Summary
Full Decision
ARBITRATION DECISION
I. REPORT
A, NIF ..., with headquarters in ..., successor of B, NIF ..., with headquarters in Rua … [as a result of merger by incorporation pursuant to subparagraph a) of article 112 of the Commercial Companies Code (doc. no. 4 attached and hereby reproduced in full)], not having been notified of any express decision on the hierarchical appeal that it filed on 26 November 2013 against the decision rejecting the administrative complaint that it lodged against the 2012 stamp tax assessment for €170,485.70 (cf. docs nos. 1, 2 and 3 attached and hereby reproduced in full for all purposes), has hereby, under the terms and for the purposes set out in subparagraph a) of no. 1 of article 2, in subparagraph a) of no. 1 of article 10, in fine, and in articles 15 and following, all of Decree-Law no. 10/2011, of 20 January (Legal Framework of Tax Arbitration), submitted a request for arbitral decision with a view to having declared illegal and annulled the stamp tax assessment challenged therein, with all legal consequences, namely the condemnation of the now-challenged party to refund to the now-claimant the amount of tax paid of €170,485.70 plus indemnity interest calculated from 26 April 2013, 30 July 2013 and 27 November 2013 until the date of its complete and effective refund, and to compensate it for the costs resulting from the litigation, namely the fees of its judicial representative, to be determined in execution of judgment.
It thus bases, in essence, its request as follows:
a) The tax challenged was assessed at the rate of 1% on the taxable patrimonial value (VPT) of €17,048,570 of the land for construction entered in the urban property roll of the parish of ... of the municipality of ... under no. ..., which on the date of the facts was the property of the claimant, hereinafter referred to simply as "land for construction" (cf. property booklet presented with the administrative complaint under doc. no. 2);
b) The assessment act mentions the "Item of TGIS 28.1", suggesting that its foundation lies in the provision of no. 28.1 of the General Table of Stamp Tax (TGIS) attached to the Stamp Tax Code (CIS), as amended by article 4 of Law no. 55-A/2012, of 29 October, to which the provisions of the Code of the Municipal Property Tax (CIMI) are subsidiarily applied (cf. doc. no. 3);
c) The tax challenged was paid in full by the now-claimant in three successive installments of €56,828.58, on 26 April 2013, 30 July 2013 and 27 November 2013 (cf. the payment slips attached to doc. no. 3).
d) The tax administration understood in the administrative complaint proceedings that the stamp tax then complained of and here challenged is levied on the VPT of €17,048,570 and was correctly assessed at the rate of 1% on that same VPT;
e) The decision rejecting the complaint considered that the requirements for the incidence of item no. 28.1 of the General Table of Stamp Tax (TGIS) attached to the Stamp Tax Code (CIS) as amended by article 4 of Law no. 55-A/2012, of 29 October, were met, in that, in the view of the Tax Authority, "(…) urban properties that are land for construction and to which residential use has been assigned in the context of their respective valuations, as recorded in their respective property rolls, are subject to stamp tax, in accordance with the instructions contained in the email of DSIMT (...)" (cf. doc. no. 2).
f) This understanding of the Tax Authority, which formed the basis of the decision rejecting the complaint, is illegal, as this Arbitral Tribunal has understood, moreover, on multiple occasions and under various panels, namely in cases 42/2013-T, 48/2013-T, 49/2013-T, 50/2013-T, 53/2013-T, 75/2013-T, 132/2013-T, 144/2013-T, 158/2013-T, 186/2013-T and 218/2013-T.
g) That is, contrary to what the Tax Authority understands, land for construction is not – nor was it on the date of the tax event – a property with residential use, is not, and cannot be, used for residential purposes, nor is it even, physically, capable of being inhabited.
h) The law defines land for construction as ... land licensed or authorized for subdivision or construction operations (no. 3 of article 6 of the CIMI), and defines residential properties as buildings or constructions licensed or normally intended for residential purposes (no. 2 of article 6 of the CIMI; articles 62 and following of the legal regime for urban buildings);
i) Even if land for construction is licensed or authorized for the construction of residential properties, it does not thereby become a residential property.
j) When item 28.1 of the General Table of Stamp Tax limits its incidence to "properties with residential use" it naturally intends to include residential properties and not land for construction.
k) Thus, the definition of "property with residential use" employed by no. 28.1 of the TGIS, since it is not given by the CIS, having regard to article 67 no. 2 thereof, coincides with the definition employed in article 6 of the CIMI of "residential property", as a building or construction intended for residential purposes.
l) For this reason it is understood that in case no. 49/2013-T, the Tax Arbitration Tribunal held that: "the circumstance that for a particular land for construction the building of a property intended for residential purposes, or for any other purpose, is authorized, although it must be considered in its valuation, does not determine any change in the classification of the land which, for tax purposes, continues to be considered as such".
m) That is, land for construction is not a building, is not a construction.
n) A property (with) residential use is by definition a built property, and not a property yet to be built or a future thing.
o) The challenged act is thus, from the outset, illegal due to the lack of the requirement for incidence.
p) This is further supported by the spirit of the legislator, clearly expressed in the words spoken by the Secretary of State for Tax Affairs at the plenary meeting of the National Assembly, of 10 October 2012, which discussed in general the bill no. 96/XII, which would give rise to Law 55-A/2012, of 29/10: "[...] the Government proposes the creation of a special tax to tax urban residential properties of higher value. It is the first time in Portugal that special taxation has been created on high-value properties intended for residential purposes. This tax [...] will be levied on houses with a value equal to or greater than 1 million euros" (emphasis here, Parliamentary Journal of the National Assembly of 11/10/2012, pp. 31 to 32).
q) If the stamp tax of item no. 28.1, as amended by Law 55-A/2012, already applied to the VPT of land, there would be no need for the State Budget Law for 2014 to add the inclusion of land for construction that it added.
r) For this reason it is understood that in case no. 186/2013-T, the Tribunal held that "the most decisive logico-systematic argument is provided by the legislator itself: doubtless recognizing that the concept of 'residential use' was useless, Law no. 83-C/2013, of 31 December, amended, in its article 194, item 28.1 of the TGIS, giving it new wording."
s) The same Tribunal concluding learnedly, presided over by Professor Fernando Araújo, it should be noted, "although problems of unconstitutionality remain for the future that the new wording does not resolve, and perhaps even aggravates, the fact that matters in the case at hand is that, at the date of the facts to which the present case refers, there was a wording of item 28.1 of the TGIS that the legislator itself subsequently recognized to be insufficient to support an interpretation such as that which is upheld by the Respondent in the present case."
t) The land for construction in question here not being a property used for residential purposes, either in physical terms or in the terms in which the law defines it, the stamp tax provided for in no. 28.1 of the TGIS does not apply to its ownership, whereby the assessment act in question which is now challenged before the silent conduct of the decision-making body – with the period referred to in article 66, no. 5 of the Code of Tax Procedure and Process (CPPT) having expired – suffers from the defect of violation of law, and cannot remain in the legal order.
u) Even if, by absurdity, it could be understood that land for construction is a property with residential use, and concluded that it meets the provision of no. 28.1 of the TGIS, it would nonetheless remain illegal the assessment now challenged.
v) In that case, the assessment act now challenged would also be unconstitutional by violation of the principle of equality enshrined in the Constitution.
x) The stamp tax of no. 28.1 of the TGIS has the nature of an accessory tax to the IMI, which here occupies the place of the principal tax, insofar as the tax legal relationship that emerges from it is subordinate to the vicissitudes of the tax legal relationship of the latter.
z) As an accessory tax to the IMI, the stamp tax of no. 28.1 of the TGIS follows the modality of addition, in that it is assessed on the same taxable matter of the principal tax.
aa) By selecting from among the real estate portfolio of each taxpayer only certain properties that exceed a certain value, the stamp tax of no. 28.1 of the TGIS introduces an inequality in taxation between those who have their real estate portfolio composed of such properties and those who have a real estate portfolio of equal value but composed of other properties.
bb) For example, with two owners each having two properties with residential use, in which the VPT of the first are €750 thousand each, and those of the second are €500 thousand and €1 million, both reveal the same contributory capacity of €1.5 million, but one is taxed and the other is not.
cc) The singular formulation of the basis of incidence – and of the corresponding field of exclusion – of the stamp tax of no. 28.1 of the TGIS achieves the feat of completely ignoring contributory capacity as a presupposition, criterion and measure of tax, thus ineluctably wounding the principle of equality before the Law.
dd) The decision rejecting the complaint further understood that the regime provided for in article 6 of Law no. 55-A/2012, of 29 October, would not be applicable here, since it would only benefit the tax for the year 2011 and not the assessment here in discussion, which concerns 2012.
ee) However, no. 1 of that article 6 provides that, in 2012, the tax event occurs on 31 October, and that the assessment must be made by 20 December 2012 at the rate of 0.5% or 0.8%, depending on whether it is a property valued in accordance with the CIMI or not.
ff) This is to say that, in 2012, the tax event does not occur on 31 December, that the assessment should not be made in the months of February and March of the following year, and that the rate should not be 1%, as would otherwise result from the provisions of the TGIS, the CIS and the CIMI.
gg) Now, the assessment act only took place on 21 March 2013, and applies the rate of 1% on the VPT of €17,048,570.
hh) It is thus verified that the assessment act now challenged, relating to the year 2012, violated all the rules of the transitional regime of 2012, whereby it also cannot remain in the legal order for this reason.
Response of the Tax Authority
The Tax Authority came to defend in the response the maintenance of the tax acts challenged, asking for the rejection of the request with reaffirmation, in essence, of the arguments that formed the basis of the decision maintaining that act.
The respondent alleges:
a) It is the understanding of the Tax Authority that the property on which each of the assessments challenged is made has the legal nature of a property with residential use, whereby the assessment acts which are the subject of the present request for arbitral decision should be maintained, as they embody the correct interpretation of Item 28 of the General Table, added by Law 55-A/2012, of 29/12.
b) Law no. 55-A/2012, of 29/10/2012 amended article 1 of the CIS, and added item 28 to the TGIS.
c) With this legislative amendment, the stamp tax would henceforth also apply to the ownership, usufruct or right of superficies of urban properties whose taxable patrimonial value contained in the property roll, in accordance with the Code of the Municipal Property Tax (CIMI) is equal to or greater than €1,000,000.00.
d) In the absence of any definition of the concepts of urban property, land for construction and residential use, in the context of stamp tax, recourse must be had to the CIMI, in search of a definition that permits the assessment of possible subjection to stamp tax, in accordance with the provision of article 67, no. 2 of the CIS as amended by Law no. 55-A/2012, of 29/10.
e) Under the terms of the said legal provision, to matters not regulated in the Code, relating to item no. 28 of the TGIS, the provisions of the CIMI are subsidiarily applied.
f) Article 2, no. 1 of the CIMI provides that "property is any fraction of territory, including waters, plantations, buildings and constructions of any nature incorporated or situated on it, with a character of permanence, provided that it forms part of the patrimony of a natural or legal person and, under 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 where they are located, although situated on a fraction of territory that constitutes an integral part of a different patrimony or does not have a patrimonial nature".
g) In turn, article 6, no. 1 of the CIMI provides concerning the types of existing urban properties, integrating in this concept land for construction, that is, "land situated inside or outside an urban agglomeration, for which a license or authorization has been granted, prior communication admitted or favorable prior information issued for subdivision or construction operation, and also those which have been so in the acquisition title, except for land on which the competent entities prohibit any of those operations…"
h) The notion of use of the urban property is found in the part relating to the valuation of real estate, which is well understood since the valuation of the real estate (purpose) incorporates value to the real estate, constituting a fact of distinction determinant (coefficient) for purposes of valuation.
i) As results from the expression "...value of authorized constructions", contained in article 45, no. 2 of the CIMI, the legislator opted to determine the application of the methodology of valuation of properties in general, to the valuation of land for construction, and therefore applicable to them the use coefficient provided for in article 41 of the CIMI. [See Judgment no. 04950/11, of 14/02/2012, of the Administrative Court of the South: "The regime for valuation of the patrimonial value of land for construction is enshrined in article 45 of the CIMI. The valuation model is equal to that of built buildings, although starting from the building to be constructed, taking as a basis the respective project, the value of land for construction corresponds, fundamentally, to a legal expectation, embodied in a right to construct thereon a property with certain characteristics and with a certain value. This expectation of production of wealth materialized in a building to be constructed is what increases the value of the patrimony and the wealth of the owner of the land for construction, as soon as the real estate in question comes to be considered as land for construction. For that reason, the greater the value of the property to be constructed, the greater the value of the land for construction that underlies it (cfr. Art. 6, no. 3 of the CIMI). (…) "In conclusion, in the valuation of land for construction, the legislator wanted the methodology of the valuation of urban properties in general to be applied, so all coefficients must be taken into consideration, above identified, namely the use coefficient provided for in article 41 of the CIMI, further resulting such legal requirement from no. 2 of article 45 of the CIMI, by referring to the value of authorized or foreseen constructions on the same land for construction".
j) Thus, for purposes of determining the taxable patrimonial value of land for construction the application of the use coefficient in the context of valuation is clear, whereby its consideration for purposes of applying item 28 of the TGIS cannot be ignored, the following order of considerations being valid in this sense:
k) The use of the real estate (aptitude or purpose) is a coefficient that contributes to the valuation of the real estate, in the determination of taxable patrimonial value, applicable to land for construction;
l) Item 28 TGIS itself refers to the expression "properties with residential use", appealing to a classification that overlays the species provided for in no. 1 of article 6 of the CIMI.
m) Contrary to what is advocated by the Claimant, the Tax Authority understands that the concept of "properties with residential use", for purposes of the provision in item 28 of the TGIS, comprises both built properties and land for construction, from the outset taking into account the literal element of the rule.
n) It should be noted that the legislator does not refer to "properties intended for residential purposes", having opted for the notion "residential use" - a different and broader expression whose meaning should be found in the need to integrate other realities beyond those identified in article 6, no. 1 subparagraph a) of the CIMI.
o) The mere constitution of a right of potential construction immediately increases the value of the real estate in question, hence the rule contained in article 45 of the CIMI that requires the separation of the two parts of the land.
p) On one side, the part of the land where the building to be constructed will be located is considered, and on the other the area of free land. Once the amount of the first part is determined, the value determined is reduced to a percentage between 15% and 45% as provided in no. 2 of the said rule, because the construction is not yet carried out.
q) As to the value of the land adjacent to the area of implantation, this is determined in the same terms in which the value of the area of free land and the area of excess land is determined for any urban real estate.
r) Long before the actual construction of the property, it is possible to determine and establish the use of the land for construction.
s) Regarding the alleged violation of constitutional principles, the Tax Authority cannot fail to point out that the Constitution of the Republic requires that what is necessarily equal be treated as equal and what is essentially different be treated as different, not preventing differential treatment, but only arbitrary, unreasonable discriminations, that is, distinctions in treatment that do not have justification and sufficient material foundation.
t) The Tax Authority understands that the provision of item 28 of the TGIS does not constitute a violation of any constitutional requirement.
u) Item 28 of the TGIS is levied on the ownership, usufruct or right of superficies of urban properties with residential use, whose taxable patrimonial value contained in the property roll, in accordance with the CIMI, is equal to or greater than €1,000,000.00, that is, it is levied on the value of the real estate.
v) This is a general and abstract rule, applicable uniformly to all cases in which the requirements of fact and law are met.
x) Also, the different valuation and taxation of a real estate in full ownership as opposed to a real estate constituted in condominium ownership results from the different legal effects inherent to these two figures.
z) Condominium ownership determines the division/splitting of full ownership and the independence or autonomy of each of the units that constitute it for all legal purposes, under the terms provided for in article 2, no. 4 of the CIMI and article 1414 and following of the Civil Code, whereas a property in full ownership constitutes, for all purposes, a single unit.
aa) It is also important to note that taxation in the context of stamp tax obeys criteria of suitability, applying uniformly to all holders of real estate with residential use of value exceeding €1,000,000.00, applying to the wealth embodied and manifested in the value of real estate.
PROCEDURAL MATTERS
This collective Arbitral Tribunal was duly constituted on 23-6-2014, with the arbitrators appointed by the Deontological Council of CAAD, with the respective legal and regulatory formalities complied with (cfr articles 11-1/a) and b), of the RJAT and 6 and 7, of the Deontological Code of CAAD), and is competent ratione materiae, in accordance with article 2 of the RJAT.
By order of 5-11-2014, the meeting provided for in article 18 of the RJAT was dispensed with.
The parties have legal personality and capacity, are legitimately placed and are regularly represented (cf. articles 4 and 10, no. 2 of the RJAT and article 1 of Ordinance no. 112-A/2011, of 22 March).
No procedural defects were identified.
II GROUNDS
The subject matter of the case concerns the question of whether or not item 28.1 of the TGIS includes land with construction use or, put another way, whether the stamp tax provided for in item 28.1 of the TGIS (as worded at the time) applies or not to the VPT of land for construction.
FACTUAL MATTERS
Proven Facts
The following are the essential undisputed and proven facts:
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In 2013, B was recorded as the holder of the land for construction entered in the urban property roll of the parish of ..., municipality of ... under article ..., with the taxable patrimonial value of €17,048,570.00;
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B was notified of the Stamp Tax assessment of item 28.1 of the TGIS, in a total of €170,485.70, relating to the identified land for construction;
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From the Stamp Tax assessment it results that the tax assessed refers to the year 2012;
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From the Stamp Tax assessment it results that a rate of 1% was applied;
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For payment purposes, the tax was divided into three payment slips with the numbers 2013 ..., 2013 ... and 2013 ... which were payable during the months of April, July and November 2013, respectively;
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The first installment was paid on 26/04/2013;
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The second installment was paid on 30/07/2013;
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The third and final installment was paid on 27/11/2013;
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The administrative complaint submitted by B on the grounds of the illegality of the assessment was rejected by order of 21/10/2013;
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B appealed the rejection hierarchically, on 26 November 2013;
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On 17/12/2013 the merger of B into A was registered with the competent Commercial Registry Conservatoria, by transfer of assets, with B being extinguished on that date;
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The hierarchical appeal filed was not the subject of express decision, presumption of its rejection on 26 January 2014;
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On 10 April 2014, the Claimant filed the present request for arbitral decision.
Unproven Facts
No other facts with relevance to the arbitral decision were proven.
Grounds of the Factual Matters
The factual matters given as proven are based on the documentary evidence presented and not contested and on the copy of the administrative file attached by the Tax Authority.
THE LAW
A. Of the Tax Assessed
The essential question to be decided concerns the determination of the basis of incidence of item 28.1 of the TGIS, particularly with regard to the integration of land for construction in the concept of "urban property with residential use".
Now, on this question there are already numerous decisions of the Administrative and Tax Arbitration Center, examples of which are the decisions of 18/09/2013, case no. 49/2013-T, of 02/10/2013, case no. 53/2013-T, of 09/10/2013, case no. 48/2013-T, of 18/10/2013, case no. 42/2013, of 01/11/2013, case no. 75/2013-T, case no 215/2013-T, case no 240/2013-T, case no 310/2013-T and case no 284/2013-T.
There are also numerous decisions of the Supreme Administrative Court on this matter, examples of which are the judgments issued on 24/9/2014, in cases nos. 01533/13, 0739/14 and 0825/14; on 10/9/2014, in cases nos. 0503/14, 0707/14 and 0740/14; on 9/7/2014, in case no 0676/14; on 2/7/2014, in case no 0467/14; on 28/5/2014, in cases nos. 0425/14, 0396/14, 0395/14; on 14/5/2014, in cases nos. 055/14, 01871/13 and 0317/14; on 23/4/2014, in cases nos. 270/14 and 272/14; and on 9/4/2014, in cases nos. 1870/13 and 48/14
Given the identity of the factual question and identity of the legal matter, this jurisprudence is also accepted here, whereby, following what has been set out in the cited judgment of 9/4/2014, case no. 01870/13, it will be said, fully endorsing the grounds presented:
"The concept of 'urban property with residential use' was not defined by the legislator either in Law no. 55-A/2012, which introduced it, or in the IMI Code, to which no. 2 of article 67 of the Stamp Tax Code (also introduced by that Law), refers on a subsidiary basis. And it is a concept that, probably due to its imprecision – a fact all the more serious given that it is in function of it that the scope of objective incidence of the new taxation is delimited -, had a short life, as it was abandoned upon the entry into force of the State Budget Law for 2014 (Law no. 83-C/2013, of 31 December), which gave new wording to that item no. 28 of the General Table, and which now delimits its scope of objective incidence through the use of concepts that are legally defined in article 6 of the IMI Code. This amendment - to which the legislator did not attribute an interpretative character, nor do we think it did –, merely makes it unequivocal for the future that land for construction whose building, authorized or foreseen, is for residential purposes is included in the scope of item 28.1 of the General Table of Stamp Tax (provided that its taxable patrimonial value is of a value equal to or greater than 1 million euros), explaining nothing, however, in relation to past situations (assessments for 2012 and 2013), such as the one in question in the present case. Now, as to these, it does not seem that the interpretation of the appellant can be followed, as it does not unequivocally result either from the letter or the spirit of the law that the intention of the latter was, ab initio, to encompass in its scope of objective incidence land for construction for which the construction of residential buildings was authorized or foreseen, as results today unequivocally from item 28.1 of the General Table of Stamp Tax. Nothing unequivocal results from the letter of the law, moreover, as it itself, when using a concept that it did not define and which also was not defined in the statute to which it referred on a subsidiary basis, lent itself, unnecessarily, to ambiguities, on a matter – of tax incidence - in which certainty and legal security should also be paramount concerns of the legislator. And from its "spirit", ascertainable in the explanatory memorandum of the bill that is at the origin of Law no. 55-A/2012 (Bill no. 96/XII – 2nd, Parliamentary Journal of the National Assembly, series A, no. 3, 21/09/2012, p. 44, available at www.parlamento.pt) nothing more follows than the concern to raise new tax revenue, from sources of wealth "more spared" in the past from the rapacity of the Exchequer than income from employment, in particular capital income, movable capital gains and property, reasons which make no relevant contribution to the clarification of the concept of "properties (urban) with residential use", as they take it as settled, without any concern to clarify it. Such clarification, however, came – as informed in the Arbitral Decision issued on 12 December 2013, in case no 144/2013-T, available in the CAAD database -, at the time of presentation and discussion in the National Assembly of that bill, in the words of the Secretary of State for Tax Affairs, who is reported to have expressly stated, as gathered from the Parliamentary Journal of the National Assembly (DAR I Series no. 9/XII – 2, of 11 October, p. 32) that: «The Government proposes the creation of a special tax on urban residential properties of higher value. It is the first time in Portugal that special taxation has been created on high-value properties intended for residential purposes. This tax will be 0.5% to 0.8% in 2012 and 1% in 2013, and will be levied on houses with a value equal to or greater than 1 million euros" (emphasis ours), from which it is gathered that the reality to be taxed intended by the legislator is, after all, and notwithstanding the terminological imprecision of the law, "properties (urban) residential", in common language "houses", and not other realities. The fact that it may be considered that in determining the taxable patrimonial value of urban properties classified as land for construction account must be taken of the use that the construction authorized or foreseen for it will have for determination of the respective value of the implantation area (cfr. nos. 1 and 2 of article 45 of the CIMI), does not determine that land for construction can be classified as "properties with residential use", as "residential use" always appears in the IMI Code referred to "buildings" or "constructions", existing, authorized or foreseen, as only these can be inhabited, which does not occur in the case of land for construction, which do not, in themselves, have conditions for such, not being susceptible of being used for residential purposes except if and when the construction authorized and foreseen for them is erected thereon (but in that case they will no longer be "land for construction" but another species of urban properties – "residential", "commercial, industrial or for services" or "other" – article 6 of the CIMI). It would be strange, moreover, if the determination of the scope of the tax incidence rule of item no. 28 of the General Table of Stamp Tax were, after all, found in the rules for determining the taxable patrimonial value of the IMI Code, and that the terminological imprecision of the legislator in the wording of that rule was, after all, clarified and finally explained by way of an indirect and ambiguous reference to the use coefficient established by the legislator in relation to built properties (article 41 of the IMI Code). Thus, bearing in mind that land for construction – whatever the type and purpose of the building that will be, or may be, erected on it – does not satisfy, on its own, any condition to be licensed as such or to define itself as being residential use as its normal destination, and the tax incidence rule referring to urban properties with "residential use", without any specific concept being established for that effect, there cannot be drawn from it a potentiality future, inherent to a distinct property that may perhaps be built on the land.
It is concluded (…) that, resulting from article 6 of the IMI Code a clear distinction between "residential" urban properties and "land for construction", these cannot be considered as "properties with residential use" for purposes of the provision in item no. 28.1 of the General Table of Stamp Tax, in its original wording, as it was given by Law no. 55-A/2012, of 29 October".
It proceeds thus, with these grounds, the request for annulment of the assessment, making unnecessary the consideration of the other grounds invoked by the claimant.
B. Of Indemnity Interest
Determined the illegality of the assessment and its consequent annulment, with the tax debt unduly paid being paid, the right to indemnity interest subsists, whenever this results from error attributable to the services of the Tax Authority, as provided for in no. 1 of article 43 of the General Tax Law (LGT).
The legal norms determinative in the analysis of this question are article 43 of the LGT and article 61 of the Code of Tax Procedure and Process (CPPT), whereby article 43 of the LGT defines the situations that give rise to the payment of indemnity interest and article 61 of the CPPT defines the periods for payment and the initial and final terms of the counting of indemnity interest. These two rules must be understood in harmony.
When, due to error attributable to the services of the tax administration, the taxpayer unduly pays a tax and the assessment act was challenged through administrative complaint or judicial challenge [or request for arbitral decision] within the respective legal period (article 43 nos. 1 and 2 of the LGT), indemnity interest is counted from the date of payment of the undue tax until the respective credit note is issued (article 61 no. 5 of the CPPT)
In the light of the uniform jurisprudence of the Supreme Administrative Court, "in general, it can be affirmed that the error attributable to the services that carried out the assessment, understood in a broad sense, is demonstrated when they proceed to administrative complaint or challenge of that same assessment" (cfr., e.g., Judgment of the Supreme Administrative Court of 31 October 2001, Case no. 26167)[1].
Thus and on the basis of the provisions of nos. 1 and 2 of article 43 of the LGT and article 61 of the Code of Tax Procedure and Process (CPPT), indemnity interest is owed on the amounts unduly assessed and paid, counted from the day following the dates of the undue payments and until the date of issuance of the respective credit note, at the legal rate.
In the case sub judice, the request for payment of indemnity interest by the Claimant is unequivocally justified since the tax assessment challenged is illegal.
Thus and in addition to reimbursement, the Claimant is also entitled to payment of indemnity interest, at the legal rate in force, on each of the installments of stamp tax paid, counted from the dates of the respective payments until the date of processing of the respective credit note, in which they are included – cfr. art. 43 of the LGT and no. 4 of art. 61 of the CPPT.
III DECISION
In accordance with the foregoing, this Tribunal decides:
a) To declare the illegality of the assessments which are the subject of these proceedings, due to lack of legal basis and violation, in the terms set out, of articles 4 and 6 of Law no. 55-A/2012, of 29 October and, consequently, finding the request well-founded on this ground, decides to annul the assessment acts which are the subject of the proceedings;
b) To find the request for indemnification (interest) well-founded and, consequently,
c) To condemn the Tax and Customs Authority to refund the amount of tax paid, with indemnity interest calculated at the legal rate and in the other terms provided for in articles 43 of the LGT and 61 of the CPPT.
Value of the Case
In accordance with the provision of article 306, nos. 1 and 2, of the Code of Civil Procedure (CPC) and 97-A, no. 1, subparagraph a), of the CPPT and 3, no. 2, of the Regulation of Costs in Tax Arbitration Proceedings, the value of the case is fixed at €170,485.70
Costs
Under the terms of article 22, no. 4, of the RJAT, the amount of costs is fixed at €3,672 (three thousand six hundred and seventy-two euros), in accordance with Table I attached to the Regulation of Costs in Tax Arbitration Proceedings, entirely at the charge of the Tax and Customs Authority.
Lisbon, 18-12-2014
The Arbitral Tribunal,
José Poças Falcão
(President)
(Maria Forte Vaz)
(Suzana Fernandes da Costa)
[1] Cfr also, Diogo Leite de Campos, Benjamim Silva Rodrigues and Jorge Lopes de Sousa, General Tax Law - Annotated and Commented, Editor Encontro da Escrita, 4th Edition, 2012, p. 342, note 2: "The error attributable to the services that carried out the assessment is demonstrated when they proceed to administrative complaint or challenge of that same assessment and the error is not attributable to the taxpayer (for example, there will be annulment due to error attributable to the taxpayer when the assessment is based on incorrect factual assumptions, but the error is based on an incorrect indication in the statement that the taxpayer submitted)".
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