AIMI Unconstitutionality Challenge: CAAD Arbitral Decision 310/2018-T on Additional Property Tax for Real Estate Companies

ARBITRAL DECISION

REPORT

On 4 July 2018, A..., SA, with the TAX ID NUMBER ... and registered office in ..., ..., ...-... ... (hereinafter referred to as the Claimant), came, pursuant to the provisions of articles 2, no. 1, paragraph a) and 10, no. 1, paragraph a), of Decree-Law no. 10/2011, of 20 January, which approved the Legal Regime for Tax Arbitration (RJAT) and articles 1 and 2 of Ordinance no. 112-A/2011, of 22 March (Binding Ordinance), to request the constitution of an Arbitral Tribunal, in which the Tax and Customs Authority (hereinafter AT or Respondent) is respondent, stating that it does not intend to exercise the power to appoint an arbitrator.

The request for constitution of the arbitral tribunal was accepted by His Excellency the President of CAAD and automatically notified to the AT, and, in accordance with the provisions of no. 1 of article 6 and paragraph b) of no. 1 of article 11 of the RJAT, as amended by article 228 of Law no. 66-B/2012, of 31 December, the Deontological Council appointed the undersigned as arbitrator of the single arbitral tribunal, responsibility accepted within the applicable period, without opposition from the Parties.

A. Subject Matter of the Request:

The Claimant petitions for a declaration of illegality of the dismissal dispatch of the gracious complaint no. ...2018..., as well as of the tax act which was the object of that proceeding, the assessment of the Additional Property Transfer Tax ("AIMI") with the number 2017..., issued by the Tax and Customs Authority ("AT") with reference to the year 2017, in the total amount of € 19,620.15 (nineteen thousand, six hundred and twenty euros and fifteen cents), the annulment of which it requests.

The Claimant further requests the condemnation of the Respondent to the restitution of the tax unduly paid, increased by compensatory interest, in accordance with articles 100 and 43 of the General Tax Law (LGT) and 61 of the Code of Tax Procedure and Process (CPPT).

B. Summary of the Positions of the Parties:

1. Of the Claimant:

As grounds for the request, the Claimant invokes, in summary, the following:

• The objecting party is a commercial company in the real estate sector that has as its main activity the purchase and sale of real estate (CAE 068100), namely land for construction, which it acquires in order to promote buildings, with this real estate property being destined, solely and exclusively, for the exploitation of its economic activity, whether by sale or by leasing;

• The legal regime of the AIMI, instituted by Law no. 42/2016, of 28 December, which approved the State Budget for 2017, configures this tax as a complementary tax to the IMI, with the aim of taxing "real estate property for residential purposes of very high value";

• According to the Report on the State Budget for 2017, the ratio legis of the AIMI would be the introduction of a tax that broadened the funding base of Social Security and fell "on the holders of the largest real estate assets, strengthening the progressivity of the system";

• The AIMI regime, set out in articles 135-A to 135-K of the IMI Code, focuses on the sum of the tax property values (VPT) of the taxpayer's real estate; however, no. 2 of article 135-B of the IMI Code excludes from the scope of the tax urban properties classified as "commercial, industrial or for services" and "others", in accordance with paragraphs b) and d) of no. 1 of article 6 of the same Code, with residential urban properties being subject to tax, as well as land for construction, regardless of its intended use, insofar as they are not expressly included in the norm delimiting the negative scope of application;

• The AIMI came to replace the previous mode of taxation of "luxury real estate property", provided for in item 28.1 of the General Table of Stamp Tax, as amended by Law no. 83-C/2013, although its contours present several divergences from the initial regime;

• Being undeniable the parallelism between item 28 and the current configuration of the AIMI, both taxes suffer from the same flaws with respect to real estate essential to obtaining revenues in the context of an economic activity, and the impugned tax act materializes the violation of the principles of equality, proportionality and taxpaying capacity;

• In the matter of taxation of property, no. 3 of article 104 of the CRP establishes that "The taxation of property [as is the case with the AIMI] must contribute to equality among citizens";

• In the concrete situation at issue, it is necessary to assess the legitimacy of the AIMI and whether it passes the test of the principle of taxpaying capacity: the land for construction owned by the Claimant, on which the impugned assessment fell, is essential to obtaining revenues in the context of its economic activity, themselves also subject to taxation;

• In effect, in the case of companies such as the Claimant, the ownership of land for construction constitutes the patrimonial substrate of its economic activity, being an essential means to the production of income, thus entirely failing the assumption that ownership of such real estate constitutes, by itself, an indication of increased taxpaying capacity;

• Given the activity exercised, it is usual for the Claimant to maintain in its current assets, for several years, land destined for building for exploitation or resale, in accordance with market conditions and others, beyond the control of real estate companies;

• According to the jurisprudential trend formed regarding the unconstitutionality of item 28 of the TGIS, the taxation of land for construction in the AIMI context aggravates the economic conditions of taxpayers, without there existing any material nexus of justification between the taxpaying capacity manifested by their respective owners and the payment of a tax that, in a vague and generic manner, contributes to the progressivity of the tax system;

• What creates a glaring material inequality between companies whose activity presupposes the ownership of real estate and those other companies whose activity does not result from the holding of real estate or those that hold them while pursuing a commercial, industrial or service activity;

• When discussing the details of the Proposal for the State Budget for 2017, it was established that there would be excluded from the scope of the AIMI, in addition to those classified as industrial and those licensed for tourist activity, urban properties "commercial, industrial or for services" and "others";

• However, the configuration of the tax fact as a function of the intended use of properties and the economic activity carried out therein is not at all justified in light of the purpose of the fiscal measure adopted, since there is no reason visible to negatively discriminate against real estate that constitutes "stock" of a company whose corporate purpose is the realization of real estate operations, excluding from taxation real estate devoted to other economic activities;

• The norm in question is manifestly unbalanced, incongruous and inadequate to the pursuit of the legal purpose, which makes it materially unconstitutional, by violation of the principle of proportionality;

• In sum: article 135-B, no. 1, of the CIMI, should be disapplied by the Tribunal, given its material unconstitutionality, by violation of the principles of equality, proportionality and taxpaying capacity, insofar as it focuses on real estate with commercial use, held by companies pursuing a real estate activity;

• Even if the material unconstitutionality of the aforementioned norm with the above scope is not accepted, its material unconstitutionality is clear with respect to land for construction, given the exemption of urban properties classified as "commercial, industrial or for services" – all of which determining the annulment of the impugned assessment.

C. Of the Respondent:

Following the notification dispatch in accordance with and for the purposes provided for in article 17 of the RJAT, the AT submitted a response, in which, defending the lawfulness of the impugned assessment, requests the dismissal of the claim, invoking, in summary:

• The subject matter of the claim concerns the dismissal of the gracious complaint no. ...2018..., presented against the AIMI assessment no. 2017..., referring to the year 2017, in the amount of € 19,620.15, with the Claimant ultimately requesting that "…the AIMI assessment impugned here be annulled, with the legal consequences";

• The Claimant is a legal entity, owner on 01.01.2017 of the properties identified in the impugned assessment, not covered by the exclusions provided for in no. 2 of article 135-B, nor by no. 3 of article 135-C of the CIMI, with the VPT having been determined in accordance with that recorded in the matrix, in accordance with nos. 1 and 2 of article 135-C of the CIMI;

• As follows from article 135-B of the CIMI, the AIMI focuses on urban properties classified as residential and as land for construction, regardless of their potential use, insofar as they are not expressly included in the norm delimiting the negative scope of application;

• Concerning legal entities and equivalent structures, the AIMI has the nature of real property taxation and not personal taxation, insofar as the modeling of the amount payable abstracts from the economic dimension of the entities and does not affect the totality of their net assets, reflecting the idea that the elements of the real estate property of these entities perform, as a rule, an economic function, not representing mere accumulation of wealth;

• The legislator expressly chose the taxation of properties classified as residential or as land for construction, even when they are part of the assets of companies, not including them in the delimitation of the negative scope of application;

• The Claimant seeks to establish a parallelism between the AIMI regime and that of the previous item 28.1 of the TGIS, as amended by Law no. 83-C/2013; however, the Constitutional Court has repeatedly "Not judged unconstitutional the norm contained in Item 28.1 of the TGIS (2014 Budget Amendment reading), insofar as it imposes annual taxation on the ownership of land for construction whose building, authorized or planned, is for residential purposes, whose tax property value is equal to or greater than € 1,000,000.00";

• The AIMI, unlike item 28.1 of the TGIS, focuses on real estate property regardless of its allocation to any productive process or income-generating activity (no. 1 of article 135-B of the IMI Code) and regardless of the asset classes in which they are recorded: inventories, tangible fixed assets or non-current assets held for sale;

• The legislator chose, in no. 2 of article 135-B of the IMI Code, a negative delimitation of the scope of application, excluding from the AIMI real estate that, by its potential allocation, can be economically recognized as factors of production, in the capacity of capital;

• The concern to ensure "the absence of impact on economic activity" did not lead to the exclusion of the scope of the tax from commercial companies and other equivalent entities that, by having as their object the pursuit of economic activities, would be affected to a greater or lesser degree by the burden of the tax;

• The negative delimitation of the scope of application was enshrined in objective application and not in subjective application, with nothing in the letter of the law suggesting that the exclusion from taxation can extend to the other properties not included therein, when they are devoted to a certain economic activity of the taxpayer;

• Contrary to what the Claimant seeks to make believe, the ratio legis of the exclusion from taxation provided for in article 135-B, no. 2, of the CIMI, cannot have the scope of encompassing urban properties classified as residential and land for construction that constitute the object of the economic activity of taxpayers;

• The goods in question are not merely instrumental to the exercise of the activity, rather they are part of the very core of the economic activity, they are the object of commerce or industry, as they are destined for resale or, in the case of land for construction, also for transformation in the event that buildings are erected thereon for subsequent sale;

• The real estate excluded from subjection to the AIMI, in accordance with no. 2 of article 135-B of the CIMI, those are the ones that perform an instrumental function to economic activities industrial, commercial or service, by constituting buildings supporting the functioning of such activities, not being, by themselves, revenue-generating;

• The fact that a given asset is worth, as a "factor of production of wealth" is not sufficient to contradict the taxpaying capacity of its owner and its ability to bear an additional contribution for the desired consolidation of the budget;

• Taxation in the AIMI context results in a specific imposition on property and not on income, as it focuses on manifestations of taxpaying capacity consisting of elements of real estate property that possess the characteristics indicated in article 135-B of the IMI Code, without individualizing taxpayers and subjecting to tax any and all entity that is the holder of real property rights over the urban properties encompassed;

• There is no unconstitutionality due to violation of the principles of equality and taxpaying capacity;

• Nor can the Tax and Customs Authority refrain from applying the law on grounds of unconstitutionality, as it is subject to the principle of legality;

• Should unconstitutionality of the legal regime of the AIMI be found, compensatory interest is not owed.

The AT ends by requesting that, should the unconstitutionality invoked by the Claimant be declared, the notification of the arbitral decision to the Public Prosecutor's Office be ordered, in accordance with the provisions of articles 280, no. 3, of the CRP and 72, no. 3, of the Constitutional Court Law.

By arbitral dispatch of 17 October 2018, the holding of the meeting referred to in article 18 of the RJAT was dispensed with, the Parties were invited to submit written statements within a successive period of 10 days, with commencement by the Claimant, fixing the date of 10 December 2018 for the delivery of the final decision and warning the Claimant that, by that date, it should proceed to payment of the subsequent arbitration fee.

The Parties did not submit statements.

II. PROCEDURAL MATTERS

• The Arbitral Tribunal is competent and was regularly constituted on 11 September 2018, in conformity with the requirements of paragraph c) of no. 1 of article 11 of Decree-Law no. 10/2011, of 20 January, as amended by article 228 of Law no. 66-B/2012, of 31 December;

• The parties have legal standing and capacity, are entitled to participate and are legally represented, in accordance with articles 4 and 10 of the RJAT and article 1 of Ordinance no. 112-A/2011, of 22 March.

• The proceeding does not suffer from vices that would invalidate it.

III. SUBSTANTIATION

III.1 FACTUAL MATTERS

A. Proven Facts:

• The Claimant is a commercial company with its registered office in the national territory, whose business is "Purchase and sale of real estate", CAE 068100 (page 21 of the PA);

• On 30.06.2017, the AT made in the name of the Claimant an AIMI assessment with the number 2017..., in the amount of € 19,620.15 (Doc. 2, attached to PI);

• The assessed AIMI focused on urban properties owned by the Claimant, located in the parish and municipality of ..., with the total tax property value (VPT), determined in accordance with article 135-C, no. 1, of the CIMI, of € 4,905,037.89 (Doc. 2, attached to PI and pages 22 to 25 of PA);

• The said AIMI assessment was notified to the Claimant, which proceeded to its payment on 29.09.2017 (doc. 2, attached to PI);

• On 29.01.2018, the Claimant submitted a gracious complaint regarding the impugned assessment;

• The gracious complaint which proceeded under number ...2018... was dismissed by dispatch of the Head of the Finance Service of ..., of 29.03.2018;

• The decision dismissing the gracious complaint was notified to the Claimant by office no. 2018... of the Finance Service of ..., remitted under CTT registration no. ...PT, of 05.04.2018.

B. Unproven Facts:

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

C. Substantiation of the Proven and Unproven Factual Matters:

Based on the documentary elements made available by the Parties, the facts set out above are considered proven, regarding which there is no controversy.

III.2 REGARDING THE LAW

On the scope of application of the AIMI. Residential urban properties and land for construction allocated to economic activities.

The Claimant is a limited company that develops its activity in the real estate sector, having as its corporate purpose the purchase and sale of real estate and the acquisition of land for construction, with the intention of promoting buildings thereon.

Its real estate property constitutes, therefore, an essential means to the pursuit of its income-generating activity.

In this context, the Claimant understands itself not to be a taxpayer of the Additional Municipal Property Tax (AIMI), as this has been configured as "a complementary tax to the IMI, with the aim of taxing «the accumulation of residential real estate property of very high value»", indicating the high economic capacity of its holder, which is manifestly not the case of the real estate it holds in "stock".

Articles 135-A to 135-K of the IMI Code contain the legal regime of the AIMI, created by Law no. 42/2016, of 28 December, which approved the State Budget for 2017, with article 135-A dealing with subjective application and article 135-B, with objective application.

Article 135-A of the CIMI, which provides for the subjective application of the AIMI, establishes that "Taxpayers of the additional municipal property tax are natural or legal persons who are owners, usufructuaries or surface right holders of urban properties situated in Portuguese territory", being "equivalent to legal entities any structures or centers of collective interests without legal personality that appear in the matrices as taxpayers of the municipal property tax", on "the date of 1 January of the year to which the additional municipal property tax applies."

With respect to the scope of the real property application of the AIMI, article 135-B of the IMI Code establishes that this encompasses "the sum of the tax property values of urban properties situated in Portuguese territory of which the taxpayer is the owner" (no. 1), with the exception of those that are "classified as «commercial, industrial or for services» and «others» in accordance with paragraphs b) and d) of no. 1 of article 6 of this Code." (no. 2).

In turn, no. 1 of article 6 of the IMI Code, to which article 135-B of the same Code refers, mentions the various species of urban properties that it classifies as:

a) Residential;

b) Commercial, industrial or for services;

c) Land for construction, and

d) Others,

concepts better concretized by the legislator in the following numbers, with residential, commercial, industrial or service properties being characterized as those that have been "for such licensed or, in the absence of a license, that have as their normal purpose each of these ends." (no. 2), land for construction as being "land situated within or outside an urban area, for which subdivision licensing or authorization, prior communication admitted, or favorable prior information issued for subdivision or construction operations, and also those that have been so declared in the acquisition deed, with the exception of land in which the competent entities prohibit any of those operations, namely those located in green areas, protected areas or which, in accordance with municipal land planning plans, are allocated to public spaces, infrastructures or facilities." (no. 3) and, residually, as others, those "land situated within an urban area that are not land for construction nor are covered by the provision of no. 2 of article 3, and also buildings and constructions licensed or, in the absence of a license, that have as their normal purpose other ends than those referred to in no. 2 and also those of the exception of no. 3." (no. 4).

The Claimant argues, in summary, that it was the legislative intention to proceed with the creation of a tax on real estate fortunes, in which urban properties devoted to economic activities would not be subject to taxation in AIMI, whereby this additional cannot focus on the properties of its ownership, in particular those classified as "land for construction" which constitute "the patrimonial substrate of its economic activity" and "essential means to the pursuit of its income-generating economic activity".

However, it does not appear possible to extract from the letter of the law, as the "starting point", "irremovable element of all interpretation" and "limit of the search for intent"[1], that no. 2 of article 135-B of the CIMI, has the meaning that "land for construction", when constituting the substrate of an economic activity exercised by a legal entity or equivalent, falls within the negative delimitation of the scope of AIMI.

In effect, no. 2 of article 135-B of the CIMI only expressly excepts from the scope of application urban properties that are "classified as «commercial, industrial or for services» and «others» in accordance with paragraphs b) and d) of no. 1 of article 6 of this Code."

It can thus be said that, "With respect to legal entities the AIMI is a true general tax on real estate property, although from its application some classes of properties are excluded (…) a general tax, but partial, on real estate fortunes (…)"[2] and that it was not on the basis of the activity to which the real estate is allocated that the exclusion from the scope of AIMI came to be defined.

On the Unconstitutionality of the AIMI, by focusing on properties that constitute the substrate of an economic activity

The Claimant considers that the legal regime of the AIMI, as a tax on real estate property, contravenes the constitutional principles of equality, proportionality and taxpaying capacity enshrined in articles 13 and 104, no. 3, of the CRP, requesting the disapplication to the concrete case of articles 135-A et seq. of the IMI Code, with the consequent annulment of the tax act impugned, for which it invokes, in summary, that such legal regime and the taxation resulting therefrom promote differentiated treatment and an unjustified inequality among taxpayers.

It thus considers that in instituting the AIMI, the legislator intended to tax properties with residential purposes, as actual manifestations of wealth, but it was clear that the intention was to exclude from the scope of its application all properties devoted to economic activities.

It further argues that, in the case of companies in the real estate sector, the ownership of real estate constitutes the patrimonial substrate of the economic activity itself, essential to its pursuit, with the essential premise of taxation not being found, since ownership of those properties does not constitute an indication of an increased taxpaying capacity; thus, the application of the AIMI to real estate held by these entities will penalize this sector of activity in an unjustifiably aggravated manner, to the detriment of the remainder.

To this argumentation, the Tax and Customs Authority counters that the choices underlying the delimitation of the objective scope of AIMI were made within the margin of "freedom of legislative formation" and do not violate the principles of equality of taxation based on taxpaying capacity, in light of the doctrine and jurisprudence of the Constitutional Court.

The AT argues that one is faced with a "partial tax on certain manifestations of taxpaying capacity", whereby it is "not normatively appropriate to make a comparison between the overall value of the property of other taxpayers", and should instead take as the basis of comparison, to assess compliance with the principle of equality, the property of other taxpayers with the same corporate purpose.

The Respondent further argues that "the different valuation and taxation of real estate with residential use as opposed to real estate intended for commerce, industry or services results from the different aptitude of the real estate in question, which supports the different treatment given by the legislator who, for economic and social reasons, decided, within its freedom of formation, to remove from the scope of the tax real estate intended for other purposes than residential".

It further argues that the AT that the principle of equality requires that all those who are holders of the same form of wealth be taxed in the same manner and that, like any tax on property, the AIMI is dissociated from any possible realization of profit from the sale of real estate, as well as the existence or non-existence of a negative or positive net situation, with only the tax property value of the properties being relevant for the economy of the tax.

Before the facts given as proven and the legal norms applicable to the situation under analysis, it is appropriate to note that the principle of tax equality translates into a specific expression of the general principle of equality inherent in article 13 of the CRP, and should be understood not only as equality before the law (formal sense), but as equality in the law (material sense), which invokes the principle of taxpaying capacity or capacity to contribute to meeting public charges in accordance with the economic capacity revealed by income, expenditure or property (cf. no. 1 of article 4 of the General Tax Law).

This principle of taxpaying capacity, constituting a measure and term of comparison of equality in tax matters, refers to the ideas of "generality or universality, whereby all citizens are bound to the duty to pay taxes, and uniformity, requiring that such duty be assessed by the same criterion – the criterion of taxpaying capacity. This thus implies equal tax for those with equal taxpaying capacity (horizontal equality) and different tax (in qualitative or quantitative terms) for those with different taxpaying capacity in proportion to this difference (vertical equality)."[3]

With respect to taxation of property, article 104, no. 3, of the CRP, establishes that "the taxation of property must contribute to equality among citizens", without a "general tax on property" having been created among us until the appearance of the AIMI that, reinforcing the overall progressivity of the system, would be apt to promote a more just distribution of wealth[4].

On the other hand, despite the broad margin of legislative formation in creating taxes, the legislator is forbidden from arbitrariness in taking legislative measures that are manifestly disproportionate or inadequate.

However, the Constitutional Court has come to understand that "The violation of the constitutional principle of equality underlies a concrete and actual situation of unjustified or discriminatory differentiation, and it is certain that, in this regard, constitutional jurisprudence has insistently stressed that that principle does not prohibit the creation of distinctions, provided that these are not arbitrary or devoid of sufficient material foundation"[5].

It does not appear, however, that the application of AIMI to real estate owned by companies that carry out their activity in the real estate sector, as is the case with the Claimant, owner of land for construction acquired with the intention of promoting buildings thereon for sale, is discriminatory or that such companies should merit more advantageous treatment than that granted to the generality of urban property owners.

Citing the Arbitral Decision rendered in process no. 664/2017-T, with which we agree, we shall say that "The ownership of real estate property, for the purposes of sale and transformation, with a view to obtaining economic results, ceases to constitute a patrimonial asset that is indicative of an increased taxpaying capacity, which goes beyond the tax that focuses on taxable profit by reason of the economic activity developed. What is at issue, therefore, is not the taxation of actual income earned by such entities through the activity developed, but the complementary taxpaying capacity that results from the ownership of property and which by itself can facilitate the raising of credit or the strengthening of its negotiating position in the conclusion of contracts".

Tracing the parallelism between taxation in the AIMI context and that found in the revoked item 28 of the General Table of Stamp Tax, with respect to land for construction, the Claimant invokes Constitutional Court Decision no. 250/2017, which judged unconstitutional the norm of item 28.1 of the General Table of Stamp Tax, as amended by Law no. 83-C/2013, of 31 December, insofar as it imposed annual taxation on the ownership of land for construction whose building, authorized or planned, was for residential purposes, whose tax property value was equal to or greater than € 1,000,000.00.

However, as can be read in the cited Arbitral Decision no. 664/2017-T, that "judgment emphasized that it is not possible to compare residential buildings that correspond to an actually real buildability definitely incorporated in the legal sphere of the holder and land for construction that correspond to merely potential buildability, not yet materialized, to conclude that it is not possible to integrate within the same normative provision of tax buildings of high tax property value and land for construction which are worth essentially for their future urban development exploitation.

It must first be said that the precept analyzed therein does not have the same normative content as the provision now under consideration and that the jurisprudential understanding that came to be established cannot be directly transposed to the situation of the case at hand.

The principle of tax equality was invoked in that judgment because it was understood that the inclusion within the scope of application of the norm of a land for construction alongside an already built residential property does not reflect the different taxpaying capacity of their respective owners, and that is the decisive reason for the judgment of unconstitutionality. In the case at hand, conversely, for the purpose of the exclusion from the additional IMI, one seeks to establish the equation between land for construction and urban properties commercial, industrial or for services from the inverse perspective that land for construction potentially usable for those purposes does not distinguish itself from already built properties that are classified as commercial, industrial or for services.

But (…) there is no reason in that circumstance to consider the violation of the principle of tax equality to be verified, given that – as, moreover, is acknowledged in judgment no. 250/2017 – land for construction and built property correspond to distinct realities, and the exclusion from the additional IMI with respect to real estate classified as commercial, industrial or for services is shown to be justified by its instrumental function with respect to a certain productive activity, which is not applicable to land that can only reach that potentiality in the future.

The cited Constitutional Court judgment no. 250/2017 brings, therefore, no new argument that could found, in the situation of the case, a judgment of unconstitutionality.".

In light of the foregoing, the constitutional principles of equality and taxpaying capacity are not considered violated in any of the dimensions invoked by the Claimant, and the impugned assessment is to be upheld.

On Issues of Barred Cognizance

In the judgment, the judge must rule on all issues that should be assessed, abstaining from ruling on issues of which it should not have knowledge (final segment of no. 1 of article 125 of the CPPT), and the issues on which the tribunal's powers of cognizance fall are, in accordance with no. 2 of article 608 of the CPC, applicable as subsidiary to the tax arbitral proceeding, by referral from article 29, no. 1, paragraph e) of the RJAT, "the issues which the parties have submitted for its assessment, with the exception of those whose decision is barred by the solution given to others (…)".

With the impugned assessment being to remain in the legal order, for the reasons set out above, cognizance of the issue relating to the request for compensatory interest is barred.

Cognizance of the invoked absolute exception of the timeliness of the request for arbitral pronouncement referred to in conclusion I of the Respondent's Response is equally barred, as the facts determining it were not specified in that pleading.

DECISION

Based on the factual and legal grounds set out above and, in accordance with article 2 of the RJAT, it is decided:

• To judge the request for arbitral pronouncement as unfounded and, consequently, to absolve the Tax and Customs Authority from all claims;

• To condemn the Claimant to payment of procedural costs.

VALUE OF THE PROCEEDING: In accordance with the provisions of article 306, nos. 1 and 2, of the CPC, 97-A, no. 1, paragraph a), of the CPPT and 3, no. 2, of the Regulation of Costs in Tax Arbitration Proceedings, the proceeding is valued at € 19,620.15 (nineteen thousand, six hundred and twenty euros and fifteen cents).

COSTS: Calculated in accordance with article 4 of the Regulation of Costs in Tax Arbitration Proceedings and Table I attached thereto, in the amount of € 1,224.00 (one thousand, two hundred and twenty-four euros), to be borne by the Claimant.

Let notice be given.

Lisbon, 10 December 2018.

The Arbitrator,

Mariana Vargas

Document prepared by computer, in accordance with no. 5 of article 131 of the CPC, applicable by referral from paragraph e) of no. 1 of article 29 of Decree-Law 10/2011, of 20 January.

The wording of this decision is governed by the Orthographic Agreement of 1990.

[1] José de Oliveira Ascensão, "The Law – Introduction and General Theory", 13th Edition revised, Almedina, Coimbra, page 396.

[2] José Maria Fernandes Pires, "The Additional to IMI and Personal Taxation of Property", Almedina, Coimbra, 2017, page 42.

[3] José Casalta Nabais, "Tax Law", Almedina, Coimbra, 2014, 7th Edition, page 155.

[4] According to José Maria Fernandes Pires, cited work, page 31, "The argument most used in the defense of the existence of general and personal taxes on property, and also that which our Constitution enshrines, is that of promoting a more just distribution of wealth. (…) The increase in progressivity produced by this tax, as well as the tax revenues it would be capable of generating, could serve to reduce the rates applicable to average and lower incomes, lowering the tax burden on those citizens and increasing social justice".

[5] Cf. Constitutional Court Judgment no. 211/03, of 28/04, process no. 308/02.