Process: 396/2017-T

Date: May 4, 2018

Tax Type: Selo

Source: Original CAAD Decision

Summary

This CAAD arbitral decision (396/2017-T) addresses duplicate Stamp Tax assessments under Item 28.1 of the General Stamp Tax Table (TGIS) for urban properties. The claimant company challenged IS assessments for 2013, arguing double collection occurred when the Tax Authority issued two separate sets of collection notes for the same property with multiple independent units. The original assessments (2014 series) were paid in September 2015, but new assessments (2016 series) were issued for the identical tax period and taxable event. After the claimant filed a gracious complaint that was tacitly rejected and initiated arbitration proceedings, the Tax Authority conducted an internal verification and annulled the contested 2016 assessments motu proprio during the arbitral proceedings. This created supervening uselessness of proceedings (inutilidade superveniente da lide), as the original claim for annulment became moot. The tribunal confirmed the annulment and addressed the secondary claim for compensation of bank guarantee costs incurred to suspend enforcement proceedings. The decision illustrates how duplicate tax collection constitutes an illegality under Portuguese tax law, the Tax Authority's power to self-correct errors during arbitration, and the procedural consequences when contested tax acts are annulled before final judgment. The case demonstrates the importance of proper verification systems to prevent duplicate assessments on properties under horizontal ownership regimes with multiple independent units subject to Stamp Tax under TGIS Item 28.

Full Decision

ARBITRAL DECISION

1. REPORT

A..., LDA, with tax identification number no. ..., with registered office at Rua ..., no. ... ...-... Lisbon, hereinafter referred to as the Claimant, submitted to the Administrative Arbitration Centre (CAAD) a request for constitution and arbitral pronouncement with a view to annulling the Gracious Complaint no. ...2016..., which was subject to tacit rejection, as well as the annulment of Stamp Tax (IS) Assessments for 2013, Item 28, identified through collection documents with nos. 2016..., 2016..., 2016..., 2016..., 2016..., 2016..., 2016..., 2016..., 2016..., 2016..., 2016..., 2016..., 2016... and 2016..., relating to the urban property in the parish of ..., registered in the respective urban property register under article U-....

The Claimant bases the illegality of the decision of tacit rejection of the Gracious Complaint above identified and illegality of the assessments underlying it and consequent annulment of the tax acts, based on the following defects:

  • Double Collection, given that the Respondent issued two separate Stamp Tax assessments for each unit capable of independent use, whereby in these there is identity of Tax, period and taxable event, and when the tax assessments subject to complaint were issued, the original assessments had already been satisfied by the Claimant.

Based on the above grounds, it also requests that the Claimant be indemnified for costs associated with the provision of a bank guarantee for suspension of the execution proceedings relating to the assessments pointed out as duplicative.

The Tax and Customs Authority, in turn, notified to respond, did not provide a response.

Subsequently, following the Claimant's position regarding the existence of double collection, the Respondent, after internal verification of what was alleged by the Claimant, submitted to the case file, on 11 April 2018, a request indicating that the assessments subject to the request for arbitral pronouncement had already been annulled, annexing to it a computer extract from the Stamp Tax assessment system.

The sole arbitrator was designated and appointed on 14.08.2017.

In accordance with the provisions of article 11, no. 1, paragraph c) of the RJAT, the singular arbitral tribunal was constituted on 08.09.2017.

The holding of the arbitral meeting referred to in article 18 of the RJAT was waived.

2. SANATION

The Tribunal is materially competent and is regularly constituted, in accordance with articles 2, no. 1, paragraph a), 5 and 6, all of the RJAT.

The parties have legal personality and capacity, are legitimate and are represented, in accordance with articles 4 and 10 of the RJAT and article 1 of Order no. 112-A/2011, of 22 March.

There are no nullities and preliminary questions affecting the entire proceedings, therefore it is now necessary to rule on the claim.

The cumulation of claims made in this request for arbitral pronouncement, concerning assessment acts of the same tax (Stamp Tax), based on the same factual basis and applying the same rules of law, is fully justified in light of the principle of procedural economy enshrined in article 3 of the RJAT.

3. FACTUAL MATTER

3.1. Proven Facts:

Following analysis of the documentary evidence produced and the position of the parties, in this case taking into account the Respondent's failure to respond, the following facts are considered proven and relevant for deciding the case:

  • The Claimant is the owner of the urban property registered in the urban property register of the parish of ..., under article ...;

  • The identified urban property is held under a full/vertical ownership regime, with apartments or divisions capable of independent use, as confirmed by the property registration document attached to the case file;

  • With respect to the urban property above identified and more specifically with respect to each of the apartments or divisions capable of independent use, Respondent AT issued Stamp Tax collection notes, relating to item 28.1 of the TGIS, for the year 2013, with the following nos.: 2014..., 2014..., 2014..., 2014..., 2014..., 2014..., 2014..., 2014..., 2014..., 2014..., 2014..., 2014..., 2016....

  • The Stamp Tax collection notes above identified were notified to the Claimant and were subject to payment on 01.09.2015;

  • With respect to the urban property already identified and with reference to the period 2013, Respondent AT issued, during 2016, Stamp Tax assessments, Item 28.1 of the TGIS, broken down into collection notes with the following nos.: 2016..., 2016..., 2016..., 2016..., 2016..., 2016..., 2016..., 2016..., 2016..., 2016..., 2016..., 2016... and 2016...;

  • The collection notes identified in item 5 were not paid, and their respective execution proceedings were instituted during 2016, currently being suspended by provision of a guarantee.

  • The Claimant submitted a Gracious Complaint on 12.12.2016, regarding the Stamp Tax Assessment tax acts, set out and identified in the collection documents better identified in item 5, which was assigned no. ...2016....

  • Such Gracious Complaint was not expressly decided.

  • On 27.06.2017, assuming the figure of "tacit rejection" of the gracious defense remedy introduced, the present Claimant submitted, via electronic platform, the request for constitution and pronouncement of an arbitral tribunal, which was accepted on 28.06.2017;

  • The Claimant proceeded on 27.06.2017 to payment of the initial court fee;

  • The Stamp Tax assessments better identified by the collection documents contained in item 5 were annulled by the Tax and Customs Authority, as evidenced by the document submitted by it on 08.04.2018, supported by a communication issued by DSIMT – Directorate of Services for the Municipal Tax on Onerous Property Transfers, Stamp Tax, Single Circulation Tax and Special Contributions, the contents of which are hereby fully reproduced;

No other facts with relevance for deciding the case were proven.

3.2. Basis for the Proven Factual Matter:

As regards the proven facts, the arbitrator's conviction was based on the documentary evidence attached to the case file, as well as on the acceptance by the parties of the factual matter brought before these proceedings.

4. LEGAL MATTER

4.1. Issues to be Decided:

The request for arbitral pronouncement thus has as its object the declaration of illegality of Stamp Tax (IS) assessment acts, under the provisions of item 28.1 of the TGIS, relating to the year 2013 better identified in item 5 of the factual matter, due to double collection in relation to the Stamp Tax assessments, set out in the collection documents contained in item 3 of the proven facts.

Additionally, the Claimant petitions for compensation for costs relating to the provision of a guarantee for suspension of the execution proceedings relating to the tax acts subject to these proceedings.

In view of the above, taking into account the provisions of article 124 of the CPPT, applicable by virtue of paragraph a) of no. 1 of article 29 of the RJAT, it is necessary to rule on the defects pointed out to the IS tax acts subject to these arbitral proceedings, following such criterion.

Therefore, first, the Tribunal must decide on the question of annulment carried out by Respondent AT during the course of this arbitral instance.

Second, the question for the Tribunal to resolve concerns the request for compensation for costs relating to provision of a guarantee.

4.2. Official Annulment of Tax Acts:

As evidenced above, following the processing of these arbitral proceedings, the Respondent proceeded, motu proprio, to annul the tax acts subject to this arbitral dispute, as evidenced by the document submitted by it on 08.04.2018, supported by a communication issued by DSIMT – Directorate of Services for the Municipal Tax on Onerous Property Transfers, Stamp Tax, Single Circulation Tax and Special Contributions, the contents of which are hereby fully reproduced.

What is to say that the Stamp Tax assessments relating to the year 2013, subject to the decision of tacit rejection of Gracious Complaint no. ...2016..., disappeared from the tax legal order, by virtue of the annulment carried out after the institution of this Request for Arbitral Pronouncement.

The futility or supervening impossibility of the dispute, currently provided for in art. 277, paragraph e) of the CPC, occurs when, due to a fact occurring during the course of the proceedings, the plaintiff's claim cannot be maintained, by reason of the disappearance of the subjects or the object of the proceedings, or falls outside the scope of the remedy sought.

In either case, the resolution of the dispute ceases to be of interest – here, both by impossibility of achieving the intended result; and by the fact that it has already been achieved by another means [José Lebre de Freitas, João Redinha, Rui Pinto, Código de Processo Civil anotado, I Volume, 2ª Edição, Almedina, 2003, annotation 3 to art. 287, p. 512].

The proceedings are extinguished because its continuation became futile: once the fact is verified, the tribunal does not rule on the merits, limiting itself to declaring that extinction.

However, the fact capable of determining the extinction of the proceedings due to futility of the dispute must be supervening, that is, its occurrence must take place after the institution of the proceedings. It is therefore not sufficient for the mere existence of a fact that makes the dispute futile.

In the case of these proceedings, there is no doubt as to the supervening nature of the cause of extinction of the dispute – annulment by the Respondent Tax and Customs Authority – in that the assessments subject to this action were annulled on 7 March 2018, whereas this arbitral instance had its genesis with the acceptance of the request occurring on 28.06.2017.

In view of the above, it is evident that with the disappearance from the tax legal order of the Stamp Tax assessment tax acts for 2013 invoked as affected by the defect of double collection, it renders the continuation of this dispute futile and determines the extinction of the proceedings, given that the fact of the Claimant's processual claim regarding the annulment of the tax acts in question is already effectuated by official annulment of those same tax acts.

4.3. Compensation for Provision of Guarantee:

Notwithstanding the above, while it is true that the Claimant's claim is satisfied as regards the annulment of the tax acts achieved, it is important to assess the Claimant's request for compensation for costs associated with the establishment of a bank guarantee for suspension of the execution proceedings of the Stamp Tax assessments subject to this action.

One could theoretically question the possible inability to assess this same request, in view of the solution provided regarding the annulment of the assessments carried out officially by the Respondent, of the Claimant's right to such compensation for the bank guarantee provided for purposes of suspension of the tax execution proceedings of the taxes subject to this dispute.

In this regard, this singular arbitral tribunal understands that nothing prevents that, notwithstanding the existence of a cause of extinction of the proceedings, the question concerning such compensation can and should be assessed (in light of the request formulated by the Claimant) in this same instance.

In fact, such request is rooted precisely in the official success of what was the Claimant's main claim: the annulment of the Stamp Tax assessment tax acts (as well as the decision rejecting the gracious complaint), which has the possible consequence of restoring the situation as it would have existed if the tax act(s) had not been carried out.

This same doctrine flows from the provision of paragraph b) of no. 1 of article 24 of the RJAT, according to which the arbitral decision must "restore the situation that would have existed if the tax act subject to the arbitral decision had not been carried out, adopting the acts and operations necessary for that purpose;"

In this same line of reasoning, by reference to paragraph a) of no. 1 of article 29 of the RJAT, in accordance with article 100 of the LGT, "The tax administration is obliged, in case of total or partial success of the complaint, judicial challenge or appeal in favor of the taxpayer, to immediately and fully restore the legality of the act or situation subject to the dispute, including payment of indemnity interest, if applicable, from the date of expiration of the period for execution of the decision."

The right to indemnity interest in the context of arbitral proceedings is also established in no. 5 of article 24 of the RJAT, according to which such interest is owed under the terms provided in the General Tax Law and the Tax Procedure and Process Code.

Always with the aim of restoring the situation existing in the event that the tax act is deemed undue, the legislator similarly provided for a mechanism for restoring that same original situation when bank guarantee or equivalent guarantee is provided for purposes of suspension of tax execution.

To this end, article 53 of the General Tax Law provides:

"Guarantee in case of undue payment

1 – The debtor who, to suspend execution, offers bank guarantee or equivalent, shall be fully or partially indemnified for losses resulting from its provision, if maintained for a period exceeding three years, in proportion to the award in administrative appeal, challenge or opposition to execution that have as their object the secured debt.

2 – The period referred to in the preceding number shall not apply when it is found, in gracious complaint or judicial challenge, that there was error attributable to the services in the tax assessment.

3 – The indemnification referred to in no. 1 has as its maximum limit the amount resulting from application to the guaranteed value of the indemnity interest rate provided in this law and may be requested in the complaint or judicial challenge proceeding itself, or autonomously.

4 – Indemnification for undue guarantee provision shall be paid by setoff against the revenue of the tax in the year in which payment was made."

It follows from the above that the legislator makes the right to payment of losses associated with undue guarantee provision for a period of less than three years dependent on the fact that there was error attributable to the services in the tax assessment.

It is therefore important, taking into account the fact that we are dealing with annulment of the tax acts carried out officially by the Tax Authority during the course of this arbitral instance, to assess whether or not there is subsumption to the existence of error attributable to the services.

Now, in this regard, by its clarity and suitability to the case at hand, we cannot fail to cite here in part an excerpt from the decision of the Supreme Administrative Court, in the context of case no. 0574/14, of 07.01.2016, in which the following summary was issued:

"Having the Tax Administration come to officially annul the CA assessments, during the pendency of the judicial challenge instituted against such assessments and where, in addition to requesting the annulment of these tax acts, indemnity interest was also sought from AT, such fact is in itself demonstrative of error attributable to the services and determinative of payment of interest under article 43 of the LGT."

On this matter, the cited decision also provides the following reasoning, which in its entirety we endorse:

"Error attributable to the services, which the judgment recognizes in the context of judicial challenge by finding established the supervening futility of the dispute because annulment determined the extinction of the assessment, the same purpose that was also sought by the judicial challenge in progress, in accordance with the provisions of article 124/1 of the CPPT.

Thus it must be understood that error attributable to the services was demonstrated by the act of annulment, even if official, for the situation is equivalent, to say nothing of being the result, given the time and manner in which such act appears, to the fact that in the challenge such error is verified and recognized.

In this sense see Diogo Leite de Campos Benjamin Rodrigues and Lopes de Sousa in annotation to article 43 of the LGT 2nd edition pp 181.

For this reason the AT's position cannot be accepted.

In fact, to consider in a situation like this that official annulment was not constitutive of the right to the indemnity interest sought was to place, as the respondent rightly points out in its counter-allegation, arbitrarily, in the hands of the Tax Administration the constitution of that same right whenever service error occurred, which would constitute manifest abuse that the law cannot tolerate or permit."

In light of the case law understanding of the Supreme Administrative Court cited above, which we accept, it cannot be left unconsidered that the annulment of the tax acts, in this case of Stamp Tax assessments for 2013 underlying this Request for Arbitral Pronouncement, configure the existence of error attributable to the services.

Having reached this point, considering the fact that the tax execution proceedings are suspended by means of a guarantee provided by the Claimant (this factuality not being contested by the Respondent), it is important to analyze the question concerning the indemnification request formulated.

The provision of guarantee necessarily entails charges/commissions depending on, in particular, the risk, value and term of the guarantee issued, which is why the Claimant, as a result of providing the guarantee, will necessarily be burdened with the respective costs of issuance and maintenance associated with that operation of securing the execution debt.

As the guarantees provided in accordance with the provisions of no. 6 of article 199 of the CPPT (total value of the assessment subject to this challenge, interest, court costs and other additions) (See no. 6 of article 199 of the CPPT) and given the achievement of full success during the course of this action by reason of the annulment carried out by the Respondent, the costs associated with its undue provision cannot fail to be compensated by the Respondent.

As we are dealing with error attributable to the services, regardless of whether the guarantee is maintained for more or less than three years, the prerequisites conferring on the Claimant the right to indemnification in accordance with the provisions of article 53 of the LGT are met, thus restoring the situation that would have existed had the tax acts (now annulled) not been carried out.

Therefore, the request formulated by the Claimant for condemnation of the Respondent to payment of expenses and charges, vested and future, owed by the issuance and maintenance of the guarantee provided for suspension of tax execution proceedings for collection of Stamp Tax assessment tax acts for 2013 now in question, is proper.

Although the Claimant did not expressly formulate a quantum for indemnification, this does not legally flow as required in view of the provisions of article 569 of the Civil Code.

The calculation of indemnification shall therefore take place in the context of execution of judgment, taking into account the legal limits of its amount, arising from the application of no. 3 of article 53 of the LGT.

5. DECISION:

In these terms and with the reasoning set out above, this singular arbitral tribunal decides:

  • To determine the extinction of the proceedings due to supervening futility of the dispute by annulment of the tax acts in accordance with and for the purposes of article 277, paragraph e) of the CPC and, as well, to condemn Respondent Tax and Customs Authority to payment to the Claimant of indemnification, with the quantitative limitations arising from no. 3 of article 53 of the LGT, with respect to costs and charges, vested and future, incurred with the provision of guarantee for suspension of collection in tax execution proceedings of the tax acts in the meantime subject to annulment.

  • Having the Arbitral Tribunal been duly constituted, it condemns the Respondent to costs in the amount of € 918.00 in accordance with Table I of the RCPAT, and in compliance with the provisions of articles 12, no. 2, and 22, no. 4, both of the RJAT, and the provisions of article 4, no. 4, of the cited Regulation.

The value of the proceedings is fixed at € 11,573.50, in accordance with article 32 of the Code of Procedure in Administrative Courts and article 97-A of the CPPT, applicable by virtue of the provisions of article 29, no. 1, paragraphs a) and b), of the RJAT, and article 3, no. 2, of the Regulation of Costs in Tax Arbitration Proceedings (RCPAT).

This arbitral decision shall be notified to the parties and, in due course, the case shall be filed.

Lisbon, 4 May 2018.

The sole arbitrator

(Luís Ricardo Farinha Sequeira)

Text prepared by computer, in accordance with article 138, no. 5 of the Code of Civil Procedure (CPC), applicable by reference to article 29, no. 1, paragraph e) of the Tax Arbitration Regime, with blank lines and reviewed by me.

Frequently Asked Questions

Automatically Created

What happens when duplicate Stamp Tax (Imposto do Selo) assessments are issued under Verba 28 of the TGIS?
When duplicate Stamp Tax assessments are issued under Verba 28 of the TGIS, it constitutes an illegality based on double collection (duplicação de coleta). This occurs when the Tax Authority issues multiple assessments for the same tax, period, and taxable event. In this case, two sets of collection notes were issued for 2013 Stamp Tax on the same urban property with independent units - the original 2014 series (already paid) and a duplicative 2016 series. The duplication violates fundamental tax principles as taxpayers cannot be assessed twice for the same tax liability. The proper remedy is annulment of the duplicate assessments, either through administrative review or arbitration.
What is supervening uselessness of proceedings (inutilidade superveniente da lide) in Portuguese tax arbitration?
Supervening uselessness of proceedings (inutilidade superveniente da lide) occurs in Portuguese tax arbitration when the object of the dispute ceases to exist during the proceedings, rendering a decision on the merits unnecessary. In this case, it arose because the Tax Authority annulled the contested Stamp Tax assessments motu proprio after internal verification confirmed the claimant's allegations of duplicate collection. Once the challenged tax acts were eliminated from the legal order, the original claim for annulment became purposeless. Under Article 124 CPPT and Article 29(1)(a) RJAT, the tribunal must acknowledge this development and terminate proceedings on that ground, though it may still rule on consequential claims like compensation.
Can a taxpayer claim compensation for bank guarantee costs when duplicate tax assessments are annulled?
Yes, taxpayers can claim compensation for bank guarantee costs when duplicate tax assessments are annulled, though success depends on demonstrating the Tax Authority's fault. When enforcement proceedings are initiated for contested assessments, taxpayers often provide bank guarantees to suspend collection. If the assessments are later annulled as duplicates, the guarantee costs represent damages flowing from the Tax Authority's error. The compensation claim typically covers guarantee issuance fees, commissions, and other bank charges. However, the tribunal must evaluate whether the duplicate assessment resulted from culpable conduct by the Tax Authority and whether the costs were necessary and proportionate to protect the taxpayer's rights during the dispute.
How does the CAAD arbitral tribunal handle cases where the Tax Authority annuls contested assessments during proceedings?
When the Tax Authority annuls contested assessments during CAAD arbitration proceedings, the tribunal must acknowledge the supervening uselessness of the original claim for annulment. The tribunal verifies the annulment through official documentation (such as system extracts from the tax authority's databases) and confirms that the challenged acts have been eliminated from the legal order. While the primary claim becomes moot, the tribunal retains jurisdiction to decide consequential matters, such as compensation claims for costs incurred due to the illegal assessments. The tribunal's role shifts from judging the legality of the acts (now annulled) to determining whether additional relief is warranted for damages suffered during the period the illegal assessments remained in effect.
What constitutes duplicate tax collection (duplicação de coleta) under Portuguese Stamp Tax law for urban properties?
Duplicate tax collection (duplicação de coleta) under Portuguese Stamp Tax law for urban properties occurs when the Tax Authority issues multiple assessments with identity of tax type, taxable period, taxable person, and taxable event. For properties under horizontal/vertical ownership regimes with independent units, Item 28.1 TGIS applies to each unit capable of independent use. Duplication arises when the authority mistakenly generates separate assessment cycles for the same units and year - for example, issuing collection notes in both 2014 and 2016 for the 2013 tax year on identical property units. This constitutes an illegality because each taxable event should generate only one valid assessment. Proper property registration verification and system controls should prevent such errors, particularly for complex properties with multiple independent units.