CAAD Ruling 496/2017-T: Stamp Tax on Mortgage Late Interest, Merchant Service Fee & Interchange Fees

Arbitration Decision (consult full version in PDF)

The arbitrators Fernanda Maçãs (presiding arbitrator), Luís Menezes Leitão and Manuel Pires (member arbitrators), constituting this Arbitration Court, agree:

Report

1. A..., s.A, NIPC..., notified of the assessment of Stamp Tax no. 2017..., in the amount of €4,004,413.07, relating to Stamp Tax on late payment interest on loans for owner-occupied housing (in the amount of €297,253.16), Stamp Tax on the Merchant Service Fee (in the amount of €1,117,109.57), and Stamp Tax on the multilateral interchange fee and interbank commissions on card operations in automated teller machines (in the amount of €2,523,780.21)[1], as well as the corresponding assessments of compensatory interest, in the total amount of €418,582.45, all relating to the year 2014, came, under the terms of articles 2, no. 1, paragraph a), 5, no. 3, paragraph b), 6, no. 2, 10, no. 1, paragraph a) and no. 2, all of Decree-Law no. 10/2011, of 20 January, to file the present request for arbitral decision, with a view to annulling the aforementioned assessment, in the amount of €3,938,142.94 (partial annulment), as well as the corresponding assessments of compensatory interest.

2. The request for establishment of the Arbitration Court was accepted by the President of CAAD and automatically notified to the Tax and Customs Authority on 04/09/2017.

3. In exercise of the option of appointment of arbitrator provided in paragraph b) of no. 2 and in no. 3 of article 6 of the RJAT and in compliance with the provisions in paragraph g) of no. 2 of article 10 and in no. 2 of article 11, of the same diploma, the Claimant designated as Arbitrator Prof. Doctor Luís Menezes Leitão.

4. Under the terms of paragraph b) of no. 2 of article 6 and no. 3 of article 11 of the RJAT, and within the deadline provided in no. 1 of article 13 of the RJAT, the senior official of the Tax and Customs Authority ("TA") designated as Arbitrator Prof. Doctor Manuel Pires.

5. In accordance with nos. 5 and 6 of article 11 of the RJAT, the President of CAAD notified the Claimant of the appointment of the Arbitrator by the senior official of the Tax Administration and notified the arbitrators appointed by the parties to appoint the third arbitrator who assumes the status of Presiding Arbitrator, the Arbitrators appointed by the parties having agreed on the appointment of Counsellor Dr. Maria Fernanda dos Santos Maçãs as Presiding Arbitrator.

6. The President of CAAD informed the Parties of this appointment, under the terms and for the purposes of the provisions in no. 7 of article 11 of the RJAT and, in compliance with what is provided in no. 7 of article 11 of the RJAT, the Collective Arbitration Court was constituted, on 14/12/2017.

7. In these terms, the Arbitration Court is regularly constituted to hear and decide the subject matter of the proceedings.

8. To substantiate the request for arbitral decision, the Claimant alleges, in summary, the following:

8.1. Regarding the illegality of the assessment of Stamp Tax on late payment interest on owner-occupied housing loans:

8.1.1. According to the Claimant, if late payment interest arising from breach of housing credit contracts were subject to Stamp Tax, the tax would constitute a charge on the debtors of such interest, that is, on its clients, as results from the combination of articles 1 and 3, nos. 1 and 3, paragraph g), of the Stamp Tax Code (STC);

8.1.1.1. And, if such imposition of Stamp Tax constituted a situation of substitution without withholding, article 28 of the General Tax Law (GTL) would be inapplicable, which establishes the liability regime in case of tax substitution;

8.1.1.2. Which had already been decided, moreover, in the judgment of the Supreme Administrative Court of 25-03-2015 (Case no. 01080/13).

8.1.2. Furthermore, there was erroneous interpretation of the provisions in the aforementioned article 7, no. 1, paragraph l), of the STC, in light of its literal meaning:

8.1.2.1. This is because, the tax legislator knowing of the existence of remunerative interest, payment for financial services, and interest that is compensation for debtor default, provided for in article 806 of the Civil Code, one cannot consider it as inadvertent the lack of distinction between them in the exemption norm;

8.1.2.2. Moreover, the wording of the exemption norm is identical to the wording of the imposition norm, and there are no reasons to interpret them differently;

8.1.2.3. As already decided in the context of case no. 292/2016-T: "(…) the fact that in both aforementioned norms of the STC and the TGIS – article 7, no. 1, paragraph l), of the STC and item 17.3.1 of the TGIS – reference is made to «interest… on loans», without any specification of any type of interest, leads to the conclusion that the exemption refers to the same types of interest that are covered by the imposition norm, provided that the loans are «for acquisition, construction, reconstruction or improvement of owner-occupied housing» (…)";

8.1.2.4. Moreover, under article 8, no. 2, of Decree-law no. 58/2013, of 8 May, late payment interest is materially in the nature of a mere additional to remunerative interest, with its amount fixed through the application of a surcharge, added to the rate of remunerative interest applicable to the operation, which applies to the principal not paid;

8.1.3. And there was also erroneous interpretation of the provisions in the aforementioned article 7, no. 1, paragraph l), of the STC in light of the historical and teleological elements:

8.1.3.1. The exemption provided for in paragraph l) of no. 1 of article 7 of the STC has been ensured by the Portuguese legal system since Decree-Law no. 119-B/83, of 28 February, as "a measure to encourage the acquisition of owner-occupied housing";

8.1.3.2. And this is only one of several measures in the tax system aimed at encouraging the acquisition of owner-occupied housing, implementing the duty incumbent on the State under article 65 of the Constitution of the Portuguese Republic (CPR);

8.1.3.3. Only very recently did the TA reverse its understanding of the concept of "interest" for purposes of the exemption norm, despite the absence of any legislative amendment to the wording of the provision, and in contradiction with that rationale.

8.1.4. Furthermore, there was erroneous interpretation of the provisions in the aforementioned article 7, no. 1, paragraph l), of the STC in light of the systemic element:

8.1.4.1. If the TA's interpretation were to prevail, families in default situations would be more burdened, contrary to a series of measures and statutory instruments adopted by the legislator, namely:

i. Decree-Law no. 103/2009, of 12 May, in whose Preamble it stated: "Given the current economic situation and its reflection in the labor market, it is highly convenient to relax the rules concerning the conditions of loans for owner-occupied permanent housing, thus supporting families regarding the charges assumed with their permanent housing and preserving the housing patrimony itself (…)";

ii. Decree-Law no. 227/2012, of 25 October, which created the "Action Plan for Default Risk" (PARI) and the "Extrajudicial Procedure for Regularization of Default Situations" (PERSI), applicable to housing credit contracts;

iii. Laws no. 57/2012, 58/2012, 59/2012 and 60/2012, all of 9 November 2012, which established a set of protection measures for housing credit debtors;

8.1.4.2. And, in that interpretation of the TA, credit institutions, in the course of negotiation and/or restructuring imposed by law, would, in the limit, be obliged to forgive late payment interest to debtors, but the State would not forego collection of the respective stamp tax, which would then be borne by those credit institutions in their capacity as taxpayer of the tax (cf. article 2, no. 1, paragraph b), of the STC).

8.1.5. Finally, the interpretation of article 7, no. 1, paragraph l), of the STC, in light of the principle of accessoriness of late payment interest relative to the corresponding financial operations, also leads to the conclusion that such interest is exempt from Stamp Tax:

8.1.5.1. This was recognized in Binding Information no. 357, requested by the Claimant: "(…) bank late payment interest consists, in summary, of an increase in the rate of remunerative interest (conventional or statutory) inherent to a given banking product, thus constituting a mere extension of its compensatory scope, in light of the unavailability of the capital transferred and wrongly restricted to the creditor during the period of the debtor's default (…)";

8.1.5.2. The practice of the Claimant is fully in accordance with the legal framework in that in other credit operations (including in the real estate credit domain) it proceeds to levy stamp tax on late payment interest – because for those there is no exemption norm comparable to article 7, no. 1, paragraph l), of the STC, relating to housing credit.

8.1.6. Going deeper, one could even exclude the taxation of late payment interest under Stamp Tax because such interest is not financial interest, as it would have to be, given the heading of item 17 - "financial operations" and also of the residual norm 17.3.4 - "other commissions and consideration for financial services":

8.1.6.1. In fact, unlike financial interest, late payment interest does not denote any capacity to contribute – quite the contrary;

8.1.6.2. Now, although the Constitution does not expressly enshrine the principle of capacity to contribute, its constitutional dignity has been recognized by the Constitutional Court as an expression of the principle of fiscal or tax equality, in its "uniformity" aspect, i.e., the duty of all to pay taxes according to the same criterion (e.g. its Decision no. 452/2003);

8.1.6.3. And the incidence of Stamp Tax, since the 2000 reform, has been in the direction of, as is recognized in the Preamble of the STC, evolving from a "tax on documents" to a "tax on operations which, regardless of their materialization, reveal income or wealth";

8.1.6.4. Since late payment interest reveals no additional wealth on either the lender's or the borrower's side, being merely compensatory of the patrimonial decrease of the injured party resulting from the contractual breach that was at its origin, the taxation of late payment interest under Stamp Tax would make item 17.3 of the TGIS, combined with article 1, no. 1, of the STC materially unconstitutional;

8.1.6.5. What is aimed at is to tax interest that constitutes consideration for a financial operation and that is exempt from VAT, falling within the incidence of Stamp Tax, as a residual tax;

8.1.6.6. Now, just as there is no basis for taxing under VAT late payment interest arising from breach of service provision contracts subject to VAT (cf. article 16, no. 6, paragraph a), of the VAT Code), so too in the Stamp Tax framework, in the realm of financial service provisions exempt from VAT, there is no such basis.

8.2. Regarding the illegality of the assessment of Stamp Tax on the Merchant Service Fee:

8.2.1. According to the Claimant, if the Merchant Service Fee (MSF) were subject to Stamp Tax, such tax would constitute a charge on the debtors of that fee, that is, on its merchant clients, as holders of the economic interest in the underlying operation, under articles 1 and 3, nos. 1 and 3, paragraph g), of the STC.

8.2.1.1. And, if such imposition of Stamp Tax constituted a situation of substitution without withholding, article 28 of the General Tax Law (GTL) would be inapplicable, which establishes the liability regime in case of tax substitution;

8.2.1.2. Which had already been decided, moreover, in the judgment of the Supreme Administrative Court of 25-03-2015 (Case no. 01080/13);

8.2.1.3. Moreover, since in the specific case there was no commission, as the "Merchant Service Fee" constitutes a discount made by the Claimant when paying to clients the credits which it acquires from them, the Claimant had no way to proceed with the collection of the tax;

8.2.1.4. And since the tax was not collected, it is not due from the Claimant, as tax substitute, and should be demanded from the merchant clients to whom the MSF was charged.

8.2.2. According to the Claimant, the MSF is not even subject to Stamp Tax because it does not correspond to remuneration for services provided by the Bank to the merchant:

8.2.2.1. Breaking down the structure of the card payment system according to a publication of the Bank of Portugal, we would have:

• The cardholder (final consumer) gives a payment order to the merchant for the purchase;

• The acquirer or acquirer bank (merchant's bank that provided the TPA) requests authorization from the card issuing bank (final consumer's bank) for payment;

• The card issuing bank authorizes payment and provides a payment guarantee;

• The acquirer pays the merchant by discounting a value from the purchase price (the so-called "Merchant Service Fee");

• The card issuing bank reimburses the acquiring bank and the latter, in turn, pays the former an interchange fee;

• The card issuing bank charges its client (the final consumer, the cardholder) the value of the transaction.

8.2.2.2. The legal relationship/contractual link identified in 4. reflects an acquisition, with discount, of the merchant's credit, not the provision of a financial service.

8.2.2.3. The Claimant recognizes that "the acquirer promotes the security of commercial transactions and allows the merchant to transfer the risks inherent to good collection of the price, and, in turn, the merchant no longer has to worry about the risk of default by clients (which is justified when these do not pay in cash or defer in time, in any way, payment for the good or service)." (article 173 of the Petition);

8.2.2.4. And that "The advantage also lies in the reduction of cash handling work resulting from lesser use of cash, in the reduction of theft risk and in the expansion of demand for its goods and services, whose form of acquisition offers greater convenience." (article 174 of the Petition);

8.2.2.5. However, the Bank's remuneration derives from "various rental and management commissions, line fees, registrations, connection fees and commissions for other additional services" (article 175 of the Petition), not from the MSF, which would have different cause.

8.2.2.6. As it writes, "In accordance with what is contractually stipulated and which corresponds to current practice, acquisition by the acquirer immediately exonerates the merchant's client and there is no assumption of guarantee of good collection on the part of the merchant.", and "Hence the acquisition takes place slightly below the nominal value, with that discount intended to remunerate the mentioned risk." (articles 178 and 180 of the Petition);

8.2.2.7. Contrary to what was stated by the tax inspection services, the moment of settlement of the credit to the Claimant is posterior to the moment of settlement of that same credit to the merchant – therefore it would be "manifestly evident that the operation in question does not constitute a provision of services, for which the provider would receive a commission as a form of remuneration." (article 186 of the Petition);

8.2.2.8. Moreover, such operation does not correspond to the definition of service provision contract contained in article 1154 of the Civil Code (to which one must resort, even by compulsion of no. 2 of article 11 of the GTL, due to lack of a fiscal concept): the acquirer assumes no obligation with respect to any result to the merchant; there is no obligation to provide assumed by the acquirer; there is not even the objective of achieving a determined result; and the operation in question, occurring via electronic, automatic and automated means, does not fall under any intellectual or manual work;

8.2.2.9. Now, it adds, "the verification of a provision of services is absolutely determinant for item 17.3.4 of the TGIS to be applicable.", as "the operations subject under item 17.3 of the TGIS are defined according to the nature of the service provisions that are furnished and not exclusively according to the nature of the provider." (articles 198 and 205 of the Petition);

8.2.2.10. Thus, "An interpretation of 'financial services' for purposes of subjection to Stamp Tax, without any correspondence with the concept of provision of services in Civil Law, would suffer from manifest error of law.", especially when "the new configuration of Stamp Tax is one that attends exclusively to the economic substance of operations" (articles 212 and 218 of the Petition);

8.2.2.11. Now, the economic (and legal) substance of the operation in question would be a credit assignment (cf. articles 577 et seq. of the Civil Code), which would be based on a purchase and sale contract; it would not involve the granting of credit in any way, and only for the use of credit do items 17.1 and 17.2 of the TGIS provide for rates depending on the maturity date of the credit granted;

8.2.2.12. Since such assignment does not involve the granting of credit and, therefore, is not subject to the rate specifically provided for financial operations of credit use, it could only be considered a financial operation subject to Stamp Tax if it could be subsumed to item 17.3 ("Operations carried out by or with intermediation of credit institutions, financial companies or other entities legally equated to them and any other financial institutions") – but for that it would have to be an operation expressly provided in its breakdowns (17.3.1. to 17.3.4.).

8.2.3. If it were admitted that the MSF corresponds to a "commission for provision of financial service" subject to Stamp Tax, the norm contained in item 17.3.4 of the TGIS would be materially unconstitutional, by violation of articles 103 and 104 of the Constitution of the Portuguese Republic (CPR):

8.2.3.1. In the first place, because "there is no true consumption or expense on the part of the merchant, at least as far as the discount fee element is concerned, and therefore the materiality that sustains the concrete purpose of imposition of Stamp Tax is not verified" (article 279 of the Petition);

8.2.3.2. Then because, since VAT always applies in all cases also to the discounted value (the price of the good acquired, which the seller receives net of the MSF), by subjecting the value of that Merchant Discount Fee to Stamp Tax one would be making, in material terms, a double taxation on the same fact – being irrelevant the distinction between VAT levied on the consideration paid by the client (or by the acquiring bank) to the merchant, and Stamp Tax levied on a provision paid by the merchant to the acquirer, because such provisions do not have autonomy;

8.2.3.3. Finally, because the Constitutional Court itself has already ruled on the inadmissibility of interpretive fiscal imposing norms (in its Decision no. 172/2000, being unable to invoke in contrary its Decision no. 193/2001 because the parameter that served as the basis for the assessment of unconstitutionality was prior to the 1997 constitutional revision and, therefore, prior to the effectiveness of the principle of prohibition of retroactivity of tax law, enshrined in article 103, no. 3, of the CPR).

8.2.4. According to the Claimant, the amendment introduced by article 153 (and by article 154, which attributed it an "interpretive" nature) of Law no. 7-A/2016, of 30 March, which approved the State Budget for 2016, entering into force on 31 March 2016, changed nothing about the situation:

8.2.4.1. First of all because to verify the incidence under Stamp Tax under item 17.3.4 of the TGIS, even in the added segment ("including fees relating to card-based payment operations"), it continues to be necessary that there be a provision of financial services (as the first part of the item continues to impose) – and, according to the Claimant, for the reasons previously stated, such provision does not exist.

8.2.5. Even if that were not the understanding, it would have to be concluded that the amendment introduced by Law no. 7-A/2016, of 30 March, had an innovative character, being, consequently, unconstitutional, by violation of the principle of prohibition of retroactivity of tax law of article 103, no. 3, of the CPR, and of the principle of protection of confidence and legal certainty, which follows from article 2 of the CPR:

8.2.5.1. Despite the intention of the legislator having been to make the new wording of item 17.3.4 of the TGIS apply to facts prior to its entry into force – as follows from article 154 of said Law no. 7-A/2016 which attributed an interpretive character to the amendment introduced by its article 152 – in fact it would be expanding the scope of incidence of the norm to situations that do not constitute commissions or consideration relating to financial services;

8.2.5.2. And it would be doing so in a retroactive manner, violating the above-cited constitutional norms – which is subject to judicial review (citing the judgment of the Supreme Administrative Court of 29 November 2005, issued in case no. 0237/05, and decisions no. 128/09, of 12 March 2009, and no. 399/2010, of 27 November 2010, of the Constitutional Court);

8.2.5.3. Moreover, because the taxable event would occur at the moment of the discount of the MSF from the price of goods or services sold or provided by the clients of the Claimant in the year 2014, having regard to the provisions of article 5, paragraph h), of the Stamp Tax Code, we would be dealing with a situation of first-degree retroactivity indisputably prohibited by the CPR;

8.2.5.4. And prohibited also in light of the four criteria established by constitutional case-law (citing decision no. 128/2009, of 12 March 2009) to consider intolerable the self-revision of laws in light of the constitutional principle of protection of confidence: i) that the State has adopted behaviors capable of generating expectations of continuity in the taxpayer; ii) that the expectations generated are legitimate and justified; iii) that taxpayers have planned their activity and managed their daily affairs having regard to the perspective of continuity of that State behavior; and, iv) that there are no reasons of public interest that justify the change in the behavior that had been maintained by the State in relation to that situation of taxpayers.

8.3. Regarding the legality of the assessment of Stamp Tax relating to the multilateral interchange fee and interbank commissions on card operations in automated teller machines:

A. In general

8.3.1. At first, the Claimant invokes that the TA based the additional assessment on the following construction: the multilateral interchange fee and interbank commissions charged for operations in automated teller machines constitute commissions subject to VAT, but exempt under paragraph c) of no. 27 of article 9 of the VAT Code and, therefore, subject to Stamp Tax, under nos. 1 and 2 of article 1 of the STC (objective incidence) and under paragraph b) of no. 1 of article 2 of the STC (subjective incidence), falling under item 17.3.4 of the TGIS:

8.3.1.1. The Claimant understands that the interpretation of article 1, no. 2, of the STC is wrong, in the sense that operations which are exempt from VAT are necessarily subject to Stamp Tax: for them to be so, under the provisions of item 17.3 of the TGIS, they must be charged for the provision of a service;

8.3.1.2. However, the multilateral interchange fee (MIF) and interbank commissions for the use of ATMs do not have the same cause as commissions for provisions of services related to automatic payment terminals (such as the "Monthly Service Fee", price charged for the service of monthly rental of the Automatic Payment Terminal, which includes the service of technical assistance to the equipment, as well as software upgrade whenever necessary), within which VAT is levied;

8.3.1.3. However, the "(MIF), as well as interbank commissions charged for the use of ATMs" "do not correspond to remuneration for provisions of payment services (carried out by a bank to another bank)." (article 393 of the Petition);

B. Regarding the legality of the assessment of Stamp Tax relating to the multilateral interchange fee:

8.3.2. In fact, a payment operation at an automatic terminal is a complex operation involving four autonomous relationships: "i) between the cardholder and the bank issuing it; ii) between the merchant and the acquiring bank; iii) between the cardholder and the merchant; and iv) between the issuing bank and the acquiring bank (the latter being the one placed in question by the tax inspection services)." (article 400 of the Petition);

8.3.2.1. "To interbank relationships, between issuing bank and acquiring bank, the denomination 'direct relationship' or 'account relationship' is usually assigned (cf. MARIA RAQUEL GUIMARÃES, op. loc. cit.; and CATARINA MARTINS DA SILVA GENTIL ANASTÁCIO, «Bank Transfer», Almedina, 2004, pp. 191 et seq.)." (article 402 of the Petition);

8.3.2.2. "With regard to the relationship established between issuing bank and acquiring bank, it is, as clearly results from its configuration, an interbank operation.", wherein "Generally, interchange fees are charged in any payment made through bank cards, which are paid by the merchant's bank (acquirer) to the cardholder's bank (issuer)." (articles 412 and 414 of the Petition);

8.3.2.3. Such interchange fees "can be bilateral or multilateral: the former are agreed between the issuing bank and the acquiring bank and the latter, more usual, can be agreed by a set of issuing banks and acquiring banks or, as more commonly occurs, in the absence of such agreement, are imposed by companies providing credit card and debit card services under the respective brands under which they operate, such as Visa, MasterCard, Maestro, etc." (article 415 of the Petition);

8.3.2.4. "Multilateral interchange fees are thus originally charged by those companies, which justify their charging by the network management and supervision operations they provide that enable the verification and authorization of transactions and the security and authentication of money transfers and, as well, are charged by the standing of the brand under which they operate – Visa, MasterCard and others" (article 421 of the Petition);

8.3.2.5. "The multilateral interchange fee paid by the acquiring bank to the issuing bank has as its economic justification the financial rebalancing of the positions of both banks in this scheme and the joint assumption of those costs." (article 402 of the Petition);

8.3.3. The Claimant also invokes that, under the very terms of Regulation (EU) no. 2015/751, of the European Parliament and of the Council, of 29 April 2015, the interchange fee "corresponds to the component net compensation received by the issuer (cf. article 2, point 11.), after settled by "compensation" the various bundles of multilateral interchange fee between the various banking entities" (article 426 of the Petition).

8.3.3.1. And that "the tax administration services, by considering a gross amount of multilateral interchange fee, ignore this nature/function of rebalancing the distribution of costs in interbank relationships.", as "There is no question of consideration for financial services between banks and, even if there were, which is not conceded, only the net amount could receive the qualification of commission." (articles 427 and 428 of the Petition).

C. Regarding the legality of the assessment of Stamp Tax relating to interbank commissions on card operations in automated teller machines:

8.3.4. After qualifying as mandate relationships the relationship between the holder of a debit card and its bank, the relationship between the merchant and acquiring bank, and "with some specificities" the relationship between the issuing bank and the acquiring bank, concludes that "the Issuing Bank does not provide a payment service to the Acquiring Bank" (article 458 of the Petition);

8.3.4.1. Thus, "The multilateral interchange fee aims at nothing more than a distribution of costs in interbank relationships." (article 460 of the Petition).

8.3.5. It further adds that the "operations carried out at ATM also do not create any contractual links, either between the bank holding the ATM and the cardholder, or between the bank holding the ATM and the card issuing bank." (article 461 of the Petition), citing various doctrine, namely Maria Raquel Guimarães:

8.3.5.1. "Thus, in this relationship of reciprocal cooperation established via an interbank convention, "(…) the bank where the ATM is installed that provides the cash* to the cardholder is not party to the underlying contractual relationship here: this banking institution is merely an auxiliary that the card issuing bank uses in fulfilling the contract concluded with its client, acting guided by a duty of interbank cooperation. (…) The banking institution owning the automated teller machine acts in fulfillment of a duty of reciprocal cooperation that is imposed on it by an interbank convention, with the objective of ensuring the proper functioning of the system, and not in fulfillment of any obligation assumed before the user. (…) this possibility only exists if the different banking institutions issuing cards and owning automated teller machines are linked by a convention that permits achieving an objective of 'interoperability', of reciprocal cooperation (…)."" (article 466 of the Petition);

8.3.5.2. The Claimant concludes that, therefore, "the amounts paid by the issuing bank to the bank holding the card do not constitute remuneration for a provision of financial services", rather they derive from an "interbank cooperation convention" and aim to "distribute costs, borne by any and all banking institutions, associated with the technology used to make available to its clients automated operations." (articles 472 and 473 of the Petition);

8.3.5.3. In consequence, "There is not even a fact, act, situation or other legal event capable of falling within the incidence of stamp tax (cf. article 1, no. 1, of the STC), nor much less its provision is safeguarded by item 17.3.4 of the TGIS." (article 476 of the Petition).

D. Regarding the applicability of the exemption provided for in paragraph e) of no. 1 of article 7 of the STC

8.3.6. The Claimant understands that, in light of the provisions of paragraph e) of no. 1 of article 7 of the Stamp Tax Code, there is "a set of realities that appear in item 10 of the TGIS (guarantees) and item 17 of that table (interest, commissions and credit), whose exemption from tax depends only on the fact that these are carried out between the institutions and entities indicated there." (article 487 of the Petition);

8.3.6.1. Contrary to what was understood by the TA, "the regulatory text in question contains no indication that the legislator intended to limit the application of the exemption to interest, commissions and guarantees connected with credit granting operations." (article 489 of the Petition);

8.3.6.2. This would be proved by the evolution of this exemption since it "was created when the Stamp Tax reform was conducted, carried out by Law no. 150/99, of 11 September, effective from 01.03.2000" (article 495 of the Petition), passing through the amendment introduced by "article 37, no. 2 of Law no. 30-C/2000, of 29 December (State Budget Law for 2001) [which] introduced a no. 2 to that article 6, which came to provide that 'The provisions of paragraphs e) and f) only apply to financial operations directly intended for credit granting, within the scope of the activity exercised by the institutions and entities referred to in those paragraphs'." (article 497 of the Petition), through the subsequent revocation of that restriction "with the wording given to article 6 of the Stamp Tax Code (current article 7) by article 30 of Law no. 32-B/2002, of 30 December (State Budget Law for 2003)" (article 499 of the PI), and through the expansion of the exemption to guarantees provided by no. 1 of article 36 of Law no. 107-B/2003, of 31 December (State Budget Law for 2004) (article 504 of the Petition), demonstrating "that the legislator intended to expressly exempt, under Stamp Tax, taxable facts not related to credit granting" (article 505 of the Petition).

8.3.6.3. The Claimant cites in its favor a work from 2005 ("Taxes on Real Property Patrimony") by Joaquim Silvério Mateus;

8.3.6.4. Adding that "in light of the amendment of article 7 of the Stamp Tax Code contained in the State Budget Law for 2016, the argument of the tax inspection services to the effect that that norm was repealed by the interpretive sense being clarified lacks any foundation." (article 517 of the Petition);

8.3.6.5. Moreover, "item 17 of the TGIS comprises two large blocks of financial operations: a first block of operations to which items 17.1 and 17.2 pertain, and a second block of operations to which item 17.3 pertains." (article 517 of the Petition); in the first block (items 17.1 and 17.2) are included the operations of credit granting in any form; in the second group (item 17.3) are included financial operations such as commissions and other consideration, as well as interest on credit granted (article 529 of the Petition), with only "to the financial operations indicated in this latter item the legislator determined that the same had to be carried out by or with intermediation of credit institutions, financial companies or other entities legally equated to them and any other financial institutions." (article 530 of the Petition);

8.3.6.6. Thus, when the exemption norm contained in paragraph e) of no. 1 of article 7 of the Stamp Tax Code "refers, in a first part, to 'interest and commissions charged', the interpreter is immediately directed to item 17.3, and can conclude that interest and commissions resulting from operations carried out by or with intermediation of credit institutions, financial companies or other entities legally equated to them and any other financial institutions are exempt."; "When the aforementioned exemption norm refers, in a second part, to 'the use of credit granted', immediately the interpreter would be directed to items 17.1 and 17.2." (articles 532 and 533 of the Petition);

8.3.6.7. To avoid the conclusion that all use of credit granted (to which items 17.1 and 17.2 pertain) would be exempt, "It added, in the part referring to the use of credit granted, which entities would benefit from that exemption." (articles 534 and 536 of the Petition);

8.3.6.8. It further added that "the case law cited by the tax administration services does not apply to the case at hand (judgment of the Central Administrative Court South of 21.09.2010), not only because unequivocal financial operations are in question here (differently from the case at hand) but also because there is unequivocal fulfillment of the subjective element of the exemption, in the case sub judice, in an operation between banks." (article 540 of the Petition);

8.3.6.9. This is consistent, moreover, with the teleology of the exemption of the operations listed in paragraph e) of no. 1 of article 7 of the Stamp Tax Code, when carried out between financial institutions, as it "aims to unburden the intermediate stages of the economic circuit in which they operate, making the tax apply in the final phase of the circuit, that is, when they reach the final consumer." (article 517 of the Petition);

8.3.6.10. In fact, having regard to the fact that "concerning financial operations, the law considers taxpayers of the tax 'the entities granting credit and guarantee or creditors of interest, premiums, commissions and other consideration', as results from paragraph b) of no. 1 of article 2 of the Stamp Tax Code" (article 545 of the Petition), and that "the burden of the tax rests on the client of the financial institutions (cf. paragraph g) of no. 3 of article 3 of the Stamp Tax Code)" (article 546 of the Petition), the tax being recoverable "when the intermediate operator relates to its own final consumer clients" (article 550 of the Petition) "one can only conclude that paragraph e) of no. 1 of article 7 of the Stamp Tax Code must be interpreted, having present its ratio legis, in the sense that it is necessary to exempt from Stamp Tax the multilateral interbank fees in reference." (article 551 of the Petition).

8.3.7. According to the Claimant, the fact that article 152 of the State Budget Law for 2016 added a no. 7 to article 7 of the Stamp Tax Code with the following wording: "The provision of paragraph e) of no. 1 only applies to guarantees and financial operations directly intended for credit granting, within the scope of the activity exercised by the institutions and entities referred to in that paragraph." changes nothing about that, even though article 154 of Law no. 7-A/2016, of 30 March, intended that the wording given has "an interpretive character".

8.3.7.1. And this is because, in its view, "notwithstanding the declared interpretive character of the legislative amendment in question, we are, in fact, facing an innovative norm and not an interpretive one." (article 562 of the Petition);

8.3.7.2. Thus, "Article 154 of Law no. 7-A/2016, of 30 March, qualifying as interpretive the current wording of no. 7 of article 7 of the Stamp Tax Code with the purpose of its application to taxable facts occurring before its entry into force, constitutes a retroactive norm, in violation of the principle of prohibition of retroactivity of tax law enshrined in article 103, no. 3, of the CPR, as well as of the principle of protection of confidence and legal certainty, which follows from article 2 of the CPR." (article 568 of the Petition);

8.3.7.3. The Claimant invoked in support of the necessary verification of the qualification made by the legislator the Judgment of the Supreme Administrative Court of 29.11.2005, issued in case no. 0237/05, and the Judgment of the Constitutional Court no. 128/09, of 12.03.2009;

8.3.7.4. It then distinguishes three degrees of retroactivity to conclude that article 103, no. 3, of the CPR "aims only to protect situations that translate into the application of new law to facts prior to its entry into force." (article 588 of the Petition), which would be the case in the proceedings, since "the taxable event would occur at the moment of charging the commissions, and therefore in the year 2014." (article 595 of the Petition);

8.3.7.5. In any case, the retroactive application of the new law, allegedly interpretive, would be unconstitutional by violation of the principle of confidence and legal certainty, citing in support various doctrine and Judgments of the Constitutional Court no. 287/90, of 30 October, no. 128/2009, of 12 March, and no. 172/2000.

E. Regarding the unconstitutionality of item 17.3.4 of the TGIS by violation of the principle of capacity to contribute

8.4.1. The Claimant further adds, subsidiarily, that item 17.3.4 of the TGIS would be materially unconstitutional, by violation of articles 103 and 104 of the CPR, when interpreted in the sense that it includes in its scope the MIF and interbank commissions charged for the use of ATMs;

8.4.1.1. This is because "In the taxation in this tax on financial operations it is necessary that there be an underlying economic reality that sustains it and that can be traced back to the taxation of 'expense' / 'consumption' of financial services." (article 628 of the Petition);

8.4.1.2. Being that, in the case, "there is no true consumption or expense, at least as far as the compensation element is concerned, and therefore the materiality that sustains the concrete purpose of imposition of Stamp Tax is not verified." (article 629 of the Petition);

8.5. Regarding the request for payment of interest:

8.5.1. The Claimant finally claims the return of the amounts unduly paid on 22 May 2017 and, insofar as the assessment of such amounts was due to error attributable to the services, compensatory interest under article 43, no. 1, of the GTL.

1. The Tax and Customs Authority presented a response and attached administrative records, invoking, in summary, the following:

9.1. Regarding the legality of the assessment of Stamp Tax on late payment interest on owner-occupied housing loans:

9.1.1. Regarding who is responsible for payment of the tax, it states that "although the burden of the tax belongs to the beneficiary of the credit, according to no. 1 and paragraph f) of no. 3 of art. 3 of the STC, the Bank is the taxpayer of the tax and therefore responsible for the assessment and payment thereof, under article c) of no. 1 of art. 2, of no. 1 of art. 23, according to which 'Assessment of the tax is the responsibility of the taxpayers referred to in no. 1 of article 2.', and of art. 41, according to which: 'Payment of the tax is made by the persons or entities referred to in article 23.', all of the STC." (article 8 of the Response);

9.1.1.1. On the other hand, the case law and doctrines cited to exclude the application of the provisions of no. 1 of article 28 of the GTL depend on the verification that "the substitute 'has employed in the collection task the diligence that may be expected of him''" (article 16 of the Response), and do not consider the provisions of no. 3 of the same article, from which it results that "for amounts not withheld and should have been so in a definitive manner, the principal responsible is the substitute" (article 28 of the Response);

9.1.1.2. In fact, if such interpretation were to be accepted, collection of Stamp Tax would become practically impossible;

9.1.2. It also states that the Claimant, "in drawing the conclusion that late payment interest charged for breach of owner-occupied housing credit contracts is covered by the norm contained in paragraph l) of no. 1 of article 7 of the STC, which provides for exemption, under Stamp Tax, of interest associated with housing credit, the Claimant makes a biased interpretation of the systemic, historical and teleological elements, not only of the STC and the respective TGIS, but also of the various tax norms at issue" (article 35 of the Response);

9.1.2.1. And this is because "the interpreter should not limit itself to the letter of the tax law, but reconstruct, from the texts, the legislative thinking, taking into account the unity of the legal system in its entirety, the circumstances in which the law was elaborated and the specific conditions of the time in which it is applied." (article 40 of the Response);

9.1.2.2. According to the Respondent, the starting point should be the following: "In these terms, in casu, one must bear in mind the primary fact that such exemption is a tax benefit, appearing, therefore, as a measure of an exceptional character." (article 46 of the Response);

9.1.2.3. And "it is interpreted that, in choosing to reduce the taxation of housing credit by suppressing the burden of the stamp tax inciding on interest, the tax legislator admitted, only, the assumption of the punctual fulfillment of the contractual clauses agreed under the housing credit financial product." (article 51 of the Response);

9.1.2.4. Thus, "it can only be understood that it was the intention of the legislator, to exempt from stamp tax, in light of paragraph l) of no. 1 of article 7 of the STC, only remunerative interest associated with housing credit." (article 52 of the Response);

9.1.2.5. Moreover this is inculcated by the literal element of the norm which refers to "interest charged for loan", being that "by fulfillment of the loan, to which the exemption norm refers, the creditor has, only and solely, the right to remunerative interest (and to be reimbursed of the principal loaned, as is clear).", as "late payment interest is, by contrast, the consequence of breach of the loan contract, aiming to repair the damage caused by such breach." (articles 54 to 56 of the Response);

9.1.2.6. And even if such were not the understanding, "the particular configuration of the principle of tax legality, insofar as it translates into a true rule of typicality of taxes, postulates the eradication of recourse to analogy with respect to norms embraced by the reservation of law (i.e., incidence, rate, tax benefits and taxpayer guarantees)." (article 70 of the Response);

9.1.2.7. The Respondent asserting that "in distinguishing the tax treatment to be conferred on the mentioned interest (remunerative and default), one is not attributing a penalizing character to the norm of clients who breach housing credit contracts, but rather distinguishing cases of contractual compliance (deserving of the exemption, which encourages housing credit and its contractual compliance), from pathological cases of breach which, as appears evident, do not merit the same incentive." (article 79 of the Response);

9.1.2.8. It further adds that "On this matter, A... was duly elucidated, in the response to its request for Binding Information no. 357, where it requested the sanctioning of the Tax Administration on 'the alleged lack of legal support, under items 17.2.1 and 17.2.2 of the TGIS34, for the tax incidence of stamp tax on late payment interest resulting from timely noncompliance with payments due by clients within the scope of financial operations concluded with credit institutions.''" (article 104 of the Response);

9.1.2.9. And, moreover, the Claimant itself "acknowledges the subjection to stamp tax of late payment interest relating to breach of other loan contracts (when not intended for permanent housing)." (article 106 of the Response);

9.1.3. The Respondent also contests the thesis of the Claimant according to which "the late payment interest due for breach of housing credit is not subject to Stamp Tax, because it does not reveal any capacity to contribute." (article 110 of the Response);

9.1.3.1. It questions, first of all, such argument, because it would imply requiring capacity to contribute in late payment interest applicable to breach of other loan contracts, especially in comparison with acquisitions without recourse to financing;

9.1.3.2. Which would evidence the "fragile" character of the argument, and would reveal that what was at issue was not a housing credit contract, but rather a situation of contractual breach, being irrelevant the breached contract.

9.2. Regarding the legality of the assessment of Stamp Tax on the Merchant Service Fee[2]:

9.2.1. The Respondent begins by refusing the assertion that it was only concluded that taxation is due under Stamp Tax because collection of the Merchant Service Fee (MSF) is exempt from VAT;

9.1.1.1. And, after invoking the provisions of no. 1 of article 1 of the STC, it states: "the MSF falls (without any doubt) under item 17.3.4 of the TGIS: 'other commissions and consideration for financial services'." (article 123 of the Response);

9.2.2. It next contests that responsibility for the tax is that of the Claimant's clients, as sought by the Claimant based on the verification of a situation of "substitution without withholding";

9.2.2.1. First of all because, contrary to what the Claimant seeks, the Respondent understands that there was withholding;

9.2.2.2. There being good reasons not to be able to invoke, as the Claimant does, that it withheld its commission, but not the tax due: if the withholding was less than it should have been, one could not know if the amount missing in the withholding was, in fact, the amount of the tax; and because, thus being, the thesis of the inapplicability of article 28 of the GTL fell;

9.2.2.3. Moreover, this thesis would always depend on having employed in the task of collection the diligence that was to be expected of the taxpayer, which could not occur when "having the Claimant at its disposal the totality of the client's credit, it makes the full withholding of the commission due to it, but withholds not a cent of the stamp tax due to the State, withholding to which it was obligated by Law" (articles 142 and 143 of the Response);

9.2.2.4. Adding that "to assume any other reading would be to open doors to fraud and tax evasion, without consequences for the Banks that so acted" (article 8 of the Response);

9.2.2.5. Which, in any case, would not be possible in light of the provisions of no. 3 of article 28 of the GTL: "the substituted is only subsidiarily responsible for payment of the difference between the amounts that should have been deducted and those that actually were";

9.2.3. The Respondent also objects to the thesis of the Claimant that collection of the MSF does not represent collection of a commission, but rather a discount:

9.2.3.1. Notes that to overcome that purely rhetorical difficulty "to proceed with collection of the tax it is sufficient to consider that the value actually withheld contains the stamp tax due (and if some part is lacking, it is relating to a fraction of the commission referred to); or, if not so, the Claimant should at the moment of withholding add the concern of withholding the tax due (as is a consequence of law) and not just the amount relating to its commission (which is a consequence merely contractual)." (article 158 of the Response);

9.2.4. The Respondent also refuses the thesis of the Claimant that collection of the MSF occurs outside a consideration of a financial service provision, payment of any commission, or, even, a provision of services:

9.2.4.1. Begins by opposing the citations, made by the Claimant, extracted from a publication of the Bank of Portugal, other citations from the same source that recognize the character of provision of services of the activity of banks as "acquirers" in a system of electronic payments;

9.2.4.2. And, to contest the nature of credit assignment invoked by the Claimant in the operation in which it charges the MSF, it asks: "Why would the debit or credit card user be, ultimately, a debtor to the Bank issuing the card, and not to the Bank owning the payment terminal (which supposedly acquired the credit)?" (article 188 of the Response);

9.2.4.3. And "Why is it that these rules have full effectiveness in relation to the debit or credit card user (the debtor), even without a notification being made to him, as would be required (as a condition of effectiveness) in a situation of credit assignment, as provided for in article 583 of the Civil Code?" (article 189 of the Response);

9.2.4.4. And "Why would the acquirer of the credit to the merchant (and it is acquirer the Bank that provides the payment terminal, according to what the Claimant defends) not issue any receipt of discharge to the debtor (the client of the commercial establishment) when it receives its credit?" (article 190 of the Response);

9.2.5. The Respondent also disagrees with the allegation that item 17.3.4 of the TGIS is unconstitutional, by violation of articles 103 and 104 of the CPR:

9.2.5.1. It invokes, first of all, that there is evidence of capacity to contribute "because the merchant is creditor of the amount X, which deposits in its bank, increasing the volume of capital deposited there and, by using a service of a financial institution for that purpose, pays a commission" (article 202 of the Response);

9.2.5.2. It adds that "the taxation under VAT of the price earned by the merchant does not prevent, evidently, that there be taxation under stamp tax under the terms described: these are two distinct facts, as distinct are the subjects that bear the tax, because VAT is borne by the merchant's client (due to consumption carried out), being stamp tax borne by the merchant (due to the use of financial services with payment of commissions), being unable to argue that its client has already paid VAT (which is not a charge to it, which results from another taxable fact, etc)." (article 209 of the Response);

9.2.5.3. And, to sustain the constitutionality of the incidence of Stamp Tax, it adds: "If such argument were to be accepted, in no case would consumption be taxed if this were borne by income previously subject to taxes (especially to IRS)…being that in this case we are even speaking of situations in which the burden of the tax does not shift: the worker pays IRS on the income earned and then, when uses such income already reduced by the tax on income, is again taxed by taxes on consumption." (article 210 of the Response);

9.2.6. It then moves on to consider the effect of the wording given by Law no. 7-A/2016, of 30 March, to item 17.3.4 of the TGIS, taking into account the attribution of an interpretive character to the addition introduced:

9.2.6.1. It refuses the retroactive nature of that addition, writing: "In the same way that the [Claimant] understands that the 'new part' of the wording of that item is always umbilically linked to the first part (pre-existing), referring to consideration for financial services (which the Claimant excludes itself from and, therefore, does not consider itself covered by the legal provision), it would be to maintain the same understanding in the opposite direction: if you provide financial services and therefore receive a commission (as the Bank of Portugal states), the 'new part' brings nothing new, only makes explicit the first part." (article 222 of the Response);

9.2.6.2. Finally, it invokes case law to the effect that the amendment introduced in 2016 regarding Stamp Tax is interpretive (Judgments of the SAC of 29/06/2016, in case 01630/15, and of 3 November 2016, in case 0976/16).

9.3. Regarding the legality of the assessment of Stamp Tax relating to the multilateral interchange fee and commissions on card operations in automated teller machines:

9.3.1. The Respondent contests that the TA had (only) as legal basis, to subsume such situations to subjection to Stamp Tax, the fact that they are exempt from VAT;

9.3.1.1. It invokes that the objective incidence of Stamp Tax is sustained by article 1 of the STC and item 17.3.4 of the TGIS, and that the subjective incidence of Stamp Tax follows from paragraph b) of no. 1 of article 2 of the STC;

9.3.1.2. And it adds: "To this is added the reference to the VAT exemption granted to such operations, to make clear that the taxation under Stamp Tax is not hindered by taxation under VAT of the same, in light of the provisions of no. 2 of article 1 of the STC." (article 248 of the Response);

9.3.2. The Respondent also refuses the assertion by the Claimant that "commissions charged for use of Automatic Payment Terminals (APTs) or automated teller machines (vulgo, ATM or multibanco) made available by it are not consideration for financial services!!!" (article 250 of the Response);

9.3.2.1. Even asking if, then, they would be "vending machines", for what title the Claimant would receive payments for their use, and for what title the Claimant would be exempt from VAT (articles 251, 253 and 255 of the Response);

9.3.2.2. The Respondent accepted the breakdown of electronic payment operations reproduced by the Claimant, noting that "of the various legal and economic relationships established between said entities, we highlight the only one that matters here: between B and D, that is, between the bank of the 'client', who uses the APT, and the bank of the 'merchant' that makes available the possibility of payment by APT." (article 262 of the Response);

9.3.2.3. Expressly situating the charging of the "interchange fee" in the realm of relationships between banks: "the 'merchant's bank' pays the 'client's bank' a fee for the use of the APT (reducing the earnings of the 'merchant', transferring to it an amount less than what was actually borne by the client, that is, less than the price set between client and merchant), called the 'interchange fee'" (article 263 of the Response);

9.3.2.4. And considering that "the system is so linear that the 'client's' bank, receiving payment order of X from that client (and it is that X that is deducted from the bank account), already pays the 'merchant's' bank an amount less (X discounted from the interchange fee)." (article 269 of the Response);

9.3.2.5. It then adds an objection to the argument that "the interchange fee serves to pay for the use of the credit or debit card brand (visa, mastercard, etc)" (article 275 of the Response): "if that were so, when the client's bank was the same as the merchant's bank, there would also have to be payment of an interchange fee (to pay for the visa, mastercard brand, etc).";

9.3.3. Finally, it opposed – on grounds of "unreasonableness of the argument", without more – to the idea that, if subject to Stamp Tax, the relevant value of the interchange fee should be given by "net compensation" (the value received, discounted from the value paid to other banking institutions for the same reasons).

9.3.4. Moving on to the issue of the use of ATM boxes, it alleges that the Claimant (in citing, in article 430 of the Petition, doctrine that referred to it) admitted that this was a service;

9.3.4.1. The Respondent adds: "Being a service, we cannot equate that it is not financial and, consequently, covered by the aforementioned incidence norms." (article 288 of the Response);

9.3.4.2. Since in operations in which there is no charging of commissions Stamp Tax is zero, the Respondent considers that "the services made available by the Claimant in automated teller machines are subject to Stamp Tax, as a financial service, and for the quantum of the taxable matter only, operations subject to financial consideration by the part of users/clients will participate." (article 292 of the Response);

9.3.4.3. It dispenses itself, however, from discussing the legal configuration of the relationship (which the Claimant understands to be a mandate) "which permits the Claimant to provide those services and be remunerated for them" because such "has no relevance whatsoever to the question to be decided." (article 298 of the Response).

9.4. Regarding the exemption from Stamp Tax under the provisions of article 7, no. 1, paragraph e), of the Stamp Tax Code:

9.4.1. The Respondent addresses the issue – which it considers subsidiary – of the exemption of the previous operations via paragraph e) of no. 1 of article 7 of the STC;

9.4.1.1. It begins by contesting the argument of the Claimant about the peaceful understanding of such norm before the intervention of Law no. 7-A/2016, of 30 March;

9.4.1.2. It considers that "if doubts could exist, these cease to have any foundation when the legislator itself makes the express interpretation of the text it drafted." (article 319 of the Response);

9.4.1.3. Which would have been recognized by the SAC – citing a Judgment of 15 June 2016 (case no. 0770/15), a Judgment of 29 June 2016 (case 01630/15), and a Judgment of 3 November 2016 (case 0976/16);

9.4.2. The Respondent opposes to the historical evolution presented by the Claimant that which contradicts it: the case law of the SAC and authentic interpretation.

9.4.2.1. It even considers this to be "the main historical evolution of the provision: it was the subject of authentic interpretation", considering that it is not up to "the judge to substitute itself for the legislator and assess the goodness of the norm, being obliged to apply it in the terms in which it is defined" (article 334 of the Response);

9.4.2.2. And that if such were to occur "is that we would be faced with the violation of an essential constitutional principle: that of separation of powers." (article 336 of the Response);

9.5.1. The Respondent, in closing, further considers that the issue of retroactivity of the interpretive law is indifferent to the case, since "lack of merit will always be the legally sustained result" (article 349 of the Response);

9.5.1.1. The fact that the interpretation that the legislator intends to prevail is not the majority view does not make an interpretive intervention impossible;

9.5.1.2. For the Respondent to this does not prevent "the Constitutional Court from defending another position in the context of concrete review of any other proceeding." (article 355 of the Response);

9.5.1.3. According to the Respondent, even if it entirely refused interpretive nature to the legislator's 2016 intervention, the arbitration tribunal could reach the same conclusions reached (without the interpretive law) by the Judgment of the SAC South, dated 21 September 2010 (case 02754/08).

9.6. Regarding the request for payment of compensatory interest:

9.6.1. The Respondent considers, most simply, that "should the petitioned be found to lack merit (as is hoped, so that justice be done), compensatory interest will also not be due." (article 364 of the Response).

1. Since there were no reasons justifying it, the Court dispensed with the holding of the first meeting provided for in article 18 of the RJAT, which it did under the principles of the Court's autonomy in conducting proceedings, setting 14 June 2018 as the date for the issuance of the arbitral decision. By order of 9 June 2018, duly substantiated, the deadline for issuance of the decision was extended by a further two months with the deadline set for 14 August.

2. The Claimant and the Respondent presented arguments reiterating the arguments presented in previous case documents.

Proceedings Sanitation

The parties have legal personality and capacity, show themselves to be legitimate and are properly represented (articles 4 and 10, no. 2, of the RJAT and article 1 of Ordinance no. 112-A/2011, of 22 March).

The Court is competent and regularly constituted.

The proceedings do not suffer from nullities.

No exceptions were raised.

No other circumstances exist that prevent knowledge of the merits of the case.

III. Matter of Fact

III.1. Proven Facts

1. With relevance for the assessment and decision of the issues raised, prior and on the merits, the following facts are taken as established and proven:

12.1. Following an external general inspection action carried out on the records of the Claimant by the Division of Inspection of Banks and Other Financial Institutions of the Large Taxpayers Unit, relating to the fiscal year 2014, resulted in corrections to Stamp Tax, in the total amount of €4,004,413.07;

12.2. Such corrections were thus itemized:

i. Correction in the amount of €297,253.16 relating to tax on late payment interest due for breach of housing credit contracts;

ii. Correction in the amount of €66,270.13 relating to assessment commissions underlying housing credit operations;

iii. Correction in the amount of €1,117,109.57 relating to the commission designated "Merchant Service Fee";

iv. Correction in the amount of €2,523,780.21 relating to the multilateral interchange fee and commissions charged on operations carried out with cards in automated teller machines.

12