Stamp Tax on Land for Construction Under Verba 28.1 TGIS: CAAD Ruling 455/2014-T

Arbitration Case No. 455/2014-T

Claimant: A

Respondent: TAX AND CUSTOMS AUTHORITY ("AT")

ARBITRAL AWARD

The arbitrator, Dr. Henrique Nogueira Nunes, appointed by the Ethics Council of the Administrative Arbitration Center ("CAAD") to constitute the Arbitral Tribunal, constituted on 2 September 2014, decides as follows:

1. STATEMENT OF FACTS

1.1. A, with tax identification number …, hereinafter referred to as "Claimant", requested the constitution of the Arbitral Tribunal pursuant to Article 2, paragraph 1, subparagraph a) of Decree-Law No. 10/2011, of 20 January (hereinafter "RJAT").

1.2. The request for arbitral decision concerns the declaration of illegality of the stamp tax assessment act better identified under the collection document issued with number …, dated 17.03.2014, in the total amount of € 55,755.50, carried out pursuant to the provision in item 28.1 of the TGIS, relating to the year 2013. Additionally, the Claimant requests reimbursement of the allegedly unduly paid tax and the payment of compensatory interest.

1.3. To support its request, the Claimant alleges, in summary, the following defects:

a) Error in assumptions, by virtue of:

(i) The assessment, by the Respondent, of stamp tax for the year 2013, pursuant to the provision in item 28.1 of the TGIS, is vitiated by illegality, due to error in the assumptions of law resulting from erroneous qualification of the tax fact

(ii) Stamp tax does not apply to any urban property, but only to two types of property, namely those provided for in items Nos. 28.1 and 28.2.

(iii) The stamp tax assessment act, which underlies the qualification of a property with residential use as construction land, in order to include the latter within the objective scope of application of the rule provided for it, suffers from illegality and, as such, should be annulled;

(iv) Also requesting the payment of compensatory interest to be calculated from the date of payment of each of the stamp tax instalments unduly assessed.

1.4. The Tax and Customs Authority responded in the sense that the concept of "properties with residential use", for purposes of the provision in item 28 of the TGIS, comprises an expression "different and broader" covering both constructed properties and construction land without erected construction, but planned for such purpose, concluding for the maintenance of the assessment act.

1.5. The Tribunal deemed it appropriate to dispense with the holding of the first meeting of the Arbitral Tribunal, in accordance with the provision in Article 18 of the RJAT, having heard the parties. No exceptions or preliminary questions were identified, the presentation of arguments was waived, and a deadline was set for the issuance of the arbitral decision by the end of the 6-month period from the date of constitution of the Arbitral Tribunal.

1.6. The Tribunal was regularly constituted and is competent ratione materiae, in accordance with Article 2 of the RJAT.

The parties have legal personality and capacity, show themselves to be legitimate and are regularly represented (cf. Articles 4 and 10, paragraph 2 of the RJAT and Article 1 of Portaria No. 112-A/2011, of 22 March).

No procedural nullities were identified.

1. ISSUE TO BE DECIDED

The dispute in the present proceedings concerns the (strictly) legal question of whether construction land can be qualified as "property with residential use" and, if so, whether it can be included within the objective scope of application of item 28.1 of the TGIS, amended by Article 4 of Law No. 55-A/2012, of 29 October.

1. FACTS

With relevance for the appraisal and decision of the merits, the following facts are deemed proven:

A) The Claimant is a commercial company whose corporate purpose consists of the acquisition, promotion or operation of real estate developments, including in particular the development, execution and commercialization of real estate and/or tourist developments, rehabilitation, construction or reconstruction, property divisions and urban developments, the acquisition of real estate, their rental, costly operation by other forms, their enhancement, the rental of real estate or the buying and selling of real estate, as well as the resale of those acquired for that purpose. 2. The company may acquire other rights over real estate, with a view to their economic operation. 3. The company may, in particular, invest in the acquisition, promotion or operation of rural or mixed properties, not developing forestry investment, but rather intended to constitute, a clear commitment, in particular to the development and expansion of urban areas, tourist areas, logistical centers, leisure activities, infrastructure, or any other legally permitted purposes – (cf. Permanent Certificate attached as Document No. 1 to the request for arbitral decision).

B) The Claimant is the owner of construction land located at .., in …, parish of …, municipality of …, inscribed in the property matrix under article ... of the said parish and described in the real estate registration office of ... under description No. ..., since 09.05.1986. (cf. Urban Property Notebook attached as Document No. 2 to the request for arbitral decision and Real Estate Registration Certificate attached as Document No. 3 to the request for arbitral decision).

C) The identified urban property, classified as construction land, has no building or construction erected on its ground as of the date of the facts (2013), and its respective tax patrimonial value as of the date of the facts exceeded € 1,000,000.00, amounting more specifically to:

– cf. the corresponding assessment act and the urban property notebook attached to the request for arbitral decision as Documents Nos. 4 and 2, respectively.

D) The Tax and Customs Authority, considering the Tax Patrimonial Value assigned to the construction land above identified, understood that the objective assumptions for the assessment of Stamp Tax were met, resulting from the amendment to the TGIS of item No. 28 provided for in Law No. 55-A/2012, of 29 October.

E) In this context, the Claimant was notified of the collection document for payment of Stamp Tax listed below, relating to the first instalment of the tax for the year 2013, with mention of the assessment date – "2014-03-17" – in accordance with the following table:

– cf. Assessment document and respective collection attached as Document No. 4 to the request for arbitral decision.

F) The Claimant proceeded to pay the assessed tax – cf. Document No. 4 attached to the request for arbitral decision.

G) On 30 June 2014, the Claimant filed a request for constitution of the Arbitral Tribunal with the CAAD – cf. electronic request in the CAAD system.

1. UNPROVEN FACTS

There are no facts with relevance to the decision on the merits that have not been proven.

1. JUSTIFICATION OF THE DECISION ON FACTS

As regards the essential facts, the settled matter is conformed identically by both parties and the conviction of the Tribunal was formed based on the documentary (official) evidence attached to the proceedings and discriminated above, whose authenticity and veracity was not questioned by either of the parties.

1. ON THE LAW

6.1. On the error in assumptions: objective scope of application of item 28.1 of the TGIS

The assessment which constitutes the immediate object of this arbitral action has its origin in item 28.1 of the TGIS, amended by Article 4 of Law No. 55-A/2012, of 29 October, having as an essential premise the situation of being faced with real estate that can be included within the concept of "properties with residential use".

Since in the situation under scrutiny the real estate in question is exclusively construction land, devoid of any building, it is important to determine the meaning of the expression "properties with residential use" so as to conclude whether it covers, or does not cover, construction land.

The matter under analysis has already been the subject of extensive tax arbitral jurisprudence. We refer in particular, without concern for exhaustiveness, to the decisions rendered in the following cases: 42/2013-T, of 18-10-2013; 48/2013-T, of 09-10-2013; 49/2013-T, of 18-09-2013; 53/2013-T, of 02-10-2013; 75/2013-T, of 01-11-2013; 144/2013-T, of 12-12-2013 and 158/2013-T, of 10-02-2014.

Judicial courts have also ruled on this same question. We refer to recent decisions rendered by the Supreme Administrative Court ("STA") in the following cases: 048/14, of 09-04-2014 and 0270/14, of 23-04-2014.

Both the arbitral jurisprudence cited and the judicial jurisprudence cited, which we follow, consider that construction land is outside the scope of the provision of item 28.1 of the TGIS, in the wording in force at the date of the facts, in the terms explained below, beginning by analyzing the legislative context in which the amendment of item 28 to the TGIS occurred.

A. Context of the approval of item 28.1 of the TGIS and respective regime

In the discussion in Parliament of the Bill No. 96/XII (2nd), which originated Law No. 55-A/2012, which amended item 28 to the TGIS, the State Secretary for Tax Affairs stated that:

"(...) For the fiscal system to promote more equality it is fundamental that the effort of budgetary consolidation be shared by all taxpayers and affect all types of income, encompassing with special emphasis capital income and high-value properties. This matter, it will be recalled, was extensively addressed in the Constitutional Court ruling (...).

This proposal has three essential pillars: the creation of special taxation on urban properties with value exceeding 1 million euros; the increase in taxation on capital income on securities capital gains; and the reinforcement of rules to combat tax fraud and evasion.

First, the Government proposes the creation of a special rate to tax residential urban properties of higher value. It is the first time that in Portugal special taxation is created on high-value properties intended for housing. This rate will be 0.5% to 0.8% in 2012 and 1% in 2013, and will apply to houses valued at or exceeding 1 million euros. With the creation of this additional rate, the tax burden required of these owners will be significantly increased in 2012 and 2013" (emphasis ours) – cf. Journal of the Assembly of the Republic, Series I, No. 9/XXII-2, of 11 October 2012, pp. 31-32.

Neither the houses nor the residential urban properties referred to here correspond to construction land. It is noted that residential urban properties are one of the classification concepts contained in Article 6 of the IMI Code clearly distinct from construction land. In effect, the cited paragraph 1 of Article 6 provides that:

"1 - Urban properties are divided into:
(i) Residential;
(ii) Commercial, industrial or for services;
(iii) Construction land;
(iv) Others." (emphasis ours)

Thus, residential urban properties and construction land are, for purposes of IMI (whose applicability, by reference, to Stamp Tax is, as will be seen below, to be invoked), two distinct categories, with their own legal classifications and definitions contained in the mentioned Article 6 of the IMI Code[1].

In light of the above and as emphasized in the arbitral decision in case No. 75/2013-T, of 1 November 2013, it appears clear that "in the spirit of the Bill that originated Law No. 55-A/2012 was not the taxation of construction land, there being, on the other hand, no evidence to the contrary coming from the Deputies who approved the law".

Having established the context, it should be noted that the regime in question was approved by Law No. 55-A/2012, of 29 October, and, among several amendments it made to the Stamp Tax Code, amended item 28 to the TGIS, with the following wording:

"28 – Ownership, usufruct or right of superficies of urban properties whose tax patrimonial value contained in the property matrix, in accordance with the Municipal Property Tax Code (CIMI), is equal to or exceeding € 1,000,000 – on the tax patrimonial value used for purposes of IMI:

28.1 – For property with residential use – 1%;

28.2 – For property, when the taxpayers that are not natural persons are residents in a country, territory or region subject to a clearly more favorable tax regime, contained in the list approved by portaria of the Minister of Finance – 7.5 %". (emphasis ours)

B. The concept of "property with residential use"

It is thus necessary to interpret the provision in item 28.1 of the TGIS and determine its meaning and scope, given the absence of a legal definition of the concept of property with residential use (a notion fundamental to determining the objective scope), whether in the Stamp Tax Code itself or in any other statute, including the IMI Code applicable by reference.

In effect, as emphasized in the Arbitral Award relating to case No. 53/2013-T, of 2 October 2013, the concept of "property with residential use" is not employed by other tax legislation, in particular, in what is relevant to the case, in the Stamp Tax Code and in the IMI Code, the latter, of subsidiary application in the scope of item 28 of the TGIS, as provided for in Articles 2, paragraph 4; 3, paragraph 3, subparagraph u); 5, subparagraph u); 23, paragraph 7; 46, paragraph 5 and 67, paragraph 2, all of the Stamp Tax Code.

In the same sense, the Arbitral decision in case No. 144/2013-T, of 12 December 2013, notes that this concept used in item 28.1 (of property with residential use) "not only does not appear defined in any provision of the Stamp Tax Code, but also is not used in the IMI Code, statute to which paragraph 2 of Article 67 of the CIS expressly refers when matters not regulated in the CIS concerning item 28 are at issue."

Tax rules must be interpreted like any others, the conception that they would have the exceptional character that was once attributed to them being overcome.

It should be noted in this regard that Article 9 of the Civil Code marks the prevalence of the spirit over the letter of the law, although it has expressly placed the letter as a limit to the search for meaning[2]. Article 9 of the Civil Code represents the emanation of a general hermeneutic principle, having intrinsic validity for that reason. This provision states that:

"1. Interpretation should not be confined to the letter of the law, but should reconstruct from the texts the legislative thought, having especially in mind the unity of the legal system, the circumstances in which the law was elaborated and the specific conditions of the time in which it is applied.

1. However, the legislative thought that does not have in the letter of the law a minimum of verbal correspondence, even if imperfectly expressed, cannot be considered by the interpreter.

2. In fixing the meaning and scope of the law, the interpreter shall presume that the legislator adopted the most correct solutions and knew how to express his thought in adequate terms."

The LGT, in its Article 11, came, in the specific field of tax laws, to establish a set of interpretation rules in the following manner:

"1. In determining the meaning of tax rules and in qualifying the facts to which they apply, the general rules and principles of interpretation and application of laws are observed.

1. Whenever, in tax rules, terms proper to other branches of law are used, they should be interpreted in the same sense that they have there, unless otherwise directly follows from the law.

2. If doubt persists about the meaning of the rules of incidence to be applied, the economic substance of the tax facts should be considered.

3. Gaps resulting from tax rules covered by the reservation of law of the Assembly of the Republic are not susceptible to analogical integration."

It appears that the text of the LGT adds nothing, referring to general rules and principles, beyond incorporating distinct principles of difficult compatibility.

As seen above, the IMI Code uses (in its Article 6, paragraph 1) the notion of residential urban properties, which it establishes as an autonomous and distinct category from that of construction land, but does not provide for the concept of "property with residential use", whose interpretation is now required.

At this point, we again resort to arbitral jurisprudence and to the Award rendered in case No. 53/2013-T, above referenced, which is upheld here and from which the following excerpt is transcribed:

"3.2.5. Concept of «property with residential use» as relating to residential properties

The concept closest to the literal tenor of this expression used is manifestly that of «residential properties», defined in paragraph 2 of Article 6 of the CIMI as encompassing «buildings or constructions» licensed for residential purposes or, in the absence of a license, that have as their normal destination residential purposes.

To understand that the expression «property with residential use» coincides with [that] of «residential properties», it is manifest that the assessments will suffer from error on the facts and law assumptions, since all properties in relation to which Stamp Tax was assessed under the said item No. 28.1 are construction land, without any building or construction, required to fulfill that concept of «residential properties».

For that reason, to adopt the interpretation that «property with residential use» means «residential property», the assessments whose declaration of illegality is requested will be illegal, as there is in any of the land any building or construction.

However, the non-coincidence of the terms of the expression used in item No. 28.1 of the TGIS with that which is drawn from paragraph 2 of Article 6 of the CIMI points to the sense that it was not intended to use the same concept.

3.2.6. Concept of «property with residential use» as a concept distinct from «residential properties»

The word «use» (or «allocation»/«dedication»), in this context of utilization of a property, has the meaning of «action of destining something to a particular use»1.

«When, as is usually the case, rules (legislative formulations) bear more than one meaning, then the positive function of the text translates into giving stronger support to or suggesting more strongly one of the possible meanings. For among the possible meanings, some will correspond to the more natural and direct significance of the expressions used, while others will only fit within the verbal framework of the rule in a forced, distorted manner. Now, in the absence of other elements that induce the choice of the less immediate sense of the text, the interpreter should opt in principle for that sense which better and more directly corresponds to the natural significance of the verbal expressions used, and in particular to their technical-legal significance, in the (not always accurate) assumption that the legislator knew how to correctly express his thought»2.

The relevance of the text of the law is especially emphasized in the interpretation of rules of incidence of Stamp Tax, which amount to an amalgam, under a common denomination, of an incongruous set of taxes of completely distinct natures (on income, on spending, on patrimony, on acts, etc.), which leaves no appreciable margin for application of the principal interpretive criterion, which is the unity of the legal system, which demands its overall coherence.

The recognized lack of coherence of Stamp Tax is particularly exuberant in the case of this item No. 28.1, hastily included outside the General State Budget, by a tax legislator without perceptible global fiscal orientation, which successively implements norms of tax increases to the extent of reversals in budget execution, impositions of international institutional creditors (represented by the "troika") and oversight by the Constitutional Court. (...)

In this context, absent sure interpretive elements that allow detection of legislative coherence in the solution adopted in said item No. 28.1 or the appropriateness or inappropriateness of the solution adopted (relevant for interpretive purposes in light of paragraph 3 of Article 9 of the Civil Code), the tenor of the legal text must be the prime element of interpretation, in accordance with the presumption, imposed by the same paragraph 3 of Article 9, that the legislator knew how to express his thought in adequate terms.

In light of those meanings of the words «use» and «dedicate» (or «allocate»), which are «to give purpose» or «to apply», the formula used in that item No. 28.1 of the TGIS manifestly encompasses properties that are already applied to residential purposes, so it is important to inquire whether it will also encompass properties that, although not yet applied to residential purposes, are intended for these purposes and those whose purpose is unknown.

In light of the literal tenor of item No. 28.1, it is to be excluded from the scope of incidence of Stamp Tax provided there the construction land of some Claimants that still do not have any type of utilization defined, since they are still neither applied nor intended for residential purposes. That is, construction land that does not have defined utilization cannot be considered properties with residential use, since they do not yet have any use or other purpose than construction of unknown type. An interpretation in the sense that item No. 28.1 refers to properties whose use is unknown has the minimum of verbal correspondence in the letter of that rule, so a hypothetical legislative thought of that type cannot be considered by the law interpreter, in light of the prohibition contained in paragraph 2 of Article 9 of the Civil Code.

But this is not enough to clarify the situation of those construction land that, although not yet applied to residential purposes, already has a determined purpose, in particular, in the lot license (...).

For that reason, it is necessary to clarify when it can be understood that a property is dedicated to residential purpose, in particular whether it is when that purpose is fixed in a licensing act or similar, or only when the actual assignment of that purpose is realized.

First of all, the comparison of item No. 28.1 of the TGIS with paragraph 2 of Article 6 of the CIMI clearly points to the sense that an actual use is necessary.

In truth, a building or construction licensed for housing or, even without a license, but that has housing as its normal destination, is, in light of paragraph 2 of that Article 6, a residential property.

For that reason, on the assumption that the legislator of Law No. 55-A/2012 knew how to express his thought in adequate terms (as Article 9, paragraph 3, of the Civil Code requires to be presumed), if he intended to refer to those properties already licensed for housing or that have housing as their normal destination, he would certainly have used the concept of «residential properties», which would express perfectly and clearly his thought, in light of the definition given by that paragraph 2 of Article 6 of the CIMI.

Consequently, it must be presumed that the use of a different expression is aimed at a different reality, so, in good hermeneutics, «property with residential use» cannot be a property merely licensed for housing or intended for that purpose (that is, it will not be enough that it be a «residential property»), having to be a property that already has actual residential use.

That this is the meaning of the expression «use» (or «allocation»), in the same context of property classification that the CIMI makes, is confirmed by Article 3 in which, with respect to rural properties, reference is made to those «that are in use or, in the absence of concrete use, have as their normal destination a use generating agricultural income», which shows that use is concrete, actual. In truth, as seen by the final part of this text, a property may have as its destination a particular utilization and be or not be in such use, which shows that use is, at the level of the connection of a property to a particular utilization, something more intense than mere destination and which may or may not occur, after the latter and not before it4.

Moreover, the text of the law by adopting the formula «property with residential use», instead of «urban properties of residential use», which appears in the said «Statement of Reasons», points strongly to the sense that it is required that residential use already be materialized, since only then will the property be with that use.

With regard to Article 45 of the CIMI, it has no relationship with the classification of properties, only indicating the factors to be considered in the valuation of construction land. What is considered there, in making reference to the «building to be constructed» is the consideration of the destination of the land, which, as has been seen, is something that, in the context of the CIMI, does not imply use and occurs before it.

The correctness of this interpretation in the sense that only properties that are actually dedicated to housing are included in the scope of item 28.1 of the TGIS is also confirmed by the identifiable ratio legis of the restriction of the field of application of the rule to properties with residential use, in the context of the «circumstances in which the law was elaborated and the specific conditions of the time in which it is applied», which Article 9, paragraph 1, of the Civil Code also establishes as interpretive elements5.

First of all, the limitation of taxation in Stamp Tax to «properties with residential use» makes it clear that it was not intended to encompass within the scope of incidence of the tax properties with use for services, industry or commerce, that is, properties dedicated to economic activity, which makes sense in a context where, as is well known, the economy is in a recessionary spiral, publicly proclaimed at the highest level, with unemployment rates reaching maximum historical levels, with an avalanche of business closures resulting from economic unsustainability.

Having in mind this situation and it being well known and public that the revival of economic activity and the increase in exports are the ways out of the crisis, it is understood that legislative measures were not taken that would hinder economic activity, in particular the increase in the tax burden that hinders it and affects competitiveness in international terms.

For that reason, it is to be concluded that the available interpretive elements, including the «circumstances in which the law was elaborated and the specific conditions of the time in which it is applied», clearly point to the sense that it was not intended to encompass within the scope of item 28.1 situations of properties that are not yet dedicated to housing, notably construction land held by companies6."

In this regard, for the reasons just set out, the understanding advocated by the AT cannot proceed, that the notion of use (residential) of an urban property should be drawn from the regime for the valuation of real estate contained in Article 45 of the IMI Code (which takes into account the use coefficient provided for in Article 41 of the same Code).

In fact, as the decision of arbitral case No. 144/2013-T rightly states, "If the primary meaning of «use», as we have said, suggests an actual, direct destination given to a particular good, we do not see how this understanding can be overturned by the observation that the legislator, in the context of the valuation of construction land, authorizes (to admit that it authorizes) the use of the use coefficient, with a view to what may be constructed in it.

C. The Case Sub Judice

In accordance with the facts, which result from consensus, the real estate underlying the Stamp Tax assessment carried out here, challenged, constitutes construction land, devoid of any building.

Taking as correct and valid (as we do) the understanding according to which item 28.1 of the TGIS requires the necessity of actual residential use of an urban property and not merely potential, construction land cannot be considered included in that item, as it does not permit, by its own nature, to have an actual and current residential use.

Thus, in the present situation we are not faced with a property with current residential use, so Stamp Tax provided for in item 28.1 of the TGIS cannot apply to it, the controversial assessment suffering from error in the assumptions, embodied in the violation of said item 28.1, and should be annulled (cf. Article 135 of the CPA, of subsidiary application ex vi Articles 2, subparagraph d) of the CPPT and 29, paragraph 1, subparagraphs a) and d) of the RJAT).

6.2 On the reimbursement of the amount paid and the request for Compensatory Interest

The Claimant requests reimbursement of the amount paid under the assessment act in dispute in the proceedings, in the total amount of € 18,585.18, plus compensatory interest for the unduly paid amount.

In the case at hand, it is manifest that, following the illegality of the assessment act, for the reasons that are better set out in this decision, there is a basis for reimbursement of the tax paid by the Claimant, by virtue of the provisions of the aforementioned Articles 24, paragraph 1, subparagraph b), of the RJAT and 100 of the LGT, as this is essential to "restore the situation that would exist if the tax act subject to the arbitral decision had not been carried out".

With regard to compensatory interest, it is also clear in the proceedings that the illegality of the impugned tax assessment act is directly attributable to the Respondent, which, on its own initiative, carried it out without legal support, suffering from an erroneous interpretation (and thus application) of the legal norms to the concrete case.

Consequently, the Claimant is entitled to the receipt of compensatory interest, in accordance with the provisions of Articles 43, paragraph 1, of the LGT and 61 of the CPPT.

Compensatory interest should be paid to the Claimant from the date on which it carried out the respective payment of the stamp tax instalment in question in the proceedings until the full reimbursement of the amount paid, at the legal rate.

Considering that the Claimant attached to the proceedings proof of payment of the 1st instalment of the unduly assessed stamp tax, having, however, not attached proof of payment of the 2nd instalment and the 3rd instalment[3], the reimbursement of the tax relating to these 2 instalments and the payment of the respective compensatory interest is conditioned on the presentation by the Claimant to the Respondent of the respective proof of payment of the unduly assessed and collected tax.

Thus, the Claimant's request proceeds.

1. DECISION

In light of the above, this Singular Arbitral Tribunal decides:

• To judge the request for arbitral decision as well-founded and to declare the annulment of the Stamp Tax assessment act, better identified under the collection document issued with number ..., dated 17 March 2014, in the total amount of € 55,755.50, with the legal consequences.

• To judge the request to condemn the Respondent to reimburse to the Claimant
  the amount paid as tax, plus compensatory interest in accordance with legal terms, from the date on which such payment was made until the date of complete reimbursement of the same.

The value of the case is set at Euro 55,755.50, in accordance with the provisions of Articles 3, paragraph 2 of the Regulation on Costs in Tax Arbitration Proceedings (RCPAT), 97-A, paragraph 1, subparagraph a) of the CPPT and 306 of the CPC.

The amount of costs is set at Euro 2,142.00, pursuant to Article 22, paragraph 4 of the RJAT and Table I attached to the RCPAT, charged to the Tax and Customs Authority, in accordance with the provisions of Articles 12, paragraph 2 of the RJAT and 4, paragraph 4 of the RCPAT.

Let notice be given.

Lisbon, 13 November 2014.

The Arbitrator,

Dr. Henrique Nogueira Nunes

Text drawn up by computer, in accordance with Article 131, paragraph 5 of the Code of Civil Procedure, applicable by reference to Article 29, paragraph 1, subparagraph e) of the RJAT.

The wording of this arbitral decision is governed by the spelling prior to the Orthographic Agreement of 1990.

[1] Paragraphs 2 to 4 of Article 6 of the IMI Code define the concepts in question:

"2 – Residential, commercial, industrial or for services are buildings or constructions licensed for such purposes or, in the absence of a license, that have as their normal destination each of these purposes.

3 – Construction land is understood as land situated within or outside an urban agglomeration, for which a license or authorization for a property division or construction operation has been granted, admittance of prior notification or favorable prior information has been issued, and also those that have been declared as such in the title of acquisition, excepting land in which the competent entities prohibit any of those operations, in particular those located in green areas, protected areas or that, in accordance with municipal territorial planning plans,

are dedicated to spaces, infrastructure or public facilities. (wording of Law No. 64-A/2008, of 31 December)

4 – Included in the provision of subparagraph d) of paragraph 1 is land situated within an urban agglomeration that is neither construction land nor is covered by the provision in paragraph 2 of Article 3, and also buildings and constructions licensed or, in the absence of a license, that have as their normal destination purposes other than those referred to in paragraph 2 and also those of the exception in paragraph 3."

[2] See Oliveira Ascensão, "Interpretation of laws. Integration of gaps. Application of the principle of analogy", in Journal of the Bar Association, Year 57 – III, Lisbon, December 1997, pp. 913-941.

[3] Although strictly speaking the Claimant has until 30/11/2014 to make payment of this 3rd instalment.