IMI Tax Exemption for Real Estate Funds: Material Incompetence Ruling in CAAD Case 475/2016-T

ARBITRAL DECISION[1]

The arbitrator, Dr. Sílvia Oliveira, appointed by the Deontological Council of the Administrative Arbitration Centre (CAAD) to form the Singular Arbitral Tribunal, constituted on 4 November 2016, with respect to the process identified above, decided as follows:

1. STATEMENT OF FACTS

1.1

The Real Estate Fund A... (FIA...), legal entity number ..., represented by A..., S.A., in its capacity as managing entity, with registered office at Rua..., no...., ..., in Lisbon, registered in the competent Commercial Registry Office under number ... (hereinafter referred to as "Claimant"), submitted a request for arbitral pronouncement and constitution of a Singular Arbitral Tribunal on 29 July 2016, pursuant to the provisions of Article 4 and No. 2 of Article 10 of Decree-Law no. 10/2011, of 20 January [Legal Regime of Arbitration in Tax Matters (RJAT)], in which the Tax and Customs Authority is Respondent (hereinafter referred to as "Respondent").

1.2

The Claimant requests "the constitution of an arbitral tribunal and presentation of the (...) request for arbitral pronouncement, with a view to the declaration of illegality and consequent annulment of the following acts of assessment of Municipal Property Tax:

a) Assessment no. 2015..., dated 26/02/2016 and notified to the claimant on 18/03/2016, in the amount of EUR 13,696.19;

b) Assessment no. 2015..., dated 1/04/2016 and notified to the claimant on 17/06/2016, in the amount of EUR 13,401.88",

Furthermore requesting that "the reimbursement of those amounts already paid be ordered, in the total amount of EUR 27,098.97, plus compensatory interest at the legal rate, accrued from 1 May 2016 on the amount of EUR 13,696.19 and accrued from 1 August 2016 on EUR 13,401.88, until full reimbursement of these amounts".

1.3

The request for constitution of the Arbitral Tribunal was accepted by the Honourable President of CAAD on 1 August 2016 and notified to the Claimant on the same date.

1.4

The Claimant did not proceed with the appointment of an arbitrator, wherefore, pursuant to Article 6, No. 2, paragraph a) of RJAT, the undersigned was appointed as arbitrator by the President of the Deontological Council of CAAD on 19 October 2016, with the appointment being accepted within the legally prescribed period and terms.

1.5

On the same date, both Parties were duly notified of this appointment and did not manifest their will to refuse the arbitrator's appointment, pursuant to Article 11, No. 1, paragraphs a) and b) of RJAT, in conjunction with Articles 6 and 7 of the Deontological Code.

1.6

Thus, in accordance with paragraph c), No. 1, Article 11 of RJAT, the Arbitral Tribunal was constituted on 4 November 2016, and an arbitral order was issued on 7 November 2016, directing the Respondent to "(...) within 30 days, respond, attach a copy of the administrative file and request, if it wishes, the production of additional evidence"

1.7

On 9 December 2016, the Respondent submitted its Answer, in which it stated that:

1.7.1

"After checking the elements contained in the computer system regarding IMI, it was found that, meanwhile, all the properties belonging to the municipalities of..., ..., ..., ..., ..., ... have already had the said exemption recorded, and such situation is duly reflected in the assessment (...)"

1.7.2

Consequently, "(...) it is found (...) that the competent services have already proceeded with the issuance of the respective reimbursement to the Claimant of the amounts unduly paid (...) (referring to the properties located in the municipality of...) and (...) (relating to the immovable property located in the municipalities of..., ..., ... and...) (...)", "and is awaiting the processing of the change in the assessment (...) and respective reimbursement of amounts paid with reference to the properties located in the municipalities of ... and...".

1.8

Thus, according to the Respondent, "(...) only the legality of the assessment relating to the properties located in the municipality of..." is discussed in the present proceedings, concluding the Respondent's Answer that "the subsequent futility of the dispute should be declared (...) with the consequent apportionment of costs" and, "as regards the remainder of the request for arbitral pronouncement, it should be judged as not substantiated by lack of proof, and consequently the Respondent be absolved, pursuant to (...) the pleadings, all with the due and legal consequences".

1.9

On the same date, the Respondent attached to the said Answer three documents to support the allegations in the said pleading, as well as the instructing administrative file.

1.10

By arbitral order of 12 December 2016, "taking into consideration the Answer presented on 9 December 2016 by the Respondent (...)", the Claimant was notified to, in accordance with the principle of contradiction, and within 5 days, pronounce itself on the content of the information identified above, including on the documents attached by the Respondent in its Answer.

1.11

Additionally, also pursuant to the arbitral order referred to in the preceding point, both Parties were notified to, within the same 5-day period, pronounce themselves on the possibility of dispensing with the holding of the meeting referred to in Article 18 of RJAT and the presentation of written arguments.

1.12

The Respondent submitted, on 14 December 2016, a request to the effect that "(...) it considers (...) that the holding of the meeting referred to in Article 18 of RJAT can be dispensed with, requesting (...), if the Claimant agrees, that the arguments be dispensed with (...)" but "(...) if the Claimant considers it necessary for arguments to be presented, they should have a successive character";

1.13

The Claimant submitted, on 20 December 2016, a request in which it pronounced itself on the content of the arbitral order dated 12 December 2016, as well as on the possibility of dispensing with the holding of the meeting provided for in Article 18 of RJAT, but stating that "(...) it considers it necessary to present written arguments".

1.14

By arbitral order, dated 20 December 2016, taking into consideration the orders referred to above and the requests submitted by the Parties, the Arbitral Tribunal decided "in accordance with the procedural principles enshrined in Article 16 of (...) (RJAT), of contradiction [paragraph a)], of equality of the parties [paragraph b)], of autonomy of the Arbitral Tribunal in conducting the proceedings and in determining the rules to be observed [paragraph c)], of cooperation and procedural good faith [paragraph f)] and of free conduct of the proceedings enshrined in Articles 19 and 29, No. 2 of RJAT, as well as taking into account the principle of limitation of useless acts, provided for in Article 130 of the Code of Civil Procedure (CPC), applicable by force of Article 29, No. 1, paragraph e) of RJAT:

1.14.1

Dispense with the holding of the meeting referred to in Article 18 of RJAT;

1.14.2

Not to dispense with the presentation of arguments and, consequently, notify the Claimant and the Respondent to, in that order and in successive manner, present written arguments within 10 days, with the period for the Respondent beginning to count from the date of notification of the attachment of the Claimant's arguments or the end of the period granted for that purpose (in the event that the Claimant does not present arguments).

1.14.3

Set 7 February 2017 for the purpose of issuing the arbitral decision."[2]

1.15

Lastly, the Tribunal also warned the Claimant that, until the date of issuing the arbitral decision, it should proceed with payment of the subsequent arbitral fee, pursuant to No. 3 of Article 4 of the Regulation of Costs in Tax Arbitration Proceedings and communicate that payment to CAAD (which it proceeded to do on 12 January 2016).

1.16

On 10 January 2017, the Claimant presented its written arguments, reiterating the arguments used in the request:

1.16.1

To the effect that "only during the (...) month of November 2016, that is, four months after receipt by the Administrative Arbitration Centre of the request for constitution of this arbitral tribunal, did the ATA finally deign to re-record the IMI exemption relating to the aforementioned properties which it had wrongfully and unjustifiably cancelled in 2014";

1.16.2

Thus, "given the tacit admission by the ATA regarding the factual allegations (...) on the illegality of the assessment of IMI relating to the (...) aforementioned properties (...)" the Claimant understands that "it is not necessary to expend further considerations on the proof of this segment of the facts";

1.16.3

However, the Claimant understands that "as regards the properties located in the municipality of..., from the documentary evidence attached to the present proceedings (...) the following facts were proved (...)" which contradict the position assumed by the Respondent, taking into account the applicable legislation;

1.16.4

Wherefore the Claimant concludes in the same terms as in the Request.

1.17

On 20 January 2017, the Respondent submitted its written arguments, in the sense of reiterating the arguments already presented in its Answer and concluding in the same terms.

1.18

Following the arbitral order of 1 February 2017 (see footnote no. 2), inviting clarification of the scope of the arbitral request presented, the Claimant submitted a request on 7 February 2017 to the effect of clarifying that "it seeks the declaration of illegality of the assessments of the 1st and 2nd instalments of IMI relating to the year 2015 embodied in the IMI assessment documents no. 2015..., dated 26/02/2016, and no. 2015..., dated 1/04/2016, and the consequent annulment thereof in the part still not reimbursed, that is, in the amount relating to the 24 (twenty-four) properties located in the municipality of...", as well as "(...) it seeks (...) that the amount to be reimbursed be increased by compensatory interest at the legal rate, accrued from 1 May 2016 on the amount of EUR 13,696.19 and accrued from 1 August 2016 on EUR 13,401.88, until full reimbursement of these amounts".

1.19

The Respondent did not pronounce itself on the content of the clarifications referred to in the preceding point.

2. GROUNDS OF CLAIM

Of the Nature and Activity

2.1

The Claimant begins by clarifying that "the FIA..., as an autonomous patrimony without legal personality, is a special real estate fund created by Decree-Law no. 104/2009, of 12 May, which has as its managing company A..., S.A.", being "its capital represented by 138,477 participation units fully subscribed (...)" by "IAPMEI – Agency for Competitiveness and Innovation, I.P. and Tourism of Portugal, I.P." and "(...) has among its main objectives the support of companies that, although economically viable, face possible financial difficulties, being specially designed for the acquisition of immovable property integrated in the patrimony of these companies as a way of providing immediate financial resources to them".

2.2

In this context, the Claimant further clarifies that "in its policy to support the economic recovery of companies in financial difficulties (...) it acquires the immovable property that are affected by the economic activity pursued by the applying company" and "simultaneously cedes the use of those same properties to the applying company – through the conclusion of lease contracts – also establishing the possibility of their subsequent repurchase".

2.3

Thus, "it was precisely in this context and pursuant to and for the purposes of Decree-Law no. 104/2009, of 12 May, that (...) acquired, for valuable consideration, all the immovable property that comprise the portfolio of this real estate investment fund".

Of the Facts

2.4

In this context, the Claimant states that:

2.4.1

"received, on 18 March 2016, the IMI assessment relating to the 1st instalment of the year 2015 (...) identified (...)", and proceeded with its payment "(...) on 6 April 2016 (...)";

2.4.2

"on 17 June 2016 (...) received the IMI assessment relating to the 2nd instalment of the year 2015 (...)", and proceeded with its payment "(...) on 11 July 2016 (...)".

2.5

The Claimant proceeds by stating that "on 30 March 2016 (...) received the statement showing the IMI assessment for the year 2015 (...)", and from its "(...) simple reading (...) it clearly results that the majority of the properties (...) are (...) exempt from IMI (...)", but that "inexplicably, the properties (...) listed were taxed in respect of IMI, having incorrectly been fixed (...) tax amounts (...)" of tax.

Of the Tax Regime of FIA... in respect of IMI

2.6

In this matter, the Claimant states that "Decree-Law no. 104/2009, of 12 May, which created the FIA..., is silent on the applicable tax regime", but "this omission was remedied by the publication of Law no. 3-B/2010, of 28 April (...)", because "the said Law no. 3-B/2010, of 28 April, in its Article 117 determined that the Special Real Estate Fund for Support of Companies (...) applies the special tax regime applicable to real estate investment funds for housing rental (FIIAH) and to real estate investment companies for housing rental (SIIAH), approved by Article 102 of Law no. 64-A/2008, of 31 December".

2.7

Now, in accordance with what this regime establishes, in No. 6 of Article 8, there is verified, according to the Claimant, "(...) a total exemption of IMI with respect to the properties that are affected by the typical and principal activity of the real estate investment funds for housing rental, which consists of the rental of properties for permanent housing".

2.8

Thus, according to what is alleged by the Claimant, "in the context of the said referral expressly made by Article 117 of the 2010 State Budget, the properties that integrate the assets of the FIA... are subject to the special tax regime for the FIIAH (...), namely in respect of IMI exemption", wherefore it understands that "the legislator intended to apply to the FIA... a regime of total exemption in respect of property taxes, namely the exemption of IMI on the properties that comprise its assets".

2.9

Now, the Claimant understands that, as "the FIA... can only acquire properties that are used in the pursuit of the economic activity of the applying companies", "by all the more reason, all the properties acquired by the FIA..., namely the industrial pavilions or commercial and service facilities necessarily benefit from the exemption established with respect to the FIIAH for the properties intended for permanent housing rental".

2.10

In these terms, the Claimant states that "since its constitution in 2009 until the date of receipt of the IMI assessments in question, the FIA... has never been, and rightly so, taxed in respect of IMI" because "any other interpretation would result in the incorrect application of the norms in question and would lead, in practice, to the annihilation of the legal objectives that presided over the creation of the FIA... and to the referral itself to the tax regime of the FIIAH".

Of the Illegalities of the IMI Assessments no. 2015... and no. 2015...

2.11

According to the Claimant, "already on 13 August 2015 (...) it had initiated a process of gracious objection to the assessment of the 1st and 2nd Instalments of the (...) (IMI) relating to the year 2014", having obtained clarifications from the Financial Department of ..., to the effect that "exempt from corporate income tax (IRC) are the income of any nature obtained by FIIAH constituted between 1 January 2009 and 31 December 2015, operating in accordance with national legislation and observing the conditions provided for in the preceding articles" and "(...) exempt from IMI, while they remain in the portfolio of the FIIAH, are the urban properties intended for rental for permanent housing that integrate the patrimony of the investment funds referred to (...)" wherefore "from the conjunction of these two articles, it results that the Special Real Estate Fund for Support of Companies will be subject to total exemption from IMI and not the reduction to 50% of the IMI rates of Article 49 of the EBF".

2.12

Thus, for the Claimant, "it results crystallinely (...) that the Service Department for Municipal Property Tax understands (...) that the FIA... (...) is completely exempt from IMI, whereby the collection of this tax is not only illegal, wrong and unduly made, but also results from non-compliance with the express instruction of the competent body of the ATA", wherefore it understands, in consequence, that "both assessments here contested are tainted with illegality, by violation of Article 8 of the special tax regime applicable to the (...) (FIIAH) and to the (...) (SIIAH) (...), applicable to the FIA... by force of Article 117 of Law no. 3-B/2010, of 28 April".

2.13

In these terms, the Claimant understands that "such illegality generates the voidability of the mentioned assessments (...)" being that the "(...) error in the assessments now contested is clearly attributable to the services (...)", wherefore "compensatory interest is owed to the Claimant pursuant to Article 43, No. 1 of the General Tax Law, which are already being requested".

2.14

The Claimant concludes its request for arbitral pronouncement, to the effect that "the present objection should be considered well-founded, by proof and by way thereof, on the grounds of error in the subjection to IMI of the properties identified (...) the illegality of the assessments of the 1st and 2nd instalments of IMI relating to the year 2015 (...) and, in consequence":

2.14.1

"The IMI assessment act no. 2015..., dated 26/02/2016, in the amount of EUR 13,696.19 be annulled";

2.14.2

"The IMI assessment act no. 2015..., dated 1/04/2016, in the amount of EUR 13,401.88 be annulled";

2.14.3

"the reimbursement of those amounts already paid be ordered, in the total amount of EUR 27,098.97, plus compensatory interest (...) accrued (...) until full reimbursement of these amounts".

3. RESPONDENT'S ANSWER

3.1

The Respondent begins by stating in its Answer that "the FIA... was, at the date of the assessments (...) in question, owner of various properties located in different parishes" and that "by way of Law no. 83-C/2013, of 31 December (...), Article 49 of the Tax Benefits Statute ceased to provide for exemption from Municipal Property Tax, effective 1 January 2014, for properties integrated in real estate investment funds, with these now being able to benefit only from a reduction to half of the respective rates", whereby "(...) all exemptions that were recorded in the computer application of IMI in relation to the properties that integrated the patrimony of the Claimant were centrally terminated".

3.2

However, the Respondent proceeds by stating that, given that "Article 117 of Law no. 3-B/2010, of 28 April, determines that the FIA... (...) applies, with the necessary adaptations, the special tax regime applicable to real estate investment funds for housing rental (FIIAH) (...)", pursuant to which "it is considered that properties acquired by the FIA... that are let in lease or other form of costly cession of use to the alienating companies are exempt from IMI, provided that the properties continue to be used in the development of the respective activities", "the reduction of rate was informatically removed, by central services, with respect to all properties registered in the tax matrix in the name of the Claimant, after which instructions were transmitted to the finance services of the area of location of those properties to proceed with the recording of the exemption, if applicable, to the FIIAH".

3.3

Thus, the Respondent states that "by virtue of those instructions, the matrix updates should be locally triggered after verification that the properties of the respective territorial areas of competence fell within the scope of the said automatic exemption from IMI, that is, only the properties in those conditions can benefit from the exemption from IMI".

3.4

In these terms, taking into consideration what is alleged by the Claimant and "after checking the elements contained in the computer system regarding IMI, it was found that, meanwhile, all the properties belonging to the municipalities of..., ..., ..., ..., ..., ... and..., have already had the said exemption recorded, such situation being duly reflected in the assessment (...)" whereby, "consequently, it is found (...) that the competent services have already proceeded with the issuance of the respective reimbursement to the Claimant of the amounts unduly paid (...) (referring to the properties located in the municipality of...) and (...) (relating to the immovable property located in the municipalities of..., ..., ... and ...) (...)", "and is awaiting the processing of the change in the assessment referred to above and respective reimbursement of amounts paid with reference to the properties located in the municipalities of ... and ...".

3.5

In consequence, according to the Respondent, "(...) only the legality of the assessment relating to the properties located in the municipality of..." is discussed in the present proceedings, with respect to which "(...) the Claimant submitted, albeit with reference to the IMI of 2014 (...) a gracious objection, which was rejected by notification of 09.05.2016 (...)", whereby "not conforming to the decision, the Claimant submitted, in June, a hierarchical appeal, which is pending appreciation in the competent services for that purpose (...)".

3.6

Thus, the Respondent understands that:

3.6.1

"As for the properties located in the municipalities of..., ..., ..., ..., ..., ... and ... (...), with the exemption having been recorded, the annulment of the respective assessments has already been effected", "which results in the subsequent futility of the dispute" that the Respondent considers "attributable to the Claimant, as regards the municipality of..., because the annulment of the assessment (01-04-2016) and respective reimbursement (02-06-2016) are prior to the request for arbitral pronouncement (29-07-2016), the costs in this part being attributable to the Claimant" and "attributable to the Respondent, as regards the remaining municipalities";

3.6.2

"With respect to the properties located in the municipality of..., the assessment acts in question in the proceedings do not suffer from any illegality, because (...) proof was not made of the requirements for access to the requested tax benefit, namely, the lease, wherefore, in this segment, the arbitral request should be judged as not substantiated".

4. PRELIMINARY ASSESSMENT

4.1

The request for arbitral pronouncement is timely since it was presented within the period provided for in paragraph a) of No. 1 of Article 10 of RJAT.[3]

4.2

The parties have legal personality and capacity, are entitled with respect to the request for arbitral pronouncement and are duly represented, pursuant to Articles 4 and 10 of RJAT and Article 1 of Ministerial Order no. 112-A/2011, of 22 March.

4.3

The cumulation of requests made here by the Claimant is legal and valid, pursuant to Article 3, No. 1 of RJAT, given that the substantiation of the requests depends essentially on the appreciation of the same factual circumstances and on the interpretation and application of the same principles or rules of law.

4.4

With respect to the value of the Request for Arbitral Pronouncement, the Claimant does not indicate any value in that request but requests that the IMI assessment acts identified therein be annulled, requesting that "the reimbursement of those amounts already paid be ordered, in the total amount of EUR 27,098.97, plus compensatory interest at the legal rate (...)".

4.5

Now, taking into consideration the provisions of Article 306 and Article 297, both of the CPC, "when several requests are cumulated in the same action, the value is the amount corresponding to the sum of the values of all of them" (that is, EUR 27,098.97), whereby the value of the case is set at that amount (which has already been considered for the purposes of initial costs of the case and without implication in respect of final costs of the case (which in accordance with the provisions of Article 4, No. 4 of the Regulation of Costs in Tax Arbitration Proceedings, will be set by the Arbitral Tribunal in the chapter of the Decision).

4.6

As to the question of the competence of the Arbitral Tribunal to assess the request for arbitral pronouncement formulated by the Claimant, see Chapter 6 (Preliminary Issues).

4.7

No nullities are verified.

5. FACTUAL MATTER

Of the Proven Facts

5.1

The following facts are considered as proven (based on the documents identified below, attached by the Claimant, as well as based on the documents that are part of the administrative process, attached by the Respondent and documents attached to the Answer):

5.1.1

The Claimant is an FIA... which, as an autonomous patrimony without legal personality, assumes the nature of a special real estate fund (created by Decree-Law no. 104/2009, of 12 May), its capital being represented by 138,477 participation units fully subscribed by IAPMEI – Agency for Competitiveness and Innovation, I.P. and Tourism of Portugal, I.P.

5.1.2

The Claimant has, among its main objectives, the support of companies that, although economically viable, face possible financial difficulties, being specially designed for the acquisition of immovable property integrated in the patrimony of these companies as a way of providing immediate financial resources to them.

5.1.3

The Claimant, as a special real estate fund, has A..., S.A. as its managing company.

5.1.4

The assets of the Claimant (as FIA...) can integrate any properties, whether these are autonomous fractions or urban, rural or mixed real estate, provided that they are integrated in the patrimony of the companies and are used in the development of the respective activities.

5.1.5

Through capital from the Agency for Competitiveness and Innovation, I.P. and Tourism of Portugal, I.P., the Claimant (as FIA...) makes it possible for companies in financial difficulties to transform, during a limited period of time, their properties affected by the respective business activity into immediate financial availabilities, ensuring them the use of those same properties during that period through lease, as well as the possibility of their subsequent recovery.

5.1.6

In this context, the Claimant (as FIA...) acquired, for valuable consideration, all the properties that comprise its portfolio.

5.1.7

The Claimant was notified on 18 March 2016 of document no. 2015..., relating to the first instalment of the IMI assessment for the year 2015, dated 26 February 2016 (whose tax amount amounted to EUR 41,088.43), in the amount of tax of EUR 13,696.19, as per document no. 1 attached with the request.

5.1.8

The Claimant was notified on 30 March 2016 of the statement showing the IMI assessment identified in the preceding point, in which the Respondent included all the properties of the Claimant, having considered the majority of them as exempt from IMI, except those identified in document no. 5 attached with the request, which refer to the following Municipalities:

5.1.9

The Respondent proceeded on 1 April 2016 to the alteration of the IMI assessment for the year 2015 as a consequence of the recording of the exemption relating to the five properties located in the municipality of..., with the issuance of the respective reimbursement to the Claimant of the amounts unduly paid, in the amount of EUR 294.28, as per document no. 2 attached to the Answer.

5.1.10

The Claimant paid on 6 April 2016 the amount of tax referred to in point 5.1.7 above, as per document no. 2 attached to the request.

5.1.11

The Claimant was notified on 17 June 2016 of document no. 2015..., relating to the second instalment of the IMI assessment for the year 2015, relating to the assessment dated 1 April 2016 (that is, the IMI assessment for the year 2015, corrected pursuant to point 5.1.9 above), in the amount of tax of EUR 13,401.88, as per document no. 3 attached with the request.

5.1.12

The Claimant paid on 11 July 2016 the amount of tax referred to in the preceding point, as per document no. 4 attached with the request.

5.1.13

The Respondent proceeded on 5 November 2016 to the alteration of the IMI assessment of 1 April 2016 as a consequence of the recording of the exemption relating to the three properties located in the municipality of..., with the issuance of the respective reimbursement to the Claimant of the amounts unduly paid, as per documents no. 1 and 3 attached to the Answer.

5.1.14

The Respondent proceeded on 8 November 2016 to the alteration of the IMI assessment of 1 April 2016 as a consequence of the recording of the exemption relating to the seven properties located in the municipality of..., with the issuance of the respective reimbursement to the Claimant of the amounts unduly paid, as per documents no. 1 and 3 attached to the Answer.

5.1.15

The Respondent proceeded on 9 November 2016 to the alteration of the IMI assessment of 1 April 2016 as a consequence of the recording of the exemption relating to the property located in the municipality of..., with the issuance of the respective reimbursement to the Claimant of the amounts unduly paid, as per documents no. 1 and 3 attached to the Answer.

5.1.16

The Respondent proceeded on 10 November 2016 to the alteration of the IMI assessment of 1 April 2016 as a consequence of the recording of the exemption relating to the property located in the municipality of..., with the issuance of the respective reimbursement to the Claimant of the amounts unduly paid, as per documents no. 1 and 3 attached to the Answer.

5.1.17

The Respondent proceeded on 19 November 2016 to the alteration of the IMI assessment of 1 April 2016 as a consequence of the recording of the exemption relating to the two properties located in the municipality of..., and is awaiting the processing of the change in the assessment referred to above and respective reimbursement of the amounts unduly paid, as per documents no. 1 and 3 attached to the Answer.

5.1.18

The Respondent proceeded on 22 November 2016 to the alteration of the IMI assessment of 1 April 2016 as a consequence of the recording of the exemption relating to the property located in the municipality of..., and is awaiting the processing of the change in the assessment referred to above and respective reimbursement of amounts paid, as per documents no. 1 and 3 attached to the Answer.

5.1.19

The Respondent did not proceed with any alteration relating to the IMI assessment affecting the twenty-four autonomous fractions that constitute the property acquired by the Claimant on 26 March 2002, registered in the urban property tax matrix of the Union of the parishes of..., ... and..., under article..., whose total tax amount amounts to EUR 5,082.65

5.2

No other facts were proved that could affect the decision on the merits of the request.

Of the Unproven Facts

5.3

No evidence was obtained that, until the date of issuing this arbitral decision (17 February 2017), the Respondent had proceeded with the processing of the alteration of the IMI assessment of 1 April 2016 as a consequence of the recording of the exemption relating to the two properties located in the municipality of ... and had proceeded with the respective reimbursement of the amounts unduly paid by the Claimant.

5.4

No evidence was obtained that, until the date of issuing this arbitral decision (17 February 2017), the Respondent had proceeded with the processing of the alteration of the IMI assessment of 1 April 2016 as a consequence of the recording of the exemption relating to the property located in the municipality of ... and had proceeded with the respective reimbursement of the amounts unduly paid by the Claimant.

5.5

No other facts were verified as unproven with relevance to the arbitral decision.

6. PRELIMINARY ISSUES

Question of Subsequent Futility of the Dispute

6.1

The Respondent raised in its Answer the question of subsequent futility of the dispute, with respect to a part of the tax amount relating to the IMI assessment for the year 2015, which is the object of the request, taking into consideration:

6.1.1

The alteration of the IMI assessment dated 26 February 2016 (in the total amount of EUR 41,088.43), on 1 April 2016, as a consequence of the recording of the exemption relating to the properties located in the municipality of ...(see point 5.1.9), with the issuance of the respective reimbursement to the Claimant of the amounts unduly paid, in the amount of EUR 294.28;

6.1.2

The alteration of the IMI assessment dated 1 April 2016 (in the total amount of EUR 40,205.62, being equivalent to the IMI assessment identified in the preceding point, adjusted with the alteration referred to in the same point), on 5 November 2016, as a consequence of the recording of the exemption relating to the properties located in the municipality of ... (see point 5.1.13), with the issuance of the respective reimbursement to the Claimant of the amounts unduly paid, in the amount of EUR 3,480.63;

6.1.3

The alteration of the IMI assessment of 1 April 2016 (referred to in the preceding point), on 8 November 2016, as a consequence of the recording of the exemption relating to the properties located in the municipality of ... (see point 5.1.14), with the issuance of the respective reimbursement to the Claimant of the amounts unduly paid, in the amount of EUR 5,374.87;

6.1.4

The alteration of the IMI assessment of 1 April 2016 (referred to in point 6.1.2), on 9 November 2016, as a consequence of the recording of the exemption relating to the properties located in the municipality of ... (see point 5.1.15), with the issuance of the respective reimbursement to the Claimant of the amounts unduly paid, in the amount of EUR 365.50;

6.1.5

The alteration of the IMI assessment of 1 April 2016 (referred to in point 6.1.2), on 10 November 2016, as a consequence of the recording of the exemption relating to the property located in the municipality of ... (see point 5.1.16), with the issuance of the respective reimbursement to the Claimant of the amounts unduly paid, in the amount of EUR 219.32;

6.1.6

The alteration of the IMI assessment of 1 April 2016 (referred to in point 6.1.2), on 19 November 2016, as a consequence of the recording of the exemption relating to the properties located in the municipality of ... (see point 5.1.17), and is awaiting the processing of the change in the assessment referred to above and respective reimbursement of amounts unduly paid, in the amount of EUR 1,047.57;

6.1.7

The alteration of the IMI assessment of 1 April 2016 (referred to in point 6.1.2), on 22 November 2016, as a consequence of the recording of the exemption relating to the property located in the municipality of ... (see point 5.1.18), and is awaiting the processing of the change in the assessment referred to above and respective reimbursement of amounts paid, in the amount of EUR 860.00.

6.2

The Claimant notified to pronounce itself on the question of subsequent futility of the dispute identified above, with respect to the properties referred to therein, stated in the request submitted for that purpose on 20 December 2016 the following:

6.2.1

"The properties that integrate the portfolio of the FIA... located in the municipalities of ... (3 properties) ... (1 property), ... (7 properties), ... (1 property) and ...(1 property) had the respective exemptions recorded during the past month of November, that is, four months after receipt by the Arbitration Centre (...) of the request for constitution of this arbitral tribunal";

6.2.2

"The content of the information contained in paragraph b) of point 1 of (...) the order of 12/12/2016" is confirmed, that "having been made changes to the assessments relating to the properties located in the (...) municipality of..., (...) in the municipality of..., (...) in the municipality of..., (...) in the municipality of..., (...) in the municipality of..., (...) in the municipality of..., (...) and in the municipality of ...(...), the competent services have already proceeded with the issuance of the reimbursement (...) of the amounts unduly paid (...) relating to the (...) properties located in the municipality of ... (...), and in the municipalities of..., ..., ... and ... (...), and are awaiting the processing of the change in the assessment (...) and respective reimbursement of amounts paid with reference to the properties located in the municipalities of ... and...".

6.2.3

"The content of the information contained in paragraph c) of point 1 of (...) the order of 12/12/2016 is partially confirmed, adding that in the present request for Arbitral Pronouncement is still discussed the payment of compensatory interest by the ATA accrued (...)" because the "annulment of the mentioned assessments, at a moment after the institution of this proceedings and although only with respect to the properties located in the municipalities of..., ..., ..., ..., ... and ... does not, by itself, constitute a fact that implies the unnecessary for an arbitral pronouncement on the present dispute, to the extent that such pronouncement will always produce effects with respect to the mentioned request for payment of compensatory interest".

6.3

Indeed, the Claimant reiterates that "(...) it is considered that there is no subsequent futility of the (...) dispute, to the extent that, in addition to the requests for annulment of the assessments (...) compensatory interest was also requested (...) on the amounts subject to those assessments" and the "annulment of the mentioned assessments, at a moment after the institution of (...) proceedings (...) does not, by itself, constitute a fact that implies the unnecessary for an arbitral pronouncement on the present dispute (...)".

6.4

Now, in general terms, the question of subsequent futility of the dispute as a cause of termination of the instance, pursuant to Article 287, paragraph e) of the CPC, concerns the principle of stability of the instance which begins with the formulation of a request consisting of a material claim with a request for its judicial protection (procedural claim), which flows from an essential or instrumental causal legal fact (grounds for claim).

6.5

The dispute becomes futile if a fact, or a situation, occurs after its institution which implies the unnecessary to pronounce on it due to lack of effect, and this unnecessary must be assessed in objective terms, not being confused with a borderline situation, then a procedural prerequisite, which is the interest in acting.[4][5][6]

6.6

Thus, it is incumbent on the judge to choose either the termination of the instance due to futility of the dispute (as said, to be assessed objectively) or the unnamed dilatory exception (concept of relation between the party and the object of the process) which, as a rule, "ab initio" may be revealed in the course of the case.[7]

6.7

In this context, taking into consideration the facts given as proven in points 5.1.13 to 5.1.18 of the preceding Chapter, based on the positions defended by both Parties, as well as the facts supported by the various documents attached to the file (including the respective administrative process), this Tribunal considers that the Claimant is correct in stating that the annulment of part of the IMI assessments for the year 2015 (referred to above), at a moment after the date of institution of the proceedings (29 July 2016), will determine, with respect to the properties covered by those annulments, the unnecessary to assess the legality of those assessments already annulled (due to subsequent futility), but will always determine the analysis of the question of the incidence of compensatory interest on the amounts that may have been unduly paid, as well as the analysis and determination of responsibility for the costs of the arbitration.

Question of Material Incompetence of the Arbitral Tribunal

6.8

Nevertheless, the foregoing notwithstanding, it should be noted that, in the proceedings, the requests formulated by the Claimant were to the effect of obtaining:

6.8.1

The declaration of illegality and consequent annulment of the following assessment acts:

a) IMI Assessment no. 2015..., dated 26/02/2016, in the amount of EUR 13,696.19;

b) IMI Assessment no. 2015..., dated 1/04/2016, in the amount of EUR 13,401.88.

6.8.2

The reimbursement of those amounts already paid, in the total amount of EUR 27,098.97, plus compensatory interest at the legal rate, accrued until full reimbursement of the amounts paid as tax.

6.9

In this context, and notwithstanding the clarification requested by this Tribunal from the Claimant (by means of the arbitral order of 1 February 2017) regarding the scope of the request for arbitral pronouncement (see point 1.18), the Claimant limited itself to confirming the object of the request for arbitral pronouncement as initially formulated, that is, reiterated that it materialized in the request for "(...) declaration of illegality of the assessments of the 1st and 2nd instalments of IMI relating to the year 2015 embodied in the documents (...) no. 2015..., dated 26/02/2016, and no. 2015..., dated 1/04/2016, and the consequent annulment thereof in the part still not reimbursed, that is, in the amount relating to the 24 (twenty-four) properties located in the municipality of..." (underlined).

6.10

Additionally, the Claimant reiterated in those clarifications provided that it intended "(...) that the amount to be reimbursed be increased by compensatory interest at the legal rate, accrued from 1 May 2016 on the amount of EUR 13,696.19 and accrued from 1 August 2016 on EUR 13,401.88, until full reimbursement of these amounts".

6.11

It should be noted here that the Respondent said nothing about the content of the clarifications provided by the Claimant.

6.12

In this context, it should be noted that, in accordance with the documents attached to the file and in accordance with the facts given as proven in Chapter 5 of this Decision, each of the billing documents referred to in the preceding point (which the Claimant calls IMI assessments) has underlying an assessment with a date that does not coincide (no. 2015 ... refers to an assessment dated 26/02/2016 and no. 2015... refers to an assessment dated 1/04/2016), because the Respondent effected on 1 April 2016 the alteration of the IMI assessment of 26 February 2016 as a consequence of the recording of the exemption relating to the properties located in the municipality of ..., with the issuance of the respective reimbursement of the amounts unduly paid, in the amount of EUR 294.28 (see point 5.1.9 and point 6.1.1).

6.13

Nevertheless, as we have seen, in November 2016 (various dates), the Respondent also made alterations to the IMI assessment (dated 1 April 2016) as a consequence of the recording of the exemptions relating to the properties located in the municipalities of ..., ..., ..., ..., ... and ... (see points 6.1.2 to 6.1.7 above), with the consequent effects relating to the various amounts paid in excess with respect to the payment of IMI for the year 2015 (first and second instalments).

6.14

Thus, remained without any alteration, as the Claimant confirmed in its request dated 7 February 2017, the IMI assessment relating to the year 2015, as far as the properties located in the municipality of ... are concerned, because, according to what the Respondent alleges in its Answer, "(...) the assessment acts in question in the proceedings do not suffer from any illegality, because (...) proof was not made of the requirements for access to the requested tax benefit, namely the lease, whereby, in this segment, the arbitral request should be judged as not substantiated" (see point 3.6.2 above).

6.15

In these terms, and because there has not been the annulment of the total tax amount relating to the IMI for the year 2015, as referred to above in point 5.1.9 and in points 5.1.13 to 5.1.19, it is important here, previously, to address whether this Arbitral Tribunal is competent to analyse and decide the main question underlying the proceedings, which will be to know whether:

6.15.1

The Claimant is correct in stating that as "the FIA... can only acquire properties that are used in the pursuit of the economic activity of the applying companies", "by all the more reason, all the properties acquired by the FIA..., namely the industrial pavilions or commercial and service facilities necessarily benefit from the exemption established with respect to the FIIAH for properties intended for permanent housing rental", concluding that "(...) both assessments here contested are tainted with illegality (...)" that "(...) generates the voidability of the mentioned assessments (...)" or

6.15.2

On the contrary, the Respondent is correct in stating that the assessment acts in question in the proceedings do not suffer from any illegality, because "(...) the Claimant, in the request for arbitral pronouncement, does not make any proof of the fulfilment of the requirements for access to the benefit, namely the lease of the properties (...) located in...", "the proof of this condition being essential and prior to the verification of the others (...)".

6.16

Thus, preliminarily, it should be noted that, in accordance with Article 113 of the IMI Code, "the tax is assessed annually, with respect to each municipality, by the central services of the General Tax Authority, based on the taxable property values of the properties and with respect to the taxpayers that are recorded in the tax matrices on 31 December of the year to which it relates", being that the assessment "(...) is effected in the months of February and March of the following year".

6.17

Additionally, in accordance with Article 119 of the IMI Code, "the services of the General Tax Authority send to each taxpayer, by the end of the month preceding the month of payment, the respective billing document, with a breakdown of the properties, its parts capable of independent use, respective taxable property value and the tax amount attributed to each municipality of the location of the properties" and, pursuant to Article 120 of the same Code, the tax must be paid in one, two or three instalments (during the months of April, July and November, respectively), depending on the amount of tax assessed.

6.18

In these terms, the payment instalments (one, two or three, depending on the total amount of tax to be paid annually) of an IMI assessment effected pursuant to the respective Code are not independently challengeable by virtue of originating from a single annual obligation, and the division of this annual assessment into instalments is nothing more than a mere technique of tax collection.[8]

6.19

In the concrete case, the Claimant states, in all circumstances in which it manifests its request for arbitral pronouncement, that it seeks the declaration of illegality and consequent annulment of the assessment acts it enumerates, whether they are the billing notices relating to the first and second instalments relating to the IMI assessment for the year 2015 [regardless of whether there was an assessment on 1 April 2016 that corrected the IMI assessment for the year 2015 (initially assessed on 26 February 2016), correcting the value of the initial tax amount from EUR 41,088.43 to EUR 40,205.62].

6.20

In these terms, whether in the initial pleading that gave rise to the arbitral proceedings, or in the requests dated 20 December 2016, 7 February 2017, as well as in written arguments (presented on 10 January 2017), the Claimant has always substantiated as the object of its request for arbitral pronouncement the declaration of illegality and consequent annulment of the first (billing document no. 2015...) and second instalment of the IMI assessment(s) relating to the year 2015.

6.21

So much so that the value attributed to the arbitral procedure amounted to the total of the first and second instalments of IMI for the year 2015 (EUR 27,098.97) and not to the total of the IMI assessment for that year [that is, to the total of the three instalments, in the amount of EUR 40,205.62 (already after effecting the adjustment of EUR 294.28 relating to the tax relating to the properties located in the municipality of ...).

6.22

Now, being this the object of the proceedings, the Arbitral Tribunal cannot know and decide on the request for declaration of illegality and consequent annulment of the IMI assessment relating to the year 2015 in the part that concerns the properties located in the municipality of..., given that this concerns two of the three payment instalments of the tax and, as we have seen (point 6.18), these are not independently challengeable.

6.23

Thus, if it were to do so, the Arbitral Tribunal would be exceeding, in its analysis, given the above, the request formulated by the Claimant, whereby it is considered materially incompetent to do so, under penalty of incurring a defect of undue pronouncement.[9]

7. LEGAL GROUNDS

7.1

Given the conclusions referred to in the analysis of Preliminary Issues conducted within the scope of the preceding Chapter (see points 6.7, 6.22 and 6.23), it is important here in this chapter only to analyse the question of reimbursement of tax paid unduly, effected pending the proceedings (and only as regards the part of the assessment annulled by the Respondent), as well as to analyse the question of responsibility for payment of the costs of the arbitration.

Of the Reimbursement of Tax Paid with Compensatory Interest

7.2

With respect to the payment of compensatory interest, in accordance with No. 5 of Article 24 of RJAT, "payment of interest, regardless of its nature, is due, pursuant to the provisions set forth in the general tax law and in the Code of Tax Procedure and Process", resulting from this that an arbitral decision is not limited to the assessment of the legality of the tax act.

7.3

In the same way, in accordance with Article 24, No. 1, paragraph b) of RJAT, it should be understood that the request for compensatory interest is a claim relating to tax acts (e.g. assessment acts), which aims to clarify/concretize the content of the duty to "re-establish the situation that would exist if the tax act subject of the arbitral decision had not been enacted, adopting the acts and operations necessary for that purpose".

7.4

As Jorge Lopes de Sousa states, "it is within the competence of the arbitral tribunals operating in CAAD to set the effects of the arbitral decision which can be defined in a process of judicial challenge, namely the annulment of the acts whose declaration of illegality is requested, the condemnation of the Tax and Customs Authority to the payment of compensatory interest (...)" (underlined).[10][11]

7.5

Thus, in tax arbitration proceedings there may be a place for the payment of compensatory interest, pursuant to Articles 43, Nos 1 and 2, and 100 of the General Tax Law (LGT), when it is determined that there was error attributable to the services from which resulted the payment of tax debt in an amount superior to the legally due, even if not expressly requested.[12]

7.6

In these terms, the right to compensatory interest will always depend on the verification of an error attributable to the services of the Respondent, from which resulted a payment of tax debt in an amount superior to the legally due, which occurred in the part of the IMI assessment for the year 2015 annulled by the Respondent pending the arbitral proceedings.

7.7

Thus, given what is established in Article 61 of the Code of Tax Procedure and Process (CPPT), with the requirements of the right to compensatory interest met (that is, verified the existence of error attributable to the services from which resulted payment of tax debt in an amount superior to the legally due, as provided for in No. 1 of Article 43 of the LGT), the Claimant is entitled to compensatory interest at the legal rate, calculated on the amounts paid in excess, within the scope of the IMI assessment relating to the year 2015 (in the part of the tax amount annulled by the Respondent), which will be counted in accordance with the provisions of No. 3 of Article 61 of the CPPT, that is, from the date of payment of the unduly paid tax until the date of issuance of the respective credit note.[13]

Of Responsibility for Payment of the Costs of the Arbitration

7.8

In accordance with Article 22, No. 4 of RJAT, "the arbitral decision issued by the arbitral tribunal includes the setting of the amount and apportionment between the parties of the costs directly resulting from the arbitral proceedings".

7.9

Thus, pursuant to Article 527, No. 1 of the CPC (by force of Article 29, No. 1, paragraph e) of RJAT), it must be established that the Party which has given cause to the costs shall be condemned to pay them or, in the absence of a decision on the merits of the action, the party which drew benefit from the proceedings.

7.10

In this context, No. 2 of the said article specifies the expression "has given cause", in accordance with the principle of decaissement, understanding that a party gives cause to the costs of the proceedings in the proportion in which it is unsuccessful.

7.11

In the case under analysis, taking into consideration what is set forth in this Decision, the principle of proportionality requires that responsibility for costs be attributed to the Claimant and to the Respondent in the proportion of their respective unsuccessfulness (14% and 86% respectively), in accordance with Article 12, No. 2 of RJAT and Article 4, No. 4 of the Regulation of Costs in Tax Arbitration Proceedings.

8. DECISION

8.1

Taking into consideration the analysis effected, this Arbitral Tribunal decided:

8.1.1

To absolve the Respondent, on grounds of subsequent futility of the dispute, as to the request for annulment of the IMI for the year 2015 that fell on the properties identified in the proceedings relating to the Municipalities of ... (3 properties), ... (1 property), ... (7 properties), ... (1 property) and ... (1 property), as well as as to the request for annulment of the IMI assessment for the same year that fell on the property identified in the proceedings relating to the Municipality of ... (5 properties), with the consequent effects thereof;

8.1.2

In consequence, to condemn the Respondent to reimburse the tax unduly paid, with reference to the properties referred to in the preceding point (which has not yet been reimbursed to date), with the exception of those located in the Municipality of...;

8.1.3

To declare the Arbitral Tribunal as materially incompetent to know the request for challenge of the first and second instalments of IMI relating to the year 2015 affecting the properties identified in the proceedings relating to the Municipality of ... (24 properties), with the consequent effects thereof;

8.1.4

To condemn the Claimant and the Respondent to the payment of the costs of the present proceedings, in the proportion of their respective unsuccessfulness.

Value of the case: Taking into consideration the provisions of Articles 306, No. 2 of the CPC, Article 97-A, No. 1 of the CPPT and Article 3, No. 2 of the Regulation of Costs in Tax Arbitration Proceedings, the value of the case is set at EUR 27,098.07.

Costs of the proceedings: Pursuant to the provisions of Table I of the Regulation of Costs in Tax Arbitration Proceedings, the value of the costs of the Arbitral Proceedings is set at EUR 1,530.00, to be charged to the Claimant (14%) and to the Respondent (86%), in accordance with Article 22, No. 4 of RJAT.

Let it be notified.

Lisbon, 17 February 2017

The Arbitrator

Sílvia Oliveira

[1] The drawing up of the present decision is governed by the spelling prior to the Orthographic Agreement of 1990, except with respect to transcriptions made hereto.

[2] This date was altered by the arbitral order of 1 February 2017 to 17 February 2017, pursuant to which the Claimant was notified to, within 5 days, come before the proceedings to properly clarify the scope of the arbitral request presented and the Respondent was also notified to, within the same period, counting from the date of notification of the attachment of the clarifications that were to be provided by the Claimant.

[3] In this context, it should be noted that from the analysis of the file it emerges that the request for arbitral pronouncement has as its object the acts of assessment of IMI relating to the year 2015, on the grounds of illegality of the said acts, relating to the properties identified in the proceedings, the Claimant seeking that the Arbitral Tribunal declare the illegality of these assessments and, in consequence, annul them and reimburse the amounts paid, plus compensatory interest.

Thus, it was analysed the moment of the beginning of the counting of the period for the deduction of the request for arbitral pronouncement relating to the request for annulment of the assessments identified, taking into consideration that the provision in Article 10, No. 1, paragraph a) of RJAT (relating to tax assessment acts) refers (as regards the beginning of the counting of the period) to what is established in Nos 1 and 2 of Article 102 of the CPPT (that is, the counting of the period begins on the day following the "end of the period for voluntary payment of tax instalments legally notified to the taxpayer").

Now, in the case under analysis, we have IMI to be paid in three instalments (up to the end of the months of April, July and November 2016), and this payment in instalments is nothing more than a technique of tax collection and not a partial payment properly speaking.

In these terms, for the purpose of counting the period provided for in Article 10 of RJAT, it must be assessed in function of the "end of the period for payment of each of the tax instalments legally notified" and, given that the law does not comprise the autonomous challenge of each of the tax instalments in question, on the date of presentation of the request for arbitral pronouncement (29 July 2016) the 90-day period provided for in Article 10 of RJAT was still in course, counting from the day following the end of the period for payment of the 2nd instalment (31 July 2016) of the tax in question, whereby it is concluded that the request is timely.

[4] There are situations in which, although the party insists on the continuation of the dispute, the unfolding of the same points to a decision which will be inane or irrelevant in terms of not modifying the situation put in judgement.

[5] Procedural interest is determined before the need for judicial protection through the means by which the "plaintiff" unilaterally opted (in this sense, see Judgment of the Supreme Court of Justice no. 501/10 of 15 March 2012).

[6] In fact, the impossibility or subsequent futility of the dispute (which constitutes a cause of termination of the instance) occurs when, by fact occurring pending such instance, "the claim of the plaintiff cannot be maintained by virtue of the disappearance of the subjects or of the object of the proceedings or finds satisfaction outside the scheme of the remedy sought", and that, "(...) the solution of the dispute ceases to interest (...) due to impossibility of achieving the aimed result (...)" or "(...) by it having already been achieved by another means" (in this sense see José Lebre de Freitas, João Redinha, Rui Pinto, in "Code of Civil Procedure", Annotated, Vol. 1st, 2nd ed., 2008, annotation 3 to Article 287, page 512, cited in the Judgment of the Supreme Administrative Court no. 0875/14 of 30 July 2014).

[7] Interest in acting constitutes an unnamed dilatory exception, of official knowledge (Articles 494 and 495 of the CPC), leading to the absolution of the instance (in this sense, see Judgment of the Supreme Court of Justice no. 501/10 of 15 March 2012).

[8] In this sense, see notably the Judgment of the Supreme Administrative Court of 27 October 2016 (no. 09711/16) and A. Braz Teixeira, in "Principles of Tax Law", Volume I, 3rd Edition, Almedina, 1995, pp. 243 et seq.).

[9] In this sense, see Judgment of the Supreme Administrative Court of 27 October 2016 (no. 09711/16), pursuant to which it is defended that "(...) excess of pronouncement presupposes that the judge goes beyond the knowledge requested of it by the parties. In other words, there will be excess of pronouncement whenever the cause of the judgment does not identify itself with the grounds for claim or the judgment does not coincide with the request. Whereby it must be considered null, by defect of ultra petita, the judgment in which the Judge invokes, as a reason for deciding, a title, or a cause or legal fact, essentially different from that which the party placed on the basis (grounds for claim) of its conclusions (request). In the tax judicial process the defect of excess of pronouncement, as a cause of nullity of the judgment, is provided for in Article 125, No. 1 of the C.P.P. Tributário in the last segment of the norm. In the regime of tax arbitration, it should, above all and taking into consideration the most recent jurisprudence of the Constitutional Court, be framed in the grounds of undue pronouncement enshrined in the cited Article 28, No. 1, paragraph c) of the R.J.A.T., the challenge of the arbitral decision also on the grounds of the alleged material incompetence of the arbitral Tribunal (cfr. ac. T. Constitutional 177/2016, II series of the Official Gazette of 3/5/2016)".

[10] See Leite de Campos, Diogo, Silva Rodrigues, Benjamim, Sousa, Jorge Lopes, in "General Tax Law - Annotated and Commented", 4th Ed., 2012, page 116).

[11] On the subject of compensatory interest can see from the same author (Sousa, Jorge Lopes), Interest in Tax Relations, in "Fundamental Problems of Tax Law", Lisbon, 1999, page 155 et seq.).

[12] In this sense, see Judgment of the Supreme Administrative Court no. 05110/11 of 31-01-2012, pursuant to which "the reconstitution of the hypothetical current situation justifies the obligation of restitution of the tax that has been paid, as well as the payment of compensatory interest, whose attribution to the taxpayer, pursuant to law, is not dependent on the formulation of a request to that effect, a position which is in accordance with the consequent effects flowing from the annulment of the tax act, as well as from the fact that payment of interest is not dependent on a request" (underlined). In the same context, cfr. Article 100 of the LGT, Article 61, No. 3 of the CPPT, the Judgment of the Supreme Administrative Court of 11/2/2009 (rec. 1003/08), the Judgment of the Supreme Administrative Court of 11/7/2006 (proc. 1258/06), the Judgment of the Supreme Administrative Court of 23/1/2007 (proc. 205/04) and Diogo Leite de Campos and Others, in "General Tax Law, Commented and Annotated", Vislis, 3rd Edition, 2003, p.520.

[13] Valid understanding for the regularisations of tax effected or to be effected relating to the amounts unduly paid with respect to the IMI/2015 affecting the properties located in the municipalities of..., ..., ..., ..., ... and ... (as referred to in points 5.1.13 to 5.1.18 above).