IMT Exemption for Tourist Utility Properties: Dation in Payment and Article 20 DL 423/83 Benefit

ARBITRAL DECISION

The arbitrators Maria Fernanda dos Santos Maçãs (president arbitrator), Paulo Lourenço and Ricardo Rodrigues Pereira, appointed by the Deontological Council of the Administrative Arbitration Centre to form the Arbitral Tribunal, hereby decide as follows:

I. REPORT

1. On 13 July 2015, A…, S. A., NIPC…, with registered office at Praça…, n.º…, …-… Porto (hereinafter, the Claimant), filed a request for the constitution of an arbitral tribunal, pursuant to the combined provisions of articles 2 and 10 of Decree-Law no. 10/2011, of 20 January, which approved the Legal Framework for Arbitration in Tax Matters, as amended by article 228 of Law no. 66-B/2012, of 31 December (hereinafter, abbreviated as RJAT), seeking the declaration of illegality and consequent annulment of the IMT assessment no.…, in the total amount of € 487,500.00, as well as the ordering of the Tax and Customs Authority to proceed with the reimbursement of the amount of tax improperly paid, plus compensatory interest, for violation of law.

1.1. The Claimant attached 25 (twenty-five) documents and did not request the production of any other evidence.

1.2. The Respondent is the AT – Tax and Customs Authority (hereinafter, the Respondent or AT).

1.3. In essence and in brief summary, the Claimant alleged the following:

In the course of its banking activities, the Claimant granted various financing arrangements to the commercial company B…, S. A., namely through loans and overdrafts. To secure the reimbursement of these financing arrangements and the payment of respective interest, three mortgages were established over various properties comprising the C…, located at Quinta…– … and…, municipality of Lamego, which was recognized as having permanent tourist utility status, pursuant to Decree-Law no. 423/83, of 5 December, through Despatch no. …/2008, of 12 September 2008, of the State Secretary for Tourism.

The commercial company B…, S. A., in partial fulfillment of the aforementioned obligations undertaken before the Claimant and which corresponded to credits of the latter, in the total amount of € 7,500,000.00, offered in satisfaction the aforementioned properties of which it was the owner.

For purposes of executing the respective public deed of dation in satisfaction, which took place on 27 November 2009, the Claimant travelled to the Finance Service of Lisbon-… and presented the "IMT Form 1" declaration duly completed; subsequently, IMT assessment no. … was issued – under which the AT verified the application of the IMT exemption, provided for in no. 1 of article 20 of Decree-Law no. 423/83, of 5 December – as well as the Stamp Tax assessment no. … – in which a tax amount of € 12,000.00 was calculated, corresponding to the reduction of the tax amount to one-fifth, pursuant to item 1.1 of the TGIS, combined with the provision of no. 1 of article 20 of Decree-Law no. 423/83, of 5 December.

Subsequently, in October 2014, the AT initiated an inspection procedure, of partial scope in IMT and Stamp Tax, covering only the fiscal year 2009. As a consequence of that inspection action, the AT deemed it appropriate to make a correction in the amount of € 7,500,000.00 to the taxable matter in IMT for the Claimant's fiscal year 2009 – corresponding to the value of the aforementioned dation in satisfaction that was effected – on the grounds that the aforementioned exemption that had been granted in 2009 was not applicable, and thus the amount of € 487,500.00 was due, as IMT.

As a consequence of that correction, the AT issued on 10 April 2015 an additional IMT assessment – the assessment challenged in these proceedings – in the amount of € 487,500.00, in which it is stated that the same was "effected pursuant to no. 2 of article 19 and paragraph b) of no. 2 of article 21 of the IMT Code, due to undue recognition of IMT exemption pursuant to no. 1 of article 20 of Decree-Law no. 423/83, of 5 December"; the Claimant proceeded, in a timely manner, to voluntarily pay this IMT assessment.

The Claimant contends that the aforementioned IMT assessment is illegal, as it contradicts an act of verification of a tax benefit that was not revoked within the legal deadline, pursuant to the provision of article 141, no. 3, of the CPA, since such an act of verification could only be revoked within the period of one year and that assessment is issued five years after that act.

The Claimant further asserts that the same IMT assessment is illegal due to express violation of the four-year statute of limitations provided for in article 31, no. 3, of the IMT Code, since an additional assessment could only be made within that period and the assessment challenged, which is an additional assessment, is made more than five years after the initial assessment.

The Claimant further alleges that the assessment in question is illegal due to express violation of the provision of article 31, no. 2, of the IMT Code, regarding the competent authority for its issuance, since, if that assessment were legally permissible, it could only be issued by the finance service where the "IMT Form 1" declaration was submitted (Lisbon…) and, in this case, it was issued by the finance service of the location of the properties (…).

The Claimant concludes by petitioning for the "annulment of the Challenged Assessment, for violation of law, with all legal consequences, namely the reimbursement to the Claimant of the amount of tax improperly paid, plus compensatory interest and default interest that may be due until the complete reimbursement of that amount, pursuant to the provision of article 43 of the General Tax Law".

1. The request for the constitution of the arbitral tribunal was accepted and automatically notified to the AT on 16 July 2015.

2. The Claimant did not appoint an arbitrator, and therefore, pursuant to paragraph a) of no. 2 of article 6 and paragraph b) of no. 1 of article 11 of the RJAT, the President of the Deontological Council of CAAD appointed the signatories as arbitrators of the collective arbitral tribunal, who communicated acceptance of the appointment within the applicable period.

3. On 28 August 2015, the parties were duly notified of this appointment and did not manifest any intention to refuse the appointment of the arbitrators, pursuant to the combined provisions of article 11, no. 1, paragraphs a) and b) of the RJAT and articles 6 and 7 of the CAAD Code of Deontology.

4. Thus, in accordance with the provision of paragraph c) of no. 1 of article 11 of the RJAT, the collective Arbitral Tribunal was constituted on 14 September 2015.

5. On 26 October 2015, the Respondent, duly notified for this purpose, presented its Response in which it specifically contests the arguments raised by the Claimant and concludes that the claim is unmeritorious, with its consequent dismissal of the request.

6.1. The Respondent attached no documents and did not request the production of any other evidence.

6.2. On the same occasion, the Respondent attached to the proceedings the respective administrative file (hereinafter, abbreviated as PA).

6.3. In essence and also briefly, it is important to highlight the most relevant arguments upon which the Respondent based its contestation:

The Respondent advances an interpretation that disregards the temporal element of the acquisition of the properties, being indifferent whether this occurred before or after the enterprise was already installed and operating; what matters, therefore, for purposes of the exemption provided for in no. 1 of article 20 of Decree-Law no. 423/83, of 5 December, is whether the acquisition of the property was intended for the installation of a tourist enterprise or rather for its operation.

In the present case, the acquired properties are allocated to services, as evidenced by their respective licenses for tourist use issued by the Municipal Chamber of…, and therefore are not intended for the installation of the aforementioned enterprise, which, moreover, was already installed at the time of acquisition by the Claimant.

Thus, relying on certain case law from both the Supreme Administrative Court and arbitral tribunals constituted under the aegis of CAAD, the Respondent sustains that the acquisition referenced in these proceedings does not benefit from the IMT exemption provided for in no. 1 of article 20 of Decree-Law no. 423/83, of 5 December.

Furthermore on this matter, the Respondent states that the Claimant does not attribute any illegality to the legal-tax framework of the facts underlying the challenged IMT assessment – the aforementioned acquisition does not benefit from the IMT exemption provided for in no. 1 of article 20 of Decree-Law no. 423/83, of 5 December – and therefore such an assessment act was done in accordance with the law and should be maintained.

The Respondent further asserts that the tax benefit provided for in no. 1 of article 20 of Decree-Law no. 423/83, of 5 December, has automatic nature, not depending on any administrative act of recognition; therefore, the IMT assessment under challenge was not based on any revocation of tax benefits previously granted that would be autonomously challengeable. In this manner, being a tax benefit of automatic nature, there is no true act of recognition, since the exemption operates by mere application of the law to the facts, and therefore, contrary to what is invoked by the Claimant, no revocation of a tax benefit occurred, and there is no violation of the provision of article 141, no. 3, of the CPA.

In another order of considerations, the Respondent asserts that no IMT assessment existed prior to the execution of the deed of dation in satisfaction – the declaration then issued by the Finance Service of Lisbon… cannot be considered an act of recognition of a tax benefit and even less an assessment – and therefore it cannot be considered that the challenged assessment is an additional assessment. Thus, the Respondent concludes, the AT was not prevented from assessing the outstanding IMT within the eight-year period legally provided for this purpose (by combination of article 45, no. 1, of the General Tax Law with article 35, no. 1, of the IMT Code) and applicable to the situation at hand, as occurred, with no violation of applicable law or any principles, especially those of legal certainty and legal security.

Regarding the raised question of competence to issue the challenged IMT assessment, the Respondent states that since this was not intended to correct a prior assessment, having been promoted ex officio, pursuant to the provision of article 21, no. 2, paragraph b), of the IMT Code, the Finance Service of… is competent for this purpose, given the location of the transferred properties.

The AT concludes by stating that "the assessment now challenged is based on a correct interpretation and application of the aforementioned exemption provision, and cannot accept any of the arguments, nor can any of the defects alleged by the Claimant to the challenged assessment proceed".

1. Pursuant to the principles of tribunal autonomy in the conduct of proceedings in order to promote celerity, simplification and informality thereof (cf. articles 19, no. 2, and 29, no. 2, both of the RJAT), the holding of the meeting referred to in article 18 of the RJAT was waived. 20 February 2016 was likewise set as the deadline for the rendering of the arbitral decision.

2. Notified for this purpose, the parties presented written allegations.

II. PRELIMINARY ASSESSMENT

The Arbitral Tribunal was regularly constituted and is competent.

The proceedings do not suffer from any nullities.

The parties have standing and legal capacity, are duly represented and are legitimate parties.

There are no exceptions or other preliminary issues that prevent the examination of the merits and which require examination.

III. REASONING

III.1. FACTUAL MATTERS

§1. PROVEN FACTS

With respect to factual matters, it is important, first and foremost, to emphasize that the Tribunal need not pronounce on everything alleged by the parties; rather, it has the duty to select the facts relevant to the decision and distinguish proven from unproven matters (cf. article 123, no. 2, of the Tax Procedure Code and article 607, nos. 3 and 4, of the Civil Procedure Code, applicable ex vi article 29, no. 1, paragraphs a) and e), of the RJAT). Thus, the facts relevant to the judgment of the case are selected and delineated according to their legal relevance, which is established in light of the various plausible solutions of the legal question(s).

Accordingly, the following facts are considered proven:

a) In the course of its banking activities, the Claimant granted various financing arrangements, namely through loans and overdrafts, to the commercial company B…, S. A., NIPC…, with registered office at…, n.º…, Lisbon.

b) To secure the reimbursement of those financing arrangements and the payment of respective interest, three mortgages were established over the following autonomous units of the urban property designated "C…", located at…– … and …, civil parish of …, municipality of Lamego, described in the Land Registry Office of … under numbers …of the civil parish of … and … of the civil parish of …, registered in the urban property matrix of the civil parish of … under article…, then owned by the commercial company B…, S. A. (cf. Doc. nos. 2 to 19 attached to the initial petition):

c) Through Despatch no. …/2008, of 12 September 2008, of the State Secretary for Tourism, published in the Official Journal, 2nd Series, no. 202, of 17 October 2008, the tourist utility status was declared in perpetuity for the enterprise "C…", pursuant to Decree-Law no. 423/83, of 5 December, which encompasses the aforementioned autonomous units (cf. Doc. no. 20 attached to the initial petition).

d) Among the various financing arrangements granted by the Claimant, on 27 November 2009, the commercial company B…, S. A. owed the Claimant a total amount of € 7,500,000.00 (cf. Doc. no. 19 attached to the initial petition).

e) For payment of that amount, the commercial company B…, S. A., through a public deed executed on 27 November 2009, at the Notarial Office of D…, in Lisbon, effected the dation in satisfaction to the Claimant of the aforementioned autonomous units, which at that time had the following patrimonial tax values and to which the parties thereto attributed the values that are also referenced below (cf. Doc. no. 19 attached to the initial petition):

f) On 25 November 2009, with a view to the execution of the aforementioned public deed of dation in satisfaction, the Claimant travelled to the Finance Service of Lisbon-… and presented the "IMT Form 1" declaration duly completed, in particular with the identification of the autonomous units that would be the subject thereof and the values by which they would be transferred, having entered relative to each of the aforementioned autonomous units the number "33" in the field "09|COD." of the column "Tax Benefits" of the schedule that constitutes its Annex III (cf. Doc. no. 21 attached to the initial petition).

g) Following the submission of the "IMT Form 1" declaration by the Claimant, the Tax and Customs Authority (Finance Service of Lisbon-…) issued IMT assessment no.…, in the total amount of € 0.00, containing the following mention relative to each of the aforementioned autonomous units: "Benefits: 33 – Tourist Utility (Art. 20 of D. L. 423/83), 100% on the taxable matter" (cf. Doc. no. 22 attached to the initial petition).

h) On the same occasion, the Tax and Customs Authority (Finance Service of Lisbon-…) issued the Stamp Tax assessment, in the total amount of € 12,000.00, containing the following mention relative to each of the aforementioned autonomous units: "Benefits: 33 – Tourist Utility (Art. 20 of D. L. 423/83), 100% on the taxable matter". (cf. Doc. no. 23 attached to the initial petition).

i) Under Service Order no. OI2014…, the Claimant was subject to an internal inspection action, commencing on 10/10/2014 and ending on 24/10/2014, carried out by the Tax Inspection Services of the Financial Directorate of…, of partial scope in IMT and Stamp Tax, extending to the fiscal year 2009 (cf. PA attached to the proceedings).

j) Following that inspection action, the Tax Inspection Services of the Financial Directorate of … prepared the Tax Inspection Report, the content of which is hereby given as entirely reproduced, which contains, among other things, the following which is important to highlight here (cf. PA attached to the proceedings):

[Report text omitted for brevity in proceedings]

k) The Claimant was notified of the Tax Inspection Report, through office letter no.…, of 23.12.2014, of the Large Taxpayers Unit (cf. Doc. no. 24 attached to the initial petition).

l) Subsequently, the Tax and Customs Authority (Finance Service of…) issued the ex officio IMT assessment no.…, in the total amount of € 487,500.00, with a payment deadline of 13.04.2015 (cf. Doc. no. 1 attached to the initial petition).

m) The Claimant voluntarily paid the entirety of the assessed IMT (cf. Doc. no. 25 attached to the initial petition).

n) On 13 July 2015, the Claimant filed the request for the constitution of the arbitral tribunal that gave rise to the present proceedings.

§2. UNPROVEN FACTS

With relevance to the appreciation and decision of the case, there are no facts that have not been proven.

§3. REASONING ON FACTUAL MATTERS

With respect to the proven factual matters, the Tribunal's conviction was based on the facts articulated by the parties, whose adherence to reality was not disputed, on the documents attached to the proceedings and on the administrative file.

III.2. LEGAL MATTERS

The Claimant begins by contending that the ("additional") IMT assessment challenged constitutes the revocation of an administrative act granting/recognizing a tax benefit, in violation of the provisions of articles 140 and 141 of the CPA (version prior to the publication of Decree-Law no. 4/2015, of 7 January), in particular regarding the period for revocation of the act.

Additionally, the Claimant further alleges that the ("additional") IMT assessment challenged was made beyond the period established in article 31, no. 3, of the IMT Code, and therefore the statute of limitations for IMT assessment has expired.

The Claimant further alleges that the ("additional") IMT assessment at issue was made by a Finance Service lacking competence to do so, thus resulting in violation of the provision of article 31, no. 2, of the IMT Code, regarding the competent authority for issuance of that assessment.

Given that statute of limitations for the right to assess the tax is invoked, it is necessary to begin by examining this defect as it is the one whose procedural merit would determine more stable and effective protection of the Claimant's interests (article 124 of the Tax Procedure Code ex vi article 29, no. 1, paragraph a), of the RJAT).

§1. On the Statute of Limitations for the Right to Assess

The examination of this defect requires that we determine the nature of the IMT assessment challenged: initial assessment or additional assessment? Indeed, the examination of the statute of limitations issue will depend on the answer we give to this question.

Article 45, no. 1, of the General Tax Law provides as follows: "The right to assess taxes expires if the assessment is not validly notified to the taxpayer within the period of four years, unless the law sets another period."

One of the cases in which the law sets another period is IMT, with article 35, no. 1, of its Code providing: "Tax can only be assessed within the eight years following the transfer or the date on which the exemption ceased to be effective, without prejudice to the provision of the following number and, as to the remainder, to article 46 of the General Tax Law."

Thus, as an exception to the general statute of limitations period of four years, the law sets, for IMT, a special period of eight years, counted from the transfer or the date on which the exemption ceased to be effective.

However, if it is considered that the IMT assessment challenged constitutes an additional assessment, it is then necessary to consider no. 3 of article 31 of the IMT Code, which provides: "An assessment may only be made within four years counted from the assessment to be corrected, except if it is due to omission of property or values, in which case it may still be made later, without prejudice in all cases to the provision of article 35."

In the case at hand, it results that "Following the submission of the "IMT Form 1" declaration," by the Claimant duly completed, with entry relative "to each of the aforementioned autonomous units the number "33" in the field "09|COD." of the column "Tax Benefits" (…)", "the Tax and Customs Authority (Finance Service of Lisbon-…) issued IMT assessment no.…, in the total amount of € 0.00, containing the following mention relative to each of the aforementioned autonomous units: "Benefits: 33 – Tourist Utility (Art. 20 of D. L. 423/83), 100% on the taxable matter"" (points f) and g) of the proven facts).

The question is whether we are or are not dealing with a first assessment to be followed by the additional assessment now challenged.

Let us examine this.

It is settled and uniform case law that an additional assessment presupposes that there has been a prior assessment – relative to the same tax fact, the same taxable person and the same period of time – which it is intended to correct or rectify because, due to an error of fact or law or due to an omission or inaccuracy made in the declarations submitted for purposes of assessment, a lower amount of tax than was due was determined to be collected.

In other words, an additional assessment is nothing more than the correction of a deficient assessment as a consequence of errors or omissions, which may be the responsibility of either the services or the taxpayers – in this sense, among others, the judgments of the Supreme Administrative Court of 17/01/2007, rendered in case no. 0909/06, of 14/09/2011, rendered in case no. 0294/11 and of 18/05/2011, rendered in case no. 0153/11 (all available at www.dgsi.pt).

Furthermore, as was established in the judgment of the Supreme Administrative Court of 14/09/2011, rendered in case no. 0294/11, "IMT assessment made as a consequence of evaluation of property that at the time of transfer of the goods appeared exempt from that tax is not an additional assessment, since it is not intended to correct a prior assessment".

In truth, it is understandable that, following an exemption, there is no occasion for assessment, insofar as the same functions as a fact preventing the full constitution of the tax legal relationship (due to lack of either the subjective or objective element).

In the case at hand, nothing permits the conclusion that we are dealing with an additional assessment, since the IMT assessment challenged was not made in order to correct or rectify a prior assessment flawed by an error of fact or law or by omissions or inaccuracies made in the declarations submitted for purposes of assessment. In truth, the transfer of ownership of the aforementioned autonomous units which constitutes the tax fact did not give rise to the assessment of the tax because a document was issued with mention of exemption, pursuant to the provision of no. 1 of article 20 of Decree-Law no. 423/83, of 5 December, in accordance with the indications given by the Claimant. It is true that the tax fact occurred, but from that alone, without more, cannot be derived that there was an IMT assessment from which no tax would have resulted as payable because it was considered that it was exempt therefrom; on the contrary, by force of the exemption invoked by the Claimant (cf. point f) of the proven facts), no IMT assessment whatsoever was then made.

Established that it constitutes a first assessment of tax and in light of the proven factuality, we have that the IMT assessment challenged was made and validly notified to the Claimant within the eight-year period that results from the provision of article 45, no. 1, of the General Tax Law, combined with no. 1 of article 35 of the IMT Code.

The alleged defect of statute of limitations for the right to assess IMT is therefore without merit.

§2. On the Illegal Revocation of an Administrative Act Recognizing Tax Benefits

The Claimant alleges that the IMT assessment act challenged is illegal because it presupposes the revocation of an administrative act granting a tax benefit, which, according to its understanding, violates the provision of articles 140 and 141 of the CPA (version prior to the publication of Decree-Law no. 4/2015, of 7 January), in particular regarding the period for revocation of the act.

The answer to this question presupposes that the regime of the tax benefit in question be characterized.

A) Scope of Application of Article 20, No. 1, of Decree-Law No. 423/83, of 5 December

On the scope of application of the legal provision contained in no. 1 of article 20 of Decree-Law no. 423/83, of 5 December, the Supreme Administrative Court pronounced itself in the judgment rendered on 23/01/2013, in case no. 0968/12, in expanded proceedings, which gave rise to the jurisprudence-standardizing judgment no. 3/2013, published in the Official Journal, 1st Series, no. 44, of 04/03/2013, which standardized the case law in the following terms: "The concept of 'installation', for purposes of the benefits to which no. 1 of article 20 of Decree-Law no. 423/83, of 5 December refers, relates to the acquisition of properties (or autonomous units) for construction of tourist enterprises, after their respective urban operations have been duly licensed, aimed at benefiting companies engaged in the activity of promotion/creation of the same and not the purchasers of autonomous units in constructed/installed enterprises under plural ownership regime, since this relates to 'operation' and not to 'installation'".

Given the importance of uniformity of case law, especially in light of the security and stability of legal relationships which the law should aspire to achieve, and which is enshrined in article 8, no. 3, of the Civil Code – by imposing on the judge the duty to consider all cases that merit similar treatment, in order to obtain a uniform interpretation and application of the law – it is appropriate for us to adhere to that jurisprudential orientation and to the grounds on which the aforementioned judgment is based, set out, in abbreviated but clarifying form, in the respective summary, as follows:

"I – In determining the meaning and scope of tax provisions and in qualifying the facts to which they apply, the general rules and principles of interpretation and application of laws are observed", and "Whenever, in tax provisions, terms specific to other branches of law are employed, they shall be interpreted in the same sense as they have therein, unless otherwise directly follows from the law" (article 11, nos. 1 and 2, of the General Tax Law).

II – In the framework of the legal regime for the installation, operation and functioning of tourist enterprises, established in Decree-Law no. 39/2008, of 7 March, the concept of installation of a tourist enterprise comprises the set of legal acts and the formalities necessary for licensing (in the broad sense, comprising prior communications or authorizations, as the case may be) of the urban operations necessary for the construction of a tourist enterprise, as well as obtaining the titles that make it suitable to function and be operated for tourist purposes (cf. Chapter IV, articles 23 et seq.).

III – When the legislator uses the expression acquisition of properties or autonomous units intended for "installation", for purposes of the benefit to which no. 1 of article 20 of Decree-Law no. 423/83, of 5 December refers, it cannot but be understood as referring precisely to the acquisition of properties (or autonomous units) for construction of tourist enterprises, after their respective urban operations have been duly licensed, aimed at benefiting companies engaged in the activity of promotion/creation of the same.

IV – This concept of "installation" is the one that is adequate to all types of tourist enterprises and is not called into question by the fact that enterprises may be constructed/installed under a plural ownership regime, since this relates to "operation" and not to "installation".

V – In tourist enterprises established under plural ownership (which comprise lots and or autonomous units of one or more buildings, pursuant to the provision of article 52, no. 1, of Decree-Law no. 39/2008, of 7 March), two distinct procedures stand out, although they may occur simultaneously: one relating to the performance of operations necessary to install the enterprise; another, relating to operations necessary to put it into operation and to operate it, with the sale of projected or constructed units forming a necessary part of the second.

VI – The legislator intended to promote tourist activity by providing for the exemption/reduction of payment of Sisa/Stamp Tax, for promoters intending to construct/create establishments (or adapt and remodel existing units) and not when it is merely the acquisition of units (or accommodation units) integrated in enterprises and intended for operation, even if acquired on a date prior to the installation/licensing of the enterprise itself.

VII – Those acquiring the units do not become co-financiers of the enterprise, with responsibility for its installation, since they are acquiring a tourist product that was placed on the market by the promoter, whether the acquisition is made on plans or after the enterprise is installed, as any final consumer, all the more so since the units may be acquired for their exclusive use and without any time limitation (in the case of tourist enterprises established under plural ownership).

VIII – Not being concerned with the acquisition of properties or autonomous units intended for construction/installation of tourist enterprises, but rather with the acquisition of accommodation units by final consumers, albeit because they are integrated in the enterprise in question and are allocated to tourist operation, the same cannot benefit from the exemptions established in article 20, no. 1, of Decree-Law no. 423/83.

IX – This interpretative result is that which results from the historical, rational/teleological and also literal element of the legal provisions in question.

X – "Tax benefits are measures of an exceptional character instituted for the protection of relevant extrafiscal public interests that are superior to those of the taxation itself that they prevent (article 2/1 of the Tax Benefits Statute) (…)" and although admitting extensive interpretation (article 10 of the Tax Benefits Statute), cannot be considered by the interpreter legislative intent that does not have in the letter of the law a minimum of correspondence, albeit imperfectly expressed (article 9/2 of the Civil Code), beyond which because they represent a derogation from the rule of equality and the principle of contributive capacity that materially grounds taxes, tax benefits must be justified by a relevant public interest."

In the case at hand, it is manifest that only the acquisition of autonomous units integrated in a tourist enterprise is concerned, whose installation and promotion belonged to the transferring company.

Thus, considering also that the legislation applicable to the case sub judice did not undergo modification, it is reiterated in the present proceedings the foundational discourse of the cited judgment, for which reason we consider that the acquisition of the autonomous units at issue, by the Claimant, does not benefit from the IMT exemption provided for in no. 1 of the aforementioned Decree-Law no. 423/83.

B) Type of Tax Benefit in Question

As was established in the Arbitral Decision rendered in case no. 834/2014-T, "no. 1 of Decree-Law no. 423/83, of 5 December, constitutes a tax relief with the characteristics of a tax benefit, that is, 'a measure of an exceptional character instituted for the protection of relevant extrafiscal public interests superior to those of the taxation itself that it prevents' (no. 1 of article 2 of the Tax Benefits Statute).

In providing for the exemption from sisa (later IMT) and reduction to one-fifth of stamp tax, there is a combination of a total exemption and another partial one.

It is a dynamic tax benefit, also designated as a fiscal incentive or stimulus, in which the cause of the benefit is the adoption of the benefited behavior or the exercise of the promoted activity". It integrates into an extrafiscal policy, of pursuit of economic and social objectives through fiscal means [2] because, as results from D.L. 423/83, what is intended to be benefited is investment in tourist enterprises to which tourist utility will be recognized, whether these are new (to be created), whether existing but subject to remodeling, improvement or re-equipment, or that increase their capacity (article 5).

And attending to article 5 of the Tax Benefits Statute (article 4 in the wording prior to the republication by Decree-Law no. 108/2008, of 26/06), which provides that "Tax benefits are automatic or dependent on recognition; the former result directly and immediately from the law, the latter presuppose one or more subsequent acts of recognition", we are dealing with "automatic benefits".

In truth, it is settled and uniform case law that the tax benefit in question in these proceedings – exemption from IMT for acquisitions of properties or autonomous units intended for installation of enterprises qualified as having tourist utility – since it results directly and immediately from the law, is of automatic application, provided that the conditions set forth in no. 1 of article 20 of Decree-Law no. 423/83, of 5 December are met.

In this sense, one may read in the judgment of the Supreme Administrative Court, of 20/01/2010, rendered in case no. 0937/09, among others, that:

"(…) from the analysis of D.L. 423/83 it results that in none of its provisions is the granting of the exemption from IMT or reduction of Stamp Tax, these yes expressly provided for in no. 1 of article 20, conditioned on their express mention and provision in the despatch itself granting tourist utility. The only tax benefits on which this despatch must pronounce are only those provided for in article 16, whose no. 4, in the wording introduced by D.L. 38/94, of 8/2, establishes that 'for the purposes of paragraph b) of no. 1 (exemption or reduction of rates due for licenses, to civil governments and the Directorate-General for Shows), the despatch granting tourist utility shall define, under the proposal of the Commission for Tourist Utility, the measure and deadline for the benefits to be granted'.

And if it were otherwise the legislator's intention, it is evident that it would have enshrined it. And, thus being, the tax benefits here concerned result immediately and directly from the law (no. 1 of article 20 of D.L. 423/83, of 5/12), that is, are automatic, once that the conditions for application that do not comprise acts of recognition are verified, except for the qualification of tourist utility, albeit granted previously.

In this sense, see the judgment of this STA of 2/10/1991, rendered in the appeal no. 13016, in which it is concluded that the exemptions provided for in no. 1 of article 20 of D.L. 423/83 present the nature of automatic and binding.

Having such benefits, thus, automatic nature, it is obvious that the same are of automatic application once the legally imposed conditions are verified".

On the automatic nature of this tax benefit, see also, among others, the judgment of CAAD rendered in case no. 103/2014-T.

Given the foregoing, the effectiveness of that tax benefit is not dependent on the issuance of any administrative act of recognition susceptible to revocation pursuant to the terms and periods provided for in the legal provisions cited by the Claimant.

And no such administrative act is present in the case at hand.

Indeed, following the "submission of the "IMT Form 1" declaration," by the Claimant, the document issued by the tax services "with mention relative to each of the aforementioned autonomous units: "Benefits: 33 – Tourist Utility (Art. 20 of D. L. 423/83), 100% on the taxable matter"", does not have underlying an autonomous intervention by the Tax Administration on the information entered into the system, being limited to reproducing the elements declared by the Taxable Person, in the sense of the exemption. That document does not have and could not have the power to constitute in itself a decision of authority recognizing the right to the exemption, given that we are, it is repeated, dealing with an automatic benefit and not one dependent on an administrative act of recognition. Even if otherwise understood, if one were to admit there to be an administrative act, the same would have to be considered null and of no effect, due to lack of essential elements to serve as authoritative determination constitutive of rights[3].

In light of the legal regime for the attribution of this benefit, which the Claimant cannot ignore, we cannot even speak of a situation in which the appearance of an act constitutive of rights could induce into excusable error the taxpayer, creating legitimate expectations protectable according to the principles of good faith and protection of reliance.

The alleged illegal revocation of an administrative act recognizing tax benefits is therefore without merit.

§3. On the Violation of the Provision of Article 31, No. 2, of the IMT Code, Regarding the Competent Authority for Issuance of the Assessment Challenged

The Claimant, taking as a premise that the assessment at issue constitutes an additional IMT assessment, alleges that competence to effect the same belongs to the Finance Service of Lisbon-… and not to the Finance Service of…, the authority that actually effected and notified it to the Claimant.

The Claimant sustains this position by invoking the provision of article 31, no. 2, of the IMT Code – which determines that "the chief of the finance service where the assessment was made or where the declaration was filed for purposes of the provision of no. 3 of article 19 shall promote the competent additional assessment" – as there are corrections to assessments already issued, based on that declaration, and grounded in an erroneous interpretation of Law or an erroneous consideration of facts already known to the AT. Now, the Claimant filed the aforementioned declaration (IMT Form 1 declaration) with the Finance Service of Lisbon-….

As has already been stated, the IMT assessment at issue constitutes a first assessment of tax, promoted ex officio by the AT, and therefore, in light of the provision of article 21, no. 2, paragraph b), of the IMT Code, the competent finance service to effect it is that of the area where the properties are located, that is, it is the Finance Service of….

The alleged incompetence of the Finance Service of … to effect the assessment at issue is therefore without merit.

§4. On Compensatory Interest

In accordance with the provision of article 43, no. 1, of the General Tax Law, "compensatory interest is due when it is determined, in a gracious reclamation or judicial challenge, that there was an error attributable to the services from which results payment of the tax debt in an amount greater than legally due".

Thus, not being judgment to be made on the merits of the request for declaration of illegality and consequent annulment of the IMT assessment challenged, the request for compensatory interest which depended on the existence of an error attributable to the services in that IMT assessment effected by the Tax and Customs Authority is also without merit.

IV. DECISION

For the reasons set out above, this Arbitral Tribunal decides:

a) To find the request for declaration of illegality and consequent annulment of the IMT assessment challenged, in the amount of € 487,500.00, as well as the request for compensatory interest, unmeritorious;

b) To dismiss the Respondent from the request; and

c) To condemn the Claimant to pay the costs of the proceedings.

PROCESS VALUE

In accordance with the provision of articles 306, no. 2, of the Civil Procedure Code, 97-A, no. 1, paragraph a), of the Tax Procedure Code and 3, no. 2, of the Regulations of Costs in Tax Arbitration Proceedings, the process value is fixed at € 487,500.00 (four hundred eighty-seven thousand five hundred euros).

COSTS

Pursuant to article 22, no. 4, of the RJAT, the amount of costs is fixed at € 7,650.00 (seven thousand six hundred fifty euros), pursuant to Table I attached to the Regulations of Costs in Tax Arbitration Proceedings, to be borne by the Claimant.

Lisbon, 19 February 2016.

The Arbitrators,

(Maria Fernanda dos Santos Maçãs)

(Paulo Lourenço)

(Ricardo Rodrigues Pereira)

[1] In line, moreover, with profuse case law of the Supreme Administrative Court of which we cite, by way of example, the judgments rendered on 23/01/2013, in cases nos. 01001/12, 01005/12 and 01069/12, on 30/01/2013, in cases nos. 0970/12, 0971/12, 0972/12, 0999/12, 01003/12 and 01193/12, on 06/02/2013, in case no. 01000/12, on 08/02/2013, in case no. 01004/12, on 17/04/2013, in cases nos. 01023/12 and 01002/12, on 23/04/2013, in case no. 01195/12, on 11/09/2013, in case no. 01049/13, on 25/09/2013, in case no. 01038/13, on 09/10/2013, in cases nos. 01050/13, 1040/13 and 01015/13, on 18/10/2013, in case no. 01048/13, on 30/10/2013, in case no. 01052/13, on 13/11/2013, in case no. 01054/13, on 4.12.2013, in case no. 0824/13, on 29.1.2014, in case no. 01043/13, on 5.2.2014, in cases nos. 01041/13, 01047/13 and 01917/13, on 26/02/2014, in cases nos. 0860/13 and 08763, on 02/04/2014, in case no. 01914/13, on 09/04/2014, in case no. 0859/13, on 28/05/2014, in case no. 0291/14 and on 18/06/2014, in case no. 01527/13 (all available at www.dgsi.pt).

[2] Casalta Nabais, Direito Fiscal, Almedina, 2012, 7th ed., p. 390. Also on the classification of tax reliefs broadly conceived, ibidem, p. 391.

[3] For a distinction between a mere act of declaratory content and a constitutive verification, the latter a true administrative act, cf. VIEIRA DE ANDRADE, Lições de Direito Administrativo, 2nd ed., Coimbra, 2011, p. 146.