Summary
Full Decision
ARBITRAL DECISION
1 - Report
1.1 – A..., taxpayer no..., resident at Rua ..., n.º..., ..., in Lisbon and B..., taxpayer no..., resident at Rua ..., n.º..., ..., also in Lisbon, hereinafter referred to as "Claimants", requested the establishment of a sole arbitral tribunal, under the combined provisions of article 2, no. 1, subparagraph a) and article 10, both of Decree-Law no. 10/2011, of 20 January (Legal Framework for Arbitration in Tax Matters, hereinafter referred to only as "LFTM") and articles 1 and 2 of Ordinance no. 112-A/2011, of 22 March, in which the Tax and Customs Authority (hereinafter "Respondent" or "TA") is the Respondent Party.
1.2 - The request for arbitral pronouncement, submitted on 04 October 2018, concerns the declaration of illegality of the dismissal decision of the ex officio review request no. ...2016..., issued by the Director of Finances of Faro, on 04 July 2018, in the exercise of the delegation of powers to which the dispatch no. 4034/2018, of 29 January, published in the Official Journal 2nd series no. 78, of 20 April 2018, relates, and consequent annulment of the stamp duty levy (item 28.1 of the General Table of Stamp Duty – GTSD) with the no..., issued by the "TA" on 20-03-2015, with reference to the year 2014, in the amount of 24,200.20 € (twenty-four thousand, two hundred euros and twenty cents).
1.3 – The Claimants chose not to appoint an arbitrator.
1.4 - The request for establishment of the arbitral tribunal was accepted by the President of CAAD and notified to the TA on 08 October 2018.
1.5 - The signatory was appointed by the President of the Deontological Council of CAAD as arbitrator of the sole arbitral tribunal, pursuant to the provisions of article 6 of the LFTM, and the acceptance of the appointment was communicated within the applicable time period.
1.6 - On 27 November 2018, the Parties were notified of this appointment, and neither opposed it, pursuant to the combined provisions of article 11, no. 1, subparagraphs a) and b) of the LFTM and articles 6 and 7 of the Deontological Code of CAAD.
1.7 - Thus, in accordance with the provisions of article 11, no. 1, subparagraph c), of the LFTM, the sole arbitral tribunal was established on 17 December 2018.
1.8 - The Respondent was notified, by arbitral dispatch of 18 December 2018, pursuant to article 17, no. 1 of the LFTM, to present a Reply, if desired, within thirty days, and to request the production of additional evidence.
1.9 - It was further notified to submit, within the same period, the administrative file (AF) referred to in article 111 of the TAC.
1.10 - On 30 January 2019, the Respondent submitted its Reply, defending itself by impugning and pleading for dismissal of the request for arbitral pronouncement, on the grounds that it was not proven, maintaining in the legal order the challenged tax levy act with the consequent acquittal of the Respondent from the claim.
1.11 - On the same date it attached to the record the respective AF.
1.12 - Considering that the Parties did not request the production of any evidence beyond the documents attached to the case, the Arbitral Tribunal, in light of the principles of autonomy in case management, celerity, simplification and procedural informality, inherent in articles 16 and 29, no. 2, of the LFTM, by dispatch of 27 December 2018, dispensed with the holding of the meeting provided for in article 18 of the same instrument, and further decided that the case would proceed with optional written submissions within ten days, to be presented successively by the Respondent.
1.13 - By the same dispatch it was determined that the arbitral decision would be issued by the end of the time period referred to in article 21, no. 1 of the LFTM.
1.14 – The Claimants submitted written submissions on 07 February 2019.
1.15 – The TA likewise did so on 18 February 2019.
Position of the Parties
Of the Claimants -
They substantiate their request for arbitral pronouncement, in summary, as follows:
That they are co-owners (in 3/4 and 1/4, respectively) of the urban property located on Rua de ..., registered in the urban property matrix of the parish and municipality of ..., under article....
Previously this property was registered in the same matrix under article ... as "urban property composed of ..., crossed by the railway line", the owner being the deceased C..., of whom the Claimants are heirs.
Following information provided by the Municipal Council of ..., as appears from dispatch no. ... of the Finance Service of ..., of 3 October 2014, the said property is considered land for construction as it is located in an area covered by the Urbanization Plan of Operational Unit no. ... of ..., approved by Resolution of the Council of Ministers no. 43/2006, of 23 March 2006 and which is published in the Official Journal – I Series B, of 3 May 2006, at p. 3192 et seq.
It follows from no. 2 of article 35 and article 36 of the said plan that the urbanizable area (AUR1) has a potential building capacity of 30,530m2, and may have a maximum residential density of 55 units per hectare, a maximum building footprint area of 3,815m2, a maximum construction area of 15,260m2 and a maximum number of units of 170.
And that, in accordance with subparagraph a) of no. 1 of article 35 of the same plan, the AUR1 relevant for the case is "located in the designated 'zone ...', to the east of Rua ..., which will have a predominantly residential occupation, combined with commercial and service uses, in a built occupation integrated with open green spaces for framing, recreational and leisure spaces, various accesses and parking areas".
Thus the Claimants, in light of the change in the classification of the property, were notified to present the model 1 declaration of the Municipal Property Tax, which they failed to do, with the result that the property was officially described under article ... and valued as land for construction, with a total land area of 30,530 m2, a property footprint area of 3,815 m2 and a gross construction area of 15,260 m2 being considered, from which resulted the taxable patrimony value (TPV) of 2,420,020.00 €.
That on 04 August 2010 the previous owner of the property – C...-, deceased on 06-07-2014, submitted to the Municipal Council of ... a request for licensing of a subdivision operation for the said property, cf. File no. .../10 and addendum no. .../13. However, on 17 July 2013, withdrawal was requested, which was accepted by dispatch of 24 October 2013.
Nevertheless, the Claimants were notified of the levy of Stamp Duty, with legal basis in item no. 28.1 of the General Table of Stamp Duty, made on 20 March 2015, in the amount of 24,200.20 €, with reference to the year 2014, and the payment was made within the respective legal time periods.
However, considering that the said levy suffers from a defect of violation of law due to error in the factual and legal presuppositions, they presented, on 11 August 2016, a request for ex officio review, pursuant to no. 1 of article 78 of the General Tax Law.
Indeed, they argue that the reality that the Tax Administration subjects to Stamp Duty is not land for construction, since it is land for which no license or any kind of favorable prior information was granted for a subdivision or construction operation.
Furthermore, item no. 28.1 of the General Table of Stamp Duty provides that this tax applies to land for construction whose building, authorized or planned, is for housing, a fact which does not appear in the respective property matrix.
And even if approval had been granted for the subdivision operation, in the terms projected by the deceased C..., of the total construction area of 12,743 m2, it is noted that 3,228 m2 related to support areas, swimming pools and green zones, which corresponds to approximately 25% of the total area.
And that the said subdivision operation provided for the construction of 153 units of different types (T0, T1 and T2), none of which would have a taxable patrimony value exceeding 1,000,000.00 €.
However, by dispatch of 04 July 2018, notified to the Claimants, through their legal representative, on 11 July 2018, cf. dispatch no. ... of the Finance Department of Faro, of 09 of the same month, the request for ex officio review was dismissed on the grounds that it is not the appropriate means of challenge against the levy as the period for gracious objection had expired and, furthermore, because no error imputable to the services had occurred.
They conclude by pleading for the acceptance of the request for arbitral pronouncement and thereby for the annulment of the dismissal decision issued in the proceeding instituted pursuant to the request for ex officio review no. ...2016... and annulment of the challenged levy, in the amount of 24,200.20 €, with all the consequences provided for by law, namely the reimbursement of the amount improperly paid, plus the corresponding indemnitory interest.
Of the Respondent -
Defending itself by impugning, it invokes the following arguments:
That the Claimants are heirs of C..., deceased on 06-07-2014, who appeared in the property matrix of the parish and municipality of ... as owner of the urban property registered under article ... and described as ..., crossed by the railway line.
By reason of the fact that the said property is located in an area covered by the Urbanization Plan of Operational Unit no. ... of ..., whose regulations were approved by Resolution of the Council of Ministers no. 43/2006, and as such has construction viability, Respondent B... was notified, in the capacity of head of household of the unliquidated and undivided inheritance opened by death of the said C..., to present the model 1 declaration of Municipal Property Tax, in order to register the property as land for construction, which it failed to do.
Thus, the Finance Service of ... proceeded to the evaluation and official registration of the property as land for construction, under article ... and taxable patrimony value of 2,420,020.00 €.
That the subjection to stamp duty of item 28.1 of the General Table annexed to the Stamp Duty Code results from the combination of two facts: the housing allocation and the taxable patrimony value of the urban property registered in the matrix being equal to or exceeding 1,000,000.00 €.
It concludes by pleading for the total dismissal of the request for arbitral pronouncement and acquittal of the Respondent, maintaining in the legal order the challenged tax act, since the contested levy embodies a correct interpretation and application of the law to the facts.
2 - Procedural Matters
2.1 - The Parties have legal personality and judicial capacity, show themselves to be legitimate and are regularly represented (articles 4 and 10, no. 2, of the LFTM and article 1 of Ordinance no. 112-A/2011, of 22 March).
2.2 - The case does not suffer from nullities, the request was timely presented and no exceptions were raised.
2.3 - The Arbitral Tribunal is regularly established and is materially competent to hear and decide the request, cf. article 2, no. 1, subparagraph a) of the LFTM.
2.4 - There are no other circumstances that preclude the examination of the merits of the case.
3. Matter of Fact
3.1 Proven Facts
With relevance for the appreciation and decision of the questions raised, the following facts are given as established and proven:
- C..., TIN ..., was the holder of the property registered, since the year 1981, in the urban property matrix of the parish and municipality of ..., under article..., with an area of 30,530 m2 and described as "urban property composed of ..., crossed by the railway line", cf. document no. 6 attached by the Claimants);
- On 04 August 2010, C..., in the capacity of owner of the said property, submitted to the Municipal Council of ... a request for licensing of a subdivision operation for the same property, to which File no. .../10 relates, cf. document no. 8 attached by the Claimants;
- On 17 July 2013 the same owner requested from the said council the withdrawal of the licensing procedure mentioned above, in the following terms: "(…) Given all that has been set out above, the Applicant hereby informs of his withdrawal from his intention to license the subdivision operation that is proceeding under File no. .../10, pursuant to and for the purposes of the provisions of no. 1 of article 110 of the Code of Administrative Procedure", cf. document no. 8 attached by the Claimants;
- On 25 October 2013, the Municipal Council of..., cf. dispatch no..., informed the said applicant that, by dispatch of 2013/10/24, it has no objection to the withdrawal of the said licensing procedure for subdivision operation, located on Rua ..., zone between ... and ..., ..., file no. .../10 and addendum no. .../13, cf. document no. 11 attached by the Claimants;
- For the property in question no license or authorization was granted, no prior communication was admitted or favorable prior information was issued for a subdivision or construction operation, cf. document no. 11 attached by the Claimants;
- In the acquisition title of the property it was not declared that it was intended for construction or subdivision. This results from the fact that the property was registered in the property matrix in the year 1981, under article..., and described as urban property composed of ..., crossed by the railway line, cf. document no. 6 attached by the Claimants;
- On 06 July 2014 the said C... deceased, succeeded in the inheritance by Claimants A... and B..., cf. no. 4 of the information attached to document no. 1 attached by the Claimants;
- On 10 October 2014 the Finance Service of ..., through dispatch no..., notified Respondent B..., in the capacity of head of household of the inheritance opened by death of the said C..., that "(…) Following the information provided by the Municipal Council of..., it is found that the property in question (referring to article ... contained in subparagraph a) above) is land for construction with construction viability, located in an area covered by the Urbanization Plan of Operational Unit no. ... of ..., whose regulations were approved by Resolution of the Council of Ministers no. 43/2006, published in the Official Journal no. 85 of 03 May 2006, identified in subparagraph a) no. 1 of article 35.
As provided for in subparagraph b) of article 13 of the CIMI, where an event occurs that is capable of determining a change in the classification of a property, the taxpayer must submit the model 1 declaration of Municipal Property Tax within sixty days from the occurrence of such fact.
Finding that the said declaration was not submitted, a model 1 declaration of Municipal Property Tax was officially submitted with registration no..., which gave rise to article..., for the evaluation of land for construction, a copy of which is attached. The Areas registered in the declaration correspond to the areas contained in article 36 of the said Urban Planning Regulations", cf. document no. 7 attached by the Claimants;
- On 19 October 2014 the property was evaluated, with a taxable patrimony value of 2,420,020.00 €, and was registered in the said urban property matrix under article ..., with the description of "land for construction" and deleting from the matrix article..., cf. document no. 7 attached by the Claimants.
A percentage for calculating the footprint area was set at 22, with the following areas appearing: total land: 30,530 m2; building footprint: 3,815 m2; gross construction: 15,260 m2; and gross dependent: 3,815 m2.
The Claimants are the titleholders, in the proportion of ¼ for B... and ¾ for A....
- On 20 March 2015 the TA proceeded to levy stamp duty, by reference to item no. 28.1 of the General Table of Stamp Duty, with no. 2014..., for the year 2014, in the amount 24,200.20 €, issuing the corresponding collection notices in the name of the deceased "C..., REPRESENTED BY: B...", for payment of the 1st installment, in the amount of 8,066.74 €, in April/2015; of the 2nd, in the amount of 8,066.73 €, in July/2015; and of the 3rd, in the amount of 8,066.73 €, in November/2015, cf. documents nos. 2, 3 and 4 attached by the Claimants;
- The payments occurred on the following dates: the 1st installment on 30-04-2015; the 2nd on 30-07-2015; and the 3rd on 26-11-2015, cf. notations contained in documents nos. 2, 3 and 4 attached by the Claimants;
- On 11 August 2016 the Claimants submitted a request for ex officio review of the levy made, pursuant to no. 1 of article 78 of the General Tax Law, which was instituted at the Finance Department of Faro with no. ...2016..., cf. document no. 12 attached by the Claimants;
- By dispatch of the Director of Finances of Faro, of 04 July 2018, issued in the exercise of the delegation of powers to which dispatch no. 4034/2018, of 29 January, published in the Official Journal 2nd series no. 78, of 20 April 2018, relates, the said request for ex officio review was dismissed, cf. document no. 1 attached by the Claimants.
- On 11 July 2018 the Claimants were notified of the said dismissal decision, through their legal representative Dr. D..., by dispatch no..., of 09-07-2018, registered with proof of receipt (registration no...), cf. document no. 1 attached by the Claimants.
- On 04 October 2018 the Claimants submitted a request for establishment of an Arbitral Tribunal, under subparagraph a) of no. 1 of article 2 and article 10 of Decree-Law no. 10/2011, of 20 January.
3.2 Non-Proven Facts
There are no facts relevant to the decision of the case that should be considered as not proven.
3.3 Reasoning
Regarding the matter of fact, the Tribunal does not have the duty to pronounce itself on all the matters alleged, but rather has the duty to select those of interest for the decision, taking into account the claim (or claims) that grounds the request filed by the claimant [(cf. articles 596, no. 1 and 607, nos. 2 to 4 of the CCP, applicable ex vi of article 29, no. 1, subparagraphs a) and e) of the LFTM)] and to determine whether it considers it proven or not proven (cf. article 123, no. 2 of the TAC).
According to the principle of free assessment of evidence, the Tribunal bases its decision, in relation to the evidence produced, on its intimate conviction, formed from the examination and evaluation it makes of the means of proof brought to the case and in accordance with its experience of life and knowledge of persons (cf. article 607, no. 5 of the CCP). Only when the probative force of certain means is pre-established by law (e.g. full probative force of authentic documents, cf. article 371 of the Civil Code) is the principle of free assessment of evidence not applicable to the assessment of the evidence produced.
Thus, the Tribunal's conviction was based on the documentary compilation attached to the record as well as on the positions taken by the parties.
The TA does not dispute any of the facts alleged by the Claimants.
4 - Matter of Law (Reasoning)
Subject Matter of the Dispute
The question that constitutes the thema decidendum comes down to whether the property registered in the urban property matrix of the parish and municipality of ..., under article..., as land for construction, meets the objective presuppositions for subjection to stamp duty in accordance with the provisions of Item 28.1 of the GTSD, in the wording introduced by article 194 of Law no. 83-C/2013, of 31 December.
Questions to be Decided:
- Regarding the (il)legality of the challenged levy; and
- Regarding the request for payment of indemnitory interest.
Regarding the (Il)legality of the Challenged Levy -
For the Tax and Customs Authority, the levy in question was effected in accordance with the Law, namely item 28.1 of the GTSD, in the wording introduced by article 194 of Law no. 83-C/2013, of 31 December, since the property in question is registered in the property matrix as "land for construction" as it is located in an area covered by the Urbanization Plan of Operational Unit no. ... of ..., whose regulations were approved by Resolution of the Council of Ministers no. 43/2006, published in the Official Journal no. 85 of 03 May 2006, identified in subparagraph a) no. 1 of article 35.
However, the Claimants understand that the challenged levy suffers from illegality due to a defect of violation of law due to error in the factual and legal presuppositions, since the said property does not have the characteristics of land for construction nor is building for housing authorized or planned. Furthermore, in accordance with the said urban planning plan, construction for housing would not comprise the entirety of the land nor would the taxable patrimony value of each unit be equal to or exceed 1,000,000.00 €, given the high number of units permitted to be built (170).
Thus, it is necessary to evaluate:
Under item 28 of the General Table of Stamp Duty, the ownership, usufruct or right of superficies of urban properties whose taxable patrimony value contained in the matrix, pursuant to the Municipal Property Tax Code (CIMI), is equal to or exceeding 1,000,000.00 €, is subject to stamp duty, the tax applying to the taxable patrimony value used for Municipal Property Tax purposes.
Item 28.1 of the same table, in the wording introduced by article 194 of Law no. 83-C/2013, of 31 December, states: "For residential property or for land for construction whose building, authorized or planned, is for housing, in accordance with the provisions of the Municipal Property Tax Code" the rate of 1%" will apply.
In accordance with no. 1 of article 6 of this code, urban properties are divided into: a) Residential; b) Commercial, industrial or for services; c) Land for construction; d) Others.
No. 3 of the same article 6 considers land for construction "land situated within or outside an urban agglomeration, for which a license or authorization for a subdivision or construction operation has been granted, prior communication admitted or favorable prior information issued, and also those which have been thus declared in the acquisition title, with the exception of land where the competent entities forbid any of such operations, namely those located in green zones, protected areas or which, in accordance with municipal land use plans, are assigned to public spaces, infrastructures or facilities".
According to doctrine[1], which we support, "Currently the Law only considers land for construction those for which the respective owner has already acquired the rights to build or to carry out subdivision operations, conferred by the competent public authorities. Those lands that, without benefiting from these already recognized building or subdivision rights, have been acquired expressly for that purpose and simultaneously have construction viability are also thus considered.
In schematic form, no. 3 of article 6 of the Municipal Property Tax Code distinguishes three types of land for construction:
- Those over which the right to build has already been constituted, the form of constitution of this right being able to be the issuance of a building license issued by the competent authority – the municipalities, the admission of prior communication or the issuance of favorable prior information, pursuant to the Legal Framework for Urbanization and Building;
- Those over which the right to subdivision has already been constituted, the form of constitution of this right being able to be the issuance of a subdivision authorization for building issued by the competent authority - the municipalities, the admission of prior communication or the issuance of favorable prior information, pursuant to the Legal Framework for Urbanization and Building;
- Those which, not yet benefiting from those rights, have been acquired and the acquisition title expressly states that they are intended for construction or subdivision and which, simultaneously, have construction viability, documented by a statement from the municipality, which states that the land has construction viability (final part of no. 3 of article 37 of the CIMI).
(…) Prior to the approval of the Reform of Patrimony Taxation, the scope of the definition of the concept of land for construction was debated. Some currents argued, in particular, that this concept should coincide with the provisions of Municipal Master Plans (PDM). According to these theories, all lands envisaged in the PDM as having construction viability should, for that reason alone, be land for construction for the purposes of the Municipal Property Tax Code. The argument was that this was the way to harmonize planning legislation with fiscal legislation and also that this would be a way for Municipalities to combat the practices of some landowners not building on existing land in urban centers, waiting for its appreciation, thereby producing situations of urban landscape degradation.
As we have noted, this was not the option followed by the legislator, which makes perfect sense. In fact, there are many situations of rustic lands which the PDMs foresee with construction suitability, whose owners have no intention of building thereon, and in some cases even exploit them for agricultural purposes. In such cases, it would be manifestly excessive and disproportionate to subject these lands to tax at an artificially inflated value due to a construction prospect that is not within their purposes.
The Municipal Property Tax Code enshrines the principle according to which the classification of a property as land for construction always depends on the will of the respective titleholder, either through the request for a building license or subdivision authorization, or through the declaration, in the acquisition title of land, of its intended use for construction, where construction viability exists.
This legislative option derives from the theory of the public character of the right to build, according to which this right originates in the collectivity. This conception of the public character of the right to build is opposed to the liberal and private conception of this right.
(…) The right to build is not inherent in the right of property, but only arises ex novo in the patrimony of the owner when an administrative act of the competent public entity recognizes and authorizes the owner to build or to subdivide. It is public power, and only it, that has the constitutive legitimacy to cause this right to arise in the sphere of law of the owner, and only when this right is constituted in the sphere of law of the owner does the Municipal Property Tax Code establish that we are dealing with land for construction".
In the same sense Silvério Mateus[2] pronounces himself, according to which "for land to be classified as land for construction it is not enough that it be included in an area capable of being urbanized in the Municipal Master Plan. (…) the potential use of such soils for construction should not be a criterion for its qualification, which should occur when the building license or the subdivision permit is issued".
Also case law has been pronouncing itself in the same sense, as evidenced by, among others, the judgments of the Central Administrative Court of the North of 10-11-2016 (File no. 00618/08.3BEPNF, in the summary of which it is stated:
"I – Plots of land for construction are constituted with the issuance of the subdivision license, appearing, in specified form, in the respective permit – cf. article 77, no. 1, subparagraph e) of the Legal Framework for Urbanization and Building.
II With the issuance of the subdivision permit, the Municipality places at the disposal of the holder of such permit the possibility of utilizing what is implied in the respective urban operation.
III The issuance of the permit is a condition of effectiveness of the license or authorization for the performance of a subdivision operation and depends on the payment of the fees owed by the applicant – cf. article 74, no. 2 of the Legal Framework for Urbanization and Building".
And of the Supreme Administrative Court of 22-05-2013 (File no. 01146/12), thus summarized:
"I - The right to build only arises ex novo in the patrimony of the owner when an administrative act of the competent public entity recognizes and authorizes the owner to build or to subdivide.
II - Therefore, a rustic property becomes "land for construction" only with the administrative act that grants the license to subdivide or build and not with the initial request for the licensing procedure".
Thus, considering that for the property in question no license or authorization was granted, no prior communication was admitted or favorable prior information was issued for a subdivision or construction operation, the property being registered and described in the property matrix only and solely by force of the Urbanization Plan of Operational Unit no. ... of ..., cf. document no. 7 attached by the Claimants (subparagraph h) of the evidence), and that in the respective acquisition title it was not declared that the property was intended for construction or subdivision, cf. subparagraph f) of the evidence, since article ... which was at the origin of the ... was registered in the matrix, in the year 1981, as "urban property composed of ..., crossed by the railway line", the challenged levy is illegal as it violates the provisions of item 28.1 of the GTSD and no. 3 of article 6 of the CIMI, that is, because it objectively applies to a property registered in the matrix as land for construction, but which, in light of the evidence produced, is not, since it does not meet the presuppositions provided for in this latter norm.
In this sense the arbitral decision issued in File no. 156/2016, of 07-09-2016, which we support, may be seen.
Furthermore, in light of the evidence produced, the challenged levy would always be illegal even if the property were correctly classified as land for construction, for the following reasons:
First, because the building of the property, even if for housing, is neither authorized nor planned, an indispensable requirement under the provisions of the said item 28.1 of the GTSD, and the existence of the Urbanization Plan of Operational Unit no. ... of..., which confers on the property construction viability, is not suitable to determine the integration of the property in the species "land for construction" of the classification of the property as urban.
The references made in item 28.1 and in article 45, no. 2, of the CIMI to planned buildings, in addition to authorized ones, allow us to conclude that, contrary to what may have been understood by the Tax and Customs Authority, it will not be essential that there already exists an administrative act of approval of a construction project (which would constitute "authorization"), it being sufficient that a construction with determined characteristics is planned, at least as to the footprint area of the building to be constructed.
There is no indication in these norms of the GTSD and the CIMI of what should be understood by "planned building", but, taking into account the documents required for the evaluation of land for construction, indicated in article 37, no. 2, of the CIMI, it is concluded that one can only speak of authorized or planned building when the "building to be constructed", referred to in no. 1 of article 45, is defined in a subdivision permit or building license permit, or approved project, or prior communication, or favorable prior information or documentary proof of construction viability. Indeed, it is only in these situations that there will be legal consistency in foreseen the future realization of construction with determined characteristics.
In fact, municipal land use plans do not confer the right to urbanize and build. The acquisition of urban development faculties is successive and gradual and depends on the fulfillment of urban development burdens (see article 15 of the General Law of Bases on Public Land Policy, Land Use Planning and Urbanism, Law no. 31/2014, of 30 May).
Although the property here in question is registered in the property matrix as being "land for construction", this does not legitimize the automatic application of item 28.1 of the GTSD, since the mere matrix registration does not, in itself, constitute evidence that a property has a building for housing planned.
Citing again José Maria Fernandes Pires[3] "(…) The amendment introduced in item 28.1 of the General Table of the Stamp Duty Code came (…) to extend the scope of the application of the tax to land for construction, in relation to which the building for housing is authorized or planned.
Excluded from subjection to item 28.1 are (…), as well as land for construction, in relation to which building for housing purposes is neither authorized nor planned".
In this sense, among many others, the arbitral decisions issued in Files nos. 300/2017, of 04-03-2018; 262/2017, of 12-12-2017; 167/2017, of 06-07-2017; 290/2016, of 26-10-2016; 578/2015, of 19-04-2016; and 142/2016, of 01-09-2016, which we support, may be seen.
Second, because the areas contained in the property matrix relating to the property in question (article...) correspond to those contained in subparagraph a), no. 1 of article 35 of the said urban planning plan, as appears from the evidence (subparagraph g) and document no. 7 attached by the Claimants) and not to any subdivision license or building authorization or permission, because quite simply they do not exist, the envisaged building capacity having a predominantly residential occupation, combined with commercial and service uses, in a built occupation integrated with open green spaces for framing, recreational and leisure spaces, road access and parking areas.
In this case the property would be intended for construction whose building would not be intended solely for housing, but also for commerce and services.
In this sense, among others, the arbitral decisions issued in Files nos. 541/2016, of 27-06-2017; 478/2016, of 03-03-2017; 578/2015, of 19-04-2016; and 522/2015, of 18-03-2016, which we support, may be seen.
Finally, because, in light of the building typology and the respective maximum number of units (170) permitted in that urban plan; the TPV of the land of 2,420,020.00 €; and the percentage for calculating the footprint area set at 22, pursuant to nos. 2 and 3 of article 45 of the CIMI, none of the fractions of the properties to be erected would have a TPV equal to or exceeding 1,000,000.00 €.
In this sense, in particular, the arbitral decisions issued in Files nos. 211/2018-T, of 10-12-2018; and 452/2016-T of 20-03-2017, which we also support, may be seen.
Regarding the Request for Condemnation to the Payment of Indemnitory Interest
The Claimants further request that they be paid indemnitory interest, due to error of the services, in accordance with article 43, no. 1, of the GTL, having proven the payment of the sum levied.
This provision, applicable subsidiarily to the tax arbitration process, by force of the provisions of article 29, no. 1, subparagraph a), of the LFTM, states "Indemnitory interest is due when it is determined, in gracious objection or judicial challenge, that there was error imputable to the services from which there results payment of the tax debt in an amount exceeding that legally owed."
The existence of error imputable to the services is considered to be verified, according to uniform case law of the STA[4], whenever there is acceptance of the gracious objection or judicial challenge of the levy act (in the same sense, the decision in arbitral file no. 218/2013-T).
Having demonstrated the erroneous application of the norm of incidence that justifies the annulment of the challenged levy, the right of the Claimant to indemnitory interest is recognized at the legal default rate, pursuant to articles 43, nos. 1 and 4, and 35, no. 10, of the GTL, article 559, no. 1, of the Civil Code and Ordinance no. 291/2003, of 8 April, from the date of actual payment of the amount improperly levied until the date of processing of the respective credit note, in accordance with the provisions of no. 5 of article 61 of the TAC.
5 - Decision
In light of the foregoing, the decision is as follows:
a) To find the request for declaration of illegality and consequent annulment of the levy of stamp duty (item 28.1 of the General Table of Stamp Duty – GTSD) with no. 2014..., issued by the Tax and Customs Authority on 20-03-2015, with reference to the year 2014, in the amount 24,200.20 € (twenty-four thousand, two hundred euros and twenty cents) to be well-founded, for the defect of violation of law due to error on the factual and legal presuppositions.
b) To find the request for annulment of the dismissal decision of the request for ex officio review no. ...2016..., issued by the Director of Finances of Faro, on 04 July 2018, in the exercise of the delegation of powers to which dispatch no. 4034/2018, of 29 January, published in the Official Journal 2nd series no. 78, of 20 April 2018, relates, to be well-founded; and
c) To find the request for condemnation of the Tax and Customs Authority to reimburse the sum improperly paid by the Claimants, in the amount of 24,200.20 €, plus the respective indemnitory interest at the legal rate, from the date of payment until the date of processing of the respective credit note, to be well-founded.
Value of the Case
In accordance with the provisions of articles 306, no. 2, of the CCP, 97-A, no. 1, subparagraph a) of the TAC and 3, no. 2 of the Costs Regulation in Tax Arbitration Processes (CRTAP), the value of the case is fixed at 24,200.20 €.
Costs
Pursuant to article 22, no. 4 of the LFTM, the amount of costs is fixed at 1,530.00 €, in accordance with Table I, annexed to the CRTAP, to be borne by the Tax and Customs Authority.
Notify.
Lisbon, 31 March 2019.
The Arbitrator,
(Rui Ferreira Rodrigues)
Text prepared by computer, in accordance with the provisions of article 131, no. 5, of the CCP, applicable by reference from article 29, no. 1, subparagraph e), of the LFTM.
[1] José Maria Fernandes Pires, in "Lessons on Patrimony and Stamp Taxes", 3rd ed. Almedina, 2016, pp. 108/112
[2] Mateus, J. Silvério and Freitas, Leonel Corvelo de, in "Taxes on Real Estate Patrimony. The Stamp Tax", Annotated and Commented", Engifisco, Lisbon, 2005, p. 118
[3] José Maria Fernandes Pires, op. cit. pp. 508
[4] Judgments of the STA of 22-05-2002, File no. 457/02; of 31.10.2001, File no. 26167; of 2.12.2009, File no. 0892/09
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