Summary
Full Decision
ARBITRAL DECISION
The Arbitrator Dr. Maria Antónia Torres, appointed by the Ethics Board of the Administrative Arbitration Centre ("CAAD") to form the Singular Arbitral Tribunal, constituted on 25 November 2016, decides as follows:
1. REPORT
1.1. A…, taxpayer no. …, with registered office at Rua …, …, …, B…, taxpayer no. …, resident at Rua …, …, …, C…, taxpayer no. …, resident at …, no. – "B, …, …, requested the constitution of an arbitral tribunal, pursuant to article 2, paragraph 1, subsection a), and article 10, both of Law-Decree no. 10/2011 of 20 January (hereinafter "RJAT"[1]).
1.2. The request for arbitral decision concerns the declaration of illegality, and consequent annulment, of the tax assessment acts for IMI (Municipal Property Tax), with no. …, and relating to properties registered in the urban registry under the articles … and …, in the amount of €134.54, concerning the 1st Requester, with no. …, and relating to properties registered in the urban registry under the articles … and …, in the amount of €157.72, concerning the 2nd Requester, and with no. …, relating to properties registered in the urban registry under the articles … and … (the latter in co-ownership), in the amount of €415.58 concerning the 3rd Requester, totalling €704.89 (seven hundred and four euros and eighty-nine cents), relating to the year 2015, and better identified in the initial petition presented by the Requesters, and which are hereby considered to be articulated and reproduced for all legal purposes, which concern properties owned by the Requesters, located in the Historic Centre of Guimarães.
They further request the condemnation of the Respondent to restrain the amounts unduly paid and that they be recognized the right to compensatory interest on all amounts paid.
1.3. The Requesters presented their request on the grounds that, as the properties are located in the Historic Centre of Guimarães (as certified by the Municipality of Guimarães), they were classified by UNESCO as part of a set considered World Heritage. However, the Requesters allege that, in accordance with Law no. 107/2001, cultural assets included in the world heritage list constitute, for all purposes, assets qualified as of national interest. On the other hand, an asset classified as of national interest is designated as a national monument whether it is a location, building or ensemble. And, finally, in accordance with article 44 of the EBF, properties classified as a national monument are exempt from IMI, such exemption being of an automatic nature. For all this, lacking the acts sub judice of formal defect.
1.4. The Tax Authority defends that the request sub judice should be judged unfounded. First and foremost, and by way of exception, the defence is made by saying that arbitral action is not the appropriate procedural means for what it understands to be the claim of the Requesters: the recognition of the exemption provided in article 44 of the EBF. Therefore, the Respondent submits that the Arbitral Tribunal should refrain from partially recognizing the request.
1.5. As a direct consequence of the same line of argument, the Respondent raises the incompetence of the arbitral tribunal ratione materiae, being outside its jurisdiction issues concerning the recognition of tax exemptions.
The Respondent further alleges that the 1st Requester lacks legal capacity and that the power of attorney attached to the initial petition does not conveniently identify the signatory thereof, which would constitute a dilatory exception leading to dismissal of the action.
By way of opposition, the Respondent defends by saying that it disagrees with the classification given by the Requesters to the properties sub judice and that from it, no conclusions sought by the Requesters could in any case be drawn. The Respondent further alleges that the Historic Centre of Guimarães "does not have the classification of UNESCO World Heritage… given that it is a "…mere listing in a World Heritage Committee list". Thus, the Respondent understands that, at most, we are dealing with a designation as a National Monument but not with a classification as such. And on this subject the Respondent further adduces a series of arguments and deductions better expressed in its Response and its Arguments.
Both parties presented their arguments successively. The meeting of the arbitral tribunal provided for in article 18 of the RJAT was dispensed with, as there was no need for additional presentation of evidence.
2. PRELIMINARY FINDINGS
The Tribunal was regularly constituted and is competent ratione materiae, in accordance with article 2 of the RJAT.
The Respondent, in its defence, sustains that there exists material incompetence of the Arbitral Tribunal to assess the recognition of tax benefits, requesting that the tribunal refrain from assessing any questions relating to the recognition of the exemption provided in article 44 of the EBF.
The alleged incompetence of the Arbitral Tribunal arises, according to the Respondent, from the provisions of subsection a) of paragraph 1 of article 2 of the RJAT, which allows the conclusion that "the knowledge of the matter relating to the recognition of tax exemptions is not covered within the scope of the material competence of the Arbitral Tribunal".
Having regard to the decision on this exception raised by the Respondent, the Tribunal understands that the subject-matter of the case is not a question of recognition of an exemption, but rather a question of an objective exemption provided by law, to which the Requester considers itself entitled, and which was disregarded by the Respondent, indeed initially recognized and subsequently revoked, resulting from this the enactment of the IMI assessment acts now being challenged.
Thus, the exception is unfounded and this Tribunal is judged materially competent to settle the dispute.
The parties have legal personality and legal capacity, prove themselves to be legitimate and are regularly represented (cf. articles 4 and 10, paragraph 2 of the RJAT and article 1 of Ordinance no. 112-A/2011 of 22 March).
With regard to the allegation made by the Respondent that the 1st Requester would lack legal capacity, this tribunal disagrees with that conclusion. The power of attorney attached to the initial petition is signed by C… who, according to documents provided by the Requesters, is President of the Board of Administration of the 1st Requester, through a provision granted by D…, it being incumbent upon the body of which he is president, in accordance with the said provision, to manage the movable and immovable property of A…. Now, this is an act of ordinary management of the property of A…, whereby it is considered that the capacity of representation of C… and the legal capacity of the 1st Requester are verified.
No irregularities were identified in the proceedings.
3. FACTUAL MATTERS
With relevance for the decision on the merits, the Tribunal considers the following facts to be proven:
1) The Requesters were at the relevant date owners of the properties previously better identified;
2) The Requesters were notified of the IMI assessments relating to those properties and made payment of the tax;
3) The properties benefited in the past from the exemption from IMI under article 44 of the EBF, which was revoked by the Respondent with effect from 2015.
4) The properties in question are located and form part of the so-called Historic Centre of Guimarães, which is part of the UNESCO World Heritage list and is designated as a national monument as an Ensemble. In Notice 15171/2010 it is declared that the ensemble known as the Historic Centre of Guimarães, located in the parishes of … and … and …, municipality of Guimarães, district of Braga, was included in the indicative list of UNESCO World Heritage. In the map attached to the said notice, "the area inscribed in the UNESCO World Heritage List – National Monument" is delimited.
Facts Not Proven
No essential facts, with relevance for the assessment of the merits of the case, which were not proven, were found.
4. ON THE LAW
With the factual matters established, it is important to consider the legal matters raised by the parties.
As identified above, the matter to be decided concerns the declaration of illegality of the IMI assessment acts, relating to the year 2015, on the properties above better identified, property of the Requesters.
Defence by Opposition
According to the provisions of subsection n) of paragraph 1 of article 44 of the Tax Benefits Statute, the following are exempt from IMI: "properties classified as national monuments and properties individually classified as of public interest or municipal interest, in accordance with the applicable legislation".
This provision refers, in particular, to the Framework Law for the Protection and Enhancement of Cultural Heritage (Law no. 107/2001 of 8 September), which establishes that immovable property may be classified as of national interest, public interest or municipal interest and specifically in the categories of Monument, Ensemble and Site.
But let us consider. In accordance with article 15 of Law 107/2001 of 8 September:
"1 - Immovable property may belong to the categories of monument, ensemble or site, in the terms in which such categories are defined in international law, and movable property, among others, to the categories indicated in title VII.
2 - Movable and immovable property may be classified as of national interest, of public interest or of municipal interest.
3 - For immovable property classified as of national interest, whether they are monuments, ensembles or sites, the designation 'national monument' shall be adopted and for movable property classified as of national interest the designation 'national treasure' is created.
4 - Property is considered to be of national interest when its protection and enhancement, in whole or in part, represents a cultural value of significance for the Nation.
(...)"
In Notice no. 15171/2010, published in the Diário da República, II Series of 30 July 2010, issued under paragraph 3 of article 72 of Law-Decree 309/2009 of 23 October, it is declared that the ensemble known as the Historic Centre of Guimarães, located in the parishes of … and … and …, municipality of Guimarães, district of Braga, was included in the UNESCO World Heritage list. In the map attached to the said notice, "the area inscribed in the UNESCO World Heritage List – National Monument" is delimited.
Article 15, paragraph 7, of Law 107/2001 expressly states that "immovable cultural assets included in the world heritage list constitute, for all purposes and in their respective category, assets qualified as of national interest".
Finally, as set out in article 15 of Law 107/2001 and article 3 of Law-Decree 309/2009, an asset classified as of national interest is designated as a "national monument", regardless of whether it is a single building, ensemble or site, it being clear that the immovable property that comprise the ensemble or site are covered by that classification.
Now, this is naturally the case of the properties of the Historic Centre of Guimarães. The Historic Centre of Guimarães is protected heritage of national interest and viewed as a whole, as an Ensemble.
In light of Law 107/2001, the properties in question are today of national interest, and not merely of public or municipal interest, being consequently classified as national monuments.
The fact that individually classified properties may coexist, in the event of delimitation of an ensemble or site, in accordance with article 56 of Law-Decree 309/2009, has only provisional relevance for delimiting the protection zone of that property until publication of the classification of the ensemble or site.
In light of this framework, let us return to article 44 of the EBF. Now, the article sub judice refers to two realities which it treats differently. On the one hand, it establishes that properties classified as national monuments are exempt from municipal property tax. No more. On the other hand, it equally establishes an exemption from the same tax for properties individually classified as of public interest or municipal interest.
It is our understanding that if the legislator did not wish to make a distinction between immovable property classified as national monument and those classified as of public or municipal interest, requiring the latter to have individual classification, it would not have done so. But the truth is that this distinction results clearly from the letter of the law.
For that reason it is understood that article 44 of the Tax Benefits Statute distinguishes between "property classified as national monument" and "property individually classified as of public interest or municipal interest", only requiring individualization in relation to these two latter categories, not already in the case of property of national interest.
We further understand that the argument that some authors defend a restrictive interpretation of exemptions for property classified with the aim of excluding from the benefits granted under IMI or IMT all situations in which there has not occurred a procedure or act of individual classification as national monument, property of public or municipal interest does not hold.
The truth is that it was in this sense that article 6 g) of the IMT Code was amended by Law 55-A/2010 of 31 December, leading to the exemption no longer encompassing "acquisitions of properties classified as of national interest, public interest or municipal interest, under Law no. 107/2001 of 8 September" to pass only to contemplate only "acquisitions of properties individually classified as of national interest, public or municipal interest, in accordance with applicable legislation".
However, the legislator did not amend in the same sense the tax benefits under IMI, despite having proceeded with the modification of the wording of article 44 of the EBF itself, with its subsection n) continuing to require individual classification for the grant of the exemption only in the case of properties of public or municipal interest, but not making such requirement for national monuments.
On the contrary, the rule of paragraph 5 of article 44, in the wording given to it by Law 3-B/2010 of 28 April, expressly provides that "the exemption referred to in subsection n) of paragraph 1 is of an automatic nature, operating through notification of the classification as national monuments or of individualized classification as properties of public or municipal interest (…)". We thus understand it to be clear that the legislator's intention was to dispense with individualized classification for purposes of IMI exemption for national monuments, requiring it only in relation to property of public or municipal interest.
The argument that the use of the term "national monument" in this norm has a different intent from the use given to the same expression in Law 107/2001 and in Law-Decree 309/2009 does not hold given that no other source can be seen from which to interpret the term in article 44 of the EBF.
Now, in summary:
- the Historic Centre of Guimarães being included in the world heritage list, as an Ensemble;
- Law 107/2001 expressly stating that immovable property included in that list are, for all purposes and in their respective category (Ensemble), classified as of national interest;
- the same law and Law-Decree 309/2009 stating that immovable property classified as of national interest is designated as a "national monument";
- this entire reasoning applying to the Historic Centre of Guimarães;
- paragraph 1 subsection n) of article 44 of the EBF referring to "national monument" with no other source of interpretation of the term being known beyond those referred to above;
It is manifest that the properties sub judice benefit from the said exemption, the IMI assessments here challenged being thus illegal, in the part to which such properties refer, and the tax paid must be reimbursed to the Requesters.
On Compensatory Interest
The Requesters petition for the condemnation of the Respondent to payment of compensatory interest, provided for in articles 43 of the General Tax Law and 61 of the Code of Tax Procedure and Process.
It is clear from the case file that the illegality of the tax assessment acts challenged is directly attributable to the Respondent, which, on its own initiative, enacted them without legal support, suffering from an erroneous interpretation (and thus application) of the legal norms to the concrete case.
Consequently, the Requesters are entitled to receive compensatory interest on the amounts paid, in accordance with the provisions of articles 43, paragraph 1, of the GTL and 61 of the CTPP.
5. DECISION
In these terms and with the reasoning herein set out, this arbitral tribunal decides:
1. That the request for declaration of illegality of the tax assessment acts for IMI relating to the properties better identified in the case, as regards the year 2015, is granted;
2. That the request for reimbursement of the amount paid by the Requesters, together with the respective compensatory interest until full reimbursement of that same amount, is granted.
* * *
The value of the case is fixed at €704.89 (seven hundred and four euros and eighty-nine cents), in accordance with the provisions of articles 3, paragraph 2 of the Regulation of Costs in Tax Arbitration Proceedings (RCPAT), 97-A, paragraph 1, subsection a) of the CTPP and 306 of the CPC.
The amount of costs is fixed at €306 (three hundred and six euros) under article 22, paragraph 4 of the RJAT and Table I annexed to the RCPAT, and borne by the Respondent, in accordance with the provisions of articles 12, paragraph 2 of the RJAT and 4, paragraph 4 of the RCPAT.
Notify.
Lisbon, 24 July 2017
The Arbitrator
(Maria Antónia Torres)
Text prepared by computer, in accordance with article 131, paragraph 5 of the Code of Civil Procedure, applicable by reference from article 29, paragraph 1, subsection e) of the RJAT.
The drafting of this arbitral decision is governed by the spelling prior to the 1990 Orthographic Agreement.
[1] Acronym for Legal Regime of Tax Arbitration.
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