Stamp Tax on Building Land Under Verba 28.1 TGIS: CAAD Arbitration Decision 587/2015-T

ARBITRAL DECISION

I. REPORT

A…, SA, legal entity no…, with registered address at the place of…, parish of…, Municipality of …, registered at the Commercial Registry Office of ... under the same number (hereinafter referred to as the claimant), filed on 08/09/2015 a request for constitution of a sole arbitral tribunal, in accordance with the combined provisions of articles 2nd and 10th of Decree-Law no. 10/2011, of 20 January (Legal Regime of Arbitration in Tax Matters, hereinafter referred to only as LRATM), in which the Tax and Customs Authority is the respondent.

The request for constitution of the arbitral tribunal was accepted by the President of CAAD on 09/09/2015 and notified to the Tax and Customs Authority on 23-09-2015.

In accordance with the provisions of paragraph a) of no. 2 of article 6th and paragraph b) of no. 1 of article 11th of LRATM, the Deontological Council appointed the undersigned as arbitrator of the sole arbitral tribunal on 5-11-2015. Upon communicating acceptance of the appointment within the applicable deadline, the parties were notified, and they accepted the designation of the indicated arbitrator, whereby, in accordance with the provision in paragraph c) of no. 1 of article 11th of LRATM, the arbitral tribunal was constituted on 20-11-2015. On the same date an arbitral order was issued, in accordance with article 17th of LRATM and TCA was notified to present its Reply, which was presented in the proceedings on 17-12-2015, which is hereby considered fully reproduced. The respective administrative proceedings were also attached.

On 29-12-2015 an arbitral order was issued, dispensing with the holding of the meeting provided for in article 18th of LRATM, in which a deadline was set for the parties to present their written submissions, if they so wished, and a date was set for the delivery of the arbitral decision until 22-02-2016, which was extended by a further five days, until 27-02-2016, in accordance with the arbitral order issued on 22-02-2016.

The Parties did not present submissions.

The Claimant filed the present arbitral request with a view to obtaining a declaration of illegality of the Stamp Tax ("ST") assessment issued by the Tax and Customs Authority under the provisions of item 28.1 of the General Table of Stamp Tax (GTST), on the urban property described as land for construction under article … of the urban property registry of the parish of…, referring to the year 2012, corresponding to collection notes nos. 2013 … (1st installment), 2013 … (2nd installment) and 2013 … (3rd installment), as per documents attached with the request for arbitral decision, in the global amount of €42,315.40. The present arbitral request was filed after administrative complaints had been filed which were dismissed and respective hierarchical appeals, which were dismissed and archived.

The Claimant further requests the condemnation of the Tax and Customs Authority to reimburse the amounts of tax paid and to pay compensatory interest.

The Claimant contends, in summary, with reference to the year 2012, that the classification of the land for construction as "properties with residential use", for the purposes of item 28 of GTST is illegal, by reason of violation of the provisions of articles 6th, 41st and 45th of the Municipal Property Tax Code. It further alleges that the taxation on real property introduced by Law no. 55-A/2012, namely by item 28 of GTST, leads to flagrant inequalities among citizens that find no material justification therefor and that, in this way, item 28 of GTST violates the principle of equality in the aspect of proportionality, constitutionally enshrined.

The Tax and Customs Authority (TCA) replied, arguing that the request for declaration of illegality and consequent annulment of the contested assessments be judged without merit, with its dismissal from the request. It contested both the alleged illegality of the tax assessment expressed in the collection notes attached to the proceedings and also the alleged unconstitutionalities attributed to the provision contained in item 28.1 of GTST.

The arbitral tribunal was regularly constituted and is materially competent, in the face of the provisions of articles 2nd, no. 1, paragraph a), and 30th, no. 1, of LRATM.

The parties have legal personality and capacity, are legitimate (arts. 4th and 10th, no. 2, of the same statute and article 1st of Ordinance no. 112-A/2011, of 22 March) and are duly represented.

There is no nullity that may taint the present proceedings.

It remains to decide

II. FACTUAL MATTER

1. Facts considered proven

a) The claimant company, A… SA, is the owner of the urban property with the registry article no… of the Parish of…, which consists of land for construction and has the tax patrimonial value of € 4,231,540.00 – See documents nos. 1 to 3 attached with the request for arbitral decision, whose contents are given as reproduced;

b) The Claimant was notified of the Stamp Tax assessment, made under item 28.1 of the General Table of Stamp Tax, corresponding to collection notes nos. 2013…, 2013 … and 2013…, respectively 1st, 2nd and 3rd installments in the amount of €14,105.13 each, in the global amount of €42,315.40, referring to the year 2012 - See documents nos. 1 to 3 attached to the arbitral request;

c) The Claimant filed three Administrative Complaints with a view to annulling the aforementioned collection notes, which were dismissed - see Documents with nos. 4 to 6 and 7 to 9 attached with the arbitral request;

d) On 18-09-2013, 05-02-2014 and 29-04-2014 it filed three Hierarchical Appeals against the dismissals of the Administrative Complaints for annulment of the said collection notes and ST assessment, of which one was dismissed and the remaining two archived – See Documents nos. 10 to 12 and 13 to 15

e) On 16-06-2015 the Claimant was notified of Offices nos. …, … and…, the first being a dismissal of the first Hierarchical Appeal and the latter being filings of the remaining two;

f) On 08-09-2015, the Claimant filed the present request for constitution of the arbitral tribunal.

1. Facts considered unproven

There are no facts relevant to the decision that were not proven.

1. Substantiation of proven factual matter

The proven facts are based on the documents indicated for each of the points, whose authenticity and correspondence to reality were not questioned.

III. LEGAL MATTER

The question at issue in the present arbitral request is whether land for construction, to which was assigned, in an evaluation process, the use of "Housing" falls within the scope of item 28.1 of the General Table of Stamp Tax (GTST), in its original wording or, in other words, prior to the State Budget Law (SBL) for 2014. Let us see, therefore, if the Claimant has reason.

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 item 28 to GTST, with the following wording:

28 – Ownership, usufruct or right of surface of urban properties whose tax patrimonial value contained in the registry, in accordance with the Municipal Property Tax Code (MPTC), is equal to or greater than € 1,000,000 – on the tax patrimonial value used for the purpose of MPT:

28.1 – For property with residential use – 1 %;

28.2 – For property, when the taxable persons who are not natural persons are resident in a country, territory or region subject to a clearly more favourable tax regime, contained in the list approved by ordinance of the Minister of Finance – 7.5 %.

In the transitional provisions contained in article 6th of that Law no. 55-A/2012, the following rules were established relating to the assessment of the tax provided for in that item:

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

a) The taxable event occurs on 31 October 2012;

b) The taxable person of the tax is the one mentioned in no. 4 of article 2nd of the Stamp Tax Code on the date referred to in the previous paragraph;

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

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

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

f) The applicable rates are as follows:

i) Properties with residential use assessed in accordance with the Municipal Property Tax Code: 0.5 %;

ii) Properties with residential use not yet assessed in accordance with the Municipal Property Tax Code: 0.8 %;

iii) Urban properties when the taxable persons who are not natural persons are resident in a country, territory or region subject to a clearly more favourable tax regime, contained in the list approved by ordinance of the Minister of Finance: 7.5 %.

2 – In 2013, the assessment of stamp tax provided for in item no. 28 of the respective General Table must be based on the same tax patrimonial value used for the purposes of assessment of municipal property tax to be carried out in that year.

3 – Non-delivery, in whole or in part, within the indicated deadline, of the amounts assessed as stamp tax constitutes a tax violation, punished in accordance with the law.

The term "use", in the referenced item 28.1 and in the sub-paragraphs i) and ii) of paragraph f) of no. 1 of article 6th of Law no. 55-A/2012, is a concept that is not used in any other tax legislation, in these precise terms, which is that of "property with residential use".

Namely in the MPTC, which in several provisions of the Stamp Tax Code introduced by that Law is indicated as a statute of subsidiary application regarding the tax provided for in the referred item no. 28 [articles 2nd, no. 4, 3rd, no. 3, paragraph u), 5th, paragraph u), 23rd, no. 7, and 46th and 67th of Stamp Tax Code], a concept with that designation is not used.

Law no. 83-C/2013, of 31 December (SBL 2014), amended that item no. 28.1, giving it the following wording:

28.1 - For residential property or for land for construction whose construction, authorized or planned, is for housing, in accordance with the provisions of the Municipal Property Tax Code – 1 %

At issue is the interpretation of the concepts in question and the meaning and scope of the provision of incidence under discussion in the present proceedings, on which the parties reveal different understanding.

1. Concepts of properties used in the MPTC

In the MPT, the species of properties are enumerated in its articles 3rd to 6th in the following terms:

Article 2nd

Concept of property

1 – For the purposes of this Code, property is every fraction of territory, encompassing waters, plantations, buildings and constructions of any nature incorporated therein or situated thereon, with a character of permanence, 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 constructions, in the aforementioned circumstances, endowed with economic autonomy in relation to the land where they are located, even though situated in a fraction of territory that forms an integral part of a diverse patrimony or does not have a patrimonial nature.

2 – Buildings or constructions, even if movable by nature, are considered to have a character of permanence when devoted to non-transitory purposes.

3 – The character of permanence is presumed when buildings or constructions are situated in the same location for a period exceeding one year.

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

Article 3rd

Rural properties

1 – Rural properties are lands situated outside an urban agglomeration that are not to be classified as building land, in accordance with no. 3 of article 6th, provided that:

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

b) Not having the devotion indicated in the previous paragraph, they are not built or have only buildings or constructions of an accessory character, without economic autonomy and of reduced value.

2 – Also rural properties are lands situated within an urban agglomeration, 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 having, in fact, this devotion.

3 – Also rural properties are:

a) Buildings and constructions directly devoted to the production of agricultural income, when situated on the lands referred to in the previous numbers;

b) Waters and plantations in the situations referred to in no. 1 of article 2nd

4 – For the purposes of this Code, urban agglomerations are considered, in addition to those located within legally fixed perimeters, nuclei with a minimum of 10 housing units served by public roads, with their perimeter delimited by points distanced 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 4th

Urban properties

Urban properties are all those that should not be classified as rural, without prejudice to the provision of the following article.

Article 5th

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 mixed.

Article 6th

Species of urban properties

1 – Urban properties are divided into:

a) Residential;

b) Commercial, industrial or for services;

c) Building land;

d) Others.

2 – Residential, commercial, industrial or for services are buildings or constructions licensed for such purpose or, in the absence of license, that have as their normal destination each of these purposes.

3 – Building land is considered to be lands situated within or outside an urban agglomeration, for which a license or authorization has been granted, prior notification admitted or favorable prior information issued of a subdivision or construction operation, and also those that have been declared as such in the title of acquisition, excepting lands in which the competent entities forbid any of those operations, namely those located in green areas, protected areas or that, in accordance with municipal territory planning plans, are devoted to public spaces, infrastructure or facilities. (Wording of Law no. 64-A/08, of 31-12)

4 – Included in the provision of paragraph d) of no. 1 are lands situated within an urban agglomeration that are not building land nor are covered by the provision of no. 2 of article 3rd and also buildings and constructions licensed or, in the absence of license, that have as their normal destination other purposes than those referred to in no. 2 and also those of the exception of no. 3.

Given this, it is necessary to proceed to the correct interpretation of the legal provision contained in item 28.1 of GTST. To this end, account must be taken of the principles that guide the interpretive task of the legal norm.

1. Rules on interpretation of laws

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

Article 11th

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, in tax provisions, terms peculiar to other branches of law are employed, they must be interpreted in the same sense as they have there, unless otherwise directly results from the law.

3. If doubt persists about the meaning of the provisions of incidence to be applied, consideration should be given to the economic substance of the tax facts.

4. Gaps resulting from tax provisions covered by the reservation of law of the Assembly of the Republic are not capable of analogical integration.

The general principles of interpretation of laws, to which no. 1 of article 11th of the GTL refers, are established in article 9th of the Civil Code, which establishes the following:

Article 9th

Interpretation of the law

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

2. The interpreter cannot, however, consider legislative thought 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 will presume that the legislator enshrined the most appropriate solutions and knew how to express his thought in adequate terms.

4. Concept of "property with residential use"

As can be seen from the provisions of the MPTC transcribed, the concept of "property with residential use" is not used in the classification of properties. This concept is also not found, with this terminology, in any other statute.

The starting point of the interpretation of that expression is, naturally, the text of the law, and it is on the basis of it that the "legislative thought" must be reconstructed, as required by no. 1 of article 9th of the Civil Code, applicable by virtue of the provision of article 11th, no. 1, of the GTL.

The concept closest to the literal tenor of this expression used is manifestly that of "residential properties", defined in no. 2 of article 6th of the MPTC as encompassing "buildings or constructions" licensed for residential purposes or, in the absence of license, that have as their normal destination residential purposes.

If it is understood that the expression "property with residential use" coincides with that of "residential property", it is manifest that the assessments would be tainted by error concerning the factual and legal presuppositions, because the property in relation to which the Stamp Tax was assessed under the referred item no. 28.1 is building land, without any building or construction, which are required by that no. 2 of article 6th to fulfill that concept of "residential properties".

For this reason, if the interpretation is adopted that "property with residential use" means "residential property", the assessments whose declaration of illegality is requested are illegal.

However, the non-coincidence of the terms of the expression used in item no. 28.1 of GTST with that which is derived from no. 2 of article 6th of the MPTC points towards the fact that it was not intended to use the same concept. It seems, therefore, to be distinct concepts, as well noted in the Arbitral Award delivered in case no. 559/2014 –T, which is transcribed:

"The word "use", in this context of use of a property, has the meaning of "action of designating something for a certain use". ([1])

"When, as is usually the case, norms (legislative formulas) have more than one meaning, then the positive function of the text is translated into 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, whereas others will only fit into the verbal framework of the norm in a forced, artificial way. Now, in the absence of other elements that induce the choice of the less immediate sense of the text, the interpreter should opt in principle for that sense which best and most immediately corresponds to the natural meaning of the verbal expressions used, and namely to their technical-legal meaning, in the assumption (not always exact) that the legislator knew how to express his thought correctly". ([2])

The relevance of the text of the law is especially emphasized in the matter of interpretation of provisions of incidence of Stamp Tax, which are reduced 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 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 item no. 28.1, hastily included outside the General State Budget, by a tax legislator without perceivable global fiscal direction, who is successively implementing norms of fiscal increase as a result of budget execution setbacks, impositions of international institutional creditors (represented by the "troika") and supervision of the Constitutional Court.

In fact, although in the "Explanatory Statement" of Bill no. 96/XII/2nd ([3]), on which Law no. 55-A/2012 was based, reference is made to the laudable concern of the Government to "strengthen the principle of social equity in austerity, ensuring an effective distribution of the necessary sacrifices to comply with the adjustment programme" and its commitment "to ensure that the distribution of these sacrifices will be made by all and not only by those who live from the income of their work", it is manifest, on the 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 item no. 28.1, by taxing additionally properties with residential use and not also properties that do not have it, reveals that concerns of social equity and the proclaimed intention of distribution of sacrifices by all reaches much more some than properly all.

In this context, in the absence of secure interpretive elements that allow the detection of legislative coherence in the solution adopted in the referred item no. 28.1 or the correctness or incorrectness of the solution adopted (relevant for interpretive purposes in the face of no. 3 of article 9th 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 no. 3 of article 9th, that the legislator knew how to express his thought in adequate terms.

In the face of those meanings of the words "use" and "be devoted", which are "give destination" or "apply", the formula used in that item no. 28.1 of GTST, manifestly encompasses properties that have already been given the destination of housing, properties that are already applied to residential purposes, whereby it is important to inquire whether it will also encompass properties that, despite not being yet applied to residential purposes, are destined for these purposes."

The question now is whether, in light of the version of the law in force at the time of the taxable event (2012), we can understand that a property is devoted to the purpose of housing, namely when that destination is fixed for it in a subdivision permit or licensing act or similar, or only when the actual assignment of that destination is concretized.

Now, the confrontation of item no. 28.1 of GTST with no. 2 of article 6th of the MPTC, which defines the concept of residential properties, points towards it being necessary to have an actual devotion, since a building or construction licensed for housing or, even without license, but that has housing as its normal destination, is, in the face of no. 2 of that article 6th a residential property, for in it such classification is given to "buildings or constructions licensed for such purpose or, in the absence of license, that have as their normal destination each of these purposes".

For this reason, assuming that the legislator of Law no. 55-A/2012 knew how to express his thought in adequate terms (as article 9th, no. 3, of the Civil Code presumes), if he intended to refer to those properties already licensed for housing or that have housing as their normal destination, he would certainly have used the concept of "residential properties", which would express perfectly and clearly his thought, in the face of the definition given by that no. 2 of article 6th of the MPTC. Thus, it should be presumed that the use of a different expression is intended for a distinct reality, whereby, "property with residential use", as it appeared in the version of the law in force for 2012, cannot be a property merely licensed for housing 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.

To which is added also that the text of the law by adopting the formula "property with residential use", instead of "urban properties of residential use", which appears in the referred Explanatory Statement, clearly points towards the fact that it is required, in light of the version applicable to the year 2012, that residential devotion was already concretized at the time the taxable event occurs, because only thus the property could be considered as property with residential use.

In the case at hand, we are dealing with mere building land, that is, something that naturally cannot have, at all, residential use since there is no building or construction implanted therein.

On the other hand, the legislative intention of not extending the scope of incidence to building land was expressly stated by the Government when presenting to the Plenary of the Assembly of the Republic Bill 96-XII in saying, through the voice of the State Secretary 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 a special taxation is created on high-value properties intended for housing. This rate will be 0.5% to 0.8% in 2012, and 1% in 2013, and will apply to houses of value equal to or greater than 1 million euros. With the creation of this additional rate, the tax effort required from these owners will be significantly increased in 2012 and in 2013".

The express reference to "houses" as the target of the incidence of the new tax leaves no room for doubt about the legislative intention, and moreover, no reference is found in the discussion of the referred Bill to "building land".

As for the allegation that the TCA extracts from the provision of article 45th of the MPTC, it has no relation to the classification of properties, only indicating the factors to be considered in the evaluation of building land.

Finally, it must be taken into account that Law no. 83-C/2013, of 31 December (SBL 2014), did not aim to clarify the logical element underlying the original wording of item no. 28.1, but rather came to confirm, indirectly, the interpretation that it did not encompass building land. Let us see: if in the original wording of that item no. 28.1, when speaking of "property with residential use", the legislator already intended to encompass buildings and constructions that constituted "residential properties" (in accordance with article 6th, no. 2, of the MPTC), and building land for which housing was authorized or planned, it would be natural to give the new wording an interpretive nature, which did not happen. That is so much so that, as is known, the same Law no. 83-C/2013, took that position in other provisions [article 177th, no. 7, regarding paragraphs a) and b) of no. 3 of article 17th-A of the Income Tax Code, and article 185th, no. 1, regarding article 3rd-A of the Value Added Tax Code]. Finally, it is usual in budget laws, when it is intended that the new wordings apply to situations potentially encompassed by previous wordings, to assign it an interpretive nature. Therefore, if the legislator did not do so in this matter it was because it understood that it should not do so, and it is not up to the tribunal to go beyond what the law allows it.

For this reason, the fact that an interpretive nature was not assigned to the new wording points towards it being intended to alter the scope of incidence of the referred item no. 28.1 of GTST and not to maintain it, clarifying it.

For all the foregoing, the contested assessments are tainted by a defect of error concerning the legal presuppositions, embodied in violation of item no. 28.1 of GTST, which justifies their annulment. ([4])

1. Questions of precluded knowledge

In the sentence, the judge must pronounce on all questions he must assess, refraining from pronouncing on questions of which he must not know (final segment of no. 1 of article 125th of Code of Administrative Tax Procedure), and the questions on which the powers of cognition of the tribunal fall are, in accordance with no. 2 of article 608th of the Code of Civil Procedure, applicable subsidiarily to the tax arbitral process, by referral of article 29th, no. 1, paragraph e), of LRATM, "the questions that the parties have submitted to its assessment, excepted those whose decision is precluded by the solution given to others (...)".

In the face of the solution given to the questions relating to the concept of "property with residential use", to the restitution of amounts paid and to the payment of compensatory interest in favor of the taxable person, the knowledge of the remaining questions raised by the parties is precluded, namely that of the invoked unconstitutionality of the provision of incidence contained in Item 28.1 of GTST, because the same is not susceptible to the interpretation that, in the case, was made by the TA.

In other words, the illegality charged to the ST assessment expressed in the collection notes contested in the present proceedings arises directly and clearly from the tenor of the applicable provision of incidence, whereby it does not seem necessary to resort to the analysis of the alleged unconstitutionalities invoked by the Claimant.

Resolved, therefore, the question at this level of application of the infra-constitutional norm the knowledge of the questions raised by the Claimant as to the alleged unconstitutionalities is precluded.

IV. REGARDING THE REQUEST FOR COMPENSATORY INTEREST

The provision of paragraph b), of no. 1, of art. 24th of LRATM, provides that the arbitral decision on the merit of the claim of which no appeal or objection lies binds the tax administration from the end of the deadline set for appeal or objection, and this administration - in the exact terms of the success of the arbitral decision in favor of the taxable person and until the end of the deadline set for voluntary execution of the sentences of the tax courts - must restore the situation that would have existed if the tax act object of the arbitral decision had not been performed, adopting the acts and operations necessary to this effect.

Such provision is in harmony with the provision of art. 100th of the GTL, applicable to the case by virtue of the provision in paragraph a), of no. 1, of art. 29th of LRATM, in which it is established that "The tax administration is obliged, in case of total or partial success of complaints or administrative appeals, or of judicial proceedings in favor of the taxable person, to the immediate and full restoration of the situation that would have existed if the illegality had not been committed, including the payment of compensatory interest, in the terms and conditions provided by law."

Provides, in turn, article 43rd, no.1, of the General Tax Law that "compensatory interest is due when it is determined, in administrative complaint or judicial objection, that there was error attributable to the services resulting in payment of the tax liability in an amount superior to that legally due."

From the analysis of the evidentiary elements contained in the present proceedings it is possible to infer that the TA had total and complete knowledge of the relevant factual elements to proceed to the correct assessment of the tax. It had the opportunity to revoke the act, either in administrative complaint proceedings or in hierarchical appeal proceedings. In addition, with the notification of the arbitral request filed and the means of proof attached to the request the TA had the possibility of revoking the act stopping its effects, which did not occur. Not having done so and maintaining the assessment and collection notes tainted with error concerning the presuppositions, and therefore illegal, it is obliged to indemnify.

Thus, in view of the provision of article 61st of Code of Administrative Tax Procedure and considering that the requirements of the right to compensatory interest are met, that is, verified the existence of error attributable to the services resulting in payment of the tax liability in an amount superior to that legally due, as provided for in no. 1 of art. 43rd of the GTL, the Claimant is entitled to compensatory interest at the legal rate, calculated on the amounts paid by the Claimant, from the date on which the payment was made until its complete reimbursement, as a way of achieving the restoration of the situation that would have existed if the illegality had not been committed.

It does not seem that there are other relevant questions raised by the parties.

V - DECISION

In these terms, this Arbitral Tribunal decides:

a) To judge the arbitral request totally well-founded and in consequence annul the assessment of stamp tax expressed in the collection notes identified above;

b) To condemn the Respondent to reimburse the Claimant of the amounts that have been paid improperly as title of ST, with reference to the year 2012, in the global amount of €42,315.40

c) To condemn the Tax and Customs Authority to the payment of compensatory interest to the Claimant, from the date of each of the improper payments, until its complete restitution.

d) To condemn the Respondent to the payment of arbitral costs.

VI. Value of the proceedings

In accordance with the provision of art. 315th, no. 2, of the Code of Civil Procedure and 97th-A, no. 1, paragraph a), of the Code of Administrative Tax Procedure and 3rd, no. 2, of the Regulation of Costs in Tax Arbitration Proceedings the value of the proceedings is set at €42,315.40

VII. Costs

In accordance with art. 22nd, no. 4, of LRATM, the amount of costs is fixed at € 2,142.00, in accordance with Table I attached to the Regulation of Costs in Tax Arbitration Proceedings, to be borne by the Claimant.

Notify.

Lisbon, 25 February 2016

The Arbitrating Judge,

(Prof. Dr. Maria do Rosário Anjos)

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

([2]) BAPTISTA MACHADO, Introduction to Law and the Discourse of Legitimation, page 182.

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

([4]) In this sense the Supreme Administrative Court has been deciding, as can be seen from the awards of 09-04-2014, delivered in cases nos. 01870/13 and 048/14, and of 23-04-2014, delivered in cases nos. 0271/14, 0270/14 and 0272/14, available at http://www.dgsi.pt.