Summary
Full Decision
ARBITRAL DECISION
The arbitrators Maria Fernanda Maçãs (chair), Cristina Aragão Seia and Ana Teixeira de Sousa (panel members), designated by the Deontological Council of the Administrative Arbitration Centre (CAAD) to form the present arbitral tribunal, agree as follows:
I. REPORT
1. A..., SA, NIPC ... (hereinafter A... or Claimant), with registered office at Rua ..., nº..., ..., room..., Porto, having succeeded the company it held B..., SA (hereinafter B...), former Legal Entity nº..., which had its registered office at the same address, meanwhile extinguished by dissolution and liquidation, filed a request for constitution of the collective arbitral tribunal, pursuant to the combined provisions of articles 2, no. 1, al. a) and 10, no. 1, al. a) of Decree-Law nº 10/2011, of 20 January (Legal Framework for Arbitration in Tax Matters, hereinafter RJAT), and articles 1 and 2 of Order nº 112-A/2011, of 22 March, in which the Tax and Customs Authority (hereinafter AT) is the Respondent, with a view to the declaration of illegality of the assessment of Municipal Tax on Onerous Transfers of Real Estate (hereinafter IMT), in the amount of € 575,250.00, carried out by the Tax Service of ..., and respective compensatory interest, of € 219,057.04, totaling € 794,307.04, relating to the purchase of real estate effected by B... on 30.12.2009.
The request for constitution of the arbitral tribunal was accepted by the President of CAAD and followed its normal processing.
The collective arbitral tribunal was constituted on 14 November 2018.
2. To support the request for arbitral decision, the Claimant presented, in summary, the following argumentation:
2.1. The notification addressed to a legally non-existent entity for several years is null for impossibility of its object/passive subject, pursuant to article 161, no. 2, al. c), of the Code of Administrative Procedure (hereinafter CPA).
2.2. Furthermore, "The tax act in question is not dated, and therefore, for this reason also, it is null, pursuant to the combined articles 151, no. 1 f) of the CPA and 161, no. 2 g) of the same legal instrument."
2.3. Moreover, at the time of notification, the right to assess the tax would have already expired, pursuant to article 35, no. 1, of the IMT Code (CIMT), in the applicable wording ("Tax can only be assessed in the eight years following the transfer or the date on which the exemption ceased to have effect, (…)") and article 45 of the General Tax Law (hereinafter LGT).
2.4. This is because, it is alleged, "as the IMT assessment was received in late March 2018, it is manifest that more than 8 years have elapsed from the date of the real estate transfer in question (tax fact), 30.12.2009."
2.5. The Tax Service "partially based the IMT assessment on a circular letter from 1991 (circular letter nº D-2/91, of 17 June), according to which the AT only 'allowed' the maintenance of IMT exemption if the transformation/alteration of the real estate had resulted in subdivision of rural property or in lease."
2.6. But the Claimant alleges that it is unaware of such circular letter, and contends that it cannot be valid for the application of IMT, since such tax did not exist in 1991.
2.7. Such understanding being, in any case, not binding on private parties and even less so on the courts.
2.8. Moreover, given the subject matter in question, relating to objective tax incidence and tax benefits, both "essential elements of taxes" [article 103, no. 2 of the Constitution of the Portuguese Republic (CRP)], this would imply violation of the principle of legality to which the Administration is constitutionally bound.
2.9. And therefore, "the purported circular letter invoked by the SF/AT, in addition to being illegal due to lack of authority to create rules of tax incidence or concerning tax benefits, would be unconstitutional and illegal due to abusive distortion of the principles underlying taxation according to actual income."
2.10. Adding, on the other hand, that "It is not understood how subdivision of property would not constitute a change of destination of the real estate (maintaining the exemption from IMT on acquisition for resale), whereas its purported annexation would constitute a change of destination of the real estate (causing the exemption from IMT on acquisition for resale to lapse)", since "one and the other operations have exactly equal nature, merely of opposite 'direction': in one case it is a question of dividing a property; in the other of annexing it."
2.11. It also alleges that "it did not receive any assessment of compensatory interest", having only received the IMT assessment.
2.12. By which "If by chance it exists, naturally the respective calculation operations and determination are unknown (rate used, calculation period and calculation basis), grounds of fact and law, in violation of articles 35, no. 9 of the LGT, 77, nos. 1 and 2 of the LGT, 153, nos. 1 and 2 of the CPA and 268, no. 3 of the CRP."
2.13. "Consequently, the assessment of any CI [compensatory interest], in the present case, is null, legally non-existent or legally ineffective, as results from the provisions of articles 161, no. 2 g) and l) of the CPA, 36, nos. 1 and 2 of the CPPT and 77, no. 6 of the LGT."
2.14. "Or, at least, if it exists, it must be annulled due to defect of lack of grounds – by reason of omission of the respective calculation operations and determination (rate, calculation period and calculation basis), and omission of the corresponding grounds of fact and law, in violation of the aforementioned legal provisions."
2.15. Furthermore, "the destination, use, nature and application that B... always gave to the real estate in question never changed, between the date of its acquisition (intended for resale), in 2009, and the date of its resale, 2012."
2.16. And "these always remained exactly the same, without any transformation or annexation (or any other modification), between the date of their purchase (2009) and the date of their resale (2012)."
2.17. "What occurred was simply a mere alteration in the registration numbering of the real estate in question – that is, a mere formal tax alteration."
2.18. "In the case of the real estate of ..., the substitution of registration of two registration articles (1 rural and 1 urban) by 1 single urban article resulted from an order of the SF, which required the presentation of a model 1 declaration."
2.19. "In fact, on 15.02.2011, the SF of ... notified B... to register the entire property as urban, in accordance with the Portuguese Geographic Institute (IGP), and to present the respective model 1 declaration of the IMI".
2.20. "Likewise in the case of the real estate of ... there occurred a mere alteration in the registration numbering – that is, a mere formal numerical registration alteration."
2.21. "That is, a mere substitution of 4 registration articles (2 rural and 2 urban) by 1 single registration article, urban - without any physical alteration, of nature, destination or application of the real estate (or any other alteration)."
2.22. "The SF made the IMT assessment exclusively on the basis that a formal alteration occurred in the numbers of the registration entries between the moment of purchase and the moment of sale of the real estate in question."
2.23. "In doing so, the SF/AT incurred in violation of the principle of the inquisitorial system and the discovery of material truth."
2.24. Since the tax is not due, compensatory interest is not due.
2.25. In any case, there would never be any ground for censure, on the grounds of fraud or negligence, in the conduct of the Claimant, or its predecessor, and it cannot be imputed to it any delay in the assessment of the tax.
2.26. As the undue IMT assessment was partially paid by way of compensation, the Claimant has the right to compensatory interest, pursuant to articles 43 and 100 of the LGT.
2.27. And "Given that the Claimant was forced to provide guarantee for the outstanding unpaid amount, it further has the right to be indemnified for the totality of the expenses incurred with the provision and maintenance of such guarantee, pursuant to articles 171 of the Code of Tax Procedure and Process (CPPT) and 53 of the LGT."
2.28. It concludes by requesting the declaration of nullity or annulment of the IMT assessments and compensatory interest, with restitution of the totality of the tax paid, the payment of compensatory interest, indemnification for the totality of the expenses incurred with the provision and maintenance of the guarantees provided and the "payment of the arbitration fee and other charges, if any."
3. The AT responded, by way of opposition, contending that the request should be judged unfounded, insofar as, essentially:
3.1. As to the notified entity, although "by oversight the assessment was issued in the name of the extinguished company, it was sent to the address of the tax representative of the aforementioned company."
3.2. That "the company continued to exercise acts, having requested from the tax enforcement body the provision of guarantee with a view to the suspension of the tax enforcement proceedings."
3.3. As to the lack of date, "although it may be alleged that the act is not dated, it emerges clearly that the Claimant had full knowledge of the date of its issuance."
3.4. That "if a defect exists that affects the act, such could never result in its nullity, but merely in irregularity."
3.5. That "The jurisprudence of the Administrative Contentiousness Section of the Supreme Court of Justice (STA) has formed a solid orientation to the effect that formal defects do not necessarily impose the annulment of the act to which they relate and that essential procedural formalities are downgraded to non-essential if, despite them, satisfaction was given to the interests that the law had in mind in providing for them". –
3.6. That "it is unquestionably established that the date of the assessment constitutes, in the present case and at most, a mere curable irregularity, especially since the Claimant had full knowledge of the date of notification of the assessment."
3.7. As to the allegation of expiration invoked, "the exemption ceased to have effect with the resale of the real estate in December 2012."
3.8. That "from that date (December 2012) the 8-year period mentioned in article 35 of the CIMT began, in order to proceed with the assessment of the tax."
3.9. As to the invocation of the circular letter, "the explanation in the letter in question is limited to the enumeration, by the Respondent and in light of the interpretation of the law, of the circumstances in which there is no loss of exemption because it does not constitute a different destination from resale, postulating and clarifying the situations in which the real estate does not constitute a different destination for resale".
3.10. That "the understanding propounded by the Claimant is manifestly unfounded, the assessment act relating to the application of Circular nº 7/2004 of the DSIRC not suffering from any unconstitutionality or illegality."
3.11. As to compensatory interest, "the Claimant was duly notified of the grounds of the compensatory interest upon receipt of Letter nº ... of 2018-03-19, which states that they are 'Compensatory interest: due for delay in the IMT assessment under articles 33 of the CIMT and 35 of the General Tax Law (LGT), calculated from the expiry of the deadline for requesting IMT assessment (2012-08-05 for the first four properties and 2011-03-17 for the last two properties) until the date on which the omission was remedied at the rate equivalent to the rate of legal interest fixed pursuant to no. 1 of article 559 of the Civil Code'.".
3.12. That "integrating compensatory interest the very debt of the tax, it is established that the Claimant was duly notified upon notification of Letter nº... of 2018-03-19."
3.13. As to the alterations to the real estate of ..., "the notification made by the Tax Service of ... had as its object a technical opinion promoted by the Portuguese Geographic Institute, having concluded that the rural property lost its agricultural effectiveness and, for that purpose, should be registered as urban property."
3.14. That, therefore, "the arguments that it was the Tax Service of ... itself that promoted, without more, the registration of the rural property as urban are unfounded."
3.15. As to the understanding adopted in the IMT assessment, "the Circular Letter D-2/91, of 17 June, in its no. 2 considers not to constitute a different destination from that of resale and, for that reason, not to lead to the loss of the tax exemption, only two situations: that of subdivision of rural property, with its subsequent sale by lots, and lease alone."
3.16. That "the real estate in question were not subject to alteration as to their nature – they were acquired in a certain state (urban and rural) – and they were subsequently transformed (annexed) giving rise to two new urban articles, which were subsequently sold."
3.17. That "This transformation constitutes a different destination from that on which the benefit of IMT exemption was based, provided for in article 7 of the CIMT, leading to the expiration of such exemption, under no. 5 of article 11 of the CIMT".
3.18. That "the legislator exempts the reseller from the payment of IMT, because the goods are not intended for him/her, however it taxes him/her under income tax (IRC/IRS)."
3.19. That "The law establishes a set of requirements for the scheme of IMT exemption of properties acquired for resale, which constitute mechanisms to prevent its abusive use and the practice of tax fraud operations."
3.20. That "any fact that evidences deviation from the purpose that justifies the same constitutes a resolutory condition of the benefit, emphasizing that this only acts provided that the properties acquired for resale are subject to such destination within three years from the date of acquisition, in the conditions in which they were at the time they were acquired by the resale company (i.e., that the properties are resold in the state and conditions in which they were acquired)."
3.21. As to the real estate of ..., "from consultation of the computer application relating to the property register, it is verified that the properties underwent substantially an alteration as to their nature, in particular, the urban articles ...º and ...º and the rural articles ...º and ...º, of the extinct parish of ... (municipality of ...), were annexed by the Claimant on 2012-07-06, through the model 1 declaration of the IMI with registration nº..., and gave rise to the urban article ... of the same parish, with a total area of 15,950 m2 and the application of warehouses and industrial activity, this latter article having been transferred on 2012-09-25 to C... ."
3.22. That, thus, "the real estate in question were altered as to their nature and, for that purpose, the requirements of the benefit of IMT exemption, provided for in article 7 of the CIMT, are not met, leading to the expiration of such exemption under no. 5 of Art. 11 of the CIMT."
3.23. As to the lack of notification of the assessment of compensatory interest, "the Claimant was duly notified of the grounds of the compensatory interest, upon receipt of Letter nº ... of 19.03.2018, which states that 'Compensatory interest: due for delay in the IMT assessment under articles 33 of the CIMT and 35 of the General Tax Law (LGT), calculated from the expiry of the deadline for requesting IMT assessment (2012-08-05 for the first four properties and 2011-03-17 for the last two properties) until the date on which the omission was remedied at the rate equivalent to the rate of legal interest fixed pursuant to no. 1 of article 559 of the Civil Code'.". –
3.24. That "analyzing the assessments placed in issue one notes that all elements relating to the assessment of compensatory interest were notified to the Claimant, namely: the applicable legal provisions, the nature and quantification of the tax act, the taxation period, calculation period, base value, rate and amount of interest determined".
3.25. That "the IMT assessment was carried out due to a fact attributable to the Claimant, given the alteration of the properties and, for that purpose, when the assessment of tax is delayed, interest will accrue to it, without prejudice to the penalty imposed, pursuant to the provision of article 35 of the LGT".
3.26. That "there is fault whenever the conduct of the passive subject integrates the hypothesis of any tax infraction".
3.27. That "Without conceding, let it further be added that, as explained by ANTÓNIO LIMA GUERREIRO, in annotation to article 77 of the LGT, «It has been uniform jurisprudence of the Supreme Administrative Court (followed from the Judgment of 11 December 1991, appeal 11897), that the failure to notify the grounds does not affect the legality of the act. It is an element external to the act and not a requirement of its perfection. The failure to notify the grounds leads only to the consequence provided for in article 37 of the CPPT (article 22 CPT, at the time of the facts), under which, if the notification does not contain all the requirements provided for in the law, the interested party may request notification of those that have been omitted or a certified copy containing them, free of any charge, with the deadline for complaint, appeal or judicial challenge to commence only from notification of the omitted facts or the certified copy containing them.»"
3.28. That "In the same sense, the administrative contentiousness section of the STA has formed a solid orientation to the effect that formal defects do not necessarily impose the annulment of the act to which they relate, and that essential procedural formalities are downgraded to non-essential if, despite them, satisfaction was given to the interests that the law had in mind in providing for them". –
3.29. That "Thus, even if the act sub judice suffered from deficiencies at the level of the grounds for the decision – which is only admitted by mere academic hypothesis – such deficiencies would be downgraded to mere non-essential irregularities."
4. By order of 20 January 2019, the production of testimonial evidence was rejected as the question is essentially one of law and the relevant matter of fact requires documentary evidence. In the same order, the meeting provided for in article 18 of the RJAT was dispensed with, the parties were notified to produce successive arguments and 14 May 2019 was designated as the final deadline for the issuance of the arbitral decision.
5. The parties produced written arguments reiterating what was alleged in the previous procedural documents.
II. PRELIMINARY EXAMINATION
The Arbitral Tribunal was duly constituted on the basis of articles 2, no. 1, paragraph a) and 10, no. 1 of the RJAT, and is competent to consider and decide upon the request for arbitral decision.
The parties, who are duly represented, enjoy legal personality and capacity and have standing (articles 4 and 10, no. 2, of the same instrument and 1 of Order nº 112-A/2011, of 22 March).
The proceedings are not affected by any nullities.
It is necessary to decide.
III. GROUNDS
1. Factual Matters
1.1. Established Facts
The following facts relevant to the decision are considered established:
a) B... was extinguished on 25.10.2016, by dissolution and liquidation (doc. 4 attached with the arbitral request and p. 8 Administrative process 1), a fact which is known to the AT (doc. 3 attached with the arbitral request).
b) It appears from the AT's Portal for B... that this entity ceased its activity in October 2016 as well as that a tax representative, D..., was appointed, with no record of any residence of this representative different from the registered office of company B..., in Rua ..., nº..., ..., ..., Porto.
c) The minutes of B..., which approved the closure of liquidation, inserted in document 4 attached by the Claimant, also approves the designation of the aforesaid tax representative, D..., assigning to him a professional domicile coinciding with that of the registered office of company B....
d) On 26 March 2018, an IMT assessment in the amount of € 575,500.00 was sent to the registered office of the Claimant, although addressed to B..., pursuant to article 18, no. 3 of the CIMIT, on the grounds of no. 5 of article 11 of the same instrument (doc. 1 attached with the arbitral request).
e) There were at issue 6 urban and rural registration articles listed in the aforementioned letter: ... of the municipality of ..., of the extinct parish of ... (articles ...º and ...º urban, intended for a construction site, warehouses and industrial activity; articles ...º and ...º rural) and ... of the municipality of ..., parish of ... (article...º rural; urban land with 33,720 m2 carved out of the rural article ...º, section...) (doc. 10 attached with the arbitral request and Administrative process 2).
f) The real estate corresponding to these registration articles were purchased by B... on 30 December 2009, and were intended for resale (point E.3, p. 9 of doc. 6 and doc. 9 attached with the arbitral request).
g) Because they were acquired for resale, these real estate benefited on 30 December 2009 from IMT exemption, pursuant to article 7 of the IMT Code (point F, p. 9 of doc. 6 attached with the arbitral request).
h) The real estate in question are two warehouses of large dimensions, intended for industrial activity, one in the municipality of ..., another in the municipality of ... each composed of a covered area and an uncovered area (docs. 8, 10 and 11 attached with the arbitral request).
i) The real estate were always recorded in the sphere of B... in "inventories", that is, as goods purchased for resale (doc. 9 attached with the arbitral request).
j) In relation to each of them there occurred an alteration in the registration numbering (doc. 10 attached with the arbitral request).
k) In the case of the real estate of ..., the substitution of registration of the two registration articles referred to (1 rural and 1 urban) by 1 single urban article - ... of the parish of ...-, with the area of the former rural article becoming part of the curtilage of the new urban article, resulted from notification of the Tax Service of ..., on the basis of an opinion of the Cadastral Geographic Institute, to present a model 1 declaration (doc. 12 and 13 attached with the arbitral request).
l) The destination given to the property (to the 8,100 m2 of the urban part and to the 33,720 m2 of the rural part) was maintained after its registration in a single registration article –... of the parish of ... (8,100 m2 of building footprint plus 33,720 m2 of curtilage) (docs. 10 and 11 attached with the arbitral request).
m) In the case of the real estate of ..., the alteration in the registration numbering implied the substitution of the 4 registration articles (2 rural and 2 urban) by 1 single urban registration article – article..., currently, article ...º, of the extinct parish of ... (docs. 10 and 11 attached with the arbitral request).
n) The said real estate were sold in 2012, before three years had passed from the exemption: in September 2012, that of ... and, in December of that year, that of ... (doc. 7 attached with the arbitral request).
o) The assessment was partially paid by way of application/compensation of tax credits from special payments on account to be returned to B..., in the total amount of € 56,870.07 (doc. 2 attached with the arbitral request).
p) For the remainder, guarantee was provided, through pledge of shares, in the tax enforcement proceedings arising from the assessments now being challenged (doc. 3 attached with the arbitral request).
1.2. Unproven Facts
There are no other facts with relevance for the consideration of the merits of the case that have not been established.
1.3. Grounds for the Determination of Factual Matters
The established facts are based on the free assessment by the Tribunal of the position of the parties, on the documents attached by the parties and other documentation contained in the administrative file.
2. Matters of Law
The Claimant requests the declaration of illegality of the assessment acts which are the subject of the challenge, with the following grounds:
- Nullity for impossibility of its object/passive subject of the notification made to an extinguished company;
- Nullity for lack of date in the IMT assessment act;
- Illegality for expiration pursuant to articles 35, no. 1, of the CIMT and 45, no. 1, of the LGT;
- Illegality for error as to the assumptions of fact and law of the interpretation of articles 7, no.1, and 11, no. 5, of the CIMT;
- Illegality for unconstitutionality of the establishment of criteria of tax incidence through an administrative circular, with violation of the principles of legality, typicality and reservation of law;
- Illegality for violation of the principles of the inquisitorial system and discovery of material truth;
- Inexistence/illegality of compensatory interest.
The Tribunal will pronounce itself on the defects alleged, beginning with those that imply nullity, followed by the others that imply annulment of the assessment.
A. As to the Nullity of the Assessment for Notification to a Legally Non-existent Company
The Claimant alleges that the notification of the assessment is null for being addressed to a non-existent entity – B...S.A..
Indeed, the notification was addressed and received by B..., through Letter nº ... of 19-03-2018 (Doc. 1 attached by the Claimant), which was sent to the address of this B....
It is this Letter, addressed to B..., which contains the aforementioned IMT assessment, here being challenged.
Pursuant to the documents attached to the file by the Claimant, B... was extinguished on 25.10.2016, by dissolution and liquidation, as evidenced by the attachment by the Claimant of document 4. This document incorporates the minutes of closure of liquidation, confirming the absence of liabilities and the transmission to the Claimant, A... S.A., holder of 97.5% of the capital stock of B... at the time of dissolution and closure of liquidation, of the remaining assets. And this is known to the AT, as evidenced by the document extracted from the Commercial Registry and declaration of cessation of activity, which corresponds to document 5.
It appears from the AT's Portal for B... that this entity ceased its activity in October 2016, as well as that a tax representative, D..., was appointed, with no record of any residence of this representative different from the registered office of company B..., in Rua ..., nº..., ..., ..., Porto.
Moreover, the minutes of B..., which approved the closure of liquidation, inserted in document 4 attached by the Claimant, also approves the designation of the aforementioned tax representative, D..., assigning to him a professional domicile coinciding with that of the registered office of company B....
For its part, the Claimant, which succeeded B..., company in which it held 97.5% of the capital stock, likewise has its registered office at the same address: Rua..., nº..., ..., ..., Porto.
Article 18, no. 3 of the General Tax Law qualifies as a passive subject the natural or legal person, patrimony or organization of fact or law which, pursuant to the law, is bound to comply with the tax obligation, whether as direct contributor, substitute or liable party.
Article 147, no. 2 of the Commercial Companies Code (CSC) provides that tax liabilities still not yet due on the date of dissolution do not preclude distribution pursuant to no. 1, but for such liabilities all shareholders become unlimited and jointly liable, although they may, in any form, reserve the amounts they estimate for their payment.
Now, article 147, no. 2, of the CSC establishes a compromise between the interests of the Public Treasury and those of shareholders. The existence, on the date of dissolution, of tax liabilities still not yet due does not preclude immediate distribution of the corporate assets, contrary to what occurs with the existence on that date of tax liabilities already due or non-tax liabilities, whether due or not. In return, the liability for tax liabilities still not yet due extends to all shareholders, unlimited and jointly, therefore much more heavily than what is established in article 163 of the CSC, for subsequent liabilities.
Having ascertained and confirmed the tax liability of the Claimant, as shareholder of B..., let us examine whether a valid notification was effected.
Notification was made through Letter and by registered mail.
The notification was sent to the registered office of B..., which is the current registered office of the Claimant, which succeeded B... and also the registered office or professional domicile of the tax representative designated by B..., pursuant to the minutes of its appointment in 2016.
It is true that B... had an obligation to appoint a tax representative and that it did so and that the AT's notification was not made in the name of the latter. Given that its existence would require that it could and should receive notifications from the AT since it is ultimately a figure with non-negligible contours in the relationship between the represented party and the Tax Administration.
However, in the present case, it was incumbent on the Tax Administration to notify the company, as a passive subject, of the IMT assessment identified as a result of the inspection action it conducted, since, as is well known, notifications are intended to give notice of facts to those who may be affected by them, and they follow a formalism designed with the intention that this objective, in which it is fundamentally exhausted, be achieved.
In the situation under analysis, the Tax Administration notified the passive subject, which became aware of such notification, and which is the Claimant having succeeded B....
Indeed, the Claimant also does not assert, at least expressly, that it did not become aware of such notification, but merely that the same was made to an extinguished entity, having no virtue to produce its effects.
However, such notification was validly effected to the shareholder who succeeded B..., the Claimant, at the address of the latter which is also the address of the tax representative, and, consequently, with immediate repercussions in its legal sphere.
And, in such circumstances, it becomes clear that the notification of the additional IMT assessment produced all its effects in the legal sphere of the Claimant on the date it was received.
In view of the foregoing, this ground of invalidity claimed against the assessment now being challenged is unfounded.
B. As to the Nullity of the Assessment for the Tax Act Not Being Dated
The Claimant alleges that the official assessment act is not dated pursuant to articles 151, 1 and 162, 2 g) of the CPA.
Now the notification is made through Letter nº ... dated 19-03-2018.
This Letter was sent by registered mail with the Claimant having noted by hand that it was received on 26-03-2018.
Document 1 attached by the Claimant, which constitutes the Letter through which the official IMT assessment was made, includes the envelope indicating that it was sent with Registered Receipt on 19-03-2018.
Even if the said tax act lacked a date, the fact is that such omission, if it existed, could not lead to its nullity by virtue of an essential formal defect.
Indeed, as reflected upon by Mário Esteves de Oliveira and Others (Code of Administrative Procedure, 2nd ed., Almedina, 1997, pp. 586-7) considering the relevance of this mention, especially for determination of the beginning of the effects of the act, for the counting of expiry deadlines, etc., it seems more proper to consider it "as the determining moment of the efficacy of the act than as a condition of its legal validity (…)".
Now, in the case, it is not questioned that the alleged omission, if it existed, would have had any repercussions as to the beginning of its efficacy.
In view of the foregoing, the allegation of nullity of the assessment for this reason is to be considered unfounded.
C. As to the Alleged Expiration of the Assessment
At issue are the 6 urban and rural registration articles listed in the aforementioned letter: 4 from the municipality of ... (articles ... and ...º urban, intended for a construction site, warehouses and industrial activity; articles ...º and ...º rural); 2 from the municipality of ... (article... rural; article ...º urban, urban land with 33,720 m2). These registration articles were purchased by B... on 30.12.2009, intended for resale (cf. doc. 6 attached with the arbitral request).
Because they were acquired for resale, these real estate benefited on 30.12.2009 from IMT exemption, pursuant to article 7 of the CIMT.
For maintenance of such IMT exemption, the real estate purchased for resale should be resold within 3 years, as was and is provided for in article 11, no. 5, of the CIMT.
According to the SF of ..., "B) Having consulted the computer application relating to the property register, it is verified that the said properties underwent substantially an alteration as to their nature, namely:
B.1) The urban articles ...º and ...º and the rural articles ...º and ...º, all of the extinct parish of..., municipality of ... (...), were annexed by the purchaser (B..., SA) on 2012-07-06, through the model 1 declaration of the Municipal Property Tax (IMI) with registration nº..., and gave rise to the urban article ...º of the same parish, with a total area of 15,950 m2 and the application of warehouses and industrial activity. This latter article is what was transferred on 2012-09-25 to C..., NIF...; B.2) The urban article ...º and the land with 33,720 m2 (…), both of the parish of..., municipality of ... (...) were annexed by the purchaser (B..., SA) on 2011-02-15, through the model 1 declaration of the Municipal Property Tax (IMI) with registration nº..., and gave rise to the urban article ...º of the same parish, with a total area of 41,820 m2 and the application of warehouses and industrial activity. This latter article is what was transferred on 2012-12-28 to E..., SA, NIF... .
That is, according to the SF of ..., the real estate purchased by B... on 30.12.2009, for resale, were allegedly subject to transformation/substantial alteration of their nature and destination, by reason of their alleged annexation, and are therefore formally substituted by registration articles with different numbering, such transformation having occurred in one case in 2012 and in another case in 2011.
The said real estate were subsequently resold within the aforesaid 3-year period, in September (real estate of ...) and December 2012 (real estate of...) (cf. doc. 7).
Pursuant to article 35, no. 1 of the CIMT, in the applicable wording, "Tax can only be assessed in the eight years following the transfer or the date on which the exemption ceased to have effect, without prejudice to what is provided for in the following number and, as to the remainder, in article 46 of the General Tax Law.".
According to the Claimant, the tax fact occurred on 30-12-2009.
Now, as the IMT assessment was received in late March 2018, for the Claimant it is manifest that more than 8 years have elapsed from the date of the real estate transfer in question, 30.12.2009.
By which it requests that the IMT assessment (and the inherent JC) be annulled for expiration, pursuant to articles 35, no. 1, of the CIMT and 45, no. 1, of the LGT.
The question which arises is whether the expiration period should begin to run from the beginning of the year following the year in which the tax fact occurred (30-12-2009) - date of the deed of acquisition of the real estate, or from the date of the finding of non-compliance with the conditions to which the granting of the exemption was subordinated, namely the obligation to resell the property within three years or the attribution of a different destination.
This alleged different destination having been attributed in the years 2012 and 2011, with the alteration of the rural/urban qualification in the register, as verified by the Tax Service of....
On this question there was divergent jurisprudence of the STA.
In the Judgment of the STA of 26/10/2011, Proc. nº 0354/11, following jurisprudence set out in the Judgment of the Full Bench of the Tax Contentiousness Section of 24/2/2010, Proc. nº 0873/09, the thesis was adopted that "the relevant period, for the purpose of determination of expiration or prescription, should be counted, unless provided otherwise by special law, in taxes of single obligation, from the date on which the tax fact occurred (no. 1 of article 48 of the LGT), and not from the date of the declaration of revocation of the exemption."
However, in the Judgment of the STA of 8/6/2011, Process nº 0174/2011, it was contended that: "While it is not possible for the AT to assess the tax, the period of prescription cannot begin to run, as it only begins to run when the right can be exercised, pursuant to what is provided for in article 306 of the CC" (cf. Jurisprudence reiterated, inter alia, in the Judgments of the STA, of 26/5/2010, Appeal nº 211/10 and of 22/9/2010, Appeal nº 383/10).
A decision must be made on this point.
On the one hand, expiration is based on the need to ensure certainty and legal security of legal relationships, and, on the other, prescription is based on the inertia of the title holder; both periods should, logically, begin to run only at the moment when the obligation to pay the tax and/or the right to recover it can be exercised (cf. VAZ SERRA, "Prescription and Expiration", BMJ, 1961, p. 190).
This is also the view of J. Silvério Mateus and Leonel Corvelo de Freitas in "Taxes on Real Estate Property | Stamp Duty", in commentary to article 35 of the CIMT, "(…) In such cases, the period of expiration of the right to assess commences on the date on which the exemption ceases to have effect".
This is precisely what is provided for in the present no. 1 of article 35 of the IMT Code, that the counting of the expiration period commences from the date of the transfer or the date on which the exemption ceased to have effect.
In fact, the tax relationship is constituted by the tax fact and its essential elements cannot be altered by the will of the parties (article 36, nos. 1 and 2, of the LGT).
In cases of expiration of the exemption, the tax fact occurs on the date on which the exemption ceases to have effect, as is inferred from no. 1 of article 35 of the CIMT.
The expiration of the exemption occurs "as soon as it is verified that the properties acquired for resale were given a different destination", with what results from what is provided for in article 11, no. 5, of the CIMT.
In the case in question, the period for the AT to exercise its right to assess IMT can only begin to run from the date on which it is allegedly stated that a different destination was given to the properties acquired on 30-12-2009, which are the year of 2011 or the year of 2012, as was verified.
In view of the foregoing, given that the assessment took place in March 2018, the Claimant's claim as to the expiration of the right to assess such IMT cannot be upheld.
D. As to the Illegality of the Assessment for Error in the Assumptions of Fact and Violation of Articles 7, no.1, and no. 5, of Article 11 of the CIMT
The question in issue revolves around the meaning and scope of no. 5 of article 11 of the CIMT, which has the following content: "the acquisition referred to in article 7 shall cease to benefit from exemption as soon as it is verified that the properties acquired for resale were given a different destination or that the same were not resold within three years or were again resold for resale".
More specifically, only the meaning and scope of the phrase: if the properties in question were given a "different destination," in terms of having ceased to meet the conditions of the exemption, is at issue.
According to the Respondent, following the doctrine of Circular Letter D-2/91, of 17 June, which in its no. 2 considers not to constitute a different destination from that of resale and, for that reason, not to lead to the loss of the tax exemption, only two situations: that of subdivision of rural property, with its subsequent sale by lots, and lease alone, it concludes that the exemption was lost.
Indeed, in its view, the properties in question underwent alteration as to their nature – they were acquired in a certain state (urban and rural) – and they were subsequently transformed (annexed) giving rise to two new urban articles, which were subsequently sold.
This transformation constitutes, for the Respondent, a different destination from that on which the benefit of IMT exemption was based, which only applies provided that the properties are in the same conditions as they were at the time they were acquired for resale, leading to the expiration of such exemption, under no. 5 of article 11 of the CIMT.
In the opposite sense, it is alleged by the Claimant, for its part, that "the destination, use, nature and application that B... always gave to the real estate in question never changed, between the date of its acquisition (intended for resale), in 2009, and the date of its resale, 2012.
Indeed, the same always remained "exactly the same, without any transformation or annexation (or any other modification), between the date of their purchase (2009) and the date of their resale (2012)",(…) with only "a mere alteration in the registration numbering of the real estate in question – that is, a mere formal tax alteration."
"In the case of the real estate of ..., the substitution of registration of two registration articles (1 rural and 1 urban) by 1 single urban article resulted from an order of the SF, which required the presentation of a model 1 declaration".
"Likewise, in the case of the real estate of ... there occurred a mere alteration in the registration numbering – that is, a mere formal numerical registration alteration."
"That is, a mere substitution of 4 registration articles (2 rural and 2 urban) by 1 single registration article, urban - without any physical alteration, of nature, destination or application of the real estate (or any other alteration)."
In sum, according to the allegation of the Claimant, the illegality results from the fact that the IMT assessment is based exclusively "on the fact that a formal alteration occurred in the numbers of the registration entries between the moment of purchase and the moment of sale of the real estate in question."
Let us examine this.
Article 7 of the IMT Code, under the heading "Exemption for the acquisition of properties for resale", provides, in its no. 1, that "Acquisitions of properties for resale (…), relating to the exercise of the activity of buyer of properties for resale, are exempt from IMT".
And, pursuant to the provision of article 11, no. 5, "The acquisition referred to in article 7 shall cease to benefit from exemption as soon as it is verified that the properties acquired for resale were given a different destination (…)".
The scheme that was already provided for, with identical contours, in article 11, no. 3 of the Code of Municipal Tax on Transfers and Tax on Inheritance and Donations ("Sisa Code"), according to which acquisitions of properties for resale (…), relating to the exercise of the activity of buyer of properties for resale, were exempt from sisa, with such exemption expiring by virtue of article 16, no. 1, as soon as it was verified that "the properties acquired for resale were given a different destination (…)".
As to the meaning and scope of the expression "different destination" the jurisprudence of the STA, in the context of the application of the Sisa Code (which does not differ from the present IMT Code in what this matter is concerned), considered as such the completion of the construction of an urban property: "It commits the transgression (…) if, having purchased, with sisa exemption, a plot of land where an urban property was being constructed, it completes the construction thereof and proceeds to its sale, even if within the period of two years, without paying the sisa corresponding to the purchase of the land, given that the accused had ceased to benefit from the exemption granted, for not having resold the land in the state in which it had acquired it." – cf. Judgment of the STA, process nº 016153, of 27 May 1970.
In another decision, the STA held that "the sisa exemption granted to acquisitions of properties for resale lapses when the real estate are not resold in the state in which they were acquired", it not being important, however, "modification of such state the works done by the buyer from which no substantial alteration of the external structure or internal arrangement of the divisions of the buildings results" – cf. Judgment of the STA, process nº 016253, of 16 May 1973.
This line of jurisprudence, according to which, it must be repeated, the exemption was excluded in cases where the company purchased land on which an urban property was already being constructed and completed its construction and proceeded to its sale, on the grounds that the plot of land was not being resold in the state in which it had been acquired, was definitively rejected by the Judgment of the Full Bench of the Tax Contentiousness Section of the Supreme Administrative Court, issued on 26 January 2005, in process nº 0798/04.
Underlying this new line of jurisprudence was a situation in which the disputed question was whether, in the case of a company having acquired for resale a plot of land with a property under construction, still unfinished, to be completed, in which a building intended for housing was being constructed, and then having proceeded with the necessary civil construction works for the completion of the property there existing, unfinished, and for the subsequent establishment of condominium property, and for the sale of the respective autonomous units, constitutes a deviation from the declared purpose in the acquisition act (resale) the fact that it had proceeded to complete the unfinished building there existing, with performance of all the necessary finishing and improvement works of the building, and to the subsequent establishment of condominium property and sale of the respective autonomous units.
In the decision under examination, reaffirming jurisprudence previously upheld by the Full Bench of the Tax Contentiousness Section on 10-11-1982, in rec. nº 001730, and also, on 23-02-2000, in rec. nº 018135, it was established that only a "substantial alteration of the property, namely the transformation of land into urban property, through the construction of a building subsequently sold or the demolition of a house and subsequent sale of the land for construction" constitutes a different destination, with the circumstance that the property acquired (land with a residential building under construction), still unfinished, was resold in a state different from that in which it was acquired by reason of the works for completion of the construction of the building, as well as by reason of the establishment of condominium property of such property and resale of the respective autonomous units, not representing a different destination.
It was equally established that "it does not prevent the exemption the fact that the property is not yet fully constructed: what was acquired was a 'plot of land with a property under construction, still unfinished, to be completed'."
More recently, this jurisprudence was reaffirmed in the Judgment of the Full Bench of the Tax Contentiousness Section, of 17 September 2014, process nº 01626/13, where it can be read, inter alia, that "(…) the thesis that properties must be resold in the exact state in which they were acquired does not find, as was already well referred to in that judgment of the STA of 23-02-2000, the slightest support in the text of the law.
«No allusion was made, therefore, here by the law to the coincidence between the state of the properties at the moment of acquisition and at the subsequent moment of resale". We therefore hold that the 2nd instance was right in proclaiming that from said article 16, no. 1, "it does not result that the reseller only benefits from the exemption when reselling the property in the state in which he/she acquired it. What he/she has to do is resell it within two years, regardless of the state in which the property was when he/she bought it and the state in which it was when he/she resold it"».
"For the purposes of expiration of tax exemption, it does not matter whether or not the real estate is resold in the precise and exact state in which it was acquired; what matters is that there is no metamorphosis or substantial alteration of the property acquired for resale. By which if this is constituted by land with a residential building already under construction, the works done by the buyer for the finalization of such construction, in such a way as to sell the land with the building already completed (or to sell its autonomous units), does not represent a transfiguration or substantial alteration of the application of the property acquired for resale, does not represent, in sum, a 'different destination' from resale of the property acquired.
"Just as was highlighted in the foundation judgment, for the said purposes only a 'substantial alteration' of the property acquired constitutes a different destination, namely the transformation of a rural property into urban property (by the purchase of land and subsequent construction thereon of a building for sale) or the demolition of a residential house and subsequent sale of the land for construction, with the circumstance that the property acquired (land with a residential building still unfinished) was resold in a state different from that in which it was acquired by reason of the works for completion of the building, the establishment of condominium property and resale of the respective autonomous units, not representing a different destination.
"Consequently, only in cases where the residential building acquired under construction is subject to works to achieve an application or use completely distinct (as would happen in the case of it being altered to an industrial, commercial or school building, which imply works of profound transformation and a mutation capable of configuring a substantial alteration of the real estate, namely in terms of use) or in cases where, even while maintaining residential application, the building is subject to substantial works that transform it into something quite different from what was contained in the building license in force at the time of acquisition, is it possible to state that the works performed by the acquirer are capable of diverting the declared destination: - resale of land with the residential building thereon implanted under a certain project and building license), thereby integrating the legal concept of 'different destination'."
"This position corresponds, moreover, to that which had already been assumed, in the context of stamp duty, by the Tax Administration itself, as can be seen from reading the Order of the Management Department for Stamp and Patrimony Transfer Taxes, of 13-09-1995, published in CTF nº 380, p. 490, with the following content: «The basis of the exemption in no. 3 of article 11 is based on the fact that the properties acquired remain in the interchangeable assets, as goods of companies taxed by the exercise of the activity of acquisition of properties for resale, such characteristic not being affected by the completion of the properties acquired, still under construction, and by the subsequent establishment of condominium property»".
"The completion of the construction, in accordance with the approved project, did not substantially alter the nature of the property acquired, the same occurring after the establishment of condominium property, it being therefore certain that the property acquired for resale indeed had such application, by means of resale thereof, by autonomous units.
"The completion of the construction of an urban property already constructed unfinished and subsequent establishment of the respective condominium property and subsequent resale in autonomous units cannot lead to the loss of said exemption»."
It can also be read in the Judgment of the STA that we are reproducing that this orientation corresponds, also, to that assumed in Opinion nº 119/95 of the Tax Studies Centre, sanctioned by order of 13/09/96 of the Secretary of State for Tax Affairs, according to which the «basis of the exemption [of purchase for resale] in question is based on the fact that the properties acquired remain in the interchangeable assets, as goods of companies taxed by the exercise of the activity of acquisition of properties for resale, such characteristic not being affected by the completion of the properties acquired, still under construction, and by the subsequent establishment of condominium property.(…) the completion of the construction, in accordance with the approved project, did not substantially alter the nature of the property acquired, the same occurring after the establishment of condominium property, it being therefore certain that the property acquired for resale, had indeed such application, by means of resale of the respective autonomous units.»".
The Judgment of the STA which we have been reproducing dealt, in conflict of decisions, with the following disputed question: whether the fact that a company had acquired for resale land intended for construction – where a residential building was already being constructed - and had subsequently proceeded with the works necessary for the completion of the construction of that building and the establishment of condominium property and sale of the respective autonomous units, constitutes a deviation from the declared purpose in the acquisition act (resale).
The STA concluded upholding the jurisprudence followed by the Full Bench of the Tax Contentiousness Section of the STA, cited above, of 26/1/2005, according to which "«it does not prevent the exemption the fact that the property is not yet fully constructed: what was acquired … was 'a plot of land with a property under construction, still unfinished, to be completed'". From such it does not result, however, any substantial alteration of its external structure or internal arrangement of the building.
"As is pointed out by Nuno Sá Gomes, in CTF 380, pp. 488 et seq., the basis of the exemption in question is based on the fact that the properties acquired remain, as goods, in the interchangeable assets of the company taxed by the exercise of the activity of acquisition of properties for resale, «such characteristic not being affected by the completion of the properties acquired, still under construction, and by the subsequent establishment of condominium property».
"As, moreover, occurs with the acquisition of rural properties acquired for resale and subsequent subdivision with sale by lots, notwithstanding the numerous works which, in general, such operation implies, from the construction of the road network to basic sanitation.
In contrast to what was held, one is not, thus, facing raw materials acquired for transformation into goods – cf. DL nº 410/89, of 21 November – but rather goods forming part of the interchangeable assets of the company".
«(…) The STA concludes, uniformizing the conflicting jurisprudence in the following terms: "for the purposes of expiration of the municipal tax exemption on onerous transfers of real estate (IMT) which results from the combination of the rules contained in articles 7 and 11 no. 5 of the CIMT (exemption for acquisition of properties for resale), it does not matter whether or not the real estate acquired is resold in the precise state in which it was acquired; what matters is that there is no metamorphosis or substantial alteration of the property acquired for resale. By which if the real estate acquired is constituted by land with a residential building already under construction or remodeling through an approved project (whether unfinished, or in an advanced phase of construction/remodeling), the expression for resale does not require that the real estate be alienated as it existed at the moment of acquisition, instead admitting the possibility of carrying out all the works necessary for the completion of such construction, so as to complete it, license it for the said destination, establish condominium property and alienate the respective autonomous units"».
Having considered and weighed all the above, having outlined the essential features of the applicable tax legal regime, we are in a position to proceed with the framing of the situation submitted to the consideration of this tribunal, on the basis of the factuality acquired procedurally and contained in the evidence.
The essential question is, therefore, to ascertain whether, in the situation of the case, a substantial alteration of the real estate, the acquisition of which was the subject of IMT exemption, occurred, which has determined the diversion of its purpose resulting in the expiration of the exemption pursuant to article 11, no. 5, of the IMT Code.
From reading the grounds for the tax act in question, it is verified that what led to the performance of the act was the interpretation of no. 5 of article 11 of the CIMT followed by the SF of ... and resulting from the application of Circular Letter D-2/91, of 17 July, which, in its no. 2, considers not to constitute a different destination from that of resale and, for that reason, not to lead to the loss of the tax exemption, only two situations: "D1.) The subdivision of rural property, with its subsequent sale by lots; and D.2) Lease alone. (…)."
According to the SF of ..., "the properties in question were not the subject of subdivision, but rather, as has already been said, of alteration as to their nature - they were acquired in a certain state (urban and rural) and they were subsequently transformed (annexed by the purchaser (…), giving rise to two new urban articles, which were subsequently sold. This transformation constitutes a different destination from that on which the benefit of IMT exemption was based, provided for in article 7 of the CIMT, leading to the expiration of such exemption under no. 5 of article 11 of the CIMT".
And this is also the position followed by the Respondent in the response.
It appears that this interpretation involves an error of interpretation of fact and law of the provisions in question, as we proceed to demonstrate.
As results from the evidence, the real estate in question are two warehouses of large dimensions, intended for industrial activity, one in the municipality of ..., another in the municipality of..., with alterations in the registration numbering having occurred in relation to each of them.
In the case of the real estate of ..., the substitution of registration of the two registration articles referred to (1 rural and 1 urban) by 1 single urban article - ... of the parish of ...-, with the area of the former rural article becoming part of the curtilage of the new urban article, such alteration having resulted from notification of the Tax Service of ..., on the basis of an opinion of the Cadastral Geographic Institute, to present a model 1 declaration.
The destination given to the property (to the 8,100 m2 of the urban part and to the 33,720 m2 of the rural part) was maintained after its registration in a single registration article –... of the parish of ... (8,100 m2 of building footprint plus 33,720 m2 of curtilage).
In the case of the real estate of ..., the alteration in the registration numbering implied the substitution of the 4 registration articles (2 rural and 2 urban) by 1 single urban registration article – article ...º, currently, article ..., of the extinct parish of....
As we have seen, according to the uniformizing jurisprudence of the STA mentioned above, "for the purposes of expiration of the municipal tax exemption on onerous transfers of real estate (IMT), it does not matter whether or not the real estate acquired is resold in the precise state in which it was acquired; what matters is that there is no metamorphosis or substantial alteration of the property acquired for resale, in terms that are projected in a subsequent application or use completely distinct."
Thus, bearing in mind the mentioned uniformizing jurisprudence of the STA, it appears that the alterations in the registration numbering of the real estate in question do not constitute physical alterations and much less substantial ones of the real estate, with repercussions on the subsequent application or use thereof.
Indeed, when all is said and done, we are faced with a mere alteration of a legal and formal nature affecting the same physical reality.
Moreover, the argument followed regarding the interpretation of Circular Letter D-2/91 is not understandable. In fact, if it is admitted that this does not give rise to the loss of the exemption, on the grounds that it does not constitute a different destination from that of resale, subdivision of a rural property, then by majority of reasoning the same regime must be admitted to apply to the present case.
This is because a subdivision entails not only alterations in the legal status of the subdivided land but also physical alterations, reflected in the division of the land into lots, as autonomous legal and physical realities. In the present case, there occurred a mere change in registration nomenclature, without any physical alteration of the real estate. We are speaking of modifications that are strictly legal and formal.
Finally, as the Claimant rightly points out, it cannot be conceived that the registration alterations in question are capable of diverting the real estate from their purpose (resale) when it is not minimally questioned that they were acquired by it within the scope of its activity, remaining as interchangeable assets of the company as goods for the development of its activity of purchase for resale.
On the contrary, it results from the evidence that "The real estate were always recorded in the sphere of B... in 'inventories', that is, as goods purchased for resale".
Now, as we saw above, according to the doctrine and jurisprudence mentioned above, the basis of the exemption in question is based on the fact that the properties acquired remain, as goods, in the interchangeable assets of the company taxed by the exercise of the activity of acquisition of properties for resale (…)".
Thus, it is clear that the grounds for the tax acts now being challenged involve an error of appreciation of fact and the applicable law, which makes the assessments now being challenged illegal.
In view of all the foregoing, it is to be judged that the request for arbitral decision is well-founded, with the consequent annulment of the assessments (of IMT and compensatory interest) now being challenged.
2.2. Issues Rendered Moot
Considering that the other defects affecting the assessments now being challenged are productive of mere annulability, in accordance with the provision of article 163, no. 1 of the CPA, being to be judged well-founded the request for pronouncement as to the error of fact and law in the interpretation of articles 7 and 11, no. 5, of the CIMT, which ensures effective and stable protection of the rights of the Claimant, the knowledge of the remaining questions of illegality raised is rendered moot, as being useless (article 130 of the CPC).
3. Indemnification for Undue Guarantee and Compensatory Interest
The Claimant alleges that the assessment now being challenged was partially paid by way of application/compensation of tax credits from special payments on account to be returned to B..., in the total amount of € 56,870.07, by which it requests the return of the tax indevidly paid and compensatory interest.
On the other hand, for the remainder, guarantee was provided in the tax enforcement proceedings arising from the assessments now being challenged, through pledge of shares, all as results from the facts given as established.
Beginning with indemnification for guarantee indevidly provided, its scheme is contained in article 53 of the LGT, which establishes the following:
"Article 53
Guarantee in Case of Undue Payment
1 – The debtor who, to suspend enforcement, offers a bank guarantee or equivalent shall be indemnified totally or partially for the damage resulting from its provision, if it has maintained it for a period exceeding three years in proportion to the outcome of an administrative complaint, challenge or objection to enforcement which has as its object the debt guaranteed.
2 – The period referred to in the previous number does not apply when it is verified, in a gracious petition or judicial challenge, that there was an error attributable to the services in the assessment of the tax.
3 – The indemnification referred to in no. 1 has as its maximum limit the amount resulting from the application to the guaranteed amount of the rate of compensatory interest provided for in the present law and can be requested in the procedure itself for complaint or judicial challenge, or autonomously.
4 – Indemnification for provision of undue guarantee shall be paid by deduction from the receipt of the tax of the year in which the payment was made".
In the case in question, the assessment acts now being challenged, as was demonstrated, are illegal. Moreover, the said tax assessment acts and compensatory interest were of the exclusive initiative of the Tax Administration, with the Claimant contributing in no way to their being effected and, much less, in the manner in which they were.
In this context, although no bank guarantee was provided, pledge of shares was effected, which should be considered equivalent, as is inferred from article 199, no. 4 of the CPPT (…), with a view to obtaining the suspension of the mentioned tax enforcement proceeding.
The provision of guarantee by the Claimant appears, therefore, to be undue, by which the Claimant has the right to be recompensed for the damage which it may effectively suffer with the provision of such guarantee.
There being no elements that allow the determination of the amount of indemnification, the sentence must be made with reference to what is to be determined in execution of the present Arbitral Decision (cf. what is provided for in articles 609, no. 2, of the CPC, applicable pursuant to article 29, no. 1, paragraph e) of the RJAT).
For its part, as to compensatory interest, article 43, no. 1, of the LGT provides that "compensatory interest is due when it is determined, in a gracious petition or judicial challenge, that there was an error attributable to the services resulting in payment of the tax debt in an amount greater than that legally due", with no. 5 of article 61 of the CPPT providing that "interest is counted from the date of undue payment of the tax until the date of processing of the respective credit note, in which they are included".
In the present case, in addition to the assessments now being challenged being illegal, it is verified that the illegality of the same is attributable to the AT for, in those assessments, it having incurred in a defect of violation of law
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