Summary
Full Decision
ARBITRAL DECISION
I - REPORT
A - IDENTIFICATION OF THE PARTIES
Claimant: A... - Open Real Estate Investment Fund, with registered office at ..., no. ..., ...-... Lisbon, bearing the collective taxpayer identification number NIPC: ..., represented by the management company B... – Management Company of Movable Investment Funds, SA, (NIPC...), hereinafter referred to as the Claimant or taxpayer.
Respondent: Tax and Customs Authority, hereinafter referred to as the Respondent or AT.
The Claimant filed a petition for the establishment of an Arbitral Court in tax matters and a request for arbitral decision, under the terms of paragraph a) of no. 1 of article 2 and paragraph a) of no. 1 of article 10, both of Decree-Law no. 10/2011, of January 20 (Legal Framework for Arbitration in Tax Matters, hereinafter abbreviated as RJAT).
The petition for the establishment of the Arbitral Court was accepted by the President of CAAD, and in accordance with the provisions of paragraph c) of no. 1 of article 11 of Decree-Law no. 10/2011, of January 20, as amended by article 228 of Law no. 66-B/2012, of December 31, the Tax Authority was notified on 2017-07-17.
The Claimant did not proceed with the appointment of an arbitrator, wherefore, in accordance with the provisions of no. 1 of article 6 and paragraph b) of no. 1 of article 11 of Decree-Law no. 10/2011, of January 20, as amended by article 228 of Law no. 66-B/2012, of December 31, the Deontological Board appointed as Arbitrator Rita Guerra Alves, whose appointment was accepted by her in accordance with the legally provided terms.
On 2017-08-30, the parties were duly notified of such appointment, and did not express their intention to challenge the appointment of the arbitrator, in accordance with article 11, no. 1, paragraphs a) and b), of the RJAT and articles 6 and 7 of the Deontological Code.
The Singular Arbitral Court was duly constituted on 2017-09-17, to examine and decide on the subject matter of the present dispute, and the Tax and Customs Authority was automatically notified on 2017-09-17 as evidenced in the respective minutes.
B - REQUEST
The Claimant herein petitions for the declaration of illegality of the tax assessment acts for Stamp Tax, numbers 2015..., 2015..., 2015..., which set a tax to be paid of € 44,071.76 (forty-four thousand, seventy-one euros and seventy-six cents).
C - GROUNDS FOR THE CLAIM
To support its request for arbitral decision, the Claimant alleged, with a view to declaring the tax assessment acts for Stamp Tax illegal, the following:
The Claimant is the owner, as of the date to which the assessment underlying the present proceedings relates (2014), of the property currently registered as article ..., in the Union of Civil Parishes of ..., ... and ..., municipality and district of Porto.
The property, as of the date of the facts, was registered in the respective cadastre as land for construction.
The property registered in the respective cadastre as land for construction cannot be subsumed within the concept of "property with residential use allocation" and, consequently, is not included within the scope of objective incidence of item 28.1 of the TGIS.
The Claimant alleges that the property in question in the present petition did not have in 2014 a "construction authorized or foreseen" for "residential purposes" as required by item 28.1 of the TGIS.
In these terms, given the situation of the property in question, the taxation provided for in item 28.1 of the TGIS could not have been applied in this case, as its respective application requirements were not met.
The Claimant concludes by alleging that the Stamp Tax assessment, which is the indirect subject matter of the present petition, should be declared illegal for violation of the provisions of item 28.1 of the TGIS and article 6 of the Municipal Property Tax Code (CIMI).
D - THE RESPONDENT'S REPLY
The Respondent, duly notified for such purpose, timely submitted its reply in which, in brief summary, alleged the following:
In the property register that forms the basis of the present assessment, it is verified that the land for construction is allocated to residential use.
Now, urban properties that are land for construction and to which residential use has been attributed within the scope of their respective valuations, being recorded as such in the respective cadastres, are subject to Stamp Tax.
As there is no definition in the Stamp Tax of what is meant by 'urban property', 'land for construction' and 'residential use allocation', it is necessary to resort subsidiarily to the Municipal Property Tax Code (CIMI) to obtain a definition that allows determining the possible subjection to Stamp Tax, in accordance with the provisions of article 67, no. 2 of the Tax Code (CIS) as amended by Law no. 55-A/2012, of October 29.
From the "Annotation no. 2 to subdivision license no. ALV/.../.../...." which appears on page 20 of the administrative file, there is expressly stated the total construction area and the total area of lots, leaving no doubt that the purpose of the property in question is construction.
It cannot be ignored that the license permit for the carrying out of urban development operations should contain, among other elements, the number of lots and the indication of the location area, purpose, implantation area, construction area, number of floors, number of units in each of the lots, with specification of units intended for subsidized housing, when foreseen, in accordance with paragraph a) of article 77 of the Urban Development Regime (RJUE).
E - FACTUAL BASIS
For the examination of the questions submitted for consideration, it is necessary to describe the relevant factual matter, based on the documentary evidence produced by the parties for the proceedings and the absence of challenge of the administrative tax proceedings.
Thus, regarding relevant factual matters, this Court deems the following facts as established:
The Claimant is the owner of the urban property corresponding to land for construction, currently registered as article ..., in the Union of Civil Parishes of ..., ... and ..., municipality and district of Porto;
The property, as of the date of the facts, was registered in the respective cadastre as land for construction;
The TPC (Tax Patrimonial Value), basis of the impugned assessment, corresponds to €4,407,175.50;
The Tax Patrimonial Value, as of the date (December 31, 2014), for purposes of the assessments exceeds €1,000,000.00 (one million Euros);
The urban property in question constituted land for construction that was subject to a subdivision process, issued on December 3, 2009, by the Municipal Chamber of ..., whose Subdivision License no. ALV/.../.../..... authorizes the constitution of a building intended for residential purposes.
The Claimant was notified of the following Stamp Tax assessment acts:
no. 2015..., of 2014, concerning the first installment of Stamp Tax, on the real property ... ..., ...-D-U-..., with a collection of €44,071.76 and a tax to be paid of €14,690.60;
no. 2015..., of 2014, concerning the second installment of Stamp Tax, on the real property ... ..., ...-D-U-..., with a collection of €44,071.76 and a tax to be paid of €14,690.58;
no. 2015..., of 2014, concerning the third installment of Stamp Tax, on the real property ... ..., ...-D-U-..., with a collection of €44,071.76 and a tax to be paid of €14,690.58;
The Claimant filed a gracious complaint with no. ...2017..., on which an order of dismissal was issued on April 7, 2017, and the same was notified to the Claimant.
F - FACTS NOT PROVEN
Of the facts with interest for the decision of the case, contained in the impugned assessment, all subject to concrete analysis, those not contained in the above factual description have not been proven.
G - ISSUES TO BE DECIDED
Given the positions of the parties, adopted in the arguments presented by each, the following constitutes the central issue, which must therefore be examined and decided:
A) The declaration of illegality of the tax assessment acts for Stamp Tax, concerning the year 2014, respectively no. 2015..., 2015..., 2015..., which set a tax to be paid of € 44,071.76 (forty-four thousand, seventy-one euros and seventy-six cents).
B) The payment of compensatory interest.
H - LEGAL GROUNDS
Given the positions taken by the parties in the pleadings submitted, the central question to be resolved by this Arbitral Court will consist in deciding whether the act of assessment of Stamp Tax, no. 2015..., 2015..., 2015..., which set a tax to be paid of € 44,071.76 (forty-four thousand, seventy-one euros and seventy-six cents), on the urban property, registered as article ..., in the Union of Civil Parishes of..., ... and ..., municipality and district of Porto, with the tax patrimonial value of € 4,407,175.50€, was based on the erroneous interpretation and application of item 28.1 of the TGIS and article 6, no. 1, subparagraphs f), i) of the aforementioned Law no. 55-A/2012, of October 29.
Given the factual matters established as proven, we shall proceed to determine the applicable law, prioritizing, in compliance with the provisions of paragraph a) of no. 2 of article 124 of the Tax Procedural Code (CPPT), the analysis of the defects of the assessment act, whose merit determines a more stable and effective protection of the interests of the Claimants.
We shall thus proceed to analyze the Defects due to error regarding the premises of the law concerning the assessment, regarding the issue of the classification of land for construction, within the scope of incidence of article 28, no. 1 of the TGIS, introduced by the Regime of Law no. 55-A/2012, of October 29.
With the amendment of the regime, regarding the subjection to Stamp Tax, of properties with residential use allocation, through the addition of item 28 of the General Table of Stamp Tax, effected by article 4 of Law 55-A/2012, of October 29, this came to typify the taxable facts, in accordance with the following wording:
"28 – Ownership, usufruct or right of surface of urban properties whose tax patrimonial value contained in the cadastre, in accordance with the Municipal Property Tax Code (CIMI), is equal to or greater than € 1,000,000 – on the tax patrimonial value used for purposes of Municipal Property Tax (IMI):
28.1 – Per residential property or for land for construction whose construction, authorized or foreseen, is for residential purposes, in accordance with the provisions of the Municipal Property Tax Code (CIMI);
28.2 – Per property, when the passive subjects that are not natural persons are resident in a country, territory or region subject to a clearly more favorable tax regime, contained in the list approved by ministerial order of the Minister of Finance – 7.5%."
And are contained in article 6 of Law no. 55-A/2012, the transitional provisions that established the rules pertaining to the assessment of the tax provided for in that item:
"1 – In 2012, the following rules must be observed by reference to the assessment of stamp tax provided for in item no. 28 of the respective General Table:
The taxable fact occurs on October 31, 2012;
The passive subject of the tax is the one mentioned in no. 4 of article 2 of the Stamp Tax Code on the date referred to in the previous subparagraph;
The tax patrimonial value to be used in the assessment of the tax corresponds to what results from the rules provided in the Municipal Property Tax Code by reference to the year 2011;
The assessment of the tax by the Tax and Customs Authority must be made by the end of November 2012;
The tax must be paid, in a single installment, by the passive subjects by December 20, 2012;
The applicable rates are the following:
Properties with residential use allocation assessed in accordance with the Municipal Property Tax Code: 0.5%;
ii) Properties with residential use allocation not yet assessed in accordance with the Municipal Property Tax Code: 0.8%;
iii) Urban properties when the passive subjects that are not natural persons are resident in a country, territory or region subject to a clearly more favorable tax regime, contained in the list approved by ministerial order of the Minister of Finance: 7.5%.
2 – In 2013, the assessment of stamp tax provided for in item no. 28 of the respective General Table must be made on the same tax patrimonial value used for purposes of municipal property tax assessment to be made in that year.
3 – The non-delivery, total or partial, within the indicated period, of the amounts assessed as stamp tax constitutes a tax infraction, punished in accordance with the law."
On the interpretation of this legal provision, the decision 53/2013-T[1] has already ruled as follows: "In the aforementioned item 28.1 and in the sub-items i) and ii) of subparagraph f) of no. 1 of article 6 of Law 55-A/2012, a concept was used that is not used in any other tax legislation in these precise terms, which is that of 'property with residential use allocation'. In particular in the CIMI, which in various norms of the Tax Code in the resources introduced by that Law is indicated as a diploma of subsidiary application regarding the tax foreseen in the aforementioned item no. 28 [articles 2, no. 4, 3, no. 3, subparagraph u), 5, subparagraph u), 23, no. 7, and 46 and 67 of the Tax Code], a concept defined in those terms is not used."
Thus and regarding Item 28, no. 1 of the TGIS, introduced by the Regime of Law no. 55-A/2012, of October 29, it is necessary for its application to land for construction, the verification of three cumulative requirements, respectively as follows:
Ownership, usufruct or right of surface of urban properties;
The TPC of the urban property is equal to or greater than € 1,000,000 €
And land for construction whose construction, authorized or foreseen, is for residential purposes
From the facts proven, we have no doubt that the first two requirements are met.
Regarding the third requirement, and as stipulated in said legal provision, land for construction must be authorized for construction or building, an authorization that is effected through a Subdivision License.
Item 28.1 requires that such authorization be issued for the construction/building of an urban property for residential purposes.
As such, the Authorization through a Subdivision License is intended for the construction/building of an urban property with a residential purpose or nature.
In these terms, it is incumbent on this Court to determine whether the Subdivision License which authorized the construction/building for residential purposes encompasses the concept of urban property (land for construction) for residential purposes.
Regarding the concept of property, it is for this purpose necessary to resort to the concept of property as provided in the CIMI, in which the types of properties are enumerated, in its articles 2 to 6, which are transcribed for better understanding:
"Article 2
Concept of property
1 – For purposes of this Code, property is any fraction of territory, comprising waters, plantations, buildings and constructions of any nature incorporated therein or built thereon, with a character of permanence, provided that it forms part of the patrimony of a natural or legal person and, in normal circumstances, has economic value, as well as waters, plantations, buildings or constructions, in the circumstances above, endowed with economic autonomy in relation to the land where they are located, although situated in a fraction of territory that constitutes an integral part of a different patrimony or does not have a patrimonial nature.
2 – Buildings or constructions, although movable by nature, are considered as having a character of permanence when assigned to non-transitory purposes.
3 – The character of permanence is presumed when the buildings or constructions are located in the same location for a period exceeding one year.
4 – For purposes of this tax, each autonomous fraction, under the horizontal property regime, is considered as constituting a property.
Article 3
Rural properties
1 – Rural properties are lands situated outside an urban settlement that are not to be classified as land for construction, in accordance with no. 3 of article 6, provided that:
They are allocated or, in the absence of concrete allocation, have as normal destination a use generating agricultural income, such as are considered for purposes of individual income tax (IRS);
Not having the allocation indicated in the previous subparagraph, are not constructed or have only buildings or constructions of an accessory nature, without economic autonomy and of reduced value.
2 – Rural properties are also lands situated within an urban settlement, provided that, by force of legally approved provision, they cannot have use generating any income or can only have use generating agricultural income and are actually having this allocation.
3 – There are also rural properties:
Buildings and constructions directly allocated to the production of agricultural income, when situated in the lands referred to in the previous numbers;
Waters and plantations in the situations to which no. 1 of article 2 refers.
4 – For purposes of this Code, urban settlements are considered, in addition to those situated within legally fixed perimeters, nuclei with a minimum of 10 units served by streets of public use, with their perimeter delimited by points distanced 50 m from the axis of the streets, in the transversal direction, and 20 m from the last building, in the direction of the streets.
Article 4
Urban properties
Urban properties are all those that should not be classified as rural, without prejudice to the provisions of the following article.
Article 5
Mixed properties
1 – Whenever a property has rural and urban parts is classified, in its entirety, in accordance with the main part.
2 – If neither of the parts can be classified as main, the property is considered as mixed.
Article 6
Types of urban properties
1 – Urban properties are divided into:
Residential;
Commercial, industrial or service;
Land for construction;
Other.
2 – Residential, commercial, industrial or service are buildings or constructions licensed for such purposes or, in the absence of license, which have as normal destination each of these purposes.
3 – Land for construction is considered the lands situated within or outside an urban settlement, for which a license or authorization has been granted, admitted prior notification or issued favorable prior information of a subdivision or split operation, and also those that have been thus declared in the acquisition title, excepting lands in which the competent entities prohibit any of those operations, in particular those located in green areas, protected areas or which, in accordance with municipal territorial planning, are allocated to spaces, infrastructure or public equipment. (As amended by Law no. 64-A/08, of December 31)
4 – Are included in the provision of subparagraph d) of no. 1 lands situated within an urban settlement that are not land for construction nor are encompassed by the provisions of no. 2 of article 3, and also buildings and constructions licensed or, in the absence of license, which have as normal destination other purposes than those referred to in no. 2, and also those of the exception of no. 3."
Let us see, with regard to the interpretation of Tax Norms, for the case sub judice, the provisions of article 11 of the General Tax Law:
"Article 11
Interpretation
In determining the meaning of tax norms and in qualifying the facts to which they apply, the general rules and principles of interpretation and application of laws are observed.
Whenever, in tax norms, terms proper to other branches of law are employed, they must be interpreted in the same sense that they have there, unless otherwise directly results from the law.
Should doubt persist about the meaning of the norms of incidence to be applied, account shall be taken of the economic substance of the taxable facts.
Gaps resulting from tax norms covered by the legislative reserve of the National Assembly cannot be filled by analogy."
To this provision, it is also necessary to resort to the general principles of interpretation of laws, as provided in article 9 of the Civil Code by referral of no. 1 of article 11 of the General Tax Law, which establishes the following:
"Article 9
Interpretation of the law
Interpretation must not be limited to the letter of the law, but must reconstruct from the texts the legislative intent, taking especially into account the unity of the legal system, the circumstances in which the law was elaborated and the specific conditions of the time in which it is applied.
The interpreter cannot, however, consider the legislative intent that does not have in the letter of the law a minimum of verbal correspondence, even if imperfectly expressed.
In fixing the meaning and scope of the law, the interpreter shall presume that the legislator adopted the most correct solutions and knew how to express his intent in adequate terms."
In view of the legal grounds already exposed, and considering the legal provisions enunciated, the following interpretations of the concept of 'property with residential use allocation' arise. The Concept of 'property with residential use allocation' as referring to residential properties, and the Concept of 'property with residential use allocation' as a concept distinct from 'residential properties'.
In the provisions of articles 2 to 6 of the CIMI transcribed above, the legislator does not use, in the classification of properties, the concept of 'property with residential use allocation'. Similarly, this concept is not found, with this terminology, in any other legislation.
The lack of exact terminological correspondence of the concept of 'property with residential use allocation' with any other concept used in other legislation may give rise to various interpretative hypotheses.
The text of the law is the starting point for the interpretation of the expression 'properties with residential use allocation', as it is on the basis of it that the 'legislative intent' must be reconstructed, as imposed by no. 1 of article 9 of the Civil Code, applicable by virtue of the provisions of article 11, no. 1, of the General Tax Law, already transcribed.
Thus on the interpretation of the concept of 'property with residential use allocation', it is important to cite Decision 53/2013-T, which has ruled on this matter. And in that Decision two interpretative hypotheses of the concept of 'property with residential use allocation' are equally sustained, respectively in the same sense as the present decision, as to the concept of 'property with residential use allocation' as referring to residential properties, and as to the Concept of 'property with residential use allocation' as a concept distinct from 'residential properties'.
Decision 53/2013-T states, on the concept of 'property with residential use allocation' as referring to residential properties:
"The concept closest to the literal wording of this expression used is manifestly that of 'residential properties', defined in no. 2 of article 6 of the CIMI as encompassing 'buildings or constructions' licensed for residential purposes or, in the absence of license, which have as normal destination residential purposes.
If it is understood that the expression 'property with residential use allocation' coincides with that of 'residential properties', it is manifest that the assessments will be defective in error as to the factual and legal premises, since all properties as to which Stamp Tax was assessed under the referred item no. 28.1 are land for construction, without any building or construction, required to fulfill that concept of 'residential properties'.
Therefore, if the interpretation is adopted that 'property with residential use allocation' means 'residential property', the assessments whose declaration of illegality is sought will be illegal, as there is no building or construction in any of the lands.
However, the non-coincidence of the terms of the expression used in item no. 28.1 of the TGIS with that which is extracted from no. 2 of article 6 of the CIMI, points in the sense that it was not intended to use the same concept."
On the interpretation of the second hypothesis: Concept of 'property with residential use allocation' as a concept distinct from 'residential properties', Decision 53/2013-T is cited again:
"The word 'allocation', in this context of use of a property, has the meaning of 'action of designating something for a determined use'. ( [2] )
'When, as is usually the case, norms (legislative formulas) contain more than one meaning, then the positive function of the text is expressed in giving stronger support to or suggesting more strongly one of the possible meanings. This is because, among the possible meanings, some will correspond to the most natural and direct significance of the expressions used, while others will only fit into the verbal framework of the norm in a forced, artificial manner. Now, in the absence of other elements that induce the selection of the less immediate sense of the text, the interpreter should choose in principle that meaning which best and most immediately corresponds to the natural significance of the verbal expressions used, and in particular to its legal-technical significance, on the assumption (not always correct) that the legislator knew how to express his intent correctly'. ( [3] )
The relevance of the text of the law is especially emphasized in the matter of interpretation of norms of incidence of Stamp Tax, which boil down to an amalgam, under a common denomination, of an incongruous set of taxes of completely distinct natures (on income, on expenditure, on patrimony, on acts, etc.), which leaves little room for application of the primary interpretative criterion, which is the unity of the legal system, which demands its overall coherence.
The recognized lack of coherence of Stamp Tax is particularly exuberant in the case of this item no. 28.1, hastily included outside the General State Budget, by a fiscal legislator without discernible overall fiscal orientation, which is successively implementing norms of fiscal burden increase in line with the setbacks of budget execution, the impositions of international institutional creditors (represented by the 'troika') and the supervision of the Constitutional Court.
In truth, although in the 'Statement of Reasons' of the Bill no. 96/XII/2nd ( [4] ), on which Law no. 55-A/2012 was based, reference is made to the laudable concern of the Government to 'reinforce the principle of social equity in austerity, guaranteeing an effective distribution of necessary sacrifices for compliance with the adjustment program' and its commitment 'to ensure that the distribution of these sacrifices will be made by all and not only by those who live from the income of their work', it is manifest, on the one hand, that those reasons for equity, certainly existing, did not begin to apply in mid-2012, already existing at the beginning of the year, when the General State Budget came into force, and on the other hand, that the scope of item no. 28.1, in taxing additionally the properties with residential use allocation and not also the properties that do not have it, reveals that the concerns for social equity and the proclaimed intention to distribute sacrifices among all, affects much more some than properly all.
In this context, as there are no reliable interpretative elements that allow detecting legislative coherence in the solution adopted in the referred item no. 28.1 or the correctness or incorrectness of the solution adopted (relevant for interpretative purposes in the face of no. 3 of article 9 of the Civil Code), the content of the legal text must be the principal element of interpretation, in accordance with the presumption, imposed by the same no. 3 of article 9, that the legislator knew how to express his intent in adequate terms.
In light of those meanings of the words 'allocation' and 'allocate', which are 'to give destination' or 'to apply', the formula used in that item no. 28.1 of the TGIS clearly encompasses properties that are already applied to residential purposes, so it is necessary to inquire whether it will also encompass properties that, although not yet applied to residential purposes, are destined for these and those whose destination is unknown.
In light of the literal content of item no. 28.1, it is to be excluded from the scope of incidence of Stamp Tax provided therein lands for construction of some Claimants that do not yet have any type of use defined, as they are not yet applied nor destined to residential purposes. That is, lands for construction that do not have defined use cannot be considered properties with residential use allocation, as they do not yet have any allocation nor other destination than construction of unknown type. An interpretation to the effect that item no. 28.1 refers to properties whose allocation is unknown does not have the slightest verbal correspondence in the letter of that norm, so that a hypothetical legislative intent of this type cannot be considered by the interpreter of the law, in view of the prohibition contained in no. 2 of article 9 of the Civil Code.
But this is not enough to clarify the situation of those lands for construction that, not yet applied to residential purposes, already have a determined destination, in particular in the subdivision license, which is the case of the properties referred to in subparagraphs z) to dd) of the factual matters established.
Therefore, it will be necessary to clarify when it can be understood that a property is allocated to a residential purpose, in particular whether it is when such destination is fixed in an act of licensing or similar, or only when the effective assignment of that destination is concretized.
First of all, the confrontation of item no. 28.1 of the TGIS with no. 2 of article 6 of the CIMI, which defines the concept of residential properties, clearly points in the direction of the necessity of an effective allocation.
In truth, a building or construction licensed for residence or, even without license, but which has residence as its normal destination, is, in light of no. 2 of that article 6, a residential property.
Therefore, on the assumption that the legislator of Law no. 55-A/2012 knew how to express his intent in adequate terms (as article 9, no. 3, of the Civil Code requires to be presumed), if it was intended to refer to those buildings already licensed for residence or which have residence as their normal destination, it would certainly have used the concept of 'residential properties', which would express perfectly and clearly his intent, in light of the definition given by that no. 2 of article 6 of the CIMI.
Consequently, it must be presumed that the use of a different expression is intended to have a distinct reality, so that, in good hermeneutics, 'property with residential use allocation' cannot be a property merely licensed for residence or destined for that purpose (that is, it will not suffice that it be a 'residential property'), having to be a property that already has effective allocation to that purpose.
That this is the meaning of the expression 'allocation', in the same context of classification of properties that the CIMI makes, is confirmed by article 3 in which, regarding rural properties, reference is made to those "that are allocated or, in the absence of concrete allocation, have as normal destination a use generating agricultural income", which shows that the allocation is concrete, effective. In truth, as is seen from the final part of this text, a property may have a determined use as destination and be or not be allocated to it, which shows that allocation is, at the level of connection of a property to a determined use, something more intense than mere destination and which may or may not occur, downstream of this and not upstream. ( [5] )
Moreover, the text of the law, in adopting the formula 'property with residential use allocation', instead of 'urban properties of residential use allocation', which appears in the referred 'Statement of Reasons', points strongly in the sense that it is required that residential use allocation already be concretized, as only then will the property be with such allocation.
With regard to article 45 of the CIMI, it has no relation whatsoever with the classification of properties, only indicating the factors to be considered in the valuation of land for construction. What is pondered there, in referring to the "building to be constructed", is the pondering of the destination of the land, which, as has been seen, is something that, in the context of the CIMI, does not imply allocation and occurs before it.
The correctness of this interpretation to the effect that only properties that are effectively allocated to residence are included within the scope of incidence of item no. 28.1 of the TGIS is also confirmed by the perceivable ratio legis of the restriction of the field of application of the norm to properties with residential use allocation, in the context of the "circumstances in which the law was elaborated and the specific conditions of the time in which it is applied", which article 9, no. 1, of the Civil Code also erects as interpretative elements. ( [6] ).
First of all, the limitation of taxation in Stamp Tax to "properties with residential use allocation" allows one to perceive that it was not intended to encompass within the scope of incidence of the tax properties with allocation to services, industry or commerce, that is, properties allocated to economic activity, which is understandable in a context in which, as is notorious, the economy finds itself in a recessionary spiral, publicly proclaimed at the highest level, with unemployment rates reaching maximum historical levels, with an avalanche of business closures resulting from economic unsustainability.
Keeping in mind this situation and it being well known and public that the revitalization of economic activity and the increase of exports are the exits from the crisis, it is understandable that legislative measures would not be taken that would hinder economic activity, in particular the increase in the tax burden that hinders it and affects competitiveness in international terms.
Therefore, it is to be concluded that the available interpretative elements, including the "circumstances in which the law was elaborated and the specific conditions of the time in which it is applied", clearly point in the sense that it was not intended to encompass within the scope of incidence of item no. 28.1 situations of properties that are not yet allocated to residence, in particular lands for construction held by companies. ( [7] )"
Indeed, from what is stated above, it is found that within the scope of application of Item 28.1 of the TGIS, the situation of the Claimant is encompassed, regarding the urban property corresponding to land for construction, with a subdivision license that grants title and authorizes therein the construction of a building to be destined to residence.
For this reason, the subdivision license confers on the urban property a residential use allocation, and as such is included in Item 28.1, through the subsidiary application of the CIMI and CIMT and in the interpretation stated above.
Before what is stated, the land for construction is encompassed by Stamp Tax provided for in item 28.1 of the TGIS.
In this manner, the assessment sub judice, whose declaration of illegality is sought, does not suffer from a defect by violation of that item no. 28.1, due to error as to the legal premises, and thus we are before the legality of the assessments.
Let us then turn to the alleged invocations that constitute the subject of the Claimant's grounds, regarding unconstitutionality, by violation of the principles of equality and proportionality.
The Constitutional Court has ruled on several occasions on the principle of tax equality, to the effect that there is no unconstitutionality, by violation of the principles of equality and proportionality.
Let us see in this sense what was decided in Decisions no. 590/2015, and no. 695/2014, which are partly transcribed:
"The constitutional principle of tax equality, as a specific expression of the general structural principle of equality (article 13 of the Constitution), finds concretization 'in the generality and uniformity of taxes. Generality means that all citizens are bound to pay taxes (...); in turn, uniformity means that the distribution of taxes among citizens obeys the same identical criterion for all' (Teixeira Ribeiro, Lessons of Public Finance, 5th edition, p. 261). And such criterion, as Casalta Nabais points out, is found in the principle of contributive capacity: 'This thus implies equal tax for those who have equal contributive capacity (horizontal equality) and different tax (in qualitative or quantitative terms) for those who have different contributive capacity in proportion to this difference (vertical equality)' (Tax Law, 7th edition, 2012, p. 155). As a premise and criterion of taxation, the principle of contributive capacity 'on the one hand, constituting the ratio or cause of taxation removes the fiscal legislator from arbitrariness, requiring that in the selection and articulation of taxable facts, he adheres to revelations of contributive capacity, that is, erects as object and taxable matter of each tax a determined economic premise that is manifestation of such capacity and is present in the various legal hypotheses of the respective tax' (Casalta Nabais, ob. cit., p. 157)."
In the same sense Decision no. 695/2014, "the principle of tax equality can be concretized through diverse aspects: a first, is in the generality of the tax law, in its application to all without exception; a second, in the uniformity of the tax law, in treating equally those taxpayers who are in equal situations and differently those who are in different situations, in the measure of the difference, to be assessed by contributive capacity; a last, is in the prohibition of arbitrariness, in preventing the introduction of discriminations among taxpayers that are devoid of rational foundation"."
We share the same understanding expressed in said Decisions, concluding that there is no unconstitutionality by violation of the principles of equality and proportionality of the application of item 28.1 of the TGIS, to the present case in question.
In the terms stated, this Court decides, for the declaration of legality of the assessments made by the AT.
With regard to the Claimant's request for condemnation of the Respondent in compensatory interest, this Court understands that the Claimant has no merit, since article 43, no. 1, of the General Tax Law provides that compensatory interest is due when it is determined that there was error attributable to the services resulting in payment of the tax debt in an amount greater than legally due, which in the present case has not occurred.
Thus, as there is no error attributable to the Tax and Customs Authority, which carried out the assessment act on its own initiative, the request for payment of compensatory interest is without merit.
J - DECISION
In light of all the above, this Arbitral Court decides:
To rule against the petition for declaration of illegality of the tax assessment acts for Stamp Tax, no. 2015..., 2015..., 2015..., which set a tax to be paid of € 44,071.76 (forty-four thousand, seventy-one euros and seventy-six cents).
To rule against the petition for payment of compensatory interest.
The value of the case is set at € 44,071.76 (forty-four thousand, seventy-one euros and seventy-six cents), corresponding to the value of the assessment, considering the economic value of the case assessed by the value of the tax assessments challenged, and accordingly costs are fixed, in the respective amount of €2,142.00 (two thousand one hundred and forty-two euros), at the charge of the Claimant, in accordance with article 12, no. 2 of the Legal Framework for Tax Arbitration, article 4 of the Regulation of Costs and Procedural Taxes (RCPAT) and Table I annexed to the latter. – no. 10 of article 35, and nos. 1, 4 and 5 of article 43 of the General Tax Law, articles 5, no. 1, subparagraph a) of the Regulation of the Tax Procedural Code (RCPT), 97-A, no. 1, subparagraph a) of the Tax Procedural Code (CPPT) and 559 of the Civil Procedure Code (CPC)).
Notify.
Lisbon, November 3, 2017.
The Arbitrator
Rita Guerra Alves
[1] On this matter, Arbitral Court decisions of CAAD, no. 42/2013-T, 48/2013-T, 49/2013-T have also decided.
[2] Contemporary Portuguese Language Dictionary of the Academy of Sciences of Lisbon, I volume, page 102.
[3] BAPTISTA MACHADO, Introduction to Law and to Legitimating Discourse, page 182.
[4] The Bill no. 99/XII/2nd is available at http://www.parlamento.pt/ActividadeParlamentar/Paginas/DetalheIniciativa.aspx?BID=37245
[5] Other CIMI norms make it clear that the term 'allocation' is used to reference already existing situations and not merely future, even if foreseeable, ones, like 'destination'. This is the case of article 9 of the CIMI, which, after establishing that 'the tax is due from' 'the 4th year following, inclusive, that one in which land for construction has come to appear in the inventory of a company whose purpose is the construction of buildings for sale' or 'the 3rd year following, inclusive, that one in which a property has come to appear in the inventory of a company whose purpose is its sale' [subparagraphs d) and e) of no. 1], determines that 'for purposes of the provisions of subparagraphs d) and e) of no. 1, passive subjects must communicate to the tax service of the area of the situation of the properties, within 60 days counted from the occurrence of the determining fact of its application, the allocation of the properties to those purposes'. The 'allocation of properties to those purposes', in the context of this article 9, amounts to the concrete assignment to the properties of the purpose 'for sale', materialized by their inventory, not sufficing that they have been constructed or acquired with a view to their sale.
[6] In this approach, not in mind are the special cases provided in item no. 28.2, of ownership of properties by legal persons resident in a country, territory or region subject to a clearly more favorable tax regime, contained in the list approved by ministerial order of the Minister of Finance to which, as in other norms, strong tax penalty is assigned, because these are situations normally associated with tax evasion.
[7] Outside the special cases provided in item no. 28.2.
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