Summary
Full Decision
ARBITRAL DECISION
Arbitral Case No. 259/2013-T
Claimant: A
Respondent: Tax and Customs Authority ("AT")
ARBITRAL DECISION
The arbitrator, Dr. Henrique Nogueira Nunes, appointed by the Ethics Council of the Administrative Arbitration Center ("CAAD") to form the Arbitral Tribunal, constituted on 22 January 2014, decides as follows:
- REPORT
1.1. The A, with the tax identification number …, represented by its Head of Household, Mr. B, hereinafter referred to as "Claimant", requested the constitution of the Arbitral Tribunal under article 2, No. 1, paragraph a) of Decree-Law No. 10/2011, of 20 January (hereinafter "RJAT").
1.2. The request for arbitral decision has as its object the illegality and consequent annulment of the Stamp Tax assessment act dated 07 November 2012, relating to the year 2012, in the total amount of € 17,553.50, based on the provisions in paragraphs a) to f) of No. 1 of article 6 of Law No. 55-A/2012, which added item 28 to the General Table of the Stamp Tax Code ("TGIS"), first-instance tax act underlying the collection document attached to the request for arbitral decision (single payment), and likewise, of the dismissal (implied) of the Hierarchical Appeal (second-instance tax act) aimed at the annulment of the same assessment act.
Additionally, the Claimant petitions for compensation in the amount of € 878.23, due for damages resulting from the undue provision of a guarantee intended to suspend a tax enforcement procedure instituted by the AT.
1.3. To support its request, the Claimant alleges, in summary, the following defects:
a) Error in the assumptions, by virtue of:
i) The conditions of taxation provided in item 28.1 of the TGIS not being met, as the assessment concerns a plot of land for construction and not constructed buildings;
ii) It must be concluded, always and in any circumstance, that land for construction and residential property are of absolutely distinct species;
iii) Residential properties correspond to buildings or constructions, that is to say, those having actual residential use (which presupposes their physical existence);
iv) In the context of interpretation of the norm, the historical element is also clear in showing that what is at stake are luxury "houses" and not plots of land for construction;
v) It is not within the discretion of the Tax Administration to "fill in" regarding objective incidence the category of property, in clear violation of the principles of contributive capacity, feasibility and equality;
vi) It is manifestly abusive and illegal to consider that land for construction is part of the object of the norm under analysis, so it must always be declared that the assessment act in question is void, on the grounds of illegality;
vii) There is a clear and unequivocal violation of the principles that shape the tax regime, namely that of tax capacity, feasibility and equality, with the consequent violation of the constitutional principle of proportionality;
viii) There is a duplication of collection as, for the same period, two assessments were required relating to item 28.1 of the TGIS, relating to two tax facts, both in 2012, the first on 31 October and the second on 31 December.
b) As to lack of reasoning:
i) It petitions for the annulment of the assessment act, because the notification for payment of Stamp Tax does not contain the indication of essential elements, namely regarding the reasoning of the corresponding assessment act, with absence of legal reasoning.
1.4. The Tax and Customs Authority responded to the effect that the concept of "properties with residential use", for the purposes of item 28 of the TGIS, includes both constructed properties and plots of land for construction, given the literal element of the norm, arguing for the non-existence of violation of the constitutional principles of proportionality and equality, and concluding for the maintenance of the assessment act and dismissal of the claim.
1.5. On 31 March 2014, the first meeting of the Arbitral Tribunal took place, at the headquarters of CAAD, in accordance with the provisions of article 18 of the RJAT. No exceptions were identified, witness testimony and presentation of arguments were waived, and a deadline was set for the issuance of the arbitral decision.
1.6. The Tribunal was regularly constituted and is competent ratione materiae, in accordance with article 2 of the RJAT.
The parties have legal personality and capacity, appear as legitimate and are duly represented (cf. articles 4 and 10, No. 2 of the RJAT and article 1 of Order No. 112-A/2011, of 22 March).
No procedural nullities were identified.
- QUESTION TO BE DECIDED
The present case concerns the (strictly) legal question of whether a plot of land for construction can be qualified as a "property with residential use" and, if so, can be included within the scope of application of item 28.1 of the TGIS, added by article 4 of Law No. 55-A/2012, of 29 October.
- FACTS
With relevance for the assessment and decision on the merits, the following facts are established:
A) The Claimant, represented by its Head of Household, corresponds to the undivided gross estate opened by the death of C – cf. Document No. 1 presented by the Claimant with the request for arbitral decision;
B) The Claimant is the owner of an urban property corresponding to a plot of land for construction, described in the Property Registry Office of … under No. ..., registered in the urban property matrix in article ..., of the parish of ..., with the taxable value of € 3,510,700.00 (three million five hundred and ten thousand seven hundred euros) – cf. the corresponding urban property record attached as Document No. 3 to the request for arbitral decision.
C) The identified urban property, classified as a plot of land for construction, has no building or construction erected on its soil and, as of the date of the facts (2012), its respective taxable patrimonial value was greater than € 1,000,000.00, specifically amounting to:
[Table showing: Property Identification: ... U-0... | Patrimonial Value (€): 3,510,700.00]
– cf. the corresponding assessment act and the urban property record attached to the request for arbitral decision as Documents Nos. 4 and 3, respectively.
D) The Tax and Customs Authority, considering the Taxable Patrimonial Value assigned to the aforementioned plot of land for construction, understood that the objective conditions for the assessment of Stamp Tax were met, arising from the addition to the TGIS of item No. 28 provided for in Law No. 55-A/2012, of 29 October – See, in this sense, articles 30 and 39 of its response.
E) Within this scope, in November 2012, the Claimant was notified of the Stamp Tax payment document listed below, relating to the single payment of the tax for the year 2012, with mention of the assessment date – "2012-11-07" – and payment deadline of 20 December 2012, under the following table:
[Table showing:
Property Identification | TGIS Item | Patrimonial Value (€) | Rate (%) | Collection (€) | Document Identification | Amount to Pay
... U-0... | 28.1 | 3,510,700.00 | 0.50 | 17,553.50 | 2012 | € 17,553.50
Total | € 17,553.50]
– cf. payment notification document attached as Document No. 4 to the request for arbitral decision.
F) The Claimant did not proceed with payment of the assessed tax and on 27 December 2012 expressed, under article 169, No. 2 of the CPPT, its intention to appeal against such assessment act and likewise its purpose of providing a guarantee through the constitution of a mortgage on the property designated by the letters "BF", registered in the urban property matrix in article …, of the parish of ..., with the Taxable Patrimonial Value fixed at € 68,710.00 – cf. Document No. 5 attached to the request for arbitral decision.
G) Such guarantee was offered by the Claimant and accepted by the Respondent – cf. Documents Nos. 6 and 7 attached with the request for arbitral decision.
H) The Claimant filed, on 06 March 2013, an Administrative Complaint against the assessment act in question in these proceedings - cf. Document No. 8 attached with the request for arbitral decision and administrative file attached by the AT.
I) On 02 April 2013, the Claimant was notified of the AT's intention to dismiss the Complaint – cf. document No. 9 attached with the request for arbitral decision and administrative file attached by the AT and invited to exercise the right to be heard regarding the draft decision notified, which was done by the Claimant – cf. Document No. 10 attached with the request for arbitral decision and administrative file attached by the AT.
J) On 05 June 2013, the Claimant was notified of the final decision dismissing the Complaint – cf. Document No. 11 attached with the request for arbitral decision and administrative file attached by the AT.
K) The Claimant opted to file a Hierarchical Appeal, addressed to the Minister of Finance, which it did on 27 June 2013 – cf. Document No. 12 attached with the request for arbitral decision.
L) The AT did not pronounce itself within the legally fixed period of 60 days, provided for in No. 5 of article 66 of the CPPT – with the presumption of implied dismissal forming on 26 August 2013 – No. 5 of article 57 of the LGT.
M) On 19 November 2013, the Claimant filed a request for the constitution of the Arbitral Tribunal with the CAAD – cf. electronic request in the CAAD system.
N) The Claimant attaches as Document No. 13 to the request for arbitral decision an invoice/receipt stating that it corresponds to the costs incurred with the constitution and registration of a mortgage intended to suspend the tax enforcement procedure No. ...
- UNPROVED FACTS
There are no facts with relevance for the decision on the merits that have not been established.
- REASONING FOR THE DECISION ON FACTS
As regards the essential facts, the agreed matter is shaped identically by both parties and the Tribunal's conviction was formed on the basis of the official documentary elements attached to the file and listed above whose authenticity and veracity were not questioned by either party.
- ON THE LAW
6.1. Formal Defects – Lack of Reasoning
The Claimant invokes as a cause of invalidity of the original assessment act underlying the Stamp Tax payment document mentioned in point E of the facts, the circumstance that the notification of this document does not contain the indication of essential elements, such as its legal reasoning.
It is irrefutable that tax assessment acts constitute impositive acts that affect the rights and legally protected interests of taxpayers, which is why they only produce effects in their sphere when duly notified to them (cf. article 36, No. 1 of the Code of Tax Procedure and Process – "CPPT" – and article 77, No. 6 of the General Tax Law – "LGT"). In this context, it is a requirement for the validity of notifications that their content comprise "the decision, its grounds and means of defense and deadline to react against the notified act" (cf. article 36, No. 1 of the CPPT).
The General Tax Law also enshrines the duty to provide reasoning for tax acts, even if done summarily "by means of a brief statement of the factual and legal reasons that motivated it, and the reasoning may consist in mere declaration of agreement with the grounds of previous opinions, information or proposals, including those included in the tax inspection report". The reasoning must contain "the applicable legal provisions, the qualification and quantification of tax facts and the operations for determining the taxable matter and the tax" (cf. article 77, Nos. 1 and 2 of the LGT, implementing article 268, No. 3 of the Constitution of the Portuguese Republic – "CRP").
In the concrete case, in light of the parameters just stated, the Stamp Tax payment document sent to the Claimant does indeed contain relevant gaps, as, regarding reasoning, it merely mentions "the assessment carried out observes the provisions in paragraphs a) to f) of No. 1 of article 6 of Law No. 55A/2012, of 29 October", and one must recognize the insufficiency of the elements contained in the notification and externalized by the AT.
However, the defect in reasoning invoked does not confuse itself with the duty to communicate the grounds. While the lack of reasoning constitutes a defect capable of determining the annulment of the act that suffers from it, the failure or defective performance of the duty to communicate the grounds, that is, the invalidity of the notification, cannot reflect on the validity of the notified act.
Faced with insufficient notification, as occurs in this case, it was incumbent upon the Claimant to use the mechanism provided for in article 37, No. 1 of the CPPT, according to which: "the interested party may, within 30 days or within the period for complaint, appeal, or challenge or other judicial remedy that may be available from this decision, if shorter, request notification of the omitted requirements or a certificate containing them, free of any payment". Completing No. 2 of the same article that "If the interested party makes use of the faculty granted in the previous number, the period for complaint, appeal, challenge or other judicial remedy is counted from the notification or delivery of the certificate that was requested".
The eventual deficiencies that the notification presents only affect the effectiveness of the notified act and not its perfection or validity, as, as clearly results from article 132 of the CPA and No. 6 of article 77 of the LGT, communication of the act constitutive of duties and charges is only a condition of its effectiveness.
In truth, without prejudice to the censure that such omissive conduct by the AT merits [and in our view merits], the Claimant not having requested the certificate relating to the (essential) elements omitted from the notification, namely the assessment act in question and the "more detailed" grounds thereof, nor did it come to know whether such elements actually do not exist, as it can only be sure that they were not communicated to it.
Any problems existing regarding the failure or defective performance of the duty to communicate tax acts and their grounds cannot reflect on the validity of the notified act – cf. Judgment of the STA, of 15 February 2012, Case No. 872/11. In the same sense, in light of the Code of Tax Procedure ("CPT") which in this matter contained identical regime to the CPPT, see the Judgments of the STA, of 6 October 2005, Case No. 221/05, and of 24 April 2002, Case No. 26636.
Moreover, both in the Administrative Complaint and Hierarchical Appeal presented, and in the arbitral petition itself, the Claimant demonstrated perfect knowledge of the substantive issue at stake in these proceedings, arguing exhaustively in defense of its position.
In light of the foregoing, the alleged formal defect invoked by the Claimant of lack of reasoning does not hold.
6.2. On Error in the Assumptions: Scope of Objective Incidence of Item 28.1 of the TGIS
The assessment that is the object of this arbitral action has its origin in article 1 of the Stamp Tax Code, in item 28.1 of the TGIS, added by article 4 of Law No. 55-A/2012, of 29 October, and in article 6, No. 1, paragraph f), sub-paragraph i) of the same Law (transitional regime), having as an essential assumption the existence of real property that can be included within the concept of "properties with residential use".
Since in the situation under scrutiny the real property in question is exclusively a plot of land for construction, devoid of any building, it is important to determine the meaning of the expression "properties with residential use" in order to conclude whether it encompasses, or not, plots of land for construction.
The matter under analysis has already been the subject of extensive tax arbitration jurisprudence. We refer specifically, without concerns for exhaustiveness, to the decisions rendered in the following cases: 42/2013-T, of 18-10-2013; 48/2013-T, of 09-10-2013; 49/2013-T, of 18-09-2013; 53/2013-T, of 02-10-2013; 75/2013-T, of 01-11-2013; 144/2013-T, of 12-12-2013 and 158/2013-T, of 10-02-2014.
The Judicial Courts have likewise pronounced on this same question. We refer to the recent decisions rendered by the Supreme Administrative Court ("STA") in the following cases: 048/14, of 09-04-2014 and 0270/14, of 23-04-2014.
Both the cited arbitral jurisprudence and the cited judicial jurisprudence, which we follow, consider that plots of land for construction are outside the scope of item 28.1 of the TGIS, in the wording in force at the date of the facts, under the terms that are explained below, beginning with an analysis of the legislative context in which the addition of item 28 to the TGIS occurred.
A. Context of the Approval of Item 28.1 of the TGIS and Its Regime
In the parliamentary discussion of Bill No. 96/XII (2nd), which originated Law No. 55-A/2012, which added item 28 to the TGIS, the State Secretary for Tax Affairs stated that:
"(...) For the tax system to promote more equality, it is fundamental that the effort for budget consolidation be shared by all taxpayers and focus on all types of income, embracing with special emphasis capital income and high-value properties. This matter, it is recalled, was extensively addressed in the Constitutional Court judgment (...).
This proposal has three essential pillars: the creation of special taxation on urban real estate with value exceeding 1 million euros; the increase in taxation on capital income on securities gains; and the strengthening of rules to combat tax fraud and evasion.
First, the Government proposes the creation of a special rate to tax high-value residential urban properties. This is the first time that Portugal creates special taxation on high-value properties intended for housing. This rate will be 0.5% to 0.8% in 2012 and 1% in 2013, and will apply to houses with value equal to or exceeding 1 million euros. With the creation of this additional rate, the fiscal effort required of these owners will be significantly increased in 2012 and 2013" (emphasis ours) – cf. Diário da Assembleia da República, I series, No. 9/XXII-2, of 11 October 2012, pp. 31-32.
Both the houses and the residential urban properties referred to here do not correspond to plots of land for construction. It is noted that residential urban properties are one of the classificatory concepts in article 6 of the IMI Code clearly distinct from plots of land for construction. Indeed, the cited No. 1 of article 6 provides:
"1 - Urban properties are divided into:
a) Residential;
b) Commercial, industrial or for services;
c) Plots of land for construction;
d) Other." (emphasis ours)
Thus, residential urban properties and plots of land for construction are, for the purposes of IMI (whose applicability, by reference, to Stamp Tax is, as will be seen below, to be invoked), two distinct categories, with their own legal classifications and definitions contained in the aforementioned article 6 of the IMI Code.
In light of the foregoing and as the arbitral decision in Case No. 75/2013-T, of 1 November 2013, emphasizes, it appears clear that "in the spirit of the Bill that originated Law No. 55-A/2012 was not the taxation of plots of land for construction, with no evidence to the contrary arising from the Deputies who approved the law".
Having established the context, it is worth noting that the regime in question came to be approved by Law No. 55-A/2012, of 29 October, and, among several changes it made to the Stamp Tax Code, added item 28 to the TGIS, with the following wording:
"28 – Ownership, usufruct or right to surface of urban properties whose taxable patrimonial value contained in the registry, under the terms of the Code of Municipal Tax on Real Estate (CIMI), is equal to or exceeding € 1,000,000 – on the taxable patrimonial value used for purposes of IMI:
28.1 – For properties with residential use – 1%;
28.2 – For properties, when the taxpayers that are not natural persons are resident in a country, territory or region subject to a clearly more favorable tax regime, contained in the list approved by order of the Minister of Finance – 7.5%". (emphasis ours)
Article 6 of the aforementioned Law No. 55-A/2012 established, as "Transitional Provisions", a set of rules relating to the assessment of the tax provided for in item 28 of the TGIS, clarifying article 67, No. 2 of the Stamp Tax Code introduced by that Law that "To matters not regulated in this Code concerning item No. 28 of the General Table, the provisions of the CIMI shall apply, subsidiarily."
B. The Concept of "Property with Residential Use"
It is thus important to interpret the provisions in item 28.1 of the TGIS and determine its meaning and scope, given the absence of a legal definition of the concept of property with residential use (fundamental notion for delimiting objective incidence), either in the Stamp Tax Code itself or in any other statute, including the IMI Code applicable by reference.
Indeed, as emphasized in the Arbitral Judgment relating to Case No. 53/2013-T, of 2 October 2013, the concept of "property with residential use" is not employed by other tax legislation, in particular, as relevant in this case, in the Stamp Tax Code and in the IMI Code, the latter, applicable subsidiarily within the scope of item 28 of the TGIS, as provided for in articles 2, No. 4; 3, No. 3, paragraph u); 5, paragraph u); 23, No. 7; 46, No. 5 and 67, No. 2, all of the Stamp Tax Code.
In the same sense, the Arbitral judgment in Case No. 144/2013-T, of 12 December 2013, notes that this concept used in item 28.1 (of property with residential use) "not only does not appear defined in any provision of the Stamp Tax Code, but neither is it used in the IMI Code, the statute to which article 67, No. 2 of the Stamp Tax Code expressly refers when matters not regulated in the Stamp Tax Code are at stake regarding item 28."
Tax norms must be interpreted as any others, with the conception that they would have the exceptional character once attributed to them having been overcome.
It is worth noting in this regard that article 9 of the Civil Code marks the prevalence of the spirit over the letter of the law, although it expressly placed the letter as a limit to the search for meaning. Article 9 of the Civil Code represents the emanation of a general hermeneutical principle, which has, for that reason, intrinsic validity. This provision states:
"1. Interpretation must not be confined to the letter of the law, but must reconstruct from the texts the legislative thought, taking especially into account the unity of the legal system, the circumstances under which the law was drafted and the specific conditions of the time in which it is applied.
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However, the interpreter cannot consider the legislative thought that does not have in the letter of the law a minimum of verbal correspondence, however imperfectly expressed.
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In determining the meaning and scope of the law, the interpreter shall presume that the legislator adopted the most correct solutions and knew how to express its thought in appropriate terms."
The LGT, in its article 11, came, in the specific field of tax laws, to establish a set of interpretation rules as follows:
"1. In determining the meaning of tax norms and in qualifying the facts to which they apply, the general rules and principles of interpretation and application of laws are observed.
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Whenever tax norms use terms specific to other branches of law, they must be interpreted in the same sense as they have there, unless otherwise directly results from the law.
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If doubt persists about the meaning of the incidence norms to be applied, the economic substance of the tax facts must be considered.
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Gaps resulting from tax norms covered by the reservation of law of the Assembly of the Republic are not susceptible to analogical integration."
It appears that the text of the LGT adds nothing, referring to the general rules and principles, in addition to incorporating distinct principles of difficult compatibility.
As seen above, the IMI Code uses (in its article 6, No. 1) the notion of residential urban properties, which enshrines as an autonomous and distinct category from that of plots of land for construction, but does not provide for the concept of "property with residential use", whose interpretation now becomes necessary.
At this point, we again resort to arbitral jurisprudence and the Judgment rendered in Case No. 53/2013-T, referred to above, which we endorse and from which the following excerpt is transcribed:
"3.2.5. Concept of "property with residential use" as referring to residential properties
The concept closest to the literal meaning of this expression used is manifestly that of "residential properties", defined in No. 2 of article 6 of the CIMI as encompassing "buildings or constructions" licensed for housing purposes or, in the absence of a license, that have as their normal purpose housing purposes.
If it is understood that the expression "property with residential use" coincides with that of "residential properties", it is manifest that the assessments suffer from error regarding the assumptions of fact and law, as all properties for which Stamp Tax was assessed under the aforementioned item No. 28.1 are plots of land for construction, without any building or construction, required to meet that concept of "residential properties".
Therefore, if the interpretation is adopted that "property with residential use" means "residential property", the assessments whose declaration of illegality is sought will be illegal, as there is no building or construction on any of the plots.
However, the non-coincidence of the terms of the expression used in item No. 28.1 of the TGIS with that extracted from No. 2 of article 6 of the CIMI, points in the direction that the same concept was not intended to be used.
3.2.6. Concept of "property with residential use" as a distinct concept from "residential properties"
The word "use" (afectação), in this context of use of a property, has the meaning of "action of destining something to a particular use".
"When, as is usually the case, the norms (legislative formulas) have more than one meaning, then the positive function of the text is translated into giving stronger support to or more strongly suggesting one of the possible meanings. For among the possible meanings, some will correspond to the more natural and direct meaning of the expressions used, whereas others can only fit within the verbal framework of the norm in a forced, contrived manner. Now, in the absence of other elements that induce the choice of the less immediate meaning of the text, the interpreter should in principle opt for that meaning which better and more immediately corresponds to the natural meaning of the verbal expressions used, and specifically to their technical-legal meaning, assuming (not always exact) that the legislator knew how to correctly express its thought".
The relevance of the text of the law is especially emphasized in the interpretation of norms of incidence of Stamp Tax, which amount to an amalgam, under a common denomination, of an incongruous set of taxes of completely distinct natures (on income, on expenditure, on assets, on acts, etc.), which leaves no appreciable margin for application of the primary interpretative criterion, which is the unity of the legal system, which demands its overall coherence.
The recognized lack of coherence of Stamp Tax is particularly exuberant in the case of this item No. 28.1, hastily included on the margins of the General State Budget, by a tax legislator without perceptible global tax orientation, that is successively implementing norms of tax increase in line with the vicissitudes of budget execution, the impositions of international institutional creditors (represented by the "troika") and the oversight of the Constitutional Court. (...)
In this context, with no interpretative elements that reliably allow detection of legislative coherence in the solution adopted in the aforementioned item No. 28.1 or the correctness or incorrectness of the solution adopted (relevant for interpretative purposes in light of No. 3 of article 9 of the Civil Code), the text of the law must be the primary element of interpretation, in accordance with the presumption, imposed by the same No. 3 of article 9, that the legislator knew how to express its thought in appropriate terms.
In light of those meanings of the words "use" (afectação) and "to use" (afectar), which are "to give destination" or "to apply", the formula used in that item No. 28.1 of the TGIS manifestly encompasses properties that are already applied to housing purposes, so it is important to inquire whether it will also encompass properties that, although not yet applied to housing purposes, are destined for these and those whose destination is unknown.
In light of the literal text of item No. 28.1, it is necessary to exclude from the scope of application of Stamp Tax provided for therein the plots of land for construction of some Claimants that still do not have any defined use, as they are not yet applied or destined for housing purposes. That is, plots of land for construction that have no defined use cannot be considered properties with residential use, as they have yet no application nor any destination other than construction of unknown type. An interpretation in the sense that item No. 28.1 refers to properties whose use is unknown does not have the minimum of verbal correspondence in the letter of that norm, so a hypothetical legislative thought of that type cannot be considered by the interpreter of the law, in light of the prohibition contained in No. 2 of article 9 of the Civil Code.
But this is not enough to clarify the situation of those plots of land for construction that, although not yet applied to housing purposes, already have a determined destination, namely, in the subdivision license (...).
Therefore, it is necessary to clarify when a property can be understood as being used for housing purposes, namely whether it is when such use is fixed for it in a licensing act or similar, or only when the actual assignment of that use is realized.
First, the comparison of item No. 28.1 of the TGIS with No. 2 of article 6 of the CIMI, which defines the concept of residential properties, manifestly points in the direction that actual use is necessary.
Indeed, a building or construction licensed for housing or, even without a license, but which has housing as its normal purpose, is, in light of No. 2 of that article 6, a residential property.
Therefore, on the assumption that the legislator of Law No. 55-A/2012 knew how to express its thought in appropriate terms (as article 9, No. 3, of the Civil Code presumes), if it intended to refer to those properties already licensed for housing or that have housing as their normal purpose, it would certainly have used the concept of "residential properties", which would express perfectly and clearly its thought, in light of the definition given by that No. 2 of article 6 of the CIMI.
Consequently, it must be presumed that the use of a different expression is intended to have a distinct reality, so, in proper hermeneutics, "property with residential use", cannot be a property merely licensed for housing or intended for that purpose (that is, it will not suffice that it be a "residential property"), having to be a property that already has actual use for that purpose.
That this is the meaning of the expression "use" (afectação), in the same context of classification of properties that the CIMI makes, is confirmed by article 3 in which, regarding rural properties, reference is made to those "that are used for or, in the absence of concrete use, have as their normal purpose a use generating agricultural income", which shows that the use is concrete, actual. Indeed, as seen from the final part of this text, a property can have a particular use as its purpose and be or not be used for it, which shows that the use is, at the level of connection of a property to a particular purpose, something more intense than the mere purpose and can or may not occur, downstream of this and not upstream.
Moreover, the text of the law by adopting the formula "property with residential use", instead of "urban properties with residential use", which appears in the aforementioned "Explanatory Memorandum", strongly points in the direction that the residential use already be concretized, as only then will the property have that use.
Regarding article 45 of the CIMI, it has no relation to the classification of properties merely indicating the factors to be considered in the valuation of plots of land for construction. What is weighed there, by referring to the "building to be constructed" is the weighing of the destination of the plot, which, as seen, is something that, in the context of the CIMI, does not imply use and occurs before this.
The correctness of this interpretation in the sense that only properties that are actually used for housing are included within the scope of application of item No. 28.1 of the TGIS is also confirmed by the ratio legis perceptible from the restriction of the field of application of the norm to properties with residential use, in the context of "the circumstances under which the law was drafted and the specific conditions of the time in which it is applied", which article 9, No. 1, of the Civil Code also raises to interpretative elements.
First, the limitation of Stamp Tax taxation to "properties with residential use" makes it clear that it was not intended to encompass within the scope of application of the tax properties with use for services, industry or commerce, that is, properties used for economic activity, which is understandable in a context where, as is well-known, the economy is in a recessionary spiral, publicly proclaimed at the highest level, with unemployment rates reaching maximum historical levels, with an avalanche of business closures resulting from economic unsustainability.
With this situation in mind and being common knowledge and public that the revitalization of economic activity and the increase of exports are the ways out of the crisis, it is understood that legislative measures would not be taken that would hinder economic activity, namely the increase in the fiscal burden that hinders it and affects competitiveness in international terms.
Therefore, it is to be concluded that the available interpretative elements, including the "circumstances under which the law was drafted and the specific conditions of the time in which it is applied", clearly point in the direction that it was not intended to encompass within the scope of application of item No. 28.1 situations of properties that are not yet used for housing, in particular plots of land for construction held by companies."
Within this scope, for the reasons just set out, the understanding advocated by the AT cannot hold, that the notion of use (residential) of an urban property should be sought in the regime for valuation of real estate contained in article 45 of the IMI Code (which takes into account the use coefficient provided for in article 41 of the same Code).
Indeed, as the judgment in the arbitral case No. 144/2013-T well states, "If the primary meaning of 'use' (afectação), as we stated, suggests an actual destination, direct, given to a particular good, we do not see how this understanding can be undermined by the finding that the legislator, within the valuation of plots of land for construction, authorizes (admitting that it authorizes) the use of the use coefficient, with a view to what can be constructed on it.
C. The Case Sub Judice
According to the facts, which result as agreed, the property underlying the Stamp Tax assessment carried out, here challenged, constitutes a plot of land for construction, devoid of any building.
Taking as correct and valid (as we do) the understanding that item 28.1 of the TGIS requires the need for an actual residential use of an urban property and not merely potential, a plot of land for construction cannot be considered included in that item, as it does not allow, by its very nature, to have an actual and current residential use.
Thus, in the situation at hand, we are not dealing with a property with current residential use, so Stamp Tax provided for in item 28.1 of the TGIS cannot apply to it, with the contested assessment suffering from error in the assumptions, embodied in the violation of the aforementioned item 28.1, and it should be annulled (cf. article 135 of the CPA, applicable subsidiarily ex vi articles 2, paragraph d) of the CPPT and 29, No. 1, paragraphs a) and d) of the RJAT).
With regard to the alleged defects of duplication of collection and unconstitutionality due to violation of the principle of equality and proportionality, invoked by the Claimant, consideration of such issues is precluded by the declaration of illegality of the Stamp Tax assessment in the case, due to substantive defect that prevents its re-enactment or renewal.
As the Commentary to the Code of Administrative Court Procedure, Almedina, 2005, by Mário Aroso de Almeida and Carlos Cadilha, in annotation to article 95 of that statute, p. 483 (applicable by reference from article 2, paragraph c) of the CPPT and article 29, No. 1, paragraphs a) and c) of the RJAT) states "If the court ruled favorable on the main claim, the judicial power is precluded regarding a subsidiary or alternative claim; and in the same terms, if the ruling adopted as to one question consumes or leaves prejudiced other aspects of the case that correlate with it."
In these terms, in light of the substantive interpretation advocated, consideration and assessment of the other defects imputed to the assessment act is precluded.
6.3. Compensation for Undue Provision of Guarantee
The Claimant further makes a request for compensation for undue guarantee, under article 53 of the LGT and article 171 of the CPPT, for the amount of costs incurred with the constitution and registration of a voluntary mortgage intended to suspend the tax enforcement procedure No. ... – cf. Document No. 13 attached to the request for arbitral decision.
Having deducted the sum of € 100, corresponding to fees for the granting of the power of attorney made in that act by one of the heirs.
In its response, the AT said nothing regarding this request of the Claimant.
Let us examine.
The regime for the right to compensation for undue guarantee is contained in article 53 of the LGT, which establishes the following:
"Article 53
Guarantee in Case of Undue Payment
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The debtor who, to suspend enforcement, offers a bank guarantee or equivalent will be compensated wholly or partially for damages resulting from its provision, if maintained for a period exceeding three years in proportion to the vesting in administrative appeal, challenge or opposition to enforcement that have as their object the guaranteed debt.
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The period referred to in the previous number does not apply when it is verified, in administrative complaint or judicial challenge, that there was error attributable to the services in the assessment of the tax.
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The compensation referred to in No. 1 has as its maximum limit the amount resulting from the application to the guaranteed value of the rate of compensatory interest provided for in this law and may be requested in the complaint itself or judicial challenge, or autonomously.
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Compensation for undue provision of guarantee will be paid by set-off against the receipt of the tax of the year in which payment was made."
From this legal provision results, for what is relevant here, that the right to compensation for the guarantee improperly provided, to be attributed without dependence on the period referred to in No. 1 of the article above cited (as, in this case, the error is attributable to the AT), depends on the verification of the following assumptions:
a) the provision of a bank guarantee or equivalent (with a view to suspending the tax enforcement that has as its object the collection of debt arising from the impugned assessment);
b) the existence of damages resulting from the provision of that guarantee; and
c) the success in the administrative complaint, judicial challenge, or opposition where the error attributable to the services is verified.
In turn, article 171 of the CPPT provides:
"1 - Compensation in case of bank guarantee or equivalent improperly provided shall be requested in the proceedings in which the legality of the enforceable debt is disputed.
2 - Compensation must be requested in the complaint, challenge or appeal or if its ground is subsequent within 30 days after its occurrence."
Although it is not entirely clear to this Tribunal whether the document offered by the Claimant – cf. Document No. 13 attached to the request for arbitral decision - actually refers to expenses incurred with the provision of a voluntary mortgage intended to suspend the tax enforcement procedure mentioned above, the fact is that the Respondent in no way contests this fact.
The guarantee provided by the Claimant to suspend the tax enforcement procedure instituted for coercive collection of the assessment in question in these proceedings took the form of a voluntary mortgage.
Now, it results from the letter of article 53 of the LGT and article 171 of the CPPT that the guarantees that can generate a right to compensation under those provisions are only bank guarantee and equivalent guarantees and not every guarantee that is suitable to suspend tax enforcement.
A guarantee equivalent to a bank guarantee will be one that implies for the interested party an expense whose amount increases as a function of the period of time during which it is maintained (in this sense, see Jorge de Sousa, in Code of Tax Procedure and Process annotated and commented 6th edition 2011, page 242).
A voluntary mortgage, which only has initial constitution costs, does not appear as a guarantee equivalent to a bank guarantee for the purposes of the provisions in article 171 of the CPPT and article 53 of the LGT.
In this same sense, which is followed, see the Judgment of the Supreme Administrative Court, rendered in Case No. 528/12, of 24-10-2012, where it was considered that this type of guarantee cannot be understood as a guarantee equivalent to a bank guarantee.
In light of the foregoing, it is concluded that the Claimant has no right to the compensation provided for in article 171 of the CPPT and article 53 of the LGT, without prejudice to, given the constitutional principle of liability of the Administration contained in article 22 of the Constitution of the Portuguese Republic ("CRP"), always being able to resort to general compensatory means to be reimbursed for this charge.
In these terms, in this part, the request of the Claimant does not hold.
- DECISION
In light of the foregoing, this Singular Arbitral Tribunal hereby decides to:
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Judge favorable the request for declaration of illegality and annulment of the Stamp Tax assessment act in question in these proceedings, and the consequent annulment of the dismissal (implied) of the Hierarchical Appeal presented, with the legal consequences.
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Judge unfavorable the request for recognition of the right of the Claimant to compensation for undue guarantee in the terms petitioned.
The value of the case is fixed at Euro 17,553.50, in accordance with the provisions of articles 3, No. 2 of the Regulations of Costs in Tax Arbitration Proceedings (RCPAT), 97-A, No. 1, paragraph a) of the CPPT and 306 of the CPC.
The amount of costs is fixed at Euro 1,224.00, under article 22, No. 4 of the RJAT and Table I attached to the RCPAT, charged to the Tax and Customs Authority, in accordance with the provisions of articles 12, No. 2 of the RJAT and 4, No. 4 of the RCPAT.
Let notification be made.
Lisbon, 12 June 2014
The Arbitrator,
Dr. Henrique Nogueira Nunes
Text prepared by computer under the terms of article 131, No. 5 of the CPC, applicable by reference from article 29, No. 1, paragraph e) of Decree-Law No. 10/2011, of 20 January, with blank verses and revised.
The wording of this arbitral decision is governed by the spelling prior to the Orthographic Agreement of 1990.
[1] This being a duty to which all administrative acts impositive of duties and charges are subject, under the terms provided for in articles 124 and 125 of the Code of Administrative Procedure ("CPA").
[2] And which is in some way "sanctioned" with the ineffectiveness of the notified act, so as not to prejudice or compromise the rights of defense of the taxpayer which, at any time, can request the certificate of the omitted elements under the right to information that it has.
[3] It is important not to forget that there is minimal or summary reasoning, as the payment notification contains the reference, albeit indirectly, to item 28.1 of the TGIS.
[4] Nos. 2 to 4 of article 6 of the IMI Code define the concepts in question:
"2 – Residential, commercial, industrial or for services are buildings or constructions licensed for such purposes or, in the absence of a license, which have as their normal purpose each of these purposes.
3 – Plots of land for construction are understood to be plots located within or outside an urban agglomeration, for which a subdivision or construction license or authorization has been granted, admitted prior notice or issued favorable prior information on a subdivision or construction operation, and also those that have been thus declared in the acquisition title, with the exception of plots where competent entities prohibit any of those operations, namely those located in green areas, protected areas or which, in accordance with municipal land planning, are used for public spaces, infrastructure or facilities. (amended by Law No. 64-A/2008, of 31 December)
4 – Those included in the provision of paragraph d) of No. 1 are plots located within an urban agglomeration that are not plots of land for construction nor are they covered by the provision of No. 2 of article 3 and also buildings and constructions licensed or, in the absence of a license, which have as their normal purpose other purposes than those referred to in No. 2 and also those of the exception of No. 3."
[5] Article 6 of Law No. 55-A/2012 provides:
"1 – In 2012, the following rules must be observed by reference to the assessment of the Stamp Tax provided for in item No. 28 of its General Table:
a) The tax fact occurs on 31 October 2012;
b) The taxpayer of the tax is the one mentioned in No. 4 of article 2 of the Stamp Tax Code on the date referred to in the previous paragraph;
c) The taxable patrimonial value to be used in the assessment of the tax corresponds to that resulting from the rules provided for in the Code of Municipal Tax on Real Estate by reference to the year 2011;
d) The assessment of the tax by the Tax and Customs Authority must be effected until the end of November 2012;
e) The tax must be paid, in a single payment, by the taxpayers until 20 December 2012;
f) The applicable rates are the following:
i) Properties with residential use valued under the terms of the IMI Code: 0.5%;
ii) Properties with residential use not yet valued under the terms of the IMI Code: 0.8%;
iii) Urban properties when the taxpayers that are not natural persons are resident in a country, territory or region subject to a clearly more favorable tax regime, contained in the list approved by order of the Minister of Finance: 7.5%.
2 – In 2013, the assessment of the Stamp Tax provided for in item No. 28 of its General Table must focus on the same taxable patrimonial value used for purposes of assessment of municipal tax on real estate to be made in that year.
3 – The failure to deliver, wholly or partially, within the stated period, of the amounts assessed as Stamp Tax constitutes a tax offense, punished under the terms of the law."
[6] See Oliveira Ascensão, "Interpretation of laws. Integration of gaps. Application of the principle of analogy", in Journal of the Bar Association, Year 57 – III, Lisbon, December 1997, pp. 913-941.
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