Summary
Full Decision
ARBITRAL DECISION
1. Report
A… - PLANNING, MANAGEMENT AND EXECUTION OF WORKS, LDA., Tax Number …, registered under the same number in the Commercial Registry of Loures, with share capital of €1,000,000.00 and head office at …, requested the establishment of an Arbitral Tribunal pursuant to the corresponding Legal Regime of Tax Arbitration, for examination of the legality of the assessment of Stamp Duty for the year 2013, item 28.1 of the General Table of Stamp Duties (TGIS), dated 18/03/2014 and relating to an urban property registered in the cadastre under article ... of the Union of Parishes of ... and ..., municipality of ..., in the amount of €12,253.08.
The respondent is the Tax and Customs Authority.
The request for establishment of the arbitral tribunal was presented on 29-07-2014, accepted by the President of CAAD on 30 of the same month and notified to the Tax and Customs Authority on the first day of the subsequent month of August.
Pursuant to the provisions of subparagraph a) of section 2 of article 6 and subparagraph b) of section 1 of article 11 of RJAT, the Deontological Council designated the undersigned as sole arbitrator, who communicated acceptance of the assignment within the applicable period.
In accordance with the provisions of subparagraph c) of section 1 of article 11 of RJAT, the sole arbitral tribunal was constituted on 06-10-2014.
The Tax and Customs Authority filed a reply.
By order of 9 January of the current year, containing a suggestion of the designated arbitrator to which the parties did not object, it was decided to dispense with the holding of the meeting provided for in article 18 of RJAT, as well as the arguments of the parties.
The arbitral tribunal was regularly constituted and is competent.
The parties possess legal personality and capacity, are legitimate and are properly represented. (articles 4 and 10, section 2, of the same statute and article 1 of Ordinance No. 112-A/2011, of 22 March).
The proceedings do not contain vices.
2. Object of the Dispute
The issue in these proceedings concerns the application of the new taxation in Stamp Duty (IS) affecting urban properties with residential use and taxable property value equal to or greater than one million euros, introduced in 2012 to strengthen budgetary control measures on the revenue side, within a context of financial emergency.
As is well known, this taxation has raised strong doubts and considerable objection. This applies not only to specific cases of its application (e.g., vertical property, building land or its application to the year 2012), but also in general terms, regarding its possible unconstitutionality (see Luís Menezes Leitão, On the Taxation in Stamp Duty of Luxury Real Estate (item 28.1 TGIS), in Tax Arbitration No. 1, pp. 44 et seq.).
The applicant comes, precisely, to challenge the application of said taxation resulting from the application of the new item 28.1 of TGIS to urban properties corresponding to building land, requesting the annulment (or even declaration of nullity) of said Stamp Duty assessment act.
The assessment was made under the provisions of item 28.1 of the Table annexed to the Stamp Duty Code, and the applicant contends that the legal prerequisites required for application of the tax provided for in said item are not met with respect to the property in question.
The applicant argues, in summary, that the property is building land and is therefore not covered by item 28.1 of the General Table of Stamp Duties, in the version given by Law No. 55-A/2012, of 29 October, in effect in 2013, which establishes "For property with residential use – 1%".
More specifically, the applicant identifies the following defects in the tax act at issue:
a) absence of author of the act, as the tax assessment act of liquidation was not made known to the applicant, but only the first and second collection notices, which do not indicate the authority that performed the assessment at issue;
b) absence of reasoning for the act;
c) absence of prior hearing of the applicant;
d) error of law regarding the facts, in that the premise would be a given legal figure, but the facts actually existing would not materialize that figure as the tax authority erroneously considered it did, whereby the AT made an incorrect interpretation of article 1, section 1, of the Stamp Duty Code and Item 28.1 of TGIS, as well as of article 6, section 1, subparagraph f) (i), of said Law No. 55-A/2012;
e) double taxation, given that IMI equally affects the taxable property value of properties, is annual, and is owed by whoever is owner, usufructuary or superficiary owner on 31 December of the year to which it relates, just as with item 28.1, whereby both taxes, IMI and IS (item 28.1), would tax the same factual situation or, in other words, the same economic capacity;
f) unconstitutionality, for violation of constitutional principles of legality, justice and equality and the principle of contributory capacity flowing from this, as well as the principle of impartiality and also the principle of prohibition of retroactive application of tax law, in this latter case if the new version of said item given by Law No. 83-C/2013, of 31 December (State Budget Law for 2014) is considered applicable;
- Concluding that the claim should be ruled upon favorably, as proved, declaring null or annulling the assessment, for violation of the legal provisions and constitutional principles it cites, with indemnificatory interest being owed.
The Tax and Customs Authority contested, specifically refuting all defects imputed to the act, concluding that the assessment at issue constitutes a correct interpretation and application of law to the facts, not suffering from the vice of violation of law, whether of the Constitution or of the Stamp Duty Code, and that, consequently, the applicant's claim should be ruled unfounded and the respondent entity absolved of the claim, with the claim for indemnificatory interest also being ruled unfounded.
To this end the respondent invokes the nature of bulk tax acts inherent in the assessments of the new tax and maintains that the corresponding Stamp Duty assessments when affecting building land for housing construction affect properties with the legal nature of properties with residential use, whereby the acts of assessment that are the subject of the request for arbitral pronouncement should be upheld, as they constitute a correct interpretation of Item 28 of the General Table, added by Law 55-A/2012, of 29 December.
The Tax and Customs Authority further alleges that the interpretation of said item sustained by it is consistent with the Constitution.
Furthermore the AT invokes that at the time of submission of the claim, the third tax act relating to the tax owed in the year which will be embodied in the third collection notice, to be issued, had not yet been notified to the applicant, nor had the voluntary payment period yet expired, for which reason in that part the applicant's claim is premature, should be disregarded and, if applicable, later be the subject of an autonomous claim.
3. Factual Matter
3.1. Facts Proven
a) In the year 2013 the applicant was owner of the property that gave rise to the assessment of Stamp Duty for the year 2013, in the amount of €12,253.08, dated 18/03/2014 and relating to an urban property registered in the cadastre under article ... of the Union of Parishes of ... and ..., municipality of ...;
b) That assessment gave rise, at least, to two collection notices, one corresponding to the first installment and another to the second installment, with numbers 2014... and 2014..., with voluntary payment deadline, respectively, April and July 2014;
c) The property corresponded to building land, with the planned construction partially intended for residential use;
d) The assessment is based on item 28.1 of TGIS;
e) The applicant made payment of the first installment already in enforcement proceedings (with number ...2014...), which it did on 18/07/2014, having disbursed the amount (partial) of the tax and accrued interest (default interest in the amount of €37.16 and costs in the amount of €67.81), making the total of €4,191.33;
f) On 29-07-2014 the applicant submitted the request for arbitral pronouncement that gave rise to these proceedings.
3.2. Facts Not Proven
There are no facts not proven that are relevant to the decision in this case.
3.3. Reasoning for Determination of Factual Matter
The proven facts are based on the allegations of the parties and on the documents offered, the correspondence of which to reality is not disputed.
4. Legal Matter
The question that is the subject of this action is whether building land on which building is authorized for property intended (even if partially) for residential use that must be considered in the assessment of its taxable property value fall or do not fall within the scope of item 28.1 of the General Table of Stamp Duties (TGIS), in its original version, introduced by Law No. 55-A/2012, of 29 October.
4.1. Regime of Law No. 55-A/2012, of 29 October
Law No. 55-A/2012, of 29 October, made several amendments to the Stamp Duty Code and added item 28 to TGIS, with the following wording:
28 – Ownership, usufruct or right of superfices of urban properties whose taxable property value entered in the cadastre, pursuant to the Code of Municipal Tax on Real Estate (CIMI), is equal to or greater than €1,000,000 – on the taxable property value used for purposes of IMI:
28.1 – For property with residential use – 1%;
28.2 – For property, when the taxable persons who are not natural persons are residents of a country, territory or region subject to a clearly more favorable tax regime, listed in the ordinance approved by the Finance Minister – 7.5%.
The term 28.1 and subparagraphs i) and ii) of subparagraph f) of section 1 of Law No. 55-A/2012 employed a concept that is not used in any other tax legislation, in these precise terms, which is that of "property with residential use".
Specifically in CIMI, which in several provisions of the Stamp Duty Code introduced by that Law is indicated as a statute of subsidiary application with respect to the tax provided for in said item 28 [articles 2, section 4, 3, section 3, subparagraph u), 5, subparagraph u), 23, section 7, and 46 and 67 of the Stamp Duty Code], a concept with that designation is not used.
Law No. 83-C/2013, of 31 December, amended that item 28.1, giving it the following wording:
28.1 - For residential property or for building land whose construction, authorized or planned, is for residential use, pursuant to the provisions of the Code of IMI – 1%.
4.2. Concepts of Properties Used in CIMI
In IMI, the types of properties are enumerated in articles 3 to 6 in the following terms:
Article 2
Concept of property
1 – For purposes of this Code, property is any portion of territory, including waters, plantations, buildings and structures of any kind incorporated in or located on it, of a permanent character, provided that it forms part of the patrimony of a natural or legal person and, in 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 on which they are located, even if situated in a portion of territory that constitutes an integral part of a different patrimony or does not have patrimonial nature.
2 – Buildings or structures, even if movable by nature, are deemed to have a permanent character when devoted to non-transitory purposes.
3 – The permanent character is presumed when buildings or structures are located in the same place for a period greater than one year.
4 – For purposes of this tax, each autonomous fraction, under the horizontal property regime, is deemed to constitute a property.
Article 3
Rural properties
1 – Rural properties are lands situated outside an urban settlement that are not to be classified as building land, pursuant to section 3 of article 6, 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 is considered for purposes of personal income tax (IRS);
b) Not having the devotion indicated in subparagraph a), they are not built on or have only buildings or structures of an accessory character, without economic autonomy and of reduced value.
2 – Also rural properties are lands situated within an urban settlement, provided that, by virtue of legally approved provision, they cannot have use generating any income or can only have use generating agricultural income and are actually having this devotion.
3 – Also rural properties are:
a) Buildings and structures directly devoted to the production of agricultural income, when situated on the lands referred to in the preceding sections;
b) Waters and plantations in the situations to which section 1 of article 2 refers.
4 – For purposes of this Code, urban settlements are considered, in addition to those situated within legally established perimeters, nuclei with a minimum of 10 dwellings served by public streets, their perimeter being delimited by points distanced 50 m from the axis of the streets, in the transversal sense, and 20 m from the last building, in the sense of the streets.
Article 4
Urban properties
Urban properties are all those that should not be classified as rural, without prejudice to the provisions of the following article.
Article 5
Mixed properties
1 – Whenever a property has rural and urban parts it is classified, in its entirety, according to the principal part.
2 – If neither part can be classified as principal, the property is deemed mixed.
Article 6
Types of urban properties
1 – Urban properties are divided into:
a) Residential;
b) Commercial, industrial or for services;
c) Building land;
d) Other.
2 – Residential, commercial, industrial or for services are buildings or structures licensed for such or, in the absence of a license, which have as their normal destination each of these purposes.
3 – Building land is considered to be land situated within or outside an urban settlement for which a license or authorization has been granted, admitted prior notification or issued favorable prior information of a subdividing or construction operation, and also those that have been so declared in the title of acquisition, excepting lands in which the competent entities prohibit any of such operations, specifically those located in green areas, protected areas or which, in accordance with municipal land planning plans, are devoted to public spaces, infrastructure or facilities. (Version of Law No. 64-A/08, of 31-12)
4 – Properties falling under the provision of subparagraph d) of section 1 are lands situated within an urban settlement that are not building land nor are covered by the provision of section 2 of article 3 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 section 2 and also those under the exception of section 3.
4.3. Rules on Interpretation of Laws
Article 11 of the General Tax Law establishes the essential rules for interpretation of tax laws in the following terms:
Article 11
Interpretation
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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.
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Whenever tax provisions employ terms specific to other branches of law, they must be interpreted in the same sense as they have therein, unless otherwise directly derives from the law.
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If doubt persists as to the meaning of the tax provisions of incidence to be applied, regard shall be had to the economic substance of the tax facts.
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Gaps resulting from tax provisions covered by the reservation of law of the Assembly of the Republic are not susceptible to analogical integration.
The general principles of interpretation of laws, to which section 1 of article 11 of LGT refers, are established in article 9 of the Civil Code, which establishes the following:
Article 9
Interpretation of law
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Interpretation must not be confined to the letter of the law, but must reconstruct from the texts the legislative intent, having especially in mind the unity of the legal system, the circumstances in which the law was enacted and the specific conditions of the time in which it is applied.
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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.
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In fixing the meaning and scope of the law, the interpreter shall presume that the legislature adopted the most correct solutions and knew how to express its intent in adequate terms.
4.4. Object of the Proceedings and Order of Examination of Defects Invoked
Preliminarily, the scope of these proceedings must be defined. Specifically, it must be determined whether they relate to the entirety of the assessment act, such entirety understood as corresponding to the first through third installments of the tax. Or whether, differently and as the AT contends, the proceedings should relate only to the first two installments, because the deadline for voluntary payment of the third installment had not yet elapsed, nor had the corresponding collection document been, at that time, notified to the applicant.
To this end the AT alleges that "the request for arbitral pronouncement has as its object the annulment of the Stamp Duty assessment in the total amount of €12,253.08 relating to the urban property registered in the cadastre under article …, located in the Municipality of ..., Union of Parishes of ... and ..." and that "to that request for annulment, the applicant comes to associate the request for annulment of collection notices Nos. 2014... (1st installment, in the amount of €4,084.36) and 2014... (2nd installment, in the amount of €4,084.36)", as well as also (this being the controversial point), the "collection notice to be issued in the future for payment of the 3rd installment, also in the amount of €4,084.36". The AT further states that the arbitral tribunal has already ruled on a similar situation, "in the decision rendered in proceedings No. 180/2013-T", having determined that "at the date of submission of the request for arbitral pronouncement the applicant had not been notified of the third installment of the tax relating to 2012, and therefore could not request the annulment of the assessment relating to November, which, unless better advised, should be the subject of an autonomous request for annulment". The AT contends that this solution should likewise be adopted in these proceedings, concluding that, at least in this respect, the applicant's claim should be ruled unfounded, reason for which it subsequently refers only to collection notices Nos. 2014... and 2014....
Item 28.1 of Stamp Duty corresponds to an annual tax. In the present case the act of assessment relates to the year 2013 and is dated 2014-03-18, as appears from the collection documents (not assessment documents) of the first and second installments, with numbers 2014... and 2014... and which were notified to the applicant (indeed, it was not notified of other facts).
Nevertheless, from these documents it clearly appears that the act of assessment relates to property U-... of the parish of ..., relates to the new item 28.1 of the Table annexed to the Stamp Duty Code, and to that property is imputed a taxable property value in the amount of €1,225,308.25, whereby being 1% the rate applicable to that amount of incidence, the tax assessed (and owed) amounts to €12,253.08. There follows indication of the value of the first (and then second) installment to be paid, with payment codes by means of electronic transfer and other relevant facts for purposes of administration and management. But there remain no doubts, therefore, that the tax act underlying the collection notice is a single tax act, corresponding to the tax for the year, and that it is precisely against that tax act that the applicant intends to challenge.
In these terms, the respondent is incorrect when it attempts to discern in the collection of the new item three acts of tax assessment, as if the tax were quarterly and not annual, based on this to contend that the applicant's claim is premature, insofar as it would concern a third but still non-existent tax act. Thus one must not confuse assessment (a single one) of tax, with the deadline and corresponding installments (three) of payment of the tax assessed.
And neither is the respondent correct when it attempts to impute to the applicant the request for annulment (or declaration of nullity) of three separate tax acts, one of them not yet performed. This is because there are no doubts that it is the tax act (single) described above that the applicant intends to see eradicated from the legal order, as clearly appears from its concluding request in the Initial Petition asking for ruling favorably on the claim, "declaring null or annulling the Assessment, for violation of the legal provisions and constitutional principles cited". That is, it is clearly petitioned for the nullity or annulment of the "assessment" and not of "assessments", as it would be if the AT, in its understanding that the applicant petitions for annulment of three separate tax acts, had adhesion to reality.
It is concluded, therefore, that the request for arbitral pronouncement refers to the act of assessment of item 28.1 of Stamp Duty for 2013, which in fact corresponds to a single tax act, already issued, even though subject to payment in successive installments, whereby the scope of the claim is maintained, as formulated by the applicant.
On the other hand, the tribunal is not bound by the order of presentation of defects by the parties, and may begin analysis with those that best protect the interests in confrontation. For that reason, it is deemed useful to attempt to obviate the questions raised by bulk tax acts and by the possible unconstitutionality of the provision. Analysis shall begin, therefore, with the alleged error in the prerequisites and consequent defect of violation of law, reverting to the previous ones only if this proves necessary, that is, if the tax act survives this first validity test.
4.5. Hypotheses for Interpretation of the Concept of "Property with Residential Use"
From the provisions of CIMI transcribed above, it follows that the concept of "property with residential use" is not used in the classification of properties. Nor is this concept found, in this terminology, in any other statute. Thus, given the lack of exact terminological correspondence between the concept of "property with residential use" and any other used in other statutes, several interpretative hypotheses may be ventured.
As is now established jurisprudence, the starting point for interpretation of that expression "properties with residential use" will be the text of the law, to reconstruct based on it the "legislative intent", as is required by section 1 of article 9 of the Civil Code, applicable by virtue of the provisions of article 11, section 1, of LGT.
4.6. Concept of "Property with Residential Use" as Referring to Residential Properties
The concept closest to the literal tenor of the expression used ("property with residential use") is manifestly that of "residential properties", defined in section 2 of article 6 of CIMI as encompassing "buildings or structures" licensed for residential purposes or, in the absence of a license, which have as their normal destination residential purposes.
If one understands that the expression "property with residential use" coincides with that of "residential properties", it is manifest that the assessments will suffer from error regarding the factual and legal premises, since all properties with respect to which Stamp Duty was assessed under said item 28.1 are building lands, without any building or structure, required by that section 2 of article 6 to fulfill that concept of "residential properties".
For this reason, if one were to adopt the interpretation that "property with residential use" means "residential property", the assessments whose declaration of illegality is requested will be illegal, as there is no building or structure on any of the lands.
However, the non-coincidence of the terms of the expression used in item 28.1 of TGIS with that extracted from section 2 of article 6 of CIMI points toward the conclusion that it was not intended to use the same concept.
4.7. Concept of "Property with Residential Use" as a Concept Distinct from "Residential Properties"
The word "devotion" (afectação), in this context of use of a property, has the meaning of "action of designating something for a determined use".
"When, as is usually the case, provisions (legislative formulas) admit more than one meaning, the positive function of the text is expressed in giving stronger support to or suggesting more strongly one of the possible meanings. That is, among the possible meanings, some will correspond to the most natural and direct meaning of the expressions used, while others will fit into the verbal framework of the provision only in a forced, artificial manner. Now, in the absence of other elements that lead to the choice of the less immediate meaning of the text, the interpreter should opt in principle for that meaning that best and most immediately corresponds to the natural meaning of the verbal expressions used, and especially to its technical-legal meaning, on the assumption (not always exact) that the legislature knew how to express correctly its intent".
Now, the relevance of the text of the law is especially emphasized in the matter of interpretation of tax provisions of incidence of Stamp Duty, which are reducible to an amalgam, under a common denomination, of an incongruous set of taxes of completely distinct natures (on income, on expenditure, on patrimony, on acts, etc.), which leaves no appreciable margin for application of the primary interpretative criterion, which is the unity of the legal system, which requires the global coherence of this.
Moreover, the acknowledged lack of coherence of Stamp Duty is even particularly exuberant in the case of this item 28.1, included on the margin of the State Budget for 2013, within a context of generalized tax increases, dictated by urgent and pressing budgetary reasons, by the pressure of international institutional creditors (represented by the "troika") and also as a consequence of supervision by the Constitutional Court of successive provisions intended to expand revenue and reduce public expenditure.
Thus, even though in the "Exposition of Motives" of Legislative Proposal No. 96/XII/2nd, on which Law No. 55-A/2012 was based, reference is made to the concern of the Government to "reinforce the principle of social equity in austerity, ensuring an effective sharing of the sacrifices necessary to meet the adjustment program" and to its commitment "to ensure that the sharing of those sacrifices will be done by all and not only by those who live from the income of their work", it is manifest that the scope of item 28.1, by taxing in an increased manner only certain properties with residential use and not also properties that do not have such use, does not achieve that goal of equitable expansion of taxable bases.
In this context, without there being secure interpretative elements that would permit detection of legislative coherence in the solution adopted in said item 28.1 or the correctness or incorrectness of the solution adopted (relevant for purposes of interpretation in light of section 3 of article 9 of the Civil Code), the tenor of the legal text must be the primary element of interpretation, in accordance with the presumption, imposed by that same section 3 of article 9, that the legislature knew how to express its intent in adequate terms.
In light of those meanings of the words "devotion" (afectação) and "to devote" (afectar), which are "to designate" or "to apply", the formula used in that item 28.1 of TGIS manifestly encompasses properties to which destination for residential purposes has already been given, properties that are already applied to residential purposes, whereby it is important to ascertain whether it will also encompass properties that, although not yet applied to residential purposes, are destined for these, specifically by permit of subdivision.
To determine this, it will be necessary to clarify when it can be understood that a property is devoted to a residential purpose, specifically whether it is when this destination is set for it in a subdivision permit or licensing act or the like, or only when the actual attribution of this destination is concretized.
From the outset, the confrontation of item 28.1 of TGIS with section 2 of article 6 of CIMI, which defines the concept of residential properties, points toward the conclusion that an actual devotion is necessary.
In truth, a building or structure licensed for residential purposes or, even without a license, but which has as its normal destination residential purposes, is, in light of section 2 of that article 6, a residential property, as it gives this classification to "buildings or structures licensed for such or, in the absence of a license, which have as their normal destination each of these purposes".
For this reason, on the assumption that the legislature of Law No. 55-A/2012 knew how to express its intent in adequate terms (as article 9, section 3, of the Civil Code requires be presumed), if it intended to refer to those properties already licensed for residential purposes or which have residential purposes as their normal destination, it would certainly have used the concept of "residential properties", which would express perfectly and clearly its intent, in light of the definition given by that section 2 of article 6 of CIMI.
Consequently, it must be presumed that the use of a different expression is intended to refer to a distinct reality, whereby, in good hermeneutics, "property with residential use" cannot be a property merely licensed for residential purposes or destined for that purpose (that is, it will not be sufficient that it be a "residential property"), and must be a property that already has actual devotion to that purpose.
That this is the meaning of the expression "devotion" (afectação), in the same context of classification of properties that CIMI makes, is confirmed by article 3, in which, regarding rural properties, reference is made to those "that are devoted or, in the absence of concrete devotion, have as their normal destination a use generating agricultural income", which shows that devotion is concrete, actual. In truth, as is seen from the final part of this text, a property may have a determined use as its destination and be or not be devoted to it, which shows that devotion is, at the level of the connection of a property to determined use, something more intense than mere destination and that may or may not occur, downstream from this and not upstream.
Moreover, the text of the law in adopting the formula "property with residential use", instead of "urban properties with residential use", which appears in said "Exposition of Motives", points strongly toward the conclusion that it is required that the residential devotion already be concretized, as only then will the property be with that devotion.
In the case at hand, one is faced with a reality even more remote in relation to residential devotion which is that there does not even exist any building or structure and, therefore, one cannot consider an existing devotion that presupposes its existence.
Moreover, nor is it derived from the normative text what degree of devotion (residential) is relevant for purposes of incidence of the new item: the whole property, only part of it and, in the second possibility, will there be a minimum necessary to make relevant for tax purposes that "devotion" merely partial, or will it be relevant no matter how minimal?
Furthermore, the legislative intention to confine the scope of incidence to "urban properties … residential" with exclusion of building lands was expressly referred to by the Government when presenting in the Plenary of the Assembly of the Republic Legislative Proposal 96-XII by saying, by the voice of the Secretary of State for Tax Affairs:
"First, the Government proposes the creation of a special rate to tax residential urban properties of higher value. It is the first time in Portugal that special taxation on high-value properties intended for residential use has been created. This rate will be 0.5% to 0.8%, in 2012, and 1%, in 2013, and will affect houses valued at equal to or greater than 1 million euros. With the creation of this additional rate, the tax effort required of these property owners will be significantly increased in 2012 and 2013".
The express reference to "houses" as the target of incidence of the new tax leaves no room for doubt regarding the legislative intent.
On the other hand, no reference to "building lands" is found in the discussion of said Legislative Proposal.
As concerns article 45 of CIMI, invoked by the respondent as the basis of the "devotion" found therein, it has no relation to the classification of properties, merely indicating the factors to be weighed in the assessment of building lands. What is weighed there, in making reference to the "building to be constructed" is the weighing of the destination of the land, which, as was seen, is something that, in the context of CIMI, does not imply devotion and occurs before it.
Furthermore, there is the added fact that Law No. 83-C/2013, of 31 December, came to confirm, at least indirectly, the interpretation that item 28.1 in its original version did not encompass building lands.
In truth, if the original version of that item 28.1, in speaking of "property with residential use" already intended to encompass the buildings and structures that constituted "residential properties" (pursuant to article 6, section 2, of CIMI), and also building lands for which residential construction was authorized or planned, it would be natural that interpretative status be attributed to the new version, similar to what Law No. 83-C/2013 does in other provisions [article 177, section 7, regarding subparagraphs a) and b) of section 3 of article 17-A of the Code of IRS, and article 185, section 1, regarding article 3-A of the Code of Value Added Tax] and is usual to do in budget laws, when it is intended that the new versions apply to situations potentially encompassed by the prior versions.
For this reason, the fact that interpretative status was not attributed to the new version points toward the conclusion that it was intended to alter the scope of incidence of said item 28.1 of TGIS and not maintain it, clarifying it.
In view of the foregoing, the assessments whose declaration of illegality is requested by the applicant suffer from the defect of error regarding the legal premises, embodied in violation of item 28.1 of TGIS, which justifies its annulment (article 135 of the Code of Administrative Procedure).
4.8. Indemnificatory Interest
The applicant made payment of the 1st installment of the tax, plus default interest and costs, whereby if the present request for annulment of the tax act is well-founded, the AT should be condemned to reimburse it, for the tax paid unduly, as well as default interest and costs, all in the total amount of €4,191.33, plus also indemnificatory interest, calculated from the date of payment (18/07/2014).
Indeed, in the case at hand, as has equally been constant jurisprudence, it is not seen how not to impute to the AT error for the interpretation that it itself created. It is therefore evident that indemnificatory interest is owed under the terms stated, and the tax and accrued amounts should be considered "tax debt" for purposes of section 1 of article 43 and 100 of LGT and article 24, section 1, subparagraph b) and section 5 of RJAT, with interest being calculated pursuant to article 61 of CPPT.
5. Disposition
In accordance with the foregoing, it is ruled that the claim is well-founded and, in consequence, the above-identified tax assessment act is annulled, on the ground of defect of violation of law, it being further declared that the party is entitled to indemnificatory interest calculated on the amount disbursed and from the date of its disbursement, until processing of the corresponding credit notice in which same are included.
6. Value of the Proceedings
In accordance with the provisions of article 306, sections 1 and 2, of CPC and article 97-A, section 1, subparagraph a), of CPPT and section 3, section 2, of the Regulation of Costs in Tax Arbitration Proceedings, the value of the proceedings is fixed at €12,253.08.
7. Costs
Pursuant to article 22, section 4, of RJAT, the amount of costs is fixed at €918.00 (nine hundred eighteen euros), in accordance with Table I annexed to the Regulation of Costs in Tax Arbitration Proceedings, entirely borne by the Tax and Customs Authority.
Text prepared on computer, in accordance with the Code of Civil Procedure (CPC), applicable by referral of article 29, section 1, subparagraph e) of RJAT, governed by the orthography prior to the Orthographic Agreement of 1990, with blank verses and reviewed by the undersigned arbitrator.
Lisbon, 31-01-2015
The Arbitrator
(Jaime Carvalho Esteves)
Frequently Asked Questions
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