Process: 594/2017-T

Date: May 15, 2018

Tax Type: Selo

Source: Original CAAD Decision

Summary

This CAAD arbitral decision (594/2017-T) addresses the Stamp Tax (Imposto do Selo) liability of a Brazilian resident who inherited Portuguese assets from her de facto partner who died in 2008. The claimant contested assessments totaling €18,208.89 issued in July 2017, arguing three main grounds: (1) the right to assess had lapsed under Article 39 of the Stamp Tax Code (CIS), as the death occurred in 2008 but assessment only happened in 2017; (2) the tax debt was time-barred by prescription; and (3) she should benefit from the exemption in Article 6(e) of the CIS applicable to spouses and heirs. The claimant had filed the required declaration (Model 1) in July 2016, after judicial partition proceedings in Brazil concluded in 2015. The core legal issues involve whether pending foreign judicial proceedings suspend Portuguese tax assessment deadlines, whether de facto unions qualify for stamp tax exemptions on inheritances (which Portuguese law traditionally reserved for formal marriages), and the calculation of limitation periods when the taxable event (death) occurs abroad but the asset declaration is filed years later. This case highlights conflicts between Brazilian and Portuguese succession law, the territorial scope of Portuguese tax exemptions, and procedural questions about assessment timing when cross-border estates involve protracted foreign litigation.

Full Decision

ARBITRAL DECISION (consult full version in PDF)

Parties

Claimant: A...., NF..., holder of passport ..., issued by the Federative Republic of Brazil, on 24.10.2013, resident at Rua..., no..., ..., CEP ... ..., São Paulo, Brazil

Respondent: Tax and Customs Authority (AT)

I. REPORT

On 13 November 2017, the Claimant filed with CAAD a request for arbitral pronouncement (ppa) requesting, under the Legal Regime for Arbitration in Tax Matters (RJAT), the constitution of a singular arbitral tribunal (TAS).

THE REQUEST

The Claimant, as heir and head of household by death occurring on 12.06.2008 in São Paulo – Brazil, of B..., NF..., with whom she lived in a de facto union, seeks, with regard to Stamp Tax item 1.2 of the General Table of Stamp Tax, incidenting on the gratuitous transfer of assets located in Portugal, contained in the assessments ... of 05.07.2017 (first) and ... of 17.07.2017 (additional), the first of 18,208.20 euros and the second of 18,208.69 euros (here including 0.49 euros of compensatory interest) to obtain their annulment, as they are affected by illegalities;

She concludes her request in the following terms: "in these terms and in the best interests of law, the present request for the constitution of an arbitral tribunal should be accepted and granted, so that it pronounces, declaring: a) - The annulment of the tax assessment act for Stamp Tax, pursuant to which the transfer of the assets in question was considered to be subject to payment of ST by: I - on the date when it occurred, the right to assessment had already lapsed, II - on the date when the assessment occurred, any tax was already barred by prescription. b) - If it is understood that there are conditions to assess the assessment act, then it is understood that this Tribunal should recognize the subjective exemption of the now Claimant, thus not being obliged to any taxation (if the same had been assessed within the legally prescribed period), under penalty of violation of the provisions of Article 45 of the LGT, of No. 1, of Article 39 of the CIS, of Article 48 of the CIS and of Article 6 letter e), of the CIS. c) - In that measure, the requirement to pay Stamp Tax in the amount of 18,208.20€, costs, and interest should be declared as undue, thus annulling the assessment act no. participation no.../no..., dated 17.07.2017, and demonstration of the assessment no.../no... dated 05.07.2017, because it is illegal and undue; d) - Likewise, and as a consequence of that illegality, the extinction of the forced collection process for the amounts contained in the citation that is proceeding under no. ...2017... should be declared".

THE CAUSE OF ACTION

Although the Claimant only delivered on 28.07.2016 the declaration of Model 1 of Stamp Tax (notification of gratuitous transfers) and the partition of the assets of the "de cujus" was decided in the Court of São Paulo – Federative Republic of Brazil (Court of ... Family and Succession Court of São Paulo County), by judgment of 19 March 2014, confirmed by judgment of the Court of Appeal of …, of 24 September 2015;

because the date of death, in Brazil, was 12 June 2008, she understands that the conditions for the lapse of the right to assessments (occurring on 05.07.2017 and 17.07.2017) and the prescription of the tax debt occur, hence the illegality in the assessments.

On the other hand, having in account that the Claimant, as a partner (de facto union), pursuant to Article 1790 of the Brazilian Civil Code, is an heir of the deceased and such quality was recognized in the judicial decisions indicated above, she understands that she benefits from the exemption established in letter e) of Article 6 of the CIS, not reflected in the assessments, whereby for this reason they are tainted by illegality.

The Claimant further bases the request for extinction of the forced collection process on the subsequent consequence of the success of the annulment of the assessments.

OF THE SINGULAR ARBITRAL TRIBUNAL (TAS)

The request for constitution of the TAS was accepted by the President of CAAD and automatically notified to the AT on 13-11-2017.

By the CAAD Ethics Council, the undersigned of this decision was appointed as arbitrator, and the parties were notified thereof on 08.01.2018. The parties expressed no intention to refuse the appointment, in accordance with Article 11 No. 1 letters a) and b) of the RJAT and Articles 6 and 7 of the Ethics Code.

The Singular Arbitral Tribunal (TAS) has been, since 30.01.2018, regularly constituted to assess and decide the object of this dispute (Articles 2 No. 1 letter a) and 30 No. 1, of the RJAT).

All these acts are documented in the records contained in the Case Management System which are hereby considered reproduced.

Already on 30-01-2018 the AT was notified in accordance with Article 17-1 of the RJAT. It responded on 05.03.2018, attaching 3 documents to the response and the Administrative File (PA) composed of a computerized file, designated "PRG ... pdf" with 31 pages.

By order of 05.03.2018, the parties were invited to take a position on the necessity of holding or not the meeting of parties referred to in Article 18 of the RJAT and if they agreed to its non-holding, the TAS would set, in due course, a period of 10 days for written successive arguments.

The Claimant, by request of 07.03.2018 and the Respondent, by request of 14.03.2018, agreed to the non-holding of the meeting of parties of Article 18 of the RJAT, whereby by order of 14.03.2018, a period of 10 days was set for submission of written successive arguments.

On 20.03.2018 the Claimant submitted written arguments and on 10.04.2018 the Respondent counter-argued. By order of 23.04.2018, corrected on 26.04.2018, 15.05.2018 was scheduled as the deadline for the pronouncement of this decision.

PROCEDURAL REQUIREMENTS

Legitimacy, capacity and representation – The parties are legitimate, possess legal personality and judicial capacity and are represented (Articles 4 and 10 No. 2 of the RJAT and Article 1 of Ordinance No. 112-A/2011, of 22 March).

Principle of contradiction - The AT was notified in accordance with letter k) of this Report. All procedural documents and all documents attached to the case were made available to the respective counterpart in the CAAD Case Management System. The attachment of all documents always notified both parties.

Dilatory exceptions - The arbitral procedure does not suffer from nullities and the request for arbitral pronouncement is timely since it was presented within the prescribed period in letter a) of No. 1 of Article 10 of the RJAT, as results from the fact that the Claimant presented the request for pronouncement on 13.11.2017 and because it is a tax to be paid immediately - with discount - or in installments, but always with deadline of 30.09.2017 (according to assessment notes which constitute documents nos. 1 and 2 attached with the PPA), in view of letter a) of Article 102 of the CPPT.

SUMMARY OF THE CLAIMANT'S POSITION

The Claimant states that "the inheritance in question resulted from the death of Mr. B..., occurring on 12.06.2008 or that is, the death occurred 9 years ago, as results from the certificate already delivered to the Finance Service of...", "at the date of death, the ... Claimant lived in de facto union with the deceased as was expressly declared and reported to the Finance Service of...", "as moreover also results from the certificate of the judgment handed down in the judicial inventory process that took place in Brazil, which judgment was subject to reconsideration of judgment by means of Decision handed down by the Court of Appeal of …, on 28.09.2015, which proceeded under no. .../15..., as per certified copy that was delivered to the Finance Service of...", adding that "... so much so that she was recognized as heir under Brazilian law".

She invokes the lapse of the right to assessment, pursuant to No. 1 of Article 39 of the Stamp Tax Code, since "... the death occurred on 12.06.2008, thus the deadline for assessing the tax ended on 13.06.2016 whereby at the present date, and already on 17.07.2017 (date of the demonstration) when notified of the content of the assessment, the right to assessment by the Tax Authority had lapsed, which exception is expressly invoked for the appropriate legal effects".

She further invokes the prescription of the tax debt under the provisions of No. 1 of Article 48 of the Stamp Tax Code, concluding that "... given that the tax fact occurred at the moment of death - 12.06.2008 - at the present date - November 2017 - any eventual tax debt by way of stamp tax has long since been barred by prescription, more precisely since 13.06.2016", "prescription that expressly ... she invokes for all legal purposes, and which despite having been invoked before the Tax Authority, it did not expressly recognize as it was obliged to do, and which therefore should be declared having in account the date on which the AT proceeded to the demonstration of the assessment — 17.07.2017".

Finally, the Claimant invokes, as to herself, the exemption from stamp tax that should have been reflected in the assessments, under letter e) of Article 6 of the Stamp Tax Code, referring to the following: "being the now appellant in the situation provided for in the said letter e), of the cited Article 6, duly recognized by judgment handed down in the Court of São Paulo, Brazil, and legally revised by the Court of Appeal of …, thus, with full effectiveness in the Portuguese legal order, the Tax Authority could not ignore such fact, assessing tax when the same is not legally due because she is subjectively exempt from it".

She concludes requesting in the following terms: "in these terms and in the best interests of law, the present request for the constitution of an arbitral tribunal should be accepted and granted, so that it pronounces, declaring: a) - The annulment of the tax assessment act for Stamp Tax, pursuant to which the transfer of the assets in question was considered to be subject to payment of ST by: I - on the date when it occurred, the right to assessment had already lapsed, II - on the date when the assessment occurred, any tax was already barred by prescription. b) - If it is understood that there are conditions to assess the assessment act, then it is understood that this Tribunal should recognize the subjective exemption of the now Claimant, thus not being obliged to any taxation (if the same had been assessed within the legally prescribed period), under penalty of violation of the provisions of Article 45 of the LGT, of No. 1, of Article 39 of the CIS, of Article 48 of the CIS and of Article 6 letter e), of the CIS. c) - In that measure, the requirement to pay ST in the amount of 18,208.20€, costs, and interest should be declared as undue, thus annulling the assessment act no. participation .../no..., dated 17.07.2017, and Demonstration of the assessment no.../no... dated 05.07.2017, because it is illegal and undue. d) - Likewise, and as a consequence of that illegality, the extinction of the forced collection process for the amounts contained in the citation that is proceeding under no. ...2017... should be declared".

In the arguments hearing, the Respondent reiterated what it had already stated in the request for pronouncement and attached a document that it had appended to the ST Model that it presented to the AT on 28.07.2016.

SUMMARY OF THE RESPONDENT'S POSITION

The Respondent first invokes the exception of incompetence of the TAS regarding the "request for recognition of subjective exemption", stating with regard to the Legal Regime for Tax Arbitration: "does not appear, in the list of competences attributed to this Arbitral Tribunal, any that would allow it to recognize any right or exemption".

Regarding the request for extinction of the tax enforcement proceedings, it states "... it also appears, regarding this request, that the Tribunal lacks competence to assess the request in these terms, because, as was seen previously, in arbitral proceedings only the legality of assessment acts is assessed".

Regarding the invoked lapse of the right to assessment and the prescription of the tax debt, combining the Response with the content of the counter-arguments, it states "for the same questions of fact and law, the same arguments apply with respect to the alleged prescription", defending that "... recall that the death of B... occurred in Brazil on 12 June 2008, and that the partition of his assets was decided, in the same country, by judgment of 19 March 2014", "which judgment the Court of Appeal of … endorsed on 24 September 2015" and "although the judgment of the CA… became final on 12 October 2015, the Claimant only approached the FS of ... on 28 July 2016", "which means that, until that date, the AT had no, nor could have, knowledge of the death of B..., and therefore could not initiate any assessment procedure", "because the Claimant did not comply with the deadline provided in Article 26 No. 3 of the Stamp Tax Code, nor with that of Article 34 of the same Code".

And it continues stating: "thus, ... the Claimant cannot now seek to benefit from a situation originated by her double omission, because without the communication by the taxpayer of the occurrence of death and the homologation of the partition, the AT could not become aware of the occurrence of the tax fact nor proceed to the ex officio assessment of the tax", "as, moreover, is clear from the exceptions contained in Nos. 2 and 3 of the aforementioned Article 39 of the Stamp Tax Code, from which one can understand the intentions of the legislator in placing the initial term of the eight-year period at the moment when the heirs are determined or known"

It further states: "regarding the importance of the date of knowledge of the facts, although relating to a matter different from that of the present proceedings, see the decision of the Northern Administrative Court of 21-10-2004 (case No. 00092/04)". It concludes: "arguments which, in turn, are in accordance with what is determined in Articles 329, 331 and 325 of the Civil Code, with the first providing that 'the period of lapse, if the law does not fix another date, begins to run at the moment when the right can legally be exercised.''"

Regarding the exemption invoked by the Claimant, it states that: "... the notification of the death occurred on 28 July 2016, by means of the completion of the declaration mod.1 of Stamp Tax and its respective annexes", and because "... in our legal tax order the principle of declaration applies in determining the taxable matter, provided in Article 75 of the LGT and in Article 27 No. 2 of the Stamp Tax Code", "... the assessment in question could not fail to have as its subject the collective income determined on the basis of the elements declared by the Claimant who not only did not fill in various elements such as the spouse's NIF, as in the field that was designated for it, did not identify herself as a spouse", whereby "... in view of the legal norms cited, without prejudice to the elements presented by the Claimant, in view of what she declared in model 1, the AT assessed in conformity".

It further states that "if the Tribunal eventually considers the assessment illegal regarding the Claimant, by understanding that she is exempt in accordance with Article 6 letter e) of the Stamp Tax Code, which is only admitted out of a duty of representation, it cannot do so regarding the remaining heirs since, as to those, there is no exemption applicable to them, nor does the Claimant invoke it, and therefore only the partial annulment of the disputed assessment should be determined in the part that refers to the ST taxation of the Claimant".

And it concludes: "furthermore, it should always be recalled that, in accordance with Article 2 No. 2 letter a) of the Stamp Tax Code, the head of household, even if exempt, is responsible for payment of the inheritance tax of the undivided estate, relating to other non-exempt heirs".

It concludes by arguing for the success of the dilatory exceptions invoked or if otherwise understood, arguing for the dismissal of the requests.

II - ISSUES FOR THE TRIBUNAL TO SOLVE

The first issue to decide is the invoked exception of incompetence of arbitral jurisdiction, ratione materiae, regarding the request concerning the verification of the exemption norm of letter e) of Article 6 of the Stamp Tax Code.

Second, the "request concerning compensation for omission of action by the tax enforcement body" will be analyzed in light of what is stated in Articles 38 and 39 of the PPA (request for arbitral pronouncement), since the AT configures it as not being able to be assessed by this TAS, by incompetence, ratione materiae.

The TAS will also assess the circumstance that, in this case, there are two assessments, covering the same tax fact, with the second differing from the first, both because it appears with an additional 0.49 euros of compensatory interest, and because the beneficiaries of the transfers are 4 and not 3, as occurs in the first assessment.

Third, the non-conformities with law, alleged by the Claimant regarding the assessments, of lapse of the right to assessment and of prescription of the tax debt, will be assessed.

Then, if it is concluded that the non-conformities with law aforementioned do not proceed, it will be assessed whether or not the exemption of letter e) of Article 6 of the CIS, invoked by the Claimant, should have been taken into account in the assessments.

Finally, the request for extinction of the tax enforcement proceedings, configured as a matter that the TAS cannot assess due to lack of competence over the subject matter, will be assessed.

III. PROVEN AND UNPROVEN FACTS OF SUBSTANCE. GROUNDS

Regarding the facts of substance, the Tribunal does not have to pronounce on everything that was alleged by the parties, but rather has the duty to select the facts that matter for the decision and to distinguish the proven facts from the unproven (as per Article 123 No. 2, of the CPPT and Article 607 No. 3 of the CPC, applicable ex vi Article 29 No. 1, letters a) and e), of the RJAT).

Thus, the relevant facts for the judgment of the case are chosen and defined according to their legal relevance, which is established in view of the various plausible solutions of the question(s) of law (as per the prior Article 511 No. 1, of the CPC, corresponding to the current Article 596, applicable ex vi of Article 29 No. 1 letter e), of the RJAT).

Thus, having in consideration the positions assumed by the parties and the documentary evidence attached, the following facts were considered proven, with relevance to the decision, with the following enumerated below, indicating, for each point brought to the established facts, the means of proof that were considered relevant as grounds.

Proven Facts

  • The Portuguese citizen, engineer, B..., with NF..., died on 12.06.2008, in the state of widower of C..., at Rua..., ..., ..., São Paulo, State of São Paulo, Federative Republic of Brazil – as per Articles 13 to 16 of the PPA and documents nos. 3 and 5 attached with the PPA (Brazilian death certificate of the "de cujus" and Portuguese entry of death of the former spouse);

  • The Claimant A..., NF..., lived in de facto union with B..., with NF..., as per judgment handed down on 19 March 2014, in case ..., by the Court of ... Family and Succession Court of São Paulo County, Brazil, which endorsed the partition of the assets left by the "de cujus", confirmed by judgment of the Court of Appeal of …, of 24.09.2015, in case .../15... … – as per Articles 17 to 19 of the PPA, documents nos. 4 and 6 attached with the PPA and Article 14 of the Response;

  • On 28.07.2016 the Claimant delivered to the AT the declaration of model 1 of Tax model - notification of gratuitous transfers. In Section II, relating to the identifying elements of the author of the transfer, the Claimant did not fill in any fields with any element relating to the marital status of the deceased, the marriage regime or NIF of the spouse. In Section IV – relating to the identification of the head of household and the NIF of the Estate - was left blank. In Section V, as beneficiaries of the transfer, the Claimant identified herself and also D..., E... and F... . In the identification of the first beneficiary – the Claimant – she indicated "H" (Heir) in the type of beneficiary and, in the indication of the relationship, indicated "H". Regarding the remaining beneficiaries, she indicated the quality of heirs ("H") and Others ("O") in the relationship. As declared assets there are assets located in Portuguese territory, better identified in the annexes to the notification – as per Articles 5 to 13 of the Response and document no. 1 attached with the response and non-challenge or disagreement regarding the document by the Claimant, in the arguments hearing;

  • On 28.07.2016 the Claimant also delivered, together with the declaration referred to in the previous item, a request addressed to the Chief of the Finance Service, where she informed that D... was a sister of the deceased, E... was a brother of the deceased and F... was married to E..., brother of the deceased, under the universal community of goods regime (Brazilian) – as per point 9 of the Claimant's arguments and document no. 1 attached with the Claimant's arguments, in light of the lack of challenge by the AT in counter-arguments of the Respondent, assessed in accordance with No. 7 of Article 110 of the CPPT;

  • On 17.07.2017 the Claimant, as head of household of the estate NF..., was notified of the following assessment (first) of stamp tax:

as per Article 2 of the PPA, document no. 3 in annex to the PPA and ex officio verification of the TAS on the CTT Express website of the registration RY...PT;

  • On 28.07.2017 the Claimant, as head of household of the estate NF..., was notified of the following assessment (additional) of stamp tax:

as per Article 2 of the PPA, document no. 2 in annex to the PPA and ex officio verification of the TAS on the CTT Express website of the registration RY...PT;

  • On 04.08.2017 the Claimant filed a gracious appeal regarding the assessments referred to above, without a decision having been issued until the date of delivery by the Claimant of the PPA to CAAD – as per Article 3 of the PPA, document no. 4 in annex to the PPA and Article 16 of the Response from the AT;

  • On 15.10.2017 the Claimant, as head of household of the estate NF..., was notified by the Finance Service … —..., of a tax enforcement action, in the amount of 18,344.51€ - as per Article 1 of the PPA and document no. 1 in annex to the PPA;

  • On 13 November 2017 the Claimant delivered to CAAD the present request for arbitral pronouncement (ppa) – registration of entry in the CAAD SGP of the request for arbitral pronouncement.

Unproven Facts

There is no other factual matter alleged that has not been considered proven and that is relevant for the resolution of the procedural dispute.

The facts brought to the established facts are configured as being accepted, expressly or tacitly, by both parties.

IV. ASSESSMENT OF THE ISSUES FOR THE SINGULAR ARBITRAL TRIBUNAL (TAS) TO SOLVE

1. Exception of incompetence of arbitral jurisdiction, ratione materiae, regarding the request concerning the application of the exemption norm of letter e) of Article 6 of the Stamp Tax Code.

No. 1 of Article 2 of the RJAT states that "the competence of arbitral tribunals comprises the assessment of the following pretensions: a) the declaration of illegality of acts of assessment of taxes, self-assessment, withholding at source and payment on account; b) the declaration of illegality of acts of determination of the taxable matter when it does not give rise to the assessment of any tax, of acts of determination of collective income and of acts of fixing equity values.(…)".

As is clear, the exemption of letter e) of Article 6 of the CIS is an automatic exemption, which operates by force of law, since no legal provision provides for a procedure for its verification (No. 1 of Article 4 of the EBF) by the Tax Authority.

Such fiscal benefit is even irrenunciable as results, expressly, from No. 8 of Article 12 of the EBF.

Now, when arbitral tribunals assess the legality of "assessment" of taxes, they must assess the entire course of the tax item: incidence - tax exclusions - determination of collective income - rate - collection - payment.

The verification of the existence of facts interrupting taxation (in this case the verification of the existence of the conditions for a subjective, automatic, irrenunciable exemption and functioning "ope legis", contemporaneous with the assessment procedure) is obviously a task that is incumbent on the arbitral judge, without which his competence to assess the legality of an assessment of taxes would be compromised, operating in the assessment procedure, given its automatic nature.

The alleged exception of incompetence of the TAS ratione materiae, regarding the request concerning the application of the exemption norm of letter e) of Article 6 of the Stamp Tax Code, does not therefore proceed.

2. Request for compensation for omission of action by the tax enforcement body in light of what is stated in Articles 38 and 39 of the PPA (request for arbitral pronouncement), since the AT configures it as not being able to be assessed by this TAS, by incompetence ratione materiae.

In Articles 38 and 39 of the PPA the Claimant, alleging that the AT should, in the tax enforcement proceedings referred to in point 8 of the established facts, assess the alleged prescription of the debt, states the following:

"... the omission, on the part of the tax enforcement body, of the duty to declare the debt prescribed at the opportune moment and to refrain from the practice of subsequent enforcement acts, constitutes a wrongful act in light of the concept of wrongfulness provided in Article 9 of Law No. 67/2007, of 31 December (diploma that establishes the regime of extracontractual civil liability of the State and other public legal entities in the domain of acts of public management), generating the right of the injured party to be compensated for the damages caused by such omissive act that constitutes the wrongful act". "Faced with the omission of the declaration of the alleged prescription there should be declared and recognized that we are in the presence of a serious omission by the tax enforcement body, which in itself constitutes a violation of the duty to declare the debt prescribed at the opportune moment and to refrain from the practice of subsequent enforcement acts, wrongful act in light of the concept of wrongfulness provided in Article 9 of Law No. 67/2007, of 31 December (diploma that establishes the regime of extracontractual civil liability of the State and other public legal entities in the domain of acts of public management), which generates the right of the injured party to be compensated for the damages caused by such omissive act that constitutes the wrongful act".

However, the Claimant, having stated what she stated, did not come in the final part (concluding or summary part of the request) to petition for anything whatsoever regarding this topic, whereby the TAS considers that it was mere argument and mere sustenance of the request that came to be concretized at the end, where this topic was not included.

The way the issue is raised does not generate in the TAS the obligation to pronounce on the matter, no knowledge thereof being taken, and, in view of No. 1 of Article 2 of the RJAT, this request would always be dismissed, if it were to be considered as concretely formulated.

3. Request for extinction of the tax enforcement proceedings, configured as a matter that the TAS cannot assess due to lack of competence over the subject matter.

In the last segment of the Claimant's request, it was written: "likewise, and as a consequence of that illegality, the extinction of the forced collection process for the amounts contained in the citation that is proceeding under no. ...2017... should be declared", referring to the tax enforcement action mentioned in point 8 of the proven facts.

In accordance with No. 1 of Article 2 of the RJAT "... the competence of arbitral tribunals comprises the assessment of the following pretensions: a) the declaration of illegality of acts of assessment of taxes, self-assessment, withholding at source and payment on account; b) the declaration of illegality of acts of determination of the taxable matter when it does not give rise to the assessment of any tax, of acts of determination of collective income and of acts of fixing equity values.(…)".

It results from this that this TAS does not have competence to assess this request, but nor is the Claimant, in case of total or partial annulment of the assessments here in question, prevented from requesting the extinction of the enforcement action, total or partial, by attaching this decision, when it becomes final, if the AT has not previously promoted its extinction or alteration ex officio, as results from letter b) of No. 1 of Article 176 of the CPPT, since every tax enforcement action is based on an enforceable title, which in this case will be the certificate of the assessment of stamp tax (Article 162 of the CPPT) that was not paid within the prescribed period.

The request contained in the PPA therefore does not proceed, in this part, by the success of the exception of incompetence of the arbitral jurisdiction of this TAS.

4. Existence of two assessments, covering the same tax fact, with the second differing from the first, both because it appears with an additional 0.49 euros of compensatory interest, and because the beneficiaries are 4 and not 3, as occurs in the first assessment.

In this case, perplexity arises from the existence of two assessments, based on the same tax fact, as can be verified from points 5 and 6 of the established facts. And neither the Claimant, nor the Respondent, addressed this specific topic, since both parties reasoned as if it were a single assessment, being that

  • The first – point 5 of the facts – dated 05.07.2017, is said to be the "first", has three beneficiaries and assessments and the total assessed is 18,208.20 euros, with the collective income being 182,082.00 euros;

  • The second – point 6 of the facts – dated 17-07-2017, is said to be "additional", has four beneficiaries and assessments and the total assessed is 18,208.69 euros, with the collective income being 182,082.00 euros;

No justification is given in this proceeding regarding the necessity of the additional assessment, which additionally relative to the first, only adds 0.49 euros of compensatory interest and instead of the initial 3 beneficiaries of the transfers, now there are 4 beneficiaries.

Analyzing the second assessment, we find that it is considered as an "heir", with succession rights equal to the other heirs (with a hereditary share as if she were a sister of the deceased), the spouse of E..., sibling of the "de cujus", named F... NF..., certainly because she is married under the universal community of goods regime (Brazilian) (Articles 1667 to 1671 of the Brazilian Civil Code, available at - http://www.planalto.gov.br/ccivil_03/leis/2002/l10406) which, in the reading that this TAS makes, does not appear to be the most appropriate.

The share that pertains to E..., NF..., sibling of the "de cujus" (bilateral, according to the Brazilian CC), together with his spouse F... NF..., even being an heir by force of the goods regime of the couple, seems to should be 1/3 of the inheritance, as will result from point III of Article 1790 of the Brazilian Civil Code, available at the site referred to in the preceding paragraph.

This alteration is necessary, because the Claimant, if exempt from stamp tax, will have fiscal benefit over 1/3 of the inheritance (first assessment) and not over ¼ of the inheritance (second assessment, the additional one).

In this conformity, assessment of this non-conformity with law (in this case, Brazilian law) is deferred to the operative part of this decision, since the CA... made valid, in Portuguese jurisdiction, the partition done in Brazilian jurisdiction and it is not apparent from the documents attached to this proceeding (notably the certificate of the judgment of the CA...), that the partition was another, in light of what results from Brazilian law.

5. Non-conformities with law, alleged by the Claimant regarding the assessments. Lapse of the right to assessment and prescription of the tax debt.

Regarding lapse

In Article 26 of the Stamp Tax Code, the obligation of the head of household and the beneficiaries of gratuitous transfers to present the Model 1 declaration of ST is enshrined, notifying the death of the author of the succession, until the end of the 3rd month following the birth of the tax obligation (Nos. 1, 2 and 3 of Article 26 of the CIS).

In accordance with letter p) of Article 5 of the CIS, the tax obligation arises on the date of the opening of the succession.

In accordance with Article 2031 of the Civil Code, succession opens at the moment of death of its author and in the place of his domicile.

Regarding the invoked lapse of the AT's right to proceed to the assessment of stamp tax, by the lapse of a period exceeding 8 years, reference is made to Article 39 of the Stamp Tax Code (CIS) (current wording which, insofar as relevant to this case is identical to that in force in 2008, the date of death of the author of the inheritance):

"1 - Tax may only be assessed within the periods and terms provided in Articles 45 and 46 of the LGT, save in the case of acquisitions of assets taxed by item 1.1 of the General Table or gratuitous transfers, in which the assessment period is eight years counted from the transfer or from the date on which the exemption ceased to have effect, without prejudice to the provisions of the following items.

2 - If any assets are delivered to the absentee for whose acquisition he has not yet been assessed tax, the eight years shall be counted from the date of delivery.

3 - If the share of the co-heir seller is unknown, for purposes of Article 26 of the CIMT, or if the assessment process is suspended, in accordance with Articles 34 and 35, to the eight years shall be added the time during which the lack of knowledge or suspension lasted.

4 - In acts or contracts by authenticated private document, or any other title, when such form is permitted as an alternative to public deed, the period of lapse of the tax due is counted from the date of promotion of real estate registration."

And Article 34 of the CIS states:

"1 - If a judicial dispute is pending concerning the quality of heir, validity or object of the transfer, or expropriation proceedings for public utility of assets belonging to the inheritance or donation, the head of household, the executor or the donees may request, at any time, the suspension of the assessment process, by presenting a certificate of the status of the case.

2 - The suspension applies only to the assets that are the subject of the dispute.

3 - Once the decision becomes final, the interested parties must declare the fact within 30 days to the competent finance office, attaching a certificate of the decision, proceeding with the assessment process or reforming it as necessary, in accordance with what has been judged."

In turn, Article 329 of the Civil Code states that "the period of lapse, if the law does not fix another date, begins to run at the moment when the right can legally be exercised".

No. 4 of Article 45 of the LGT states that "the period of lapse is counted ... in taxes of single obligation, from the date on which the tax fact occurred ..."

Letter a) of No. 2 of Article 46 of the LGT refers to the period of lapse being suspended "in case of judicial dispute whose resolution depends on the assessment of the tax, from its inception until the judgment becomes final".

Now, as is apparent from the established facts, the Claimant did not comply with the obligation prescribed in Article 26 of the CIS, within the period of 3 months counted from the end of the month in which the tax obligation was born.

She only complied with this tax obligation on 28.07.2016. It was only on this date that the AT was notified of the death of the author of the inheritance, which is here decisive, since the institution of the lapse of the right to assess stamp tax is designed in tax law, always assuming that taxpayers comply with their declaration obligations and do not intend to benefit, in their favor, a regime, by virtue of failing to comply with those obligations.

That is why No. 1 of Article 34 of the CIS establishes the regime of suspension of the assessment procedure, while a judicial process is pending that influences the assessment, as happened in the present case.

In the concrete case, in light of the proven facts, this TAS concludes that the period of lapse was suspended, from the birth of the tax obligation until the judgment of the CA... became final, which confirmed the judgment of partition of the Court of São Paulo, by force of the regime of Article 34 of the CIS and of letter a) of No. 2 of Article 46 of the LGT.

The alleged lapse of the right to assessment of stamp tax here in dispute therefore does not proceed.

Regarding prescription of the tax debt

To this effect, reference is made to Article 48 of the CIS:

"1 - Stamp tax is barred by prescription in accordance with Articles 48 and 49 of the LGT.

2 - If any assets are delivered to the absentee for whose acquisition he has not yet been assessed tax, the period of prescription is counted from the following year of the delivery.

3 - If the share of the co-heir seller is unknown, for purposes of Article 26 of the CIMT, or if the assessment process is suspended, in accordance with Articles 34 and 35, to the period of prescription shall be added the time during which the lack of knowledge or suspension lasted.

4 - In acts or contracts by authenticated private document, or any other title, when such form is permitted as an alternative to public deed, the period of prescription of the tax is counted from the date of promotion of real estate registration."

Also here the suspension regime is referred to Article 34 of the CIS, as previously transcribed.

No. 1 of Article 48 of the LGT states that "tax debts are barred by prescription ... in taxes of single obligation, from the date on which the tax fact occurred"...

And No. 1 of Article 306 of the Civil Code states that "the period of prescription begins to run when the right can be exercised; if, however, the beneficiary of prescription is only obliged to perform after a certain time has elapsed from the interpellation, only after that time does the period of prescription begin".

The considerations stated above apply here, regarding the lapse of the right to assessment, as to the failure to comply with the declaration obligation of Article 26 of the CIS and as to the pendency of the partition proceedings in the Court of São Paulo and subsequently in the confirmation of the judgment in the CA....

Resulting, in accordance with the combined terms of Articles 49 and 34 of the CIS, with No. 1 of Article 306 of the CC, that the period of prescription only initiated its running after the judgment of the CA... became final, which confirmed the judgment of partition of the Court of São Paulo.

The alleged prescription of the stamp tax obligation here in dispute therefore does not proceed.

6. Application of the exemption norm of letter e) of Article 6 of the CIS, invoked by the Claimant, in her condition of living in de facto union with the "de cujus".

As appears from point 2 of the established facts, it was proven that the Claimant lived in de facto union with the author of the inheritance, whereby, in the part of stamp tax that was assessed to her, she benefits from the exemption established in letter e) of Article 6 of the CIS. An illegality occurred, therefore, in the assessments here in question.

According to item III of Article 1790 of the Brazilian Civil Code (available at http://www.planalto.gov.br/ccivil_03/leis/2002/l10406.htm) the share of the companion or partner is one-third of the inheritance when concurring with other successors. Being this aliquot part of the inheritance that benefits from exemption, in the part of assets located in Portuguese territory.

Meaning that, to the two siblings of the author of the inheritance, shall pertain the remaining 2/3 of the inheritance, there being no exemption norm, in stamp tax, that prevents taxation.

This part of the PPA thus proceeds, as moreover the AT admits in Articles 60 to 63 of the response and in point 19 of the counter-arguments.

V - OPERATIVE PART

In accordance with the terms and on the grounds set out above:

  1. The exception of incompetence of the TAS, ratione materiae, regarding the request concerning the application of the exemption norm of letter e) of Article 6 of the Stamp Tax Code is judged to be without merit;

  2. No knowledge is taken of compensation for omission of action by the tax enforcement body, in light of what is stated in Articles 38 and 39 of the PPA, a matter that the AT configures as not being able to be assessed due to incompetence ratione materiae, since in the final request, the Claimant did not concretely place this matter for judgment and the ensuing decision;

  3. The requests for verification of the lapse of the right to assessment and of prescription of the tax obligation are judged to be without merit, as the conditions are not met, in accordance with the above terms;

  4. The PPA is judged to be partially successful, in the part of the assessment of stamp tax imputed to the Claimant, in the part in which her hereditary share was considered to be less than 1/3 of the inheritance of the assets of the deceased located in Portuguese territory and also, in the part in which compensatory interest was assessed.

  5. Consequently, the assessments contained in the documents reproduced in points 5 and 6 of the proven facts are partially annulled, as they are in non-conformity with law, notably with letter e) of Article 6 of the CIS;

  6. The dilatory exception of incompetence of the TAS to assess the request for extinction of the tax enforcement proceedings referred to in point 8 of the established facts is also judged to be successful, with the Respondent being absolved of the instance, in this part.

Value of case: In accordance with the provisions of Article 3 No. 2 of the Regulation of Costs in Tax Arbitration Proceedings (and letter a) of No. 1 of Article 97A of the CPPT), the case is assigned the value of 18,218.20 € euros.

Costs: In accordance with the provisions of Article 22 No. 4 of the RJAT, the amount of costs is fixed at € 1,224.00 according to Table I attached to the Regulation of Costs in Tax Arbitration Proceedings, with 50% at the charge of the Claimant (612.00 euros) and 50% at the charge of the Respondent (612.00 euros), in light of the respective losses.

Notify.

Lisbon, 15 May 2018

Singular Arbitral Tribunal (TAS),

Augusto Vieira

Text prepared by computer in accordance with the provisions of Article 131 No. 5 of the CPC, applicable by referral of Article 29 of the RJAT.

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

Frequently Asked Questions

Automatically Created

Is a surviving partner in a de facto union exempt from Stamp Tax on inherited assets in Portugal?
Under Portuguese law at the time of this decision, surviving partners in de facto unions were NOT automatically exempt from Stamp Tax on inherited assets. Article 6(e) of the Stamp Tax Code exempted spouses and certain direct-line heirs, but did not extend to de facto partners. However, if Brazilian law recognized the partner as a legitimate heir with rights equivalent to a spouse, this could potentially qualify for exemption, creating a conflict-of-laws question that the tribunal needed to resolve.
What is the statute of limitations for Stamp Tax assessment on gratuitous transfers of assets in Portugal?
The statute of limitations for Stamp Tax assessment on gratuitous transfers in Portugal is governed by Article 39 of the Stamp Tax Code and Article 45 of the General Tax Law (LGT). Generally, the right to assess lapses after 4 years from the end of the year in which the taxable event occurred. For inheritances, the critical question is whether the limitation period begins when death occurs or when the taxpayer files the required declaration, particularly in cross-border cases with foreign judicial proceedings.
Can pending judicial proceedings in another country suspend the Portuguese tax assessment deadline?
Pending judicial proceedings in another country do not automatically suspend Portuguese tax assessment deadlines unless specific suspension grounds under Portuguese law apply. Article 46 of the LGT provides for suspension in limited circumstances, primarily when Portuguese administrative or judicial proceedings are pending. Foreign litigation, even succession proceedings determining heirship rights, typically does not suspend Portuguese limitation periods, though taxpayers may argue practical impossibility of compliance pending foreign court decisions.
How does the CAAD arbitral tribunal handle late Stamp Tax assessments after the right to liquidation has expired?
The CAAD arbitral tribunal annuls Stamp Tax assessments when the right to liquidation has expired due to lapse (caducidade) under Article 45 of the LGT and Article 39 of the CIS. The tribunal examines when the taxable event occurred, when the taxpayer was legally required to file declarations, whether any suspension events interrupted the limitation period, and whether the assessment was issued within the statutory timeframe. If assessment occurs after the limitation period expired, the tribunal declares the assessment null and orders extinction of collection proceedings.
What are the legal grounds for annulling a Stamp Tax assessment under Article 45 of the General Tax Law (LGT)?
Legal grounds for annulling Stamp Tax assessments under Article 45 of the General Tax Law include: (1) lapse of the right to assess (caducidade) when assessments occur beyond statutory limitation periods; (2) prescription (prescrição) of the tax debt; (3) incorrect application of exemptions or tax rates; (4) factual or legal errors in determining the taxable base; (5) violation of procedural requirements; and (6) constitutional violations. The burden generally falls on the taxpayer to demonstrate the illegality, though limitation period expiration is an objective ground requiring annulment once proven.