Summary
Full Decision
ARBITRAL TAX JURISPRUDENCE
Case No. 692/2018-T
Decision Date: 26 September 2019
IMI
Value of Claim: €125,490.96
Subject Matter: AIMI – Properties Allocated to Tourist Accommodation Services – Error in Matrix Classification – Exclusion from Taxation – Article 135-B, No. 2 CIMI.
ARBITRAL DECISION
The arbitrators Alexandra Coelho Martins (arbitrator-president), António Alberto Franco and Olívio Mota Amador, designated by the Deontological Council of the Administrative Arbitration Centre ("CAAD") to form the Arbitral Tribunal, hereby agree as follows:
I. REPORT
A..., LDA., hereinafter referred to as the "Claimant," a legal entity number..., with registered office in..., ..., in..., notified of the levy of the additional municipal property tax ("AIMI") for the year 2018, in the amount of €125,490.96, submitted a request for the constitution of a Collective Arbitral Tribunal, in accordance with Articles 2, No. 1, paragraph a) and 15 et seq. of the Legal Framework for Arbitration in Tax Matters ("RJAT"), approved by Decree-Law No. 10/2011, of 20 January, as subsequently amended.
The respondent is the Tax and Customs Authority, hereinafter referred to as the "TA" or "Respondent."
The Claimant hereby submits a request for an arbitral ruling declaring the illegality and consequent annulment of the AIMI levy for 2018, issued under No. 2018..., and for the TA to be condemned to refund the amount paid, plus compensatory interest calculated until full and effective reimbursement.
As grounds for its claim, the Claimant alleges that the urban properties in its ownership, whose aggregate of taxable patrimonial values constituted the basis of incidence of AIMI with reference to the year 2018, fall within the scope of the AIMI exclusion norm provided for in Article 135-B, No. 2 of the Municipal Property Tax Code ("IMI"), rendering No. 1 of the same legal provision inapplicable, as the said properties form an integral part of the four-star tourist village "B..." and are allocated solely to hotel-type tourist accommodation services.
The said enterprise has various complementary equipment and support infrastructure for sports and leisure, including reception, bar, swimming pools, spa, hairdresser, among others, and is sought exclusively for accommodation for short periods of time, without residential purposes.
According to the Claimant, the error in the matrix classification of the properties in question, classified as "residential" instead of "for services," cannot prevail over the material reality of the effective and exclusive tourist aptness and use, on penalty of constituting an irrebuttable presumption, legally inadmissible (cf. Article 73 of the General Tax Law "LGT").
It considers that the incorrect matrix classification of the properties constitutes a defect capable of being raised and known in the contestation of the tax levy act that is its consequence. The failure to react against the classification and assessment of the properties comprising the tourist enterprise does not have a preclusive effect, whereby, in the context of the contestation of a subsequent levy act, that defect [error in matrix classification] is capable of being raised, under the terms provided for in Article 129 of the CIMI and the principle of unified contestation enshrined in Article 54 of the Code of Tax Procedure and Process ("CPPT"), in conjunction with Article 99 of the same legal code.
This understanding also follows from the Constitutional Court Judgment No. 410/2015, of 29 September 2015, which declared unconstitutional the interpretation that qualified as a burden, rather than as a faculty, the judicial reaction against interlocutory acts immediately harmful to rights, as this constitutes a violation of the principle of effective judicial protection and the principle of justice.
The Claimant attached 17 documents, requested the use of evidence produced in arbitral process No. 674/2017-T, which dealt with the same facts, and requested proof by inspection of the tourist establishment.
On 28 December 2018, the request for constitution of the Arbitral Tribunal was accepted by His Excellency the President of CAAD and followed its normal proceedings with notification to the TA on 3 January 2019.
In accordance with Articles 5, No. 3, paragraph a), 6, No. 2, paragraph a) and 11, No. 1, paragraph a), all of the RJAT, the Deontological Council of CAAD designated the arbitrators of the Collective Arbitral Tribunal, who communicated acceptance of the assignment within the applicable deadline. The Parties, notified of this designation on 15 February 2019, did not object.
The Collective Arbitral Tribunal was constituted on 7 March 2019.
On 8 April 2019, the Respondent attached the administrative file ("PA") and submitted a Reply, in which it defends itself by way of exception and by way of contestation.
With respect to exception, the Respondent raises the material incompetence of the Arbitral Tribunal and requests dismissal of the action, in accordance with Articles 576, No. 1 and 577, paragraph a) of the Code of Civil Procedure ("CPC"), applicable ex vi Article 29, No. 1, paragraph e) of the RJAT, on the basis of the following arguments:
(a) At issue is the nature of a property, a matter that is not capable of being discussed in arbitral proceedings;
(b) The matrix classification must be reviewed independently, in accordance with the provisions of Articles 134, No. 3 of the CPPT, 129 and 130 of the IMI Code, and presents itself as a presupposed and autonomous act in relation to the tax levy acts, whereby the Claimant was obliged, with mandatory character, to have filed an administrative claim against it;
(c) The appropriate means of reaction against the dismissal of such a claim, should it occur, would be an administrative action for annulment and for the performance of a due act, which does not fall within the competence of arbitral jurisdiction, as it does not entail the review of the legality of a levy;
(d) The regime for claiming matrix corrections provided for in Article 130 of the IMI Code constitutes a true burden and not a mere faculty, an interpretation that does not conflict with the principle of effective judicial protection and access to justice insofar as the request for correction of matrix entries is capable of being submitted at any time. However, under the law, the effects of the correction only take effect as of the year of submission of the rectification request;
(e) Furthermore, even if review by CAAD were admitted, not all the gracious means provided for the assessment procedure have been exhausted, under Article 134, No. 7 of the CPPT, from which results clear material incompetence of the Arbitral Tribunal;
(f) In summary, the correction of matrix entries is not capable of being reviewed in arbitral jurisdiction because neither Article 2, No. 1 of the RJAT nor the Binding Order (Ordinance No. 112-A/2011, of 22 March) provide for the review of acts of dismissal of an administrative-tax nature regarding correction of cadastral matrices, being limited to the review of tax levy acts or acts fixing the taxable matter, covered by the means of judicial contestation, in accordance with Article 97, No. 1, paragraph a) of the CPPT, of which the arbitral action constitutes an alternative means of proceedings, under the terms of the legislative authorization contained in Article 124, Nos. 1, 2 and 4, paragraph a) of Law No. 3-B/2010, of 28 April;
(g) By not questioning in good time the classification and assessment of the properties that comprise the tourist enterprise, contained in official documents, the Claimant cannot now review them, which could constitute an abuse of right in the form of venire contra factum proprium;
(h) The contrary interpretation would be unconstitutional by violation of Article 212, No. 3 of the CRP and of the right to double degree of jurisdiction, as appeals of decisions of arbitral tribunals are only admitted exceptionally (Articles 20, 268, No. 4 of the CRP). It would also offend, in the view of the Respondent, the principles of effective judicial protection and justice, to which it appeals to Constitutional Court jurisprudence.
With respect to the merits, the Respondent understands that it correctly applied the rules in force to the facts (Articles 135-A to C and F of the CIMI), taking into account that the allocation of the properties was declared by the Claimant itself, through form MOD. 129 (Declaration for registration or alteration of registration of properties omitted from the matrix), as being residential, such declaration being maintained, without having been called into question by the Claimant, for more than 28 years.
Thus, according to the Respondent, given the declared residential allocation, the properties are not excepted by Article 135-B, No. 2 of the CIMI, not meriting the contested levy any censure.
With respect to the request for compensatory interest, the TA contends that these are not due, as the respective legal requirements are not met, since there is no illegality that denotes the undue character of the tax obligation attributable to error by the services, as required by the provision of Article 43, No. 1 of the LGT. It considers that the TA merely applied the legal consequences that flow directly from the law.
If the invoked exception of material incompetence does not proceed, the Respondent argues for the dismissal of the action and dismissal of all claims. Finally, as a subsidiary matter, in case the action is upheld, it requests, by appeal to Article 280, No. 3 of the CRP and Article 72, No. 3 of the Constitutional Court Law, that notification of the Arbitral Judgment be made to the Public Prosecutor.
On 29 April 2019, after notification to comment on the matter of exception, the Claimant reiterated that the object of the case is a tax levy act [AIMI] with respect to which, in accordance with the principle of unified contestation established in Article 54 of the CPPT, it may invoke any illegality of the procedure, including the error in the classification of properties in the matrix, the law not requiring prior administrative contestation (claim) as a condition of procedurality, as stated in a similar situation in the Decision of arbitral process No. 674/2017-T. It argues that the exception should be ruled unfounded.
By order of 30 April 2019, the Arbitral Tribunal denied the request for proof by inspection, due to abundant documentary evidence, postponed the review of the exception to the final decision and dispensed, as unnecessary, with the meeting referred to in Article 18 of the RJAT.
On 6 May 2019, the Tribunal determined the notification of the Parties to submit optional and successive arguments and fixed the date for delivery of the arbitral decision.
Both Parties opted not to submit arguments.
The deadline for delivery of the decision was extended, under Article 21, No. 2 of the RJAT.
II. PRELIMINARY REVIEW
1. PRELIMINARY ISSUE OF MATERIAL INCOMPETENCE OF THE ARBITRAL TRIBUNAL
The Respondent raises the exception of material incompetence of the Arbitral Tribunal, from the outset, by considering that at issue is the matrix classification of the properties and their assessment, reviewable as an administrative act in tax matters.
The questions raised in this connection were already reviewed, with respect to the same parties and facts, in the Arbitral Decision concerning case No. 674/2017-T, which is attached, with the sole difference (without impact on the analysis to be performed) being the period to which the AIMI levy refers, that case concerning the AIMI levy for 2017 and the present case for 2018.
The grounds of the cited Arbitral Decision are examined, whose content deserves full agreement and to which adherence is given:
"The competence of courts is the measure of their jurisdiction, the manner in which jurisdictional power is divided and apportioned among them. In a concrete or qualitative sense, it will be the susceptibility of exercise by the court of its jurisdiction for the review of a certain case.
Arbitral Tribunals are provided for in Article 209, No. 2 of the Constitution of the Portuguese Republic ("CRP"), and the scope of tax arbitral jurisdiction is delimited, in the first instance, by the provisions of Article 2 of the RJAT which enumerates, in its No. 1, the corresponding criteria for material apportionment. There it is determined that this "type" of court has competence to review the following claims:
'a) Declaration of illegality of acts of tax levies, self-levies, withholding at source and payment on account;
b) Declaration of illegality of acts fixing the taxable matter when it does not give rise to the levy of any tax, acts determining the taxable base and acts fixing patrimonial values.'
In the thesis of the Respondent, as the case at hand does not concern a tax act, but rather an administrative act in tax matters, the appropriate means would be administrative action and not judicial contestation, as results from Article 97 of the CPPT. Indeed, under the legislative authorization in respect of tax arbitration, contained in Article 124, No. 1 of Law No. 3-B/2010, of 28 April, tax arbitral process must constitute an alternative means to the process of judicial contestation, it not being possible to discuss the nature of a property in arbitral proceedings.
In these terms, according to the Respondent, given the delimitation of competence of Tax Arbitral Tribunals, effected by the cited Article 2, No. 1 of the RJAT and, equally, by Article 2 of the Binding Order, centered on the review of tax acts (tax levy acts, self-levy acts, withholding at source, payment on account and acts fixing the taxable matter, in the latter case, when it does not give rise to the levy of any tax), these Tribunals cannot know of a request that implies the correction or alteration of the matrices of the properties in question in the case, a request that does not relate to a tax act of levy.
However, this argument is not accepted. The object of the present case, delimited clearly from the outset in the preamble of the request for arbitral ruling, relates solely to 'the levy of the additional municipal property tax (AIMI) in the amount of €125,490.96' […], the Claimant requesting the declaration of illegality and annulment of such act.
Submitted for review by the Tribunal is a tax act proper sensu, of tax levy, which defines in a unilateral and imperative manner the AIMI obligation of the Claimant relating to the year 2017. The appropriate means for the review of acts of this nature is judicial contestation, of which grounds may be any illegality, as provided in Articles 97, No. 1, paragraph a) and 99 of the CPPT, such illegality being capable of being anchored in an error in the classification of urban property matrices.
It is noteworthy that the Claimant does not question at any moment the assessment of the properties whose VPT's (or rather, whose sum of their respective VPT's) constituted the basis of incidence of AIMI. The assessment of those properties is not at issue. Equally, the Claimant does not formulate a request for correction or alteration of the property matrices, nor could the strict cassatory effect of the arbitral ruling allow satisfaction of a request of that nature.
It is unequivocal that the object of the case is an act of AIMI levy, and the claim formulated is that of declaration of illegality and annulment of that act, a matter that falls within the competence of tax arbitral jurisdiction and which, for that reason, this Tribunal can know, under the terms provided in the cited Articles 2, No. 1, paragraph a) of the RJAT and 2 of the Binding Order, whereby the exception of material incompetence of the Arbitral Tribunal raised by the Respondent fails.
The Respondent raises a set of (other) questions which it frames under the guise of the exception of material incompetence, but which, in reality, constitute preliminary questions of a different nature.
It begins by referring to the fact that assessment and matrix classification must be reviewed independently and present themselves as a presupposed and autonomous act in relation to AIMI levy acts. Constituting an immediately harmful act, its contestation constitutes a true burden and not a mere faculty. It argues that, by not using, in good time, the appropriate means of reaction, namely the request for a 2nd assessment (Article 76 of the CIMI), its contestation (Article 77 of the CIMI), the claim of the matrix (Article 130 of the CIMI), or the contestation of acts fixing patrimonial values (Article 134 of the CPPT), the assessment became consolidated. Thus, that act (of assessment) cannot subsequently be attacked, upon the corresponding tax levy.
It adds that even if review by CAAD were admitted, not all the gracious means provided for the assessment procedure have been exhausted, under Article 134, No. 7 of the CPPT, 'from which [in the conception of the Respondent] results clear material incompetence of the arbitral tribunal.'
We identify various problems in this construction. First of all, with respect to the necessity of independent review of assessment, insofar as it is a matter that does not form part of the Claimant's cause of action, it not being referred to or invoked anywhere any defect relating to assessment, nor the VPT determined by the respective procedure being questioned, whereby it constitutes a subject matter alien to that discussed in the present case.
[…]
The question concerns solely the matrix classification of the urban properties in the ownership of the Claimant and which the latter alleges to be erroneous, for not corresponding to its effective purpose and allocation – which is services – and not, as recorded in the matrices, residential or habitational.
With respect to the alleged necessity of exhausting the gracious means provided in the assessment procedure, determined in Article 134, No. 7 of the CPPT, it is relevant to recall that the scope of application of the norm in question is limited to the contestation of acts fixing patrimonial values or errors in matrix entries of patrimonial values, which is certainly not the situation which is the object of the present arbitral case, in which a AIMI levy act is reviewed whose alleged invalidity is not connected with defects in the fixing of patrimonial values or in the matrix entry of these values.
However, even if it were so understood, the jurisprudence of the Supreme Administrative Court ("STA") has interpreted that this requirement (of exhaustion of the gracious means provided in the assessment procedure) is not to be made, being therefore dispensable, in cases where the contestation is not founded on the erroneous fixing of the patrimonial value or, in other words, 'in which the taxpayer does not disagree with the quantification of the patrimonial value', as occurs in the present situation – cf. STA Judgments in cases No. 1101/13, of 15 January 2014; No. 311/11, of 19 October 2011; No. 4/08, of 16 April 2008, and No. 968/02, of 6 November 2002.
In the Judgment delivered in case No. 930/13, of 2 March 2016, in a situation where it was necessary to determine whether the levy (in that case of IMI) could be the object of contestation on the basis of declarative error (error / defect of the declaration itself that served as the basis for the declaration for registration in the matrix), without validly raised a second assessment request, a point with manifest parallelism with the situation here under review, the STA understood, in line with what is stated above that:
'(…) the final result of the assessment gains autonomy from the perspective of contestation in light of what Article 77 of the CIMI provides, it being understood that the failure to contest the result of assessment under Articles 77 of the CIMI and 134 of the CPPT results in a decided case regarding the assessment value, although it does not cure possible illegalities of acts prior to the assessment process (this was decided in this STA judgment of 04/12/2013 rendered in appeal No. 0877/13).
And, for this reason, it has been understood that, in the contestation of the final act embodied in IMI levies, the taxpayer is not prevented from requesting review of any illegality of the preparatory acts of such additional levies by the fact of not having contested the assessable act of assessment.
And, having considered and weighed everything, we understand that in the present case the taxpayer does not review the quantitative aspect of the patrimonial assessment effected but rather and, as the taxpayer itself states, the problem at issue is not exhausted solely by a mere disagreement with the patrimonial value subject to taxation and the assessment process. The problem is not in the quantification of the 'taxable matter' in itself, but rather in the declarative error evidenced, according to the taxpayer, in the plans of the building itself. There is an act underlying the assessment that is placed in question by the contestor.
The question of declarative error in matrix registration leads back to a question about the prerequisites prior to the levy and the occurrence of possible declarative error may be invoked at the time it was, that is, after the 1st assessment.
(…)
In line with what we have been expressing, it must be concluded that in the contestation made of the IMI levy act after assessment for purposes of fixing patrimonial value, the purported illegalities resulting from official registration in the matrix of a certain physical reality as a property may be alleged and reviewed.'
On the other hand, with respect to the procedure for claiming matrices provided for in Article 130 of the CIMI, it is appropriate to note that the law does not make judicial contestation dependent on its prior use, constituting a facultative claim. Article 185, No. 1 of the Code of Administrative Procedure ("New CPA") [4 applicable by cross-reference of Article 29, No. 1, paragraph d) of the RJAT] provides in this respect that '[c]laims and appeals are necessary or facultative, depending on whether or not the possibility of access to contentious means of contestation or condemnation to perform a due act depends on their prior use' and, in accordance with No. 2 of the same article, 'are facultative in character, unless the law designates them as necessary'.
Not being a necessary claim, as the law does not designate it as such, the adoption of the mechanism of Article 130 of the IMI Code does not constitute a necessary condition for the opening of the contentious proceeding, whereby the omission of a procedural prerequisite is not verified that would prevent review of the merits, which in this case would not be one of material incompetence, as qualified by the Respondent, but of uncontestability of the act – cf. Article 89, No. 4, paragraph i) of the CPTA [5 applicable by cross-reference of Article 29, No. 1, paragraph c) of the RJAT]. On the other hand, as taxpayers may claim at any time against errors in matrix entries, there is no room for invocation of the stability or incontestability inherent in the figure of a decided case or resolved case.
The Respondent also appeals to the exception to the rule regime of unified contestation governing tax litigation, expressed in Article 54 of the CPPT, and defends that this principle is inapplicable to the present situation, by virtue of the fact that we are dealing with a presupposed and autonomous act in relation to the AIMI levy act.
The cited norm provides:
'Article 54
Unified Contestation
Except when they are immediately harmful to the rights of the taxpayer or express provision to the contrary, interlocutory acts of the procedure are not susceptible to contentious contestation, without prejudice to the possibility of invoking in the contestation of the final decision any illegality previously committed.'
It is observed that, in accordance with the legal text, the rule discipline in tax litigation is that '[it is] only possible, in principle, to contest the final act of the tax procedure, given that only that act affects or harms, immediately, the legal sphere of the taxpayer, and that in tax litigation the criterion for contestability of acts is that of their objective, immediate, current and not merely potential harmfulness' – cf. STA Judgments, cases No. 1032/09, of 23 June 2010, and No. 1361/13, of 23 October 2013.
Thus, possible illegalities of interlocutory acts of the tax procedure can only be raised in the contestation filed against the final act of the procedure, which embodies a decision-making act harmful to the rights and legally protected interests of the taxpayer.
However, there are two exceptions introduced by the mentioned Article 54 of the CPPT to the rule regime described. The first exception concerns interlocutory acts with respect to which the law expressly provides otherwise, i.e., the so-called 'detachable acts', which in the absence of immediate contestation become fixed in the legal system, with the right or procedural faculty to subsequently discuss their legality being precluded – cf. STA Judgment, case No. 1032/09. For this, there must exist an express norm to this effect, which is not verified in the situation sub iudice.
As to this point, it is concluded, therefore, that the registration of properties in the matrix with a certain classification – erroneous – relating to the species of urban properties in question does not constitute a detachable act within the meaning of Article 54 of the CPPT. A different solution could be raised if the subject matter that was being discussed in the case were the act of patrimonial assessment itself, qualifying as a detachable act and with autonomy for purposes of contestation. However, as emphasized above, such act was not questioned nor does the Claimant invoke any defect relating to it as a cause for annulment of the AIMI levy act which is the object of the present case.
The second exception refers to acts which, being interlocutory, that is, inserted in the tax procedure and prior to the final decision, display immediate harmfulness. In these cases, the possibility of their direct contestation is opened, without prejudice, however, to their illegality being capable of being raised subsequently in the contestation that comes to be filed against the final act (e.g., of tax levy).
In these circumstances, the fact that the harmful interlocutory act is not contested autonomously does not prevent the defects from which it suffers from constituting grounds for contestation of the final decision of the procedure, with there being no preclusive effect which the Respondent invokes. See in this regard, by way of merely exemplary illustration, the STA Judgments in cases No. 0312/15, of 29 March 2017, and No. 1685/13, of 8 January 2014, providing in the latter that 'possible illegalities committed in acts prior to that of fixing the patrimonial value subject to taxation of the property, such as official registration in the matrix of a certain physical reality as a property, may be the object of autonomous contestation – through special administrative action – or raised in contestation of a subsequent tax or tax matter act, such as a second assessment'.
In the interpretation we make of Article 54 of the CPPT, the nuclear normative parameter continues to be that of unified contestation of the final (decision-making) act of the procedure, the burden of autonomous contestation remaining exceptional. The cited norm merely expands, in this second exception, the possibility of contestation to a moment preceding that of the decision, with a view to greater protection and safeguard of the taxpayer, allowing it not only to defend itself, but also possibly to prevent an unfavorable final decision and not, as would result from the interpretation of the Respondent, to restrict the guarantees of defense of the taxpayer, with the attribution of a preclusive effect that would not be proportionate, from the outset, given the difficulties and doubts that arise in the identification and qualification of an act as 'immediately harmful'.
In summary, in accordance with the principle of unified contestation established in Article 54 of the CPPT, the Claimant may invoke in the arbitral request any illegality of the tax procedure, including the error in the classification of properties in the matrix, the law not requiring prior administrative contestation as a condition of procedurality, nor does the preclusive effect that the Respondent invokes (decided case/resolved case) occur. Thus, the defense by exception raised by the latter is unfounded.
The Respondent also raises the constitutional nonconformity of this interpretation of Article 54 of the CPPT, despite it being the one that has been consensually adopted by the STA, in harmony with the jurisprudence above stated.
We begin with the analysis of the alleged violation of the competence of Administrative and Tax Courts (Article 212, No. 3 of the CRP). Tax Arbitral Tribunals, also contemplated in Article 209, No. 2 of the Fundamental Law, have a concurrent competence to that of Administrative and Tax Courts, which legitimately and in accordance with the free margin of conformity of the ordinary legislator (materialized in Article 2 of the RJAT), attributed to them jurisdiction to decide disputes to which corresponds the form of judicial contestation and which concern tax acts of tax levy (without prejudice to the restrictions contained in Articles 2 and 3 of the Binding Order, namely with respect to some specific claims, such as those relating to customs duties, and to the value of disputes).
Being two categories of jurisdiction recognized by the Constitution and the delimitation of their respective competence falling within the margin of conformity of the legislator, the thesis of the alleged unconstitutionality cannot be accepted.
With respect to the alleged violation of the right to double degree of jurisdiction, understood as the possibility of ordinary appeal of jurisdictional decisions, it is relevant to note that the absence of ordinary appeal is an inherent property of arbitral processes, and is provided for in the respective legal regime (RJAT), to which the Respondent validly bound itself, through Ordinance No. 112-A/2011, of 22 March. In this manner, it would constitute a true 'venire contra factum proprium' for the Respondent, having voluntarily agreed to submit itself to arbitral jurisdiction, configured with a single instance and, therefore, devoid of ordinary appeal, to subsequently, in the course of proceedings, breach the agreement given to it, by invoking the principle of effective judicial protection.
It is further noted that the constitutional principle of effective judicial protection is compatible with the well-known figure of renunciation of appeal, grounded in Article 632 of the Code of Civil Procedure ("CPC"), insofar as it derives from the validly manifested will of the parties intervening in the dispute, it being permissible for these parties to renounce appeals, with production of effects, in the case of advance renunciation, if this comes from both parties, as occurs in the case of 'accession' to tax arbitral jurisdiction. Once again, the thesis of unconstitutionality cannot be accepted.
On the contrary, the Constitutional Court has pronounced itself to the effect of constitutional nonconformity of the interpretation that the TA advocates, in Judgment No. 410/2015, of 29 September 2015.
Indeed, on the question of whether 'the imposition, without adequate legal basis, of the burden of autonomous and immediate judicial contestation of an immediately harmful interlocutory act (…), in such terms as to make the invocation of the defects of such act impossible within the framework of the final decision of the tax procedure' respects the constitutional parameters of effective judicial protection and justice, this Court decided that such interpretation of Article 54 of the CPPT gravely unprotects the rights of the taxpayer, ruling it unconstitutional.
This understanding is not contradicted by Constitutional Court Judgment No. 718/2017, of 15 November 2017. In the latter judgment, a situation with properties distinct from those which preside over the declarative error in the classification of properties in the act of registration in the matrix is discussed, and which relates to decision-making acts of requests for recognition of tax benefits (in the field of tax benefits dependent on recognition), not classifiable as interlocutory acts.
Indeed, in Judgment No. 718/2017, the Constitutional Court, with respect to decision-making acts of requests for recognition of tax benefits, admits their qualification as 'autonomous tax acts', given the constitutive nature of that recognition and not merely declarative. Thus, it proceeds from the presupposition that such acts do not form part of the tax levy procedure as 'preparatory acts', even if detachable, being rather 'presupposed acts', following JOSÉ CASALTA NABAIS, 'The Unified Contestation of the Tax Act,' in Tax Justice Notebooks, No. 11, January-March 2016, pp. 18 and 19.
The jurisprudence of the STA has decided that in these circumstances the non-contestation (autonomous) before courts of acts of dismissal of requests for recognition of tax benefits prevents judicial contestation of final decisions of tax levy – cf. STA Judgment in case No. 459/14, of 18 November 2015.
Concluding the Constitutional Court, in Judgment No. 718/2017, that this interpretation – relating to 'presupposed acts' and not to 'interlocutory acts' – does not violate the principle of effective judicial protection (Article 268, No. 4 of the CRP), without prejudice to it not being the most protective, i.e., the one conferring or assuring a greater level of protection to individuals.
However, in the situation under analysis in the present case, we are not dealing with an autonomous tax act, a presupposed act of constitutive effects, but with an interlocutory act, of declarative nature. The solution that the (ordinary) law postulates in one case and another is distinct, as distinct are the properties that characterize interlocutory acts and presupposed acts, remaining fully valid the judgment of disvalue that Judgment No. 410/2015 of the Constitutional Court, mentioned above, formulates with respect to the unconformity of the interpretation that the TA advocates of Article 54 of the CPPT, within the scope of interlocutory acts of the tax procedure, this precept being to be interpreted and applied in conformity with the Constitution, in the sense advocated by the Claimant, of applicability of the principle of unified contestation, with the consequent unfoundedness of the exception raised by the Respondent."
It should be further noted that the allegation of the Respondent to the effect of qualifying the action of the Claimant as falling within the scope of the institute of abuse of rights cannot be accepted, as there was no allegation nor is there identification of facts capable of such qualification, nor can we uphold the position that the incorrect matrix classification by the taxpayer should subject it to the incidence of tax whose requirements are not provided for in the law.
For the reasons set out in Arbitral Decision No. 674/2017-T above transcribed, which are subscribed to in their entirety, the preliminary issue of material incompetence of the Arbitral Tribunal raised by the Respondent must be ruled unfounded, concluding that this Tribunal was regularly constituted and, given the configuration of the object of the case, is competent ratione materiae to know of the AIMI levy act relating to 2018, in accordance with the provisions of Articles 2, No. 1, paragraph a) and 5 of the RJAT and 2 and 3 of the Binding Order.
2. OTHER PROCEDURAL REQUIREMENTS
The parties possess legal standing and capacity, have legitimacy and are regularly represented (cf. Articles 4 and 10, No. 2 of the RJAT and Article 1 of Ordinance No. 112-A/2011, of 22 March).
The request for arbitral ruling is timely, being presented within the deadline provided for in Article 10, No. 1, paragraph a) of the RJAT.
No issues were identified that would prevent review of the merits.
III. FACTUAL GROUNDS
1. PROVEN FACTS
With relevance to the decision, it is important to note the following facts which are deemed proven:
A. A..., LDA., here the Claimant, is the owner of a set of urban properties consisting of 77 townhouses and 55 hillside apartments (in total 132 accommodation units), located in..., parish of... and municipality of Loulé, which form part of the tourist enterprise B..., implanted in the... of the... – cf. documents 1, 2 and 4 attached by the Claimant with the request for arbitral ruling (ppa) and PA.
B. From 1989 onwards, the shareholder of the Claimant, C..., requested the TA services for the registration of the said properties in the matrix, by submitting the corresponding Forms No. 129 – "Declaration for registration or alteration of registration of urban properties in the matrix," which state that these are properties intended for housing – cf. PA.
C. The opening of the tourist enterprise B... proceeded from authorization by the then Directorate-General for Tourism, granted in February 1993, following an inspection of the establishment, in accordance with and for purposes of Article 4 of Decree-Law No. 328/86, of 30 September – cf. document 15 attached with the ppa.
D. By dispatch of the Secretary of State for Commerce and Tourism, of... November 19..., the status of tourist utility was attributed, on a definitive basis, to the first category tourist village B... – cf. documents 16 and 17 attached with the ppa.
E. In December 2001, following legislative changes, the enterprise was reclassified as a four-star tourist village – cf. documents 15 and 4 attached with the ppa.
F. In July 2010, the enterprise was reconverted by Turismo de Portugal, I.P., in accordance with and for purposes of Article 75, No. 2 of Decree-Law No. 39/2008, of 7 March, with the typology (tourist village) and category (four stars) that had been attributed to it under the previous regime, the validity and effectiveness of the opening title that the Directorate-General for Tourism initially granted under Decree-Law No. 328/86 being maintained – cf. document 4 attached with the ppa.
G. All the urban properties referred to in subparagraph A above comprise the enterprise B... and are allocated to tourist accommodation services, each comprising one or more accommodation units, in a total of 132, with swimming pool or jacuzzi, functionally distinct and independent from each other, equipped and ready for occupation and use, with daily cleaning and tidying service, towel, bedding and personal hygiene products replenishment – cf. documents 3, 4, 5 and 6 attached with the ppa.
H. The tourist enterprise B... further comprises support and complementary infrastructure and equipment, such as reception, bar, swimming pools, outdoor and indoor, spa, gymnasium, children's playground, hairdresser, games room and common rest areas, with other accessory services being provided in the field of sports, leisure, and food – cf. documents 5 and 6 attached with the ppa.
I. The tourist enterprise B... offers exclusively hotel-type accommodation services – cf. documents 3, 4, 7, 8 and 15 to 17 attached with the ppa and PA.
J. The entire area of... in which B... is implanted, including all the building referred to in subparagraph A above, has urban planning framework in the Urban Plan of the... and is covered, for purposes of land use and occupation, by a sub-unit or zone SUT, whose exclusive principal use is tourism – cf. documents 7 to 14 attached with the ppa.
K. The Claimant was notified of the AIMI levy act, issued under No. 2017..., dated 30 June 2018 and relating to the same year, in the amount of €125,490.96, resulting from the application of the rate of 0.4% to the basis of incidence of €31,372,740, corresponding to the sum of the taxable patrimonial values ("VPT") of 120 urban properties [which comprise 132 accommodation units] referred to in subparagraph A above, better identified in the levy act, and which constitute the urban properties in the ownership of the Claimant that form part of the enterprise B.... The legal basis invoked in the levy act in question were Articles 135-C, No. 1 and 135-F, No. 1, both of the IMI Code – cf. document 2 attached with the ppa.
L. The Claimant made payment of the AIMI levy in the amount of €125,490.96 on 26 September 2018 – cf. document 1 attached with the ppa and PA.
M. Up to the date of the disputed AIMI levy (2018), the properties forming part of the enterprise B... were registered in the matrix with residential allocation – cf. PA and document 2 attached with the ppa.
N. In disagreement with the AIMI levy identified above, on 27 December 2018, the Claimant submitted to CAAD the request for constitution of the Tribunal Arbitral which gave rise to the present case.
2. FACTS NOT PROVEN
With relevance to the decision, there are no facts which should be considered not proven.
3. REASONING OF THE DECISION ON FACTUAL MATTERS
The facts pertinent to the judgment of the case were selected and delimited in function of their legal relevance, in light of the plausible solutions to the legal questions, in accordance with the application combined with Articles 123, No. 2 of the CPPT, 596, No. 1 and 607, No. 3 of the CPC, applicable by cross-reference of Article 29, No. 1, paragraphs a) and e) of the RJAT.
Allegations made by the parties and presented as facts, consisting of strictly conclusive affirmations, incapable of proof and whose validity must be assessed in relation to the concrete established facts, were neither given as proven nor not proven.
With respect to the proven facts, the conviction of the arbitrators was founded on critical analysis of the documentary evidence attached to the case by both Parties and on the positions assumed by them in relation to the essential facts, which are coincident.
The use of testimonial evidence produced in case No. 674/2017-T did not prove determinative since the pertinent facts are proven by documents.
IV. REVIEW OF THE MERITS
The fundamental question to be reviewed concerns the allegation, by the Claimant, of substantive defect due to error in the presuppositions in the application of the regime of Article 135-B of the IMI Code, by virtue of the fact that the conditions for exclusion from the incidence of AIMI provided for in No. 2 of the cited legal provision are met, specifically by the fact that the urban properties held by the Claimant are exclusively allocated to the activity of provision of hotel-type accommodation services, not having residential allocation, contrary to what appears, in error, in the respective property matrices.
It is relevant to note in this respect that the objective incidence of AIMI is delimited based on "the sum of the taxable patrimonial values of urban properties located in Portuguese territory of which the taxpayer is the owner," in accordance with the provision of Article 135-B, No. 1 of the IMI Code, with the exception, however, in accordance with the provision of the negative incidence delimitation norm provided for in No. 2 of the cited Article 135-B, of "urban properties classified as 'commercial, industrial or for services' and 'others'," under the terms of Article 6, No. 1, paragraphs b) and d) of that Code.
The Claimant relies on multiple Arbitral Decisions which pronounce on identical subject matter: of 15 October 2018, case No. 695/2017-T; of 2 August 2018, case No. 674/2017-T; of 16 July 2018, case No. 666/2017-T; of 5 May 2017, case No. 409/2016-T; of 31 March 2017, case No. 291/2016-T; of 9 March 2016, case No. 556/2015-T; and of 5 June 2015, case No. 741/2014-T.
As set out in the argument in case No. 674/2017-T, cited above, the solution of exclusion from taxation of properties with non-residential allocation stems from the previous item 28 of the General Table of Stamp Duty ("TGIS"), the near ancestor of AIMI, grounded in options of economic policy of not increasing taxation on the productive sector.
The Constitutional Court, accepting the position of JOSÉ MARIA FERNANDES PIRES, states in this respect that "the application of the tax to properties with allocation to housing and land for construction in which the construction of housing is foreseen or approved, reveals the intention not to burden the productive sector and enterprises in general. In fact, properties allocated to business activities, namely commerce, services or industrial activity, may reach a value exceeding one million with relative ease, without this fact being capable of revealing relevance in terms of wealth identical to that revealed by those with allocation to housing with the said value" – cf. Constitutional Court Judgment No. 692/2016, of 14 December 2016.
Concern for relief of the productive sector which continued to be secured by the legislator of AIMI who, without prejudice to introducing, in the name of greater fiscal equity, a progressive personal basis element, taxing more highly the larger real estate patrimonies, continued to avoid its impact on economic activity, through the exclusion of incidence of rustic properties, mixed properties and others used as factors of production – commercial, industrial and service properties – in accordance with the Budget State Report for 2017, for the Strategy for Promotion of Economic Growth and Budget Consolidation, p. 60.
It results from the above that the tax legislator maintained the exclusion from taxation that came from item 28 of the TGIS, with respect to urban properties directly allocated to productive activities, in which hotel and tourist operations cannot fail to be included.
The Claimant, despite having incorrectly declared the urban properties comprising enterprise B... as intended for housing purposes, demonstrated that these properties have no residential purposes, as they form an integral part of a tourist enterprise open to the public that has furnished exclusively, since the date of opening, dating back to 1993, hotel-type accommodation services and related sports and leisure services.
Having made that proof, the act of AIMI levy violates the negative incidence delimitation norm relating to the material or objective incidence, which is contained in Article 135-B, No. 2 of the IMI Code, which excludes from this tax properties classified as "commercial, industrial or for services" and "others," referred to in paragraphs b) and d) of No. 1 of Article 6 of the IMI Code.
It is important to recall that the incidence of the tax, with respect to urban properties, is associated with the real and objective purpose which is given to them, independently of what may appear in the matrix entry, whereby, the facts ascertained falling within the normative scope of paragraph b) of No. 1 of Article 6 of the CIMI, and not within that defined in paragraph a) of the same number, the tax situation cannot fail to be assessed in function of the latter norm, as this would correspond to treating the two norms indistinctly for purposes of tax incidence.
It is true that the error in the matrix classification of the properties in question, classified as "residential" instead of "for services," may initially be attributable to the Claimant, as it derives from the matrix entry declarations made by its shareholder through Form MOD. 129; however, it cannot be overlooked that the TA has powers to promote official correction of matrix errors and that, in this case, it never did so.
In any event, manifesting itself the unequivocal allocation of the properties exclusively to services and, therefore, to a productive activity, a condition for exclusion from the objective incidence of AIMI, the legal requirements for taxation of the Claimant are not met in the context of this tax, whereby the tax act of AIMI levy contested, relating to the year 2018, suffers from substantive defect, due to error in the presuppositions, and must be annulled, with the consequent refund of the AIMI tax obligation paid in excess.
COMPENSATORY INTEREST
The right to compensatory interest is grounded in Article 43 of the LGT which, in its No. 1, makes it dependent on the determination that there was error attributable to the services, from which resulted the payment of a tax obligation superior to that legally due.
It results from the proceedings on record that the erroneous classification of the properties in the matrices – as "residential" rather than "for services" – was due to the declarations of the shareholder of the Claimant, at the time of registration of the properties, and that the Claimant itself over the last decades (almost 30 years) never promoted the correction of this error that is, in this manner, attributable to it.
The TA proceeded to levy the AIMI to the Claimant on the basis of the elements at its disposal, declared by the (shareholder of the) taxpayer, a procedure which merits no censure.
Thus, the undue AIMI levy originated in error by the taxpayer itself and not the TA, whereby the claim for condemnation of the TA to payment of compensatory interest is unfounded, given the lack of proof of the constitutive presuppositions of that right, namely with respect to the determination of error attributable to the services.
The Respondent requests, under Article 280, No. 3 of the CRP and Article 72, No. 3 of the Constitutional Court Law, that notification of the Arbitral Judgment be made to the Public Prosecutor. However, the situation of the present arbitral case does not fall within the scope of the norms in question, as no norm or segment of a norm was not applied due to unconstitutionality, whereby this request of the Respondent is denied.
Finally, it is important to note that the relevant questions submitted for review by this Tribunal were known and reviewed, as were not those whose decision was prejudiced by the solution given to others or, in any event, whose review would be futile – cf. Article 608 of the CPC, ex vi Article 29, No. 1, paragraph e) of the RJAT.
IN SUMMARY
For the reasons set out above, the conclusion is that the AIMI tax levy act contested is illegal, by violation of the incidence exclusion norm contained in Article 135-B, No. 2 of the IMI Code, which determines its annulment, in accordance with Article 163 of the new CPA, applicable by cross-reference of Article 29, No. 1, paragraph d) of the RJAT.
V. DECISION
In accordance with what has been set out, the arbitrators of this Arbitral Tribunal agree:
(a) To rule unfounded the exception of material incompetence of the Arbitral Tribunal raised by the Respondent;
(b) To rule founded the claim for annulment of the AIMI levy act for the year 2018, in the amount of €125,490.96, with the consequent refund of the amount paid to the Claimant;
(c) To rule unfounded the claim for condemnation of the TA to payment of compensatory interest.
VI. VALUE OF THE CASE
The value of the case is fixed at €125,490.96 corresponding to the AIMI levy at issue – cf. Article 97-A, No. 1, paragraph a) of the CPPT, applicable by virtue of the provision of Article 29, No. 1, paragraph a) of the RJAT and Article 3 of the Regulation of Costs in Tax Arbitration Proceedings ("RCPAT").
VII. COSTS
Costs in the amount of €3,060.00, being €2,938.00 borne by the Respondent and €122.00 borne by the Claimant, in proportion to the partial loss of the case (respectively 96% and 4%), in accordance with Table I attached to the RCPAT, and with the provision of Articles 12, No. 2 and 22, No. 4 of the RJAT, 4, No. 5 of the RCPAT and 527, Nos. 1 and 2 of the CPC, ex vi Article 29, No. 1, paragraph e) of the RJAT.
Notification to be given.
Lisbon, 26 September 2019
The Collective Arbitral Tribunal,
Alexandra Coelho Martins
António Alberto Franco
Olívio Mota Amador
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