Summary
Full Decision
ARBITRAL JURISPRUDENCE IN TAX MATTERS
Case No. 38/2019-T
Decision Date: 2019-09-13
Tax Type: VAT
Value of Claim: €1,205,631.79
Subject Matter: VAT – Waiver of VAT exemption.
ARBITRAL DECISION
The arbitral tribunal agrees as follows:
I – Report
1. A CLOSED REAL ESTATE INVESTMENT FUND A..., with registered office at ..., No. ..., ..., ...-... Lisbon, with tax identification number ..., represented by its management company B... – REAL ESTATE INVESTMENT FUND MANAGEMENT COMPANY, S.A., with tax identification number ... and registered office at the same address, hereby requests the constitution of an arbitral tribunal, pursuant to the provisions of Articles 2, No. 1, subparagraph a), and 10 of Decree-Law No. 10/2011, of January 20, to examine the legality of the act of partial dismissal of a hierarchical appeal lodged against the tax act of additional VAT assessment No. ... M and compensatory interest with No. ... M, with reference to the period of December 2007, and further requests the reimbursement of the tax improperly paid, in the amount of €1,205,631.79, and the condemnation of the Tax Authority to payment of indemnity interest.
The claim is grounded on the following terms.
Following a request for VAT refund in the amount of €3,000,000.00 submitted with reference to the period of December 2007, the Claimant was subject to an inspection action that resulted in additional VAT assessment on the grounds that not all necessary conditions were met for the application of the VAT exemption waiver regime.
The principal disagreement between the Claimant and the Tax Authority lies in the different understanding of the requirements on which the waiver of VAT exemption depends, particularly regarding the requirement of the nature of an autonomous unit (fracção autónoma) when lease contracts have been executed during the period of validity of Decree-Law No. 241/86, of August 20.
Indeed, with respect to a set of autonomous units leased to VAT taxable persons for which the right to waiver of VAT exemption was exercised, the possibility of tax deduction was not admitted, despite the fact that these were parts of autonomous units or parts not identified in the respective property register as being susceptible to independent use, specifically with respect to units P, U, X, AM and AG of the enterprise "...".
The financial lease of real property is exempt from VAT pursuant to No. 29 of Article 9 of the VAT Code, an exemption which taxable persons may waive, under the terms of Article 12, No. 4, because it is understood to be an incomplete exemption that could constitute a factor of distortion in the operation of the tax.
The waiver of exemption was regulated by Decree-Law No. 241/86, of August 20, which provided in No. 1 of Article 4 that "taxable persons who waive the exemption shall have the right to deduction of the tax borne for the performance of operations relating to each real property or autonomous part", terminology that was subsequently abandoned by Decree-Law No. 21/2007, of January 29, which expressly refers to the concept of "autonomous unit (fracção autónoma)".
However, these concepts cannot be confused, since "autonomous unit" has a markedly legal character, being associated with the constitution of horizontal property ownership, whereas "autonomous part" has a factual and practical connotation, and its determination should be made by reference to the material situation in which the space is found, taking into account whether it is capable of being used, in fact, independently.
In the case at hand, the Claimant promoted the implementation of the "... Park" project, having acquired by 2007 various assets and services for the construction of the complex, and in this context various lease contracts were executed relating to parts of the property.
With respect to unit U, the Claimant executed with C... a lease contract for non-residential purposes relating to an autonomous part of a future autonomous unit – provisionally denominated as 1, body C, which, following execution of a deed of horizontal property ownership, would be designated as "unit U".
This part of the unit includes an office area that is divided into seven parts susceptible to independent use, making it possible for the lessee to occupy only room 1, with access to the outside.
With respect to unit X, provisionally designated in the project as C3, which in the initial project had a constructed area of 2,000 m², the Claimant executed a lease contract with D..., Lda., but which was reduced to half that area (1,000 m²) because it was found that the lessee did not have need to use a larger area.
With respect to units AG and AM, designated in the project as unit 02 of Body D, the Claimant executed a lease contract with E..., S.A., and requested waiver of the tax exemption with respect to half of that unit. In the construction project, the stores in Body D had an associated office, and the existence of two autonomous units was foreseen; however, the lessee chose not to use the office space, which resulted in changes to the areas foreseen in the project, and this autonomous unit subsequently gave rise to three autonomous units upon the constitution of the final horizontal property ownership – AG, AH and AM.
In any of these cases, the Tax Authority considers that the legal requirements necessary for the option to be taxed under VAT are not met because these are areas that are not susceptible to independent use.
In the Claimant's understanding, the Tax Authority limited itself to making a formal assessment of the requirements on which the waiver of exemption depends, thereby violating the principle of the prevalence of substance over form. Moreover, the purpose of the parties was not to obtain an undue tax advantage but to exercise a legally provided option to choose taxation in real estate operations, and therefore the solution advocated by the Administration also violates the principle of proportionality and substantive justice.
The Tax Authority, in its response, argues that Article 12 of the VAT Code, which provides for waiver of VAT exemption, interpreted in conjunction with the provisions of Decree-Law No. 241/86, of August 20, which developed the regime for the exercise of this right, permits the conclusion that the waiver, with respect to real property, is only admissible with respect to autonomous units, in cases where there is constitution of horizontal property ownership, or with respect to autonomous parts, in cases where there is constitution of full property ownership, with all parts being susceptible to independent use.
In this case, the Claimant sought to deduct VAT and obtain reimbursement of the tax paid in relation to a set of autonomous units and autonomous parts of the "... Park" complex, intended for commerce, offices and services, with respect to which it had requested waiver of the exemption.
In the course of the tax inspection procedure opened following the refund request, it was found that autonomous units designated A through AO were constituted under a horizontal property ownership regime, but that it was no longer possible to waive VAT exemption with respect to units U, X, AG and AM because they did not constitute parts susceptible to independent use.
Unit U constituted an autonomous unit under a horizontal property ownership regime, dedicated to warehouses and industrial activity and valued at a single value of €1,398,420.00, which was divided into a set of rooms that are leased to different entities and thus constitute parcels of autonomous units.
Unit X, dedicated to warehouses and industrial activity and valued at a single value of €1,116,410.00, was subject to a lease contract executed with company D..., Lda. that refers only to half of the unit, and it cannot be concluded that the leased part constitutes an autonomous part in terms of being susceptible to independent use.
With respect to units AG and AM, a lease contract was executed with E..., S.A., when the waiver of exemption certificate relates only to half of that unit, which prevents consideration of the waiver to the extent it concerns part of an autonomous unit.
It concludes that the requirements for waiver of exemption are not met in the sense of the dismissal of the claim.
2. In the continuation of the process, the meeting referred to in Article 18 of the RJAT was dispensed with and the process was ordered to proceed to successive arguments.
The parties did not present arguments.
3. The request for constitution of the arbitral tribunal was accepted by the President of CAAD and notified to the Tax and Customs Authority in accordance with the applicable regulations.
Pursuant to the provisions of subparagraph a) of No. 2 of Article 6 and subparagraph b) of No. 1 of Article 11 of the RJAT, as amended by Article 228 of Law No. 66-B/2012, of December 31, the Deontological Council designated as arbitrators of the collective arbitral tribunal the undersigned, who communicated acceptance of the appointment within the applicable period.
The parties were duly and timely notified of this designation and did not manifest any intention to refuse it, in accordance with the combined provisions of Article 11, No. 1, subparagraphs a) and b), of the RJAT and Articles 6 and 7 of the Deontological Code.
Thus, in accordance with the provisions of subparagraph c) of No. 1 of Article 11 of the RJAT, as amended by Article 228 of Law No. 66-B/2012, of December 31, the collective arbitral tribunal was constituted on March 27, 2019.
The arbitral tribunal was regularly constituted and is materially competent in light of the provisions of Articles 2, No. 1, subparagraph a), and 30, No. 1, of Decree-Law No. 10/2011, of January 20.
The parties have legal personality and capacity, are legitimate and are represented (Articles 4 and 10, No. 2, of the same statute and 1 of Ordinance No. 112-A/2011, of March 22).
The process does not suffer from nullities and no exceptions have been raised.
It is incumbent upon us to examine and decide.
II – Grounds for Decision
Matters of Fact
4. The facts relevant to the decision of the case which may be considered established are the following:
A) The Claimant filed, on December 5, 2011, a judicial challenge before the Administrative and Tax Court of ..., within the scope of case No. .../11...B..., against the decision of partial dismissal of the hierarchical appeal relating to the tax act of additional VAT assessment No. ... M and compensatory interest with No. ... M, with reference to the period of December 2007;
B) Following the publication of Decree-Law No. 81/2018, of October 15, which permitted, under certain conditions, the "migration" of cases pending in tax courts to arbitral tribunals, the Claimant, meeting the listed requirements, requested that the case be transferred and examined by the Administrative Arbitration Center, by means of submission of the present request for arbitral pronouncement, and further requested the extinction of the judicial proceedings of case No. .../11...B...;
C) The arbitral claim was filed on January 18, 2019;
D) The Claimant constitutes a Real Estate Investment Fund, whose operation is governed by Decree-Law No. 60/2002, of March 30, and is qualified as a mixed taxable person by carrying out VAT-taxable operations with right to deduction and exempt operations without right to deduction;
E) The Claimant promoted the construction of the "..." complex, intended for commerce, offices and services, and requested waiver of VAT exemption with respect to units designated with the letters U, X, AG and AM;
F) In the period of 2007 12, the Claimant filed the periodic VAT return in the amount of €3,481,872.55, corresponding to the amount of tax to be paid, and subsequently exercised the right to tax deduction with the consequent request for refund with respect to units for which it requested waiver of the exemption;
G) In the Tax Inspection Report it was determined that units U, X, AG and AM did not meet the requirements for waiver of VAT exemption based on the following considerations:
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Unit U: provisionally designated in the architecture project as 01 of body D, was intended to constitute a future autonomous unit dedicated to warehouses and industrial activity and valued at a single value of €1,398,420.00, which was divided into a set of rooms that are leased to different entities and thus constitute parcels of autonomous units;
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Unit X: provisionally designated 02 of body C, was intended to constitute an autonomous unit dedicated to warehouses and industrial activity and valued at a single value of €1,116,410.00, and was subject to a lease contract executed with company D..., Lda. that refers only to half of the unit, and it cannot be concluded that the leased part constitutes an autonomous part in terms of being susceptible to independent use;
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Units AG and AM: provisionally designated as 02 of body D, gave rise to three autonomous units under a horizontal property ownership regime, and were subject to a lease contract with E..., S.A., with the finding that the waiver of exemption certificate relates only to half of each of those units and does not correspond to the leased units;
H) Following the dismissal of a petition for administrative reconsideration lodged against additional assessments Nos. ... and ..., the Claimant filed a hierarchical appeal which was partially dismissed by order of the Deputy Director-General, of August 12, 2011, maintaining the understanding, with the grounds set forth in the Tax Inspection Report, that the requirements for waiver of VAT exemption did not exist with respect to the mentioned real property units;
I) The head of the finance office of the finance service of ..., on October 12, 2005, issued a certificate of waiver of VAT exemption with respect to part of the future autonomous unit to which the number 01 of body D was provisionally assigned in the Commercial and Service Park (...);
J) The head of the finance office of the finance service of ..., on July 10, 2006, issued a certificate of waiver of VAT exemption with respect to half of the future autonomous unit provisionally designated as No. 3 of body D, with an area of 1000 m², of the Commercial and Service Park (...);
K) The head of the finance office of the finance service of ..., on March 8, 2006, issued a certificate of waiver of VAT exemption with respect to half of the future autonomous unit provisionally designated as No. 2 of body D of the Commercial and Service Park (...).
The tribunal formed its conviction regarding the facts established on the basis of documents attached to the petition and on the administrative file provided by the Tax Authority and on uncontested allegations of fact.
Matters of Law
Competence of the Arbitral Tribunal to Know Claims for Reimbursement of Tax Improperly Paid
5. The Tax Authority raised the dilatory exception of incompetence of the arbitral tribunal with respect to the claim for reimbursement of improperly paid tax, on the grounds that this claim, insofar as it seeks reimbursement, although it may constitute a consequence of the declaration of illegality of the impugned assessment acts in terms of execution, does not fall within the competence of the arbitral tribunal as defined in Article 2, No. 1, subparagraphs a) and b), of the RJAT.
In the initial petition, the Claimant makes clear that its claim is aimed at the additional VAT assessment, as well as the decision of dismissal of the hierarchical appeal submitted following a prior petition for administrative reconsideration. However, in the formulation of the claim, the challenging party requests not only the annulment of the assessment act and the order of dismissal, but also reimbursement in the amount of €1,205,631.79, plus the respective indemnity interest.
It should be stated at the outset that although the competence of arbitral tribunals in tax matters comprises only claims for recognition involving the declaration of illegality of acts assessing taxes, fixing the taxable base and fixing patrimonial values, in accordance with the aforementioned subparagraphs a) and b) of No. 1 of Article 2 of the RJAT, the fact is that it is a consequence of the arbitral decision of allowance that the Tax Administration should perform the legally due tax act in replacement of the impugned act and restore the situation that would exist if that act had not been performed (Article 24, No. 1, of the RJAT).
That is, moreover, the necessary consequence of the duty to execute sentences annulling administrative acts (Article 179 of the Administrative Procedure Code), which becomes applicable, in the same exact terms, to situations in which there is administrative annulment by initiative of the Administration or at the request of the private party (Article 172 of the Code of Administrative Procedure).
In this case, the Claimant has presented a claim for reimbursement of improperly paid tax, but this is merely an accessory claim conditioned on the declaration of illegality of the impugned tax acts, not assuming the nature of an autonomous claim for condemnation to performance of a due act or recognition of legally protected rights that exceeds the scope of material competence of the arbitral tribunal.
This is further indicated by the fact that nothing prevents the tribunal from issuing a condemnation, if warranted, to payment of indemnity interest.
Pursuant to No. 5 of Article 24 of the RJAT "payment of interest is due, regardless of its nature, in accordance with the terms provided in the General Tax Law and the Code of Tax Procedure and Process", which refers to the provisions of Articles 43, No. 1, and 61, No. 5, of each of those statutes, requiring payment of indemnity interest from the date of improper payment of the tax until the date of processing of the respective credit note. The payment of indemnity interest becomes due whenever the improper tax obligation results from error attributable to the services verifiable either in administrative challenge or in judicial challenge.
There is thus occasion, following the declaration of illegality of the act assessing tax, for the payment of indemnity interest, in accordance with the cited provisions of Articles 43, No. 1, of the General Tax Law and 61, No. 5, of the Code of Tax Procedure and Process, calculated on the amount that the Claimant improperly paid, at the rate of legal interest (Articles 35, No. 10, and 43, No. 4, of the General Tax Law).
And, consequently, the arbitral tribunal is not prevented from including in the operative part the mere consequences of the declaration of illegality of the tax act.
Substantive Issue
6. The only issue in debate concerns whether the waiver of VAT exemption with respect to lease of real property or autonomous units, referred to in Article 12, No. 4, of the VAT Code, and regulated at the time of the facts by Decree-Law No. 241/86, of August 20, applies only to autonomous units legally constituted under a horizontal property ownership regime or may also extend to autonomous parts that may be subject to independent use.
The Claimant argues that the concept of autonomous unit has a markedly legal character, being associated with the constitution of horizontal property ownership, whereas the concept of autonomous part has a factual and practical connotation, and therefore its determination should be made by reference to the material situation in question, being relevant that it is a space that may be used independently.
In contrast, the Tax Authority argues that waiver of VAT exemption is admissible only with respect to the entire property or autonomous units, and it is not possible for this right to be exercised, as in the case under examination, with respect to parcels of autonomous units or half of autonomous units.
In the original version, Article 12, No. 4, of the VAT Code permitted that "taxable persons who lease real property or autonomous parts thereof to other taxable persons may also waive the exemption referred to in No. 30 of Article 9". The subsequent No. 6, however, made the exercise of the exemption waiver dependent on prior presentation by the lessor or seller of a declaration, in an approved form, containing the name of the lessee or buyer, the rent or price and other conditions of the contract, and accordingly issued by the tax administration a certificate, when the presuppositions of the waiver were established, which was intended to be exhibited upon execution of the contract or deed of transfer.
The regime of VAT exemption waiver was subsequently developed by Decree-Law No. 241/86, of August 20, which provided in its Article 1:
"1 – Taxable persons who, pursuant to Nos. 4 to 6 of Article 12 of the VAT Code, intend to waive the exemptions referred to in Nos. 30 and 31 of Article 9 of the same Code shall submit, in triplicate, to the competent finance office, a declaration in the form approved.
2 – Whenever the presuppositions provided for in Nos. 4 and 5 of Article 12 of the VAT Code are met, the finance office shall issue the certificate referred to in No. 6 of the same article within a maximum period of 30 days from the date of submission of the declaration mentioned in the preceding number."
Article 4 of that statute further specified the terms under which VAT deduction is due in case of waiver of exemption, establishing the following:
"1. Without prejudice to the provisions of the following articles, taxable persons who waive the exemption in accordance with Article 1 shall have the right to deduction of the tax borne for the performance of operations relating to each real property or autonomous part, according to the rules defined in Articles 19 and following of the VAT Code.
- It shall not, however, be permitted to taxable persons to effectuate the deduction relating to each real property or autonomous part in the tax determined for other real properties or autonomous parts or any other operations, nor to request the respective reimbursement in accordance with Nos. 5 and 6 of Article 22 of the VAT Code, before the execution of the deed of transfer or the lease contract of the real properties."
That provision, as various others of the same statute – such as Articles 3, No. 2, 4, Nos. 1 and 2, 5, No. 1, 6, No. 1, and 8 – referred to lease operations of real property or autonomous parts, which was in consonance with the original wording of Article 12, No. 4, of the VAT Code which equally used this terminology.
However, as a result of the amendments introduced to the VAT Code by Decree-Law No. 21/2007, of January 29, the cited Article 12, No. 4, now reads as follows:
"Taxable persons who carry out the lease of urban real property or autonomous units thereof to other taxable persons who use them, in whole or predominantly, in activities that confer right to deduction, may waive the exemption provided for in No. 29) of Article 9".
In that sequence, Decree-Law No. 21/2007, of January 29, intending to introduce into VAT legislation a set of measures designed to combat situations of fraud, evasion and abuse in the context of real estate operations subject to taxation – as appears from its preamble – repealing the previous statute that regulated that matter, came to define, as objective conditions for waiver of exemption in operations relating to real property, that it be an urban property or an autonomous unit thereof or, in the case of transfer, a plot of land for construction, and that the contract concern the transfer of the right of ownership of the real property or its lease and relate to the entirety of the real property (Article 2, No. 1, subparagraphs a) and c)). And, with respect to the formalities for the waiver of exemption, it maintained the requirement of the request for issuance of a certificate for purposes of waiver, which shall contain the name or corporate designation of the transferring or lessor taxable person and the acquiring or lessee taxable person of the real property, as well as the identification of the real property, an indication of the object of the operation (transfer of right of ownership or lease), the activity to be performed on the real property and the selling price of the real property or the monthly rent value and a declaration that all conditions for waiver of the exemption are met (Article 4, No. 1).
As legal commentary has pointed out, Decree-Law No. 21/2007, for the aforementioned reasons of combating fraud, evasion and tax abuse that occurred under the previous regime, substantially restricted the situations in which it is possible to waive VAT exemption in the lease and sale of real property and, among other measures, proceeded to exclude from waiver of exemption the lease or transfer of parts of real property, namely lesser real rights, such as bare ownership, usufruct, right of soil and right of surface (ANGELINA TIBÚRCIO, VAT Code and RITI – Notes and Comments, coordination Clotilde Celorico Palma/António Carlos Santos, Coimbra, 2014, pages 168 and 170; ANTÓNIO BEJA SANTOS/AFONSO ARNALDO, "The real estate sector and VAT. Perspectives of a troubled relationship", in Journal of Public Finances and Tax Law, Year 1, No. 2, pages 103-105).
As has also been noted, VAT exemption with respect to lease of real property, referred to in Article 9, subparagraph 29), of the VAT Code, is an incomplete exemption, in that it does not permit deduction of VAT borne at the preceding stage. "Consequently, that amount of tax, being shifted to the value of the rent or to the selling price of the real property, in a concealed manner, has the consequence of duplication of VAT, in cases where real property is leased or acquired by taxable persons who destine it to the performance of taxable operations".
Thus, "the principal advantage inherent in waiver of VAT exemption consists in the possibility for the seller/lessor to recover, by way of deduction, the VAT borne in the construction or purchase of real property and therefore to present itself in the market with a more competitive price. On the other hand, the lessee or purchaser may proceed to deduction of the VAT assessed on the rent or purchase price of the real property, thereby clearing the VAT that, in case the operation were exempt, would be concealed, which represents a saving in operating costs" (ANGELINA TIBÚRCIO, ob. cit., pages 166-168).
7. Now, in the case at hand, it is important to note that the waiver of VAT exemption occurred still within the domain of Decree-Law No. 241/86, which, in consonance with the then-applicable wording of Article 12, No. 4, of the VAT Code, referred to real property or autonomous parts. The concept of autonomous parts is necessarily distinct from the concept of autonomous units, which has a precise technical legal meaning that refers to the horizontal property ownership regime. Autonomous units are those that, "in addition to constituting independent units, are distinct and isolated from each other, with separate access to a common part of the building or to the public way" (Article 1415 of the Civil Code).
Autonomous part indisputably has a broader meaning, corresponding to a part of real property that functions autonomously and does not have to fulfill the legal requirements demanded for the constitution of horizontal property ownership. It may consist of offices installed separately in part of a real property or an autonomous unit (see ANTÓNIO BEJA SANTOS/AFONSO ARNALDO, ob. cit., page 104).
Moreover, as was stated, the waiver of exemption is dependent on the issuance of an exemption certificate issued by the Tax Administration and it is in the procedure intended for the issuance of that document that it is incumbent upon the Administration to verify whether the presuppositions of the waiver of exemption are fulfilled, and especially whether the real property or part of the real property that is the object of the lease may be understood as a unit of independent use. And, as has been recognized by administrative case law, the waiver certificate has a constitutive nature of the right to waiver and subsequent deduction or reimbursement of VAT (Supreme Administrative Court decision of October 7, 2015, Case No. 01455/12).
Now, in the case at hand, the Tax Authority issued certificates of waiver of exemption with respect to units U, X, and AM and AG, which constitute documents Nos. 11, 12 and 14 attached to the initial petition, and in them the Administration expressly states that the waiver of exemption concerns a "part of the future autonomous unit" (unit U) or half of the future autonomous unit (units X and AM and AG), which means that the Administration, in issuing the certificate, did not call into question that these were autonomous parts for purposes of the provisions of Article 12, No. 4, of the VAT Code.
It is true that in the decision dismissing the hierarchical appeal, repeating what appeared in the Tax Inspection Report, it is declared that, with respect to units AG and AM, there is a discrepancy between the object of the lease contract and the content of the waiver of exemption certificate, since the latter refers to half of each of those units whereas the lease encompassed the set of leased units. However, nothing permits the conclusion, in light of the evidence in the file, that the certificate does not correspond to the business actually conducted, and it is the Tax Authority that bears the burden of proving the facts constituting the right it asserts (Article 74, No. 1, of the General Tax Law).
The Claimant further mentions the illegality of the non-admission of the right to VAT deduction with respect to unit P (Article 56), but does not allege any facts that permit specifying the terms on which the request for waiver of exemption was made with respect to that unit, and therefore the claim proves to be inconclusive on that matter.
Indemnity Interest
The Claimant further requests condemnation of the Tax Authority to payment of indemnity interest, at the legal rate, calculated on the tax, until the complete reimbursement of the amount owed.
In accordance with the provisions of subparagraph b) of Article 24 of the RJAT, the arbitral decision on the merits of the claim, against which there is no appeal or challenge, binds the Tax Administration, in the exact terms of the allowance of the arbitral decision in favor of the taxable person, requiring it to "restore the situation that would exist if the tax act that is the subject of the arbitral decision had not been performed, adopting the acts and operations necessary for that purpose". This is in harmony with the provision of Article 100 of the General Tax Law, applicable by force of the provision of subparagraph a) of No. 1 of Article 29 of the RJAT.
Further, pursuant to No. 5 of Article 24 of the RJAT "payment of interest is due, regardless of its nature, in accordance with the terms provided in the General Tax Law and the Code of Tax Procedure and Process", which refers to the provisions of Articles 43, No. 1, and 61, No. 5, of each of those statutes, requiring payment of indemnity interest from the date of improper payment of the tax until the date of processing of the respective credit note.
There is thus occasion, following the declaration of illegality of the act assessing the IMT, for the payment of indemnity interest, in accordance with the cited provisions of Articles 43, No. 1, of the General Tax Law and 61, No. 5, of the Code of Tax Procedure and Process, calculated on the amount that the Claimant improperly paid, at the rate of legal interest (Articles 35, No. 10, and 43, No. 4, of the General Tax Law).
The Tax Authority argues, in its response, that indemnity interest is due not from the date of improper payment of the tax, but from the date of notification of the decision dismissing the hierarchical appeal, because only from that decision onward can the Administration take a position on the taxable person's claim. But this postponement is not provided for in Article 43 of the General Tax Law, which only refers to situations in which "revision of the tax act by initiative of the taxpayer is carried out more than one year after the taxpayer's request, unless the delay is not attributable to the tax administration (No. 2, subparagraph c)), which manifestly is not the case.
III – Decision
It is decided as follows:
a) The arbitral claim is allowed with respect to the tax act in the part concerning units U, X, AM and AG;
b) The Tax Authority is condemned to pay indemnity interest, at the legal rate, calculated on the tax, until complete reimbursement of the amount owed.
Value of the Cause
The Claimant indicated as the value of the cause the amount of €1,205,631.79, which was not contested by the Respondent and corresponds to the value of the assessment which the Claimant sought to prevent, and therefore the value of the cause is fixed at that amount.
Costs
Pursuant to Articles 12, No. 2, and 24, No. 4, of the RJAT, and Article 3, No. 2, of the Regulation of Costs in Tax Arbitration Proceedings and Table I attached to that Regulation, the amount of costs is fixed at €16,524.00, which is borne by the Respondent.
Notify.
Lisbon, September 13, 2019
The President of the Arbitral Tribunal
Carlos Fernandes Cadilha
The Arbitrator Member
Leonardo Marques dos Santos
The Arbitrator Member
A. Sérgio de Matos
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