Stamp Tax on Usucapião Property Acquisition: CAAD Arbitral Decision 268/2017-T

Arbitral Decision

I. Report

1. Taxpayer A… (hereinafter referred to as "Claimant"), with tax identification number …, resident at …, Sesimbra, …-… …, filed, pursuant to the combined provisions of articles 2 and 10 of Decree-Law no. 10/2011 of 20 January, i.e., the Legal Framework for Arbitration in Tax Matters ("RJAT"), a request for the constitution of an Arbitral Tribunal in order for the rejection of the request for official revision of the official tax assessment of Stamp Duty ("IS"), identified by number …, to be declared illegal, and, additionally, for the respective IS assessment referred to above to be declared illegal, with the Tax and Customs Authority ("Respondent" or "AT") being the defendant.

A) Constitution of the Arbitral Tribunal

1. Pursuant to the provisions of subparagraph a) of article 6, paragraph 2, and subparagraph b) of article 11, paragraph 1, of the RJAT, the Ethics Council of the Administrative Arbitration Centre ("CAAD") appointed the undersigned as arbitrator of the singular tribunal, who communicated acceptance of the appointment within the applicable period, and notified the parties of this appointment on 12 June 2017.

2. Thus, in accordance with the provisions of subparagraph c) of article 11, paragraph 1, of the RJAT, and by means of the communication from the President of the Ethics Council of the CAAD, the Singular Arbitral Tribunal was constituted on 28 June 2017.

B) Procedural History

1. In the request for arbitral pronouncement, the Claimant petitioned both for the illegality of the rejection of the request for official revision of the IS tax assessment indicated above, and for the declaration of illegality of the respective assessment no. …, by reason of acquisition through adverse possession (usucapião) of an urban property intended for residence.

2. The AT submitted a response, petitioning for the dismissal of the request for arbitral pronouncement, on the grounds that there was no defect constituting a violation of law, and requesting that the tax act under analysis, as it did not violate any legal or constitutional provision, be maintained in the legal order.

3. By order of 18 October, the Singular Arbitral Tribunal, pursuant to the provisions of subparagraph c) of article 16 of the RJAT, decided, without opposition from the parties, that it was not necessary to hold the meeting referred to in article 18 of the RJAT, as a result of the simplicity of the issues at hand, as well as considering that it had at its disposal all the necessary elements to reach a clear and impartial decision.

4. In the same order, the parties were duly notified to proceed with their written submissions, whereupon,

5. The Claimant duly submitted its submissions on 26 October.

6. The Respondent submitted submissions in a timely manner, which do not warrant reference here, as it is considered that no new elements were added to the position already adopted in the Respondent's Response.

7. The present Arbitral Tribunal decided, in accordance with article 18, paragraph 2, of the RJAT, that oral arguments were not necessary, as the positions of the parties were perfectly defined in their respective pleadings, and set 30 November 2017 as the deadline for the arbitral decision.

8. The Arbitral Tribunal was regularly constituted and is competent to examine the issues indicated (article 2, paragraph 1, subparagraph a) of the RJAT), the parties have legal personality and capacity and have full standing (articles 4 and 10, paragraph 2 of the RJAT and article 1 of Regulation no. 112-A/2011 of 22 March). No nullities occur and no exceptions have been raised, such that nothing prevents a judgment on the merits.

9. The present case is thus in conditions for a final decision to be rendered.

II. Issue to be Decided

1. The central issue to be examined and decided regarding the merits of the case, as derived from the procedural documents of the parties, is whether, in the case at hand, IS is due on the acquisition through adverse possession (usucapião) of an urban property, and, according to the Claimant's argument, the taxable fact of the acquisition of the property had already been taxed at the time of the promise to sell contract accompanied by delivery in the context of Transfer Tax on Immovable Property ("SISA").

III. Decision on the Facts and Its Reasoning

1. Having examined the documentary evidence produced, the present tribunal finds the following facts proven, relevant to the decision of the case:

I. The Claimant is the owner of an urban property intended for residence, consisting of a single-family dwelling, located at …, … of the parish of …, municipality of Sesimbra, registered in the property register under number …, with a Tax Property Value ("VPT") of € 81,650.00.

II. According to the Deed of Justification presented as evidence, on 25 May 1972, B… and his spouse promised to sell to C… fifteen plots of land duly delimited and physically separated, with the aforementioned property constituting one of these plots.

III. In the year 1983, the Claimant and his spouse promised to purchase from C… the said plot of land on which the aforementioned urban property was subsequently built, having paid the price in full and the Claimant entering into possession and enjoyment of the property.

IV. In 1984, the now Claimant proceeded to register the plot of land in the property register, having obtained the appropriate building permit and, from that year onwards, having paid the respective property contributions/municipal contributions/IMI.

V. On 16 March 1984, SISA was assessed to the Claimant for the fiscal acquisition resulting from the promise contract with delivery of the said plot of land intended for urban construction, to which the SISA case number … of 16-03-1984 was assigned.

VI. Following the aforementioned SISA assessment, the construction land was valued, in accordance with article 109 of the Code of Municipal Tax on SISA and Tax on Succession and Gifts ("CIMSISD"), and on 28 August 1984, the Claimant paid the SISA due by reference to the difference verified between the value declared in the first SISA assessment (no. …, of 16-03-1984) and the value of the valuation carried out, to which Case number … was assigned.

VII. In 1991, the Claimant obtained the housing license for the urban property built on the plot of land in question, and was the recipient of the valuation that occurred in 2012, which set the VPT of the said property at € 81,650.00.

VIII. The Claimant formally completed the acquisition of the urban property in 2013, through the mechanism of adverse possession (usucapião), by executing, for this purpose, a Deed of Notarial Justification.

IX. On 29 April 2013, the Claimant presented the factual framework of his situation to the Finance Service of …, requesting that no IS assessment be issued as a consequence of the aforementioned Deed of Notarial Justification of acquisition through adverse possession of the urban property.

X. On 8 May 2013, IS assessment no. … was issued, based on the VPT of € 81,650.00, and the Claimant was notified to make payment of € 8,165.00, choosing the same method of payment in installments.

XI. The documentary evidence provided by the Claimant was analysed, from which it appears that the IS assessment is partially paid in the amount of € 7,348.50.

XII. On 29 April 2013, the Claimant filed an Appeal for Administrative Review requesting the annulment of the IS assessment, setting out his understanding that SISA tax had already been paid for acquisition of the property now subject to IS assessment, by virtue of the promise to sell contract accompanied by delivery of the property.

XIII. The said Appeal for Administrative Review was rejected by order issued by the Head of the Finance Service of … on 20 June 2013.

XIV. On 18 October 2016, the now Claimant submitted the request for official revision of a tax act which is the subject of the present Request for Arbitral Pronouncement, pursuant to the version in force of article 78, paragraph 2, of the General Tax Law ("LGT"), as at the date of exercise of the IS assessment that he intended to prevent.

XV. The period stipulated in article 57, paragraph 1, of the LGT having elapsed, and the Claimant correctly considering that the request for official revision of the tax act submitted was implicitly rejected on 18 March 2017, it is upon this rejection that the present request for arbitral pronouncement focuses.

XVI. However, the now Respondent pronounce itself regarding the request for revision of the tax act in the sense of its express rejection of the same on 1 June 2017, in disregard of the period stipulated in article 57, paragraph 1, of the LGT.

XVII. In this sense, the Claimant has requested the present Arbitral Tribunal to consider the express rejection of the request for official revision of the tax act as "procedurally ineffective and irrelevant," or, subsidiarily, that the scope of the present request for arbitral pronouncement be extended "to the new (and subsequent) express act of rejection of the request for official revision of a tax act, for the same grounds (and illegalities) invoked in the request for arbitral pronouncement."

1. It is necessary to take a position on this factual matter.

2. Article 57, paragraph 5, of the LGT provides: "Without prejudice to the principle of speed and diligence, failure to comply with the period referred to in paragraph 1, calculated from the date of entry of the taxpayer's petition into the competent service of the tax administration, is presumed to constitute its rejection for purposes of hierarchical appeal, contentious appeal, or judicial challenge." (emphasis ours).

3. The period for pronouncement by the Respondent having elapsed regarding the request for revision of the tax act, a legitimate expectation was created in the now Claimant of consolidation of his situation in the legal order.

4. In this sense, the subsequent imposition of express rejection of the request for revision of the tax act constitutes a change in the judicial proceedings, in accordance with article 70, paragraph 1, of the Code of Administrative Court Procedure ("CPA"), whereby,

5. Faced with a change in judicial proceedings, the Claimant has the right to "allege new grounds and offer different means of proof in support of his claim."

6. The Claimant opting not to allege any new facts, merely requesting the extension of the present request for arbitral pronouncement so as to encompass the subsequent arguments presented by the Respondent, arguing, for this purpose, the same grounds already presented,

7. The present Arbitral Tribunal comes to accept his claim and determine that the grounds alleged by the Claimant in the request for arbitral pronouncement be extended to the arguments for the rejection of the request for official revision of the tax act, presented by the Respondent on 1 June 2017.

8. The conviction of the present tribunal regarding the facts found proven resulted from the documents annexed to the case file and contained in the non-contested pleadings of the parties, as specified in the points of the facts enumerated above.

9. There is no factuality relevant to the decision of the case found not proven.

IV. On the Law

A) Legal Framework

1. Given that the legal issue to be decided in the present case requires interpretation of the relevant legal texts, it is important, first of all, to enumerate the norms that comprise the relevant legal framework as at the date of the occurrence of the facts.

2. In this sense, it is essential to understand Decree-Law no. 287/2003 of 12 November, which proceeds to repeal the CIMSISD and notably expands the tax base of IS.

3. With the reform of property taxation, the legislator chose to introduce into the IS Code the taxation of gratuitous transfers (non-exempt successions and gifts), ceasing to exist an autonomous tax code.

4. Thus, item 1.2 was introduced into the General Table of IS, which establishes the subjection to IS of "gratuitous acquisition of property, including by adverse possession (usucapião)."

5. Effectively, article 1 of the IS Code provides:

"Stamp duty is levied on all acts, contracts, documents, titles, papers and other facts or legal situations provided for in the General Table, including gratuitous transfer of property."

1. And further, in subparagraph a) of paragraph 3:

"For purposes of item 1.2 of the General Table, gratuitous transfers are considered to be those which have as their object:

a) Right of Ownership or fractional figures of that right over immovable property, including acquisition through adverse possession (usucapião)." (emphasis ours).

1. As a brief introduction to the subject of adverse possession, without prejudice to developing its definition further in the present decision, article 1287 of the Civil Code ("CC") provides that adverse possession corresponds to possession of the right of ownership or other rights of enjoyment, maintained for a certain period of time, enabling the possessor, unless otherwise provided, to acquire the right corresponding to the exercise of such possession.

2. When adverse possession is invoked, its effects retroact to the date of the beginning of possession, and possession is constituted, among other facts, by the reiterated practice, with publicity, of material acts corresponding to the exercise of the right. (see articles 1288, 1317 subparagraph c) and 1263 of the CC)

3. It is also necessary to analyse the wording of articles 1 and 2 of the CIMSISD as at the date of the relevant facts for the present case:

Article 1

"The following are subject to SISA and to tax on successions and gifts, in accordance with the following articles, gratuitous or temporary transfers of property, whatever the title by which they operate.

Article 2

SISA is levied on transfers, for valuable consideration, of the right of ownership or fractional figures of that right, over immovable property.

(…)

§ 1 For this purpose, transfers of immovable property are considered to be:

(…)

2nd Promises of sale and purchase or exchange of immovable property, as soon as delivery is verified to the promise purchaser or to the promise exchangers, or when the former or these are enjoying the property."

1. It thus appears that the tax law then in force, as does the current law (namely in the Code of Municipal Tax on Gratuitous Transfer of Immovable Property – "CIMT"), considered, for purposes of tax incidence, as a taxable transfer (equivalent to conclusion of a purchase and sale contract) a broad set of situations, without necessary coincidence with civil law concepts, including the conclusion of a promise contract with delivery of the thing.

B) Arguments of the Parties

1. In the present request for arbitral pronouncement made against the rejection of the request for official revision of the tax act and, consequently, the IS assessment act, the Claimant alleges, in summary, that:

2. There cannot be subjection to IS on the acquisition through adverse possession when, for tax purposes, the acquisition of the property has already been deemed to have occurred and, consequently, taxed accordingly.

3. Effectively, the Claimant alleges, "the taxation in the context of Stamp Duty faces, in this case, a logical contradiction, a logical impossibility, in that, if it was considered by tax law that there was an acquisition (for valuable consideration) for tax purposes in 1983 in the present case (triggered – and thus taxed, in 1984 – by a promise contract with delivery of the property), this same tax law cannot again consider that there exists, for tax purposes again an acquisition (now gratuitous) of the same property, by the same taxpayer, subject to a second taxation" (article 25 of the request for arbitral pronouncement).

4. Additionally, the Claimant still contends that such taxation in the context of IS violates "the principle derived from the coordination norm between (…) the CIMT, which succeeded the SISA Code, and the Stamp Duty Code (CIS) in the context of gratuitous transfers: the principle of non-overlapping application of these two taxes, which only apply simultaneously when the transaction is mixed (a mixture of valuable and gratuitous), and even then with the requirement of proper segregation of the gratuitous and valuable parts of the acquisition of the property for purposes of incidence of the two taxes without overlaps" (article 27 of the request for arbitral pronouncement).

5. Parallelly, and regarding the tax base of the IS levied, the Claimant further argues that, even if accepting the subjection of the acquisition through adverse possession of the present property to IS, its incidence would not be based on the VPT of the property as at 2013.

6. Sustaining this position, the Claimant highlights consolidated case law in the Tax Contentious Section of the Supreme Administrative Court, citing, for this purpose, that "only the act of acquisition of the adverse-possessed property (and not the act of acquisition of improvements – in particular, building – carried out therein by the adverse possessor) falls within the scope of the objective incidence of stamp duty on acquisition through adverse possession" (article 40 of the request for arbitral pronouncement).

7. And, in this sense further, "if we take into consideration only the Deed of Notarial Justification of possession executed to determine the taxable matter in question, we would be considering that the adverse possessor (in this case, the claimant) acquired by adverse possession and that, therefore, there was gratuitously transferred to him an urban property (land with construction built thereon)," which "does not correspond to the factual reality" (article 41 of the request for arbitral pronouncement).

8. Accordingly, the Claimant requests that the illegality of the rejection of the request for official revision of the tax act be declared and, consequently, the IS assessment act be declared illegal, and that the right to reimbursement of the amounts paid be recognized,

9. Also requesting that he be paid the due compensatory interest.

10. For its part, the Respondent, after being duly notified for this purpose, submitted its response in which, in summary, and citing the arguments already presented in the context of rejection of the request for official revision of the tax act, alleged the following:

11. "(…) although adverse possession constitutes an original acquisition (…), for tax purposes, the legislator came to consider it a "gratuitous transfer of immovable property."

Now, when the legislator came to state, in article 1, paragraph [3] of the IS Code, that for purposes of item 1.2 of the General Table are considered gratuitous transfers, in particular "acquisition through adverse possession," it was not unaware that adverse possession does not constitute a translative acquisition of ownership, nor did it seek to alter that nature. The legislator's objective, aiming to broaden the objective tax base of the tax, was to equate, for purposes of Stamp Duty, adverse possession with gratuitous transfers. It is, therefore, a legal fiction for tax purposes." (article 29 of the Respondent's Response).

1. The Respondent further alleges that "the taxable fact which is the subject of taxation is not the acquisition, but rather the notarial act constituted by the Deed of Notarial Justification which evidences acquisition through adverse possession, i.e., the objective incidence is the notarial document in question." (article 31 of the Respondent's Response).

2. And further, "In fact, there is no duplication of taxation in the present case inasmuch as what was taxed in 1984, by virtue of the conclusion of the promise to sell contract, accompanied by delivery, was the acquisition proper, whereas in 2013, what is being taxed is the act of Notarial Deed of Justification by adverse possession." (article 34 of the Respondent's Response).

3. Parallelly, and in order to rebut the arguments of the Claimant regarding the VPT that is relevant for determining the IS to be paid, the Respondent argues:

4. "(…) regarding the determination of the Tax Property Value in the case of acquisition through adverse possession, article 13, paragraph 1, of the IS Code is applicable to the situation in the case, which, at the date of the facts, required that the value of immovable property be the tax property value contained in the register in accordance with the Municipal Property Tax Code ("CIMI") at the date of the transfer, or that determined by valuation in the cases of omitted properties or those registered without tax property value." (article 56 of the Respondent's Response).

5. And the Respondent further elaborates: "It should be noted that Circular no. 19/2009 of 21 July, drawn up by the Department of Services for the Tax on Gratuitous Transfer of Immovable Property, the Tax on Stamp Duty, Motor Vehicle Taxes and Special Contributions (DSMIT), came to determine, on this issue, that being the acquisition considered original, the adverse possessor (Claimant) does not succeed to the rights of the previous holder of the right of ownership or other right of real enjoyment over the acquired property.

Furthermore, according to the said Circular, being the taxable value in acquisition through adverse possession the taxable value of the property acquired, the eventual credit right of the adverse possessor against the owner regarding useful improvements carried out under the doctrine of unjust enrichment cannot be deducted from the taxable value for Stamp Duty purposes." (articles 59 and 60 of the Respondent's Response).

1. The Respondent's conclusion on this issue being that "it should be understood that the taxable value in acquisitions through adverse possession as at the date of the facts is the tax value of the property acquired, without any deduction, at the moment of the birth of the tax obligation, that is, on the date when the judicial action for justification becomes final or when the Deed of Notarial Justification is executed." (article 62 of the Respondent's Response).

C) Assessment by the Tribunal

1. As a preliminary matter, it should be noted that, in the eyes of this Arbitral Tribunal, the issue to be decided concerns defining, based on the facts found proven, the legality of the IS assessment regarding the acquisition through adverse possession of the urban property registered in the property register under article … .

2. Accordingly, the present tribunal will seek to determine whether, in the case at hand, IS is due on the acquisition through adverse possession of a property that had already been taxed in the context of SISA at the time of conclusion of the promise to sell contract with delivery of the thing.

3. It is important, first of all, to determine the incidence of IS on the acquisition of a property through adverse possession. The question is whether what is at issue is the taxation of the acquisition or, as the Respondent alleges, the taxation of the notarial act of justification and, as a consequence of the answer found, to decide its application to the specific case at hand.

4. The current configuration of IS places it, together with the Municipal Property Tax (IMI) and the Municipal Tax on Gratuitous Transfer (IMT), as an instrument for taxation of property, by the legislator's choice, which for a long time ceased to view IS merely as a "tax on paper."

5. Throughout its history, with greater emphasis on its recent evolution, IS, which originated as a tax on documents, stamped paper, credit titles, authentication of documents, contracts, settlement agreements, notarial acts and the like, has expanded its tax base converting itself into a heterogeneous tax, affecting a diverse multiplicity of facts, acts and legal situations ("acts, contracts, documents, titles, papers and other facts or legal situations"…, as established in article 1 of the Code), apparently without a common characteristic that would give them identity.[1]

6. This tax ultimately assumed the nature of "supplementary tax to income and consumption taxes, aiming to reach manifestations of tax capacity not covered by the incidence of any other taxes. Without constituting the nature of overlapping taxation, this tax tends to assume a residual function filling spaces left open by income and consumption taxation."[2]

7. It is not a matter of controversy in this decision that acquisition through adverse possession falls within the scope of objective incidence of IS.

8. However, it is necessary to take a position on what the IS Code intended to tax: whether the original acquisition or the notarial act that supports it.

9. In this sense, and looking to the very incidence norm contained in item 1.2 of the General Table of IS, this is clear when it expressly refers to: "Gratuitous acquisition of property, including through adverse possession (…)."

10. There is thus no doubt that it is upon the acquisition and its respective value that the tax is levied, such that the Respondent's argument that IS in question would be levied on the "Public Deed" document does not hold.

11. Starting from the premise that the legislator's intention in the context of IS was to tax acquisition through adverse possession, it is now relevant to analyse whether the present case constitutes a double taxation of the same acquisition for tax purposes. Let us examine this,

12. The tax legislator, in order to avoid situations of tax evasion and also to avoid constraints resulting from registration formalities or other matters that could jeopardise the levy of the tax, departs from the conceptual rigour of civil law and creates a set of presumptions by means of which it considers certain facts or contracts as acquisitions which, in light of civil law, do not produce that effect.

13. This is what happens with the promise to sell contract with delivery of the thing, whereby the legislator is permitted to do so for reasons of tax effectiveness, being certain that it merely alters the moment at which it collects the tax due for the acquisition, but it must be noted that -

14. Nothing in the law permits taxation of the acquisition of the same property twice by the same taxpayer.

15. In the present case, as results from the proven facts, the conclusion of the promise to sell contract with delivery of the property was considered by the AT, in conformity with the provisions of the SISA Code then in force, as an act equivalent to acquisition by Public Deed of sale and purchase.

16. Thus, the property cannot be subject to new taxation, considering that the same taxpayer who acquired it in 1983 (by virtue of the legal fiction established) comes to acquire it also in 2013, through adverse possession.

17. This would be equivalent to taxing the acquisition of the same property twice, considering, as the Claimant contends, that upon the same property two acquisitions occurred in favour of the same taxpayer, one for valuable consideration (1983) and another gratuitous (2013).

Let us examine this,

1. Although the doctrine establishes adverse possession as "a mode of original acquisition of real rights of enjoyment,"[3] it is settled that this classification cannot prevent the use of the figure of adverse possession to prevent situations of redundancy and repetition of obligations of adverse possessors.

2. In this sense, Professor José Alberto C. Vieira states: "It seems pertinent to note, however, that adverse possession may be invoked even by one who has already acquired the right by another valid title" – as is the case here – "using it in its probative function, to avoid the probatio diabolica, or in its consolidative function, to prevent, for example, the tabular acquisition by a third party in good faith.

It is evident that adverse possession, in these cases, does not have the effect of a constitutive fact, which would imply a double acquisition of the same right by one who is already its holder, a logical and substantive redundancy.

Thus, adverse possession can only truly be an original fact acquiring real rights of enjoyment when it benefits a formal possessor, allowing him precisely to constitute in his favour a right that until then did not exist in the legal order." – a situation which, as we verify, is not the case here, as the Deed of Justification of the urban property did not come to constitute any new rights to the Claimant.

1. Effectively, the now Claimant was already considered the legitimate owner, for tax purposes, of the urban property here in question, consolidating in his legal order all the duties implicit in that fact from 1984, a date much earlier than the formalization of ownership under civil law, with the execution of the Deed of Justification, in 2013.

2. The invocation of the aforementioned Deed in order to ensure the taxation of a fact already previously taxed creates, as Vieira states, "a logical and substantive redundancy" which seems to imply that, for tax purposes, the Claimant is considered an original owner twice of the same property.

3. Additionally, resorting to the case law of our Superior Courts, we find in the Decision handed down on 18-09-2014, in case no. 635/07.0BEBRG, by the Central Administrative Court of Appeal (TCAN), an identical situation which would result in double taxation, in which this Court expressly considered the following:

"1- Having the appellants concluded in 1972, by Public Deed, a contract of sale and purchase of a property, being this one of the modes of acquisition of ownership (article 1316 of the Civil Code) and the form prescribed in article 875 of the Civil Code having been respected, it must be concluded that they acquired ownership at that date.

2- The execution of a Public Deed of Justification of acquisition through adverse possession, for the purpose of resuming the succession of titles and proceeding to registration of that property previously acquired, in accordance with article 34 of the Property Registration Code (….), does not constitute a gratuitous transfer of property that could constitute a taxable fact within the scope of the normative provision of article 1, paragraph 1, of the IS Code."

1. Further in this Decision, the Court substantiated its decision, considering that: "Although acquisition through adverse possession constitutes an original acquisition (articles 1287 and following of the Civil Code) for tax purposes, it is considered as a gratuitous transfer of immovable property, and consequently, subject to stamp duty in accordance with article 1 of the IS Code. It happens that, in the present case, we do not have a gratuitous transfer of property, because no one can acquire what is already theirs. Indeed, it results from the case file that the Appellants did not acquire the property in question through adverse possession, as they had already acquired it through purchase and sale by Public Deed executed in 1972.

2. Assuming that the controversial issue under analysis is the result of divergence between the concepts applicable within tax law and the corresponding concepts of civil law – in particular, acquisition of ownership under civil law and possession that is relevant for tax obligations – the interpretation defended by the Respondent constitutes a situation of abuse of rights (venire contra factum proprium) and violates the principles of justice, proportionality and uniformity of the legal system.

3. It is true that in 2013 the now owner under tax law norms was not yet so under the rules in force in civil law, and, as is usual, was seen to be in the necessity of resorting to the notarial justification act for recognition of adverse possession, merely for the necessity of regularization of ownership of the property under civil law and property registration rules.

4. However, and it is necessary to state our understanding clearly, no taxable fact (acquisition) susceptible of taxation was verified, since that had occurred, for all tax purposes, in 1983.

5. It is still necessary to address the arguments of the Respondent regarding the lack of evidence of duplication of collection.

6. In this respect, the AT alleges that account must be taken of the provisions of article 205 of the Tax Code of Procedure and Process ("CPPT"): "There shall be duplication of collection (...) when, entire tax having been paid, another tax of equal nature is demanded of the same or a different person, relating to the same taxable fact and the same period of time."

7. For duplication of collection to exist, it is therefore necessary that the following requirements be cumulatively satisfied in the case at hand:

a) the taxable fact is the same;

b) the nature of the tax already paid and that newly required are identical,

c) both taxes relate to the same temporal period.

1. In the Respondent's view, this last requirement is not satisfied, that is, the taxation does not relate to the same taxing period, such that, instead of a duplication of collection, we would be faced with the figure of double taxation (in which various incidence norms apply to the same taxable fact).

2. On this matter, Arbitral Decision 105/2015-T[4] pronounces itself, refuting arguments of the same nature on the part of the AT, so that we transcribe them below and subsume them to the case at hand:

3. "Now, the ATA's argument is not well founded, in that what occurred was, solely, that by virtue of the reform of property taxation that occurred in 2004, the acquisitive fact came to be taxed in stamp duty when previously it was taxed in municipal SISA tax, successions and gifts. It cannot be extracted from the law, in either the old or the current version, the legislator's intention to subject the acquisition of the same property, by the same taxpayer, to double taxation."

4. In the case at hand, the same property was taxed for the gratuitous acquisition deemed as such by virtue of the conclusion of the promise contract with delivery, such that it appears illogical and incongruous to consider that at the moment of execution of the Deed of Notarial Justification a new taxable transfer occurred.

5. If new taxation upon the same property were to be accepted, one would be acting contrary to the spirit of the legislator who established the protection against double taxation in the context of IMT and IS as they are presently configured,

6. Which we consider would naturally extend to taxation in the context of SISA that occurred in 1984.

7. Regarding the divergence of the parties regarding the VPT to be considered for the IS levy, and despite this Tribunal considering that the issue does not assume the relevance that the parties give it, as we consider that the IS levy here contested is not due, it is necessary to clarify the assumptions for determining the amount of IS to be paid assumed by the AT.

8. For brevity in the exposition, reference is made to the recent Decision of 23-09-2015, of the 2nd Section of the Supreme Administrative Court, delivered in case no. 0667/15, which concentrates the uniform case law of the Supreme Administrative Court on this issue.

9. It is clear from the cited case law that only the act of acquisition of the original property (and not the act of acquisition of improvements made thereon) can be inscribed within the scope of objective incidence of IS.

10. In consequence, and merely for academic reasons, it is the position of this Tribunal that, should taxation occur in the context of IS, only the act of acquisition of the plot of land and not the act of acquisition of improvements made to the same property by adverse possessors (such as building) should be taxed.

11. Accordingly, and concluding our argument, we consider that when, in 2013, a Deed of Justification is executed for acquisition through adverse possession in order to regularize the situation in civil law terms of the property, the taxable fact provided for in article 1, paragraphs 1 and 3, subparagraph a) of the IS Code does not occur, and in that measure,

A) The rejection of the request for official revision of the tax act suffers from a defect of violation of law due to error regarding the assumptions of law and fact, and should be annulled and, consequently,

B) The IS assessment on acquisition through adverse possession no. … which underlies it should be annulled, with the legal consequences.

V. Decision

1. Accordingly, this Arbitral Tribunal decides:

A) To declare the request for arbitral pronouncement well-founded and, in consequence, declare illegal and annul the IS assessment act mentioned above, with reference to 2013, from which resulted tax to be paid in the amount of € 8,165.00, relating to the taxation of acquisition through adverse possession of an urban property; and, consequently,

B) To determine the reimbursement to the Claimant of the amount paid up to the date in question as IS, in the amount of € 7,348.50;

C) To order the Respondent, in accordance with article 43, paragraph 1, of the LGT and articles 61, paragraphs 2 and 5, of the Tax Code of Procedure and Process ("CPPT"), to pay compensatory interest, at the rate resulting from article 43, paragraph 4, of the LGT, calculated on the paid amount of € 7,348.50, from the date on which the aforementioned assessments were paid and until full reimbursement of the amount referred to; and

D) To order the Respondent to pay the costs of the proceedings.

VI. Case Value

1. The case value is fixed at € 8,165.00, in accordance with article 97-A, paragraph 1, subparagraph a), of the CPPT, applicable by virtue of subparagraphs a) and b) of article 29, paragraph 1, of the RJAT and paragraph 2 of article 3 of the Regulation on Costs in Tax Arbitration Proceedings ("RCPAT").

VII. Costs

1. In accordance with the provisions of article 22, paragraph 4, of the RJAT, the amount of the arbitration fee is fixed at € 918.00, in accordance with Table I of the aforementioned Regulation, to be borne by the Respondent, given the full success of the claim.

Notify the parties.

Lisbon, CAAD, 9 November 2017

The Arbitrator

(Sérgio Santos Pereira)

[1] See Pires, José Maria Fernandes, in op. cit., p. 404.

[2] See Mateus, J. Silvério Dias and Freitas, L. Corvelo (2005) Taxes on Immovable Property. The Stamp Duty. Annotated and Commented, Engifisco, Lisbon, p. 534.

[3] Vieira, José Alberto C. (2008) Real Rights, Coimbra Publisher, p. 431, et seq.

[4] https://caad.org.pt/tributario/decisoes/decisao.php?s_processo=105%2F2015-T&s_data_ini=&s_data_fim=&s_resumo=&s_artigos=&s_texto=&id=1426