Stamp Tax on Building Land: Are Construction Plots Subject to Verba 28.1 TGIS?

ARBITRAL DECISION

The arbitrators Dr. Jorge Manuel Lopes de Sousa (presiding arbitrator), Prof. Dr. Maria do Rosário Anjos and Prof. Dr. Miguel Patrício, appointed by the Deontological Council of the Centre for Administrative Arbitration to form the Arbitral Tribunal, constituted on 02-10-2014, agree as follows:

1. Report

A – ..., NIPC …, filed a request for constitution of a collective arbitral tribunal, pursuant to the combined provisions of articles 2.º and 10.º of Decree-Law No. 10/2011, of 20 January (Legal Framework for Arbitration in Tax Matters, hereinafter referred to only as LFAT), in which the Tax and Customs Authority is the Respondent.

The request for constitution of the arbitral tribunal was accepted by the President of the CAAD and automatically notified to the Tax and Customs Authority on 30-07-2014.

Pursuant to the provisions of subparagraph a) of item 2 of article 6.º and subparagraph b) of item 1 of article 11.º of the LFAT, the Deontological Council appointed the arbitrators of the collective arbitral tribunal, the signatories hereto, who communicated their acceptance of the appointment within the applicable period, and notified the parties of this appointment on 17-09-2014.

Thus, in compliance with what is prescribed in subparagraph c) of item 1 of article 11.º of the LFAT, the collective arbitral tribunal was constituted on 02-10-2014.

The Claimant requests the declaration of legality of the Stamp Tax assessments Nos. 2014…, 2014…, 2014…, 2014…, 2014…, 2014…, 2014…, 2014…, 2014…, 2014…, 2014…, 2014…, 2014…, 2014… and 2014… in the total amount of € 328,896.03.

All assessments were made applying entry No. 28.1 of the General Table of Stamp Tax.

The Claimant requests the declaration of illegality of these assessments and further seeks recognition of the right to compensation for the costs incurred in the constitution of a guarantee.

The Claimant contends, in summary, that all the real properties to which the assessments relate, made with respect to the year 2013, are land for construction and, therefore, are not covered by the concept of "property with residential designation" which appears in the aforementioned entry No. 28.1 of the TGIS and, if understood that they are, this rule would be materially unconstitutional.

The Tax and Customs Authority (TCA) filed a reply, arguing that the request for declaration of illegality and consequent annulment of the disputed assessments should be judged unfounded, with its absolution from the claim.

By order of 05-11-2014, the meeting provided for in article 18.º of the LFAT was dispensed with and the proceedings continued with optional written submissions.

The Parties made no submissions.

The arbitral tribunal was duly constituted and is substantively competent, in light of what is prescribed in articles 2.º, item 1, subparagraph a), and 30.º, item 1, of the LFAT.

The parties have legal personality and capacity, have standing (articles 4.º and 10.º, item 2, of the same decree-law and article 1.º of Regulatory Decree No. 112-A/2011, of 22 March) and are properly represented.

The proceedings are not affected by any nullities.

1. Statement of Facts

2.1. Facts established as proven

a) The Claimant in the year 2013 was the owner of land for construction, situated in the Municipality of …, Parish of …, identified by the following urban property registration numbers No. …, No. …, No. …, No. …, No. …, No. …, No. …, No. …, No. …, No. …, No. …, No. …, No. …, No. …, No. …, (document No. 16 attached with the request for arbitral decision, the content of which is hereby reproduced);

b) The Claimant was notified of assessment No. 2014 …, of 18-03-2014, made under entry 28.1. of the General Table of Stamp Tax, in the amount of € 23,117.55, relating to the year 2013 and to the property with registration number … (document No. 1, attached with the request for arbitral decision, the content of which is hereby reproduced);

c) The Claimant was notified of assessment No. 2014 …, of 18-03-2014, made under entry 28.1. of the General Table of Stamp Tax, in the amount of € 23,396.12, relating to the year 2013 and to the property with registration number … (document No. 2, attached with the request for arbitral decision, the content of which is hereby reproduced);

d) The Claimant was notified of assessment No. 2014 …, of 18-03-2014, made under entry 28.1. of the General Table of Stamp Tax, in the amount of € 10,627.79, relating to the year 2013 and to the property with registration number … (document No. 3, attached with the request for arbitral decision, the content of which is hereby reproduced);

e) The Claimant was notified of assessment No. 2014 …, of 18-03-2014, made under entry 28.1. of the General Table of Stamp Tax, in the amount of € 23,495.04, relating to the year 2013 and to the property with registration number … (document No. 4, attached with the request for arbitral decision, the content of which is hereby reproduced);

f) The Claimant was notified of assessment No. 2014 …, of 18-03-2014, made under entry 28.1. of the General Table of Stamp Tax, in the amount of € 29,749.93, relating to the year 2013 and to the property with registration number … (document No. 5, attached with the request for arbitral decision, the content of which is hereby reproduced);

g) The Claimant was notified of assessment No. 2014 …, of 18-03-2014, made under entry 28.1. of the General Table of Stamp Tax, in the amount of € 29,396.44, relating to the year 2013 and to the property with registration number … (document No. 6, attached with the request for arbitral decision, the content of which is hereby reproduced);

h) The Claimant was notified of assessment No. 2014 …, of 18-03-2014, made under entry 28.1. of the General Table of Stamp Tax, in the amount of € 19,057.23, relating to the year 2013 and to the property with registration number … (document No. 7, attached with the request for arbitral decision, the content of which is hereby reproduced);

i) The Claimant was notified of assessment No. 2014 …, of 18-03-2014, made under entry 28.1. of the General Table of Stamp Tax, in the amount of € 13,615.57, relating to the year 2013 and to the property with registration number … (document No. 8, attached with the request for arbitral decision, the content of which is hereby reproduced);

j) The Claimant was notified of assessment No. 2014 …, of 18-03-2014, made under entry 28.1. of the General Table of Stamp Tax, in the amount of € 13,557.66, relating to the year 2013 and to the property with registration number … (document No. 9, attached with the request for arbitral decision, the content of which is hereby reproduced);

k) The Claimant was notified of assessment No. 2014 …, of 18-03-2014, made under entry 28.1. of the General Table of Stamp Tax, in the amount of € 19,230.97, relating to the year 2013 and to the property with registration number … (document No. 10, attached with the request for arbitral decision, the content of which is hereby reproduced);

l) The Claimant was notified of assessment No. 2014 …, of 18-03-2014, made under entry 28.1. of the General Table of Stamp Tax, in the amount of € 20,729.75, relating to the year 2013 and to the property with registration number … (document No. 11, attached with the request for arbitral decision, the content of which is hereby reproduced);

m) The Claimant was notified of assessment No. 2014 …, of 18-03-2014, made under entry 28.1. of the General Table of Stamp Tax, in the amount of € 29,715.99, relating to the year 2013 and to the property with registration number … (document No. 12, attached with the request for arbitral decision, the content of which is hereby reproduced);

n) The Claimant was notified of assessment No. 2014 …, of 18-03-2014, made under entry 28.1. of the General Table of Stamp Tax, in the amount of € 28,761.36, relating to the year 2013 and to the property with registration number … (document No. 13, attached with the request for arbitral decision, the content of which is hereby reproduced);

o) The Claimant was notified of assessment No. 2014 …, of 18-03-2014, made under entry 28.1. of the General Table of Stamp Tax, in the amount of € 22,367.72, relating to the year 2013 and to the property with registration number … (document No. 1, attached with the request for arbitral decision, the content of which is hereby reproduced);

p) The Claimant was notified of assessment No. 2014 …, of 18-03-2014, made under entry 28.1. of the General Table of Stamp Tax, in the amount of € 22,075.91, relating to the year 2013 and to the property with registration number … (document No. 15, attached with the request for arbitral decision, the content of which is hereby reproduced);

q) On 28-07-2014, the Claimant filed the request for constitution of the arbitral tribunal (CAAD computer system).

2.2. Facts not established as proven

It was not established that the Claimant had provided any guarantee for suspension of a fiscal enforcement proceeding related to the collection of the amounts assessed.

2.3. Basis for the established facts

The established facts are based on the documents indicated for each of the items, whose authenticity and correspondence to reality were not disputed.

1. Legal Matters

The issue that is the subject of the present action is whether land for construction falls within the scope of entry No. 28.1 of the General Table of Stamp Tax (TGIS), in its original wording.

3.1. Regime of Law No. 55-A/2012, of 29 October

Law No. 55-A/2012, of 29 October, made several amendments to the Stamp Tax Code and added entry 28 to the TGIS, with the following wording:

28 – Ownership, usufruct or right of superficies of urban properties whose tax value contained in the register, in accordance with the Code of Municipal Property Tax (CMPT), is equal to or greater than € 1,000,000 – on the tax value used for purposes of property tax:

28.1 – For property with residential designation – 1%;

28.2 – For property, when the taxpayers who are not natural persons are resident in a country, territory or region subject to a clearly more favorable tax regime, listed in a decree approved by the Minister of Finance – 7.5%.

In the transitional provisions contained in article 6.º of that Law No. 55-A/2012, the following rules were established regarding the assessment of the tax provided for in that entry:

1 – In 2012, the following rules must be observed with respect to the assessment of stamp tax provided for in entry No. 28 of the respective General Table:

a) The taxable event occurs on 31 October 2012;

b) The taxpayer of the tax is the one mentioned in item 4 of article 2.º of the Stamp Tax Code on the date referred to in the preceding subparagraph;

c) The tax value to be used in the assessment of the tax corresponds to what results from the rules provided for in the Code of Municipal Property Tax with reference to the year 2011;

d) The assessment of the tax by the Tax and Customs Authority must be made by the end of the month of November 2012;

e) The tax must be paid, in a single installment, by the taxpayers until 20 December 2012;

f) The applicable rates are as follows:

i) Properties with residential designation valued in accordance with the Code of Municipal Property Tax: 0.5%;

ii) Properties with residential designation not yet valued in accordance with the Code of Municipal Property Tax: 0.8%;

iii) Urban properties when the taxpayers who are not natural persons are resident in a country, territory or region subject to a clearly more favorable tax regime, listed in a decree approved by the Minister of Finance: 7.5%.

2 – In 2013, the assessment of the stamp tax provided for in entry No. 28 of the respective General Table must be based on the same tax value used for the purposes of the assessment of municipal property tax to be made in that year.

3 – The non-payment, in whole or in part, within the stated period, of the amounts assessed as stamp tax constitutes a tax infraction, punished in accordance with the law.

In the aforementioned entry 28.1 and in subitems i) and ii) of subparagraph f) of item 1 of article 6.º of Law No. 55-A/2012, a concept has been used that is not employed in any other tax legislation, in these precise terms, which is that of "property with residential designation".

Specifically in the CMPT, which in several provisions of the Stamp Tax Code introduced by that Law is indicated as a diploma of subsidiary application with respect to the tax provided for in the aforementioned entry No. 28 [articles 2.º, item 4, 3.º, item 3, subparagraph u), 5.º, subparagraph u), 23.º, item 7, and 46.º and 67.º of the STC], such a concept is not employed.

Law No. 83-C/2013, of 31 December, amended that entry No. 28.1, giving it the following wording:

28.1 - For residential property or for land for construction whose building, authorized or foreseen, is for residential purposes, in accordance with what is provided in the Code of Municipal Property Tax – 1%

3.2. Concepts of properties used in the CMPT

In the municipal property tax, the types of properties are listed in its articles 3.º to 6.º as follows:

Article 2.º

Concept of property

1 – For purposes of this Code, property is any parcel of territory, including waters, plantations, buildings and structures of any kind incorporated therein or erected thereon, with a permanent character, provided that it forms part of the patrimony of a natural or legal person and, under normal circumstances, has economic value, as well as waters, plantations, buildings or structures, in the circumstances above, endowed with economic autonomy in relation to the land where they are located, although situated in a parcel of territory that constitutes an integral part of a different patrimony or does not have a patrimonial nature.

2 – Buildings or structures, even if movable by nature, are considered as having a permanent character when devoted to non-transitory purposes.

3 – The permanent character is presumed when the buildings or structures have been erected on the same site for a period exceeding one year.

4 – For purposes of this tax, each autonomous fraction, under the horizontal property regime, is considered as constituting one property.

Article 3.º

Rural properties

1 – Rural properties are lands situated outside an urban settlement that are not to be classified as land for construction, in accordance with item 3 of article 6.º, provided that:

a) They are devoted or, in the absence of concrete devotion, have as their normal destination a use generating agricultural income, such as are considered for purposes of personal income tax (IRS);

b) Not having the devotion indicated in the preceding subparagraph, they are not constructed or have only buildings or structures of an ancillary character, without economic autonomy and of reduced value.

2 – Also considered rural properties are lands situated within an urban settlement, provided that, by virtue of legally approved provisions, they may not have a use generating any income or may only have a use generating agricultural income and are in fact having this devotion.

3 – Also considered rural properties are:

a) Buildings and structures directly devoted to the generation of agricultural income, when situated on the lands referred to in the preceding items;

b) Waters and plantations in the situations referred to in item 1 of article 2.º

4 – For purposes of this Code, urban settlements are considered, in addition to those situated within legally fixed perimeters, nuclei with a minimum of 10 housing units served by public roads, with their perimeter delimited by points at a distance of 50 m from the axis of the roads, in the transverse direction, and 20 m from the last building, in the direction of the roads.

Article 4.º

Urban properties

Urban properties are all those that should not be classified as rural, without prejudice to what is provided in the following article.

Article 5.º

Mixed properties

1 – Whenever a property has rural and urban parts it is classified, in its entirety, in accordance with the main part.

2 – If neither of the parts can be classified as main, the property is considered as mixed.

Article 6.º

Types of urban properties

1 – Urban properties are divided into:

a) Residential;

b) Commercial, industrial or for services;

c) Land for construction;

d) Others.

2 – Residential, commercial, industrial or for services are buildings or structures licensed for such purpose or, in the absence of a license, which have such purpose as their normal destination.

3 – Land for construction is considered to be lands situated within or outside an urban settlement for which a license or authorization has been granted, prior communication admitted or favorable preliminary assessment issued for a subdivision or construction operation, and also those that have been so declared in the deed of acquisition, except for lands in which the competent entities prohibit any of those operations, namely those located in green areas, protected areas or which, in accordance with municipal planning instruments, are devoted to public spaces, infrastructure or equipment. (Amended by Law No. 64-A/08, of 31-12)

4 – The provision of subparagraph d) of item 1 includes lands situated within an urban settlement that are not land for construction and are not covered by the provision of item 2 of article 3.º and also buildings and structures licensed or, in the absence of a license, which have as their normal destination purposes other than those referred to in item 2 and also those in the exception of item 3.

3.3. Rules on interpretation of laws

Article 11.º of the General Tax Law establishes the essential rules for the interpretation of tax laws as follows:

Article 11.º

Interpretation

1. In determining the meaning of tax provisions and in qualifying the facts to which they apply, the general rules and principles of interpretation and application of laws are observed.

2. Whenever tax provisions employ terms specific to other branches of law, these must be interpreted in the same sense as they have there, unless otherwise directly follows from the law.

3. Should doubt persist about the meaning of the provisions of scope that apply, the economic substance of the tax facts must be taken into account.

4. Gaps resulting from tax provisions covered by the reservation of law of the Assembly of the Republic are not susceptible to analog integration.

The general principles of the interpretation of laws, to which item 1 of article 11.º of the GTL refers, are established in article 9.º of the Civil Code, which provides as follows:

Article 9.º

Interpretation of law

1. Interpretation should not be limited to the letter of the law, but should reconstruct from the texts the legislative intent, taking especially into account the unity of the legal system, the circumstances in which the law was drawn up and the specific conditions of the time in which it is applied.

2. However, the interpreter cannot consider the legislative intent that does not have in the letter of the law a minimum of verbal correspondence, even if imperfectly expressed.

3. In determining the meaning and scope of the law, the interpreter shall presume that the legislator adopted the most correct solutions and knew how to express his intent in adequate terms.

3.4. Interpretation hypotheses of the concept of "property with residential designation"

As can be seen from the provisions of the CMPT transcribed above, the concept of "property with residential designation" is not used in the classification of properties.

Neither is this concept, with this terminology, found in any other statute.

Thus, in the absence of exact terminological correspondence of the concept of "property with residential designation" with any other used in other statutes, several interpretive hypotheses can be ventured.

The starting point for the interpretation of that expression "properties with residential designation" is, naturally, the text of the law, being on the basis of it that the "legislative intent" must be reconstructed, as imposed by item 1 of article 9.º of the Civil Code, applicable by virtue of what is provided in article 11.º, item 1, of the GTL.

3.5. Concept of "property with residential designation" as referring to residential properties

The concept most closely matching the literal tenor of this expression used is manifestly that of "residential properties", defined in item 2 of article 6.º of the CMPT as encompassing "buildings or structures" licensed for residential purposes or, in the absence of a license, which have residential purposes as their normal destination.

If one understands that the expression "property with residential designation" coincides with that of "residential properties", it is manifest that the assessments are affected by an error in the factual and legal presuppositions, since all the properties in respect of which Stamp Tax was assessed under the aforementioned entry No. 28.1 are land for construction, without any building or structure, required by that item 2 of article 6.º to meet that concept of "residential properties".

Therefore, if one adopts the interpretation that "property with residential designation" means "residential property", the assessments whose declaration of illegality is requested will be illegal, because there is no building or structure on any of the lands.

However, the non-coincidence of the terms of the expression used in entry No. 28.1 of the TGIS with that which emerges from item 2 of article 6.º of the CMPT points towards the fact that the same concept was not intended to be used.

3.6. Concept of "property with residential designation" as a concept distinct from "residential properties"

The word "designation", in this context of the use of a property, has the meaning of "action of assigning something to a particular use". ( [1] )

"When, as is usually the case, legal rules (legislative formulas) have more than one meaning, then the positive function of the text is expressed in giving stronger support to or more strongly suggesting one of the possible meanings. For among the possible meanings, some will correspond to the most natural and direct meaning of the expressions used, while others can only fit within the verbal framework of the rule in a forced, contrived manner. Now, in the absence of other elements that induce the choice of the less immediate meaning of the text, the interpreter should generally opt for that meaning which best and most immediately corresponds to the natural meaning of the verbal expressions used, and particularly to their technical-legal meaning, on the assumption (not always accurate) that the legislator knew how to express his intent correctly". ( [2] )

The relevance of the text of the law is especially emphasized in matters of interpretation of the scope provisions of Stamp Tax, which are reduced to an amalgam, under a common denomination, of an incongruous set of tributes of completely distinct natures (on income, on expenditure, on patrimony, on acts, etc.), which leaves little room for application of the primary interpretive criterion, which is the unity of the legal system, which demands its global coherence.

The recognized lack of coherence of Stamp Tax is particularly exuberant in the case of this entry No. 28.1, hastily included outside the General State Budget, by a fiscal legislator with no perceptible global tax orientation, who is successively implementing rules of tax increases as a result of the setbacks in budget execution, the impositions of international institutional creditors (represented by the "troika") and the supervision of the Constitutional Court.

In truth, although in the "Statement of Reasons" of the Bill No. 96/XII/2.ª ([3]), on which Law No. 55-A/2012 was based, the Government made reference to the laudable concern to "strengthen the principle of social equity in austerity, ensuring an effective distribution of the sacrifices necessary to comply with the adjustment program" and to its commitment "to ensure that the distribution of these sacrifices will be made by all and not only by those who live from their work income", it is manifest, on one hand, that those reasons of equity, certainly existing, did not begin to apply in mid-2012, already existing at the beginning of the year, when the General State Budget entered into force, and on the other hand, that the scope of entry No. 28.1, by additionally taxing properties with residential designation and not also properties that do not have it, reveals that the concerns for social equity and the proclaimed intention of distributing sacrifices to all affects much more some than properly all.

In this context, as there are no reliable interpretive elements that allow us to detect legislative coherence in the solution adopted in the aforementioned entry No. 28.1 or the correctness or incorrectness of the solution adopted (relevant for interpretive purposes in light of item 3 of article 9.º of the Civil Code), the tenor of the legal text must be the primary element of interpretation, in accordance with the presumption, imposed by the same item 3 of article 9.º, that the legislator knew how to express his intent in adequate terms.

In light of those meanings of the words "designation" and "to designate", which are "to give a purpose" or "to apply", the formula used in that entry No. 28.1 of the TGIS manifestly encompasses properties that have already been given a purpose for residence, properties that are already applied to residential purposes, so it is important to inquire whether it will also encompass properties that, although not yet applied to residential purposes, are destined for these.

For this, it will be necessary to clarify when it can be understood that a property is designated for a residential purpose, namely whether it is when this purpose is fixed in a subdivision deed or licensing act or similar, or only when the actual assignment of this purpose is materialized.

From the outset, the comparison of entry No. 28.1 of the TGIS with item 2 of article 6.º of the CMPT, which defines the concept of residential properties, points towards the need for an actual designation.

In truth, a building or structure licensed for residence or, even without a license, but which has residence as its normal destination, is, in light of item 2 of that article 6.º, a residential property, since in it this classification is given to "buildings or structures licensed for such purpose or, in the absence of a license, which have such purpose as their normal destination".

Therefore, if one presumes that the legislator of Law No. 55-A/2012 knew how to express his intent in adequate terms (as imposed by article 9.º, item 3, of the Civil Code that one presume), if he intended to refer to those properties already licensed for residence or which have residence as their normal destination, he certainly would have used the concept of "residential properties", which would express perfectly and clearly his intent, in light of the definition given by that item 2 of article 6.º of the CMPT.

Consequently, one must presume that the use of a different expression is intended to have a different reality, so that, in good hermeneutics, "property with residential designation" cannot be merely a property licensed for residence or destined for that purpose (that is, it will not be sufficient that it be a "residential property"), but must be a property that already has actual designation to that purpose.

That this is the meaning of the expression "designation", in the same context of the classification of properties that the CMPT makes, is confirmed by article 3.º in which, with respect to rural properties, reference is made to those "devoted or, in the absence of concrete designation, having as their normal destination a use generating agricultural income", which shows that designation is concrete, actual. In truth, as can be seen from the final part of this text, a property may have as its destination a particular use and be or not be designated to it, which shows that designation is, at the level of the connection of a property to a particular use, something more intense than mere destination and that may or may not occur, downstream of the latter and not upstream. ( [4] )

Moreover, the text of the law by adopting the formula "property with residential designation", instead of "urban properties of residential designation", which appears in the aforementioned "Statement of Reasons", strongly points towards the fact that residential designation must already be materialized, since only then will the property be with that designation.

In the case at hand, we are faced with a reality even more distant from residential designation, which is that there is not even any building or structure and, therefore, one cannot consider an existing designation that presupposes its existence.

On the other hand, the legislative intent not to extend the scope to construction lands was expressly mentioned by the Government when presenting to the Plenary of the Assembly of the Republic the Bill 96-XII by saying, through the State Secretary for Tax Affairs:

"First, the Government proposes the creation of a special tax to tax high-value residential urban properties. For the first time in Portugal, special taxation is created on high-value properties destined for residence. This rate will be 0.5% to 0.8%, in 2012, and 1%, in 2013, and will apply to houses valued at equal to or greater than 1 million euros. With the creation of this additional tax, the tax burden required of these owners will be significantly increased in 2012 and in 2013". ( [5] )

The express reference to "houses" as the target of the scope of the new tax leaves no room for doubt about the legislative intent.

On the other hand, no reference to "land for construction" is found in the discussion of the aforementioned Bill.

With respect to article 45.º of the CMPT, it has no relation to the classification of properties, only indicating the factors to be considered in the valuation of land for construction. What is considered there, in making reference to the "building to be constructed" is the consideration of the destination of the land, which, as has been seen, is something that, in the context of the CMPT, does not imply designation and occurs before it.

Law No. 83-C/2013, of 31 December, contrary to what the Tax and Customs Authority argues, did not aim to clarify the logical element underlying the initial wording of entry No. 28.1, but rather came to confirm, indirectly, the interpretation that it did not encompass land for construction.

In truth, if the original wording of that entry No. 28.1, in speaking of "property with residential designation" already intended to encompass the buildings and structures that constituted "residential properties" (in the terms of article 6.º, item 2, of the CMPT), and the land for construction in which building for residential purposes had been authorized or foreseen, it would be natural that interpretive nature be attributed to the new wording, in the manner that the same Law No. 83-C/2013 does in other provisions [article 177.º, item 7, with respect to subparagraphs a) and b) of item 3 of article 17.º-A of the IRS Code, and article 185.º, item 1, with respect to article 3.º-A of the Value Added Tax Code] and is customary to do in budgetary laws, when it is intended that the new wordings apply to situations potentially encompassed by the previous wordings.

Therefore, the fact that interpretive nature was not attributed to the new wording points towards the fact that it was intended to alter the scope of the aforementioned entry No. 28.1 of the TGIS and not maintain it, clarifying it.

For the foregoing reasons, the disputed assessments are affected by an error in the legal presuppositions, embodied in a violation of entry No. 28.1 of the TGIS, which justifies their annulment (article 135.º of the Code of Administrative Procedure). ( [6] )

1. Compensation for provision of guarantee

The Claimant formulates, at the end of the request for arbitral decision, that recognition be given to the right to compensation for costs incurred in the constitution of guarantees to stop fiscal enforcement.

It was not established that fiscal enforcement had been instituted for collection of the amount assessed nor that the Claimant had provided any guarantee.

The arbitral process is an adequate means for recognition of the right to compensation for improperly provided guarantee, since article 171.º of the Code of Tax Procedure is applicable on a subsidiary basis, by virtue of what is provided in article 29.º, item 1, subparagraph c), of the LFAT.

However, what is established in that article 171.º is that "compensation in case of a bank guarantee or equivalent improperly provided shall be requested in the proceeding in which the legality of the debt to be enforced is disputed".

Therefore, only when the guarantee is "provided" can the right to compensation be requested, and that provision may occur during the pending proceeding, a situation in which it will constitute a supervening fact, invocable in accordance with item 2 of article 171.º of the Code of Tax Procedure.

Indeed, it is this solution that is compatible with the role of courts, as a service of justice, since their function is to resolve existing concrete disputes and not merely hypothetical or abstract ones. Therefore, if recognition of the right to compensation is requested prior to the provision of the guarantee, the request must be judged unfounded, without prejudice to this request being formulated during the pending proceeding, if the provision of the guarantee occurs in the meantime, since in this case, one will be faced with a supervening ground, invocable within the 30-day period provided for in item 2 of article 171.º of the Code of Tax Procedure.

Thus, not being alleged and proven that a guarantee was provided, the request for recognition of the right to compensation must be judged unfounded, without prejudice to this right being able to be recognized even in execution of judgment, if such provision occurs.

As results from the statement of facts established, it was not proven that the Claimant had provided a guarantee to suspend any fiscal enforcement proceeding instituted for collection of the amounts which are the subject of the disputed assessments.

1. Decision

In these terms, this Arbitral Tribunal agrees to:

a) Judge the request for arbitral decision as founded;

b) Annul the Stamp Tax assessments Nos. 2014…, Nos. 2014…, Nos. 2014…, Nos. 2014…, Nos. 2014…, Nos. 2014…, Nos. 2014…, Nos. 2014…, Nos. 2014…, Nos. 2014…, Nos. 2014…, Nos. 2014…, Nos. 2014… and Nos. 2014….

1. Value of the process

In accordance with what is provided in article 315.º, item 2, of the Code of Civil Procedure and 97.º-A, item 1, subparagraph a), of the Code of Tax Procedure and article 3.º, item 2, of the Regulation of Costs in Tax Arbitration Proceedings, the value of the process is fixed at € 328,896.03.

1. Costs

Pursuant to article 22.º, item 4, of the LFAT, the amount of costs is fixed at € 5,814.00, in accordance with Table I attached to the Regulation of Costs in Tax Arbitration Proceedings, to be borne by the Tax and Customs Authority.

Lisbon, 05 December 2014

The Arbitrators

(Jorge Manuel Lopes de Sousa)

(Maria do Rosário Anjos)

(Miguel Patrício)

[1] Dictionary of Contemporary Portuguese Language of the Academy of Sciences of Lisbon, Volume I, page 102.

The Houaiss Dictionary of the Portuguese Language defines "designation", in a context close to this one, as "act that gives a purpose to a public asset".

The Great Dictionary of the Portuguese Language, by JOSÉ PEDRO MACHADO, indicates "to assign" and "to apply" among the meanings of "to designate".

[2] BAPTISTA MACHADO, Introduction to Law and Legitimizing Discourse, page 182.

[3] Bill No. 99/XII/2.ª is available at:
http://www.parlamento.pt/ActividadeParlamentar/Paginas/DetalheIniciativa.aspx?BID=37245

[4] Other provisions of the CMPT reveal that the term "designation" is used to reference already existing situations and not merely future ones, even if foreseeable, such as "destination".

It is the case of article 9.º of the CMPT, which, after establishing that "the tax is due as from" "the 4th year following, inclusive, that in which a land for construction has come to be included in the inventory of an enterprise whose purpose is the construction of buildings for sale" or "the 3rd year following, inclusive, that in which a property has come to be included in the inventory of an enterprise whose purpose is its sale" [subparagraphs d) and e) of item 1], provides that "for purposes of what is provided in subparagraphs d) and e) of item 1, taxpayers must communicate to the finance office of the area of the situation of the properties, within 60 days counted from the occurrence of the event giving rise to its application, the designation of the properties to those purposes".

The "designation of properties to those purposes", in the context of this article 9.º, is reduced to the concrete assignment of properties to the purpose "for sale", materialized by their inventorying, not being sufficient that they have been constructed or acquired having in view their sale.

[5] Page 32 of the Proceedings of the Assembly of the Republic, No. 9 of the 2nd Legislative Session of the XII Legislature, relating to the Plenary Meeting of 10-10-2012, available at:

http://app.parlamento.pt/darpages/dardoc.aspx?doc=6148523063446f764c324679626d56304c334e706447567a4c31684a5355786c5a79394551564a4a4c305242556b6c42636e463161585a764c7a497577716f6f6f6f6c4d6a42545a584e7a77364e764a5449775447566e61584e7359585270646d4576524546534c556b744d4441354c6e426b5a673d3d&nome=DAR-I-009.pdf

[6] In this sense the Supreme Administrative Court has been deciding, as can be seen from the rulings of 09-04-2014, handed down in proceedings Nos. 01870/13 and 048/14, and of 23-04-2014, handed down in proceedings Nos. 0271/14, 0270/14 and 0272/14, available at:

http://www.dgsi.pt/jsta.nsf/2eae0bd4de5026e80256b480065970d?CreateDocument