CAAD 431/2018-T: Stamp Tax on Merchant Service Charges, Interchange Fees & Mortgage Interest – Temporal Application of Tax Law

ARBITRAL DECISION

The arbitrators Councillor Jorge Lopes de Sousa (arbitrator-president), Dr. Adelaide Moura and Dr. Francisco Manuel Guimarães de Melo (arbitrator members) appointed by the Deontological Board of the Centre for Administrative Arbitration to form the Arbitral Tribunal, constituted on 14-11-2018, agree as follows:

1. Report

A..., S.A., a company with registered office at ..., no. ..., in Lisbon (...-...), with the single registration number and legal entity number ... (hereinafter "Claimant" or "A..."), pursuant to the provisions of article 10 of Decree-Law No. 10/2011, of 20 January (hereinafter "RJAT"), requested the constitution of an Arbitral Tribunal, with a view to the declaration of illegality of the decision to reject the administrative objection no. ...2017... and the Stamp Duty additional assessment no. 2017..., of 15-05-2017, and the corresponding compensatory interest assessments no. 2017..., no. 2017..., no. 2017..., no. 2017..., no. 2017..., no. 2017..., no. 2017..., no. 2017..., relating to the year 2014, in the total amount of € 154,377.70.

The Claimant further requests the restitution of the amounts paid plus indemnitory interest.

The AUTHORITY FOR TAX AND CUSTOMS is the respondent.

The request for constitution of the arbitral tribunal was accepted by the President of CAAD and automatically notified to the Authority for Tax and Customs on 04-09-2018.

Pursuant to the provisions of subparagraph a) of paragraph 2 of article 6 and subparagraph b) of paragraph 1 of article 11 of the RJAT, the Deontological Board appointed as arbitrators the signatories, who communicated their acceptance of the assignment within the applicable period.

On 24-10-2018, the parties were duly notified of such appointment, and did not manifest any intention to refuse the appointment of the arbitrators, in accordance with the combined provisions of article 11, paragraph 1, subparagraphs a) and b) of the RJAT and articles 6 and 7 of the Deontological Code.

Thus, in conformity with the provisions of subparagraph c) of paragraph 1 of article 11 of the RJAT, as amended by article 228 of Law No. 66-B/2012, of 31 December, the collective arbitral tribunal was constituted on 14-11-2018.

The Authority for Tax and Customs responded, defending the lack of merit of the request for arbitral ruling.

By order of 06-12-2018 the meeting provided for in article 18 of the RJAT was waived and it was decided that the proceedings should continue with written pleadings.

Only the taxpayer submitted pleadings.

The arbitral tribunal was duly constituted, in accordance with the provisions of articles 2, paragraph 1, subparagraph a), and 10, paragraph 1, of Decree-Law No. 10/2011, of 20 January.

The Parties are duly represented, enjoy legal personality and capacity, are entitled and are represented (articles 4 and 10, paragraph 2, of the same statute and article 1 of Order No. 112-A/2011, of 22 March).

The proceedings are not affected by any nullities.

2. Factual Matters

2.1. Proven Facts

Following an external general inspection action carried out by the Division of Inspection of Banks and Other Financial Institutions of the Unit of Large Taxpayers in the records of the current Claimant, regarding the year 2014, there resulted corrections to Stamp Duty in the total amount of € 139,088.35 (Tax Inspection Report that is part of the administrative file and of document no. 1 attached with the request for arbitral ruling, whose contents are hereby reproduced);

In the scope of the aforementioned inspection the following corrections were made in respect of Stamp Duty:

Merchant Service Fee ("MSF") (No. 1 of article 1 of CIS - item 17.3.4 of TGIS) € 24,867.57: Stamp duty assessed in default, resulting from the application of the 4% rate on the "Merchant Service Fee" commission charged by the taxpayer, in its capacity as provider of automatic payment service to the beneficiary of the transfer (merchant), on sales settled by bank card;

Multilateral Interchange Fee and interbank commissions charged for the use of ATMs (No. 1 of article 1, No. 1 of article 9 and No. 1 of article 22, all of CIS and item 17.3.4 of TGIS) € 100,741.12: Stamp duty assessed in default, resulting from the application of the 4% rate on fees and commissions charged by the taxpayer in ATM usage operations;

Mora interest charged arising from breach of housing credit contracts (No. 1 of article 1 of CIS - item 11.11 of TGIS) € 13,479.66: Amount of stamp duty assessed in default, resulting from the application of the 4% rate on mora interest arising from default in housing loans;

In the Tax Inspection Report, which is part of the document attached with the request for arbitral ruling and of the administrative file, whose contents are hereby reproduced, the following is stated, among other matters:

(...)

1. The MSF is a commission charged by the entity providing the automatic payment service (A...) to the beneficiary of the transfer (the merchant), on sales settled by bank card, so as to remunerate A... in card-based payment operations {with underlying the transfer of funds from the account of the final customer/consumer to the merchant's account);

2. A... does not proceed to liquidate any tax in respect of the MSF;

3. The Bank of Portugal itself (supervisory entity) considers the MSF to be a commission;

4. The MSF, being subject to VAT, is exempted therefrom, as it falls within subparagraph c) of paragraph 27) of article 9 of CIVA;

5. Being VAT-exempt, the MSF is subject to Stamp Duty, pursuant to No. 1 and No. 2 of article 1 of CIS;

6. Pursuant to subparagraph b) of No. 1 of article 2 of CIS - "Subjective incidence", tax passive subjects are "[entities granting credit and guarantee or creditors of interest, premiums, commissions and other consideration", with the obligation to liquidate and deliver to State coffers imposed on them by No. 1 of articles 23, 41, 43 and No. 1 of article 44, all of CIS;

7. In accordance with the provisions of subparagraph g) of No. 3 of article 3 of CIS, in "(...) remaining financial operations carried out by or with intermediation of credit institutions, companies or other financial institutions (...)", the person bearing the tax burden is the client (in this case the merchants who have the TPAs in their stores);

8. In turn, under subparagraph h) of No. 1 of article 5 of CIS, the tax obligation is constituted in "...operations carried out by or with intermediation of credit institutions, financial companies or other entities legally assimilated to them, at the time of collection of interest, premiums, commissions and other consideration ...";

9. Pursuant to No. 1 of article 9 of CIS, the taxable value of Stamp Duty is that resulting from the TGIS;

10. No. 1 of article 22 of CIS refers the tax rates to be applied to the TGIS;

11. The MSF commission fully fits within item 17.3.4 of TGIS, as it is a commission charged by the entity providing the automatic service (A...) to the merchant:

12. This commission is not covered by the exemption provided for in subparagraph e) of No. 1 of article 7 of CIS.

(...)

1. The multilateral interchange fees (MIF) and interbank commissions charged for the use of Automatic Teller Machines in operations with bank cards are commissions charged between banks [holders of ATMs or issuers of bank cards];

2. A... did not proceed to liquidate any Stamp Duty on the MIF commissions or on the interbank commissions charged for the use of Automatic Teller Machines in operations (as described above) carried out with bank cards;

3. The MIF commissions and the interbank commissions charged for the use of Automatic Teller Machines in operations (as described above) carried out with bank cards, being subject to VAT, are exempted therefrom, pursuant to subparagraph c) of paragraph 27) of article 9 of CIVA;

4. Being VAT-exempt, the MIF commissions and the interbank commissions charged for the use of Automatic Teller Machines in operations (as described above) are subject to Stamp Duty, pursuant to No. 1 and No. 2 of article 1 of CIS;

5. Pursuant to subparagraph b) of No. 1 of article 2 of CIS - "Subjective incidence", tax passive subjects are "Entities granting credit and guarantee or creditors of interest, premiums, commissions and other consideration", with the obligation to liquidate and deliver to State coffers imposed on them by No. 1 of articles 23, 41, 43 and No. 1 of article 44, all of CIS;

6. In accordance with the provisions of subparagraph g) of No. 3 of article 3 of CIS, in "...remaining financial operations carried out by or with intermediation of credit institutions, companies or other financial institutions...", the person bearing the tax burden is the client (in this case the other financial institution or credit institution);

7. In turn, under subparagraph h) of No. 1 of article 5 of CIS, the tax obligation is constituted in "...operations carried out by or with intermediation of credit institutions, financial companies or other entities legally assimilated to them, at the time of collection of interest, premiums, commissions and other consideration...";

8. Pursuant to No. 1 of article 9 of CIS, the taxable value of Stamp Duty is that resulting from the TGIS;

9. No. 1 of article 22 of CIS refers the tax rates to the TGIS;

10. The MIF commissions and the interbank commissions charged for the use of Automatic Teller Machines in operations with cards (as referred to above) fully fit within item 17.3.4 of TGIS;

11. The commissions referred to above are not covered by the exemption provided for in subparagraph e) of No. 1 of article 7 of CIS.

(...)

It is understood that, in the legislative choice to reduce the taxation of housing credit by suppressing the burden of stamp duty levied on interest, the tax legislator admitted, solely, the premise of punctual compliance with the contractual clauses agreed under the financial product of credit.

Thus, in light of the typologies of interest offered above, only remunerative interest will be capable of fitting within the purposes of the aforementioned premise, insofar as they constitute the typical remuneration of a loan contract, being due in function of the time period between the voluntary availability of funds by the credit institution and successive repayment installments by the client.

Furthermore, if one were to accept the intended inclusion of mora interest arising from non-compliance with these contracts, one would be conferring an additional benefit, in taxation, on other subjects in breach of the aforementioned contracts, and it is questionable whether such an option is just, having regard, in particular, to the principle of equality, constitutionally enshrined.

In this way, moratoria interest, resulting from default in the performance of obligations by the client, in a delay in the repayment installment that potentiates the damage to the interests of the creditor, distance themselves from the identified premise, instead presenting a scenario of irregular contractual performance that should be avoided and that supports, thus, the indemnifying function characterizing such interest.

Given all the foregoing, the fiscal expenditure resulting from the exemption in question is only justified in situations relating to remunerative interest, because it is this interest that results from regular performance of a housing credit contract, and not, with respect to realities arising from another typology of interest, whether originating from default or breach of contractual clauses.

It is further worth noting that the subjection to taxation in the context of stamp duty of mora interest arising from non-compliance with housing credit contracts does not violate the principle of tax capacity, for the reasons set out below.

In fact, the principle of tax capacity must indeed guide the tax legal system, as a consequence and realization of the principle of equality provided for in article 13 of the Constitution of the Portuguese Republic, on the economic plane, and the fact is that it should be articulated with a certain margin of appreciation by the tax legislator, as has been understood by the Constitutional Court itself.

Thus, in light of the above case law of the Constitutional Court, it does not surprise us that the intention of the legislator was, in fact, the subjection to taxation in the context of stamp duty of mora interest arising from default on loans, and this without incurring a violation of the principle of tax capacity, having regard, however, to the aforementioned appreciation with other principles also structural to the tax system, namely the "(...) the principle of the Social State, the freedom of the legislator to shape the law, and certain requirements of practicability and cognoscibility of the tax fact, also indispensable for the fulfillment of the purposes of the tax system (...)". for the reasons set out below.

Now, in the concrete case, consideration should be given to the expressed intentio legis in item 17.3.1, which is embodied in the taxation of operations for the collection of interest carried out by or with the intermediation of credit institutions and financial companies, encompassing, as can be concluded from the letter of the law, other situations occurring as a consequence of financial operations:

"Thus, stamp duty is levied on operations for the collection of interest in the context of banking and financial activity, as a direct or indirect consequence of financial operations, namely by discounting bills and Treasury bills, loans, credit accounts and credits in liquidation. Within the scope of the incidence are included only interest resulting from operations specific to credit institutions, financial companies and other financial institutions carried out in the exercise of their respective activity. This scope includes not only interest directly resulting from such activity but also that indirectly earned by such institutions as a consequence of breach of contracts, as is the case of mora interest. Conversely, interest deriving from contracts outside the legal object of the aforementioned institutions is not subject to tax ...".

It follows from the foregoing that with item 17.3, the legislator will have aimed at the taxation of banking and financial activity, as an integral part of which is the right to receipt of mora interest for breach of credit granting contracts.

Being so, credit activity is a fundamental activity carried out by credit institutions, and, consequently, interest obligations acquire extreme relevance in the financial domain.

In effect, and as already mentioned previously, the obligation to pay interest, whether moratoria or not, is accessory to the capital obligation, especially with respect to its creation, but may, in the course of the obligational relationship, become autonomous from the latter.

Now, if the capital obligation results from the exercise of banking and financial activity developed by credit-granting institutions, the receipt of mora interest cannot be dissociated from the aforementioned activity, since the obligation to pay such interest only arises because underlying it is an obligation to return capital resulting from the conclusion of a loan contract.

Finally, it cannot be overlooked that mora interest results from breach of the contract concluded between the client and the banking institution, the same being due only as a consequence of that same breach aiming thus a "compensation" to the creditor entity for the damage resulting from the non-timely performance by the debtor entity, and, given that such interest does not appear to be remuneration in the strict sense, the same constitute a "compensation" for damage caused to the banking institution motivated by the "risk" inherent in the subject matter of its social purpose (financial services) in which credit granting is included, subject to taxation.

Wherefore, as a consequence, it is ascertained that the provision of subparagraph i) of No. 1 of article 7 of CIS aims to exempt from stamp duty, exclusively, remunerative interest originating from regular performance of the housing credit contract.

Thus, mora interest due for non-punctual performance of the housing credit contract is subject to stamp duty under item 17.3.1 of TGIS, not being subsumable in the exemption posited in subparagraph l) of No. 1 of article 7 of CIS.

For all the foregoing, Stamp Duty was assessed in the amount of € 13,479.66, which resulted from the application of the 4% rate on mora interest resulting from non-performance of housing loans, in the total value of € 336,991.60, assessed in accordance with the terms provided in item 17.3.1 of TGIS, combined with No. 1 of article 1, subparagraph b) of No. 1 of article 2, No. 1 and subparagraphs f) and g) of No. 3 of article 3, subparagraph h) of No. 1 of article 5, No. 1 of article 9, No. 1 of article 22, No. 1 of article 23, article 41 and No. 1 of article 44, all of CIS (...).

Following the aforementioned corrections, the Stamp Duty assessment no. 2017... was issued on 15-05-2017, relating to the year 2014, in the amount of € 139,088.35, and the compensatory interest assessments nos. 2017..., 2017..., 2017..., 2017..., 2017..., 2017..., 2017... and 2017..., in the total amount of € 15,289.35 (document no. 2 attached with the request for arbitral ruling, whose contents are hereby reproduced);

On 10-07-2017, the Claimant proceeded to pay the tax and interest assessed in the aforementioned tax act, in the total amount of € 154,377.70 (document no. 3 attached with the request for arbitral ruling, whose contents are hereby reproduced);

The Claimant, on 9-11-2017, filed an administrative objection against the aforementioned Stamp Duty assessment and compensatory interest;

By way of official letter no. ..., of 06-03-2018, from the Unit of Large Taxpayers, the Claimant was notified of the draft decision to reject the administrative objection in question (document no. 4 attached with the request for arbitral ruling, whose contents are hereby reproduced);

In the draft decision to reject the administrative objection the following is stated, among other matters:

§ VI. ANALYSIS OF THE CLAIM

I) Merchant Service Fee (No. 1 of article 1 of CIS - item 17.3.4 of TGIS) €24,867.57 (111.2.2.1 of RTI)

1. The Claimant contests the understanding of the Inspection Services, that the "Merchant Service Fee" (MSF), being a commission subject to Value Added Tax (VAT), but exempt in accordance with subparagraph c) of No. 27 of article 9 of CIVA, should for that reason be subject to stamp duty, pursuant to Nos. 1 and 2 of article 1 of CIS (subjective incidence), with inclusion in item 17.3.4 of the General Table of Stamp Duty.

2. As providers of banking services, banks, in general, have the right to remuneration: "Commissions" - which "today assume a significant weight, as a component of the total cost of financial products and services marketed by credit institutions and financial companies and in the competitive relationship between institutions" (Notice of the Bank of Portugal No. 8/2009), which are freely fixed and should meet principles of "reasonableness" and "proportionality". Being in banking language commissions qualified as "the monetary payments exigible from clients by credit institutions as remuneration for services rendered by them, or subcontracted to third parties, within the scope of their activity",(See the legal definition contained in subparagraph f) of No. 3 of article 3 of Decree-Law No. 58/2013 of 6 May, and subparagraph a) of article 2 of Notice of the Bank of Portugal No. 8/2009).

3. The bank, within the scope of its activity, makes available to its clients the Automatic Payment Terminal (hereinafter referred to as APT) service. These devices are intended to validate payment orders given by holders of multibanco cards and credit cards, within the scope of commercial relationships.

4. For each use of this means of payment, a commission is charged by the entity managing the merchant, designated as "Merchant Discount Rate" or "Merchant Service Fee" (hereinafter designated as MSF).

5. The "Merchant Service Fee" is nothing more than a commission, which represents the remuneration of the bank for the services provided to the merchant, connected with the provision of a service that enables him to accept cards of the most diverse brands and networks, national or international (e.g., Multibanco, Visa Electron, Visa, MasterCard, etc.) as a form of payment for goods and services traded by him and which reflects, in particular, the execution of actions necessary for electronic processing of transactions (e.g. authorization, validation, processing of credit payment operations in the account of its merchant client, etc.) as well as the possible cost for the use of licenses of international card brands accepted for payment via APT at its point of sale.

6. Within the scope of the aforementioned service order, a correction was made to stamp duty on consideration for financial services, including fees for card-based operations - more specifically - on the Merchant Service Fee (No. 1 of article 1 of CIS - item 17.3.4 of TGIS), in the amount of € 24,867.57, based on information provided by the Claimant, as it appears on pages 27 to 29 of the TIR.

7. The correction has as its legal basis article 2, No. 1 subparagraph b) combined with No. 1 of article 23 and article 41, both of CIS, relating to the non-liquidation of stamp duty on the "merchant service fee" (or "merchant discount rate"), which constitutes a consideration paid by the merchant (client of the bank) to the acquirer of the payment system (the bank), for sales settled by bank card by the merchant's clients.

8. The stamp duty assessed in default results from the application of the 4% rate (item 17.3.4 of TGIS) on the "Merchant Service Fee" commission charged by the taxpayer, in its capacity as provider of automatic payment service to the beneficiary of the transfer (merchant), on sales settled by bank card.

9. The MSF commission fully fits within item 17.3.4 of TGIS, and the 4% rate provided for therein should be applied to it.

10. The Claimant argues that the tax act is illegal, because, although the taxpayer is the passive subject of the tax, the tax should be demanded from its clients, to whom interest and commissions were charged, since they are the bearers of the tax burden, and to support his defense invokes doctrine and case law of the STA, which refer to article 28 of the General Tax Law not being applicable to the situation, and that the substitute should be relieved of any responsibility.

11. In points 15 to 17 of the PI it alleges that "(...) the rules of the General Tax Law (LGT) concerning responsibility in case of tax substitution cannot be applied to cases of tax substitution without withholding", wherefore it understands article 28 of the LGT to be inapplicable, making reference to the Decision of the STA No. 01080/13.

12. Also the doctrine invoked by the Claimant, that is, Sérgio Vasques, acknowledges this need for the substitute to take steps to collect the tax in question, otherwise it is not possible to hold the substitute responsible for the tax.

13. To this understanding we may make only one reservation, concerning cases in which the substitute has not diligently performed the duties incumbent on him, neglecting the tasks of liquidation and collection.

14. The institute of tax substitution embodies a mechanism that aims to safeguard tax credits, through the simplification of the operations of assessment, liquidation and collection of tax. On the tax substitute rests an obligation of payment before the creditor State, satisfying a debt that is his, although not original, due to corresponding to an obligation of the substitute.

15. The function of this institute aims to facilitate and make efficient the fulfillment of the obligation to deliver the tax. Not proceeding with the duty of diligence and efficiency that rests on him, in his capacity as passive subject, he is burdened with the fulfillment of the obligation, regardless of whether he has demanded fulfillment from the substitute, in accordance with the provisions of article 28 of the LGT.

16. In the General Tax Law annotated and commented, coordinated by José Maria Pires, Ed. Almedina, 2015, on page 177, Point 4, it is stated that "Tax substitution is not confused with the figure of tax repercussion, which is characteristic of VAT and Stamp Duty. (...)". As results from subparagraph a) of No. 4 of article 18 of the LGT, the third upon whom the tax burden is repercussed is not a passive subject of the tax legal-juridical relationship. The passive subject of VAT and stamp duty is the debtor of the tax to the State, there being, in this case, no substitution. There is, rather, a third party, the repercussed, who will bear, in economic terms, the burden of the tax, but who can never be considered a passive subject of the tax legal-fiscal relationship. In the case of temporary substitution (as in the case of IRS), the holder of income never ceases to be a passive subject of the tax legal-juridical relationship. A different situation is the one that refers to VAT and stamp duty, given that those who bear the tax burden economically do not even become passive subjects of the relationship.

17. Thus, the allegations of the passive subject Claimant to the effect that he has no responsibility to fulfill the obligation resulting from the taxation in stamp duty of the aforementioned financial operations are without merit. The law imposes on him the obligation to liquidate, declare and deliver the tax, regardless of whether he has made the burden fall on the operations in question.

18. The inspection services classified the operation in question as being a commission, charged for the provision of a service, subjecting it to taxation in stamp duty, capable of being framed in item 17.3.4 of TGIS. The wording of this rule, applicable at the date of the facts, was "Other commissions and consideration for financial services".

19. Pursuant to the provisions of subparagraph c) of No. 1 of article 2 of CIS, the "(...) credit institutions ... that have intermediated credit transactions, provision of guarantee or interest, commissions and other consideration (...)" are passive subjects of stamp duty, wherefore the provisions of incidence necessary to subject the aforementioned operations to tax would be fulfilled.

20. The passive subject Claimant understands that the Inspection Services took a wrong premise, with respect to the qualification of the operation in question, by considering that the commissions charged constitute a consideration for the provision of financial services to merchants. On the legal plane, he argues that these operations should be considered as a credit assignment, in accordance with the provisions of article 577, No. 1 of the Civil Code ("CC"), citing doctrine and case law to defend this allegation (points 112 to 117 of the PI).

21. It is important to refer to, below, which are the requirements that the legislator demands for there to be an effective credit assignment:

a) The existence of a business transaction that transmits all or part of the credit, "this legal business transaction may consist of a sale and purchase (article 874), a donation (article 940), a partnership (article 984 c), a factoring contract, a performance in satisfaction (article 837) or pro solvendo (article 840, No. 2) or an act constituting a guarantee";

b) The non-existence of legal or contractual impediments to transmission;

c) The credit is not, by the very nature of the performance, tied to the person of the creditor, "assignment not being permitted, since it would subject the debtor to having to perform to a person different from the one in relation to whom the performance is, by nature, intimately tied".

1. The law applicable to the requirements of assignment and to the effects between the parties is defined in accordance with the legal transaction that substantiates the assignment, therefore, it will be the law that results from that transaction, that which should be applicable to these aspects.

2. With respect to the parties, the transmission of the credit encompasses not only the credit itself, but also the guarantees and other accessories of the credit, provided they are separable from the person of the assignor and that there is no agreement establishing otherwise.

3. The transmission also encompasses the exceptions that the debtor possessed against the assignor (article 585 CC), and he can now invoke them against the assignee, even if the latter was unaware of them, according to Menezes Leitão, the rule applies fully "nemo pluris iuris in alienum transfere potest ipse habet".

4. The law determines, pursuant to article 587 of the CC, that the assignor-merchant must provide to the assignee a guarantee of the existence and enforceability of the credit at the time of assignment. However, the assignor only guarantees the solvency of the debtor if he has expressly undertaken to do so.

5. Thus, not all credit assignments configure credit utilizations/grants, referring to the fact that in the case of credit assignments without recourse, that is, "whenever the commercial right of recourse of the acquirer against the creditor in case of debtor non-performance is not agreed", the essential element of credit concession is lacking - the obligation of restitution - even when the maturity of the obligation, of the payment of the price of the assignment, precedes the maturity of the assigned credit. In this sense, it is not because it does not integrate any financing that the credit assignment without recourse can be considered not covered by the incidence of stamp duty. Assignment constitutes a financing in the sense of placing economic means at the disposal of the assignor, but not in the sense of a true credit utilization/grant.

6. Let us see then, in the operation in question here, we perceive that the merchant, by accepting the multibanco card or credit card of the client, acknowledges that the credit resulting from the sale he will make will be satisfied by the acquirer - Bank, which, in turn, undertakes to acquire that credit.

7. It is of the legal essence of the card that the credit of the merchant with respect to the cardholder be transferred, in the very moment of the purchase.

8. Within the scope of the provision in question, and having regard to the above characterization, it can be concluded that we are dealing with payment operations/transfers, whose order is given by the bank card user, configuring, thus, a transfer of funds, operations capable of being framed in subparagraph c) of No. 27 of article 9 of CIVA.

9. It thus appearing unquestionable that two distinct relationships are established with the "entities providing the automatic service" (Bank). On the one hand, there is the relationship established between such entity (Bank) and its clients (merchants), who are also the beneficiaries of that transfer. On the other hand, there is the relationship inherent to the transfer of funds between the deposit accounts of the payer and the beneficiary of the transfer and that is established between the entity providing the automatic service and the final consumer, the latter being the holder of the bank card.

10. Thus, this provision of services is dependent on the realization of operations of acquisition and the consequent use of the bank card (for this reason conditioned), and is therefore characterized by the accessory character with respect to the main operation, which is, however, subordinated to the main operation (inherent to the relationships of final client / merchant).

11. For the use of the system referred to above, the entity providing the automatic service (Bank) charges the beneficiary of the transfer (merchant) a "Merchant Service Fee", which thus constitutes a commission for the service provided, as the Bank of Portugal itself considers.

12. The allegations of the passive subject Claimant with respect to the issue in question are thus without merit, the AT considering that the aforementioned commission falls within a provision of services, and therefore the subject of taxation in stamp duty.

13. The Claimant considers illegal the application of item 17.3.4 of TGIS to that operation, for violation of articles 103 and 104 of the Constitution of the Portuguese Republic ("CRP"), because as explicitly stated in points 167 and 175 of the PI, article 153 of the State Budget Law for the year 2016 (Law No. 7-A/2016) determined that item 17.3.4 of TGIS would have the following wording "17.3.4 - Other commissions and consideration for financial services, including fees relating to card-based payment operations", even though such alteration has an interpretative character (article 154 of Law No. 7-A/2016).

14. Notwithstanding the declared interpretative character given to item 17.3.4 of TGIS, the Claimant understands that we are dealing with an innovative rule, not an interpretative one, citing for this purpose Baptista Machado (points 185 and 186 of the PI). Understanding the current wording of item 17.3.4 of TGIS, the referred "Merchant Service Fee", he concludes for the innovative character of the rule.

15. Service Instruction No. 40051, Series of 2017-12-04, divulges the understanding of the Authority for Tax and Customs, which goes in the direction that the alteration of the wording of the law contained in item 17.3.4 of TGIS, by the State Budget Law for the year 2016 (Law No. 7-A/2016 - articles 153 and 154), has an interpretative character.

16. The fees and commissions in question here fulfill all the requirements of incidence, and are thus subject to stamp duty, in the terms prescribed in item 17.3.4 of TGIS. Given the nature of this type of operations, the exemption provided for in subparagraph e) of No. 1 of article 7 of CIS is not applicable to them, as results from No. 7 of the same rule.

17. According to Ferrer Correia, in Opinion published in the "Collection of case law, Year XIV, Volume IV, Decision of the STA of 4 February 1998, cited on page 108 of the General Tax Law commented and annotated, Almedina, 2015, coordination José Maria Pires", the fundamental criterion for ascertaining whether we are dealing with an interpretative rule is "that the principle contained in the new law can be considered implicit in the prior law". And the prior rule already imposed stamp duty on the aforementioned operation.

18. The interpretative rule merely served to clarify, if there had been any doubt, that the fees relating to card-based payment operations have a place in item 17.3.4 of TGIS, where the taxation of "Other commissions and consideration for financial services" already appeared.

19. In "Other commissions and consideration for financial services" various services rendered to clients are included. Thus, having regard to the economic substance of the operation, it becomes clear that the same is already contemplated in the letter of the law at the date of the facts.

20. For the foregoing reasons, the allegations of the passive subject, now Claimant, as regards the innovative character of the aforementioned legislative alteration, nor that its application to the case is unconstitutional by incurring a manifest violation of the principle of prohibition of retroactive fiscal legislation, as set out in article 103, No. 3 of the CRP, as well as the principle of protection of confidence and legal certainty (point 195 of the PI) do not succeed. To support his understanding he cites Gomes Canotilho and Vital Moreira (points 198 to 199 of the PI) and the Decision of the Constitutional Court No. 128/09, of 12.3.2009 (points 200 and 230 of the PI) and further the Decision T. Constitutional No. 399/2010, of 27.11.2010 (points 208 to 212 of the PI).

J) On the illegality of the correction relating to the multilateral interchange fee and interbank commissions charged for the use of ATMs (point III 2.2.2 of the RIT) for the use of ATMs, in the amount of €100,741.12.

1. The basis of the correction in question resides in the fact that the Tax Inspection Services understand that the multilateral interchange fee and the interbank commissions charged for the use of ATMs consist of commissions subject to VAT, but exempted therefrom in accordance with subparagraph c) of No. 27 of article 9 of CIVA. For that reason they are subject to stamp duty, pursuant to Nos. 1 and 2 of article 1 of CIS (objective incidence) and subparagraph b) of No. 1 of article 2 of CIS (subjective incidence), having a place in item 17.3.4 of TGIS.

2. The Claimant alleges that being this the basis of the correction in question, the tax act in issue violates the law, by erroneous interpretation of No. 2 of article 2 of CIS and item 17.3.4 of TGIS (point 262 of the PI). To support his allegations, he describes in detail how payment operations are processed in the APT (points 273 to 330 of the PI).

3. For better understanding of the "MSF" commission charged to Merchants for the use of Automatic Payment Terminals, the following aspects should be borne in mind:

A) Automatic Payment Terminal (APT);

B) What is the "Merchant Service Fee";

C) On the subjection to stamp duty of the "Merchant Service Fee" commission.

1. Since the Bank of Portugal (BP) is the entity of supervision and regulation of credit institutions and other financial entities, it published on its website in the area of "Publications" the "Notebooks of the Bank of Portugal" which have the exclusive purpose of providing specific information on the banking sector to the general public. In this sense, it published on its website, Notebook No. 10, entitled "Payment Terminals and Automatic Teller Machines".

2. For the framing of the operation, in the aforementioned publication, the BP with respect to the APT, defines it as "...a device for accepting cards that allows payments to be made electronically. It reads the data from the card to authorize the operation and collects the elements of the transaction for processing. It also enables electronic authentication of the operation (entry of the secret code) and the issuance of receipts with information about the transaction data.".

3. In general terms, it is a terminal that allows payments to be made electronically in commercial establishments, by means of bank cards, in which:

4. The cardholder (or client) gives a payment order relating to the settlement of a purchase (debt) to the merchant, through the use of his card in the APT and for his authentication enters a secret code or his signature is requested as a form of authentication;

5. The information is transmitted by the acquirer (or "acquirer") to the card issuer, requesting the respective authorization;

6. The card issuer gives a "guarantee" of payment through an authorization;

7. The acquirer (or "acquirer") pays the merchant and charges him a commission, called "merchant service fee".

8. The acquirer (or "acquirer") is then reimbursed by the card issuer and pays him a commission entitled multilateral interchange fee (or "multilateral interchange fee"); 6. The card issuer charges the value of the transaction to the cardholder.

9. As with APTs, clients currently make various payments with cards (whether debit or credit) - hence payments made by card - through Automatic Teller Machines (ATM)63;

10. If there is a payment (for example, water, electricity, or any other good and/or service) made through ATMs, just as referred to when analyzing APTs, a commission is also charged here - in this case, by the Bank holding the ATM to the Bank holding the bank card (whether debit or credit) - for the service provided;

11. In the same way, when a client of one bank makes a cash withdrawal from an automatic teller machine (or ATM) belonging to another Bank [Bank holding the ATM], the Bank holding the ATM charges a commission to the bank holding or issuing the bank card/SIBS64, for the service provided.

12. Having regard to the operations described in the normal exercise of its activity, elements were requested from the Claimant, within the scope of external inspection 2014 (OI2016...), as it appears on page 46 of the RIT.

13. In accordance with No. 1 of article 1 of CIS, "stamp duty is levied on all acts, contracts, documents, titles, books, papers and other facts provided for in the General Table". In turn, No. 2 of article 1 of CIS establishes that "Operations subject to value added tax and not exempted therefrom are not subject to tax".

14. That is, in the definition of the scope of incidence of stamp duty in financial operations it is important to bear in mind the provisions of No. 2 of article 1 of the Code, which in order to avoid the overlapping of taxation, removes from the incidence of this tax the operations subject to VAT and not exempted therefrom.

15. Wherefore, regarding financial operations, the rule adopted in the common VAT system, contained in article 13 B, subparagraph d), of the Sixth Directive 77/388/EEC, of the Council, of 17 May 1977, transposed into Portuguese law through No. 28 (current No. 27) of article 9 of the VAT Code, is that of exemption, without the right to deduct tax borne upstream.

16. Thus, the then subparagraph d) of point B of article 13 of the Sixth Directive 77/388/EEC89 of the Council, of 17 May 1977, now appears in subparagraphs b) to g) of No. 1 of article 135 of Chapter 3 "Exemptions for the benefit of other entities" of Directive No. 2006/112/EC of the Council, of 28 November, relating to the common system of value added tax.

17. Without prejudice to other community provisions, the Member States shall exempt, under conditions they lay down with a view to ensuring the correct and straightforward application of the following exemptions and to preventing any possible fraud, evasion and abuse:

18. The grant and negotiation of credit, and likewise the management of credit effected by those who granted it;

19. The negotiation and acceptance of undertakings, endorsements and other guarantees, and likewise the management of credit guarantees effected by those who granted those credits;

20. Operations, including the negotiation relating to deposits of funds, current accounts, payments, transfers, credits, cheques and other negotiable instruments, with the exception of the collection of debts;

21. Operations, including the negotiation, relating to currencies, banknotes and coin with liberatory value, with the exception of coins and notes of a collection nature; coins are considered to be of a collection nature if they are gold, silver or other metal coins, and likewise banknotes, which are not normally used by virtue of their liberatory value or which present a numismatic interest;

22. Operations, including the negotiation, but excluding custody and management, relating to shares, holdings in companies or associations, bonds and other securities, excluding securities representing goods and the rights or securities referred to in No. 3 of article 5 of the VAT Code;

23. The management of common investment funds, as defined by the Member States;"

24. The aforementioned provision of the VAT Code (article 9, No. 27, identifies the banking and financial operations covered by the exemption, expressly referring to others that are similar to them are excluded from it, wherefore are thus exempt from VAT, the "...following operations:

a) The grant and negotiation of credit, in any form, including discount and rediscount operations, as well as their administration or management carried out by those who granted it;

b) The negotiation and provision of endorsements, guarantees, collateral and other guarantees, as well as the administration or management of credit guarantees carried out by those who granted it;

c) Operations, including negotiation, relating to deposits of funds, current accounts, payments, transfers, collections, cheques, negotiable instruments and similar, with the exception of simple debt collection operations;

d) Operations, including negotiation, which have as their object currencies, banknotes and coins, which are legal means of payment, with the exception of coins and banknotes that are not normally used as such, or which have numismatic interest;

e) Operations and services, including negotiation, but excluding simple custody and administration or management, relating to shares, other holdings in companies or associations, bonds and other securities, excluding securities representing goods and securities representing transactions on real property when carried out for a period of less than 20 years;

f) Services and operations relating to the placement, taking and firm purchase of issues of public or private securities;

g) Administration or management of investment funds;",

1. Analyzed the aforementioned operations, in particular that relating to the commission entitled "multilateral interchange fee, as well as the commissions charged for the use of automatic teller machines or ATMs in operations carried out with bank cards, are services rendered (remunerated as commissions), capable of being framed in the exemption provided for in subparagraph c) of No. 27) of article 9 of CIVA, which exempts from this tax the "(...) operations, including negotiation, relating to deposits of funds, current accounts, payments, transfers, collections, cheques, negotiable instruments and similar, with the exception of simple debt collection operations".

2. Wherefore, in concrete, the commissions entitled multilateral interchange fee (MIF) and the interbank commissions in question (charged for the use of Automatic Teller Machines) are subject to stamp duty pursuant to No. 1 of article 1 of CIS, and are not exempted therefrom.

3. Constituting objective incidence rules of Stamp Duty, the items provided for in the General Table of Stamp Duty (TGIS), it is important to analyze first the items contained therein. And from that analysis, it is quickly concluded that item "17 - Financial operations", more specifically item "17.3.4 - Other commissions and consideration for financial services", expressly provides for the incidence of stamp duty on commissions charged in operations carried out by or with the intermediation of credit institutions, financial companies or other entities legally assimilated to them and any other financial institutions. In this way, this provision expressly provides for the incidence of stamp duty on commissions charged (as those in question here) by the entity providing the service (in this case, A...).

4. On the application of the exemption provided for in subparagraph e) of No. 1 of article 7 of CIS, having regard to the letter of the law, the passive subject Claimant concluded that it depends only on the fact that they are carried out between institutions and entities indicated therein, there being in this rule no element that allows one to affirm that only interest, commissions and guarantees connected with credit operations are covered by the exemption rule in question (point 336 of the PI). For this purpose it invokes No. 3 of article 9 of the CC which establishes "In determining the meaning and scope of the law, the interpreter shall presume that the legislator enshrined the most correct solutions and knew how to express his thought in adequate terms".

5. The claimant further states in point 367 of the PI that given the alteration of No. 7 of article 7 of CIS by the State Budget Law for the year 2016, the argument of the Inspection Services, to the effect that that rule was repealed, due to the interpretative character being clarified, lacks foundation.

6. The new No. 7 of article 7 of CIS provides "The provisions of subparagraph e) of No. 1 apply only to guarantees and financial operations directly intended for the granting of credit, within the scope of the activity exercised by the institutions and entities referred to in that subparagraph".

7. As referred to on page 61 of the R/T, which states "And in a Decision of the Supreme Administrative Court dated 2016-06-29 (case no. 01630/15), it is stated that «With the State Budget for the current year 2016, Law No. 7-A/2016, of 30.03, see article 152, the Legislator introduced a No. 7 in that article 7, clarifying that the provisions of subparagraph e) of No. 1 apply only to guarantees and financial operations directly intended for the granting of credit, within the scope of the activity exercised by the institutions and entities referred to in that subparagraph, attributing an interpretative nature to the provision of this new No. 7, see article 153 (article 154).

8. Given the interpretative doubt existing around the provisions of that article 7, No. 7, the legislator came to restrict its application to guarantees and financial operations directly intended for the granting of credit, thus expressly excluding commissions received by Banks as part of insurance intermediation activity.

9. In effect, the exemption from tax of the operations listed in subparagraph e) of No. 1 of article 7 of CIS, when carried out between financial institutions, aims to lighten the intermediate phases of the economic circuit in which they operate, causing the tax to be levied in the final phase of the circuit, that is, when they reach the final consumer.

10. Nor can those allegations of the Claimant succeed, due to these operations having a place in the provision of No. 1 of article 1, No. 1 of article 9 and No. 1 of article 22, all of the Stamp Duty Code and item 17.3.4 of TGIS, with stamp duty being due, relating to the multilateral interchange fee and interbank commissions charged for the use of ATMs, in the amount of € 100,741.12.

K) On the illegality of the stamp duty assessment on mora interest relating to housing credit - Point III 2.2.3 of the R.I.T, in the amount of € 13,479.66.

1. The Claimant alleges that the basis of the correction in question resides in the fact that the Tax Inspection Services consider that mora interest charged by virtue of the non-performance of the Claimant's clients, relating to housing credit contracts, are not covered by the provision of subparagraph l) of No. 1 of article 7 of CIS, which provides for the exemption from stamp duty, interest associated with housing credit, applicable only, in the understanding of those services, to remunerative interest on the loaned capital.

2. Subparagraph l) of No. 1 of article 7 of CIS establishes that "Interest charged on loans for acquisition, construction, reconstruction or improvement of own housing;" are exempt from stamp duty.

3. The Claimant charged mora interest arising from non-performance of housing loan contracts, as well as assessment and inspection commissions in credit operations, merchant service fees, and fees and commissions relating to automatic payments, and that this collection resulted from operations carried out by it, while a financial institution and within the scope and exercise of its economic activity.

4. He did not exercise the task of liquidation and collection of stamp duty, conduct that should be expected of him.

5. With regard specifically to the nature of the interest obligation, it can be verified from the reading of article 561 of the Civil Code that "(...) the credit of interest is not necessarily dependent on the main credit, either of them being capable of being assigned or extinguished without the other."

6. Although the interest obligation is in a relationship of accessoriness with the capital obligation, it assumes full autonomy with respect to the latter, as already mentioned in accordance with article 561 of the Civil Code.

7. In this context, the use of credit arising from a contract concluded between two entities, for the purpose of financing the acquisition of own housing, constitutes, pursuant to the provision of tax incidence posited in item 17.3.1 of TGIS, applicable by force of No. 1 of article 1 of CIS, a tax fact relevant to stamp duty.

8. In the concrete case, consideration should be given to the expressed intentio legis in item 17.3.1 of TGIS, which is embodied in the taxation of operations for the collection of interest carried out by or with the intermediation of credit institutions and financial companies, encompassing, as can be concluded from the letter of the law, other situations occurring as a consequence of financial operations.

9. This scope includes not only interest directly resulting from such activity, but also that indirectly earned by such institutions, as a consequence of breach of contracts, as is the case of mora interest.

10. By the application of item 17.3.1 of TGIS, the legislator will have aimed at the taxation of banking and financial activity, as an integral part of which is the right to receipt of mora interest for breach of credit granting contracts.

11. It is concluded, thus, that stamp duty in the amount of € 13,479.66 is due, which resulted from the application of the 4% rate on mora interest resulting from non-performance of housing loans, in the total value of €336,991.60, assessed in accordance with the terms provided in item 17.3.1 of TGIS, combined with No. 1 of article 1, subparagraph b) of No. 1 of article 2, No. 1 and subparagraphs f) and g) of No. 3 of article 3, subparagraph h) of No. 1 of article 5, No. 1 of article 9, No. 1 of article 22, No. 1 of article 23, article 41 and No. 1 of article 44, all of CIS.

Not having the Claimant exercised the corresponding right to prior hearing, it was, by official letter no. ..., of 16-4-2018, from the Unit of Large Taxpayers, notified of the decision to reject the administrative objection, which made definitive the aforementioned draft decision (document no. 5 attached with the request for arbitral ruling, whose contents are hereby reproduced);

The value of the MSFs charged in an amount less than € 0.125 is € 450.65 [article 313 of the request for arbitral ruling, document no. 6 attached thereto and subparagraph g) of point I of the Claimant's pleadings, not contested by the Authority for Tax and Customs];

The sum of multilateral interchange fees charged in an amount less than € 0.125 amounts to a total of € 205,740.41 [document no. 6 attached with the request for arbitral ruling and subparagraph h) of point I of the Claimant's pleadings, not contested by the Authority for Tax and Customs];

On 03-09-2018, the Claimant filed the request for arbitral ruling that gave rise to these proceedings.

2.2. Unproven Facts and Justification of Factual Determination

The facts were established as proven based on the documents referred to and on statements of the Claimant not contested by the Authority for Tax and Customs.

3. Legal Matters

The Authority for Tax and Customs made corrections to the Stamp Duty assessed by the Claimant in the year 2014, understanding that it should have liquidated Stamp Duty, applying item 17.3.4 of TGIS, within the scope of its activity regarding the "Merchant Service Fee" (MSF) and the multilateral interchange fee and interbank commissions charged for the use of ATMs.

The Claimant defends in these proceedings, in summary, that there is no place for payment of Stamp Duty with respect to these fees and that, should they exist, the obligation of liquidation does not fall on it.

The Authority for Tax and Customs further understood that there is place for payment of Stamp Duty relating to mora interest arising from non-performance of housing credit contracts, with the Claimant defending that Stamp Duty is not due on the basis of these interests.

3.1. Question of the Non-existence of Responsibility in the Sphere of the Claimant

The first question raised by the Claimant is whether it can be held responsible for the payment of Stamp Duty.

The Claimant argues, in summary, if we are dealing with operations taxed in Stamp Duty, the Claimant is not the holder of the economic interest, with the holders of such economic interest being:

– in the case of the Merchant Service Fee, the holders of that economic interest are the merchants, insofar as they benefit economically from the operation being processed through the payment terminal made available by the Claimant, thus obtaining, immediately, the guarantee of payment of the good or service made available by them;

– in the case of the Multilateral Interchange Fee, the holders of the economic interest are, in the case of an operation in APT, also the merchants, insofar as the MIF is integrated in the MSF and, in the case of an operation in ATM, the holders of the card - in this latter case it is the bank issuing the card that pays to the acquiring bank (Claimant) the Multilateral Interchange Fee;

– the present situation constitutes a case of substitution without withholding, not being, therefore, applicable article 28 of the LGT, which provides that the tax substitute is responsible for the amounts withheld and not delivered;

– the Claimant did not proceed to any withholding at source of the tax in question, which is not legally provided for in this situation;

– the Claimant merely proceeded to make the discount, and only that value, did not withhold any values as tax, with the amounts discounted, in nominal values, corresponding to the value of the merchant service fee;

– it will be illegal the tax act impugned, in that it results in the burdening of the Claimant with the tax burden, in violation of the provisions of article 3, No. 3, subparagraph g), of CIS, as well as article 28 of the LGT.

The Authority for Tax and Customs defends in these proceedings that Stamp Duty is not demanded from the Claimant within the scope of tax substitution, but rather because it is a passive subject of the tax, pursuant to article 2, No. 1, subparagraph c), of CIS.

However, in the Tax Inspection Report there is no reference to subparagraph c), but rather to subparagraph b) of No. 1 of article 2 of CIS, wherefore, as post hoc rationalization is not relevant ( [1] ), it is on the basis of this legal justification that it must be assessed whether the Claimant is a passive subject of the tax.

This article 2, No. 1, subparagraph b), of CIS establishes that «passive subjects of the tax are (...) entities granting credit and guarantee or creditors of interest, premiums, commissions and other consideration».

In the Tax Inspection Report it is stated that the Claimant had the duty to liquidate and deliver to the State the Stamp Duty «pursuant to subparagraph b) of No. 1 of article 2 of CIS - "Subjective incidence", tax passive subjects are "Entities granting credit and guarantee or creditors of interest, premiums, commissions and other consideration", with the obligation to liquidate and deliver to State coffers imposed on them by No. 1 of articles 23, 41, 43 and No. 1 of article 44 of CIS».

The Claimant, in the request for arbitral ruling, does not even question the framing of its situation in these rules, expressly acknowledging in its article 15 that, «in fact, the Claimant will be the passive subject of the tax, pursuant to the provisions of subparagraph c) of No. 1 of article 2 of CIS».

Thus, being a passive subject of the tax, it is incumbent on the Claimant to liquidate the tax, by force of the provision of No. 1 of article 23 of CIS, invoked by the Authority for Tax and Customs, if it finds itself in any of the situations in which Stamp Duty is due.

It is not relevant, thus, to ascertain whether the Claimant is a passive subject to exclude subjective incidence, whether the Claimant is a direct contributor or substitute (two of the categories provided for in No. 3 of article 18 of the LGT), because in any case, regardless of knowing who holds the title to the economic interest of the operation, it is on the Claimant that the burden of liquidation falls and it is only to him and not to the holders of the cards or to the merchants that the Authority for Tax and Customs can demand payment of the tax. ( [2] )

Furthermore, in harmony with the provisions of subparagraph h) of article 5 of CIS, in operations carried out by or with intermediation of credit institutions, financial companies or other entities legally assimilated to them, the tax obligation is considered constituted at the time of collection of commissions and consideration, wherefore the Authority for Tax and Customs could demand payment of Stamp Duty.

It results from this regime that we are, in the relationships between the Claimant and the entities to whom it charges commissions or consideration, not in a situation of tax substitution (which is carried out through withholding at source of the tax liquidated by the substitute, pursuant to article 20 of the LGT) but rather in a situation in which it is admitted (and legally intended) the economic repercussion of the tax, this being, for ease of collection, demanded from he who is not the holder of the economic interest, but is in a situation in which it is possible for him to transfer the burden to the sphere of the holder of the economic interest within the scope of his private relationships with the latter, remaining at the disposal of the passive subject whether or not to effect such transfer, through the inclusion or not of the value of the tax in the prices of the goods transmitted or services rendered. ( [3] )

In situations of this kind, «the only tax-responsible party, before the State, for the lack of assessed tax is, in case of divergence between the person who appears as passive subject and he who appears as holder of the economic interest on whom the tax burden falls, the passive subject, and not the repercussed or the holder of such economic interest» (arbitral decision rendered in case no. 496/2017-T).

Thus, neither subparagraph g) of No. 3 of article 3 of CIS nor article 28 of the LGT constitute an obstacle to demanding the tax from the Claimant (if it is determined that taxation should exist).

For the foregoing, the liquidation impugned does not suffer from the defect that the Claimant attributes to it, by hypothetical violation of the rules on the subjective incidence of Stamp Duty.

3.2. Question of the Merchant Service Fee (MSF)

The Authority for Tax and Customs understood in the Tax Inspection Report, on the objective incidence of Stamp Duty on the MSF that:

• The MSF is a commission charged by the entity providing the automatic payment service (A...) to the beneficiary of the transfer (the merchant), on sales settled by bank card, so as to remunerate A... in card-based payment operations {with underlying the transfer of funds from the account of the final customer/consumer to the merchant's account);

• A... does not proceed to liquidate any tax in respect of the MSF;

• The Bank of Portugal itself (supervisory entity) considers the MSF to be a commission;

• The MSF, being subject to VAT, is exempted therefrom, as it falls within subparagraph c) of paragraph 27) of article 9 of CIVA;

• Being VAT-exempt, the MSF is subject to Stamp Duty, pursuant to No. 1 and No. 2 of article 1 of CIS;

• Pursuant to subparagraph b) of No. 1 of article 2 of CIS - "Subjective incidence", tax passive subjects are "Entities granting credit and guarantee or creditors of interest, premiums, commissions and other consideration", with the obligation to liquidate and deliver to State coffers imposed on them by No. 1 of articles 23, 41, 43 and No. 1 of article 44 of CIS;

• In accordance with the provisions of subparagraph g) of No. 3 of article 3 of CIS, in "(...) remaining financial operations carried out by or with intermediation of credit institutions, companies or other financial institutions (...)", the person bearing the tax burden is the client (in this case the merchants who have the APTs in their stores);

• In turn, under subparagraph h) of No. 1 of article 5 of CIS, the tax obligation is constituted in "...operations carried out by or with intermediation of credit institutions, financial companies or other entities legally assimilated to them, at the moment of collection of interest, premiums, commissions and other consideration ...";

• Pursuant to No. 1 of article 9, the taxable value of Stamp Duty is that resulting from the TGIS;

• No. 1 of article 22 of CIS refers the tax rates to be applied to the TGIS;

• The MSF commission fully fits within item 17.3.4 of TGIS, as it is a commission charged by the entity providing the automatic service (A...) to the merchant:

• This commission is not covered by the exemption provided for in subparagraph e) of No. 1 of article 7 of CIS.

3.2.1. Error of Interpretation of No. 2 of Article 1 of CIS

The Claimant understands that there is «erroneous interpretation of No. 2 of article 1 of CIS» because one cannot extract from article 1, No. 2, of CIS that operations that are VAT-exempt are necessarily subject to Stamp Duty, but only that the same operation cannot be cumulatively taxed in VAT and Stamp Duty.

This statement that from article 1, No. 2, of CIS one can only conclude that the same operation cannot be cumulatively taxed in VAT and Stamp Duty is true, which is acknowledged by the Authority for Tax and Customs.

However, as the Authority for Tax and Customs also refers, «it is not only that article that is invoked to bring about taxation» and «it is also referred to by the inspection services No. 1 of the same article (the rule of objective subjection), supplemented with reference to item 17.3.4 of TGIS, which embodies what is said in No. 1 of article 1 of C