Stamp Tax on Vertical Property Under Verba 28.1 TGIS: CAAD Arbitration 293/2016-T

ARBITRAL DECISION

I. REPORT

1.1. A…, UNIPESSOAL, LDA., with registered office at Rua …, n.ºs…, …, … and …, in Lisbon (…-…), with the unique registration number and collective person number …, which falls within the geographical jurisdiction of the Finance Services office in Lisbon –…, has, pursuant to the provisions of articles 2.º, n.º 1, paragraph a), 5.º, n.º 2, paragraphs a) and b), 6.º, n.º 1, 10.º, n.º 1, paragraph a) and n.º 2, all of the Legal Regime for Tax Arbitration (RJAT), requested the CONSTITUTION OF A SINGULAR ARBITRAL TRIBUNAL with a view to declaring the illegality of the Stamp Duty (IS) assessments identified by the documents with numbers 2016…, 2016…, 2016…, 2016… and 2016…, all dated 05.04.2016, relating to the year 2015, concerning the ownership of an urban property in full ownership, with floors or divisions capable of independent use, located in the parish of …, municipality of Lisbon, registered in the urban property register under article…, and of the IS assessments identified by the documents with numbers 2016…, 2016…, 2016… and 2016…, all dated 05.04.2016, relating to the year 2015, concerning the ownership of an urban property in full ownership, with floors or divisions capable of independent use, located in the parish of …, municipality of Lisbon, registered in the urban property register under article….

1.2. The request for arbitral pronouncement aims, based on the provisions of paragraph a) of article 99.º of the Code of Tax Procedure and Process (CPPT), to declare the illegality of the assessments identified by the documents numbered 2016…, 2016…, 2016…, 2016… and 2016…, all dated 05.04.2016, relating to the year 2015, concerning the ownership of an urban property in full ownership, with floors or divisions capable of independent use, located in the parish of…, municipality of Lisbon, registered in the urban property register under article…, and of the IS assessments identified by the documents numbered 2016…, 2016…, 2016… and 2016…, all dated 05.04.2016, relating to the year 2015, concerning the ownership of an urban property in full ownership, with floors or divisions capable of independent use, located in the parish of …, municipality of Lisbon, registered in the urban property register under article….

1.3. The respondent is the TAX AUTHORITY AND CUSTOMS AUTHORITY (AT).

1.4. The request for constitution of the arbitral tribunal was accepted by the esteemed President of CAAD and automatically notified to the Tax Authority and Customs Authority on 06-06-2016.

1.4. Inasmuch as the Claimant did not proceed to appoint an arbitrator, pursuant to the provisions of article 6.º, n.º 2, paragraph a), of the RJAT, the undersigned was designated as arbitrator by the President of the Deontological Council of CAAD, with the appointment having been accepted within the legally prescribed timeframe and terms.

1.5. On 22-07-2016 both Parties were duly notified of this appointment, and neither manifested an intention to challenge the appointment of the arbitrator, in accordance with the provisions of article 11.º, n.º 1, paragraphs a) and b) of the RJAT, read in conjunction with articles 6.º and 7.º of the Deontological Code.

1.6. In accordance with the provision of paragraph c), n.º 1, of article 11.º of the RJAT, the Collective Arbitral Tribunal was constituted on 08-08-2016.

1.7. In the Arbitral Request, which it submitted, the Claimant invoked, in summary, the following:

a) The IS assessments in question were issued pursuant to the provisions of item 28.1 of the General Stamp Duty Table (TGIS), introduced by Law n.º 55-A/2012, of 29 October, and amended by Law n.º 83-C/2013, of 31 December;

b) However, the Claimant does not agree since the said item is not applicable to urban properties in full ownership, with floors or divisions capable of independent use, which are characterized by the fact that no floor or division has a tax-assessed value equal to or greater than € 1,000,000.00;

c) In the present case, it is evident that the floors and divisions, capable of independent use, which comprise the urban properties in question constitute, each one individually, a property, within the meaning of the aforementioned article 2.º, n.º 2, of the Real Estate Transfer Tax Code;

d) As extracted from the property records, the divisions and floors that make up the urban property in question each have a defined economic use – residential, services or industrial – in accordance with article 6.º, n.º 2, of the Real Estate Transfer Tax Code;

e) The economic value of each of the divisions and floors in question is all the more evident given that their economic purpose and use is not the same, with some divisions being intended for residential use and others for services and industry;

f) Furthermore, the economic value of each of the divisions and floors is further evidenced by the circumstance that, for each one, a concrete and autonomous tax-assessed value was determined;

g) With regard to the determination of the tax-assessed value, article 12.º, n.º 3, of the Real Estate Transfer Tax Code provides that "Each floor or part of a property capable of independent use shall be considered separately in the property registration, which also distinguishes the respective tax-assessed value";

h) In turn, article 119.º, n.º 1, of the Real Estate Transfer Tax Code provides, regarding the collection of Real Estate Transfer Tax, that "The services of the Directorate-General of Taxes send to each taxpayer, by the end of the month prior to payment, the respective collection document, with a breakdown of the properties, their parts capable of independent use, the respective tax-assessed value and the tax collected attributable to each municipality in which the properties are located";

i) Based on the above provisions, in the context of Real Estate Transfer Tax, specifically with regard to the determination of tax-assessed value, property registration and the assessment and collection of the tax, the legislature grants the same treatment to a property in full ownership as to a property in condominium ownership;

j) In conclusion, in light of all the foregoing, the property which constitutes the subject matter of item 28.1 of the TGIS is, in the present case, each of the floors and divisions capable of independent use, and the tax-assessed value to be considered for purposes of the applicability of item 28.1 of the TGIS is the tax-assessed value of each of the floors and divisions capable of independent use, inasmuch as it is this value that is used for purposes of Real Estate Transfer Tax, in accordance with article 2.º, n.º 1, 12.º, n.º 3 and 119.º, n.º 1, all of the Real Estate Transfer Tax Code;

k) Therefore, in summary, the tax event for purposes of item 28.1 of the TGIS is the ownership of each of the floors or divisions capable of independent use;

l) Given that none of the floors and divisions capable of independent use, which are the subject of the assessment acts in question, has a tax-assessed value equal to or greater than € 1,000,000.00, it is concluded that the IS assessments under review are illegal and must be annulled;

m) Without prejudice to the foregoing, if the above argument is not deemed to be well-founded, the IS assessments in question should nevertheless be annulled by application of materially unconstitutional law, by violation of the principle of fiscal equality resulting from article 13.º of the CRP, in its aspect of uniformity;

n) The central question regarding the principle of equality lies in the choice of a criterion that legitimizes the legislative option to tax only certain phenomena, in this case the ownership of urban properties with residential use, with a tax-assessed value equal to or greater than € 1,000,000.00;

o) The criterion on which the principle of equality should be based, in the fiscal domain, is that of contributive capacity;

p) However, the tax in question proves to be contrary to the CRP since it is not fixed in accordance with contributive capacity;

q) In fact, given the objective scope of application of the tax in question – urban properties with residential use with a tax-assessed value equal to or greater than € 1,000,000.00 – it is evident the non-conformity with the criterion of contributive capacity;

r) The legislature chose to establish as criteria for the determination of the objective scope of application, on the one hand, the qualification of the property – urban property with residential use – and, on the other hand, the tax-assessed value – equal to or greater than € 1,000,000.00;

s) However, the Claimant does not perceive the reasons that justify why only the ownership of urban properties with residential use and a tax-assessed value equal to or greater than € 1,000,000.00 are subject to IS;

t) The aforementioned criteria adopted by the legislature in determining the objective scope of application of IS, inasmuch as they exclude from taxation identical manifestations of real property wealth, appear to be non-conformant with the principle of contributive capacity, as a corollary and expression of the principle of fiscal equality;

u) Without prejudice to all the foregoing, the interpretation given by the tax administration to item 28.1 of the TGIS when the ownership of an urban property in full ownership, with floors or divisions capable of independent use, is at issue, as is the case here, is also contrary to the principle of equality, in the aspect of contributive capacity;

v) According to the IS assessments under review, it seems that the tax administration understands that, even though each of the floors or divisions capable of independent use has a tax-assessed value less than € 1,000,000.00, if the sum thereof results in a value equal to or greater than that threshold, IS shall apply to the ownership of each of the floors or divisions that comprise it;

w) This understanding is manifestly contrary to the principle of equality, leading, in the extreme, to situations in which owners with identical wealth and contributive capacity receive different treatment under IS;

x) In addition to the violation of the principle of equality and contributive capacity, taxation in the manner envisioned by item 28.1 of the TGIS also incurs a violation of the principle of progressivity, enshrined in articles 103.º, n.º 1 and 104.º, n.º 1 and n.º 3, both of the CRP;

y) In the present case, IS on the ownership of urban properties with residential use, of tax-assessed value equal to or greater than € 1,000,000.00, at the rate of 1% (cf. item 28.1 of the TGIS) does not assume a progressive character;

z) Inasmuch as the legislature has not established differentiating mechanisms in the application of the tax in question, tending in fact to the desired reduction of inequality in the social distribution of wealth, it must be concluded that, in the present case, we are faced with a clear violation of the principle of progressivity;

aa) IS on the ownership, usufruct and surface right of urban properties with residential use is also materially unconstitutional by violation of the principle of progressivity provided for in articles 103.º, n.º 1 and 104.º, n.º 3 of the CRP, which, consequently, should lead to the annulment of the assessments in question;

bb) Given that the present request for arbitral pronouncement is well-founded, the Claimant should be reimbursed the amounts unduly paid;

cc) Inasmuch as the assessments under review result from error attributable to the services, which resulted in payment of tax that was entirely undue, the Claimant also has, in accordance with article 43.º, n.º 1, of the General Tax Code, the right to compensatory interest.

1.8. The Respondent presented a reply, in which it presented a defense by way of objection, arguing, in the sense of the lack of merit of the request for arbitral pronouncement, in summary, the following:

a) The stamp duty assessment in question was made by the Tax Administration taking into account the nature of the urban properties, namely their divisions allocated to residential use, as of the date of the tax event, in accordance with the property registration information concerning the properties in question, applying, with the necessary adaptations, the rules contained in the Real Estate Transfer Tax Code;

b) Having regard to the property registration information contained in the property records, the Claimant does not succeed, with the documents it files with the record, in proving that contradicts the nature of the divisions with residential character;

c) The contested stamp duty assessments were issued in accordance with the information contained in the property record of the property, whereby they are valid and are not affected by any illegality;

d) At the time the Claimant held full ownership of the urban properties under analysis, valued in accordance with the Real Estate Transfer Tax Code, in the context of the general valuation of urban properties, described as "property in full ownership with floors or divisions capable of independent use", with a tax-assessed value (VP) greater than € 1,000,000.00;

e) In compliance and in accordance with the provisions of article 6.º, n.º 2 of Law n.º 55-A/2012, of 29/10, which added item n.º 28 to the TGIS, with the amendment made by Law n.º 83-C/2013 of 31/12 and whose respective rule of incidence refers to urban properties, valued in accordance with the Real Estate Transfer Tax Code, with VP equal to or greater than € 1,000,000.00 and, in accordance with its n.º 28.1, residential use, the AT proceeded to notify the collection documents for payment of the assessments in question;

f) What is at issue here are collection notes that result from the direct application of the legal rule, which translates into objective elements, without any subjective or discretionary assessment;

g) Since the assessments are correct and the appraised tax is due, compensatory interest is not owed, not least because there is no error attributable to the Services, which merely acted, as they should, in strict compliance with the legal rule;

h) What expressly results from the letter of the law is that the legislature intended to tax with item 28.1 in question properties as a single legal-tax entity, as will be explained below;

i) In accordance with the rules of the Real Estate Transfer Tax Code, specifically article 113.º, n.º 1, assessment is made on the basis of the tax-assessed values of the properties and in relation to the taxpayers listed in their respective property registers;

j) The properties being in the full ownership regime, not having autonomous fractions to which tax law attributes the qualification of property, because from the notion of property of article 2.º of the Real Estate Transfer Tax Code, only autonomous fractions of property in the condominium ownership regime are deemed to be properties – n.º 4 of the cited article 2.º of the Real Estate Transfer Tax Code;

k) From the foregoing, the defect of violation of law due to error as to the legal assumptions should be judged to be without merit, maintaining in the legal order the assessments challenged as they constitute a correct application of the law to the facts;

l) The provision of item 28.1 of the TGIS does not constitute any violation of the principle of equality, with there being no discrimination in the taxation of properties constituted in condominium ownership and properties in full ownership with floors or divisions capable of independent use, or between properties with residential use and properties with other uses;

m) The rules on valuation procedures, the rules on property registration, and the rules on the assessment of parts capable of independent use do not allow for the assertion that there should be an equation of property in the full ownership regime with the vertical property regime, precisely because it would be illegal and unconstitutional;

n) These civil law regimes are different, and tax law respects them;

o) It is thus a consequence of the tax event of the stamp duty of item 28.1 consisting of the ownership of urban properties whose tax-assessed value contained in the property register, in accordance with the Real Estate Transfer Tax Code, is equal to or greater than € 1,000,000.00, that the tax-assessed value relevant for purposes of the applicability of the tax is thus the total tax-assessed value of the urban property and not the tax-assessed value of each of the parts that comprise it, even when capable of independent use;

p) The different valuation and taxation of a property in full ownership as opposed to a property constituted in condominium ownership stems from the different legal effects inherent to these two figures.

q) The constitution in condominium ownership determines the division/partition of full ownership and the independence or autonomy of each of the fractions that constitute it, for all legal purposes, in accordance with n.º 2 of art. 4.º of the Real Estate Transfer Tax Code and art. 1414.º et seq. of the Civil Code, whereas property in full ownership constitutes, for all purposes, a single legal-tax entity;

r) In this manner, one cannot conclude an alleged discrimination in violation of the principle of equality when, in truth, we are faced with distinct realities, valued by the legislature differently;

s) Taxation in the context of IS obeys the criterion of suitability, to the exact extent that it aims at taxing the wealth consubstantiated in the ownership of immovable property of high value, appearing in a context of economic crisis that cannot at all be ignored;

t) Thus, the legislative choice of this mechanism for obtaining revenue is legitimated, which would only be censurable, in light of the principle of proportionality, if it resulted in a manifestly indefensible outcome;

u) The notifications effected for payment of the tax installments did not violate any legal or constitutional principle, and should therefore be maintained;

v) The present request for arbitral pronouncement should be judged to be without merit, given the legality of the assessments and collection notes, and the respondent entity should accordingly be absolved of the request.

1.10. By order of 06-10-2016, considering that no exceptions were raised and that there is only a dispute regarding matters of law, this Tribunal dispensed with the holding of the meeting provided for in article 18.º of the RJAT, in application of the principles of autonomy in the conduct of the proceeding, expedition, simplification and procedural informality. It further decided that the proceeding would continue with optional written submissions and fixed 09-12-2016 as the deadline for issuance of the arbitral decision.

1.11. The Claimant presented final submissions, in which it reiterated what it had already stated in the Request for Arbitral Pronouncement.

1.12. The Respondent presented final submissions, in which it reiterated what it had already stated in its Reply.

II. PROCEDURAL ASSESSMENT

2.1. The present request for constitution of an arbitral tribunal is brought with a cumulation of requests for declaration of illegality of the tax acts identified above.

2.2. In accordance with article 3.º, n.º 1, of the RJAT, the cumulation of requests is admissible when "(…) the merit of the requests depends essentially on the assessment of the same factual circumstances and the interpretation and application of the same principles or rules of law".

2.3. In the case sub judice, the legal requirements for the cumulation of requests are met.

2.4. In effect, what is contested in the present proceeding is the legality of the IS assessments, relating to 2015, concerning the ownership of two urban properties in full ownership, with floors or divisions capable of independent use, which were issued pursuant to the provisions of item 28.1 of the General Stamp Duty Table (TGIS).

2.5. Considering, therefore, that the IS assessments in question relate to the same tax period and are based on the same factual and legal grounds, the requirements for the cumulation of requests established in the aforementioned article 3.º, n.º 1, of the RJAT are thus met.

2.6. Therefore, the request for cumulation of requests presented by the Claimant is granted.

2.7. No exceptions were raised.

2.8. The parties possess legal standing and capacity, are properly parties to the request for arbitral pronouncement and are duly represented, in accordance with the provisions of articles 4.º and 10.º of the RJAT and article 1.º of Ordinance n.º 112-A/2011, of 22 March.

2.9. There are no defects in the proceeding, and therefore the tribunal must proceed to decide the merits.

III. MERITS

III.1. MATTERS OF FACT

§1. Proven Facts

The following facts are deemed proven:

a) The Claimant is the owner of the urban properties located in the parish of …, municipality of Lisbon, registered in the urban property register under articles … and …, as shown in the information contained in the property records attached to the file;

b) The urban property registered in the property register under article … is composed of the following twelve floors and divisions capable of independent use, intended for commerce and residential use:

c) The urban property registered in the property register under article … is composed of the following six floors and divisions capable of independent use, intended for commerce and residential use:

d) In April 2016, the Claimant was notified of the IS assessments relating to the ownership of five floors, intended for residential use, capable of independent use, that comprise the urban property in full ownership registered in the property register under article …, which are identified below:

e) Also in April 2016, the Claimant was notified of the IS assessments relating to the ownership of four floors, intended for residential use, capable of independent use that comprise the urban property in full ownership registered in the property register under article…, which are identified below:

f) On 27-04-2016, the Claimant proceeded to make voluntary payment of the first installment of the tax assessed for each of the floors or divisions with independent use described above.

§2. Unproven Facts

Relevant to the decision, there are no essential unproven facts.

§3. Reasoning as to Matters of Fact

As to the proven factual matters, the Tribunal's conviction was based on the free assessment of the positions assumed by the Parties regarding the facts and the contents of the documents attached to the file, which were not contested by the Parties.

III.2. MATTERS OF LAW

§1. Questions to be Decided

Having established the relevant factual basis, it appears that the present proceeding concerns exclusively matters of law.

It is incumbent upon the Tribunal to assess the legality of the stamp duty assessment acts in question.

The central question to be decided by the Tribunal is whether the tax-assessed value (VPT) to be considered for purposes of the application of Item 28 of the TGIS, where property not constituted in the condominium ownership regime is at issue, is the VPT attributed to each floor or division with independent use and with residential use, or whether it is the global VPT, corresponding to the sum of the VPT of each floor or division capable of independent use and with residential use.

§2. Application of Law to the Case Sub Judice

Article 4.º of Law n.º 55-A/2012, of 29 October, which came into force on 30 October following, added an item to the TGIS then in force, with the following wording:

"28 - Ownership, usufruct or surface right of urban properties whose tax-assessed value contained in the property register, in accordance with the Real Estate Transfer Tax Code, is equal to or greater than € 1,000,000 - on the tax-assessed value used for purposes of Real Estate Transfer Tax:

• 28.1 - For property with residential use - 1%;

• 28.2 - For property, when the taxpayers are not natural persons and are resident in a country, territory or region subject to a clearly more favorable tax regime, contained in the list approved by ordinance of the Minister of Finance - 7.5%."

Subsequently, article 194.º of Law n.º 83-C/2013, of 31 December, introduced new wording to item 28 of the TGIS, which now included land for construction, as follows:

"28.1 - For residential property or for land for construction whose construction, authorized or planned, is for residential purposes, in accordance with the provisions of the Real Estate Transfer Tax Code - 1%".

This amendment has, however, no implications for the present case.

Now, the Stamp Duty Code (CIS) and its General Table, in the wording introduced by Law n.º 55-A/2012, of 29 October, does not clarify the meaning of the expression "property with residential use".

Article 67.º, n.º 2 of the CIS, added by Law n.º 55-A/2012, of 29 October, provides that "[t]o matters not regulated in the present Code relating to item n.º 28 of the General Table, the provisions of the Real Estate Transfer Tax Code shall apply, as a subsidiary matter".

The legislature, in n.º 1 of art. 2.º of the Real Estate Transfer Tax Code, adopts the following concept of property:

"For the purposes of this Code, property is any parcel of land, including waters, plantations, buildings and constructions of any kind incorporated or based thereon, with a permanent character, provided that it forms part of the patrimony of a natural or legal person and, in normal circumstances, has economic value, as well as waters, plantations, buildings or constructions, in the circumstances above, endowed with economic autonomy in relation to the land on which they are situated, although located on a parcel of land that constitutes an integral part of a different patrimony or does not have a patrimonial character".

As observed by SILVÉRIO MATEUS and CURVELO DE FREITAS, "n.º 1 of this article [of article 2.º] provides for the existence of three requirements necessary for one to be faced with the concept of property, namely physical structure, patrimonial character and economic value" (Taxes on Real Property. The Stamp Duty, Lisbon, Engifisco, 2005, p. 101, annotation n.º 1.1).

In this manner, floors or divisions of independent use of immovable property registered in the urban property record in full ownership are not excluded from the concept of property, relevant for purposes of the Real Estate Transfer Tax Code and of CIS.

Article 2.º, n.º 4 of the Real Estate Transfer Tax Code further provides that "for purposes of this tax [Real Estate Transfer Tax], each autonomous fraction, in the condominium ownership regime, is deemed to constitute a property". In this provision the legislature clarifies, unequivocally, that autonomous fractions of immovable property registered in condominium ownership are considered properties, for purposes of Real Estate Transfer Tax. But this does not authorize the interpreter to make an interpretation a contrario, in the sense of excluding from the concept of property the units of independent use of immovable property registered in full ownership.

It appears, in truth, that the ratio of n.º 2 of art. 4.º is precisely to include in the concept of property the units (fractions, floors or divisions) of independent use.

This meaning appears to be confirmed by the provision in n.º 3 of article 12.º of the Real Estate Transfer Tax Code, which provides that "[e]ach floor or part of a property capable of independent use is considered separately in the property registration, which also discriminates the respective tax-assessed value."

From this it follows that the units of independent use of immovable property registered in full ownership are subject to valuation based on the criteria provided for in article 38.º of the Real Estate Transfer Tax Code, relevant for purposes of the application of Item 28 of the TGIS, as results from the final part of the provision contained in item 28.1 of the TGIS, which determines that the taxable value corresponds to the "tax-assessed value used for purposes of Real Estate Transfer Tax".

The Tax Authority and Customs Authority considers as the VPT relevant for purposes of application of item 28.1 of the TGIS the global VPT of immovable property registered in full ownership, in manifest contradiction with the practice of a plurality of assessment acts, relating to the various floors capable of independent use.

From the literal element of interpretation, in conjunction with the systematic and teleological elements, it follows that the tax-assessed value to be considered for purposes of the application of item 28.1 of CIS is that corresponding to each of the units capable of independent use.

In the same sense, the Supreme Administrative Court understands that "[h]aving item 28 of the General Table made no distinction between properties in the condominium ownership regime and full/vertical ownership and referring to the tax-assessed value used for purposes of Real Estate Transfer Tax, it shall not be incumbent upon its applicator to introduce any distinction, all the more so as it concerns a rule of incidence. If it were the legislature's intention to tax immovable property that, having a single property register article, because they are constituted by parts capable of independent use have assigned various tax-assessed values, and intended that for purposes of taxation in the context of stamp duty, in this case, the sum of these various tax-assessed values be taken into account, it would not have added the final part of the provision: on the tax-assessed value used for purposes of Real Estate Transfer Tax. Nothing in the law requiring the consideration of any sum of all or part of the VPT assigned to the various parts of a property with a single property register article, likewise it proves non-conformant with the law to perform such arithmetic operation only for purposes of taxation enshrined in item 28 of the General Stamp Duty Table." (cf. Judgment of 04.05.2016, rendered in case n.º 0166/16)

This is also the meaning most conformant with the Constitution of the Portuguese Republic, particularly with the principle of fiscal equality.

The Tax Authority and Customs Authority, in applying item 28.1 of the TGIS in a differentiated manner depending on whether the residential unit is inserted in immovable property registered in condominium ownership or in full ownership, is allowing a formal criterion of differentiation to prevail, to the detriment of the material equality required by the Fundamental Law.

From the point of view of contributive capacity, as an operative criterion of the principle of equality, which postulates material equality, it is irrelevant whether the property is in vertical or condominium ownership – the evidenced contributive capacity is the same, and the application of item 28.1 of the TGIS should be made in the same terms.

Since it is possible to interpret item 28.1 of the TGIS in conformity with the Constitution, the judgment of unconstitutionality of the norm contained therein should be avoided.

Therefore, regarding immovable property registered in full ownership, only the floor or division capable of independent use with residential use whose VPT is equal to or greater than € 1,000,000.00 is subject to Stamp Duty, by application of item 28.1 of the TGIS.

Considering that, in the present proceeding, none of the floors with respect to which Stamp Duty was assessed by application of Item 28.1 of the TGIS has a VPT equal to or greater than € 1,000,000.00, it is concluded that the respective assessment acts are illegal and their respective annulment is decided.

From the illegality of the assessment acts in question, and the consequent annulment thereof, results the right of the Claimant to be reimbursed the amounts of tax unduly paid.

The Claimant further requests payment of compensatory interest. As to this, n.º 1 of art. 43.º of the General Tax Code provides the following: "[c]ompensatory interest is owed when it is determined, in a favorable reclamation or judicial objection, that there was error attributable to the services from which resulted payment of the tax debt in an amount greater than that legally due".

It is considered that "[t]he error attributable to the services that made the assessment is demonstrated when they proceed to a favorable reclamation or objection of that same assessment and the error is not attributable to the taxpayer" (DIOGO LEITE DE CAMPOS, BENJAMIM SILVA RODRIGUES, JORGE LOPES DE SOUSA, General Tax Code. Annotated and Commented, 4th ed., Lisbon, 2012, p. 342).

The law further determines, in art. 100.º of the General Tax Code, that: "[t]he tax administration is obligated, in case of total or partial acceptance of reclamations or administrative appeals, or of judicial proceedings in favor of the taxpayer, to the immediate and complete reconstruction of the situation that would have existed if the illegality had not been committed, comprising the payment of compensatory interest, in accordance with the terms and conditions provided for in the law."

As is stated in the Judgment of the Supreme Administrative Court of 11/02/2009, appeal n.º 1003/08, "[h]aving the legislature adopted compensation in the form of compensatory interest, as a consequence of a decision annulling an assessment act, presuming the patrimonial prejudice derived from the deprivation of the amount paid as a consequence of an illegal assessment act, the interpretation of art. 100.º of the General Tax Code in conformity with the Constitution is that it recognizes the right to compensatory interest from the date on which the deprivation of the illegally assessed amount occurred and not merely from the date of the term of execution of the annulment decision."

In the present proceeding we are faced with a plurality of Stamp Duty assessments based on error attributable to the services, from which resulted unduly paid tax installments by the Claimant, whereby this party is recognized to have the right to compensatory interest on the amounts of tax unduly paid.

In accordance with the provision in n.º 1 of art. 61.º of the Code of Tax Procedure and Process (CPPT), "[i]nterest shall be calculated from the date of unduly paid tax until the date of processing of the respective credit note, in which they are included".

IV. DECISION

In these terms, and with the grounds set forth, this Tribunal decides:

i) To judge the request for arbitral pronouncement to be well-founded and, consequently, to annul the Stamp Duty assessments in question, with all legal consequences;

ii) To judge the request for reimbursement of tax unduly paid, plus compensatory interest, at the legal rate, calculated from the date of payment of the tax, until full reimbursement, all in the manner to be determined in execution of judgment.

V. VALUE OF THE CASE

In accordance with the provision of article 306.º, n.º 2, of the Code of Civil Procedure, 97.º-A, n.º 1, paragraph a), of the Code of Tax Procedure and Process and 3.º, n.º 2, of the Regulations on Costs in Tax Arbitration Proceedings, the value of the case is fixed at € 30,847.63.

VI. COSTS

In accordance with article 22.º, n.º 4, of the RJAT, the amount of costs is fixed at € 1,836.00, in accordance with Table I attached to the Regulations on Costs in Tax Arbitration Proceedings, to be borne by the Respondent.

Notice to be given.

Lisbon, 28 November 2016

The Arbitrator

Paulo Nogueira da Costa