Summary
Full Decision
ARBITRAL TAX JURISPRUDENCE
Case No. 708/2018-T
Date of Decision: 2019-07-29
Value of Claim: € 13,380.50
Subject Matter: Corporate Income Tax - Item 28.1 of the General Stamp Duty Table - Property in full ownership without floors or divisions capable of independent use - Year 2014
ARBITRAL DECISION
1 - Report
1.1 – A..., S.A., which previously traded under the firm name "B..., S.A.", with the tax identification number ... and with registered office at Avenida ..., no. ..., in ..., in its capacity as managing company and in representation of "C...", with registered office at ..., no. ..., in Lisbon, hereinafter referred to as the "Claimant", with the tax identification number ..., hereby requests, under the terms of articles 2, no. 1, subparagraph a) and 10, nos. 1 and 2, both of Decree-Law no. 10/2011, of 20 January (Legal Framework for Arbitration in Tax Matters), hereinafter referred to only as the "RJAT" and articles 1 and 2 of Administrative Order no. 112-A/2011, of 22 March, the constitution of a single arbitral tribunal, with the Tax and Customs Authority as the Respondent (hereinafter "Respondent" or "AT").
1.2 - The request for arbitral pronouncement, submitted on 31 December 2018, has as its object the declaration of illegality of the rejection order of the official review request no. ...2016..., issued by the Deputy Director of Finance of Lisbon, on 24 September 2018, under delegated authority, and the consequent annulment of the stamp duty tax (item 28.1 of the General Stamp Duty Table – TGIS) with no. 2014..., issued by the "AT" on 20-03-2015, with reference to the year 2014, in the amount of 13,380.50 € (thirteen thousand, three hundred and eighty euros and fifty cents), to which the collection notes nos. 2015..., 2015... and 2015... relate, the first in the amount of 4,460.18 € and each of the remaining ones in the amount of 4,460.18 €, with payment deadline in the months of April, July and November of the year 2015, respectively.
1.3 – The Claimants chose not to appoint an arbitrator.
1.4 - The request for constitution of the arbitral tribunal was accepted by the President of CAAD and notified to the AT on 03 January 2019.
1.5 - The undersigned was appointed by the President of the Deontological Council of CAAD as arbitrator of the single arbitral tribunal, under the terms provided in article 6 of the RJAT, and notification of acceptance of the appointment was communicated within the applicable timeframe.
1.6 - On 15 February 2019, the Parties were notified of this appointment and did not object to it, under the combined terms of article 11, no. 1, subparagraphs a) and b) of the RJAT and articles 6 and 7 of the Deontological Code of CAAD.
1.7 - Thus, in accordance with the provision of article 11, no. 1, subparagraph c), of the RJAT, the single arbitral tribunal was constituted on 07 March 2019.
1.8 - The AT was notified, by arbitral order of 07 March 2019, under the terms of article 17, no. 1 of the RJAT, to present its Response, if it so wished, and request the production of additional evidence within 30 days.
1.9 - It was further notified to present, within the same period, the administrative file (PA) referred to in article 111 of the CPPT.
1.10 – On 08 April 2019 the AT requested the extension of the deadline for submission of the Response for a period of fifteen days.
1.11 This was granted by order of the same date, issued under the terms of no. 2 of article 19 of the RJAT and no. 5 of article 569 of the CPC, the latter applicable by force of subparagraph e), no. 1 of article 29 thereof.
1.12 - On 07 May 2017, the Respondent submitted its Response, defending itself by exception (extinction of the right of action by failure to meet the deadline for constitution of the arbitral tribunal, cf. article 27 of the statement of claims) and merits, arguing for the dismissal of the request for arbitral pronouncement as unsubstantiated, maintaining the tax act of assessment in the legal order with the consequent discharge of the Respondent from the claim.
1.13 - On the same date it attached to the proceedings the respective PA.
1.14 - Considering that the Parties did not request the production of any evidence beyond the documentary evidence attached to the proceedings, the Arbitral Tribunal, in light of the principles of autonomy in case management, expedition, simplification and procedural informality, inherent in articles 16 and 29, no. 2, of the RJAT, by order of 07 May 2019, dispensed with the holding of the meeting provided for in article 18 of the same Decree-Law, and further decided that the proceedings should continue with optional written arguments, within 10 days, successively for the Respondent.
1.15 - By the same order it was determined that the arbitral decision would be issued by the deadline referred to in article 21, no. 1 of the RJAT, that is, by 09 September 2019, by force of the provision in subparagraph e) of article 279 of the Civil Code, since day 8 of the same month is a non-working day (Sunday).
1.16 – The Parties did not submit arguments.
1.17 – On 12 June 2019 and in view of the principle of adversarial proceedings, in light of the exception invoked by the Respondent (extinction of the right of action by failure to meet the deadline for constitution of the arbitral tribunal), an order was issued, notified on the same date to the Claimant, so that it could pronounce itself, if it so wished, within ten days, having, however, opted for silence.
Position of the Parties
Of the Claimant -
It supports its request for arbitral pronouncement, briefly, as follows:
That it is the owner of an urban property with article ... of the parish of ..., municipality of Lisbon, registered in the matrix as land for construction, on which the AT proceeded with the assessment of stamp duty for the year 2014, relating to item 28.1 of the General Stamp Duty Table (TGIS), to which correspond the collection notes nos. 2015..., 2015 ... and 2015..., in the total amount of 13,380.50 €.
That the referred item of the TGIS, in its latest wording introduced by Law no. 83-C/2013, of 31 December, in force from 01 January 2014, provided for the taxation of "land for construction whose building, authorized or envisaged, is for housing" whose tax property value was equal to or greater than 1,000,000.00 €.
Thus, with respect to land for construction, the relevant taxable event for such taxation was based on the ownership of a real right - "ownership, usufruct or right of superficies" - over land for construction which, having a tax property value equal to or greater than 1,000,000.00 €, had a building for housing "authorized or envisaged", with the consequent existence of the respective administrative proceedings associated with construction and the necessary building license/authorization and respective approved project.
Thus the right to build is not inherent in the property right, but only arises anew in the owner's patrimony when an administrative act of the competent public entity recognizes and authorizes it, which does not occur with the property in question, since the same did not have, in 2014, a building, authorized or envisaged for housing.
Given that the contested assessment is manifestly illegal, due to error in the factual and legal assumptions, it should be annulled.
It further states that, given the activity it carries out, the immovable properties of which it is the owner are intended for lease, and thus, in these terms as well, the assessment appears manifestly illegal due to error in the factual and legal assumptions, and should be annulled.
Further, as a subsidiary argument, it raises the unconstitutionality of item 28.1 of the TGIS, for violation of the principles of equality and tax capacity, enshrined in articles 13 and 104, no. 3, respectively, of the Constitution of the Portuguese Republic, when interpreted in a way that applies to land for construction, since the assessment is liable to give rise to differential treatment and unjustified inequality among taxpayers.
It concludes by arguing for the admissibility of the request for arbitral pronouncement and consequently for the annulment of the rejection order issued in the proceeding instituted under the terms of the official review request no. ...2016... and annulment of the contested assessment, in the amount of 13,380.50 €, with all the consequences provided for in law, namely the reimbursement of the amount unduly paid, plus the corresponding compensatory interest.
Of the Respondent -
Defending itself by exception, it invokes the following arguments:
That the request for arbitral pronouncement is manifestly untimely, in light of the deadline provided for in article 10, no. 1 of the RJAT, and therefore the dilatory exception referred to in subparagraph h), no. 1 of article 89 of the CPTA and subparagraph e), no. 1 of article 287 of the CPC applies (we believe by lapse reference was made to this provision of the CPC/61 instead of article 277 of the CPC/2013), which determines its discharge from the proceedings.
Defending itself on the merits, it invokes the following arguments:
That the contested assessment does not suffer from any error in the factual and legal assumptions, and therefore should be maintained.
That, contrary to what the Claimant contends, the property in question is not land for construction, but rather a property in full ownership, without floors or divisions capable of independent use. In fact, according to the Certificate of Property Description, the 1st Evaluation Sheet made in 2013, and printouts of property elements extracted from the AT's computer system, which are part of the Administrative File (PA) attached to the proceedings, the urban property in question is registered under article ... of the property matrix of the parish of ..., being constituted under the regime previously referred to with a TaxPV of 1,338,050.00 €.
In fact, in all IMP Model 1 declarations submitted by the Claimant as well as in the respective sheets relating to the evaluations made, it was never mentioned that the property in question is land for construction, but rather a property in full ownership, without floors or divisions capable of independent use, intended for housing.
The TaxPV of the property in question at the date of the taxable event (31-12-2014) was 1,338,050.00 €, in light of the evaluation made on 27-01-2014, resulting from the Model 1 IMP declaration submitted on 28-12-2013, and that was the tax property value used for stamp duty purposes, cf. final part of item 28 of the TGIS and the provision of article 113/1 of the IMPI, applicable by force of article 67/2 of the Stamp Duty Code.
Thus the assessment in question was made by reference to item 28.1 of the TGIS because it was a residential property with TaxPV equal to or greater than 1,000,000.00 €, and therefore, with the TaxPV of the property in question being 1,338,050.00 € and the rate of 1%, the tax was assessed in the amount of 13,380.50 € (1,338,050.00 € x 1%).
It concludes by arguing for the total dismissal of the request for arbitral pronouncement and discharge of the Respondent, maintaining in the legal order the contested tax act, since the disputed assessment embodies a correct interpretation and application of law to the facts, not suffering from any defect of violation of law through error in the assumptions.
2. Preliminary Matters
2.1 - Because the peremptory exception invoked may result in the total discharge from the claim, cf. article 576, no. 3 of the Code of Civil Procedure (CPC), it should be addressed ex officio and with priority (article 579 of the CPC).
It should be noted from the outset that the extinction of the right of action by failure to meet the deadline for constitution of the arbitral tribunal constitutes a peremptory exception rather than a dilatory one, which results in total or partial discharge from the claim, cf. decisions of the STA of 17-06-2015 (Case 0194/15) and 22-05-2013 (Case 0340/13).
Thus:
According to the AT, the Claimant should have submitted the request for arbitral pronouncement within 90 days counted from the final date for voluntary payment of the assessment, in light of the provision of article 10, no. 1, subparagraph a) of the RJAT, combined with article 102, no. 1, subparagraph a) of the CPPT.
Therefore, given that the last day of the deadline for voluntary payment occurred on 30 November 2015, cf. article 120, no. 1, subparagraph c) of the IMPI Code, applicable ex vi of article 67, no. 2 of the Stamp Duty Code, as well as doc. 4 attached by the Claimant, the request for arbitral pronouncement would be manifestly untimely as it was submitted on 31 December 2018, that is, on a date after 29 February 2016, by force of the provision of article 279, subparagraph e) of the Civil Code, since day 28 of the same month (last day of the deadline was Sunday).
Thus occurring "(…) the dilatory exception referred to in subparagraph h), no. 1, of article 89 of the CPTA, and subparagraph e), no. 1 of article 287 of the CPC, applicable ex vi of article 2 of the RJAT, which determines the discharge of the Respondent from the proceedings".
On 12-06-2019 the Claimant was notified to respond, if it so wished, within ten days to the said exception, which it failed to do and did not submit arguments for which it was also notified.
However, the request for constitution of the arbitral tribunal was submitted on 31 December 2018, following notification of the order rejecting the official review request of the assessment now impugned, submitted by the Claimant on 21 December 2016, under the provision of article 78, no. 1, of the General Tax Law (LGT), and processed in the Finance Directorate of Lisbon with no. ...2016... .
The said rejection order was issued by the Deputy Director of Finance of Lisbon, on 24 September 2018, under delegated authority, and notified to the Claimant on 01 October 2018, in the terms and manner provided in no. 10 of article 39 of the CPPT, that is, on the 5th day after the registration of availability of the notification in the Claimant's electronic mailbox, cf. subparagraph n) of the evidence, and had the following content: "Seen. In light of the opinions and proposals that precede, the content, substance and grounds of the information provided below, I consider that the request does not merit approval, with the rejection plan of the request becoming final, since, according to what is reported, the legal requirements provided for the requested Review are not met. Necessary actions".
In the information of 21-08-2018, on which the rejection order was based, under the terms of article 77, no. 1 of the LGT, the suitability of the means and timeliness of the official review request are challenged, being stated in point 6.3: "In this sense, it is verified that the request made by statement, which is considered submitted on 2016-12-20 (pages 18), under the terms of no. 2 of article 26 of the CPPT, appears manifestly UNTIMELY, in that the deadline for payment dates to 2015".
It may be said in passing that, if the decision had been limited to examining the timeliness of the request for review of the tax act, and not also its legality, as actually occurred and is stated in the said information, the means of challenge would be the administrative action provided for in article 37 of the Code of Procedure in Administrative Courts (CPTA) and not impugning or requesting arbitral pronouncement.
In fact, according to Jorge Lopes de Sousa, the competence of arbitral tribunals "is restricted to activity connected with tax assessment acts, falling outside their competence the examination of the legality of administrative acts of total or partial rejection or revocation of exemptions or other tax benefits, when dependent on recognition by the Tax Administration, as well as other administrative acts relating to tax matters that do not involve examination of the assessment act, referred to in subparagraph p) of no. 1 of article 97 of the CPPT".
The examination of the competence of the arbitral tribunal involves a judgment on the suitability of the administrative action or judicial impugnation proceedings in the case sub judice, having regard to the provision of that article, which defines the respective fields of application, distinguishing "impugning administrative acts in tax matters that involve examination of the legality of the assessment act" (subparagraph d) of no. 1) and "contentious challenge of total or partial rejection or revocation of exemptions or other tax benefits, when dependent on recognition by the tax administration, as well as other administrative acts relating to tax matters that do not involve examination of the legality of the assessment act" (subparagraph p) of no. 1), and that under no. 2 of article 97, the "contentious challenge of administrative acts in tax matters, which do not involve examination of the legality of the assessment act, by the tax administration, comprising central government, regional governments and their members, even when performed by delegation, is governed by the rules on proceedings in administrative courts".
To specify this distinction between the scope of application of these procedural means, which, by force of subparagraph a) of no. 1 of article 2 of the RJAT, is relevant in defining the competence of tax arbitral tribunals, consolidated case law provides that "the use of judicial impugning proceedings or contentious challenge (now administrative special action, by force of the provision of article 191 of the CPTA) depends on the content of the impugned act: if this involves examination of the legality of an assessment act the judicial impugning proceedings will apply, and if it does not involve such examination the contentious challenge/administrative special action applies" (cf. decision of the STA of 25.06.2009, case no. 0194/09).
This understanding, consolidated by the case law of the Arbitral Tribunals, which function within the scope of CAAD (cf. decisions nos. 148/2014-T, of 19-09-2014; 236/2013-T, of 22-04-2014; and 244/2013-T, of 06-05-2014, among others).
Also the case law of the Supreme Administrative Court has been pronouncing in the same sense, cf. decisions of 14-05-2015 (Case 01958/13), 18-06-2014 (Case 01752/13) and 28-05-2014 (Case 01263/13), among many others.
Thus it is absolutely necessary to assess the suitability and timeliness of the official review request as well as the request for constitution of the arbitral tribunal:
As to the timeliness of the review of the contested tax act -
Indeed article 78, no. 1 of the LGT states: "The review of tax acts by the entity that performed them may be carried out on the initiative of the taxpayer, within the period of administrative complaint and on the grounds of any illegality, or, on the initiative of the tax administration, within four years after the assessment or at any time if the tax has not yet been paid, on the grounds of error attributable to the services".
The assessment in question with no. 2014..., in the amount of 13,380.50 €, relates to the year 2014 and was made with reference to Item 28.1 of the TGIS, on 20 March 2015.
Thus, its review should occur, if effected on the initiative of the Claimant, within the period of administrative complaint and on the grounds of any illegality, or within four years after the assessment, if effected on the initiative of the Tax and Customs Authority.
However, it has been understood in case law that the review of the tax act on the initiative of the tax administration may be effected at the request of the taxpayer, as results from article 78, no. 1, of the LGT and article 86, no. 4, subparagraph a), of the CPPT, within four years counted from the assessment (or at any time, in case the tax has not been paid), thereby investing the taxpayer with a right to a decision on the request formulated. And the "error attributable to the services" referred to in article 78, no. 1, at the end, of the LGT comprises not only lapse, material error or factual error, but also error of law, and such attribution to the services is independent of proof of fault of the officials involved in the issuance of the affected assessment. - - -
In the same sense Jorge Lopes de Sousa and others when they state: "(…) In any case, the duty of the Administration to carry out the review of tax acts in favor of the taxpayer, when it detects such a situation on its own initiative or that of the taxpayer, exists in relation to all taxes, as the principles of justice, equality and legality, which the tax administration must observe in the totality of its activity (article 266, no. 2, of the CRP and 55 of the LGT), require that all errors in assessments that have led to the collection of tax in an amount greater than what would be due in light of the law be automatically corrected (…). Thus it is to be concluded that, the fact that the period of administrative complaint and judicial impugning of the assessment act has elapsed, does not prevent the taxpayer from requesting the official review and contending against the act rejecting it".
Thus, considering that the contested assessment was made on 20 March 2015 and that the review request was submitted to the competent entity on 21 December 2016, it must be concluded that it is timely, since the four-year period referred to in no. 1 of article 78 of the LGT was not exceeded, cf. the provision of subparagraph c) of article 279 of the Civil Code.
As to the timeliness of the request for constitution of the arbitral tribunal -
Under the terms of article 10, no. 1, subparagraph a) of the RJAT, the request for constitution of an arbitral tribunal is submitted within 90 days, counted from the events provided in nos. 1 and 2 of article 102 of the Code of Tax Procedure and Process (CPPT), regarding acts capable of autonomous impugning and, as well, from the notification of the decision or the expiry of the legal deadline for decision of the hierarchical appeal.
Although the review of the tax act at the request of the taxpayer is an administrative, and not contentious, means of challenge, it will open access to contentious proceedings, since the decision on the review request is capable of direct impugning under the terms of article 97, no. 1, subparagraph d) and article 102, no. 1, subparagraph e), both of the CPPT, corresponding therefore to the notification of the rejection order issued in the review of the tax act.
Thus, considering that the Claimant was notified of the respective rejection order, issued in the proceeding for review of the tax act, on 01 October 2018, which will constitute the initial term or dies a quo for the submission of the request for constitution of the arbitral tribunal, cf. subparagraph n) of the evidence; and
That the request for constitution of the arbitral tribunal was submitted on 31 December 2018, it is timely, since the 90-day period provided for in article 10, no. 1, subparagraph a) of Decree-Law no. 10/2011, of 20 January, combined with the provision of subparagraph e) of article 279 of the Civil Code, was observed, counted under the terms of article 102, no. 1, subparagraph e) of the CPPT.
It is therefore held that the exception raised by the Respondent, of extinction of the right of action, by failure to meet the deadline for submission of the request for constitution of the arbitral tribunal, is unfounded.
2.2 The Parties have legal standing and capacity, show themselves to be legally interested and are regularly represented (articles 4 and 10, no. 2 of the RJAT and article 1 of Administrative Order no. 112-A/2011, of 22 March).
2.3 - The proceedings do not suffer from any nullities.
2.4 - No other circumstances exist that preclude the examination of the merits of the case.
2.5 - No other circumstances exist that preclude the examination of the merits of the case.
3. Factual Matters
3.1 Proved Facts
With relevance to the examination and decision of the issues raised, the following facts are taken as established and proved:
a) On 19 February 2005, in the urban property matrix of the parish of ..., municipality of Lisbon, there was registered, under article ..., a property in full ownership without floors or divisions capable of independent use, located on Rua de ..., nos. .../.., with covered area of 580.00 m2; uncovered area of 47.00 m2; and garden of 1,200.00 m2, with the following description: "Property with 4 floors, being 1 with basement and another with attic. It is intended for housing (mansion). Having outbuildings and garden serving it. Composed of basement with 17 rooms; ground floor with 14 rooms; 1st floor with 16 rooms; attic with 5 rooms" (cf. page 12 of the Administrative File (PA) attached to the proceedings by the Respondent and which is here given as fully reproduced).
b) On 08 May 2008, the said property, described in the ... Registry Office of Land Registry of Lisbon under no. ..., and with the patrimony value of 186,639.99 €, was acquired by "D..., S.A.", taxpayer no. ..., cf. public deed of purchase and sale celebrated on that date in the Notarial Office of E..., located on Rua ..., no. ...-.., in Lisbon (cf. pages 15 to 21 of the PA attached to the proceedings by the Respondent and which is here given as fully reproduced).
c) On 11 June 2008 the property owner submitted at the ... Tax District of Lisbon a Model 1 declaration of the IMPI, to which was assigned no. ..., by reason of the 1st transfer having occurred during the existence of the IMPI, under the terms of article 15, no. 1, of Decree-Law no. 287/2003, of 12 November, having declared it to be a property in full ownership without floors or divisions capable of independent use, intended for housing, with four floors and 52 rooms and attached the property plans (cf. pages 11, 13 and 22/28 of the PA attached to the proceedings by the Respondent and which is here given as fully reproduced).
d) The evaluation of the property, to which corresponded sheet no. ..., was carried out on 28-07-2008, as an urban property intended for housing, in full ownership without floors or divisions capable of independent use, with the TaxPV determined at 1,364,680.00 € (cf. page 10 of the PA attached to the proceedings by the Respondent and which is here given as fully reproduced).
e) Due to reasons related to the administrative division of the city of Lisbon, the property, with matrix registration in the year 1977, came to belong to the parish of ... (...) and registered in the respective matrix under article ... (cf. pages 108/109 of the PA attached to the proceedings by the Respondent and which is here given as fully reproduced).
f) On 28 December 2013 the Claimant submitted a Model 1 declaration, to which was assigned no. ..., under the terms of article 130, no. 3, subparagraph a) of the IMPI (outdated TaxPV), having declared it to be a property in full ownership without floors or divisions capable of independent use, 76 years old, intended for housing, with four floors and 52 rooms (cf. pages 2/3 of the PA attached to the proceedings by the Respondent and which is here given as fully reproduced).
g) The evaluation, to which corresponded sheet no. ..., was carried out on 27-01-2014, as an urban property intended for housing, in full ownership without floors or divisions capable of independent use, with the TaxPV determined at 1,338,050.00 € (cf. pages 7/8 of the PA attached to the proceedings by the Respondent and which is here given as fully reproduced).
h) On 31 December 2014, the urban property registered in the urban matrix of the parish of ..., municipality of Lisbon, under article ..., was a property in full ownership without floors or divisions capable of independent use, intended for housing, with the TaxPV of 1,338,050.00 € (cf. page 61 of the PA attached to the proceedings by the Respondent as well as documents nos. 2 to 4 attached with the request for arbitral pronouncement and which are here given as fully reproduced).
i) On 20 March 2015, the Respondent proceeded with the assessment of stamp duty, relating to item 28.1 of the General Stamp Duty Table, with no. 2014..., with reference to the year 2014, in the amount 13,380.50 € (thirteen thousand, three hundred and eighty euros and fifty cents), to which relate collection notes nos. 2015..., 2015... and 2015..., the first in the amount of 4,460.18 € and each of the remaining ones in the amount of 4,460.18 €, with payment deadline in the months of April, July and November of the year 2015, respectively (cf. documents nos. 2 to 4 attached with the request for arbitral pronouncement and which are here given as fully reproduced).
j) On 17 March 2016, the Claimant submitted a Model 1 declaration of the IMPI, to which was assigned no. ..., under the terms of article 13, no. 1, subparagraph d) of the IMPI, having declared that the areas of the property were calculated using the plans submitted by it, that the property, which was intended for housing, had four floors and 45 rooms, and that it was about to enter works, and therefore needed a new evaluation when the same were completed (cf. pages 22 to 28, 60 and 108/109 of the PA attached to the proceedings by the Respondent and which are here given as fully reproduced).
k) The evaluation, to which corresponded sheet no. ..., was carried out on 19-06-2016, as an urban property in full ownership without floors or divisions capable of independent use, intended for housing, with the TaxPV determined at 1,552,520.00 € (cf. pages 22 to 28, 60 and 108/109 of the PA attached to the proceedings by the Respondent and which are here given as fully reproduced).
l) On 21 December 2016 the Claimant submitted a request for official review of the assessment made, under the terms of article 78, no. 1, of the General Tax Law, which was processed in the Finance Directorate of Lisbon with no. ...2016... (cf. document no. 1 attached with the request for arbitral pronouncement and pages 29/54 of the PA attached to the proceedings by the Respondent, which are here given as fully reproduced).
m) By order of the Deputy Director of Finance of Lisbon, of 24 September 2018, issued under delegated authority, the said official review request was rejected, in the following terms: "Seen. In light of the opinions and proposals that precede, the content, substance and grounds of the information provided below, I consider that the request does not merit approval, with the rejection plan of the request becoming final, since, according to what is reported, the legal requirements provided for the requested Review are not met. Necessary actions (cf. document no. 1 attached with the request for arbitral pronouncement and pages 100/103 of the PA attached to the proceedings by the Respondent, which are here given as fully reproduced).
n) On 01 October 2018 the Claimant was notified of the said rejection order, in the terms and manner provided in no. 10 of article 39 of the CPPT (cf. document no. 1 attached with the request for arbitral pronouncement and pages 99 and 105 of the PA attached to the proceedings by the Respondent, which are here given as fully reproduced).
o) On 31 December 2018 the Claimant submitted a request for constitution of an Arbitral Tribunal, under subparagraph a) of no. 1 of article 2 and article 10 of Decree-Law no. 10/2011, of 20 January.
3.2 Unproved Facts
There are no facts relevant to the decision of the case that should be considered unproved.
3.3 Grounds
Regarding the factual matters, the Tribunal does not have the duty to pronounce on all the alleged material, but rather has the duty to select that which is relevant to the decision, taking into account the claim (or claims) that grounds the request formulated by the claimant [(cf. articles 596, no. 1 and 607, nos. 2 to 4 of the CPC, applicable ex vi of article 29, no. 1, subparagraphs a) and e) of the RJAT)] and record whether it considers it proved or unproved (cf. article 123, no. 2 of the CPPT).
According to the principle of free assessment of evidence, the Tribunal bases its decision, regarding the evidence produced, on its intimate conviction, formed from the examination and assessment it makes of the means of proof brought to the proceedings and in accordance with its experience of life and knowledge of persons (cf. article 607, no. 5 of the CPC). Only when the evidential force of certain means is predetermined in law (e.g., full evidential force of authentic documents, cf. article 371 of the Civil Code) does the principle of free assessment of evidence not apply to the assessment of produced evidence.
Thus, the Tribunal's conviction was founded on the documental collection attached to the proceedings as well as on the positions assumed by the Parties. As for the fact stated in subparagraph h) of the evidence, in which it is considered proved that, on 31 December 2014, the urban property registered in the urban matrix of the parish of ..., municipality of Lisbon, under article ..., was a property intended for housing, in full ownership without floors or divisions capable of independent use, and not land for construction, this also results from the fact that the property has been so described in the matrix since its registration in the year 1977 and continues to be so until 16-04-2019, at least, the date of the property description certificate (pages 108/109 of the PA), with the Claimant itself mentioning such description in the various Model 1 declarations of the IMPI submitted by it on 11-06-2008, 28-12-2013 and 17-03-2016, for the purpose of determining the TaxPV and thus considered by the expert appraiser who, moreover, used the plans submitted by the Claimant, clearly clarifying the type of property in question, cf. pages 22/28 of the PA. On the other hand, the TaxPV of 1,338,050.00 €, determined by the evaluation made on 27-01-2014, following the Model 1 declaration of IMPI submitted on 28-12-2013, is the same as that appearing in the matrix on 31-12-2014, as appears from documents nos. 2 to 4 attached by the Claimant, which in itself indicates the absence of any other alteration to the property description and consequent evaluation that may have occurred in the meantime, especially since the proceedings do not show that any complaint was filed against the matrix for improper inclusion of the property, under the terms of article 130, no. 2, subparagraph b) of the IMPI.
4 - Substantive Law (Grounds)
Object of the Dispute
The issue which constitutes the thema decidendum comes down to determining whether the property registered in the urban matrix of the parish of ..., municipality of Lisbon, under article ..., meets the objective requirements for subjection to stamp duty in accordance with the provision of Item 28.1 of the TGIS, in the wording introduced by article 194 of Law no. 83-C/2013, of 31 December.
Questions to be Decided:
- Of the (il)legality of the contested assessment; and
- Of the request for payment of compensatory interest.
On the (Il)legality of the Contested Assessment -
Under the terms of article 1, no. 1 of the Stamp Duty Code (CIS) stamp duty is levied on all acts, contracts, documents, titles, papers and other facts or legal situations provided for in the General Table (TGIS), including gratuitous transfers.
According to item 28 of this table, the ownership, usufruct or right of superficies of urban properties whose tax property value stated in the matrix, under the terms of the Property Municipal Tax Code (IMPI), is equal to or greater than 1,000,000.00 €, is subject to stamp duty, being levied on the tax property value used for IMPI purposes.
In turn item 28.1 of the same table, in the wording introduced by article 194 of Law no. 83-C/2013, of 31 December, states: "For a residential property or for land for construction whose building, authorized or envisaged, is for housing, under the terms provided in the IMPI Code" a rate of 1%" shall apply.
According to no. 6 of article 1 of the CIS, the concept of property, for purposes of this code, is that defined in the IMPI, that is, that provided for in article 6 of this code, which provides for the following types of urban properties:
"1 - Urban properties are divided into:
a) Residential;
b) Commercial, industrial or for services;
c) Land for construction;
d) Others.
2 - Residential, commercial, industrial or for services are buildings or structures licensed for such use or, in the absence of a license, that have as their normal purpose each of these uses.
3 - Land for construction is considered to be land located inside or outside an urban agglomeration for which a license or authorization has been granted, prior notification admitted or favorable preliminary information issued for a subdivision or construction operation, and also those thus declared in the title of acquisition, except land in which the competent entities prohibit any of those operations, namely those located in green areas, protected areas or that, in accordance with municipal land planning plans, are allocated to spaces, infrastructure or public facilities".
Under the terms of article 2, no. 4 of the CIS, the passive subjects of the tax are those referred to in article 8 of the IMPI, that is, the owner of the property on 31 December of the year to which the tax relates.
Article 23, no. 7 of the CIS (wording in force at the date of the taxable event) states that in the situations provided for in item 28 of the TGIS, the tax is assessed annually, regarding each urban property, by the central services of the Tax and Customs Authority, applying, with the necessary adaptations, the rules contained in the IMPI.
Thus, by force of no. 1 of article 113 of this code, the tax is assessed on the basis of the tax property values of the properties and in relation to the passive subjects that appear in the matrices on 31 December of the year to which the same relates, with the assessment being made in the months of February and March of the following year, cf. no. 2 of the same article.
Under the terms of article 46, no. 5, of the CIS, the collection document is issued within the periods, terms and conditions defined in article 119 of the IMPI, with the necessary adaptations.
Finally article 67, no. 2, states that matters not regulated in the CIS regarding item 28 of the TGIS are subsidiarily subject to the provision of the IMPI.
Examining:
For the Tax and Customs Authority the contested assessment was made in accordance with the Law, namely item 28.1 of the TGIS, in the wording introduced by article 194 of Law no. 83-C/2013, of 31 December, given that the property in question is registered in the matrix as a property in full ownership without floors or divisions capable of independent use, intended for housing.
However, the Claimant considers that the contested assessment suffers from illegality due to a breach of law through error in the factual and legal assumptions, since the said property is land for construction for which no building authorization or envisaged for housing exists.
Thus the crux of the matter comes down to determining whether the urban property located at Rua de ..., no. ..., in Lisbon, registered in the matrix of the parish of ... under article ..., municipality of Lisbon, on the date of the taxable event, that is, 31 December 2014, was a residential property, as stated by the Respondent, or land for construction, as referred to by the Claimant, and, in that case, whether the building, authorized or envisaged, was for housing.
Upon examination of the property description certificate of the said property, issued on 16-04-2019, it clearly appears that the same, initially registered in the matrix of the parish of ..., municipality of Lisbon, under article ..., is not land for construction, but a property in full ownership without floors or divisions capable of independent use, with four floors and 45 rooms, intended for housing, cf. pages 108/109 of the PA (subparagraph j) of the evidence).
In fact, in all Model 1 declarations of IMPI submitted by the Claimant in the period between 11 June 2008 and 17 March 2016, in the number of three, the first because, on 08-05-2008, the 1st transfer took place during the existence of the IMPI (article 15, no. 1, of Decree-Law no. 287/2003, of 12 November); the second, submitted on 28-12-2013, because the TaxPV was considered inadequate (article 130, no. 3, subparagraph a) of the IMPI); and the third for reasons of improvement works (article 13, no. 1, subparagraph d) of the IMPI), it always declared it to be a property, intended for housing, in full ownership without floors or divisions capable of independent use. It further declared that the areas were calculated using the plans submitted by it, cf. pages 22 to 28 of the PA, perfectly clarifying the number of floors of the property (basement, ground floor, 1st floor and attic) with various rooms (fifty-two in the declarations submitted on 11-06-2008 and 28-12-2013 and forty-five in that of 17-03-2016), that the property was intended for housing and was about to undergo works, and therefore needed a new evaluation when the same were completed (reference made in the declaration of 17-03-2016).
It should also be noted that the experts, appointed under the terms of article 63/1 of the IMPI, who proceeded with the fiscal evaluation, confirmed the elements declared by the Claimant.
Thus, given that the property was residential and in full ownership without floors or divisions capable of independent use, on 27-01-2014 and 19-06-2016, the dates of the evaluations made by force of the submission of Model 1 declarations of IMPI of 28-12-2013 and 17-03-2016, respectively, no reason is apparent for the property to be land for construction on 31-12-2014.
Thus, there are no doubts for this Arbitral Tribunal that the property registered in the urban matrix of the parish of ..., municipality of Lisbon, under article ..., on the date of the taxable event (31 December 2014) was a property intended for housing, in full ownership without floors or divisions capable of independent use, with four floors and 52 rooms, especially since the proceedings do not show that any complaint was filed against the matrix for improper inclusion of the property, under the terms of article 130, no. 2, subparagraph b) of the IMPI.
Subsidiarily, the Claimant considers that the special taxation provided for in item 28.1 of the TGIS, when interpreted in a way that applies to "land for construction" is contrary to the principle of equality, enshrined in article 13 of the Constitution of the Portuguese Republic (CRP) and, in parallel, contrary to the principles of tax equality and tax capacity enshrined in article 104, no. 3, of the same Diploma, and therefore requests the non-application of the said provision of the TGIS.
Considering that the property in question is not land for construction, but a property in full ownership without floors or divisions capable of independent use, the Arbitral Tribunal does not need to pronounce on such unconstitutionality. In any case it will always be said that we absolutely agree with the Constitutional Court (Plenary), as per decision no. 378/2018, of 04-07-2018, to which we refer, which decided "not to find unconstitutional the provision of Item 28.1 of the General Stamp Duty Table, approved by Law no. 55-A/2012, of 29 October, and altered by Law no. 83-C/2013, of 31 December, in the part in which it imposes annual taxation on the ownership of land for construction whose building, authorized or envisaged, is for housing, whose tax property value is equal to or greater than €1,000,000.00".
In the same sense decisions nos. 605/2018 and 568/2016 of the same Court, respectively of 14-11-2018 and 19-10-2016, were understood.
Also regarding the non-applicability of item 28.1 of the TGIS in the taxation of urban properties with housing allocation that form part of the economic substrate of the activity of the Claimant, the Constitutional Court has been holding the constitutionality of that rule of incidence, according to, among others, decisions nos. 247/2016, 83/2016, 590/2015 and 568/2016 above referred, respectively of 04-05-2016, 04-02-2016, 11-11-2015 and 19-10-2016, with which we agree and to the arguments of which we refer.
Thus the contested assessment merits no criticism and should be maintained in the legal order, as well as the rejection order, of 24-09-2018, issued in the request for review of the tax act to which the proceeding no. ...2016... refers, since the requirements inherent in items 28 and 28.1 of the TGIS were observed, namely the type of property (residential property); the passive subject (the Claimant, as the owner of the property on the date of the taxable event, that is, on 31-12-2014; the TaxPV on the same date (1,338,050.00 €) and the rate applied (1%).
On the Request for Compensation for Interest
The Claimant further requests that it be paid compensatory interest, for service error, under the terms of article 43, no. 1, of the LGT.
However, given the legal resolution of the case, the request for reimbursement of the amounts paid as stamp duty and the condemnation to payment of compensatory interest are prejudiced (article 608, no. 2, of the CPC).
5 - Decision
In light of the foregoing, it is decided:
a) To hold the peremptory exception of extinction of the right of action raised by the Respondent to be unfounded;
b) To hold unfounded the request for revocation of the order of the Deputy Director of Finance of Lisbon, by delegation, of 24-09-2018, issued in case no. ...2016... relating to the official review proceeding provided for in article 78 of the General Tax Law, maintaining it in the legal order;
c) To hold unfounded the request for arbitral pronouncement regarding the assessment of stamp duty (item 28.1 of the General Stamp Duty Table – TGIS) with no. 2014..., issued by the Tax and Customs Authority on 20-03-2015, with reference to the year 2014, in the amount 13,380.50 € (thirteen thousand, three hundred and eighty euros and fifty cents), with the consequent discharge of the Tax and Customs Authority from the claim; and
d) To condemn the Claimant to payment of the arbitral costs of the proceedings.
Value of the Proceedings
In accordance with the provision of articles 306, no. 2, of the CPC, 97-A, no. 1, subparagraph a) of the CPPT and 3, no. 2 of the Costs Regulation in Tax Arbitration Proceedings (RCPAT), the value of the proceedings is fixed at 13,380.50 €.
Costs
Under the terms of article 22, no. 4 of the RJAT, the amount of costs is fixed at 918.00 €, in accordance with Table I, attached to the RCPAT, to be borne by the Claimant.
Notify.
Lisbon, 29 July 2019.
The Arbitrator,
(Rui Ferreira Rodrigues)
Text prepared by computer, under the terms of the provision in article 131, no. 5, of the CPC, applicable by reference of article 29, no. 1, subparagraph e), of the RJAT.
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