Summary
Full Decision
Arbitration Decision
Report
A…, Tax ID…, with address at Street…, …, …, in Lisbon, filed a request for arbitral pronouncement, under the provisions of the Legal Framework for Tax Arbitration approved by Decree-Law No. 10/2011, of 20 January (LFTA), as amended by Law 66-B/2012, for a declaration of illegality of the dispatch of the Director of Services (acting as substitute) of IMT, Stamp Tax, IUC and Special Contributions, which rejected the Hierarchical Appeal No. … of 23 December 2015 and the consequent annulment of the liquidations of Stamp Tax (relating to item 28.1 of the corresponding General Table), relating to the urban property registration article … of the parish of … in the Municipality of …, for the year 2013, in the total amount of €25,777.10 (twenty-five thousand, seven hundred and seventy-seven euros and ten cents), further petitioning the refund of the tax amounts disbursed, plus compensatory interest.
The Tax and Customs Authority (TA) is the Respondent.
The Claimant did not proceed to designate an Arbitrator. For this purpose, the President of the Deontological Council of the Centre for Administrative Arbitration designated the undersigned, who expressly accepted such appointment. The parties were duly notified thereof and did not express their wish to refuse it.
The arbitral tribunal was thus constituted on twenty-four June 2016.
The TA timely submitted its response and administrative process (gracious complaints, its decision, corresponding hierarchical appeal and its decision, always of rejection), arguing for the stability of the tax act.
The Tribunal was regularly constituted and is materially competent.
The parties have legal personality and procedural capacity and are legitimate.
The process is free of nullities.
Given that the position of the parties is absolutely clear and there being no disputed questions of fact, and taking into account the principles of autonomy of the arbitral tribunal (art. 16, paragraph c), of the LFTA), of free conduct of the process (art. 19 of the LFTA), of procedural celerity and avoidance of unnecessary acts, with the agreement of the parties, the hearing referred to in art. 18 was considered unnecessary, as was the production of arguments, whose performance was therefore waived, and a date was set for the pronouncement of the arbitral decision.
Factual Matters
The following factuality is deemed proven:
a) In 2013, the Claimant was the owner of an urban property in total or vertical ownership, i.e. in complete ownership, not constituted as condominium, located at…, in the parish of…, Municipality of …, registered in the corresponding property register under article…, to which corresponded a total tax patrimonial value (TPV) greater than the value of one million euros;
b) Such property, designated as Block B, was composed of 8 buildings, of 3 floors, with 23 divisions susceptible to independent use, all destined for habitation;
c) Having that property a TPV of €2,219,740.00, to none of those 23 divisions susceptible to independent use corresponded a TPV equal to or greater than the value of one million euros (but rather a TPV always less than €115,750.00);
d) The TA proceeded to liquidate the Stamp Tax from item 28.1 of the GTS by reference to those divisions and to the year 2013;
e) The total value of the tax liquidation relating to those twenty-three liquidations is €25,777.10;
f) The acts of liquidation in question gave rise to the corresponding collection documents for the three installments of tax, the last of which with payment deadline at the end of November 2014;
g) All such installments were paid in full, within their respective payment periods;
h) The Claimant submitted gracious complaints against these liquidations, first against the first and second installments and then against the third installment;
i) The complaint was expressly rejected on 18 December 2014, after the Claimant exercised its right of hearing;
j) The Claimant submitted a Hierarchical Appeal of such rejection, on 21 January 2015, in the exact terms of the rejected complaints;
k) Which was rejected on 7 January 2016, with the Claimant being notified thereof on the following day;
l) The request for arbitral pronouncement was submitted on 7 April 2016.
There are no other facts with relevance for the assessment of the merits of the case that are not proven.
The proven facts are based on documents provided by the Claimant, whose correspondence to reality is not disputed.
Matters of Law
Position of the Parties
The issue in these proceedings corresponds to the application, in situations of so-called vertical ownership, of the new taxation in Stamp Tax affecting urban properties with habitation use and TPV equal to or greater than one million euros. This new taxation was introduced in 2012 to reinforce budgetary control measures on the revenue side, within a framework of financial necessity (or economic-financial, see Sustainability and Solidarity in Times of Crisis, Suzana Tavares da Silva, in Fiscal Sustainability in Times of Crisis, Coord. José Casalta Nabais and Suzana Tavares da Silva, pp. 61 et seq).
As is well known, such new Stamp Tax taxation has raised strong doubts and considerable contention. This is so not only for specific cases of its application (e.g., vertical ownership, co-ownership, building land or its application to the year 2012), but also in general terms, due to its possible unconstitutionality, whether of its general regime or of its transitional regime (see Luís Menezes Leitão, On the Stamp Tax Taxation of Luxury Properties (item 28.1 GTS), in Tax Arbitration No. 1, pp. 44 et seq).
Claimant
The Claimant contests, precisely, the application of the new item 28.1 of the GTS to urban properties not constituted as condominium, but which include divisions susceptible to independent use, in which the minimum value of incidence established in law is reached by the sum of the TPV of the separate property register entries (or autonomous) corresponding to those various divisions, but not by any one of them individually considered.
The Claimant contends that it is not the owner of a property with TPV equal to or greater than the stated minimum amount, but rather of a property in vertical ownership in which the TPV exceeding that value is only reached by the sum of the TPV of the divisions susceptible to independent use allocated to habitation, without any of them, considered individually, reaching that minimum threshold of tax relevance (see the foregoing table). For this reason, the liquidations in question would be affected by unconstitutionality, which would render them voidable.
This position was successively maintained without success, both in the Gracious Complaints and in the subsequent Hierarchical Appeal, as well as in the present request for arbitral pronouncement.
Respondent
Differently, the Respondent contests such understanding, arguing instead for the maintenance of the liquidations, in line with the decisions rejecting the said Complaints and Appeal.
To this end, the Respondent contends, in summary, that complete or vertical ownership corresponds to a property, this being the reality to be considered for verification of the minimum value in the rule of incidence. The TPV relevant for purposes of tax incidence would, therefore, be the TPV of the urban property and not the TPV of each of the parts that compose it, even if these are susceptible to independent use, as they are allocated to habitation. This is because the unity of the property is not affected, and its separate parts cannot be legally equated with the autonomous fractions of a property constituted as condominium, especially since their ownership is necessarily attributed to only one single owner (or more than one, but in cases of co-ownership).
Summary of the Disputed Issues
In summary, in the present case, the only relevant issue is to know which TPV to consider in cases of vertical ownership and, should it be concluded in favor of the total TPV, whether the consideration of that total TPV of the property gives rise to a defect of unconstitutionality.
Matters of Law
Vertical Ownership
First, it should be noted that the liquidation of the disputed tax is single, although it is paid in three installments. Thus, the submission of gracious complaints against the collection notices for those installments corresponds to an imprecision. It is not considered, however, that this should influence the decision on the merits of the case, as it is clear that the Claimant seeks to contest the liquidation, having done so in time. On this matter, see the decision rendered in the process conducted in the arbitral tribunals functioning under the aegis of CAAD, with No. 397/2015-T, precisely on the indivisibility of the tax act. The merit of the application must thus be analyzed.
As referred to in Law No. 55-A/2012, of 29 October, which amended the Stamp Tax Code, adding a new item to the General Table of the STC.
On the issue of determining the (minimum) TPV relevant for the application of item 28.1 of the GTS in cases of vertical ownership, the decisions of CAAD have already pronounced, among others and beyond those mentioned above, in processes numbered 50/2013-T, 132/2013, 181/2013-T, 183/2013-T, 272/2013-T, 280/2013-T, 26/2014-T, 30/2014-T, 88/2014-T, 177/2014-T and 206/2014-T, which were subsequently confirmed by several other arbitral decisions, namely 349/2015-T, 397/2015-T, 440/2015-T, 490/2015-T, 518/2015-T and 597/2015-T.
In all of them the issue was, as in these proceedings, to know whether the TPV relevant for the rule of incidence (28.1 of the GTS) is the TPV corresponding to each of the divisions susceptible to independent use separately considered in the register or whether, on the contrary, the relevant TPV should correspond to the sum of all such divisions susceptible to independent use, but forming part of the same property and allocated to habitation.
And the answer, in those decisions, was always for the first option and it is understood that correctly. Let us now examine the reasons underlying such jurisprudence and the interpretation followed here.
The Stamp Tax Code
The new item was inserted in the Stamp Tax Code, an option that offers no significant contribution to systematically frame the new tax, since such tax "affects a heterogeneous multiplicity of facts or acts … without a common feature that gives them identity", which was, moreover, aggravated by the Reform of Property Taxation of 2003/2014, making "the problem of the classification of this tax" even more complex (see José Maria Fernandes Pires, Op. Cit., p. 422).
But it is known that this new item was introduced as a way to reinforce budgetary control measures on the revenue side, within a framework of financial necessity (or economic-financial, see Sustainability and Solidarity in Times of Crisis, Suzana Tavares da Silva, in Fiscal Sustainability in Times of Crisis, Coord. José Casalta Nabais and Suzana Tavares da Silva, pp. 61 et seq), with the purpose of identifying new forms of externalization of contributive capacity that could be called upon to support the aim of reducing the negative budgetary balance.
And it did so by choosing to make the new taxation apply exclusively to certain goods, implying, therefore, a strong negative discrimination against them, which postulates a reinforced explanation of such choice, so as not to put the principle of equality in crisis, or equity in the terminology of Glória Teixeira, whether in its sense of horizontal equity or that of vertical equity (Glória Teixeira, Manual of Tax Law, p. 56, 2nd ed., Almedina).
Now, it seems to be discerned in the legislator's thinking the intention to identify in properties with TPV equal to or greater than one million euros ("luxury") destined for habitation, a referential, not arbitrary, of an additional contributive capacity, capable of broadening the spectrum of contributions to the desired and necessary budgetary equilibrium.
In this framework, the issue to be decided is whether a property constituted in complete or vertical ownership, but with floors or divisions with independent uses, is a "property with habitation allocation" for purposes of the application of art. 1 of the STC and item 28.1 of the GTS, added by art. 4 of Law No. 55-A/2012, of 29 October (especially since, as in the present case, it may have areas allocated to non-habitation purposes) or whether by "property" should instead be considered the divisions separately considered in the property register and, further, which TPV is relevant (whether the TPV relating to the property, whether the TPV inherent to the sum of its parts with habitation allocation, or whether rather the TPV relating, autonomously, to each of these).
To this end, it is important to bear in mind that each floor or part of a property susceptible to independent use is considered separately in the property registration of the total property, which also discriminates the tax patrimonial value thereof (No. 2 of art. 12 of the Urban Property Tax Code), and the Urban Property Tax is liquidated individually in relation to each floor or part of a property susceptible to independent use (art. 119, No. 1 of the Urban Property Tax Code).
And, if this is so in Urban Property Tax, then it should also be so in Stamp Tax. Let us see why.
Literal Interpretation
As stated in the decision taken in process 206/2014-T: "Given that the STC refers to the Urban Property Tax Code, it must be concluded that the registration in the property register of properties in vertical ownership, constituted by different parts, floors or divisions with independent use, obeys the same registration rules as horizontal properties."
Since Urban Property Tax and Stamp Tax "are liquidated individually in relation to each of the parts", then "the legal criterion for defining the incidence of the new tax must be the same". Consequently, there will be incidence of item 28.1 of the GTS (only) if any of those parts, floors or divisions with independent use presents a TPV, at least, equal to the amount provided for in the rule of incidence.
Thus, for this purpose property will be the independent area, considered separately and autonomously in the register, and subject to Stamp Tax if two requirements are met: being destined to habitation purposes and having a TPV equal to or greater than one million euros, criterion for assessing "luxury" habitation properties. Otherwise, a reality not foreseen by the legislator would be created: that of, so to speak, a "residential property", possibly inserted within a larger property with various purposes, in which the TPV of that, spurious to the property registrations, would consist of the fiction of a TPV given by the addition of the autonomous TPV of each independent division (independent and with habitation purpose) considered in the property registration. That is, where the legislator considered two realities, the interpreter would now, without support in the legislative text, as occurs in the liquidations now in question, have to fictionally create a third reality, hybrid, halfway between the urban property and its independent divisions. Divisions to which the legislator of the Urban Property Tax, and of Stamp Tax by reference to the Urban Property Tax Code, understood to give tax relevance.
Also in the decision rendered in process 272/2013-T (CAAD) it is stated that "considering that the registration in the property register of properties in vertical ownership, constituted by different parts, floors or divisions with independent use, under the Urban Property Tax Code, obeys the same registration rules as properties constituted as horizontal condominiums, and their respective Urban Property Tax, as well as the new Stamp Tax, are liquidated individually in relation to each of the parts, it offers no doubt whatsoever that the legal criterion for defining the incidence of the new tax must be the same". Moreover, it is further stated in that same decision that the TA's position "finds no legal support and is contrary to the criterion applicable under the Urban Property Tax Code and, by reference, under Stamp Tax", which is why "the adoption of the criterion defended by the TA violates the principles of legality and tax equality, as well as that of the prevalence of material truth over legal-formal reality".
And in the same sense it is stated in the arbitral decision of process 30/2014-T (CAAD) that there is to be found in the TA's doctrine a "nonconformity with the literal element of the final part of the rule of incidence (item 28 of the GTS) which states that the tax affects "the tax patrimonial value used for purposes of Urban Property Tax" and therefore should not affect the sum of tax patrimonial values of properties, parts of properties or floors, having no legal support the operation of adding tax patrimonial values of floors or parts of property susceptible to independent use, with habitation allocation, separated from the TPV of the others with different purposes, so as to reach the threshold of taxable taxation of 1,000,000.00 euros or more".
As is also stated in the arbitral decision taken in process 30/2014-T (CAAD), what happens with regard to urban properties with habitation allocation, in vertical ownership, with floors or divisions susceptible to independent use, is that the TA proceeds, in the operations of liquidating Stamp Tax, just as it proceeded in the present case, to adapt the rules of the Urban Property Tax Code (adding the tax patrimonial values of the same property, without considering those corresponding to parts of the property with non-habitation purpose, thus giving rise to a new and hybrid TPV). Indeed, this "adaptation" corresponds to "adding the TPV of each floor or independent division allocated to habitation purposes (separated from the TPV of the floors or divisions destined to other purposes), creating a new legal reality, without legal support, which is a global TPV of urban properties in vertical ownership, with habitation allocation", which violates "the literal element of the rule of incidence" (incidence on "the tax patrimonial value used for purposes of Urban Property Tax"). Thus, "in urban properties with habitation allocation, in vertical ownership, with floors or divisions susceptible to independent use", the tax patrimonial value "that results exclusively from No. 3 of article 12 of the Urban Property Tax Code should be considered. Both for Urban Property Tax and for this Stamp Tax".
And the same understanding applies to properties in which all divisions susceptible to independent use are destined to habitation as occurs in the present case.
Concretely, as was concluded in the decision rendered in process 26/2014-T of CAAD, "for purposes of application of item 28 of the GTS to properties in vertical ownership, the same rules of the Urban Property Tax Code as to properties in horizontal ownership apply, and in the same sense the TPV for purposes of application of the item is the individual TPV of each independent residential fraction, and in the present case none of the fractions exceeds the incidence criterion of 1,000,000.00€", the same occurring also in the present proceedings.
It is thus concluded, in summary, as clearly appears from the decisions cited, that the literal interpretation of the new item of the GTS cannot but be different from that sustained by the TA, indeed, the opposite, given the clear and indisputable reference made regarding the new item of the GTS to the rules of the Urban Property Tax Code, and the interpreter of the rule cannot "create" a new concept of property so as to obtain a hybrid TPV, in cases of properties with habitation and non-habitation use, not recognized in the register and without any support in the text of the law. What must also apply to properties in vertical ownership whose divisions are destined, all, to habitation purpose.
Economic Substance
Moreover, as is well stated in Decision 117/2013 T of CAAD, "the interpretation based exclusively on the literal content.... cannot be accepted, since in the interpretation of tax rules the general rules and principles of interpretation and application of laws are observed (article 11, No. 1, of the General Tax Law) and article 9, No. 1, expressly forbids interpretations based exclusively on the literal content of the rules by providing that "interpretation should not be limited to the letter of the law", but should rather "reconstruct from the texts the legislative thought, taking especially into account the unity of the legal system, the circumstances in which the law was elaborated and the specific conditions of the time in which it is applied". Since for there to be correspondence between the interpretation and the letter of the law it will suffice "a minimum of verbal correspondence, even if imperfectly expressed" (article 9, No. 3, of the Civil Code), which will only prevent the adoption of interpretations that cannot in any way be reconciled with the letter of the law, even recognizing in it imperfection in the expression of the legislative intention".
And if we now look at the economic substance of the tax facts, in compliance with art. 11, No. 3 of the General Tax Law, without adhering to an economic interpretation of the rules of tax law, which is now condemned by Doctrine (see Taxes, General Theory, Américo Fernando Brás Carlos, p. 196, 2014, 4th ed. Almedina), we must equally recognize that the expression "each urban property" used in No. 7 of article 23, by identity of reasons, encompasses not only urban properties in horizontal ownership, but also floors, divisions or parts of urban properties in vertical ownership, provided they are allocated to habitation purposes, always proceeding, in either case, from a single tax base for all legal purposes: the tax patrimonial value used for purposes of Urban Property Tax (final part of item 28 of the GTS), as was concluded in the arbitral decision of process 177/2014-T (CAAD).
Or, as is emphasized in the decision rendered in process 272/2014-T of CAAD, "from the legislator's perspective, it does not matter the legal-formal rigor of the concrete situation of the property but rather its normal use, the purpose for which the property is destined", so that "for the legislator the situation of the property in vertical or horizontal ownership did not matter, since no reference or distinction is made between them. What matters is the material truth underlying its existence as an urban property and its use", that is the economic reality of the holding of independent parts, e.g. susceptible to independent use or rental, as are the autonomous fractions in the case of horizontal ownership, and therefore susceptible to permit use or the obtaining of income in a similar manner and thereby externalizing, for this reason, equal contributive capacity (as would be externalized by the sum of the TPV of various autonomous fractions of the same property in horizontal ownership or of various properties whose TPV, as a whole, exceeded the value of one million euros, without such having been considered by the legislator as an externalization of contributive capacity relevant for purposes of Stamp Tax).
System Coherence
And if we look at the totality of the tax system we will not find indications that would refute the conclusion drawn so far.
As is stated in the Decision rendered in process 26/2014-T of CAAD, no censure of the legislator regarding vertical ownership is discerned. Indeed, "it will be said, not without reasonableness, that the legislator, for purposes of taxation under Urban Property Tax, chose to confer autonomy, independence, to each one of the parts or each one of the floors of a single property, provided that each one shows independent use, to the point of providing for individualized registration in the property register of each of those independent parts and imposing on taxation under Urban Property Tax also an autonomous collection. Despite the legal existence of a single property, it is the legislator itself who not only recommends but imposes the autonomous consideration of each of the independent parts, for purposes of property tax". Indeed, as appears from an economic interpretation of the fact, with the prevalence of its substance over its form, as above was seen. And if this is so in Urban Property Tax, it would not be understood that this would not also be so in Stamp Tax, namely in the case of new taxation on "luxury" properties (in the sense used in Parliament by the then State Secretary of Tax Affairs and referred to below).
Indeed, if the legislator is indifferent to one or the other form of structuring the ownership of urban properties in the Urban Property Tax Code, it would not be understood that the legislator now intended to favor one at the expense of the other, namely by considering one form of structuring more advanced than the other. In fact, as was decided in processes 26/2014-T and 272/2014-T of CAAD, "the current legal regime does not impose an obligation to establish horizontal ownership", which is why "the discrimination operated by the TA translates into an arbitrary and illegal discrimination", since "the TA cannot distinguish where the legislator itself understood not to do so, under penalty of violating the coherence of the tax system, as well as the principle of fiscal legality provided for in article 103, No. 2 of the Constitution, and also the principles of justice, equality and fiscal proportionality."
That is, the literal interpretation initially reached continues to be valid.
Intention of the Legislator
And it is true that nothing induces the interpreter to the conclusion that the specific legislator of the new item of the GTS, contrary to the legislator of Urban Property Tax, which moreover remains unchanged, intended to discriminate vertical ownership as against horizontal. As is well recalled in the Decision rendered in the already referred process 26/2014-T of CAAD, "when presenting and discussing in Parliament the bill proposal No. 96/XII (2nd), the State Secretary of Tax Affairs stated expressly: 'The Government proposes the creation of a special tax on residential urban properties of higher value. It is the first time in Portugal that a special taxation has been created on properties of high value destined for habitation. This tax will be 0.5% to 0.8% in 2012 and 1% in 2013, and will affect houses of value equal to or greater than 1 million euros' (see Parliamentary Debates I Series No. 9/XII -2, of 11 October, p. 32). Now, as is emphasized in that Decision, "the State Secretary of Tax Affairs presents this bill proposal referring without equivocation to the expression "houses"… of value equal to or greater than 1 million euros", so that "it results with meridian clarity that item 28.1 of the GTS cannot be interpreted in the sense that it encompasses each one of the floors, divisions or parts susceptible to independent use when only from their sum results a TPV greater than that provided for in the same item". This is because, in such a case, "none of the "houses" … presents, of itself, "value equal to or greater than 1 million euros"".
It being, therefore, clear, as is stated in the referred decision 272/2014-T, that for the legislator only that value of one million euros, provided that allocated "to a habitation (house, autonomous fraction or floor with independent use) translates a contributive capacity above the average and, as such, susceptible to determine a special contribution to guarantee the fair distribution of the tax effort".
And if this is so, then we must attend to the concept of "house" as a physical reality that permits a habitation purpose, a unit susceptible to independent use, including its rental, since it is in that economic reality that we will find the externalization of the contributive capacity associated with "luxury habitations" that the legislator considered relevant. Moreover, if this were not so, the legislator would proceed to a discrimination that would not be justified, since as already seen there is not found in the system a censure of vertical ownership when compared with horizontal. Moreover, such a distinction would clash with necessary equity between identical externalizations of the same contributive capacity.
Contributive Capacity and Interpretation Consistent with the Constitution
It is certain that the tax legislator is subordinate to the principles of equality, which, as well stated by Sérgio Vasques (Manual of Tax Law, pp. 249 et seq, 2011, Almedina), is more than a mere negative limit and imposes something more than the mere prohibition of arbitrariness, rather postulating a distribution of taxes according to the criterion of contributive capacity, so that the legislator must anchor taxation in reasonable and non-arbitrary economic elements, susceptible to justifying the tax pretension in a contributive capacity concretely externalized by the taxpayer.
In this way it is imperative to seek in the text of the new item a reading that gives effect to those principles. Or, which amounts to the same, not to extract from that text a meaning that violates such principles.
Now, the contributive capacities externalized by the ownership of a property composed of a set of autonomous fractions in horizontal ownership or by a set of divisions of independent use in the regime of vertical ownership, cannot but be considered identical, if not even, possibly, smaller in the case of the second hypothesis. That is, a property does not surely have a greater market value for being organized as vertical ownership. It is worth the same (permitting equal benefit by its use or equal income by way of its rental, as above was referred), or will even have a smaller value, since the alternatives of transferability will possibly be smaller. And we know that TPV intends to be an approximation, precisely, to the market value of properties and will, therefore, be the measure and limit of the contributive capacity relevant for the new item of the GTS.
Thus, the interpretation argued by the TA, finding no hermeneutical justification, as has been seen so far, would also lead to a manifest inequality between owners of properties in horizontal and vertical ownership (and also as already seen that no punitive intention regarding the latter is discerned, even if it were admitted that such were constitutionally permissible). In that same sense, as is well emphasized in the decision of process 272/2014-T of CAAD, the "existence of a property in vertical or horizontal ownership cannot be, by itself, an indicator of contributive capacity. On the contrary, it appears from the law that one and the other should receive the same tax treatment in obedience to the principles of justice, fiscal equality and material truth".
Concluding, "material truth is the one that imposes itself as the determining criterion of contributive capacity and not the mere legal-formal reality of the property, since the constitution of horizontal ownership implies merely a legal alteration of the property not even imposing a new evaluation" (as is stated in the decision rendered in process 26/2014-T of CAAD). And that fact "does not appear coherent with the TA's decision to tax the habitation parts of a property in vertical ownership, based on the global TPV of the property and not on what is actually attributed to each part". Thus, "the TA cannot distinguish where the legislator itself understood not to do so, under penalty of violating the coherence of the tax system, as well as the principle of fiscal legality … and also the principles of justice, equality and fiscal proportionality", as was said through the creation ex novo of an innovative concept and of a hybrid TPV, frequently corresponding to part of a property.
Conclusion
In these terms, the tax acts in question are affected by the defect of violation of law, due to error in legal and factual assumptions, since no part of the property possesses a TPV of value equal to or greater than the threshold resulting from the applicable rule, which renders said tax acts voidable (which should, therefore, be declared).
It is thus necessary to annul the disputed stamp tax liquidations and the act of rejection of the hierarchical appeal.
Such liquidations being paid in full, these must be refunded.
Compensatory Interest
The Claimant petitions for compensatory interest.
Indeed, from the illegality of the liquidation it follows that compensatory interest is owed (art. 43, No. 1 of the General Tax Law, 61, No. 4 of the Code of Tax Procedure and Process and 24, No. 5 of the LFTA), computed from payment until processing of the credit note, if from that illegality there has resulted payment exceeding the amount due by error imputable to the TA (that is, by error not imputable to the taxpayer – see Diogo Leite Campos, Benjamim Silva Rodrigues and Jorge Lopes de Sousa, General Tax Law, Annotated and Commented, writings encounters, 4th ed., 2012, p. 342).
What manifestly occurs in these proceedings, as has been seen.
The Respondent should, therefore, be condemned to refund to the Claimant the amount which the latter improperly disbursed by reference to the liquidations here in question, plus compensatory interest, at the legal rate, computed from the successive payments, until the date of processing of the credit note in which they are included (art. 61, No. 5, of the Code of Tax Procedure and Process).
Operative Part
As a result of the foregoing, this Single Tribunal decides:
To uphold the request for arbitral pronouncement and declare illegal the disputed Stamp Tax liquidations on the ground of violation of law, resulting from error in assumptions, and further,
To annul the said liquidations and, in consequence,
To annul the express rejection of the hierarchical appeal subsequent to the gracious complaint relating to those liquidations;
To uphold the request for refund of the amounts unduly paid;
And also that for the payment of compensatory interest, from the dates of undue payment of the tax, at the legal subsidiary rate, on the amount to be refunded and until the date of issuance of the corresponding credit notes;
Thus condemning the Tax and Customs Authority to make these same payments.
Value
As referred to, the liquidations subject to annulment amount to the total value of €25,777.10, being, therefore, this the value of the action and of the claim, and its economic value.
Thus and in accordance with the provisions of art. 306, Nos. 1 and 2, of the Code of Civil Procedure and 97-A, No. 1, paragraph a), of the Code of Tax Procedure and Process and 3, No. 2, of the Costs Regulation in Tax Arbitration Proceedings, the process is assigned the stated value of €25,777.10 (twenty-five thousand, seven hundred and seventy-seven euros and ten cents).
Costs
Pursuant to art. 22, No. 4, of the LFTA, the amount of costs is fixed at €1,530.00 (one thousand five hundred and thirty euros), in accordance with Table I attached to the Costs Regulation in Tax Arbitration Proceedings, at the charge of the Tax and Customs Authority, Respondent herein.
Lisbon, seventh November 2017
Text prepared by computer, in accordance with the Code of Civil Procedure (CPC), applicable by reference of article 29, No. 1, paragraph e) of the LFTA, with blank lines, reviewed and signed by the undersigned arbitrator.
The Arbitrator
(Jaime Carvalho Esteves)
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