CAAD 561/2016-T: IMT and Stamp Tax Exemption for Real Estate Investment Funds (FIIAH) – Retroactivity Challenge

ARBITRAL DECISION

I – Report

1.1. A…, S.A., with registered office at …, n.º … –…, …-… Lisbon (hereinafter referred to as the "Claimant") – in its capacity as management company of the real estate investment fund "B… – Closed Real Estate Investment Fund for Residential Rental" ("B…"), registered with the Securities Commission, with Tax Number …–, in view of Property Transfer Tax assessment n.º … and Corporate Income Tax assessment n.º…, filed, on 5/9/2016, a request for constitution of an arbitral tribunal and arbitral decision, pursuant to the provisions of article 2.º, no. 1, subparagraph a), of Decree-Law no. 10/2011, of 20/1 (Legal Regime of Arbitration in Tax Matters, hereinafter referred to only as "LRAT"), in which the Tax and Customs Authority (TCA) is named as respondent, seeking that it be "declared the nullity [or, should it be otherwise understood, the voidability] of the [above-mentioned] assessments, on the basis of the [...] unconstitutionality" of "article 236.º (Transitional Rule within the scope of the Special Regime Applicable to FIIRH and SIIRH) provided by Law n.º 83-C/2013, of 31 December – to the extent that it determines the application of the current Tax Regime of FIIRH «to properties that have been acquired by FIIRH before 1 January 2014, counting, in those cases, the period of three years provided in no. 14 from 1 January 2014» – constitutes a new regime of expiration of the exemptions provided in no. 7, subparagraph a) and no. 8 of article 8.º (Tax Regime) of the Tax Regime of FIIRH, revealing a flagrant and unequivocal violation of the principle of non-retroactivity of tax law, enshrined in article 103.º (Tax System), number 3, of the Constitution of the Portuguese Republic". The Claimant further considers that it should be reimbursed "for the full amount paid by virtue of the Assessments subject to this request for arbitral decision, increased, pursuant to article 43.º (Undue Payment of Tax Obligation) of the General Tax Code, by the compensatory interest that may be due until the date of such reimbursement."

1.2. On 12/2/2016 the present Sole Arbitral Tribunal was constituted.

1.3. Pursuant to art. 17.º, no. 1, of the LRAT, the TCA was served as respondent to submit its answer, pursuant to the said article. The TCA submitted its response on 25/1/2017, arguing for the complete lack of merit of the Claimant's request.

1.4. By order of 13/3/2017, the Tribunal considered that it was unnecessary, under the provisions of art. 16.º, subparagraph c), of the LRAT, to hold the meeting provided in the said article 18.º and that the case was ready for decision. Accordingly, by arbitral order of 16/3/2017, the date of 27/3/2017 was set for the pronouncement of the arbitral decision.

1.5. The Arbitral Tribunal was duly constituted, is materially competent, the case is free from defects that would invalidate it, and the Parties have legal personality and capacity, being legitimate.

II – Parties' Arguments

2.1. The Claimant alleges in its initial petition that: a) "the assessments [at issue] are affected by illegality due to violation of the provisions of article 103.º (Tax System), number 3, of the Constitution of the Portuguese Republic and should, consequently, be declared null"; b) "Property Transfer Tax is a single obligation tax [...]. This qualification is relevant here inasmuch as the exemptions from Property Transfer Tax and Corporate Income Tax, contained, respectively, in numbers 7, subparagraph a), and 8 of article 8.º (Tax regime) of the Tax Regime of FIIRH, were granted at the request of B…, pursuant to article 10.º (Recognition of exemptions) of the Property Transfer Tax Code, at a moment prior to the entry of the relevant properties into the assets of B…. That is, at the moment when the properties – object of the Assessments – entered into the assets of B…, the exemptions from Property Transfer Tax and Corporate Income Tax provided, respectively, in numbers 7, subparagraph a), and 8 of article 8.º (Tax regime) of the Tax Regime of FIIRH became definitively crystallized in the tax legal order"; c) "effectively, the fact subject to taxation is, both in the case of Property Transfer Tax and in the case of Corporate Income Tax, the acquisition of ownership of the relevant properties by B…. And the exemptions from Property Transfer Tax and Corporate Income Tax were not, at the date when they entered into the assets of B…, conditioned by the verification of any subsequent facts or circumstances, nor, furthermore, subject to any regime of expiration"; d) "as no [...] facts or circumstances on which the expiration of the recognized exemption depended were legally provided at the moment of recognition of the exemption, it is manifest that the subsequent imposition of such facts or circumstances to exemptions crystallized in the tax legal order of the Claimant is affected by unconstitutionality, due to violation of the principle of non-retroactivity of tax law, enshrined in article 103.º (Tax System), number 3, of the Constitution of the Portuguese Republic"; e) "article 236.º (Transitional Rule within the scope of the Special Regime Applicable to FIIRH and SIIRH) of Law n.º 83-C/2013, of 31 December [...], by extending the application of the current Tax Regime of FIIRH «to properties that have been acquired by FIIRH before 1 January 2014, counting, in those cases, the period of three years provided in no. 14 from 1 January 2014» - is violating in a direct and unequivocal manner the principle of non-retroactivity of tax law constitutionally enshrined. In effect, the extension enshrined there constitutes a new regime of expiration of the exemptions provided in numbers 7, subparagraph a) and 8 (Tax Regime) and not merely a clarification of a previously provided criterion"; f) "in the case sub judice there are no doubts whatsoever that the tax facts that the new law intends to regulate have already produced all their effects under the old law"; g) "it must be clarified here whether the unconstitutionality now alleged by [the] Claimant should have as a consequence the voidability or the nullity of the Assessments [...]. [...]. Considering that the principle of fiscal non-retroactivity has the character of a fundamental right, endowed with the protective legal regime of this right, its disregard originates the nullity of the act, in this case, the nullity of the Assessments"; h) "the admissibility of challenging the defect of nullity without dependence on a time limit does not exclude the competence of the Tax Arbitral Tribunal, namely, by literal interpretation of article 10.º (Request for constitution of the arbitral tribunal) of the LRAT. Effectively, the said article 10.º (request for constitution of the arbitral tribunal) of the LRAT should not be interpreted in the sense that it is exclusively applicable to situations involving acts whose challenge is subject to a time limit"; i) "without conceding and merely out of an abundance of caution, admitting, subsidiarily, that the defect (abstract illegality) of the Assessments determines their voidability (and not nullity), the Assessments should be annulled accordingly, pursuant to articles 10.º, no. 1, subparagraph a), of the LRAT and of article 102.º, no. 1, subparagraph a), of the Code of Tax Procedure and Process."

2.2. Therefore, the Claimant seeks, in summary: "(I) [that it be] declared the nullity of the Assessments on the basis of their unconstitutionality (abstract illegality); subsidiarily, should it be otherwise understood, the Assessments should be annulled"; "(II) to be reimbursed [...] for the full amount paid by virtue of the Assessments subject to this request for arbitral decision, increased, pursuant to article 43.º (Undue Payment of Tax Obligation) of the General Tax Code, by the compensatory interest that may be due until the date of such reimbursement."

2.3. For its part, the TCA alleges in its response that: a) the "Claimant argues that the TCA should not have proceeded with the assessments sub judice, as such tax acts are based on article 236.º of the Tax Regime of FIIRH, which allegedly suffers from unconstitutionality due to violation of the principle of non-retroactivity of tax law, pursuant to article 103.º, no. 3 of the CRP. However, and without prejudice to what is set out below as to the non-existence of the defect of unconstitutionality charged by the Claimant, it must be stated here from the outset that the TCA's action, contrary to what [the] Claimant contends, could not have been different"; b) "pursuant to no. 2 of article 266.º of the CRP, the Administration is obliged to act in accordance with the principle of legality, such principle being concretized at the infraconstitutional level in no. 1 of article 3.º of the Code of Administrative Procedure (CAP) [...]. That is, from such legal obligations it follows that the organs and agents of the administration do not have competence to decide on the non-application of norms regarding which doubts of constitutionality are raised"; c) "from the foregoing it results that the Administration is subject to the law and to the law of the land and its organs and agents must be the first to comply with it; and cannot, therefore, be required to pronounce on the options of the legislator, as these, once embodied in law, are the normative discipline within which it exercises its attributions in the pursuit of the public interest"; d) "in sum, the TCA could not/cannot refuse to apply a norm or fail to comply with the law by invoking or questioning its constitutionality, as it is subject to the principle of legality, as established in arts. 266.º no. 2 of the CRP, 3.º no. 1 of the CAP and 55.º of the GTC"; e) "article 102.º of Law n.º 64-A/2008, of 31 December (State Budget for 2009), approved a special regime applicable to real estate investment funds for residential rental (FIIRH) and to real estate investment companies for residential rental (SIIRH). The regime provided there would apply to FIIRH or SIIRH constituted during the five years following the entry into force of the said law and to real estate acquired by them in the same period. With respect to the tax regime specifically provided there, it must be noted, for what matters here, the provision of article 8.º, no. 7, subparagraph a), relating to the exemption in the context of Property Transfer Tax and article 8.º, no. 8, relating to the exemption in the context of Stamp Duty"; f) "pursuant to article 8.º, no. 7, subparagraph a), are exempt from Property Transfer Tax «The acquisitions of urban properties or autonomous fractions of urban properties intended exclusively for rental for permanent housing, by the investment funds referred to in no. 1». Such exemption applying, by virtue of the provision of no. 1, to FIIRH constituted between 1 January 2009 and 31 December 2013, operating in accordance with national legislation and in observance of the conditions provided in articles 1.º to 7.º of the respective legal regime. For its part, pursuant to article 8.º, no. 8, «Are exempt from stamp duty all acts performed, provided that connected with the transmission of urban properties intended for permanent housing which occurs by force of the conversion of the right of ownership of such real estate into a right of rental on the same, as well as with the exercise of the purchase option provided in no. 3 of article 5.º»"; g) "Law n.º 83-C/2013, of 31 December (State Budget for 2014), gave new wording to the mentioned article 8.º, relating to the tax regime applicable to FIIRH, adding, in particular, numbers 14 to 16 [...]. Furthermore, Law n.º 83-C/2013, of 31 December also enshrined, in its article 236.º, the following transitional rule [...]"; h) "in effect, no. 14 of article 8.º of the Tax Regime of FIIRH came to concretize the meaning of the expression «urban properties intended exclusively for rental for permanent housing», thus, pursuant to the provisions therein, «it is considered that urban properties are intended for rental for permanent housing whenever they are the subject of a rental contract for permanent housing within a period of three years counted from the moment when they came to be part of the assets of the fund». Being that, alongside such clarification, with the introduction of nos. 15 and 16.º in the said article 8.º, came to be provided a regime of cessation of the benefit in the case of non-observance of the legal requirement contained in no. 14"; i) "[the] Claimant argues that the assessments in question are affected by illegality due to violation of the provision of article 103.º (Tax System), no. 3, of the CRP, and should, in consequence, be declared null. [...]. However, as will be better demonstrated, the Claimant's arguments are manifestly without merit"; j) "first of all, it must be noted that, at the date of creation of the tax regime applicable to FIIRH, with Law n.º 64-A/2008, of 31 December, the exemptions in question, both in the context of Property Transfer Tax and in the context of Stamp Duty, required, respectively: (i) that the acquisition of the real estate have as exclusive destination «rental for permanent housing» and (ii) that the transmission have as object «properties intended for permanent housing which occurs by force of the conversion of the right of ownership of such real estate into a right of rental on the same, as well as with the exercise of the purchase option provided in no. 3 of article 5.» That is, the taxpayers who intended to benefit from the said exemptions have always had, since the beginning of the tax regime applicable to FIIRH, to fulfill the assumption that such properties be intended exclusively for rental for permanent housing. Whereby the Claimant is mistaken when it asserts that the exemptions in question were not conditioned by any facts or circumstances, and, consequently, the argument that it constructs starting from such erroneous assumption is equally vitiated by error. [...] the new wording introduced by Law n.º 83-C/2013, of 31 December, in favor of legal certainty and the principle of protection of legitimate expectations, and in the wake of the legislator's intent, when the regime was created, came only to clarify the criterion already required"; l) "it is to be concluded, thus, that, with the alterations introduced, the ratio of the enshrined exemptions was not altered, it being noted that the immediate extinction of the benefit was not determined in the event of failure to verify the execution of the said rental contract, as a rather lengthy period of three years was granted for this purpose"; m) "given the alienation of the properties, it is unequivocal that [the] Claimant could not, in any way, benefit from the requested exemption; n) "the exemptions in question did not simply cease to apply: what happened, merely, was that criteria were established to concretize a legal requirement provided for in indeterminate form"; o) "it is manifest that, since the beginning of the regime, the tax benefits in question applicable to FIIRH have always depended on the dedication of the real estate to rental for permanent housing, a legal requirement that the TCA, within the scope of its inspection powers, has always been able to assess, in order to conclude on the persistence of the benefit or, rather, on the restoration of the rule system of taxation-standard"; p) "contrary to what [the] Claimant argues, there is no introduction ex novo of a regime of expiration of the benefit, and even less is there any frustration of the expectations of the taxpayers or violation of the principle of non-retroactivity of tax law"; q) "as it cannot be imputed to the services of the TCA an error that, of itself, has determined the payment of a tax debt in an amount higher than that legally due - since it was not within its discretion to decide differently from how it decided -, it can only be concluded that no compensatory interest is due pursuant to article 43.º of the GTC."

2.4. The TCA concludes, finally, that: "(i) the present request for arbitral decision should be ruled without merit and consequently the Respondent absolved of all requests, as petitioned above, with all due and legal consequences, or, should it be otherwise understood, (ii) it is requested, by appeal to the provision of article 280.º, no. 3, of the CRP and of article 72.º, no. 3, of the Law of the Constitutional Court, that the notification to the Public Prosecutor of the learned arbitral decision be determined."

III – Proven, Unproven Facts and Respective Grounds

3.1. The following facts are considered proven:

i) The Claimant requested from the TCA the assessment of Property Transfer Tax and Corporate Income Tax of the acts of alienation of real estate by «B…», as follows: property U-… located at …, …, …, ..., registered in the urban property matrix of the parish of … and …; Property Transfer Tax assessment n.º … and Corporate Income Tax assessment n.º…, in the respective amounts of €27,764.75 and €3,880.00 (which, added together, correspond to the amount at issue here: €31,664.75) – see Doc. 1 attached to the present records.

ii) The property at issue was acquired on 5/8/2013, benefiting from the exemptions from Property Transfer Tax and Corporate Income Tax contained, respectively, in no. 7, subparagraph a), and no. 8 of art. 8.º of the special regime applicable to FIIRH, having been alienated in June 2016.

iii) The above-mentioned assessments were paid by the Claimant on 21/6/2016, as appears from the reading of Doc. 2 attached to the records. Dissatisfied with the said assessments, the Claimant filed its request for arbitral decision on 5/9/2016.

3.2. There are no unproven facts relevant to the decision of the case.

3.3. The facts considered pertinent and proven (v. 3.1) are grounded in the analysis of the positions presented by the parties and the documentary evidence attached to the records.

IV – On the Law

In the case under analysis, there are two disputed points of law: 1) to determine whether the Property Transfer Tax and Corporate Income Tax assessments are illegal because made pursuant to article 236.º of Law 83-C/2013, of 31/12, which the Claimant considers unconstitutional due to violation of article 103.º of the CRP (and, furthermore, null due to alleged infringement of the essential content of a fundamental right, pursuant to article 133.º, no. 2, subparagraph d), of the CAP); and 2) to determine whether compensatory interest is owed to the Claimant.

Let us then examine.

1. The Claimant alleges that the assessments in question are illegal because made pursuant to art. 236.º of Law n.º 83-C/2013, of 31/12 (State Budget 2014) – an article which the Claimant considers unconstitutional due to violation of the said art. 103.º of the CRP.

In its understanding, "article 236.º (Transitional Rule within the scope of the special regime applicable to FIIRH and SIIRH) of Law n.º 83-C/2013, of 31 December (State Budget for 2014), by extending the application of the current Tax Regime of FIIRH «to properties that have been acquired by FIIRH before 1 January 2014, counting, in those cases, the period of three years provided in no. 14 from 1 January 2014» – is violating in a direct and unequivocal manner the principle of non-retroactivity of tax law constitutionally enshrined. In effect, the extension enshrined there constitutes a new regime of expiration of the exemptions provided in numbers 7, subparagraph a) and 8 (Tax Regime) and not a mere clarification of a previously required criterion." Therefore, the Claimant concludes that "in the case sub judice there are no doubts whatsoever that the tax facts that the new law intends to regulate have already produced all their effects under the old law".

This does not, however, appear to be the question at issue.

First and foremost, it is appropriate to examine Law n.º 64-A/2008, of 31/12, which approved the special regime applicable to FIIRH. In that regime was provided, in particular: in no. 7 of article 8.º, that were exempt from Property Transfer Tax "the acquisitions of urban properties or autonomous fractions of urban properties intended exclusively for rental for permanent housing" by the said funds; and, in no. 8 of that same article, that were exempt from Stamp Duty "all acts performed, provided that connected with the transmission of urban properties intended for permanent housing which occurs by force of the conversion of the right of ownership of such real estate into a right of rental on the same".

Law n.º 83-C/2013, of 31/12, altered the wording of the said art. 8.º, adding nos. 14 to 16, which are reproduced here:

"14 - For the purposes of the provision in nos. 6 to 8 of the said art. 8.º, it is considered that "urban properties are intended for rental for permanent housing whenever they are the subject of a rental contract for permanent housing within a period of three years counted from the moment when they came to be part of the assets of the fund, the taxpayer being required to communicate and provide proof to the TCA of the respective effective rental, within 30 days following the end of the said period.

15 - When the properties have not been the subject of a rental contract within the three-year period provided in the previous number, the exemptions provided in nos. 6 to 8 become void, the taxpayer being required in that case to request from the TCA, within 30 days following the end of the said period, the assessment of the respective tax.

16 - Should the properties be alienated, with the exception of the cases provided in article 5.º, or should the FIIRH be subject to liquidation, before the expiry of the period provided in no. 14, the taxpayer must also request from the TCA, prior to the alienation of the property or the liquidation of the FIIRH, the assessment of the tax due pursuant to the previous number".

In art. 236.º of the said Law n.º 83-C/2013, of 31/12, the following transitional rule was further enshrined:

"1 - The provisions of nos. 14 to 16 of article 8.º of the special regime applicable to FIIRH and SIIRH, approved by articles 102.º to 104.º of Law n.º 64-A/2008, of 31 December, shall apply to properties that have been acquired by FIIRH as from 1 January 2014.

2 - Notwithstanding the provision of the previous number, the provisions of nos. 14 to 16 of article 8.º of the special regime applicable to FIIRH and SIIRH, approved by articles 102.º to 104.º of Law n.º 64-A/2008, of 31 December, shall equally apply to properties that have been acquired by FIIRH before 1 January 2014, counting, in those cases, the three-year period provided in no. 14 from 1 January 2014".

From this it is concluded that the said Law established a transitional period for application of the legal amendments, with a view to, as the Respondent states (v. §52 and 56 of the response), "in favor of legal certainty and the principle of protection of legitimate expectations, and in the wake of the legislator's intent, when the regime was created, [...] only to clarify the criterion already required [...]. It being certain that, in any case, given the alienation of the properties in the course of 2015, it is unequivocal that the Claimant could not [...] benefit from the requested exemption."

In the same vein, it is noted in the Administrative Decision dated 14/3/2016, rendered in proc. 398/2015-T, that "the obligation to dedicate the real estate to permanent housing rental is not a requirement of the amendments introduced by the State Budget for 2014, but rather a requirement of the FIIRH tax regime from its inception, indeed a natural consequence of the motivations that led to the creation of these funds. However, this was not the case in the present matter [...]. The Property Transfer Tax assessments made [...] were not based on its maintenance in the fund for a period equal to or greater than 3 years without there having been dedication to permanent housing rental. [...]."

In effect, as is also referred to in the Administrative Decision dated 22/4/2016, which was rendered in process n.º 691/2015-T: "The State Budget for 2014 does, it is true, establish a new requirement for the exemption: if the dedication to permanent housing rental does not occur within the 3-year period after the entry of the real estate into the fund, the fund must request the assessment of the Property Transfer Tax that was not assessed. However, this was not the case in the present matter [...]. The Property Transfer Tax and Stamp Duty assessments in question were not based on its maintenance in the fund for a period equal to or greater than 3 years without there having been dedication to permanent housing rental. [...]. In fact, the assessments in question, as appears from the assessment notes attached to the file, were based on the fact that the real estate was given a "destination other than that on which the benefit was based". Thus, we understand that it is not a matter of retroactivity, or lack thereof, of the norm applied".

In fact, it is sufficiently demonstrated that the property at issue was alienated in 2016, with the consequent dedication of the same to a purpose different from that for which the exemptions were granted. This is not, therefore, a matter of a time period, as the Claimant alleged.

In this regard, and as is also rightly noted in the Administrative Decision dated 2/5/2016, rendered in proc. 689/2015-T, "the alienation of the property would always determine the expiration of the exemption by application of the provision of no. 3 of article 14.º of the Special Framework, it not being, therefore, in the situation sub judice, a matter of any retroactive application of a norm that comes to introduce a new regime of expiration of the exemptions, neither is there any lesion of expectations of the Claimant or aggravation of its tax position, whereby we thus understand that the Property Transfer Tax and Stamp Duty assessments in question are legal. It is thus moot the analysis of the question raised by the Claimant as to the alleged retroactivity of the regime provided by article 236.º of the Law of the State Budget for 2014 to the extent that, as was above demonstrated, the conditionalities that gave rise to the tax assessments in question bear no relation whatsoever to the amendments originated by the said article, solely with the alienation of the real estate and consequent dedication to a purpose different from that for which the exemptions from Property Transfer Tax and Stamp Duty were granted."

For the reasons noted, with which this Tribunal concurs, it is concluded – also in the present case –, that the analysis of the question of the alleged retroactivity of the regime contained in art. 236.º is moot, and that there has not, as a result of the assessments in question, occurred any unjustified lesion of expectations of the Claimant or an unjustified aggravation of its tax position. In these terms, it is concluded, consequently, that the Property Transfer Tax and Corporate Income Tax assessments at issue should be maintained in full in the legal order.

Note finally, as a final observation, that, in the present case, it would never be a matter of the (also alleged by the Claimant) nullity due to infringement of "essential content of a fundamental right" (v. §49 and §50 of the initial petition), since, as has been the uniform understanding of the jurisprudence of the Supreme Administrative Court, the defect of violation of law due to error in the factual or legal assumptions (which is what could be at issue here) generates mere voidability, unless the tax act was contrary to the content of a fundamental right (a situation which, clearly, is not at issue here) – which does not occur even if there has been a violation of the principles of tax legality or of non-retroactivity of tax law (see, in this regard and by way of mere example, the following Decisions of the Supreme Administrative Court: n.º 1709/03, of 28/1/2004; n.º 1938/03, of 3/3/2004; n.º 1259/04, of 22/5/2005; n.º 669/05, of 9/11/2005; n.º 612/05, of 23/11/2005; n.º 231/13, of 26/6/2013; n.º 481/13, of 26/2/2014; n.º 1916/13, of 12/3/2014; n.º 703/14, of 21/1/2015).

See, also, in the same vein, the following excerpt from the Decision of the Administrative Court of Appeals of 26/3/2015 (proc. 00354/08.0BEPRT): "Alleges [...] the Appellant [that the tax in question] is null by [...] infringement of the essential content of a fundamental right. It follows from the provision of art. 133.º, nos. 1 and 2, subparagraph d), of the Code of Administrative Procedure applicable ex vi of 2.º, subparagraph c), of the GTC, that null are the acts to which any of the essential elements is lacking or for which the law expressly provides such form of invalidity, namely the acts which infringe the essential content of a fundamental right. [The Appellant] is not correct. The acts that infringe a fundamental right must be those that contend with the rights, freedoms and guarantees of citizens; not those that contend merely with the principle of legality, as occurs in the case at hand. [...] it is settled in the jurisprudence of tax litigation that the nullity of a norm on which an assessment act is based does not imply the nullity of this, generating only a situation of abstract illegality of the assessment [...] (cf. in that sense, among many others, the decisions of the Supreme Administrative Court of 25/05/2004, proc. n.º 208/04, 9/11/2005, proc. 669/05, 7.05.2008, proc. n.º 1034/07, of 5.07.2007, proc. n.º 479/06, of 16/09/2009, proc. n.º 0418/09, and of 23/10/2013, proc. n.º 0579/13). Thus, the tax act that applies norms [allegedly] unconstitutional [...] does not originate the nullity of the assessment, but generates mere voidability, being at issue the defect of violation of law due to error in the factual or legal assumptions."

1. Pursuant to article 43.º, no. 1, of the GTC, compensatory interest is owed when it is determined, in gracious objection or judicial challenge, that there has been an error imputable to the services from which results payment of the tax debt in an amount higher than that legally due. It is, therefore, a necessary condition for the attribution of the said interest the demonstration of the existence of an error imputable to the services. In that sense, see, for example, the following decision: "The right to compensatory interest provided in no. 1 of art. 43.º of the GTC [...] depends on having been demonstrated in the process that such act is affected by error in the factual or legal assumptions imputable to the TCA." (Decision of the Supreme Administrative Court of 30/5/2012, proc. 410/12).

Now, having not occurred, as results from what has been said in 1), any error imputable to the services, it is concluded by the lack of merit of the request for payment of compensatory interest to the Claimant.

V – DECISION

In view of the foregoing, it is decided:

• To rule without merit the request for arbitral decision, maintaining in full in the legal order the tax assessment acts now being challenged, and accordingly absolving the respondent entity of the request.

• To rule without merit the request also as regards the recognition of the right to compensatory interest in favor of the claimant.

The value of the case is set at €31,664.75 (thirty-one thousand six hundred and sixty-four euros and seventy-five cents), pursuant to art. 32.º of the Tax Procedure Code and of art. 97.º-A of the Tax Procedure and Process Code, applicable by virtue of the provision of art. 29.º, no. 1, subparagraphs a) and b), of the LRAT, and of art. 3.º, no. 2, of the Rules of Costs in Tax Arbitration Proceedings.

Costs to be borne by the Claimant, in the amount of €1,836.00 (one thousand eight hundred and thirty-six euros), pursuant to Table I of the Rules of Costs in Tax Arbitration Proceedings, and in fulfillment of the provision of articles 12.º, no. 2, and 22.º, no. 4, both of the LRAT, and of the provision of art. 4.º, no. 4, of the said Regulation.

Notify.

Lisbon, 27 March 2017.

The Arbitrator

(Miguel Patrício)

Document prepared by computer, pursuant to the provision of art. 131.º, no. 5, of the Code of Civil Procedure, applicable by remission of art. 29.º, no. 1, subparagraph e), of the LRAT.

The wording of the present decision is governed by the orthography prior to the Orthographic Agreement of 1990.