Stamp Tax on Pension Fund Management Fees: CAAD Arbitration 352/2017-T Decision

ARBITRAL DECISION

The Arbitrators José Poças Falcão, Rui Ferreira Rodrigues and António Alberto Franco, appointed by the Deontological Council of the Administrative Arbitration Center to form this Arbitral Tribunal, hereby agree as follows:

I – REPORT

1. A…, S.A., NIF…, with headquarters at Avenida …– …– … in …, submitted, on 30-05-2017, a request for constitution of the arbitral tribunal, pursuant to Articles 2º and 10º of Decree-Law No. 10/2011, of January 20 (Legal Framework for Arbitration in Tax Matters, hereinafter designated only as RJAT), in conjunction with Article 102º of the CPPT, in which the Tax and Customs Authority (hereinafter designated only as Respondent) is the Respondent.

2. The Claimant seeks, through its request, a declaration of illegality of the Stamp Duty Assessment Act No. 2017… and respective compensatory interest, relating to the year 2015.

3. The request for constitution of the arbitral tribunal was accepted by the President of CAAD and automatically notified to the Tax and Customs Authority on 31-05-2017.

3.1. The Claimant did not proceed to appoint an arbitrator, whereby, under the provisions of subsection a) of No. 2 of Article 6º and subsection b) of No. 1 of Article 11º of the RJAT, the President of the Deontological Council appointed the signatories as arbitrators of the collective arbitral tribunal, who communicated acceptance of the appointment within the deadline.

3.2. On 26-07-2017 the parties were notified of the appointment of the arbitrators, with no objection being raised.

3.3. In compliance with what is prescribed in subsection c) of No. 11º of the RJAT, the collective arbitral tribunal was constituted on 10-08-2017.

3.4. In these terms, the Arbitral Tribunal is properly constituted to appreciate and decide on the subject matter of the proceedings.

1. To support its request for an arbitral pronouncement, the Claimant alleged, in summary, the following:

The Claimant is a pension fund management company (SGFP) governed by Decree-Law No. 12/2006, of January 20, which approved the Framework for Establishment and Operation of Pension Funds and Management Entities, legislation that regulates the establishment and operation of pension funds and their management entities and also transposed into the Portuguese legal order Directive 2003/41/CE of the European Parliament and of the Council, of June 3 (hereinafter "Directive 2003/41/CE"), relating to the activities and supervision of institutions for occupational pension schemes.

The Claimant exercises, as an SGFP, its activity of managing various pension funds, among which stand out the open funds B…, C…, D…, E…, Retirement Savings Plans ("PPR") in the form of Pension Funds F…, G…, H…, I… and J…, and also various closed funds (hereinafter jointly designated "pension funds").

Over the years it charged, monthly, commissions to the pension funds, as consideration for the provision of its management services, and therefore understood that, pursuant to the Stamp Duty Code and the General Table of Stamp Duty, it did not have to charge Stamp Duty on the same.

Under the service order No. OI2016…, of 05.09.2016, the Tax Inspection Services conducted an inspection to analyze the tax classification of management commissions charged by the Claimant to the pension funds, for the 2015 tax period, and from the respective Report it results, although it does not expressly state it, that the foundation of these corrections derives from Information No. I2014…, from the Department of Services of IMT and Opinion No. …/2013 of the Center for Tax and Customs Studies.

SGFPs cannot be considered, for purposes of Stamp Duty incidence, as "financial institutions," under penalty of unconstitutionality due to violation of the principle of legality.

The tax rules do not contain the definition of what should be understood by "credit institutions," "financial societies or equivalent entities" or "any other financial institutions." The provision on subjective incidence contained in Entry 17.3 includes the concepts of (i) credit institution, (ii) financial company or other entities legally equivalent to it, and of (iii) financial institution, the meaning of which must be interpreted in light of Banking, Financial and Insurance Law, as provided for in No. 2 of Article 11º of the LGT.

It is Decree-Law No. 298/92, of December 31, which approved the General Framework of Credit Institutions and Financial Companies, that contains the concept of credit institution, more specifically from Article 3º, from which it follows that neither the SGFPs, nor pension funds are qualifiable as "credit institutions."

Similarly, in view of Article 6º, No. 1 of the same legislation, neither the SGFPs, nor the pension funds are also qualifiable as "financial companies," and to this end the RGICSF goes even further when establishing that "insurance companies, pension fund management companies and real and movable property investment companies shall not be considered financial companies."

On the other hand, neither Decree-Law No. 12/2006, of January 20, nor any other legislative instrument, qualifies SGFPs as financial companies, whereby this reasoning tainted by the AT ends here, even if it were accepted that SGFPs correspond to the definition of financial companies.

It is also in the RGICSF, more specifically in Article 2º-A, subsection z) that the definition of "financial institutions" is found. It clarifies that the definition of "financial institution" contained in the RGICSF, and also in Regulation 575/2013, since the former is a replica of the latter, never encompasses entities in the insurance sector. Hence, contrary to what the AT argues, SGFPs and pension funds are not qualified as "financial institutions" in light of the existing legal definition, whether for purposes of Domestic or European Law.

It is further added that in the current legal framework, the legislation ceased to qualify insurance companies as "financial institutions," with the legislator now qualifying them as "financial enterprises."

It concludes, thus, that: (i) the concept of financial institution is that contained in the RGICSF and (ii) the legislator opted to cease qualifying insurers as financial institutions.

When the tax legislator, in the 1999 Stamp Duty reform, added the reference to "other financial institutions" in Entry 17.3 of the TGIS, in view of what was enshrined in Article 120º-A of the previous table, the definition of "financial institution" mentioned above already existed in Banking Law.

In the strange interpretation of the AT, we have that natural persons who were insurance brokers and who are "financial entities" by virtue of this Article 3º of Law No. 25/2008… are therefore also "financial institutions" for purposes of Entry 17.3 of the TGIS!...

The Directive in question itself (2003/41/CE) – invoked by the AT – makes no classification or establishes any definition of the concept of financial institution. If it is true that professional pension plans were harmonized at European level through this Directive, it is equally true that something very different are the entities that manage them and which vary from country to country, not being subject to harmonization through Directive… whereby no inference can be drawn from this Directive as to the nature or classification of SGFPs or pension funds.

It is expressly stated in Article 32º of DL 12/2006 that the management of pension funds can only be carried out by management companies provided for in the same legal instrument or by insurance companies that legally operate in the "life" branch and possess an establishment in Portugal. Whereby it is demonstrated that, contrary to many other areas of the financial sector, SGFPs are still a reality exclusively subject to national legislation, except with respect to professional pension plans, whereby it is not possible to resort to European law to draw inferences as to their legal nature as a national legal construction.

Directive 2004/39/CE places pension funds and SGFPs outside the concept of "other financial institutions," and Article 30º of the CVM, which constitutes its transposition, exchanges the subsections by mere oversight.

It is not because they manage "large amounts of money" or because some of their activities are similar to activities subject to the RGICSF that SGFPs and pension funds pass to have a qualification whose very definition, precisely contained in the RGICSF, does not include them and which, moreover, a specific rule expressly excludes them from another definition existing there.

The fact that the Bank of Portugal includes SGFPs in its statistics in the sector of the so-called Non-Monetary Financial Institutions (IFNM) – alongside the Funds themselves – integrating them in the subsector of Financial Auxiliaries is that a merely statistical classification of the Bank of Portugal that cannot lead to a legal definition.

The definition of No. 1 of Article 4º of Regulation (EU) No. 575/2013, of 2013-06-26 excludes from the concept of "financial institution" "holding companies in the insurance sector and mixed financial holding companies, within the meaning of Article 212º, No. 1, point g) of Directive 2009/138/CE."

The expression "any other financial institutions" may also simply mean that the concept of "financial institution" is broader and includes the previous concepts that are referred to in Entry 17.3 of the TGIS. Indeed, "credit institutions" and "financial companies" are also qualified as "financial institutions" by virtue of the legal definition contained in Article 2º-A, subsection z), of the RGICSF. In these terms, the concept of "financial institution" contained in Entry 17.3 should be interpreted with the meaning that the concept has in the positive law, that is, in the RGICSF, where it is defined.

The interpretation carried out by the AT of the provision on subjective incidence contained in Entry 17.3, apart from being illegal, is also unconstitutional, due to violation of the principle of tax legality and the principle of typicality and, also, the principles of equality and legal certainty.

In any case, if it is understood that the commissions charged by the Claimant are subject to Stamp Duty (which is not conceded), then it will be necessary to conclude that the exemption provided for in Article 7º, No. 1, subsection e), of the CIS applies.

The provision of No. 7 of Article 7º of the CIS, when applied to facts prior to 31.03.2016, is unconstitutional due to violation of the principle of non-retroactive application of tax law, for which reason the assessment in question is unquestionably illegal, since the only ground presented by the AT for not applying the exemption provided for in subsection g) of No. 1 of the same Article 7º was, precisely, the application of the said No. 7.

It is unequivocal that Article 37º, No. 2, of the 2001 State Budget Law, does not contain, in itself, any material delimitation to the scope of application of the Stamp Duty exemption sought in subsections e) and f) of No. 1 of Article 6º of the CIS. This delimitation was introduced directly in the new wording given to No. 2 of the then Article 6º of the CIS.

The inspection services understand that the introduction of the limitation to the exemption introduced in No. 2 of Article 6º by the 2001 State Budget Law… is an authentic interpretation of what, in truth, already existed in these rules since 1999. It is not understood how such "delimitation of the material scope" of these exemptions can be qualified as "interpretive." Interpretive of what?

And, as is also evident, there was never any controversy (much less a "special controversy") in the interpretation of this exemption between its entry into force and the amendment made by the 2001 State Budget Law. With respect to the commissions charged, there was a uniform understanding, namely from the AT, on the non-taxation, in the Stamp Duty sphere, of commissions charged by financial institutions.

Analyzing the 2003 State Budget Law and the amendment it introduced to the then Article 6º of the CIS, it is verified that its No. 2 (the rule that limited the exemption provided for in subsections e) and f) No. 1) was expressly repealed by the legislator - by virtue of Article 30º of the 2003 State Budget Law - having been replaced by the previous rule contained in No. 3.

A rule that was repealed on December 31, 2002 can never be applied to commissions paid between 2011 and 2014, about a decade later.

Only with the entry into force of the 2016 State Budget Law was the exemption restricted by the requirement of "credit extension," as had been in effect in 2001 and 2002.

Note that subsection g) established an exemption applicable to certain financial operations carried out by SGPS for the benefit of various entities, adding at the end through the expression "and also" a final operation in the opposite sense, that is, carried out by other entities for the benefit of SGPS. Thus it is demonstrated how the same legislator used the expression "and also" two subsections later: instead of establishing a final case "as the essential and prior element in relation to the others" (as the AT intended), the expression was used solely as the adding of another exemption situation, which in this case is even diametrically opposed to the previous ones.

Thus, the exemption is not conditioned by the fact that the financial services described therein are directly linked to credit extension operations, within the scope of activity exercised by the institutions and entities referred to in subsection e) of No. 1 of Article 7º of the CIS.

Taking into account the negative and positive functions of the grammatical element of the rules, one arrives at the conclusion (even because it is the only one that someone in good faith could draw) that in no circumstance can subsection e) of No. 1 of the current Article 7º of the CIS be interpreted in the sense that it contains some kind of self-imposed limitation, such that it is limited to operations that directly concern credit extension.

It is impossible to read subsection e) after the amendment introduced by the 2003 State Budget Law, in the sense intended by the AT, since venture capital companies, which came to be included in that subsection, cannot extend credit. As is all too evident, the legislator intended to effectively eliminate the restriction that existed in No. 2 of the then Article 6º.

Article 152º of the 2016 State Budget Law prescribed an addition to that article of the Stamp Duty Code, through the provision of a new No. 7, whose wording presents numerous similarities with the wording that had been instituted by the 2001 State Budget Law for the then No. 2 of Article 6º of the same Code and which, as demonstrated above, was in effect for 2 years until it was repealed by the 2003 State Budget Law.

However, the legislator did not limit itself, with the 2016 State Budget Law, to rescuing a formula that had already been employed about 15 years before for purposes of imposing a reduction to the scope of the Stamp Duty exemption provided for in subsection e) of No. 1 of Article 7º of the CIS. Through Article 154º of the 2016 State Budget Law, the legislator determined that, namely, the wording given to the new No. 7 of Article 7º of the CIS had an interpretive character.

Given the differences between an innovative law and an interpretive law (to which we refer for a matter of economy), the Claimant understands that there is no way to deny the innovative character of No. 7 added by Article 152º of the 2016 State Budget Law to Article 7º of the CIS, and as such, we are facing a case in which a new law will apply (through the interpretive character given to it by Article 154º of the 2016 State Budget Law) to facts entirely occurred (e.g. in the years 2011 to 2014) at a time prior to its publication. The rule conferring interpretive character suffers from the vice of unconstitutionality to the extent that it is patently contrary to the prohibition of retroactivity of tax law.

It results from all the above exposition and reiterated here, in the spirit of a prudent and cautious economic agent, that there was no way, given a perfectly understandable legal framework (marked, inexorably, by the regime that existed before the 2001 State Budget Law and after the 2003 State Budget Law), the doctrinal instructions that were publicly stated by the AT and confirmed by reputable tax specialists, the same could adopt any other understanding and behavior other than to consider that the management commissions charged by pension fund management companies were covered, at worst (ignoring here the issue of subjective non-incidence), by the Stamp Duty exemption contained in Article 7º, No. 1, subsection e), of the CIS.

From the Claimant's perspective, the result of the retroactive application (through the combination of Articles 152º and 154º of the 2016 State Budget Law) of the "material delimitation" of the exemption provided for in subsection e) of No. 1 of Article 7º of the CIS undermines the confidence that was based on the conduct that the legislator (first) and the AT (second) had adopted in the past on the applicability of said exemption to the management commissions it charged.

Articles 152º and 154º of the 2016 State Budget Law cannot, under penalty of violation of the prohibition imposed in Article 103º, No. 3, of the CRP, delimit the scope of the exemption of subsection e) of No. 1 of Article 7º of the CIS with respect to management commissions charged by the Claimant to pension funds in years prior to its entry into force, and as such, the AT will not be able to avail itself of the "cover" apparently given by those innovative rules to, from then on, justify the maintenance in the legal order of the tax assessments and compensatory interest now challenged under penalty of flagrant unconstitutionality.

Given the equation made by Directive 2003/41/CE (…) between management companies and pension funds there are substantive and formal reasons to argue for the applicability of Directive 2008/7/CE to pension funds. The prohibition on applying indirect taxes to these entities results from Article 5º, No. 1, subsection a) of the aforementioned Directive 3008/7/CE, combined with Directive 2003/41/CE.

But even if it is understood that Directive 3008/7/CE is not applicable, the taxation in the Stamp Duty sphere would still violate the provision of Article 11º of DL 12/2006, which prevents the assets of pension funds from responding to any other obligations, beyond those listed in that law.

The taxation in the Stamp Duty sphere of management commissions charged by SGFPs to Pension Funds violates the provisions of Directive 3008/7/CE and Directive 2003/41/CE.

The incidence of Stamp Duty on the commissions in question also violates the principle of non-discrimination in force in European Law.

The Claimant concludes, thus, by the illegality of the assessment subject to the arbitral request, further requesting indemnification for costs with improperly provided guarantees.

1. The Tax and Customs Authority submitted a response, reiterating and transcribing part of the inspection report, further invoking, in summary, the following:

As the inspection services noted, No. 2 of Article 1º of the CIS determines that operations subject to value added tax and not exempt therefrom are not subject to stamp duty, with the RIT concluding by the exemption of operations in the VAT sphere.

With regard to the classification of commissions charged by management companies to pension funds, and as was well noted in the RIT, it is relatively settled that the same are exempt from VAT pursuant to subsection g) of No. 27 of Article 9º of the CIVA, whether in the case that the management of pension funds is carried out by insurance companies in the "Life" branch, or in the case that management is carried out by companies constituted exclusively for such purpose.

For its part, Entry 17.3.4 of the General Stamp Duty Table, for what is relevant here, provides for the subjection to Stamp Duty, at a rate of 4% of "Other commissions and consideration for financial services."

The wording of subsection e) of Article 7º of the CIS was given by Law No. 107-B/2003, of December 31, and No. 7 was added by Law No. 7-A/2016 of March 30, with an interpretive character, thus integrating into the interpreted rule.

In the RIT, A… was characterized as a pension fund management company, governed by the provisions of Decree-Law No. 12/2006, of January 20, which regulates the establishment and operation of pension funds and entities managing pension funds and transposes into the Portuguese legal order Directive No. 2003/41/CE of the European Parliament and Council, of June 3, relating to activities and supervision of institutions for occupational pension schemes.

As results from the combination of the rules provided for in Article 1º of the CIS and Entries 17.3 and 17.3.4, operations carried out by or with intermediation of credit institutions, financial companies or other entities legally equivalent to them and any other financial institutions are subject to stamp duty, with "other commissions and consideration for financial services" being taxed at 4%. Thus, Entry 17.3 excludes from its field of incidence financial operations that are not carried out by or with intermediation of the entities referred to therein, whereby the incidence unquestionably operates only in cases where said operations are carried out by or with the intermediation of those entities.

To thus resolve the question of incidence, one must know whether Pension Funds and Pension Fund Management Companies are included in the expression referred to in the rule under consideration. It follows from Article 11º of the LGT that the fiscally relevant concept of "credit institutions, financial companies or other entities legally equivalent to them and any other financial institutions" for purposes of the incidence rule in question – and, therefore, the correlative exemption rule - must be that which prevails in financial law, particularly in banking and insurance law, whether national or community.

This is evidenced by the terms of subsection f) of No. 1 of Article 3º of Law No. 25/2008, of June 5, which expressly provides that pension fund management companies are financial entities. Moreover, community law transposed by Decree-Law No. 12/2006 converges in the same interpretive direction, since the criterion that presided over the preparation of Directive No. 2003/41/CE was that, given the importance and influence that these entities assume in the achievement of the single market of financial services it was considered "(...) pressing the preparation of a directive relating to the prudential supervision of institutions for occupational pension schemes, since these important financial institutions, which have a key role to play in the integration, efficiency and liquidity of financial markets, are not subject to a coherent community legislative framework that allows them to take full advantage of the advantages of the single market."

In the same sense, see the definition contained in No. 1 of Article 4º of Regulation (EU) No. 575/2013 of 2013-06-26, of the European Parliament and Council, according to which a financial institution is a company that is not a credit institution, whose principal activity is the acquisition of holdings or the exercise of one or more of the activities listed in Annex I, points 2 to 12 and 15, of Directive 2013/36/EU. Moreover, pursuant to subsections e) and f) of No. 1 of Article 30º of the Code of Securities (CVM), both SGFPs and Funds are qualified, alongside other financial institutions, institutional investors, and it is factually undeniable their actual relevance as institutional investors.

With a view to the qualification of pension fund management companies, it is important to take into account the General Framework of Credit Institutions (RGICSF), starting with Article 2º-A (Definitions), and the provisions of subsection z).

Thus, comparing the activities identified in the citation of the RGICSF and Directive No. 2013/36/EU with those referred to above as assignments of a pension fund management company, we are led to conclude that the Claimant fulfills the requirements to be qualified as a "financial company," a category which also includes the financial institutions defined in subsection z).

Given this, there is no doubt that SGFPs are subsumed in the body of Entry 17.3, either as financial companies or as institutions, in light of the qualification made in accordance with the criteria of the RGICSF and applicable European law, as is corroborated by Directive 2003/41/CE and other instruments of national and European law.

It should be noted that the legislator of the CIS, surely aware of the diversity of operators in the financial market and its foreseeable evolution, due to the deepening of the internal market of financial services[1] in the European Union, resorted to a broad formulation of the body of Entry 17.3 that allows the framing of any entities that are considered legally equivalent to financial companies and those that are qualified as financial institutions.

According to No. 3 of Article 68º-A of the LGT "The tax administration must proceed to convert binding information or other type of understanding provided to taxpayers into administrative circulars, when a relevant legal question has been raised and this has been appreciated in the same sense in three requests for information or it is foreseeable that it will be." In the situation in question, the understanding invoked was not converted into an administrative circular, whereby, also here, the taxpayer's claim will not be able to prevail.

Without conceding, it will even be said that even if the understanding had been converted into a circular, the same refers to the regime applicable to depositary commissions for investment and pension funds charged by Banks to Investment and Pension Fund Management Companies, whereas the situation under discussion refers to management and administration commissions, charged by Pension Fund Management Companies to the Funds."

It is important to take into account that Law No. 150/99, of September 11 approved the CIS and the General Table, which replaced, respectively, the Regulation of Stamp Duty, approved by Decree No. 12 700, of November 20, 1926, and the General Table of Stamp Duty, approved by Decree No. 21 916, of November 28, 1932, and subsequent amendments. Accordingly, the legislative amendment to the General Stamp Duty Table determined the expiry of the effects of the aforementioned dispatch of 12.03.1999.

The rule provided for in No. 3 of Article 6º does not concern the possible qualification of another type of institution as financial, but rather as a delimitation of the scope of the said RGICSF.

From all the above, it is concluded, without room for doubt, that operations carried out by or with intermediation of pension fund management companies, in the name and on behalf of the funds, are materially considered financial operations, and the management companies are therefore subsumable in the notion of "any other financial institutions," contained in Entry 17.3 of the TGIS, for purposes of subjection to taxation in the Stamp Duty sphere. In this way, the objective element provided for in the incidence rule is fulfilled, constituting the commissions charged by the management companies by way of remuneration for the administration and management of pension funds, consideration for financial services in terms and for the purposes of Entry 17.3.4 of the TGIS.

In summary, as concluded by the DSIMT, which is here given as fully reproduced, the commissions sub judicio cumulatively fulfill the objective and subjective elements provided for in Entry 17.3.4 of the TGIS, and, accordingly, are subject to stamp duty by virtue of the provision of No. 1 of Article 1º of the CIS.

According to the new wording given to Article 6º, subsections e) and f), relating to interest charged and the use of credit granted, as well as commissions charged, by the credit institutions provided for therein were covered by the exemption only with respect to financial operations directly intended for credit extension, within the scope of activity exercised by the institutions and entities referred to in those subsections.

The systematic and rational elements require that the exemption rule reports, to interest, to commissions charged, to guarantees provided or to mere use, in all cases, by reference to credit granted as stipulated in the normative.

Two years after the amendment introduced to Article 6º the legislator understood that the interpretive sense to be given to subsections e) and f) was clarified, having, through the 2003 Budget Law, restored in No. 2 the initial text introduced with Law No. 150/99 which approved the Stamp Duty Code. It is not true that there has been any express repeal, as the Claimant invokes.

The limit to the exemption desired by the legislator, before and after the new wording given to the subsections, is the same, that is, the exemption provided for in the current subsection e), No. 1, of Article 7º of the CIS only applies to commissions provided for in Entry 17 when they are directly linked to credit extension operations, within the scope of activity exercised by the institutions and entities referred to in that normative.

If there were any doubts as to the interpretation of the legal rule in question, the State Budget for 2016 (Law No. 7-A/2016, of 30.03) added No. 7 to Article 7º of the CIS, assigning to it an interpretive character (cf. respectively, Articles 152º and 154º of that law). The truth is that the legislator (and not the AT, as the Claimant seems to confuse, and the latter must strict obedience to the law) comes, with manifestly clarifying scope, to clarify that the exemption applies, indeed, only to guarantees and financial operations directly intended for credit extension.

With the AT being subject to the principle of tax legality, by virtue of Article 266º, No. 2 of the CRP, Article 8º of the LGT and Article 3º, No. 1 of the CPA, then the position of the Respondent in the RIT and in the present proceedings, in view of what is legally determined in the State Budget Law for 2016, cannot be other than that adopted.

To which is added the fact (which the Claimant surely also does not ignore) that the AT cannot disapply rules based on unconstitutionality. Whereby, even if the ground for non-application of the rule is unconstitutionality, from the legal impositions mentioned above (Article 266º, No. 2 of the CRP, Article 8º of the LGT and Article 3º, No. 1 of the CPA) it follows that administrative organs and agents do not have competence to decide the non-application of that legal rule.

The State Budget Law for 2016, specifically its Articles 152º and 154º, constitute an interpretive subsidy that should not be ignored in the task of ascertaining the meaning of the provision under analysis, coming Article 7º, No. 7 of the CIS, added by that law, only to clarify what has always been the spirit of the rule with regard to the scope of the exemption provided for in subsection e) of No. 1 of that Article 7º of the CIS, in accordance with the understanding adopted by the case law of higher courts, revealing itself thus as a non-innovative solution, which the judge or the interpreter can reach without exceeding the limits normally imposed on the interpretation and application of law.

The taxation of management commissions in stamp duty does not manifestly constitute a violation of the freedom of establishment of pension fund management companies, whereby no question should be submitted to the CJEU in this respect. On the other hand, the formulation of questions is untimely since, due to the very functioning of the reference system, these questions must be based on a factual framework that, at this time, is not established.

The Respondent concludes, therefore, by the legality of the stamp duty assessment act contested by the Claimant which should, thus, be maintained and, moreover, even if the arbitral request is judged to be well-founded, the request for indemnification for improper guarantee provision due to error attributable to the services should still be rejected.

1. By order of 20-10-2017, the meeting of Article 18º of the RJAT was dispensed with.

2. The Parties submitted pleadings, maintaining the positions set forth in their respective filings.

II – PROCEDURAL CLARIFICATION

8.1. The tribunal is competent and regularly constituted.

8.2. The parties have legal personality and capacity, demonstrate themselves legitimate and are properly represented (Articles 4º and 10º, No. 2, of the RJAT and Article 1º of Ordinance No. 112-A/2011, of March 22).

8.3. The proceedings do not suffer from nullities and no exceptions have been raised that prevent appreciation of the merits.

III – FACTUAL AND LEGAL MATTERS

III.1. Factual Matters

1. Factual Matters

9.1. It is important, first and foremost, to emphasize that the Tribunal does not have to pronounce on everything that was alleged by the parties, but rather it is incumbent upon it the duty to select the facts that matter to the decision and distinguish the proved from the unproved matters (cf. Article 123º, No. 2, of the CPPT and Article 607º, Nos. 3 and 4, of the CPC, applicable ex vi Article 29º, No. 1, subsections a) and e), of the RJAT). In this way, the facts relevant to the judgment of the case are chosen and defined according to their legal relevance, which is established in view of the various plausible solutions to the question(s) of Law.

Within this framework, the following facts with relevance to the decision are considered proved:

• The Claimant is a pension fund management company (SGFP), governed by Decree-Law No. 12/2006, of January 20, which approved the Framework for Establishment and Operation of Pension Funds and Management Entities;

• As an SGFP, it exercises its activity of managing various pension funds, among which stand out the open funds B…, C…, D…, E…, Retirement Savings Plans ("PPR") in the form of Pension Funds F…, G…, H…, I… and J…, and also various closed funds;

• In the year 2015 the Claimant charged, monthly, commissions to the pension funds, as consideration for the provision of its management services, totaling the amount of 9,826,813.64 €;

• When charging these commissions, the Claimant understood that, pursuant to the Stamp Duty Code and the General Table of Stamp Duty, it did not have to charge Stamp Duty on the same;

• Under the service order No. OI2016…, of 05-09-2016, relating to the 2015 tax year, the Tax Inspection Services conducted an inspection to analyze the tax classification of management commissions charged by the Claimant to pension funds, for the 2015 tax period, in the Stamp Duty sphere (exemption from Article 4º of Decree-Law No. 20/86, of February 13 and subsection e), No. 1, of Article 7º of the CIS, combined with Entry 17.3.4 of the TGIS;

• Through official letter No. …, of 21-11-2016, from the Department of Services of Municipal Tax on Onerous Transfers of Real Estate, Stamp Duty, Single Motor Vehicle Tax and Special Contributions, the Claimant was notified to give its opinion on the Draft Report of the Tax Inspection, pursuant to Article 60º of the General Tax Law and Article 60º of the Complementary Framework for Tax and Customs Inspection Proceedings (RCIPTA), in which corrections in the Stamp Duty sphere were proposed;

• According to that Draft Report, the foundation of the corrections came from what was stated in Information No. I2014… of the said department of services, of 10-11-2014 and in Opinion No. …/2013 of the Center for Tax and Customs Studies, of 28-05-2013 (Documents Nos. 4 and 5, attached with the initial petition);

• The Claimant chose not to exercise the right to prior hearing;

• The corrections proposed by the AT in the Stamp Duty sphere amount to 393,072.52 €, as stated in the Draft Report of the Tax Inspection;

• Through official letter No. …, of 22-12-2016, from the said department of services, the Claimant was notified, pursuant to Article 62º RCIPTA, of the Tax Inspection Report (RIT), in which the corrections in the Stamp Duty sphere, proposed in the said draft report, were maintained (Document No. 3, attached with the initial petition);

• In view of the corrections sought by the AT in the RIT, the Claimant was notified of the stamp duty assessment statements for the year 2015, with No. 2017…, in the amount of 393,072.52 € and compensatory interest with Nos. 2017…, 2017…, 2017…, 2017…, 2017…, 2017…, 2017… and 2017…, in the amount of 22,627.86 €, to which corresponds the total amount of 415,700.38 €, with the payment deadline of 02-03-2017 (Document No. 7, attached with the initial petition); and

• For purposes of suspension of the execution proceedings instituted by the Tax Authority with No. …2017…, the Claimant provided a guarantee in the amount fixed of 525,445.71 €, pursuant to insurance surety policy No. CA… (Document No. 8, attached with the initial petition).

9.2. Foundation of the Factual Matters:

The factual matters given as proved took into account the positions assumed by the Parties in their filings and were based on the critical examination of documentary evidence, as well as the administrative proceedings in the file.

9.3. There are no other facts with relevance to appreciation of the merits of the case that have not been proved.

III.2. Legal Matters

9.4 Questions to be Decided

It results from the Report that the legal matters comprise the following questions to be decided.

First, it is important to clarify the tax classification of commissions charged for the management of pension funds. It is necessary to determine, in the hermeneutic sphere, the semantic content of Entry 17.3 of the General Table of Stamp Duty, with the objective of clarifying the legal nature of pension fund management companies and ascertaining whether the management commissions charged by management companies to their respective pension funds are subject to Stamp Duty. A positive answer to this question refers to the second question, which concerns knowing whether such commissions benefit from the exemption provided for in Article 7º, No. 1, subsection e), of the Stamp Duty Code.

A third question raised in the proceedings consists of ascertaining the meaning and scope of the rule of No. 7 added to Article 7º of the CIS by Article 152º of Law No. 7-A/2016, of March 30 (State Budget 2016). At issue is the alleged interpretive nature that Article 154º of this law ascribes to this No. 7 and the conformity with the Constitution of the Portuguese Republic of the retroactive effects that would supposedly result therefrom. Also brought to the fore is the question of whether taxation in the Stamp Duty sphere of management commissions charged by SGFPs to Pension Funds violates the provisions of Directive 3008/7/CE and Directive 2003/41/CE and whether, in case of doubt by this Tribunal, the question should be submitted, on a preliminary basis, to the CJEU. Finally, the question is raised of whether the Claimant is entitled to indemnification for the guarantee provided.

The arbitral decision rendered by a Collective Tribunal in CAAD case No. 303/2017-T, presided over by the arbitrator who also presides over this Tribunal, will be followed especially closely.

9.5 Pension Fund Management Companies and Entry 17.3

The first of the questions to be decided refers to the interpretation of Entry 17.3 of the General Table of Stamp Duty (TGIS), where the incidence of this tax (Stamp Duty) occurs on "[o]perations carried out by or with intermediation of credit institutions, financial companies or other entities legally equivalent to them and any other financial institutions […]." According to the provision of Entry 17.3.4 of the TGIS, on the amount charged as "other commissions and consideration for financial services" the Stamp Duty applies at a rate of 4%.

It is in this context, of determination of the incidence of Stamp Duty under Entry 17.3 of the TGIS, that the discussion on the legal nature of pension fund management entities is pertinent. It depends on whether the same are subsumed to the subjective incidence of Entry 17.3.

At this point, the determination of the semantic content of the formulation "credit institutions, financial companies or other entities legally equivalent to them and any other financial institutions," of Entry 17.3 is unavoidable. For the accomplishment of this methodological operation, Article 11º/2 of the General Tax Law (LGT) offers an important point of support, by prescribing that "Whenever, in tax rules, terms peculiar to other branches of law are used, they must be interpreted in the same sense as they have there, unless otherwise directly results from the law."

In light of this provision, it is necessary to analyze Article 6º of the General Framework of Credit Institutions and Financial Companies (RGICSF). There the types of financial companies are enumerated, excluding "for purposes of this legislation," the "financial companies, insurance companies, pension fund management companies and real and movable property investment companies" (Article 6º/3 of the RGICSF). From this provision it results that the RGICSF is not applicable to SGFPs. However, this alone does not prevent them from being considered "financial companies" for other purposes. Article 6º of the RGICSF does not have a doctrinal concern of exhaustive determination of the connotation and denotation of the concepts of financial company or financial institution, but rather of delimitation of the scope of application of the general framework in question. Indeed, as has been emphasized by prior arbitral case law[2], we can find financial institutions or financial companies beyond the scope of application of the RGICSF. This can be confirmed through the analysis of various statutes.

Regulation (EU) No. 575/2013 of the European Parliament and of the Council, of June 26, 2013, on prudential requirements for credit institutions and investment companies. In its Article 4º No. 1 § 26, the financial institution is characterized as "a company that is not an institution, whose principal activity is the acquisition of holdings or the exercise of one or more of the activities listed in Annex I, points 2 to 12 and 15, of Directive 2013/36/EU, including a financial company, a mixed financial company, a payment institution, within the meaning of Directive 2007/64/EC of the European Parliament and of the Council, of November 13, 2007, on payment services in the internal market, and an asset management company, but excluding holding companies in the insurance sector and mixed financial holding companies, within the meaning of Article 212º, No. 1, point g) of Directive 2009/138/CE." For its part, § 27 of Article 4º No. 1 of the aforementioned Regulation (EU) No. 575/2013 considers "financial sector entity": "a) An institution; b) A financial institution; c) An auxiliary services enterprise included in the consolidated financial situation of an institution; d) An insurance company; e) An insurance company of a third country; f) A reinsurance company; g) A reinsurance company of a third country; h) A holding company in the insurance sector; […]". Under this Regulation, a holding company in the insurance sector integrates the concept of "financial sector entity."

As results from Article 13º, No. 25, of Directive No. 2009/138/CE of the Parliament and Council, of November 25, 2009, relating to access to insurance and reinsurance activities and their pursuit (Solvency II) (recast), "financial institution" means any of the following entities: "a) A credit institution, a financial institution or an auxiliary banking services company, within the meaning, respectively, of points 1, 5 and 21 of Article 4º of Directive 2006/48/CE; b) Insurance companies, reinsurance companies or holding companies in the insurance sector within the meaning of subsection f) of No. 1 of Article 212º; c) An investment company or a financial institution, within the meaning of point 1 of No. 1 of Article 4º of Directive 2004/39/CE; d) A mixed financial company, within the meaning of point 15 of Article 2º of Directive 2002/87/CE." In this way, under Directive No. 2009/138/CE, holding companies in the insurance sector are qualified as financial institutions.

For its part - and this point is of special relevance for the legal question under consideration - Directive 2003/41/CE of the European Parliament and Council, of June 3, 2003, relating to the activities and supervision of institutions for occupational pension schemes, points to the qualification of these entities as financial institutions, in a broad sense. In this sense it points, in a clear manner, to the preamble references (i) to the creation of a "single market in financial services" with a view to enabling "financial institutions to develop activities in other Member States and to ensure a high level of protection for consumers of financial services" (Recitals 1 and 2); (ii) to the opportunity of "preparation of a directive on the prudential supervision of institutions for occupational pension schemes, since these important financial institutions, which have a key role to play in the integration, efficiency and liquidity of financial markets, are not subject to a coherent community legislative framework that allows them to take full advantage of the advantages of the single market" (Recital 4); (iii) to institutions for occupational pension schemes as "providers of financial services" (Recital 20).

Decree-Law 12/2006, of January 20, proceeded to the transposition of this Directive into the Portuguese legal order, having approved the regime for establishment and operation of pension funds and their respective management companies.

Article 32º, No. 1, of this legislation provides that "[p]ension funds may be managed either by companies constituted exclusively for this purpose, designated in this decree-law as management companies, or by insurance companies that legally operate in the 'Life' branch and possess an establishment in Portugal."

Immediately following, Article 33º of the same normative instrument provides that "[i]n the capacity of administrator and manager of the fund and its legal representative, the managing entity is responsible for performing all acts and operations necessary or appropriate for the proper administration and management of the fund, namely: a) To proceed with the evaluation of the fund's liabilities; b) To select and negotiate the securities, real or movable property, that must constitute the fund, in accordance with the investment policy; c) To represent, regardless of mandate, the associates, participants, contributors and beneficiaries of the fund in the exercise of rights arising from their respective holdings; d) To proceed with the collection of contributions provided and guarantee, directly or indirectly, payments due to beneficiaries; e) To proceed, with the beneficiary's agreement, to direct payment of charges owed by that person and corresponding to those referred to in No. 4 of Article 6º, through deduction of the respective amount from the pension in payment; f) To register in the real estate registry, in the name of the fund, the real estate that forms part of it; g) To keep in order its accounting and that of the funds it manages."

It is deduced from the above-cited articles that SGFPs approach, from the point of view of the formal and material requirements of their activity, management companies that operate in the insurance and reinsurance sector[3]. The competencies of SGFPs clearly point, as has been understood by prior arbitral case law, to the exercise of a materially financial activity, which cannot fail to be considered relevant, considering the principles of prevalence of substance over form and of material equality[4]. The Tax Inspection Report is therefore right when it characterized Futuro, here the Claimant, as a pension fund management company, governed by the provisions of Decree-Law No. 12/2006, of January 20, which regulates the establishment and operation of pension funds and entities managing pension funds and transposes into the Portuguese legal order Directive No. 2003/41/CE of the European Parliament and Council, of June 3, relating to activities and supervision of institutions for occupational pension schemes.

It is also important to recall in this regard that Article 30º, No. 1, subsection e), of the Code of Securities (CVM) includes in the list of institutional investors "pension funds and their respective management companies," which, in the context of activities relating to financial instruments, are subject to supervision by the CMVM (Article 359º, No. 1, subsection d), of the CVM, without prejudice to the subjection of the same entities to supervision by the Insurance and Pension Fund Supervisor Authority (ASF). It is the material elements collected that must be considered at the moment of application of Entry 17.3 of the TGIS, in whose literal content one alludes to "[…] financial companies or other entities legally equivalent to them and any other financial institutions […]."

It should be taken as good, therefore, the conclusion that the commissions charged by SGFPs to their respective funds are subsumed to the incidence of Stamp Duty, both on the objective and subjective planes. This is so, inasmuch as Entry 17.3 of the TGIS provides for the taxation of "[o]perations carried out by or with intermediation of credit institutions, financial companies or other entities legally equivalent to them and any other financial institutions," determining the sub-entry 17.3.4 that included therein are "other commissions and consideration for financial services." In both poles of the legal relationship we find subjects comprehended in the conceptual and semantic field of sub-entry 17.3.2. In view of the above, and accepting for their merits argumentative, the orientation that had already been affirmed in the decisions rendered in arbitral cases No. 348/2016-T, of May 2, 2017, No. 633/2016-T, of May 19, 2017 and No. 667/2016-T, of June 20, 2017, the understanding is sustained that SGFPs fulfill the subjective element of the type "any other financial institutions," provided for in Entry 17.3 of the TGIS.

9.6 The Exemption of Article 7º No. 1 Subsection e) of the CIS

It is necessary to proceed to the treatment of the second question to be decided, concerning the interpretation and application of the exemption contained in Article 7º, No. 1, subsection e), of the Stamp Duty Code. The relevant wording, which was in force on the date of the facts, was introduced by Law No. 107-B/2003, of December 31. There it is provided: "1 - Are also exempt from the tax: […] e) Interest and commissions charged, guarantees provided and, also, the use of credit granted by credit institutions, financial companies and financial institutions to venture capital companies, as well as to companies or entities whose form and object fulfill the types of credit institutions, financial companies and financial institutions provided for in community legislation, all domiciled in the Member States of the European Union or in any State, with the exception of those domiciled in territories with privileged tax regimes, to be defined by order of the Minister of Finance; […]"

Accepting, for their substantive merits, the orientation followed by the arbitral decisions rendered in cases No. 348/2016-T, of May 2, 2017, No. 633/2016-T, of May 19, 2017, No. 667/2016-T, of June 20, 2017 and, likewise, Nos. 9/2017-T, of August 30 and 441/2017-T, it is emphasized that the exemption provided for in subsection e) of No. 1 of Article 7º of the CIS assumes a dual dimension, subjective and objective.

The considerations previously developed regarding the legal nature of SGFPs make it possible to substantiate the application of the rule contained in subsection e) of No. 1 of Article 7º of the CIS to the case at hand. On the one hand, SGFPs, as already clarified, integrate the concept of "financial institution," understood in a material sense. With regard to pension funds, subsection c) of Article 2º of Decree-Law No. 12/2006, in the wording in force on the date of the facts, provided that they consist of "[a]utonomous assets exclusively allocated to the realization of one or more pension plans and or health benefit plans," and may be qualified as "venture capital companies, as well as to companies or entities whose form and object fulfill the types of credit institutions, financial companies and financial institutions […]."

Pension funds, just as occurs with their respective management companies, are considered institutional investors by the Code of Securities [Article 30º, No. 1 subsections e) and f)]. The qualification of pension funds as "financial institutions" also results from No. 4 of Article 32º of Decree-Law No. 12/2016, which provides that "[m]anaging entities perform all their acts in the name and on behalf of the associates, participants, contributors and beneficiaries and, in the capacity of administrators of the funds, may negotiate securities or real estate, make bank deposits in the name of the fund and exercise all rights or perform all acts that directly or indirectly are related to the assets of the fund." It is concluded, thus, that pension funds integrate the broad concept of "financial institutions," in the same manner as occurs with their respective management companies.

As for the objective scope of the rule of subsection e) of No. 1 of Article 7º of the CIS, matters appear less linear. Here arises the question of whether the scope of the rule contained in subsection e) of No. 1 of Article 7º of the CIS is limited, or not, to operations and services typical of banking, whereby the commissions charged by entities managing pension funds to their respective funds would be excluded. Legal hermeneutics, as the art of understanding, recognizes that the interpretation of a legal rule cannot be carried out in an acontextual manner. On the contrary, it requires that the interpreter be in possession of multiple relevant sub-information. Because this is so, it is important to pay special attention to the succession of rules over time and to the specific modifications that have been introduced in the respective literal content.

It is important to note that the original version of Article 6º (current 7º) of the CIS, approved by Law No. 150/99, of September 11, provided the following:

"1 - Are also exempt from the tax:

e) Interest charged and the use of credit granted by credit institutions and financial companies to institutions, companies or entities whose form and object fulfill the types of credit institutions and financial companies provided for in community legislation, all domiciled in Member States of the European Union, or in any State fulfilling the principles derived from the Code of Conduct approved by the Resolution of the Council of the European Union, of December 1, 1997;

f) Commissions charged by credit institutions to other institutions of the same nature or entities whose form and object fulfill the types of credit institutions provided for in community legislation, domiciled in Member States of the European Union, or in any State fulfilling the principles derived from the Code of Conduct approved by the Resolution of the Council of the European Union, of December 1, 1997;"

This version still provided for a limitation, in the following terms: "2 - The provision of subsections f) and g) does not apply when any of the parties do not have headquarters or effective management in national territory."

Article 37º of Law No. 30-C/2000, of December 29 (State Budget 2001), introduced a new No. 2 to Article 6º (causing the then No. 2 to become No. 3), where it was established that: "2 – The provision of subsections e) and f) applies only to financial operations directly intended for credit extension, within the scope of activity exercised by the institutions and entities referred to in those subsections."

Two years later, Article 30º of Law No. 32-B/2002, of December 31 (State Budget 2013), eliminated No. 2 of Article 6º, bringing the effects of the respective rule to an end in the legal order. In this way, the limitation of the exemption to operations directly intended for credit extension, within the scope of activity developed by the entities referred to in subsections e) and f) of No. 1 of Article 6º, was removed. This is, unquestionably, hermeneutically relevant information.

Following the elimination of No. 2, Nos. 3 and 4 of the wording were renumbered, becoming 2 and 3. In this way, the legislator proceeded, through Article 30º of Law No. 32-B/2002, of December 31, to the repeal of No. 2 of Article 6º, which had been introduced by Article 37º of Law No. 30-C/2000, of December 29. Through Article 30º of Law No. 32-B/2002, of December 31, the legislator merged the previous subsections e) and f), which gave rise to a new wording of subsection e).

This came to exempt from Stamp Duty "[i]nterest and commissions charged and, also, the use of credit granted by credit institutions and financial companies to venture capital companies, as well as to companies or entities whose form and object fulfill the types of credit institutions and financial companies provided for in community legislation, all domiciled in Member States of the European Union, or in any State, with the exception of those domiciled in territories with privileged tax regimes to be defined by order of the Minister of Finance."

Thus, and as is stated in the decisions rendered in arbitral cases No. 348/2016-T, of May 2, 2017, No. 633/2016-T, of May 19, 2017, No. 667/2016-T, of June 20, 2017 and, likewise, No. 9/2017-T, of August 30, the reason for the merger of the subsections did not have to do with the incorporation into the new subsection e) of No. 1 of the expressly repealed No. 2 of Article 6º, but rather with the standardization of the assumptions of the stamp duty exemption of credit granted and interest charged with those of commissions charged in operations in which only credit institutions and financial companies were intervening. It is this meaning that immediately results from the introduced amendments.

It is accepted as meritorious the orientation followed in the referred decisions when in them it is affirmed that the historical evolution of the provision points clearly in the sense that only in the original version and, subsequently, during the period in which the wording given by Article 37º of Law No. 30-C/2000, of December 29, was in effect (which added a No. 2 to Article 6º), the exemption clearly had credit extension as its catalyst element as mentioned in such normative. That is, only there was there a relationship of dependence between the exemption and credit. With specific regard to commissions charged, the exemption could only apply to those that had as their basis operations intended for credit extension, by virtue of the restriction introduced in the aforementioned No. 2 of Article 6º.

It is also this meaning derived from the text of the provision when it uses the expression "and, also," which, being a conjunctive phrase, means, according to the main Portuguese language dictionaries, "equally," "as well as," "more," "also," "idem," "likewise," "in the same manner," "in the same way," pointing clearly, beyond any reasonable doubt, to a coexistence characterized by autonomy and independence. That is, the exemption of interest and commissions charged takes on autonomy and independence with the exemption of the use of credit and is subject to an identical regime.

It does not appear legitimate to interpret the expression "and, also," as meaning "when directly intended for," or "when directly related to," inasmuch as these latter expressions denote a relationship of subordination and dependence. This same meaning is supported by the fact that the expression "when directly intended for" had been deliberately and expressly rejected by Article 30º of Law No. 32-B/2002, of December 31 (State Budget 2003), when it eliminated No. 2 of Article 6º.

The literal and grammatical content of subsection e) of Article 7º is particularly clear in this domain, with no room to speak, with respect to the segment under analysis, of polysemy of the rule. Tax law, by the values of confidence, security and legal certainty to which it is constitutionally and legally bound, imposes increased requirements in the field of typicity, precision, clarity and determinability of laws. The text,[5] with its inherent linguistic properties, continues to perform a fundamental function of production and transmission of meaning and in the stabilization of expectations.

Indeed, removing those domains in which there is an assumed orientation to combat abuses in the fields of tax planning and base erosion and profit shifting, such as those that invoke general and special anti-abuse clauses, the literal and grammatical element retains a central relevance in tax law as a factor in creating stability, predictability and calculability. For that reason, the same is not compatible with a hermeneutical deconstruction of normative texts in terms that – devaluing linguistic statements and making equally admissible the most disparate interpretations – end up obliterating the objective linguistic function of coding and mediation of deontic meanings.

In light of the above, it is concluded that the exemption provided for in subsection e) of No. 1 of Article 7º of the CIS was not limited, before the entry into force of Law No. 7-A/2016, of March 30, to operations directly intended for credit extension within the scope of activity developed by credit institutions, financial companies and other financial institutions.

9.7 The Alleged Interpretive Rule Introduced by the State Budget 2016

Law No. 7-A/2016, of March 30 (State Budget 2016), through its Article 152º, added to the CIS No. 7 of Article 7º, which provides the following: "The provision of subsection e) of No. 1 applies only to guarantees and financial operations directly intended for credit extension, within the scope of activity exercised by the institutions and entities referred to in that subsection." Article 154º of the State Budget 2016 provides for the interpretive character of the aforementioned provision. The legislator adopted, as to this point, a legislative technique to which it has been resorting with relative frequency. In fact, the inclusion of "interpretive rules," applicable to various domains of tax legislation constitutes one of the characteristic notes of the 2016 State Budget. This occurred, not only in the Stamp Duty sphere, but also within the scope of Income Tax, Corporate Income Tax, Real Estate Transfer Tax and Temporary Solidarity Tax Codes.

The figure of the interpretive law has a not insignificant relevance in legal hermeneutics, inasmuch as, pursuant to Article 13º No. 1 of the Civil Code, "The interpretive law integrates into the interpreted law." From this results a general regime of retroactive application of the interpretive law with ex tunc effects, that is, retroacting to the moment of entry into force of the interpreted law. However, No. 1 of Article 13º itself of this legislation relativizes this general regime in benefit of legal certainty and protection of confidence by saving "the effects already produced by compliance with the obligation, by judgment passed in res judicata, by settlement, even if not ratified, or by acts of an analogous nature."

That is, the legislator does not cease to recognize that the interpretive law introduces innovations in the legal order, inasmuch as it narrows the semantic horizon of interpretive possibilities, in such terms that, taken to its ultimate consequences, could call into question legal certainty, security and peace, which leads it to yield before the effect of res judicata and other modalities of stabilization of expectations (e.g., chose décidée).

If this is so in the general regime of the interpretive law, greater concessions to the principles of legal certainty and protection of confidence are not excluded in special domains of law (e.g., restrictions on rights, freedoms and guarantees, criminal law, tax law) in which constitutional requirements of certainty and security acquire special intensity, especially having in regard, in the case of tax law, the establishment of an express prohibition of retroactivity in Article 103º No. 3 of the CRP[6].

This aspect is particularly important inasmuch as interpretive laws are never absolutely neutral from the semantic point of view. Just as in quantum physics the simple act of observing an object interferes with that observed object, so also in the legal order the approval of an interpretive law interferes with the meaning of the interpreted law[7]. The degree of interference produced by the interpretive law must be substantively analyzed and valued from the point of view of the matters on which it impacts, of the beneficial or harmful effects it produces on its addressees and of the disturbance it causes to the constitutional principles that structure the legal system.

To this is added that in the qualification of a law as interpretive the nomen iuris is not absolutely decisive. There may be laws self-qualified as interpretive that turn out to be innovative, possibly proposing a meaning incompatible with the interpreted law. Similarly, it is equally true that not all interpretive laws can be treated the same way. There are meanings proposed by interpretive laws that appear more or less close to the literal content of the interpreted text and others that can hardly be compatible with it. Similarly, some are more harmful or more beneficial in their interference with the rights or interests of their addressees. All of this must be evaluated and weighed in concrete form, according to a contextual approach.

Now, in the domain of the CIS, the legislator did not limit itself to clarifying the interpretive sense of a rule in force. Differently, as results from the considerations previously developed, the interpretive rule contained in No. 7 of Article 7º of the CIS is innovative in character with respect to the legal regime previously in effect. With the aggravation that this interpretive rule exhumed a sense that, having interrupted a period of non-subjection to stamp duty of commissions charged for the management of pension funds[8], had as its support solely the brief effectiveness in No. 2 of Article 6º of the CIS (ex vi Article 37º/2 Law No. 30-C/2000), until its elimination by Article 30º of Law No. 32/2002, about 13 years before the approval of Article 154º of the State Budget 2016. Also here facing relevant sub-information in the hermeneutic sphere, with significance from the point of view of the regularity of state conduct and the stabilization of expectations backed by investments (investment backed expectations).

In the domain of tax law, it is not admitted that the spirit of repealed laws can come to haunt the interpretation and application of the tax law regime introduced alongside the repealing rules during their period of effectiveness – even through mediumistic invocation by some courts – and end up reincarnating, some years later, in the body of an alleged interpretive law. Recourse to this legislative technique would inevitably put at risk the transparency and accessibility that should characterize the legal rules that guide the conduct of economic operators, violating tax legality and legal certainty and protection of confidence of citizens, which present themselves as sub-principles of the rule of law principle.

To understand what is really at stake in the concrete case, it is important to emphasize, by way of an intermediate result (Zwischenergebnis), that here we are dealing with a supposed interpretive law that: a) reintroduces into the legal order a normative sense devoid of any literal and grammatical support in the interpreted law; b) that sense would correspond expressly and unequivocally to the literal content of a rule already eliminated; c) that elimination occurred about 13 years before the approval of the supposed interpretive law; d) during that time the management commissions charged by SGFPs were exempt from Stamp Duty without this having been questioned by the AT; e) the interpretive law introduced a normative sense manifestly unfavorable to the taxpayer and f) sought to give that sense a retroactive effect under Article 13º/3 of the Civil Code.

In general, the rules of legal hermeneutics postulate that the interpretive result cannot fail to have a minimum correspondence to the letter of the law (Article 9º, No. 2 of the Civil Code). Now, as was then observed, there is no literal foundation in the wording of subsection e) of No. 1 of Article 7º of the CIS that permits the interpreter to conclude the limitation of the exemption therein provided to guarantees and financial operations directly intended for credit extension, within the scope of activity exercised by the institutions and entities referred to in the same subsection. Indeed, the conjunctive and additive expression "and, also," which conveys a sense of autonomy and independence, in no case can be interpreted as meaning "when directly linked to," or "when directly related to" in terms that suggest a relationship of subordination and dependence.

It does not appear relevant to mention in this regard (as some do) the decision of the Central Administrative Court of the South, rendered in case No. 02754/08, of 21-09-2010, the decision of the Supreme Administrative Court, rendered in case No. 0770/15, of 06/17/2016, and, likewise, the decision of the Supreme Administrative Court rendered in case No. 01630/15, of 06/29/2016, to sustain the interpretation of the provision in question. Indeed, the mentioned case law does not refer to management commissions charged to pension funds by management companies and, in general, to commissions or other consideration for the provision of financial services.

As is emphasized in the CAAD case law already mentioned, the commissions referred to in that case law are those charged for the exercise of insurance brokerage activity, taxed by Entry 22.2, distinct from the provision of financial services covered by Entry 17.3.4, both of the TGIS. In this way, that case law is not relevant to the discussion in the present proceedings and cannot be used as a dictum probandi to corroborate any alleged divergence in interpretation in the mediation of the semantic content of subsection e) of No. 1 of Article 7º of the CIS.

Being a legislative amendment with innovative content and manifestly unfavorable sense to the taxpayer, the same cannot have retroactive effect, under penalty of violation of the principle of legal certainty and protection of confidence of citizens, inherent in the rule of law principle, as results from Article 103º, No. 3, of the CRP[9].

It is therefore considered that Law No. 7-A/2016, of March 30 (State Budget 2016) came, through the combined interpretation of its Articles 152º and 154º, to delimit the material scope of the exemption provided in subsection e) of No. 1 of Article 7º of the CIS, in an innovative and retroactive manner, and, as such, unconstitutional, due to violation of the principle of prohibition of retroactivity of tax rules, provided for in Article 103º, No. 3, of the CRP, inherent in the principle of legal certainty and protection of confidence of citizens. But even if it were a true interpretive rule, the constitutional protection guaranteed to the taxpayer in Article 103º, No. 3 cannot be disregarded, by prohibiting retroactivity (authentic) of tax law. Interpretive laws may be admissible and integrated into the interpreted laws, as stated in Article 13º of the Civil Code. But this does not extend necessarily and without limits to domains such as criminal law or tax law, or even restriction of rights, freedoms and guarantees, where the requirements of legality, typicity, certainty and legal security appear especially demanding.

These principles may determine that also in the case of interpretive laws of tax laws the prohibition of retroactivity is particularly pertinent. The weighing of the literal and grammatical element present, of the meaning proposed by the interpretive law, of the greater or lesser adequacy of that meaning to that literal element and of the lapse of time that occurred between the interpreted law and the interpretive law, can support the conclusion that the supposed interpretive law in question here does not have here only a declarative nature, instead producing innovative and constitutive effects.

Inasmuch as they bind courts to a certain interpretation, among several in the abstract possible and already adopted by other courts, they necessarily imply a retroactive application of the interpreted law. Through interpretive rules, the State comes to prevent, a posteriori, the Law it created from functioning through its intrinsic logic communicable to the addressees of the rules, altering the framework of relevant elements of legal interpretation, in terms that collide with the principle of legal certainty and protection of confidence of citizens and with the prohibition of retroactivity of tax laws enshrined in Article 103º, No. 3, of the CRP. Whereby it should be understood that the present interpretive tax law with innovative content unfavorable to the taxpayer can only produce prospective effects, and should be interpreted in conformity with the Constitution, in the line of the orientation recently recommended by the Constitutional Court in Decisions Nos. 267/2017 of May 31, 2017 and 644/2017, of October 4, 2017 and, previously, in Summary Decision No. 404/2017 (Case No. 519/17). Otherwise, there would be a real and systemic risk of proliferation of retroactive tax laws disguised as interpretive laws[10].

In light of the above, this Tribunal finds that the Claimant is right in considering the commissions it charged as exempt from Stamp Duty, in accordance with the provision of subsection e) of No. 1 of Article 7º of the CIS.

In these terms, the request for a declaration of illegality of the Stamp Duty assessments and compensatory interest subject to the arbitral request will proceed, due to error of law as to the meaning and scope of the aforementioned provisions, with the consequent annulment of the same.

The knowledge of the other vices attributed by the Claimant to the tax acts in question is prejudiced.

9.10 The Provision of Guarantee for Suspension of Execution

The Claimant provided a guarantee, through insurance surety, for the amount fixed by the head of the Finance Services of Oeiras…, to, in accordance with legal terms, suspend the tax execution proceedings instituted as a result of failure to pay the stamp duty assessment subject to these proceedings [cfr and), in the list of proved facts], instituted after the non-voluntary payment of the assessments now contested.

Pursuant to Article 43º No. 1 of the LGT, "Indemnifying interest is due when it is determined, in administrative reclamation or judicial impugnation, that there was error attributable to the services resulting in payment of the tax debt in an amount exceeding the legally due amount."

For its part, Nos. 1 and 2 of Article 53º of the LGT, provide that "The debtor who, to suspend execution, offers bank guarantee or equivalent will be indemnified in whole or in part for damages resulting from its provision, if he has maintained it for a period exceeding three years in proportion to the time of completion in administrative appeal, impugnation or opposition to execution that have as object the debt guaranteed.", the three-year period not applying "when it is verified, in administrative reclamation or judicial impugnation, that there was error attributable to the services in the tax assessment."

In the case at hand, the conduct by the AT of the acts in controversy resulted from error in the interpretation of the legal rules in question, an error that is only attributable to the respective services, whereby the three-year period is not applicable in the present proceedings. No. 1 of Article 171º of the CPPT determines, for its part, that "[i]ndemnification in case of bank guarantee or equivalent [such as, for example, insurance surety] improperly provided will be requested in the proceedings in which the legality of the enforceable debt is controversial."

No. 2 of the same article provides that "[i]ndemnification must be requested in the administrative reclamation, impugnation or appeal or in case its ground is subsequent within 30 days after its occurrence."

Thus it is concluded that the Claimant is right in the present proceedings also with respect to the request for compensation for damages/costs resulting from the improper provision of the guarantee mentioned, which certainly incurred costs [the policy documented in the proceedings – Document 8 – indicates the debit of an insurance premium in the amount of € 3,423.28].

Reasons why this request also proceeds, although the fixing of the indemnification quantum must be relegated to execution of judgment.

IV DECISION

In these terms, it is decided in this Arbitral Tribunal:

a) To judge the main arbitral request well-founded, annulling the acts of Stamp Duty assessment and compensatory interest challenged;

b) To judge the request for indemnification for improperly provided guarantee well-founded, and whose specific amount will be determined in execution of judgment; and

c) To condemn the respondent entity, the Tax and Customs Authority, to the costs of the proceedings.

PROCESS VALUE

In accordance with the provisions of Article 306º, No. 2, of the CPC, 97º-A, No. 1, subsection a), of the CPPT and 3º, No. 2, of the Regulation of Costs in Tax Arbitration Proceedings, the value of € 415,700.38 is fixed to the proceedings.

COSTS

Pursuant to Article 22º, No. 4, of the RJAT, the amount of costs is fixed at € 6,732.00, according to Table I annexed to the Regulation of Costs in Tax Arbitration Proceedings, to be charged to the Respondent as decided above.

• Notification to be made, including to the Public Prosecutor [Madam Attorney General of the Republic], considering the mandatory appeal requirement (Article 280º-3, of the Constitution of the Portuguese Republic).

Lisbon, February 5, 2018

THE COLLECTIVE ARBITRAL TRIBUNAL

THE PRESIDING ARBITRATOR

(José Poças Falcão)

THE MEMBER ARBITRATOR

(Rui Ferreira Rodrigues)

THE MEMBER ARBITRATOR

(António Alberto Franco)