Stamp Tax on High-Value Properties: CAAD Ruling 708/2016-T Annuls 11 Assessments Under TGIS Clause 28

ARBITRAL DECISION

I – Report

1.1. A..., widow (hereinafter referred to as "Claimant") - resident at Rua do..., no...., ..., ...-... ..., with NIF..., and in the capacity of legal representative of the undivided estate, with NIF ... -, having been notified of the dismissal of the administrative appeal (reclamação graciosa) that she had filed against 11 liquidations of Stamp Duty (IS) all relating to the year 2015, in the total amount of €12,050.70 (see Docs. 1 to 33 attached to the case), filed, on 29/11/2016, a request for the constitution of an arbitral tribunal and arbitral pronouncement, pursuant to the provisions of Article 99 of the CPPT and Articles 2, no. 1, al. a), and 10, nos. 2 et seq. of Decree-Law no. 10/2011, of 20/1 (Legal Framework for Arbitration in Tax Matters, hereinafter designated only as "RJAT"), in which the Tax and Customs Authority (AT) is requested, with a view to annul "the decision that dismissed the Administrative Appeal" and to declare "the illegality, due to breach of law, including constitutional law, and, consequently, [annul] the [11] liquidation acts" now in question. She further requests that the AT be condemned "to refund to the Claimant the Stamp Duty that was paid by her, in the amount of €12,050.70" and that she be recognized the right to payment of accrued indemnificatory interest on that sum of €12,050.70.

1.2. On 15/2/2017 the present Singular Arbitral Tribunal was constituted.

1.3. Pursuant to Article 17, no. 1, of the RJAT, the AT was cited, as the respondent party, to submit a reply, in accordance with and for the purposes of the aforementioned article. The AT submitted its reply on 22/3/2017, having argued, in summary, the total lack of merit of the Claimant's request.

1.4. By order dated 22/5/2017, the present Tribunal considered, under the provisions of Articles 16, als. c) and e), and 19, both of the RJAT, unnecessary the meeting provided for in Article 18 of the RJAT, as well as the hearing of witnesses, and that the case proceed to decision, having fixed the date of 31/5/2017 for its issuance.

1.5. The Arbitral Tribunal was properly constituted, is materially competent, the case does not suffer from defects that would invalidate it, and the Parties have judicial personality and capacity, being properly constituted.

II – Allegations of the Parties

2.1. The ora Claimant now alleges, in her initial petition, that: a) "the liquidations of Stamp Duty (IS) that are the object of the present request for arbitral pronouncement suffer from the defect of breach of law"; b) "[the] liquidations of Stamp Duty [...] object of the present request for arbitral pronouncement relate to an urban property in full ownership with floors or divisions susceptible to independent use, located at Rua..., no...., in ..., with six floors, registered in the urban property matrix of the Union of Freguesias of ... and ..., municipality of Loures, under article ... (which originated from article ... of the extinct freguesia of ...), which was the property of the Claimant A... and her deceased husband B..., with whom she was married under the regime of community of property, as stated in the respective Urban Property Booklet and in the respective permanent certificate of property registration (with access code PL-...-...-...-...), copies of which are attached as documents nos. 40 and 41"; c) "on the ground floor of that property there is a shop intended for commerce, and, on each of the remaining floors (1st, 2nd, 3rd, 4th and 5th floors), there are two divisions with independent use intended for housing (cf. documents nos. 38 and 39)"; d) "the aforementioned urban property is, therefore, composed of 6 floors, with 11 divisions, all with independent use (cf. documents nos. 40 and 41)"; e) "all these 11 divisions are functionally and economically independent, being distinct and isolated from each other, with separate access to a common part of the property or to the public road (as is the case with the shop, which corresponds to article U-...-RC – cf. documents nos. 1 to 33, and 40)"; f) "each one of these 11 divisions corresponds to its own property article (cf. Page 11 of 27 documents nos. 1 to 33, and 40). Each of these 11 divisions was subject to an autonomous assessment procedure for purposes of IMI (cf. document no. 40)"; g) "each one of these 11 fractions were leased by the head of the household and her deceased husband to as many tenants, as the AT is aware through the tax declarations that were submitted to it by the Claimant"; h) "in effecting the liquidations that are the object of the present request for arbitral pronouncement, the AT assumed that it was a single property, and that, given that the sum of the VPT attributed by it to each of its 11 autonomous divisions amounted to €1,205,070.00, the ownership of that property would be subsumed in Item 28.1 of the General Table of Stamp Duty (TGIS), because the VPT used for purposes of IMI was, thus, greater than the €1,000,000.00 mentioned in that Item 28.1 of the TGIS"; i) "however, in the provision of that norm of Item 28.1 of the TGIS (which [...] was added to the CIS by Article 4 of Law no. 55-A/2012, of 29/10), as well as in the provisions of Articles 2-4, 3-3/u, 4-6, 5/u of the CIS (in the wording given to them by Article 3 of that Law no. 55-A/2012), properties with the characteristics of that which belonged to the head of the household and her husband, and which, after the death of the latter and the acceptance of the inheritance by the respective heirs, became part of the assets of the undivided estate (cf. documents nos. 38 and 39), are not integrated. In fact, the concept of property used by the legislator in Item no. 28.1 of the TGIS does not correspond to the concept of property that was considered by the AT in effecting the IS liquidations under review"; j) "what the legislator intended with that item was to tax the contributive capacity revealed by taxpayers who were owners, usufructuaries or holders of the right of superficies of dwellings (whether villas or apartments, and, from 2014, also land for construction, ex vi of the wording given to Item 28.1 of the TGIS by Article 194 of Law no. 83-C/2013, of 31/12) whose VPT was equal to or greater than €1,000,000.00"; l) "the concept of property underlying that norm does not, therefore, correspond to that provided for in Article 2 in the interpretation that the AT may have made of it, that is, that, in cases of properties with floors or divisions susceptible to independent use, only where horizontal property exists is each autonomous fraction deemed to constitute a property – cf. Article 2-4 of the CIMI"; m) "if each floor or part of a property susceptible to independent use has conditions to be considered separately in the property registration, in such a way as to be specifically discriminated in its respective VPT, then it will only be integrated in the legal situation of that Item no. 28.1 of the TGIS if, in addition to having "residential use", its VPT is equal to or greater than €1,000,000.00. If the parts of the property in full ownership are functionally and economically independent, being able thus, each of them, to be used, autonomously and independently, for housing or commerce, each of these parts will only be subject to IS by virtue of Item no. 28.1 of the TGIS if its respective VPT is equal to or greater than €1,000,000.00"; n) "in the case at issue, the ratio legis of the aforementioned norm (Item no. 28.1 of the TGIS) is to tax the contributive capacity of taxpayers revealed by ownership, usufruct or right of superficies of properties, or of parts of those properties susceptible to independent use, with "residential use", when the VPT entered in the matrix, pursuant to the Code of Municipal Property Tax (CIMI), is equal to or greater than €1,000,000.00"; o) "as Article 67-2 of the CIS provides that "to matters not regulated in the present code relating to item 28 of the General Table, the CIMI applies subsidiarily", and the final part of item 28 of the TGIS establishes that the taxable value that is relevant for that purpose is that used for purposes of IMI ("on the taxable value used for the purpose of IMI"), the interpretation underlying the liquidations that are the object of the present request for arbitral pronouncement violates the principles of legality, tax equality, justice and the prevalence of material truth over legal-tax reality"; p) "if the value provided for in Item 28.1 of the TGIS referred to the totality of the 11 fractions, it would not be understood why 11 liquidations were carried out and 11 collection notices issued and notified"; q) "in the case at issue, it is verified that the VPT that appears in the matrix of each of the aforementioned 11 independent divisions (to which, in the terms set out, corresponds its own property article and which were subject to an autonomous assessment procedure for purposes of IMI - cf. documents nos. 1 to 33, and 40) is not equal to or greater than €1,000,000.00"; r) "in the light of the correct interpretation and application of the norm of Item 28/28.1 of the TGIS, it is thus important to conclude that the liquidations that are here the object of a request for arbitral pronouncement suffer from the defect of breach of law, and therefore, on the grounds of illegality, they should be annulled"; s) "once the annulment of the 11 (eleven) liquidations of Stamp Duty that are the object of the present request for arbitral pronouncement is determined, it should, consequently, be ordered the refund to the Claimant of those amounts, in the total value of €12,050.70 (cf. documents nos. 1 to 33). In addition to the refund of these €12,050.70, it should also be ordered the payment to the Claimant of indemnificatory interest (cf. Articles 43 and 100 of the LGT, and 61 of the CPPT) accrued on the amounts paid".

2.2. In conclusion, the ora Claimant requests that be annulled "the decision that dismissed the Administrative Appeal" and that be declared "the illegality, due to breach of law, including constitutional law, and, consequently, [annul] the [11] liquidation acts" now in question. She further requests that the AT be condemned "to refund to the Claimant the Stamp Duty that was paid by her, in the amount of €12,050.70" and that she be recognized the right to payment of accrued indemnificatory interest on that sum of €12,050.70.

2.3. For its part, the AT now alleges, in its response: a) that, "at the time, the Claimant held full ownership of the urban property under review, assessed in accordance with the CIMI, within the framework of general assessment of urban properties, described as "property in full ownership with floors or divisions susceptible to independent use", having the same taxable value (VPT) greater than €1,000,000.00 (cf. property booklet attached to the case with the PI)"; b) that, "in compliance with item no. 28.1 of the TGIS, in the wording given by Law no. 83-C/2013, of 31/12, whose incidence norm refers to urban properties, assessed in accordance with the CIMI with VPT equal to or greater than €1,000,000.00, and residential use, the AT proceeded to notify the collection documents with a view to payment of the liquidations in question (docs. identified in the PI)"; c) that "what is at issue here are liquidations that result from the direct application of the legal norm, which translates into objective elements, without any subjective or discretionary assessment"; d) that, "as regards IMI liquidation, where properties in full ownership are concerned, the VP that serves as the basis for its calculation will indisputably be the one registered in the property booklet as "total taxable value""; e) that, "in compliance with the provisions of Article 119, no. 1, of the CIMI, the collection document is sent to the taxpayer with discrimination of the parts susceptible to independent use, their respective taxable value and the tax due to each municipality of the location of the properties"; f) that, "although the liquidation of IS, in the situations provided for in item no. 28.1 of the TGIS, is carried out in accordance with the rules of the CIMI, the truth is that the legislator reserves those aspects that require appropriate adaptations, namely those in which, as is the case with properties in full ownership, even if with floors or divisions susceptible to independent use (although the IMI is liquidated with respect to each part susceptible to independent use) for purposes of IS the property as a whole is relevant, since the divisions susceptible to independent use are not deemed to be property, but only autonomous fractions under the horizontal property regime, as per no. 4 of Article 2 of the CIMI"; g) that "the provision of item 28.1 of the TGIS does not constitute any violation of the principle of equality, there being no discrimination in the taxation of properties constituted in horizontal property and properties in full ownership with floors or divisions susceptible to independent use, or between properties with residential use and properties with other uses"; h) that "the liquidations in question constitute a correct interpretation and application of the law to the facts, not suffering from the defect of breach of law, and should, consequently, be judged to lack merit in the allegation adduced".

2.4. In conclusion, the AT considers that "the present request for arbitral pronouncement should be judged to lack merit, as not proven, with the legal order being maintained in respect of the tax acts of liquidation challenged, the respondent entity being accordingly absolved of the requests."

III – Proven Facts, Unproven Facts and Respective Grounds

3.1. The following facts are considered proven:

i) The following (11) liquidations of Stamp Duty (IS) are at issue:

1. Stamp Duty liquidation no...., dated 05/04/2016, relating to the property registered in the urban property matrix under article U-...-RC, of the Union of Freguesias of ... and ..., municipality of Loures, relating to the year 2015, issued by the AT, from which resulted a tax amount of €1,885.70, which was notified to the Claimant through collection documents identified, respectively, with nos. 2016 ..., 2016 ... and 2016 ... (see Docs. 1 to 3);

2. Stamp Duty liquidation no...., dated 05/04/2016, relating to the property registered in the urban property matrix under article U-...-... ESQ, of the Union of Freguesias of ... and ..., municipality of Loures, relating to the year 2015, issued by the AT, from which resulted a tax amount of €1,016.50, which was notified to the Claimant through collection documents identified, respectively, with nos. 2016..., 2016 .. and 2016 ... (see Docs. 4 to 6);

3. Stamp Duty liquidation no...., dated 05/04/2016, relating to the property registered in the urban property matrix under article U-...-... DT, of the Union of Freguesias of ... and ..., municipality of Loures, relating to the year 2015, issued by the AT, from which resulted a tax amount of €1,016.50, which was notified to the Claimant through collection documents identified, respectively, with nos. 2016..., 2016 ... and 2016 ... (see Docs. 7 to 9);

4. Stamp Duty liquidation no...., dated 05/04/2016, relating to the property registered in the urban property matrix under article U-...-... ESQ, of the Union of Freguesias of ...and ..., municipality of Loures, relating to the year 2015, issued by the AT, from which resulted a tax amount of €1,016.50, which was notified to the Claimant through collection documents identified, respectively, with nos. 2016..., 2016 ... and 2016 ... (see Docs. 10 to 12);

5. Stamp Duty liquidation no...., dated 05/04/2016, relating to the property registered in the urban property matrix under article U-...-... DT, of the Union of Freguesias of ... and ..., municipality of Loures, relating to the year 2015, issued by the AT, from which resulted a tax amount of €1,016.50, which was notified to the Claimant through collection documents identified, respectively, with nos. 2016..., 2016 ... and 2016 ... (see Docs. 13 to 15);

6. Stamp Duty liquidation no...., dated 05/04/2016, relating to the property registered in the urban property matrix under article U-...-... ESQ, of the Union of Freguesias of ... and ..., municipality of Loures, relating to the year 2015, issued by the AT, from which resulted a tax amount of €1,016.50, which was notified to the Claimant through collection documents identified, respectively, with nos. 2016..., 2016 ... and 2016 ... (see Docs. 16 to 18);

7. Stamp Duty liquidation no...., dated 05/04/2016, relating to the property registered in the urban property matrix under article U-...-... DT, of the Union of Freguesias of ... and ..., municipality of Loures, relating to the year 2015, issued by the AT, from which resulted a tax amount of €1,016.50, which was notified to the Claimant through collection documents identified, respectively, with nos. 2016..., 2016 ...and 2016 ... (see Docs. 19 to 21);

8. Stamp Duty liquidation no...., dated 05/04/2016, relating to the property registered in the urban property matrix under article U-...-4 ESQ, of the Union of Freguesias of ... and ..., municipality of Loures, relating to the year 2015, issued by the AT, from which resulted a tax amount of €1,016.50, which was notified to the Claimant through collection documents identified, respectively, with nos. 2016..., 2016 ... and 2016 ... (see Docs. 22 to 24);

9. Stamp Duty liquidation no...., dated 05/04/2016, relating to the property registered in the urban property matrix under article U-...-4 DT, of the Union of Freguesias of ... and ..., municipality of Loures, relating to the year 2015, issued by the AT, from which resulted a tax amount of €1,016.50, which was notified to the Claimant through collection documents identified, respectively, with nos. 2016 ..., 2016 ... and 2016 ... (see Docs. 25 to 27);

10. Stamp Duty liquidation no...., dated 05/04/2016, relating to the property registered in the urban property matrix under article U-...-5 ESQ, of the Union of Freguesias of ...and..., municipality of Loures, relating to the year 2015, issued by the AT, from which resulted a tax amount of €1,016.50, which was notified to the Claimant through collection documents identified, respectively, with nos. 2016..., 2016 ... and 2016 ... (see Docs. 28 to 30); and

11. Stamp Duty liquidation no...., dated 05/04/2016, relating to the property registered in the urban property matrix under article U-...-5 DT, of the Union of Freguesias of ... and ..., municipality of Loures, relating to the year 2016, issued by the AT, from which resulted a tax amount of €1,016.50, which was notified to the Claimant through collection documents identified, respectively, with nos. 2016 ..., 2016 ... and 2016 ... (see Docs. 31 to 33).

ii) The Claimant is the head of the estate opened by the death of B..., who died on 5/4/2013 (as per death certificate attached as Doc. 38), she and the son of both, C..., being the only heirs of the aforementioned estate. The urban property in question, which is part of the assets of the aforementioned estate, is composed of 6 floors, with 11 divisions, all with independent use (see Docs. 40 and 41). All 11 divisions are functionally and economically independent, being distinct and isolated from each other, with separate access to a common part of the property or to the public road (as is the case with the shop, which corresponds to article U-...-RC – see Docs. 1 to 33, and 40). Each one of these 11 divisions corresponds to its own property article.

iii) As shown in the table contained in point 19 of the request for arbitral pronouncement, it can be verified that the VPT attributed to each of the 11 fractions does not exceed, for any of them, the one million euros contained in item no. 28 of the TGIS (there are 10 fractions with, each one, a VPT of €101,650.00, and one fraction with a VPT of €188,570.00) – see Docs. 1 to 33, and 40.

iv) The Claimant was notified of the liquidations referred to above, in the total amount of €12,050.70 – an amount that was paid by the Claimant (see Docs. 1 to 33).

v) On 1/8/2016, the ora Claimant filed an administrative appeal (reclamação graciosa) against the 11 liquidations identified above (see Doc. 34). By means of Official Letter no...., of 20/10/2016, from the SF of Loures ..., the Claimant was notified of the decision issued on 20/10/2016, which dismissed the aforementioned administrative appeal (see Doc. 37).

vi) Aggrieved, the Claimant filed the present request for arbitral pronouncement on 29/11/2016.

3.2. There are no facts not proven that are relevant to the decision of the case.

3.3. The facts considered pertinent and proven (v. 3.1) are grounded in the analysis of the positions set forth by the parties and the documentary evidence attached to the present case.

IV – On the Law

In the case now under review, the essential questions that arise are: 1) whether the subjection to IS, pursuant to the provisions of item no. 28 of the TGIS, is determined by the VPT that corresponds to each of the parts of the property with residential use, or whether, instead, it is determined by the global VPT of the property, which would correspond to the sum of all VPTs of the floors or independent units that comprise it; 2) whether the claimed indemnificatory interest is owed.

Let us then examine.

1. At the origin of the first question is item no. 28 of the TGIS, added by Article 4 of Law no. 55-A/2012, of 29/10, which provides as follows:

"28 – Ownership, usufruct or right of superficies of urban properties whose taxable value entered in the matrix, in accordance with the Code of Municipal Property Tax (CIMI), is equal to or greater than €1,000,000.00 – on the taxable value for purposes of IMI: 28.1 – Per property with residential use – 1%. 28.2 – Per property, when the taxpayers who are not natural persons are residents in a country, territory or region subject to a clearly more favorable tax regime, contained in the list approved by ordinance of the Minister of Finance – 7.5%."

Law no. 55-A/2012, which came into force on 30/10/2012, did not proceed to define the concepts contained in the aforementioned item no. 28, namely, the concept of "property with residential use". However, observing what Article 67, no. 2, of the Code of Stamp Duty (CIS), also added by the aforementioned Law no. 55-A/2012, provides, it is verified that "to matters not regulated in the present code relating to item 28 of the General Table, the CIMI applies subsidiarily." Where there is doubt as to the scope of the aforementioned item, it is thus justified to observe what the CIMI says.

From a reading of the CIMI it is perceived that the concept of "property with residential use" refers, naturally, to the concept of "urban property" which is defined in Articles 2 and 4. For its part, it is verified that the determination of VPT follows Articles 38 et seq. of the CIMI.

Among the various types of "urban properties" (Article 6), there is expressly mentioned "residential urban properties" [v. no. 1, al. a)], adding thereafter, no. 2 of the same article of the CIMI, that these "are buildings or constructions licensed for such purpose or, in the absence of a license, that have as their normal destination each of these purposes."

If it is true that no. 4 of Article 2 of the CIMI states that, "for the purposes of this tax, each autonomous fraction, under the horizontal property regime, is deemed to constitute a property", it is equally true that there is nothing in the law that points to a distinction between properties in horizontal and vertical ownership as regards their identification as "residential urban properties". From this it is concluded that autonomous parts of properties in vertical ownership with residential use should be considered as "residential urban properties".

In fact, it makes no sense to distinguish in law what the law itself does not distinguish (ubi lex non distinguit nec nos distinguere debemus). Indeed, nothing indicates, either in item no. 28, or in the provisions of the CIMI, a justification for that particular differentiation. Note, in this regard, what Article 12, no. 3, of the CIMI provides: "each floor or part of a property susceptible to independent use is considered separately in property registration, which also discriminates its respective taxable value."

The uniform criterion that is thus required is that which determines that the incidence of the norm in question only takes place when one of the parts, floors or divisions with independent use of a property in horizontal or full ownership with residential use, possesses a VPT greater than €1,000,000.00. Fixing as the reference value, for the incidence of the new tax, the global VPT of the property in question, finds no basis in the applicable legislation, which is the CIMI, considering the referral made by the aforementioned Article 67, no. 2, of the CIS.

Thus, and observing the case now under review, it is verified that, as noted by the Claimant, "the VPT that appears in the matrix of each of the aforementioned 11 independent divisions [...] is not equal to or greater than €1,000,000.00" (see point iii) of the proven facts). From this it is concluded, in light of what has been set forth above, that IS as referred to in item no. 28 of the TGIS should not apply to these, being, consequently, illegal the liquidation acts impugned by the ora Claimant.

In fact, and as well noted by the DA issued in proc. no. 552/2015-T, of 27/1/2016, in a case identical to the one now under review, "the main question brought before the court [...] is to know whether the subjection to Stamp Duty (item 28 of the TGIS) of an urban property not constituted in horizontal property is determined by the VPT that corresponds to each of the divisions with independent use and with residential use [...], or whether it is determined by the global VPT of the property, which would correspond to the sum of all VPTs of the floors or divisions with independent use and residential use that comprise it [...]. Effectively, from a formal point of view, the AT is correct in stating that a property constituted in horizontal property is a distinct legal-tax reality from an urban property in vertical or full ownership. However, if no. 4 of article 2 of the CIMI establishes the legal fiction that each of the autonomous fractions of a property constituted in horizontal property constitutes a property, it does not necessarily follow that a part with independent use of an urban property not constituted in horizontal property is to be considered a property. If the legislator used, in the norm of item 28.1 of the TGIS, the expression "urban property with residential use", it does not seem legitimate that the AT would intend to include in it the floors or divisions with independent use of properties not constituted in horizontal property which, as it itself acknowledges, are not properties, and therefore cannot be equated to the autonomous fractions of properties constituted under the horizontal property regime. With regard to the determination of the taxable value of properties not constituted in horizontal property, Article 7, no. 2, of the CIMI applies, but only as regards "urban properties with parts that may be classified in more than one of the classifications of no. 1 of the previous article", in which case, according to its al. b) "(…) each part is assessed by application of the corresponding rules, the value of the property being the sum of the values of its parts". And this is the only norm of the CIMI in which reference is made to the "[global] value of the property", without, however, this having any relevance at the level of tax liquidation. Thus, from the combination of the norms of no. 2 of article 7 and of no. 1 of article 6, both of the CIMI, it results that, if an urban property not constituted in horizontal property comprises exclusively parts or divisions intended for housing, the value of the property does not equal the sum of its parts."

It should be noted, lastly, that this understanding (of an infra-constitutional order), which has been defended here, has been endorsed by the STA, as can be seen from the recent Decision no. 47/15, of 9/9/2015, in which it was signaled, in a clear manner, that, "where a property constituted in vertical property is concerned, the incidence of IS should be determined, not by the VPT resulting from the sum of the VPT of all divisions or floors susceptible to independent use (individualized in the property article), but by the VPT attributed to each of those floors or divisions intended for housing."

See also, in this regard, what was pertinently observed in the following recent decision of the STA (Decision of 24/5/2016, issued in appeal 1344/15): "the question that it is incumbent on us to decide relates to the interpretation of items 28 and 28.1 of the General Table of Stamp Duty (TGIS) added by Article 4 of Law no. 55-A/2012, of 29/10, in order to define whether it applies to urban properties, with a single property article but constituted by parts with use and residential purpose to which were attributed independent VPTs, each of these of a value less than one million euros. This question is no longer new in this Supreme Court and has been given a uniform answer in the sense upheld in the appealed judgment [that is, and as summarized by this decision: "Where a property constituted in vertical property is concerned, the incidence of IS should be determined, not by the VPT resulting from the sum of the VPT of all divisions or floors susceptible to independent use (individualized in the property article), but by the VPT attributed to each of those floors or divisions intended for housing."], by all, the decision dated 04.05.2016, appeal no. 0166/16. Also the Constitutional Court has already ruled on the constitutional dimension of this norm in light of the principles of tax equality, contributive capacity and proportionality, having concluded that the norm contained in items 28 and 28.1 of the General Table of Stamp Duty, added by Article 4 of Law no. 55-A/2012, of 29 October, to the extent that it imposes annual taxation on the ownership of urban properties with residential use, whose taxable value is equal to or greater than €1,000,000.00, is not unconstitutional, by all Decision 247/2016, dated 04.05.2016. In the present appeal there is no need for assessment of the norm in question in light of such principles and constitutional parameters, rather it is necessary to undertake a teleological and systematic interpretation of the same, and therefore the jurisprudential orientation that has been followed by the common courts, and which will now be followed, does not touch the good doctrine imposed by that Constitutional Court."

1. In light of what is provided in no. 5 of Article 24 of the RJAT – "interest is due, regardless of its nature, in accordance with the terms provided in the general tax law and in the Tax Code of Procedure and Process" –, it has been understood that this norm permits the recognition of the right to indemnificatory interest in arbitral processes. It is thus justified to analyze the present claim.

Indemnificatory interest is owed when it is determined, in an administrative appeal or judicial challenge, that there has been an error attributable to the tax authority from which results payment of the tax debt in an amount greater than legally due (see Article 43, no. 1, of the LGT). It is, therefore, a necessary condition for the award of the aforementioned interest the demonstration of the existence of error attributable to the tax authority: "The right to indemnificatory interest provided for in no. 1 of Article 43 of the LGT [...] depends on it being demonstrated in the case that that act is affected by error regarding the factual or legal presuppositions attributable to the AT." (Decision of the STA of 30/5/2012, proc. 410/12); "The right to indemnificatory interest provided for in no. 1 of Article 43 of the General Tax Law presupposes that it be determined in the case that in the liquidation 'there was error attributable to the tax authority', understood as the 'error regarding the factual or legal presuppositions attributable to the Tax Administration'" (Decision of the STA of 10/4/2013, proc. 1215/12).

Having existed, as follows from what was said in point 1), error attributable to the tax authority, this determines the merit of the claim for payment of indemnificatory interest to the Claimant.

V – DECISION

In light of the foregoing, it is decided:

– To declare the illegality of the Stamp Duty liquidations impugned, due to error in the legal presuppositions, determining their annulment, as well as the refund of the amount of €12,050.70, induly paid.

– To judge the claim to have merit also in the part that concerns the recognition of the right to indemnificatory interest in favor of the claimant.

The amount of the case is set at €12,050.70 (twelve thousand and fifty euros and seventy cents), pursuant to Article 32 of the CPTA and Article 97-A of the CPPT, applicable by virtue of the provisions of Article 29, no. 1, als. a) and b), of the RJAT, and Article 3, no. 2, of the Regulation of Costs in Tax Arbitration Proceedings (RCPAT).

Costs to be borne by the respondent, in the amount of €918.00 (nine hundred and eighteen euros), pursuant to Table I of the RCPAT and in compliance with the provisions of Articles 12, no. 2, and 22, no. 4, both of the RJAT, and the provisions of Article 4, no. 4, of the aforementioned Regulation.

Notify.

Lisbon, 31 May 2017.

The Arbitrator

(Miguel Patrício)

Text prepared by computer, in accordance with the provisions of Article 131, no. 5, of the CPC, applicable by referral of Article 29, no. 1, al. e), of the RJAT.

The wording of the present decision is governed by the spelling prior to the Orthographic Agreement of 1990.