Summary
Full Decision
ARBITRAL DECISION
I – REPORT
A..., in the capacity of head of household of B..., with the tax identification number..., hereinafter designated as the Claimant, with tax domicile at Street..., no...., Porto, filed a petition for the constitution of a singular Arbitral Tribunal, in accordance with articles 2º and 10º of Decree-Law no. 10/2011, of 20 January (Legal Framework for Arbitration in Tax Matters, hereinafter designated as LFAT), in which the Tax and Customs Authority is requested (hereinafter designated as the Respondent), with the objective of obtaining a declaration of illegality of the decision of the Head of the Finance Service of Porto... who, with delegated powers, rejected the administrative appeal presented against the assessment act for Municipal Property Tax (IMI) relating to the year 2016, as well as the annulment of the said assessment act.
The petition for the constitution of the Arbitral Tribunal was accepted by the Esteemed President of CAAD on 4 January 2018 and automatically notified to the Tax Authority.
In light of the provisions of no. 1 of article 6º and of subparagraph a) of no. 1 of article 11º of Decree-Law no. 10/2011, of 20 January, the Ethics Council of the Administrative Arbitration Centre (CAAD) designated the signatory as arbitrator, who immediately accepted the assignment. The Parties, duly notified, raised no opposition to the designation of the arbitrator.
In accordance with the provisions of subparagraph c) of no. 1 of article 11º of Decree-Law no. 10/2011, of 20 January, as amended by article 228º of Law no. 66-B/2012, of 31 December, the singular Arbitral Tribunal was constituted on 12 March 2018.
On 14 March 2018, the Esteemed Director-General of the Tax and Customs Authority (Tax Authority) was notified in accordance with the terms and for the purposes provided in article 17º of the LFAT.
On 20 April 2018, the respondent filed its reply and, in accordance with no. 2 of article 17º of the LFAT, remitted for attachment to the proceedings the administrative file.
On 20 June 2018, an arbitral order was issued determining the dispensation with the meeting provided for in article 18º of the LFAT and ordering notification of the parties for submission of arguments.
The claimant submitted arguments on 04 September 2018 and the respondent's arguments were submitted on 06 September 2018.
In light of the complexity of the legal provisions, doctrinal and case law positions divergent on similar controversial matters, the tribunal considered it appropriate to develop a thorough study of the subject matter of the present arbitral proceedings, whereby, in accordance with article 21º of the LFAT, orders extending the deadline for issuing the arbitral decision were issued, which are recorded in the history of the arbitral proceedings contained in the CAAD system.
The arbitral tribunal has material jurisdiction, in light of the provisions of article 2º, no. 1, subparagraph a) of the LFAT.
The Parties possess legal standing and capacity and have legitimacy in accordance with articles 4º and 10º, no. 2 of the LFAT and article 1º of Regulation no. 112-A/2011, of 22 March.
No exceptions were raised and the proceedings suffer from no nullities.
In light of the provisions of subparagraph a) of no. 1 of article 10º of Decree-Law no. 10/2011, of 20 January, the petition for arbitral pronouncement was presented within the time limit.
I – 1 – CAUSE OF ACTION AND CLAIMS
The cause of action of the petition for arbitral pronouncement comprises:
The rejection of the administrative appeal no. ...2017..., decided by order of 29.09.2017 of the Head of Finance of the Finance Service Porto..., issued pursuant to delegation of powers.
The administrative appeal was presented against the assessment act for Municipal Property Tax (IMI), identified by document no. 2016..., in the amount of € 238.16 (first instalment), relating to the year 2016 and concerning the urban property registered under article U-..., located on Street..., no...., and included in the Union of Parishes of..., ..., ..., ..., ... and...; of the municipality of Porto.
The illegality of the assessment act for Municipal Property Tax (IMI), for the year 2016, aforementioned, inasmuch as the urban property subject to taxation benefits from the IMI exemption, provided for in subparagraph n) of no. 1 of article 44º of the Tax Benefits Statute, hereinafter designated as TBS.
The Claimant requests the annulment of the assessment act for IMI for the year 2016 and the restitution of the amount unduly paid, with payment of compensatory interest in accordance with article 43º of the General Tax Law (GTL) and article 61º of the Code of Tax Procedure and Process (CTPP).
I – 2 – POSITION OF THE RESPONDENT
2.1 The Respondent considers that the decision to reject the administrative appeal no. ...2017..., as well as the assessment act for Municipal Property Tax (IMI) for the year 2016, in the amount of € 238.16, relating to the urban property registered under article U-..., of the Union of Parishes of..., ..., ..., ..., ... and...; of the municipality of Porto, does not suffer from any illegality, inasmuch as the said property does not benefit from the exemption provided for in the provisions of subparagraph n) of no. 1 of article 44º of the TBS.
2.2 In accordance, the Respondent upholds the legality of the decision to reject the administrative appeal, inasmuch as the assessment act is legal and derives from the applicable provisions in accordance with the IMI code, given that the property aforementioned does not benefit from the exemption provided for in subparagraph n) of no. 1 of article 44º of the TBS.
I – 3 – ISSUES TO BE DECIDED
The singular arbitral tribunal must decide on:
3.1 Whether the urban property aforementioned benefits from the IMI exemption provided for in subparagraph n) of no. 1 of article 44º of the TBS.
3.2 The illegality of the decision to reject the administrative appeal presented against the assessment act for IMI for the year 2016, and concerning the urban property aforementioned.
3.3 The illegality of the assessment act for IMI for the year 2016, relating to the said property, effected by the Tax Authority Services and notified in accordance with the law.
3.4 The undue payment of IMI, in the amount of € 238.16, relating to the year 2016, arising from the assessment identified by Assessment Notice no. 2016....
3.5 The condemnation of the Respondent to payment of compensatory interest, in accordance with article 43º of the GTL and article 61º of the CTPP.
II – RELEVANT LEGAL FRAMEWORK
II – 1 – LEGAL FRAMEWORK PRESENTED BY THE CLAIMANT
The urban property subject to the IMI assessment belongs to the estate of B... and is located in a parish included in the so-called "Historic Zone of Porto", namely in the Parish of..., classified by UNESCO as Cultural Heritage of Humanity.
The "Historic Zone of Porto", formed by part of the territorial jurisdiction referring to the former Parishes of..., ..., ..., ..., ... and..., was individually classified, with the publication of Decree no. 67/97, of 31 December 1997, as a property of public interest and not as a set of properties of public interest.
The "Historic Zone of Porto" is a property individually classified as of public interest in accordance with that Decree no. 67/97, of 31 December 1997, which placed it on a par with other properties individually classified in the same act as being of public interest, such as the S. Bento Station and many others throughout the country.
The "Historic Zone of Porto" possesses, from the point of view of public and monumental interest, a unitary and inseparable character which is apparent in the legislator's concern to designate it as a property, a non-building zone, with special restrictions on construction and rehabilitation, and fully deserving of an IMI exemption, in function of the national purpose of its recovery and those restrictions imposed on owners of properties located in this zone.
The IMI exemption provided for in subparagraph n) of no. 1 of article 44º of the TBS does not derive exclusively from the individual classification of the "Historic Zone of Porto" as a property of public interest, since it is common knowledge that part of this "Historic Zone of Porto" is classified by UNESCO as world heritage.
Law no. 107/2001, of 8 September, (Foundational Law "of policy and regime for protection and valorization of cultural heritage"), in no. 7 of its article 15º establishes that "the immovable cultural assets included in the World Heritage List integrate, for all purposes and in their respective category, the list of assets classified as of national interest".
In light of the provisions of no. 3 of article 15º of the said Foundational Law, the designation "national monument" is adopted for immovable assets classified as of national interest, whether they are monuments, ensembles or sites.
Since the property subject to the IMI assessment is located in the zone classified as world heritage (located in the former parish of...), it is itself an integral part of a national monument.
It should be noted that the public holder of IMI revenues itself—the Porto Municipality—recognizes the exemption, as is apparent from the information contained in the document "Delimitation of the Urban Rehabilitation Area of the Historic Centre of Porto in Own Instrument" (cf. page 163), published by the Porto Urban Rehabilitation Company, when it states that the part of the Historic Centre of Porto that is classified as World Heritage benefits from the IMI exemption also granted to properties individually classified as of public interest.
II – 2 – LEGAL FRAMEWORK PRESENTED BY THE RESPONDENT
2.1 From the arguments produced by the Claimant, the Respondent accepts as relevant that:
a) The Claimant is the owner of an urban property located in the "Historic Zone of Porto".
b) The "Historic Zone of Porto" is classified by Decree no. 67/97, of 31 December and by Regulation no. 975/2006, of 12 June.
c) The "Historic Zone of Porto" is further inscribed in the UNESCO World Heritage List as of 1996.
d) The "Historic Zone of Porto" is further classified as a National Monument by virtue of article 15º of the Foundational Law of Cultural Heritage.
2.2 The "Historic Zone of Porto" is not to be confused with the "Historic Centre of Porto". These are two distinct cultural realities.
2.3 The "Historic Zone of Porto" is classified as being a property of public interest, by virtue of Decree no. 67/97 and Regulation no. 975/2006. The classification "Property of Public Interest" is not to be confused with the classification of "National Monument".
2.4 The "Historic Centre of Porto" is classified as a cultural asset of "National Interest" as a result of its inclusion in the List of World Heritage, as is apparent from no. 7 of article 15º of the Foundational Law of Cultural Heritage (FLCH), in conjunction with Notice no. 15 173/2010, published in the Official Journal, 2nd Series, no. 147, of 30 July 2010.
2.5 Subparagraph n) of no. 1 of article 44º of the TBS establishes that "exempt from municipal property tax are (…) properties classified as national monuments and properties individually classified as of public interest or of municipal interest in accordance with applicable legislation."
2.6 In accordance with nos. 5 and 6 of article 44º of the TBS, the classification of properties as national monuments or with individual classification of properties of public interest may only be effected by the Directorate-General of Cultural Heritage.
2.7 During the Estado Novo the legal regime of cultural heritage provided for three graduations of the concept of Classification, whereby properties could be classified as: i) National Monument; ii) Property of Public Interest; iii) Property with Municipal Value.
2.8 Law no. 13/85, of 6 July (first Foundational Law of Cultural Heritage), embodied a conceptual evolution and adopted new graduations. For immovable assets this Law provided for three categories, namely: i) Monuments; ii) Ensembles; iii) Sites.
2.9 Law no. 13/85 was never regulated and for this reason throughout its term, cultural assets continued to be classified in light of the graduations present in the legal regime of cultural heritage created by the Estado Novo and mentioned in point 2.7.
2.10 Law no. 107/2001, of 8 September (Foundational Law of Cultural Heritage (FLCH)), in its article 15º, provides for three classifications: i) National Interest; ii) Public Interest; iii) Municipal Interest.
2.11 Since 2001 there no longer exists a classification denominated National Monument, but only classifications denominated National Interest, Public Interest or Municipal Interest, whereby it is impossible to state, as the Claimant does, that the Historic Centre of Porto is classified as a National Monument.
2.12 There exists no UNESCO classification denominated "Heritage of Humanity", "UNESCO Heritage", "World Heritage" or any equivalent expression.
2.13 The "World Heritage List" referred to in no. 2 of article 11º of the 1972 Convention and, therefore, the list referred to in no. 7 of article 15º of the FLCH is only a List in the charge of the Cultural Heritage Committee, with the purpose of ensuring that, in accordance with the provisions of article 6º of the UNESCO 1972 Convention, the cultural asset recognized constitutes a universal heritage for the protection of which the international community as a whole has the duty to cooperate.
2.14 In inscribing the "Historic Centre of Porto" on the "World Heritage List" the UNESCO Cultural Heritage Committee did not undertake any prior administrative classification procedure, as indeed with respect to all Portuguese cultural assets that integrate that List.
2.15 Article 72º of Decree-Law no. 309/2009 in determining the official opening of a classification procedure following the inclusion of an asset on the UNESCO list does no more than clarify that until the official opening of the procedure there was no classification.
2.16 The classification benefited by the "Historic Centre of Porto" results from the articulation of the provisions of the FLCH, of Decree-Law no. 309/2009 and of Notice no. 15 173/2010, of 30 July.
2.17 Notice no. 15 173/2010 in referring that "(…) it becomes public that, in 1996, was included in the indicative list of UNESCO World Heritage the ensemble known as historic centre (…)" came to give effect to the decision of the UNESCO World Committee, aiming to publicize, through publication in 2010 in the Official Journal, the decision taken in 1996 by the UNESCO Committee.
2.18 In light of no. 7 of article 15º of the FLCH, cultural assets inscribed on the "UNESCO World Heritage List" will be classified as immovable assets of National Interest.
2.19 As a corollary of the hermeneutical development surrounding the concept of classification, denomination, designation, categories and graduations, it is concluded that the "Historic Centre of Porto": i) belongs to the category of Ensemble (no. 1 of Notice no. 15 173/2010); ii) Is included in the List of assets classified as of National Interest (article 15º, no. 7 of the FLCH); iii) Is designated as a National Monument (articles 3 and 7 of the FLCH), whereby the designation of National Monument is not to be confused with nor equivalent to the concept of classification denominated National Monument contained in Decree no. 20 985 of 1932.
2.20 The 1972 Heritage Convention in its article 1º establishes that "For the purposes of this Convention shall be considered as cultural heritage: (…) Ensembles – Groups of separate or connected buildings which, because of their architecture, unity or integration in the landscape have universal exceptional value from the point of view of history, art or science."
2.21 The UNESCO 1972 Convention appeals to an idea of unity or architectural continuity, however, admits that not all architectural groupings or buildings, even of universal exceptional value, enjoy total uniformity or homogeneity, whereby in the "ensemble" there may exist immovable assets devoid of cultural value.
2.22 The ensemble denominated "Historic Centre of Porto" does not constitute, in light of article 2º of the IMI Code, a property, but rather a multiplicity composed of thousands of properties.
2.23 The 1st segment of article 44º, no. 1, subparagraph n) of the TBS refers to the classification of Monument that was in effect in our legal system until the entry into force of the FLCH, a classification that cannot be confused with the concept of designation of National Monument (national interest) present, for what is relevant here in articles 15º, no. 3 and 15º, no. 7 of the FLCH.
2.24 If the Claimant and the Tribunal were to adopt the equivalence or equation between the classifications provided for in the legislation of the Estado Novo and those provided for in the FLCH, that is, the equivalence between the classification National Monument (provided for in Decree 20 985 of 1932) and the classification National Interest (provided for in article 15º, no. 2 of the FLCH), it would always be stated that such reasoning, beyond being unlawful, suffers from unconstitutionality.
III – PROCEDURAL STEPS
With a view to the free conviction of the tribunal, in light of the provisions of subparagraph e) of article 16º of the LFAT, relating to the free assessment of facts and free determination of probative steps, articulated with the inquisitorial principle provided for in article 99º of the GTL, applicable by reference of subparagraph a) of no. 1 of article 29º of the LFAT, the tribunal took into account all the evidence produced by the Claimant and by the Respondent.
The tribunal took into account the arbitral decisions invoked, both by the Claimant and by the Respondent, of which stand out the arbitral decisions relating to proceedings nos. 325/2014-T, 76/2015-T, 33/2016-T, 98/2016-T, 379/2016-T, 534/2016-T, 204/2017-T, 354/2017-T, as well as the Judgments of the Central Administrative Court South, issued in proceeding no. 277/14.4BELRS-CT, of 27.04.2017, proceeding no. 00134/14.4BEPRT, of 07.12.2016, proceeding no. 00693/14.1BEPRT, of 01.06.2017, proceeding no. 01480/14.2BEPRT, of 04.05.2017, and in proceeding no. 09510/16-CT, of 29.06.2017, and of the Central Administrative Court North, issued in proceeding no. 00134/14.4BEPRT, 2nd Section of Tax Litigation.
The tribunal analyzed page 163 of the "Annexes to the Document of Delimitation of the Urban Rehabilitation Area of the Historic Centre of Porto", dated December 2011, available at http://www.portovivosru.pt/pt/area-de-atuacao/areas-de-reabilitacao-urbana/aru-centro-historico-do-porto, invoked by the Claimant in article 22º of the petition for arbitral pronouncement. The said page is integrated in a document that addresses Incentives and Support Programs for the ARU of the Historic Centre of Porto and in the point relating to "Tax Incentives", on page 163, in the space relating to IMI (Municipal Property Tax) (subparagraph a) is stated that "Exempt from IMI are properties classified as National Monuments and properties individually classified as of Public Interest, Municipal Value or Cultural Heritage. Thus, the part of the Historic Centre of Porto that is classified as World Heritage benefits from this regime (art. 40º, no. 1, subparagraph n) of the TBS, art. 15º no. 3 and no. 7, Law no. 107/2001, of 2001/09/08, and UNESCO World Heritage List, in 1996, as Historic Centre of Porto).
The tribunal further analyzed the document "Delimitation of the Urban Rehabilitation Area of the Historic Centre of Porto in Own Instrument", available at http://www.portovivosru.pt/pt/area-de-atuacao/areas-de-reabilitacao-urbana/aru-centro-historico-do-porto, in which, on page 104, is inscribed point 6.4.6 under the heading "Improve the fiscal regime/financing programs applicable to classified areas and buildings" from which the following segments stand out: "Although fundamental aspects of this objective are beyond the direct reach of this strategic program, it is considered indispensable, if not decisive for the financing of the planned interventions, to propose improvements to the existing fiscal regime, namely with respect to the current rules for exemption from Municipal Property Tax (IMI).
Established in the existing fiscal benefits regime total exemption of this tax for classified immovable assets, it is considered that the same treatment that was opportunely established for Municipal Property Transfer Tax (IMT) should be given, applying in full solely and exclusively to individually classified buildings and to all those which, proven, have concluded rehabilitation works. Failing to do so, that is, applying indiscriminately to all immovable assets that compose a classified area of national interest, as is the case with the Historic Centre of Porto, would be to reward the inaction of owners who do not carry out rehabilitation works on their properties (…)".
IV – ON THE MERITS
IV – 1 – THE FACTS
IV – 1 – 1 – PROVEN FACTS
Having examined and analyzed the documentary evidence produced, with relevance to the assessment and decision of the case the following facts are considered proven:
The estate opened by the death of B..., with the tax identification number..., in 2016, is the owner of the urban property registered in the registry under article U-... of the Union of Parishes of..., ..., ..., ..., ... and..., of the municipality of Porto, located on Street..., no...., Porto, in accordance with the property register attached to the petition for arbitral pronouncement as document 4.
The ensemble known as "Historic Centre of Porto", located in the parishes of..., ..., of... and of..., municipalities of Porto and Vila Nova de Gaia, district of Porto, is part of the UNESCO World Heritage List, in accordance with Notice no. 15 173/2010, published in the Official Journal, 2nd Series, no. 147, of 30 July 2010.
The territorial limits of the "Historic Centre of Porto" and the "Historic Zone of Porto" are not coincident as is evident from Annex I to Notice no. 15 173/2010, published in the Official Journal no. 147, 2nd Series, of 30 July 2010, and from the graphic delimitation contained in the plan relating to the "Historic Zone of Porto" annexed to Regulation no. 975/2006, published in the Official Journal no. 113, 2nd Series, of 12 June 2006.
The non-coincidence of the territorial limits of the "Historic Centre of Porto" and the "Historic Zone of Porto" is irrelevant for the decision of the case, inasmuch as the property subject to the IMI assessment in question is located in the area of the former parish of... and this integrates territory included in both realities denominated as "historic".
The Claimant was notified of the IMI assessment no. 2016..., in the amount of € 238.16, relating to the year 2016, relating to the immovable asset aforementioned, in accordance with the Assessment Notice attached to the petition for arbitral pronouncement as document 3.
On 26 April 2017, the Claimant proceeded to pay the IMI relating to the assessment identified in the preceding point, in accordance with a document integrated in the Administrative File attached to the Arbitral proceedings by the Respondent.
The Claimant presented against the aforementioned IMI assessment an administrative appeal, which was rejected by Order of 29.09.2017 of the Head of Finance of the Finance Service Porto..., in accordance with a copy of the Notification and decision attached to the petition for arbitral pronouncement as document 1.
IV – 1 – 2 – UNPROVEN FACTS
It was not proven that the Directorate-General of Cultural Heritage has certified in accordance with the FLCH that the Property subject to the IMI assessment is individually classified. There are no other essential facts with relevance to the assessment of the merits of the case which have not been proven.
V – 2 – MATTERS OF LAW
2.1 In order to decide on the issues to be decided it is important to enumerate and examine the applicable law.
2.2 The IMI assessment for the year 2016 in question was carried out by the Services of the Tax and Customs Authority under articles 1º, 2º, 8º, 112º and 113º all of the IMI Code.
2.3 The taxation of the urban property registered under article U-... of the Union of Parishes of..., ..., ..., ..., ... and...; of the municipality of Porto, can only be set aside in light of the existence of some tax benefit of an objective or subjective nature.
2.4 In accordance with article 2º of the TBS "tax benefits are considered to be exceptional measures instituted for the protection of relevant extra-fiscal public interests that are superior to those of taxation itself that they prevent." And, in accordance with no. 1 of article 5º of the same legal act "tax benefits are automatic or dependent on recognition; the former result directly and immediately from the law, the latter presuppose one or more subsequent recognition acts."
2.5 In turn, no. 1 of article 6º of the TBS prescribes that "the definition of the objective and subjective prerequisites of tax benefits must be done in generic terms, and with a view to the protection of relevant public interests, individual benefits only being admitted for exceptional reasons, duly justified in the act that institutes them."
2.6 It is thus important to decide whether in light of the applicable legal framework the urban property aforementioned benefits from the exemption provided for in subparagraph n) of no. 1 of article 44º of the TBS, provision which establishes that exempt from IMI are "properties classified as national monuments and properties individually classified as of public interest or of municipal interest, in accordance with applicable legislation."
2.7 It is important to take into account the evolutionary regulatory framework regarding the qualification or classification of immovable assets with relevance as a cultural asset and, to this extent, it should be noted that the Convention for the Protection of World, Cultural and Natural Heritage, which took place in Paris in 1972, was approved by the Portuguese State through Decree no. 49/79, of 6 June. The Convention aimed to establish which cultural and natural assets could be inscribed on the World Heritage List, setting out the duties of subscribing States regarding the identification and protection of said assets.
2.8 The property in question is an immovable asset located in the "Historic Centre of Porto", this being an ensemble or group of separate or connected buildings which, by virtue of their architecture, unity or integration in the landscape, have value as cultural heritage.
2.9 The "Historic Centre of Porto" was inscribed on the "UNESCO World Heritage List", as declared by Notice no. 15 173/2010, published in the Official Journal, 2nd Series, no. 147, of 30 July 2010, issued under no. 3 of article 72º of Decree-Law no. 309/2009, of 23 October.
2.10 Decree-Law no. 309/2009 establishes the procedure for classification of immovable assets of cultural interest, as well as the legal regime of protection zones and the detailed safeguarding plan, in development of the legal regime approved by Law no. 107/2001, of 8 September, whereby this Law proceeded to the repeal of Laws nos. 2032, of 11 June 1949, and 13/85, of 6 July.
2.11 Thus, it is in light of the provisions of Law no. 107/2001, of 8 September (FLCH), and of Decree-Law no. 309/2009, of 23 October, that the classification of the immovable asset with exceptional cultural relevance denominated "Historic Centre of Porto" must be evaluated and considered, as well as of the urban property subject to the IMI assessment for the year 2016, whose legality is assessed in the context of the present arbitral proceedings.
2.12 Under the legal framework approved by Law no. 107/2001 cultural assets are moveable and immovable assets which, in accordance with the provisions of nos. 1, 3 and 5 of article 2º of that law, represent material testimony with value of civilization or culture, that is, all assets that integrate relevant cultural heritage and which, being testimony with value of civilization or culture, should be subject to special protection and valorization.
2.13 It is important to note that, in accordance with no. 7 of article 15º of Law no. 107/2001, immovable cultural assets included in the world heritage list integrate, for all purposes and in their respective category, the list of assets classified as of national interest, whereby, in accordance with no. 2 of said article 15º, moveable and immovable assets may be classified as of national interest, of public interest or of municipal interest.
2.14 In turn, in accordance with no. 3 of article 15º of Law no. 107/2001, and of no. 3 of article 3º of Decree-Law no. 309/2009, for immovable assets classified as of national interest, regardless of whether they are monuments, ensembles or sites, the designation "national monument" shall be adopted.
2.15 Since the provision of no. 1 of article 15º of Law no. 107/2001 establishes that "immovable assets may belong to the categories of monument, ensemble or site, in the terms in which such categories are defined in international law (…)", it is important to consider that for purposes of cultural heritage, in accordance with article 1º of the 1972 Convention, the concept of monument is a reality that may integrate "monumental architectural works, sculpture or painting, elements or structures of archaeological character, inscriptions, caves and groups of elements with universal exceptional value from the point of view of history, art or science".
2.16 The delimitation of an ensemble or site is established as a result of the evaluation effected in the context of the classification procedure regulated in the provisions of articles 4º to 35º of Decree-Law no. 309/2009, whereby, in accordance with no. 1 of article 56º of the same act, in the area covered by the delimitation of an ensemble or a site may coexist immovable assets individually classified.
2.17 As to the relevance of protection zones it is important to take into account the provisions of Chapter III of Decree-Law no. 309/2009, namely articles 39º, 41º and 43º, inasmuch as, no. 2 of article 56º of the aforementioned Decree-Law establishes that "the effects of the protection zone of an individually classified immovable asset are maintained until publication of the classification of the ensemble or site (…). Now, from this provision only follows the elimination of the protection zone of the individually classified asset, given that such protection zone is encompassed by the territorial area of the classified ensemble or site, to which, in turn, in the context of the classification procedure, a protection zone will be assigned. Thus, it must be emphasized that the classification of an ensemble or site does not extinguish the classification individually assigned previously to an asset, nor does it prevent the subsequent individual classification of assets integrated in an ensemble or site, understanding classification for this purpose with the meaning arising from no. 1 of article 18º of the FLCH (the final act of the administrative procedure by which it is determined that a certain asset possesses an invaluable cultural value).
2.18 It is in this context that the exegesis of the provisions of article 44º of the TBS must be made, in order to establish its normative scope for determining whether the property aforementioned is or is not exempt from IMI.
2.19 Thus, it is important not to overlook that the current article 44º of the TBS results from the remuneration made to the TBS through Decree-Law no. 108/2008, of 26 June, whereby the relevant provisions for the case sub judice were contained in article 40º of the TBS, whose wording was amended by article 82º of Law no. 53º-A/2006, of 29 December (Budget Law for 2007). From 1 January 2007 the norm of subparagraph n) of no. 1 of article 40º of the TBS came to provide that exempt from municipal property tax are "properties classified as national monuments and properties individually classified as of public interest, of municipal value or cultural heritage, in accordance with applicable legislation." In essence this norm corresponds to the current wording of subparagraph n) of no. 1 of article 44º of the TBS.
2.20 In its initial wording the norm of subparagraph n) of no. 1 of article 40º of the TBS established that exempt from IMI were "properties classified as national monuments or properties of public interest and also those classified as properties of municipal value or as cultural heritage, in accordance with applicable legislation."
2.21 This norm is not only in the letter of the law, but also in the material legal sense quite different from the norm that became effective from 1 January 2007, as well as from the current norm of subparagraph n) of no. 1 of article 44º of the TBS which establishes that "properties classified as national monuments and properties individually classified as of public interest or of municipal interest, in accordance with applicable legislation" are exempt from IMI.
2.22 Considering that factors of legal hermeneutics are the grammatical element (the letter of the law), the rational (or teleological) element, the systematic element and the historical element, it is to be concluded that with the amendment introduced in the provision of subparagraph n) of no. 1 of article 40º of the TBS (current article 44º) there was an unequivocal intention of the legislator to alter the prerequisites for IMI exemption of classified properties. This intention was determined and conscious, inasmuch as the legislator included transitional provisions in the law, having through subparagraph c) of article 88º of Law no. 53-A/2006, of 29 December, determined that "the tax administration notifies, within 180 days after the entry into force of this law, all taxpayers who are benefiting from the exemption referred to in subparagraph n) of no. 1 of article 40º of the Tax Benefits Statute, of the cessation of this benefit by alteration of its prerequisites."
2.23 The alteration of the prerequisites for the grant of the IMI exemption, which, in accordance with no. 5 of article 44º of the TBS, is automatic, operating through notification of the classification of the asset, is underpinned by an unequivocal intention or purpose (legislative intent) to restrict the scope of application of the municipal property tax exemption.
2.24 In the interpretation and application of the current provision of subparagraph n) of no. 1 of article 44º of the TBS it is not possible not to take into account these elements of a historical and teleological nature. If this is not done one would not be making an adequate application of the law, putting into question the purposes of taxation which aims at the satisfaction of the financial needs of the State and other public entities and the promotion of social justice, equality of opportunity and the necessary correction of inequalities in the distribution of wealth and income (article 5º of the GTL and article 103º of the CRP). Thus, taxation must be effected in a framework of equality, legality and material justice, in order that taxation of assets contributes to equality among citizens (no. 3 of art. 104º of the CRP).
2.25 It is true that, based on the already-mentioned provisions of Law no. 107/2001 and Decree-Law no. 309/2009, the "Historic Centre of Porto" was classified as a "National Monument", however, as is mentioned in Notice no. 15 317/2010, the "Historic Centre of Porto" is an ensemble with cultural relevance and universal exceptional value, which makes it a singular immovable asset not encapsulable in the concept of property inherent in article 2º of the IMI Code. Indeed, the "Historic Centre of Porto" is not inscribed as such in any property article in the registry.
2.26 On the other hand, the classification of the "Historic Centre of Porto" as an immovable asset of national interest does not determine the automatic and universal classification of all assets integrated in its perimeter. What was classified was the culturally diversified unit constituted by the ensemble to which was assigned the denomination "Historic Centre of Porto". The confirmation of this assertion follows from consultation of plan 11 (Buildings of Patrimonial or Museological Value), contained on page 67 of the document denominated "Historic Centre of Porto World Heritage – Management Plan Volume I", in which the Porto Municipality Council considers that within the limit of the area included in the UNESCO List there is heritage classified as a national monument, heritage classified as a property of public interest and heritage in the process of classification. This document can be consulted at http://www.portovivosru.pt/pdfs/planoges_HPPM_v1.pdf.
2.27 Furthermore, the ensemble known as "Historic Centre of Porto" is not a property for the purposes provided in the rules of incidence of the IMI Code, whereby it is not subject to IMI, and therefore cannot be exempt from said tax. However, this is not the issue under consideration in the present arbitral proceedings, what is at issue is whether the properties inscribed in the property articles of the parishes integrated in the "Historic Centre of Porto" are exempt from IMI. The tribunal's answer must be negative.
2.28 The properties inscribed in the property registries, despite integrating the "Historic Centre of Porto", retain their legal and economic autonomy, and although they contribute to the universal exceptional value of the urban fabric of the historic centre they are not confused with it. Such assets, by themselves, are an autonomous legal asset which, in accordance with the law, perform a function whose relevance must be individually evaluated, and in light of the provision of subparagraph n) of no. 1 of article 44º of the TBS, will only be exempt from IMI if it itself is classified as a legal reality.
2.29 With the inclusion in the UNESCO List and publication of Notice no. 15 173/2010, the "Historic Centre of Porto" came to constitute an autonomous legal, social, economic and historical reality subject to the rules of the legal regime for protection and valorization of cultural heritage, however, such circumstance did not extinguish the legal autonomy of the assets that integrate it as an urban ensemble, which, as has already been mentioned, did not come to constitute a property encapsulable in the provisions of article 2º of the IMI Code.
2.30 Thus, the properties inscribed in the property registries of the parishes that integrate the territorial perimeter of the "Historic Centre of Porto" in order to benefit from the exemption provided for in subparagraph n) of no. 1 of article 44º of the TBS will have to be individually classified as of public interest or of municipal interest, which was not the case with respect to the urban property that gave rise to the IMI assessment for the year 2016, and which constitutes the subject matter to be decided in the present arbitral proceedings.
2.31 It is irrelevant to attempt to base the exemption of properties that integrate the perimeter of the "Historic Centre of Porto" with the comparative analysis between the grammatical element of the provision of subparagraph g) of article 6º of the Code of Municipal Property Transfer Tax (CMPT) and the grammatical element of subparagraph n) of no. 1 of article 44º of the TBS, inasmuch as the legal act subject to taxation is absolutely distinct. In IMI taxation is levied on the ownership of the asset, whereas in CMPT taxation is levied on the act of transfer and the exemption from CMPT only arises, in concrete terms, with respect to the asset which is the subject of transfer and which has been classified, which is not verified in IMI, inasmuch as the asset subject to taxation may be quite different from the asset subject to classification, as happens with respect to the "Historic Centre of Porto". To this extent, the properties that integrate that historic centre, because they are an autonomous legal reality, can only enjoy the exemption provided for in subparagraph n) of no. 1 of article 44º of the TBS if they are individually classified as of public interest or of municipal interest, in accordance with applicable legislation.
2.32 To this extent, as the property inscribed in the property registry under article U-... of the Union of Parishes of..., ..., ..., ..., ... and...; of the municipality of Porto, was not the subject of any of the said classifications, the IMI assessment for the year 2016, aforementioned, does not suffer from any illegality, whereby the tax is legal and due, the action of the Services of the Tax and Customs Authority not being susceptible to any censure.
VI – DECISION
In the terms and with the grounds set out above, the Arbitral Tribunal decides:
To wholly reject the petition for arbitral pronouncement; and
To condemn the Claimant in the costs of the proceedings.
VI – 1 – VALUE OF THE CASE
The value of the proceedings is fixed at € 238.16 (two hundred and thirty-eight euros and sixteen cents), in accordance with the provisions of articles 3º, no. 2 of the Regulation of Costs in Tax Arbitration Proceedings (RCPAT), article 97º-A, no. 1, subparagraph a) of the CTPP and article 306º of the Code of Civil Procedure (CCP).
VI – 2 – COSTS
The amount of costs is fixed at € 306 (three hundred and six euros) under article 22º, no. 4 of the LFAT and of Schedule I attached to the RCPAT, charged to the Claimant, in accordance with the provisions of articles 12º, no. 2 of the LFAT and 4º, no. 4 of the RCPAT.
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Lisbon, 07 February 2019
The Arbitrator
Jesuíno Alcântara Martins
Text prepared by computer, in accordance with article 131º, no. 5 of the Code of Civil Procedure, applicable by reference of article 29º, no. 1, subparagraph e) of the LFAT.
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