Summary
Full Decision
ARBITRAL DECISION
I – REPORT
On 3 August 2015, A..., taxpayer no. ... and B..., taxpayer no. ..., married, residing at ..., no. ..., ...-... Santarém, filed a request for constitution of an arbitral tribunal, pursuant to the combined provisions of articles 2 and 10 of Decree-Law no. 10/2011, of 20 January, which approved the Legal Regime of Arbitration in Tax Matters, as amended by article 228 of Law no. 66-B/2012, of 31 December (hereinafter, abbreviated as RJAT), seeking a declaration of illegality of the act of assessment of Personal Income Tax (IRS) and compensatory interest, no. 2014..., relating to the year 2013, as well as the partial granting of the gracious complaint, in the amount of €34,040.02.
To support their request, the Applicants allege, in summary:
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the illegality of the assessment act, due to omission of essential legal formality as a consequence of violation of article 60, no. 1, subsection a) of the General Tax Law (LGT);
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the illegality of the assessment act of IRS and compensatory interest due to lack of substantiation, resulting from violation of articles 268, no. 3 of the Constitution of the Portuguese Republic (CRP) and article 77 of the LGT;
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the illegality of the assessment act due to error concerning the factual and legal presuppositions;
On 07-09-2015, the request for constitution of the arbitral tribunal was accepted and automatically notified to the Tax Authority (AT).
The Applicant did not proceed to nominate an arbitrator, wherefore, pursuant to the provisions of subsection a) of no. 2 of article 6 and subsection a) of no. 1 of article 11 of the RJAT, the President of the Deontological Council of CAAD appointed the Honorable Dr. Fernando Pinto Monteiro as arbitrator of the singular arbitral tribunal, and the same communicated acceptance of the appointment within the applicable deadline.
On 20-10-2015, the parties were notified of this appointment and did not manifest any wish to refuse it.
In conformity with the provision in subsection c) of no. 1 of article 11 of the RJAT, the singular Arbitral Tribunal was constituted on 04-11-2015.
On 15-12-2015, the Respondent, duly notified to this effect, filed its response defending itself solely through objection.
On 20-10-2016, the meeting referred to in article 18 of the RJAT took place, where the witnesses presented by the Applicant were heard.
Having been granted a deadline for submission of written pleadings, the same were submitted by the parties, commenting on the evidence produced and reiterating and developing their respective legal positions.
An arbitral decision was rendered, notified to the parties on 05-11-2016.
Disagreeing with the said decision, the Respondent filed an objection directed to the Central Administrative Court of the South.
By judgment dated 12-12-2017, the Venerable Southern Administrative Court upheld the objection filed by the Respondent, with legal consequences.
The Honorable Dr. Fernando Pinto Monteiro, arbitrator of the singular tribunal constituted in this proceeding, came to resign from arbitral functions invoking reasons that could be considered as justifiable.
By order of 21-02-2018, the Honorable President of the Deontological Council of CAAD considered the invoked reasons justifiable and accepted the resignation of the Honorable Dr. Fernando Pinto Monteiro.
In the same order, the Honorable President of the Deontological Council of CAAD determined the replacement, as arbitrator in the present proceeding, of the Honorable Dr. Fernando Pinto Monteiro by the undersigned, who communicated acceptance of the appointment within the applicable deadline.
On 21-02-2018 the parties were notified of the said order.
On 13-03-2018, the undersigned was appointed arbitrator in the present proceeding.
The Arbitral Tribunal is materially competent and is regularly constituted, pursuant to articles 2, no. 1, subsection a), 5 and 6, no. 1, of the RJAT.
The parties have legal personality and capacity, are legitimate and are legally represented, pursuant to articles 4 and 10 of the RJAT and article 1 of Ordinance no. 112-A/2011, of 22 March.
The proceeding does not suffer from nullities.
Thus, there is no obstacle to the examination of the merits of the case.
Everything considered, it is necessary to render
II. DECISION
A. FACTUAL MATTER
A.1. Facts Established as Proven
The Applicant acquired, by gift from C... and D... (parents of the Applicant), the autonomous fraction designated by the letter "O", corresponding to the ... left floor of the urban property, located at ..., no. ..., parish of ..., municipality of Lisbon, described in the Land Registry Office of Lisbon, under the number.../... and registered in the urban property matrix under article ..., by public deed executed on 30 December 2010.
At the suggestion of the notary responsible for executing the said deed, the grantors attributed to the gift the value of €148,000.00.
The property had, until two years prior to the gift and on the date of execution of the public deed of gift, the taxable patrimonial value of €334.46.
The gift benefited from the exemption provided for in article 6, subsection e) of the Stamp Tax Code.
Since the gift constituted the first transfer during the validity of the Municipal Property Tax Code, it resulted in the appraisal of the property, changing its taxable patrimonial value from €334.46 to €73,333.00.
The Applicant's parents made this gift with the intention of helping her to begin her life.
The Applicant's parents gifted to their other two children, E... and F..., a monetary amount, the first of whom chose to invest such amount in the acquisition of a restaurant and the second decided to apply such value in the acquisition of a house for permanent residential use.
Regarding the Applicant here, her parents chose to gift her a property.
This property had been acquired by the Applicant's parents and made available to the Applicant for her residence while she attended university studies in Lisbon.
The gifted property served for the Applicant's residence, and at the date of the gift, she had no objective of selling it.
During the year 2011, the activity to which the Applicant was engaged – textile advertising – began to generate negative results.
In 2012, the Applicant decided to close the activity, and remained with a set of debts which he could not pay.
To meet the debts, the Applicants decided to sell the property.
The sale took place in August 2013 for the value of €160,000.00.
The Applicants incurred expenses and charges with the acquisition and disposal of the property, in the amount of €9,840.00, related to the real estate mediation commission.
At no time did the Applicant's parents influence the Applicant's decisions regarding the property, nor did they receive any amount on account of the disposal thereof.
On 1 June 2014, the Applicants jointly, as a household unit, filed the IRS Model 3 Declaration no. ...-2013-..., relating to the year 2013.
In the said declaration, "A", the Applicant B..., was registered as holder.
In annex G of the said declaration, the Applicants indicated as the value of realization of the property the amount of €160,000.00, and as the value of acquisition the amount of €148,000.00, as well as the amount of €9,840.00 as expenses and charges.
The Applicants declared as the date of acquisition of the property the date of acquisition thereof by the Applicant's parents (July 2003).
From the said declaration resulted the IRS assessment no. 2014..., establishing a refund of €1,358.05.
On 19-06-2014, the Tax Services proceeded to open a process of analysis of divergences to verify the values and dates relating to the disposal of the property declared by the Applicants in Annex G.
Through the document identified by code 2014..., delivered in the electronic mailbox of ViaCTT, on 26-06-2014, notification was sent to the Applicant, informing of the opening of the procedure for analysis of the IRS declaration for the year 2013, as well as to proceed with the attachment of documents proving the elements declared, relating to his personal and family situation and the disposal of the property, within 15 days, with the warning that failure to regularize the situation within the established deadline would result in the correction of the declared values.
The Applicant accessed the electronic mailbox of ViaCTT on 07-07-2015.
The Applicant did not comply with what was requested, and did not proceed with the attachment of documents proving the declared amounts.
By office dated 17-09-2014, sent by registered mail with return receipt, registration no. RF...PT, the Finance Service effected a second notification, of similar content to that referred to in point 23 above.
The letter was sent to the address located at ..., no. ...–..., ...-... Santarém, and was returned to the sender with the indication "article not collected".
A new notification dated 22-10-2014 was made, sent to the Applicant by registered mail with return receipt, registration no. RF...PT, to the address located at..., no. ... – ..., ...-... Santarém, which was returned to the sender with the indication "article not collected".
In the notification referred to in the previous point, the detection of inaccuracies, properly itemized, the intention of the AT to make corrections, also properly itemized, and the provision of a 15-day period for, if so desired, to exercise his right to prior hearing were communicated.
The address located at ..., no. ...–..., ...-... Santarém, was listed in the AT's register as the domicile of the Applicant.
The divergences procedure terminated with the preparation of an official declaration and the alteration of the value of acquisition of the property from €148,000.00 to €334.06.
From this official assessment resulted the additional assessment act of IRS and compensatory interest no. 2014..., in the amount of €34,040.02.
On 11-02-2015, the Applicants filed gracious complaint no. ...2015..., requesting:
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the alteration of the date of acquisition of the property to the month of December 2010; and
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the alteration of the respective value of acquisition to €73,000.00.
The Applicants were notified, pursuant to article 60 of the LGT, to make written submissions on the draft decision of the gracious complaint, but did not respond to the notification after the 15-day period granted for that purpose.
On 05-05-2015, through Office no. ... of the Finance Directorate of ..., the Applicants were notified of the decision of partial granting of the gracious complaint, which granted the request for alteration of the date of acquisition of the property, and rejected the request for alteration of the value of acquisition thereof.
A.2. Facts Established as Not Proven
With relevance to the decision, there are no facts that should be considered as not proven.
A.3. Substantiation of the Factual Matter Proven and Not Proven
Regarding the factual matter, the Tribunal does not need to pronounce on everything that was alleged by the parties, but rather has the duty to select the facts that matter for the decision and to discriminate proven from unproven matters (cf. art. 123, no. 2, of the Code of Tax Procedural Process (CPPT) and article 607, no. 3 of the Code of Civil Procedure (CPC), applicable ex vi article 29, no. 1, subsections a) and e), of the RJAT).
Thus, the facts pertinent to the judgment of the case are chosen and delimited according to their legal relevance, which is established in view of the various plausible solutions to the legal question(s) (cf. former article 511, no. 1, of the CPC, corresponding to the current article 596, applicable ex vi article 29, no. 1, subsection e), of the RJAT).
Thus, taking into account the positions assumed by the parties, in light of article 110/7 of the CPPT, the documentary and testimonial evidence, and the procedural file attached to the case, the facts listed above were considered proven, with relevance to the decision, taking into account that, as written in the Ruling of the TCA-South of 26-06-2014, rendered in proceeding 07148/13, "the evidentiary value of the report of the tax inspection (...) may have probative force if the assertions contained therein are not challenged".
In particular, beyond what is referred to above, the fact established as proven in point 30 took into account the content of p. 13 of the document "PA 8 - Proc. Diverg." and p. 5 of the document "PA- Annex 7 Doc 1-9", and the facts established as proven in points 2, 6 to 13 and 16 took into account the testimonies of the first and third witnesses, with no incongruities noted and there being no other means of evidence capable of establishing any reasonable doubt regarding the facts in question.
Allegations made by the parties and presented as facts, consisting of strictly conclusive statements, incapable of proof and whose truthfulness must be assessed in relation to the concrete factual matter consolidated above, were neither given as proven nor as not proven.
B. ON THE LAW
The Applicants begin by invoking the illegality of the assessment act due to omission of essential legal formality as a consequence of violation of article 60, no. 1, subsection a) of the LGT, alleging that "we never actually came to be notified to exercise our right to a hearing regarding the corrections that gave rise to the said tax acts."
The Respondent, for its part, regarding this matter, maintains that "it effected three notifications, with the intention of obtaining the documents proving the values and dates relating to the disposal of the property declared by the Applicants in Annex G of the Model 3 IRS declaration", referring to the notifications alluded to in points 22, 24 and 26 of the facts established as proven.
In light of such notifications, the Respondent maintains that "notwithstanding having been given the opportunity to pronounce, they chose not to do so when they did not comply with the electronic notification and when they refused to receive the notifications sent to their tax domicile (whose participation is mandatory pursuant to article 43 of the CPPT and 19 of the LGT)."
The Respondent further states that "admitting, by mere academic hypothesis and without conceding, that the Applicants were not validly notified to exercise the right to prior hearing within the scope of the divergences analysis procedure, the alleged omission of that legal formality should be considered cured, (...) [i]nasmuch as the Applicants filed a gracious complaint against the assessment within which they again had the opportunity to pronounce on the additional assessment, having chosen not to exercise the right of hearing".
In support of this last thesis, the Respondent invokes the ruling decided in the Ruling of the STA of 25-06-2015, rendered in proceeding 01391/14.
Let us examine this then.
As results from the facts established as proven under points 26 and 27, a notification dated 22-10-2014 was made, sent to the Applicant by registered mail with return receipt (registration no. RF...PT), to the address located at..., no. ... –..., ...-... Santarém, which was returned to the sender with the indication "article not collected", a notification in which the detection of inaccuracies, properly itemized, the intention of the AT to make corrections, also properly itemized, and the provision of a 15-day period for, if so desired, to exercise his right to prior hearing were communicated.
Further proven is the fact that the address located at ..., no. ... –..., ...-... Santarém, was listed in the AT's register as that of the Applicant, and that the Applicants submitted, in the year in question, a joint income declaration, with the subject as "A", the Applicant.
Article 60 of the LGT provides:
"4 - The right of hearing shall be exercised within the deadline to be set by the tax administration in a registered letter to be sent for that purpose to the tax domicile of the taxpayer."
Article 38 of the CPPT also provides:
"1 - Notifications are made compulsorily by registered mail with return receipt, whenever they have as their object acts or decisions capable of altering the tax situation of taxpayers or the summons for them to attend or participate in acts or proceedings.
2 - For the purposes of the foregoing, the communication of the postal services for the collection of registered mail sent by the tax administration must always contain a clear identification of the sender.
3 - Notifications not covered by no. 1, as well as those relating to the assessments of taxes resulting from declarations of taxpayers or corrections to the taxable matter that has been subject to notification for the purposes of the right to a hearing, are made by registered mail. (...)
5 - Notifications shall be personal in the cases provided for by law or when the entity proceeding thereto deems it necessary."
Article 39, also of the CPPT, further adds that:
"1 - Notifications made pursuant to no. 3 of the previous article are presumed to have been made on the 3rd day following the date of registration or on the 1st business day following that, when that day is not a business day.
2 - The presumption of the previous number may be rebutted by the notified party when the fact that notification occurs on a date later than presumed is not attributable to him, and for this purpose the tax administration or the court, based on a request from the interested party, shall request the postal service for information on the actual date of receipt.
3 - When there is a return receipt, the notification is considered made on the date on which it is signed and is deemed to have been made to the person of the notified, even when the return receipt has been signed by a third party present at the domicile of the taxpayer, it being presumed in this case that the letter was duly delivered to the addressee.
4 - The postal service distributor shall notify the persons referred to in the previous number by annotation of the identity card or other official document.
5 - In the event that the return receipt is returned or does not come signed because the addressee has refused to receive it or has not collected it within the period provided for in the postal services regulations and it is not proven that the taxpayer has meanwhile communicated a change of tax domicile, the notification shall be made within the 15 days following the return by new registered mail with return receipt, the notification being presumed if the letter has not been received or collected, without prejudice to the notified party being able to prove just impediment or the impossibility of communicating the change of residence within the legal deadline.
6 - In the case of refusal of receipt or non-collection of the letter, provided for in the previous number, the notification is presumed made on the 3rd day following the date of registration or on the 1st business day following that, when that day is not a business day."
As results from article 60/5 of the LGT, the rule provided for notification for the purposes of prior hearing is that of using registered mail.
In this case, it is found that the AT chose to use registered mail with return receipt.
Such circumstance, in itself, shall have no invalidating effect, as long as the regulations governing this form of notification are complied with, since pursuant to article 38/5 of the CPPT the AT may resort to personal notification (of which notification via registered mail with return receipt is a form; cf. articles 225/2/b) and 250 of the Code of Civil Procedure), whenever it deems necessary.
However, and as also results from the facts established as proven, the letter in question was returned to the sender, with the notation "Not collected".
In such situations, article 39/5 of the CPPT imposes that, if it is not proven that the taxpayer has meanwhile communicated a change of tax domicile (which is the case), the notification shall be made within 15 days following the return by new registered mail with return receipt.
Now, in this case, such letter was not sent, the AT not demonstrating that the notification was received by the addressee, nor benefiting from any presumption to that effect, which would only occur if it had sent a new registered letter with return receipt, and this was signed by the taxpayer or by a third party present at his domicile (pursuant to article 39/3 of the CPPT), or, if the letter had not been received or collected (pursuant to article 39/5 and 6 of the CPPT).
Naturally, the office dated 17-09-2014, sent by registered mail with return receipt, registration no. RF...PT, does not constitute a first notification for the purposes of exercising the right to a hearing, since it was sent to notify the opening of the procedure for analysis of the IRS declaration for the year 2013, as well as to proceed with the attachment of documents proving the elements declared, relating to his personal and family situation and the disposal of the property, within 15 days, with the warning that failure to regularize the situation within the established deadline would result in the correction of the declared values.
Thus, not demonstrating nor presuming the receipt by the addressee of the notification sent to exercise the right to a hearing, it cannot be considered that the duty of prior hearing has been duly fulfilled by the AT.
This established, it is then necessary to determine whether, as the Respondent wishes, the verified omission of this legal formality should be considered cured.
As mentioned, the Respondent relies on the Ruling of the STA of 25-06-2015, rendered in proceeding 01391/14, in whose summary appears, among other things, that "Having the taxpayer filed a gracious complaint against the additional assessment and in this means of administrative reaction had the opportunity to pronounce on the additional assessment and on all the issues regarding which he should previously have been granted the faculty to pronounce, we should consider that the defect of omission of legal formality by omission of notification to exercise the right to prior hearing has been cured."
First of all, it should be noted that, unless better opinion prevails, the ruling in question does not result that always, when a gracious complaint against the additional assessment has been filed and, in the respective procedure, there has been the opportunity to pronounce, it should be understood that the omission of the duty of prior hearing regarding the assessment object of that procedure has been cured, that is, that, in sum, in filing a gracious complaint regarding an assessment in which his right to prior hearing has not been observed, the taxpayer is renouncing such right, as long as the AT observes it prior to the decision of that complaint.
Moreover, such understanding would be contrary to the earlier jurisprudence of the STA itself, in which it was understood that "Do not rule out the relevance of the defect of violation of the right to hearing the facts that, after the assessments have been drawn up, the taxpayer has had the opportunity to impugn them administratively and judicially and has been heard in the context of administrative impugnation."[3], as well as, from a more general standpoint, to the understanding that:
"3) Administrative impugnations constitute forms of protection of the taxpayer against the Tax Authority, so that the institution of its procedure reopens the examination of the situation underlying the tax act, which is not consolidated until the final judgment of the judicial decision on its impugnation.
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To associate the preclusive effect of the competence of the arbitral tribunal with the non-invocation in the administrative forum of a certain defect that is the basis of the request for arbitral pronouncement collides with the regime of administrative impugnations as guarantees of taxpayers within the framework of the right to effective judicial protection.
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The restriction of the universe of constitutive elements of the cause of action for arbitration on the basis of the discussion carried out in administrative proceedings constitutes a disproportionate restriction of effective judicial protection, in so far as the guarantee of compliance with tax legality ensured by administrative procedures for review of the tax act cannot operate as an impediment to such review in contentious proceedings, whether such guarantee is provided through a court of the State or through an arbitral tribunal."[4]
In effect, since administrative impugnations are forms of protection of the taxpayer against the Tax Authority, the taxpayer should not, as a rule, be prejudiced in his rights by choosing to use them, in particular by the association of preclusive effects (in this case, of invocation of the violation of his right to prior hearing) to the use of such means.
Hence it is considered that, for the jurisprudence emanating from the aforesaid Ruling of the STA of 25-06-2015, rendered in proceeding 01391/14, to be applicable, it is necessary to demonstrate, as is expressly referred to therein, that the taxpayer has "had the opportunity to pronounce on the additional assessment and on all the issues regarding which he should previously have been granted the faculty to pronounce", an opportunity that must have materialized concretely, and not merely abstractly, under penalty of falling into the pointed-out interpretation that in filing a gracious complaint regarding an assessment in which his right to prior hearing has not been observed, the taxpayer is renouncing such right, as long as the AT observes it prior to the decision of that complaint.
That is to say, put another way, if it were understood that it would be sufficient, for the application of the doctrine embodied in the ruling under analysis, the mere abstract opportunity for the taxpayer "to pronounce on the additional assessment and on all the issues regarding which he should previously have been granted the faculty to pronounce", it would be concluded that in all situations in which there was prior hearing regarding the gracious complaint, the "defect of omission of legal formality by omission of notification to exercise the right to prior hearing to the assessment" would be "cured", since from such standpoint (abstract) the taxpayer is free to pronounce on everything it is possible to pronounce on.
Thus, and for what has been stated, it is judged that the "defect of omission of legal formality by omission of notification to exercise the right to prior hearing to the assessment" shall only be "cured", when the content of the very notification to exercise prior hearing by the taxpayer in the context of the gracious complaint contains, expressly and concretely, all "the issues regarding which he should previously have been granted the faculty to pronounce".
Now, in this case that will not be what occurs.
In effect, the gracious complaint, as results from point 29 of the facts established as proven, was restricted to the issues, raised by the Applicants, concerning:
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the alteration of the date of acquisition of the property to the month of December 2010; and
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the alteration of the respective value of acquisition to €73,000.00.
Now, in the context of prior hearing, the Applicants could have raised other issues, as they came to do in the context of impugnation, namely the illegality of the act of assessment of IRS and compensatory interest due to lack of substantiation, resulting from violation of articles 268, no. 3 of the CRP and article 77 of the LGT and the illegality of the assessment act due to, in their understanding, article 45, nos. 1 and 3 of the IRS Code establishing an implicit legal presumption and such presumption being able to be considered rebutted concretely, issues that were not covered by the prior hearing of the gracious complaint procedure, since they had not been raised as the object of the same by the Applicants, nor were they officially raised by the AT, thus not including either the draft decision notified to the Applicants for the purposes of prior hearing in the gracious complaint, nor the final decision thereof.
It is further added that the said Ruling of the STA of 25-06-2015, rendered in proceeding 01391/14 is based on the understanding that "the final administrative decision ends up being the second-degree act (because the gracious complaint was decided), so it should be in relation to this act that it should be determined whether or not the taxpayer had the opportunity to participate in its formation", an understanding that will not, with all due respect, be directly transposable to the tax arbitral process.
In effect, it has been abundantly affirmed by the arbitral jurisprudence of CAAD, and by the doctrine itself, that the object of the tax arbitral process is the assessment act, as results from article 2/1/a) of the RJAT, and not the second-degree and third-degree acts, which shall be relevant solely to assess the timeliness of the request for arbitral pronouncement, pursuant to article 10/1/a) also of the RJAT, which is why it has been understood that defects peculiar to second and third-degree acts fall outside the competence of tax arbitral tribunals functioning at CAAD.
As explained by Carla Castelo Trindade[5], "not arbitrable are the defects peculiar to acts of rejection of gracious complaints and hierarchical appeals or requests for official revision of the tax act because they escape the material scope of tax arbitration." That is, "The object of the request for arbitral pronouncement shall be, then, the (i)legality of the first-degree tax act, regardless of whether the taxpayer points as the object of his arbitral action this one (the first-degree act), or the second-degree one, always provided that the second-degree one appraises the (i)legality of the first-degree act."
Thus, and for what has been stated, it is judged that it is not a case for application of the doctrine of the Ruling of the STA of 25-06-2015, rendered in proceeding 01391/14, but rather of the aforesaid jurisprudence according to which "Do not rule out the relevance of the defect of violation of the right to hearing the facts that, after the assessments have been drawn up, the taxpayer has had the opportunity to impugn them administratively and judicially and has been heard in the context of administrative impugnation."
Having arrived here, it remains only to determine, in obedience to the reiterated jurisprudence constant in the STA on the matter in question, whether there is a non-relevance of the omission of the right of hearing, by way of application of the principle of utilization of the administrative act.
As the STA has repeatedly stated, "The non-relevance of the omission of the right to a hearing, through the application of the principle of utilization of the administrative act, is only admissible when the intervention of the interested party in the tax procedure is unequivocally incapable of influencing the final decision."[6]
That high Court has thus understood that "the principle of utilization of the act in tax law in view of its ablative nature is only in very specific cases in which the complete irrelevance of the formal defect in the genesis of the administrative act is considered, inasmuch as it does not contend with its existence or validity, that in the tax context can be attended to."[7]
Or, as referred to in the already indicated Ruling of the STA of 25-06-2015, rendered in proceeding 01391/14, cited by the Respondent itself, "The touchstone for the application of the said principle should be, instead, the unsusceptibility of the participation of the interested party to influence the final decision, whether in its direction or in its grounds."
Now, in this case, it cannot be concluded that the exercise of the right of hearing by the Applicants would be unsusceptible to "influence the final decision, whether in its sense or in its grounds," being evident, moreover, the opposite, since the very decision of the gracious complaint did not maintain, in its precise terms, the assessment act in crisis, partially revoking it, so that, immediately in that part, it is evident that the timely exercise of the right of participation of the Applicants was susceptible to influencing the final decision of the assessment procedure.
Thus, and in light of the foregoing, the defect of form argued by the Applicants is verified, given the violation of the provision in article 60 of the LGT, and consequently, the assessment object of the present arbitral process should be annulled, as well as the acts which presuppose its validity, in particular the assessment of compensatory interest and the decision of the gracious complaint procedure, the arbitral request formulated being well-founded.
In light of what has been decided, knowledge of the remaining questions raised by the Applicants is precluded.
C. DECISION
In view of which, it is decided in this Arbitral Tribunal to uphold entirely the arbitral request formulated and, consequently:
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Annul the act of assessment of IRS and compensatory interest no. 2014..., as well as the order, dated 5 May 2015, which partially rejected the gracious complaint filed against the same act;
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Condemn the Respondent in the costs of the proceeding, to be determined below.
D. Value of the Proceeding
The value of the proceeding is fixed at €34,040.02, pursuant to article 97-A, no. 1, a), of the Code of Tax Procedural Process, applicable by force of subsections a) and b) of no. 1 of article 29 of the RJAT and no. 2 of article 3 of the Regulation of Costs in Tax Arbitration Proceedings.
E. Costs
The amount of the arbitration fee is fixed at €1,836.00, pursuant to Table I of the Regulation of Costs in Tax Arbitration Proceedings, to be paid by the Respondent, since the request was entirely well-founded, pursuant to articles 12, no. 2, and 22, no. 4, both of the RJAT, and article 4, no. 4, of the aforesaid Regulation.
Let notification be made.
Lisbon, 9 April 2018
The Arbitrator
(José Pedro Carvalho)
ARBITRAL DECISION
REPORT
At pages 2, A..., taxpayer no. ... and B..., taxpayer no. ..., married, residents in Santarém at ..., no. ..., ...-... SANTARÉM, comes, pursuant to subsection a) of no. 1 of art. 2, all of the RJAT (Legal Regime of Tax Arbitration) with reference to IRS and COMPENSATORY INTEREST, assessed for the year 2013, and also, of the partial granting of the gracious complaint filed for the same purpose, to request the constitution of the Arbitral Tribunal to assess the legality of the above-referenced assessments of IRS and COMPENSATORY INTEREST, with the following grounds.
1st
The applicants were notified of assessment no. 2014... concerning IRS and Compensatory Interest, for the year 2013, and, not conforming to the assessment, filed a gracious complaint requesting its annulment.
2nd
By office no. ..., of 5/05/2015, of the Division of Tax Justice of the Finance Directorate of ..., the applicants were notified of the partial granting of the said gracious complaint.
3rd
Not conforming to the assessment nor to the partial granting of the gracious complaint, the Applicants come to present the request for arbitral pronouncement against:
i) the assessment of IRS 2014..., of the Director General of the Tax Authority, with reference to the year 2013, from which resulted the amount payable of 34,040.20;
ii) order of 5 May 2015 which determined the partial rejection of the gracious complaint.
4th
In view of the provision in subsection a) of no. 1 of art. 10 of the article 102, no. 1, subsection e) of the CPPA, the deadline for submission of the request for arbitral pronouncement of the decision of the gracious complaint is ninety days counted from notification of the decision, whereby the present request for Pronouncement of the Arbitral Tribunal is timely.
RELEVANT FACTS FOR ASSESSMENT OF THE REQUEST
5th
By public deed of 30 December 2010, C... and D..., donated to their daughter A..., now applicant, by virtue of their available share, the autonomous fraction designated by the letter "O" corresponding to the ... left floor of the urban property located at ..., no. ..., parish of ..., municipality of Lisbon, and described in the Land Registry Office of Lisbon under no. .../..., hereinafter "PROPERTY".
6th
On the date of the deed the property had the VPT (taxable patrimonial value) of €334.46, and was attributed, by mere lapse, to the gift, for tax purposes, €148,000.
7th
As it was the first transfer after entry into force of the CIMI, it was appraised, according to the new rules, having been attributed to it the value of €73,300, sold in August 2013 for €160,000.
8th
The applicants also incurred, with the acquisition and disposal of the property, the real estate mediation commission, in the amount of €9,840.
9th
On 1 June 2014, the applicants filed their Model 3 declaration of IRS, for the year 2013, having indicated in its annex G the disposal as well as the acquisition value of €148,000 and realization value of €148,000.
10th
By mere lapse, they indicated as the date of acquisition of the property July 2013 and not the date of the public deed of gift of December 2010.
11th
From the said declaration resulted the IRS assessment no. 2014..., with a refund of €1,358.05.
12th
The Tax Administration promoted a process of divergences for verification of the values and dates declared in the said annex G, having notified the applicants to submit the documents proving and to exercise their right to a hearing on the alterations proposed in the official declaration drawn up, namely alteration of the acquisition value of €148,000 to 334.06 – the VPT of the property on the date of disposal - and the non-consideration of expenses with the acquisition and disposal of the same.
13th
From the official declaration resulted the additional assessment of IRS and compensatory interest no. 2014..., in the amount of €34,040.02 which is also now challenged, and the submission, on 11 February 2015, of the gracious complaint for correction of the property acquisition date to December 2010 and of the acquisition value of €73,300.
14th
The Division of Tax Justice of the Finance Directorate of Santarém, by office no. ..., of 05/05/2015, notified the applicants of the decision of partial granting of the gracious complaint, having granted the request for alteration of the date of acquisition of the property, but maintained the value of €334.06.
15th
Contrary to what the Tax Administration alleges, the Applicants never came to be notified to exercise the right of option regarding the corrections, namely the correction of the property acquisition value, having been with total surprise when they were confronted with the additional IRS and Compensatory Interest assessment no. 2014....
16th
The lack of notification in accordance with the provisions of subsection a) of no. 1 of art. 60 of the General Tax Law is a violation that in itself shall imply also the annulment of the assessment whose legality is challenged due to omission of essential legal formality – lack of prior hearing.
17th
The additional assessment of IRS and Compensatory Interest is not sufficiently substantiated, in fact and in law, as it does not explain, being only indicated a set of values, which it is IRS of the year 2013 without any additional identification as to its nature and origin, imperceptible to a normal recipient and, also for the now applicants, being only mentioned that the assessment may be subject to gracious complaint or judicial impugnation without identifying, even, the concrete legal provisions in which that same additional assessment is based.
18th
Well, art. 77, no. 2 of the LGT provides that even when made in summary form, the substantiation of tax acts must always contain the applicable legal provisions, the qualification and quantification of the tax acts and the operations for determining the taxable matter and the tax.
19th
The Tax Administration has the legal duty to make express reference to the applicable legal provisions, and substantiation that does not contain such reference is always insufficient and has as a consequence the annulability of the act.
20th
No. 2 of art. 77 of the LGT provides for even simpler, though no less rigorous, substantiation than that provided for in no. 1, for the tax assessment acts to which it applies. It provides on the minimum of express substantiation of the tax act, the substantiation strictly necessary for its legality (...) (Cf. GURREIRO, ANTONIO LIMA; General Tax Law – Annotated, Lisbon, 2001, p. 339).
21st
Only by making express reference to the elements listed in the said no. 2 of article 77 of the General Tax Law, will the law be duly complied with, services being unable to omit the factual elements and the applicable legal provisions, prejudicing the defense possibilities of the taxpayer, as they effectively do in the concrete case.
22nd
The duty of motivation or substantiation of any administrative or tax act has associated with it two purposes: (i) on the one hand, to inform the respective addressee of the reasons or motives that led to the taking of decision in a certain sense; and, (ii) on the other hand, to allow for review of the legality of the decision and the validity of the reasons that underlie a concrete decision.
23rd
As Vieira de Andrade teaches, the imperative of express substantiation (...) thus typically plays a functional guarantee role with the intention of ensuring the rationality and controllability of the characteristic moments of the administrative function, those in which the organs of the Administration take decisions of authority that produce legal modifications in the external world (Cf. ANDRADE, JOSÉ CARLOS VIEIRA; The duty of express substantiation of administrative acts, Coimbra, 1992, p.215).
24th
However, the assessment notified is, as demonstrated, deficient in the necessary substantiation, and must be annulled accordingly (cf. article 135 of the Administrative Procedure Code).
25th
The substantiation contained in a remission to the substantiation already provided cannot be invoked, first of all, because there is no explicit remission to any concrete document containing that same substantiation.
26th
Pursuant to no. 2 of art. 77 of the LGT, it results that, as a rule, assessment acts, it is not enough that the substantiation is made by remission to the final report of the tax inspection procedure. In the substantiation of tax acts must "always" also contain the applicable legal provisions, the qualification and quantification of the tax facts and the operations for determining the taxable matter.
27th
In effect, tax acts – in particular assessment acts, as administrative acts, do not "result" from the inspection report, but rather from the substantiated decision of the respective tax administration organ practice (cf. ALFARO, MARTINS; Supplementary Regime of the Tax Inspection Procedure – Commented and Annotated, Lisbon, 2003, p. 446).
28th
However, without conceding, even if it were admitted that assessment acts could be substantiated in some other external document, without the need to comply with the minimum substantiation requirements demanded by the provision in no. 2 of article 77 of the General Tax Law, it would always have to require express remission in the very assessment act to that same external document, which also did not occur, as the Applicants have already stated.
29th
Respect for the most elementary rights of taxpayers requires that substantiation be contemporary and contextual and, also, that it not be presumed, being required to result clearly, expressly and unequivocally from the act itself, which did not occur.
30th
And, in cases where substantiation by remission is admitted, it is required that such remission be express, so that the substantiation is as accessible to the taxpayer as if it appeared in the act itself, which also did not occur.
31st
This principle, enshrined in no. 1 of article 77 of the LGT, also results from article 63, no. 1 of the Supplementary Regime of the Tax Inspection Procedure, which makes the substantiation of tax acts or matters dependent on the conclusions of the Inspection Report on adhesion or agreement with these.
32nd
But adhesion or agreement requires that the author expressly refer to and identify the report, opinion, information or proposal with which he manifests such adhesion. Consequently, there must be an express and unequivocal reference to well-individualized elements of the administrative process, because otherwise the burden or duty of determining – as the law requires – clearly, sufficiently or congruently, what motivated the decision taken, searching in the file for which elements were taken into account in the decision, would be transferred to the administered party.
33rd
It is indeed a settled understanding in jurisprudence that substantiation presented after the act is practiced does not count as substantiation. Nor that contained in evidentiary documents prior to which no express or implicit remission has been made (cf. Ruling of the STA, rendered in proceeding no. 0228/03, in www.dgsi.pt).
34th
In the acts under censure there is no reference, express or implicit, to the Tax Inspection Report or to any other concrete document, so that, not appearing in the very act the substantiation legally required – that is, the demonstration of the presuppositions upon which the assessment depends - it also cannot be understood that it has been fulfilled, by remission to any other document, which is not identified.
35th
Moreover, as regards compensatory interest, no substantiation is invoked either factually or legally for their assessment. Now, the Applicants cannot conform to the assessment of compensatory interest without the respective demonstration of the assessment expressly result from the respective substantiation, namely the demonstration of the fulfillment of the legal presuppositions on which the assessment is based.
36th
It thus seems curial to conclude that the act of assessment of tax and compensatory interest in question was practiced with offense to the applicable legal norms and principles, in particular art. 268, no. 3 of the Constitution of the Portuguese Republic and article 77 of the General Tax Law, and should be annulled accordingly (art. 135 of the Administrative Procedure Code).
37th
The said assessment act - on what is not conceded and only by mere caution is admitted, is illegal, not only for the mentioned lack of substantiation, but also due to error on the factual and legal presuppositions of the corrections made by the Tax Administration.
38th
In accordance with article 10, no. 1, subsection a) of the IRS Code, capital gains are constituted by gains obtained which, not being considered business and professional income, capital or land income, result from onerous disposal of real rights over immovable property and assignment of any assets from the private patrimony to business and professional activity exercised in the individual name by its owner.
39th
When the property is acquired by gift exempt from Stamp Tax – gratuitous transfer, gift of assets from parents to children – the acquisition value should correspond to the VPT appearing in the matrix until two years prior to the gift (art. 45, no. 3, of the IRS Code, as amended by Law 3-B/2010, of 28 April).
40th
The legislator intended to prevent the tax planning commonly used under the old law to reduce the taxable capital gain resulting from the disposal of urban properties with outdated VPT.
41st
This abusive practice was translated into the fictitious gift of the property, generally to a child, given the Stamp Tax exemption that these gratuitous transfers benefited from), followed by the onerous disposal to third parties at a price identical or similar to the VPT resulting from the first appraisal of the property, made pursuant to the Municipal Property Tax Code, when the first transfer occurred after its entry into force.
42nd
The gift would serve only to trigger the appraisal of the property and to raise the VPT that in an subsequent disposal would be used as the acquisition value in the calculation of capital gains, with a view to reducing taxation.
43rd
The fight against abuses was conducted through the establishment in a rule of objective incidence of an implicit presumption or legal fiction, as a way to overcome evidentiary difficulties.
44th
Now the LGT establishes that the presumptions established in the tax incidence norms always admit contrary proof (art. 73 of the LGT).
45th
The Constitutional Court has already accepted this solution in the context of the principle of tax equality, noting that the establishment of presumptions with the objective of conferring certainty and simplicity to fiscal relations, of allowing prompt and regular perception of taxes and of preventing evasion and fraud (...) must be compatible with the principle under analysis (of tax equality), which passes both through the constitutional illegitimacy of absolute presumptions insofar as they prevent the taxpayer from proving the non-existence of the contributory capacity aimed at in the respective law, as well as through the requirement of suitability of relative presumptions to present the economic presupposition taken into account (...). Presumptions must be supported by concretely positive elements that justify them rationally and admit contrary proof, so that the tax is linked to a certain, proven economic presupposition and not merely a probable one (cf. Ruling of the Constitutional Court no. 348/97).
46th
It cannot fail to be admitted, in this forum, the possibility of the Applicants rebutting the presumption on which the calculation of the capital gain resulting from the disposal of the property was based and the additional IRS assessment act practiced with reference to the year 2013, now challenged.
47th
It shall be demonstrated how the gift of the property obeyed other purposes than that of drastically reducing the real estate capital gain resulting from its disposal.
48th
Initially the donors were owners of a farm in ... having decided to sell part of the farm, with the proceeds of the sale being applied to the acquisition of some land and as well, to the acquisition of the property.
49th
The period in which the property was disposed of and investments were made coincided with the marriage of two children, with the parents making monetary gifts to the same, one of whom chose to acquire a house for permanent residential use and the other to acquire a restaurant.
50th
Meanwhile, with the property unoccupied, the parents decided to make it available for residence of their daughter, while the latter attended the university course in which she was enrolled.
51st
In late 2008, on the occasion of the marriage of their daughter, the parents decided to make her a monetary gift, as had happened with the other two children, she having suggested that alternatively she be gifted the property in which she had lived as a student and, therefore, had very significant sentimental value.
52nd
Because there was no urgency, the gift deed was only executed on 30 December 2010, which was influenced by the decision of the applicants to move to Santarém and lease the property.
53rd
In 2011, by virtue of the economic and financial crisis, the activity to which B... was engaged – textile advertising – began to generate negative results, so in 2012 he decides to close the activity, inheriting, however, a set of debts which he could not pay.
54th
Pressured by the debts that were accumulating and in order to be able to fulfill the commitments assumed, the applicants decided to sell the property in August 2013.
55th
The sale of the property was effected for €160,000, approximately the value that had been attributed to it at the gift of the property (€148,000).
56th
From the factuality described, the applicants understand that the following conclusions cannot fail to be drawn:
57th
a) The acquisition of the property by C... and D..., parents of the complainant, was carried out in a context of real estate investment and using the proceeds from the sale of part of the property they owned;
b) The gift of the property was a true gift, representing nothing more than the materialization of the wedding gift that her parents wished to offer her, similar in measure and extent to what they had done for her other two children;
c) Although the gift deed was only executed in 2010, the property was used as residence of the applicants from late 2008, the date of their marriage, until late 2010;
d) The sale of the property in 2013 (three years after the gift) was motivated solely and exclusively by the need to pay the debts assumed following the closure of the company activity which they had until then managed.
58th
In sum, the gift of the property was not made with the purpose of reducing the capital gain that would result from its future disposal, but rather with the intention of freely disposing of a good in favor of another person, a daughter, with the serious and altruistic intention of helping her at the beginning of life.
59th
In that measure, in light of the evidence produced, the implicit legal presumption contained in no. 3 of art. 45 of the IRS Code should be considered rebutted, according to which any and every gift exempt from tax of a property with outdated VPT is carried out with the sole purpose of, in a future disposal, eliminating or drastically reducing the capital gain resulting therefrom.
60th
For which reason the rule contained therein should be disapplied and, instead, the general rule resulting from subsection b) of no. 1 of the same legal provision should be applied: for determining gains subject to IRS, acquisition value is considered, in the case of goods or rights acquired gratuitously, the value that would serve as the basis for the assessment of Stamp Tax, should this be due.
61st
There is no doubt that the gift of properties from parents to children was and is exempt from Stamp Tax, pursuant to article 6, subsection e) of the Stamp Tax Code.
62nd
However, should it have been due, in accordance with the law in force at the date of the facts, being the first transfer of the property after the entry into force of the Municipal Property Tax Code, the Stamp Tax would have been assessed based on the value resulting from the appraisal which, by legal imposition, should have been made following that same transfer (cf. Art. 27 of Dec. Law no. 287/2003, of 12 November, combined with art. 15, no. 1, of the same decree law).
63rd
Having the property been appraised at €73,300, this would be the value that would serve as the basis for the assessment of Stamp Tax, should this be due, and, therefore, it would be this (and not the VPT of the property until two years prior to the gift) the acquisition value to be taken into account for purposes of calculating the capital gains resulting from its disposal.
64th
The payment of the real estate mediation commission for the disposal of the property (€9,84.00) is a necessary expense and practiced should be considered pursuant to art. 51, subsection) of the IRS Code, which fact is sufficient to conclude that the assessment act is illegal as is the decision of the gracious complaint, because based on error regarding the factual (and legal) presuppositions, and the same should be annulled, as is hereby requested.
65th
In light of the foregoing, the assessment of IRS and compensatory interest must be annulled accordingly and as well, the decision of the gracious complaint that maintained them), with the other legal consequences.
66th
The assessment of compensatory interest lacks demonstration by the tax administration with basis in substantiation: that the delay in the assessment of the tax is due to a fact attributable to the taxpayer, pursuant to the provision in art. 35, no. 1, of the General Tax Law.
67th
At no moment does the tax administration refer to the existence of guilt attributable to the Applicants, a fundamental presupposition of the claim for the assessment of compensatory interest, which are not a mere consequence of the tax debt, and lack express, accessible and contextual substantiation, similar to any matter subject to correction following a tax inspection procedure.
68th
Art. 268, no. 2, of the CRP establishes that administrative acts are subject to notification to the interested parties, in the form provided for by law and lack express and accessible substantiation when they affect rights or legally protected interests, with art. 77 of the LGT providing that the decision of procedure is always substantiated by means of a brief exposition of the reasons of fact and law that motivated it, and the substantiation can consist in mere declaration of agreement with the reasons of previous opinions, information or proposals, including those forming part of the report of the tax inspection.
69th
What matters is that the taxpayer addressee of the decision become minimally aware of the iter volitivo of the administration regarding the determination of the taxable matter. Violation of these requirements of the decision implies its illegality, the basis for subsequent annulment in judicial impugnation of the assessment (articles 89 and 120, subsection c).
70th
In the present case it matters that the taxpayer addressee of the decision become minimally aware of the iter volitivo of the tax administration regarding the assessment of compensatory interest, so that violation of this requirement of the decision implies its illegality, ground for its annulment.
71st
In the Ruling of 1 July 1998, Case no. 43812, the STA considered that the duty of express substantiation that burdens administrative activity consists in the obligation of exteriorization of the reasons of fact and law that are at the basis of the administrative decision, so that its enunciation is fit to express a justification of the option taken.
72nd
Also the Ruling of 11-11-1998 Case 31,339, of the STA, considers that the duty of substantiation requires that a normal recipient, placed in the position of the appellant, faced with the express tenor of the act, be able to comprehend the logical-legal course followed by the recalled authority to reach such decision, so as to be able to determine oneself, consciously, in the sense of impugnation or non-impugnation.
73rd
In the case under consideration, the tax administration refrains from indicating which elements it bases itself on to promote the assessment of compensatory interest, notifying the complainant of the respective demonstration of the assessment, through the same document by which it had notified the assessment of IRS, making no mention of the guilt of the applicants in the supposed delay in the assessment of the tax, and much less proceeding to the demonstration of such guilt.
74th
The tax administration limited itself to notifying the assessment of compensatory interest, without indicating the reasons by which it considers there to be guilt, attributable to the applicants in the supposed delay in the assessment of the tax.
75th
In this sense, the tax administration prevents the applicants from knowing, in all its extent, the why of the additional charge imposed on them, as well as from assessing its legality, so that the lack of substantiation constitutes a defect of form that determines the annulability of the assessment.
76th
On this orientation, the Supreme Administrative Court pronounced itself in the Ruling of 18 February 1998, in case no. 22,325, understanding that compensatory interest represents, as the name itself indicates, a compensation or indemnification, a kind of civil reparation for the delay in the assessment, with the consequent delay in the entry of the tax into the State coffers. (...) The imputability referred to in the law is not satisfied with mere objective connection of the fact to the taxpayer, even with its illicitness, behavior still containing a subjective judgment consisting in the attribution or imputation of the non-fulfillment to the will of the agent so as to be able to formulate, with respect to his conduct, a judgment of censure; in a word, guilt. Such imputability does not occur if the delay in the assessment – the taxpayer having, in Model 2 declaration, timely presented, provided the Administration with all the necessary elements for its effectuation – results from mere divergence, not culpable, of criteria regarding the quantification of certain items as costs. The blamelessness or reasonableness, in terms of a normal or average taxpayer, required by the legal order, of the criterion adopted, in divergence with the tax authority, even if erroneous, precludes guilt.
77th
Moreover, in the Ruling rendered on 23 October 2002, by the Supreme Administrative Court, case no. 1145/02, it was held that compensatory interest resulting from delay in the assessment of the respective tax (...) presupposes the existence of guilt (intention or negligence) of the taxpayer for the delay or lack of the assessment.
78th
Pursuant to the provisions of articles 74, no. 1, of the General Tax Law and 342, no. 1 of the Civil Code, it is incumbent upon the tax administration to demonstrate and prove these facts constitutive of the right to assess compensatory interest, namely the guilt of the taxpayer in the possible delay or retardation of the assessment of the tax, that is, to demonstrate the presupposition of the assessment of compensatory interest which translates into the (...) existence of a causal nexus between the conduct of the taxpayer and the retardation of the assessment and, as well, a judgment of censure, by way of intention or negligence, assessed in the abstract, according to the diligence of the "bonus pater familias" (cf. Ruling of the STA, of 17-10-2001, Case 25,803).
79th
Thus, guilt should have been assessed in the notification at hand or in any other document to which it referred. The assessment of compensatory interest is not an automatic consequence of any additional assessment of the tax, corresponding instead to the final result of the entire cognitive and evaluative process where the causal nexus referred to is established, and a judgment of censure is formulated regarding the conduct of the taxpayer (Ruling of the Supreme Administrative Court, of 3 October 2001, in case no. 25,034.
80th
Now, the delay in the assessment cannot be attributed to the applicants as a matter of guilt, since they always acted in accordance with an (more than) plausible interpretation of the law, namely following instructions of the notary when executing the gift deed, so the presuppositions that the law makes dependent on the assessment of compensatory interest are not fulfilled.
81st
The assessment of compensatory interest is illegal and should be annulled accordingly.
82nd
It should be noted that, in deciding as it did, rejecting the gracious complaint filed, the order of the Chief of Division of the Finance Directorate of ..., of 5 May 2015, which rests on factual and legal presuppositions not in conformity with the applicable legal norms and principles, is characterized by an incorrect application of the law to the facts, which should determine its respective annulment with the legal consequences (Cf. Article 135 of the Administrative Procedure Code).
83rd
It further requests the hearing of witness G..., MANAGER, RESIDENT AT STREET..., NO...., ...-... CASCAIS.
It ends requesting:
The admission of the present request.
RESPONSE OF THE ADMINISTRATION
84th
The applicants filed on 1 June 2014 the Model 3 declaration of IRS for the year 2013, stating in annex G, the disposal of the property in August 2013, declaring as value of realization €160,000.00 and as acquisition value the amount of €148,000.00 and, €9,840.00 as expenses and charges.
85th
Following receipt and examination of the elements of the declaration, on 19-06-2014, the services proceeded to open a proceeding for analysis of divergences of the declared elements of values and dates of disposal of the property.
86th
The applicant was notified of the opening of the proceeding and to proceed with the attachment of documents proving the declared elements, relating to his personal and family situation and the disposal of the property, within 15 days, with the warning that the lack of regularization of the situation would result in correction of the declared elements.
87th
The notification, via electronic means, was delivered in the ViaCTT mailbox, on 26-06-2014, the applicant having accessed the mailbox on 21-07-2014.
88th
The Applicant did not comply with what was requested, failing to attach the documents proving.
89th
Notwithstanding the Applicant having been validly notified, the services, to obtain the missing documents, made a second notification by office of 17-09-2014, by registered mail with return receipt with no. RF...PT, sent to the ..., ..–..., ... –... Santarém (address in the register) being returned with the indication "article not collected".
90th
The Applicant was notified once more, by registration RF...PT, to the ..., ... –..., ...-... Santarém, the address in the register, to present documents and that corrections would be made in the absence of delivery of the same, being indicated the fields, the declared values and to correct and the identification of the property, returned with indication "article not collected".
91st
Faced with the lack of delivery, the services issued the official assessment no. 2014..., object of the present arbitral action.
92nd
Disagreeing with the assessment, the applicants filed a gracious complaint which, by order of 5 May 2015, was partially granted.
93rd
The Applicants were notified to make written submissions on the draft decision of the gracious complaint, but, within the 15-day period, they gave no response.
94th
The applicants come to manifest their disagreement regarding the understanding of the AT underlying the assessments which they deem illegal, alleging the following:
(i) The omission of essential legal formality;
(ii) The illegality of the act of assessment of IRS and Compensatory Interest due to lack of substantiation;
(iii) The illegality of the assessment act due to error on the factual and legal presuppositions.
95th
They have no reason, as shall be demonstrated below.
96th
They affirm that "contrary to what the tax administration alleges in the decision of partial granting that precedes (...) we never actually came to be notified to exercise our right to a hearing regarding the corrections that gave rise to the said tax acts" and that "at no time were we (...) notified to pronounce on an alleged proposal to correct the value of acquisition of the property, having been with total surprise that we were confronted with the act of additional assessment of IRS and Compensatory Interest no. 2014..., concluding that the AT violated the provision in subsection a) of no. 1 of art. 60 of the General Tax Law.
97th
This does not correspond to the truth, showing it to be proven that the AT made three notifications, with the intention of obtaining documents proving the values and dates relating to the disposal of the property declared by the applicants in annex G of the Model 3 declaration of IRS.
98th
The first notification was sent to the Applicant, via electronic means, through the document identified by code 2014..., delivered in the electronic postal mailbox of ViaCTT on the 26-06-2014.
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