Summary
Full Decision
ARBITRAL DECISION
REPORT
On 18 May 2018, A..., S.A., with Tax ID Number (NIPC)..., hereinafter referred to as the Applicant, with registered office in Portugal, requested the constitution of an arbitral tribunal and filed a request for arbitral decision, pursuant to article 2(1)(a) and article 10(1)(a) of Decree-Law No. 10/2011, of 20 January (Legal Regime for Arbitration in Tax Matters, hereinafter referred to as LRAT), wherein the Tax and Customs Authority (hereinafter referred to as TCA) is named as Respondent.
The Applicant is represented in these proceedings by its mandataries, Dr. B... and Dr. C..., and the Respondent is represented by legal experts, Dr. D... and Dr. E....
Through the request for constitution of the arbitral tribunal and arbitral decision, the Applicant seeks the declaration of illegality and consequent annulment of the compensatory interest assessment act No. 2017..., of 04.07.2017, in the amount of € 21,836.54 (twenty-one thousand, eight hundred and thirty-six euros and fifty-four cents).
After verification of the formal regularity of the request presented, pursuant to article 6(2)(a) of the LRAT, and given that the Applicant did not proceed with the appointment of an arbitrator, the undersigned was appointed by the President of the Deontological Board of CAAD.
The undersigned accepted the appointment made, and the Arbitral Tribunal was constituted on 30 July 2018, at the headquarters of CAAD, located at Avenida Duque de Loulé, No. 72-A, in Lisbon, in accordance with the communication of constitution of the arbitral tribunal which is attached to these proceedings.
After being notified for this purpose, the Respondent presented, on 28 September 2018, its response, in which it presented its defense, both by way of exception and by way of objection on the merits.
By order of 2 October 2018, the Tribunal, in respect of the principle of contradiction, notified the Applicant to make submissions regarding the exceptions raised by the Respondent.
On 19 October 2018, in response to the order indicated above, the Applicant presented a request in compliance therewith.
Given that there was no need for additional evidence production beyond that already documentarily incorporated in the case file, there being no apparent need for the parties to correct their respective procedural pleadings, and the proceedings containing all elements necessary for the rendition of the decision, by reasons of procedural economy and expedience, and the prohibition of useless acts, the Tribunal decided to dispense with the holding of the meeting referred to in article 18 of the LRAT, in the order issued on 23 October 2018, granting therein a successive period of 10 days for the Applicant and Respondent, in that order, to present their respective written submissions.
In that order, the Tribunal, in compliance with article 18(2) of the LRAT, set 30 January 2019 as the date for rendition of the arbitral decision, and warned the Applicant that it should proceed with payment of the subsequent arbitration fee, pursuant to article 4(3) of the Regulation of Costs in Tax Arbitration Proceedings, and communicate such payment to CAAD.
The Applicant and Respondent presented their submissions on 6 November 2018 and 19 November 2018, respectively.
I. The Applicant's Arguments
The Applicant supports its request for annulment of the compensatory interest assessment to which it was subjected, as being illegal, on the grounds that it suffers from the following defects:
Defect of nullity of the impugned act
The Applicant contends that the demonstration of compensatory interest assessment presented in the file is merely "a demonstration of assessment, not an assessment." Adding that "a demonstration of account reconciliation – without it being clear what accounts or reconciliations were made – also cannot serve as an assessment."
Defect of lack of substantiation of compensatory interest assessment
The Applicant invokes that it was not "notified of any Assessment, in accordance with the Law."
In this sense, the Applicant states that it received two documents denominated "Demonstration of compensatory interest assessment" and "Demonstration of account reconciliation," without these containing information "that makes clear what accounts or reconciliations were made," concluding that "it cannot serve as an assessment. Much less can it fulfill the function of notification to make payment of the determined balance(?) in accordance with the compensation demonstration attached(?). Nor does it serve to warn that, if payment is not made, execution proceedings are instituted. However, Execution was indeed instituted and the Applicant was served. It was precisely through service that the Applicant became aware of the assessment number:... If the Applicant had not been served in the execution proceedings, neither would the Bank, here the Applicant, have known the assessment number."
The Applicant further states that: "(…) it was not notified of any Assessment, in accordance with the Law. And to the question of whether those documents, in which references are made to Compensatory Interest, could function as notification of an Assessment, the answer must be, obviously, negative: they completely omit factual and legal substantiation, the indication of means of defense, the applicable norms."
Concluding on this matter in the sense that: "(…) the – possibly effected, but never notified – assessment of compensatory interest must be annulled, by violation of the constitutional requirement of substantiation, provided for in article 268(3) of the Portuguese Constitution and the legal requirements expressly provided, in general, in article 77(2) of the General Tax Law, and, in particular, in article 5(9) of the General Tax Law."
Defect of error regarding the factual assumptions
The Applicant manifests the understanding that "(…) there never fell upon it any obligation to effect any withholding at source (…)," because, "the present applicant, in its capacity as Depositary Bank of the Real Estate Investment Fund "F...-REAL ESTATE INVESTMENT FUND CLOSED"- which has the nature of a Collective Investment Undertaking (abbreviated OIC), pursuant to and for purposes of the General Regime of Collective Investment Undertakings (approved by Law No. 16/2015, of 24 February), established and operating in accordance with national legislation, therefore covered by the regime provided for in article 22-A of the EBF, in fulfillment of its functions as depositary of the fund and registrar of the units of participation owned by the respective participants, upon the liquidation of the fund, and in accordance with instructions of the respective management entity, delivered the amounts, legally and contractually due to the participants."
The Applicant further states that "(…) the redemption operation is inherent to open-ended funds, constituting the inverse operation to the subscription operation, the latter as an operation of entry into the fund, the former as an exit from the fund. However, there is no place for redemption operations in closed-ended funds, but only for purchase and sale, and, ultimately, for liquidation of the fund itself, which is what occurred in the present case."
The Applicant further adds, regarding the compensatory interest assessment in dispute, that "(…) the regime established in article 22-A of the EBF came to replace a regime in force for more than twenty years, having entered into force in January 2015, immediately following the Income Tax Reform (approved by Law No. 82-E/2014, of 31 December), and this Law qualified the gains resulting from redemption of units of participation in investment funds as capital gains (sub-item 5) of item b) of article 10(1) of the Personal Income Tax Code) and in the same provision was made the qualification of the gains from "liquidation" as "capital gains". Such qualification of the gains from "redemption" contradicted the qualification that the TCA, traditionally, had been sustaining, namely that of "income from capital". It is important to highlight that this solution of article 22-A of the EBF resulted in the establishment of an innovative solution in the Portuguese tax system regarding the taxation of capital gains, which is to establish "withholding at source on capital gains," having circumscribed the solution to "capital gains" from redemption."
Continuing, the Applicant argues that: "[i]n article 22-A of the EBF, regarding withholding at source on income earned by participants in OICs resident in national territory, there is only provision for withholding, at the rate of 28%, in the case of: ● "distributed income" - item a) of paragraph 1; ● "income arising from redemption" – item b) of paragraph 1. For other income, in the legal expression, "in other cases [income is taxed] in accordance with the provisions of the Personal Income Tax Code or the Corporate Income Tax Code – cf. item e) of paragraph 1 of the same article 22-A of the EBF. There is no provision in the Personal Income Tax Code that establishes withholding at source on possible gains from "liquidation" of investment funds."
In truth, according to the Applicant, "[t]he legislator recognizes and distinguishes the existence of various types of capital gains that can arise from participation in OICs (…). This distinction of the various types of "operations" is in accordance with article 10(1) of the Personal Income Tax Code which also distinguishes between capital gains from disposition, redemption and liquidation."
The Applicant concludes in the sense that "[f]rom what has been stated, it is clear that, from the legal regime provided for in article 22-A of the EBF, there does not arise any obligation to withhold at source that the Applicant should have complied with, upon payment of the amounts due upon liquidation to the participants, and while depositary of the investment fund and registrar of the units of participation of each participant in the fund."
And concludes by stating that "(…) the only capital gains that the legislator subjected to withholding at source are the CAPITAL GAINS from REDEMPTION, enshrined and delimited in item b) of paragraph 1 of article 22-A of the EBF."
II. The Respondent's Response
For its part, the TCA, in its response, defends itself, both by way of exception and by way of objection on the merits:
By Way of Exception
By way of exception, the Respondent invokes, on one hand, the material incompetence of the arbitral tribunal in light of the wording of Binding Opinion No. 112-A/2011, of 22 March; on the other hand, the material incompetence of CAAD for consideration of questions related to compensatory interest assessment and termination of execution proceedings; on another hand, still, the untimeliness of the request for arbitral decision regarding the withholding at source act and compensatory interest assessment; and finally, the impropriety of the procedural means.
Regarding the alleged exception of material incompetence of the arbitral tribunal in light of Binding Opinion No. 112-A/2011, of 22 March
The Respondent argues that "[a]lthough not directly impugned, from the consideration sought by the A regarding the alleged illegality of the withholding at source act. Pursuant to article 2, item a) of Opinion No. 112/2011, of 22 March, the Tax Administration bound itself to the jurisdiction of arbitral tribunals functioning at CAAD that have as their object the consideration of claims relating to taxes whose administration is entrusted to them, with the exception of claims relating to the declaration of illegality of withholding at source acts, which have not been preceded by resort to the administrative remedy, in accordance with article 132 of the Tax Code of Administrative Procedure."
"As results from the administrative instruction process, the Applicant failed to present the gracious remedy provided for in article 131 of the Tax Code of Administrative Procedure - gracious claim."
Now, "[d]isposes article 2, item a) of said Opinion No. 112-A/2011 that the binding of the TCA to the jurisdiction referred to has as its object the consideration of claims relating to taxes whose administration is entrusted to it, referred to in paragraph 1 of article 2 of the LRAT, "with the exception of claims relating to the declaration of illegality of self-assessment, withholding at source and payment on account acts that have not been preceded by resort to the administrative remedy in accordance with articles 131 to 133 of the Tax Code of Administrative Procedure."
Regarding the alleged exception of material incompetence of CAAD for consideration of questions related to compensatory interest assessment and termination of execution proceedings
The Respondent argues that, as the request for arbitral constitution aims at the annulment of compensatory interest assessment owed due to delay in tax delivery, the same "(…) is outside the material scope of tax arbitration as molded by the legislator of the LRAT (…)" and thus does not have "(…) admission in the present arbitral instance, as it does not fall within the competence of arbitral tribunals" provided for in paragraph 1 of article 2 of the LRAT, because it understands that from this legal norm results "(…) unequivocally, that the legislator opted not to contemplate (in the LRAT) the possibility of consideration of the compensatory interest assessment act, which does not have the nature of a tax."
Regarding the alleged exception of untimeliness of the request for arbitral decision
The Respondent states that "[a] admitting, in theory, the consideration, in this tribunal, of the legality of withholding at source, not preceded by a gracious claim, the request for arbitral decision would always be manifestly untimely," because "[it] was practiced on 14/06/2017." (…) "[A]s the Applicant submitted the request for arbitral decision on 18/05/2018, it is evident that the same is manifestly untimely," in light of the period stipulated for this purpose in article 10 of the LRAT, as well as it will be according to the Respondent regarding the compensatory interest assessment act.
Regarding the alleged impropriety of the procedural means
The Respondent states that "the claim of the A should always be formulated within the framework of the tax execution process, by way of its opposition, pursuant to article 204 of the Tax Code of Administrative Procedure."
By Way of Objection on the Merits
The Respondent defends itself regarding the invoked defect of lack of substantiation, beginning its discourse by stating that: "[c]ontrary to what is affirmed by the A, the demonstration of the assessment indicates the basis on which the interest was calculated, the period and the rate. However, it will always be said that, having received the assessment and the account reconciliation, and allegedly not discerned what it referred to, could have made use of the faculty conferred on it by article 37 of the Tax Code of Administrative Procedure (…)."
Now, the Respondent considers that "[t]he density of substantiation varies according to the type of act and concrete circumstances. The substantiation must be sufficient and clear (…). And, in the present case, "[t]here remain no doubts that the Applicant, taking into account the content of the request for arbitral decision that it deduced, cannot fail to have perceived the assumptions concretely taken into account by the author of the assessment and the reasons why the value of compensatory interest was reached. That is, the Applicant has elements to understand the cognitive and evaluative path taken in the assessment act notified."
Indeed, the Respondent asserts that, were one to be in a situation in which "(…) the notifications in dispute [had been] effected without being accompanied by substantiation of the respective act, it would be an irregular notification," which "[d]oes not extend to the act notified, transforming it into an illegal act susceptible to being annulled, but only conditions the effectiveness of the tax act transmitted, which, by virtue of this, will only begin to produce all of its effects from the moment when the notification is made in the form determined by law."
The Respondent further states that "[t]he failure to communicate the grounds of the assessment act is not confused with the lack of substantiation of the act (…) and whereas the latter constitutes a defect that invalidates the administrative act and is susceptible to determine its annulment, provided that requested within the legal periods for this purpose, the former, because it is already outside the act, can only defer the beginning of the period for appeal, provided that the provisions of article 37 of the Tax Code of Administrative Procedure are observed. Thus, notification is not an intrinsic element of the act and, therefore, is not a requirement of its validity, but merely a condition of its effectiveness."
"The failure to communicate the grounds of an act only determines the annulability of that communication act, since it does not affect validity, but only its effectiveness."
Concluding on this matter that "this ground of the Applicant is unfounded."
Regarding the invoked defect of error regarding factual assumptions
The Respondent clarifies that: "[t]he tax regime of collective investment undertakings was redefined by Decree-Law No. 7/2015, of 13 January and the amendments introduced entered into force on 1 July 2015. If prior to this date there was exemption from Personal Income Tax, with income being taxed in the fund's sphere (definitively, but with the option of aggregation in Personal Income Tax), with the new regime taxation is made "at exit." The method of taxation "at exit" was generalized, proceeding to tax in Personal Income Tax and Corporate Income Tax the income earned by investors, respectively natural persons or legal entities."
The Respondent further alleges that "[i]ncome from units of participation in real estate investment funds (REIF), including capital gains resulting from their respective liquidation, equated to redemption, began to be considered as income from real property, that is, Category G income, but now as real estate capital gains. Applying the special rate of 28% (provided for in article 72(1) of the Personal Income Tax Code) for withholding at source with final effect to be applied to income arising from redemption or liquidation of units of participation earned by subjects of Personal Income Tax resident in Portuguese territory outside the scope of a commercial, industrial or agricultural activity. That is, the gains obtained, resulting from liquidation of the Fund, are qualified as capital gains pursuant to item 5) of item b) of paragraph 1 of article 10 of the Personal Income Tax Code."
"Now, taking into account the equation of redemption to liquidation, effected by the Personal Income Tax regime, and the provision in item b) of paragraph 1 of article 22-A of the EBF, capital gains resulting from liquidation of REIFs are subject to withholding at source with final effect at the rate of 28%."
Concluding in the sense that "[a]ll considered, the lack of merit of the claims of the A is manifest."
III. Preliminary Issues - Cleansing
The Tribunal is competent and is regularly constituted, pursuant to article 2(1)(a) of the LRAT and articles 5 and 6, all of the LRAT.
The parties have legal personality and capacity, are shown to be legitimate and are regularly represented.
IV. Factual Matter
With interest for the decision, the following facts are deemed proven:
a) The Applicant is the depositary bank of the Real Estate Investment Fund "F...-Real Estate Investment Fund Closed," with Tax ID Number... – by agreement of the parties -;
b) On 22 April 2016, the units of participation of Fund A..., identified in A., were liquidated, and the respective income made available to participants, without deduction of any tax. – by agreement of the parties – ;
c) In the framework of the internal inspection procedure, initiated by Service Order No. OI2017/... of the Tax Inspection Services of the Finance Department of Porto, the Applicant was notified, through Official Notice No. 2017..., of the Tax Inspection Services of the Finance Department of Porto to present elements/clarifications regarding the liquidation of Fund F... – pages 3 to 6 of the administrative instruction process attached to the case file. - ;
d) On 19 June 2017, the Applicant delivered to the Tax and Customs Authority a letter of response to the official notice indicated above. – cf. pages 7 to 71 of the administrative instruction process attached to the case file - ;
e) At the end of June 2017, the Applicant was notified of the Tax Inspection Report regarding the inspection action identified above. – cf. pages 72 to 79 of the administrative instruction process attached to the case file;
f) On 4 July 2017, the Applicant was notified of the Demonstration of compensatory interest assessment No. 2017..., of 04.07.2017, and of the demonstration of account reconciliation No. 2017..., in the amount of € 21,836.54. – cf. Doc. No. 1 and 2 attached with the request for arbitral constitution - ;
g) On 16 July 2017, the Applicant proceeded with the payment of the amount of € 510,919.16 (five hundred and ten thousand, nine hundred and nineteen euros and sixteen cents) as withholding at source (Income from Redemption of Units of Participation) – cf. Annex 4 of Doc. No. 3 attached with the request for constitution of the arbitral tribunal - ;
h) On 20 October 2017, the Applicant presented a gracious claim against the compensatory interest assessment act identified above – cf. Doc. 1 attached with the request submitted by the Applicant on 18.10.2018 - ;
i) In September 2018, the Applicant was notified to exercise the right to prior hearing, pursuant to article 60 of the General Tax Law;
j) On 18 May 2018, the Applicant filed, with CAAD, a request for arbitral decision which gave rise to the present proceedings.
V. Facts Deemed Not Proven
There are no facts deemed not proven, because all facts relevant to the consideration of the request were deemed proven.
VI. Substantiation of the Factual Matter Deemed Proven
For the conviction of the Arbitral Tribunal, regarding the proven facts, the documents attached to the case file were relevant, as well as the administrative instruction process, all analyzed and weighed in conjunction with the pleadings, from which results agreement regarding the factuality presented by the parties, pursuant to article 110(7) of the Tax Code of Administrative Procedure.
It should be noted that, regarding the factual matter, the Tribunal does not have to pronounce itself on everything that was alleged by the parties, it being its duty only to select the facts that are relevant for the decision, to distinguish the proven matter from the not proven [[cf. article 123(2) of the Tax Code of Administrative Procedure and article 607(3) of the Code of Civil Procedure, applicable pursuant to article 29(1), items a) and d) of the LRAT]].
Thus, the facts relevant for the judgment of the case are selected based on their legal relevance, which is established based on the various solutions of the legal question(s) to be determined. [cf. article 596 of the Code of Civil Procedure, applicable pursuant to article 29(1), item e) of the LRAT].
VII. Legal Grounds
Preliminary Matter – Exceptions
Exception of Material Incompetence of the Arbitral Tribunal
It falls to this Tribunal, first, to consider the exception raised in Chapter I), a), of the Response in opposition to consideration of the request by the TCA, which is the alleged material incompetence of the Arbitral Tribunal in light of Binding Opinion No. 112-A/2011, of 22 March, of the Ministers of Finance and Justice.
Article 2(1) of the LRAT determines that the competence of arbitral tribunals constituted under that Regime comprises the consideration of the declaration of illegality of tax assessment acts, self-assessment acts, withholding at source acts and payment on account acts.
For its part, article 4(1) of the same LRAT makes the binding of the TCA to the jurisdiction of arbitral tribunals functioning at the Administrative Arbitration Center (CAAD) dependent on a joint Opinion of the Government members responsible for the areas of Finance and Justice, specifying in particular the type and maximum value of disputes covered. This would be the referred Binding Opinion No. 112-A/2011, of 22 March.
Item a) of article 2 of Binding Opinion No. 112-A/2011, of 22 March, provides that the binding of the TCA to the referred jurisdiction has as its object the consideration of claims relating to taxes whose administration is entrusted to it, referred to in article 2(1) of the LRAT, with the exception of claims relating to the declaration of illegality of self-assessment, withholding at source and payment on account acts that have not been preceded by resort to the administrative remedy, pursuant respectively to articles 131 to 133 of the Tax Code of Administrative Procedure.
The TCA argues in its Response that the consideration by the Arbitral Tribunal of the claim of the Applicant is not legally possible, because it was not preceded by a prior gracious claim made in accordance with article 132(1) of the Tax Code of Administrative Procedure, applicable to the impugnation of withholding at source acts, which would result from the final part of item a) of article 2 of Binding Opinion No. 112-A/2011, of 22 March.
This exception is, however, unfounded.
In truth, the impugned act is not any withholding at source which, pursuant to article 34 of the General Tax Law, is the pecuniary payment made by deduction from the income paid or made available to the replaced party by the tax replacement agent, or, that is, in accordance with article 20(1) of the General Tax Law, by deduction from any benefit paid to a person different from the taxpayer to whom, by imposition of law, the tax obligation is required.
It results from the proven facts that the reimbursement of the units of participation consequent to the liquidation of "F... – Real Estate Investment Fund Closed," with Tax ID Number..., of whose units of participation the Applicant is the depositary bank, was made without deduction of any tax.
The impugned act is rather an autonomous assessment of compensatory interest made by the TCA and not by the taxpayer, resulting from the failure of the latter to comply with the duty of final withholding of the tax, with the consequent non-payment of the tax benefit that should have been withheld, within the framework of tax substitution.
The impugned act is not, thus, any error in withholding, but rather, on the contrary, the assessment resulting from the non-existence of any withholding and consequent payment of the tax withheld, which are legally mandatory.
The impugnation of this assessment is not subject to the special regime of article 132(1) of the Tax Code of Administrative Procedure, but follows the general regime of impugning tax acts, with the provisions of Section VIII of Chapter II of Title III of the Tax Code of Administrative Procedure not applying.
The burden of prior gracious claim provided for in article 132(2) of that legal norm is therefore not applicable to it.
This would only be the case if the Applicant's claim were the consideration of the legality of withholding at source. However, the object of the Applicant's claim is not, however, a non-existent withholding, but an assessment officially promoted by the TCA.
Exception of Incompetence of the Arbitral Tribunal to Know Questions Related to Compensatory Interest Assessment
Even if this were not so, the TCA would still proceed in its Response with the autonomous assessment of compensatory interest being outside the scope of the Tribunal's competence because, pursuant to article 2(1) of the LRAT, the competence of arbitral tribunals comprises only the consideration of the declaration of illegality of tax assessment acts, self-assessment acts, withholding at source acts and payment on account acts, and acts of determination of taxable matter when they do not give rise to the assessment of any tax, acts of determination of taxable base.
Now, the Applicant's claim would be the consideration of the legality of an act of non-tax nature, merely administrative, as would be the autonomous assessment of compensatory interest.
On the other hand, according to the Respondent, in the request for arbitral decision, the Applicant would request the declaration of nullity of the institution of the execution proceedings consequent to the annulment of the impugned assessment.
This claim would, however, by virtue of article 2(1) of the LRAT, be outside the scope of arbitral jurisdiction, which does not comprise the consideration of the legality of acts of tax execution.
This exception too, first, insofar as it is based on an alleged non-tax nature of the compensatory interest obligation, cannot be upheld.
Article 35(8) of the General Tax Law, in truth, provides that compensatory interest is integrated into the very debt of the tax with which they are jointly assessed.
In accordance with that legal norm, the tax obligation thus unfolds into an obligation of principal and an obligation of interest.
The fact that the assessment of compensatory interest is effected autonomously, because the tax has already been paid, does not prejudice the intrinsic tax nature of the compensatory interest obligation, which has always been admitted by tax tribunals.
The annulment of the tax assessment therefore determines, automatically, the nullity of the act consequent to the assessment of compensatory interest, without the Arbitral Tribunal having to consider the legality of any act of tax execution in the meantime instituted.
This is what results from the dependence of the interest obligation on the principal obligation.
Should tax execution proceedings have been instituted, the nullity of the compensatory interest assessment implies the nullity of the executive title that had served as the basis for such execution, pursuant to article 162 of the Tax Code of Administrative Procedure and of the acts of tax execution already practiced.
Such effect does not depend, in accordance with what has been previously stated, on any arbitral pronouncement, the lack of merit of the impugnation being sufficient.
Meantime, it is important to note that execution proceedings were declared terminated, by virtue of voluntary payment by the executed party, proven in the present proceedings.
Impropriety of the Procedural Means
Similarly, contrary to what is sustained by the Respondent in Chapter I, a), iiii, of its Response, the proper procedural means for consideration of the Applicant's claim is not opposition, pursuant to article 204 of the Tax Code of Administrative Procedure, since what is at issue is not the inexigibility of the debt subject to execution, but the illegality of its assessment, which can only be known residentially in tax execution, when, pursuant to item a) of article 204(1) of that legal provision, the law does not ensure any other means of reaction against the assessment.
Since the debt subject to execution was paid and execution proceedings were consequently terminated, the merit of this exception would, moreover, make impossible any means of reaction against the impugned assessment, with the consequent denial of the Applicant's right to effective judicial protection, whereby this exception invoked by the Respondent is also unfounded.
Untimeliness of the Request for Arbitral Decision
In Chapter A), iii of its Response, the TCA alleges the untimeliness of the request for arbitral decision, with the argument that the withheld amount impugned dates from 14 June 2017, as referred to in article 50 of the Response, and the request for arbitral decision dates from 18 May 2018, well beyond the 3-month period from the date of the end of the voluntary payment period, referred to in article 102(1)(a) of the Tax Code of Administrative Procedure, which occurred on 31 December 2017.
It should be recalled, however, that the object of the request for arbitral decision is not any withholding, but an assessment officially promoted by the TCA and notified to the Applicant on 4 July 2017, against which the latter made a gracious claim on 20 October 2017, well within the period referred to in article 70(1) of the Tax Code of Administrative Procedure.
On the other hand, the request for arbitral decision would be deduced on 18 May 2018, so that, according to the Applicant, it should be presumed that the gracious claim was tacitly rejected, pursuant to article 102(1)(d) of the Tax Code of Administrative Procedure.
Pursuant to article 10(1) of the LRAT, the request for constitution of an arbitral tribunal is presented within 90 days, counted from the facts provided for in articles 102(1) and (2) of the Tax Code of Administrative Procedure, regarding acts susceptible to autonomous impugnation, thus including the presumption of tacit rejection, as well as notification of the decision or the end of the legal period for decision of the hierarchical appeal.
The presumption of tacit rejection, as failure to comply with the legal duty to decide, is formed after 4 months, the period within which, pursuant to article 57(1) of the General Tax Law, the tax procedure must be concluded.
These 4 months ended on 20 February 2018, the date from which the counting of the 90-day period for filing the request for arbitral decision by presumption of tacit rejection began, which ended on 21 May 2018, subsequently to the presentation of the request for arbitral decision which, therefore, should be considered timely.
Thus, the Tribunal is competent for consideration of the request, which clearly falls within the scope of arbitral jurisdiction.
Any other solution, insofar as the Applicant could not claim against a withholding that it did not effect, would violate the latter's right to effective judicial protection.
None of the exceptions raised by the Respondent are thus well-founded.
Nullity of the Impugned Act
Pursuant to the priority conferred by the first part of article 124(1) of the Tax Code of Administrative Procedure, the first of the defects invoked by the Applicant is considered, the alleged nullity of the impugned act, for supposedly lacking essential requirements for the assessment of the tax (interest).
It would not be an assessment, in the Applicant's understanding, being incomprehensible, a mere demonstration of the operations carried out to determine the tax, hereinafter referred to as "Demonstration of Interest Assessment," and the corresponding account reconciliation, without any reference to the assessment number, ..., of which only subsequently to notification of the Assessment Demonstration would the Applicant become aware.
Even if one embraces a broad concept of assessment, in the sense of not covering only the mere application of the rate to the taxable matter, but also all operations necessary to determine the tax, the truth is that all those operations, as well as the quantitative amount of the tax (interest) to be paid, are stated in said Assessment Demonstration, which the Applicant admits to have been notified of.
On the other hand, by assessment number should be understood the number of the collection document, integrating its respective control stub, which accompanied the Assessment Demonstration.
Based on this document, the Applicant would proceed with the payment of the debt subject to execution, which would be impossible if assessment had not occurred.
Such assessment number would, moreover, always be accessible to the Applicant through the Finance Portal, which it could consult.
However, to the impugned act do not apply any of the causes of nullity of article 161(1) of the Administrative Procedure Code, in particular the alleged unintelligibility invoked by the Applicant.
In truth, the impugned assessment resulted from an inspection procedure regulated in the Regulation of Tax Inspection Procedure, being based, as provided for in article 63(1) thereof, on the conclusions of the report, which, with this, integrate the instruction process.
It is evident that the Applicant perfectly understood the impugned assessment, as would always result from having impugned it in the present arbitral proceedings.
II – LACK OF SUBSTANTIATION OF THE IMPUGNED ACT
The second defect invoked, already causing mere annulability, if that invocation were well-founded, is the lack of substantiation of the impugned act.
Pursuant to article 77(2) of the General Tax Law, the tax act is considered sufficiently substantiated through the indication of the applicable legal norms, the qualification and quantification of the tax fact, including the period of time to which compensatory interest relates, and the operations necessary to determine the tax and its result.
Should the tax act result from an inspection procedure, the substantiation is based, pursuant to article 63(1) of the Regulation of Tax Inspection Procedure, on the conclusions of the report duly approved by the competent entity.
From the referred report approved by the competent entity there are contained all the elements provided for in article 77(2) of the General Tax Law.
Even so, for the Applicant, it would be incumbent additionally on the TCA to substantiate the delay in tax payment that should have been withheld being imputable to it.
This is what would result from article 35(1) of the General Tax Law, which establishes the assumptions of incidence of compensatory interest, the delay in assessment, imputable to the taxpayer.
Pursuant to article 6 of the Civil Code, however, ignorance or misinterpretation of the law neither justifies the failure of its compliance, nor exempts persons from the sanctions established therein.
It is certain, however, that the assessment of compensatory interest presupposes a judgment of censure on the taxpayer for not having complied with the omitted duty or obligation, being able to do so.
It is not necessary, however, in light of that provision of the Civil Code, that the taxpayer have represented the injury to the interests of the TCA caused by such omission.
On the other hand, such judgment of censure can be formulated, based on the materiality of the facts, in accordance with criteria of normality, rules of common experience or natural presumptions, without prejudice to the fact that, in case of reasonable doubt about the guilt of the author, the TCA should refrain from effecting the assessment.
Thus, as results from article 6 of the Civil Code, simple misinterpretation of the law, that is, the adoption of a conduct, omissive or active, that would be shown to be "contrary to law," does not prejudice either the liability for contraventions or for compensatory interest.
Error regarding unlawfulness only excludes guilt when it is excusable, which it falls to the taxpayer to prove, namely by presenting elements demonstrating that its conduct was in harmony with the notorious orientation of the TCA regarding the framing of the facts in question, it not being required of it to adopt different conduct (in this sense, Decision of the Supreme Administrative Court of 19 February 1975, in Doctrinal Decisions, No. 169, p. 62, see also Alfredo José de Sousa, "Tax Infractions: Crimes and Transgressions - The Process of Tax Transgression," Lisbon, 1986, pp. 62 et seq).
In the case of particular complexity of the question, the principle of reciprocal cooperation would, moreover, prudently, impose resort to the request for binding information regulated in article 68 of the General Tax Law. If it were not thus, that is, if the complexity of the question impeded the assessment of compensatory interest and the criminal liability of the agent, by allowing any doubt about the sense and scope of the law not to be sanctioned, the legislator would have encouraged risk behaviors and discouraged the use of the binding information mechanism, precisely established to dissipate this type of doubts and ensure effectiveness to the mutual duty of cooperation between taxpayers and the TCA.
For the Applicant, even if this were not so, that is, if the impugned act had been substantiated, that substantiation would not have been duly notified to the Applicant.
It results, however, from article 37(1) of the Tax Code of Administrative Procedure, that the absence of any requirement exacted by tax laws for notification, such as substantiation and means of defense against the notified act, does not imply the nullity of the latter, conferring only on the interested party the right to, within 30 days or within the period for gracious claim, appeal or impugnation or other procedural means that may apply from the decision, request the notification of the omitted requirements or the passage of certification containing them exempt from any payment, the period for gracious claim, appeal, impugnation or other judicial means counting from that moment, pursuant to article 37(2) of the Tax Code of Administrative Procedure.
This legal provision is only not applicable when the notification is omissive regarding the authorship, sense and date of the decision.
Such authorship, sense and date of the decision are clearly stated in the Assessment Demonstration and, consequently, in the account reconciliation and the collection document already referred to, sent jointly by the TCA to the Applicant, based on which, moreover, the latter proceeded with the payment of the debt.
Should the Applicant consider the notification incomplete, it would be incumbent on it to request the TCA to complete it.
The failure to communicate the substantiation is not a cause of the illegality of the act.
As was referred, such conclusions were notified, together with the rest of the Report, pursuant to article 62(2) of the Regulation of Tax Inspection Procedure, as, moreover, is revealed by the request for arbitral decision, in which the Applicant extensively evokes the argumentation used by the TCA in carrying out the assessment.
The Applicant was not, thus, made impossible, because the substantiation of the act had not been incorporated in the notification, to attack, as it did, the assessment.
Thus, the defects invoked by the Applicant of the nullity of the impugned act, the lack of substantiation and, subsidiarily, the lack of notification of the substantiation are unfounded.
III – TAXATION BY WITHHOLDING AT SOURCE OF INCOME FROM LIQUIDATION OF REAL ESTATE INVESTMENT FUNDS
A single question of law is discussed in the present arbitral proceedings, the applicability of item b), ii), of article 22-A(1) of the EBF, added by Law No. 7-A/2016, of 3 March, pursuant to which, without prejudice to the option of aggregation provided for in article 22-A(3), to income arising from redemption of units of participation earned by subjects of Personal Income Tax resident in Portuguese territory outside the scope of a commercial, industrial or agricultural activity, or that are attributable to a permanent establishment situated in this territory, are taxed by withholding at source with final effect at the rate provided for in article 72(1) of the Personal Income Tax Code, be applicable to income arising from liquidation of closed-ended real estate investment funds.
The Applicant understands, in paragraph 9 of the request for arbitral decision, that item b) limits the referred duty of withholding at source with final effect to income arising from redemption, setting aside the reimbursements arising from liquidation of investment funds.
The Respondent considers, in paragraphs 85 to 92 of the Response, that capital gains arising from liquidation of closed-ended real estate investment funds, despite not being expressly referred to in that item b), ii), of article 22-A(1) of the EBF, are covered by the regime applicable to capital gains arising from redemption.
In truth, according to items 87 and 88 of the Response, respectively, income from units of participation in real estate investment funds, including capital gains resulting from their respective liquidation, equated to redemption, began to be considered as income from real property, that is, Category G income of Personal Income Tax, but now as real estate capital gains, applying to them the special rate of 28% provided for in article 72(1) of the Personal Income Tax Code, provided that the income is earned by subjects of Personal Income Tax resident in Portuguese territory outside the scope of a commercial, industrial or agricultural activity[1].
This is what would result from item 5), item b), of article 10(1) of the Personal Income Tax Code, which, in the definition of the incidence of Category G, considers as capital gains both income arising from redemption of units of participation in investment funds and income arising from liquidation of these funds, with the consequent subjection to the special rate of 28%, applicable to all income of capital gains, pursuant to item c) of article 72(1) of the Personal Income Tax Code.
From this equation to redemption would also result the inclusion of all such income in Field 11, of Annex G to Declaration Model 3 of Personal Income Tax.
What is not at issue is the framing of income arising from onerous alienation of units of participation, to which applies the residual provision of item e) of article 22-A(1) of the EBF, which refers the taxation of income not referred to in the preceding items to that provided for in the Personal Income Tax Code or the Corporate Income Tax Code, as the case may be.
Such income also has the nature of capital gains, but is not subject to withholding at source, as it is not covered by articles 98 and 101 of the Personal Income Tax Code.
Such framing would not be altered by Decree-Law No. 7/2015, of 23 February, which would proceed with the revision of the tax regime of collective investment undertakings (TRCIO) and whose article 3 added the referred article 22-A to the EBF.
However, the second part of article 7(9) of that Decree-Law provides that, for purposes of determination of capital gains or capital losses resulting from onerous transmission of units of participation or corporate interests, as the acquisition value, the market value on the date of beginning of the effects of the amendment given to article 22 of the EBF by Decree-Law No. 7/2015, that is, 1 July 2015, pursuant to article 9 of that Decree-Law, or, if higher, the acquisition value of the same.
The parties also do not put in question the non-application to the capital gains in question of the transitional regime of articles 7(9) and (10) of the referred Decree-Law No. 7/2015, which aims to prevent double economic taxation, in the fund's sphere and in the sphere of participants, of said capital gains income.
According to the first part of that article 7(9), taxation of income from units of participation or shares earned by participants or shareholders of collective investment undertakings, pursuant to the new article 22-A of the EBF, affects only the part of income generated from the date of beginning of effects of Decree-Law No. 7/2015, an identical solution to that adopted for transmission of units of participation made subsequently to 30 June 2015.
Article 7(10) adds that, for purposes of article 7(9), income is considered distributed or redeemed to participants, in the first place, and up to its concurrence (FIFO method), income generated up to the date of beginning of effects of Decree-Law No. 7/2015 and which, up to that date, had not been distributed or redeemed, applying, with the necessary adaptations, what is provided for in articles 22(2) to (5), (7), (10) and (14) of the prior wording of article 22.
Pursuant to article 5(1) of the Personal Income Tax Code, capital income included in Category E of Personal Income Tax is considered to be the fruits and other economic advantages, whatever their nature or denomination, whether pecuniary or in kind, proceeding, directly or indirectly, from patrimonial elements, property, rights or juridical situations, of a movable nature, as well as from their respective modification, transmission or cessation, with the exception of gains and other income taxed in other categories.
Prior to the so-called reform of income taxation of natural persons, effected by Law No. 82-E/2014, of 31 December, this Category E covered income from units of participation in investment funds, including, beyond distributed income, income from redemption of such units of participation or liquidation of such funds, which, pursuant to article 10(1) of the Personal Income Tax Code, did not have the nature of capital gains. In the case of such income not being exempt, pursuant to item a) of article 22(14) of the EBF, no withholding at source was applied to them, except when dispensed with in accordance with item b) thereof.
In accordance with the new wording of this item j) by article 3 of Law No. 82-E/2014, only distributed income from investment funds remained covered by Category G of Personal Income Tax, maintaining, as to these, the prior regime of withholding at source.
Pursuant to the new wording of article 3(1)(b), item 5), of article 10 of the Personal Income Tax Code, given by the referred article 3 of Law No. 82-E/2014, income arising from redemption of units of participation in investment funds and from liquidation of such funds began to be considered as capital gains.
Such income, however, was not subject to withholding at source, which, pursuant to the referred articles 98 to 101 of the Personal Income Tax Code, covers only income of Categories A, B, E, F and H of the Personal Income Tax Code and not the patrimonial increments covered by Category G.
However, because such income was taxed at entry, the regime of the prior wording of article 22 of the EBF was applied to them, prior to that given by article 2 of Decree-Law No. 7/2015, with the consequent non-taxation, by exemption, at exit.
By saying that, without prejudice to the option of aggregation provided for in article 22-A(3), income arising from redemption of units of participation earned by subjects of Personal Income Tax resident in Portuguese territory outside the scope of a commercial, industrial or agricultural activity, or that are attributable to a permanent establishment situated in this territory, are taxed by withholding at source with final effect at the rate provided for in article 72(1) of the Personal Income Tax Code, item b) of article 22-A(1), introduced by Decree-Law No. 7/2015, would expand the withholding at source mechanism to a category of income hitherto not covered, the patrimonial increments resulting from redemption of units of participation taxed by Category G.
This expansion cannot fail to be considered an exception to the general rule of non-existence of deduction at source on capital gains income.
The concept of redemption referred to in that legal norm is the legal one, pursuant to article 11 of the General Tax Law.
In truth, in accordance with its paragraph 1, in determining the sense of tax norms and in qualifying the facts to which the same apply, the general rules and principles of interpretation and application of laws are observed.
It adds in paragraph 2 that, whenever tax norms employ terms proper to other branches of law, the same should be interpreted in the same sense that they have there, unless otherwise results directly from the law.
Only, according to paragraph 3, persisting doubt about the sense of the applicable norms of incidence, should account be taken of the economic substance of the tax facts.
Finally, in accordance with paragraph 4 of the same article, gaps resulting from tax norms covered in the reserve of law of the Parliament are not susceptible of analogical integration.
Absent any other sense not resulting directly from tax law, it should thus be understood that Tax Law, which is fundamentally a law of superposition, uses the concepts elaborated by other branches of law in the same sense that they have there, the interpreter - applicant not having the general faculty to alter it, on the pretext that Tax Law primarily attends to economic substance.
There thus exists, regarding the rules to be followed on interpretation of laws, any absolute autonomy or independence of Tax Law before common law, in particular Private Law, despite the alleged non-formalistic nature of Tax Law.
The subordination of Tax Law to the principles adopted in other branches of Law is thus justified by the necessary unity of the legal order and contributes to the very improvement of Tax Law.
The subordination of Tax Law to the concepts elaborated by other branches of Law is not, however, absolute and, accordingly, paragraph 2 of article 11 of the General Tax Law preserves the cases in which departure from such subordination results from its norms. This is the scope of the expression "unless otherwise results directly from the law."
In doubt, it should be understood that the tax legislator adopted the term or concept in the same sense that it has in the branch of law that elaborated it.
Pursuant to article 9(2) of the General Regime of Collective Investment Undertakings (TRCIO, approved by article 2 of Law No. 16/2015, of 4 February), the quality of participant in investment funds is acquired at the moment of subscription of units of participation with payment of their respective value, or of their respective acquisition in the market, and ceases at the moment of extinction of the units of participation within the scope of a redemption, reimbursement, liquidation or merger operation of the collective investment undertaking, or of alienation in the market.
Redemption is, like reimbursement, liquidation or merger of the collective investment undertaking, as well as alienation in the market, one of the causes of cessation of the quality of participant in the fund.
Pursuant to article 10(1) of the GRCIO, collective investment undertakings may be open-ended or closed-ended, depending on whether units of participation are, respectively, in variable number or in fixed number.
According to article 10(2) of that legal norm, units of participation of open-ended collective investment undertakings are issued and redeemed at the request of participants, in accordance with what is stipulated in the constitutive documents and in regulation of the Securities Market Commission.
By redemption should thus be understood the legal act of the initiative of the holder of units of participation, which invests the participant in the right to receive a fraction of the net patrimonial value of the fund, corresponding to the redeemed securities.
The right of redemption is exercised over the value of the units of participation.
Indeed, pursuant to article 18(6) of the GRCIO, in the value of the unit of participation for purposes of subscription and of redemption or reimbursement is, in accordance with the constitutive documents, that publicized pursuant to article 143(3) of the GRCIO at a moment subsequent to the request[2].
On the other hand, the cause of reimbursement of units of participation in case of liquidation is not any manifestation of will of its holder. Such liquidation is a consequence of the dissolution of the fund and not of any initiative of the holder of the units of participation.
On the other hand, the reimbursed amount is not the value of the units of participation, but the share in the net heritage of the fund to be distributed.
However, in accordance with article 10(3), units of participation of closed-ended collective investment undertakings cannot be subject to redemption, except as provided for in article 62(2), which is not applicable to the facts that gave rise to the present request for arbitral decision[3].
Such understanding that units of participation of closed-ended real estate investment funds cannot be subject to redemption [4] was already applicable, before the GRCIO, pursuant to article 32(3) of Decree-Law No. 249/95, of 17 November (in this sense, Paulo Câmara, "Manual of Law of Securities," Coimbra, 2009, p. 833) and see section 5.1. of the Management Regulation of "A... – Closed Investment Fund," available on the website of the Securities Market Commission on the Internet).
Holders of units of participation in closed-ended investment funds may only, thus, prior to liquidation, realize their value by sale in the secondary market.
Thus, income arising from liquidation of closed-ended investment funds, as is the case, are not mentioned in the referred item b) of article 22-A(1) of the EBF, which is of limited scope to income arising from redemption.
If, moreover, the concepts of capital gains arising from redemption and capital gains arising from liquidation of funds were identical, that is, if the specific manner of distribution of funds were necessarily redemption of their respective units of participation, it would not make sense to separately mention, in item b) of article 22-A(1), capital gains from redemption and from liquidation.
When the legislator, in the taxation of participants, intended that the regime of redemption apply to liquidation, had the care to do so expressly, as it did in item d) of article 22-A(1) of the referred EBF, pursuant to which in the case of income from units of participation in mobile investment funds or of corporate interests in mobile investment undertakings to which the regime provided for in the preceding article (article 21 of the EBF) applies, including capital gains resulting from their respective redemption or liquidation, whose holders are non-residents in Portuguese territory without a permanent establishment situated therein to which such income is attributable, the same are exempt from Personal Income Tax or Corporate Income Tax.
Thus, redemption and liquidation are distinct legal concepts.
The fact that income arising from redemption and liquidation are immovable capital gains, with the consequent consideration of only 50% of their balance for purposes of Personal Income Tax, pursuant to article 43(2) of the Personal Income Tax Code, does not signify the homogenization of such income for purposes of withholding at source, a position sustained by the TCA but which contradicts the literal sense of item b), i), of article 22-A(1) of the EBF.
Such legal solution is not particularly striking, as it is also applicable to all income from distribution considered as capital gains, pursuant to article 10(1)(b), item 3), of the Personal Income Tax Code.
Not being covered by that item b) of article 22-A(1) of that EBF, such income are covered by the residual item e) of that same article 22-A.
There exists no omitted case that should be supplied via analogical integration, moreover prohibited in article 11 of the Civil Code as to norms of exceptional nature, as is that item b), relative to non-subjection to withholding at source of capital gains income.
On the contrary, the position of the Respondent contradicts the interpretation of the TCA itself unequivocally expressed in II), 1), ii), of Official Notice - Circular No. 20.190, of 25 May 2016, of the Directorate of State Revenue and Direct Taxation (DSIRC) and, in particular, of iii) of item 20 of Circular No. 6/2015, which expressly declares taxation to be effected pursuant to the Personal Income Tax Code or the Corporate Income Tax Code, as the case may be, of income of capital gains of units of participation in investment funds not covered in item b) of article 22-A(1) of the EBF.
Concluding:
a) The obligation to withhold at source of the depositary bank provided for in item b) of article 22-A(1) of the EBF, added by article 3 of Decree-Law No. 7/2015, covers only income arising from redemption of units of participation in investment funds and not reimbursements arising from liquidation of such funds;
b) Outside the case provided for in article 62(1) of the GRCIO, such norm is not applicable to income of real estate investment funds, insusceptible of redemption.
c) Capital gains arising from liquidation of closed-ended real estate investment funds are taxed pursuant to the Personal Income Tax Code or the Corporate Income Tax Code and not pursuant to that item b) of article 22-A(1) of the EBF.
DECISION
In harmony with the foregoing, it is decided:
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To judge unfounded the exceptions of material incompetence of the arbitral tribunal in light of Binding Opinion No. 112-A/2011, of 22 March; of material incompetence of CAAD for consideration of questions related to compensatory interest assessment and termination of execution proceedings; of untimeliness of the request for arbitral decision regarding the withholding at source act and compensatory interest assessment; and finally, of impropriety of the procedural means invoked by the Respondent;
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To judge the request formulated by the Applicant as well-founded, in consequence, to annul the assessment of compensatory interest No. 2017..., of 04.07.2017 in the amount of € 21,836.54 (twenty-one thousand, eight hundred and thirty-six euros and fifty-four cents), with the consequent declaration of illegality and annulment of the act of tacit rejection of the gracious claim.
Value of the Proceedings
The value of the proceedings is fixed at € 21,836.54 (twenty-one thousand, eight hundred and thirty-six euros and fifty-four cents) pursuant to article 97-A(1)(a) of the Tax Code of Administrative Procedure, applicable by virtue of items a) and b) of article 29(1) of the LRAT and article 3(2) of the Regulation of Costs in Tax Arbitration Proceedings.
Costs
Costs to the charge of the Respondent in accordance with article 22(2) of the LRAT, article 4 of the Regulation of Costs in Tax Arbitration Proceedings, and Table I attached thereto, which are fixed in the amount of € 1,224.00.
Let notification be made.
Lisbon, 29 January 2019
The Arbitrator
(Jorge Carita)
[1] With the consequent aggregation of its income in only 50%, pursuant to item b) of article 43(2) of the Personal Income Tax Code.
[2] According to article 18(1) of that provision, in redemption, the portfolio of the collective investment undertaking is valued at its fair value, in accordance with the rules fixed in the constitutive documents, pursuant to definitions in regulation of the Securities Market Commission. Previously, pursuant to article 33(4) of Decree-Law No. 294/95, the value of each unit of participation should, for purposes of redemption, correspond to the last known and publicized value on the date of the respective request or on the date to which it refers, unless the management regulation determines that such value be that of the first subsequent valuation or that of the date of reimbursement.
[3] In accordance with article 62(1) thereof, closed-ended alternative investment undertakings of determined duration cannot exceed 10 years, being permitted their extension, one or more times, for a period not exceeding the initial, by deliberation of the assembly of participants to this effect with six months advance notice in relation to the end of the duration of the undertaking. Being deliberated the extension, pursuant to article 62(2), redemption of units of participation is only permitted to participants who have voted against the extension. Article 62(4) establishes the value of the unit of participation, whose redemption is requested pursuant to article 62(2), corresponds to that of the last day of the period initially foreseen for the duration of the closed-ended alternative investment undertaking, confirmed by opinion of the auditor of the investment undertaking. The liquidation of "F... – Real Estate Investment Fund Closed," of whose units of participation the Applicant is the depositary bank, was not, however, effected pursuant to that legal norm.
[4] Thus, the depositary bank of units of participation of the closed-ended investment fund, even though in the name of the management company, cannot charge redemption commissions.
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