Summary
Full Decision
ARBITRAL DECISION
The arbitrators appointed by the Ethics Council of the Administrative Arbitration Centre to form the Arbitral Tribunal, constituted on 6 March 2018, Dr. Alexandra Coelho Martins (arbitrator-president), Dr. José Nunes Barata and Dr. João Pedro Rodrigues (arbitrator members), agree as follows:
REPORT
A..., LDA., hereinafter referred to as the "Claimant", legal entity number..., with registered office at..., ..., in..., notified of the assessment of the additional municipal property tax ("AIMI") for the year 2017, in the amount of € 125,490.96, filed a request for constitution of a Collective Arbitral Tribunal, under articles 2.º, n.º 1, paragraph a) and 15.º et seq. of the Legal Regime for Tax Arbitration ("RJAT"), approved by Decree-Law n.º 10/2011, of 20 January, and hereby challenged the aforementioned tax act, with the Tax and Customs Authority ("AT") being the respondent.
The Claimant seeks a declaration of illegality and consequent annulment of the AIMI assessment act for 2017, with the condemnation of AT to refund the amount paid on 27 September 2017, of € 125,490.96, plus indemnatory interest accrued until full and effective reimbursement of the tax.
As grounds for its claim, the Claimant alleges that the urban properties in its ownership, whose aggregate patrimonial values constituted the tax base for AIMI with reference to the year 2017, are covered by the AIMI exclusion provision set forth in article 135.º-B, n.º 2 of the Municipal Property Tax Code ("IMI"), rendering n.º 1 of the same legal provision inapplicable, since the aforementioned properties form an integral part of a tourism enterprise and have no residential purposes whatsoever.
This enterprise, designated "B...", is classified as a four-star "tourist village" and the dwellings and apartments contained therein are exclusively devoted to tourist accommodation services. For this purpose, the enterprise has various complementary facilities and infrastructure for support, sports and leisure, including reception, bar, swimming pools, spa among others, and is sought exclusively for accommodation for short periods of time, with non-residential purposes.
The Claimant contends that the error in the cadastral classification of the properties in question, classified as "residential" instead of "for services", cannot prevail over the actual and exclusive capacity and tourism use, under penalty of constituting an irrefutable presumption, legally inadmissible (cf. article 73.º of the General Tax Act "LGT").
Furthermore, failure to challenge the assessment of the properties comprising the tourism enterprise cannot preclude the possibility of, in the context of challenging a subsequent assessment act, invoking the defect of incorrect cadastral classification. This understanding derives from article 129.º of the IMI Code, from the principle of unitary challenge established in article 54.º of the Code of Procedure and Tax Process ("CPPT"), in conjunction with article 99.º of the same compendium, and also from the Judgment of the Constitutional Court n.º 410/2015, of 29 September 2015. A contrary position would constitute a violation of the principle of effective judicial protection and the principle of justice.
The request for constitution of the Arbitral Tribunal was accepted by the President of CAAD and followed its normal procedure, namely with notification to AT, effected on 29 December 2017.
The Ethics Council appointed the signatories as arbitrators of the Collective Arbitral Tribunal, who communicated their acceptance of the office within the applicable period, in accordance with the provisions of article 6.º, n.º 2, paragraph a) and article 11.º, n.º 1, paragraph a), both of the RJAT.
The parties, duly notified, did not lodge opposition to the appointments and the Collective Arbitral Tribunal was constituted on 6 March 2018, in accordance with article 11.º, n.º 1, paragraphs b) and c), and n.º 8 of the RJAT and articles 6.º and 7.º of the Code of Ethics of CAAD.
The Respondent submitted the administrative file and presented a response, in which it first raises the exception of material incompetence of the arbitral tribunal, based on the following arguments:
The matter at hand concerns the assessment of properties and their cadastral classification, to be examined as an administrative act in tax matters that does not entail the examination of the legality of a tax assessment act and, consequently, is not covered by the means of judicial challenge, in accordance with article 97.º, n.º 1, paragraph a) of the CPPT, of which arbitral action constitutes an alternative means of procedure, in accordance with the legislative authorization on tax arbitration contained in article 124.º, n.ºs 1, 2 and 4, paragraph a) of Law n.º 3-B/2010, of 28 April;
Arbitral jurisdiction has its competence delimited by article 2.º, n.º 1 of the RJAT and by the Binding Ordinance (Ordinance n.º 112-A/2011, of 22 March), which restricts it to acts of tax assessment, self-assessment, withholding at source, payment on account and determination of taxable matter (in the latter case, when it does not give rise to the assessment of any tax), whereby it cannot know of a request that implies the correction or alteration of the cadastres of the properties in question, as this does not respect a tax assessment act and the nature of a property is not capable of being discussed in arbitral proceedings, and furthermore, in doing so, it would be eliminating from the legal order the assessments made by AT that were never placed in question by the taxpayer;
The assessment and cadastral classification must be examined independently and present themselves as a presupposed and autonomous act in relation to the acts of assessment in IMI proceedings. Constituting an immediately injurious act, its challenge constitutes a true burden and not a mere faculty;
Having the Claimant not, in a timely manner, used the appropriate means of reaction, namely the request for second assessment (article 76.º of the IMI Code), its challenge (article 77.º of the IMI Code), the cadastral claim (article 130.º of the IMI Code), or the challenge of acts fixing patrimonial values (article 134.º of the CPPT), the assessment became consolidated. Thus, that act (of assessment) cannot be subsequently attacked when the corresponding tax assessment is made;
Furthermore, even if challenge in CAAD were to be admitted, all the voluntary remedies provided for in the assessment procedure were not exhausted, in accordance with article 134.º, n.º 7 of the CPPT, from which it follows clearly that the arbitral tribunal lacks material competence;
The contrary interpretation would be unconstitutional by virtue of violation of article 212.º, n.º 3 of the CRP and of the right to two degrees of jurisdiction, as appeals from the decisions of arbitral tribunals are only admitted on an exceptional basis (articles 20.º, 268.º, n.º 4 of the CRP).
Regarding the merits, the Respondent considers that it correctly applied the norms in force to the facts (articles 135.º A to C and F of the IMI Code), taking into account that the use of the immovable properties, declared by the Claimant itself, through form MOD. 129 (Declaration for registration or alteration of registration of properties omitted from the cadastre), is residential, and such declaration has remained until today, without the Claimant ever challenging the assessment or classification of those properties. Thus, according to the Respondent, the properties are not excepted by article 135.º-B, n.º 2 of the IMI Code, not deserving the challenged assessment any criticism.
It adds that the fact that the Claimant contradicts what was itself declared in official documents constitutes abuse of right in the form of venire contra factum proprium.
With regard to the request for indemnatory interest, it contends that this is not owed, as the respective legal conditions are not met, since there is no illegality that denotes the improper character of the tax payment attributable to an error by the services, as claimed by the provision of article 43.º, n.º 1 of the LGT.
It concludes by supporting the invoked dilatory exception of material incompetence of the arbitral tribunal, with the consequent dismissal of the action, and, should this not be the case, seeks the dismissal of the action and absolution of all claims. In case of acceptance, it requests, by appeal to the provisions of article 280.º, n.º 3 of the CRP and article 72.º, n.º 3 of the Law of the Constitutional Court, that the Public Prosecutor's Office be notified of the Arbitral Decision.
On 4 June 2018, the meeting referred to in article 18.º of the RJAT was held, giving the parties the opportunity for contradictory debate on the matter of exception invoked by the Respondent, to be decided finally. A witness was examined and party statements were made. At the same meeting, the parties were notified for further submissions and of the deadline for delivering the decision, which was set for 6 September 2018. Finally, the Claimant was warned to pay the subsequent arbitration fee by the date of the arbitral decision, in accordance with the provisions of n.º 3 of article 4º of the Regulations of Costs in Tax Arbitration Proceedings and to communicate such payment to CAAD.
On 19 June 2018, the Claimant submitted a request to waive final submissions, considering that the essential facts had been proven and that repetition of the legal solution advocated in the initial application would be redundant.
The Respondent submitted submissions on 5 July 2018. It argues in the same sense as advocated in its response, reiterating that arbitral jurisdiction is not competent to know of the claim underlying the request made, as it implies the correction/alteration of the cadastres of the properties in question and does not refer to a tax assessment act. It alleges, as in its initial pleading, that the assessment of immovable properties and their cadastral classification presents itself as a presupposed and autonomous, immediately injurious act, and that, therefore, it would have to be autonomously challenged, as a burden and not a mere faculty, in accordance with article 54.º, n.º 1, first part of the CPPT, an interpretation which, in a situation it considers analogous, the Constitutional Court ("TC") did not judge unconstitutional (Judgment n.º 718/2017, of 15 November).
CLARIFICATION
The Tribunal was regularly constituted and is materially competent (cf. articles 2.º, n.º 1, paragraph a) and 5.º of the RJAT).
The parties have legal personality and capacity, have standing and are regularly represented (cf. articles 4.º and 10.º, n.º 2 of the RJAT and article 1.º of Ordinance n.º 112-A/2011, of 22 March). The proceedings do not suffer from any nullities.
The Respondent raised the preliminary question of material incompetence of the Arbitral Tribunal, the examination of which was deferred to the final decision and will be assessed immediately after the establishment of the facts.
REASONING
FINDINGS OF FACT
For the purposes of the decision, the following facts are relevant:
A..., LDA., here Claimant, is the owner of a collection of 120 urban properties, located in..., in the parish of... and municipality of Loulé, which form part of the tourism enterprise B..., located in the... of...– cf. documents 1 and 2 submitted by the Claimant with the request for arbitral decision (initial application) and Administrative File ("AF").
From 1989 onwards, the shareholder of the Claimant, C..., requested from the services of the Respondent the registration of the aforementioned properties in the cadastre, by submitting the corresponding forms Mod. n.º 129 – "Declaration for registration or alteration of registration of urban properties in the cadastre", which state that these are properties intended for housing – cf. AF.
The opening of the tourism enterprise B... was authorized by the then Directorate-General for Tourism, granted in February 1993, following an inspection carried out at the establishment, in accordance with the terms and for the purposes of the provision of n.º 4 of Decree-Law n.º 328/86, of 30 September – cf. document 14 submitted with the initial application.
By order of the State Secretary for Trade and Tourism, of 19 November 1996, tourism utility was granted, on a definitive basis, to the first-category tourist village B...– cf. document 16 submitted with the initial application.
In December 2001, following legislative changes, the enterprise was reclassified as a 4-star tourist village – cf. document 15 submitted with the initial application.
In July 2010, the enterprise was reconverted by Portugal Tourism, I.P., in accordance with the terms and for the purposes of n.º 2 of article 75.º of Decree-Law n.º 39/2008, of 7 March, with the typology (tourist village) and category (four stars) that had been attributed to it under the previous regime, with the opening authorization that the Directorate-General for Tourism had initially granted under Decree-Law n.º 328/86 maintaining its validity and effectiveness – cf. documents 3 and 15 submitted with the initial application.
All the urban properties referred to in paragraph A above comprise the enterprise B... and are devoted to tourist accommodation services, each comprising one or more accommodation units, in a total of 132 (77 terraced houses and 55 apartments on a slope), with swimming pool or jacuzzi, functionally distinct and independent from each other, equipped and ready to occupy and use, with daily cleaning and tidying service, replacement of towels, bed linens and personal hygiene consumables – cf. documents 3, 4 and 5 submitted with the initial application, the content of which was corroborated by the witness testimony.
The tourism enterprise B... further comprises infrastructure and complementary support facilities, such as reception, bar, indoor and outdoor swimming pools, spa, gymnasium, children's playground, hairdresser's salon, game room and common rest areas, with other ancillary services being provided in the area of sports, leisure and catering – cf. documents 4, 5 and 15 submitted with the initial application, the content of which was corroborated by witness testimony.
The tourism enterprise B... offers exclusively hotel-type accommodation services, being sought for non-residential purposes and use by all its clients is limited to short periods of time devoted to rest and leisure – cf. document 15 submitted with the initial application, the content of which was corroborated by witness testimony and party statements.
The entire area of... in which B... is located, including all the construction referred to in paragraph A above, has urban planning framework in the Urban Development Plan for... and is covered, for purposes of land use and occupation, by a sub-unit or zone SUT, whose main exclusive use is tourism – cf. documents 6 to 13 submitted with the initial application, the content of which was corroborated by witness testimony.
The Claimant was notified of the AIMI assessment act, issued under n.º 2017..., dated 30 June 2017 and referring to the same year, in the amount of € 125,490.96, resulting from the application of the rate of 0.4% to the tax base of € 31,372,740, corresponding to the sum of the patrimonial values ("VPT") of the 120 urban properties referred to in paragraph A above, better identified in this assessment act, and which constitute the urban properties owned by the Claimant that form part of the enterprise B...– cf. document 1 submitted with the initial application, which is reproduced for all purposes.
The Claimant made payment of the AIMI assessment in the amount of € 125,490.96 – cf. document 1 submitted with the initial application and AF.
To date, the properties comprising the enterprise B... are registered in the cadastre with residential use, and the Claimant has not requested alteration of their classification to services – cf. AF and document 2 submitted with the initial application.
On 22 December 2017, the Claimant filed the corresponding request for constitution of the Arbitral Tribunal in the CAAD computer system.
FACTS NOT PROVEN AND REASONING
The facts relevant to the judgment of the case were selected and defined based on their legal relevance, in light of the plausible solutions to the legal questions, in accordance with the combined application of articles 123.º, n.º 2 of the CPPT, 596.º, n.º 1 and 607.º, n.º 3 of the Code of Civil Procedure ("CPC"), applicable ex vi article 29.º, n.º 1, paragraphs a) and e) of the RJAT.
For the purposes of the decision, there are no alleged facts that should be considered as not proven.
With regard to the proven facts, the conviction of the arbitrators was based on the positions assumed by the parties which, as to the essential facts, is not divergent, and on the critical analysis of the documentary evidence submitted in the file which is largely comprised of official documents and publicly accessible documents.
The testimony of witness D... and the statements of party administrator E... were objective, consistent and with knowledge of the facts to which they referred, however, it should be noted that they merely corroborated facts regarding which the Tribunal's conviction was formed by analysis of the documentary evidence.
DELIMITATION OF THE QUESTIONS TO BE DECIDED
First and foremost, it is necessary to address the exception of material incompetence invoked by the Respondent which is of public policy order and whose examination precedes that of any other matter (cf. articles 16.º of the CPPT and 13.º of the Code of Procedure in Administrative Courts ("CPTA"), ex vi articles 29.º, n.º 1, paragraphs a) and c) of the RJAT and 2.º, paragraph c) of the CPPT).
In case the exception is not upheld, the fundamental question to be examined concerns the allegation by the Claimant of error in the application of the regime of article 135.º B of the IMI Code, by being met the conditions for exclusion from the scope of AIMI set forth in n.º 2 of the cited legal provision, specifically by the fact that the urban properties held by the Claimant are exclusively devoted to the activity of providing hotel-type accommodation services, having no residential use, contrary to what appears, by error, in their respective cadastral records.
Finally, the Tribunal must pronounce on the request for indemnatory interest.
LAW
Preliminary Questions – Material Incompetence of the Arbitral Tribunal
The Respondent raises the exception of material incompetence of the Tribunal considering that the matter at hand concerns the assessment of properties and their cadastral classification, to be examined as an administrative act in tax matters.
The competence of courts is the measure of their jurisdiction, the manner in which jurisdictional power is divided and distributed among them. In a specific or qualitative sense, it will be the susceptibility of exercise by the court of its jurisdiction for the examination of a certain case[1].
Arbitral Tribunals are provided for in article 209.º, n.º 2 of the Constitution of the Portuguese Republic ("CRP"), with the scope of tax arbitral jurisdiction being delimited, in the first place, by the provisions of article 2.º of the RJAT which sets forth, in its n.º 1, the corresponding criteria for material distribution. It thereby determines that it is competent for this "type" of tribunal to examine the following claims:
"a) A declaration of illegality of acts of tax assessment, self-assessment, withholding at source and payment on account;
b) A declaration of illegality of acts determining the taxable matter when it does not give rise to the assessment of any tax, of acts determining the collectible matter and of acts fixing patrimonial values."
In the thesis of the Respondent, as the proceedings do not concern a tax act, but rather an administrative act in tax matters, the appropriate means of procedure would be administrative action and not judicial challenge, as results from the provisions of article 97.º of the CPPT. Moreover, in accordance with the legislative authorization on tax arbitration contained in article 124.º, n.º 1 of Law n.º 3-B/2010, of 28 April, the tax arbitral process must constitute an alternative means of procedure to the judicial challenge process, making it not possible to discuss the nature of a property in arbitral proceedings.
In these terms, according to the Respondent, given the delimitation of competence of tax Arbitral Tribunals, effected by the cited article 2.º, n.º 1 of the RJAT and equally by article 2.º of the Binding Ordinance, centered on the examination of tax acts (of tax assessment, self-assessment, withholding at source, payment on account and determination of taxable matter, in the latter case, when it does not give rise to the assessment of any tax), these Tribunals cannot know of a request that implies the correction or alteration of the cadastres of the properties in question in the proceedings, a request which does not respect a tax assessment act.
This argument is not, however, accepted. The object of the present proceedings, clearly defined from the outset in the preamble of the request for arbitral decision, concerns only the "assessment of the additional municipal property tax (AIMI) in the amount of € 125,490.96", which was identified under n.º 2017..., dated 30 June 2017, with the Claimant seeking a declaration of illegality and annulment of such act.
A proper tax act, of tax assessment, which unilaterally and imperatively defines the AIMI obligation of the Claimant for the year 2017, is submitted for examination by the Tribunal. The means of procedure appropriate for the examination of acts of this nature is judicial challenge, for which any illegality constitutes grounds, as provided for in articles 97.º, n.º 1, paragraph a) and 99.º of the CPPT, and the same may be anchored in an error in the classification of urban cadastral records.
It is noteworthy that the Claimant does not at any point question the assessment of the properties whose VPT's (or rather, whose sum of their respective VPT's) constituted the tax base of AIMI. The assessment of those properties is not in question. Likewise, the Claimant does not formulate a request for correction or alteration of cadastral records, nor would the strict annulling effect of the arbitral decision be able to permit satisfaction of a request of that nature.
It is unequivocal that the object of the proceedings is an AIMI assessment act, and the request formulated is for a declaration of illegality and annulment of that act, a matter that falls within the competence of tax arbitral jurisdiction and which, for that reason, this Tribunal may examine, in accordance with the provisions of the cited articles 2.º, n.º 1, paragraph a) of the RJAT and 2.º of the Binding Ordinance, thereby undermining the exception of material incompetence of the Arbitral Tribunal invoked by the Respondent.
The Respondent raises a set of (other) questions that it frames under the guise of the exception of material incompetence, but which, in fact, constitute preliminary questions of a different nature.
It first states that the assessment and cadastral classification must be examined independently and present themselves as a presupposed and autonomous act in relation to acts of AIMI assessment. Constituting an immediately injurious act, its challenge constitutes a true burden and not a mere faculty. It argues that, not having the Claimant, in a timely manner, used the appropriate means of reaction, namely the request for second assessment (article 76.º of the IMI Code), its challenge (article 77.º of the IMI Code), the cadastral claim (article 130.º of the IMI Code), or the challenge of acts fixing patrimonial values (article 134.º of the CPPT), the assessment became consolidated. Thus, that act (of assessment) cannot be subsequently attacked when the corresponding tax assessment is made.
It adds that even if examination in CAAD were to be admitted, all the voluntary remedies provided for in the assessment procedure were not exhausted, in accordance with article 134.º, n.º 7 of the CPPT, "from which [in the Respondent's conception] it clearly results that the arbitral tribunal lacks material competence."
Several problems are identified in this construction. First, with regard to the necessity for independent examination of the assessment, as this is a matter that does not form part of the cause of action of the Claimant, with no reference being made anywhere or any defect invoked relating to the assessment, nor the VPT determined by the respective procedure being questioned, whereby it constitutes a matter extraneous to that discussed in the present proceedings.
Likewise, there is disagreement with the statement that, in examining the merits in the direction of upholding the claim, the tribunal would be eliminating from the legal order the assessments made by AT. As was just stated, these assessments were not questioned, nor placed in issue by the taxpayer, nor do the powers of decision of this Tribunal, which are bounded by the strictly impugnationary nature of the arbitral action, extend beyond the annulling constitutive pronouncement, which permits the elimination of the AIMI assessment act from the legal order, with ex tunc retroactive effect, implying the restoration of the hypothetical situation that would currently exist if that assessment act had never existed and the inherent possibility of condemnation to payment of indemnatory interest or indemnification for improper provision of guarantee. Thus, there are no grounds justifying the fear that AT would see eliminated the assessments of the properties of which the Claimant is the owner.
The question concerns solely the cadastral classification of the urban properties owned by the Claimant which the latter alleges to be erroneous, by not corresponding to their actual, effective, material and objective purpose – which is services – and not, as appears in the cadastres, residential or housing.
With regard to the alleged necessity of exhaustion of the voluntary remedies provided for in the assessment procedure, determined in article 134.º, n.º 7 of the CPPT, it is relevant to recall that the scope of application of the rule in question is limited to the challenge of acts fixing patrimonial values or inaccuracies in the cadastral registration of patrimonial values, which is certainly not the situation that is the object of these arbitral proceedings, in which a AIMI assessment act is examined whose alleged invalidity is not connected with defects in the fixing of patrimonial values or in the registration of these values.
However, even if this were to be understood, the jurisprudence of the Supreme Administrative Court ("STA") has interpreted that this requirement (of exhaustion of voluntary remedies provided for in the assessment procedure) is not necessary, being therefore dispensable, in cases where the challenge is not based on the erroneous fixing of the patrimonial value or, put another way, "where the taxpayer does not disagree with the quantification of the patrimonial value", as occurs in the present situation – cf. Judgments of the STA in proceedings n.º 1101/13, of 15 January 2014; n.º 311/11, of 19 October 2011; n.º 4/08, of 16 April 2008, and n.º 968/02, of 6 November 2002.
In the Judgment delivered in proc. n.º 930/13, of 2 March 2016, in a situation where the question was whether the assessment (in that case IMI) could be subject to challenge based on declaratory error (error/defect of the declaration itself that served as the basis for the declaration for registration in the cadastre), without a valid request for second assessment having been made[2], a point with manifest parallelism to the situation here under examination, the STA understood, in line with the above, that:
"(…) the final result of the assessment gains autonomy from the point of view of challenge in light of the provision of article 77º of the IMI Code, it being understood that the failure to challenge the result of the assessment in accordance with article 77º of the IMI Code and article 134º of the CPPT results in res judicata as to the value of the assessment, although it does not cure any illegalities of the acts prior to the assessment process (as was decided in this STA's decision of 04/12/2013 in appeal n.º 0877/13).
And, for this reason it has been understood that, in the challenge of the final act constituted in IMI assessments, the taxpayer is not prevented from requesting the examination of any illegality of the preparatory acts to such assessments by the fact of not having challenged the distinguishable act of assessment.
And, considering everything examined and weighed, we understand that in the case of the present proceedings the taxpayer does not examine the quantitative of the patrimonial assessment carried out but rather, and as the taxpayer itself states, the problem at hand is not exhausted solely with a mere disagreement with the patrimonial value and the assessment process. The problem is not in the quantification of the "collectible matter" in itself, but rather in the declaratory error evidenced, according to the taxpayer, in the plans of the building itself. There is an act underlying the assessment which is put in question by the claimant.
The question of declaratory error in cadastral registration reduces itself to a question about the prerequisites prior to the assessment and the occurrence of possible declaratory error can be invoked at the time it was, that is to say after the first assessment.
(…)
In line with what we have been expressing it follows that in the challenge made to the IMI assessment act after assessment for purposes of fixing the patrimonial value, pretended illegalities resulting from the official registration in the cadastre of a certain physical reality as property can be alleged and examined."[3]
Furthermore, with regard to the cadastral claim procedure provided for in article 130.º of the IMI Code, it should be noted that the law does not make judicial challenge dependent on its prior use, configuring a voluntary claim. Article 185.º, n.º 1 of the Code of Administrative Procedure ("New CPA")[4] provides on this matter that "[c]laims and appeals are necessary or voluntary, depending on whether or not their prior use is a prerequisite to access to contentious means of challenge or condemnation to the performance of a due act" and, in accordance with n.º 2 of the same article, "they have voluntary character, unless the law designates them as necessary."
Not being a necessary claim, as the law does not designate it as such, the adoption of the mechanism of article 130.º of the IMI Code does not constitute a necessary condition for access to contentious proceedings, whereby there is no omission of a procedural prerequisite that would prevent examination of the merits which, in this case, would not be material incompetence, as qualified by the Respondent, but rather unchallengeable act – cf. article 89.º, n.º 4, paragraph i) of the CPTA[5]. Furthermore, with taxpayers being able to claim inaccuracies in cadastral registrations at any time, the invocation of the stability or incontestability inherent in the figure of res judicata or res iudicata is not appropriate.
The Respondent also appeals to the exception to the general regime of unitary challenge that governs tax contentious proceedings, expressed in article 54.º of the CPPT, and argues that this principle is inapplicable to the present situation, by virtue of being faced with a presupposed and autonomous act in relation to the AIMI assessment act.
The cited rule provides:
"Article 54.º
Unitary Challenge
Except when they are immediately injurious to the rights of the taxpayer or there is express provision to the contrary, interlocutory acts of the procedure are not susceptible to contentious challenge, without prejudice to the possibility of invoking in the challenge to the final decision any illegality previously committed."
It is found that, in accordance with the legal text, the general regime in tax contentious proceedings is that it is "possible, in principle, to challenge only the final act of the tax procedure, given that only that act affects or injures, immediately, the legal sphere of the taxpayer, and that in tax contentious proceedings the criterion for challengeability of acts is that of their objective, immediate, actual and not merely potential injuriousness" – cf. Judgments of the STA, proceedings n.º 1032/09, of 23 June 2010, and n.º 1361/13, of 23 October 2013.
Thus, any illegalities of interlocutory acts of the tax procedure can only be raised when challenging the final act of the procedure, which constitutes a decision injurious to the rights and legally protected interests of the taxpayer.
There are, however, two exceptions introduced by the aforementioned article 54.º of the CPPT to the general regime described. The first exception concerns interlocutory acts regarding which the law expressly provides otherwise, i.e., the so-called "detachable acts", which in the absence of immediate challenge become fixed in the legal order, with the right or procedural faculty of subsequently discussing their legality being precluded – cf. Judgment of the STA, proc. n.º 1032/09. For this to occur, there must be an express rule to this effect, which is not present in the situation under examination.
On this point, it is concluded, therefore, that the registration of properties in the cadastre with a certain classification – erroneous – relating to the species of urban properties in question does not constitute a detachable act within the meaning of article 54.º of the CPPT. A different solution could be raised if the matter that was in question in the proceedings were the very act of patrimonial assessment, which could be qualified as a detachable act and with autonomy for purposes of challenge. However, as noted above, such an act was not questioned nor did the Claimant invoke any defect relating to the same as grounds for annulment of the AIMI assessment act that is the object of these proceedings.
The second exception refers to acts which, being interlocutory, that is, inserted in the tax procedure and prior to the final decision, have immediate injuriousness. In these cases, the possibility of their direct challenge opens up, without prejudice, however, to their illegality being able to be raised subsequently in the challenge that may be lodged against the final act (e.g. of tax assessment).
In these circumstances, the fact that the injurious interlocutory act is not autonomously challenged does not prevent defects from which it suffers from constituting grounds for challenging the final decision of the procedure, there being no preclusive effect that the Respondent invokes. See in this regard, by way of merely exemplary reference, the Judgments of the STA in proceedings n.º 0312/15, of 29 March 2017, and n.º 1685/13, of 8 January 2014, with the latter providing that "any illegalities practiced in the acts prior to the fixing of the patrimonial tax value of the property, such as that of official registration in the cadastre of a certain physical reality as property, can be subject to autonomous challenge – through special administrative action – or invoked in challenge of a later tax act or in tax matters, such as that of second assessment."
In the interpretation made of article 54.º of the CPPT, the core normative parameter continues to be that of unitary challenge of the final (decision-making) act of the procedure, with the burden of autonomous challenge remaining exceptional. The cited rule merely extends, in this second exception, the possibility of challenge to a moment that precedes that of the decision, with a view to greater protection and safeguarding of the taxpayer, allowing the taxpayer not only to defend itself but also possibly to prevent an unfavorable final decision and not, as would result from the Respondent's interpretation, to curtail the safeguards of defense of the taxpayer, with the attribution of a preclusive effect that would not be proportionate, not least given the difficulties and doubts that arise in the identification and qualification of an act as "immediately injurious"[6].
In summary, in accordance with the principle of unitary challenge established in article 54.º of the CPPT, the Claimant may invoke in the arbitral request any illegality of the tax procedure, including the error in the classification of properties in the cadastre, the law not requiring prior administrative challenge as a condition of procedibility, nor does the preclusive effect invoked by the Respondent (res judicata/res iudicata) arise. In this manner, the defense by exception raised by the Respondent fails.
The Respondent further raises the constitutional inconformity of this interpretation of article 54.º of the CPPT, despite it being the one that has been consensually adopted by the STA, in harmony with the jurisprudence set forth above.
Beginning with the analysis of the invoked violation of the competence of Administrative and Tax Courts (article 212.º, n.º 3 of the CRP). Tax Arbitral Tribunals, also contemplated in article 209.º, n.º 2 of the Fundamental Law, have jurisdiction concurrent with that of Administrative and Tax Courts, which legitimately and in accordance with the free discretion of the ordinary legislator (materialized in article 2.º of the RJAT), attributed to them jurisdiction to decide disputes to which there corresponds the form of judicial challenge and which concern tax assessment acts (without prejudice to the restrictions contained in articles 2.º and 3.º of the Binding Ordinance, namely with regard to some specific claims, such as those concerning customs duties, and to the value of disputes).
Being two categories of jurisdiction recognized by the Constitution and the delimitation of their respective competence falling within the legislator's discretion, the thesis of the pointed unconstitutionality cannot be accepted.
Regarding the invoked violation of the right to two degrees of jurisdiction, understood as the possibility of ordinary appeal from jurisdictional decisions, it is noteworthy that the absence of ordinary appeal is a property inherent to arbitral proceedings, and is contained in their respective legal regime (RJAT), to which the Respondent validly bound itself, through Ordinance n.º 112-A/2011, of 22 March. In this manner, it would constitute a true "venire contra factum proprium" that the Respondent, having voluntarily agreed to submit itself to arbitral jurisdiction, configured as a single instance and therefore lacking ordinary appeal, would subsequently, during the pendency of proceedings, breach the agreement made with it, invoking the principle of effective judicial protection.
In addition, it should be noted that the constitutional principle of effective judicial protection is compatible with the well-known figure of waiver of appeal, with basis in article 632.º of the Code of Civil Procedure ("CPC"), as it derives from the will, validly manifested, of the parties intervening in the dispute, and it is permissible for those parties to waive appeals, with effect, in case of advance waiver, if it proceeds from both parties, as occurs in case of "submission" to tax arbitral jurisdiction. Again, the thesis of unconstitutionality cannot be accepted.
On the contrary, the Constitutional Court pronounced itself in the sense of constitutional inconformity of the interpretation that AT advocates, in Judgment n.º 410/2015, of 29 September 2015.
In fact, regarding the question of whether "the imposition, without adequate legal basis, of the burden of autonomous and immediate judicial challenge of an interlocutory injurious act (…), in such terms that the invocation of the defects proper to such an act becomes impossible in the context of the final decision of the tax procedure" respects the constitutional parameters of effective judicial protection and justice, this Court decided that such interpretation of article 54.º of the CPPT seriously unprotects the rights of the taxpayer and judges it unconstitutional.
This understanding is not contradicted by the Judgment of the Constitutional Court n.º 718/2017, of 15 November 2017. In this latter judgment, a situation with properties distinct from those presiding over the declaratory error in the classification of properties in the cadastral registration act is discussed and which concerns decision-making acts of requests for recognition of tax benefits (in the field of tax benefits dependent on recognition), not classifiable as interlocutory acts.
In fact, in Judgment n.º 718/2017, the Constitutional Court, regarding the decision-making acts of requests for recognition of tax benefits, admits their qualification as "autonomous tax acts", in light of the constitutive nature of that recognition and not merely declarative. In this manner, it proceeds from the premise that such acts do not form part of the tax assessment procedure as "preparatory acts", even if detachable, being rather "presupposed acts", following José Casalta Nabais, "A impugnação unitária do ato tributário", in Cadernos de Justiça Tributária, n.º 11, Janeiro-Março 2016, pp. 18 and 19.
The jurisprudence of the STA has decided that in these circumstances the non-challenge (autonomous) in court of acts of refusal of requests for recognition of tax benefits prevents judicial challenge of final decisions of tax assessment – cf. Judgment of the STA in proc. n.º 459/14, of 18 November 2015.
Concluding the Constitutional Court, in Judgment n.º 718/2017, that this interpretation – relating to "presupposed acts" and not "interlocutory acts" – does not violate the principle of effective judicial protection (article 268.º, n.º 4 of the CRP), without prejudice to not being the most protective, i.e., the one that grants or ensures a greater level of protection to individuals.
However, in the situation being analyzed in the present proceedings, we are not faced with an autonomous tax act, a presupposed act of constitutive effects, but with an interlocutory act, of a declarative nature. The solution that the law (ordinary) postulates in one case and the other is distinct, as distinct are the properties that characterize interlocutory acts and presupposed acts, with the judgment of disapproval that Judgment n.º 410/2015 of the Constitutional Court, mentioned above, formulates regarding the unconstitutionality of the interpretation that AT advocates of article 54.º of the CPPT, within the scope of interlocutory acts of the tax procedure, remaining fully valid, this precept being to be interpreted and applied in conformity with the Constitution, in the sense advocated by the Claimant, of applicability of the principle of unitary challenge, with the consequent dismissal of the exception invoked by the Respondent.
On the Merits
The objective incidence of AIMI is delimited to "the sum of the patrimonial tax values of urban properties situated in Portuguese territory of which the taxpayer is the owner", in accordance with the provisions of article 135.º-B, n.º 1 of the IMI Code, being, however, excluded with respect to "urban properties classified as 'commercial, industrial or for services' and 'others'", in accordance with article 6.º, n.º 1, paragraphs b) and d) of the IMI Code, as is extracted from the rule delimiting the negative scope of incidence provided for in n.º 2 of the cited article 135.º-B.
This solution dates back to the predecessor entry 28 of the General Table of Stamp Tax ("TGIS"), the immediate predecessor of AIMI and is justified by choices of economic policy.
The constitutional jurisprudence that has pronounced on entry 28 is based on the idea that the penalization of properties with economic use would contribute to burdening the productive sector and worsening the country's economic situation, adopting the position of José Maria Fernandes Pires: "the application of the tax to properties with use for housing and land for construction in which the construction of housing is foreseen or approved, reveals intention not to burden the productive sector and businesses in general. In fact, properties devoted to business activities, namely commerce, services or industrial activity, can easily reach a value exceeding one million, without this fact being able to reveal relevance in terms of wealth identical to that revealed by properties with use for housing with said value" – cf. Judgment of the Constitutional Court n.º 692/2016, of 14 December 2016.
This concern continued to be protected by the legislator of AIMI which, without prejudice to introducing, in the name of greater tax equity, an element progressive in personal basis, taxing more highly larger real estate patrimonies, continued to avoid its impact on economic activity, through the exclusion of the scope of rural, mixed and other properties used as factors of production – commercial, industrial and services – in accordance with the State Budget Report for 2017, for the Strategy for Promotion of Economic Growth and Budget Consolidation, p. 60, available for consultation at https://www.parlamento.pt/ActividadeParlamentar/Paginas/DetalheIniciativa.aspx?BID=40721.
It results from the above that the tax legislator maintained the exclusion from taxation that came from entry 28 of the TGIS, with respect to urban properties directly devoted to productive activities, in which tourism and hotel exploitation cannot fail to be included.
The Claimant, despite having erroneously declared the urban properties comprising the enterprise B... as intended for residential purposes, amply demonstrated that these properties have no residential purposes, as they form an integral part of a tourism enterprise that has provided exclusively, since the date of opening, which dates back to 1993, hotel-type accommodation services and related sports and leisure services.
Having made that proof, the taxation carried out ends up by offending the rule delimiting the material or objective scope, which excludes from AIMI properties classified as "commercial, industrial or for services" and "others", in accordance with paragraphs b) and d) of n.º 1 of article 6.º of the IMI Code. In fact, one cannot overlook that the incidence of the tax, with regard to urban real estate, is associated with the real, actual, material and objective use given to the same, independent of what may appear in the cadastral registration, whereby, falling the factuality ascertained within the normative scope of paragraph b) of n.º 1 of article 6.º of the IMI Code, and not within that defined in paragraph a) of the same number, the tax situation cannot fail to be assessed in function of the latter rule, as this would correspond to treating the two rules indiscriminately for purposes of the scope of the tax.
It is true that the error in the cadastral classification of the properties in question, classified as "residential" instead of "for services", may initially be attributable to the Claimant, as it derives from the declarations of registration in the cadastre, made by its shareholder through form Mod. 129; however, it cannot be overlooked that AT has the power to promote correction of cadastral inaccuracies of its own motion and that, in this case, it never did so.
In any event, manifesting the unequivocal exclusive devotion of the immovable properties to services and, therefore, to a productive activity, a condition for exclusion from the objective scope of AIMI, the legal prerequisites for taxation of the Claimant in respect of this tax are not met, whereby the tax act of AIMI assessment impugned, relating to the year 2017, suffers from a substantive defect, by error in the prerequisites, and must be annulled, in accordance with and for the purposes of article 163.º of the CPA, with the consequent refund of the AIMI tax obligation paid in excess.
On the Request for Indemnatory Interest
The right to indemnatory interest is based on article 43.º of the LGT which, in its n.º 1, makes it depend on the determination that there was error attributable to the services, from which payment of a tax obligation superior to that legally owed has resulted.
It results from the established facts that the erroneous classification of properties in the cadastres – as "residential" instead of "for services" – was due to the declarations of the shareholder of the Claimant, when registering the properties, and that the Claimant itself over the past decades (nearly 30 years) never promoted correction of this error which is, in this manner, attributable to it.
AT carried out the AIMI assessment to the Claimant on the basis of the elements at its disposal, declared by the (shareholder of the) taxpayer, a procedure which does not merit criticism.
In this manner, the improper assessment of AIMI had its origin in an error of the taxpayer itself and not of AT, whereby the request for condemnation of AT to payment of indemnatory interest does not proceed, given the failure to prove the constitutive prerequisites of that right, specifically with regard to the determination of error attributable to the services.
* * *
The Respondent requests, under the provisions of article 280.º, n.º 3 of the CRP and article 72.º, n.º 3 of the Law of the Constitutional Court, that notification to the Public Prosecutor's Office of the Arbitral Decision be determined. However, the situation of the present arbitral proceedings does not fall within the scope of the rules in question, as no rule or segment of rule has been disapplied for unconstitutionality.
Finally, it should be noted that the relevant questions submitted for examination by this Tribunal have been examined and assessed, with those whose determination became moot by the solution given to others not having been so.
DECISION
In light of the above, the arbitrators of this Arbitral Tribunal agree to:
Dismiss the exception of material incompetence of the Arbitral Tribunal raised by the Respondent;
Uphold the request for annulment of the AIMI assessment act for the year 2017, in the amount of € 125,490.96, with the consequent refund of the amount paid to the Claimant;
Dismiss, as not proven, the request for condemnation of AT to payment of indemnatory interest.
* * *
The value of the case is set at € 125,490.96, in accordance with the provisions of articles 3.º, n.º 2 of the Regulations of Costs in Tax Arbitration Proceedings ("RCPAT"), 97.º-A, n.º 1, paragraph a) of the CPPT and 306.º, n.ºs 1 and 2 of the CPC, the latter being applicable ex vi article 29.º, n.º 1, paragraph e) of the RJAT.
Costs in the amount of € 3,060.00, with 19/20 to be borne by the Respondent and 1/20 to be borne by the Claimant, in accordance with Table I attached to the RCPAT, and with the provisions of articles 12.º, n.º 2 of the RJAT, 4.º, n.º 5 of the RCPAT and 527.º, n.ºs 1 and 2 of the CPC, ex vi article 29.º, n.º 1, paragraph e) of the RJAT.
Lisbon, 2 August 2018
[Text prepared by computer, in accordance with article 131.º, n.º 5 of the CPC, applicable by cross-reference to article 29.º, n.º 1, paragraph e) of the RJAT]
The Arbitrators,
Alexandra Coelho Martins
José Nunes Barata
João Pedro Rodrigues
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