Summary
Full Decision
ARBITRAL DECISION (consult full version in PDF)
1. Report
A - General
1.1. A..., S.A., with unique registration number and collective person number..., with registered office at..., nos ... to..., ..., ...-... ... (hereinafter designated "Claimant"), presented, on 24.09.2018, a request for constitution of a singular arbitral tribunal in tax matters, which was accepted, aiming, on the one hand, in immediate terms, the annulment of the dismissal order of the official review procedure brought against the acts of assessment of Municipal Property Tax (hereinafter "IMI") nos. 2014..., 2014... and 2014..., for the year 2014 and, likewise, in mediate terms the declaration of illegality of the aforementioned IMI assessment acts, in the global amount of € 35,845.33 (thirty-five thousand eight hundred and forty-five euros and thirty-three cents), and, on the other hand, the recognition of the right to compensatory interest for the payment of unduly paid tax instalments.
1.2. Pursuant to the provisions of subparagraph a) of item 2 of article 6 and subparagraph b) of item 1 of article 11 of Decree-Law no. 10/2011, of 20 January, in the version given to it by article 228 of Law no. 66-B/2012, of 31 December (hereinafter "RJAT"), the Deontological Council of the Centre for Administrative Arbitration (hereinafter "CAAD") designated the undersigned as arbitrator, and the Parties, after being duly notified, did not manifest opposition to such designation.
1.3. By order of 03.10.2018, the Tax and Customs Authority (hereinafter "Respondent") proceeded to designate Dr. B... and Dr. C... to intervene in the present arbitral proceedings, in the name and representation of the Respondent.
1.4. In accordance with the provisions of subparagraph c) of item 1 of article 11 of Decree-Law no. 10/2011, of 20 January, in the version given to it by article 228 of Law no. 66-B/2012, of 31 December, the Arbitral Tribunal was constituted on 05.12.2018.
1.5. On the same day 05.12.2018, the highest-ranking official of the Respondent's service was notified to, if he so wished, within 30 days, present a response and request production of additional evidence.
1.6. On 17.01.2019, the Respondent presented its response.
B – Position of the Claimant
1.7. The Claimant is the owner of the following urban properties (hereinafter "Properties"):
1.8. The Properties identified above are located in the historic centre of..., a protected ensemble that is included in the UNESCO World Heritage List, a fact that became public through the Notice of 20.01.1988, of the Directorate of Cultural Services, published in the Official Journal, no. 39/1988, Series I, of 17.02.1988.
1.9. The Claimant proceeded to pay the first, second and third instalments of the assessment acts now in dispute, on 29.04.2015, 30.07.2015 and 26.11.2015, respectively.
1.10. The Claimant presented on 08.02.2018 a request for official review with respect to the assessment acts now mediately impugned, which was dismissed by the Director of Finance of... on 20.06.2018.
1.11. The Claimant considers that the inclusion of properties in the UNESCO World Heritage List has as a necessary and immediate consequence their classification as properties of national interest and, therefore, as "national monuments".
1.12. And the properties classified as "national monuments", pursuant to the provisions of subparagraph n) of item 1 of article 44 of the Statute of Tax Benefits (hereinafter "EBF"), are exempt from IMI, and this exemption has an automatic character and begins in the very year in which classification as "national monument" occurs.
1.13. Although the law provides for the "communication of classification as national monuments (...), to be carried out by the Institute for the Management of Architectural and Archaeological Heritage, I.P., or by municipal councils (see item 5 of article 44 of the EBF), such communication has a merely instrumental character, since the exemption is automatic, resulting directly from the law and from the classification of the properties as national monument.
1.14. Now, having the Properties to which reference has been made been included in the ensemble designated as "Historic Centre of..." which constitutes UNESCO World Heritage, it follows clearly that they are, from the date of publication of the Notice of 20.01.1988, of the Directorate of Cultural Services, in the Official Journal, no. 39/1988, Series I, of 17.02.1988, classified as "national monuments", pursuant to and for the purposes of article 15 of Law no. 107/2001, of 8 September, the so-called Law of Bases of Cultural Heritage (hereinafter "LBPC").
1.15. The said formulation of the LBPC was further reiterated by Decree-Law no. 309/2009, of 23 October, relating to Immovable Cultural Heritage, which provides, in item 3 of its article 3, that the designation of "national monument" is attributed to immovable property classified as of national interest, whether they are monuments, ensembles or sites.
1.16. Thus, the IMI assessment acts that are the subject of the present proceedings suffer from errors in factual and legal presuppositions.
1.17. The compensatory interest claimed is due, since the Claimant paid tax instalments which it considered illegal, due to error attributable to the services.
C – Position of the Respondent
1.18. The Respondent begins by raising the incompetence of the arbitral tribunal to assess the dismissal of the request for official review of a tax act, on the grounds that the assessment of such a matter goes beyond the competences reserved to it by law, insofar as the act of dismissal of official review is not covered by the subparagraphs of item 1 of article 2 of the RJAT.
1.19. By way of challenge, the Respondent understood, with its Response, to make certain corrections and remove certain confusions which, in its view, vitiate the initial pleading of the Claimant.
1.20. For this purpose, it discoursed on the concept of "classification" over time, from the last years of constitutional monarchy to the moment immediately preceding the current LBPC, passing through the legislation of the 1st and 2nd republics that governed this matter.
1.21. It also examined the distinction of the various concepts set out in article 15 of the LBPC, seeking to distinguish three distinct legal-patrimonial concepts concerning immovable cultural property, namely: category (monument, ensemble and site, which are not defined), classification (national, public or municipal interest) and designation.
1.22. Thus, pursuant to item 3 of article 15 of the LBPC, to the monument, ensemble or site (i.e., to the category) which is classified as of national interest is further attributed the designation of national monument.
1.23. Now, the Claimant confused the concepts of classification and designation, and further confused the concept of designation introduced by the LBPC with the concept of graduation of classification as national monument that was in force from 1932 until the entry into force of the LBPC, and it is, as of the date to which the facts pertain, impossible to affirm that the Historic Centre of... is classified as a national monument, being clear that classification is not, for these purposes, synonymous with or equivalent to designation.
1.24. Additionally, there is no UNESCO classification called "World Heritage", "UNESCO Heritage", "World Heritage" or similar expression.
1.25. The "World Heritage List" to which the UNESCO Convention and item 7 of article 15 of the LBPC refer is merely a list; a list of heritage whose protection must be assumed by the international community.
1.26. However, the inscription of a particular property in the said list does not mean that a true and proper classification has been made regarding that particular cultural property, which would always be dependent on a prior administrative procedure, within the exclusive competence of Portuguese public administration, specifically directed at it, which never existed.
1.27. Now, it would offend the principle of legality to admit that the inscription of a cultural property in the UNESCO world heritage list had tax effects equivalent to those that would result from an administrative process specifically aimed at classification, which would always be invalid due to pretermission of the right to prior hearing of the interested parties and ineffective due to the absence of formal publication of the decision of the UNESCO World Heritage Committee in the Portuguese official journal.
1.28. Furthermore, article 72 of Decree-Law no. 309/2009, of 23 October, determines the opening of an official procedure for classification at the level of national interest, following the inclusion of an immovable property in the world indicative list, which means that the inclusion is not, in itself, the same as classification.
1.29. Therefore, the Historic Centre of... is, pursuant to item 7 of article 15 of the LBPC, at most, classified as of national interest, being designated as a national monument (this designation not being equivalent to the classification as national monument contained in the 1932 legislation).
1.30. This means that the immovable properties forming part of the Historic Centre of... are not exempt from IMI, since subparagraph n) of item 1 of the EBF requires, in the 2nd and 3rd segments of the provision, an individual classification of each of the properties of the said ensemble, the 1st segment of the provision, which refers to the classification of properties as national monuments, being a reference to the legislation prior to the LBPC and not to the LBPC.
1.31. The Historic Centre of... is an ensemble and as is evident, not all the properties that comprise it have cultural value, or do not all have the same cultural value, and it is abusive to interpret that all properties within the ensemble are, merely by virtue of that fact, classified and, as such, exempt from IMI.
1.32. Not being, as they are not, the Properties that gave rise to the assessments now in dispute individually classified as national monuments, they cannot benefit from the IMI exemption.
1.33. This is all the more so because the tax benefit is inseparably linked to the tax concept of property and the Historic Centre of... is not a property, and IMI exemptions, namely that referred to in subparagraph n) of item 1 of article 44 of the EBF, require that there be an individual classification of properties, such classification being the exclusive responsibility of the General Directorate for Cultural Heritage, the Claimant not having succeeded in proving that the classification of the Properties of which it is the owner has taken place.
1.34. Furthermore, the interpretation conveyed by the Claimant is contrary to the Constitution of the Portuguese Republic, insofar as it violates the principles of tax equality (attributes an unjustified advantage to owners of properties without any cultural value integrated in the Historic Centre of... as against other owners of properties also without such value but outside the Historic Centre of...); of tax justice; of contributory capacity (attributes an unjustified advantage to owners of properties devoid of individual cultural value as against owners who have actual cultural value and who are subject to heavier financial charges and more burdensome bureaucratic procedures); of proportionality (considers completely exempt from IMI realities completely distinct from each other); of local autonomy (the municipality of... sees its local autonomy harmed, insofar as it had no say in the matter of loss of revenue); and of participation in decision (since the municipality of... was not even consulted on this important matter), in addition to organic unconstitutionality (the question of equivalence or equating between different graduations of classification would necessarily have to result from the law of parliament or authorized decree-law).
1.35. The Respondent further considers that the request for a ruling on the payment of compensatory interest is not well-founded, if the request for declaration of illegality of the assessments impugned is upheld, because, first, the request for official review of the tax act was submitted outside the period for administrative reclamation and, secondly, because the Respondent did not have access, at the time the said assessment acts were made, to the elements which, now, support the request for arbitral ruling (and which had already supported the request for review whose dismissal motivated the request for arbitral ruling which is before us).
D – Conclusion of the Report and Clarification
1.36. On 01.02.2019, the Claimant, in the sequence of the submission of the Response, understood to exercise its right to reply, arguing for the dismissal of the exception of material incompetence of the arbitral tribunal and requesting the translation into Portuguese of documents drafted in a foreign language, submitted by the Respondent to the proceedings, a claim to which the latter opposed through a request dated 05.02.2019.
1.37. By request dated 23.04.2019, the Respondent informed the arbitral tribunal that it had become aware that the Claimant had brought an Administrative Action before the Administrative and Tax Court of Beja (case no. .../19...BEPRT), where it precisely comes to discuss the right to enjoy the exemption provided for in article 44, item 1, subparagraph n) of the Statute of Tax Benefits, with respect to the urban properties to which the IMI assessments now in dispute pertain, the undecided action constituting a true prejudicial question with framework in article 15 of the Code of Procedure in Administrative Courts (hereinafter "CPPT"), applicable subsidiarily by virtue of subparagraph b) of item 1 of article 29 of the RJAT, and therefore requested that the instance be suspended until the matter which is the subject of the said Administrative Action was resolved.
1.38. Invited to pronounce itself on the pretension of the Respondent, the Claimant understood that there were no reasons to order the requested suspension of the instance.
1.39. By arbitral order of 21.05.2019, the arbitral tribunal decided, with the grounds presented therein, the incidents which had been raised, ruling that there was no material incompetence of the arbitral tribunal, that there was no need to translate into Portuguese the documents in a foreign language presented by the Respondent, and that there were no reasons to order the requested suspension of the instance. By that same order, the arbitral tribunal dispensed with the meeting referred to in article 18 of the RJAT and asked the Parties whether they wished to present arguments, a right which the Respondent did not waive.
1.40. Thus, by request dated 23.05.2019, the arbitral tribunal extended by two months the time limit for the pronouncement of the arbitral decision and granted a time limit for the Parties, if they so wished, to present their arguments.
1.41. By request dated 31.05.2019, the Respondent raised the nullity of the arbitral order of 21.05.2019, requesting its revocation, and the arbitral tribunal invited the Claimant to pronounce itself thereon, if it so wished, which it did, sustaining the validity of the said order.
1.42. On 05.06.2019, the Claimant presented its arguments, which, in substantive terms, reiterate what was argued in the pleadings previously presented.
1.43. On 18.06.2019, the Respondent presented, in turn, its arguments which, also, replicate what was sustained in the pleadings previously presented by it, having made clear that its presentation does not suggest or even imply a waiver of the request for revocation of the arbitral order of 21.05.2019, which, hereinafter, will be assessed and decided by this arbitral tribunal.
1.44. As has been seen, the arbitral tribunal is materially competent, pursuant to the provisions of articles 2, item 1, subparagraph a) of the RJAT.
1.45. The Parties possess legal personality and capacity, are regularly represented and have standing pursuant to article 4 and item 2 of article 10 of the RJAT, and article 1 of Order no. 112-A/2011, of 22 March.
1.46. The cumulation of claims (declaration of illegality of assessment acts, on the one hand, and recognition of the right to compensatory interest, on the other) made in the present request for arbitral ruling, in homage to the principle of procedural economy, is justified since article 3 of the RJAT, by expressly admitting the possibility of "cumulation of claims even if relating to different acts", accommodates, without hermeneutical abuse, the assessment of a claim that derives, of necessity, from the judgment that the arbitral tribunal forms regarding the validity of the assessments in dispute.
1.47. The proceedings, without prejudice to what may be decided regarding the requested revocation of the arbitral order of 21.05.2019, do not suffer from any nullity.
1.48. Having invoked the nullity of the said arbitral order, this must be the first matter to be assessed following the establishment of the facts, after which the merits of the case will be decided.
2. Factual Matters
2.1. Proven Facts
2.1.1. The Claimant is the owner of the Properties referred to in 1.7.
2.1.2. The Claimant proceeded to pay the first, second and third instalments of the assessment acts now in dispute, on 29.04.2015, 30.07.2015 and 26.11.2015, respectively, with the global amount of € 35,845.33 (thirty-five thousand eight hundred and forty-five euros and thirty-three cents).
2.1.3. The Claimant presented on 08.02.2018 a request for official review with respect to the assessment acts now in dispute, which was dismissed by the Director of Finance of... on 20.06.2018.
2.1.4. The Claimant presented on 24.09.2018 a request for arbitral ruling having as mediate object the illegality of the assessments in dispute.
2.1.5. The Respondent was notified of the presentation of the request for arbitral ruling on 01.10.2018.
2.1.6. The Respondent began to intervene in the proceedings, submitting a request to the proceedings on 09.10.2018.
2.1.7. The Respondent was notified of the constitution of the arbitral tribunal on 05.12.2018.
2.1.8. The Respondent was notified of the bringing of an Administrative Action by the Claimant before the Administrative and Tax Court of Beja (case no. .../19...BEPRT) on 18.04.2019.
2.1.9. The Properties are located in the Historic Centre of..., an ensemble that is included in the UNESCO World Heritage List, a fact that became public through the Notice of 20.01.1988, of the Directorate of Cultural Services, published in the Official Journal, no. 39/1988, Series I, of 17.02.1988.
2.2. Unproven Facts
There are no facts relevant to the assessment of the merits of the case that have been ruled as unproven.
2.3. Reasoning for the Establishment of Factual Matters
The facts were ruled as proven and unproven based on the documents submitted to the proceedings by the Parties and on the positions assumed by them in the pleadings submitted by them.
3. Legal Matters
3.1. Issues to be Decided
It results from what has been stated above that, after deciding the request for revocation of the arbitral order of 21.05.2019, due to alleged nullity, the substantive issues to be assessed are, fundamentally, the following:
a) To determine whether the Properties are exempt from IMI, pursuant to and for the purposes of the provisions of subparagraph n) of item 1 of article 44 of the EBF; and
b) Finally, to clarify whether, in the event that the request for declaration of illegality and consequent annulment of the contested assessment acts is upheld, the Claimant, within the scope of the present arbitral proceedings, may obtain a ruling condemning the Respondent to pay compensatory interest with respect to the amounts delivered by it to satisfy tax instalments illegally demanded.
3.2. On the Nullity of the Arbitral Order of 21.05.2019
By request dated 31.05.2019, the Respondent raised the nullity of the arbitral order of 21.05.2019, requesting its revocation. By that arbitral order, the arbitral tribunal understood that the requested suspension of the arbitral instance, in view of the interests at issue, was not justified, which is why it dismissed the request dated 23.04.2019 presented by the Respondent.
The Respondent, reading and re-reading the said arbitral order, in particular what is contained on pages 4 to 9 thereof, was unable to determine what the legal provision(s) were that authorized the arbitral tribunal to make its decision, which is why the said order, in its understanding, on the one hand, suffers from nullity (article 195/1 of the CPC), by not having specified the grounds of law that justify the decision and, on the other, clearly offends the Constitution of the Portuguese Republic, namely effective judicial protection and the principles of proportionality, equality, and legal confidence and certainty.
Now, the Respondent's argument is not understood, because from the reading of the said order it is clear that the tribunal did not find a provision that would allow it to grant the requested suspension of the instance, by having ruled that the presuppositions on which that suspension would depend were not met. Reference was made, moreover, to item 1 of article 272 of the CPC which states that "the court may order suspension when the decision of the case is dependent on the judgment of another already brought or when another justified reason occurs", which is manifestly not the case.
Furthermore, in the present arbitral proceedings the Claimant only seeks to impugn and have annulled the IMI assessments for the year 2014. The request for IMI exemption, whose dismissal motivated the submission of the said Administrative Action, is from 2018 and will have no effect whatsoever with respect to the IMI assessments that are the subject of the present proceedings, which concern, as has been said, only the limited year 2014.
For these reasons the request presented by the Respondent was dismissed, and it is not seen how the understanding that this decision violates constitutional provisions, whatever they may be, in particular those alleged by the Respondent, can be sustained, since both proceedings have different objects, the administrative action, which is subsequent to what is before us, having no impact on what comes to be decided in this arbitral proceeding.
Thus, the request presented by the Respondent on 31.05.2019 is dismissed, as it is not seen in what way the arbitral order whose nullity and unconstitutionality has been argued can be null or even unconstitutional.
3.3. The Meaning and Scope of the Expression "Properties Classified as National Monuments" to which the First Part of Subparagraph n) of Item 1 of Article 44 of the EBF Appeals
Subparagraph n) of item 1 of article 44 of the EBF provides that "exempt from municipal property tax are properties classified as national monuments and properties individually classified as of public interest or of municipal interest, pursuant to the applicable legislation".
Now, the legal issue that must be assessed has already been the subject of various decisions, both in the CAAD and in administrative and tax courts, and it is possible to discern a sufficiently well-founded decisional path favorable to the Claimant's claim, an understanding that this arbitral tribunal fully endorses and from which it has no intention whatsoever of departing.
The reasoning in the Arbitral Award handed down in case 46/2017-T is very enlightening, which this arbitral tribunal adopts in full and, therefore, reproduces here:
"The properties in question were not individually classified, so the application of the exemption can only arise from the first part of that rule which alludes to 'properties classified as national monuments'.
The Tax and Customs Authority argues that this reference refers to properties that were classified as national monuments under the legislation in force before Law no. 107/2001, of 8 September, as this provides for the category of national monument, but not the classification as national monument, in items 1 and 2 of article 15.
However, item 5 of article 44, as amended by Law 3-B/2010, of 28 April, makes reference to the 'communication of classification as national monuments', clearly referring to communications that may occur after its entry into force, so this expression should be interpreted as referring to immovable property to which the designation of 'national monument' is attributed. In fact, this communication was not provided for, in these terms, in the previous version, so it would not be understood why reference would be made to communications regarding monuments classified before the entry into force of Law no. 107/2001, more than nine years before. In this context, if the legislator intended to refer only to monuments classified before Law no. 107/2001, it would certainly have made an express reference. In its absence, and it being to be presumed that the legislator knew how to express its thinking in adequate terms (article 9, item 3, of the Civil Code), it must be concluded that the first part of the exemption referred to covers properties classified as national monuments that were not subject to individual classification.
Moreover, in the same vein, article 53, item 1, of Law no. 107/2001 alludes to the 'act that decrees the classification of monuments', so it is unequivocal that, under this diploma, there is 'classification of monuments'.
For this reason, the initial part should be interpreted as referring to 'properties classified as national monuments' under Law no. 107/2001, inclusive.
And, as 'national monuments' should be considered all 'immovable property classified as of national interest, whether they are monuments, ensembles or sites', as article 15, item 3, of Law no. 107/2001 and article 3 of Decree-Law no. 309/2009, of 23 October, expressly attribute this designation to all. That is, they are 'properties classified as national monuments' for purposes of the initial part those properties to which this designation is attributed.
Being the 'properties individually classified as of public interest or of municipal interest' expressly referred to in that subparagraph n) of item 1 of article 44 of the EBF, the useful scope of the initial reference to 'properties classified as national monuments' will consist in extending the exemption to properties that are subject to classification not individually, particularly those integrated into 'monuments, ensembles or sites', to which item 3 of article 15 of Law no. 107/2001 refers, which attributes to them, precisely, the designation of 'national monument', which is used in subparagraph n) of item 1 of article 44 of the EBF.
The 'immovable property included in the world heritage list is integrated, for all purposes and in its respective category, in the list of property classified as of national interest', by virtue of the provisions of item 7 of article 15 of Law no. 107/2001.
Thus, from the entry into force of this Law, the inclusion of immovable property in the world heritage list has as a consequence its classification as of national interest, proceeding for all purposes to be integrated into the list of property classified as of national interest, which amounts to them being considered immovable property classified as of public interest, without need for any other classification act, and to their having the designation of 'national monuments'.
In this context, the opening of a classification procedure which entails the inclusion of an immovable property in the world indicative list, pursuant to item 1 of article 72 of Decree-Law no. 309/2009, of 23 October, does not aim to assess whether the conditions for classification are met, nor to the pronouncement of a final decision by the Government, pursuant to article 30, item 1, of the same diploma (since the classification is already made 'for all purposes' by virtue of item 7 of article 15 of Law no. 107/2001), but only to identify which immovable properties were included in that list, particularly through a location map, and to fix the respective special protection zone.
It is in this context that, with respect to immovable property inscribed in the world heritage list as of the date of entry into force of Decree-Law no. 309/2009, it is provided, in item 3 of its article 72, only for publication in the form of notice in the Official Journal, of the location and implementation map of immovable property inscribed in the world heritage list, including the respective protection zone, and not a decision of the Government in the form of a decree, as is provided for in its article 30, item 1, for final decisions of procedures for classification of immovable property as of national interest.
Thus, with respect to immovable property inscribed in the world heritage list before the entry into force of Decree-Law no. 309/2009, there is no need for any classification act, and they are integrated 'for all purposes and in their respective category, in the list of property classified as of national interest', by virtue of item 7 of Law no. 107/2001.
For this reason, with respect to these immovable properties inscribed in the world heritage list, there is no need for the 'communication of classification as national monuments (...) to be made by the Institute for the Management of Architectural and Archaeological Heritage, I.P.' [1] which is referred to in item 5 of article 44 of the EBF, since there is no classification to communicate.
Thus, in these cases, the exemption operates automatically, following the publication of the notice provided for in article 72, item 3, of Decree-Law no. 309/2009.
However, the exemption in question covers only the 'properties classified as national monuments', those which have the designation of 'national monument', whether monuments, ensembles or sites, to the extent that such categories are defined in international law (articles 2, item 1, and 3, item 2, of Decree-Law no. 309/2009)".
Now, the Properties being located in the Historic Centre of..., as was demonstrated without any opposition from the Respondent that they are, it must be concluded, as results from the decision transcribed above and its convincing reasoning, that they assume, for these purposes, the nature of national monuments, benefiting, to that extent, from the IMI exemption enshrined in subparagraph n) of item 1 of article 44 of the EBF, and therefore the IMI assessments on the basis of which the Claimant was required to pay amounts that it manifestly should not have borne must be annulled.
Nor should it be said that the interpretation adopted by this arbitral tribunal violates the constitutional principles of tax equality, tax justice, contributory capacity, proportionality, local autonomy, or participation in decision.
As is readily apparent, a tax benefit will always, in an immediate and superficial analysis, disturb the principles of equality, tax justice, contributory capacity, and proportionality. However, these principles are only truly harmed when the legislator opts to establish a regime that contains differential treatment between persons that does not find minimally reasonable or intelligible justification, when in essence it establishes regimes that distinguish, in completely arbitrary and absolutely unjustified terms, taxpayers. By contrast, as is evident, it should be recognized that there is a sufficiently wide field of maneuver within which the legislator can, with discretion and prudence, implement its decisions, its choices within the framework of the economic policy it intends to pursue and carry out.
In the case at hand, the IMI exemption in question cannot be considered arbitrary or discriminatory insofar as it establishes a different tax treatment with respect to situations that are, themselves, also distinct: immovable property classified as "national monuments" have a different tax regime from those properties that do not enjoy such classification. The former have the right to IMI exemption and the latter, in principle, do not have that right.
As is well explained in the arbitral decision handed down in case 470/2018-T:
"it must be recalled and emphasized that the exemption in question was inserted by Law no. 109-B/2001, of 27.12, into the Statute of Tax Benefits and has been the subject of subsequent amendments, also by Law of the Assembly of the Republic. Without prejudice to the reference to the Law of Bases of Cultural Heritage as regards the properties to which it is applicable, a diploma that must be interpreted like any other law, in accordance with legal hermeneutical factors, such exemption is unequivocally established in subparagraph n), of article 44, of the Statute of Tax Benefits (whose formal constitutionality the Claimant does not question), and not in the Law of Bases of Cultural Heritage, with no inconstitutionality occurring consequently due to violation of local autonomy, the principle of participation in decision or organic [inconstitutionality]."
Also correctly, and with detailed reasoning to which we adhere without hesitation, the arbitral decision handed down in case 468/2018-T rejected the alleged unconstitutionality due to violation of the principles of local autonomy and participation, because, accepting that the tax revenue from IMI belongs to the municipalities, it is certain that the creation of taxes (incidence, rate, guarantees for taxpayers and, of particular interest to us here, tax benefits) are within the exclusive competence of the Assembly of the Republic.
3.4. On Compensatory Interest
Subparagraph b) of item 1 of article 24 of the RJAT provides that "the arbitral decision on the merits of the claim against which no recourse or challenge lies binds the tax administration from the end of the period provided for recourse or challenge, and the latter, in the exact terms of the acceptance of the arbitral decision in favor of the taxpayer and until the end of the period provided for the voluntary execution of rulings of tax courts, must restore the situation that would exist if the tax act that is the subject of the arbitral decision had not been made, adopting the acts and operations necessary for this purpose", which is in harmony with what is provided for in article 100 of the LGT, applicable by virtue of the provisions of subparagraph a) of item 1 of article 29 of the RJAT.
It is not ignored that the legislative authorization granted to the Government by article 124 of Law no. 3-B/2010, of 28 April, on the basis of which the RJAT was approved, determines that the tax arbitral process constitutes an alternative procedural means to the judicial challenge process and to the action for recognition of a right or legitimate interest in tax matters. Although subparagraphs a) and b) of item 1 of article 2 of the RJAT base the competence of arbitral tribunals in "declarations of illegality", it seems reasonable to understand that the competences of arbitral tribunals encompass the powers which in judicial challenge proceedings are attributed to tax courts, and it is certain that in judicial challenge proceedings, in addition to annulment of tax acts, claims for indemnification may be assessed, particularly regarding compensatory interest.
Indeed, the principle of cognoscibility of indemnification claims, in administrative reclamation or in judicial proceedings, is justified whenever the damage sought to be redressed results from facts attributable to the Tax and Customs Authority. Moreover, pursuant to item 5 of article 24 of the RJAT "payment of interest, regardless of its nature, is due, pursuant to the terms provided for in the General Tax Law and in the Code of Procedure and Tax Process" (CPPT), which refers to the manifestations of this principle that we find in item 1 of article 43 of the LGT and in article 61 of the CPPT.
Thus, the assessment of the Claimant's request for payment of compensatory interest is justified.
Compensatory interest is due when it is determined, in administrative reclamation or judicial challenge, that there has been an error attributable to the services from which results payment of the tax debt in an amount higher than what is legally due.
Error attributable to the services is considered to be that which is not attributable to the taxpayer and rests on incorrect factual presuppositions that are not the responsibility of the taxpayer. Now, when the controversial assessment acts were made, the Properties were already part of the Historic Centre of... and that ensemble was already a national monument. Thus, the administration knew or could not be unaware that the Properties in question benefited from IMI exemption. Therefore, there is no doubt that there was an error attributable to the services.
As the Claimant paid the tax instalments which, by virtue of the assessments now claimed and now annulled, were, due to an error attributable to the services, demanded of it, it has the right not only to reimbursement of all it paid unduly, but also to receive compensatory interest calculated from the date of payment of each of the IMI instalments, until its complete reimbursement.
4. Decision
Pursuant to and with the grounds set out above, the Arbitral Tribunal decides:
a) To fully uphold the request for arbitral ruling, and consequently to annul the acts of IMI assessment for 2014 with numbers 2014..., 2014... and 2014...;
b) To condemn the Respondent to reimburse the Claimant of all that it paid with respect to the now annulled IMI assessments and, likewise, to pay to it compensatory interest pursuant to legal terms, from the date on which each of the payments was made, until the date of complete reimbursement; and
c) To condemn the Respondent to the costs of the present proceedings.
5. Value of the Case
When a tax assessment act is impugned, the value of the case is that of the amount whose annulment is sought, which corresponds to the economic utility of the claim. Thus, in accordance with the provisions of item 2 of article 306 of the CPC, article 97-A of the CPPT and also item 2 of article 3 of the Regulation of Costs in Tax Arbitration Proceedings, the case is assigned the value of € 35,845.33 (thirty-five thousand eight hundred and forty-five euros and thirty-three cents).
6. Costs
For the purposes of the provisions of item 2 of article 12 and item 4 of article 22 of the RJAT and item 5 of article 4 of the Regulation of Costs in Tax Arbitration Proceedings, the amount of costs is set at € 1,836.00 (one thousand eight hundred and thirty-six euros), pursuant to Table I annexed to the said Regulation, to be borne entirely by the Respondent.
Lisbon, 29 July 2019
The Arbitrator
(Nuno Pombo)
Text prepared by computer, pursuant to item 5 of article 131 of the CPC, applicable by reference of subparagraph e) of item 1 of article 29 of Decree-Law no. 10/2011, of 20 January, and in the spelling prior to the said Orthographic Agreement of 1990.
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