Summary
Full Decision
ARBITRAL DECISION
1. Report
On 27-03-2017, A..., taxpayer no...., resident in ..., Porto, in his capacity as head of the estate of B..., with tax identification number ..., hereinafter referred to as the Claimant, submitted to the Center for Administrative Arbitration (CAAD) a request for the constitution of an arbitral tribunal with a view, immediately, to the annulment of the dismissal of the administrative complaint, and mediately, to the annulment of the tax assessment act for the Municipal Property Tax (IMI) relative to the year 2015 and the property registered in the urban property register under article..., of the union of civil parishes of ..., ..., ..., ..., ... and ..., municipality of Porto.
The Claimant alleges that the tax assessment in question is illegal, since the property benefits from an exemption in respect of IMI that is provided for in article 44, paragraph 1, paragraph n) of the Tax Benefits Statute (EBF).
The Claimant begins by stating that the property is located in a civil parish (civil parish of...) covered by the so-called "Historic Zone of Porto", classified by UNESCO as Cultural Heritage of Humanity. According to the Claimant, the "Historic Zone of Porto", formed by part of the territorial jurisdiction referring to the former civil parishes of Massarelos, Miragaia, Santo Ildefonso, São Nicolau, Sé and Vitória, was individually classified as a property of public interest. Thus, for the Claimant, the so-called "Historic Zone of Porto" is a property individually classified as being of public interest under the terms of Decree-Law No. 67/97 of 31-12, which placed it on par with other properties individually classified in the same decree as being of public interest, including the S. Bento Station.
The Claimant states that, even if the "individuality" referred to above was not accepted, it would still be recognized that properties classified as "national monuments" would not need to meet the requirement introduced by the element "individually", insofar as they would be exempt from IMI for being "properties classified as being of public interest or of municipal interest". The Claimant alleges, for this purpose, that the "Historic Zone of Porto" was inscribed on the World Heritage List, and consequently, by the terms of the Framework Law of the policy and regime for the protection and enhancement of cultural heritage, classified as a "national monument".
To support its position, the Claimant cites the decisions of CAAD in proceedings No. 325/2014-T, 76/2015-T, 98/2016-T and 379/2016-T.
Finally, the Claimant requests the condemnation of the Tax Authority to reimburse the tax wrongfully paid and to pay indemnity interest, under the terms of articles 43 of the General Tax Law (LGT) and 61 of the Code of Tax Procedure and Process (CPPT).
A sole arbitrator was appointed, on 18-05-2017, Suzana Fernandes da Costa.
In accordance with the provisions of article 11, paragraph 1, paragraph c) of the RJAT, the singular arbitral tribunal was constituted on 02-06-2017.
The Tax Authority presented its response, on 05-07-2017 (within the legal deadline for this purpose).
The Tax Authority argues that the request for declaration of illegality and consequent annulment of the disputed tax assessment should be judged unfounded, since the tax assessment in question embodies a correct interpretation of article 44, paragraph 1, paragraph n) of the EBF.
The Tax Authority begins by providing historical context of the classification of properties, from the year 1901.
The Tax Authority alleges that there is no UNESCO classification termed "Heritage of Humanity", "UNESCO Heritage", "World Heritage" or any other expressed equivalent.
For the Tax Authority, the Historic Center of Porto does not possess the classification of "UNESCO World Heritage", because, on one hand that mention refers to a mere list of the World Heritage Committee and, on the other hand, that inscription was not preceded by any administrative classification procedure under our legal system.
The Tax Authority states that Notice No. 15173/2010 of 30 July announced that, in 1996, the ensemble known as the Historic Center of Porto was included in the indicative list of UNESCO World Heritage, but no classification of the Historic Center of Porto was carried out.
In fact, for the Tax Authority, there is no classification of the Historic Center of Porto termed a national monument.
The Tax Authority further alleges that the Historic Center of Porto enjoys the designation of National Monument, as a result, not of a decision by the competent authority, but also stating that "the classification rating of National Monument evident in article 24 of Decree 20.985 does not confuse nor is equivalent to the concept of designation of National Monument evident in article 15.3 of LBPC".
It asserts that, as a cultural asset inscribed on the "UNESCO World Heritage List", the Historic Center of Porto is classified as property of National Interest, being designated as a National Monument.
In fact, for the Tax Authority the classification of National Monument cannot be confused with the concept of designation of National Monument.
On the other hand, the Tax Authority alleges that it is abusive to interpret that all properties inserted within the ensemble find themselves, solely by that fact, classified and as such, exempt from IMI.
Finally, the Tax Authority adds that the exemption provided for in article 44, paragraph 1, paragraph n) of the EBF can only be applied to a property, and the ensemble termed Historic Center of Porto is not a property, but rather a universality comprised of thousands of properties. Consequently, the Tax Authority concludes that IMI exemption, since it can only be directed at individual tax properties, requires the individual classification of properties.
As to document 6 submitted by the Claimant, the Tax Authority states that the Municipality of Porto only has competence to certify properties classified as Municipal Value and Municipal Interest.
To support its position, the Tax Authority attached to the proceedings a judgment delivered by the Administrative and Tax Court of Porto (proceedings No. 134/14.4BEPRT).
Finally, the Tax Authority exposes that the interpretation conveyed by the Claimant is contrary to the Constitution of the Portuguese Republic (CRP), insofar as it violates the principles of tax equality, tax justice, contributory capacity, local autonomy and participation in decision-making.
With the presentation of the response, the Claimant also sent a petition requesting the waiver of the arbitral meeting provided for in article 18 of the RJAT, as well as final arguments.
On 06-07-2017, an order was issued ordering notification of the Claimant regarding the Tax Authority's request for waiver of the meeting and the presentation of arguments.
On 17-07-2017, the Claimant came forward to manifest its agreement with the waiver of the meeting, also noting that it understood it convenient to present final written arguments.
On 18-07-2017, an order was issued waiving the holding of the meeting provided for in article 18 of the RJAT, taking into account the position of the parties and under the protection of the provisions of articles 16, paragraph c) and 19 of the RJAT, and the principles of procedural economy and the prohibition of the practice of useless acts.
In the same order, the parties were also ordered to be notified so that, if they wished, they could submit written arguments within a period of 15 days, and the date of 20-10-2017 was set for the delivery of the arbitral decision.
The Claimant was also warned to, by that date, attach to the proceedings proof of payment of the subsequent arbitration fee.
Neither of the parties submitted arguments.
The parties have legal personality and capacity and are legitimate (articles 4 and 10, paragraph 1 and 2 of the RJAT and article 1 of Ordinance No. 112-A/2011 of 22 March).
The present request for arbitral judgment was presented in a timely manner, in accordance with article 10, paragraph 1, paragraph a) of Decree-Law No. 10/2011 of 20 January.
The proceedings do not suffer from any nullities and no preliminary issues were raised.
2. Matters of Fact
2.1. Proven Facts:
Having analyzed the documentary evidence produced, the following facts are considered proven and of interest for the decision of the case:
1. The estate opened by the death of B..., with tax identification number..., was, in 2015, the owner of the urban property registered in the register under article..., of the union of civil parishes of..., ..., ..., ..., ... and ..., municipality of Porto, located in Rua..., ..., as per the property card attached to the arbitration request as document 5.
2. The aforementioned property, of the Historic Center of Porto, is part of the UNESCO World Heritage List, as per Notice No. 15173/2010 published in the Official Journal (Diário da República) No. 147 of 30 July 2010.
3. The urban property that integrates the ensemble Historic Center of Porto was classified as property of public interest, by Decree-Law No. 67/97 of 31 December.
4. The Claimant was notified of the IMI assessment No..., for the year 2015, in the amount of 258.80 €, relating to the aforementioned property, as per the assessment attached to the arbitration request as document 4.
5. The Claimant proceeded to pay the aforementioned assessment, as per document 4 attached to the arbitration request.
6. The Claimant filed an administrative complaint of the aforementioned assessment, which was dismissed by an order dated 29-12-2016, as per copy of the decision attached to the arbitration request as document 1.
No other facts with relevance to the decision of the case were proven.
2.2. Basis for the Proven Facts:
With regard to the proven facts, the arbitrator's conviction was based on the documentary evidence attached to the proceedings and on the facts admitted by agreement.
2.3. Unproven Facts
With relevance to the assessment and decision of the case, there are no facts that have not been proven.
3. Matters of Law:
3.1. Object and Scope of the Present Proceedings
The issue to be decided in the present proceedings is whether the property in question, inserted in the Historic Center of Porto classified as UNESCO World Heritage, may or may not benefit from the IMI exemption provided for in article 44, paragraph 1, paragraph n) of the EBF.
On this matter, the decisions of CAAD in proceedings No. 325/2014-T, 76/2015-T, 33/2016-T, 98/2016-T, 379/2016-T and 534/2016-T have already pronounced themselves.
The Central Administrative Court of the South has also ruled, in the judgments of 07-12-2016 in proceedings No. 00134/14.4BEPRT, of 01-06-2017 in proceedings No. 00693/14.1BEPRT, and of 04-05-2017 in proceedings No. 01480/14.2BEPRT.
The Convention for the Protection of World, Cultural and Natural Heritage, which took place in Paris, and was approved by Decree No. 49/79, of 6 June, sought to establish which natural and cultural assets may come to be inscribed on the World Heritage List, establishing the duties of Member States regarding the identification and protection of such assets.
In this sequence, various monuments, sites or ensembles have come to obtain the classification of UNESCO World Heritage, with particular emphasis on the ensembles classified, more specifically, the Historic Centers classified as UNESCO World Heritage, in this case, the Historic Center of Porto.
The aforementioned ensembles classified as World Heritage have benefited, for several years, from IMI exemption, under the combined provisions of articles 44, paragraph 1, paragraph n) of the Tax Benefits Statute and 15, paragraph 2, 3 and 7 of Law No. 107/2001, of 8 September (Framework Law for Protection of Cultural Heritage).
Article 44, paragraph 1, paragraph n) of the Tax Benefits Statute (EBF) establishes that the following are exempt from IMI: "properties classified as national monuments and properties individually classified as being of public interest or of municipal interest, in accordance with applicable legislation".
This article is composed of two provisions. First, properties classified as national monuments are exempt from IMI. Second, properties individually classified as being of public interest or of municipal interest are exempt from the same tax.
In turn, article 15 of Law No. 107/2001, of 8 September, which establishes the bases of the policy and regime for the protection and enhancement of cultural heritage, provides:
"1 - Immovable assets may belong to the categories of monument, ensemble or site, as such categories are defined under international law, and movable assets, among others, to the categories indicated in title VII.
2 - Movable and immovable assets may be classified as being of national interest, public interest or municipal interest.
3 - For immovable assets classified as being of national interest, whether they are monuments, ensembles or sites, the designation "national monument" shall be adopted and for movable assets classified as being of national interest the designation "national treasure" is created.
4 - An asset is considered to be of national interest when its respective protection and enhancement, in whole or in part, represents a cultural value of significance to the Nation.
(...)
7 - Immovable cultural assets included in the world heritage list integrate, for all purposes and in the respective category, the list of assets classified as being of national interest."
From the articulation of these provisions, it results that immovable properties located in Historic Centers included in the UNESCO World Heritage List are classified as being of national interest, falling within the category of "national monuments" and, consequently, benefiting from the exemption enshrined in paragraph n) of paragraph 1 of article 44 of the EBF.
This formulation was reiterated in Decree-Law No. 309/2009, of 23 October, with its article 3, paragraph 1 stating that "an immovable asset can be qualified as being of national interest, public interest or municipal interest", and adding in paragraph 3 that "the designation 'national monument' is attributed to immovable assets classified as being of national interest, whether they are monuments, ensembles or sites".
The fact that individually classified properties may coexist, in the case of delimitation of an ensemble or a site, under the terms of article 56 of Decree-Law 309/2009, only has provisional relevance to delimit the protection zone of that property until the publication of the classification of the ensemble or site.
For this reason it is understood that article 44 of the EBF distinguishes between "property classified as a national monument" and "property individually classified as being of public interest or municipal", only requiring individualization with respect to these two latter categories, and not as regards properties of national interest.
We also consider that the argument defended by some authors does not hold up, namely the defense of a restrictive interpretation of exemptions to assets classified with the aim of excluding from the benefits granted in respect of IMI or IMT all situations in which there has been no procedure or act of individual classification as a national monument, property of public interest or municipal.
It was in this sense that article 6 g) of the IMT Code was amended by Law 55-A/2010, of 31 December, leading to the exemption having ceased to cover "acquisitions of properties classified as being of national interest, public interest or municipal interest, under Law No. 107/2001, of 8 September" to only contemplating "acquisitions of properties individually classified as being of national interest, public or municipal interest, in accordance with applicable legislation".
However, the wording of article 44 of the EBF was not amended in the same sense, continuing to require individual classification for the attribution of the exemption only in the case of properties of public or municipal interest, but making no such requirement for national monuments.
Rather the contrary, the provision of paragraph 5 of article 44 of the EBF states that "the exemption referred to in paragraph n) of paragraph 1 is of an automatic nature, operating by means of communication of the classification as national monuments or of the individualized classification as properties of public interest or municipal interest (...)". We thus understand it to be clear that the legislator's intention was to dispense with individualized classification for the purposes of IMI exemption for national monuments, only requiring it with respect to properties of public or municipal interest.
The property in question in the present proceedings is part of the Historic Center of Porto, which was inscribed on the UNESCO World Heritage List, as declared by Notice No. 15173/2010, published in the Official Journal (Diário da República), Series II of 30 July 2010, issued under paragraph 3 of article 72 of Decree-Law 309/2009, of 23 October.
Thus, and as concluded by the decision of CAAD in proceedings No. 76/2015-T, with the property in question being integrated in the Historic Center of Porto, legally qualified as a national monument, it is manifest that it benefits from said exemption, and the IMI assessment here contested is thus illegal, and the tax that was paid should be returned to the Claimant.
In that same sense we conclude as in the judgment of the Central Administrative Court of the North of 07-12-2016, in proceedings No. 00134/14.4BEPRT, according to which:
"1 - The following are exempt from municipal property tax: properties classified as national monuments and properties individually classified as being of public interest or of municipal interest, in accordance with applicable legislation – see article 44, paragraph 1, paragraph n) of the Tax Benefits Statute.
2 - Immovable properties located in Historic Centers included in the UNESCO World Heritage List are classified as being of national interest, falling within the category of "national monuments" – see article 15, paragraph 3 and paragraph 7 of Law No. 107/2001, of 8 September.
3 - Properties inserted in Historic Centers Classified benefit from exemption from municipal property tax."
4. Regarding Indemnity Interest
The Claimant requests the condemnation of the Tax Authority to reimburse the tax wrongfully paid, plus indemnity interest, under the terms of article 43 of the General Tax Law (LGT) and article 61 of the Code of Tax Procedure and Process (CPPT).
Article 43, paragraph 1 of the LGT determines that "indemnity interest is due when it is determined, in an administrative complaint or judicial challenge, that there was an error attributable to the services from which results payment of the tax debt in an amount greater than legally due", with paragraph 4 of article 61 of the CPPT providing that "if the decision recognizing the right to indemnity interest is judicial, the payment period is counted from the beginning of the period of its voluntary execution".
In the present proceedings, it is verified that the illegality of the disputed tax assessment, due to error in the legal assumptions, is attributable to the Tax Authority for having proceeded to the incorrect interpretation and application of the legal provision contained in article 44, paragraph 1, paragraph n) of the EBF.
Thus, the Claimant has the right, in accordance with the provisions of articles 24, paragraph 1, paragraph b), of the RJAT and 100 of the LGT, to the reimbursement of the amount of tax wrongfully paid and to indemnity interest, under the terms provided in articles 43, paragraph 1, of the LGT and 61 of the CPPT, calculated from the date of payment of the tax, at the rate resulting from paragraph 4 of article 43 of the LGT, until the date of processing of the respective credit note, in which they will be included.
5. Decision
In view of the foregoing, it is determined:
1. To judge the claim submitted by the Claimant in the present tax arbitration proceedings as founded, regarding the illegality of the Municipal Property Tax assessment No.... in the amount of 258.80 €;
2. To judge founded the request for condemnation of the Tax and Customs Authority to reimburse the Claimant the amount of tax paid, plus indemnity interest in accordance with legal terms, from the date on which such payment was made until the date of full reimbursement thereof.
6. Value of the Case:
In accordance with the provisions of article 315, paragraph 2, of the CPC and 97-A, paragraph 1, paragraph a) of the CPPT and 3, paragraph 2 of the Regulation of Costs in Tax Arbitration Proceedings, the value of the action is fixed at 258.80€.
7. Costs:
Under the terms of article 22, paragraph 4, of the RJAT, and of Table I attached to the Regulation of Costs in Tax Arbitration Proceedings, the amount of costs is fixed at 306.00 €, payable by the Tax and Customs Authority.
Notify.
Lisbon, 20 October 2017.
Text elaborated by computer, in accordance with article 138, paragraph 5 of the Code of Civil Procedure (CPC), applicable by referral from article 29, paragraph 1, paragraph e) of the Tax Arbitration Regime, revised by me.
The Arbitrator Judge
Suzana Fernandes da Costa
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