Stamp Tax on Building Land Under Clause 28 TGIS: CAAD Arbitration 68/2016-T

ARBITRAL DECISION

I. REPORT

1. A… (hereinafter referred to as the "Claimant", sole trader), with tax identification number …, with address at Street …, no. …, ..., …-… …, filed, on 4 February 2016, pursuant to the combined provisions of Articles 2 and 10 of Decree-Law no. 10/2011, of 20 January, i.e., Legal Regime for Arbitration in Tax Matters ("RJAT"), a request for constitution of an Arbitral Tribunal, so as to have declared illegal the Stamp Duty ("SD") assessments listed below, pursuant to Item no. 28 of the General Stamp Duty Table ("GSDT"), relating to the tax year 2012, in the total amount of € 145,280.70, against the Tax and Customs Authority ("Respondent" or "TA").

A) Constitution of the Collective Arbitral Tribunal

1. In accordance with paragraph (a) of Section 2 of Article 6 and paragraph (b) of Section 1 of Article 11 of the RJAT, the Deontological Council of the Centre for Administrative Arbitration ("CAAD") appointed the signatories as arbitrators of the Collective Arbitral Tribunal, who communicated their acceptance of the appointment within the applicable period, and notified the parties of such appointment on 13 April 2016.

2. Accordingly, in compliance with the provision set forth in paragraph (c) of Section 1 of Article 11 of the RJAT, and upon communication by the President of the Deontological Council of the CAAD, the Collective Arbitral Tribunal was constituted on 29 April 2016.

B) Procedural History

1. In the request for arbitral decision, the Claimant petitioned for a declaration of illegality of the rejections of the hierarchical appeals identified below and, consequently, the illegality of the Stamp Duty assessment acts listed above.

2. The TA filed a response, petitioning for the dismissal of the request for arbitral decision, on the grounds that there is no defect of violation of law, requesting that the tax acts under analysis, as they do not violate any legal or constitutional provision, be maintained in the legal order.

3. By order of 8 June 2016, the Collective Arbitral Tribunal, pursuant to the provisions of paragraph (c) of Article 16 of the RJAT, decided, without opposition from the parties, that it was not necessary to hold the meeting referred to in Article 18 of the RJAT, as a result of the simplicity of the matters at issue, as well as considering that it had at its disposal all the necessary elements to reach a clear and impartial decision.

4. It also decided, in accordance with Section 2 of Article 18 of the RJAT, that it was not necessary to produce oral arguments, as the positions of the parties were clearly defined in their respective pleadings, without violation of the principles of due process and equality of the parties.

5. The final deadline set for the issuance of the arbitral decision was 28 October 2016.

6. The Collective Arbitral Tribunal was regularly constituted and is competent to review the matters indicated (Article 2, Section 1, paragraph (a) of the RJAT), the parties have legal personality and capacity and possess full standing (Articles 4 and 10, Section 2 of the RJAT and Article 1 of Ordinance no. 112-A/2011, of 22 March). There are no procedural defects, and therefore nothing prevents judgment on the merits.

7. The present proceedings are therefore in a condition for the final decision to be rendered.

II. ISSUE TO BE DECIDED

1. The present Tribunal shall examine and decide on the merits of the case, which consists, in particular, in determining whether urban properties legally classified as land for construction should be covered by the concept of properties with residential use, pursuant to Item no. 28 of the GSDT, as worded at the date of the occurrence of the facts (2012).

2. In other words, the present Tribunal shall determine whether, as the Claimant alleges, land for construction was not, at that date, classified as properties with residential use, thus falling outside the scope of the said item, or, on the contrary, as the Respondent contends, were considered properties with residential use and, in that context, subject to Stamp Duty, pursuant to Item no. 28 of the GSDT.

III. DECISION ON FACTUAL MATTERS AND ITS REASONING

1. Having examined the documentary evidence produced, the present Tribunal finds the following facts to be proven, as relevant to the decision of the case:

I. The Claimant is the owner of land for construction, located in the Municipality of Sintra, Parish of …, all with a Tax-assessed Property Value ("TAPV") exceeding € 1,000,000, as demonstrated in the table above;

II. The Claimant, with respect to the tax year 2012 and as a result of Item no. 28 of the GSDT, received the assessment acts from the TA indicated above, in the total amount of € 145,280.70;

III. The present initial petition was preceded by Administrative Complaints, with respect to each of the assessments individually considered, whose express rejection gave rise to the submission of Hierarchical Appeals, in the same terms, with the express rejection of the latter being communicated to the Claimant on the following dates:

1. The Tribunal's conviction regarding the facts found to be proven resulted from the examination of the documents attached to the file and contained in the petition and response of the parties, as specified in the factual matters points set forth above.

2. There is no factual matter relevant to the decision of the case found to be not proven.

IV. ON THE LAW

A) Legal Framework

1. Given that the legal issue to be decided in the present proceedings requires the interpretation of the relevant statutory provisions, it is first necessary to list the norms that compose the relevant legal framework at the date of the occurrence of the facts.

2. The subjection to Stamp Duty of properties with residential use resulted from the addition of Item no. 28 to the GSDT, effected by Article 4 of Law 55-A/2012, of 29 October, which defined the following tax facts:

"28 – Ownership, usufruct or right of superficies of urban properties whose tax-assessed property value appearing in the records, pursuant to the Code of the Municipal Property Tax (CMPT), is equal to or exceeds € 1,000,000.00 – on the tax-assessed property value used for purposes of the Municipal Property Tax:

28.1 – For properties with residential use – 1%

28.2 – For properties, when the taxable persons who are not natural persons are residents in a country, territory or region subject to a tax regime clearly more favourable, contained in the list approved by ordinance of the Minister of Finance – 7.5%".

1. It should be noted that, with respect to tax year 2012, Article 6 of that Law provided the following transitional provisions:

"1 - In 2012, the following rules must be observed with respect to the assessment of Stamp Duty provided in Item no. 28 of the respective General Table:

a) The tax event occurs on 31 October 2012;

b) The taxpayer is the one mentioned in Section 4 of Article 2 of the Stamp Duty Code on the date referred to in the preceding paragraph;

c) The tax-assessed property value to be used in the assessment of the tax corresponds to that resulting from the rules provided in the Code of the Municipal Property Tax with reference to the year 2011;

d) The assessment of the tax by the Tax and Customs Authority must be made by the end of November 2012;

e) The tax shall be paid, in a single installment, by the taxpayers by 20 December 2012;

f) The applicable rates are as follows:

i) Properties with residential use assessed pursuant to the Code of the Municipal Property Tax: 0.5%;

ii) Properties with residential use not yet assessed pursuant to the Code of the Municipal Property Tax: 0.8%;

iii) Urban properties when the taxable persons who are not natural persons are residents in a country, territory or region subject to a tax regime clearly more favourable, contained in the list approved by ordinance of the Minister of Finance: 7.5%.

(…)"

1. The said law also added Section 7 to Article 23 of the Stamp Duty Code, concerning the assessment of Stamp Duty: "where the tax is due by the situations provided in Item no. 28 of the General Table, the tax is assessed annually, in relation to each urban property, by the central services of the Tax and Customs Authority, applying, with the necessary adaptations, the rules contained in the CMPT", and Article 67, Section 2, which provides that "to matters not regulated in this Code concerning Item 28 of the General Table, the CMPT applies, on a subsidiary basis".

2. Additionally, and taking into account the legislative amendment introduced by Law no. 83-C/2013, of 31 December, it is also necessary to transcribe the text of Item 28.1 of the GSDT from 1 January 2014, "for residential property or for land for construction whose building, authorized or planned, is for residential use, as provided in the Code of the Municipal Property Tax".

3. In this context, and taking into account the indication above, let us now examine the Code of the Municipal Property Tax ("Municipal Property Tax Code").

4. In the Municipal Property Tax Code, the types of properties are enumerated (in Articles 2 to 6) as follows:

"Article 2 - Concept of Property

1 – For purposes of this Code, property means any portion of land, including water, plantations, buildings and structures of any kind incorporated or situated thereon, having a permanent character, provided that it forms part of the assets of a natural or legal person and, in normal circumstances, has economic value, as well as water, plantations, buildings or structures, in the circumstances above, endowed with economic autonomy in relation to the land where they are located, even though situated in a portion of land that forms an integral part of different assets or does not have a patrimonial nature.

2 – Buildings or structures, although movable by nature, are considered to have a permanent character when devoted to non-transitory purposes.

3 – The permanent character is presumed when buildings or structures are situated in the same location for a period exceeding one year.

4 – For purposes of this tax, each separate unit under horizontal property ownership is deemed to constitute a property.

Article 3 - Rural Properties

1 – Rural properties are lands situated outside an urban agglomeration that are not to be classified as land for construction, pursuant to Section 3 of Article 6, provided that:

a) They are devoted, or, in the absence of concrete use, have as normal destination a use generating agricultural income, as are considered for purposes of the personal income tax (IRS);

b) Not having the use indicated in the preceding paragraph, they are not built on or have only buildings or structures of an accessory character, without economic autonomy and of reduced value.

2 – Also rural properties are lands situated within an urban agglomeration, provided that, by virtue of legally approved provision, they cannot have use generating any income or can only have use generating agricultural income and are in fact being used for this purpose.

3 – Also rural properties are:

a) Buildings and structures directly devoted to the production of agricultural income, when located on the lands referred to in the preceding sections;

b) Water and plantations in the situations referred to in Section 1 of Article 2.

4 – For purposes of this Code, urban agglomerations are considered to be, in addition to those situated within legally fixed perimeters, clusters with a minimum of 10 units served by public roads, with their perimeter delimited by points 50 m away from the centerline of the roads, in the transverse direction, and 20 m from the last building, along the roads.

Article 4 - Urban Properties

Urban properties are all those that should not be classified as rural, without prejudice to the provisions of the following article.

Article 5 - Mixed Properties

1 – Whenever a property has both rural and urban parts, it is classified, in its entirety, according to the main part.

2 – If neither part can be classified as the main part, the property is deemed to be mixed.

Article 6 - Types of Urban Properties

1 – Urban properties are divided into:

a) Residential;

b) Commercial, industrial or service;

c) Land for construction;

d) Other.

2 – Residential, commercial, industrial or service properties are buildings or structures licensed for such purpose or, in the absence of a license, that have as normal destination each of these purposes.

3 – Land for construction means lands situated within or outside an urban agglomeration for which a license or authorization has been granted, prior notification has been admitted or favorable prior information has been issued for subdivision or construction operations, and also those that have been declared as such in the deed of acquisition, except lands where competent authorities prohibit any of those operations, in particular those located in green zones, protected areas or that, in accordance with municipal land-use plans, are devoted to public spaces, infrastructure or facilities.

4 – Included in the provision of paragraph (d) of Section 1 are lands situated within an urban agglomeration that are not land for construction and are not covered by the provision of Section 2 of Article 3, as well as buildings and structures licensed or, in the absence of a license, that have as normal destination purposes other than those referred to in Section 2 and also those covered by the exception in Section 3".

1. Parallel to this, and since it is one of the issues raised by the Respondent, it is necessary to highlight what is provided in Article 45 of the Municipal Property Tax Code.

"Article 45 - Tax-assessed Property Value of Land for Construction

1 - The tax-assessed property value of land for construction is the sum of the value of the site area of the building to be constructed, which is located within the perimeter of the building's attachment to the ground, measured by its external part, added to the value of the land adjacent to the site.

2 - The value of the site area varies between 15% and 45% of the value of authorized or planned buildings.

3 - In determining the percentage of the value of the site land, the characteristics referred to in Section 3 of Article 42 are taken into account.

4 - The value of the area adjacent to the construction is calculated in accordance with Section 4 of Article 40.

5 - When the document evidencing construction feasibility referred to in Article 37 only makes reference to the indices of the Municipal Master Plan, the expert appraisers must estimate, with adequate grounds, the respective construction area, taking into account, in particular, the average construction areas of the surrounding zone".

1. Finally, attention should also be paid to the rules on the interpretation of laws, which are fundamental in order to understand the scope of the concept of property with residential use.

2. Article 11 of the General Tax Law ("GTL") establishes the essential rules for the interpretation of tax laws as follows:

"Article 11 - Interpretation

1. In determining the meaning of tax rules and in qualifying the facts to which they apply, the general rules and principles of interpretation and application of laws are observed.

2. Whenever terms specific to other branches of law are used in tax rules, they must be interpreted in the same sense as that which they have there, unless otherwise directly provided by law.

3. Where doubt persists as to the meaning of the applicable tax rules, the economic substance of the tax facts must be considered.

4. Gaps resulting from tax rules covered by the legislative reserve of the Assembly of the Republic are not susceptible to analogical interpretation".

5. The general principles of statutory interpretation, to which Section 1 of Article 11 of the GTL refers, are set forth in Article 9 of the Civil Code, which provides as follows:

"Article 9 - Interpretation of Law

1. Interpretation must not be limited to the letter of the law, but must reconstruct the legislative intent from the texts, having particular regard for the unity of the legal system, the circumstances in which the law was enacted and the specific conditions of the time in which it is applied.

2. However, the interpreter cannot consider legislative intent that does not have in the letter of the law a minimum of verbal correspondence, even if imperfectly expressed.

3. In determining the meaning and scope of the law, the interpreter shall presume that the legislator adopted the most appropriate solutions and was able to express its intent in adequate terms".

4. Accordingly, it is within this legal framework that it is important to decide whether urban properties classified as land for construction are, or are not, included in the concept of property with residential use, pursuant to Item no. 28 of the GSDT, at the date of the occurrence of the facts (2012).

B) Arguments of the Parties

1. The Claimant began by stating that "it follows from Item 28.1 of the GSDT that there are three elements that constitute the tax fact: ownership, usufruct or right of superficies over urban properties; that such urban properties have 'residential use' and that such properties have a tax-assessed property value equal to or exceeding € 1,000,000".

2. In this regard, it considers that "the third requirement that integrates the tax fact is not present: the property in question does not have 'residential use'".

3. Now, in the Claimant's view, "there is no use in land for construction, whether for residential, commercial, or service purposes. There is not, for a 'naturalistic' reason, if they are lands... for construction, land is not devoted to residential use, nor to commercial use".

4. The Claimant continues its exposition, considering that, pursuant to Article 6, Section 3 of the Municipal Property Tax Code, land for construction are those "for which a license or authorization for licensing or construction has been granted and also those that have been declared as such in the deed of acquisition…", understanding therefore that the legislator designed "the concept of land for construction based on the use, actual or presumed, for construction".

5. For the Claimant, although "the land is intended for the construction of properties devoted to residential use, this use is only verified with the actual construction of the property, with the consequent removal of the matriculation record of the land for construction and its replacement by a new matriculation record of the built urban property or autonomous unit. The authorization or contemplation of any building does not, therefore, alter the classification of land for construction, but only requires its assessment in accordance with the new property value resulting from the authorization or contemplation of the building".

6. With respect to this point, the Claimant concludes that "land for construction do not have a use, whether residential or otherwise, and it follows from the law that such uses only take place in relation to built properties. Moreover, that the legislator's intent was for taxation to apply only to built properties, is evident from the words spoken in the Assembly of the Republic by the State Secretary for Tax Affairs (…)", citing, next, the words of that Government member, at the plenary session of 10 October 2012, the session in which the draft Law no. 96/XII was discussed, which would later give rise to Law no. 55-A/2012, of 29 October.

7. Wherefore, with respect to this point, the Claimant concludes its thesis by reinforcing that "«urban residential properties» and «houses», obviously do not include land for construction". Thus, the land for construction, on whose ownership the Stamp Duty assessment that was targeted at the Claimant fell, does not fall within the provision of Item no. 28 of the GSDT".

8. Making further reference to several arbitral decisions and also to decisions of the Supreme Administrative Court, which are said to have ruled in the same sense.

9. Additionally, the Claimant also raised the unconstitutionality underlying the "taxation in Stamp Duty on land for construction, property of companies (…) which acquired them either for sale or for construction, is absurd and violates the nature of taxation".

10. On this point, it concludes that "the taxable capacity that the legislator wishes to 'reach' with the Stamp Duty provided in Item 28 of the GSDT is the wealth expressed in the ownership of high-value properties. However, it is reiterated, in the case of the present Claimant, such properties are not demonstrative of wealth, insofar as they are, solely, productive instruments. Moreover: we are faced with a frontal violation of the constitutional principle of equality. A company that acquires for its assets, as merchandise or raw material, other types of goods, is not subject to this taxation in Stamp Duty. On the contrary, a company that acquires properties as merchandise or raw material, in particular land for construction, is already subject to a tax on assets, such as that established in Item 28 of the GSDT".

11. The Claimant thus concludes its request by asking for a declaration of illegality of the Stamp Duty assessment acts previously identified.

12. For its part, the Respondent, after being duly notified, filed its response, in which it began by arguing that the concept of property with residential use, for purposes of the provision in Item no. 28 of the GSDT, comprises both built properties and land for construction, given the literal meaning of the rule.

13. The Respondent observes that "the legislator does not refer to 'properties intended for residential use', having chosen the notion of 'residential use' – an expression different and broader, whose meaning is to be found in the need to integrate other realities beyond those identified in Article 6, Section 1, paragraph (a) of the Municipal Property Tax Code".

14. Then developing an extensive rationale which, in its opinion, allows framing land for construction within the concept of property with residential use, relying, in particular, on Article 45 of the Municipal Property Tax Code.

15. "The mere establishment of a right of potential construction immediately increases the value of the property in question, hence the rule in Article 45 of the Municipal Property Tax Code that requires separating the two parts of the land. On one side, the part of the land where the building to be constructed will be situated is considered, and on the other the area of free land (…)."

16. In this sense, in the Respondent's opinion, "long before the actual construction of the property, it is possible to determine and identify the use of the land for construction".

17. On the other hand, and with respect to the alleged violation of constitutional principles, the Respondent recalls that the Constitution of the Portuguese Republic "requires that what is necessarily equal be treated equally and what is essentially different be treated differently, not preventing differential treatment, but only arbitrary, unreasonable discriminations, that is, distinctions in treatment that lack adequate justification and material basis".

18. In conclusion, the TA requests that the claim put forward be dismissed and, as a consequence, that it be absolved from the request.

C) Appreciation by the Collective Arbitral Tribunal

1. As a preliminary matter, it is incumbent upon the Collective Arbitral Tribunal to determine whether the request for arbitral decision is timely.

2. In this regard, the first express rejection of the Hierarchical Appeals mentioned above was notified to the Claimant on 10 November 2016 (with the remaining notifications being of a later date, as previously demonstrated).

3. Now, pursuant to Article 10, Section 1, paragraph (a) of the RJAT, the request for constitution of an Arbitral Tribunal is filed "within 90 days, counted from the facts provided in Sections 1 and 2 of Article 102 of the Code of Tax Procedure and Process, as to acts subject to autonomous challenge and, as well, from the notification of the decision or the end of the legal period for decision of the hierarchical appeal (…)", so that, the present initial petition having been filed on 4 February 2016, it is timely.

4. On the other hand, it is also important to note that, in the opinion of the present Collective Arbitral Tribunal, the joinder of claims requested by the Claimant should proceed, since, pursuant to Article 3, Section 1 of the RJAT, this is admissible with respect to different acts, "when the merit of the claims essentially depends on the examination of the same factual circumstances and the interpretation and application of the same principles or rules of law".

5. Having considered the foregoing, it is now necessary to examine, for purposes of applying Item no. 28 of the GSDT, as worded in 2012, whether the concept of property with residential use includes, or does not include, land for construction.

6. To this end, the Collective Arbitral Tribunal will closely follow the Arbitral Decision regarding case no. 42/2013-T, of 18 October (a decision which it commends from the outset), for its relevance, detail and proximity to the present discussion (a decision which was also mentioned by the Claimant in its initial petition).

7. By way of introduction, it should be noted that the Municipal Property Tax Code does not use, in the classification of urban properties, the concept of property with residential use (in fact, such a concept is not found in any other statute either).

8. It is therefore necessary to interpret, on the basis of the legal framework set forth above, the concept of property with residential use.

9. In this respect, and in order to support the present decision, we transcribe below part of Arbitral Decision no. 42/2013-T, of 18 October, where the following was decided:

"From a literal interpretation of the applicable tax rule it results that the legislator intended to include within the scope of application of the rule urban properties that have 'residential use'.

The expression 'residential use' does not appear to have any meaning other than residential use, that is, urban properties that have actual use for residential purposes, either because they are licensed for such purpose or because they have that normal destination.

And we cannot confuse 'residential use' which implies actual use of an urban property for that purpose with the expectation or potential of an urban property possibly having 'residential use'.

Land for construction, not being built on, do not by themselves satisfy any condition to be considered as properties with residential use, since, on the one hand, they do not have a license of use for residential purposes, and, on the other hand, they are not habitable (because quite simply they are not built on).

Therefore, it does not appear to us to be sufficient to fall within the scope of the applicable objective tax rule that there exist the expectation of an urban property coming to have 'residential use', or the potential of coming to have 'residential use'".

1. Now, in the case of land for construction, in fact, nothing more exists than the mere expectation (or, possibly, potential), of the same, and only after construction, of coming to have residential use.

2. However, only when such use is realized will we be able to consider that the urban property falls within the scope of Item no. 28 of the GSDT.

3. In fact, the concept of residential use must undoubtedly be referable to something that is capable of being inhabited, although, as stated above, it is not legally recognized as such.

4. In this way, although land for construction will very likely result in the future in a property with residential use, so long as it remains as such (that is, legally classified as land for construction), it cannot, at the date of the facts, in the view of the present Tribunal, be included within the scope of Item no. 28 of the GSDT.

5. Concurrently, the TA demonstrated, as described above, that, in its opinion, it is by virtue of Article 45 of the Municipal Property Tax Code that land for construction are framed as properties with residential use.

6. In this context, and for its relevance to the present decision, let us examine once more Arbitral Decision no. 42/2013, of 18 October.

7. As set forth in the arbitral decision previously mentioned, "Article 45 of the Municipal Property Tax Code aims at the assessment of land for construction, considering as one of its elements the authorized or possible destination, depending on the urban planning constraints. Once again we are in the realm of possibilities, of expectations, and that is not sufficient to alter the nature of the property, which continues to be considered as land for construction, nor to support that the property in question comes to have 'residential use' for purposes of the objective scope of Item 28.1 of the GSDT".

8. In fact, it is the opinion of the present tribunal that, at the date of the facts, the concept of property with residential use, referred to in Item no. 28 of the GSDT, is limited exclusively to the concept of urban residential property, pursuant to Article 6, Section 1, paragraph (a) of the Municipal Property Tax Code.

9. In other words, in the view of the present Tribunal, in harmony with the understanding expressed by the Claimant and in Decision no. 42/2013-T, of 18 October, the TA cannot resort to Article 45 of the Municipal Property Tax Code to establish a relationship between land for construction and property with residential use.

10. In that sense, the present tribunal concludes that, since the urban property in question is land for construction, it cannot be included within the scope of Item no. 28 of the GSDT.

11. Finally, and although the analysis so far presented is, in the view of the present Tribunal, sufficient to recognize the illegality of the assessment acts carried out by the TA, it is important to note that, if doubts remained, the recent amendment to the text of Item no. 28 of the GSDT would certainly have been able to dispel them.

12. Indeed, Law no. 83-C/2013, of 31 December, which came into force on 1 January 2014, amended the text of Item no. 28 of the GSDT to "residential property or land for construction whose building, authorized or planned, is for residential use, as provided in the Code of the Municipal Property Tax (…)".

13. Now, in the view of the present Tribunal, such amendment occurred, naturally, because the legislator must have perceived that there was a need, realized only from 2014 onwards, to extend the said item to land for construction, in the terms mentioned above.

14. In this manner, it is clear that until that date (2014), the text of the aforementioned item left outside its scope of application properties legally classified as land for construction (otherwise, there would have been no need to amend the text of the said item).

15. Additionally, the Claimant also raised the unconstitutionality of Item 28 of the GSDT, in the terms previously mentioned.

16. However, such unconstitutionality was only raised with respect to an interpretation of Item 26.1 of the GSDT that would consider land for construction to be covered by it (cf. the petition, IV, a) and b)). Since that is not the interpretation of the Tribunal, there is no need to examine the issue.

17. Accordingly, and on the basis of the reasons enumerated above, the present Tribunal understands that land for construction cannot, at the date of the facts, be covered by the concept of property with residential use, as referred to in the text of Item no. 28 of the GSDT, and therefore it concludes that the legal requirement for the tax to apply has not been met.

V. DECISION

1. In these terms, this Collective Arbitral Tribunal decides:

A) Find the request for arbitral decision to be well-founded and, as a consequence, declare illegal the express rejection of the Hierarchical Appeals previously mentioned and consequently annul the Stamp Duty assessment acts referred to above, with respect to 2012, from which resulted tax to be paid in the amount of € 145,280.70, concerning the taxation of land for construction, pursuant to Item no. 28 of the GSDT;

B) Condemn the Respondent to pay the costs of the proceedings.

VI. VALUE OF THE PROCEEDINGS

1. The value of the proceedings is set at € 145,280.70, pursuant to Article 97-A, Section 1, paragraph (a) of the Code of Tax Procedure and Process, applicable by virtue of paragraphs (a) and (b) of Section 1 of Article 29 of the RJAT and Section 2 of Article 3 of the Regulation of Costs in Tax Arbitration Proceedings ("RCAP").

VII. COSTS

1. In accordance with the provision of Article 22, Section 4 of the RJAT, the amount of the arbitration fee is set at € 3,060.00 pursuant to Table I of the aforementioned Regulation, to be borne by the Respondent, given the full acceptance of the claim.

Let notice be given.

Lisbon, CAAD, 8 July 2016

The Arbitrators

(Counsellor Dr. José Baeta Queiroz – Presiding Arbitrator)

(Professor Doctor Nuno Cunha Rodrigues – Arbitrator)

(Dr. Sérgio Santos Pereira – Arbitrator)