Summary
Full Decision
ARBITRAL DECISION
Report
A – General
1.1. A…, S.A., Public Company, with registered office at Rua … no.…, …-… Porto, with share capital of € 1,293,063,324.98 (one thousand two hundred and ninety-three million, sixty-three thousand, three hundred and twenty-four euros and ninety-eight cents), registered at the Commercial Registry Office of Porto under unique registration number and legal entity number … (hereinafter referred to as "Claimant"), filed on 04.05.2016, a request for constitution of a single arbitral tribunal in tax matters, which was accepted, seeking, on the one hand, the declaration of illegality of the tax act imposing an additional assessment of Municipal Tax on Onerous Property Transfers (hereinafter "IMT"), relating to property acquired, as shall be further seen, and, on the other hand, the recognition of the right to compensatory interest for payment of an undue tax obligation.
1.2. Pursuant to the provisions of letter a) of number 2 of article 6 and letter b) of number 1 of article 11 of Decree-Law no. 10/2011, of 20 January, as amended by article 228 of Law no. 66-B/2012, of 31 December (hereinafter, "RJAT"), the Ethical Council of the Administrative Arbitration Centre (CAAD) appointed the undersigned as arbitrator, and the parties, after being duly notified, did not express opposition to that appointment.
1.3. By order of 18.05.2016, the Tax and Customs Authority (hereinafter referred to as "Respondent") appointed Dr. B… and Dr. C… to intervene in the present arbitral proceedings, in the name and representation of the Respondent.
1.4. In accordance with the provisions of letter c) of number 1 of article 11 of the RJAT, the arbitral tribunal was constituted on 14.07.2016.
1.5. On 15.07.2016, the highest-ranking official of the Respondent's services was notified to send to the Arbitral Tribunal a copy of the administrative file that might exist and, if desired, within a period of 30 days, to present its response and request production of additional evidence.
1.6. On 16.09.2016, the Respondent presented its response.
B – Claimant's Position
1.7. The Claimant is a credit institution authorized by the Bank of Portugal to carry out banking activities.
1.8. The Claimant, on 16.07.2012, acquired the autonomous fraction designated by the letter "M" of the urban property registered in the urban property register of the parish of …, municipality of…, under property number…, located at Rua…, no. … (hereinafter, the "Property") by adjudication in execution, within the scope of the Insolvency Proceedings of D…, taxpayer … (hereinafter, the "Insolvent").
1.9. The Insolvency Administrator recognized that the acquisition mentioned in 1.8. was entitled to exemption from IMT under the provisions of article 270 of the Insolvency and Business Recovery Code (hereinafter, "CIRE").
1.10. The benefit of exemption was equally recognized, pursuant to article 16 of the CIRE, in the respective IMT assessment.
1.11. The Respondent's services subsequently took the position that the said acquisition could not benefit from exemption from IMT because the property was owned by a natural person, did not belong to a company nor was it engaged in the exercise of an economic activity.
1.12. Without prejudice to believing that the exemption referred to in number 2 of article 270 is applicable to the case, and as a matter of course, the Claimant argues that the acquisition would in any event be exempt from IMT pursuant to number 1 of article 8 of the Code of Municipal Tax on Onerous Property Transfers (hereinafter, "CIMT"), which also operates automatically.
1.13. The Claimant further argues that the Respondent's position cannot be accepted according to which the request for recognition of the exemption was not timely formulated, since the Claimant presented the IMT Model 1 Declaration on 16.07.2012, and the financial services should promote the appropriate procedure for automatic recognition in case of omission in the verification or declaration of IMT exemption by the bodies responsible for the insolvency proceedings.
1.14. All the more so as the Respondent is a party to the same insolvency proceedings, being aware of the Claimant's creditor position in that proceedings.
1.15. Finally, the Claimant requests that the right to receive compensatory interest be recognized, for having paid an undue tax obligation, pursuant to number 1 of article 43 of the General Tax Law (hereinafter, "LGT").
C – Respondent's Position
1.16. The Respondent, in its response, begins its defense by exception, arguing, first, error in the form of the proceedings, because the recognition of the exemption provided for in number 1 of article 8 of the CIMT implies recourse to an administrative action and not a request for arbitral decision.
1.17. Then, also by exception, the Respondent alleges lack of jurisdiction of the arbitral tribunal because the matter at issue concerns the appreciation of matters relating to the recognition of tax exemptions, which does not fall within the sphere of the powers of cognizance attributed to arbitral tribunals functioning within the framework of CAAD.
1.18. There would also be lack of jurisdiction, according to the Respondent, because outside the scope of arbitral jurisdiction is the recognition of tax exemption related to the transfer of real property within the scope of insolvency proceedings, both under article 270 of the CIRE and pursuant to article 8 of the CIMT, since the verification of the respective requirements falls exclusively to the court where said proceedings took place.
1.19. The Respondent alleges that only on 12.11.2015 did the Claimant raise the question of the exemption provided for in number 1 of article 8 of the CIMT, with the transfer of the property having occurred much earlier, on 16.07.2012, with a period of 30 days, counted from the date of execution of the adjudication, for presentation of the IMT declaration. This means, therefore, that on 12.11.2015, the Claimant's right to have its right to the requested exemption recognized had long since lapsed.
1.20. By way of challenge on the merits, the Respondent argues that number 2 of article 270 of the CIRE is not applicable, since the Insolvent was a natural person, not being a company, understood as an organization of capital and labor intended for the exercise of any economic activity, nor a merchant, with it not even being demonstrated that the Property was engaged in an business activity, of which in any case it would only be an element of the company's assets and never the company itself.
1.21. The appreciation of the request relating to the tax benefit of number 1 of article 8 of the CIMT would be unconstitutional, by violation of the principles of trust and legal certainty.
1.22. In the case at issue, the assessment and payment of IMT do not precede the fact giving rise to transfer of the Property, and it is certain that it must be based on the IMT Model 1 Declaration presented by the taxpayer, in which an exemption was declared under number 2 of article 270 of the CIRE, it not being admissible to alter the grounds of claim around number 1 of article 8 of the CIMT, as the Claimant attempted to do on 12.11.2015.
1.23. In addition, the correction of errors in the declarations presented can only be made by way of their replacement, within the respective legal period, pursuant to the provisions of article 59 of the Tax Procedure and Process Code (hereinafter, "CPPT").
D – Report Conclusion
1.24. By order of 15.12.2016, the arbitral tribunal dispensed with the hearing provided for in article 18 of the RJAT, since the parties had already provided to the proceedings the elements of fact necessary and sufficient for the rendering of the decision.
1.25. As the Respondent did not waive the right to present its arguments, a deadline was set for their presentation and for the rendering of the decision, which was anticipated to take place by 14.03.2017.
1.26. The Claimant presented its arguments on 19.01.2017, in which it responded to the exceptions invoked by the Respondent in its Response.
1.27. As to the procedural means employed and the lack of jurisdiction of the arbitral tribunal ratione materiae, the Claimant relies on the arbitral and judicial decisions it cites, where the issue was analyzed, and it was concluded that the aforementioned exceptions do not stand.
1.28. With regard to the untimeliness of the request for application of the exemption of number 1 of article 8 of the CIMT, allegedly leading to the formation of the exception of partial res judicata, the Claimant understands that it is possible to convert the tax benefit under article 270 of the CIRE, if it is considered that it was improperly granted, to that which said article 8 of the CIMT grants to it.
1.29. In the rest, the Claimant maintained in its arguments what it had primarily sustained in the request for arbitral decision.
1.30. On 27.01.2017, the Respondent presented its arguments, reinforcing what it had previously expounded in its Response.
1.31. The parties have legal personality and legal capacity and have standing pursuant to article 4 and number 2 of article 10 of the RJAT, and article 1 of Order no. 112-A/2011, of 22 March.
1.32. The joinder of claims effected in the present request for arbitral decision, in honor of the principle of procedural economy, is justified because article 3 of the RJAT, by expressly permitting the possibility of "joinder of claims even though relating to different acts," accommodates, without hermeneutical abuse, the appreciation of a request that follows, by necessity, from the judgment that the arbitral tribunal reaches regarding the validity of the assessments challenged.
1.33. The proceedings do not suffer from any nullity. However, exceptions were raised, namely that of impropriety of the procedural means employed, that of lack of jurisdiction of the tribunal ratione materiae, and that of partial res judicata, whereby the arbitral tribunal must first appreciate these exceptions, since the result of that judgment may prevent appreciation of the merits of the case.
Matters of Fact
2.1. Proven Facts
The following facts with relevance to the present proceedings are deemed proven:
2.1.1. The Claimant is a banking institution, conducting the activities authorized to credit institutions (article 8 of the request for arbitral decision).
2.1.2 On 16.07.2012, within the scope of the insolvency proceedings of D…, which took place before the 1st Court of the Judicial Court of the District of …, under no.…, a Transfer Title was issued by the insolvency administrator, by virtue of which the Property was adjudicated to the Claimant (doc. no. 3, attached with the request for arbitral decision).
2.1.3 The Claimant was a mortgagee of the Insolvent (doc. no. 4, attached with the request for arbitral decision).
2.1.4 The Transfer Title contains "This transfer is exempt from IMT pursuant to number 2 of article 270 of Decree-Law 53/04" (doc. no. 3, attached with the request for arbitral decision).
2.1.5 Also on 16.07.2012, the financial services of Coimbra … were requested to assess the IMT relating to the acquisition, in insolvency proceedings, of the Property (consensus of the Parties).
2.1.6 The corresponding assessment of IMT was made, to which corresponds the IMT collection document no. … (doc. no. 6, attached with the request for arbitral decision).
2.1.7 The IMT document contains, in the part intended for the identification of benefits, the following: "Benefits: 60 - Insolvency and Business Recovery Code – Transfers included within the scope of the liquidation of the insolvent estate (Art. 270 no. 2, of D.L 53/04), 100% on the taxable base" (doc. no. 6, attached with the request for arbitral decision).
2.1.8 By office no. …/… of the Financial Services of…, the Claimant was notified to exercise the right to a hearing provided for in article 60 of the LGT relating to the demonstration of additional IMT assessment (article 14 of the request for arbitral decision and doc. no. 7, attached with it).
2.1.9 On 11.11.2015, the Claimant exercised its right to a prior hearing (doc. no. 8, attached with the request for arbitral decision).
2.1.10 By office no…, of 26.01.2012, the Claimant was notified of the act of additional IMT assessment from which an amount of tax to be paid of € 862.50 (eight hundred and sixty-two euros and fifty cents) emerges (docs. no. 1 and no. 2, attached with the request for arbitral decision).
2.1.11 On 03.02.2016, the Claimant proceeded to pay the additional IMT assessment that had been notified to it by document …, of 03.02.2016 (docs. no. and no. 5, attached with the request for arbitral decision).
2.2. Unproven Facts
With relevance for the decision, there are no facts that should be considered as unproven.
2.3. Justification of the Establishment of the Factual Basis
The facts were deemed proven based on the documents attached to the proceedings by the Parties and the positions assumed by them in the pleadings filed.
Matters of Law
3.1. Questions to be Decided
From what has been stated above, the questions to be appreciated are, in essence:
a) Whether any of the exceptions invoked by the Respondent is well-founded, which would result in its acquittal as to the merits;
b) If none of the exceptions prove to be well-founded, whether the Claimant proceeded in such a way as to require the Respondent to recognize the benefit of the exemption referred to in number 1 of article 8 of the CIMT, thereby making the act of additional IMT assessment illegal following the revocation of the exemption requested pursuant to article 270 of the CIRE;
c) Lastly, whether, if the request for declaration of illegality is found well-founded and the subsequent annulment of the contested additional IMT assessment, the Claimant, within the scope of the present arbitral proceedings, may obtain a judgment against the Respondent for payment of compensatory interest with respect to the amount it delivered to satisfy the tax improperly demanded.
3.2. On the Exceptions Invoked by the Respondent
3.2.1. On the Impropriety of the Procedural Means Employed and the Lack of Jurisdiction of the Arbitral Tribunal Ratione Materiae
The Respondent understands that the Claimant filed a request for arbitral decision aimed at attacking the additional IMT assessment. However, what is at issue is to judge the applicability of two tax benefits (that of article 270 of the CIRE and that of article 8 of the CIMT), which is why the arbitral tribunal lacks jurisdiction ratione materiae and the procedural means employed is improper, given that the Claimant should have availed itself of an administrative action and not a request for arbitral decision, as it did.
Letter a) of number 1 of article 2 of the RJAT determines that the jurisdiction of arbitral tribunals comprises the appreciation of the declaration of illegality of acts assessing taxes, self-assessment, withholding at source, and payment on account. Article 4 of the RJAT states in turn that "the binding of the tax administration to the jurisdiction of tribunals constituted pursuant to the present law depends on an order of the members of the Government responsible for the areas of finance and justice, which establishes, in particular, the type and maximum value of the disputes covered." The same is to say that not included within the scope of the material jurisdiction of arbitral tribunals is the appreciation of matters relating to the recognition of exemptions and tax benefits.
The Respondent argues that it follows from the request and the grounds therefor to which the present proceedings relate that the Claimant's claim consists precisely in obtaining recognition that the requirements were met for it to benefit from both exemptions provided for in number 2 of article 270 of the CIRE and number 1 of article 8 of the CIMT, in the alternative, further arguing, as stated, that tax acts relating to the recognition of tax exemptions are separable from the tax procedure, subject to be contested by taxpayers through appropriate means, and that the tax assessment resulting therefrom cannot be challenged through a request for arbitral decision.
Now, the Claimant filed the request for constitution of the arbitral tribunal because it did not agree with the act of additional IMT assessment to which the present proceedings relate. It is clear that the analysis to which the arbitral tribunal will have to proceed may include a judgment on the susceptibility of the Claimant being able to benefit from the mentioned exemptions, but that appreciation will always be made in light of the necessary discernment on whether the act of additional IMT assessment that prompted the present request for arbitral decision is illegal or not.
Thus, the arbitral tribunal understands that it is materially competent to appreciate the request formulated by the Claimant, pursuant to the provisions of article 2, number 1, letter a) of the RJAT.
The Respondent further argues that only the court where the insolvency proceedings took place would have jurisdiction to verify the legal requirements on which the exemptions at issue depend. Now, the arbitral tribunal cannot agree with this understanding.
As the Claimant rightly recalls, the matter has already been subject to appreciation by arbitral tribunals functioning at CAAD. It is worthwhile to pay attention to what can be read in the decision rendered in proceedings no. 599/2015-T, which merits this arbitral tribunal's absolute agreement:
"In truth, there is no special rule of insolvency procedure that attributes jurisdiction to courts to recognize tax exemptions, and the general regime of tax benefits unequivocally contradicts that hypothesis.
In fact, the Fiscal Benefits Statute (EBF) applies to all tax benefits (its article 1). From article 5 of the EBF it follows that tax benefits, when they are automatic, are not the subject of any separate act of recognition, so that it is in the appropriate moment to decide whether a tax assessment act should be performed that the question of verification by the Tax and Customs Authority of the occurrence or non-occurrence of the requirements of the tax benefit arises.
In the specific case of the exemption provided for in article 270 of the CIRE, we are dealing with a tax benefit for which article 16, number 2, of the CIRE only provides the need for prior recognition by the Tax and Customs Authority when applied within the scope of a company restructuring and revitalization process, provided for in Decree-Law no. 178/2012, of 3 August. In other cases falling within article 270 of the CIRE, not expressly requiring prior recognition (neither in the CIRE, nor in the EBF, nor in article 10 of the CIMT), we are dealing with an exemption of automatic recognition, with responsibility for its verification and declaration falling to the financial service where the declaration provided for in article 19, number 1, of the CIMT is filed, as results from the provisions of letter d) of number 8 of that article 10.
On the other hand, since the right to tax benefits is a matter of tax law, the possibility of its direct recognition by the Courts is reserved to the Tax Courts, through an action for recognition of a right or legitimate interest in tax matters, pursuant to articles 212, number 3, of the Constitution of the Portuguese Republic, 144, number 1, of the Law of the Organization of the Judicial System (Law no. 62/2013, of 26 August), 49, number 1, letter c), of the Tax Courts Statute, 101, letter b) of the LGT and 97, number 1, letter h) and 145 of the CPPT, so there is no legal support for asserting the exclusive jurisdiction of the Judicial Courts for recognition of the exemption in question."
The exceptions of impropriety of the procedural means employed and lack of jurisdiction of the arbitral tribunal ratione materiae do not stand.
3.2.2. On Partial Res Judicata
Only at the stage of the prior hearing, that is, on 12.11.2015, did the Claimant raise the question of the exemption provided for in number 1 of article 8 of the CIMT.
The declaration of IMT assessment must be filed, even in situations where tax exemptions are at issue, as provided by number 3 of article 19 of the CIMT. And it must be filed within the period of 30 days counted from the date of the execution of the adjudication, pursuant to number 3 of article 36 of the same diploma. Now, the Respondent accordingly understands that the "request for attribution" of the exemption referred to in number 1 of article 8 of the CIMT is entirely untimely because it was formulated only on 12.11.2015 when the execution of the adjudication dates from 16.07.2012.
There is no doubt that the Claimant filed, within the legally provided period, the declaration whose duty of filing is imposed by number 3 of article 19 of the CIMT. It did so, however, invoking an exemption which the Respondent understands is not applicable to the acquisition at issue, with the IMT being assessed by the Tax and Customs Authority services at zero on the basis and with justification in that same exemption. But the Claimant, while continuing to maintain the applicability of the exemption referred to in number 2 of article 270 of the CIRE, further understands that it is possible to convert an allegedly improper benefit to another that appears to it absolutely indisputable.
Now, it is reasonable that this analysis can be made and it does not waive a judgment on the merits of the case. The arbitral tribunal accordingly understands that within its cognizance falls the power to judge the possibility of operating the conversion sought by the Claimant, which is why that question must be appreciated ex officio.
3.3. The Exemption Provided for in Number 1 of Article 8 of the CIMT and the Possibility of Conversion
3.3.1. Number 1 of Article 8 of the CIMT
Number 1 of article 8 of the CIMT provides as follows:
Article 8
Exemption for the Acquisition of Real Property by Credit Institutions
1 – Exempt from IMT are acquisitions of real property by credit institutions or by commercial companies whose capital is directly or indirectly dominated by such institutions, in execution proceedings brought by such institutions or by another creditor, as well as those effected in bankruptcy or insolvency proceedings, provided that, in any case, they are intended to realize credits resulting from loans made or sureties provided.
In the case to which the present proceedings relate, we are dealing with an acquisition made by a credit institution in insolvency proceedings, with that acquisition being intended to realize credits resulting from loans made or sureties provided.
It seems that there is no doubt that the Claimant, pursuant to number 1 of article 8 of the CIMT, in the acquisition of the Property, could have benefited from the exemption from IMT as the requirements on which its application depends were, on the date of that acquisition, met. In fact, (i) the Property was owned by the Insolvent; (ii) the Claimant was a mortgagee of the Insolvent; and (iii) within the scope of the insolvency proceedings, the Property was adjudicated to the Claimant to satisfy its credits.
3.3.2. The Declaratory Effect of the Recognition of the Exemption by the Tax and Customs Authority
Number 1 of article 10 of the CIMT provides that "exemptions are recognized upon request of interested parties, to be presented before the act or contract giving rise to the transfer to the competent services for the decision, but always before the assessment that would have to be made."
Number 2 of that article 10 in turn requires that the request for recognition of the exemptions referred to in number 1, where applicable, contain "the identification and description of the goods, as well as the purpose to which they are intended," further requiring that documents be attached demonstrating the requirements of the exemption.
It is noteworthy that no provision of this article 10 specifically mentions the exemption established in number 1 of article 8 of the same diploma, and it cannot be admitted that its recognition by the tax administration be more restrictive or more demanding than said automatic recognition.
As number 1 of Circular no. 5/2011 properly states, "the tax exemption established in article 8, number 1, of the CIMT, concerning situations of acquisition of real property by credit institutions, intended to realize credits, in execution or insolvency proceedings, has the nature of an automatic exemption, its recognition assuming merely declaratory effect."
This understanding is moreover in conformity with the provisions of number 1 of article 5 of the Fiscal Benefits Statute (hereinafter, "EBF"), where it can be read that "tax benefits are automatic or dependent on recognition; the former result directly and immediately from law, the latter presuppose one or more subsequent acts of recognition."
This means that the exemption at issue, strictly speaking, does not depend on the recognition that may be made by the administration, but rather on the meeting of the requirements established by law, as of the date of the facts. And those requirements are these:
(i) that the acquirer be a credit institution;
(ii) that the acquisition be effected in insolvency proceedings; and
(iii) that the acquisition be intended to realize credits resulting from loans made or sureties provided.
Let us again invoke what is provided in number 2 of article 10 of the CIMT, when it requires that documents demonstrating the requirements of the exemption be attached to the request. That attachment, as can be seen, is intended to bring to the knowledge of the tax administration services the evidence of the conditions being met for the applicant to benefit from the exemption. Now, it seems evident that the Tax and Customs Authority, if it did not know, at the very least could not ignore the fact that the requirements on which recognition of the requested exemption depends were met, with the Claimant being the one to bring to the tax administration the demonstration of the meeting of those requirements, namely:
(i) the acquirer is known to be a credit institution;
(ii) the acquisition was effected in insolvency proceedings, which is crystal clear from the circumstance of the Transfer Title being issued by E…, in his confessed capacity as administrator of the identified insolvency; and, lastly
(iii) the acquisition was intended to realize a credit resulting from a loan made or surety provided, since in the Transfer Title can be read "the Bank having been dispensed with the deposit of the remaining price, pursuant to the combined provisions of article 165 of the CIRE and 887, number 1 of the CPC."
The provision of the Code of Civil Procedure to which the insolvency administrator refers is that which today corresponds to article 815 of that diploma: "the execution creditor who acquires goods in execution is dispensed with depositing the part of the price that is not necessary to pay creditors graduated before him and does not exceed the amount he is entitled to receive; equal dispensation is granted to the creditor with security over the goods that he acquires."
Therefore, as of the date of the facts, as must be ascertained pursuant to article 12 of the EBF, not only were the requirements met for the acquisition at issue to benefit from exemption from IMT, but the Tax and Customs Authority could not ignore such a situation, whereby it should have recognized the exemption, appropriately framing the situation within the legal framework in force.
Moreover, this conclusion is all the more compelling given that it is known that the Tax and Customs Authority itself had privileged knowledge of the Insolvency Proceedings, in its capacity as a creditor that it also was of the Insolvent. Furthermore, it seems to be that conclusion which, a contrario, can be drawn from number 5 of article 36 of the LGT, since the recognition of the exemption at issue seems to be "entirely binding."
3.3.3. Number 3 of Article 19 of the CIMT
Even though one accepts the mere declaratory effect of the recognition of an exemption, such as that of number 1 of article 8 of the CIMT, one cannot forget that number 3 of article 19 provides that a declaration on an official form for the assessment of IMT "must also be filed, at any financial service or by electronic means, before the act or fact giving rise to transfer of the goods, in situations of exemption." Therefore, even in cases of exemption, the interested party must file with the services an official form declaration so that that exemption can be recognized (it not being relevant to the case, as it seems to us, the moment in which that declaration is filed in relation to the transfer-giving effect of the goods).
Article 23 of the CIMT provides that "in auctions, sales by court order or administrative action, and adjudications, the corresponding legal instruments issued by the competent bodies serve as the basis for assessment." It so happens that the Claimant, after requesting the IMT assessment, obtained an assessment at zero with express mention that the transfer is exempt from IMT under number 2 of article 270 of the CIRE. On the basis of the declaration of the acquirer, pursuant to the provisions of number 1 and number 2 of article 21 of the CIMT, it is the Tax and Customs Authority that proceeds to the assessment and that issues the collection document where it appears at zero. Let it not be thought that, after the taxpayer's declaration, the Respondent was surprised and verified that the facts were not true which gave rise to recognition of that exemption or was faced with an unexpected and unforeseen change in the circumstances on which the benefit previously obtained depended. No. The Insolvent was already, as of the date of acquisition, a natural person, not having the status of merchant. All of this was (or should have been) already known to the Respondent.
It so happens that the Respondent seeks to extract from the mention of article 270 of the CIRE in the document in which the additional IMT assessment is embodied and the Transfer Title issued by the insolvency administrator the corollary that the interested party does not merely request the Tax and Customs Authority to recognize an exemption of which it finds itself entitled, but rather the recognition of the exemption mentioned, to the exclusion of any other. With all due respect, the arbitral tribunal cannot agree with this understanding, which errs in being incomprehensibly formalistic.
What the law requires in these cases is that the interested party request recognition of the exemption, whose appreciation is strictly binding and produces merely declaratory effects. As is known, the tax administration is not in absolute dependence on what is presented to it by the taxpayer. There are several examples in which the administration is given the possibility of correcting what is submitted to it for appreciation (articles 19, number 9; 36, number 4 and 79, number 2, all of the LGT and article 48, number 1 of the CPPT). Moreover, number 1 of article 48 of the CPPT is very enlightening, which, under the heading "cooperation of the tax administration and the taxpayer," imposes on the former the duty to clarify the latter "on the need for filing of declarations, complaints and petitions and the performance of any other acts necessary for the exercise of its rights, including the correction of obvious errors or omissions that are observed." Hence, the issue of admissibility of conversion to which Circular no. 16/88, of 09.08, reappraised by Circular no. 18/95, of 11.10, both from the Directorate of Services of Stamp Tax and Heritage Transfers, does not even arise.
3.3.4. Circular no. 5/2011
Number 10 of Circular no. 5/2011 reads as follows:
"10 – Notwithstanding all that has been said above, should omission in the verification or declaration of IMT exemption by the judicial bodies be found, the competent Financial Service should promote the appropriate procedure for automatic recognition, provided that the taxpayer complies with the assessment deadlines provided for in article 36, number 3, of the CIMT and expressly requests verification and declaration of the exemption by the Head of the Financial Service."
The discipline imposed by Circular no. 5/2011 is not such as to support the understanding that the Respondent seems to make of the situation. In fact, what can be concluded from the provision we have just cited is that the tax administration should not restrict itself to what the judicial bodies, insolvency administrators, or the taxpayers themselves may or may not say, but should rather seek to ascertain the meeting of the requirements on which the automatic recognition of an exemption depends, provided that a request for the exemption has been made timely.
There is no doubt that the Claimant requested exemption from IMT. And when it presented its declaration to the tax administration to have the exemption from IMT recognized, the Claimant did not omit any relevant data that would allow the administration to proceed with its automatic recognition, although if it proved necessary to proceed with the correction of the obvious error, pursuant to and for the purposes of the provisions of number 1 of article 48 of the CPPT.
Therefore, for the reasons adduced, it will not be legitimate to admit that the Claimant is now seeking to benefit, after the transfer of the goods, from an exemption that it would not be (or is no longer) in a position to request. The facts demonstrate that such is not the case.
It is true, however, that in the Transfer Instrument reference is made to article 270 of the CIRE, which the Respondent understands to be manifestly inapplicable to the case at issue. However, it is no less true to maintain that from that document the Respondent could conclude the exemption from IMT under number 1 of article 8 of the CIMT, recognizing it, automatically, as was required.
In addition, if the omission in the verification or declaration of IMT exemption by the judicial bodies does not prevent, rather it requires, the recognition of that exemption in cases where it is shown that the taxpayer requested it, it is not surprising that the same judgment applies when one is in the presence of an error attributable to those bodies or to the taxpayers, when it is clear that the services cannot ignore that error. "The competent Financial Service should promote the appropriate procedure for automatic recognition," one reads in the cited normative. The promotion of the appropriate procedure is, therefore, a duty. This conclusion seems to us, moreover, to be a corollary of the principles of justice and cooperation referred to in articles 55 and 59, both of the LGT.
Moreover, from what has been set forth it is understood that the conclusion reached does not translate into a violation of the principles of trust and legal certainty, as the Respondent argues, nor of any other principle related to the fundamental framework of the Portuguese legal order.
3.4. Conclusion
Thus, in light of what was stated above, the arbitral tribunal understands that the act of additional IMT assessment at issue in the present proceedings is illegal.
3.5. On Compensatory Interest
Letter b) of number 1 of article 24 of the RJAT provides that "the arbitral decision on the merits of the claim from which no appeal or challenge may be brought binds the tax administration from the end of the period provided for appeal or challenge, the latter being required, in the exact terms of the favorable decision of the arbitral award in favor of the taxpayer and until the end of the period provided for voluntary execution of sentences of judicial tax courts, to restore the situation that would have existed if the tax act that is the subject of the arbitral decision had not been performed, adopting the acts and operations necessary for that purpose."
It is not ignored that the legislative authorization granted to the Government by article 124 of Law no. 3-B/2010, of 28 April, on the basis of which the RJAT was approved, determines that the tax arbitral process constitutes an alternative procedural means to judicial challenge proceedings and to an action for recognition of a right or legitimate interest in tax matters. Even though letters a) and b) of number 1 of article 2 of the RJAT found the jurisdiction of arbitral tribunals on "declarations of illegality," it seems reasonable the understanding that included in their jurisdictions are the powers that in judicial challenge proceedings are attributed to tax courts, and it is certain that in judicial challenge proceedings, in addition to the annulment of tax acts, requests for indemnification can be appreciated, not least those relating to compensatory interest.
In fact, the principle of justiciability of claims for indemnification, in administrative complaint or in judicial proceedings, is justified whenever the damage intended to be redressed results from fact attributable to the Tax and Customs Authority. Manifestations of this principle are found in number 1 of article 43 of the LGT and in article 61 of the Tax Procedure and Process Code.
The Claimant's right to the receipt of compensatory interest depends on the verification of the following requirements: a) error attributable to the services; b) that from said error results the payment of tax in an amount greater than legally due; c) that the error of the services be analyzed in the context of administrative complaint or judicial challenge.
In the present case, the error attributable to the services exists and resides in the Respondent's refusal to remedy what required obvious remedy. From the analysis of the documents brought by the parties to the proceedings, it is verified that the Respondent, in the administrative phase, could and should have granted the Claimant's request, as the Claimant had transmitted the elements necessary and sufficient for the indispensable remedy of the situation. The Respondent erred when it understood not to comply with the Claimant's claim, an error that deserves to be censured pursuant to law, not least in light of what is provided in articles 43 and 100 of the LGT.
Thus, having the Claimant paid, within the deadline that had been granted to it, the tax that was demanded of it by the additional assessment challenged, it has the right to compensatory interest counted from the date of payment of the undue tax obligation until its full reimbursement.
Decision
On the basis and with the grounds set forth, the arbitral tribunal decides:
a) To find the exceptions invoked by the Respondent unfounded;
b) To find the request for arbitral decision well-founded, declaring the illegality of the act of additional IMT assessment embodied in document no.…, in the amount of € 862.50 (eight hundred and sixty-two euros and fifty cents);
c) To further find well-founded the request for recognition of the right to compensatory interest, sentencing the Respondent to pay it to the Claimant, counted from the date of undue payment until its full reimbursement.
Value of the Case
In accordance with the provisions of number 2 of article 306 of the CPC, letter a) of number 1 of article 97-A of the CPPT, and further number 2 of article 3 of the Regulation of Costs in Tax Arbitration Proceedings, the value of the case is set at € 862.50 (eight hundred and sixty-two euros and fifty cents).
Costs
For the purposes of the provisions of number 2 of article 12 and number 4 of article 22 of the RJAT and number 4 of article 4 of the Regulation of Costs in Tax Arbitration Proceedings, the amount of costs is set at € 306.00 (three hundred and six euros), pursuant to Table I annexed to said Regulation, to be borne entirely by the Respondent.
Lisbon, 11 March 2017
The Arbitrator
_______________________________
(Nuno Pombo)
Text prepared by computer, pursuant to number 5 of article 131 of the CPC, applicable by virtue of letter e) of number 1 of article 29 of the RJAT, in accordance with the spelling rules prior to the aforementioned Orthographic Agreement of 1990.
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