Summary
Full Decision
ARBITRAL DECISION
I - REPORT
A - PARTIES
A - REAL ESTATE CLOSED-END INVESTMENT FUND, tax identification number …, now represented by B - REAL ESTATE INVESTMENT FUND MANAGEMENT COMPANY, S.A., tax identification number …, with tax domicile at Avenue …, parish of …, municipality of Lisbon, hereinafter designated as Claimant or taxpayer.
AUTHORITY FOR TAX AND CUSTOMS (which succeeded the General Directorate of Taxes through Decree-Law no. 118/2011 of 15 December) hereinafter designated as Respondent or AT.
The request for constitution of the arbitral tribunal was accepted by the President of CAAD, and the Arbitral Tribunal was duly constituted on 14-05-2014 to assess and decide on the subject matter of the present proceedings, and was automatically notified to the Authority for Tax and Customs on 14-05-2014, as recorded in the respective minutes.
The Claimant did not proceed to appoint an arbitrator, and therefore, pursuant to the provisions of no. 1 of article 6 and paragraph b) of no. 1 of article 11 of Decree-Law no. 10/2011 of 20 January, as amended by article 228 of Law no. 66-B/2012 of 31 December, the Deontological Council appointed His Excellency Dr. Paulo Ferreira Alves, with the appointment having been accepted as legally provided.
On 01-07-2014 the parties were duly notified of this appointment and did not manifest the desire to refuse the appointment of arbitrators, in accordance with article 11 no. 1, paragraphs a) and b), of the RJAT and Articles 6 and 7 of the Deontological Code.
In accordance with the provision of paragraph c) of no. 1 of article 11 of Decree-Law no. 10/2011 of 20 January, as amended by article 228 of Law no. 66-B/2012 of 31 December, the single arbitral tribunal is duly constituted on 16-07-2014.
The arbitral tribunal is duly constituted. It is materially competent, in accordance with articles 2, no. 1, paragraph a), and 30, no. 1, of Decree-Law no. 10/2011 of 20 January.
On 26-11-2014, the meeting provided for in article 18 of the RJAT took place, in which the examination of witnesses was dispensed with.
The parties possess legal personality and capacity, are legitimate and are legally represented (articles 4 and 10, no. 2, of the same decree-law and article 1 of Ordinance no. 112-A/2011 of 22 March).
The proceedings do not suffer from defects that would invalidate them.
B - CLAIM
1. The Claimant now seeks a declaration of illegality of the tax act for additional assessment of Stamp Tax no. 2014 … and 2014 …, which fixed a total tax payable of €8,845.74 (eight thousand eight hundred and forty-five euros and seventy-four cents) and a total collection of €26,537.20 (twenty-six thousand five hundred and thirty-seven euros and twenty cents).
C - GROUNDS FOR CLAIM
2. To substantiate its request for an arbitral decision, the Claimant alleged, with a view to obtaining a declaration of illegality of the tax act for additional assessment of Stamp Tax no. 2014 … and 2014 …, in summary, the following:
3. The claimant petitions for the annulment, on the grounds that they suffer from a defect of violation of law, of the following acts of assessment of Stamp Tax:
4. The Act of assessment of Stamp Tax no. 2014 …, executed on 17.03.2014, by His Excellency the Director-General of Taxes, by reference to the parcel of land registered in the property register of the parish of …, municipality of Lisbon under article …, under item 28.1 of the General Table annexed to the Stamp Tax Code, from which resulted a total collection of €13,042.50 (see Document no. 1 attached); and
5. The Act of assessment of Stamp Tax no. 2014 …, executed on 17.03.2014, by His Excellency the Director-General of Taxes, by reference to the parcel of land registered in the property register of the parish of …, municipality of Lisbon under article …, under item 28.1 of the General Table annexed to the Stamp Tax Code, from which resulted a total collection of €13,494.70 and a tax payable of
6. Which totalled a total tax payable of €8,845.74 (eight thousand eight hundred and forty-five euros and seventy-four cents) and a total collection of €26,537.20 (twenty-six thousand five hundred and thirty-seven euros and twenty cents).
7. The Claimant maintains that it is the owner of the parcels of land registered in the property register of the parish of … in Lisbon (ref. …) under articles … and …, to which the Tax Authority attributed a taxable property value (VPT) of €1,304,250 and €1,349,470.
8. Parcels of land that were acquired by the Claimant from company C – ..., S.A., by public deed of purchase and sale, executed on 30 March 2002 before the Second Notarial Office of Lisbon, for the global price of 621,000,000 escudos
9. More recently, the Claimant was notified of the acts of assessment of Stamp Tax nos. 2014 … and 2014 …, also executed on 17.03.2014, by His Excellency the Director-General of Taxes, under item 28.1 of the General Table annexed to the Stamp Tax Code, having as reference the same parcels of land on 31 December 2013, which correspond to the 2nd instalment of the aforementioned tax.
10. Now, as results from the respective urban property record, the aforementioned properties do not constitute "residential urban properties", but rather parcels of land (so-called) for construction, which were acquired by the Claimant from company C – ..., S.A., by public deed of purchase and sale, executed on 30 March 2002 before the Second Notarial Office of Lisbon, for the global price of 621,000,000 escudos.
11. It further states that all urban properties that are not constructions, or, if they are, have a use different from residential use, are excluded from the scope of the tax provided for in item 28.1 of the General Table annexed to the Stamp Tax Code.
12. It happens that the properties, being located in the protection zone of the Palácio Nacional da Ajuda, are subject to severe urban restrictions concerning their buildability, due to the Municipal Master Plan of Lisbon (PDM), prepared in accordance with the Legal Regime of Land Use Management Instruments (RJIGT).
13. It maintains that, by Ordinance dated 20.10.1959, published in the Official Journal, IIª Series, no. 253, of 29-10-1959, p. 9083-9084, the protection perimeter of the Palácio Nacional da Ajuda was fixed, which has associated with it a set of urban restrictions.
14. In this context, as can be verified, the land registered in the property register of the parish of … under no. … is classified as consolidated area/green spaces for recreation and production, in accordance with the aforementioned PDM.
15. The respondent alleges that it follows that this type of space is not, by nature, buildable, being, as such, permeable and planted, intended for urban agriculture and recreation and production purposes, and that they can only include collective facilities and recreational and leisure support infrastructure, including restaurants and beverage establishments, and recreational equipment associated with tourism.
16. From which it is inferred that the land registered in the property register of the parish of … under no. … does not have, by virtue of the Municipal Master Plan of Lisbon, any building capacity, and therefore its classification as land for construction lacks legal basis.
17. It further states that, even if constructions were admitted on the land in question, they could never be for residential purposes, due to nos. 1 and 4 of article 50 of the PDM Regulation.
18. With reference to the aforementioned land, no licence or authorization for construction has been granted, no prior notification admitted or prior information issued with a favourable opinion on a construction operation, and therefore, in the strictest sense of the concepts, it does not fall within the definition of "urban property for residential purposes", nor of "land for construction", both provided for in article 6 of the IMI Code.
19. Thus, both properties could not have been classified as "land for construction", in accordance with and for the purposes of article 6, no. 1, paragraph c) of the IMI Code, and rather the classification of "other", in accordance with and for the purposes of article 6, no. 1, paragraph d) of the IMI Code, would be more appropriate to its material reality, in view of its lack of licensing for construction, in the case of the property registered under article … of the parish of …, or due to the lack of building capacity, in the case of the property registered under article … of the parish of ….
20. The claimant maintains that in the event that it should be understood that the classification of "land for construction" given to the Claimant's parcels of land is correct – which is not accepted and merely as a matter of professional duty is conjectured – it shall always be said that even if it is "land for construction", it would always be necessary to consider such urban properties as excluded from the scope of item 28.1 of the General Table annexed to the Stamp Tax Code (in the wording given by Law no. 83.º-C/2013 of 31 December).
21. The claimant concludes that the present acts constitute a manifest error in the appreciation of the facts in question, and therefore requests that Your Excellency order the immediate annulment of the Stamp Tax assessments contained in the acts of assessment nos. 2014 … and 2014 …, executed on 17.03.2014, by His Excellency the Director-General of Taxes, with reference to the urban properties registered in the urban property register of the parish of …, under nos. … and ….
D - THE RESPONDENT'S REPLY
22. The Respondent, duly notified to that effect, filed its reply in a timely manner in which, in abbreviated summary, it alleged the following:
23. Law no. 55-A/2012 of 29/10/2012 amended article 1 of the CIS and added item 28 to the TGIS; with this legislative amendment, Stamp Tax would henceforth also apply to the ownership, usufruct or right of superficies of urban properties whose taxable property value recorded in the register, in accordance with the Property Tax Code (CIMI), is equal to or greater than €1,000,000.00.
24. Stamp Tax would thus apply to all acts, contracts, documents, titles, papers and other facts or legal situations provided for in the general table, including gratuitous transfers of assets.
25. In the absence of any definition of the concepts of urban property, land for construction and residential use, under Stamp Tax, reference must be made to the CIMI, in search of a definition that allows for assessing any liability to Stamp Tax, in accordance with the provision of article 67, no. 2 of the CIS as amended by Law no. 55-A/2012 of 29/10.
26. The Respondent argues that, pursuant to the aforementioned legal provision, to matters not regulated in the Code, concerning item no. 28 of the TGIS, the provisions of the CIMI apply subsidiarily.
27. The notion of the use of the urban property is found in the part relating to the assessment of properties, which is well understood since the assessment of the property (purpose) adds value to the property, constituting a determining fact of distinction (coefficient) for assessment purposes.
28. Thus, for the purposes of determining the taxable property value of land for construction, it is clear that the application of the use coefficient is applied in assessing Stamp Tax, and therefore its consideration for the purposes of applying item 28 of the TGIS cannot be disregarded.
29. The AT considers that the provision of item 28 of the TGIS does not constitute a violation of any constitutional rule.
30. Item 28 of the TGIS applies to the ownership, usufruct or right of superficies of urban properties with residential use, whose taxable property value recorded in the register, in accordance with the CIMI, is equal to or greater than €1,000,000.00, that is, it applies to the value of the property.
31. The Respondent concludes by supporting its position in the sense that the assessment in question constitutes a correct interpretation and application of the law to the facts, not suffering from a defect of violation of law, whether of the CRP or the CIS, and therefore, the claim made should be judged as unfounded and the requesting entity should be absolved.
E - FACTUAL BASIS
32. Before proceeding to the assessment of these issues, it is necessary to present the factual matter relevant to their understanding and decision, made on the basis of documentary evidence and taking into account the alleged facts.
33. With respect to material facts, this tribunal considers the following facts to be established:
34. The Claimant is the owner of the urban property consisting of land for construction, corresponding to the parcels of land registered in the property register of the parish of … in Lisbon (ref. …) under articles … and …, to which the Tax Authority attributed a taxable property value (VPT) of €1,304,250 and €1,349,470.
35. Parcels of land that were acquired by the Claimant from company C – ..., S.A., by public deed of purchase and sale, executed on 30 March 2002 before the Second Notarial Office of Lisbon, for the global price of 621,000,000 escudos.
36. The claimant was notified of:
a) Act of assessment of Stamp Tax no. 2014 …, executed on 17.03.2014, by His Excellency the Director-General of Taxes, by reference to the parcel of land registered in the property register of the parish of …, municipality of Lisbon under article …, under item 28.1 of the General Table annexed to the Stamp Tax Code, from which resulted a total collection of €13,042.50 and a tax payable of €4,347.50.
b) Act of assessment of Stamp Tax no. 2014 …, executed on 17.03.2014, by His Excellency the Director-General of Taxes, by reference to the parcel of land registered in the property register of the parish of …, municipality of Lisbon under article …, under item 28.1 of the General Table annexed to the Stamp Tax Code, from which resulted a total collection of €13,494.70 and a tax payable of €4,498.24.
37. The Claimant did not proceed to pay the assessed tax and manifested, in accordance with and for the purposes of no. 2 of article 169 of the CPPT, its intention to lodge a complaint against such assessment act, requesting the fixing of the amount of guarantee to be provided, in accordance with no. 5 of article 199 of the CPPT.
F - UNPROVEN FACTS
38. Of the facts with relevance to the decision of the case, contained in the challenge, all objects of concrete analysis, those not included in the factual description above were not proven.
G - ISSUES TO BE DECIDED
39. Given the positions taken by the parties in the arguments presented, the central issue to be decided is the following, which must therefore be assessed and decided:
a) The alleged declaration of illegality of the tax act for additional assessment of Stamp Tax no. 2014 … and 2014 … claimed by the Claimant.
b) The alleged indemnification for guarantee improperly provided claimed by the Claimant.
H - MATTERS OF LAW
40. Given the positions taken by the parties in the pleadings submitted, the central issue to be decided by this arbitral tribunal is to determine whether the act of stamp tax assessment in the amount of €26,537.20, relating to urban properties both consisting of "land for construction", corresponding to the parcels of land registered in the property register of the parish of … in Lisbon (ref. … under articles … and …, suffers from formal defects, specifically that raised by the respondent regarding lack of reasoning, and violation of law, by the erroneous interpretation and application of item 28.1 of the TGIS and of article 6, no. 1, paragraph f), i) of the aforementioned Law no. 55-A/2012 of 29 October.
41. The defects of law due to error on the preconditions for the right to assess, regarding the question of the classification of land for construction within the scope of article 28, no. 1 of the TGIS, introduced by the Regime of Law no. 55-A/2012 of 29 October.
42. The amendment of the regime regarding the subjection to stamp tax of properties with residential use by the addition of item 28 of the General Table of Stamp Tax, made by article 4 of Law 55-A/2012 of 29/10, came to typify the following tax facts, through the following wording:
"28 – Ownership, usufruct or right of superficies of urban properties whose taxable property value recorded in the register, in accordance with the Property Tax Code (CIMI), is equal to or greater than €1,000,000 – on the taxable property value used for purposes of IMI:
28.1 – For property with residential use – 1%;
28.2 – For property, when the taxpayers who are not natural persons are residents in a country, territory or region subject to a clearly more favourable tax regime, listed in the ordinance approved by the Minister of Finance – 7.5%."
43. Article 6 of Law no. 55-A/2012 contains the transitional provisions that established the rules relating to the assessment of the tax provided for in that item:
"1 – In 2012, the following rules must be observed for the purposes of assessing the stamp tax provided for in item no. 28 of the respective General Table:
The tax event occurs on 31 October 2012;
The taxpayer of the tax is that mentioned in no. 4 of article 2 of the Stamp Tax Code on the date referred to in the previous paragraph;
The taxable property value to be used in the assessment of the tax corresponds to that which results from the rules provided for in the Property Tax Code for the year 2011;
The assessment of the tax by the Authority for Tax and Customs must be carried out by the end of November 2012;
The tax shall be paid in a single instalment by the taxpayers by 20 December 2012;
The applicable rates are as follows:
Properties with residential use assessed in accordance with the Property Tax Code: 0.5%;
ii) Properties with residential use not yet assessed in accordance with the Property Tax Code: 0.8%;
iii) Urban properties when the taxpayers who are not natural persons are residents in a country, territory or region subject to a clearly more favourable tax regime, listed in the ordinance approved by the Minister of Finance: 7.5%.
2 – In 2013, the assessment of the stamp tax provided for in item no. 28 of the respective General Table must apply to the same taxable property value used for the purposes of assessing the municipal property tax to be carried out in that year.
3 – The failure to deliver, in whole or in part, within the time indicated, of the amounts assessed as stamp tax constitutes a tax infraction, punished in accordance with the law."
On the interpretation of this rule, the ruling 53/2013-T has already pronounced itself, which states: "The term used in the aforementioned item 28.1 and in the sub-items i) and ii) of paragraph f) of no. 1 of article 6 of Law 55-A/2012 uses a concept that is not used in any other tax legislation in these precise terms, which is that of 'property with residential use'. In particular in the CIMI, which in several norms of the CIS introduced by that Law is indicated as the rule of subsidiary application regarding the tax provided for in the aforementioned item no. 28 [articles 2, no. 4, 3, no. 3, paragraph u), 5, paragraph u), 23, no. 7, and 46 and 67 of the CIS], a concept defined in those terms is not used." On this matter, the CAAD Arbitral Tribunal rulings have already decided, nos. 42/2013-T, 48/2013-T, 49/2013-T, 189/2013-T, 207/2013-T, 247/2013-T, 284/2013-T, 288/2013-T, 308/2013-T, 31/2014-T, 202/2014-T, 310/2014-T.
44. As regards the concept of "properties", it is necessary for this purpose to resort to the concepts of "properties" used in the CIMI, in which the types of properties are enumerated in its articles 2 to 6, which are transcribed as follows:
Article 2
Concept of Property
1. For the purposes of this Code, a property is any fraction of territory, including water, plants, buildings and constructions of any nature incorporated or based thereon, with a character of permanence, provided that it forms part of the patrimony of a natural or legal person and, in normal circumstances, has economic value, as well as water, plants, buildings or constructions, in the preceding circumstances, endowed with economic autonomy in relation to the land where they are located, although situated in a fraction of territory that constitutes an integral part of a different patrimony or does not have a patrimonial nature.
2. Buildings or constructions, even if movable by nature, are deemed to have a character of permanence when used for non-transitory purposes.
3. The character of permanence is presumed when buildings or constructions are located in the same location for a period exceeding one year.
4. For the purposes of this tax, each autonomous fraction, under the horizontal property regime, is deemed to constitute a property.
Article 3
Rural Properties
1 – Rural properties are land located outside an urban agglomeration that cannot be classified as land for construction, in accordance with no. 3 of article 6, provided that:
They are used for, or in the absence of concrete use, have as their normal destination a use that generates agricultural income, such as are considered for the purposes of income tax for natural persons (IRS);
Not having the use indicated in the previous paragraph, they are not built on or have only buildings or constructions of an accessory character, without economic autonomy and of reduced value.
2 – Rural properties also include land located within an urban agglomeration, provided that, by virtue of a legally approved provision, they cannot have a use that generates any income or can only have a use that generates agricultural income and are in fact having this use.
3 – Also rural properties include:
Buildings and constructions directly used for the generation of agricultural income, when located on the land referred to in the previous numbers;
Water and plants in the situations referred to in no. 1 of article 2.
4 – For the purposes of this Code, urban agglomerations are considered, in addition to those located within legally fixed perimeters, nuclei with a minimum of 10 dwellings served by public roadways, with their perimeter delimited by points 50 m from the axis of the roadways in the transverse direction and 20 m from the last building in the direction of the roadways.
Article 4
Urban Properties
Urban properties are all those that should not be classified as rural, without prejudice to the provision of the following article.
Article 5
Mixed Properties
1 – Whenever a property has rural and urban parts, it is classified in its entirety in accordance with the principal part.
2 – If neither part can be classified as principal, the property is deemed to be mixed.
Article 6
Types of Urban Properties
1 – Urban properties are divided into:
Residential;
Commercial, industrial or for services;
Land for construction;
Others.
2 – Residential, commercial, industrial or for services are buildings or constructions licensed for such purposes or, in the absence of a licence, that have as their normal destination each of these purposes.
3 – Land for construction shall be considered as land situated within or outside an urban agglomeration for which a licence or authorization has been granted, a prior notification admitted or prior information issued with a favourable opinion on a subdivision or construction operation, and also those thus declared in the acquisition title, except land in which the competent authorities prohibit any of those operations, in particular those located in green zones, protected areas or that, in accordance with municipal land management plans, are used for spaces, infrastructures or public facilities. (Wording of Law no. 64-A/08 of 31-12)
4 – Classified under the provision of paragraph d) of no. 1 is land located within an urban agglomeration that is not land for construction nor is it covered by the provision of no. 2 of article 3, and also buildings and constructions licensed or, in the absence of a licence, that have as their normal destination other purposes than those referred to in no. 2 and also those of the exception of no. 3.
45. On the interpretation of tax norms, for the case sub judice, article 11 of the General Tax Code tells us, which establishes the essential rules for the interpretation of tax laws, as follows:
Article 11
Interpretation
In determining the meaning of tax norms and in qualifying the facts to which they apply, the general rules and principles of interpretation and application of laws are observed.
Whenever tax norms use terms specific to other branches of law, they must be interpreted in the same sense they have there, unless otherwise provided directly by law.
If doubt persists about the meaning of the applicable scope norms, attention must be paid to the economic substance of the tax facts.
Gaps resulting from tax norms covered by the legislative reserve of the Assembly of the Republic are not capable of being filled by analogy.
46. For this provision, it is also necessary to resort to the general principles of the interpretation of laws, to which no. 1 of article 11 of the LGT refers, which are established in article 9 of the Civil Code, which establishes the following:
Article 9
Interpretation of Law
Interpretation should not be limited to the letter of the law, but should reconstruct from the texts the legislative thought, taking especially into account the unity of the legal system, the circumstances in which the law was drafted and the specific conditions of the time in which it is applied.
However, the interpreter cannot consider the legislative thought that does not have in the letter of the law a minimum of verbal correspondence, even if imperfectly expressed.
In fixing the meaning and scope of the law, the interpreter shall presume that the legislator adopted the most correct solutions and was able to express his thought in adequate terms.
47. Given the legal basis already exposed, and given the articles transcribed and cited, the following interpretative hypotheses emerge regarding the concept of "property with residential use", as it relates to residential properties, and as it relates to the concept of "property with residential use" as a distinct concept from "residential properties".
48. Articles 2 to 6 CIMI above transcribed do not use by the legislator, in the classification of properties, the concept of "property with residential use". Neither is this concept found, with this terminology, in any other rule.
49. The lack of exact terminological correspondence of the concept of "property with residential use" with any other used in other rules can give rise to several interpretative hypotheses.
50. The text of the law, being the starting point for the interpretation of the expression "properties with residential use", and on the basis of which the "legislative thought" must be reconstructed, as imposed by no. 1 of article 9 of the Civil Code, applicable by virtue of the provision of article 11, no. 1, of the LGT, already transcribed.
51. On the interpretation of the concept of "property with residential use", it is important to cite the ruling 53/2013-T which has already pronounced itself on this matter. A ruling that equally supports two interpretative hypotheses regarding the concept of "property with residential use", respectively in the same sense of the present decision, as it relates to the concept of "property with residential use" as referring to residential properties, and as it relates to the concept of "property with residential use" as a distinct concept from "residential properties".
52. The ruling 53/2013-T writes, on the concept of "property with residential use" as referring to residential properties:
"The concept most closely corresponding to the literal meaning of this expression used is manifestly that of 'residential properties', defined in no. 2 of article 6 of the CIMI as covering 'buildings or constructions' licensed for residential purposes or, in the absence of a licence, that have as their normal destination residential purposes.
If it is understood that the expression 'property with residential use' coincides with that of 'residential properties', it is manifest that the assessments will suffer from error on the factual and legal preconditions, since all properties for which Stamp Tax was assessed under the aforementioned item no. 28.1 are land for construction, without any building or construction required to fulfill that concept of 'residential properties'.
For this reason, adopting the interpretation that 'property with residential use' means 'residential property', the assessments for which a declaration of illegality is requested will be illegal, because there is no building or construction on any of the land.
However, the non-coincidence of the terms of the expression used in item no. 28.1 of the TGIS with that which is extracted from no. 2 of article 6 of the CIMI points to the fact that it was not intended to use the same concept."
53. On the interpretation of the second hypothesis: Concept of "property with residential use" as a distinct concept from "residential properties", the ruling 53/2013-T is again cited, in which it writes:
"The word 'use', in this context of the use of a property, has the meaning of 'the action of assigning something to a determined use'.
"When, as is often the case, norms (legislative formulas) have more than one meaning, then the positive function of the text is expressed in giving stronger support to or more strongly suggesting one of the possible meanings. That is, among the possible meanings, some will correspond to the most natural and direct meaning of the expressions used, while others will only fit within the verbal framework of the norm in a forced, unnatural way. Now, in the absence of other elements that would lead to the selection of the less immediate meaning of the text, the interpreter should in principle opt for that meaning which best and most immediately corresponds to the natural meaning of the verbal expressions used, and in particular to its technical-legal meaning, on the assumption (not always correct) that the legislator was able to express its thought correctly. ( [2] )
The relevance of the text of the law is especially emphasized in the interpretation of the scope norms of Stamp Tax, which are reduced to an amalgamation, under a common denomination, of an incongruous set of taxes of completely different natures (on income, on spending, on property, on acts, etc.), which leaves little room for the application of the principal interpretative criterion, which is the unity of the legal system, which demands its overall coherence.
The recognized lack of coherence of Stamp Tax is particularly exuberant in the case of this item no. 28.1, hastily included outside the General State Budget, by a fiscal legislator without perceived overall fiscal orientation, who is implementing successively norms of fiscal burden as required by the setbacks in budget execution, the impositions of international institutional creditors (represented by the 'troika') and the scrutiny of the Constitutional Court.
In fact, although in the "Statement of Reasons" of the Bill no. 96/XII/2.ª ( [3] ), on which Law no. 55-A/2012 was based, reference is made to the laudable concern of the Government to "reinforce the principle of social equity in austerity, ensuring an effective distribution of the sacrifices necessary to comply with the adjustment program" and to its commitment "to ensure that the distribution of these sacrifices will be made by all and not just by those who live on income from their work", it is manifest, on the one hand, that these reasons of equity, certainly existing, did not begin to apply in mid-2012, already existing at the beginning of the year, when the General State Budget came into force, and on the other hand, that the scope of item no. 28.1, in taxing additionally properties with residential use and not also properties that do not have it, reveals that concerns with social equity and the proclaimed intention of distributing sacrifices among all reach much more some than properly all.
In this context, in the absence of sure interpretative elements that would allow detection of legislative coherence in the solution adopted in the aforementioned item no. 28.1 or the correctness or incorrectness of the solution adopted (relevant for interpretative purposes in the face of no. 3 of article 9 of the Civil Code), the content of the legal text must be the primary element of interpretation, in accordance with the presumption, imposed by the same no. 3 of article 9, that the legislator was able to express his thought in adequate terms.
Given those meanings of the words "use" and "use", which are "to give a destination" or "to apply", the formula used in that item no. 28.1 of the TGIS manifestly covers properties that are already applied to residential purposes, and therefore it is necessary to inquire whether it also covers properties that, although not yet applied to residential purposes, are destined to these and those whose destination is unknown.
Given the literal content of item no. 28.1, it is to be excluded from the scope of application of Stamp Tax provided therein land for construction of some Claimants that do not yet have any defined type of use, as they are not yet applied or destined for residential purposes. That is, land for construction that does not have defined use cannot be considered properties with residential use, as they do not yet have any use or other destination than the construction of unknown type. An interpretation to the effect that item no. 28.1 refers to properties whose use is unknown has not the slightest verbal correspondence in the letter of that norm, and therefore a hypothetical legislative thought of that kind cannot be considered by the law interpreter, in view of the prohibition contained in no. 2 of article 9 of the Civil Code.
But this is not enough to clarify the situation of those parcels of land for construction that, not yet being applied to residential purposes, already have a determined destination, in particular in the subdivision licence, which is the case of the properties referred to in paragraphs z) to dd) of the factual matter established.
For this reason, it will be necessary to clarify when a property can be understood to be used for residential purposes, in particular whether it is when that destination is fixed in a licensing act or similar, or only when the actual assignment of that destination is materialized.
Firstly, the confrontation of item no. 28.1 of the TGIS with no. 2 of article 6 of the CIMI, which defines the concept of residential properties, manifestly points to the need for an actual use.
In fact, a building or construction licensed for residential purposes or, even without a licence, but which has as its normal destination residential purposes, is, in the face of no. 2 of that article 6, a residential property.
For this reason, in the assumption that the legislator of Law no. 55-A/2012 was able to express his thought in adequate terms (as imposed by article 9, no. 3, of the Civil Code as a presumption), if it intended to refer to those properties already licensed for residential purposes or that have residential purposes as their normal destination, it would certainly have used the concept of "residential properties", which would express perfectly and clearly its thought, in the face of the definition given by that no. 2 of article 6 of the CIMI.
Consequently, it should be presumed that the use of a different expression aims at a different reality, and therefore, in good hermeneutics, "property with residential use" cannot be a property merely licensed for residential purposes or destined for that purpose (that is, it will not be sufficient that it be a "residential property"), having to be a property that already has actual use for that purpose.
That this is the meaning of the expression "use", in the same context of property classification that the CIMI makes, is confirmed by article 3, in which, regarding rural properties, reference is made to those "that are used for or, in the absence of concrete use, have as their normal destination a use that generates agricultural income", which shows that use is concrete, actual. In fact, as can be seen from the final part of this text, a property may have as its destination a certain use and be or not be used for it, which shows that use is, at the level of the connection of a property to a certain use, something more intense than the mere destination and which may or may not occur downstream of it and not upstream. ( [4] )
Moreover, the text of the law in adopting the formula "property with residential use", instead of "urban properties with residential use", which appears in the aforementioned "Statement of Reasons", points strongly to the requirement that residential use already be implemented, since only then will the property be with that use.
With respect to article 45 of the CIMI, it has no relation to property classification and only indicates the factors to be considered in the assessment of land for construction. What is considered there, in referring to the "building to be constructed" is the consideration of the destination of the land, which, as seen, is something that, in the context of the CIMI, does not imply use and occurs before it.
The correctness of this interpretation to the effect that only properties that are actually used for residential purposes are included within the scope of item no. 28.1 of the TGIS is also confirmed by the perceivable legislative purpose of the restriction of the scope of the norm to properties with residential use, in the context of the "circumstances in which the law was drafted and the specific conditions of the time in which it is applied", which article 9, no. 1, of the Civil Code also establishes as interpretative elements. ( [5] ).
Firstly, the limitation of the taxation in Stamp Tax to "properties with residential use" allows one to perceive that it was not intended to cover within the scope of application of the tax properties with use for services, industry or commerce, that is, properties used for economic activity, which is understood in a context in which, as is well known, the economy is in a recessionary spiral, publicly proclaimed at the highest level, with unemployment rates reaching maximum historical levels, with an avalanche of business closures derived from economic unsustainability.
Bearing in mind this situation and it being well known and public that the revival of economic activity and the increase in exports are the doors out of the crisis, it is understood that legislative measures were not taken that would hinder economic activity, in particular the aggravation of the tax burden that hinders it and affects international competitiveness.
For this reason, it should be concluded that the available interpretative 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 fact that it was not intended to include within the scope of application of item no. 28.1 situations of properties that are not yet used for residential purposes, in particular land for construction held by companies. ( [6] )"
54. It follows from the foregoing that the application of the regime to the situation of the Claimant, regarding the urban property corresponding to a "land for construction", which does not occur in the present case, in view of a property with current residential use, and therefore Stamp Tax provided for in item 28.1 of the TGIS does not apply to those properties.
55. In this way, the assessment sub judice, for which a declaration of illegality is requested, suffers from a defect of violation of that item no. 28.1, due to error on the legal preconditions, which justifies the declaration of its illegality and annulment (article 135 of the CPA).
I - INDEMNIFICATION FOR GUARANTEE IMPROPERLY PROVIDED
56. The claimant further petitions for indemnification for guarantee improperly provided.
57. The present tribunal does not have competence to decide on the present issue since it has not yet occurred, and the claimant at the time of filing of the present petition had not provided a guarantee, nor paid the tax resulting from the assessment acts at issue here.
58. The claimant's petition is not upheld.
J - DECISION
Therefore, having considered all the foregoing, the present Arbitral Tribunal decides as follows:
I. The petition for declaration of illegality of the tax acts of assessment of Stamp Tax, nos. 2014 … and 2014 …, is upheld as well-founded, due to a defect of violation of law regarding the norm contained in item 28, no. 1, due to error on the legal preconditions, which justifies the declaration of its illegality and annulment.
II. The petition for indemnification for guarantee improperly provided is declared unfounded.
III. The amount of the proceedings is fixed at €26,537.20, taking into account the economic value of the proceedings as measured by the value of the tax assessments under challenge, and accordingly the costs are fixed in the respective amount of €1,530.00 (one thousand five hundred and thirty euros), charged to the respondent in accordance with article 12, no. 2 of the Tax Arbitration Regime, article 4 of the RCPAT and Table I annexed to the latter. – no. 10 of article 35, and nos. 1, 4 and 5 of article 43 of the LGT, articles 5, no. 1, paragraph a) of the RCPT, 97-A, no. 1, paragraph a) of the CPPT and 559 of the CPC).
Notify.
Lisbon, 27 November 2014.
The Arbitrator
Paulo Renato Ferreira Alves
[1] Dictionary of Contemporary Portuguese Language of the Academy of Sciences of Lisbon, Volume I, page 102.
[2] BAPTISTA MACHADO, Introduction to Law and Legitimating Discourse, page 182.
[3] Bill no. 99/XII/2.ª is available at http://www.parlamento.pt/ActividadeParlamentar/Paginas/DetalheIniciativa.aspx?BID=37245
[4] Other norms of the CIMI leave room to perceive that the term "use" is used to reference situations already existing and not merely future, even if foreseeable, such as "destination". This is the case of article 9 of the CIMI, which, after establishing that "the tax is due from" "the 4th year following, inclusive, that in which land for construction has come to appear in the inventory of a company that has as its purpose the construction of buildings for sale" or "the 3rd year following, inclusive, that in which a property has come to appear in the inventory of a company that has as its purpose its sale" [paragraphs d) and e) of no. 1], determines that "for the purposes of the provision of paragraphs d) and e) of no. 1, taxpayers must notify the tax office of the area where the properties are located, within 60 days from the occurrence of the determining fact of their application, of the use of the properties for those purposes". The "use of properties for those purposes", in the context of this article 9, refers back to the concrete assignment to properties of the purpose "for sale", materialized by their inventory, it not being sufficient that they have been constructed or acquired with a view to their sale.
[5] This approach does not take into account the special cases provided for in item no. 28.2, of ownership of properties by legal persons resident in a country, territory or region subject to a clearly more favourable tax regime, listed in an ordinance approved by the Minister of Finance to which, as in other norms, strong tax penalties are assigned, since these are situations normally associated with tax evasion.
[6] Outside the special cases provided for in item no. 28.2.
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