Summary
Full Decision
ARBITRAL DECISION
1. Report
On 19-10-2016, A..., S.A., legal entity no. ..., with registered office in ..., ..., ..., ...-... Lisbon, hereinafter designated as Claimant, submitted to the Administrative Arbitration Centre (CAAD) a request for constitution of an arbitral tribunal with a view to the declaration of illegality of the collection notices for the second installments of Stamp Duty referring to the year 2015 based on item 28.1 of the General Table of Stamp Duty. Said Stamp Duty installments relate to the urban property located at Avenue ..., no. ..., Lisbon, registered in the urban property roll of the parish of ... under article ..., described at the Land Registry Office of Lisbon under no. ..., constituted in vertical ownership and with seven floors and divisions susceptible of independent use intended for residential purposes.
The Claimant alleges that the liability to stamp duty is determined not by the global tax property value (VPT) of the property, but by the VPT attributed to each of the floors or independent divisions. And since none of the floors with independent use has a tax property value (VPT) exceeding one million euros (€1,000,000), Stamp Duty cannot be assessed or collected.
The Claimant refers that the property is in vertical ownership and comprises a total of seven floors with independent use, all intended for residential purposes, and each of the floors has a VPT comprised between €37,010.00 and €257,670.00.
The Claimant alleges that the criterion used by the Tax Authority for determining the incidence of stamp duty, being the global VPT of the floors and divisions intended for residential use, is manifestly illegal and unconstitutional, inasmuch as it constitutes a violation of the principles of equality and tax proportionality. In the Claimant's view, material truth should prevail as the criterion of contributory capacity and not a merely formal reality of the property.
A sole arbitrator, Suzana Fernandes da Costa, was appointed on 21-12-2016.
In accordance with the provisions of article 11, no. 1, paragraph c) of the RJAT [Legal Regime of Tax Arbitration], the sole arbitral tribunal was constituted on 05-01-2017.
Notified in accordance with article 17 of the Legal Regime of Tax Arbitration (RJAT), the Tax and Customs Authority submitted a response on 09-02-2017.
The Tax Authority begins by presenting a defense by exception, alleging that there is incompetence of the Arbitral Tribunal, since the Claimant does not challenge a tax act, but rather challenges the payment of an installment – the second – of a tax act contained in a document which is a collection notice. The Tax Authority refers that the object of the proceedings is the annulment not of a tax act, but of collection notices for payment of the second installment of a tax. For this reason, the Tax Authority concludes that the Arbitral Tribunal is incompetent to consider the request formulated, referring to the CAAD decision in case no. 358/2016-T, in which the absolute incompetence of the tribunal was recognized.
The Tax Authority further alleges the autonomous non-challengeability of an installment of a Stamp Duty assessment. The Tax Authority refers that what the Claimant challenges are not the assessment acts but the second installments relating to the payment of a unitary value of tax. For the Tax Authority, there is a single assessment and its payment is realized in installments, which does not permit the challenge of a single installment or collection document in that installment value. And to this end invokes the CAAD decisions in cases no. 120/2012-T, 408/2014-T, 726/2014-T, 138/2015-T, 90/2015-T and 647/2015-T, which defended the indivisibility of the assessment.
Finally, the Tax Authority defends the maintenance of the tax acts scrutinized, requesting the dismissal of the request, and alleging that the property value relevant for purposes of incidence of stamp duty would be the total property value of the urban property and not the property value of each of the floors or divisions, even if they were susceptible of independent use.
The Tax Authority further alleges that there is no violation of any constitutionally enshrined principle.
At the end, the Tax Authority requests the dispensation of the meeting provided for in article 18 of the RJAT and the dispensation of the presentation of arguments.
On 14-02-2017 an order was issued ordering the notification of the Claimant to, within 10 days, exercise contradiction with respect to the matter of exception contained in the Tax Authority's response.
On 22-02-2017, the Claimant pronounced itself on the exception, stating that the exception alleged by the Tax Authority should not proceed, since, in its understanding, it is possible to autonomously challenge the assessment of each of the installments of stamp duty, with respect to the same property and with respect to the same stamp duty, in three distinct arbitral proceedings. And it refers to the CAAD decisions in cases no. 102/2015-T, 676/2014-T and 682/2014-T.
Subsequently, on 24-02-2017, an order was issued dispensing with the holding of the meeting provided for in article 18 of the RJAT, considering that there was no need for production of additional evidence beyond the documentary evidence already incorporated in the record, and also taking into account the fact that the parties had already had the opportunity to pronounce themselves, also invoking the general procedural principles of procedural economy and prohibition of practice of useless acts.
In the same order, the Claimant was notified to pronounce itself on the request for dispensation of arguments.
Since the Claimant did not pronounce itself, an order was issued on 14-03-2017, dispensing with the presentation of arguments, and designating 05-05-2017 as the date for the delivery of the decision. The Claimant was also warned to proceed with the payment of the subsequent arbitration fee until the date designated for the delivery of the decision.
The parties have legal personality and capacity and are legitimate (articles 4 and 10, no. 1 and 2 of the RJAT and article 1 of Ordinance no. 112-A/2011 of 22 March).
The arbitral request is timely, in accordance with article 10, no. 1, paragraph a) of Decree-Law no. 10/2011 of 20 January and article 102, no. 1, paragraph a) of the Code of Tax Procedure and Process.
The proceedings do not suffer from nullities.
2. Factual Matters
2.1. Proven Facts:
Having analyzed the documentary evidence produced and the position of the parties contained in the procedural documents, the following facts are considered proven and of interest for the decision of the case:
- The Claimant was, in 2015, owner of the urban property located at Avenue ..., no. ..., Lisbon, registered in the urban property roll of the parish of ... under article ..., described at the Land Registry Office of Lisbon under no. ..., constituted in vertical ownership and with seven floors and divisions susceptible of independent use intended for residential purposes, as shown in the property record attached to the arbitral request as documents 1 to 7.
- The Claimant was notified to pay the second installments of stamp duty, corresponding to the following documents:
- no. 2016 ... in the amount of €825.88, relating to the first floor of the above-mentioned property, whose VPT is €247,760.00;
- no. 2016 ... in the amount of €825.88, relating to the second floor of the above-mentioned property, whose VPT is €247,760.00;
- no. 2016 ... in the amount of €850.63, relating to the third floor of the above-mentioned property, whose VPT is €255,190.00;
- no. 2016 ... in the amount of €850.63, relating to the fourth floor of the above-mentioned property, whose VPT is €255,190.00;
- no. 2016 ... in the amount of €858.90, relating to the fifth floor of the above-mentioned property, whose VPT is €257,670.00;
- no. 2015 ... in the amount of €858.90, relating to the sixth floor of the above-mentioned property, whose VPT is €257,670.00.
- All payments had as the payment deadline July 2016.
- None of the floors or divisions with independent use possess a tax property value exceeding one million euros, as shown in the property record attached to the arbitral request as documents 1 to 7.
No other facts with relevance for the decision of the case were proven.
2.2. Substantiation of the Proven Factual Matter:
With respect to the proven facts, the arbitrator's conviction was based on the documents joined to the record by the Claimant, namely the collection notices, the property record, the property certificate, and the proofs of payment.
3. Legal Matters
Preliminary Question
The Tribunal must ex officio know the dilatory exceptions provided for in article 16 of the Code of Tax Procedure and Process (CPPT) and in articles 577, paragraph a) and 578 of the Code of Civil Procedure (CPC), applicable by virtue of article 29, no. 1, paragraphs a) and e) of the RJAT.
In accordance with the provisions of article 608 of the Code of Civil Procedure, applicable by virtue of article 22 of the RJAT, "(…) the judgment shall know, in the first place, of the procedural questions that may determine the dismissal of the instance, according to the order imposed by its logical precedence" and the judge must "resolve all questions that the parties have submitted to its consideration, except those whose decision is prejudiced by the solution given to others (…)".
Having the Respondent invoked the exceptions of incompetence of the Arbitral Tribunal to consider the request for arbitral pronouncement and of non-challengeability of the acts object of the request, it is incumbent upon the Tribunal to pronounce itself, preliminarily, on the same.
On the Incompetence of the Arbitral Tribunal
In the present proceedings, the Claimant requests the annulment of the second installment of Stamp Duty of the year 2015, referring to item 28 of the TGIS [General Table of Stamp Duty], in the amount of €5,070.78, relating to the urban property located at Avenue ..., no. ..., Lisbon, registered in the urban property roll of the parish of ... under article ..., described at the Land Registry Office of Lisbon under no. ..., constituted in vertical ownership and with seven floors and divisions susceptible of independent use intended for residential purposes.
The Respondent, in its response, defends itself by invoking the exception of incompetence of the arbitral tribunal and the non-challengeability of the acts, since, in its understanding, the second installments constitute relating to a unitary value of tax.
Thus, it is imperative to know the competence of the tribunal to consider the claim of the Claimant.
Jorge Lopes de Sousa, in the Code of Tax Procedure and Process Annotated, 4th edition, Vislis Editors, 2003, page 141, states that "questions of absolute competence are of ex officio knowledge and their knowledge precedes that of any other question (…). Thus, incompetences by reason of subject matter and by reason of hierarchy, in judicial proceedings, must be known ex officio, preceding the knowledge of any other questions and may be invoked by the interested parties…".
The competence of arbitral tribunals is provided for in article 2 of the RJAT. And its no. 1 states that "the competence of arbitral tribunals comprises the consideration of the following claims: a) the declaration of illegality of acts of assessment of taxes, self-assessments, withholdings at source and payments on account; b) the declaration of illegality of acts of fixation of taxable matter when it does not give rise to assessment of any tax, of acts of determination of collectible matter and of acts of fixation of property values".
And article 97, no. 1 of the CPPT provides that "the tax judicial proceedings comprise: a) the challenge of tax assessments. Including parafiscal taxes and acts of self-assessment, withholding at source and payment on account".
The first conclusion to be drawn consists in the fact that the claim for declaration of illegality of acts of assessment can be subject to judicial challenge or, alternatively, to a request for arbitral pronouncement.
In relation to the concept of assessment, Vítor Faveiro, in The Status of the Taxpayer. The person of the taxpayer in the Social State based on the Rule of Law, Coimbra Editor, 2002, page 683, states that it "(…) is an administrative act, of application of the rule of incidence and of its respective rate of quotity, to the collectible matter previously or supposedly determined; of the arithmetic expression of the pecuniary value of the tax obligation corresponding, and its imputation to the person of the taxpayer; and of the declaration, substantive and formal, of such operation and its notification to the taxpayer, with definitive and executory effects of effective obligation of the taxpayer and subjective right of credit of the State".
Braz Teixeira, in Principles of Tax Law, Volume I, 3rd edition, Almedina, 1993, page 244, footnote 3, also mentions that "it is necessary not to confuse the periodic installments, which, although being realized by successive acts, in diverse moments, have origin in the same obligation and constitute the various installments of the same installment that was divided, with the installments that must be effected periodically, not due to a division of the global installment, but rather to the birth, also periodic, of new obligations, by the permanence of the factual presuppositions of taxation".
Such definitions, as referred to in the CAAD decision in case no. 358/2016-T, share a common denominator, that is, that there will be a single assessment for each tax fact, through which the amount of the collection will be calculated.
For José Casalta Nabais, in Tax Law, 3rd edition, Almedina, 2005, page 318, "the assessment lato sensu, that is, while the whole of all operations intended to calculate the amount of tax, comprises: 1) the subjective assessment intended to determine or identify the taxpayer or passive subject of the tax legal relationship, 2) the objective assessment through which the collectible or taxable matter of the tax is determined and, as well as the rate to be applied, in case of plurality of rates, is determined, 3) the assessment stricto sensu translated in the determination of the collection through the application of the rate to the collectible or taxable matter, and 4) the (eventual) deductions from the collection".
As follows from the notion of assessment, for each tax fact there will be, in principle, a single assessment, by which the collection to be paid will be determined.
In article 23, no. 7 of the Stamp Duty Code, in force at the time of the facts, it was provided that "in the case of tax due by the situations provided in item no. 28 of the General Table, the tax is assessed annually, in relation to each urban property, (…) applying, with the necessary adaptations, the rules contained in the Real Estate Tax Code".
Article 113, no. 1 of the Real Estate Tax Code provides that: "the tax is assessed annually (…)", and no. 2 adds that "the assessment referred to in the preceding number is effected in the months of February and March of the following year".
In fact, the fact that the assessment can be paid in installments does not mean that, as a rule, several assessments have been made. Strictly speaking, the assessment is one, and can only support a single challenge request, as referred to in the CAAD decisions in cases no. 346/2015-T, 736/2014-T and 358/2016-T, among others.
In the present proceedings, it is clear that the Claimant requests the annulment of the second installment of Stamp Duty of the year 2015, relating to the urban property located at Avenue ..., no. ..., Lisbon, registered in the urban property roll of the parish of ... under article ..., described at the Land Registry Office of Lisbon under no. ..., constituted in vertical ownership and with seven floors and divisions susceptible of independent use intended for residential purposes. The same is affirmed in the response presented by the Claimant with respect to the exception alleged by the Respondent.
On this question there are contradictory decisions in CAAD. However, we adhere to the majority position of CAAD, which is set forth, among others, in the following decisions: 429/2016-T, 358/2016-T, 343/2016-T, 765/2015-T, 725/2015-T, 677/2015-T, 668/2015-T, 647/2015-T, 613/2015-T, 441/2015-T, 138/2015-T, 137/2015-T, 102/2015-T, 90/2015-T, 736/2014-T, 726/2014-T, 408/2014-T, 205/2013-T, 120/2012-T.
In these terms, in light of the above, it is verified that the acts object of the present request for arbitral pronouncement are not included within the scope of the provision in article 2, no. 1, paragraph a) of the RJAT, as they are not acts of assessment of taxes, therefore the exception of absolute incompetence of the Arbitral Tribunal by reason of subject matter is judged as well-founded, in accordance with the provision in article 16, no. 1 of the CPPT, applicable by virtue of article 29 of the RJAT.
On the Autonomous Non-Challengeability of an Installment
The Respondent, in its response, defends itself by invoking the exception of incompetence of the arbitral tribunal and the non-challengeability of the acts, since, in its understanding, the second installments constitute relating to a unitary value of tax.
In response to this exception alleged by the Tax Authority, the Claimant came to say that "it can autonomously challenge the assessment of each of the installments of stamp duty, with respect to the same property and with respect to the same stamp duty, in three distinct arbitral proceedings".
The judgment of the Central Administrative Court South of 27-10-2016, in case no. 09711/16, determined that "the payment installments (two or three, depending on the amount of tax to be paid annually) of an assessment of Stamp Duty, effected under art. 28 of the T.G.I.S., are not autonomously challengeable by having origin in a single annual obligation (cfr. art. 23, no. 7, of the Stamp Duty Code), being that the division of an annual assessment into installments is nothing more than a mere technique of collection of revenues (cfr. art. 120, no. 1, of the Real Estate Tax Code, "ex vi" of art. 67, no. 2, of the Stamp Duty Code)".
Thus, it is to be concluded that the second installment of Stamp Duty of 2015 is not autonomously challengeable.
In these terms, it is verified that the exception of autonomous non-challengeability of the acts object of the request exists, with the consequent dismissal of the Respondent from the arbitral instance, in accordance with the provision in article 99, no. 1 and article 576, no. 2 of the CPC, applicable by virtue of article 29 of the RJAT, the knowledge of the merits of the case being consequently prejudiced.
The recognition of the incompetence of the Arbitral Tribunal and of the autonomous non-challengeability of an installment of Stamp Duty makes it impossible to consider the merits of the case.
4. Decision
In light of the foregoing, it is decided to recognize the absolute incompetence of the tribunal and the autonomous non-challengeability of an installment, consequently dismissing the Respondent from the instance, with all legal consequences.
5. Value of the Proceedings:
In accordance with the provision in article 306, no. 2, of the CPC and 97-A, no. 1, paragraph a) of the CPPT and 3, no. 2 of the Regulation of Costs in Tax Arbitration Proceedings, the value of the action is fixed at €5,070.78.
Costs:
In accordance with article 22, no. 4, of the RJAT, and Table I attached to the Regulation of Costs in Tax Arbitration Proceedings, the amount of costs is fixed at €612.00, due by the Claimant.
Notify.
Lisbon, 5 May 2017.
Text prepared by computer, in accordance with article 138, no. 5 of the Code of Civil Procedure (CPC), applicable by referral of article 29, no. 1, paragraph e) of the Tax Arbitration Legal Regime, reviewed by me.
The sole arbitrator
Suzana Fernandes da Costa
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