articles 1 to 3 of the CIMT).

Often, both doctrinal language and case law and even scattered provisions, particularly those that typify tax benefits, reflect this variety of real or fictional transfers, using indistinctly, and sometimes even with some redundancy and lack of precision, various denominations such as, for example, sale, alienation, purchase and sale, exchange, transfer, all expressions that aim to capture the various types of fiscal transfer subject to IMT (see, among other publications, The Taxes on Immovable Property, annotations to articles 1 to 3 of the CIMT, by J. Silvério Mateus and L. Corvelo de Freitas, Engifisco publication).

This is what occurs in the provision under analysis which uses the expressions "sale", "exchange" and "transfer" without making any distinction between each one of them, without framing them nor referring them to the situations within the scope of the CIMT and also without exhausting the various transferring forms provided for in the Code that may operate transfers subject to this tax, reasons that, among others, must have led the decisions analyzed above to make references to the lack of clarity, to the lack of precision and to the ambiguity with which the provision in question is drafted.

One can even say that the legislator of the Insolvency Code, uncertain as to the best expression it should use to typify the realities it intended to cover by the exemption of the aforementioned article 270, paragraph 2, instead of using one used three expressions hoping that this would reduce the risk of missing the intended effect.

To conclude the analysis of this literal component of the provision in question, we cannot but follow one of the findings of the decision of 30-05-2012 already analyzed above which admits as grammatically more correct the position sustained by the tax administration, since the terms sell, exchange and transfer are all transitive verbs and, being so, the reference to the business or establishments thereof appears as the direct object of said verbs.

But, to achieve the true meaning and scope of a provision other interpretive elements must be considered, such as the rational or logical element, the systematic element and the historical element (see Manuel de Andrade, in Essay on the Theory of Interpretation of Laws, 8th Edition, Arménio Amado-Editor, Coimbra 1978).

In terms of the rational element, one must consider that every provision was created with a determined purpose and that, consequently, it must be understood in the sense that best responds to the result that was intended to be achieved.

According to the decision of 17-12-2014, article 270, paragraph 2 of the Insolvency Code should be seen as a facilitator and support for the quick sale of assets that are part of the insolvent estate "for obvious reasons of creditors' interest but also of the public interest in the resumption of normal functioning of the business world in which each insolvency proceeding presents itself as a disruptive element".

Not disagreeing that this purpose may be attributed to the provision in question, the truth is that this purpose does not cease to be present if one considers that it covers only the transfer of the business as a whole or the transfer of a certain establishment thereof.

One can say, it is true, that the more comprehensive the benefit, that is, if instead of covering only the transfer of the business or of an establishment thereof it also applied to the isolated transfer of any real asset of the insolvent company, that the incentive would be greater.

That is true. However, the interpretation of what is or is not covered cannot be made in function of maximums or minimums, in function of the degree of support or incentive it can confer to the protection of creditors or of the business world.

That degree only the law itself could determine, not the interpreter, and in the case at hand nothing permits one to conclude that the tax benefit should apply to any and all transfers of the assets of the insolvent company or even that the legislator or the law itself wanted that result.

As for the systematic element, the comparison of article 270, paragraph 2 with other provisions of the Insolvency Code on tax benefits can also help perceive the meaning and scope of this provision.

In this regard, what we see is that in articles 268, 269 and paragraph 1 of article 270 tax benefits are provided for in the fields of income taxation, stamp tax and tax on onerous transfers of immovable property, and it can be found that, as regards the transfer of immovable property, there are two operations common to all these provisions and which are "giving of assets in fulfillment of obligation" and "transfer of assets to creditors" (see paragraph 1 of article 268, letter d) of article 269 and letter e) of paragraph 1 of article 270).

Still in the field of operations that may involve immovable property, letter e) of article 269 provides for the exemption from stamp tax for "the sale, exchange or transfer of elements of the company's assets" and letters a) and b) of paragraph 1 of article 270 provide for the IMT exemption for transfers connected with the constitution of new companies and the realization of their capital and also transfers aimed at increasing the capital of the debtor company.

It is found thus that these situations covered by tax benefits are clearly formulated and properly delimited for certain types of operations and that, in the case of letter e) of article 269, in the field of stamp tax, the provision is quite clear and express in covering "the sale, exchange or transfer of elements of the company's assets" without any doubt, on the grammatical plane, that the verbs sell, exchange and transfer have as their direct object only and exclusively the elements of the company's assets.

That is, faced with the clarity of the wording of this provision, it would make no sense, whatever interpretive element might be invoked, that the expressions "sale" and "exchange", just like "transfer", did not refer to "elements of the company's assets".

Thus, being faced with the same grammatical construction as to the verbs used, it is found that there is no coincidence between the direct object used in the provision relating to stamp tax, which are elements of the company's assets, and the direct object contained in article 270, paragraph 2 regarding IMT, in which only the acts of "sale", of "exchange" and of "transfer", not of any assets of a company, but rather of the business itself or of any of its establishments are provided for.

Which allows one to conclude that, differently from other provisions in which the purpose pursued with the tax benefits was different, the legislator privileged here the alienation of the set of assets of the insolvent company or of any of its establishments having in view the protection of its continuation and its operation under another ownership.

The historical element can also be present with the analysis of the evolution of the provisions that preceded the current version of the provision under analysis.

And, in this regard, what is found is that the Insolvency Code was approved under Legislative Authorization Law no. 39/2003, of 22 August, which authorized the Government to "exempt from municipal transfer tax (the predecessor of IMT) the sale, exchange or transfer of the business, establishment or elements of its assets", having it used only partially such authorization by exempting only the sale, exchange or transfer of the business and of its establishments, excluding the sale, exchange or transfer of its assets as such.

Now, by using only partially the said legislative authorization, the Government could be accused, as was stated in the decision of 30/05/2012 and as the claimants invoked in their reasoning, of not having "respected the meaning and scope of the legislative authorization that was granted to it, having legislated on a matter reserved to Parliament in disregard of the parliamentary authority that was conferred upon it".

We will not enter into the consideration of this argument which could only make some sense when the decision of 30/05/2012 was handed down but which, after the publication of article 234 of Law no. 66-B/2012, of 31/12, ceased to have any relevance since Parliament itself, in maintaining, in that part, the wording of article 270, paragraph 2 that the Government had previously given to it, remedied, at least for the future, any defect and any objection that might be imputed to the initial publication of the provision in question.

Being so, if any conclusion is to be drawn from the historical evolution of the wording of article 270, paragraph 2 of the Insolvency Code it is that, at least after Law 66-B/2012, the act of isolated alienation of immovable assets of an insolvent company does not benefit from the IMT exemption provided for in the cited legal provision, it being obvious that this type of acts was not accepted in the version in force on the date on which the transfer that gave rise to the assessments challenged occurred.

To conclude, it cannot be failed to mention another STA decision, also invoked by the claimants in the initial petition, which dealt with the matter of the applicability of article 270, paragraph 2 of the Insolvency Code to an alienation in which the insolvent was a natural person.

We refer to the STA decision of 03-07-2013, case 0765/13, in which the question was whether article 270, paragraph 2 of the Insolvency Code could also apply to the sale of a property carried out within the context of an insolvency proceeding in which the insolvent was a natural person, having been decided in the negative, without having failed to recognize the lack of clarity of that provision as to "the scope of the IMT exemption provided therein".

However, in that same decision it was added, being that the reason which must have led the claimants to invoke it, that "at most, the said provision can be interpreted as covering not only the sales of the business or establishments thereof, as universalities of assets, but also the sales of elements of its assets, provided that they are integrated within the scope of insolvency plans or payment plans or carried out within the context of the liquidation of the insolvent estate".

Being that in the said decision it was not at issue to analyze the scope of the provision as to its applicability to the isolated alienation of immovable assets of a company, the truth is that, with due respect, we are faced with a statement that is not coherent with the conclusion and with the decision of the decision itself.

Indeed, in light of the letter of the provision and the absence of any express reference to natural persons it was concluded without hesitation that the exemption provided for in said legal provision is not applicable to the alienation of properties when the insolvent is a natural person, but faced with the same absence of any literal reference to support its application to the alienation of assets not integrated in the alienation of the business or of its establishments, no hesitation was shown in filling that gap and considering that the sales of elements of the company's assets could also be included therein.

In other words, if one accepts that the provision in question can be interpreted in the sense that the expressions "sale" and "exchange" do not refer only to the alienation of the business or of its establishments, and can cover any sale and any exchange carried out within the scope of the procedural acts and in the proceedings indicated by the provision, as was understood in the decisions of 30-05-2012 and 17.12.2014, then neither would it make sense to exclude its application to the insolvency of natural persons, as was decided in the decision of 03-07-2013.

Upon concluding by the inapplicability of the IMT exemption provided for in article 270, paragraph 2 of the Insolvency Code to the acts of sale of properties when the insolvent is a natural person, with which one agrees, the decision given in the decision of 03-07-2013, at least implicitly, recognized prevalence to the literal wording of the provision which provides that only the acts of "sale", of "exchange" or of "transfer" of businesses or of establishments thereof are provided for therein.

Also unfounded is the invoked nullity for lack of substantiation of the assessments challenged given that, in addition to the claimants not having indicated which provision or provisions they consider violated, it is found that the Tax Authority merely satisfied requests for IMT assessment that were presented to it, the assessments themselves having as their basis the understanding that the exemption provided for in article 270, paragraph 2 of the Insolvency Code was not applicable to the transfer in question.

DECISION

Accordingly, the arbitral tribunal decides to find unfounded the petition for a declaration of illegality of the assessments for tax on onerous transfers of immovable property (IMT) numbers ... and ..., in the amounts, respectively, of € 5,184.25 and € 8,856.43, condemning the claimants in costs.

Value of the Process

In accordance with what is provided in article 315, paragraph 2 of the Code of Civil Procedure, letter a) of paragraph 1 of article 97-A of the Code of Tax Procedure and paragraph 2 of article 3 of the Regulation of Costs in Tax Arbitration Proceedings, the value of the process is set at € 14,040.68.

Costs

In accordance with the provisions of article 12, paragraph 2 and article 22, paragraph 4 of the RJAT, as well as article 4, paragraph 4 of the Regulation of Costs in Tax Arbitration Proceedings and Table I annexed to this Regulation, costs are fixed at € 918.00 (nine hundred and eighteen euros), to be borne entirely by the claimants.

Notification

Lisbon, 21 October 2015.

The Arbitrator,

(Joaquim Silvério Dias Mateus)