Summary
Full Decision
ARBITRAL DECISION (consult full version in PDF)
I. REPORT
a) A..., hereinafter referred to as the Claimant, with Tax Identification Number ... and tax residence at Rua..., n.º ... – ..., ...-... Lisbon, having been notified by Official Letter n.º ... of 14/08/2018, of the decision to dismiss the administrative claim that it filed against the additional assessment of Stamp Tax on item 1.1 of the General Tax Stamp Table (TGIS) that was notified to it by Official Letter n.º..., of 20/11/2017, in the amount of €3,600.00, on the grounds that the acquisition of the autonomous unit designated by the letter "M", corresponding to the sixth floor, intended for residential use, of the urban property constituted under the regime of horizontal co-ownership located in ..., on Rua..., numbers... to ..., parish of ..., Municipality of Lisbon, registered in the property tax roll under article ...º, which it carried out in judicial proceedings on 15/06/2016, was not effected from an insolvent company, filed on 31 August 2018 a request for arbitral determination, under the Legal Framework of Arbitration in Tax Matters (RJAT).
b) The Claimant requests of the Court: (a) that "the illegality of the Stamp Tax assessment be declared and, likewise, of the consequent act of dismissal of the administrative claim filed, with a view to the annulment of said tax act relating to the acquisition by the Claimant, on 15/06/2016, of the autonomous unit designated by the letter "M", corresponding to the sixth floor, intended for residential use, of the urban property constituted under the regime of horizontal co-ownership located in ..., on Rua..., numbers ... to..., parish of..., Municipality of Lisbon, registered in the property tax roll under article..."; (b) "to be reimbursed by the Claimant the amount of € 3,600.00, referring to the undue payment of the above-mentioned assessment"; (c) "the Tax Authority be condemned to pay compensation interest to the Claimant, owed for the undue payment of the illegally issued assessment".
c) The request for establishment of the Single Arbitral Tribunal (TAS) was accepted by the President of CAAD and automatically notified to the Tax Authority on 31-08-2018.
d) By the CAAD Ethics Council, the signatory of this decision was appointed as arbitrator, and the parties were notified on 21.09.2018, and did not express any intention to refuse the appointment, in accordance with article 11.º n.º 1 subparagraphs a) and b) of RJAT and articles 6.º and 7.º of the Code of Ethics.
e) The Single Arbitral Tribunal (TAS) has been, since 08 November 2018, duly constituted to hear and decide the subject matter of this dispute (articles 2.º, n.º 1, subparagraph a) and 30.º, n.º 1, of RJAT).
f) To support its request, the Claimant invokes the following:
g) As regards the illegality of the assessment and of the decision that dismissed its administrative claim, it states that "The Claimant considers that by proceeding with the additional Stamp Tax assessment, the Tax Authority and Customs Authority (AT) violated its legitimate expectations and guarantees previously established, as well as the principle of trust and legal certainty, in addition to violating the principles of tax legality, prohibition of retroactivity of tax law and good faith". Given that
h) "... although not agreeing with the interpretation that the Stamp Tax exemption granted under article 269.º of the Insolvency and Company Recovery Code (CIRE) does not apply to operations within the scope of personal insolvency, the Claimant understands that the revocation of the exemption granted could only take effect within one year after its grant". And for the reason that
i) "... the Stamp Tax exemption provided for in article 269.º of CIRE constitutes a tax benefit and its grant constitutes an act creating rights for the beneficiary, in this case for the Claimant". And that,
j) "even if it is accepted that the AT has grounds to revoke the exemption granted, in addition to representing a diminution of the Claimant's acquired rights, such revocation would always be subject to the legally prescribed time limit for such purpose", as can be inferred from the citation of "António Lima Guerreiro (in General Tax Law Annotated", Rei dos Livros Publishers, page 343), "tax administrative acts that are constitutive of rights can only therefore be revoked on the grounds of invalidity, in accordance with the terms and time limits of article 141.º of the Administrative Procedure Code (CPA)"."
k) And "as provided in article 168.º, n.º 2, of the Administrative Procedure Code, an act constitutive of rights may only be subject to administrative annulment within the period of one year."
l) And it concludes: "since the Stamp Tax exemption was granted on 31/05/2016, its respective annulment could only occur until 31/05/2017", as can be inferred from the "Decision of the Supreme Administrative Court (STA), of 15/05/2013, where it was concluded as follows: (I) In determining the legal consequences of the invalidity of an administrative act in tax matters involving the grant of a tax benefit, in light of the legal possibility of its revocation, the rules of the CPA must be applied in accordance with what is provided in article 2.º of the Tax Procedure and Process Code (CPPT). (II) – The act of revocation of the tax benefit of an exemption from a tax, which produces effects ex tunc and occurs more than one year after the act granting the exemption, is illegal by violation of what is provided in article 141.º of the CPA" and of the arbitral decisions taken in CAAD cases no. 519/2016-T and no. 27/2017-T.
m) Therefore "since the AT revoked the grant of the benefit after the expiry of the one-year period, this act of revocation and the respective additional Stamp Tax assessment are illegal".
n) It concludes by stating that "in brief terms, the reasoning of the decision dismissing the administrative claim is based on the argument that the procedure for additional Stamp Tax assessment "is configured as an assessment act and not as an administrative act revoking a prior act granting a tax benefit, because this actually never existed". "However, such reasoning is untenable and contradicts the jurisprudence of the STA and the Arbitral Tribunal on the matter, whereby the Stamp Tax assessment and the dismissal of the administrative claim should be considered illegal, for the reasons already set out".
o) With regard to the request for compensation interest, it states that it considers itself entitled to such interest for the undue payment of the illegal Stamp Tax assessment, on the basis of articles 43º-1 of the General Tax Law (LGT) and 100º of the CPPT.
p) The Respondent, having been notified, responded on 12.12.2018, defending itself by way of challenge as follows:
q) As to the scope of application of the exemption in subparagraph e) of article 269º of CIRE, it states that in light of the wording of this legal provision "this exemption thus covers all acts falling within the scope of insolvency or payment plans, or liquidation of the insolvent estate, with the reservation that the insolvent be a company or establishment", in accordance with the Decision of the STA, of 03.07.2013, handed down in Appeal 765/13.
r) Adding that "with the same understanding, the decisions handed down in arbitral cases nos. 558/2015-T, 136/2016-T, 368/2016-T, 512/2016-T, 514/2016-T and 518/2016-T are mentioned, which accepted the interpretation defended by the Tax Authority regarding this question".
s) And concludes "... in the case in question there is no doubt that the Stamp Tax assessment is legal because the requirements set out in article 269º of CIRE are not met".
t) As to the argument "of the Claimant that the revocation of the tax benefit is illegal by violation of articles 140.º and 141.º of the CPA,..." it considers that this is without merit.
u) It states the following: "Contrary to what is claimed by the Claimant, there was no act constitutive of rights, because the benefit contained in article 269º of CIRE is an automatic benefit in accordance with article 5º of the Tax Benefits Statute (EBF)", given that "the article cited above determines that automatic tax benefits are those that result directly and immediately from law, as opposed to benefits dependent on recognition, which presuppose one or more subsequent acts of recognition".
v) And adds: "in turn, no. 8 subparagraph d) of article 10º of the Personal Income Tax Code (CIMT), on recognition of exemptions, provides: «exemptions that are self-recognising are the following, with their verification and declaration being the responsibility of the tax office where the declaration provided for in n.º 1 of article 19.º is filed, the following exemptions: (Wording given by article 97.º of Law 64-A/2008, of 31 December). (…) d) Exemptions of self-recognition contained in legislation extravagant to this code. (Wording given by article 97.º of Law 64-A/2008, of 31 December).»"
w) Resulting from "...the analysis of these legal provisions ... that the exemption in article 269º of CIRE is automatic, derives directly from law and there is no prior analysis or prior verification of the conditions for exemption, and there is also no act granting the exemption", clarifying that "what happens is that the taxpayer presents a declaration provided for in n.º 1 of article 19.º of CIMT, and only subsequently does the AT conduct supervision, analyzing the verification of the conditions for the exemption, as provided in article 7.º of the EBF." "This norm provides that the recognition of benefits is subject to control and after such control, the verification of the conditions for the exemption is assessed," "whereby, strictly speaking, the document issued in order to carry out the public deed of purchase and sale, is not a true assessment nor a document granting exemption, whereby at that moment there is no constitution of a right to the tax benefit", as was decided in the CAAD decision of 28/02/2017 handed down in Case 518/2016-T.
x) And concludes: "Now, this tax assessment cannot be considered a revocation of exemption, as was also considered in the CAAD decision of 21/08/2015, in Case 834/2014-T, a thesis to which we adhere, and where, given that an automatic benefit was also at issue, it was concluded: «that the procedure occurring after the effective supervision of the conditions indicated in the declaration as the basis for the benefit is configured as an assessment and not as an administrative act revoking a prior act granting a tax benefit.»", whereby "... since the legal requirements for the Author to benefit from the Stamp Tax exemption, pursuant to subparagraph e) of article 269º of CIRE, are not met, the tax administration could not fail to assess the tax owed, provided that the statute of limitations period was respected, which, in the case of taxes of a single obligation, as Stamp Tax is, is the date on which the taxable event occurred (in accordance with article 45.º, n.ºs 1 and 4, of the LGT)."
y) The AT did not expressly pronounce itself on the request for reimbursement of tax paid and on the request for condemnation to compensation interest.
z) By order of 12.12.2018, the holding of the meeting referred to in article 18.º of RJAT was dispensed with, and a time limit was granted for the presentation of written submissions, if the parties chose this form. None of the parties submitted submissions.
aa) By order of 22.02.2019, the date of 11 March 2019 was set as the deadline for the issuance of the arbitral decision.
II - PRELIMINARY EXAMINATION
bb) The parties are legitimate, enjoy legal personality and procedural capacity and are duly represented (articles 4.º and 10.º, n.º 2, of RJAT and article 1.º of Ministerial Order n.º 112-A/2011, of 22 March).
cc) The request for determination was filed on 31.08.2018 and the notification of the decision on the administrative claim was effected by the AT through Official Letter n.º ... of 14/08/2018, whereby the timeliness of its filing is verified in accordance with subparagraph a) of n.º 1 of article 10.º of RJAT.
dd) The arbitral procedure is free from defects.
Matters must now be examined.
III - MERITS
III-1- FACTUAL MATTERS
• Facts Found as Proved
The following factual matters are deemed to be proved:
a) On 31 May 2016, the Claimant filed the IMT Form 1 Declaration for assessment of IMT and Stamp Tax, with registration n.º 2016.... On that same date, an assessment of Stamp Tax was issued in its name by the AT's computer system, being item 1.1 of the TGIS, Document of Collection Authorization (DUC) n.º 2016..., relating to the acquisition of an autonomous unit of real property in horizontal co-ownership indicated in the following item, with €0.00 in tax payable, with the following appearing in "Seller of Asset – 1":
- in accordance with article 8º of the Claim Statement, article 6º of the Response and page 14/21 of the Documents filed by AT with the Response;
b) The Claimant acquired on 15 June 2016 the autonomous unit designated by the letter "M", corresponding to the sixth floor, intended for residential use, of the urban property constituted under the regime of horizontal co-ownership located in ..., on Rua ..., numbers ... to..., parish of ..., Municipality of Lisbon, registered in the property tax roll under article ...º M, within the scope of insolvency proceedings of B... (taxpayer n.º...) which proceeded before the Civil Courts of Lisbon, ... Civil Court, under case n.º .../13... YXLSB – in accordance with articles 6º and 7º of the Claim Statement, article 6º of the Response and page 2/3 of Document n.º 1 attached to the Claim Statement (information from AT);
c) On 27 November 2017, the Claimant was notified by Official Letter n.º..., of 20 November 2017, to proceed with payment of the additional Stamp Tax assessment in the amount of € 3,600.00 and on 10 January 2018 the Claimant was issued with assessment n.º 2018... – in accordance with articles 9º and 10º of the Claim Statement and page 16/21 of the Documents filed by AT with the Response;
d) On 16 February 2018 the Claimant paid the amount of Stamp Tax that was assessed against it additionally – in accordance with article 11º of the Claim Statement, Documents n.º 4 and 5 attached to the Claim Statement and page 11/21 of the Documents filed by AT with the Response;
e) On 21 February 2018 the Claimant, not accepting the additional assessment, filed the administrative claim which was assigned n.º ...2018... and by Official Letter n.º..., of 14 August 2018, was notified of its dismissal, with the following reasoning:
"Through the present communication, the claimant requests its annulment, given that the revocation of the tax benefit of the exemption from the tax occurred more than one year after its grant;
Now, in accordance with n.º 1 of article 5.º of the Tax Benefits Statute (EBF) tax benefits are automatic or dependent on recognition: the former result directly and immediately from law, the latter presuppose one or more subsequent acts of recognition;
Article 23.º, n.º 4 of the Stamp Tax Code, in the case of Item 1.1, subjects the assessment to the rules of the Personal Income Tax Code;
With the wording of Law no. 64-A/2008 (State Budget 2009), article 10º of the CIMT began to distinguish in a more developed manner the cases of exemptions of prior recognition and of self-recognition, with a clear distinction between them;
No. 8 of this article identifies exemptions that are self-recognising, which include those contained in legislation extravagant to the code (subparagraph d), stating that their verification and declaration is the responsibility of the Tax Office where the declaration provided for in n.º 1 of article 19º is filed;
It can be said that this no. 8 classifies as self-recognising benefits situations where the benefit is related to objective elements, in some cases only confirmable later and where the AT starts from the assumption that the taxpayer's declaration is a sufficient basis for considering the condition of exemption met, which is the case in point;
Despite the AT's intervention, we are dealing with a procedure not very different from that corresponding to the self-assessment carried out by taxpayers. The elements declared serve for immediate entry into the "system" in order to obtain the respective means of payment (exemption), proceeding on the assumption that the declared elements are verified, with no autonomous intervention by the AT over the data;
Thus, the procedure occurring after the effective supervision of the conditions indicated in the declaration as the basis for the benefit and which was at the origin of the present claim, is configured as an assessment act and not as an administrative act revoking a prior act granting a tax benefit, because this actually never existed." - in accordance with articles 12º and 13º of the Claim Statement, points 4 and 5 of article 6º of the AT's Response and page 3/3 of document n.º 1 attached to the Claim Statement;
f) On 31 August 2018 the Claimant filed with CAAD the present request for determination – filed in the CAAD Management System as a request for determination.
• Facts Not Proved
There is no other factual matter alleged that has not been considered proved and that is relevant to the resolution of the case.
• Reasoning for the Facts Proved and Not Proved
With regard to factual matters, the Court does not have to pronounce on everything that was alleged by the parties; rather, it is its duty to select the facts that matter for the decision and to distinguish proved factual matters from non-proved ones (in accordance with article 123.º, n.º 2, of CPPT and article 607.º, n.º 3, of the Code of Civil Procedure (CPC), applicable by virtue of article 29.º, n.º 1, subparagraphs a) and e), of RJAT).
In this manner, the pertinent facts for the judgment of the case are chosen and delineated in light of their legal relevance, which is established having regard to the various plausible solutions of the legal question(s) (in accordance with the former article 511.º, n.º 1, of the CPC, corresponding to the current article 596.º, applicable by virtue of article 29.º, n.º 1, subparagraph e), of RJAT).
Thus, having regard to the positions assumed by the parties and the documentary evidence attached, the facts listed above were considered proved, with relevance to the decision, and for each point brought to the established factual matters, the means of proof that were considered relevant are indicated as reasoning.
III-2- ON THE LAW
The following legal questions are to be decided:
• Whether the exemption here in discussion should be considered as being an "automatic tax benefit" within the meaning of n.º 1 of article 5º of the Tax Benefits Statute (EBF), as the AT argues;
• Should it not be considered that this is an "automatic tax benefit" within the meaning of n.º 1 of article 5º of the Tax Benefits Statute (EBF), whether it could be disregarded through an additional assessment, on the grounds of illegality in its grant, beyond the period of 1 year, counted from the date of its "verification and declaration".
III-2- On the Merits
A) Should the Stamp Tax exemption resulting from subparagraph e) of article 269º of CIRE be considered an "automatic tax benefit" within the terms and for the purposes of n.º 1 of article 5º of the Tax Benefits Statute (EBF)?
First, it should be noted that the Claimant, although stating that it "does not agree with the interpretation that the Stamp Tax exemption granted under article 269.º of the Insolvency and Company Recovery Code (CIRE) does not apply to operations within the scope of personal insolvency" (article 15º of the Claim Statement), only challenges that "the revocation of the exemption granted could only take effect within one year after its grant".
Therefore, the central question to be decided revolves around whether the Stamp Tax exemption here at issue should be considered an "automatic tax benefit" within the terms and for the purposes of n.º 1 of article 5º of the Tax Benefits Statute (EBF), since, in fact, the Claimant accepts, at least implicitly, that the exemption should not have been granted to it, since it acquired the real property in judicial insolvency proceedings of a natural person and not in bankruptcy proceedings of a company, in principle a legal or collective person.
It would be highly debatable to conclude that where the law refers to "company" it means "legal person" or "commercial company" (excluding, as appears to be the interpretation adopted by the AT, any business form centered on a natural person, it is sufficient to recall business forms in "individual name").
However, this proceeding does not dispute the very broad concept of "company" which, it is noted, can exist based on a natural person, given that there are individual enterprises (which belong to a single person) and partnership enterprises (constituted by several persons). In the latter group, partnerships, in turn, can be anonymous/limited partnerships, limited liability companies and social economy enterprises (cooperatives, mutual associations, charitable organizations and others), among others.
Let us first examine the text of the applicable law.
Article 269º - subparagraph e) of CIRE, under the heading "benefit relating to Stamp Tax", states that "the following acts are exempt from Stamp Tax, where they are subject thereto, provided they are envisaged in insolvency, payment or recovery plans or are carried out within the scope of liquidation of the insolvent estate: e) ... the sale, exchange or assignment of elements of the company's assets..."
No. 4 of article 23º of the Stamp Tax Code states that "where the tax is owed for acts or contracts provided for in item 1.1 of the general table, the assessment of the tax applies, with the necessary adaptations, the rules contained in the Personal Income Tax Code".
Article 10º of the Personal Income Tax Code, under the heading "recognition of exemptions", states in its n.º 1 that "exemptions are recognized at the request of the interested parties, to be submitted before the act or contract that gave rise to the transfer to the competent services for the decision, but always before the assessment that would have to be made". And in its n.º 8 and in its subparagraph d) it states that "exemptions that are self-recognising are the following, with their verification and declaration being the responsibility of the tax office where the declaration provided for in n.º 1 of article 19.º is filed, the ... exemptions of self-recognition contained in legislation extravagant to this code".
No. 1 of article 21º of the Personal Income Tax Code states: "the IMT is assessed by the central services of the General Directorate of Taxes, on the basis of the taxpayer's declaration or ex officio, and is deemed, for all legal purposes, to be a tax act carried out in the competent tax office" and
Subparagraph a) of n.º 2 of article 21º of the Personal Income Tax Code states that "when the assessment is made on the basis of the taxpayer's declaration, the tax office competent for the IMT assessment is the one where the declaration is filed".
When reading the instructions for completing IMT Form 1, approved by Ministerial Order, it is expressly stated therein "declaration for ex officio assessment".
Article 5º of the Tax Benefits Statute states, under the heading "automatic tax benefits and benefits dependent on recognition" that (1) Tax benefits are automatic or dependent on recognition; the former result directly and immediately from law, the latter presuppose one or more subsequent acts of recognition. (2) The recognition of tax benefits may take place by administrative act ... (3) The procedure for recognizing tax benefits is governed by the provisions of general tax law and the Tax Procedure and Process Code".
In turn, no. 4 of article 14º of the Tax Benefits Statute states "The administrative act granting a tax benefit is not revocable, nor can the respective agreement for its grant be rescinded, or the rights acquired be reduced, by unilateral act of the tax administration, unless there is a breach imputable to the beneficiary of the obligations imposed, or if the benefit was unduly granted, in which case such act may be revoked".
No.s 1 and 2 of article 65º of the Tax Procedure and Process Code, under the heading "recognition of tax benefits": "(1) unless otherwise provided ..., the recognition of tax benefits depends on the initiative of the interested parties, by way of a request directed specifically to that end, the calculation, when mandatory, of the requested benefit and proof of the verification of the conditions for recognition in accordance with law. (2) Requests for recognition shall be submitted to the services competent for the assessment of the tax to which the benefit refers and shall be instructed in accordance with the legal norms granting the benefits."
Article 165º of the Administrative Procedure Code states: "(1) Revocation is the administrative act that determines the cessation of the effects of another act, for reasons of merit, convenience or opportunity. (2) Administrative annulment is the administrative act that determines the destruction of the effects of another act, on the grounds of invalidity".
In article 167º of the Administrative Procedure Code it is stated that "Acts constitutive of rights may only be revoked ... on the grounds of the supervening development of technical and scientific knowledge or of an objective change in the factual circumstances, in the face of which, in one case or the other, they could not have been made" and "the revocation ... must be made within the period of one year, counted from the date of knowledge of the supervening development or of the change in circumstances, such period being extensible, for a further two years, for substantiated reasons".
And no. 2 of article 168º of the Administrative Procedure Code states that "..., acts constitutive of rights may only be subject to administrative annulment within the period of one year, counted from the date of their issuance"
Based on the law and what appears in the instructions for completing IMT Form 1, it can be concluded that the initial assessment of Stamp Tax at the zero rate, registered with n.º 2016..., expressed in DUC n.º 2016..., in the amount of €3,600.00, "verifying and declaring" the exemption that was claimed in IMT Form 1 filed on 31 May 2016, (by virtue of the application of the norms of the Personal Income Tax Code), is
• an ex officio assessment;
• a tax act carried out in the Tax Office of ... (n.º 1 of article 21º of the Personal Income Tax Code)
• carried out by the tax office of ... (subparagraph a) of n.º 2 of article 21º of the Personal Income Tax Code).
In practical terms, what is a tax benefit (in this case an exemption) that is automatic, i.e., that results directly and immediately from law?
Let us examine a clear case of automatic Stamp Tax benefit: the Stamp Tax exemption in subparagraph d) of article 6º of the Stamp Tax Code applicable to Private Social Solidarity Institutions (IPSS).
The IPSS merely notes in the document titling the taxable event the legal provision that provides for the exemption (by virtue of article 8º of the Stamp Tax Code) and this is because there is the norm of article 23º n.º 6 of the Stamp Tax Code which states "in documents and titles subject to tax the amount of tax and the date of assessment are mentioned".
This is a clear case that shows us what an automatic exemption is and how it works, "by operation of law", i.e., an exemption that depends directly and immediately on law.
And was that what happened, or something similar, in the case under analysis? The answer can only be negative. Let us see:
The exemption that was "verified and declared" to the Claimant depended on:
• A declaration submitted to the AT (IMT Form 1), where all the elements relating to the taxable event subject to taxation appear;
• The exemption was invoked in that declaration, through a code and in written form;
• The declaration was submitted to the AT through a computer application for which it is responsible and is presumed to perform operations in strict compliance with tax law;
• The Tax Office of Finance of ... issued the DUC documenting the Stamp Tax assessment act, since it is the entity competent for the assessment (n.º 1 and subparagraph a) of n.º 2 of article 21º of the Personal Income Tax Code)
• And in the DUC it appears that the exemption was granted, whereby, contemporaneously with the assessment at the zero rate, it assessed, through the automatisms of the computer system for which the AT is solely responsible, the exemption indicated in the IMT Form 1 declaration.
When examining the elements required to complete the IMT Form 1 declaration, they correspond to those required in article 65º of the Tax Procedure and Process Code:
• initiative of the interested party;
• by way of a request (in the dimension of a document used to obtain a right or a declaration from a public authority) directed specifically to that end (the law does not say that it has to be separate from another request or declaration for assessment);
• submission to the services competent for the assessment of the tax to which the benefit refers.
To consider that a benefit that was thus conferred or considered, expressed in an official written document - in a DUC - issued by the computer system of the sole responsibility of the AT, is "automatic" because it results directly and immediately from law, would be something that the interpreter, in light of the concrete facts that occurred and the content of the law that defines what is an automatic tax benefit, will not have legal basis to sustain.
The literal element of the norm is always a very relevant element, as it delimits interpretive activity.
However, the interpreter cannot consider legislative intent that does not have in the letter of the law a minimum of verbal correspondence, even if imperfectly expressed. The letter is an irremovable element of interpretation, or a "limit of the search for the spirit".
"An interpretation that does not situate itself within the possible literal meaning is no longer interpretation, but modification of meaning" (Larenz).
"(...) there must be a meaning (a motivation, a set of objectives) that reasonably fits within the literal meaning of the legislator's statement. Under penalty of, if this does not happen, a new norm is being created, instead of interpreting an already existing norm" (Hespanha).
No. 8 of article 10º and its subparagraph d) of the Personal Income Tax Code classifies this benefit as being of "self-recognition".
We do not see how the interpreter, in light of this literality, where a term specific to the status of tax benefits (Tax Benefits Statute) is used, can then conclude, in light of what is provided in n.º 2 of article 9º of the Civil Code, as if the expression "recognition" did not appear in the law, concluding that the same refers to purely automatic benefits.
It does not appear that the interpreter can be required to even imagine that when the legislator introduced the legislative change and used the expression "recognition", which is specific to the Tax Benefits Statute, did not intend to determine that the benefit in question does not depend directly and immediately on law, but rather on its invocation in an IMT Form 1 declaration, as indeed can be inferred from the expression "with their verification and declaration being the responsibility of the tax office where the declaration provided for in n.º 1 of article 19º" of the Personal Income Tax Code.
It is true that subsequently, in subparagraph d) of n.º 8 of article 10º of the Personal Income Tax Code, it goes on to state that those that follow the regime we have just set out do so, the "exemptions of self-recognition" contained in legislation extravagant to the code, as will be the case in point. Here indeed, it is clear that the legislator refers – provably incorrectly - to a type of benefits that were "automatic", and not of "self-recognition", and for the reason that this legal formulation did not exist before the publication of Law 64-A/2008, of 31.12. A corrective reading of the law is required here, given that it is public and notorious that the AT began to require in all IMT and Stamp Tax assessments for acquisitions of real property that benefit from an exemption or reduced rate, that such benefits only operate by complying with the ITM Form 1 declaration obligation.
That is, with the legislative change made by Law 64-A/2008, of 31.12, at least at the level of the change in IMT and Stamp Tax assessment, tax benefits of "self-recognition" began to exist (by the computer system for which the AT is responsible), transforming the previously purely automatic exemptions into exemptions dependent on self-recognition based on a declarative procedure, benefits that, as far as the form of their verification or recognition is concerned, are distinct from purely automatic benefits, which are those, it is noted, that depend solely and immediately on law.
It is therefore configured, in light of what has been set out, that the document on page 14/21 that is part of the Documents attached by AT with the Response (the DUC for Stamp Tax assessment where the tax benefit is "declared"), constitutes the express form of the tax act and the administrative act of Stamp Tax assessment and of "verification and declaration" (in the literal expression of the law) of the tax benefit in connection with Stamp Tax.
Indeed, the elements required by article 148º of the Administrative Procedure Code are found there. This is an act constitutive of rights (n.º 3 of article 167º of the Administrative Procedure Code).
Thus, recognizing that the exemption was wrongly "verified and declared" by the AT, whether it be understood that it could be disregarded by the mechanism of "revocation", whether by the mechanism of "annulment" (in light of the new Administrative Procedure Code), the truth is that it could only be "revoked" within the period of 1 year counted from its recognition (n.º 4 of article 14º of the Tax Benefits Statute) in light of what is the unanimous jurisprudence of the Supreme Administrative Court for this type of act.
Now, the assessment (even if it is considered that it corresponds to a true self-assessment), with verification and declaration of the Stamp Tax exemption, contemporaneously, took place on 31.05.2016 (subparagraph a) of the proved facts) and only on 27 November 2017 did the AT notify the Claimant to proceed with payment of the additional assessment here challenged, which came to be issued on 10 January 2018 (subparagraph c) of the proved facts).
In these terms, in the reading we make of the facts and their subsumption to law, the Claimant's request is well-founded.
B) Right to reimbursement of tax unduly paid and compensation interest
The Claimant formulates a request for restitution of the amount of € 3,600.00, relating to unduly assessed and paid Stamp Tax, plus the corresponding compensation interest.
Article 24.º, n.º 1, subparagraph b) of Decree-Law n.º 10/2011, of 20 January (RJAT) provides that in case of a well-founded arbitral decision the AT must: "(…) restore the situation that would have existed if the tax act subject to the arbitral decision had not been made, adopting the acts and operations necessary for such purpose;".
In the concrete case, as a consequence of the illegality of the additional assessment act, there is grounds for reimbursement of the tax paid illegally, by virtue of articles 24.º, n. º1, subparagraph b), of RJAT and 100.º of the General Tax Law (LGT), as this is essential to «restore the situation that would have existed if the tax act subject to the arbitral decision had not been made».
Thus, the Claimant must be reimbursed for the Stamp Tax it paid illegally.
The Claimant also formulated a request for condemnation of the AT to the payment of compensation interest, whereby it must be determined whether it is entitled thereto.
Article 43.º, n.º 1, of the General Tax Law (LGT) provides that: «Compensation interest is owed when it is determined, in an administrative claim or judicial challenge, that there was an error imputable to the services which resulted in payment of the tax debt in an amount greater than legally due».
In other words, there are three requirements for the right to said interest: i) the existence of an error in a tax assessment act imputable to the services; ii) the determination of such error in an administrative claim or judicial challenge proceeding and iii) the payment of a tax debt in an amount greater than legally due.
In this manner, it is immediately possible to formulate a question: is it admissible to determine the payment of compensation interest in tax arbitration proceedings? The answer to the question is affirmative.
Indeed, article 24.º, n.º 5 of RJAT provides that: "Interest payment is due, regardless of its nature, in accordance with the terms provided for in the General Tax Law and the Tax Procedure and Process Code", which refers to what is provided in articles 43.º, n.º 1, and 61.º, n.º 5, of each of those statutes.
It follows from the above that compensation interest must be paid from the date of undue payment of the tax until the date of processing of the respective credit note.
There is therefore grounds for, as a consequence of the declaration of illegality of the additional assessment act, the payment of compensation interest, in accordance with the cited provisions of articles 43.º, n.º 1, of the General Tax Law (LGT) and 61.º, n.º 5, of the Tax Procedure and Process Code (CPPT), calculated on the amount that the Claimant paid unduly, at the rate of legal interest (articles 35.º, n.º 10, and 43.º, n.º 4, of the General Tax Law (LGT)).
IV. DECISION
In these terms, based on the foregoing reasons:
a) The request for arbitral determination is found to be well-founded, the additional assessment referred to in subparagraph c) of the proved factual matters and likewise the decision dismissing the administrative claim referred to in e) of the proved factual matters are declared to be in non-conformity with law, and are hereby annulled;
b) The Respondent is condemned to reimburse the Claimant the amount of €3,600.00;
c) The request for payment to the Claimant of compensation interest is found to be well-founded, to be calculated at the legal rate, with the initial date being 16 February 2018;
V - VALUE OF THE PROCESS
The value of the process is set at €3,600.00, in accordance with article 97.º - A of the Tax Procedure and Process Code (CPPT), applicable by virtue of the provisions in article 29.º, n.º 1, subparagraph a) of RJAT and article 3.º, n.º 2 of the Regulation of Costs in Tax Arbitration Proceedings (RCPAT).
VI - COSTS
Costs to be borne by the Respondent, in the amount of €612.00, in accordance with article 22.º, n.º 4 of RJAT and Table I attached to RCPAT.
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Lisbon, 05 March 2019
Single Arbitral Tribunal
Augusto Vieira
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