Summary
Full Decision
CASE NUMBER 485/2014-T
Claimant: Bank ..., S.A.
Respondent: Tax and Customs Authority
Stamp Duty ("IS")
The arbitrator Dr. Maria Antónia Torres, appointed by the Ethics Council of the Administrative Arbitration Center ("CAAD") to constitute the Singular Arbitral Tribunal, established on 15 September 2014, decides as follows:
1. REPORT
1.1. The Bank ..., S.A., tax identification number …, hereinafter "Claimant", with registered office at Rua …, Lisbon, requested on 11 July 2014 the constitution of an arbitral tribunal, under article 2, no. 1, paragraph a), and article 10, both of Decree-Law no. 10/2011, of 20 January (hereinafter "RJAT"[1]).
1.2. The request for arbitral ruling concerns the illegality and consequent annulment of the Stamp Duty tax assessment acts issued in 2013, under numbers 2014 …, 2014 … and 2014 …, relating to the property registered in the property register under matriculation article number ..., of the union of parishes of Montijo and Afonsoeiro, Municipality of Montijo, District of Setúbal, in the amount of €10,197.00, under numbers 2014 …, 2014 … and 2014 …, relating to the property registered in the property register under matriculation article number ..., of the parish of Ramalde, Municipality and District of Porto, in the amount of €11,452.30, and under number 2014 …, relating to the property registered in the property register under matriculation article number ..., of the parish and Municipality of Portimão, District of Faro, in the amount of €12,713.80, as well as the condemnation of the Respondent to restitute the amounts unduly paid, plus compensatory interest.
1.3. In support of its request, the Claimant argues that the real properties to which the Stamp Duty assessments refer are building land and, for that reason, cannot be considered as properties "with residential use" for purposes of applying item 28.1 of the General Table of Stamp Duty.
The Tax and Customs Authority maintains that the request for a declaration of illegality and consequent annulment of the contested assessments should be judged as lacking merit given that article 6, no. 1 of the CIMI includes in the category of urban properties building land, and that it understands item 28 of the GTSD refers to the "use" of properties, appealing to the use coefficient, a concept that applies indiscriminately to all urban properties.
1.4. The parties further agreed to waive the holding of the arbitral tribunal meeting provided for in article 18 of the RJAT.
2. SANATION OF PROCEDURE
The Tribunal was regularly constituted and is competent ratione materiae, in accordance with article 2 of the RJAT.
The parties have legal standing and capacity, show themselves to be legitimate and are regularly represented (cf. articles 4 and 10, no. 2 of the RJAT and article 1 of Order no. 112-A/2011, of 22 March).
No procedural defects were identified.
3. MATTERS FOR DECISION
The matter for decision in the present case is whether the real property that was subject to the above-mentioned Stamp Duty assessments, being building land, have or do not have residential use and, consequently, whether or not item 28.1 of the General Table of Stamp Duty (GTSD) applies to them, as formulated at the date to which the assessments relate, namely the year 2013.
4. FACTS FOUND PROVED
As relevant to the assessment and decision on the merits, the following facts are found proved:
4.1. The Claimant is the owner of the urban properties registered in the urban property register under matriculation article number ..., of the union of parishes of Montijo and Afonsoeiro, Municipality of Montijo, District of Setúbal, under matriculation article number ..., of the parish of Ramalde, Municipality and District of Porto, and under matriculation article number ..., of the parish and Municipality of Portimão, District of Faro;
4.2. The properties are building land and have a patrimonial value exceeding €1,000,000 (according to property records), with no buildings existing on any of the land at the date in question;
4.3. The Claimant was notified of the Stamp Duty assessments, identified above, referring to the properties mentioned above, in the total amount of €34,363.10;
4.5. All in accordance with documents submitted with the arbitral request, in the answer submitted by the Respondent and subsequent request by the Claimant in the proceedings;
4.6. On 11 July 2014, the Claimant presented a request for the constitution of the Arbitral Tribunal – cf. electronic request in the CAAD system.
5. FACTS NOT FOUND PROVED
There are no facts of relevance to the decision on the merits that have not been proved, it being undisputed by both parties regarding the facts of the case.
6. SUBSTANTIATION OF THE DECISION ON THE FACTS
The Tribunal's conviction was based on a critical analysis of the documents indicated with respect to each of the points of the facts, with the dispute relating solely to questions of law.
7. ON THE LAW
Law no. 55-A/2012, of 29 October, added item 28 to the General Table of Stamp Duty (GTSD), with the following wording:
28 – Ownership, usufruct or right of surface of urban properties whose tax patrimonial value appearing in the register, under the terms of the Code of Municipal Property Tax (CIMI), is equal to or greater than € 1,000,000 – on the tax patrimonial value used for purposes of IMI:
28.1 – For property with residential use – 1% (...);
In the transitional provisions contained in article 6 of said Law no. 55-A/2012, the following rules were established:
c) The tax patrimonial value to be used in the assessment of the tax corresponds to that resulting from the rules provided in the Code of Municipal Property Tax by reference to the year 2011; (…)
f) The applicable rates are as follows:
i) Properties with residential use valued under the terms of the IMI Code: 0.5%;
ii) Properties with residential use not yet valued under the terms of the IMI Code: 0.8%;
Item 28.1 GTSD and sub-paragraphs i) and ii) of paragraph f) of no. 1 of article 6 of Law no. 55-A/2012 thus contain a concept that is not used in any other tax legislation which is that of "property with residential use".
The closest concept to the literal meaning of this expression is that of "residential properties", which no. 2 of article 6 of the CIMI defines as encompassing "buildings or constructions" licensed for residential purposes or, in the absence of a license, which have as their normal destination residential purposes.
However, the non-coincidence of the terms of the expression used in item no. 28.1 of the GTSD ("property with residential use") with that which is extracted from no. 2 of article 6 of the CIMI ("residential properties") points to the conclusion that it was not intended to use the same concept.
Moreover, in the same article, a clear distinction is made between residential urban properties and building land.
Following closely other rulings of the CAAD handed down on the same matter, we understand that the word "use", in this context of the utilization of property, should mean "the action of destining something to a determined use". Thus, "property with residential use" cannot be a property merely licensed for residential purposes or destined for that purpose (that is, it will not suffice that it be a "residential property"), having to be a property that already has actual use for that purpose.
Thus, "it is to be concluded that the available interpretive elements, including the 'circumstances in which the law was drafted and the specific conditions of the time in which it is applied', clearly point to the conclusion that it was not intended to encompass within the scope of item no. 28.1 situations of properties that are not yet devoted to residential use, in particular building land held by companies".
Moreover, with the State Budget Law for 2014, item 28.1 GTSD was expressly amended, so as to include, as of 01.01.2014, building land, which reinforces our conviction that such properties were not encompassed by the wording in force until 31.12.2013.
8. DECISION
The Claimant's properties are building land, and we are not dealing with properties with current residential use, nor is there any building on the said land. There was thus not, at the date in question, any devotion to a residential purpose, nor even that possibility.
For this reason, we understand that the assessments whose declaration of illegality is requested are tainted with a defect of violation of item no. 28.1 GTSD, by error regarding the legal presuppositions, which justifies the declaration of their illegality and consequent annulment (article 135 of the CPA).
Given the foregoing, it is determined:
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The declaration of illegality and annulment of the Stamp Duty assessment acts that are the subject of the present request, and better identified above, with all legal consequences;
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The restitution of the amount of tax paid by the Claimant with respect to the three properties better identified above; and
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The payment of compensatory interest by the Respondent, calculated on the amount unduly paid by the Claimant, at the legal rate, until its full payment.
Regarding compensatory interest, as already decided in the Arbitral Award handed down in case no. 14/2012-T, of 29 June 2012, it falls within the competence of tax arbitral tribunals to issue condemnatory rulings that in judicial challenge proceedings are admitted before state tax tribunals, and it is equally admissible to recognize the right to compensatory interest in arbitral proceedings.
As a consequence of the substantive illegality of the Stamp Duty assessments that are the subject of the present action, the Claimant paid tax that was not due, requiring not only its reimbursement, under the terms of articles 24, no. 1, paragraph b) of the RJAT and 100 of the LGT, but also the payment of compensatory interest as the respective constitutive conditions are met, in accordance with the provisions of articles 43 of the LGT and 61 of the CPPT, calculated on the amount paid in excess and counted from the dates of the payments made until full restitution.
The value of the case is fixed at €34,363.10 in accordance with the provisions of articles 3, no. 2 of the Regulation of Costs in Tax Arbitration Proceedings ("RCPAT"), 97-A, no. 1, paragraph a) of the CPPT and 306, no. 2 of the Code of Civil Procedure.
The amount of costs is fixed at €1,836 to be borne by the Tax and Customs Authority, in accordance with the provisions of articles 12, no. 2 of the RJAT and 4, no. 4 of the RCPAT.
Notify thereof.
Lisbon, 6 March 2015
Text prepared by computer, in accordance with article 131, no. 5 of the Code of Civil Procedure (CPC), applicable by reference from article 29, no. 1, paragraph e) of the RJAT, with blank verses.
The drafting of the present Arbitral Award is governed by old spelling.
The arbitrator,
Maria Antónia Torres
[1] Acronym for Legal Regime of Tax Arbitration.