Stamp Tax on Pension Fund Management Companies: CAAD Ruling on Verba 17.3 TGIS Subjective Incidence

ARBITRAL AWARD

The arbitrators Counselor José Baeta de Queiroz (president-arbitrator), Prof. Doctor Paulo Nogueira da Costa and Dr. José Nunes Barata (arbitrator members), appointed by the Deontological Council of the Administrative Arbitration Center to form the Arbitral Tribunal, constituted on 26 January 2017, agree as follows:

I. REPORT

1.

A..., S.A. (hereinafter "Claimant") bearing the collective identification number ..., with registered office at Avenue ...-...-... in ..., following the dispatch of 23.08.2016 from the Deputy Director of the Finance Directorate of Lisbon, which expressly dismissed the administrative complaint filed on 24-03-2016, in which the annulment of the additional assessments of Stamp Tax No. 2015..., in the amount of € 207,834.52, No. 2015..., in the amount of € 362,215.80, No. 2015..., in the amount of € 330,390.29, and No. 2015..., in the amount of € 355,593.72, relating respectively to the years 2011, 2012, 2013 and 2014, as well as the respective assessments of compensatory interest, was requested, in accordance with the provisions of paragraph a) of no. 1 of article 2 and articles 10, 15 and following, all of Decree-Law No. 10/2011, of 20 January (Legal Regime of Tax Arbitration or "RJAT"), to submit a request for arbitral decision against that decision dismissing the administrative complaint and against the tax assessments above identified, seeking their annulment.

2.

The Respondent is the TAX AND CUSTOMS AUTHORITY (hereinafter referred to as "TA" or "Respondent")

3.

The request for constitution of the arbitral tribunal was accepted by His Excellency the President of CAAD and automatically notified to the Tax and Customs Authority on 28-11-2016.

4.

Pursuant to the provisions of paragraph a) of no. 2 of article 6 and paragraph b) of no. 1 of article 11 of Decree-Law No. 10/2011, of 20 January, as amended by article 228 of Law No. 66-B/2012, of 31 December, the Deontological Council appointed as arbitrators of the collective arbitral tribunal Counselor José Baeta de Queiroz, Prof. Doctor Paulo Nogueira da Costa and Dr. José Nunes Barata, who communicated their acceptance of the appointment within the applicable timeframe.

5.

On 11-01-2017, the Parties were duly notified of such appointment, and did not express any desire to refuse the appointment of the arbitrators, in accordance with the provisions of article 11, no. 1, paragraphs a) and b) of the RJAT, combined with articles 6 and 7 of the Code of Ethics.

6.

In accordance with the provisions of paragraph c), of no. 1, of article 11 of the RJAT, the Collective Arbitral Tribunal was constituted on 26-01-2017.

7.

The Claimant, in the request for constitution of the arbitral tribunal presented by it, invokes, in summary, the following:

a) The norm of subjective scope of application contained in Item 17.3 of the General Table of Stamp Tax (TGIS) includes the concepts of (i) credit institution, (ii) financial company or other entities legally equated to it, and (iii) financial institution, whose meaning must be interpreted in light of Banking, Financial and Insurance Law, as provided in no. 2 of article 11 of the LGT, since tax norms do not contain the definition of these concepts, which are peculiar to that other branch of law;

b) The norms of subjective scope of application at issue are, as such, subject to the principle of tax legality;

c) This principle requires that the norms of scope of application be clear, precise and with a high degree of determination, not conferring administrative discretion in the filling of their concepts;

d) The answer to the major question of whether Pension Fund Management Companies (SGFP) are credit institutions, financial companies or entities legally equated to them, or financial institutions, can only be negative, as results from the General Regime of Credit Institutions and Financial Companies (RGICSF);

e) The activities practiced by entities in the insurance sector are regulated exclusively by the rules of the Solvency II regime, transposed in Portugal by Law No. 147/2015, of 9 September, which notably approved the Legal Regime for Access and Exercise of Insurance and Reinsurance Activity (RJASR) and by Decree-Law No. 12/2006, of 20 January, with respect to SGFP, and not by the RGICSF or by European banking sector legislation;

f) Thus, the definition of "financial institution" contained in the RGICSF, and also in Regulation 575/2013, since the first is a replica of the second, never encompasses entities in the insurance sector;

g) For this reason, moreover, SGFP are supervised by the ASF and not by the Bank of Portugal;

h) When the legislator intended to integrate into the concept of "financial institution" other entities that are not qualified as such under the RGICSF, it established this very thing in an express norm;

i) This was what happened with insurance companies (through article 8, no. 1 of Decree-Law No. 102/94, of 20 April, and which was maintained by article 8, no. 1, of Decree-Law No. 94-B/98, of 17 April), and this was what did not actually happen with SGFP and pension funds, regarding which no similar norm was established;

j) Within the legal framework in force, legislation ceased to qualify insurance companies as "financial institutions," with the legislator now qualifying them as "financial companies" (article 47 of RJASR);

k) From this the following conclusions are drawn: (i) the concept of financial institution is what is contained in the RGICSF and (ii) the legislator opted to cease qualifying insurance companies as financial institutions;

l) Now, if even insurance companies, which were expressly qualified as "financial institutions" ceased to be so, what can be said of SGFP and pension funds, regarding which no norm whatsoever has ever qualified them as such?

m) The use of an indeterminate concept whose filling allows the TA to include or not include, at its pleasure, the multitude of entities to which its "arguments" apply, would result in evident unconstitutionality, by violation of the principle of tax legality and the principle of typicality, and also of the principles of equality and legal certainty;

n) Thus, the interpretation effected by the TA of the norm of subjective scope of application contained in Item 17.3, in addition to being illegal, is also unconstitutional, by violation of the constitutional principles mentioned above;

o) If it is understood that the commissions charged by the Claimant are subject to Stamp Tax (which is not conceded), then it will be necessary to conclude that the exemption provided for in article 7, no. 1, paragraph e), of the CIS applies;

p) Article 37, no. 2, of the 2001 Budget Law does not itself contain any material delimitation of the scope of application of the Stamp Tax exemption postulated in paragraphs e) and f) of no. 1 of article 6 of the CIS;

q) This delimitation was introduced directly in the new wording given to no. 2 of the then article 6 of the CIS;

r) No. 2 of article 6 of the CIS, which established the said delimitation of the exemption, was expressly repealed by Law No. 32-B/2002, of 30 December (which approved the State Budget Law for 2003 – LOE 2003);

s) The repeal occurred by virtue of article 30 of the LOE 2003;

t) It is true that, in the LOE 2003, the legislator did not use the word "repealed" to enumerate and announce that the wording given by the LOE 2001 to no. 2 of the then article 6 of the CIS had been effectively repealed.

u) It did not, nor did it need to, since the repealing effect is produced by the fact that the legislator, in the LOE 2003, determines that the new wording to be given to that norm corresponded to the former wording of no. 3 of that same article;

v) Thus, the norm repealed by the LOE 2003 was only in force between 01.01.2001 and 31.12.2002;

w) In these terms, and as is evident, a norm that was repealed on 31 December 2002 can never be applied to commissions paid between 2011 and 2014, about a decade later;

x) For the Inspection Services, the expression "and likewise" that appears in paragraph e) of no. 1 of article 7 of the CIS is intended to establish a relationship between the granting of credit and interest, commissions and guarantees;

y) The Claimant considers, in a different sense, that the expression "and likewise" used by the legislator when drafting the wording given by the LOE 2003 to paragraph e) of no. 1 of the then article 6 of the CIS will be synonymous with other expressions such as "moreover," "furthermore," "besides" and "additionally";

z) That is, the expression cited contained in the norm which is interpreted here contains in itself, according to the Claimant's point of view, an idea of addition or sum in the context of an enumeration of facts;

aa) It is not, therefore, possible, in linguistic terms, to claim that beyond the relationship of enumeration of facts that results from the use of the expression "and likewise," there exists any other meaning such as a special relationship of dependence between the charging of interest and/or commissions and/or the provision of guarantees in relation to any operation of credit granting;

bb) The logical and systematic elements of interpretation converge in the same sense;

cc) The interpretation advocated by the TA with respect to paragraph e) of no. 1 of article 7 of the CIS violates, moreover, the constitutional principle of equality and the principle of typicality of tax law, as it restricts the application of a legally provided exemption, based on the application of a norm repealed on 31.12.2002.

dd) The Claimant considers profoundly wrong the interpretation contained in the Judgment of the TCAS delivered on 21.09.2010 (case No. 02754/08), cited by the Inspection Services;

ee) A hasty and manifestly erroneous interpretation by the TCAS can never serve as a guide or excuse to perpetuate the error, maintaining that interpretation, now that all hermeneutical elements have been exposed;

ff) Unfortunately, the STA has also uncritically followed the decision of the TCAS in this regard (which in turn followed uncritically the judgment of the TAF of Sintra), again in cases concerning commissions of insurance brokers that have little or nothing to do with the present case;

gg) As a final argument for the refutation of the Respondent's thesis, the Claimant invokes the amendments that Law No. 7-A/2016, of 30 March (which approved the State Budget Law for 2016 - LOE 2016), recently introduced to article 7 of the CIS;

hh) The wording given by the tax legislator to the new no. 7 of article 7 of the CIS presents numerous similarities with the wording that had been instituted by the LOE 2001 for the then no. 2 of article 6 of the same Code and which was in force for 2 years until being repealed by the LOE 2003;

ii) However, the legislator did not merely limit itself, with the LOE 2016, to resurrect a formula that had been used about 15 years earlier for the purpose of imposing a reduction to the scope of the Stamp Tax exemption provided in paragraph e) of no. 1 of article 7 of the CIS – through article 154 of the LOE 2016, the legislator established that, namely, the wording given to the new no. 7 of article 7 of the CIS had an interpretative character;

jj) It is concluded that the LOE 2016 instituted (again) a "delimitation of the material scope" of the exemption provided in article 7, no. 1, paragraph e), of the CIS, because such restriction was not contained in the legal system since its repeal in 2003;

kk) This inference leads to an also inevitable conclusion: the premise previously stated (and defended by the TA in the Report) that such restriction to the scope of exemption provided in that norm had been in force from 2001 to the present day is, after all, false;

ll) And let it not be said that the interpretative character conferred by the legislator through article 154 of the LOE 2016 to the new no. 7 of article 7 of the CIS will now come to the "rescue" of the TA, erasing any and all illegality committed in the meantime, namely in the tax procedure that preceded the assessments of tax and compensatory interest contested by the Claimant;

mm) For it is, never too much to recall, article 103, no. 3, of the CRP (norm resulting from the Constitutional Review of 1997) prescribes that "[n]o one can be obliged to pay taxes that have not been created in accordance with the Constitution, that have a retroactive nature or whose assessment and collection are not made in accordance with the law";

nn) This idea of prohibition of retroactivity of tax law prescribed in the CRP came to be included also in article 12, no. 1, of the LGT, which determines that "[t]ax norms apply to facts subsequent to their entry into force, and no retroactive taxes can be created";

oo) The Claimant considers that there is no way to deny the innovative character of no. 7 added by article 152, of the LOE 2016, to article 7 of the CIS and, as such, one is faced with a case in which a new law will apply (via the interpretative character conferred on it by article 154 of the LOE 2016) to facts that have wholly occurred (e.g. in the years 2011 to 2014) at a moment prior to its publication;

pp) As is evident, the norm that confers interpretative character is afflicted by the vice of unconstitutionality insofar as it is clearly contrary to the aforementioned prohibition of retroactivity of tax law;

qq) The Claimant further contends that the restriction of the exemption advocated by the TA violates the "capital gathering" Directives;

rr) The prohibition on applying indirect taxes to pension funds derives from article 5, no. 1, paragraph a) of Directive 3008/7/CE, combined with Directive 2003/41/CE;

ss) But even if it is understood that Directive 3008/7/CE is not applicable, the taxation in the form of Stamp Tax would still violate the provisions of article 11 of DL 12/2006, which prevents the assets of pension funds from being liable for any other obligations, beyond those listed in that law;

tt) Since this Decree-Law transposes Directive 2003/41/CE to the internal legal order, the violation of that article 11 constitutes a violation of the Directive and, thereby, of the Constitution itself (article 8 of the CRP);

uu) Thus, the taxation in the form of Stamp Tax of the management commissions charged by SGFP to Pension Funds violates the provisions of Directive 3008/7/CE and Directive 2003/41/CE;

vv) If this Tribunal comes to understand that doubts remain as to the interpretation of the rules mentioned above in light of the Law of the European Union, it has the legal duty to submit the appropriate questions to the CJEU;

ww) The Claimant provided guarantees in the amounts fixed by the Deputy Finance Manager of the Oeiras Finance Service ... to suspend the tax enforcement proceedings instituted after the non-voluntary payment of the assessments now contested;

xx) If it is concluded that the Claimant is in the right in the present proceedings, it should be compensated for the damages resulting from the provision of such undue guarantees.

8.

In its Response, the Respondent presents a defense by way of opposition, alleging, to the extent of non-merit of the request for arbitral decision, in summary, the following:

a) The Respondent understands that the Claimant's argument is without merit, for the reasons evidenced in the Final Report of Tax Inspection and in the decision of the Administrative Complaint, which it provides as fully reproduced in its Response;

b) The regime for the constitution and operation of pension funds and the respective management companies is set out, as already mentioned, in Decree-Law 12/2006, of 20 January, which transposed into our legal system Directive No. 2003/41/CE, of the European Parliament and of the Council, of 3 June, relating to the activities and supervision of the institutions managing occupational retirement pension schemes;

c) It follows from the preamble of the national instrument the objective of establishing unified treatment of pension funds, with the legislator extending the principles and normative provisions contained in the directive for occupational pension schemes to pension funds of the "third pillar of social protection" (individual pension plans);

d) Under the cited decree-law, pension funds are managed by specialized and professional entities, constituted in the form of a joint-stock company exclusively for that purpose, designated by SGFP, or by insurance companies that lawfully operate the "Life" branch and have an establishment in Portugal;

e) Regarding the qualification of pension fund management companies as financial institutions, it should be noted that when the management activity is exercised by insurance companies of the Life branch, there is no room for doubt in such qualification, in accordance with the provisions of article 8 of DL 94/98, of 17 April, which transposed Directive No. 2005/68/CE;

f) As for Management Entities specifically constituted for this purpose, they are also unanimously considered as financial institutions subject accordingly to supervision by the ISP, although of special regime, given that the regulation of their activity is not contained in the General Regime of credit institutions and financial companies, but rather in special legislation to which no. 3 of article 6 of this same Regime refers;

g) Such evidence is attested by the terms of paragraph f) of no. 1 of article 3 of Law No. 25/2008, of 5 June, which expressly states that pension fund management companies are financial entities;

h) European Union law, transposed by Decree-Law No. 12/2006, converges in the same interpretative sense, as the criterion that presided over the elaboration of Directive No. 2003/41/CE was that, given the importance and influence that these entities assume in the realization of the single market for financial services, it was considered "urgent the elaboration of a directive relating to the prudential supervision of the institutions managing occupational retirement pension schemes, since these important financial institutions, which have a key role to play in the integration, efficiency and liquidity of financial markets, are not subject to a coherent community legal framework that allows them to take full advantage of the advantages of the single market";

i) In the same sense, see the definition contained in no. 1 of article 4 of Regulation (EU) No. 575/2013 of 2013-06-26, of the European Parliament and of the Council, according to which a financial institution is an enterprise that is not a credit institution, whose main activity is the acquisition of holdings or the exercise of one or more of the activities listed in Annex I, points 2 to 12 and 15, of Directive 2013/36/EU;

j) It appears that the activities mentioned are subsumed, for example, to points 8 to 11 of Annex I of Directive 2013/36/EU, of 2013-06-26, of the European Parliament and of the Council, which refers to "Participation in securities issuance and provision of services connected with such issuance," applicable to open funds, and "Portfolio management";

k) It is the exercise of one or more of these activities that, at the level of European Union law, qualifies a given entity as a financial institution;

l) DL 157/2014, of 24/10, added to the RGICSF article 2.2-A, whose paragraph z) defines the concept of "financial institutions" as companies whose main activity consists in the exercise of one or more of the activities listed in points 2 to 12 of the list contained in Annex I to Directive 2013/36/EU, of the Parliament and the Council, of 26 June, which is similar to Annex I of Directive 2006/48/CE, which includes, in particular, portfolio management activities or portfolio management advisory services and custody and administration of securities, in which the entities in question are integrated;

m) Under paragraphs e) and f) of no. 1 of article 30 of the Securities Code (CVM), both SGFP and Funds are qualified, along with other financial institutions, institutional investors, and the actual relevance of the factually undeniable to be inferred as institutional investors;

n) Likewise, having regard to the objectives that preside and their competencies, as well as the type of operations they practice for their realization, it is easy to conclude that the activities exercised are qualifiable only as materially financial;

o) In the case at hand, the Claimant is a pension fund management company, that is, a company that, under no. 4 of article 32 of Decree-Law No. 12/2006, of 20 January, mentioned above, performs all its acts in the name and on joint account of associates, participants, contributors and beneficiaries and, in the capacity of administrator of the fund and its legal representative, may negotiate securities or immovable property, make bank deposits in the name of the fund and exercise all rights or perform all acts that directly or indirectly are related to the fund's assets;

p) Comparing the activities identified in the citation of the RGICSF and Directive No. 2013/36/EU with those mentioned above as attributions of a pension fund management company, we are led to conclude that the Claimant meets the requirements to be qualified as a "financial company," a category that also includes the financial institutions defined in paragraph z), sub-paragraph ii);

q) And so much so that, in article 6 (Types of Financial Companies), the legislator expressly excluded from the RGICSF, by providing in no. 3: "For the purposes of this instrument, insurance companies, pension fund management companies and moveable and immoveable investment companies are not considered financial companies," from which it results that it does not disqualify them as financial companies, but rather removes them from the prudential regime and supervision of the Bank of Portugal;

r) Although no. 3 of article 6 of the RGICSF expressly referred to a specific regime, it is undeniable that the nucleus of their functions resembles some of the activities exercised by entities subject to the general regime;

s) The composition of the assets that make up the assets of Pension Funds, whose management is ensured by SGFP, in accordance with a safe and efficient investment policy guided by the principle of the "prudent manager," comprises, in addition to real estate, investments in portfolios of securities or other types of financial investments, resulting from the application of the funds that are delivered to them by the contributing entities and/or participants;

t) This implies that SGPF operate in financial markets with the status of qualified investor, in accordance with the provisions of paragraph e) of no. 1 of article 30 of the Securities Code;

u) As mentioned in the preamble of Decree-Law No. 12/2006, through this instrument the transposition of Directive No. 2003/41/CE, of the European Parliament and of the Council, of 3 June, relating to the activities and supervision of the institutions managing occupational retirement pension schemes, is the occasion to proceed to a general review of the regime of pension funds, increasing the level of protection of participants and beneficiaries, as well as proceeding to its technical improvement taking into account the experience of supervision of pension funds;

v) Thus, the legislator publicly noted that it proceeded, through Decree-Law No. 12/2006, to the transposition of the Directive and thus communicated it officially to the European Commission, which in its Report on certain essential aspects of Directive 2003/41/CE relating to the activities and supervision of the institutions managing occupational retirement pension schemes (IRPPP Directive) indicates that "By 2007, all Member States had already notified their implementation measures...";

w) The scope of the Directive covers Pension Funds and SGFP, as results from no. 1 of article 2, according to which "...is applicable to the institutions managing occupational retirement pension schemes. Whenever, under national law, these institutions do not have legal personality, the Member States shall apply this directive to these institutions or, subject to no. 2, to the authorized entities responsible for their management and acting on their behalf";

x) In the preamble of the Directive, both in Recital 4, in the explanation of the objectives that presided over its publication, it is stated that the institutions managing occupational retirement pension schemes are "financial institutions that have a key role to play in the integration, efficiency and liquidity of financial markets" as well as in Recital 19, it is stated that "The institutions managing occupational retirement pension schemes are providers of financial services...";

y) There is no doubt that SGFP are subsumed in Item 17.3, either as financial companies or as institutions, in light of the qualification made in accordance with the criteria of the RGICSF and applicable European law, as corroborated by Directive 2003/41/CE and by other instruments of national and European legislation, to which the Opinion of the DS IMT alludes;

z) Given the pacified character of the qualification of pension fund management companies as financial institutions, the Bank of Portugal includes them, as well as the funds themselves, in its statistics, in the sector of the so-called Non-Monetary Financial Institutions, integrating them in the sub-sector of Financial Auxiliaries (AF) which are companies and quasi-companies financial entities whose main function is to exercise auxiliary financial activities, that is, closely linked to financial intermediation, but which do not themselves constitute financial intermediation;

aa) Corroborating all the above, from the letter of the law, that is, from the fact that Item 17.3 expressly provides for "any other financial institutions," it also follows the intention of the legislator that the definition should be understood in the broadest sense;

bb) It should be noted that the legislator of the CIS, certainly aware of the diversity of operators in the financial market and its foreseeable evolution, by virtue of the deepening of the internal market for financial services in the European Union, resorted to a broad formulation of Item 17.3 that allows for the framing of any entities that are legally considered equated to financial companies and those that are qualified as financial institutions;

cc) The operations carried out by or with the intermediation of pension fund management companies, in the name and on behalf of the funds, are considered materially financial, and therefore the management companies are subsumed in the notion of "any other financial institutions," contained in Item 17.3 of the TGIS, for purposes of subjection to taxation in the form of Stamp Tax;

dd) Thus, the objective element provided for in the norm of scope of application is fulfilled, constituting the commissions charged by the management companies for the purpose of compensation for the administration and management of the pension funds, counterpart of financial services in accordance with and for the purposes of Item 17.3.4 of the TGIS;

ee) In sum, as concluded by DSIMT, the commissions sub judice cumulatively meet the objective and subjective elements provided for in Item 17.3.4 of the TGIS, and, accordingly, are subject to stamp tax by virtue of the provisions of no. 1 of article 1 of the CIS;

ff) In this context, it falls to the SGFP, as passive subject, to assess, collect and deliver the tax calculated to the State coffers, in accordance with the provisions of article 2 of the CIS, being the charge of the fund itself, as holder of the economic interest;

gg) Furthermore, other pension fund management companies exist, which at the present date do not dispute the qualification as financial institutions or equated entities;

hh) As can be read in the opinion attached by the Claimant itself, prepared by Doctors B... and C..., "From the outset there is no contested dispute that the commissions in question fall within the scope of stamp tax, either from the objective or subjective point of view, since Item 17.3 of the TGIS provides for the taxation of 'Operations carried out by or with the intermediation of credit institutions, financial companies or other entities legally equated to them and any other financial institutions,' determining the sub-item 17.3.4 that included therein are 'other commissions and considerations for financial services'";

ii) The Claimant intends, in the present request for arbitral decision, to argue, as a second line of defense, the argument that the commissions charged to the pension funds by the respective management company would be provided for in the exemption norm currently contained in article 7, no. 1, paragraph e) of the CIS;

jj) The wording of paragraph e) was given by Law No. 107-B/2003, of 31.12, and no. 7 was added by Law No. 7-A/2016 of 30.03, with interpretative character, thus integrating itself into the interpreted norm;

kk) According to the wording introduced by article 37 of Law No. 30-C/2000 (State Budget Law for 2001) to article 6, paragraphs e) and f), relating to interest charged and to the use of credit granted, as well as commissions charged, by the credit institutions provided for therein were covered by the exemption only with respect to financial operations directly intended for credit granting, within the scope of the activity exercised by the institutions and entities referred to in those paragraphs;

ll) There is an effective delimitation of the material scope of the exemption, granted by paragraphs e) and f) of the former article 6 and current article 7, only to financial operations directly intended for credit granting;

mm) It does not seem rational to establish an autonomy between interest, commissions charged and guarantees provided, on the one hand, and the use of credit granted, on the other, for it is only in relation to credit granting that it is possible to connect with the credit institutions and companies or financial institutions granting and of companies or entities observing, in the form and in the object, the types of credit institutions and companies and financial institutions, beneficiary of the exemption norm;

nn) As the TCAS and STA point out, it seems incomprehensible that the legislator would refer to interest, commissions charged and guarantees provided, as realities with existence in themselves, for purposes of tax exemption;

oo) Considering the historical element, it is entirely legitimate to think that the aggregation of paragraphs e) and f), operated by article 30 of Law No. 32-B/2002, of 30 December, as well as the change in wording to use the expression "and likewise, the use of credit granted" will have been motivated by the legislator's conviction that no. 2 would become redundant, since the merger of the two paragraphs was effected simultaneously with the suppression of no. 2;

pp) As stated in the RIT, it should be understood that when the legislator mentions "and likewise, the use of credit granted," it identifies and delimits the intrinsic relationship existing between those perfectly identified realities and the credit, and does so in the sense that the latter should be considered as the essential and prior element in relation to the others;

qq) It is not true that any express repeal occurred, as the Claimant invokes (wrongly) in its PI;

rr) What actually happened was only and solely that the merger of the two paragraphs was effected simultaneously with the suppression of the norm previously contained in no. 2 and consequent renumbering of the former no. 3 to 2;

ss) All elements of tax legal exegesis point in the direction of such suppression having been effected by virtue of the norm being considered redundant, in face of the new wording resulting from the aggregation of the former paragraphs;

tt) In conclusion, it is correct to state that there is no precept that, in 2003, repealed a norm that could be considered interpretative, and that only intended to clarify and specify the legislator's intent regarding this matter;

uu) The Judgment of the Central Administrative Court South issued in case No. 02754/08, on 21.09.2010, mentioned in the RIT, expressly states: "5. The exemption granted by article 7, no. 1, paragraph e), of the Stamp Tax Code, in the version of DL No. 287/2003NOV12, amended by Law No. 107-B/2003DEC31, has as its catalytic element, - to which interest, commissions charged, guarantees provided or the (their) mere use are referred -, the credit granted in the terms mentioned in such normative";

vv) In the same sense, the Claimant cites the judgment delivered on 15.06.2016, by the STA, in the scope of case No. 0770/15;

ww) The said decisions of the superior courts reveal the correctness of the framework made by the inspection services;

xx) If there were doubts as to the interpretation of the legal norm in question, the State Budget for 2016 (Law No. 7-A/2016, of 30.03) added no. 7 to article 7 of the CIS, assigning to it interpretative character (cf. respectively, articles 152 and 154 of that law), determining that "the provisions of paragraph e) of no. 1 only apply to guarantees and financial operations directly intended for credit granting, within the scope of the activity exercised by the institutions and entities referred to in that paragraph";

yy) Notwithstanding the fact that the Claimant, in the scope of its defense, may disagree with the application of the law by the TA, as well as the interpretative nature conferred by the State Budget Law for 2016, this does not per se remove the interpretative character that underlies the norm, directly assigned by law;

zz) Therefore, being the TA subject to the principle of tax legality, by virtue of article 266, no. 2 of the CRP, article 8 of the LGT and article 3, no. 1 of the CPA, then, the position of the Respondent in the proceedings, given what is now legally determined in the State Budget Law for 2016, cannot be different from that adopted;

aaa) To which is added the fact that the TA cannot set aside norms based on unconstitutionality;

bbb) The norm introduced by the State Budget Law for 2016 merely comes to clarify the scope of the exemption in question, before existing interpretative divergences, which moreover, was already understood by the Supreme Administrative Court;

ccc) The judgment of the Supreme Administrative Court delivered in case No. 01630/15, of 06/29/2016, regarding article 7, no. 1, paragraph e) of the CIS and the State Budget Law for 2016 (although regarding commissions charged by Banks in the exercise of insurance mediation activity), understood that no. 7 of that article 7 is merely interpretative in nature;

ddd) It is, thus, a non-innovative solution, which the judge or interpreter can reach without exceeding the limits normally imposed on the interpretation and application of law;

eee) To wish to attribute to this law any retroactive character has no legal support, also proving by this reason unsuccessful the arguments of the Claimant, and to that extent the arbitral request;

fff) Any interpretation that does not apply the norm contained in the State Budget Law for 2016 (Law No. 7-A/2016, of 30.03), set forth in its article 152, which added number 7 to article 7 of the CIS, with the effects provided for in article 154 of that same, namely, the interpretative character of the wording given to the said norm of the Stamp Tax Code, has naturally underlying the assumption that such norm has, instead, a retroactive nature, prohibited under article 103 of the Constitution of the Portuguese Republic, being, consequently, unconstitutional, for "[t]here is place 'on the part of the ordinary legislator' to a 'violation of the principle, constitutionally enshrined, of non-retroactivity of tax law, and of the sub-principle of protection of reliance, with the consequent harm to legal certainty'," whereby the Respondent, "by caution and mere duty of representation, if such were to occur," requests the proper notification to the Public Prosecutor of the arbitral decision, so that it gives compliance with its legal prerogatives;

ggg) The Claimant further imputes to the interpretation adopted by the Tax Administration, without reason, the violation of European Union Law, namely the "Capital Gathering" Directive and the principle of non-discrimination;

hhh) No real or apparent similarity is discerned between the taxation of capital contributions in a capital company, to which article 5, no. 1, paragraph a) of Directive 2008/7/CE refers, and the taxation of a management commission of a Pension Fund;

iii) The taxation of management commissions in stamp tax does not manifest any violation of the freedom of establishment of pension fund management companies, so no question should be submitted to the CJEU in this regard;

jjj) The Respondent also considers such referral to be both unnecessary and untimely;

kkk) Unnecessary because it considers, in the terms exposed, that the matter does not raise criticism or doubts on the part of European Union Law;

lll) Furthermore, it considers the formulation of questions untimely, since, by reason of the proper functioning of the referral system, these questions must be based on a factual framework that, at this moment, is not established;

mmm) Regarding the request for indemnification for provision of undue guarantee, it is understood not to be affected by the defects that should dictate its annulment;

nnn) However, and without conceding, even if the arbitral request is judged to have merit, the request for indemnification for provision of undue guarantee based on error attributable to the services should fail, since no error can be imputed to the TA services – it was not in their available power to decide differently from the way they decided;

ooo) The Respondent thus understands that the present request for arbitral decision should be judged without merit and unproven, and consequently the Respondent absolved of all requests, or, if the Tribunal does not so understand, that, on the basis of article 280, no. 3 of the CRP and article 72, no. 3 of the Constitutional Court Law, it be determined that notification of the arbitral decision be made to the Public Prosecutor.

9.

By dispatch of 01-03-2017, there being no reasons that would advise holding the meeting referred to in article 18 of the RJAT, this tribunal decided to waive this procedure, inviting the parties to submit written final arguments.

10.

The Claimant submitted final arguments, whose conclusions summarize the arguments set forth in the request for constitution of the arbitral tribunal.

11.

The Respondent submitted final arguments, in which it fully maintained the content of its response, arguing that the present request for arbitral decision should be judged without merit and unproven, and consequently the Respondent absolved of the Request, all with the proper and legal consequences.

II. CLARIFICATION OF ISSUES

12.

No exceptions were raised;

13.

The Tribunal is regularly constituted, in accordance with articles 2, no. 1, paragraph a), 5 and 6, no. 1, of the RJAT;

14.

The Parties have legal personality and capacity, are legitimate as to the request for arbitral decision and are duly represented, in accordance with the provisions of articles 4 and 10 of the RJAT and article 1 of Ordinance No. 112-A/2011, of 22 March.

15.

No nullities are verified, thus it is necessary to decide on the merits.

III. MERITS

III.1. FACTUAL MATTERS

§1. Established Facts

16.

The following facts are established:

a) The Claimant is a pension fund management company;

b) Between the years 2011 and 2014 (and insofar as it is relevant for purposes of this request for arbitral decision), the Claimant charged, monthly, commissions to pension funds, as counterpart for the provision of its management services, as discriminated below:

[Table]

c) When charging these commissions, the Claimant did not assess Stamp Tax;

d) Under service orders Nos. OI2015..., OI2015..., OI2015... and OI2015..., relating to the fiscal years 2011, 2012, 2013 and 2014, respectively, all of 30.03.2015, the Tax Inspection Services conducted an inspection action to analyze the tax treatment of the management commissions charged by the Claimant to the pension funds, in the taxation periods of 2011 to 2014, in light of the provisions of the CIS and article 4 of Decree-Law No. 20/86, of 13 February;

e) Through Notice No. ..., of 09.09.2015, the Claimant was notified to comment on the Draft Report of the Tax Inspection, in which it was proposed to effect corrections under Stamp Tax;

f) According to that Draft, the rationale for the corrections came from the content of Information No. I2014..., of the Directorate of Services of IMT (Information DS IMT), and Opinion No. 25/2013 of the Center for Tax and Customs Studies (CEF);

g) The corrections proposed by the TA under Stamp Tax amounted to € 1,256,034.33, thus itemized (as stated in the Draft Report of the Tax Inspection):

[Table]

h) After exercising its right to prior hearing, the Claimant was notified, on 02.10.2015, of the Tax Inspection Report (Report), which maintained the above stated corrections;

i) In light of the corrections sought by the TA in the Report, the Claimant was notified of the assessments of Stamp Tax and compensatory interest better identified below:

[Table]

j) For purposes of suspending the enforcement proceedings instituted by the Tax Authority, the Claimant provided guarantees in the amounts fixed by the Deputy Finance Manager of the Oeiras Finance Service ...;

k) The Claimant, not agreeing with those assessments, filed the competent administrative complaint on 24.03.2016 with the TA;

l) After being notified to comment on the draft decision of the administrative complaint, the Claimant came to be notified, through Notice No. ..., of 29.08.2016, of the dispatch, of 23.08.2016, delivered by the Deputy Finance Director of the Finance Directorate of Lisbon, which resulted in the dismissal of such administrative complaint;

m) In such dispatch, those TA services fully maintained the assessments then complained of;

n) Not agreeing with that decision or the underlying assessments, the Claimant filed this request for arbitral decision.

§2. Unestablished Facts

With relevance to the decision, there are no unestablished facts.

§3. Motivation Regarding Factual Matters

With regard to the factual matters established, the Tribunal's conviction was based on the free assessment of the positions taken by the parties on matters of fact, in the administrative proceedings and on the content of the documents attached to the case, not contested by the Parties.

III.2. LEGAL MATTERS

III.2.1. Questions to be Decided

Having established the relevant facts, it is necessary to proceed to legal matters.

The first question to be decided in the present proceedings concerns the interpretation of the norm contained in Item 17.3 of the General Table of Stamp Tax, in order to determine whether the management commissions charged by management entities to the respective pension funds are subject to Stamp Tax.

Should it be concluded that the said management commissions are subject to Stamp Tax, it is necessary to determine whether the same benefit from the exemption provided for in article 7, no. 1, paragraph e), of the Stamp Tax Code.

Another question that arises in the present proceedings is that which concerns determining whether the norm added to article 7 of the CIS by article 152 of Law No. 7-A/2016, of 30 March (LOE 2016) has, in fact, the interpretative character referred to in article 154 of this law, and likewise, whether the same can, in light of the Constitution of the Portuguese Republic, produce retroactive effects.

It is also necessary to determine whether the taxation in the form of Stamp Tax of the management commissions charged by SGFP to Pension Funds violates the provisions of Directive 3008/7/CE and Directive 2003/41/CE, and if, in case of doubt by this Tribunal, the question should be submitted, as a preliminary matter, to the CJEU.

Also within the framework of European Union Law, it must be determined whether the incidence of Stamp Tax on the commissions here in question is violative of the principle of non-discrimination, and if, in case of doubt by this Tribunal, the question should be submitted, as a preliminary matter, to the CJEU.

Finally, the question arises of whether the Claimant has the right to indemnification for the guarantee provided.

III.2.2. On the Scope of Item 17.3 of the General Table of Stamp Tax

Item 17.3 of the General Table of Stamp Tax (TGIS) determines the incidence of this tax on "[o]perations carried out by or with the intermediation of credit institutions, financial companies or other entities legally equated to them and any other financial institutions [...]".

Under Item 17.3.4 of the TGIS, a rate of 4% applies to the amount charged as "other commissions and considerations for financial services".

It is necessary to determine whether, in view of the subjective scope of application delimited in Item 17.3 of the TGIS, pension fund management entities are covered by it.

As results from article 11 of the General Tax Law (LGT), the fiscally relevant concept of "credit institutions, financial companies or other entities legally equated to them and any other financial institutions" should be the one that prevails in financial law.

The General Regime of Credit Institutions and Financial Companies (RGICSF) lists in its article 6 the types of financial companies, with the exclusion, "for purposes of this instrument,"[1] of "insurance companies, pension fund management companies and moveable and immoveable investment companies" (article 6, no. 3, of the RGICSF). Thus, the RGICSF is not applicable to SGFP, which, however, does not prevent them from being considered "financial companies" for other purposes.

Under and for purposes of Regulation (EU) No. 575/2013 of the European Parliament and of the Council, of 26 June 2013, relating to prudential requirements for credit institutions and investment firms, its article 4, no. 1, § 26, defines a financial institution as "an undertaking that is not a credit institution whose main activity is the acquisition of holdings or the pursuit of one or more of the activities listed in Annex I, points 2 to 12 and 15, of Directive 2013/36/EU, including a financial holding company, a mixed financial holding company, a payment institution within the meaning of Directive 2007/64/CE of the European Parliament and of the Council of 13 November 2007 on payment services in the internal market, and an asset management company, but excluding insurance holding companies and mixed insurance holding companies within the meaning of article 212, no. 1, point g) of Directive 2009/138/CE".

On the other hand, under the provisions of § 27, a "financial sector entity" is considered to be: "a) A credit institution; b) A financial institution; c) An ancillary service company included in the consolidated financial situation of a credit institution; d) An insurance company; e) A third country insurance company; f) A reinsurance company; g) A third country reinsurance company; h) An insurance holding company; [...]".

Thus, according to this Regulation, an insurance holding company is included in the concept of "financial sector entity".

Under article 13, no. 25, of Directive No. 2009/138/CE, of the European Parliament and of the Council, of 25 November 2009, on the access to the activity of insurance and reinsurance and its exercise (Solvency II) (recast), a "financial institution" is understood to mean any of the following entities: "a) A credit institution, a financial institution or an ancillary banking services company, as meant, respectively, in points 1, 5 and 21 of article 4 of Directive 2006/48/CE; b) Insurance companies, reinsurance companies or insurance holding companies as meant in paragraph f) of no. 1 of article 212; c) An investment firm or a financial institution as meant in point 1 of no. 1 of article 4 of Directive 2004/39/CE; d) A mixed financial holding company as meant in point 15 of article 2 of Directive 2002/87/CE".

Thus, under Directive No. 2009/138/CE, insurance holding companies are qualified as financial institutions.

Also Directive 2003/41/CE of the European Parliament and of the Council, of 3 June 2003, relating to the activities and supervision of the institutions managing occupational retirement pension schemes, points to the qualification of these entities as financial institutions, in a broad sense.

Indeed, it is in this sense that the following references converge: (i) to the creation of an "internal market for financial services" with a view to enabling "financial institutions to develop activities in other Member States and to ensure a high level of protection of consumers of financial services" (Recitals 1 and 2); (ii) to the urgency of the "elaboration of a directive relating to the prudential supervision of the institutions managing occupational retirement pension schemes, since these important financial institutions, which have a key role to play in the integration, efficiency and liquidity of financial markets, are not subject to a coherent community legal framework that enables them to take full advantage of the advantages of the internal market" (Recital 4); (iii) to the institutions managing occupational retirement pension schemes as "providers of financial services" (Recital 20).

This Directive was transposed into the Portuguese legal system by Decree-Law 12/2006, of 20 January,[2] which approved the regime for the constitution and operation of pension funds and the respective management companies.

According to the provisions of article 32, no. 1, of Decree-Law 12/2006, of 20 January, "[p]ension funds may be managed either by companies constituted exclusively for that purpose, designated in this decree-law as management companies, or by insurance companies that lawfully operate the 'Life' branch and have an establishment in Portugal".

Article 33 of the same instrument provides that "[i]n the capacity of administrator and manager of the fund and of its legal representative, it is the duty of the management entity to perform all acts and operations necessary or convenient to the proper administration and management of the fund, namely: a) To proceed to the evaluation of the liabilities of the fund; b) To select and negotiate the values, securities or immovable property, which should make up the fund, in accordance with the investment policy; c) To represent, independently of a mandate, the associates, participants, contributors and beneficiaries of the fund in the exercise of the rights arising from their respective participations; d) To proceed to the collection of the contributions provided and to guarantee, directly or indirectly, the payments due to the beneficiaries; e) To proceed, with the agreement of the beneficiary, to the direct payment of the charges owed by that person and corresponding to those referred to in no. 4 of article 6, through the deduction of the respective amount from the pension in payment; f) To register in the land register, in the name of the fund, the immovable property that is part of it; g) To keep in order its records and those of the funds it manages".

Thus, it follows from the articles cited above that SGFP approach, from the point of view of the formal and material requirements of their respective activity, the management companies that operate in the insurance and reinsurance sector (as already stated in the arbitral awards delivered in the scope of proceedings No. 348/2016-T, of 2 May 2017, and No. 633/2016-T, of 19 May 2017).

The competencies of SGFP point to the exercise of a materially financial activity, which cannot fail to be considered relevant, having regard to the principles of the prevalence of substance over form and of equality.

In this regard, reference should be made to the provisions of article 30, no. 1, paragraph e), of the Securities Code (CVM), which includes in the list of institutional investors "pension funds and respective management companies," which, in the scope of activities relating to financial instruments, are subject to the supervision of the CMVM (article 359, no. 1, paragraph d), of the CVM, without prejudice to the supervision of the same entities by the Supervisory Authority for Insurance and Pension Funds (ASF).

Now, it is this materiality that is relevant in the application of Item 17.3 of the TGIS, as indeed results from the letter of this precept, which alludes to "[...] financial companies or other entities legally equated to them and any other financial institutions [...]".

The opinion attached to the case by the Claimant, prepared by Doctors B... and C..., actually concludes to the same effect, when it states the following:

"From the outset there is no contested dispute that the commissions in question fall within the scope of stamp tax, either from the objective or subjective point of view, since Item 17.3 of the TGIS provides for the taxation of 'Operations carried out by or with the intermediation of credit institutions, financial companies or other entities legally equated to them and any other financial institutions,' determining the sub-item 17.3.4 that included therein are 'other commissions and considerations for financial services'."

In light of what has been stated, and in the line of what had already been stated in the awards delivered in arbitral proceedings No. 348/2016-T, of 2 May 2017, and No. 633/2016-T, of 19 May 2017, it is considered that SGFP meet the type "any other financial institutions," provided for in Item 17.3 of the TGIS.

III.2.3. On the Exemption Provided for in Article 7, No. 1, Paragraph e), of the Stamp Tax Code

Let us now examine the question of the interpretation and application of the norm contained in article 7, no. 1, paragraph e), of the Stamp Tax Code.

Paragraph e) of no. 1 of article 7 of the CIS, in the wording introduced by Law No. 107-B/2003, of 31 December, and which was in force at the date of the facts, provides as follows:

"1 - The following are also exempt from the tax:

[...]

e) Interest and commissions charged, guarantees provided and likewise the use of credit granted by credit institutions, financial companies and financial institutions to venture capital companies, as well as to companies or entities whose form and object meet the types of credit institutions, financial companies and financial institutions provided for in community legislation, all of them domiciled in the Member States of the European Union or in any State, with the exception of those domiciled in territories with privileged tax regimes, to be defined by ordinance of the Minister of Finance;

[...]"

As referred to in the awards delivered in arbitral proceedings No. 348/2016-T, of 2 May 2017, and No. 633/2016-T, of 19 May 2017, the exemption provided for in paragraph e) of no. 1 of article 7 of the CIS has a mixed nature, with a subjective and an objective dimension.

As regards the subjective scope, the application of the norm contained in paragraph e) of no. 1 of article 7 of the CIS to the case at issue presupposes that SGFP can be qualified as "credit institutions, financial companies and financial institutions" and, concomitantly, that the respective pension funds can be qualified as "venture capital companies, as well as to companies or entities whose form and object meet the types of credit institutions, financial companies and financial institutions [...]".

As regards SGFP, we have already expressed ourselves in the sense that the same are included in the concept of "financial institution," understood in a material sense.

As regards pension funds, article 2, paragraph c), of Decree-Law No. 12/2006, in the wording in force at the date of the facts, provided that those consist of "autonomous assets exclusively devoted to the realization of one or more pension schemes and or health benefit schemes".

Pension funds, like their respective management companies, are considered institutional investors by the Securities Code [article 30, no. 1, paragraphs e) and f)].

The qualification of pension funds as "financial institutions" also results from no. 4 of article 32 of Decree-Law No. 12/2006, which provides that "[t]he managing entities perform all their acts in the name and on joint account of the associates, participants, contributors and beneficiaries and, in the capacity of administrators of the funds, may negotiate securities or immovable property, make bank deposits in the name of the fund and exercise all rights or perform all acts that directly or indirectly are related to the fund's assets".

It is thus concluded that pension funds are included in the broad concept of "financial institutions," in the same way as their respective management companies.

However, it is regarding the objective scope of the norm that the controversy in the case at issue centers.

It is thus necessary to determine whether the scope of the norm contained in paragraph e) of no. 1 of article 7 of the CIS is confined, or not, to operations and services that are typically banking in nature, from which would be excluded the commissions charged by pension fund management entities to the respective funds.

Let us see.

The original version of article 6 (current 7) of the CIS, approved by Law No. 150/99, of 11 September, provided as follows:

"1 - The following are also exempt from the tax:

e) Interest charged and the use of credit granted by credit institutions and financial companies to institutions, companies or entities whose form and object meet the types of credit institutions and financial companies provided for in community legislation, all of them domiciled in the Member States of the European Union, or in any State complying with the principles derived from the Code of Conduct approved by the Council Resolution of the European Union, of 1 December 1997;

f) Commissions charged by credit institutions to other institutions of the same nature or entities whose form and object meet the types of credit institutions provided for in community legislation, domiciled in the Member States of the European Union, or in any State complying with the principles derived from the Code of Conduct approved by the Council Resolution of the European Union, of 1 December 1997;"

This version nonetheless provided a limitation, in the following terms:

"2 - The provisions of paragraphs f) and g) do not apply when any of the parties

has no registered office or effective management in the national territory."

Article 37 of Law No. 30-C/2000, of 29 December (LOE 2001), introduced a new no. 2 to article 6 (with the then no. 2 becoming no. 3), providing that:

"2 – The provisions of paragraphs e) and f) apply only to financial operations directly intended for credit granting, within the scope of the activity exercised by the institutions and entities referred to in those paragraphs".

Meanwhile, article 30 of Law No. 32-B/2002, of 31 December (LOE 2013), came to eliminate no. 2 of article 6, ending the effects of the respective norm. That is, the limitation of the exemption to financial operations directly intended for credit granting was suppressed, within the scope of the activity developed by the entities referred to in paragraphs e) and f) of no. 1 of article 6. As a result of the elimination of no. 2, nos. 3 and 4 of the former wording, with the new wording, became numbers 2 and 3.

This means that the legislator, through article 30 of Law No. 32-B/2002, of 31 December, repealed no. 2 of article 6, which had been introduced by article 37 of Law No. 30-C/2000, of 29 December.

Through article 30 of Law No. 32-B/2002, of 31 December, the legislator also effected a merger between the former paragraphs e) and f), which gave rise to a new wording of paragraph e). This thus came to exempt from stamp tax "[i]nterest and commissions charged and likewise the use of credit granted by credit institutions and financial companies to venture capital companies, as well as to companies or entities whose form and object meet the types of credit institutions and financial companies provided for in community legislation, all of them domiciled in the Member States of the European Union, or in any State, with the exception of those domiciled in territories with privileged tax regimes to be defined by ordinance of the Minister of Finance".

Thus, and as stated in the awards delivered in arbitral proceedings No. 348/2016-T, of 2 May 2017, and No. 633/2016-T, of 19 May 2017, "the purpose of the merger of the paragraphs has nothing to do with the incorporation into the new paragraph e) of no. 1 of the expressly repealed no. 2 of article 6, but rather with the standardization of the prerequisites of the exemption from stamp tax of the credit granted and interest charged with that of commissions charged in operations in which the only parties were credit institutions and financial companies".

We also subscribe to the said awards when they state that "[t]he historical evolution of the precept indicates clearly that only in the original version and subsequently, between the period in which the wording given by article 37 of Law No. 30-C/2000, of 29 December (which added no. 2 to article 6), was in force, the exemption clearly had as its catalytic element the credit granted in the terms mentioned in such normative. With regard to commissions charged, the exemption could only be applied to those that had underlying operations intended for credit granting, by virtue of the restriction introduced in the mentioned no. 2 of article 6".

This is also the meaning of the letter of the precept when the expression "likewise" is used, which means "equally," "also," "in the same manner," clearly pointing to the exemption of interest and commissions charged being made in the same terms provided for the use of credit.

In light of the foregoing, it is concluded that the exemption provided for in paragraph e) of no. 1 of article 7 of the CIS was not confined, before the entry into force of Law No. 7-A/2016, of 30 March, to operations directly intended for credit granting within the scope of the activity developed by credit institutions, financial companies and other financial institutions.

III.2.4. On the "Interpretative Norm" Added by Law No. 7-A/2016, of 30 March

Law No. 7-A/2016, of 30 March (LOE 2016), through its article 152, added to the CIS no. 7 of article 7, which provides as follows:

"The provisions of paragraph e) of no. 1 apply only to guarantees and financial operations directly intended for credit granting, within the scope of the activity exercised by the institutions and entities referred to in that paragraph."

Article 154 of the LOE 2016 provides for the interpretative character of the cited precept.

However, it so happens that the legislator did not merely seek to clarify the interpretative meaning of a norm in force. From the rationale set out above, it results instead in the innovative character of the norm contained in no. 7 of article 7 of the CIS as compared to the legal regime that was in force.

The rules of legal hermeneutics postulate that the interpretative result cannot fail to have a minimum correspondence in the letter of the law (article 9, no. 2 of the Civil Code). Now, there is no literal foundation in the wording of paragraph e) of no. 1 of article 7 of the CIS that permits the interpreter to conclude for the limitation of the exemption provided therein to guarantees and financial operations directly intended for credit granting, within the scope of the activity exercised by the institutions and entities referred to in that same paragraph.

The Respondent invokes the judgment of the Central Administrative Court South, delivered in case No. 02754/08, of 21-09-2010, as well as the judgment of the Supreme Administrative Court, delivered in case No. 0770/15, of 06/17/2016, and the judgment of the Supreme Administrative Court delivered in case No. 01630/15, of 06/29/2016, to sustain the interpretation of the precept in question in the sense defended by it.

However, the jurisprudence cited does not cover the management commissions of pension funds charged to the funds by the management companies and, in general, commissions or other considerations for the provision of financial services.

The commissions to which the jurisprudence mentioned by the Respondent refers are the commissions charged for the exercise of insurance mediation activity, taxed under Item 22.2, distinct from the provision of financial services covered by Item 17.3.4, both of the TGIS. Thus, this jurisprudence is not transposable to the present proceedings, and does not allow illustrating any supposed interpretative divergence in the interpretation of paragraph e) of no. 1 of article 7 of the CIS.

Now, insofar as we are faced with a legislative amendment unfavorable to the taxpayer, it cannot have retroactive effect, under penalty of violation of the principle of legal certainty and of protection of citizens' reliance, as results from the provisions of article 103, no. 3, of the Constitution of the Portuguese Republic.

It is thus considered that Law No. 7-A/2016, of 30 March (LOE 2016) came, through the combined interpretation of its articles 152 and 154, to delimit the material scope of the exemption provided for in paragraph e) of no. 1 of article 7 of the CIS, in an innovative and retroactive manner, and, as such, unconstitutional, by violation of the principle of prohibition of retroactivity of tax norms, provided for in article 103, no. 3, of the CRP, inherent in the principle of legal certainty and protection of citizens' reliance.

But even if it were a true interpretative norm, the constitutional protection guaranteed to the taxpayer in article 103, no. 3, cannot be disregarded, by prohibiting retroactivity (authentic) of tax law.

We understand, in fact, that "[a]lso in the case of interpretative laws of tax laws, the prohibition of retroactivity is entirely relevant. It is understood that they do not have merely a declaratory nature, producing constitutive effects. To the extent that they bind the courts to a particular interpretation, among various possible in the abstract and already received by other courts, they inevitably imply retroactive application of the interpreted law[3].

Through interpretative norms, as the Constitutional Court recognized, the State comes to prevent, a posteriori, the Law it created from operating through its intrinsic logic communicable to the addressees of the norms, altering the framework of the relevant elements of legal interpretation, in terms that conflict with the principle of legal certainty and protection of citizens' reliance and with the prohibition of retroactivity of tax laws enshrined in article 103, no. 3, of the CRP[4]"[5].

In light of all the foregoing, the Respondent is not in the right when not considering the commissions charged by the Claimant to be exempt from Stamp Tax, in conformity with the provisions of paragraph e) of no. 1 of article 7 of the CIS.

Thus the request for declaration of illegality of the assessments of Stamp Tax and compensatory interest that are the object of the arbitral request is granted, on the ground of error of law as to the meaning and scope of the mentioned precepts, with the consequent annulment thereof.

Knowledge of the other defects imputed by the Claimant to the tax acts in question is thus rendered unnecessary.

III.2.5. The Request for Indemnification for Guarantees Improperly Provided

The Claimant provided guarantees in the amounts fixed by the Deputy Finance Manager of the Oeiras Finance Service ... to suspend the enforcement proceedings instituted after the non-voluntary payment of the assessments now contested.

Under nos. 1 and 2 of article 53 of the LGT, "[t]he debtor who, to suspend execution, offers a bank guarantee or equivalent shall be indemnified in whole or in part for the damages resulting from its provision, if he has maintained it for a period exceeding three years in proportion to the expiration of administrative recourse, judicial impugnation or opposition to execution that have as their object the debt guaranteed," the three-year period not applying "when it is verified, in administrative complaint or judicial impugnation, that there was error imputable to the services in the assessment of the tax".

In the case at hand, the practice by the TA of the acts in controversy resulted from error in the interpretation of the legal norms in question, an error that is solely imputable to the respective services, so the three-year period does not apply in the present proceedings.

No. 1 of article 171 of the CPPT determines, in turn, that "[i]ndemnification in case of bank guarantee or equivalent improperly provided shall be requested in the proceeding in which the legality of the debt being executed is disputed".

No. 2 of the same article provides that "[i]ndemnification must be requested in the complaint, impugnation or appeal or, if its basis is supervenient, within 30 days of its occurrence."

Thus, concluding that the Claimant is in the right in the present proceedings, it should be indemnified for the damages resulting from the provision of such undue guarantees.

For which reasons this request also succeeds.

IV. DECISION

Thus this Arbitral Tribunal decides:

a) To judge the main arbitral request as successful, annulling the acts assessing Stamp Tax and compensatory interest that are contested;

b) To judge as successful the request for indemnification for improperly provided guarantees.

V. VALUE OF THE PROCEEDINGS

In accordance with the provisions of article 306, no. 2, of the CPC, article 97-A, no. 1, paragraph a), of the CPPT and article 3, no. 2, of the Regulation of Fees in Tax Arbitration Proceedings, the proceedings are assigned a value of € 1,256,034.33.

VI. COSTS

In accordance with article 22, no. 4, of the RJAT, the amount of costs is fixed at € 17,136.00, in accordance with Table I appended to the Regulation of Fees in Tax Arbitration Proceedings, to be borne by the Respondent.

Notification to be made, including to the Public Prosecutor.

Lisbon, 20 June 2017

The Arbitrators

(José Baeta de Queiroz)

(Paulo Nogueira da Costa)

(José Nunes Barata)

[1] Underlined emphasis in original.

[2] As amended by Decree-Laws No. 180/2007, of 9 May, No. 357-A/2007, of 31 October, No. 18/2013, of 6 February and No. 124/2015, of 7 July.

[3] Andrew Pruitt, "Judicial Deference to Retroactive Interpretative Treasury Regulations", 79, The George Washington Law Review, 2011, 1558 et seq.

[4] Judgment of the Constitutional Court No. 172/00.

[5] Jónatas E.M. Machado / Paulo Nogueira da Costa, Manual of Tax Law: multilevel perspective, Coimbra, Almedina, 2016, p. 89.