Stamp Tax on Building Land Over €1M: CAAD Ruling on Housing Designation (283/2013-T)

ARBITRAL DECISION

CAAD: Tax Arbitration

Case No. 283/2013-T

Subject: Stamp Tax/2012. Construction Land

The arbitrator, Dr. Henrique Nogueira Nunes, designated by the Deontological Council of the Centre for Administrative Arbitration ("CAAD") to form the Arbitral Tribunal, constituted on 11 February 2014, decides as follows:

1. REPORT

1.1. Bank …, S.A., with tax identification number …, hereinafter designated as "Petitioner", requested the constitution of the Arbitral Tribunal under articles 2nd and 10th of Decree-Law No. 10/2011, of 20 January (hereinafter "RJAT").

1.2. The request for arbitral decision concerns the declaration of illegality of the decision dismissing the administrative appeal No. …, in which the legality of the stamp tax assessment act was discussed, better identified under the collection documents issued with the numbers …, carried out under the provision of item 28.1 of TGIS, all dated 22 March 2013, relating to the year 2012, in the total amount of € 14,771.90, and, likewise, the annulment of the stamp tax assessment act itself. Additionally, the Petitioner petitions for the payment of compensatory interest.

1.3. To support its request, the Petitioner alleges, in summary, the following defects:

a) Error in the prerequisites, by virtue of:

(i) The urban property that configures a construction land, such as the one in these proceedings, is not destined for housing for purposes of filling the scope of incidence of item 28 of TGIS;

(ii) Given the spirit that presided over the introduction of the scope of incidence of item 28 of TGIS, it must be concluded that construction lands are not covered by taxation under Stamp Tax pursuant to item 28.1;

(iii) In the concept of "house" or housing, a construction land cannot be considered insofar as a construction land constitutes, by definition, an undeveloped land;

(iv) The expressions used by the legislator refer to an effective, real and present use.

(v) It cannot be admitted that residential allocation can be determined with reference to the projected building, since the same will always be potential until the projected building is completed;

(vi) The interpretation that the Tax Authority advocates violates in a manifest way the legislator's intention;

(vii) It concludes for the annulment of the assessment in question in these proceedings, and the refund of the amount of tax paid, plus compensatory interest as from the payment date.

1.4. The Tax and Customs Authority responded to the effect that the concept of "properties with residential allocation", for purposes of the provision in item 28 of TGIS, comprises an expression "different and broader", encompassing both developed properties and construction lands still without erected building, but projected for such, concluding for the maintenance of the assessment act and inadmissibility of the request also regarding the request for compensatory interest due to the non-existence of error attributable to its services.

1.5. On 25 May 2014, the first meeting of the Arbitral Tribunal took place, at the headquarters of the CAAD, in accordance with the provision of article 18th of RJAT. No exceptions were identified, the presentation of arguments was waived, and a deadline was set for the issuance of the arbitral decision. The Petitioner was invited by the Tribunal to perfect its request for arbitral decision regarding the challenged act, and the Respondent was heard on this initiative of the Tribunal in compliance with the principle of contradictory.

1.6. The Tribunal was regularly constituted and is competent ratione materiae, in accordance with article 2nd of RJAT.

The parties have legal personality and capacity, show themselves to be legitimate and are regularly represented (cf. articles 4th and 10th, no. 2 of RJAT and article 1st of Ordinance No. 112-A/2011, of 22 March).

No procedural nullities were identified.

2. QUESTION TO BE DECIDED

The strictly legal question being discussed in these proceedings is whether a construction land can be qualified as a "property with residential allocation" and, if so, whether it can be encompassed within the scope of incidence of item 28.1 of TGIS, added by article 4th of Law No. 55-A/2012, of 29 October.

3. FACTUAL MATTER

With relevance for the assessment and decision on the merits, the following facts are taken as proven:

A) The Petitioner is the owner and lessor of a construction land registered in the urban property register under article … of the parish …, of the Municipality and District of …. (cf. Urban Property Booklet attached as Document No. 1 to the request for arbitral decision).

B) The identified urban property, classified as a construction land, for urban construction with residential purposes, has no building or construction erected on its soil on the date of the facts (2012), its respective property value subject to taxation being greater than € 1,000,000.00, specifically amounting to:

– cf. the corresponding assessment act and the urban property booklet attached to the request for arbitral decision as Documents Nos. 2 and 1, respectively.

C) The Tax and Customs Authority, considering the Property Value Subject to Taxation assigned to the construction land identified above, and the fact that it is destined for urban construction with residential purposes, understood that the objective prerequisites for the assessment of Stamp Tax were met, arising from the addition to TGIS of item No. 28 provided for in Law No. 55-A/2012, of 29 October – See, in this sense, articles 34th and 39th of its response.

D) In this context, the Petitioner was notified of the collection documents for payment of Stamp Tax listed below, relating to the three installments of the tax for the year 2012, with mention of the assessment date – "2013-03-22" – in accordance with the following table:

– cf. Assessment and collection documents attached as Document No. 2 to the request for arbitral decision.

E) The Petitioner proceeded to pay the assessed tax – cf. Document No. 7 attached with the request for arbitral decision.

F) The Petitioner filed on 28 August 2013 an Administrative Appeal against the assessment act in question in these proceedings, to which the number … was assigned. - cf. Document No. 3 attached with the request for arbitral decision and administrative proceedings file attached by the Tax Authority.

G) On 29 October 2013 the Petitioner was notified of the Tax Authority's intention to dismiss the Appeal – cf. document No. 4 attached with the request for arbitral decision and administrative proceedings file attached by the Tax Authority and invited to exercise the right to be heard regarding the draft decision notified, which was done by the Petitioner – cf. Document No. 5 attached with the request for arbitral decision and administrative proceedings file attached by the Tax Authority.

H) On 22 November 2013 the Petitioner was notified of the final decision dismissing said Appeal – cf. Document No. 6 attached with the request for arbitral decision and administrative proceedings file attached by the Tax Authority.

I) On 6 December 2013, the Petitioner filed a request for constitution of the Arbitral Tribunal with the CAAD – cf. electronic request in the CAAD system.

4. UNPROVEN FACTS

There are no facts with relevance for the decision on the merits that have not been proven.

5. SUBSTANTIATION OF THE DECISION ON FACTUAL MATTER

Regarding the essential facts, the agreed matter is conformed identically by both parties and the Tribunal's conviction was formed based on official documentary elements attached to the proceedings and discriminated above, whose authenticity and veracity were not questioned by either party.

6. ON THE LAW

6.1. On error in prerequisites: scope of objective incidence of item 28.1 of TGIS

The assessment that constitutes the immediate object of this arbitral action has its origin in item 28.1 of TGIS, added by article 4th of Law No. 55-A/2012, of 29 October, having as an essential prerequisite being faced with real property that can be encompassed in the concept of "properties with residential allocation".

Since in the situation under scrutiny the real property in question is exclusively a construction land, devoid of any building, it is important to determine the meaning of the expression "properties with residential allocation" so as to conclude whether it encompasses, or not, construction lands.

The matter under analysis has already been the subject of extensive tax arbitral jurisprudence. We refer in particular, without concerns for exhaustiveness, to the decisions rendered in the following cases: 42/2013-T, of 18-10-2013; 48/2013-T, of 09-10-2013; 49/2013-T, of 18-09-2013; 53/2013-T, of 02-10-2013; 75/2013-T, of 01-11-2013; 144/2013-T, of 12-12-2013 and 158/2013-T, of 10-02-2014.

The Judicial Courts have also pronounced themselves on this same question. We refer to the recent decisions rendered by the Supreme Administrative Court ("STA") in the following cases: 048/14, of 09-04-2014 and 0270/14, of 23-04-2014.

Both the arbitral jurisprudence cited and the judicial jurisprudence cited, which we follow, consider that construction lands are outside the scope of the provision of item 28.1 of TGIS, in the wording in force on the date of the facts, in the terms that are explained below, beginning by analyzing the legislative context in which the addition of item 28 to TGIS occurred.

A. Context of the approval of item 28.1 of TGIS and its respective regime

In the discussion in Parliament of Bill No. 96/XII (2nd), which was at the origin of Law No. 55-A/2012, which added item 28 to TGIS, the Secretary of State for Tax Affairs stated that:

"(...) For the tax system to promote greater equality, it is fundamental that budgetary consolidation efforts be shared by all taxpayers and focus on all types of income, including with special emphasis on capital income and high-value properties. This matter, it should be recalled, was extensively addressed in the ruling of the Constitutional Court (...).

This proposal has three essential pillars: the creation of special taxation on urban properties valued at more than 1 million euros; the increase in taxation on capital income on securities gains; and the strengthening of rules to combat tax fraud and evasion.

First, the Government proposes the creation of a special tax rate to tax residential urban properties of higher value. This is the first time Portugal has created special taxation on high-value properties intended for housing. This rate will be 0.5% to 0.8% in 2012 and 1% in 2013, and will apply to houses valued at equal to or exceeding 1 million euros. With the creation of this additional tax rate, the tax burden required of these owners will be significantly increased in 2012 and 2013" (emphasis ours) – cf. Journal of the Parliament, I series, No. 9/XXII-2, of 11 October 2012, pp. 31-32.

Neither the houses nor the residential urban properties referred to here amount to construction lands. It is noted that residential urban properties are one of the classificatory concepts contained in article 6th of the IMI Code clearly distinct from construction lands. Indeed, article 6th, no. 1 of the above cited provides:

"1 - Urban properties are divided into:

a) Residential;

b) Commercial, industrial or for services;

c) Construction lands;

d) Others." (emphasis ours)

Thus, residential urban properties and construction lands are, for purposes of IMI (whose applicability, by reference, to Stamp Tax is, as will be seen below, to be invoked), two distinct categories, with their own legal classifications and definitions contained in the aforementioned article 6th of the IMI Code[1].

In light of the foregoing and as emphasized by the arbitral decision in case No. 75/2013-T, of 1 November 2013, it is clear that "in the spirit of the Bill that gave rise to Law No. 55-A/2012, there was no intention to tax construction lands, and there is, moreover, no evidence whatsoever to the contrary from the Deputies who approved the law".

Having established the context, it should be noted that the regime in question came to be approved by Law No. 55-A/2012, of 29 October, and, among several amendments it made to the Stamp Tax Code, it added item 28 to TGIS, with the following wording:

"28 – Ownership, usufruct or surface right of urban properties whose property value subject to taxation registered in the register, in accordance with the Code of Municipal Property Tax (CIMI), is equal to or greater than € 1,000,000 – on the property value subject to taxation used for purposes of IMI:

28.1 – For property with residential allocation – 1%;

28.2 – For property, when the taxpayers who are not individuals are resident in a country, territory or region subject to a clearly more favorable tax regime, listed in the list approved by ordinance of the Minister of Finance – 7.5%". (emphasis ours)

B. The concept of "property with residential allocation"

It is thus important to interpret the provision of item 28.1 of TGIS and determine its meaning and scope, considering the absence of a legal definition of the concept of property with residential allocation (fundamental notion for the delimitation of objective incidence), either in the Stamp Tax Code itself or in any other legislation, including the IMI Code applicable by reference.

Indeed, as emphasized in the Arbitral Ruling relating to case No. 53/2013-T, of 2 October 2013, the concept of "property with residential allocation" is not employed by other tax legislation, in particular, as is relevant to the case, in the Stamp Tax Code and in the IMI Code, the latter, of subsidiary application within the scope of item 28 of TGIS, as provided for in articles 2nd, no. 4; 3rd, no. 3, subsection u); 5th, subsection u); 23rd, no. 7; 46th, no. 5 and 67th, no. 2, all of the Stamp Tax Code.

In the same sense, the Arbitral decision in case No. 144/2013-T, of 12 December 2013, refers that this concept used by item 28.1 (of property with residential allocation) "not only does not appear defined in any provision of the Stamp Tax Code, but neither is it used in the IMI Code, legislation to which article 67th, no. 2 of the CIS expressly refers when matters not regulated in the CIS concerning item 28 are at issue."

Tax regulations must be interpreted like any others, having overcome the conception that they would have the exceptional character that was once attributed to them.

It should be noted in this regard that article 9th of the Civil Code marks the prevalence of the spirit over the letter of the law, although it has expressly placed the letter as a limit to the search for meaning[2]. Article 9th of the Civil Code represents the emanation of a general hermeneutical principle, which has, for that reason, intrinsic validity. This provision states:

"1. Interpretation shall not be confined to the letter of the law, but shall reconstruct from the texts the legislative thought, having especially in 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.

1. However, the interpreter cannot consider the legislative thought that does not have in the letter of the law a minimum of verbal correspondence, even if imperfectly expressed.

2. In the determination of the meaning and scope of the law, the interpreter shall presume that the legislator adopted the most correct solutions and knew how to express its thought in adequate terms."

The General Tax Law, in its article 11th, came, in the specific field of tax laws, to establish a set of interpretation rules in the following manner:

"1. In the determination of the meaning of tax regulations and in the qualification of facts to which they apply, the general rules and principles of interpretation and application of laws are observed.

1. Whenever tax regulations employ terms peculiar to other branches of law, they shall be interpreted in the same sense as they have therein, unless otherwise directly provided by law.

2. If doubt persists about the meaning of the scope of incidence regulations to apply, account shall be taken of the economic substance of the tax facts.

3. Gaps resulting from tax regulations covered by the legislative reserve of the Parliament are not susceptible to analogical integration."

It appears that the text of the General Tax Law adds nothing, referring to the general rules and principles, beyond incorporating distinct principles of difficult compatibility.

As seen above, the IMI Code uses (in its article 6th, no. 1) the notion of residential urban properties, which it establishes as an autonomous and distinct category from that of construction lands, but does not provide for the concept of "property with residential allocation", whose interpretation is now necessary.

At this point, we again resort to arbitral jurisprudence and the Ruling rendered in case No. 53/2013-T, referenced above, which is endorsed here and from which the following excerpt is transcribed:

"3.2.5. Concept of "property with residential allocation" as referring to residential properties

The concept closest to the literal tenor of this expression used is manifestly that of "residential properties", defined in no. 2 of article 6th of the CIMI as encompassing "buildings or constructions" licensed for residential purposes or, in the absence of a license, that have as their normal purpose residential purposes.

To understand that the expression "property with residential allocation" coincides with [that] of "residential properties", it is manifest that the assessments would be vitiated by error on the facts and on the law, since all properties with respect to which Stamp Tax was assessed under the aforesaid item No. 28.1 are construction lands, without any building or construction, required to meet that concept of "residential properties".

Therefore, if one adopts the interpretation that "property with residential allocation" means "residential property", the assessments whose declaration of illegality is sought will be illegal, as there is no building or construction on any of the lands.

However, the non-coincidence of the terms of the expression used in item No. 28.1 of TGIS with what is extracted from no. 2 of article 6th of the CIMI points in the direction of not intending to use the same concept.

3.2.6. Concept of "property with residential allocation" as a concept distinct from "residential properties"

The word "allocation", in this context of use of a property, has the meaning of "action of destining something to a determined use".

"When, as is the rule, regulations (legislative formulas) contain more than one meaning, then the positive function of the text is translated into giving stronger support to or suggesting more strongly one of the possible meanings. Because, among the possible meanings, some will correspond to the more natural and direct meaning of the expressions used, while others will fit into the verbal framework of the regulation only in a forced, contrived manner. Now, in the absence of other elements that induce the choice of the less immediate meaning of the text, the interpreter should choose, in principle, that meaning which best and most immediately corresponds to the natural meaning of the verbal expressions used, and in particular to their technical-legal meaning, in the supposition (not always exact) that the legislator knew how to express its thought correctly".

The relevance of the letter of the law is especially emphasized in the matter of interpretation of provisions on the scope of Stamp Tax, which are reduced to an amalgam, under a common denomination, of an incongruous set of taxes of completely distinct natures (on income, on expenditure, on property, on acts, etc.), which leaves no appreciable margin for application of the primary interpretative criterion, which is the unity of the legal system, which requires its overall coherence.

The recognized lack of coherence of Stamp Tax is particularly exuberant in the case of this item No. 28.1, hastily included outside the General State Budget, by a fiscal legislator without perceptible overall fiscal orientation, who is successively implementing rules of fiscal burden increase as a result of budgetary setbacks, the impositions of international institutional creditors (represented by the "troika") and the scrutiny of the Constitutional Court. (…)

In this context, with no interpretative elements that permit detection of legislative coherence in the solution adopted in the aforesaid item No. 28.1 or the correctness or incorrectness of the solution adopted (relevant for interpretative purposes in light of no. 3 of article 9th of the Civil Code), the tenor of the legal text must be the primary element of interpretation, in accordance with the presumption, imposed by the same no. 3 of article 9th, that the legislator knew how to express its thought in adequate terms.

In light of those meanings of the words "allocation" and "to allocate", which are "to give purpose" or "to apply", the formula used in that item No. 28.1 of TGIS manifestly encompasses properties that are already applied to residential purposes, so it is important to inquire whether it will also encompass properties that, although not yet applied to residential purposes, are destined for them and those whose purpose is unknown.

In light of the literal tenor of item No. 28.1, it is to be excluded from the scope of incidence of Stamp Tax provided therein the construction lands of some Petitioners that still do not have any type of utilization defined, since they are still not applied nor destined to residential purposes. That is, construction lands that do not have defined utilization cannot be considered properties with residential allocation, since they do not yet have any allocation nor any other purpose than construction of unknown type. An interpretation to the effect that item No. 28.1 refers to properties whose allocation is unknown has no minimum of verbal correspondence in the letter of that regulation, so a hypothetical legislative thought of that type cannot be considered by the interpreter of the law, in light of the prohibition contained in no. 2 of article 9th of the Civil Code.

But this is not sufficient to clarify the situation of those construction lands that, while not yet applied to residential purposes, already have a determined purpose, namely, in the subdivision license (…).

Therefore, it must be clarified when it can be understood that a property is allocated to residential purpose, namely, if it is when such purpose is assigned to it in a licensing act or similar, or only when the actual assignment of that purpose is concretized.

From the outset, the comparison of item No. 28.1 of TGIS with no. 2 of article 6th of the CIMI, which defines the concept of residential properties, points manifestly in the direction of an actual allocation being necessary.

Indeed, a building or construction licensed for housing or, even without a license, but which has housing as its normal purpose, is, in light of no. 2 of that article 6th, a residential property.

Therefore, on the assumption that the legislator of Law No. 55-A/2012 knew how to express its thought in adequate terms (as required by article 9th, no. 3, of the Civil Code to be presumed), if it intended to refer to those properties already licensed for housing or which have housing as their normal purpose, it would certainly have used the concept of "residential properties", which would express perfectly and clearly its thought, in light of the definition given by that no. 2 of article 6th of the CIMI.

Consequently, it must be presumed that the use of a different expression is intended to apply to a different reality, so, in good hermeneutics, "property with residential allocation", cannot be a property merely licensed for housing or destined for that purpose (that is, it will not be sufficient that it be a "residential property"), having to be a property that already has actual allocation to that purpose.

That this is the meaning of the expression "allocation", in the same context of property classification made by the CIMI, is confirmed by article 3rd, which, with respect to rural properties, makes reference to those "that are allocated or, in the absence of concrete allocation, have as their normal purpose a use that generates agricultural income", which shows that allocation is concrete, actual. Indeed, as is seen from the final part of this text, a property may have as its purpose a determined use and be or not be allocated to it, which shows that allocation is, at the level of the connection of a property to a determined use, something more intense than mere purpose and that may or may not occur, downstream of this and not upstream.

Moreover, the text of the law by adopting the formula "property with residential allocation", instead of "urban properties of residential allocation", which appears in the aforementioned "Statement of Reasons", points strongly in the direction that the residential allocation must already be concretized, since only then will the property be with that allocation.

As regards article 45th of the CIMI, it has no relationship whatsoever with the classification of properties, only indicating the factors to consider in the assessment of construction lands. What is considered there, by making reference to the "building to be constructed", is the consideration of the purpose of the land, which, as has been seen, is something that, in the context of the CIMI, does not imply allocation and occurs before it.

The correctness of this interpretation to the effect that only properties that are actually allocated to housing are encompassed within the scope of incidence of item No. 28.1 of TGIS is also confirmed by the perceivable ratio legis of the restriction of the field of application of the regulation to properties with residential allocation, in the context of the "circumstances in which the law was elaborated and the specific conditions of the time in which it is applied", which article 9th, no. 1, of the Civil Code also establishes as interpretative elements.

From the outset, the limitation of Stamp Tax taxation to "properties with residential allocation" allows one to perceive that there was no intention to encompass within the scope of incidence of the tax properties allocated to services, industry or commerce, that is, properties allocated to economic activity, which is understandable in a context in which, as is notorious, the economy finds itself in a recessionary spiral, publicly proclaimed at the highest level, with unemployment rates reaching historic maximum levels, with an avalanche of business closures resulting from economic unsustainability.

Keeping this situation in mind and it being notorious and public that the revitalization of economic activity and the increase in exports are the exit doors from the crisis, it is understood that legislative measures were not taken that would hinder economic activity, namely the burden increase in taxation that hinders it and affects competitiveness in international terms.

Therefore, it is to be concluded that the available interpretative elements, including the "circumstances in which the law was elaborated and the specific conditions of the time in which it is applied", point clearly in the direction of there being no intention to encompass within the scope of incidence of item No. 28.1 situations of properties that are not yet allocated to housing, notably construction lands held by companies."

At this point, for the reasons just exposed, the understanding advocated by the Tax Authority cannot proceed to the effect that the notion of allocation (residential) of an urban property must be sought from the real property assessment regime contained in article 45th of the IMI Code (which takes into account the allocation coefficient provided for in article 41st of the same Code).

Indeed, as correctly stated in the decision of arbitral case No. 144/2013-T, "If the primary meaning of "allocation", as we have stated, suggests an actual, direct purpose, given to a determined asset, we do not see how this understanding can be overturned by the finding that the legislator, within the scope of the assessment of construction lands, authorizes (to admit that it authorizes) the use of the allocation coefficient, having in view what may come to be constructed on it.

C. The case Sub Judice

In accordance with the factual matter, which results consensual, the real property underlying the Stamp Tax assessment carried out, here challenged, constitutes a construction land, devoid of any building.

Taking as correct and valid (as we do) the understanding according to which item 28.1 of TGIS postulates the necessity of an actual residential allocation of an urban property and not merely potential, a construction land cannot be considered included in that item, since it does not allow, by its own nature, to have an actual and current residential allocation.

Thus, in the situation at hand, we are not faced with a property with current residential allocation, so Stamp Tax provided for in item 28.1 of TGIS cannot apply to it, the disputed assessment suffering from error in the prerequisites, embodied in the violation of the aforementioned item 28.1, and it must be annulled (cf. article 135th of the CPA, of subsidiary application ex vi articles 2nd subsection d) of the CPPT and 29th, no. 1, subsections a) and d) of RJAT).

6.3. On the refund of amounts paid and the request for compensatory interest

The Petitioner comes to request the refund of the amounts paid under the assessment act in question in these proceedings, in the total amount of € 14,771.90, plus compensatory interest for the undue payment of those amounts.

For its part, the Respondent alleges that it is not liable for the payment of compensatory interest, since there exists no error on the facts or on the law that can be directly attributed to it.

Let it be said from the outset that the Respondent has no reason whatsoever.

In the case at hand, it is manifest that, as a result of the illegality of the assessment act, for the reasons better explained in this decision, there is grounds for refund of the tax paid by the Petitioner, by virtue of the provision in the aforementioned articles 24th, no. 1, subsection b), of RJAT and 100th of the General Tax Law, since that is essential to "restore the situation that would exist if the tax act object of the arbitral decision had not been carried out".

As regards compensatory interest, it is also clear in the proceedings that the illegality of the disputed tax assessment act is directly attributable to the Respondent, which, on its own initiative, carried it out without legal basis, suffering from an incorrect interpretation (and thus application) of the legal norms to the concrete case.

Consequently, the Petitioner is entitled to the receipt of compensatory interest, under the terms of the provision in articles 43rd, no. 1, of the General Tax Law and 61st of the Tax Procedure Code.

The compensatory interest shall be paid to the Petitioner from the date when it made the respective payments of the stamp tax installments in question in these proceedings until the full refund of the amounts paid, at the legal rate.

In these terms, the Petitioner's request proceeds.

7. DECISION

In light of the foregoing, this Single Arbitral Tribunal decides:

• To judge the request for arbitral decision granted and to declare the annulment of the decision dismissing the Administrative Appeal with the number … and, consequently, the annulment of the Stamp Tax assessment act which underlies it, better identified under the collection documents issued with the numbers …, all dated 22 March 2013, in the total amount of € 14,771.90, with the legal consequences.

• To judge the request for condemnation of the Respondent granted to refund to the Petitioner the amounts paid as tax, plus compensatory interest according to legal terms, from the date when such payments were made until the date of full refund of the same.

The value of the case is fixed at Euro 14,771.90, in accordance with the provision in articles 3rd, no. 2 of the Regulations of Costs in Tax Arbitration Proceedings (RCPAT), 97th-A, no. 1, subsection a) of the Tax Procedure Code and 306th of the Code of Civil Procedure.

The amount of costs is fixed at Euro 918.00, pursuant to article 22nd, no. 4 of RJAT and Table I attached to the RCPAT, at the charge of the Tax and Customs Authority, in accordance with the provision in articles 12th, no. 2 of RJAT and 4th, no. 4 of RCPAT.

Notify.

Lisbon, 24 June 2014.

The Arbitrator,

Dr. Henrique Nogueira Nunes

Text prepared by computer, in accordance with article 131st, no. 5 of the Code of Civil Procedure, applicable by reference of article 29th, no. 1, subsection e) of RJAT.

The drafting of this arbitral decision is governed by the spelling prior to the Orthographic Agreement of 1990.

[1] Nos. 2 to 4 of article 6th of the IMI Code define the concepts in question:

"2 – Residential, commercial, industrial or for services are buildings or constructions licensed for such or, in the absence of a license, that have as their normal purpose each of these purposes.

3 – Construction lands are considered those lands situated within or outside an urban agglomeration, for which a license or authorization has been granted, prior notice admitted or favorable prior information issued for subdivision or construction operation, and also those that have been so declared in the title of acquisition, excluding lands on which the competent entities prohibit any of those operations, namely those located in green areas, protected areas or which, in accordance with municipal territorial planning plans,

are allocated to spaces, infrastructure or public facilities. (wording of Law No. 64-A/2008, of 31 December)

4 – Those lands situated within an urban agglomeration that are not construction lands nor are encompassed by the provision in no. 2 of article 3rd are encompassed in the provision of subsection d) of no. 1, and also buildings and constructions licensed or, in the absence of a license, that have as their normal purpose other purposes than those referred to in no. 2 and also those of the exception of no. 3."

[2] See Oliveira Ascensão, "Interpretation of laws. Integration of gaps. Application of the principle of analogy", in Journal of the Bar Association, Year 57 – III, Lisbon, December 1997, pp. 913-941.