IMI Exemption for Alto Douro Wine Region UNESCO World Heritage Site – CAAD Case 264/2018-T

ARBITRAL DECISION

I – REPORT

A..., SA, legal entity no. ..., with registered office at Rua ..., no. ..., ..., hereinafter referred to as the "Claimant", filed a request for constitution of an Arbitral Tribunal, pursuant to the provisions of Article 2, paragraph 1, subparagraph a) and Article 10, of Decree-Law no. 10/2011, of 20 January (RJAT), to challenge the Order dismissing the Administrative Complaint, issued on 20/02/2018, concerning the assessment of Municipal Property Tax (IMI) and the respective underlying assessments, in the total amount of €4,357.29.

The request for constitution of the Arbitral Tribunal was filed by the Claimant on 24-05-2018, was accepted by the Esteemed President of CAAD and notified to the AT on 29-05-2018, in accordance with the legally prescribed terms and conditions. The Claimant chose not to appoint an arbitrator, and therefore, in accordance with the provisions of subparagraph a) of paragraph 2 of Article 6 and subparagraph b) of paragraph 1 of Article 11 of the RJAT, as amended by Article 228 of Law no. 66-B/2012, of 31 December, the Deontological Council appointed on 12-07-2018 the undersigned as arbitrator of the arbitral tribunal to be constituted, who communicated her acceptance within the applicable deadline.

The singular arbitral tribunal was constituted on 01-08-2018. On the same date, an arbitral order was issued requiring the Tax and Customs Authority (AT) to submit a response within the legal deadline, in accordance with the provisions of paragraphs 1 and 2 of Article 17 of the RJAT. The Respondent submitted its response and the respective Administrative File (PA) on 28-09-2018, the contents of which are hereby deemed fully incorporated herein.

In light of the positions of the parties as evidenced in the pleadings, and considering the testimony evidence indicated by the Claimant, an arbitral order was issued on 23/10/2018 dispensing with the holding of the meeting provided for in Article 18 of the RJAT, setting a period of 15 days, equal and successive, for the parties to submit their arguments. The Claimant submitted its arguments on 13-11-2018 and the Respondent on 14-11-2018. On 16-01-2019, the Tribunal issued an arbitral order ruling on the motion filed by the Respondent on 25-10-2018, which is hereby deemed incorporated herein. In this order, the Tribunal set a new date for issuance of the arbitral decision (initially set for 21-01-2019), extending the deadline by a further 30 days, in accordance with the provisions of paragraphs 1 and 2 of the RJAT.

B) REGARDING THE REQUEST FILED AND THE CLAIMANT'S POSITION:

In summary, the Claimant grounds its arbitral request on the illegality of the tax acts performed, considering that the properties described in the respective tax assessments are an integral part of the Douro Valley Wine Region, considered as a UNESCO World Heritage site – as confirmed by Notice no. 15170/2010, published in the Official Journal, Second Series No. 147 of 30 July 2010 – as well as the certificates issued by the Regional Directorate of Culture North, all attached to the arbitral file as documents annexed to the arbitral request (PA).

From the Claimant's perspective, such properties, being integrated into the Douro Valley Wine Region, which, in turn, was recognized as a UNESCO World Heritage site, should be classified as national monuments, in accordance with the interpretation which, in its view, results from the provisions of paragraphs 3 and 7 of Article 15 of Law 107/2001, of 8 September. Thus, according to the Claimant, as the properties are national monuments, they are exempt from IMI, pursuant to the provisions set forth in Article 44, paragraph 1, subparagraph n), of the EBF. Accordingly, it concludes that the dismissal of the Administrative Complaint is illegal, as are the IMI assessments challenged herein.

C – REGARDING THE RESPONDENT'S ANSWER

In its response, the AT argues for the legality of all the challenged tax acts. In summary, the AT submits that the fact that the aforementioned properties are located within the Douro Valley Wine Region cannot, without more, mean that they should be considered as national monuments, for the purposes sought by the Claimant, thereby exempting them from IMI. It grounds its position in an extensive Response which is hereby deemed fully incorporated herein. It concludes by arguing for the maintenance in the legal order of all the challenged tax assessment acts.

II - PROCEDURAL REQUIREMENTS

The Arbitral Tribunal is regularly constituted. The Parties enjoy legal personality and capacity, are legitimate and are legally represented (cf. Articles 4 and 10, paragraph 2 of the RJAT and Article 1 of Ordinance no. 112/2011, of 22 March).

The process is not afflicted with defects that would invalidate it.

It remains to decide.

III – DECISION ON MATTERS OF FACT

Proven Facts

1. As relevant matters of fact, this Tribunal hereby establishes the following facts as proven:

The Claimant A... SA is the owner of a set of properties located in the Douro Valley Wine Region, hereinafter identified, described by property register number, parish and respective IMI value:

The Claimant was notified of the IMI assessments relating to the year 2016, with reference to each of the aforementioned properties, totalling the global amount of €4,357.29.

On 12/07/2017, the Claimant filed an Administrative Complaint against the aforementioned IMI assessment acts, which was dismissed by an order of the Finance Director of ..., dated 20/02/2018.

The aforementioned properties are part of the Douro Valley Wine Region considered as a UNESCO World Heritage site, as confirmed by notice no. 15170/2010, published in the Official Journal, Second Series, No. 147 of 30 July 2010.

The Claimant paid the IMI values corresponding to each of the challenged assessments.

On 24-05-2018, the Claimant proceeded to file the present arbitral request.

UNPROVEN FACTS

There are no other facts relevant to the decision that should be considered as unproven.

SUBSTANTIATION OF PROVEN FACTS

1. The Tribunal need not rule on all details of the matters of fact alleged by the parties, and it is incumbent upon it to select the facts relevant to the decision and to discriminate the matter it finds to be proven and to declare that which it considers unproven (cf. Article 123, paragraph 2 of the CPPT and Article 607, paragraph 3 of the CPC, applicable by virtue of Article 29, paragraph 1, subparagraphs a) and e), of the RJAT). In the present case, the matters of fact are extremely straightforward, are sustained by the documents attached to the file by the Claimant, by the PA submitted by the Respondent, and do not appear to be contested.

Accordingly, having regard to the positions taken by the parties, in light of Article 110, paragraph 7 of the CPPT, the documentary evidence attached to the file by the Claimant and that contained in the Administrative File itself, the facts enumerated above were found to be proven as relevant to the decision.

IV – DECISION ON MATTERS OF LAW

The present request for arbitral ruling addresses a single issue to be decided, which is whether the properties in question, by virtue of being integrated into the Douro Valley Wine Region, recognized as a UNESCO World Heritage site, benefit from IMI exemption or not.

According to the Claimant, the properties in question, by virtue of their integration into the Region classified as World Heritage, are classified as national monuments, in accordance with the combined interpretation of paragraphs 3 and 7 of Article 15 of Law 107/2001, of 8 September. As national monuments, the Claimant alleges, the properties are exempt from IMI, pursuant to the provisions set forth in Article 44, paragraph 1, subparagraph n) of the EBF.

The Respondent AT holds a different view, and considers that the properties in question are not national monuments, as the Claimant claims, since the recognition of a Region or city as World Heritage does not equate to recognizing all properties located in the region as national monuments. In the AT's view, the exemption provided for in Article 44, paragraph 1, subparagraph n) of the EBF presupposes that the property in question has been individually classified as a national monument. It develops a set of arguments around this interpretation, concluding that all the challenged tax assessment acts are legal, based on error in the legal prerequisites and consequent violation of law.

The issue to be decided is, therefore, exclusively a matter of law, and the dispute between the parties is based on a different interpretation of the applicable legal provisions. Let us examine whether the Claimant's position is correct.

Before, however, addressing the issue to be decided, it is important to resolve an incidental matter raised by the Claimant in its arguments, by invoking the impossibility of ex post facto substantiation by the AT, considering that in the Response submitted by the Respondent new arguments were invoked that do not appear in the order dismissing the administrative complaint.

On this matter, it should be clarified that the AT has the right of reply, as indeed results from the RJAT. While it is true that the exercise of the right of reply should not be used to overcome deficiencies in the substantiation of the challenged act(s), the AT's right of reply should not be limited, and it may, in defense of the act, raise the arguments it deems most appropriate, in accordance with the procedural rules in force.

In the present case, there is no defect of substantiation of the challenged acts, but rather the sole defect alleged in the arbitral request, which is the violation of law due to error regarding the legal prerequisites. The AT may and should exercise its legitimate right of reply, invoking and developing the arguments it considers most appropriate in defending the act(s), in accordance with the provisions of arbitral and tax procedural law. Accordingly, the issue of the inadmissibility of ex post facto substantiation, being settled, does not arise in the present case, in the manner alleged by the Claimant.

Having addressed this, we turn to the core issue to be decided, which is the alleged illegality of the challenged tax acts.

The incidence of IMI can only be ruled out in the face of the existence of some tax benefit of an objective or subjective nature. In accordance with Article 2 of the EBF, "tax benefits are considered to be measures of an exceptional character instituted for the protection of relevant extrafiscal public interests that are superior to the taxation itself which they prevent."

Article 44, paragraph 1, subparagraph n) of the Tax Benefits Statute provides:

"Exempt from municipal property tax are:
(...)
n) Properties classified as national monuments and properties individually classified as being of public interest or municipal interest, in accordance with the applicable legislation."

From this article, it follows that, in the first place, properties classified as national monuments are exempt from municipal property tax. Secondly, properties individually classified as being of public or municipal interest are exempt from the same tax.

It is also relevant to the decision to consider the regime under the Cultural Heritage Law, Law 107/2001, of 8 September (LPC), in particular Article 15 thereof, which provides:

"1 – Immovable property may belong to the categories of monument, ensemble or site, as defined in international law, and movable property, among others, to the categories indicated in Title VII.

2 – Movable and immovable property may be classified as being of national interest, public interest or municipal interest.

3 – For immovable property classified as being of national interest, whether monuments, ensembles or sites, the designation 'national monument' shall be adopted, and for movable property classified as being of national interest the designation 'national treasure' is created.

4 – Property is considered to be of national interest when its protection and enhancement, in whole or in part, represents a cultural value of significance to the Nation.

(...)

7 – Immovable cultural property included in the World Heritage List shall be integrated, for all purposes and in its respective category, into the list of property classified as being of national interest."

This formulation is further reiterated in Article 2 of Decree-Law 309/2009. In addition, Article 3, paragraph 1, of the same Decree-Law provides that: "an immovable property may be qualified as being of national interest, public interest or municipal interest", with paragraph 3 adding that "the designation 'national monument' is attributed to immovable property classified as being of national interest, whether monuments, ensembles or sites."

The legal regime resulting from the diplomas in force that regulate cultural heritage in Portugal is thus set forth, which appears to be relevant and sufficient for the decision of the case at hand.

Accordingly, in the present case, we are dealing with a set of properties (land parcels) that form part of the Douro Valley Wine Region, considered as a UNESCO World Heritage site, which was inscribed in the UNESCO World Heritage List, as declared by Notice no. 15170/2010, published in the Official Journal, Second Series No. 147 of 30 July 2010. The Respondent itself is aware of this, and in Article 178 of its response transcribes the said List.

It is, therefore, a region recognized as world heritage by UNESCO, but immediately recognized in the internal legal order, as clearly results from the notice published in the Official Journal. Accordingly, it makes no sense for the respondent's allegations in its response regarding this matter, calling into question the effects resulting from international recognition, it being certain that the same was also recognized by the internal legal order. Moreover, the Portuguese legislator has had many opportunities to adjust the internal legal regime, modifying it if deemed necessary. However, as we have seen, it did not alter the regime regarding IMI, from which it can be concluded that deliberately and consciously the legislator maintained recognition of the exemption regarding IMI.

Thus, in accordance with what has been set forth, the provision in paragraph 7 of Article 15 of Law 107/2001 is unequivocal when it expressly states that "immovable cultural property included in the world heritage list shall be integrated, for all purposes and in its respective category, into the list of property classified as being of national interest."

This is the case with the Douro Valley Wine Region and the properties that form part of it, for in light of the regime resulting from Law 107/2001, the properties in question are "of national interest," and are consequently classified as national monuments. And, as has already been stated, it results from Article 15 of Law 107/2001 and Article 3 of Decree-Law 309/2009 that property classified as being of national interest is designated as a "national monument," regardless of whether it is a single building, ensemble or site, it being clear that the immovable properties that make up the ensemble or site are covered by such classification.

As the Claimant rightly alleges, from this legal regime it follows that classification as a national monument is independent of whether it is a single building, ensemble or site. The fact that individually classified properties may coexist, in the case of delineation of an ensemble or site, in accordance with Article 56 of Decree-Law 309/2009, is only provisionally relevant to delineate the protection zone of that property until publication of the classification of the ensemble or site. This explains why Article 44 of the Tax Benefits Statute distinguishes between "property classified as a national monument" and "property individually classified as being of public or municipal interest," requiring individualization only in relation to these latter two categories, not to those of property of national interest.

In the case of properties that form part of the Douro Valley Wine Region, we are thus dealing with the first case, namely, property classified as a national monument.

However, the Respondent advocates a restrictive interpretation of the provisions in question, as clearly appears from the lengthy exposition of arguments it developed in its response. Indeed, some authors such as Casalta Nabais or Nuno Sá Gomes have advocated a restrictive interpretation of exemptions for property classified with the intention of excluding from benefits granted regarding IMI or IMT all situations in which an individual procedure or act of classification as a national monument, property of public or municipal interest has not occurred. The legislator, with the intention of following the position of these authors, promoted an amendment to subparagraph g) of Article 6 of the IMT Code, by Law 55-A/2010, of 31 December, resulting in the exemption ceasing to cover "acquisitions of property classified as being of national, public or municipal interest, under Law no. 107/2001, of 8 September" to cover only "acquisitions of property individually classified as being of national, public or municipal interest, in accordance with applicable legislation."

However, the legislator did not simultaneously amend the tax benefits regarding IMI, despite having modified the wording of Article 44 itself of the EBF, with its subparagraph n) continuing to require individual classification for granting the exemption only in the case of property of public or municipal interest, but making no similar requirement for national monuments.

It should also be noted that the provision in paragraph 5 of Article 44 in the wording given to it by Law 3-B/2010, of 28 April, expressly provides that "the exemption referred to in subparagraph n) of paragraph 1 is of an automatic character, operating by means of notification of the classification as national monuments or individual classification as property of public or municipal interest (…)."

It thus clearly results that the legislator's intention was to dispense with individual classification of each property for purposes of IMI exemption for national monuments, requiring it only in relation to property of public or municipal interest.

The understanding set forth above has been corroborated by arbitral jurisprudence, almost unanimously, with the exception of the arbitral decision attached to the file by the Respondent, issued in process no. 5/2018-T, although with factual circumstances different from those now before us. In the various arbitral proceedings that have decided matters similar to those of the present case, the understanding has been precisely in line with what is set forth here. See, among others, the arbitral decisions issued in arbitral processes nos. 325/2014-T, of 8-11-2014; no. 76/2015 – T, of 16-11-2015; no. 33/2016 – T of 9-6-2016; nos. 98/2016-T and 379/2016-T, of 7-12-2006.

Moreover, with manifest relevance for the decision of the case under analysis, there is recent jurisprudence from our higher courts, from which we highlight the Decision of the TCAN of 04-05-2017, issued in process no. 01480/14.2 BEPRT, of 4-05-2017, and in the Decision of the STA, of 12-12-2018, issued in Proc. no. 0134/14.4, in which a question similar to that of the present case was specifically addressed, concerning the Douro Valley Wine Region. In this Decision, the appeal brought by the AT, with arguments entirely similar to those it invoked in the present case, including questions relating to the alleged unconstitutionality, was dismissed, confirming the decision of the TCAN decision that had recognized the IMI exemption for properties located in the region. We highlight from the said Decision issued unanimously by the tax litigation section of the STA, the following regarding the AT's allegation:

"(…) If the jurisprudence of the appealed decision is to be maintained, every single property situated within any Ensemble or Cultural Landscape is, solely and exclusively by that fact, individually classified and, as such, exempt from IMI;

The issue is to establish jurisprudence regarding the interpretation to be given to Article 44°/1-n) EBF, in conjunction with Article 15° of the LBPC, with Decree-Law 309/2009, of 23 October, and with Article 2° of CIMI;

There is no uniform jurisprudence on this matter, either in the administrative-fiscal jurisdiction or in arbitral jurisdiction.

It being certain, however, that the understanding conveyed in the appealed TCAN decision goes against the most relevant doctrine produced on this matter, namely: JOSÉ CASALTA NABAIS, NUNO SÁ GOMES, CARLOS PAIVA and MÁRIO JANUÁRIO and the Directorate-General of Cultural Heritage itself; (…)

In light of the foregoing, it must be concluded that there are different currents of jurisprudence, creating great uncertainty and instability, which alone merits the intervention of the apex organ of fiscal justice as a condition to dispel doubts that may affect a broad range of interested parties;

Accordingly, the present Review Appeal is grounded on the violation of substantive law applicable to the case at hand, violation arising from: (i) the disregard of the historical element of interpretation; (ii) the confusion of the concepts of Classification and Designation under the LBPC; (iii) the absence of convertibility between the classifications set forth in Decree 20.985 of 1932 and the classifications set forth in the LBPC; (iv) the overlooking of the fact that the tax benefit in question is based on the fiscal concept of property; and (v) the disregard of the unity of the legal system;

(…)

Having analyzed the evolution of the concept of Classification throughout the successive national cultural heritage laws during the twentieth century, it is verified that: (a) in the Constitutional Monarchy a single classification level was provided for (National Monument); (b) in the First Republic two classification levels were provided for (National Monument and Property of Public Interest); (c) in the Estado Novo three classification levels were provided for (National Monument, Property of Public Interest and Municipal Value); (d) at the beginning of the Third Republic the concept of Category was introduced and the classification levels expanded, though they were never applied because Law 13/85 was not regulated; and (e) throughout the Third Republic and until the emergence of the LBPC the classification levels created by the Estado Novo continued to be applied;

The undeniable technicality of Cultural Heritage Law led the trial court to incur in several confusions, notably the indiscriminate use of completely distinct legal-patrimonial concepts, such as Category, Classification and Designation, which is why it alleges that the Historic Centre of Porto is classified as a National Monument;

(…)

In stating that the Historic Centre of Porto is Classified as a National Monument, the trial court erred in analysis, in that: (a) it confused the current concepts of Classification and Designation; and (b) it confused the concept of Designation introduced by the LBPC with the concept of Classification level as National Monument that was in force between the beginning of the validity of Decree 20.985 of 1932 and the entry into force of the LBPC;

(…) The inscription of the Historic Centre of Porto in the "World Heritage List" was not preceded by any administrative procedure aiming at an act of classification, since: (a) the UNESCO Cultural Heritage Committee does not form part of the Portuguese Public Administration; (b) the Portuguese State did not delegate to the UNESCO Cultural Heritage Committee the performance of an administrative procedure to classify the Historic Centre of Porto; (c) the Portuguese State never opened any administrative procedure to classify prior to the candidacy of the Historic Centre of Porto for inscription on the "World Heritage List";

(…) The first segment of Article 44°/1-n) of the EBF refers to property classified as National Monuments under the Estado Novo laws that preceded the LBPC, since these laws (given the absence of regulation of Law 13/85) only provided for three possible classifications (National Monument, Property of Public Interest and Municipal Value);

The 1st segment of Article 44°/1-n) of the EBF refers to the classification of National Monument that was in force in our legal order upon the entry into force of the LBPC, a Classification that cannot be confused with the concept of Designation of National Monument set forth, for what is relevant here, in Articles 15°/3 and 15°/7 of the LBPC;

Even if it were otherwise, the trial court would remain without grounds, as the concept of Ensemble contained in Article 1° of the UNESCO Convention of 1972 admits that within the latter there may exist immovable property devoid of cultural value, which is why the interpretation that all properties situated within an "ensemble" are, solely by that fact, exempt from IMI is abusive;

This is, moreover, the understanding subscribed by the Directorate General of Cultural Heritage itself (which thus contradicts the erroneous understanding conveyed in the certificates issued by the Regional Delegation), which states that «(...) being a classification in which the category of "Ensemble" was chosen, it is neither legitimate nor legally possible to conclude that the properties covered thereby are individually classified»;

(…) The interpretation proposed by the trial court is an interpretation that offends the fundamental principle of tax equality, in that, while the owner of urban properties located within the so-called Historic Centre of Porto and devoid of individual cultural value, the Appellant seeks to be privileged, without justifiable reason, relative to other owners of non-classified property;

The interpretation given by the trial court further represents a violation of the principle of fiscal justice, as there is not a fair allocation of the fiscal burden between, on the one hand, the owner of a property devoid of individual cultural value and, on the other, the owner of a property individually classified, whose rights of disposition, transformation and enjoyment are different from the holder of a non-individually classified property;

The interpretation given by the trial court is offensive to the principle of contributive capacity, as the Appellant, as owner of urban properties devoid of individual cultural value, seeks to enjoy a tax exemption intended to benefit owners of properties that actually have cultural value and who are subject to financial charges and more burdensome bureaucratic procedures than owners of recently constructed properties, that is, the grant of the fiscal benefit in question to the Appellant would result in an incomprehensible fiscal saving relative to the impoverishment to which owners of true properties endowed with cultural heritage value are subject;

The interpretation given by the Trial court also violates the principle of local autonomy, in that it results in the grant of a fiscal benefit without any criteria, with obvious prejudice to municipal revenues, since IMI is a municipal tax and reverts to the benefit of the municipalities where the properties are located;

In light of this allegation, whose excerpts demonstrate almost complete similarity with that alleged in the present case by the AT, the STA decided that:

"Exempt from municipal property tax are properties designated as national monuments in accordance with Article 44°, paragraph 1, subparagraph n) of the Tax Benefits Statute."

In the reasons substantiating this STA Decision, the following should be highlighted:

"Art. 40°, para. 1, subpara. n) (current Art. 44°) of the Tax Benefits Statute, in the wording prior to that given to it by Law no. 53-A/2006, of 29/12 established the possibility that the following could benefit from the exemption from Municipal Property Tax (IMI): "Properties classified as national monuments or property of public interest and likewise those classified as property of municipal value or as cultural heritage, in accordance with applicable legislation."

Based on this provision has Your Excellency been benefiting from the IMI exemption for the following identified properties…

However, the aforementioned Law no. 53-A/2006, of 29/12, amending the said provision, established that only the following could benefit from the IMI exemption: "Properties classified as national monuments and property individually classified as being of public interest, of municipal value or cultural heritage, in accordance with applicable legislation".

It is thus verified that, after the entry into force of that statute (2007.01.01), a new textual element was introduced in the same provision, namely individual classification of the property, which, by constituting an alteration of the prerequisites that permitted recognition of the exemption, determines the cessation of the benefit previously enjoyed, imposing restoration of taxation and, consequently, assessment of the tax owing…".

As one can easily see from reading the content of this notice, the AT understood that the properties of the appellant were subject to the innovatory rules of the 2007 Budget and, in that measure, the exemption previously granted had ceased by operation of law since the said properties were not individually classified.

However, as we have seen, such understanding would only be correct if the appellant's properties, despite benefiting from the tax exemption, were not covered by a prior classification designated as a national monument.

On 12.11.2003, the appellant's request relating to exemption from Municipal Tax for both properties was granted, and exemption was granted for a period of 7996 years, to run between 2004 and 9999 inclusive, that is, exemption was granted for an unlimited period, provided the prerequisites of the exemption granted were maintained.

As such exemption was granted on the basis that the said properties were located within the Historic Centre of Porto which forms part of the world heritage list and, therefore, are located within the group designated as national monuments, cf. points 1 and 2 of the matter of fact and Article 15°, nos. 3 and 7 of Law no. 107/2001, of 08.09, they did not require, in light of the "new" wording of Article 40°, para. 1, subpara. n) of the EBF, or subsequently, any individual classification, which is why, in that measure, the tax act performed is unjustified.

Indeed, such act, by not respecting the exact terms of the Law on which it was based, did not constitute a mere act communicating the cessation of the exemption by operation of law, but rather constituted a true act of revocation without legal basis."

In these terms, and without need for further development, we can affirm that the arbitral jurisprudence cited here is in compliance with the jurisprudence of our higher courts, whether of the Central Administrative Courts or of the Supreme Administrative Court. As was made clear in the excerpt from the STA Decision transcribed, the understanding that we adopt is perfectly supported and aligned with the jurisprudence of our Supreme Administrative Court.

Accordingly, fully adhering to the above-cited jurisprudence, it is concluded in the present case that, as the properties in question are located within the Douro Valley Wine Region, a region recognized as World Heritage by UNESCO and legally qualified as a national monument, the said properties benefit from IMI exemption, and thus the challenged tax acts are illegal, namely the IMI assessments and the dismissal of the administrative complaint, and the tax indevidly collected and paid by the Claimant should be refunded.

REGARDING COMPENSATORY INTEREST

The Claimant paid the full amount of the IMI assessments issued that are now being annulled. Accordingly, it is entitled to be reimbursed for the amount paid. The Claimant has also requested payment of compensatory interest relating to the indevidly paid tax.

It indeed follows from Article 43 of the LGT and Article 61 of the CPPT that compensatory interest is due "where it is determined, in an administrative complaint or judicial challenge, that there was error attributable to the services resulting in payment of the tax debt in an amount exceeding that legally due."

It may further be understood that, as follows from paragraph 5 of Article 24 of the RJAT, the right to compensatory interest may be recognized in an arbitral process. It will be necessary, however, to determine whether or not there was error attributable to the services.

Now, the information regarding the inscription of the Douro Valley Wine Region is published in the Official Journal, as set forth above, and the Tax Administration has knowledge of this information. Furthermore, the law is clear regarding the determination of IMI exemption for monuments, ensembles or sites classified as "national monuments." Accordingly, we are facing an error attributable to the services, as provided for in Article 43 of the LGT. Taking into account what is established in Article 61 of the CPPT and having verified the existence of error attributable to the Tax Administration services, from which resulted payment of the indevidly owed tax debt (see Article 43, paragraph 1 of the LGT), we can understand that the Claimant is entitled to compensatory interest at the statutory rate, calculated on the amount requested and to be counted from the date of payment made until full reimbursement of that same amount.

Accordingly, the Claimant is entitled to compensatory interest, in accordance with paragraph 1 of Article 43 of the LGT and Article 61 of the CPPT. Compensatory interest is owed at the supplementary statutory rate, in accordance with Articles 43, paragraph 4, and 35, paragraph 10, of the LGT, Article 559 of the Civil Code and Ordinance no. 291/2003, of 8 April.

V. DECISION

In accordance with the foregoing, this Arbitral Tribunal decides:

To find all requests filed in the request for arbitral ruling to be well-founded and, in consequence, annul the challenged tax acts, including all the challenged IMI assessments;

To order the Respondent to reimburse the Claimant for the amount of €4,357.29 indevidly paid, plus interest accrued from the date of payment until the date of full payment of the reimbursement due.

To order the Respondent to pay the arbitral costs due.

VI. VALUE OF THE CASE

The value of the case is set at €4,357.29 in accordance with Article 97-A, paragraph 1, a), of the CPPT, applicable by virtue of subparagraphs a) and b) of paragraph 1 of Article 29 of the RJAT and paragraph 2 of Article 3 of the Regulation of Costs in Tax Arbitration Proceedings.

VII. COSTS

The arbitration fee is set at €612.00, in accordance with Table II of the Regulation of Costs in Tax Arbitration Proceedings, in accordance with Articles 12, paragraph 2, and 22, paragraph 4, both of the RJAT, and Article 5 of the said Regulation, to be paid by the unsuccessful party.

Let notification be made.

Lisbon, 21– 02 - 2019

The Singular Arbitral Tribunal,

(Maria do Rosário Anjos)