Stamp Tax on Construction Land Under Verba 28.1 TGIS: CAAD Arbitration Ruling 229/2015-T

ARBITRAL DECISION

CAAD: Tax Arbitration

Case No. 229/2015-T

Subject Matter: Stamp Tax, construction land, Item 28.1 TGIS

CLAIMANT: A…, … Lda.

DEFENDANT: TAX AND CUSTOMS AUTHORITY

I. REPORT

A…, …, Lda, legal entity no. …, with registered office at Avenue …, no. …, …, …, Lisbon, filed on 01/04/2015 a request for the establishment of a singular arbitral tribunal, in accordance with the combined provisions of Articles 2 and 10 of Decree-Law No. 10/2011, of January 20 (Legal Regime of Arbitration in Tax Matters, hereinafter designated only as RJAT), in which the Tax and Customs Authority is the Defendant.

The request for establishment of the arbitral tribunal was accepted by the President of CAAD on 06/04/2015 and automatically notified to the Tax and Customs Authority on 10-04-2015.

Pursuant to the provisions of paragraph a) of article 6, paragraph 2, and paragraph b) of article 11, paragraph 1, of the RJAT, the Ethics Council appointed as arbitrator of the singular arbitral tribunal the undersigned, who communicated acceptance of the appointment within the applicable time period and notified the parties of such appointment.

Thus, in accordance with the provisions of paragraph c) of article 11, paragraph 1, of the RJAT, the arbitral tribunal was constituted on 11-06-2015.

The Claimant requests a declaration of illegality of the Stamp Tax assessment issued under no. 2012 …, of November 7, 2012, relating to the period from 01/01/2012 to 31/12/2012, concerning the property designated as construction land, registered in the urban property register of the municipality of ..., district of Faro, under article …, in the amount of € 13,419.50.

The assessment was made by applying item no. 28.1 of the General Table of Stamp Tax.

The Claimant requests a declaration of illegality of such assessment and the corresponding collection notice, with all legal consequences. It contends, in summary, that the contested assessment contains a defect of illegality, insofar as it violates the provisions of article 99, paragraph a) of the CPPT, as it concerns construction land and therefore is not covered by the concept of "property with residential allocation" contained in the aforementioned item no. 28.1 of the TGIS in the version in force applicable to the tax period. It further argues that until January 1, 2014 there is no basis, since the norm only taxed properties with residential allocation and the amendment introduced by the State Budget for 2014 cannot have retroactive application. It invokes in support of its thesis numerous arbitral precedents.

The Tax and Customs Authority (ATA) filed its response on 03-09-2015, contending that the request for declaration of illegality and consequent cancellation of the contested assessment and the corresponding collection notice should be judged unfounded, with its absolution from the claim.

By request submitted on 08-09-2015, the Claimant manifested its agreement with the request for waiver of the meeting referred to in article 18 of the RJAT submitted by the ATA, as well as with the waiver of final written arguments. By order of 05-10-2015, the meeting provided for in article 18 of the RJAT was waived and it was determined that the case would proceed to final decision to be rendered by 7/12/2015, with a warning to the claimant to, by that date, proceed to payment of the subsequent arbitration fee.

The Parties filed no written arguments.

The arbitral tribunal was duly constituted and is materially competent, in light of the provisions of articles 2, paragraph 1, subparagraph a), and 30, paragraph 1, of the RJAT.

The parties have legal personality and capacity, are properly parties to the action (articles 4 and 10, paragraph 2, of the same statute and article 1 of Ordinance No. 112-A/2011, of March 22) and are duly represented.

The case is free from procedural defects.

II. FACTS

1. Facts deemed proven

a) The Claimant in the year 2012 was owner of construction land, situated in the municipality of ..., district of Faro, identified by matrix article no. …, replaced by article … of the municipality of ... and … (document no. 4 attached with the request for arbitral determination, the contents of which are incorporated herein);

b) This land had, on the reference date for the contested assessment (2012), a tax value (VPT) of € 2,683,900.00, currently with a VPT of € 1,503,900.00 and allocation coefficient for services (see document no. 4 above mentioned);

c) The Claimant was notified of the Stamp Tax assessment (IS) no. 2012 …, effected under item 28.1 of the General Table of Stamp Tax, in the amount of € 13,419.50, relating to the year 2012, with payment deadline until 20/12/2012, with reference to the property described above. (documents nos. 2 and 3, attached hereto with the request for arbitral determination, the contents of which are incorporated herein);

d) Immediately after this notification the claimant filed Form 1 of IMI for revaluation of the property;

e) The revaluation of the property resulted in a decrease of the VPT to € 1,503,900.00 and the allocation coefficient changed to services, which had retroactive effect to 2009 and matrix article … was retroactively cancelled giving rise to a new matrix article;

f) As a consequence of this revaluation, the first assessment and the respective collection notice were cancelled;

g) Subsequently, the ATA decided to carry out official revaluation of the property (by understanding that a new article should not have been created) and article … was reactivated with the previous tax value and with the location coefficient "residential";

h) Consequently, the Stamp Tax assessment and collection notice were also reactivated relating to the period of the year 2012, which was notified to the Claimant, as shown in document no. 3, attached hereto with the arbitral request, with payment deadline until 28/02/2015;

i) The Claimant filed a hierarchical appeal, as appears from the administrative file attached to the proceedings by the AT and from document no. 1 attached hereto with the arbitral request, in which a decision of dismissal was issued.

j) On 01-04-2015, the Claimant filed the request for establishment of the arbitral tribunal (CAAD information system).

1. Facts deemed not proven

There are no unproven facts to consider that are relevant to the final decision.

1. Basis for the proven facts

The proven facts are based on the documents indicated for each of the points, whose authenticity and correspondence to reality were not questioned.

III. LEGAL GROUNDS

The issue that is the subject of the present action is whether or not the construction land fell within the scope of application of item 28.1 of the General Table of Stamp Tax (TGIS), in its original wording.

1. Regime of Law No. 55-A/2012, of October 29

Law No. 55-A/2012, of October 29, made various amendments to the Stamp Tax Code and added to the TGIS item 28, with the following wording:

28 – Ownership, usufruct, or right of surface of urban properties whose tax value contained in the register, in accordance with the Real Estate Tax Code (CIMI), is equal to or greater than € 1,000,000 – based on the tax value used for IMI purposes:

28.1 – For property with residential allocation – 1%;

28.2 – For property, when the taxpayers who are not natural persons are resident in a country, territory or region subject to a clearly more favorable tax regime, listed in the list approved by ordinance of the Minister of Finance – 7.5%.

In the transitional provisions contained in article 6 of that Law No. 55-A/2012, the following rules were established concerning the assessment of the tax provided for in that item:

1 – In 2012, the following rules shall be observed by reference to the assessment of stamp tax provided for in item no. 28 of the respective General Table:

a) The taxable event occurs on October 31, 2012;

b) The taxpayer of the tax is the one mentioned in paragraph 4 of article 2 of the Stamp Tax Code on the date referred to in the preceding subparagraph;

c) The tax value to be used in the assessment of the tax corresponds to that resulting from the rules provided in the Real Estate Tax Code by reference to the year 2011;

d) The assessment of the tax by the Tax and Customs Authority must be carried out by the end of November 2012;

e) The tax must be paid, in a single installment, by the taxpayers by December 20, 2012;

f) The applicable rates are as follows:

i) Properties with residential allocation assessed in accordance with the Real Estate Tax Code: 0.5%;

ii) Properties with residential allocation not yet assessed in accordance with the Real Estate Tax Code: 0.8%;

iii) Urban properties when the taxpayers who are not natural persons are resident in a country, territory or region subject to a clearly more favorable tax regime, listed in the list approved by ordinance of the Minister of Finance: 7.5%.

2 – In 2013, the assessment of the stamp tax provided for in item no. 28 of the respective General Table must be based on the same tax value used for purposes of real estate tax assessment to be carried out in that year.

3 – The failure to deliver, in whole or in part, within the indicated period, of the amounts assessed under stamp tax constitutes a tax infraction, punished in accordance with the law.

The concept used in the aforementioned item 28.1 and in subparagraphs i) and ii) of paragraph f) of article 6, paragraph 1, of Law No. 55-A/2012, is a concept not used in any other tax legislation, in these precise terms, which is that of "property with residential allocation".

Specifically, in the CIMI, which in several norms of the Stamp Tax Code introduced by that Law is indicated as the instrument of subsidiary application with respect to the tax provided for in the aforementioned item no. 28 [articles 2, paragraph 4, 3, paragraph 3, subparagraph u), 5, subparagraph u), 23, paragraph 7, and 46 and 67 of the CIS], such a concept is not used.

Law No. 83-C/2013, of December 31, amended that item no. 28.1, giving it the following wording:

28.1 - For residential property or for construction land whose building, authorized or planned, is for residential purposes, in accordance with the provisions of the Real Estate Tax Code – 1%

In the case under consideration, it should be noted that the period to which the contested tax assessment relates concerns the year 2012, relating to the period provided in article 6, paragraph 1, subparagraphs e) and f) of Law No. 55-A/2012, of October 29.

1. Concepts of properties used in the CIMI

Under the IMI, the types of properties are enumerated in its articles 3 to 6 as follows:

Article 2
Concept of Property

1 – For the purposes of this Code, property is any parcel of territory, encompassing waters, plantations, buildings and structures of any nature incorporated in or situated on it, with a permanent character, provided that it forms part of the patrimony of a natural or legal person and, under normal circumstances, has economic value, as well as waters, plantations, buildings or structures, in the circumstances above mentioned, endowed with economic autonomy in relation to the land where they are situated, even though situated on a parcel of territory that constitutes an integral part of a different patrimony or does not have patrimonial nature.

2 – Buildings or structures, even if movable by nature, are considered as having permanent character when assigned to non-transitory purposes.

3 – The permanent character is presumed when buildings or structures are situated on the same location for a period exceeding one year.

4 – For purposes of this tax, each autonomous unit, under a horizontal ownership regime, is considered as constituting a property.

Article 3
Rural Properties

1 – Rural properties are lands situated outside of an urban agglomeration that are not to be classified as construction land, in accordance with paragraph 3 of article 6, provided that:

a) They are assigned to or, in the absence of concrete assignment, have as their normal destination a use generating agricultural income, such as those considered for purposes of the tax on income of natural persons (IRS);

b) Not having the assignment indicated in the preceding subparagraph, they have no buildings or only have buildings or structures of an accessory character, without economic autonomy and of reduced value.

2 – Rural properties are also lands situated within an urban agglomeration, provided that, by force of a legally approved provision, they cannot have a use generating any income or can only have a use generating agricultural income and are actually having this assignment.

3 – Rural properties also include:

a) Buildings and structures directly assigned to the production of agricultural income, when situated on the lands referred to in the preceding paragraphs;

b) Waters and plantations in the situations referred to in paragraph 1 of article 2.

4 – For purposes of this Code, urban agglomerations are considered, beyond those situated within legally fixed boundaries, the nuclei with a minimum of 10 dwellings served by public streets, with their boundary delimited by points distanced 50 m from the axis of the streets, in the transverse direction, and 20 m from the last building, in the direction of the streets.

Article 4
Urban Properties

Urban properties are all those that should not be classified as rural, without prejudice to the provisions of the following article.

Article 5
Mixed Properties

1 – Whenever a property has rural and urban parts, it is classified in its entirety, in accordance with the main part.

2 – If neither of the parts can be classified as main, the property is considered mixed.

Article 6
Types of Urban Properties

1 – Urban properties are divided into:

a) Residential;

b) Commercial, industrial or for services;

c) Construction land;

d) Other.

2 – Residential, commercial, industrial or for services are buildings or structures licensed for such purpose or, in the absence of a license, that have as their normal destination each of these purposes.

3 – Construction lands are considered lands situated within or outside an urban agglomeration for which a license or authorization has been granted, prior notice admitted, or favorable preliminary information issued for subdivision or construction operations, and also those so declared in the acquisition deed, except for lands where the competent entities prohibit any of those operations, namely those located in green areas, protected areas or that, in accordance with municipal territorial planning plans, are assigned to public spaces, infrastructure or equipment. (Wording of Law No. 64-A/08, of 31-12)

4 – Lands situated within an urban agglomeration that are not construction lands nor are covered by the provisions of paragraph 2 of article 3, as well as buildings and structures licensed or, in the absence of a license, that have as their normal destination purposes other than those referred to in paragraph 2, and those of the exception in paragraph 3, fall within the provision of subparagraph d) of paragraph 1.

1. Norms on interpretation of laws

Article 11 of the General Tax Law establishes the essential rules for interpretation of tax laws as follows:

Article 11
Interpretation

1. In determining the meaning of tax norms and in qualifying the facts to which they apply, the general rules and principles of interpretation and application of laws are observed.

2. Whenever tax norms employ terms peculiar to other branches of law, they must be interpreted in the same sense that they have there, unless otherwise directly results from the law.

3. When doubt persists about the meaning of the applicable norms of incidence, the economic substance of the tax facts should be considered.

4. Gaps resulting from tax norms covered by the reservation of law of the National Assembly are not susceptible of analogical integration.

The general principles of interpretation of laws, to which paragraph 1 of article 11 of the LGT refers, are established in article 9 of the Civil Code, which provides as follows:

Article 9
Interpretation of Law

1. Interpretation must not be limited to the letter of the law, but must reconstruct from the texts the legislative intent, 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.

2. However, the interpreter cannot consider legislative intent that does not have in the letter of the law a minimum of verbal correspondence, even if imperfectly expressed.

3. In determining the meaning and scope of the law, the interpreter shall presume that the legislator adopted the most correct solutions and knew how to express its intent in adequate terms.

4. Concept of "property with residential allocation"

As can be seen from the norms of the CIMI transcribed above, the concept of "property with residential allocation" is not used in the classification of properties.

Neither is this concept, with this terminology, found in any other statute.

Thus, in the absence of exact terminological correspondence of the concept of "property with residential allocation" with any other used in other statutes, several interpretative hypotheses can be advanced.

The starting point of the interpretation of that expression "properties with residential allocation" is, naturally, the text of the law, and it is on the basis of it that the "legislative intent" must be reconstructed, as required by paragraph 1 of article 9 of the Civil Code, applicable by force of the provisions of article 11, paragraph 1, of the LGT.

1. Concept of "property with residential allocation" as referring to residential properties

The concept closest to the literal tenor of this expression used is manifestly that of "residential properties", defined in paragraph 2 of article 6 of the CIMI as encompassing "buildings or structures" licensed for residential purposes or, in the absence of a license, that have as their normal destination residential purposes.

If it is understood that the expression "property with residential allocation" coincides with that of "residential properties", it is manifest that the assessments will suffer from an error regarding the presuppositions of fact and law, since all properties relative to which Stamp Tax was assessed under the aforementioned item no. 28.1 are construction lands, without any building or structure, required by that paragraph 2 of article 6 to meet that concept of "residential properties".

For this reason, if the interpretation is adopted that "property with residential allocation" means "residential property", the assessments whose declaration of illegality is requested will be illegal, because there is no building or structure on any of the lands.

However, the non-coincidence of the terms of the expression used in item no. 28.1 of the TGIS with that derived from paragraph 2 of article 6 of the CIMI points in the direction of not having intended to use the same concept.

In this respect, it is also important to note that the concept of "property with residential allocation" is distinct from "residential properties". The word "allocation", in this context of use of a property, has the meaning of "action of designating something for a determined use". [1]

"When, as is usually the case, norms (legislative formulas) have more than one meaning, then the positive function of the text is expressed in giving stronger support to or more strongly suggesting one of the possible meanings. For among the possible meanings, some will correspond to the most natural and direct meaning of the expressions used, whereas others can only fit within the verbal framework of the norm in a forced, contrived manner. Now, in the absence of other elements that would lead to the choice of the less immediate sense of the text, the interpreter should opt in principle for that sense which best and most immediately corresponds to the natural meaning of the verbal expressions used, and specifically to their technical-legal meaning, under the assumption (not always correct) that the legislator knew how to express its intent correctly". ([2])

The relevance of the text of the law is especially emphasized in matters of interpretation of norms of incidence of Stamp Tax, which are reducible to an amalgamation, under a common denomination, of an incongruous set of taxes of completely distinct natures (on income, on expenditure, on patrimony, on acts, etc.), which leaves appreciable margin for application of the primary interpretative criterion, which is the unity of the legal system, which demands its overall coherence.

As is stated in the Arbitral Decision rendered in case no. 500/2014-T: "The recognized lack of coherence of Stamp Tax is particularly exuberant in the case of this item no. 28.1, hastily included as an aside to the General State Budget, by a tax legislator without perceptible overall tax orientation, which successively implements norms of tax increases as the budgetary execution setbacks and impositions of international institutional creditors (represented by the 'troika') and the oversight of the Constitutional Court occur."

In fact, although in the "Explanatory Memorandum" of the Legislative Proposal No. 96/XII/2nd ([3]), on which Law No. 55-A/2012 was based, reference is made to the laudable concern of the Government to "reinforce the principle of social equity in austerity, guaranteeing an effective sharing of the sacrifices necessary to comply with the adjustment program" and to its commitment "to ensure that the sharing of such sacrifices will be done by all and not only by those who live on income from their work", it is manifest, on one hand, that such reasons of equity, certainly existing, did not begin to have value in mid-2012, already existing at the beginning of the year, when the General State Budget entered into force, and on the other hand, that the scope of item no. 28.1, by taxing additionally properties with residential allocation and not also properties that do not have it, suggests that the concerns for social equity and the proclaimed intention of sharing sacrifices by all affects much more some than properly all.

In this context, in the absence of safe interpretative elements that would allow detection of legislative coherence in the solution adopted in that item no. 28.1 or the correctness or incorrectness of the adopted solution (relevant for interpretative purposes in light of paragraph 3 of article 9 of the Civil Code), the tenor of the legal text must be the primary element of interpretation, in accordance with the presumption, imposed by the same paragraph 3 of article 9, that the legislator knew how to express its intent in adequate terms.

In light of those meanings of the words "allocation" and "to allocate", which are "to assign a destination" or "to apply", the formula used in that item no. 28.1 of the TGIS manifestly encompasses properties that have already been assigned a destination for residential purposes, properties that are already applied to residential purposes, so it is necessary to inquire whether it will also encompass properties that, although not yet applied to residential purposes, are destined for these.

For this, it will be necessary to clarify when a property can be understood as allocated to a residential purpose, specifically whether it is when such destination is fixed in a subdivision permit or licensing act or similar, or only when the actual attribution of that destination is concretized.

From the outset, the comparison of item no. 28.1 of the TGIS with paragraph 2 of article 6 of the CIMI, which defines the concept of residential properties, points in the direction of effective allocation being necessary.

In fact, a building or structure licensed for residential purposes or, even without a license, but that has residential purposes as its normal destination, is, in light of paragraph 2 of that article 6, a residential property, since it gives such classification to "buildings or structures licensed for such purpose or, in the absence of a license, that have as their normal destination each of these purposes".

For this reason, on the assumption that the legislator of Law No. 55-A/2012 knew how to express its intent in adequate terms (as required by article 9, paragraph 3, of the Civil Code to be presumed), if it intended to refer to those properties already licensed for residential purposes or that have residential purposes as their normal destination, it would certainly have used the concept of "residential properties", which would express perfectly and clearly its intent, in light of the definition given by that paragraph 2 of article 6 of the CIMI.

Consequently, it must be presumed that the use of a different expression is intended to cover a different reality, so that, in good hermeneutics, "property with residential allocation" cannot be a property merely licensed for residential purposes or intended for that purpose (that is, it will not be sufficient for it to be a "residential property"), but must be a property that already has effective allocation to that purpose.

That this is the sense of the expression "allocation", in the same context of classification of properties that the CIMI establishes, is confirmed by article 3, in which, with respect to rural properties, reference is made to those "assigned to or, in the absence of concrete assignment, have as their normal destination a use generating agricultural income", which shows that assignment is concrete, effective. In fact, as can be seen from the latter part of this text, a property can have a determined destination and be or not be assigned to it, which shows that allocation is, at the level of the connection of a property to a determined use, something more intense than mere destination and which may or may not occur, downstream of this and not upstream. ([4])

Moreover, the text of the law by adopting the formula "property with residential allocation", instead of "urban properties with residential allocation", which appears in the aforementioned "Explanatory Memorandum", points strongly in the direction that the residential allocation must already be concretized, since only then will the property have that allocation.

In the case at hand, we are dealing with a reality even more distant in relation to residential allocation than that of there being no building or structure at all, and therefore one cannot consider existing an allocation that presupposes its existence.

On the other hand, the legislative intention not to extend the scope of application to construction lands was expressly stated by the Government when presenting to the Plenary of the National Assembly the Legislative Proposal 96-XII by saying, through the State Secretary for Tax Affairs:

"First, the Government proposes the creation of a special tax to tax urban residential properties of higher value. This is the first time in Portugal that a special tax has been created on high-value properties intended for residential purposes. This tax will be 0.5% to 0.8% in 2012, and 1% in 2013, and will apply to houses valued at equal to or greater than 1 million euros. With the creation of this additional tax, the fiscal effort required of these property owners will be significantly increased in 2012 and 2013." ([5])

The express reference to "houses" as the target of the incidence of the new tax leaves no room for doubt about the legislative intent.

On the other hand, no reference is found in the discussion of the aforementioned Legislative Proposal to "construction lands".

With respect to article 45 of the CIMI, it has no relation whatsoever to the classification of properties, only indicating the factors to be considered in the assessment of construction lands. What is considered there, by making reference to the "building to be constructed" is the consideration of the destination of the land, which, as has been seen, is something that, in the context of the CIMI, does not imply allocation and occurs before it.

For this reason, on the assumption that the legislator of Law No. 55-A/2012 knew how to express its intent in adequate terms if it intended also to refer to properties (construction lands) merely licensed for residential purposes or that have residential purposes as their normal destination, it would certainly not have used the expression "properties with residential allocation". And, for this reason, the legislator re-evaluated the situation and introduced a new version of the law, to enter into force from 01-01-2014, now including lands in these circumstances. This itself is well demonstrative that this was not the situation that resulted from the version of the law until the end of 2013.

In these terms, it must be presumed that the use of a different expression by the legislator was intended to achieve a different reality, so that "property with residential allocation" cannot be a property merely licensed for residential purposes or intended for that purpose, but must be a property that already has effective allocation to that purpose. Note that in the present case the property in question is characterized as construction land, and from the Certificate attached to the proceedings by the Claimant as document no. 2, it is possible to extract that there is no building on the property. For this very reason the only possible sense for the expression "allocation" is that of an "effective allocation". See article 3 of the CIMI, with respect to rural properties, which makes reference to those "assigned to or, in the absence of concrete assignment, have as their normal destination a use generating agricultural income", which shows that assignment is concrete, effective. As also can be seen from the latter part of this text, a property can have a determined destination and be or not be assigned to it, which shows that the requirement of effective assignment.

1. The specific case under discussion in the present proceedings

In the case at hand there existed no building or structure at the time of the contested tax assessment (2012), so we cannot consider that the property in question had an effective allocation for residential purposes. It further follows that, in light of the version of the law then in force, the legislative intention not to extend the scope of application to construction lands was expressly stated by the Government when presenting to the Plenary of the National Assembly the Legislative Proposal 96-XII by saying, through the State Secretary for Tax Affairs, as follows: "First, the Government proposes the creation of a special tax to tax urban residential properties of higher value. This is the first time in Portugal that a special tax has been created on high-value properties intended for residential purposes. This tax will be 0.5% to 0.8% in 2012, and 1% in 2013, and will apply to houses valued at equal to or greater than 1 million euros. With the creation of this additional tax, the fiscal effort required of these property owners will be significantly increased in 2012 and 2013." (our emphasis).

The express reference to "houses" as the target of the incidence of the new tax leaves no room for doubt about the legislative intent. On the other hand, no reference is found in the discussion of the aforementioned Legislative Proposal to "construction lands". With respect to article 45 of the CIMI, it has no relation whatsoever to the classification of properties, only indicating the factors to be considered in the assessment of construction lands. What is considered there, by making reference to the "building to be constructed" is the consideration of the destination of the land, which, as has been seen, is something that, in the context of the CIMI, does not imply allocation and occurs before it. For this reason, the invocation by the AT in its response, of the rules applicable for purposes of assessment of this type of property does not hold as to the purpose relevant to the issue to be decided in the present proceedings.

Finally, it is important to note that Law No. 83-C/2013, of December 31, also contradicts the position defended here by the ATA, as it did not serve to clarify the logical element underlying the initial wording of item no. 28.1, but rather served to confirm, indirectly, the interpretation that it did not encompass construction lands. In fact, if the original wording of item no. 28.1 under analysis, by referring to "property with residential allocation" intended to encompass buildings and structures that constituted "residential properties" and construction lands for which residential building was authorized or planned, then it would be natural to attribute to the new wording an interpretative nature, similarly to what is done in other provisions contained therein, such as for example article 177, paragraph 7, with respect to subparagraphs a) and b) of paragraph 3 of article 17-A of the Income Tax Code.

For all that has been stated, it is the understanding of this Tribunal that item 28.1, in the wording introduced by Law No. 55-A/2012 of October 29, does not apply to construction lands, even if these reveal the potential for construction of residential purposes. It is important to note that, on this same issue, various arbitral decisions have already been rendered, among which the following stand out: those rendered in arbitral cases nos.: 42/2013 T, 48/2013-T, 53/2013-T, 144/2013-T, 180/2013–T and 189/2013-T, 306/2014–T; 500/2014-T, 589/2014–T, 602/2014–T, 737/2014-T, among others.

Also the Supreme Administrative Court has pronounced itself, in the same sense, on this issue, namely, in Decisions rendered, specifically, on April 9 and 23, 2014 (in which Judge Advisor Isabel Marques da Silva was the reporting judge) and, also, on May 9, 2014 (in which Judge Advisor Dulce Neto was the reporting judge).

In this respect, the Decision of the STA of April 9, 2014 (in which express reference is made to arbitral decision no. 144/2013-T) concludes that "the legislator not having defined the concept of "(urban) properties with residential allocation", and it resulting from article 6 of the Real Estate Tax Code - subsidiarily applicable to Stamp Tax provided for in the new item no. 28 of the General Table - a clear distinction between "urban residential properties" and "construction lands", these cannot be considered, for purposes of incidence of Stamp Tax (Item 28.1 of the TGIS, in the wording of Law No. 55-A/2012, of October 29), as urban properties with residential allocation."

In accordance with the above stated, if the letter of the law – of Item 28.1 of the TGIS – (grammatical element) does not present itself sufficiently clear to, without strain, specify the concept of "property with residential allocation", already the logical element ("the systematic element and 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"), to which paragraph 1 of article 9 of the Civil Code points, allows to conclude, as has come to be concluded in various arbitral decisions and, also, by the Supreme Administrative Court in the above cited Decisions that, it resulting from article 6 of the Real Estate Tax Code a clear distinction between "residential" urban properties and "construction lands", these cannot be considered as "properties with residential allocation" for purposes of the provision in item no. 28.1 of the General Table of Stamp Tax, in its original wording, as was given to it by Law No. 55-A/2012, of October 29".

In these terms, the present arbitral request should be considered well-founded, and the contested assessment relating to the year 2012 should be cancelled, concerning the property (construction land) identified in the present proceedings, due to error in the presuppositions on which its issuance was based.

IV. QUESTION OF NON-RETROACTIVITY OF THE AMENDMENT TO ITEM 28 OF THE TGIS

The Claimant argues in this respect, anchored in arbitral precedent Arbitral Decision no. 215/2013T, that the amendment introduced to item 28 of the TGIS does not assume the nature of an interpretative norm, and therefore cannot have retroactive application. As we have already stated in the preceding point, the new wording of item 28 of the TGIS does not have the nature of an interpretative norm, so it does not appear tolerable, in light of the general principles provided in the law (articles 9 to 12 of the Civil Code) or in light of the Constitution of the Republic (article 103, paragraph 3) its retroactive application. Thus, the understanding invoked by the Claimant appears to be correct.

This is, in fact, the understanding consonant with the nature of the amendment introduced, which did not serve to clarify the sense of the norm, but rather to extend the scope of application of the tax, also to construction lands, certainly to achieve even greater tax revenue. And, it is considered so, because there was no controversy or doubt, either in doctrine or in jurisprudence, as to the sense of the previous law. Moreover, if this were so, it would always have to be expressly provided in the text of the new norm that it had an interpretative nature. Thus, there is no doubt that we are not dealing with an interpretative norm.

Law No. 83-C/2013, of December 31, contrary to what the Tax and Customs Authority contends, did not aim to clarify the logical element underlying the initial wording of item no. 28.1, but rather served to confirm, indirectly, the interpretation that it did not encompass construction lands.

In fact, if the original wording of that item no. 28.1, by referring to "property with residential allocation" already intended to encompass buildings and structures that constituted "residential properties" (in accordance with article 6, paragraph 2, of the CIMI), and construction lands for which residential building was authorized or planned, it would be natural to attribute to the new wording an interpretative nature, similar to what the same Law No. 83-C/2013 does in other provisions [article 177, paragraph 7, with respect to subparagraphs a) and b) of paragraph 3 of article 17-A of the Income Tax Code, and article 185, paragraph 1, with respect to article 3-A of the Value Added Tax Code] and which is usual to do in budgetary laws, when it is intended that the new wordings apply to situations potentially encompassed by the prior wordings.

For this reason, the fact that interpretative nature was not attributed to the new wording points in the direction that it was intended to alter the scope of application of the aforementioned item no. 28.1 of the TGIS and not maintain it, clarifying it.

For the foregoing, the contested assessment suffers from a defect of error regarding the presuppositions of law, consisting of a violation of item no. 28.1 of the TGIS, which justifies its cancellation (article 135 of the Code of Administrative Procedure). ([6])

V. DECISION

In these terms, this Arbitral Tribunal decides:

a) To judge the arbitral request well-founded;

b) To cancel the Stamp Tax assessment contested in the present proceedings, relating to the year 2012 and in the amount of € 13,419.50, with all legal consequences, namely, the obligation to refund the amount(s) that may have been paid by the Claimant with reference to the contested assessment, plus interest at the legal rate, until full payment.

c) To condemn the defendant entity to payment of arbitration costs.

VI. VALUE OF THE CASE

In accordance with the provisions of article 315, paragraph 2, of the CPC and 97-A, paragraph 1, subparagraph a), of the CPPT and paragraph 3, paragraph 2, of the Regulations of Costs in Tax Arbitration Proceedings, the case is valued at € 13,419.50.

VII. COSTS

In accordance with article 22, paragraph 4, of the RJAT, the amount of costs is fixed at € 918.00, in accordance with Table I annexed to the Regulations of Costs in Tax Arbitration Proceedings, to be borne by the Tax and Customs Authority.

Notify.

Lisbon, December 7, 2015

The Arbitral Judge

(Prof. Dr. Maria do Rosário Anjos)

[1] In this sense see, among others, the following arbitral decisions: Arbitral Decision rendered in case 504/2014 – T; 602/2014-T; 500/2014-T; 559/2014-T; 306/2014-T; 737/2014-T and 764/2014-T.

[2] BAPTISTA MACHADO, Introduction to Law and Legitimating Discourse, page 182.

[3] Legislative Proposal No. 99/XII/2nd is available at:
http://www.parlamento.pt/ActividadeParlamentar/Paginas/DetalheIniciativa.aspx?BID=37245

[4] Other norms of the CIMI make it clear that the term "allocation" is used to reference situations already existing and not merely future, even if foreseeable, like "destination".

It is the case of article 9 of the CIMI, which, after establishing that "the tax is due from" "the 4th year following, inclusive, that in which construction land has come to appear on the inventory of a company whose business is the construction of buildings for sale" or "the 3rd year following, inclusive, that in which a property has come to appear on the inventory of a company whose business is its sale" [subparagraphs d) and e) of paragraph 1], determines that "for purposes of the provisions of subparagraphs d) and e) of paragraph 1, taxpayers must communicate to the tax office of the area where the properties are situated, within 60 days counted from the occurrence of the fact determining its application, the allocation of the properties to those purposes". The "allocation of the properties to those purposes", in the context of this article 9, is reducible to the concrete attribution to the properties of the purpose "for sale", materialized by its inclusion in inventory, not sufficing that they have been constructed or acquired with a view to their sale.

[5] Page 32 of the Records of the National Assembly, no. 9 of the 2nd Legislative Session of the XII Legislature, relating to the Plenary Meeting of 10-10-2012, available at http://app.parlamento.pt.

[6] In this sense the Supreme Administrative Court has been deciding, as can be seen from the decisions of 09-04-2014, rendered in cases nos. 01870/13 and 048/14, and of 23-04-2014, rendered in cases nos. 0271/14, 0270/14 and 0272/14, available at http://www.dgsi.pt.