Stamp Tax on Building Land Over €1M: CAAD Rules on Verba 28.1 TGIS Application

ARBITRAL AWARD

I – REPORT

1. The taxpaying company "A..., S.A.", with the NIPC [Tax and Social Security Number]... (hereinafter "Claimant"), filed on 29 July 2016, a request for the constitution of a Collective Arbitral Tribunal, in accordance with the combined provisions of articles 2 and 10 of Decree-Law No. 10/2011 of 20 January (Legal Framework for Arbitration in Tax Matters, hereinafter "RJAT"), in which the Tax and Customs Authority (hereinafter "TA" or "Defendant") is the defendant.

2. The Claimant requests, cumulatively, an arbitral pronouncement on the illegality and consequent annulment of the assessment acts in Stamp Duty (hereinafter "SD") under article 1, paragraph 1 of the Stamp Duty Code (hereinafter "SDC") and item 28.1 of the General Table of Stamp Duty (hereinafter "GTSD"), relating to the year 2015 and to properties of which the Claimant is the owner, and formalized in the assessments nos. 2016..., 2016..., 2016..., 2016..., 2016..., 2016..., 2016..., 2016..., 2016..., 2016..., 2016..., 2016..., 2016..., 2016..., 2016..., 2016..., 2016..., 2016..., 2016..., 2016..., 2016..., 2016..., 2016..., 2016..., 2016..., 2016..., 2016..., 2016..., 2016..., 2016..., 2016..., 2016..., 2016..., 2016..., 2016..., 2016..., 2016..., 2016..., 2016..., 2016..., 2016..., 2016..., 2016..., 2016..., 2016..., 2016..., 2016..., 2016..., 2016..., 2016..., 2016..., 2016..., 2016..., 2016..., 2016..., 2016..., 2016..., 2016..., 2016..., 2016..., 2016..., 2016..., 2016..., 2016..., 2016..., 2016..., 2016..., 2016..., 2016..., 2016..., 2016..., 2016..., 2016..., 2016... and 2016..., in the total amount of € 474,970.25.

3. In accordance with the provisions of paragraph a) of article 6, point 2 and paragraph b) of article 11, point 1 of the RJAT, as amended by article 228 of Law No. 66-B/2012 of 31 December, the Deontological Council appointed the arbitrators of the Collective Arbitral Tribunal, who communicated acceptance of the assignment within the applicable period, and notified the parties of this appointment on 22 September 2016.

4. The Collective Arbitral Tribunal was constituted on 10 October 2016; it was constituted regularly and has material jurisdiction, in accordance with the provisions of articles 2, point 1, paragraph a), 5, 6, point 1, and 11, point 1 of the RJAT (as amended by article 228 of Law No. 66-B/2012 of 31 December).

5. In accordance with points 1 and 2 of article 17 of the RJAT, the TA was notified on 20 October 2016 to submit a response.

6. The TA submitted its Response on 23 November 2016.

7. In this response, the TA alleges, in summary, the complete lack of merit of the Claimant's request.

8. The Arbitral Order of 25 November 2016 dispensed with the holding of the meeting referred to in article 18 of the RJAT, giving the parties the possibility of submitting written arguments in successive periods of 10 days; and establishing, as the deadline for pronouncement of the final decision, 30 days after submission of arguments by the Defendant, or the end of the period for submission of such arguments.

9. In a Petition submitted on 6 December 2016, the Claimant waived submitting written arguments.

10. The Arbitral Order of 8 December 2016 ordered the joinder, by the Claimant, of document no. 101.

11. The Defendant submitted its written arguments on 13 December 2016.

12. In a Petition submitted on 20 December 2016, the Claimant joined to the case file document no. 101.

13. The Arbitral Order of 20 December 2016, granting the Defendant the exercise of the right to reply regarding the joinder of document no. 101, also ordered the joinder to the case file, by the Defendant, of new evidentiary elements necessary for the clarification of the truth and for the pronouncement on the merits of the case, elements whose existence was already indicated regarding the procedure for determining the patrimonial value of the properties to which the assessments subject to the dispute relate, including among these elements:

• IMI Model 1 Declaration [Property Tax Declaration] that formed the basis of the evaluation of the properties, in force at the time of the tax facts underlying the assessments in question;

• Any annexes referred to in article 37, point 3 of the IMI Code [Property Tax Code] and relating to such evaluation;

• The corresponding evaluation record prepared by the expert appraiser;

• The notification of the evaluation result;

• Information from the competent Tax Office relating to other relevant aspects.

1. In a Petition submitted on 16 January 2017, the Defendant sent the elements requested by the Arbitral Order of 20 December 2016 relating to 19 of the properties, protesting to join the elements lacking for 6 of the properties.

2. The Arbitral Order of 18 January 2017 granted the Claimant a period to exercise the right to reply regarding the joinder to the case file of the evidentiary elements sent by the Defendant.

3. In a Petition submitted on 25 January 2017, the Defendant sent the remaining elements requested by the Arbitral Order of 20 December 2016, namely those relating to the 6 properties for which it had protested to join such elements.

4. In a Petition submitted on 25 January 2017, the Claimant made pronouncements on the joinder to the case file of the elements presented by the Defendant through its Petition of 16 January 2017.

5. In a Petition submitted on 30 January 2017, the Claimant made pronouncements on the joinder to the case file of the elements presented by the Defendant through its Petition of 25 January 2017.

6. The case is not affected by nullities and there are no remaining preliminary or subsequent questions, either substantive or procedural, that prevent the consideration of the merits of the case, the conditions being met for the pronouncement of a final decision.

7. The TA proceeded with the appointment of its representatives in the case file and the Claimant joined a power of attorney, with the Parties thus being properly represented.

8. The Parties have legal personality and capacity and have standing, in accordance with articles 4 and 10, point 2 of the RJAT and article 1 of Portaria [Administrative Order] No. 112-A/2011 of 22 March.

II – FINDINGS OF FACT

II.A. Facts Considered Proven and Relevant to the Decision

1. The Claimant is a limited company whose principal activity is banking.

2. The Claimant, in the course of its activity, is the owner of various properties, including land for construction.

3. The Claimant was notified of the following assessments relating to the year 2015 (and corresponding to the apportionment of SD in three installments):

1. The Stamp Duty assessments were issued with reference to the following 25 properties of which the Claimant is the owner:

a) urban property ("land for construction") with cadastral article..., of the union of parishes of... and..., municipality of... and district of Lisbon

b) urban property ("land for construction") with cadastral article..., of the union of parishes of... and..., municipality of... and district of Lisbon

c) urban property ("land for construction") with cadastral article..., of the parish of..., municipality of... and district of Lisbon

d) urban property ("land for construction") with cadastral article..., of the parish of..., municipality of... and district of Lisbon

e) urban property ("land for construction") with cadastral article..., of the parish of..., municipality of... and district of Lisbon

f) urban property ("land for construction") with cadastral article..., of the union of parishes of..., ... and...-..., municipality of... and district of Lisbon

g) urban property ("land for construction") with cadastral article..., of the union of parishes of..., ... and..., municipality of... and district of Lisbon

h) urban property ("land for construction") with cadastral article..., of the union of parishes of... and..., municipality of... and district of Porto

i) urban property ("land for construction") with cadastral article..., of the parish of..., municipality and district of Porto

j) urban property ("land for construction") with cadastral article..., of the parish of Paranhos, municipality and district of Porto

k) urban property ("land for construction") with cadastral article..., of the parish of..., municipality and district of Porto

l) urban property ("land for construction") with cadastral article..., of the parish of..., municipality and district of Porto

m) urban property ("land for construction") with cadastral article..., of the parish of..., municipality and district of Porto

n) urban property ("land for construction") with cadastral article..., of the parish of..., municipality and district of Porto

o) urban property ("land for construction") with cadastral article..., of the parish of..., municipality of... and district of Porto

p) urban property ("land for construction") with cadastral article..., of the parish of..., municipality of... and district of Setúbal

q) urban property ("land for construction") with cadastral article..., of the union of parishes of... and..., municipality of... and district of Setúbal

r) urban property ("land for construction") with cadastral article..., of the parish of..., municipality of... and district of Setúbal

s) urban property ("land for construction") with cadastral article..., of the union of parishes of... and..., municipality of... and district of Viana do Castelo

t) urban property ("land for construction") with cadastral article..., of the parish of..., municipality of... and district of Setúbal

u) urban property ("land for construction") with cadastral article..., of the parish of..., municipality of... and district of Setúbal

v) urban property ("land for construction") with cadastral article..., of the union of parishes of... and..., municipality of... and district of Setúbal

w) urban property ("land for construction") with cadastral article..., of the parish of..., municipality of... and district of Faro

x) urban property ("land for construction") with cadastral article..., of the parish of..., municipality of... and district of Faro

y) urban property ("land for construction") with cadastral article..., of the parish of..., municipality of... and district of Faro

1. In the Property Record Books of each of the 25 properties there appears the item "Location Coefficient Type: Housing"

2. In the "Property Evaluation Data" in each of the matrices of the 25 properties there appears the item "Use/Purpose: Housing"

3. The urban property with cadastral article..., of the parish of..., municipality of... and district of Lisbon (former cadastral article...), corresponds to lot... of subdivision permit.../2001 of the Municipal Chamber of..., which authorized construction of a building intended for housing, with four stories and with implementation area of 845m2.

4. The urban property with cadastral article..., of the parish of..., municipality of... and district of Lisbon (former cadastral article...), corresponds to lot... of subdivision permit.../2001 of the Municipal Chamber of..., which authorized construction of a building intended for housing, with four stories and with implementation area of 845m2.

5. The urban property with cadastral article..., of the parish of..., municipality of... and district of Lisbon (former cadastral article...), corresponds to lot... of subdivision permit.../2001 of the Municipal Chamber of..., which authorized construction of a building intended for housing, with four stories and with implementation area of 845m2.

6. The urban property with cadastral article..., of the union of parishes of... and..., municipality of... and district of Porto (former cadastral article...), corresponds to lot... of subdivision permit.../2004 of the Municipal Chamber of..., which authorized construction of a building intended for "Facilities", with ground floor plus 2 stories and with implementation area of 1000.9 m2.

7. The urban property with cadastral article..., of the union of parishes of... and..., municipality of... and district of Setúbal (former cadastral articles..., ... and...), corresponds to lot... of subdivision permit.../1985 of the Municipal Chamber of..., which authorized construction of 3 buildings intended for housing, with four stories and with total implementation area of 920.20m2.

8. The urban property with cadastral article..., of the union of parishes of..., ... and..., municipality of... and district of Lisbon (former cadastral article...), was subject to the constructive viability certificate.../2008 of the Municipal Chamber of..., which certified that the same had as construction parameters a maximum implementation area of 2,957.85m2, a gross construction area of 6,609.80 m2 intended for housing, 1584.50 m2 intended for Commerce Services and 5,800.00 m2 intended for parking.

9. The urban property with cadastral article..., of the union of parishes of..., ... and..., municipality of... and district of Lisbon (former cadastral article...), corresponds to lot... of subdivision permit.../2007 of the Municipal Chamber of..., which authorized construction of a building, with fifteen stories intended for collective housing and one intended for commerce, and with maximum implementation area of 3170.00m2.

10. The urban property with cadastral article..., of the parish of..., municipality and district of Porto (former cadastral article...), corresponds to lot... of subdivision permit.../2008 of the Municipal Chamber of..., which authorized construction of a building with seven stories above the threshold level, with construction area above ground of 3,445.00 m2, being 2,830 m2 intended for housing and 615 m2 intended for commerce.

11. The urban property with cadastral article..., of the parish of..., municipality and district of Porto (former cadastral article...) corresponds to lot... of subdivision permit.../2008 of the Municipal Chamber of..., which authorized construction of a building with seven stories above the threshold level, with construction area above ground of 3,630.00 m2 intended for housing.

12. The urban property with cadastral article..., of the parish of..., municipality and district of Porto (former cadastral article...) corresponds to lot... of subdivision permit.../2008 of the Municipal Chamber of..., which authorized construction of a building with eight stories above the threshold level, with construction area above ground of 3,651.00 m2, of which 3,510.00 m2 are intended for housing.

13. The urban property with cadastral article..., of the parish of..., municipality and district of Porto (former cadastral article...) corresponds to lot... of subdivision permit.../2008 of the Municipal Chamber of..., which authorized construction of a building with eight stories above the threshold level, with construction area above ground of 3,006.00 m2, intended for housing.

14. The urban property with cadastral article..., of the parish of..., municipality and district of Porto (former cadastral article...) corresponds to lot... of subdivision permit.../2008 of the Municipal Chamber of..., which authorized construction of a building with eight stories above the threshold level, with construction area above ground of 3,682.00 m2, of which 3,664.00 m2 are intended for housing.

15. The urban property with cadastral article..., of the parish of..., municipality and district of Porto (former cadastral article...) corresponds to lot... of subdivision permit.../2008 of the Municipal Chamber of..., which authorized construction of a building with eight stories above the threshold level, with construction area above ground of 3,664.00 m2, intended for housing.

16. The urban property with cadastral article..., of the parish of..., municipality of... and district of Setúbal (former cadastral articles..., ..., ... and...), was subject to private works licensing approved by the Municipal Chamber of..., which authorized construction of a residential block (Block 3) comprised of basement, ground floor, first floor and attic, with a total area of 5,792.25 m2.

17. The urban property with cadastral article..., of the parish of..., municipality of... and district of Setúbal (former cadastral articles..., ..., ... and...), was subject to private works licensing approved by the Municipal Chamber of..., which authorized construction of a residential block (Block 2) comprised of basement, ground floor, first floor and attic, with a total area of 6,130.10 m2.

18. The urban property with cadastral article..., of the union of parishes of... and..., municipality of... and district of Setúbal (former cadastral article...), was subject to the constructive viability information issued on 18-05-2004 by the Municipal Chamber of..., which pronounced in the sense of the viability of construction of a housing building with two bodies, the larger with a maximum of 8 stories and the smaller with a maximum of four.

19. The urban property with cadastral article..., of the parish of..., municipality of... and district of Faro (former cadastral article...), corresponds to lot... of subdivision permit.../2005 of the Municipal Chamber of..., which authorized construction of an area of 2,250.00 m2 intended for housing and 200.00 m2 intended for Industry/Services.

20. The urban property with cadastral article..., of the parish of..., municipality of... and district of Faro (former cadastral article...), corresponds to lot 2 of subdivision permit.../2005 of the Municipal Chamber of..., which authorized construction of an area of 2,400.00 m2 intended for housing and 50.00 m2 intended for Industry/Services.

21. The urban property with cadastral article..., of the parish of..., municipality of... and district of Faro (former cadastral article...) corresponds to lot..., subsequently renumbered to lot..., of subdivision permit.../2005 of the Municipal Chamber of..., which authorized construction of an area of 3,550.00 m2 intended for housing and 50.00 m2 intended for Industry/Services.

22. The assessments resulted from the application of article 1, paragraph 1 of the SDC, combined with item 28.1 of the GTSD and article 6 of Law No. 55-A/2012 of 29 October.

23. The Claimant paid the SD on 29 April 2016 (1st installment), 27 July 2016 (2nd installment) and 7 November 2016 (3rd installment).

II.B. Facts Considered Not Proven

1- That, regarding the urban property with cadastral article..., of the parish of..., municipality of... and district of Porto (former cadastral articles... and...), there existed, at the date of the tax fact, a subdivision permit or construction license permit, or approved project, or preliminary notice, or favorable preliminary information or document evidencing constructive viability, that provided housing as a possible construction.

2- That, regarding the urban property with cadastral article..., of the parish of..., municipality of... and district of Setúbal (former cadastral article...), there existed, at the date of the tax fact, a subdivision permit or construction license permit, or approved project, or preliminary notice, or favorable preliminary information or document evidencing constructive viability, that provided housing as a possible construction.

3- That, regarding the urban property with cadastral article..., of the parish of..., municipality of... and district of Setúbal (former cadastral articles..., ... and...), there existed, at the date of the tax fact, a subdivision permit or construction license permit, or approved project, or preliminary notice, or favorable preliminary information or document evidencing constructive viability, that provided housing as a possible construction.

4- That, regarding the urban property with cadastral article..., of the union of parishes of... and..., municipality of... and district of Lisbon (former cadastral article...), there existed, at the date of the tax fact, a subdivision permit or construction license permit, or approved project, or preliminary notice, or favorable preliminary information or document evidencing constructive viability, that provided housing as a possible construction.

5- That, regarding the urban property with cadastral article..., of the union of parishes of... and..., municipality of... and district of Lisbon (former cadastral article...), there existed, at the date of the tax fact, a subdivision permit or construction license permit, or approved project, or preliminary notice, or favorable preliminary information or document evidencing constructive viability, that provided housing as a possible construction.

6- That, regarding the urban property with cadastral article..., of the union of parishes of... and..., municipality of... and district of Viana do Castelo (former cadastral article...), there existed, at the date of the tax fact, a subdivision permit or construction license permit, or approved project, or preliminary notice, or favorable preliminary information or document evidencing constructive viability, that provided housing as a possible construction.

7- That regarding the urban property with cadastral article..., of the union of parishes of... and..., municipality of... and district of Porto (former cadastral article...), there existed, at the date of the tax fact, a subdivision permit or construction license permit, or approved project, or preliminary notice, or favorable preliminary information or document evidencing constructive viability, that provided housing as a possible construction.

II.C – Reasoning Regarding the Proven and Unproven Facts

1- Regarding factual matters, the Tribunal need not pronounce on everything that was alleged by the parties; rather, it has the duty to select the facts that are relevant to the decision and to distinguish proven from unproven matters (cf. article 123, point 2 of the CPPT [Tax Procedural Code] and article 607, point 3 of the CPC [Civil Procedure Code], applicable ex vi article 29, point 1, paragraphs a) and e) of the RJAT).

2- Thus, the facts relevant for the judgment of the case are chosen and selected according to their legal relevance, which is established in view of the various plausible solutions to the question(s) of law (cf. former article 511, point 1 of the CPC, corresponding to current article 596, applicable ex vi article 29, point 1, paragraph e) of the RJAT).

3- Thus, taking into account the positions assumed by the parties, in light of article 110/7 of the CPPT, the documentary evidence and the case file joined to the case, the aforementioned facts were considered proven, with relevance to the decision.

4- In particular, the facts contained in points 7) to 25) of the factual matter result from documentation joined by the Defendant, following the arbitral order dated 20/12/2016, which comprises the documents referred to in the points in question, authorizing construction for residential purposes.

5- Notwithstanding the Claimant having alleged, in generic terms, that the administrative documents referred to in the points of the factual matter in question were expired, the fact is that it presented no proof or indication that would allow concluding in that direction.

6- The facts given as not proven are due to the absence or insufficiency of evidence relating to them.

7- In fact, notwithstanding the above-mentioned order of 20/12/2016, documentation was not made available allowing a different conclusion regarding the properties to which the unproven facts refer.

8- Specifically, regarding the property to which the fact given as unproven in point 1) relates, only the evaluation record of the property in question was made available to this Tribunal, which does not allow concluding, with the necessary certainty, for the existence of any of the documents to which the point in question refers, as well as of their respective content.

9- Regarding the property to which the fact given as unproven in point 2) relates, a municipal opinion was made available issued by the Municipal Chamber of..., with indication of the characterization table defined by the PDM [Municipal Master Plan], which expressly stipulates that the same does not constitute any legal obligation for future licensing requests, such that it does not fall under any of the types of documents to which the point in question refers.

10- Regarding the property to which the fact given as unproven in point 3) relates, only a copy of the request for registration in the property matrix in question was made available to this Tribunal, and a plan without any legend, elements that do not allow concluding, with the necessary certainty, for the existence of any of the documents to which the point in question refers, as well as of their respective content.

11- Regarding the property to which the fact given as unproven in point 4) relates, only a plan was presented containing a project for an urban development intended for housing, but without any mention or element that could relate it to a document referring to any of the types of documents to which the point in question refers, such that it is not possible, beyond any reasonable doubt, to conclude that such a document exists.

12- Regarding the property to which the fact given as unproven in point 5) relates, a certificate was made available issued by the Municipal Chamber of..., with the mention that urban occupation of the property in question was authorized, with an area of built construction above ground of 20,566.00 m2, but without indication of any specific purpose, such that it does not fall under any of the types of documents to which the point in question refers.

13- Regarding the property to which the fact given as unproven in point 6) relates, a technical report was made available issued by the Municipal Chamber of..., relating to the B... subdivision, Ltd., with the indication of construction areas, but without indication of the purpose of such construction, such that it does not fall under any of the types of documents to which the point in question refers.

14- Regarding the property to which the fact given as unproven in point 7) relates, it was determined that it corresponds to lot... of subdivision permit.../2004 of the Municipal Chamber of..., which authorized construction of a building intended for "Facilities", with ground floor plus 2 stories and with implementation area of 1000.9 m2; thus being impossible to conclude that the "building to be constructed" on the lands in question was defined in any of those documents regarded as relevant, as having as its purpose housing.

III – FINDINGS OF LAW

III.A. Position of the Claimant

a) The Claimant begins by alleging that the objective scope of item 28.1 of the GTSD cannot include properties that, while registered in the property matrix as "land for construction", cannot be subsumed under the concept of "properties with residential use", that concept which integrates the legal provision.

b) Analyzing the context of the introduction of item 28 of the GTSD, the Claimant emphasizes that, even following the amendments introduced by Law No. 83-C/2013 of 31 December, which came into force on 1 January 2014, the taxation continues to be limited to situations in which authorization or provision has been made for effective building on the land, and that such building is intended for "housing".

c) Thus, it contends, it is not sufficient that the mere property matrix registration of a property identifies it as "land for construction", being necessary, additionally, that, case by case, and concretely, it be determined whether its use "for housing" is planned or authorized, which will result from examination of the administrative licensing/authorization process.

d) In fact, as the right to build is not inherent in the right of ownership, it is necessary that the said licensing or authorization documentation exists and is valid so that one can conclude for the concrete existence of a "land for construction" susceptible of being subsumed in the provision of item 28.1 of the GTSD; that is, that on the land there has been planned or authorized, concretely, a building intended or planned for housing – it being insufficient that such building remains at the level of possibilities, and merely one of the possibilities, of use of the land.

e) Not having occurred the demonstration of the effective potentiality of building for housing on the lands in question, not having been verified an "effective allocation" of these lands, the assessment having been based, rather, on the mere content of the registration of these lands in the respective matrix, the Claimant concludes that this assessment of SD was illegal due to error in the factual and legal presuppositions.

f) Attending also to the "ratio legis" of item 28.1 of the GTSD (that of introducing a "solidarity tax" supported by "contributory capacities" above the average), the Claimant notes, subsidiarily, that the ownership of these properties does not represent an increased contributory capacity, since these properties are not regarded by the Claimant as investment assets, since they normally enter its patrimony as payments in kind and are intended for resale with the objective of settling debts of defaulting customers.

g) Also subsidiarily, and for purposes of the application of article 204 of the Constitution, the Claimant contends the unconstitutionality of item 28.1 of the GTSD when applied to "land for construction", for violating both the principle of equality and the principle of fiscal equality and contributory capacity, provided respectively in articles 13 and 104, paragraph 3 of the Constitution, with direct corollaries in norms such as articles 5 and 55 of the TLC [Tax Law Code].

h) Specifically, the Claimant alleges that item 28.1 of the GTSD discriminates unjustifiably against the residential purpose, within the possible uses of high-value real estate patrimony, and against the concentration of real estate patrimony in favor of the dispersal of this patrimony – and discriminates unjustifiably because it introduces inequalities not based on the exclusive consideration of contributory capacity.

i) The Claimant considers that item 28.1 of the GTSD is moreover unconstitutional in that it determines the double taxation of the holding of real rights of some – and only some – taxpayers, insofar as it causes SD to fall upon realities already taxed in the context of IMI [Real Estate Tax].

j) Furthermore, the Claimant considers that the principle of equality is violated by item 28.1 of the GTSD insofar as it orders attention to the tax patrimonial value of the lands, disregarding the tax patrimonial value of the dwellings that may actually be built on these lands.

k) On the other hand, the Claimant calls attention to the fact that the jurisprudence of the Constitutional Court, which pronounced on the non-unconstitutionality of the norm contained in item 28.1 of the GTSD, relates exclusively to "residential properties", thus not being applicable to the case "sub iudice", in which mere "land for construction" is in question – a situation which the Claimant considers to be entirely distinct, again because, before a procedural specification via administrative means, land for construction cannot correspond to "housing" authorized or planned therein.

l) The Claimant alleges having paid in full the amounts assessed, requesting therefore to be reimbursed and to be awarded compensatory interest, for the fact that this payment was undue and an error attributable to the services being identifiable, in accordance with article 24, paragraphs 1, b) and 5 of the RJAT, articles 43 and 100 of the TLC and article 61 of the CPPT.

m) In its Petition submitted on 25 January 2017, the Claimant, pronouncing on the joinder to the case file of the evidentiary elements presented by the Defendant in compliance with the Arbitral Order of 20 December 2016, concludes, in relation to each one of them, that it is not proven that it is land for construction whose authorized or planned building is for housing, in accordance with the provisions of the IMI Code. It alleges, in particular:

i. That the documentation is incomplete;

ii. That it is frequently merely of a fiscal nature;

iii. That that which is not, most notably that consisting of subdivision permits, is already expired;

iv. That the evidentiary elements were all emitted in the legal sphere of previous owners of the properties, being thus not opposable to the Claimant, as they cannot be effectuated in its legal sphere, given in particular its nature as a financial institution, with the limitations resulting therefrom (articles 112, paragraph 1 and 114 of the General Regime of Credit Institutions and Financial Companies approved by Decree-Law No. 298/92 of 31 December);

v. That the properties in question are not in the patrimony of the Claimant because they are the object of its habitual activity, they are merely waiting to be resold to finalize the cycle of its credit activity, such that, it insists, they do not denote the contributory capacity that legally underlies taxation in SD.

n) In its Petition submitted on 30 January 2017, the Claimant, pronouncing on the joinder to the case file of the remaining evidentiary elements presented by the Defendant, begins by noting that they are untimely in light of the period established in the Arbitral Order of 20 December 2016, and then resumes in relation to them the argument expounded in its immediately preceding Petition.

III.B. Position of the Defendant

a) In its Response, the Defendant underscores the fact that all available documentation points to the residential allocation of the properties in question, and that, on the contrary, there is no documentation capable of placing in question this description of the properties, nor has it been proven that the Claimant at any moment took advantage of the legal resources available to question, either the tax patrimonial value ("TPV") attributed to the properties, or the data on which the calculation of this tax patrimonial value rests – which allows concluding that the Claimant conformed itself with this value and with the residential allocation that was considered for purposes of the calculation thereof, for purposes of IMT [Real Estate Transfer Tax], IMI and SD.

b) Indeed, the Claimant did not challenge the valuation (article 77 of the IMI Code), did not request a 2nd valuation (article 76 of the IMI Code), did not lodge a complaint against the matrix (article 130 of the IMI Code) nor challenged the acts fixing the tax patrimonial values (article 134 of the CPPT).

c) Not having been reviewed in a timely manner, within the legal periods, any irregularity in the calculation of the positive presuppositions on which the tax incidence depends – matrix, ownership of the property, allocation of the property, TPV – these presuppositions have been consolidated and are now unattackable.

d) The Defendant recalls that the consideration of the allocation or purpose of the property is a coefficient of the valuation because, by itself, it incorporates value in this property – as results from the provision of articles 38 and 45 of the IMI Code (referring to the allocation coefficient provided for in article 41 of the IMI Code).

e) And it also recalls that article 67, paragraph 2 of the SDC orders the subsidiary application of the provision of the IMI Code, and that from article 45 of the IMI Code it results clearly that in the valuation of land for construction attention is necessarily paid to the area to be built and to the use to be given to the construction that will occur: that is, the value of the land depends on the value of the property that may come to be built thereon (as results from the provision of article 38 of the IMI Code).

f) As regards the questions of unconstitutionality raised by the Claimant, the Defendant begins by recalling that the Arbitral Tribunal is forbidden from appreciating the merits of legislative solutions, its role being solely to ascertain unconstitutionalities that make the application of the positive norm intolerable.

g) And it proceeds to understand that the economic presupposition of the manifestation of contributory capacity that was chosen for the norm of item 28.1 of the GTSD, in conditions of necessity of extraordinary measures for revenue collection, is constitutionally valid, either because it falls within the reasonable latitude of legislative discretion, or because it rests on a necessary discrimination of patrimonies, which spreads in differentiated treatment of situations that are different – and are so objectively, that is, independently of who is the holder of the properties.

h) The Defendant also understands that the question of the unconstitutionality of item 28.1 of the GTSD is overcome by a position taken by the Constitutional Court that encompasses the lands for construction themselves (citing in this regard Constitutional Court Award No. 568/2016 – and also Awards Nos. 247/2016 and 590/2015 – and Summary Decisions Nos. 268/2016 and 605/2016, all of the Constitutional Court); but it is also overcome because the discrimination of regimes between residential allocation and other purposes of use of properties is long since established, being reflected in a differentiation of regimes in the IMI Code itself (articles 40-A, 41 and 45 of the IMI Code), such that the violation of the principle of equality would result, to the contrary of what the Claimant contends, from the indiscriminate treatment of situations different among themselves.

i) Indeed, it adds, the same could be said as regards the latitude for legislative discretion that presided over the discrimination based on the minimum value of the properties that fulfills the provision of the norm of item 28.1 of the GTSD. It was an intentional discrimination, in view of the explicit weighing of the sacrifices that were required by the necessity of obtaining extraordinary revenue, faced with the multiplicity of fiscal measures involved.

j) The Defendant equally rebuts the argument that item 28.1 of the GTSD, encompassing the taxation of dispersed patrimony, would introduce unacceptable factors of discrimination: on the contrary, the Defendant contends that item 28.1 of the GTSD only allows for analytical taxation, of each property individually, never falling upon the global real property patrimony of taxpayers.

k) And it equally rebuts arguments based on the business nature of the Claimant, from which it would be drawn that the holding of properties would not be merely indicative of contributory capacity because it would instead reflect specific business realities – because it recalls that the incidence of the norm of item 28.1 of the GTSD is objective, not providing for exceptions based on the nature or circumstances of the taxpayer, nor authorizing them via interpretive means.

l) As to the argument of double taxation, the Defendant casts doubt on whether an overlap has occurred from which a genuine "double taxation" has resulted; but it calls attention to the fact that the Constitution does not expressly forbid this overlapping taxation, which may be the intentional result of a sovereign freedom of concrete configuration of the fiscal system, which must remain capable of responding to all circumstances.

m) As to the request for compensatory interest, the Defendant defends itself with the argument that there was no error attributable to the services, since the assessment results directly from the application of the law and the fulfillment of its factual presuppositions, such that article 43, paragraph 1 of the TLC is not applicable and these compensatory interests are not owed.

n) In its written arguments, the Defendant merely remits to the argument presented in its Response, contending that nothing new has occurred since submission of the arbitral request by the Claimant.

III.C. Questions to Be Decided

III.C.1 – On the Merits of the Case

The only question to be resolved in the present arbitration proceedings concerns the application of item 28.1 of the table annexed to the SDC (General Table of Stamp Duty) to the lands intended for construction previously discriminated.

At issue, thus, is the definition of the scope of application of item no. 28.1 of the GTSD, in the wording given by Law No. 83-C/2013 of 31 December, more specifically to determine whether the lands for construction in question in the present case can be subsumed in the concept of "land for construction whose building, authorized or planned, is for housing, in accordance with the provision of the Property Tax Code" to which the said item refers, taking into account that the respective tax patrimonial values are equal to or greater than € 1,000,000.00.

The question arises due to taxation under stamp duty of the ownership, usufruct or surface right of urban properties whose tax patrimonial value, appearing in the matrix, is equal to or greater than € 1,000,000, in which case tax is owed, at the rate of 1%, on the tax patrimonial value used for purposes of IMI, per property with residential allocation.

This question is not new, having been the subject of consideration both in arbitral jurisdiction and in the jurisprudence of the Supreme Administrative Court; and, in the context of the wording of the SDC given by Law No. 55-A/2012 of 29 October, the decisions made were always in a sense contrary to what the Tax Authority sustained[1].

The situation sub iudice, however, occurs in a differentiated legal framework, insofar as the facts must be appreciated in light of the wording of the SDC introduced by the State Budget for 2014, Law No. 83-C/2013 of 31 December (article 194, under the heading – Amendment to the General Table of Stamp Duty), in accordance with which item 28.1 of the General Table of Stamp Duty, annexed to the Stamp Duty Code, approved by Law No. 150/99 of 11 September, came to have the following wording:

"28.1 — For residential property or for land for construction whose building, authorized or planned, is for housing, in accordance with the provision of the Property Tax Code — 1%".

In this new legal framework, decisions have already been made in arbitral proceedings, equally in a sense unfavorable to what the TA sustained[2].

The said jurisprudence rests on the understanding that the presuppositions of the new item 28.1 of the GTSD should be considered as fulfilled:

"regarding lands for construction, whether or not located within an urban area, as defined in article 3/4 of this statute [IMI Code], should, as such, be considered lands in relation to which there has been granted: - license for subdivision operation; - construction license; - authorization for subdivision operation; - construction authorization; - admitted favorable preliminary notice of subdivision or construction operation; issued favorable preliminary information of subdivision or construction operation, as well as; - those that have been declared as such in the acquisition title, it being necessary to bear in mind that, also for that purpose, only the acquisition title with the form provided for by civil law should be relevant, that is, the public deed or the authenticated private document referred to in article 875 of the Civil Code." [see ANTÓNIO SANTOS ROCHA / EDUARDO JOSÉ MARTINS BRÁS – Taxation of Patrimony. IMI-IMT and Stamp Duty (Annotated and Commented). Coimbra, Almedina, 2015, p. 44]."[3]

Also in the award issued in arbitration case 142/2016T, already cited, which also concluded in favor of the grant of the request formulated there, the following can be read:

"There is in these norms of the GTSD and IMI Code no indication of what should be understood by 'planned building', but, taking into account the documents required for the valuation of lands for construction, indicated in article 37, point 3 of the IMI Code, it is concluded that one can only speak of authorized or planned construction when the 'building to be constructed', to which point 1 of article 45 refers, is defined in a subdivision permit or construction license permit, or approved project, or preliminary notice, or favorable preliminary information or document evidencing constructive viability".

The understanding of the aforementioned awards is entirely subscribed to here, regarding what, in light of the new wording of the SDC, should be understood by "land for construction whose building, authorized or planned, is for housing, in accordance with the provision of the Property Tax Code".

With effect, in accordance with the IMI Code, lands for construction, which, in accordance with article 6, paragraph 1, letter c) of such Code, constitute a type of urban property, may have as their allocation housing, as results from article 41, also of the IMI Code, allocation which, as results, moreover, expressly from article 45, paragraph 5 of the IMI Code, shall be determined on the basis of the elements to which article 37 of the same Code refers, point 3 of which article refers that:

"In relation to lands for construction, there must be presented a photocopy of the subdivision permit, which must be replaced, in case there is no subdivision, by photocopy of construction license permit, approved project, preliminary notice, favorable preliminary information or document evidencing constructive viability".

The mention of item 28.1 of the GTSD under analysis must thus be read as remitting to the material content of what, in light of the IMI Code, is "land for construction whose building, authorized or planned, is for housing", not sufficing the mere formality of the TA – well or poorly –, in application of the norms of that Code (IMI Code), having qualified for matrix purposes a given property as having this allocation, since if that were the legislator's intention, within the presumption of reasonableness that underlies it, surely it would have used the expression "land whose location coefficient type used for purposes of determination of TPV is housing", or another, similar.

It is concluded, thus, here, as in the jurisprudence cited above, that there should be considered as "land for construction whose building, authorized or planned, is for housing, in accordance with the provision of the Property Tax Code", those lands in which the "building to be constructed" is defined as intended for housing in a subdivision permit or construction license permit, or approved project, or preliminary notice, or favorable preliminary information or document evidencing constructive viability.

Now, in this case, it was not determined that there existed, at the date of the tax fact, a subdivision permit or construction license permit, or approved project, or preliminary notice, or favorable preliminary information or document evidencing constructive viability, that provided as a possible construction housing, regarding the following lands to which the Stamp Duty assessments that are the object of the present arbitral action relate:

• urban property with cadastral article..., of the parish of..., municipality of... and district of Porto (former cadastral articles... and...);

• urban property with cadastral article..., of the parish of..., municipality of... and district of Setúbal (former cadastral article...);

• urban property with cadastral article..., of the parish of..., municipality of... and district of Setúbal (former cadastral articles..., ... and...);

• urban property with cadastral article..., of the union of parishes of... and..., municipality of... and district of Lisbon (former cadastral article...);

• urban property with cadastral article..., of the union of parishes of... and..., municipality of... and district of Lisbon (former cadastral article...);

• urban property with cadastral article..., of the union of parishes of... and..., municipality of... and district of Viana do Castelo (former cadastral article...).

Already regarding the urban property with cadastral article..., of the union of parishes of... and..., municipality of... and district of Porto (former cadastral article...), it was determined that it corresponds to lot... of subdivision permit.../2004 of the Municipal Chamber of..., which authorized construction of a building intended for "Facilities", with ground floor plus 2 stories and with implementation area of 1000.9 m2. Thus being, it is not possible to conclude that the "building to be constructed" on the lands in question was defined in any of those documents regarded as relevant, as having as its purpose housing.

What comes to be concluded is not opposed by the fact that, in 2015, in the respective property record book of the properties in question, appeared as "Type of location coefficient" the mention "Housing", since such mention could be due to an oversight[4], as would surely occur in the case of cadastral article..., of the union of parishes of... and..., municipality of... and district of Porto (former cadastral article...), or to some other circumstance that was not determined, it being certain that no elements were presented that substantially support such mention, notwithstanding it having been expressly granted to the Defendant, in honor of the duty of determination of material truth, the possibility of doing so.

In light of the foregoing, it cannot be considered demonstrated that, regarding the aforementioned lands, they are "land for construction whose building, authorized or planned, is for housing, in accordance with the provision of the Property Tax Code", the provision of item 28.1 of the Table annexed to the SDC, in the applicable wording, not being fulfilled regarding them, such that the impugned tax acts that take them as their object will be affected by error in the factual presuppositions, and consequent error of law, and must, as such, be annulled, with the arbitral request proceeding in that part.

Already regarding the following properties to which Stamp Duty assessments that are the object of the present arbitral action relate, it was determined that:

v The urban property with cadastral article..., of the parish of..., municipality of... and district of Lisbon (former cadastral article...), corresponds to lot... of subdivision permit.../2001 of the Municipal Chamber of..., which authorized construction of a building intended for housing, with four stories and with implementation area of 845m2;

v The urban property with cadastral article..., of the parish of..., municipality of... and district of Lisbon (former cadastral article...), corresponds to lot... of subdivision permit.../2001 of the Municipal Chamber of..., which authorized construction of a building intended for housing, with four stories and with implementation area of 845m2;

v The urban property with cadastral article..., of the parish of..., municipality of... and district of Lisbon (former cadastral article...), corresponds to lot... of subdivision permit.../2001 of the Municipal Chamber of..., which authorized construction of a building intended for housing, with four stories and with implementation area of 845m2;

v The urban property with cadastral article..., of the union of parishes of... and..., municipality of... and district of Setúbal (former cadastral articles..., ... and...), corresponds to lot... of subdivision permit.../1985 of the Municipal Chamber of..., which authorized construction of 3 buildings intended for housing, with four stories and with total implementation area of 920.20m2;

v The urban property with cadastral article..., of the union of parishes of..., ... and..., municipality of... and district of Lisbon (former cadastral article...), was subject to the constructive viability certificate.../2008 of the Municipal Chamber of..., which certified that the same had as construction parameters a maximum implementation area of 2,957.85m2, a gross construction area of 6,609.80 m2 intended for housing, 1584.50 m2 intended for Commerce Services and 5,800.00 m2 intended for parking;

v The urban property with cadastral article..., of the union of parishes of..., ... and..., municipality of... and district of Lisbon (former cadastral article...), corresponds to lot... of subdivision permit.../2007 of the Municipal Chamber of..., which authorized construction of a building, with fifteen stories intended for collective housing and one intended for commerce, and with maximum implementation area of 3170.00m2;

v The urban property with cadastral article..., of the parish of..., municipality and district of Porto (former cadastral article...), corresponds to lot... of subdivision permit.../2008 of the Municipal Chamber of..., which authorized construction of a building with seven stories above the threshold level, with construction area above ground of 3,445.00 m2, being 2,830 m2 intended for housing and 615 m2 intended for commerce;

v The urban property with cadastral article..., of the parish of..., municipality and district of Porto (former cadastral article...) corresponds to lot... of subdivision permit.../2008 of the Municipal Chamber of..., which authorized construction of a building with seven stories above the threshold level, with construction area above ground of 3,630.00 m2 intended for housing;

v The urban property with cadastral article..., of the parish of..., municipality and district of Porto (former cadastral article...) corresponds to lot... of subdivision permit.../2008 of the Municipal Chamber of..., which authorized construction of a building with eight stories above the threshold level, with construction area above ground of 3,651.00 m2, of which 3,510.00 m2 are intended for housing;

v The urban property with cadastral article..., of the parish of..., municipality and district of Porto (former cadastral article...) corresponds to lot... of subdivision permit.../2008 of the Municipal Chamber of..., which authorized construction of a building with eight stories above the threshold level, with construction area above ground of 3,006.00 m2, intended for housing;

v The urban property with cadastral article..., of the parish of..., municipality and district of Porto (former cadastral article...) corresponds to lot... of subdivision permit.../2008 of the Municipal Chamber of..., which authorized construction of a building with eight stories above the threshold level, with construction area above ground of 3,682.00 m2, of which 3,664.00 m2 are intended for housing;

v The urban property with cadastral article..., of the parish of..., municipality and district of Porto (former cadastral article...) corresponds to lot... of subdivision permit.../2008 of the Municipal Chamber of..., which authorized construction of a building with eight stories above the threshold level, with construction area above ground of 3,664.00 m2, intended for housing;

v The urban property with cadastral article..., of the parish of..., municipality of... and district of Setúbal (former cadastral articles..., ..., ... and...), was subject to private works licensing approved by the Municipal Chamber of..., which authorized construction of a residential block (Block 3) comprised of basement, ground floor, first floor and attic, with a total area of 5,792.25 m2;

v The urban property with cadastral article..., of the parish of..., municipality of... and district of Setúbal (former cadastral articles..., ..., ... and...), was subject to private works licensing approved by the Municipal Chamber of..., which authorized construction of a residential block (Block 2) comprised of basement, ground floor, first floor and attic, with a total area of 6,130.10 m2;

v The urban property with cadastral article..., of the union of parishes of... and..., municipality of... and district of Setúbal (former cadastral article...), was subject to the constructive viability information issued on 18-05-2004 by the Municipal Chamber of..., which pronounced in the sense of the viability of construction of a housing building with two bodies, the larger with a maximum of 8 stories and the smaller with a maximum of four;

v The urban property with cadastral article..., of the parish of..., municipality of... and district of Faro (former cadastral article...), corresponds to lot... of subdivision permit.../2005 of the Municipal Chamber of..., which authorized construction of an area of 2,250.00 m2 intended for housing and 200.00 m2 intended for Industry/Services;

v The urban property with cadastral article..., of the parish of..., municipality of... and district of Faro (former cadastral article...), corresponds to lot 2 of subdivision permit.../2005 of the Municipal Chamber of..., which authorized construction of an area of 2,400.00 m2 intended for housing and 50.00 m2 intended for Industry/Services;

v The urban property with cadastral article..., of the parish of..., municipality of... and district of Faro (former cadastral article...) corresponds to lot..., subsequently renumbered to lot..., of subdivision permit.../2005 of the Municipal Chamber of..., which authorized construction of an area of 3,550.00 m2 intended for housing and 50.00 m2 intended for Industry/Services.

Thus, there is no doubt that the "building to be constructed" on the lands in question is defined in a subdivision permit or construction license permit, or approved project, or preliminary notice, or favorable preliminary information or document evidencing constructive viability, as having as its purpose housing.

In light of the foregoing, there must be considered such lands as "land for construction whose building, authorized or planned, is for housing, in accordance with the provision of the Property Tax Code", the provision of item 28.1 of the Table annexed to the SDC, in the applicable wording, being fulfilled regarding them, there being nothing to censure in the impugned tax acts that took them as their object; and thus, the arbitral request should be dismissed in that part.

What comes to be concluded is not opposed by the circumstance, alleged by the Claimant, that the aforementioned documents were all emitted in the legal sphere of previous owners of the properties, first of all because the same has no support in any legal norm that confers relevance upon it, and second because the administrative acts to which the documents in question refer embody the removal of restrictions on the content of real rights (namely the right to build), and are thus titled by the owner of the property, who, in this case, is the Claimant, it also being true that it is the Claimant who benefited, at the date of the tax facts, from the appreciation of the properties, resulting from the constructive aptitude guaranteed by the administrative acts that recognize it, an appreciation which was not unrelated, notoriously, to the contractual relationships whose developments culminated in the acquisition by the Claimant of the properties taxed, and which is independent of the effective subjective intention of the owner to build or not.

The allegation of the Claimant is likewise not subscribed to, that the properties in question are not in its patrimony because they are the object of its habitual activity: and this because the acquisition of goods that guarantee credits extended for, as the Claimant refers, "to finalize the cycle of its credit activity" cannot but be considered a normal consequence of banking activity, it being that the holding of properties by a credit institution, albeit intended for resale to reimburse itself of credits of defaulting debtors, denote exactly the same contributory capacity of any other holder of properties, in particular that which intends them for resale, it also being true that the Claimant, like any other economic operator, will not forego, in the resale, the appreciation resulting from the constructive aptitude of the properties, nor from any other more-valia which, for whatever reason, may come to be incorporated in the properties.

There is thus no indication of any unconstitutionality, particularly as regards the violation of the principles of equality, fiscal equality and contributory capacity, provided respectively in articles 13 and 104, paragraph 3 of the Constitution, to the contrary of what the Claimant alleges.

The Constitutional Court has pronounced several times on the principle of fiscal equality, having referred, for example, in Award No. 590/2015, that:

"The constitutional principle of fiscal equality, as a specific expression of the general structuring principle of equality (article 13 of the Constitution), finds realization 'in the generality and uniformity of taxes. Generality means that all citizens are bound to the payment of taxes (...); in turn, uniformity means that the apportionment of taxes among citizens obeys the same identical criterion for all' (Teixeira Ribeiro, Lessons of Public Finance, 5th edition, p. 261). And such criterion, as Casalta Nabais emphasizes, is found in the principle of contributory capacity: 'This thus implies equal tax for those having equal contributory capacity (horizontal equality) and different tax (in qualitative or quantitative terms) for those having different contributory capacity in proportion to this difference (vertical equality)' (Tax Law, 7th edition, 2012, p. 155). As presupposition and criterion of taxation, the principle of contributory capacity 'on one hand, constituting the ratio or cause of taxation removes the fiscal legislator from arbitrariness, obliging it to that in the selection and articulation of the tax facts, it adheres to revelations of contributory capacity, that is, it erects as the object and taxable matter of each tax a certain economic presupposition that is a manifestation of this capacity and is present in the diverse legal hypotheses of the respective tax' (Casalta Nabais, op. cit., p. 157)."

So the Constitutional Court has affirmed, another example being Award No. 84/2003, where it is read that:

"The principle of contributory capacity expresses and concretizes the principle of fiscal or tax equality in its aspect of 'uniformity' – the duty of all to pay taxes according to the same criterion – with contributory capacity filling the unitary criterion of taxation", being understood this criterion as being that in which "the incidence and apportionment of taxes – of 'fiscal taxes' more precisely – must be made according to the economic capacity or 'capacity to spend' (...) of each and not according to what each may eventually receive in public goods or services (criterion of benefit). (...) Notwithstanding the silence of the Constitution, it is generalized understanding of doctrine that 'contributory capacity' continues to be a basic criterion of our 'Fiscal Constitution' it being that one can (or should) arrive at it from the structuring principles of the fiscal system formulated in articles 103 and 104 of the CRP (...)".

This Tribunal has, however, emphasized that the principle of contributory capacity does not dispense with the concurrence of other constitutional principles. As was referred to in Award No. 711/2006, "it is clear that the 'principle of contributory capacity' must be compatible with other principles with constitutional dignity, such as the principle of the Social State, the freedom of legislative discretion, and certain requirements of practicability and cognoscibility of the tax fact, also indispensable for the fulfillment of the purposes of the fiscal system". And it continues: "To ascertain, however, the existence of a particularism sufficiently distinct to justify an inequality of legal regime, and to decide on the circumstances and factors to be considered relevant in such ascertainment, is a task that primarily falls to the legislator, which holds the primacy of the concretization of constitutional principles and the corresponding latitude for discretion. For this reason, the principle of equality presents itself fundamentally to legal operators, in the context of judicial review of constitutionality, as a negative principle (...) – as a prohibition of arbitrariness".

In summary, in the synthesis of Award No. 695/2014, "the principle of fiscal equality can be concretized through diverse aspects: a first, is in the generality of the tax law, in its application to all without exception; a second, in the uniformity of the tax law, in treating in an equal manner the taxpayers who find themselves in equal situations and in a different manner those who find themselves in different situations, in the measure of the difference, to be ascertained by contributory capacity; a last, is in the prohibition of arbitrariness, in forbidding the introduction of discriminations among taxpayers that are devoid of rational foundation".

Indeed, it not appearing arbitrary that, in a period of crisis, the State, in function of the political options of those who direct it, call upon to contribute in a more pronounced manner the owners of properties with a certain allocation and above a certain value, no double taxation being verified, but rather an additional and exceptional taxation, similar, with respect to better opinion, for example, to the IRS surcharge, it is concluded that there does not occur the violation of any constitutional norm, particularly those indicated by the Claimant, in the taxation in question.

As to the request for compensatory interest formulated by the Claimant, article 43, point 1 of the TLC establishes that compensatory interest is owed when it is determined that there was error attributable to the services from which results payment of the tax debt in an amount superior to that legally owed.

In this case, the error that affects the annulled assessments is attributable to the Tax and Customs Authority, which practiced the assessment act on its own initiative, without the necessary factual and legal support.

The Claimant thus has the right to be reimbursed of the amount that it paid (in accordance with the provision of articles 100 of the TLC and 24, point 1 of the RJAT) by force of the annulled acts and, moreover, to be indemnified for the undue payment through the payment of compensatory interest, by the Defendant, from the date of payment of the amount, until reimbursement, at the legal rate of supplementary interest, in accordance with articles 43, points 1 and 4, and 35, point 10 of the TLC, article 559 of the Civil Code and Portaria [Administrative Order] No. 291/2003 of 8 April.

IV. DECISION

In light of all the foregoing, it is decided to judge partially well-founded the arbitral request formulated in the present case and, in consequence:

a) Annul the following assessments, in the total amount of €188,950.65:

i) relating to cadastral article..., of the parish of..., municipality of... and district of Porto:

ii) relating to cadastral article..., of the parish of..., municipality of... and district of Setúbal:

iii) relating to cadastral article..., of the parish of..., municipality of... and district of Setúbal:

iv) relating to cadastral article..., of the union of parishes of... and..., municipality of... and district of Lisbon:

v) relating to cadastral article..., of the union of parishes of... and..., municipality of... and district of Lisbon:

vi) relating to cadastral article..., of the union of parishes of... and..., municipality of... and district of Viana do Castelo:

vii) relating to cadastral article..., of the union of parishes of... and..., municipality of... and district of Porto:

b) Condemn the Defendant to the restitution of the amounts indeadly paid, by force of the assessments now annulled, as well as to the payment of the corresponding compensatory interest, from the date of the undue payment of the amount, until reimbursement, in accordance with the terms above determined.

c) Judge unfounded the arbitral request regarding the remaining assessments;

d) Condemn the parties in the costs of the proceedings in the proportion of their respective loss, fixing at 60.219% the part to be charged to the Claimant and 39.781% the part to be charged to the Defendant.

V. Value of the Proceedings

The value of the proceedings is fixed at €474,970.25, in accordance with the provision of article 97-A of the CPPT, applicable ex vi article 29, point 1, paragraph a) of the RJAT and article 3, point 2 of the Regulation of Costs in Tax Arbitration Proceedings (RCPAT).

VI. Costs

The value of the arbitration fee is fixed at €7,346.00, in accordance with Table I of the Regulation of Costs of Tax Arbitration Proceedings, to be paid by the parties in the proportion of their respective loss, above fixed, namely, €4,422.30 to be charged to the Claimant and €2,923.70 to be charged to the Defendant, since the request was partially well-founded, in accordance with articles 12, point 2, and 22, point 4, both of the RJAT, and article 4, point 4 of the cited Regulation.

Lisbon, 21 February 2017

The Arbitrators

José Pedro Carvalho
(President)

A. Sérgio de Matos

Fernando Araújo

[1] Cf., e.g., Awards 49/2013-T of 18 September 2013, 53/2013-T of 2 October, 231/2013-T of 3/2/2014, Case no. 7/2014-T of 3 July, 56/2014-T of 31 July, 210/2014-T of 30 July, Case no. 125/2015-T of 12 October, all of the CAAD (available at www.caad.org.pt) and the Award of the Supreme Administrative Court of 9 April 2014, P1870/2013, which were followed by several others of similar content, available at http://www.dgsi.pt/jsta.

[2] Cf., e.g., the decisions of arbitration cases 156/2016T, 142/2016T, 524/2015T, 578/2015T, 467/2015T, and 290/2016T, all available at www.caad.org.pt.

[3] Cf. in this sense, the award issued in case 156/2016T, already cited.

[4] Cf. e.g., in that sense, the factual situation underlying arbitration case 490/2016T of the CAAD, in publication.