Summary
Full Decision
ARBITRAL DECISION
The Arbitrator Alexandre Andrade, designated by the Deontological Council of the Administrative Arbitration Centre (hereinafter referred to as CAAD) to form the Singular Arbitral Tribunal, constituted on 6 March 2019, decides as follows:
1. Report
A... (hereinafter referred to as the Claimant), Tax Identification Number..., resident in ..., no...., ..., ..., Spain, filed a request for constitution of an Arbitral Tribunal, pursuant to Decree-Law no. 10/2011 of 20 January (Legal Regime for Arbitration in Tax Matters, hereinafter referred to as RJAT), in which the TAX AND CUSTOMS AUTHORITY (hereinafter referred to as the Respondent) is named as Respondent.
In the Request for Arbitral Decision, the Claimant ultimately requests the Arbitral Tribunal to: (a) declare the illegality of the decision taken by the TA in the context of the administrative complaint filed by the Claimant, and the consequent annulment thereof; (b) consequently, declare the (partial) illegality of the Personal Income Tax Assessment Statement 2017 – no. 2018..., and the consequent annulment thereof; (c) consequently, condemn the TA to replace it with another Personal Income Tax Assessment Statement 2017 showing the amount of tax to be paid of EUR 7,570.93; (d) consequently, and considering that the Claimant paid on 31 August 2018 the amount of tax of EUR 15,141.86, condemn the TA to refund to the Claimant the amount of tax paid in excess; (e) consequently, condemn the TA to pay the Claimant compensatory interest at the legal rate, regarding the amount paid in excess and the period during which the Claimant was deprived thereof.
That is, with the Request for Arbitral Decision, the Claimant intends, on the one hand, the declaration of illegality of the TA's decision (here the Respondent) in the administrative complaint process no. 2018... and consequent (partial) annulment of the Personal Income Tax assessment no. 2018..., dated 5 July 2018 and, on the other hand, the refund of the amount of tax paid in excess, plus compensatory interest at the legal rate, pursuant to article 43 of the General Tax Law (LGT).
The Claimant states in the Request for Arbitral Decision that it results from the Assessment that the amount of tax calculated therein contains, however, an error, inasmuch as the consideration of only 50% of the capital gains for the calculation of the tax due was not taken into account.
The Claimant continues in the Request for Arbitral Decision, that although the Complainant is non-resident, and by virtue of this the Tax Authority (TA) may "wish" to consider article 43, no. 2 of the Personal Income Tax Code not applicable, the truth is that it is already understood in jurisprudence that the non-resident must necessarily benefit from the same treatment as the resident [...].
The Claimant further states in the Request for Arbitral Decision, The Assessment that was carried out is, thus, (partially) illegal, and as such should be annulled and replaced by an accurate assessment.
In the words of the Respondent, in its Reply, At the outset of the request for arbitral decision (hereinafter also referred to as ppa) it is stated that this has as its object "the declaration of illegality of the TA's decision in the administrative complaint process, and consequent annulment of the Personal Income Tax assessment no. 2018... ...". Finally, the Claimant comes to petition: «(a) declare the illegality of the decision taken by the TA in the context of the administrative complaint filed by the Claimant, and the consequent annulment thereof; (b) consequently, declare the (partial) illegality of the PERSONAL INCOME TAX ASSESSMENT STATEMENT 2017 – no. 2018..., and the consequent annulment thereof; (c) consequently, condemn the TA to replace it with another Personal Income Tax Assessment Statement 2017 showing the amount of tax to be paid of Eur 7,570.93; (d) consequently, and considering that the Claimant paid on 31.08.2018 the amount of tax of Eur 15,141.86, condemn the TA to refund to the Claimant the amount of tax paid in excess; (e) consequently, condemn the TA to pay the Claimant compensatory interest at the legal rate, regarding the amount paid in excess and the period during which the Claimant was deprived thereof.».
The Respondent further states in its Reply, For all the foregoing, unless we are mistaken, we understand that the aforementioned assessment relating to Personal Income Tax for the fiscal year 2017 should be upheld, and it should be concluded that the ppa is unfounded.
The Respondent finally requests the following: a decision should be rendered that: a) judges the present request for arbitral decision unfounded as unproven, and, consequently, absolves the Respondent according to the terms petitioned above, all with the due and legal consequences. Should this not be the case, b) the request for preliminary reference to the CJEU submitted above should be upheld.
The request for constitution of the Arbitral Tribunal was accepted by the President of CAAD on 26 December 2018 and subsequently notified to the Respondent.
Pursuant to the provisions of no. 1 of article 6 and of subparagraph b) of no. 1 of article 11 of the RJAT, the Deontological Council of CAAD appointed as Arbitrator of the Singular Arbitral Tribunal the signatory, who communicated acceptance of the assignment within the applicable period.
On 14 February 2019, the Parties were duly notified of this appointment, and neither manifested a desire to refuse the designation of the arbitrator, in accordance with the combined provisions of subparagraphs a) and b) of no. 1 of article 11 of the RJAT and articles 6 and 7 of the CAAD Deontological Code.
In accordance with the provision in subparagraph c) of no. 1 of article 11 of the RJAT, the Singular Arbitral Tribunal was constituted on 6 March 2019.
On 6 March 2019, the Singular Arbitral Tribunal rendered the following Arbitral Order: The Arbitral Tribunal having been constituted, the highest-ranking officer of the Tax Authority service shall be notified, pursuant to article 17 of Decree-Law no. 10/2011 of 20 January (RJAT), to submit a reply within a period of 30 (thirty) days and, should he wish, to request the production of additional evidence, adding that a copy of the administrative file should be sent to the Arbitral Tribunal within the period for submitting the reply, and in the event of non-submission, the provision of no. 5 of article 110 of the Code of Tax Procedure and Process shall apply.
On 9 April 2019 the Respondent submitted a Reply.
On 15 April 2019 the Respondent attached the Administrative File.
On 16 April 2019, the Singular Arbitral Tribunal rendered the following Arbitral Order: The Claimant submitted its Request for Arbitral Decision. The Respondent submitted its Reply. In its Reply, the Respondent raises the issue of a possible request for preliminary reference to the CJEU, in accordance with the terms and grounds stated in the said Reply. Before anything else and in accordance with the Principle of Contradiction, ensured, in particular, through the power conferred on the Parties to pronounce themselves on any questions of fact or law raised in the proceedings, and the Principle of Autonomy of the Arbitral Tribunal in the conduct of the proceedings, the Claimant shall be notified to, within a period of 10 (ten) days, pronounce itself, stating what it deems appropriate, on the request for preliminary reference to the CJEU raised by the Respondent in the Reply. Both Parties shall be notified of this Arbitral Order. The Claimant did not respond.
On 7 May 2019, the Singular Arbitral Tribunal rendered the following Arbitral Order: The Claimant submitted its Request for Arbitral Decision. The Respondent submitted its Reply. In its Reply, the Respondent raised the issue of a possible request for preliminary reference to the CJEU, in accordance with the terms and grounds stated in the said Reply. In accordance with the Principle of Contradiction and the principle of Autonomy of the Arbitral Tribunal in the conduct of the proceedings, the Arbitral Tribunal rendered an Arbitral Order to notify the Claimant to, within a period of 10 (ten) days, pronounce itself on the request for preliminary reference to the CJEU raised by the Respondent in the Reply. The Claimant, having been notified, said nothing. Neither of the Parties requested witness evidence. Beyond the documentary evidence already attached and incorporated in the Case File, no additional evidence is requested by the Parties. There is no matter of exception on which the Parties need to pronounce themselves. No utility is seen in holding the meeting provided for in article 18 of the Legal Regime for Tax Arbitration (RJAT), therefore, in accordance with the Principles of Autonomy of the Arbitral Tribunal in the conduct of the proceedings, Celerity, Simplification and Procedural Informality (subparagraph c) of article 16, no. 2 of article 19 and no. 2 of article 29, all of the RJAT), the holding of the meeting provided for in article 18 of the RJAT is dispensed with and it is determined that the proceedings continue with optional written submissions, for a period of 10 (ten) days, commencing with the notification of this Arbitral Order the period for submissions of the Claimant and with the notification of the submission of the Claimant's submissions, or with the end of that period, in the absence of submission thereof, the period for submissions of the Respondent. 26 July 2019 is indicated as the deadline for rendering the Arbitral Decision. Pursuant to no. 4 of article 4 of the Regulation of Costs in Tax Arbitration Proceedings, the Claimant must make payment of the subsequent arbitration fee, communicating this payment to CAAD. In the name of the Principle of Cooperation of the Parties, this Arbitral Tribunal requests the sending of procedural documents in Word format. Both Parties shall be notified of this Arbitral Order.
The Parties submitted submissions.
The Singular Arbitral Tribunal is competent and was regularly constituted.
The Parties enjoy personality and procedural capacity, are legitimate and are duly represented (article 4 and no. 2 of article 10, both of the RJAT and article 1 of Administrative Order no. 112-A/2011 of 22 March).
The proceedings do not suffer from voidness and the request was timely filed. There are no other circumstances that prevent the merits of the case from being examined.
2. Matters of Fact
2.1 Proven Facts
Having analysed the evidence produced in the course of this Proceeding, this Singular Arbitral Tribunal considers the following facts to be proven, with relevance to this Arbitral Decision:
A. The Claimant is not, for tax purposes, a resident of Portugal, as of 8 January 2015.
B. The Claimant is, for tax purposes, a resident of Spain, in ..., no...., ..., Madrid, as of 8 January 2015.
C. The Claimant acquired the autonomous fraction designated by the letter "L", corresponding to the ... left floor, for residential purposes, described in the Property Registry of Lisbon under no...., parish of ... and registered in the urban property matrix under article ...., parish of ..., on 29 July 2015, for the price of € 100,000.00.
D. The Claimant sold the autonomous fraction identified in C. of 2.1 of the Proven Facts, on 17 March 2017, for the price of 160,000.00.
E. The Claimant declared, for Personal Income Tax purposes, in the year 2017, a capital gain of € 54,078.14.
F. The Claimant submitted a Personal Income Tax Form 3 (replacement), relating to the fiscal year 2017, having marked: (i) in field 4 of table 8B, non-resident, (ii) in field 6 of table 8B, residence in an EU country and (iii) in field 7 of table 8B, requests taxation under the general regime applicable to non-residents.
G. The Claimant was notified of the Personal Income Tax assessment no. 2018..., dated 5 July 2018, in the amount of € 15,141.87.
H. The Personal Income Tax assessment no. 2018..., dated 5 July 2018, refers to the year 2017.
I. The Claimant made payment of the amount of € 15,141.87, corresponding to the Personal Income Tax assessment no. 2018..., dated 5 July 2018.
J. On 9 August 2018, the Claimant filed with the Lisbon Tax Office..., an Administrative Complaint against the Personal Income Tax assessment no. 2018..., dated 5 July 2018, in the amount of € 15,141.87.
K. The Administrative Complaint was assigned the following number: ...2018... (Personal Income Tax / 2017).
L. The Administrative Complaint was rejected.
M. The Claimant filed a Request for Arbitral Decision.
2.2 Unproven Facts
There are no facts relevant to this Arbitral Decision that have not been proven.
2.3 Justification for the Determination of Matters of Fact
The matters of fact were determined by this Singular Arbitral Tribunal and its conviction was formed on the basis of the procedural documents and requests submitted by the Parties and the documents attached by the Parties to this Proceeding.
Regarding matters of fact, the Tribunal has no duty to pronounce on all matters alleged, but rather the duty to select those of relevance to the decision, taking into account the cause (or causes) of action that grounds the claim formulated by the claimant, in accordance with no. 1 of article 596 and nos. 2 to 4 of article 607, both of the Code of Civil Procedure (CCP), applicable pursuant to subparagraphs a) and e) of no. of article 29 of the RJAT and to state whether it considers it proven or unproven, in accordance with no. 2 of article 123 of the Code of Tax Procedure and Process (CTPP).
According to the principle of free assessment of evidence, the Tribunal bases its decision, in relation to the evidence produced, on its intimate conviction, formed from the examination and evaluation it makes of the means of evidence brought to the proceedings and in accordance with its life experience and knowledge of persons, in accordance with no. 5 of article 607 of the CCP. Only when the probative force of certain means is pre-established by law (e.g., full probative force of authenticated documents, in accordance with article 371 of the Civil Code) does not the principle of free assessment of evidence dominate in the assessment of evidence produced.
Thus, having regard to the positions assumed by the Parties and the documentary evidence attached to the case file, the facts listed above were considered proven, with relevance to this Arbitral Decision.
3. Matters of Law (justification)
In the Request for Arbitral Decision, the Claimant states that it is a non-resident, and it is added, in Portugal, as of 08.01.2015, the date on which it changed its tax residence to Madrid, Spain.
The Claimant states in the Administrative Complaint: 1. The Assessment relates to the year 2017, and was issued on 05.07.2018. 2. The assessment shows an amount to be paid of EUR 15,141.87, resulting from the application of 28% to the capital gains EUR 54,078.14. The Claimant adds, in the Request for Arbitral Decision, [...] resulting from capital gains on the sale of a property of the Claimant – the sole income existing and properly declared [...].
Pursuant to C., D. and E. of 2.1 of the Proven Facts, the Claimant acquired the autonomous fraction better identified in C. of 2.1 of the Proven Facts, on 29 July 2015 and sold it on 17 March 2017, having declared, regarding the year 2017, a capital gain of € 54,078.14.
Pursuant to G. of 2.1 of the Proven Facts, after submitting the relevant Personal Income Tax return, relating to the year 2017, the Claimant was notified of the Personal Income Tax assessment no. 2018..., dated 5 July 2018, in the amount of € 15,141.87.
The TA (here the Respondent) applied the rate of 28% to the € 54,078.14, that is, applied the rate of 28% to the entire amount (income), as capital gains declared by the Claimant.
The Claimant argues, both in the Administrative Complaint and in the Request for Arbitral Decision, That amount of tax contains, however, an error, inasmuch as the consideration of only 50% of the capital gains for the calculation of the tax due was not taken into account .
The Claimant invokes in the Request for Arbitral Decision, although the Complainant is non-resident, and by virtue of this the Tax Authority (TA) may "wish" to consider article 43, no. 2 of the Personal Income Tax Code not applicable, the truth is that it is already understood in jurisprudence that the non-resident must necessarily benefit from the same treatment as the resident, in this domain. Effectively, as results from the Decision of the Supreme Administrative Court, rendered in case no. 01172/14, of 3 February 2016, it is not possible to make a differentiated treatment between citizens of the European Union non-residents and residents, taxing the entirety of the capital gains realized by the former and only half of those realized by the latter, which is why non-resident citizens must also be able to benefit from this limitation of taxation to 50% of capital gains realized provided for residents in the national territory [...].
For which reason, the Claimant argues, Thus, the amount to be considered as capital gains and consequent tax to be paid are as follows: Consider 50% of the value of capital gains: EUR 27,039.07. Tax to be paid: EUR 27,039.07 * 28% - EUR 7,570.93.
Concluding the Claimant that the Assessment that was carried out is, thus, (partially) illegal, and as such should be annulled and replaced by an accurate assessment.
The Claimant requests, finally, from the Arbitral Tribunal that: (a) declare the illegality of the decision taken by the TA in the context of the administrative complaint filed by the Claimant, and the consequent annulment thereof ; (b) consequently, declare the (partial) illegality of the Personal Income Tax Assessment Statement 2017 – no. 2018... , and the consequent annulment thereof ; (c) consequently, condemn the TA to replace it with another Personal Income Tax Assessment Statement 2017 showing the amount of tax to be paid of EUR 7,570.93 ; (d) consequently, and considering that the Claimant paid on 31 August 2018 the amount of tax of EUR 15,141.86, condemn the TA to refund to the Claimant the amount of tax paid in excess ; (e) consequently, condemn the TA to pay the Claimant compensatory interest at the legal rate , regarding the amount paid in excess and the period during which the Claimant was deprived thereof.
For its part, the Respondent states in its Reply, The matter regarding which the Arbitral Tribunal's assessment was sought relates to the exclusion of the incidence of capital gains tax at 50% (as occurs with residents), obtained by a non-resident in Portugal, but resident in a Member State of the European Union, violates European Union Law. That is, the Claimant understands that the provision of no. 2 of article 43 of the Personal Income Tax Code applies to non-residents in Portugal but residents in a Member State of the European Union.
The Respondent invokes that, Having consulted the replacement Personal Income Tax Form 3 declaration submitted in the name of the Claimant (relating to the fiscal year 2017), it is verified that in table 8 B of Form 3 field 4 (non-resident) was marked, field 6 (residence in an EU country) and field 7 (requests taxation under the general regime applicable to non-residents).
The Respondent argues, in its Reply, [...] the allegations cannot succeed, given the amendment to article 72, effected by Law no. 67-A/2017, of 31/12, namely the addition of nos. 7 (current no. 9) and 8 (current no. 10). No. 8 (current no. 10) of article 72 of the Personal Income Tax Code is peremptory, in the sense that all income obtained in that year should be included (whether in Portugal or abroad). The same is stated in no. 1 of article 15 of the Personal Income Tax Code, whereby for persons resident in Portuguese territory, Personal Income Tax is levied on all their income, including that obtained outside that territory. As such, for taxation purposes under the rate of article 68, that is, as a resident, it was necessary to have filled in fields 9 (option for the rates of article 68 of the Personal Income Tax Code) and 11 (total income obtained abroad). This means that the legal framework (as well as the declaration obligation) is no longer that which existed on the date of the Decision of the Court of Justice of the European Communities, given that the law was amended pursuant to the addition of nos. 7 and 8 (now 9 and 10) to article 72 of the Personal Income Tax Code by Law no. 67-A/2007, of 31/12. It should be noted, further, that the article which the Claimant intends to be applied to her (article 43, no. 2 of the Personal Income Tax Code) is included in chapter II of the Personal Income Tax Code which is titled "determination of taxable income". We are, therefore, faced with the determination of income. For purposes of incidence (as regards capital gains), the relevant articles are articles 9 and 10 of the Personal Income Tax Code.
The Respondent concludes, in the Reply, thus, the provision of no. 2 of article 43 of the Personal Income Tax Code cannot be applicable to the case under analysis here.
But more,
The Respondent invokes that, Should this not be the case, without conceding or admitting what was stated above, [...] In light of the foregoing, unless we are mistaken, we understand that the Arbitral Tribunal should consider that the jurisprudence set out above is not binding, given the current national legal framework, as well as to judge that the hypothesis of a clear act or an established act has not been verified, whereby it must necessarily consider that sufficient doubts arise, given the jurisprudence we have just invoked, which prevent acceptance of the Claimant's understanding without prior consultation of the CJEU, so that it can exercise its own competences, in accordance with the Treaties. Therefore, the present arbitration proceedings should be suspended and the question should be submitted to the Court of Justice, in accordance with the provisions of the preliminary reference procedure (article 267 of the TFEU), to which the Portuguese State is bound in accordance with the TFEU. Moreover, although it has been demonstrated that the TA's interpretation scrupulously complies with European Union law, no CJEU jurisprudence is known that addresses the question to be decided in these proceedings, namely rendered in cases with all the factual characteristics indicated, in view of the aforementioned legislative amendment of 2008 . Nevertheless, should doubts persist, by virtue of the obligation of preliminary reference, in light of the provision of article 267 of the Treaty [...], which establishes that "whenever a question of this nature is raised in proceedings pending before a national court or tribunal against whose decisions there is no judicial remedy under national law, that court or tribunal shall bring the matter before the Court", the proceedings should be suspended so that the CJEU establishes a binding interpretation on the matter.
The Respondent concludes its Reply, [...] a decision should be rendered that: a) judges the present request for arbitral decision unfounded as unproven, and, consequently, absolves the Respondent in accordance with the terms petitioned above, all with the due and legal consequences, Should this not be the case, b) the request for preliminary reference submitted above should be upheld.
This Singular Arbitral Tribunal considers that the thema decidendum relates, on the one hand, as the Respondent states, to the exclusion of the incidence of capital gains tax at 50% (as occurs with residents), obtained by a non-resident in Portugal, but resident in a Member State of the European Union, violates European Union Law and on the other, whether the proceedings should be suspended so that the CJEU establishes a binding interpretation on the matter.
First of all, this Singular Arbitral Tribunal invokes Arbitral Decision no. 600/2018-T, dated 8 April 2019, where this states the following: Article 63 of the Treaty on the Functioning of the European Union establishes the following: 1. Within the framework of the provisions of this chapter, all restrictions on the movement of capital between Member States are prohibited [...].
Pursuant to article 267 of the Treaty on the Functioning of the European Union, Whenever a question of this nature is raised in proceedings pending before a national court or tribunal against whose decisions there is no judicial remedy under national law, that court or tribunal shall bring the matter before the Court.
Let us first examine what the applicable legal provisions say in the case under analysis.
Pursuant to no. 2 of article 15 of the Personal Income Tax Code, In the case of non-residents, Personal Income Tax is levied only on income obtained in Portuguese territory.
Pursuant to subparagraph a) of no. 1 of article 10 of the Personal Income Tax Code, capital gains are constituted by gains obtained which, not being considered as business and professional income, capital income or real property income, result from the onerous disposal of real rights over real property [...].
Pursuant to no. 1 of article 43 of the Personal Income Tax Code , The value of income qualified as capital gains is that corresponding to the balance determined between capital gains and losses realized in the same year, determined in accordance with the following articles.
Pursuant to no. 2 of article 43 of the Personal Income Tax Code , The balance referred to in the preceding number, relating to transfers effected by residents provided for in subparagraphs a), c) and d) of no. 1 of article 10, whether positive or negative, is only considered at 50% of its value .
What is repeated is what the Claimant argues in the Request for Arbitral Decision, Although the Complainant is non-resident, and by virtue of this the Tax Authority (TA) may "wish" to consider article 43, no. 2 of the Personal Income Tax Code not applicable, the truth is that it is already understood in jurisprudence that the non-resident must necessarily benefit from the same treatment as the resident .
Pursuant to subparagraph a) of no. 1 of article 72 of the Personal Income Tax Code , Capital gains are taxed at the autonomous rate of 28%, Those capital gains provided for in subparagraphs a) and d) of no. 1 of article 10 earned by non-residents in Portuguese territory which are not attributable to a permanent establishment located therein.
Pursuant to no. 9 of article 72 of the Personal Income Tax Code , Residents of another Member State of the European Union [...], may opt, regarding the income referred to in subparagraphs a) and b) of no. 1 and in no. 2, for taxation of such income at the rate which, in accordance with the table provided for in no. 1 of article 68, would be applicable in the case of being earned by residents in Portuguese territory.
Pursuant to no. 10 of article 72 of the Personal Income Tax Code , For the purposes of determining the rate referred to in the preceding number, all income is taken into consideration, including that obtained outside this territory, under the same conditions as are applicable to residents.
Having analysed the legal provisions, let us, once again, turn to Arbitral Decision no. 600/2018-T, dated 8 April 2019, repeating, Article 63 of the Treaty on the Functioning of the European Union establishes the following: 1. Within the framework of the provisions of this chapter, all restrictions on the movement of capital between Member States are prohibited [...].
It should be noted here, because important for the justification of the decision of this Singular Arbitral Tribunal, Arbitral Decision no. 45/2012-T, dated 7 May 2012, where this states, It should further be noted that, as emerges from the jurisprudence of the Supreme Administrative Court, in the Decision of 22 March 2011, case no. 1031/10, it was the Tax Authority which, "faced with the taxpayers' declaration, levied the tax on them which it considered due (as indeed always occurs in Personal Income Tax): at the rate provided for non-residents (25%, pursuant to article 72, no. 1 of the Personal Income Tax Code) and on the total amount of the capital gain realized and not merely on 50% of this value (article 43, no. 2 of the Personal Income Tax Code), thus ignoring the European Union jurisprudence and that of this Supreme Court which adopted it (see the Decision of 16 January 2008, case no. 439/06) as to the incompatibility of that legal provision, so applied, with the (then) article 56 of the TJCE (current article 63 of the Treaty on the Functioning of the European Union), thus subjecting, as indeed occurred, to see annulled in that part the assessment challenged, given the primacy of European Union law" . In this manner, given what has been stated, the defect of violation of law alleged by the Claimants proceeds, by incompatibility of no. 2 of article 43 with article 63 of the Treaty on the Functioning of the European Union, to the extent that it restricts the reduction to 50% of capital gains subject to Personal Income Tax to taxpayers resident in Portugal, with the consequent annulment of the tax acts subject to arbitral decision .
Let us return to Arbitral Decision no. 600/2018-T, dated 8 April 2019, The CJEU considered incompatible with European Union Law, because it is a differentiated treatment incompatible with the free movement of capital guaranteed by article 63 of the Treaty on the Functioning of the European Union (former article 56), the regime of article 72, no. 1, of the Personal Income Tax Code, in the version prior to Law no. 67-A/2007, of 31 December, in case C-443/06, decision of 11-10-2007, Hollmann versus Public Treasury, by taxing capital gains of non-resident taxpayers at a fixed rate (in 2017, 28%), while residents are subject to a progressive tax on income .
In the Reply, the Respondent states, Now, as regards this matter, it is certain that in Decision C-443/06 of the Court of Justice of the European Communities of 2007 October 11, it was decided that there was a breach of European Union Law of the discipline of taxation of real property capital gains of non-residents resulting from articles 72, no. 1 and 43, no. 2 of the Personal Income Tax Code , by "article 56 EC to be interpreted as precluding national legislation, such as that at issue in the main proceedings, which subjects capital gains resulting from the disposal of real property situated in a Member State, in the case in point in Portugal, where such disposal is carried out by a resident of another Member State, to a tax burden higher than that which would apply, in relation to this same type of operation, to capital gains realized by a resident of the State in which that real property is situated.
However, the Respondent continues (in the Reply), In view of the content of the Decision of the Court of Justice of the European Communities of 2007 October 11, and in order to adapt national legislation to the decision endorsed therein , article 72 of the Personal Income Tax Code was supplemented, by Law no. 67-A/ 2017, with no. 7 (current no. 9), the content of which at the time of the facts was the following: "9 - Residents of another Member State of the European Union or the European Economic Area, provided that, in the latter case, there is an exchange of information on tax matters, may opt, regarding the income referred to in subparagraphs a) and b) of no. 1 and in no. 2, for taxation of such income at the rate which, in accordance with the table provided for in no. 1 of article 68, would be applicable in the case of being earned by residents in Portuguese territory [...]. For its part, no. 8 (current no. 10) of the same article and legislation, also supplemented by Law no. 67-A/2007, of 31/12, provided, at the time of the facts, that: 10 - For the purposes of determining the rate referred to in the preceding number, all income is taken into consideration, including that obtained outside this territory, under the same conditions as are applicable to residents [...]. That is, for the Respondent, the Claimant's allegations cannot succeed, given the amendment to article 72, effected by Law no. 67-A/2007, of 31/12 .
That is, for the Respondent, the legislative amendment, effected by Law no. 67-A/2017 of 31 December, remedied the breach of European Union Law of the discipline of taxation of real property capital gains of non-residents.
We call, once more, here, Arbitral Decision no. 600/2018-T, dated 8 April 2019, In that decision it was understood that it is incompatible with the norm that ensures that freedom of movement of capital a regime that «subjects capital gains resulting from the disposal of real property situated in a Member State, in the case in point in Portugal, where such disposal is carried out by a resident of another Member State, to a tax burden higher than that which would apply, in relation to this same type of operation, to capital gains realized by a resident of the State in which that real property is situated». This jurisprudence was recently reaffirmed in the Order of the CJEU (seventh chamber) of 06-09-2018, case C-184/18, in which it was understood that «legislation of a Member State, such as that at issue in the main proceedings, which subjects capital gains resulting from the disposal of real property situated in that Member State, carried out by a resident of a third country, to a tax burden higher than that which would apply, in that same type of operations, to capital gains realized by a resident in that Member State constitutes a restriction on the free movement of capital which, subject to verification by the referring court, is not covered by the exception provided for in article 64, no. 1, TFEU and cannot be justified by the reasons referred to in article 65, no. 1, Treaty on the Functioning of the European Union».
But Arbitral Decision no. 600/2018-T, dated 8 April 2019, says more, However, this latest decision was also rendered on the assumption of the version of article 72 introduced by Law no. 109 B/2001, of 27 December, prior to Law no. 67-A/2007 .
Thus, continues Arbitral Decision no. 600/2018-T, dated 8 April 2019, as the Tax and Customs Authority states, there is no specific CJEU jurisprudence on the compatibility of the regime introduced by Law no. 67-A/2007, in nos. 7 and 8 of the Personal Income Tax Code with article 63 of the Treaty on the Functioning of the European Union .
However, continues Arbitral Decision no. 600/2018-T, dated 8 April 2019, the CJEU understood in that decision of case C-443/06, that the essence of the incompatibility of the regime of article 71, no. 1, with European Union law results from establishing «an unequal tax treatment for non-residents, insofar as it allows, in the case of realization of capital gains, more onerous taxation and, therefore, a tax burden higher than that borne by residents in an objectively comparable situation» (§54). Along the same lines, the CJEU ruled in the decision of 19-11-2015, case C-632/13 (Skatteverket against Hilkka Hirvonen) that «the refusal, in the context of income taxation, to grant non-resident taxpayers, who derive the majority of their income in the country of origin and who have opted for the withholding tax regime, the same personal deductions as are granted to resident taxpayers, in the context of the ordinary taxation regime, does not constitute discrimination contrary to article 21 TFEU when non-resident taxpayers are not subject to an overall tax burden higher than that borne by resident taxpayers and by persons assimilated to them, whose situation is comparable to theirs».
Thus, the Arbitral Decision no. 600/2018-T, dated 8 April 2019, identifies, what essentially matters for this purpose is to ascertain whether or not there is negative discrimination in the application to the Claimants of the regime that was applied to them . The regime provided by default (in the absence of an option) in no. 1 of article 72 is more burdensome for non-residents than for residents , as while the maximum rate applicable to capital gains realized by residents is 24% of its value (maximum rate of 48% provided for in article 68, applicable to 50% of the balance of capital gains), the rate provided for in no. 1 of article 72 of the Personal Income Tax Code is 28%, applicable to the entire balance.
This Singular Arbitral Tribunal calls, here, once more on the reasoning of Arbitral Decision no. 600/2018-T, dated 8 April 2019, to highlight, Thus, it is certain that the regime of taxation at a fixed rate provided for in article 72 of the Personal Income Tax Code, in the version in force in 2017, is incompatible with the aforementioned article 63 of the Treaty on the Functioning of the European Union, as it makes the transfer of capital less attractive for non-residents and constitutes a restriction on the movement of capital prohibited by the Treaty .
This Singular Arbitral Tribunal accompanies this understanding of Arbitral Decision no. 600/2018-T, dated 8 April 2019, since, also in these Proceedings, this negatively discriminatory regime for non-residents was applied in the case, the Claimant, which was applied in the contested assessment.
As Arbitral Decision no. 600/2018-T, dated 8 April 2019, states, with which this Singular Arbitral Tribunal agrees, The fact that currently this regime can be avoided by taxpayers, if they manifest an option, does not eliminate the negative discrimination, as it imposes on them an obligation to opt that is not extensive to residents .
See what Arbitral Decision no. 600/2018-T, dated 8 April 2019, states, Furthermore, in line with what the CJEU understood in the decision of 18-03-2010, case C-440/08 (F. Gielen against State Secretary for Finance), on a parallel question of possible relevance of the possibility of opting out of a discriminatory regime (in the case concerning article 49 of the Treaty on the Functioning of the European Union), the conclusion that incompatibility occurs «is not called into question by the argument that non-resident taxpayers can opt for the equalization, which allows them to choose between the discriminatory regime and the regime applicable to residents, given that that option is not susceptible of excluding the discriminatory effects of the first of these two tax regimes . Indeed, the recognition of such an effect on the choice in question would have the consequence of validating a tax regime that would continue, in itself, to violate article 49 TFEU by reason of its discriminatory character. On the other hand, a national regime that limits freedom of establishment is incompatible with European Union law, even if its application is optional. It follows from the foregoing that the choice granted to the non-resident taxpayer through the option for equalization, does not neutralize the discrimination». This Singular Arbitral Tribunal accompanies this understanding.
Continues Arbitral Decision no. 600/2018-T, dated 8 April 2019, Along the same lines, the CJEU pronounced itself in the decision of 28-02-2013, case C-168/11: 62 Even if one admits that such a system is compatible with European Union law, it nevertheless results from the jurisprudence that a national regime restrictive of the freedoms of movement may remain incompatible with European Union law, even if its application is optional (see, to this effect, decision of 12 December 2006, Test Claimants in the FII Group Litigation, C-446/04, Coll., p. I-11753, no. 162, and of 18 March 2010, Gielen, C-440/08, Coll., p. I-2323, no. 53). In this regard, the existence of an option which might possibly make a situation compatible with European Union law does not thus have the effect of curing, by itself, the illegal character of a system, such as that provided for by the contested regulation, which comprises a mechanism of taxation not compatible with this law. It should be added that this occurs all the more in the case where, as in the matter in question, the mechanism incompatible with European Union law is that which is automatically applied in the absence of a choice made by the taxpayer . Furthermore, the CJEU pronounced itself along the same lines in the decision of 08-06-2016, case C-479/14: 42. As regards the optional character of the said taxation mechanism, it should be emphasized that, even if one admits that that mechanism is compatible with European Union law, it is settled jurisprudence that a national regime restrictive of the freedoms of movement may continue to be incompatible with European Union law, even if its application is optional. The existence of an option which might possibly make a situation compatible with European Union law does not have the effect of curing, by itself, the illegal character of a system, such as the one at issue, which continues to comprise a mechanism of taxation not compatible with this law . It should be added that this occurs all the more in the case where, as in the proceedings in question, the mechanism incompatible with European Union law is that which is automatically applied in the absence of a choice made by the taxpayer (see, to this effect, decision of 28 February 2013, Beker, C-168/11, EU:C:2013:117, no. 62 and jurisprudence referred to).
It is, as Arbitral Decision no. 600/2018-T, dated 8 April 2019, says, and rightly so, in light of this jurisprudence that the Tax and Customs Authority's claim for preliminary reference must be assessed.
Thus, calls, once more this Singular Arbitral Tribunal to the reasoning, because of its relevance, Arbitral Decision no. 600/2018-T, dated 8 April 2019, where this states, Pursuant to article 8, no. 4, of the CRP «the provisions of the treaties governing the European Union and the standards emanating from its institutions, in the exercise of their respective competences, are applicable in the domestic order, in accordance with the terms defined by European Union law, with respect for the fundamental principles of the democratic rule of law». As has been peacefully understood by jurisprudence and is a corollary of the binding obligation of preliminary reference provided for in article 267 of the TFEU (which replaced article 234 of the Treaty of Rome, former article 177), the jurisprudence of the CJEU has binding character for national courts, when it has as its object questions connected with European Union Law. And, when a question of interpretation and application of European Union Law is raised, national courts must submit the question to the CJEU through preliminary reference.
However , continues Arbitral Decision no. 600/2018-T, dated 8 April 2019, when European Union law is clear and when there is already a precedent in European jurisprudence, the interpretation of European Union Law already results from the jurisprudence of the CJEU, it is not necessary to proceed to such consultation , as the CJEU concluded in the Decision of 06-10-1982, Case Cilfit, Case 283/81. Even when the questions at issue are not strictly identical (doctrine of the established act) and when the correct application of European Union Law is so obvious that it leaves no room for any reasonable doubt as to how to resolve the question of EU law raised (doctrine of the clear act) (idem, no. 14).
See also what Arbitral Decision no. 583/2018-T, dated 15 April 2019, states, It is certain that, subsequently to the decision rendered by the CJEU on 11/10/2007, case number C-443/06, known as the Hollmann decision, the national legislator, with the objective of adapting the national tax system to the decision rendered in this decision , introduced , through Law no. 67-A/2007, of 31 December, the possibility for residents of another Member State of the European Union to opt , regarding the income referred to in nos. 1 and 2 of article 72 of the Personal Income Tax Code, for taxation of such income at the rate which, in accordance with the table provided for in no. 1 of article 68, would be applicable in the case of being earned by residents in Portuguese territory . With regard to this legislative amendment, jurisprudence has also pronounced itself, specifically the arbitral decision rendered in case no. 748/2015-T, to which it adheres, "First of all, it should be noted that the solution introduced by the legislator to circumvent the discrimination contained in the aforementioned national norm places an additional burden on non-residents, compared to residents. To this is added another objection that results from the complexity of operation of the tax, aggravated by the "option for aggregation" of all income obtained in the other country, in addition to other relevant issues associated with the principle of territoriality provided for in article 15 of the Personal Income Tax Code, the conditions of personalization of the tax and the progressivity of the tax, hardly compatible with an adequate consideration of the values earned in another member state, in the current state of European Union law.". (…) "The TA alleges that the solution adopted in article 72, nos. 8 to 10 is sufficient, as for residents in Portuguese territory, this income is also subject to aggregation. Now, such an argument does not seem appropriate as it does not take into account all the other taxation conditions inherent to the operation of a tax with the characteristics of personal income tax and shows an intention to tax according to income earned in the other country (when aggregated) well knowing that these are incomparable realities, easily distorted by an entire underlying reality that escapes the fiscal sovereignty of the Portuguese state.". For which reason, although the national legislator has provided the possibility for the non-resident taxpayer to opt for taxation applicable to residents, the truth is that this does not remove the essential discriminatory effect of the differentiation of regimes provided for in national legislation between residents and non-residents, which is thus in violation of articles 63 and 18 of the TFEU . In light of the principle of the primacy of European Union law, enshrined in article 8, no. 4 of the Constitution of the Portuguese Republic, the jurisprudence of the CJEU, in the field of European Union law, binds national courts, whereby this Tribunal cannot decide differently from what was already decided, in the context of the same question of law and the same legislation, by the CJEU. In these terms, no doubts remain that the contested assessment, to the extent that it considers as the basis for taxation of capital gains realized by the Claimant more than 50% of its value, lacks legal foundation, concluding that there is an incompatibility of no. 2 of article 43 of the Personal Income Tax Code, with article 63 of the TFEU, which determines the illegality of the assessments now challenged, and as the request for arbitral decision is well-founded .
A final reference to Arbitral Decision no. 600/2018-T, dated 8 April 2019, Indeed, the Supreme Administrative Court, in the recent decision of 20-02-2019, case no. 0901/11.0BEALM 0692/17, without raising the need for preliminary reference, concluded that the regime resulting from the combination of article 43, no. 2, with article 72 of the Personal Income Tax Code was illegal , regarding a situation in which the capital gains were realized in 2010, therefore already during the validity of Law no. 67-A/2007.
This Singular Arbitral Tribunal concluded, thus, in the same terms as Arbitral Decision no. 600/2018-T, dated 8 April 2019, that is, In the case in question, it is concluded with certainty from the reiterated jurisprudence of the CJEU that the illegality of the application of the discriminatory regime is not cured by the possibility of its elimination, which eliminates the need for preliminary reference .
Continuing,
Once more, this Singular Arbitral Tribunal calls to the reasoning Arbitral Decision no. 45/2012-T, dated 7 May 2012, The main question to be decided in the present arbitration proceedings is whether the differentiation, established by national legislation, for residents and non-residents in the national territory, of the basis of incidence in Personal Income Tax of capital gains derived from the onerous disposal of real rights over real property is (in)compatible with the freedom of movement of capital provided for in article 63 of the Treaty on the Functioning of the European Union, because it translates into a less favorable tax regime for non-residents . Indeed, the Entity Respondent considered, for the purposes of determining the taxable income and consequent Personal Income Tax assessment to the Claimants, non-residents in Portugal, but in another Member State of the European Union, the entirety of the capital gain realized by them in 2010 in the disposal of their respective shares of the real property identified above. Thus, the application of the regime provided for in no. 2 of article 43 of the Personal Income Tax Code was declined, according to which: "The balance referred to in the preceding number, relating to transfers effected by residents provided for in subparagraphs a), c) and d) of no. 1 of article 10, whether positive or negative, is only considered at 50% of its value", understanding the Entity Respondent that such discipline is only convocable for residents in the national territory, in consonance, moreover, with the literal element of the norm. As noted by the Claimants, the question at issue was already addressed by the Court of Justice of the European Union ("CJEU"), in the Decision, of 11 October 2007, rendered in case C-443/06 ("Hollmann Decision"), as a result of which the Portuguese Supreme Administrative Court ("SAC") concluded that "no. 2 of article 43 of the Personal Income Tax Code, (…) which limits the incidence of tax to 50% of capital gains realized only for residents in Portugal, violates the provision of article 56 of the Treaty establishing the European Community, by excluding from this limitation the capital gains that were realized by a resident of another Member State of the European Union.". This is exactly the same question of law that arises in the situation submitted to the assessment of this Arbitral Tribunal, and the general regime of the Personal Income Tax Code remains unchanged, which framed and founded the aforementioned jurisprudence which, next, for better understanding, will be summarized. However, beyond the general regime which remained identical , the national legislator instituted , through Law no. 67-A/2007, of 31 December (State Budget Law for 2008), subsequent to the jurisprudence of the Hollmann Decision, an optional regime of equalization of non-residents with residents , with the objective of avoiding the differentiated treatment of EU non-residents and European economic area residents who obtain real property capital gains in Portugal, vis-à-vis residents. This equalization option allows EU and European economic area non-residents to opt for taxation of such income under conditions similar to those applicable to residents in Portugal [...].
What is repeated by Arbitral Decision no. 45/2012-T, dated 7 May 2012 , As mentioned above, on the exclusive application to residents in Portugal of the limit of the incidence of Personal Income Tax to 50% of real property capital gains, provided for in no. 2 of article 43 of the respective Code, and its compliance with article 56 of the Treaty establishing the European Community, current article 63 of the Treaty on the Functioning of the European Union, the CJEU has already pronounced. It is important to recall here that the prevalence of the CJEU's interpretation of European Union law results from the provision of no. 4 of article 8 of the Constitution of the Portuguese Republic ("CRP") and the principle of the primacy of European Union Law, whether original or derived. In the Hollmann jurisprudence, the CJEU concludes that the national norm in question [no. 2 of article 43 of the Personal Income Tax Code] violates article 63 of the Treaty on the Functioning of the European Union, as it is of a discriminatory character (less favorable) for non-residents and is, therefore, restrictive of the freedom of movement of capital between Member States . This conclusion is based on the following main arguments: [...] b) In the case of sale of a real property located in Portugal, where the realization of capital gains occurs, non-residents are subject to a tax burden higher than that applied to residents, thus finding themselves, therefore, in a less favorable situation than the latter; c) Indeed, while a non-resident is applied a rate of 25% on the entirety of capital gains realized, the consideration of only half of the taxable matter corresponding to capital gains realized by a resident allows this latter to systematically benefit, in this respect, from a lower tax burden, regardless of the tax rate applicable on the entirety of their income, since the taxation of income of residents is subject to a table of progressive rates whose highest bracket is 42%; d) This regime makes the transfer of capital less attractive for non-residents and constitutes a restriction on the movement of capital prohibited by the Treaty; e) The discrimination of the national norm is not justified by the objective of avoiding penalizing residents (which are subject to a table of progressive rates that may be much higher and are taxed on a worldwide basis, unlike non-residents, who are taxed at the proportional rate of 25% (in 2017, 28%), with no aggregation), because, as noted above, being the highest bracket 42% (in 2017, 48%) it always leads, under the same conditions, to more onerous taxation of the non-resident, having regard to the reduction to 50% of the taxable income of the resident, there being, objectively, no difference that justifies this inequality of tax treatment with respect to the taxation of capital gains, between the two categories of taxpayers . We are therefore faced with a discriminatory regime incompatible with European Union Law, by violation of article 63 of the Treaty on the Functioning of the European Union .
Remains to be ascertained, continues Arbitral Decision no. 45/2012-T, dated 7 May 2012, whether the equalization option, introduced in the Portuguese tax system after the rendering of the Hollmann Decision, contained in nos. 8 and 9 of article 72 of the Personal Income Tax Code, and in force on the date of the facts subiudicio, allows for the elimination of the judgment of discrimination by the CJEU on the restrictive provision of no. 2 of article 43 of the Personal Income Tax Code to taxpayers resident. Beyond, as the Claimants rightly point out, the provision of this optional regime placing an additional burden on non-residents, compared to residents, the equalization option is not, in our understanding, susceptible of excluding the discrimination in question . Along these lines, the CJEU pronounced itself in the Decision, of 18 March 2010, rendered in case C-440/08 (Gielen Decision) in a situation that presents manifest parallelism, differing only in that in this case the violation of article 49 and not of article 63 of the Treaty on the Functioning of the European Union was at issue. It emphasizes that judicial body that "the equalization option allows a non-resident taxpayer, (…) to choose between a discriminatory tax regime and another supposedly non-discriminatory regime", stressing that that choice is not susceptible of excluding the discriminatory effects of the first of these two tax regimes. And it continues that tribunal revealing the paradox: "the recognition of such an effect on the choice in question would have the consequence (…) validating a tax regime that would continue, in itself, to violate article 49 TFEU by reason of its discriminatory character". The CJEU concludes that the Treaty "is opposed to a national regulation that discriminates against non-resident taxpayers in the granting of a tax benefit (…) despite those taxpayers being able to opt, with respect to that benefit, for the regime applicable to resident taxpayers" .
Continues, further, Arbitral Decision no. 45/2012-T, dated 7 May 2012, with relevance for this Arbitral Decision, It is not unknown that the consequences drawn here from the aforementioned European Union jurisprudence, in particular from the Hollmann Decision, afford more favorable taxation of real property capital gains earned by non-residents in Portugal, resident in the European Union, than by residents, as, beyond benefiting equally from the reduction to 50% of the basis of incidence of Personal Income Tax, they are subject to a single rate of 25% (in 2017, 28%), which will, in the majority of cases, be lower than the progressive rates of residents, in accordance with the table provided for in no. 1 of article 68 of the Personal Income Tax Code, to which is added the fact that the latter must aggregate all their income. However, this Singular Arbitral Tribunal identifies, in the current stage of European Union Law, there is no principle or norm that prevents positive discrimination of non-residents over residents, with direct taxation being an area of competence of the Member States .
But Arbitral Decision no. 45/2012-T, dated 7 May 2012 says more, It should further be noted that, as emerges from the jurisprudence of the SAC, in the Decision of 22 March 2011, case no. 1031/10, it was the Tax Authority which, "faced with the taxpayers' declaration, levied the tax on them which it considered due (as indeed always occurs in Personal Income Tax): at the rate provided for non-residents (25%, pursuant to article 72, no. 1 of the Personal Income Tax Code) and on the total amount of the capital gain realized and not merely on 50% of this value (article 43, no. 2 of the Personal Income Tax Code), thus ignoring the European Union jurisprudence and that of this Supreme Court which adopted it (see the Decision of 16 January 2008, case no. 439/06) as to the incompatibility of that legal provision, so applied, with the (then) article 56 of the TJCE (current article 63 of the Treaty on the Functioning of the European Union), thus subjecting, as indeed occurred, to see annulled in that part the assessment challenged, given the primacy of European Union law" . In this manner, given what has been stated, the defect of violation of law alleged by the Claimants proceeds, by incompatibility of no. 2 of article 43 with article 63 of the Treaty on the Functioning of the European Union, to the extent that it restricts the reduction to 50% of capital gains subject to Personal Income Tax to taxpayers resident in Portugal, with the consequent annulment of the tax acts subject to arbitral decision .
This Singular Arbitral Tribunal accompanies this understanding.
For all that has been stated here,
This Singular Arbitral Tribunal concludes that, having regard to the reiterated jurisprudence of the CJEU, the illegality of the application of the discriminatory regime is not cured by the possibility of its elimination, specifically, by an option, which eliminates the need for preliminary reference.
This Singular Arbitral Tribunal also concludes that no doubts remain that the Personal Income Tax assessment no. 2018..., dated 5 July 2018, in the amount of € 15,141.87, to the extent that it considers as the basis for taxation of capital gains realized by the Claimant more than 50% of its value, lacks legal foundation, justifying its annulment (in this case, partial).
Thus, this Singular Arbitral Tribunal judges the Request for Arbitral Decision presented by the Claimant to be well-founded, thereby annulling, in consequence, the decision rejecting the administrative complaint and, partially, the contested Personal Income Tax assessment, relating to the year 2017.
Pursuant to no. 2 of article 608 of the Code of Civil Procedure, applicable by virtue of article 29 of the RJAT, this Singular Arbitral Tribunal is not obliged to address all the arguments of the Parties, when the decision is prejudiced by the solution given, which in the present proceedings translates into the decision rendered on the illegality of the assessment, thus rendering moot the examination of other issues raised in the proceedings.
4. Request for Restitution of Amount Paid and Compensatory Interest
The Claimant formulates a request for restitution of the amount collected by the Tax and Customs Authority, as well as payment of compensatory interest.
Pursuant to no. 1 of article 43 of the LGT, compensatory interest is due when it is determined, in an administrative complaint or judicial challenge, that there was an error attributable to the services from which resulted payment of the tax debt in an amount higher than the legally due amount.
Being of to judge the Request for Arbitral Decision to be well-founded, it was concluded that there was undue payment and, consequently, the restitution of the amount paid in excess by the Claimant is justified and the payment of compensatory interest, in accordance with no. 1 of article 43 of the LGT.
Thus, pursuant to article 43 of the LGT and article 61 of the Code of Tax Procedure and Process (CTPP), the Claimant is entitled to compensatory interest, such interest to be calculated from the date of payment of the undue tax until the date of issuance of the respective credit note, the payment period for which is counted from the date the period for voluntary compliance with this decision begins (nos. 4 and 5 of article 61 of the CTPP), at the rate referred to in no. 4 of article 43 of the LGT.
5. Arbitral Decision
On these grounds, this Singular Arbitral Tribunal decides as follows:
a) Judge the Request for Arbitral Decision to be well-founded, as proven, declaring the decision rejecting the Administrative Complaint and the Personal Income Tax assessment no. 2018..., dated 5 July 2018, in the amount of € 15,141.86, corresponding to the assessment statement no. 2018... , to be illegal.
b) In consequence, annul the decision rejecting the Administrative Complaint no. ...2018..., on the Personal Income Tax assessment no. 2018... .
c) In consequence, annul, partially, the Personal Income Tax assessment no. 2018..., dated 5 July 2018.
d) Condemn the Respondent to refund to the Claimant the amount of tax wrongfully paid, in the amount of € 7,570.03, thus giving effect to the decision hereby rendered.
e) Condemn the Respondent to pay the Claimant compensatory interest at the legal rate, regarding the amount of tax wrongfully paid, from the date on which the Claimant made payment, until the complete and effective payment of the amount to be refunded to the Claimant.
f) Condemn the Respondent to bear the costs of the present proceedings.
6. Value of the Proceedings
Pursuant to no. 2 of article 306 of the CCP, subparagraph a) of no. 1 of article 97-A of the CTPP and no. 2 of article 3 of the Regulation of Costs in Tax Arbitration Proceedings, the value of the proceedings is fixed at € 7,570.93.
7. Costs
This Singular Arbitral Tribunal considers that the amount to be considered for the purposes of determining costs in the present Request for Arbitral Decision is the amount that motivated the constitution of this Singular Arbitral Tribunal, i.e., the amount of € 7,570.93, corresponding to the amount whose annulment the Claimant seeks and the amount initially indicated by the Claimant in the Request for Arbitral Decision.
Pursuant to no. 2 of article 12 and no. 4 of article 22, both of the RJAT, the amount of costs is fixed at € 612.00, in accordance with Table I attached to the Regulation of Costs in Tax Arbitration Proceedings, at the charge of the Respondent.
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Lisbon, 26 July 2019
Singular Arbitral Tribunal
The Arbitrator,
(Alexandre Andrade)
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