Summary
Full Decision
ARBITRAL DECISION
PARTIES
Claimants: A..., NF..., married to B..., NF..., domiciled at Rua ..., ... Lot/dwelling ..., ... – ... ...-....
Respondent: Tax and Customs Authority (AT)
I. REPORT
a) On 09-05-2016, the Claimants filed with CAAD a request seeking, under the Legal Framework for Arbitration in Tax Matters (RJAT), the establishment of a singular arbitral tribunal (TAS).
THE REQUEST
b) The Claimants request the annulment of the additional assessment of IMT contained in the DUC ..., dated 29.03.2016, in the amount of 16,150.38 euros, resulting from the tax event consisting of the acquisition of full ownership rights over the urban property located at ..., Rua do ..., ..., Lot/dwelling ..., ... – ... ...-..., registered in the matrix under article ..., parish and municipality of ....
c) And having paid the IMT indicated above on 29.03.2016, they request the condemnation of the AT to pay compensatory interest calculated until the date of its reimbursement.
THE CAUSE OF ACTION
d) The Claimants invoke the defect of violation of law due to possible error of law by the AT, as they understand that the acquisition of the property in question, by public deed of 17/10/2012, benefits from the IMT exemption provided in subparagraph c) of n.º 1 of article 270º of CIRE or, alternatively, in n.º 2 of the same legal provision.
e) For the reason that the acquisition constituted an act performed within the framework of the liquidation of the insolvent estate of "C... – Civil Construction Company Ltd." NIPC..., a company of which they were creditors, that is, "an act of transfer of assets to a creditor" or "an act of sale of an asset that formed an integral part of the insolvent estate, in order to satisfy their credit... performed within the framework of the liquidation of the insolvent estate".
OF THE SINGULAR ARBITRAL TRIBUNAL (TAS)
f) The request for establishment of the TAS was accepted by the President of CAAD and automatically notified to the AT on 23-05-2016.
g) The undersigned was designated as arbitrator by the CAAD Ethics Council, and the parties were notified thereof on 29-06-2016. The parties did not manifest the will to refuse the designation, in accordance with article 11.º n.º 1 subparagraphs a) and b) of RJAT and articles 6.º and 7.º of the Ethics Code.
h) The Singular Arbitral Tribunal (TAS) has been, since 14-07-2016, regularly established to examine and decide the object of this dispute (articles 2.º, n.º 1, subparagraph a) and 30.º, n.º 1, of RJAT).
i) All these acts are documented in the notice of establishment of the Singular Arbitral Tribunal dated 14-07-2016, which is hereby reproduced.
j) On 14-07-2016 the AT was notified in accordance with article 17º-1 of RJAT. It responded on 29.09.2016. It also attached the PA composed of 1 digitized file with 21 sheets and 21 written pages.
k) No witness testimony and party statements indicated by the Claimants were produced, as the AT itself stated that "there are no disputed facts".
l) The meeting of parties provided for in article 18º of RJAT did not take place because the Respondent agreed to its waiver and the Claimants intended to produce witness testimony and party statements in that act, which was deemed unnecessary in light of what was stated in the previous subparagraph.
m) The parties produced written submissions on 24.10.2016 and 04.11.2016, respectively the Claimants and the Respondent, essentially maintaining what they had already stated in their request and response.
PROCEDURAL PREREQUISITES
n) Legitimacy, capacity and representation – The parties have legal personality, judicial capacity, are legitimate parties and are represented (articles 4.º and 10.º, n.º 2, of RJAT and article 1.º of Ordinance n.º 112-A/2011, of 22 March).
o) Principle of contradictory proceedings - The AT was notified in accordance with item j) of this Report. All procedural documents and all documents attached to the file were made available to the respective counterparty in CAAD's Case Management System. Both parties were always notified of their attachment. Equally regarding the subsequent procedural course, the TAS followed what resulted from the express or tacit position of the parties as written in subparagraph l) above.
p) Dilatory exceptions - The arbitral procedure does not suffer from nullities and the request for arbitral pronouncement is timely as it was submitted within the prescribed period in subparagraph a) of n.º 1 of article 10.º of RJAT, as results from the fact that the Claimants were notified by official letter ... dated 29.02.2016 of the additional IMT assessment and the present request for pronouncement was filed with CAAD on 19-05-2016.
SUMMARY OF THE CLAIMANTS' POSITION
q) The Claimants allege that they filed against "C... – Civil Construction Company Ltd." NIPC..., a declaratory action for condemnation (and subsequently a precautionary measure of attachment) based on breach of a promise to purchase and sell contract which had as its object the property referred to in b) of this Report, claiming 399,475.70 euros.
r) But that subsequently the insolvency of "C... – Civil Construction Company Ltd." NIPC... was declared, and there they claimed their credit which was recognized in the amount of 416,617.95 euros.
s) By which, in light of what was stated in the two previous subparagraphs, they consider themselves to be creditors of the insolvent estate of "C... – Civil Construction Company Ltd." NIPC....
t) As creditors of the insolvent estate of "C... – Civil Construction Company Ltd." NIPC..., they acquired on 17.10.2012 the property referred to in b) of this Report which formed part of the insolvent estate, reason why they understand that "... the sale and purchase which is the object of the present challenge occurred during the liquidation of the insolvent estate, constituting a transfer to a creditor, reason why, both by virtue of the provisions in subparagraph c) of n.º 1 of article 270º of CIRE, and by virtue of the provisions in n.º 2 of article 270º of CIRE, the same could not fail to be considered as exempt from the payment of IMT".
u) Which was what occurred, having, moreover, the declaration of IMT Model 1 and the obtaining of the DUC at zero rate been obtained at the Finance Service, by the services of the Notary who performed the deed, in the capacity of business management, without having any direct material action in that process.
v) Exemption implicitly recognized in the DUC at zero rate which they understand to be properly granted and "only and solely because they were not willing to be subject to the scrutiny and coercive action that collection through enforcement proceedings always entails, they opted to proceed with the payment of that tax, despite disagreeing with the AT's understanding and the assessment".
w) They conclude by arguing for the annulment of the assessment. They cite in support of their understanding the decisions of the STA of 30.05.2012 (case 0949/11); of 17.12.2014 (case 0185/13) and of 11.11.2015 (case 0968/13) and decisions of CAAD in cases 95/2015-T, 99/2015-T, 123/2015-T and 446/2015-T). In their written submissions they also invoke the decisions of the TCA Sul of 19.11.2015 (case 08063/14) and the CAAD arbitral decision of 14.07.2016 (Case 664/2015).
SUMMARY OF THE RESPONDENT'S POSITION
x) Disagreeing with the Claimant's point of view, the Respondent proposes another interpretation of the applicable rules, expressing textually the following regarding the type of tax benefit in question:
"It must be clarified that the exemption sought is an exemption of automatic recognition and that the declaration model 1, provided for in n.º 1 of article 19º of CIMT, must be submitted by the taxpayer in accordance with the provisions of subparagraph d) of n.º 8 of article 10º of the same legal instrument, as indeed occurred".
"The automatic nature of the tax benefit provided for in article 270º of CIRE results from the provisions of article 5º, n.º 1, of the EBF, which determines that the tax benefits that result directly and immediately from the law are automatic, and from the fact that the legislator made that benefit not dependent on any act of recognition".
y) Further disagreeing with what was alleged by the Claimants (that they benefit from the exemption provided for in subparagraph c) of n.º 1 of article 270º of CIRE) it states: "It is understood that the onerous alienation by the judicial administrator of the insolvency of an asset, which forms an integral part of the insolvent estate, to the now Claimant which, in counterpart and in the capacity of claiming creditor renounces their claim for credit, ceasing from that date to be a creditor of the insolvent, does not fit within the legal concept of transfer of assets". "In the case at hand, however, the act subject to IMT is the onerous transfer of the property through a purchase and sale contract by which the ownership of an asset, or another right, is transferred, for a price". "Consequently, the situation in the case at hand is not susceptible to being framed in subparagraph c) of n.º 1 of article 270º of CIRE".
z) Regarding the application of the exempting rule of n.º 2 of article 270º of CIRE it states: "The AT understands, as conveyed by IMT instruction 2014/01, of DSMIT, that the exemption provided for in n.º 2 of article 270º of CIRE only covers onerous transfers of immovable property integrated in the totality or universality of the company or of one of its establishments, because it is this circumstance that specifically justifies the exemption and not the mere transfer of immovable property that is carried out within the framework of the insolvency process of the company".
"If the legislator intended to cover all onerous transfers of immovable property, even if their transfer was not integrated in the universality of the company or establishment, it would have corrected the original wording of that rule, which it chose not to do, adding only, with Law n.º 66-B/2012, of 31 December, the reference to the 'recovery plan'".
"Thus, by comparison with the CPEREF, within the framework of CIRE the IMT exemption now covers not only acts performed within the framework of the company's recovery plan but also payment plans and the liquidation of the insolvent estate, however the object of the exempt transfer continues to be the company or establishment and not every and any element of its assets".
Concluding, if there were an intention to extend that tax benefit to acquisitions of immovable property that did not comprise the universality of the company or of one of its establishments, the legislator would have had to express itself differently, there being no element in the literal wording of the rule that minimum correspondence, to which the general rules of interpretation refer, which would allow sustaining the thesis advocated by the Claimant".
"In fact, the extrafiscal reason that justifies the exception to taxation introduced with that tax benefit consists of the incentive that is intended to be given to the continuation of economic activities that depend on the alienation of the company or of one of its establishments as a universality".
aa) "The AT disagrees with the thesis according to which the literal interpretation of the rule in question in the case at hand violates the Constitution by not being in conformity with the legislative authorization granted by the Parliament to the Government" "for although that authorization comprises a broader scope than that which would come to be adopted by the Government in the amendment introduced in article 270º of CIRE, still it does not appear that a legislative amendment of narrower scope than the authorization that gives it cover violates that authorization if it is in harmony with its sense and scope".
"The legislative authorization has, precisely, its reason for existing in the fact that the Government is authorized to weigh the opportunity and extent of the legislative measures that fall within the temporal scope and are in conformity with the sense and scope of that authorization, there existing a field of configuration that, by that means, is delegated by Parliament to the Government". "Otherwise it is not clear what the sense of a legislative authorization may be, being that, in the final analysis, the Government may choose not to legislate under that authorization".
bb) It argues for the dismissal of the request, with its absolution, considering the absence of any non-compliance with the law, the assessment remaining in the legal order.
II - ISSUES WHICH THE TRIBUNAL MUST RESOLVE
It will be examined whether the assessment in question suffers from any illegality that prevents its maintenance in the legal order.
It must be observed that the TAS can only decide according to "constituted law" as per n.º 2 of article 2º of RJAT. In this line of thinking, account must be taken of the existence of judicial decisions of the STA and TCA Sul on the same substantive issue, under penalty of subjecting this decision to the appeal provided for in n.º 2 of article 25º of RJAT.
III. FACTS PROVEN AND NOT PROVEN.
REASONING
Regarding the factual matter the Tribunal does not have to pronounce on everything that was alleged by the parties, but rather has the duty to select the facts that matter for the decision and discriminate the proven matter from the unproven (as per article 123.º, n.º 2, of CPPT and article 607.º, n.º 3 of CPC, applicable ex vi article 29.º, n.º 1, subparagraphs a) and e), of RJAT).
Thus, the facts pertinent to the judgment of the case are chosen and selected according to their legal relevance, which is established in attention to the various plausible solutions of the issue(s) of law (as per former article 511.º, n.º 1, of CPC, corresponding to current article 596.º, applicable ex vi article 29.º, n.º 1, subparagraph e), of RJAT).
Thus, taking into account the positions assumed by the parties, the documentary evidence and the PA attached to the file, the following facts were considered proven, with relevance for the decision, which are not contested by the parties, indicating the respective documents (proof by documents), as reasoning. Indeed,
Although the AT states in article 33º of the response "that all alleged by the Claimant is contested" without, however, specifying any fact that merits its disagreement, such "contestation" refers, naturally, only to the legal construction, to the reading of the law, which the Claimants advance in their request, as it presents another completely divergent one, as noted above.
Facts Proven
1) The Claimants entered into a promise to purchase and sell contract with the company C... – Civil Construction Company, Ltd., NIPC..., on 26 October 2001, through which they promised to buy and the company in turn promised to sell, the fraction "..." of ... located ... – ..., identified by article ...º, of section ..., of the parish of ..., described in the Land Registry of ... – ..., under n.º..., of which the company was the owner – article 7º of the request for pronouncement and Document 5 attached to the request for pronouncement.
2) The referred company breached the promise to purchase and sell contract which led the Claimants to file a declaratory action for condemnation, based on the said contractual breach, against the said company C..., having the same been distributed with n.º .../07....T... of the 2nd Civil Court of the Family and Minors Court and District Court of ..., on 13.08.2007, and having there been resolved the contract claiming payment of the deposit doubled, that is, the sum of 399,475.70 euros – articles 8º and 9º of the request for pronouncement.
3) On 23.04.2008, the Claimants filed a precautionary attachment procedure which was granted, under the terms of which the said fraction was seized in accordance with Case .../07....T...-A of the 2nd Civil Court of the Family and Minors Court and District Court of ...), but on 22.09.2006, the insolvency of the company "C... – Civil Construction Company, Ltd." was declared – articles 10º and 11º of the request for pronouncement and Document n.º 6 attached to the request for pronouncement.
4) On 09.09.2008, the Claimants presented a claim for credits with the insolvency case, having claimed a credit in the amount of 416,617.95 euros, having the same been recognized in accordance with the Report prepared by the Insolvency Administrator. – article 12º of the request for pronouncement and Document n.º 7 attached to the request for pronouncement.
5) By public deed executed on 17/10/2012, the Claimants acquired from C... – Construction Company in Liquidation, Ltd., with NIPC..., the property referred to in 1, for the price of € 330,000.00, a deed that was executed by the Insolvency Administrator who, in turn, contacted the Notary, whose services, by business management for the Claimants, presented IMT Model 1 where the exemption of n.º 2 of article 270º of CIRE was invoked and obtained the DUC for IMT assessment at zero rate – articles 5.1 and 5.2 of the AT's response, articles 24º and 25º of the request for pronouncement and Document n.º 9 attached to the request for pronouncement.
6) In IMT Model 1 (Table V Field 48) tax benefit code 60 is listed and it also appears textually in the tax event identified in the DUC as follows: "Benefits: 60 – Code of Insolvency and Business Recovery – transfers integrated within the framework of the liquidation of the insolvent estate (article 270º n.º 2 of DL 53/04) 100% on the taxable base € 338,671.13" – in accordance with Document n.º 9 attached with the request for pronouncement.
7) Within the framework of an exemption control procedure, the Claimants were notified by official letter n.º..., of 29/10/2015, of the Finance Service of ... to exercise, if they so wished, their right to prior hearing on the draft IMT assessment on the understanding that the acquisition does not benefit from the said exemption, stating: "we are dealing with an onerous transfer of immovable property separately from the company or establishment" and concludes "it is not, thus, covered by the exemption" – article 5.3 of the response and article 1º of the request for pronouncement.
8) The Claimants exercised their right to hearing and by official letter n.º ... of 29/02/2016 of the Finance Service of ... ... they were notified of the decision which concluded that the prerequisites of the intended exemption had not been met, maintaining the assessment under n.ºs 1 and 4 of article 31º and 5º and article 36º, both of CIMT – article 5.4 of the response and articles 2º and 4º of the request for pronouncement.
9) The Claimants paid the assessed IMT, in the amount of € 16,150.38, on 29/03/2016, including interest – article 5.5 of the AT's response, article 6º of the request for pronouncement and Document n.º 4 attached to the request for pronouncement.
10) On 09-05-2016, the Claimants filed the present request for pronouncement with CAAD – entry record in the SGP of the request for pronouncement.
Facts Not Proven
There is no other factual matter alleged that has not been considered proven and that is relevant to the composition of the procedural dispute.
IV. EXAMINATION OF THE ISSUES WHICH THE SINGULAR ARBITRAL TRIBUNAL (TAS) MUST RESOLVE
The Type of Tax Benefit in Question Here. IMT Instruction 2014/01 – Transfers of Immovable Property – articles 269º and 270º of CIRE
According to the content of article 22º of the learned response and article 7º of the AT's submissions, essentially the Respondent's position is based on the internal guidance contained in IMT Instruction 2014/01 of DSIMT published on the DGI website.
There it is stated regarding the "species of the genus" of tax benefits:
"... the exemptions contained in the subparagraph of article 269º and n.º 2 of article 270º of CIRE constitute automatic tax benefits, given the absence, in those provisions, of any normative command requiring the institution of a prior administrative procedure, necessary to the recognition of the said exemptions".
And in the learned response the AT states: "It must be clarified that the exemption sought is an exemption of automatic recognition and that the declaration model 1, provided for in n.º 1 of article 19º of CIMT, must be submitted by the taxpayer in accordance with the provisions of subparagraph d) of n.º 8 of article 10º of the same legal instrument, as indeed occurred". And it adds: "The automatic nature of the tax benefit provided for in article 270º of CIRE results from the provisions of article 5º, n.º 1, of the EBF, which determines that the tax benefits that result directly and immediately from the law are automatic, and from the fact that the legislator made that benefit not dependent on any act of recognition". (emphasis ours).
In fact, the stamp duty tax exemption is characterized as being automatic in the sense of the EBF (article 5º), but the same does not appear to occur with the IMT exemption.
The tax exemption in question, conferred on the date of acquisition of the immovable property, is an exemption textually of "automatic recognition" whose verification resulted from a declaration to the competent finance service (subparagraph d) of n.º 8 of article 10º and n.ºs 1 and 3 of articles 19º, 20º, 21º and 22º of CIMT) which issued a DUC at zero rate, implicitly recognizing the tax benefit.
It is precisely that, in other words, which is stated in IMT Instruction 2014/01 of DSIMT: "... the verification of the requirements contained in n.º 2 of article 270º of CIRE so that the IMT exemption may operate... as well as its subsequent declaration, shall be the responsibility, in accordance with subparagraph d) of n.º 8 of article 8º of CIT, of the local finance service where the declaration mentioned in n.º 1 of article 19º of the same tax document is presented".
The assessment of IMT at zero rate, with implicit recognition of the IMT exemption was carried out by the AT, following the request of the taxpayer through IMT Model 1, presented, in this case, by business management for the Claimants.
It is therefore a tax benefit dependent on recognition (although automatic, that is, which operates through computerized automatisms) as per the final part of n.º 1 of article 5º of the EBF, a recognition which generates an administrative act in accordance with the first part of n.º 2 of article 5º of the EBF and not a benefit "automatic" or of "automatic nature", an administrative act which in principle is only revocable under the terms of n.º 4 of article 14º of the EBF. Indeed,
The declaration of IMT Model 1 in which the taxpayer invokes the benefit fulfills the requirements of the request to which n.º 1 of article 65º of CPPT refers, corresponding to a silent administrative act the implicit recognition of the tax benefit when the Tax Administration, following a request for IMT assessment in which an exemption is invoked, issues a DUC at zero rate, which then allows and authorizes the execution of the instrument of transfer of immovable property.
An administrative act to be valid does not need to be express, it can be silent, as in this case it appears that it should be considered.
The IMT exemption to which we refer does not result, therefore, directly and immediately from the law, since to function it is dependent, by force of law (subparagraph d) of n.º 8 of article 10º and n.ºs 1 and 3 of articles 19º, 20º, 21º and 22º of CIMT), on the presentation of IMT Model 1 in which the taxpayer invoked it and on the fact that the AT, implicitly assessing the requirements of the tax benefit, issued the DUC at zero rate (n.º 1 of article 21º of CIMT).
That is, nothing prevented the AT from, if the prerequisites of the exemption were not met, not issuing the DUC at zero rate, not implicitly recognizing the sought tax benefit, since the functions of IMT assessment are incumbent upon it, verifying the prerequisites of facts interrupting taxation (in this case the exemption) which are invoked, in light of the request contained in IMT Model 1, even in cases of exemption (n.º 3 of article 19º of CIMT).
The AT does not even invoke, in the additional IMT assessment, n.º 2 of article 31º of CIMT, the only provision that could justify, after the issuance of the DUC at zero rate, that there would have occurred "error of fact and of law" in the assessment, which is contradictory with the facts here in question:
- Issuance of the DUC at zero rate (presupposing an assessment with recognition of tax exemption) in response to the taxpayer's request;
- Requirement of compensatory interest for something to which the taxpayer only contributed with the request for the granting of the exemption which was granted to them.
The Legal Provisions in Question Here
For ease of exposition, the main legal provisions essential for, subsequently, examining the tax act in light of the defect invoked by the Claimants are transcribed.
Article 270º of CIRE has the following wording under the heading "Benefit relating to the municipal tax on onerous transfers of immovable property":
1. The following transfers of immovable property are exempt from tax on onerous transfers of immovable property, integrated in any insolvency plan, payment plan or recovery plan:
a) Those intended for the establishment of a new company or companies and for the realization of its capital;
b) Those intended for the realization of the increase in capital of the debtor company;
c) Those arising from performance in fulfillment of company assets and from the transfer of assets to creditors.
2. The following are equally exempt from municipal tax on onerous transfers of immovable property: acts of sale, exchange or transfer of the company or establishments of the company integrated within the framework of an insolvency plan, payment plan or recovery plan or performed within the framework of the liquidation of the insolvent estate".
The former Code of Special Proceedings for Business Recovery and Bankruptcy (CPEREF) provided in article 121º, n.º2, which was replaced in the new CIRE by the cited article 270º with the following:
"2. The transfers of immovable property, integrated in any of the business recovery measures, which arise from:
a) The transfer to third parties or the alienation of shareholdings representing the capital of the company, provided for in subparagraphs b) and c) of n.º 2 of article 88.º and in article 91.º, as well as in n.ºs 1 and 2 of article 100.º;
b) The performance in fulfillment of company assets and the transfer of assets to creditors, provided for in subparagraphs d) and e) of n.º 1 of article 88.º and in article 93.º, as well as in n.º 1 of article 100.º;
c) The legal separation of commercial or industrial establishments, the sale, exchange or transfer of elements of the company assets, as well as long-term leases, provided for, respectively, in subparagraphs e), f) and g) of n.º 1 of article 10º".
For its part, article 270º of CIRE was approved by the Government under the authorization granted by Law n.º 39/2003, of 22 August, whose n.º 3 of article 9 has the following wording:
«Finally, the Government is authorized to exempt from municipal sisa tax the following transfers of immovable property, integrated in any insolvency plan or payment plan or carried out within the framework of the liquidation of the insolvent estate:
a) Those intended for the establishment of a new company or companies and for the realization of its capital;
b) Those intended for the realization of the increase in capital of the debtor company;
c) Those arising from the transfer to third parties or the alienation of shareholdings representing the capital of the company, the performance in fulfillment of company assets and the transfer of assets to creditors, the sale, exchange or transfer of the company, establishments or elements of its assets, as well as long-term leases".
N.º 2 of article 270º of CIRE must be interpreted in accordance with what article 11º, n.º1, of the General Tax Law (LGT) mandates: "In determining the sense of tax rules and in qualifying the facts to which they apply, the general rules and principles of interpretation and application of laws are observed".
For this purpose, it is appropriate to cite article 10º of the Statute of Tax Benefits, according to which: "Rules that establish tax benefits are not susceptible to analogical integration, but admit extensive interpretation".
The rules and interpretative principles enshrined in article 9º of the Civil Code are applicable:
"1. Interpretation should not be limited to the letter of the law, but should reconstruct from the texts the legislative thinking, taking into account above all the unity of the legal system, the circumstances in which the law was elaborated and the specific conditions of the time in which it is applied.
2. However, the legislative thinking which does not have in the letter of the law a minimum of verbal correspondence, even if imperfectly expressed, cannot be considered by the interpreter.
3. In fixing the sense and scope of the law, the interpreter will presume that the legislator enshrined the most correct solutions and was able to express its thinking in adequate terms".
The Interpretation of n.º 2 of Article 270º of CIRE
The exemption invoked by the Claimants in the IMT Model 1 declaration was that of n.º 2 of article 270º of CIRE (code 60 of tax benefits in accordance with filling instructions then published). It was on the basis of this invocation that the DUC for IMT assessment was issued at zero rate. Only this rule is in question here.
And this appears textually in IMT Model 1 (Table V Field 48), the code 60 of the benefit being then contained in the filling instructions published by the AT and also appearing textually in the tax event identified in the DUC as follows: "Benefits: 60 – Code of Insolvency and Business Recovery – transfers integrated within the framework of the liquidation of the insolvent estate (article 270º n.º 2 of DL 53/04) 100% on the taxable base € 338,671.13".
The issue which it is incumbent upon the tribunal to examine and decide is whether the acquisition in question was exempt from IMT under the provisions of article 270.º of the Code of Insolvency and Business Recovery (CIRE), approved by Decree-Law n.º 53/2004, of 18 March, which passes by inquiring whether the said exemption operates only regarding sales, exchanges or transfers of companies or establishments as a universality of assets, as the AT contends, or also regarding sales, exchanges or transfers of immovable property (as elements of its assets), provided that they are framed within the scope of an insolvency plan or payment plan, or performed within the framework of the liquidation of the insolvent estate, as the Claimants sustain.
As results from the matter of fact proven, there is no doubt that the acquisition here in question was carried out within the framework of the liquidation of the insolvent estate.
We reproduce what was stated in this regard in the collective CAAD decision Case n.º 664/2016-T with respect to a situation identical to this case:
"Within the scope of the courts the issue is not new and has been dealt with repeatedly and uniformly in the Supreme Administrative Court as cited by the Decision of the STA of 01/20/2016 in case n.º 01350/15 (see the following decisions: 1 - of 17 December 2014, handed down in case n.º 1085/13, published in the Appendix to the Official Journal of 15 January 2016 (http://www.dre.pt/pdfgratisac/2014/32240.pdf), pages 4249 to 4252, also available at http://www.dgsi.pt/jsta.nsf/35fbbbf22e1bb1e680256f8e003ea931/bdbf686acbd6970380257dc6005569fb; 2 - of 11 November 2015, handed down in case n.º 968/13, not yet published in the official journal, available at http://www.dgsi.pt/jsta.nsf/35fbbbf22e1bb1e680256f8e003ea931/8641778b75f387b380257efc005b1e99; 3 - of 18 November 2015, handed down in case n.º 575/15, not yet published in the official journal, available at http://www.dgsi.pt/jsta.nsf/35fbbbf22e1bb1e680256f8e003ea931/dfc2214b865a8eb680257f07003bc47d; 4 - of 18 November 2015, handed down in case n.º 1076/15, not yet published in the official journal, available at http://www.dgsi.pt/jsta.nsf/35fbbbf22e1bb1e680256f8e003ea931/6584532b3466938c80257f07004e7be1).
This Decision fundamentally follows what was decided in the decision of the STA of 30 May 2012, case n.º 0949/11, referring to it and proceeding with the respective transcription in the following terms:
"The Public Treasury disagrees with what was decided, alleging that the prerequisites for meeting the requirements that determine the obtaining of the exemption benefit were not fulfilled by the acquirer, since it did not acquire the company or establishment thereof and that the provisions in article 270.º, n.º 2 of CIRE, even through extensive interpretation, do not contemplate the pure and simple sale of elements of the company's assets.
However, the appellant provides no reason that would shake our conviction that the appealed judgment rightly ruled by adopting the interpretation of article 270.º, n.º 2 of CIRE which has been peacefully and repeatedly adopted by this STA since the Decision mentioned in the appealed judgment – see beyond the decisions already cited in the opinion of the Most Excellent Attorney General beside this STA above transcribed, the recent Decisions of 11 November 2015, case n.º 0968/13 and of 18 November 2015, cases n.ºs 0575/15 and 1067/15 –, it not being the fact that the AT has of the provision an interpretation that is not in conformity with the jurisprudence of the STA – which will have, moreover, noted in a recent information 1/2014 of DSIMT and provided to the Bar Association (as stated in the appeal submissions at pages 67, verso and 68 of the file) -, a reason to postpone the understanding which has been adopted and is reaffirmed here, since it constitutes what best adapts the legal text to the sense and scope of the legislative authorization under which the rule was issued by the Government in a matter reserved to Parliament and because that interpretation is what best serves the teleology of n.º 2 of article 270.º of CIRE - «to promote and support the quick sale of assets that make up the insolvent estate for obvious reasons of creditor interest, but also of public interest in the resumption of normal functioning of the business world in which each insolvency process presents itself as a disturbing element», giving tax incentives to those who acquire the immovable property that make up the insolvent estate and that will be sold in the liquidation phase – there being no, in that light, reason to distinguish situations where the company is being sold as a whole with all its assets and liabilities, from situations where one or more of the commercial establishments that comprised it are being sold, or where immovable property that formed part of its assets are being sold (see the Decision of the STA of 18 November last, case n.º 01067/15).
It is concluded, therefore, that there is nothing to censure in the appealed judgment which rightly ruled, the appeal of the Public Treasury being doomed to fail".
N.º 2 of article 270.º of CIRE is a rule of a tax nature that establishes a tax benefit.
As already stated, the interpretation of tax rules is subject to the general rules and principles of interpretation of laws, in particular article 9.º of the Civil Code (n.º 1 of article 11.º of the General Tax Law).
Consequently, to fix the sense of n.º 2 of article 270.º of CIRE, the interpreter must seek to "reconstruct from the texts the legislative thinking, taking above all into account the unity of the legal system, the circumstances in which the law was elaborated and the specific conditions of the time in which it is applied". Let us see then.
As regards the literal element, it is to be noted that, when the Legislator, in article 270.º, n.º 2 of CIRE, refers to "acts of sale, exchange or transfer of the company or of establishments thereof", does it intend that the expressions "sale", "exchange" and "transfer" all refer to the company or establishment? Will the Legislator intend to exempt from IMT only (i) acts of sale of the company or of establishments thereof, (ii) acts of exchange of the company or of establishments thereof and (iii) acts of transfer of the company or of establishments thereof?
Or, on the contrary, does the law establish any relationship between the expressions "sale" and "exchange" and the expressions "company" and "establishments thereof"? Will the Legislator intend that the acts of "sale" and "exchange" to which article 270.º, n.º 2 of CIRE refers relate to sales and exchanges of any immovable property and not just to sales and exchanges of companies or establishments?
Indeed, if "sale", "exchange" and "transfer" all referred to the company or to establishments thereof, then the Legislator would have incurred in a manifest repetition, in that at least it would be redundant to use in the same sentence the expressions "sale" and "transfer".
In this regard, it should be recalled that, in the context of an insolvency process, the insolvent estate cannot perform gratuitous acts as this would prejudice the patrimonial interests of creditors).
Accordingly, when the law speaks of transfer of the company or of the establishment, it is, by definition, referring to an onerous transfer of a right (more precisely, of the ownership of the company or of the establishment).
Furthermore, as is known, the rules of interpretation require that a useful sense be found for the words of the Legislator, it being presumed, moreover, that the same knew how to express itself adequately (article 9.º, n.º 3 of the Civil Code).
By what can be drawn from the text of the law, the expression "sale" has a certain useful sense, quite distinct from the expression "transfer". Both expressions apply to distinct realities, ceasing to exist any redundancy or overlap.
Historical Element — The Origin of the IMT Exemption Provided for in n.º 2 of Article 270.º of CIRE
The Code of Special Proceedings for Business Recovery and Bankruptcy (hereinafter, "CPEREF"), the instrument that preceded CIRE, was guided by the principle of the primacy of the recovery of the debtor company, as can be read in its preamble that "the present instrument affirms, in categorical terms, the priority of the recovery regime over the bankruptcy proceedings leading to the definitive extinction of the debtor company". Bankruptcy should only be declared when the failed company proved to be "economically unviable" or it was not considered possible "its financial recovery" (article 1.º, n.º 2, of CPEREF).
By Law n.º 39/2003, of 22 August, the Government was authorized to legislate on the insolvency of natural and legal persons, repealing CPEREF. The new law should place emphasis on the satisfaction of creditors, whether through the liquidation of patrimony or through an insolvency plan (article 1.º, n.º 2, of Law n.º 39/2003).
As regards tax benefits, n.º 3 of article 9.º of Law n.º 39/2003 authorized the Government "to exempt from municipal sisa tax the following transfers of immovable property, integrated in any insolvency plan or payment plan or carried out within the framework of the liquidation of the insolvent estate: (...) those which arise (...) from the sale, exchange or transfer of the company, establishments or elements of its assets (...)".
Law n.º 39/2003 — apparently more generous than CPEREF, precisely because it deemed the route of an insolvency plan and the route of liquidation of the insolvent estate as valid alternatives to ensure the satisfaction of creditors — did not restrict the exemption from taxation to transfers of immovable property that could take place in a context of company recovery. Instead, that exemption was extended to transfers that took place in a context of liquidation of the insolvent company or of its establishments, or elements of its assets.
The tax benefits provided for in CPEREF were transposed to CIRE, with the important difference that they ceased to apply only within the scope of company recovery measures and came to apply also within the scope of the liquidation of assets, following the provisions of the authorizing law - Law n.º 39/2003.
By which no foundation is foreseen for defending that the tax benefit provided for in n.º 2 of article 270.º of CIRE only covers the transfer of immovable property together with the company or with the establishment of which they form part, when CPEREF admitted that exemption to the transfer also of elements of the assets of the company or establishment, and the new regime intends to be more advantageous in the possibilities offered for the recovery of insolvent companies.
Teleological Element — the Rationale of the IMT Exemption Provided for in n.º 2 of Article 270.º of CIRE.
The legislator recognizes that, in the insolvency process, it is not only the insolvent company that is at stake. The financial soundness and, in the limit, the very survival of creditor companies is also at risk, because their capacity to absorb the losses resulting from the insolvency of the debtor is far from being unlimited.
It is the need to minimize the repercussion of the debtor's insolvency on the patrimonial and financial situation of the creditors — avoiding, in the limit, situations of chain insolvency — that leads the Legislator to elect the satisfaction of creditors as the primary objective of the insolvency process. It is, in essence, protecting sound economic agents from the contagion of disease, in the interest not only of the economic agents themselves but also of the community at large.
Accordingly, because what is always at issue is the maximization of creditor satisfaction, the tax benefit provided for in n.º 2 of article 270.º of CIRE should apply indifferently to all onerous transfers of immovable property, whether they take place together or separately from the company or the establishment of which the said immovable property form part.
Moreover, it is incumbent upon the interpreter to presume that the Legislator is coherent in the solutions it adopts for similar problems and that they obey a unitary thinking (19).
Now, beyond the IMT exemption provided for in n.º 2 of article 270.º of CIRE, this instrument also establishes other tax benefits applicable to onerous transfers of immovable property that take place within the scope of the insolvency process. This is notably the case of the stamp duty exemption provided for in subparagraphs d) and e) of article 269.º of CIRE and the IMT exemption provided for in n.º 1 of article 270.º of the same instrument.
The fact is that both the stamp duty exemption and the IMT exemption provided for in n.º 1 of article 270.º of CIRE cover (incontestably) both the transfer of immovable property effected together with the company or establishment of which they form part, and the isolated transfer of immovable property, separately from the company or establishment that they comprise.
Being thus, the interpretation according to which the IMT exemption provided for in n.º 2 of article 270.º of CIRE only covers the transfer of immovable property when effected together with the company or establishment of which they form part also does not withstand the test of coherence or harmony of the legal order.
Therefore, it is to be concluded that the interpretative elements available, including the «circumstances in which the law was elaborated and the specific conditions of the time in which it is applied», point clearly towards the sense that it was intended to cover within the scope of the exemption of n.º 2 of article 270º of CIRE, both the transfer of immovable property effected together with the company or establishment of which they form part, and the isolated transfer of immovable property, separately from the company or establishment that they comprise.
This solution, sustained and widely accompanied by jurisprudence of the STA and also more recently of CAAD is the one we follow, and should also be adopted in the present proceedings, by embodying a correct interpretation of the law, ...".
By which the request for arbitral pronouncement can only proceed.
Even if this were not so, the issuance of the DUC at zero rate by the AT establishes the implicit recognition of the exemption and is, in our better opinion, constitutive of rights, thus subject to the discipline of the final part of n.º 4 of article 14º of the EBF and n.º 1 of article 141º of the CPA (old) and of the decision of the STA of 15.05.2013 (case 0566/12, at www.dgsi.pt). And given that it was conferred through a procedure generically provided for in subparagraph d) of n.º 1 of article 54º of the LGT (first part) it should be rejected by the inverse procedural route (of extinction of the benefit) and autonomous, provided for in the second part of this rule, since there does not exist procedural contemporaneity between the date of the act of additional IMT assessment (on 29.10.2015) and the date of application of the exempting rule (on 17.10.2012) on the occasion of the verification of the tax event (the acquisition of the immovable property).
Furthermore, the AT did not even invoke, for the additional assessment, "error of fact or law" (n.º 2 of article 31º of CIMT).
REQUEST FOR INTEREST
The following was proven: "The Claimants paid the assessed IMT, in the amount of € 16,150.38, on 29/03/2016, including interest – article 5.5 of the AT's response, article 6º of the request for pronouncement and document n.º 4 attached to the request for pronouncement".
Article 43.º, n.º 1, of the LGT establishes that «compensatory interest is due when it is determined, in gracious reclamation or judicial challenge, that there was error imputable to the services which resulted in payment of the tax debt in an amount greater than that legally due».
As results from the literal content of this rule, the right to compensatory interest depends on «payment of the tax debt in an amount greater than that legally due».
In the case, the Claimants bore € 16,150.38, by which the annulment of the assessment, in addition to the duty of reimbursement, may result in the payment of compensatory interest, if error imputable to the AT services in the assessment has occurred.
N.º 2 of article 43º of the LGT states that error imputable to the services is deemed to exist in cases where, although the assessment is carried out on the basis of the taxpayer's declaration, the taxpayer has followed, in its preparation, the generic guidelines of the tax administration, duly published.
This was the case, the taxpayers paid the debt assessed within the framework of a notification made to them by the AT (which is equivalent to a generic guideline of the AT), in dissonance with their positions.
Consequently, the Claimants are entitled to compensatory interest, counted in accordance with article 43.º, n.º 1, of the LGT and 61.º of CPPT from the date on which they made the said payment, until actual reimbursement.
V. RULING
In accordance with and for the reasons stated above:
- The request for annulment of the additional IMT assessment contained in the DUC..., dated 29.03.2016, in the amount of 16,150.38 euros, resulting from the tax event consisting of the acquisition of full ownership rights over the urban property located at ..., Rua ..., ..., Lot/dwelling ..., ... – ... ...-..., registered in the matrix under article ..., parish and municipality of ..., is deemed well-founded, as it is not in accordance with the rule contained in n.º 2 of article 270º of CIRE in the interpretation advocated above.
- The request for condemnation of the AT to pay compensatory interest, counted from the date of payment of the IMT and interest until the date of restitution, is deemed well-founded.
Value of the case: in accordance with the provisions of article 3.º, n.º 2, of the Regulation of Costs in Tax Arbitration Proceedings (and subparagraph a) of n.º 1 of article 97ºA of CPPT), the case is assigned the value of 16,150.380 euros.
Costs: in accordance with the provisions of article 22.º, n.º 4, of RJAT, the amount of costs is fixed at 1,224.00 € according to Table I attached to the Regulation of Costs in Tax Arbitration Proceedings, at the charge of the Respondent.
Notify.
Lisbon, 21 November 2016
Singular Arbitral Tribunal (TAS),
Text prepared by computer in accordance with the provisions of article 131.º, n.º 5, of CPC, applicable by reference to article 29.º of RJAT.
The writing of this decision is governed by the spelling rules prior to the Orthographic Agreement of 1990.
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