IMT and Stamp Tax Exemption for FIIAH Funds: Retroactivity of Tax Law in Property Sales (CAAD 655/2016-T)

ARBITRAL AWARD

I. Report

1. A… – REAL ESTATE INVESTMENT FUND MANAGEMENT COMPANY, S.A., a company with registered office at …, no. … – …, … – … Lisbon, tax identification number …, in its capacity as managing entity of the Real Estate Investment Fund B… – CLOSED REAL ESTATE INVESTMENT FUND FOR RESIDENTIAL RENTAL, tax identification number … (hereinafter only "Claimant"), pursuant to the provisions of articles 2, no. 1, letter a) and 10, no. 1, letter a), of Decree-Law no. 10/2011, of 20 January, the diploma which approved the Legal Regime of Tax Arbitration (hereinafter only "LRTA"), filed a request for the establishment of an arbitral tribunal, in which the Tax and Customs Authority is Respondent (hereinafter only "Respondent" or "TCA").

2. The said request for arbitral decision was filed on 31/10/2016.

3. In the respective request, the Claimant requested the CAAD Deontological Council to designate the Arbitrator, pursuant to the provisions of articles 6, no. 1 and 11 of the LRTA.

4. The request for establishment of the arbitral tribunal was accepted by the Excellent President of CAAD and automatically notified to the TCA on 18/11/2016, the Parties being notified on 04/01/2017 of the arbitrator designated by the Deontological Council of CAAD.

5. Following acceptance by the designated arbitrator, the present Arbitral Tribunal was constituted on 19/01/2017, in accordance with the provisions of articles 2, no. 1, letter a), 5, 6, no. 1, and 11, no. 1, all of the LRTA (as amended by article 228 of Law no. 66-B/2012, of 31 December).

6. Within the scope of the request for arbitral decision filed by it, the Claimant petitioned for the declaration of nullity/voidability of the assessment acts relating to Transfer Tax on Real Property (hereinafter only "TTRP") and Stamp Duty (hereinafter only "SD"), concerning the alienation of the real property corresponding to Registry Article … (fraction "C") of the Union of Civil Parishes of … and …, municipality of Olhão, and, subsidiarily, for their annulment.

7. The Claimant further petitioned for full reimbursement of the tax paid, plus the respective compensatory interest.

8. Making a summary of the arguments presented in the arbitral request and in the written pleadings, it is found that the Claimant invoked the following:

i) The Claimant filed a request asking for the assessment of TTRP and SD concerning the sale of the real property identified in the request for arbitral decision and acquired by it on a date prior to 31 December 2013, under article 8 (Tax regime) of the Tax Regime of REIFHR, as amended by Law no. 83-C/2013, of 31 December (State Budget for 2014) and article 236, no. 2 of the same Law (Transitional provision within the scope of the special regime applicable to REIFHR and SIHR);

ii) Number 14 of article 8 (Tax regime) of the Tax Regime of REIFHR concretely determined, for the first time, the meaning of the expression "urban real properties [are] intended for rental for permanent residence";

iii) In the said legal provision, it was established that, for purposes of the Tax Regime of REIFHR, "urban real properties [---] intended for rental for permanent residence" are urban real properties [and autonomous fractions] "that are subject to a rental contract for permanent residence within a period of three years counted from the moment they became part of the fund's assets";

iv) The introduction of this definition of "urban real properties [---] intended for rental for permanent residence" was accompanied by the concretization of the circumstances under which real properties forming part of the assets of REIFHR cease to benefit from the exemption regime provided for in numbers 6 to 8 of the Tax Regime of REIFHR (a regime of lapse of exemptions);

v) Thus, if the real properties forming part of the assets of REIFHR have not been subject to a rental contract within the period of 3 (three) years, counted from the date of their entry into that patrimony, the taxable person shall request from the Tax and Customs Authority, within 30 (thirty) days following the end of the said period, the assessment of the respective tax;

vi) The taxable person should also proceed in this manner in the case of: (i) the real properties being alienated by the REIFHR or (ii) the REIFHR being liquidated, in both cases, before the period of 3 (three) years has elapsed, counted from the date of entry of the relevant real properties into the patrimony of the REIFHR;

vii) Article 236 (Transitional provision within the scope of the special regime applicable to REIFHR and SIHR) of Law no. 83-C/2013, of 31 December (State Budget for 2014), extended the application of the above regime "to real properties that have been acquired by REIFHR before 1 January 2014, and in such cases, the period of three years provided for in no. 14 shall be counted as from 1 January 2014";

viii) It is understood that the amendments to the Tax Regime of REIFHR assume particular relevance in the context of taxes of a single obligation, in this case, TTRP and SD when they concern real properties that formed part of the assets of REIFHR at the date of entry into force of Law no. 83-C/2013, of 31 December (State Budget for 2014), that is, those covered by the above-mentioned article 236 (Transitional provision within the scope of the special regime applicable to REIFHR and SIHR);

ix) The Claimant requested from the TCA the assessment of TTRP and SD, in light of the amendments introduced in the Tax Regime of REIFHR, under article 8, no. 16 (applicable by virtue of article 236 - Transitional Provision within the scope of the Special Regime applicable to REIFHR and SIHR), no. 2, of Law no. 83 – C/2013, of 31 December);

x) If the Tax Regime of REIFHR had not been amended (cf. articles 235 (Amendment to the tax regime of funds and real estate investment companies for residential rental), and article 236 (Transitional Provision within the scope of the Special Regime applicable to REIFHR and SIHR), of Law no. 83 – C/2013, of 31 December) the Claimant would never have requested the Assessments;

xi) The present request for arbitral decision is thus limited to the analysis of the lawfulness of the Assessments which are based exclusively on the norms invoked by the Claimant and not in light of any other legal norms;

xii) The Claimant considers that the Assessments are defective due to violation of the provisions of article 103 (Tax system), no. 3, of the Constitution of the Portuguese Republic and must, consequently, be declared null (or, subsidiarily, voidable);

xiii) As no legal facts or circumstances upon which the lapse of the recognized exemption depended were legally provided for at the moment of recognition of the exemption, it is manifest that the subsequent imposition of such facts or circumstances to exemptions crystallized in the Claimant's legal-tax order is defective due to unconstitutionality, by violation of the principle of non-retroactivity of tax law, enshrined in article 103 (Tax system), no. 3, of the Constitution of the Portuguese Republic;

xiv) Article 236 of Law no. 83-C/2013, of 31 December (State Budget for 2014), by extending the application of the current Tax Regime of REIFHR "to real properties that have been acquired by REIFHR before 1 January 2014, and in such cases, the period of three years provided for in no. 14 shall be counted as from 1 January 2014" - is violating directly and unequivocally the principle of non-retroactivity of tax law constitutionally enshrined;

xv) In fact, the extension established therein constitutes a new regime of lapse of the exemptions provided for in nos. 7, letter a) and 8 of article 8 (Tax regime) and not a mere concretization of a criterion previously provided for;

xvi) The violation of the principle of retroactivity now invoked takes into account the understanding that has been followed by the Constitutional Court according to which the prohibition of retroactivity, in the field of tax law, is directed only at authentic retroactivity, covering only those cases in which the tax fact that the new law intends to regulate has already produced all its effects under the old law; excluded from its scope of application are situations of retrospectivity or improper retroactivity, that is, those situations where the law is applied to past facts but whose effects still endure in the present, as occurs when tax norms produce a worsening of the taxpayers' tax position in relation to tax facts that have not occurred entirely within the scope of the old law and continue to form themselves, even during the course of the same tax year, under the new law;

xvii) In the case sub judice there is no doubt whatsoever that the tax facts that the new law intends to regulate have already produced all their effects under the old law;

xviii) The Claimant requested from Professors Dr. C… and Doctor D…, the issuance of a legal opinion on the constitutionality of no. 2 of article 236 (Transitional Provision within the scope of the Special Regime Applicable to REIFHR and SIHR) of Law no. 83-C/2013, of 31 December, a copy of which it attached to the arbitral request;

1. Notified for this purpose, the Respondent presented its response, in which it defended itself by exception and by objection, invoking, in summary, the following:

xix) The Claimant invokes, among other defects, that the assessments are defective due to abstract illegality, but if this thesis were accepted, then the Arbitral Tribunal would be materially incompetent to assess, in abstract, the constitutionality of the norm in question, as petitioned;

xx) In fact, given what is alleged by the Claimant, it appears that the latter intends (after all) the non-application of the norm due to its alleged illegality/unconstitutionality and not due to any illegality occurring in its application to the concrete facts;

xxi) However, it so happens that the Constitutional Court is the competent forum to know both the illegality and the unconstitutionality of legal norms [arts. 280, no. 2, letters a) and d) and 281, no. 1, letters a) and b) and no. 3 of the CRP and arts. 6 and 66 of the Constitutional Court Law];

xxii) Thus, if the issue in the present proceedings is not a situation of possible non-application of a norm due to any illegality occurring in its application to the concrete facts, as the Claimant now contends, but rather its own (intrinsic) illegality/unconstitutionality, then it is important to conclude that the Arbitral Tribunal has no competence to assess this matter, given that abstract judicial review of the constitutionality of norms is sought, a matter constitutionally reserved to the Constitutional Court, pursuant to letter a) of no. 2 of article 281 of the CRP;

xxiii) It should be concluded, from the outset, that it is impossible for the present Arbitral Tribunal to decide the present dispute, in so far as there is a dilatory exception of lack of material competence, from which the Respondent's dismissal of the action follows, pursuant to the combined provisions of articles 278, no. 1, letter a) and 576, nos. 1 and 2 of the CCP, applicable by virtue of article 29, no. 1, letter e) of the LRTA;

xxiv) Furthermore, on another point, within the scope of the assessment of abstract judicial review of constitutionality, the Respondent would always be a legitimate party, since, as is well known, the TCA cannot refuse to apply norms on the grounds of their unconstitutionality or illegality, as it is subject to the principle of legality, as provided for in articles 266, no. 2 of the CRP, 3, no. 1 of the CPA and 55 of the GTL;

xxv) The claim put forward by the Claimant conflicts with the powers of the Respondent and with its binding to law and the Constitution, in so far as the assessment by the now Objected-to party regarding the illegality/unconstitutionality that it invokes would imply a clear and objective violation of legal precepts and the violation of the Constitution itself;

xxvi) Thus, being a matter of a normative act emanating from the Parliament in the typical form of a legislative act, the Tribunal should always declare the dismissal of the Respondent from the action, given the dilatory exception of lack of passive legitimacy demonstrated in the present arbitral proceedings, pursuant to articles 278, no. 1, letter d) and 576, nos. 1 and 2 of the CCP, applicable by virtue of article 29, no. 1, letter e) of the LRTA;

xxvii) Following the defense by exception, the TCA invokes the impossibility of non-application of a legal norm on the grounds of unconstitutionality, sustaining that, pursuant to no. 2 of article 266 of the CRP, the TCA is obliged to act in accordance with the principle of legality, such principle being concretized at the infra-constitutional level in no. 1 of article 3 of the CPA;

xxviii) From such legal impositions it follows that administrative bodies and agents do not have competence to decide on the non-application of norms regarding which doubts about constitutionality are raised, contrary to Courts which, pursuant to article 204 of the CRP, are prevented from applying unconstitutional norms, being attributed competence for diffuse and concrete scrutiny of constitutional compliance;

xxix) Being the Law the normative standard that governs its action, it is not up to the TCA to issue judgments of constitutionality on norms, as it is not qualified to do so, contrary to what happens with Courts;

xxx) Therefore, it could not/cannot refuse to apply a norm or cease to comply with the law by invoking or questioning its constitutionality, as it is subject to the principle of legality, as provided for in articles 266, no. 2 of the CRP, 3, no. 1 of the CPA and 55 of the GTL;

xxxi) Regarding the concrete question of constitutionality raised by the Claimant, the Respondent invokes that the assessments of TTRP and SD were requested from the TCA, in light of the amendments introduced to the tax regime of REIFHR, in so far as, in 2016, it alienated it to third parties, thus giving it a different destination from what would be supposed: residential rental;

xxxii) But, before any conclusion, for the TCA it is evident that the defect pointed out, by alleged violation of article 103 of the CRP, does not generate nullity, since the sanction that falls upon an invalid administrative act is its voidability (article 135 of the [old] CPA), nullity occurring only when it lacks one of its essential elements or when the law expressly sanctions it with this form of invalidity (article 133 of the [old] CPA);

xxxiii) In fact, and considering that the legal provision of letter d), of no. 2 of article 133 of the CPA, is only extensible to the violation of rights, freedoms and guarantees of Title II of Part I of the CRP, the case at bar has no legal framework here – in this sense, cf. decision of the CSCA, of 03/02/2012, case: 00473/09.6BEPNF;

xxxiv) Regarding the substantive issue of violation of article 103 of the CRP, the TCA invokes that, at the date of creation of the tax regime applicable to REIFHR, with Law no. 64-A/2008, of 31 December, the exemptions in question, whether in TTRP or in Stamp Duty, required, respectively: (i) that the acquisition of the real properties was intended exclusively for "rental for permanent residence" and (ii) that the transfer concerned "real properties intended for permanent residence that occurs due to the conversion of the right of ownership of such real properties into a right of rental over the same, as well as with the exercise of the purchase option provided for in no. 3 of article 5";

xxxv) That is, the taxable persons who wished to benefit from the said exemptions, have always had, from the beginning of the tax regime applicable to REIFHR, to comply with the requirement that such real properties were intended exclusively for rental for permanent residence;

xxxvi) After all, the new wording introduced by Law no. 83-C/2013, of 31 December, in favor of legal certainty and the principle of protection of legitimate expectations, and following the spirit of the legislator, at the time of creation of the regime, merely came to concretize the criterion already required, stipulating "that urban real properties are intended for rental for permanent residence whenever they are subject to a rental contract for permanent residence within a period of three years counted from the moment they became part of the fund's assets";

xxxvii) It is to be concluded, thus, that, with the amendments introduced, the ratio of the established exemptions was not altered, and it should be noted that the immediate extinction of the benefit was not determined in the event that the said rental contract was not concluded, since a sufficiently broad period of (three years) was granted for this purpose, thus respecting the principle of legal certainty and protection of legitimate expectations;

xxxviii) It being certain that, in any case, given the alienation of the real properties in 2016, it follows unequivocally that the Claimant could not, in any way, benefit from the requested exemption;

xxxix) In truth, given the provisions of the cited normative precept, regarding real properties acquired before 1 January 2014, in order to consider the allocation for permanent residence to be realized, rental contracts for permanent residence would have to be concluded within the three years following;

xl) From which it is easily inferred that the exemptions in question did not simply cease to apply: what occurred, merely, was that criteria were established to concretize a legal requirement provided for in an indeterminate manner;

xli) Necessity of legislative intervention which is understandable, given that, as results from article 2, no. 1 of the TBS, tax benefits are measures of an exceptional character instituted for the protection of relevant extra-fiscal public interests that are superior to those of taxation itself which they prevent;

xlii) On the other hand, the cessation of a tax benefit may always take place, for example, if it is found, in a concrete case, through tax inspection, that the respective requirements are not met (see art. 7 no. 1 of the TBS), and as follows from article 14, no. 1 of the TBS, "the extinction of tax benefits has the consequence of the automatic restoration of the rule of taxation";

xliii) Thus, being a matter of the alienation of the real properties without allocation of the same to rental for permanent residence, such would always determine the lapse of the exemption, under article 14, no. 2 of the TBS, and article 8, no. 16 of the regime merely came to concretize an anti-abuse measure, establishing that real properties that do not remain in portfolio with exclusive allocation to residential rental were not acquired with such purpose, further limiting such lapse to a period defined by law rather than what occurred previously, by virtue of the application of the TBS;

xliv) Only by ignoring the legal imperative that determines the lapse of the tax benefit inherent to article 14, no. 3 of the TBS, is it possible to conclude that "according to the 2008 law, a real property could have been acquired for residential rental, benefiting from the exemptions, but then been alienated for unforeseeable reasons" or further that "if it were not for the restriction introduced by no. 16, introduced by the 2013 Law, there could be no revocation or lapse of exemptions, not even in the case of alienation of the real properties";

xlv) It is true that the tax fact in TTRP or Stamp Duty occurs at the time of acquisition of the real property, however, such does not mean that, in the case at bar, it is possible to conclude that there is a circumstance of retroactivity since the new law did not simply determine, and nothing more, that the previously acquired real properties be subject to taxation in TTRP and Stamp Duty;

xlvi) What the new law came to do, rather, was merely to concretize criteria already provided for in the old law, namely: (i) the concept of allocation to rental for permanent residence, stipulating a more than sufficient period for taxable persons to be able to adapt, gathering an unequivocal means of proof (rental contract) and (ii) as well as the clarification of the situations in which the alienation of the real property intended for rental does not cause the lapse of the exemption as provided for under the TBS;

xlvii) Regarding the payment of compensatory interest, for all that has been said above, it is understood that the assessment acts do not suffer from any defect that should dictate their annulment/declaration of nullity;

xlviii) Furthermore, not being able to be imputed to the services of the TCA an error that, by itself, determined the payment of a tax debt in an amount greater than that legally due - since it was not within its discretion to decide differently from the manner in which it decided - it can only be concluded in the sense that compensatory interest is not due pursuant to article 43 of the GTL.

1. Having been notified, through an arbitral decision issued on 21/03/2017, to rule on the exceptions invoked by the TCA in its response, the Claimant came to state, in summary, that its claim was not to raise the abstract judicial review of the legality and constitutionality of article 236 of Law no. 83-C/2013, but rather that the Tribunal declare the nullity (or, subsidiarily, the voidability) of the assessments in question, on the grounds that the same are based on the application of a norm that violates the constitution and law;

2. Through an arbitral decision of 06/06/2017, the holding of the meeting referred to in article 18 of the LRTA was dispensed with, as the production of additional evidence was not requested, reserving for the final decision the knowledge of the exceptions invoked by the Respondent. In this decision, the Parties were also notified to, if they so wished, submit written pleadings.

3. Following the issuance of that decision, both Parties came to submit pleadings, produced in successive manner. The Respondent referred to what it had invoked in the Response, the Claimant invoking, in summary, the following:

xlix) It was an assessment based on a statement by the taxable person, based exclusively on the legal provision invoked in the taxable person's statement;

l) Without the amendments to the Special Regime Applicable to REIFHR and SIHR of Law no. 83 – C/2013, of 31 December, the Claimant would not have had to, nor would ever, present any request for assessment of TTRP and SD when proceeding to the sale of the real property;

li) The sole requirement of the exemption, at the date when the Claimant acquired the real property in question and when such exemption materialized, was that the real properties acquired by REIFHR were intended to be rented for permanent residence (cf. article 8 (Tax regime), numbers 7 and 8 of the Tax Regime of REIFHR in the wording in force at the date of recognition of the exemption);

lii) The amendment to the Regime of REIFHR came to provide that the alienation of real properties owned by REIFHR - or the liquidation of the REIFHR itself - before the period of 3 (three) years has elapsed, counted from the date of entry of the relevant real properties into the patrimony of the REIFHR, pursuant to number 16 of article 8 (Tax regime) of the Tax Regime of REIFHR, leads to the lapse of the exemption;

liii) These are undoubtedly and evidently new requirements that aim to establish a regime of lapse of exemptions that did not exist at the date when the tax facts occurred and that come to affect an exemption already crystallized in the Claimant's legal order;

liv) The Special Regime applicable to REIFHR and SIHR constitutes, undoubtedly, a different regime established by law – it is a set of tax benefits applicable to those entities establishing in an integrated manner the terms and conditions of their application and functioning, with a seat perfectly autonomous in the law of the State Budget that established it;

lv) The real properties that form part of REIFHR (within the limits set by law) must, therefore, be intended for rental for permanent residence; they do not have to be rented to remain in REIFHR nor are there any restrictions on their alienation;

lvi) Nor, likewise, did the Special Regime applicable to REIFHR and SIHR, prior to the amendments introduced in the 2014 State Budget, impose any regime of lapse of benefits – given that the purpose upon which they depended was verified at the moment of entry of the real properties into the patrimony of the REIFHR;

lvii) By considering the application of article 14 (Extinction of tax benefits), number 3, of the Tax Benefits Statute, within the framework of the Special Regime applicable to REIFHR and SIHR, the TCA manifestly incurs in an erroneous application of the law, clearly disregarding the very reference provided therein to different regimes established by law of which the Special Regime applicable to REIFHR and SIHR obviously forms part;

lviii) The Special Regime applicable to REIFHR and SIHR is an autonomous and "self-sufficient" regime which provided in detail for the terms and conditions of its application and, to pretend that the same overlooked the establishment of a regime of lapse of benefits, in order to have to resort to general principles provided for in the Tax Benefits Statute, has no bearing on reality and, if it were not so, as further stated, the amendment to the Special Regime applicable to REIFHR and SIHR introduced in the 2014 State Budget would not make sense;

lix) The TCA forgets an absolutely decisive and unavoidable fact: that the exemptions from TTRP and SD from which the real estate investment funds for residential rental benefited at the moment of acquisition, were satisfied with the acquisition intended for residential rental, not depending on the realization of effective rental within a certain period nor on the non-alienation of the real property within the same period, the legislator not having made the funds run the risk of non-realization of the rental;

lx) That if it were not so, the new law would not be necessary;

lxi) The Claimant is absolutely convinced that the norm upon which the assessments in question are based, suffers from unconstitutionality due to a flagrant and unequivocal violation of the principle of non-retroactivity of tax law, enshrined in article 103 (Tax system), number 3, of the Constitution of the Portuguese Republic;

lxii) Only nullity can be viewed as a consequence admitted for the practice of an administrative act based on a norm declared unconstitutional, for otherwise it would be allowed that such a norm would produce its effects in a permanent manner in the legal order making irrelevant its own unconstitutionality, so it appears to us that the tax acts performed in execution or under unconstitutional legal norms should be considered non-existent (or, at a minimum, null).

II. Hearing

The tribunal is competent and is regularly constituted.

The parties possess legal personality and capacity, being duly represented.

The procedural remedy is appropriate.

Exceptions were invoked by the Respondent which, as they may prevent consideration of the merits of the case, will be known and assessed in the present arbitral decision, as set forth below.

III. Factual Matters Considered Established

In light of the evidence brought to the proceedings and the factuality accepted by both Parties, the Tribunal considers the following facts as proven, with relevance for the final decision:

A) The Claimant constituted a closed real estate investment fund for residential rental designated as "B… - Closed Real Estate Investment Fund for Residential Rental";

B) The said real estate investment fund was the owner of the urban real property, registered under article …, fraction "C", in the urban property register of the Union of Civil Parishes of … and …, municipality of Olhão;

C) The said real property was acquired in the year 2013, and at the time of acquisition, benefited from exemption from TTRP and SD, pursuant to the provisions of no. 7 of letter a) and no. 8, both of article 8 of the Legal Regime of REIFHR;

D) The real property in question was alienated in the year 2016, which caused the Claimant to have requested, in light of the provisions of article 235 of Law no. 83-C/2013, of 31 December [norm which added no. 16 to article 8 of Law 64-A/2008, of 31 December], the assessment of the respective TTRP and SD, as detailed below (Cf. Doc. no. 1 attached with the arbitral request):

• Assessment of TTRP no. …, in the amount of € 1,003.00; and

• Assessment of SD no. …, in the amount of € 770.83.

E) The Claimant proceeded to payment of the assessment acts of TTRP and SD identified above on 12/08/2016 (Cf. Doc. no. 2 attached with the arbitral request).

No other facts with relevance for the final decision were identified.

V. Reasoning of the Decision

Prior to consideration of the merits of the arbitral request itself, it is important to note that Courts, here including Arbitral Tribunals, do not have to assess all arguments presented by the parties, as is evident from the Decision of the Plenary Session of the 2nd Section of the SAC, of 07/06/1995, issued in appeal no. 5239.

In effect, the questions raised by the parties do not coincide with the arguments, the reasons or the motivations produced. Questions, namely for the purpose of no. 2 of art. 608 of the Code of Civil Procedure, are only those of substance and which form part of the decisional matter, that is, those that relate to the claim, the cause of action and the exceptions (see in this sense the Decision of the Supreme Court of Justice, of 29/11/2005, issued in appeal no. 05S2137 or the Decision of the Central Administrative Court South, of 25/09/2012, issued in appeal no. 05073/11).

Thus, having regard to what was set forth above, what the Parties brought to the proceedings and the core of the argumentation used, whether in the arbitral request and the corresponding response presented by the Respondent, or as regards the final written pleadings, the Tribunal considers that the legal questions to be decided are the following:

A) Exception of lack of material competence of the Arbitral Tribunal to assess the abstract illegality of the assessments;

B) Lack of passive legitimacy of the Respondent;

C) Lawfulness of the assessment acts of TTRP and SD in question, in light of the legal regime approved by Law no. 64-A/2008, of 31 December (Law of the State Budget for 2009), namely, the tax regime provided for in article 8 of that legal regime;

D) Constitutionality of the assessment acts in question, in light of the norm provided for in article 235 of Law no. 83-C/2013, of 31 December, namely, of nos. 14 to 16 added to article 8 of the said tax regime, as well as, the transitional norm provided for in article 236 of that Law, as well as, the principle set forth in article 103, no. 3, of the CRP [prohibition of retroactivity of tax law];

E) Right of the Claimant to payment of compensatory interest.

VI. On the Law

A) Exception of lack of material competence of the Arbitral Tribunal to assess the abstract illegality of the assessments

As stated above, the Respondent invoked, prior to analysis of the merits of the arbitral request, the lack of material competence of the Arbitral Tribunal to assess, in abstract, the constitutionality of the norm provided for in article 236 of Law no. 83-C/2013, of 31 December, on the ground that the Claimant considered the assessment acts in question to suffer from abstract illegality.

Concretely, the Respondent alleges that the Claimant actually intends to obtain the non-application of the norm due to its illegality/unconstitutionality and not due to any illegality occurring in its application to the concrete facts, with the Constitutional Court being the competent forum to know both the illegality and the unconstitutionality of legal norms [arts. 280, no. 2, letters a) and d) and 281, no. 1, letters a) and b) and no. 3 of the CRP and arts. 6 and 66 of the Constitutional Court Law].

Thus, it concludes that it is impossible for the Arbitral Tribunal to decide the present dispute, in so far as there is a dilatory exception of lack of material competence, from which the Respondent's dismissal from the action follows.

It is therefore necessary to decide this preliminary issue, and, advancing from now the sense of the decision in this part, we consider that the Respondent is not correct.

In fact, the competences of the Arbitral Tribunal are limited, by virtue of the provisions of letters a) and b) of article 2 of the LRTA, to the assessment of claims related to: a) The declaration of illegality of assessment acts relating to taxes, self-assessment, withholding and payment on account and b) The declaration of illegality of acts setting the taxable matter when they do not give rise to assessment of any tax, acts determining taxable income and acts setting property values.

However, the Claimant, despite pointing out the unconstitutionality of the norm provided for in article 236 of Law no. 83-C/2013, does so always by reference to the assessment acts of TTRP and SD in question, which allows the claim to be framed in letter a) of no. 2 of the LRTA.

Such assessment acts are, in truth, the object of the arbitral request now formulated.

Even when the Claimant contends for the assessment of the constitutionality of the said article 236 of Law no. 83-C/2013, of 31 December, what it actually intends is for the Tribunal to declare the nullity (or voidability) of the tax assessment acts, because issued exclusively on the basis of that norm and the amendments which, in the Claimant's understanding, the same generated in the field of the tax base.

None of this invalidates, as the Claimant itself sustains, that the filing of the present request also aims to prevent the application of norms considered unconstitutional, by way of the issuance of the assessment acts in question.

Nor could it be otherwise, in so far as the Arbitral Tribunal has no competence to declare the unconstitutionality of legal norms, but only to assess the lawfulness of assessment acts, under the restricted forms which the same assume in article 2 of the LRTA, declaring, if necessary, their illegality.

That is the Claimant's claim. Therefore the exception in question is unfounded.

B) Lack of Passive Legitimacy of the Respondent

As a result of the above, the Tribunal considers that the alleged lack of legitimacy of the Respondent also lacks foundation.

In fact, although the TCA may find itself bound to strict compliance with legal and constitutional norms, and even though it cannot refuse to apply norms on the grounds of their unconstitutionality or illegality – in light of its binding to the principle of legality (cf. articles 266, no. 2 of the CRP, 3, no. 1 of the CPA and 55 of the GTL -, that is not the issue brought to the proceedings, as was found.

The Claimant's claim aims at the assessment of assessment acts which, in its view, were based on norms which it regards as illegal and unconstitutional, not the declaration of abstract unconstitutionality of a norm.

Assessment acts which were issued and are the product of the TCA itself, so it is evident that the same could be sued in the present proceedings, as it is bound to do so, by virtue of the provisions of Order no. 112-A/2011, of 22 March.

In summary, contrary to what the Respondent understands, the claim put forward by the Claimant does not conflict with the powers of the TCA itself and with its binding to law and the Constitution.

Therefore, the defect in question is also judged unfounded, considering the TCA, now Respondent, a legitimate party in the present proceedings.

C) Lawfulness of the assessment acts of TTRP and SD in question, in light of the legal regime approved by Law no. 64-A/2008, of 31 December (Law of the State Budget for 2009)

Prior to analysis of the substantive issue, it is necessary to make reference to the legal provisions in force in this matter and to the amendments to the applicable normative framework, absolutely essential for the issuing of the merit decision.

Thus, and in the first place, it is important to cite Law no. 64-A/2008, of 31 December (SB 2009), the diploma by which a special regime applicable to real estate investment funds for residential rental (REIFHR) and real estate investment companies for residential rental (SIHR) was created.

The scope of application of this legal regime would fall, in terms of subjective incidence, on entities constituted during the five years following the entry into force of the law (cf. article 102) and, as regards objective incidence, on real properties acquired by such entities during the same period (cf. article 103).

It should also be noted that, in accordance with the provision of article 104 of the said legal diploma, the assets of the REIFHR is subject to the provisions of article 46 of the Legal Regime of Real Estate Investment Funds, requiring that at least 75% of its total assets be constituted by real properties, located in Portugal and intended for rental for permanent residence (cf. art. 4).

Law no. 64-A/2008, of 31 December, established, as now relevant, a Tax Regime, applicable to these entities (cf. article 8 of article 104), in the following terms:

"Article 8

Tax regime

(…)

1. The following are exempt from TTRP:

a) Acquisitions of urban real properties or of autonomous fractions of urban real properties intended exclusively for rental for permanent residence, by the investment funds referred to in no. 1 [REIFHR constituted between 1 January 2009 and 31 December 2013, which operate in accordance with national legislation and in observance of the conditions provided for in the preceding articles];

b) Acquisitions of urban real properties or of autonomous fractions of urban real properties intended for own and permanent residence, as a result of the exercise of the purchase option referred to in no. 3 of article 5 by the tenants of the real properties forming part of the assets of the investment funds referred to in no. 1.

1. All acts performed are exempt from stamp duty, provided that they are connected with the transfer of urban real properties intended for permanent residence that occurs due to the conversion of the right of ownership of such real properties into a right of rental over the same, as well as with the exercise of the purchase option provided for in no. 3 of article 5.

(…)"

However, by virtue of the approval of Law no. 83-C/2013, of 31 December (SB 2014), the said tax regime would be amended, adding to the mentioned article 8 the following legal provisions (cf. article 235 of Law no. 83-C/2013):

"Article 8

(…)

(…)

1. For purposes of the provisions of nos. 6 to 8, it is considered that urban real properties are intended for rental for permanent residence whenever they are subject to a rental contract for permanent residence within a period of three years counted from the moment they became part of the fund's assets, the taxable person being required to communicate and provide proof to the TCA of the respective effective rental, within 30 days following the end of the said period.

2. When real properties have not been subject to a rental contract within the three-year period provided for in the previous number, the exemptions provided for in nos. 6 to 8 become void, and in that case the taxable person shall request from the TCA, within 30 days following the end of the said period, the assessment of the respective tax.

3. If real properties are alienated, with the exception of the cases provided for in article 5, or if the REIFHR is subject to liquidation, before the period provided for in no. 14 has elapsed, the taxable person shall also request from the TCA, before the alienation of the real property or the liquidation of the REIFHR, the assessment of the tax due pursuant to the previous number."

Furthermore, and as is now highly relevant, a Transitional Provision was provided for in article 236 of the cited Law no. 83-C/2013, with the following wording:

"Article 236

Transitional provision within the scope of the special regime applicable to REIFHR and SIHR

1. The provisions of nos. 14 to 16 of article 8 of the special regime applicable to REIFHR and SIHR, approved by articles 102 to 104 of Law no. 64-A/2008, of 31 December, apply to real properties that have been acquired by REIFHR from 1 January 2014 onward.

2. Without prejudice to the provisions of the preceding number, the provisions of nos. 14 to 16 of article 8 of the special regime applicable to REIFHR and SIHR, approved by articles 102 to 104 of Law no. 64-A/2008, of 31 December, also apply to real properties that have been acquired by REIFHR before 1 January 2014, and in such cases, the three-year period provided for in no. 14 shall be counted from 1 January 2014."

Absolutely essential for the analysis to be conducted below is, also, what was stated in this regard in the Report of the State Budget for 2009, prepared by the Ministry of Finance and Public Administration, which was at the genesis of the norms then added and the amendments which the tax regime applicable to REIFHR and SIHR then underwent.

Thus, and according to such Report, in the relevant part, the creation of this exceptional tax regime was framed in the following manner:

"Creation of Real Estate Investment Funds for Residential Rental

The initiative regarding the creation of funds and real estate investment companies specifically focused on investment in real properties intended for residential rental also deserves reference. With this initiative, it is intended to create an additional stimulus to the urban rental market in Portugal, envisaging a particularly favorable tax regime applicable until 31 December 2020. The present regime applies to funds and companies constituted in the five years following entry into force of the law and to real properties acquired by them during that period.

Essentially, the creation of funds and real estate investment companies whose total assets are constituted, in a percentage not less than 75%, by real properties located in Portugal intended for rental for permanent residence is provided for. In this way, it is intended to create the necessary conditions for placing real properties on the rental market and also to allow families burdened with mortgage loan installments to alienate the respective real property to the fund or company, with reduction of the respective charges, replacing them with a rental of lower value than that installment and maintaining a purchase option on the real property they rent to the fund.

It is proposed that the tax regime of these funds include:

• Exemption from Corporate Income Tax (CIT) on income of any kind obtained by REIFHR constituted between 1 January 2009 and 31 December 2014;

• Exemption from Personal Income Tax (PIT) and CIT on income relating to investment units in the investment funds referred to in the previous number, excluding the positive balance between capital gains and losses resulting from the alienation of investment units.

• Exemption from PIT on capital gains resulting from the transfer of real properties intended for own residence to investment funds that occurs due to the conversion of the right of ownership of such real properties into a right of rental, provided that the rental relationship is maintained and the purchase option comes to be exercised at the end.

• Deduction from PIT tax collection of the amounts borne by the tenants of the real properties of the investment funds as a result of the conversion of a right of ownership of a real property into a right of rental.

• Exemption from Urban Real Estate Tax, while they remain in the portfolio of the REIFHR, for urban real properties intended for rental for permanent residence.

• Exemption from TTRP in acquisitions of urban real properties or of autonomous fractions of urban real properties intended exclusively for rental for permanent residence or of urban real properties or of autonomous fractions of urban real properties intended for own and permanent residence, as a result of the exercise of the purchase option by the tenants of the real properties forming part of the assets of real estate investment funds.

• Exemption from Stamp Duty in all acts connected with the transfer of urban real properties intended for permanent residence, which occurs due to the conversion of the right of ownership of such real properties into a right of rental, as well as with the exercise of the purchase option.

• Exemption from supervisory fees for REIFHR managing entities with respect to the management of funds of this nature."

It is on the basis of the legal framework set out above that the decision on the lawfulness of the assessment acts in question must be taken and, in that measure, assessed, even if indirectly, the constitutional issue raised.

And it is advanced from now that the Tribunal will follow very closely the decision that was issued, in a situation in all respects identical, in arbitral case no. 76/2016-T.

Thus, in line with such decision and while a somewhat different decision structure has been adopted, it is first necessary to understand what was, initially and at the date the real properties in question were acquired, the tax regime of REIFHR and SIHR.

As was found and in summary, article 8 of the special regime applicable to such entities originally provided for exemption from TTRP in the following situations:

• Acquisitions of urban real properties or of autonomous fractions of urban real properties intended exclusively for rental for permanent residence, carried out by REIFHR constituted between 1 January 2009 and 31 December 2013;

• Acquisitions of urban real properties or of autonomous fractions of urban real properties intended for own and permanent residence, resulting from the exercise of the purchase option right – provided until 31 December 2020 – by the tenants of the real properties forming part of the assets of REIFHR constituted between 1 January 2009 and 31 December 2013.

In parallel, exemption from SD was provided with reference to all acts performed in connection with the transfer of urban real properties intended for permanent residence that occurs by virtue of:

• The conversion of the right of ownership of such real properties into a right of rental over the same;

• The exercise of the purchase option right – provided until 31 December 2020 – by the tenants of the real properties forming part of the assets of REIFHR constituted between 1 January 2009 and 31 December 2013.

This was the regime initially enshrined by the legislator, which, as will be found, does not differ, in its essence, from what is currently provided for, while taking into account the amendments made by articles 235 and 236 of the cited Law no. 83-C/2013.

It was required, above all, that the entities contemplated by the said tax regime acquire urban real properties, or autonomous fractions, and intend them exclusively for rental for permanent residence. Just as it currently does.

But this does not mean that the regime has remained unchanged or that, as a function of such legislative amendments, issues related to lawfulness and/or constitutionality of that provision cannot be raised.

What is important to understand is whether, in concrete terms, these legislative amendments, when applied to the case sub judice, are likely to generate a possible illegality and/or unconstitutionality.

Let us see, in particular, what changed as a result of what was established by the said articles 235 and 236 of Law no. 83-C/2013, of 31 December.

Currently, the tax regime applicable to REIFHR and SIHR provides, in TTRP, the following exemptions:

• Acquisitions of real properties or of autonomous fractions of urban real properties intended exclusively for rental for permanent residence, carried out by REIFHR constituted between 1 January 2009 and 31 December 2015 (previously, between 1 January 2009 and 31 December 2013); and

• Acquisitions of urban real properties or of autonomous fractions of urban real properties intended for own and permanent residence, resulting from the exercise of the purchase option right – provided until 31 December 2020 – by the tenants of the real properties forming part of the assets of REIFHR constituted between 1 January 2009 and 31 December 2015 (previously, between 1 January 2009 and 31 December 2013).

Whereas, in SD, the exemptions currently enshrined concern all acts performed in connection with the transfer of urban real properties intended for permanent residence, which occurs by virtue of:

• The conversion of the right of ownership of such real properties into a right of rental over the same; and

• The exercise of the purchase option right – provided until 31 December 2020 – by the tenants of the real properties forming part of the assets of REIFHR constituted between 1 January 2009 and 31 December 2015 (previously, between 1 January 2009 and 31 December 2013).

Furthermore, the new no. 14 of the said article 8 of the Tax Regime determines that "urban real properties are intended for rental for permanent residence whenever they are subject to a rental contract for permanent residence within a period of three years counted from the moment they became part of the fund's assets".

In that case, the taxable person is bound to communicate and provide proof of effective rental, within 30 days following the end of the period in question.

The new nos. 15 and 16 of the said norm determine, for their part, that the exemptions from TTRP and SD become void in the following situations:

• If the real properties are not subject to a rental contract within the said three-year period, counted from the date they became part of the REIFHR;

• If the real properties are alienated before the said three-year period has elapsed, also here computed from the date they became part of the REIFHR (except if they are alienated as a result of the exercise of the purchase option right); and

• If the REIFHR is itself subject to liquidation before the mentioned three-year period has elapsed, counted in the manner described above.

By virtue of the provisions of article 236 of Law no. 83-C/2013, of 31 December, the amendments to which reference is now made apply to real properties that have been acquired from 1 January 2014 onward, but, equally, to real properties that have been acquired before 1 January 2014, with the said lapse period of three years being counted from 1 January 2014.

By specifically referring to the arbitral decision to which reference was made above, issued by CAAD in case no. 76/2016-T, we can summarize the amendments then made in the following manner:

"In this context, previously it sufficed, for those exemptions from TTRP and Stamp Duty to be verified, that these were acquisitions of urban real properties or their autonomous fractions intended exclusively for rental for permanent residence, with nothing being provided regarding the necessity of effective celebration of the rental contract within a certain period or regarding the necessity of maintenance of the real properties in the assets of REIFHR also during a determined period.

Currently the requirements of those exemptions are, in addition to exclusive destination for rental for permanent residence, effective rental and non-alienation of the real properties, as well as non-liquidation of the REIFHR, within the referenced three-year period.

Thus, it was no longer sufficient for the real property to be intended for residential rental, at the moment of its acquisition by the REIFHR; now, if the acquisition of the real property intended exclusively for rental for permanent residence is not followed by its effective rental within said three-year period or if its alienation or liquidation of the REIFHR occurs within that same period, the exemptions in question become void".

But such a change in parameterization does not invalidate the following conclusion, as was once more well noted in that decision of the CAAD:

"However, it is important to note that, between the initial version and the version in force of the tax regime in question, there was a requirement of those exemptions from TTRP and Stamp Duty that remained unchanged: the exclusive destination of urban real properties or their autonomous fractions for rental for permanent residence.

In fact, the obligation to intend the real property for residential rental is a requirement that has been present in the tax regime established within the scope of the special regime applicable to REIFHR and SIHR from the very beginning – indeed, as a necessary consequence of the objectives and motivations underlying its creation, namely to allow families with residential mortgages and with difficulty in paying their loan installments to convert those installments into payment of a rent, by selling their respective real property to the REIFHR and celebrating, with the respective managing entity of the fund (SIHR), a rental contract on the same real property, being able to maintain, until 2020, the purchase option on the real property –, thus not being a requirement arising from the amendments introduced by article 235 of Law no. 83-C/2013, of 31 December.

Moreover, compliance with that requirement never sufficed – initially, as it does now – with a mere declared intention, at the time of acquisition of the real property, that it was intended to intend the same exclusively for residential rental, effective allocation to rental for permanent residence always having been required; the only difference lies in the fact that, now, such allocation must be concretized, by way of the celebration of a rental contract, within a determined period.

To admit an understanding to the contrary, in addition to distorting the purposes that justified the creation of REIFHR and SIHR and the enactment of a special legal regime – namely in tax matters, with the establishment of various tax benefits –, practices of evasion and fraud would be consented to, with the harmful tax consequences arising therefrom; for this reason, that is decidedly not the best interpretation of those norms".

This is also the understanding of this Tribunal, for it is what best reflects all the ratio legis which presided over the creation of this exceptional regime of taxation in the sphere of REIFHR and SIHR.

In fact, from the Report of the State Budget for 2009 – and this is a legislative instrument that cannot be ignored in situations like this – are clear what the intentions underlying the provision of exemptions in IRC, PIT, Urban Real Estate Tax, but also TTRP and SD. As evidenced therein, this was an initiative that aimed to "create an additional stimulus to the urban rental market in Portugal, envisaging a particularly favorable tax regime applicable until 31 December 2020", being the legislator's intention to "create the necessary conditions for placing real properties on the rental market and also to allow families burdened with mortgage loan installments".

That is, it would make no sense for the legislator, on one hand, to intend to stimulate the rental market and, on the other hand, to suffice with a "fiction" of rental, through mere declaration, by the entities targeted, of the intention to intend the real properties for residential rental, without actual allocation for that purpose.

If the possible alienation of the real property were innocuous, in light of this special regime of taxation, it would have no value, as far as the intention to foster the urban rental market is concerned.

This Tribunal only does not accompany the said decision of the CAAD, in the part where it appeals to the principles embodied in the TBS and, in concrete, to article 14 of the TBS, as it considers that the Tax Regime provided for by Law no. 64-A/2008, of 31 December, is self-sufficient and contains the essential (and special) nucleus of norms that regulate the tax regime of REIFHR and SIHR.

The issue is, as stated above, that, in light of that legal regime, the possible alienation of the real properties acquired by REIFHR and SIHR distorts, and in that measure, prevents, the maintenance of the exemption.

Now, referring to the present case, it was demonstrated that the REIFHR in question, here represented by the Claimant, would come to alienate, in the year 2016, a real property acquired by it in 2013 and from which it had benefited from the exemption from TTRP and SD provided for in article 8 of that Tax Regime.

It was, in fact, that circumstance – its alienation – that motivated the issuance of the assessment acts of TTRP and SD now contested by the Claimant.

And at this moment we again transcribe the decision issued by CAAD in case no. 76/2016-T:

"In fact, the assessments of TTRP and Stamp Duty in controversy resulted from the fact that the mentioned urban real property was given a different destination from that on which the granting of the exemptions from TTRP and Stamp Duty was based – exclusively rental for permanent residence –, different destination which is evidenced by the alienation of the real property – once this is effected, the requirement on which the exemptions were based (rental for permanent residence) can no longer be fulfilled – and without there being any evidence that the same was effected in favor of one of its tenants and, therefore, under the aforementioned purchase option right.

In this manner, the assessments of TTRP and Stamp Duty in controversy did not emerge from "application of the requirement associated with allocation to a specific destination (rental for permanent residence), within the three-year period introduced by article 236 of the transitional regime already referred to (and respective calculation of the period), but rather from the alienation of a real property allocated to a REIFHR managed by the Claimant, outside the scope "of acquisitions of urban real properties or of autonomous fractions of urban real properties intended for own and permanent residence, as a result of the exercise of the purchase option by the tenants of the real properties forming part of the assets of the investment funds" (…) which, implicitly, resulted in that real property ceasing to be (or never having been) allocated, by the REIFHR, to the legally provided purpose in article 8, nos. 7, letter a) and 8 of that special regime (residential rental)" (arbitral decision issued in case no. 688/2015-T). It is not, therefore, a question of a period.

In this measure, we understand that both the assessment of TTRP and the assessment of Stamp Duty in question, do not suffer from any illegality, being in full conformity with what is provided for in letter a) of no. 7 and in no. 8 of article 8 of the special regime applicable to REIFHR and SIHR and also with the provisions of article 14, no. 3 of the TBS, such they are lawful".

Also in this case it is not a question of a period, but of the change in the allocation of the real property – initially for the purpose of residential rental and, in the year 2016, for sale. An alteration which was made – with complete legitimacy, it is not contested – by the proprietor of the real property itself, the Claimant.

What cannot be intended is that the subjective modification of the facts and, in concrete, the de-allocation of the real property for rental purposes, has no consequence in the tax sphere, as the Claimant does.

In this particular, special reference must also be made to the Legal Opinion which the Claimant attached to the proceedings, authored by the illustrious Professors C… and D….

In fact, however much the opinion formulated by those legal experts in the said opinion is respected, the Tribunal maintains the understanding that the considerations then produced, especially as regards the possible unconstitutionality of article 236 of Law no. 83-C/2013, of 31 December, in no way undermine the conclusion that, in the concrete case, the Claimant altered the purpose for which the real property had been acquired.

This Tribunal understands that, in light of the Tax Regime provided for in article 8, the sale of a real property, acquired by a REIFHR or SIHR for rental, originally generated the obligation of assessment of TTRP and SD.

Therefore, the possible retroactive application of the norm provided for in article 236 of Law no. 83-C/2013, of 31 December, is a question which need not be analyzed in the present case, as it does not even arise, in the perspective of this Tribunal. Being in this manner rendered moot.

Without prejudice to this and merely for the sake of argument, it should be said that possible constitutional issues may arise in cases where real properties are not alienated (provided that the factual circumstances permit it), not in this case.

Therefore we also agree with what is referred to in the said decision of the CAAD:

"In this context, it is our understanding that no. 16 of article 8 of the special regime applicable to REIFHR and SIHR, applied in conjunction with the provision of no. 15 of the same article, produces no alteration in the substance and/or in the requirements for application of the exemptions established by nos. 7 and 8 of the same article 8, with respect to the assessments of TTRP and Stamp Duty in controversy.

In fact, contrary to what is argued by the Claimant, it is not correct to say that the facts or circumstances upon which the respective lapse depended were not already legally provided for, at the moment of recognition of the exemption, at least with respect to the circumstance that occurred in this case: the alienation of the real property[2].

In truth, the fact that the Claimant proceeded to alienate the said urban real property which, upon acquiring, declared that it would intend for the purpose that allowed it to be granted – as it was – the exemption from TTRP and Stamp Duty, would always have determined – even if the cited no. 16 had not been added to the mentioned article 8, nor existed the transitional provision of article 236 of Law no. 83-C/2013, of 31 December – the lapse of such exemptions, by effect of the provisions of no. 3 of article 14 of the TBS.

Thus, in the situation sub judice there is no question of the retroactive application of any norm that came to introduce a new regime of lapse of the exemptions from TTRP and Stamp Duty provided for in nos. 7 and 8 of article 8 of the special regime applicable to REIFHR and SIHR.

Consequently, the knowledge of the issue relating to the alleged retroactivity of the transitional regime provided for by article 236 of Law no. 83-C/2013, of 31 December, is rendered moot, since, as referred to above, the conditions that originated the assessments of TTRP and Stamp Duty in controversy have no relationship with the addition of nos. 14, 15 and 16 to article 8 of the special regime applicable to REIFHR and SIHR, carried out by article 235 of the cited Law no. 83-C/2013, but solely with the alienation of the said urban real property for purposes other than those for which the exemptions from TTRP and Stamp Duty were granted".

Also as a result of what has been said above, the invoked nullity (or, subsidiarily, voidability) of the TTRP and SD assessment acts becomes moot, from the perspective of the possible violation of the principle of non-retroactivity of tax law, embodied in article 103, no. 3, of the Constitution of the Portuguese Republic.

The assessment acts were due for the reasons set forth above.

Finally, it should be noted that the question to be decided has already been the subject of numerous CAAD decisions, in which a conclusion was reached in like manner, examples of which are the arbitral decisions issued in cases nos. 320/2015-T, 688/2015-T, 689/2015-T, 691/2015-T, 694/2016-T, 705/2015-T, 706/2015-T, 707/2015-T, 708/2015-T, 709/2015-T, 710/2015-T, 717/2015-T, 729/2015-T, 735/2015-T, 737/2015-T, 30/2016-T, 56/2016-T, 59/2016-T, 61/2016-T, 62/2016-T, 63/2016-T, 76/2016-T, 85/2016-T, 93/2016-T, 121/2016-T, 125/2016-T, 126/2016-T, 165/2016-T, 232/2016-T, 241/2016-T, 288/2016-T and 617/2016-T.

For this reason, the claim filed by the Claimant must entirely fail.

D) Constitutionality of the assessment acts in question, in light of the norm provided for in article 235 of Law no. 83-C/2013, of 31 December, namely, of nos. 14 to 16 added to article 8 of the said tax regime, as well as, the transitional norm provided for in article 236 of that Law, as well as, the principle set forth in article 103, no. 3, of the CRP [prohibition of retroactivity of tax law]

As stated above, analysis of this issue was rendered moot by virtue of the sense of the decision issued regarding the lawfulness of the assessment acts of TTRP and SD in question, in light of the legal regime created by Law no. 64-A/2008, of 31 December.

E) Right of the Claimant to payment of compensatory interest.

Given that it was considered that the assessment acts do not suffer from any defect or illegality, the Claimant has no right to reimbursement of the tax in question and to payment of compensatory interest relating to the amounts of TTRP and SD paid by it.

VII. Decision

In light of the foregoing, it is decided to judge the request for arbitral decision unfounded, as not proven, and, in consequence:

i) Judge unfounded the claim filed by the Claimant, as it is considered that the assessment acts of TTRP and SD in question do not suffer from illegality and, for that reason, cannot be annulled or declared null;

ii) Judge unfounded the claim for payment of compensatory interest;

iii) Condemn the Claimant to pay the costs of the present proceedings.

VIII. Value of the Proceedings

The value of the proceedings is fixed at € 1,773.83, pursuant to the provisions of article 97-A, no. 1, letter a), of the Code of Tax Procedure and Process, applicable by virtue of the provisions of letters a) and b) of no. 1 of article 29 of the LRTA and of no. 2 of article 3 of the Regulation of Costs in Tax Arbitration Proceedings.

IX. Costs

The value of the costs of the proceedings is fixed at € 306.00, pursuant to Table I of the Regulation of Costs of Tax Arbitration Proceedings, to be paid by the Claimant, given the complete failure in the present action.

Let it be notified.

Lisbon, 21 August 2017

The Arbitrator

(Diogo Bonifácio)