Stamp Tax Exemption on Mortgage Interest: CAAD Ruling 756/2016-T on Article 7(1)(l) CIS

ARBITRAL DECISION

Decide, in these proceedings, the Arbitrators Clotilde Celorico Palma (Arbitrator President), Luís Menezes Leitão appointed by A..., S.A., and Manuel Pires, appointed by the Tax and Customs Authority (Arbitrator Members), to constitute the present Arbitral Tribunal:

I. REPORT

1 – A..., S.A., a company with registered office at Avenida ..., n.º..., in Lisbon, with the unique registration and legal entity number ... (hereinafter referred to as A... or Claimant), requested, pursuant to paragraph a) of Article 2, paragraph 1 and Articles 10 et seq. of Decree-Law No. 10/2011, of 20 January (hereinafter referred to as RJAT), the constitution of an arbitral tribunal in tax matters, with a view to requesting an Arbitral Opinion on the decision dismissing the hierarchical appeal presented against the dismissal of the administrative review claim presented with reference to the assessment of Stamp Tax No. 2015..., in the amount of € 1,481,299.66, and the respective assessments of compensatory interest, relating to the year 2012, with a view to the "declaration of illegality of those dismissal decisions, as well as the respective tax acts".

2 – Substantiating these requests, the Claimant alleged, in summary, that:

a) We are faced with an illegality of the Stamp Tax (IS) assessment on two realities, namely: (i) the default interest relating to housing credit and, (ii) the Merchant Service Fee (hereinafter TSC);

b) With respect to the first illegality, the basis of the corrections lies in an erroneous interpretation by the tax inspection services of the application of the exemption provided for in paragraph l) of Article 7, paragraph 1 of the Stamp Tax Code (hereinafter CIS);

c) The inspection report of January 2015 of the Division of Inspection of Banks and Other Financial Institutions of the Unit of Large Taxpayers of the Tax and Customs Authority (AT) is vitiated by illegality in providing that the default interest charged by the Claimant is not covered by the aforementioned exemption, as there is no legal basis or any intention of the legislator in that sense;

d) The AT makes an erroneous interpretation of the literal, historical, teleological and systematic elements of the aforementioned norm, since IS "never had a punitive character, which, according to the interpretation of the tax administration would have" and "the Portuguese legal system is "unitary", and there is a clear concern of the legal order with the support and incentive to access to own housing [...] it is not logical to now penalize debtors with Stamp Tax on default interest";

e) There cannot be any distinction between the types of interest provided for in the law, for purposes of applying the tax exemption norm, which falls, generically, on all interest, as long as associated with operations carried out by or with credit institutions or equivalent, relating to "loans for acquisition, construction, reconstruction or improvement of own housing";

f) Even if it were erroneously not understood as such and, therefore, if it were understood that default interest should be subject to IS, the AT incurs in "error regarding responsibility for payment of IS", and the burden of this tax should fall on the debtors of such interest, as results from the conjunction of Articles 1 and 3, paragraphs 1 and 3, paragraph g), of the CIS;

g) For its part, with respect to the alleged illegality of the IS assessments relating to the TSC, it is erroneous the understanding of the AT in assuming that this is "a commission, subject to VAT, but exempt from this tax in accordance with paragraph c) of Article 9, paragraph 27 of the VAT Code and, for that reason, according to the Respondent is subject to Stamp Tax, in accordance with paragraphs 1 and 2 of Article 1 of the CIS and in accordance with paragraph c) of Article 2, paragraph 1 of the CIS, falling under item 17.3.4 of the General Table of Stamp Tax (hereinafter TGIS)";

h) There is no basis for extracting from the norm contained in Article 1, paragraph 2, of the CIS, that operations exempt from Value Added Tax (hereinafter VAT) are necessarily subject to IS;

i) The TSC is not a commission, because "we are not dealing with consideration for a financial service and the discount here in question [the TSC] does not have the same cause as commissions for service provision operations";

j) It is important to consider the procedure of operations relating to Automatic Payment Terminals (hereinafter APT), a device for accepting cards that allows payments to be made electronically, as determined by Notebook No. 10, of the Bank of Portugal, of May 2011 - "Payment and Automatic Cash Terminals":

"1. The cardholder (final consumer) gives an order of payment to the merchant for the purchase;

1. The acquirer (the merchant's bank that provided the APT) requests authorization from the card-issuing bank (the final consumer's bank) for the payment;

2. The card-issuing bank authorizes the payment and provides a payment guarantee;

3. The acquirer pays the merchant by discounting an amount from the purchase price (the so-called "Merchant Service Fee");

4. The card-issuing bank reimburses the acquiring bank and this, in turn, pays the former an interchange fee;

5. The card-issuing bank charges its customer (the final consumer, the cardholder) the value of the transaction.";

k) The acquirer provides the service of making the APT available, and for the provision is remunerated by various considerations, invoiced to its customers, which include, in particular, the revenues from APT rental, the revenues from the connection rate and connection to DOV lines ("Data Over Voice");

l) In the relationship between the acquirer and the merchant established within this operation, it is stipulated that the former pays to the latter the value of the credit that the latter holds over the final consumer, thus exonerating the latter, that is, it is the acquirer that acquires the credit from the merchant;

m) It is stipulated that such acquisition is carried out contemplating a discount on the nominal value of the credits ceded and it is that positive difference between the value of acquisition of the credits (cession price) and the value of the credits ceded that is designated by TSC;

n) The merchant does not receive, therefore, the amount corresponding to the transactions in their entirety, but a lower amount than the price of the goods or services sold or provided – which corresponds to the so-called TSC;

o) For the provision of the various services inherent to the making available of APTs, the merchant remunerate the Bank through various commissions: rental and management commissions, line fees, registrations, connection fees and commissions for other additional services;

p) Even if it is considered that the TSC is subject to IS, this constitutes a burden on the debtors, that is, the Claimant's customers, in accordance with the conjunction of Article 1 and 3, paragraphs 1 and 3, paragraph g), of the CIS;

q) On the other hand, even if it is understood that the TSC is a commission and that, therefore, it is subject to IS, for it to be classified under item 17.3.4 of the TGIS, it is necessary to admit that we are dealing with a provision of services, which is not true, since "there is not even the objective of achieving a certain result", nor does it "amount to any intellectual or manual work";

r) If even then it is understood that the TSC corresponds to a "commission for the provision of financial services subject to Stamp Tax", item 17.3.4 of the TGIS should be considered as materially unconstitutional, for violation of Articles 103 and 104 of the Constitution of the Portuguese Republic (hereinafter CRP);

s) Even if all the above-stated were considered unfounded, Article 153 of the State Budget Law for 2016 determined that item 17.3.4 of the TGIS would have the following wording "17.3.4 – Other commissions and considerations for financial services, including fees relating to payment operations based on cards", which means that, if this wording of the norm were to apply to the facts in question, which occurred before its entry into force, "the TSC would not have a place in item 17.3.4 of the TGIS, on which Stamp Tax would not be charged".

3 – In this context, the Claimant hereby requests this Tribunal, in summary:

• That it declare the annulment of the decision dismissing the hierarchical appeal presented against the dismissal of the administrative review claim;

• That it declare the annulment of the tax act which was the subject thereof;

• That it condemn the Respondent to reimburse to the Claimant the amount paid in excess, whether the Stamp Tax assessment, as well as the corresponding assessments of compensatory interest, totaling € 1,621,732.40, plus compensatory interest.

Attached to the petition are various documents.

4 – Having complied with the necessary and legal procedural steps, in particular those provided for in Decree-Law No. 10/2011 and in Ordinance No. 112-A/2011, of 22 March, a Collective Arbitral Tribunal was constituted on 11 April 2017, formed by Professor Doctor Luís Menezes Leitão – Arbitrator appointed by the Claimant -, by Professor Doctor Manuel Pires – Arbitrator appointed by the Respondent, and by Professor Doctor Clotilde Celorico Palma – Arbitrator President, appointed in accordance with Article 11, paragraph 8, of the RJAT.

5 – Notified in accordance with Article 17, paragraph 1, of the RJAT, the AT submitted a response in which it impugns the grounds of the request, alleging, in summary, that:

a) As to the alleged error regarding responsibility for payment of IS, although the burden of the tax belongs to the credit beneficiary, it is the Claimant that is the passive subject of the tax and therefore responsible for its assessment and payment;

b) In the field of IS the "concept of "passive subject" is differentiated from "tax burden" and that, often, the person who in a given situation assumes one position is distinct from the one who assumes the other position";

c) The Claimant's indication of its customers as responsible for tax payment and, thus pointing them, as "putative targets of inspection actions and eventual resulting tax corrections", is a "technique" of the Claimant, which has as its main objective to "manacle the AT", due to its knowledge of the "fragmentation of the Claimant's customers";

d) Regarding the alleged erroneous interpretation of paragraph l) of Article 7, paragraph 1, of the CIS, the Claimant makes a biased interpretation of the literal, historical, teleological and systematic elements, moreover, not only of the CIS and the TGIS, but of all tax norms applicable to the case;

e) Effectively the legislator did not specify which interest he was referring to in paragraph l) of Article 7, paragraph 1, of the CIS, but we should not restrict ourselves to the letter of the law alone, but rather reconstruct from the texts the legislative thought, taking into account the unity of the legal order in its entirety;

f) It is assumed that, taking into account the teleological interpretation of the provision, we are faced with a tax benefit, appearing as an exceptional measure, however, "the law cannot provide for all situations capable of occurring in the concrete plane of facts, and it is therefore not possible to conclude, without more, and by mere appeal to the literal element, that, because such situations are not expressly excluded from the letter of the law, they have a place in the normative provision in question";

g) The norm should thus, in light of the elements set out above, be interpreted in the sense that only "remunerative interest can be framed within the purposes of the aforementioned premise, in that it constitutes the typical remuneration of a loan contract, whereas default interest, resulting from default in fulfilling obligations by the customer, distances itself from the identified premise";

h) Regarding the above-stated argument of non-subjection of default interest to IS, and since the Claimant recognizes the application of IS to default interest relating to non-compliance with other loan contracts (and not financial ones), "there is an inconsistency that destroys the argument, since this default interest charged for non-compliance with a loan contract, results from a financial operation, that is, normal banking activity, so that, even if a housing credit contract were not involved, it would always be taxed under Stamp Tax";

i) On the other hand, regarding the TSC there was a simplification of the reading of the inspection report, in that, contrary to what the Claimant asserts, the AT did not reach the conclusion "that this taxation is due, because it is exempt from VAT";

j) Differently from what the Claimant defends, the same is classifiable under item 17.3.4 of the TGIS by a combination of several factors: not only because it is exempt from VAT, but also because the underlying operation qualifies as a provision of services;

k) All the other arguments wielded by the Claimant are "tendentious arguments, which bias the question, a mixture of sophisms with omissions from parts of the cited texts, whose sole objective is to divert attention from what really happens";

l) The arbitral opinion request should, based on the above, be judged unfounded, maintaining the tax acts in the legal order and thus absolvifying the respondent entity from the request.

6 – The meeting provided for in Article 18 of the RJAT was waived by Order of 26 May 2017, on the grounds that no exception was at issue nor were witnesses called.

7 – By Order of 26 May 2017, the parties were notified to submit optional written pleadings, neither of them having submitted any.

8 – By the same Order, the Tribunal set as the date of issuance of the Arbitral Decision 30 September 2017.

9 – On the basis of the special procedural complexity, the Tribunal decided, in accordance with and for the purposes of paragraph 2 of Article 21 of Decree-Law No. 10/2011, for an extension of two months of the period for issuance of the arbitral decision in the Process referred to above, counting from the period of six months provided for in its paragraph 1.

II. PROCEDURAL SANITATION

The Tribunal is competent.

The parties have legal personality and capacity, are legitimate and are duly represented. No nullities and prior questions affecting the entire process are verified.

III. GROUNDS

1 – Questions to be decided

The questions upon which the Arbitral Tribunal must pronounce itself substantiate, in essence, determining whether the AT proceeded appropriately in having made the corrections of additional Stamp Tax assessments with respect to the 2012 fiscal year on: (i) default interest arising from non-compliance with housing credit contracts based on the inapplicability of the exemption provided for in Article 7, paragraph 1, paragraph l), of the CIS and, (ii) the commission designated "Merchant Service Fee" based on the application of item 17.3.4 of the TGIS.

Let us see.

2 – Factual matters

In light of the positions of the parties expressed in the pleadings and the documents forming part of the administrative process attached, the following facts relevant to the decision of the case are found to be proven:

a) The Claimant in the 2012 fiscal year did not assess IS on default interest due to non-compliance with housing credit contracts, under the terms of paragraph l) of Article 7, paragraph 1 of the Stamp Tax Code;

b) The Claimant in the 2012 fiscal year did not assess IS on the Merchant Service Fee, in accordance with paragraphs 1 and 2 of Article 1 of the CIS and in accordance with paragraph c) of Article 2, paragraph 1 thereof, as it did not fall under item 17.3.4 of the General Table of Stamp Tax;

c) Directive 2007/64/EC of the European Parliament and of the Council, of 13 November, which established the legal basis for the creation of an internal market for payments in the European Union, creating uniform rules applicable to the provision of payment services, transposed by Decree-Law No. 317/2009, of 30 October, was in force at the date of the facts under consideration;

d) The TSC is paid by the beneficiary (of a payment through a credit card, typically, a merchant), to the acquirer, relating to a segment of the payment operation in a four-party system, and has been expressly provided for and regulated, since 2015, in Regulation (EU) 2015/751, of the European Parliament and of the Council, of 29 April 2015, on interchange fees applicable to card-based payment transactions;

e) In accordance with the procedure of operations relating to Automatic Payment Terminals (hereinafter APT), a device for accepting cards that allows payments to be made electronically, as provided for by Notebook No. 10, of the Bank of Portugal, of May 2011 - "Payment and Automatic Cash Terminals":

"1. The cardholder (final consumer) gives an order of payment to the merchant for the purchase;

1. The acquirer or acquirer (the merchant's bank that provided the APT) requests authorization from the card-issuing bank (the final consumer's bank) for the payment;

2. The card-issuing bank authorizes the payment and provides a payment guarantee;

3. The acquirer pays the merchant by discounting an amount from the purchase price (the so-called "Merchant Service Fee");

4. The card-issuing bank reimburses the acquiring bank and this, in turn, pays the former an interchange fee;

5. The card-issuing bank charges its customer (the final consumer, the cardholder) the value of the transaction.";

f) The Claimant was the subject of an inspection action to the records of the 2012 fiscal year, carried out by the Division of Inspection of Banks and Other Financial Institutions of the Unit of Large Taxpayers of the AT, during the period elapsed between March and November 2014;

g) On 27 November 2014, the Claimant was notified of the draft tax inspection report, which contained various corrections in the area of Corporate Income Tax (CIT), VAT and IS.

h) In light of the notification of the aforementioned draft inspection report, the Claimant exercised its right to prior hearing;

i) On 5 January 2015, the Claimant was notified of the final tax inspection report, which made the draft inspection report final;

j) With respect to IS, the Division of Inspection of Banks and Other Financial Institutions made the following corrections:

• € 343,286.85, resulting from the application of the 4% rate on default interest due to non-compliance with housing credit contracts;

• € 1,138,012.78, resulting from the application of the 4% rate on the commission designated "Merchant Service Fee";

• € 19,751.68, resulting from the application of the 0.5% rate on the value of repurchase contracts;

k) Following those corrections, the Claimant was notified of the assessment of Stamp Tax No. 2015..., in the amount of € 1,481,299.66, and the respective assessments of compensatory interest, relating to the 2012 fiscal year, which totals a value of € 1,621,732.40;

l) On 6 March 2015, the Claimant made payment of the tax and respective interest;

m) Not being satisfied with the assessments described above, the Claimant filed an administrative review claim, limited to the following corrections:

• € 343,286.85, resulting from the application of the 4% rate on default interest due to non-compliance with housing credit contracts;

• € 1,138,012.78, resulting from the application of the 4% rate on the commission designated "Merchant Service Fee";

n) On 23 September 2015, the Claimant was notified of the draft decision dismissing the administrative review claim;

o) Following that notification, the Claimant exercised its right to prior hearing;

p) Subsequently, the Claimant was notified of the decision dismissing the administrative review claim;

q) On 18 November 2015, the Claimant filed a hierarchical appeal of the decision dismissing the administrative review claim;

r) In December 2016, the Claimant was notified of the decision dismissing the hierarchical appeal.

There are no facts relevant to the decision that have not been proven.

3. Motivation of the decision on factual matters

The facts which above were considered proven result from the application of two criteria to the judgment of factual matters: the first, the relevance of each concrete fact to the decision, which it is the duty of the Arbitral Tribunal to determine, selecting from among all the facts which were alleged by the parties those which show suitability for such purpose and discriminating between the proven and non-proven matter (cf. Article 123, paragraph 2, of the Code of Tax Procedure (CPPT) and Article 607, paragraph 3, of the Code of Civil Procedure (CPC), applicable ex vi Article 29, paragraph 1, paragraphs a) and e), of the RJAT). That is, the selection of factual matter relevant to the solution of the case is made through the condensation of the factual materiality alleged in the pleadings, taking into account the syllogism which should exist between the facts selected, the legal grounds and the operative part which will decide the case.

In the case at hand, the selection of facts relevant to the judgment of the case was made through the choice of facts which, in function of the various plausible legal solutions, presented relevance for the legal solution of the questions debated in the proceedings (cf. Article 596 of the CPC, applicable ex vi Article 29, paragraph 1, paragraph e), of the RJAT).

The second criterion underlying the decision on factual matters is based on the tribunal's conviction. The tribunal's conviction emerges from the critical analysis of the evidence, the inferences drawn from the instrumental facts and all elements which are decisive for that conviction. But, beyond that conviction, account must be taken of the facts which are admitted by agreement, proven by documents or by confession reduced to writing, as required by Article 607, paragraph 4, of the CPC, applicable ex vi Article 29, paragraph 1, paragraph e), of the RJAT.

The tribunal's conviction is based on the free evaluation of evidence which, however, does not cover facts for whose proof the law requires special formality, nor those which can only be proven by documents or which are fully proven, whether by documents, by agreement or confession of the parties (Article 607, paragraph 5, of the CPC).

From the application of these criteria to the case at hand, it results that the tribunal's conviction regarding the facts selected and considered proven was based on the documents in the proceedings.

Finally, it is important to note that the tribunal also took into account, in responding to the factual matters, the maxims of circumstantial evidence of deterministic-natural content which, together with the degree of acceptable probability, gave the tribunal, in the apprehension of the facts, the material truth as it was ascertained and that, given that there are no unproven facts, the motivation of the lack of proof of the same is not justified (On the referred contents and maxims of circumstantial evidence, judgments of probability and judicial presumptions, see. Karl Larenz, Methodology of Legal Science, 2nd edition, pp. 367 et seq. and Pires de Lima - Antunes Varela, Annotated Civil Code, 4th ed., vol. I, p. 312).

4. Legal questions

It is now important to analyze the legal questions raised, which we shall do separately.

4.1 On the assessment of IS on default interest relating to housing credit

Item 17.3.1 of the TGIS, in the wording given by Law No. 12-A/2010, of 30 June (former item 17.2.1.), provides for the application of the 4% rate to "interest from, in particular, discounting of bills and treasury bills, from loans, from credit accounts and from unsecured credit".

Paragraph l) of Article 7, paragraph 1 of the Stamp Tax Code, establishes that "are also exempt from tax" "interest charged on loans for acquisition, construction, reconstruction or improvement of own housing".

"In determining the meaning of tax norms and in qualifying the facts to which they apply, the general rules and principles of interpretation and application of laws are observed" (Article 11, paragraph 1, of the General Tax Law/LGT).

Therefore, "in fixing the meaning and scope of the law, the interpreter shall presume that the legislator established the most appropriate solutions and knew how to express its thought in adequate terms" (Article 9, paragraph 3, of the Civil Code).

In light of this last presumption, the fact that in both aforementioned norms of the CIS and the TGIS reference is made to "interest ... from loans", without any specification of any type of interest, leads to the conclusion that the exemption refers to the same types of interest that are covered by the incidence norm, as long as the loans are "for acquisition, construction, reconstruction or improvement of own housing". In fact, in light of the presumption that the legislator knew how to express its thought in adequate terms, if in two related norms the legislator uses the same expression, which is the one it considers most appropriate to express its thought, it is to be concluded that it does so with the intention of expressing the same reality.

Thus, it must be concluded that, if default interest on loans is covered within the scope of objective incidence defined by item 17.3.1 of the TGIS, they will be covered by the exemption when those loans are intended for acquisition, construction, reconstruction or improvement of own housing.

Moreover, the thesis of the Tax and Customs Authority that norms on tax benefits should be interpreted restrictively has no legal support.

Norms providing for tax benefits have the nature of exceptional norms, as results from the express tenor of Article 2, paragraph 1, of the Tax Benefits Statute (EBF), and therefore should be interpreted, in principle, in their precise terms, without amplifications or restrictions, so as to cover all cases literally provided for therein and only those, as is settled jurisprudence on the interpretation of such norms, without prejudice to any amplifications or restrictions which make it possible to conclude with certainty that the legislator did not adequately express the legislative intention, in particular preparatory works and explanatory texts.

That is, norms on tax benefits should be interpreted in strict and not restrictive terms.

In the case at hand, given that in Article 7, paragraph 1, paragraph l), of the TGIS there is no textual support for restriction of its field of application only to some types of interest covered by the incidence norm and given that there is no manifestation of legislative intention by another means (such as the preamble of a decree or statement of reasons or parliamentary discussion) which makes it possible to conclude that it was intended to establish a different solution from that resulting from the literal tenor, it must be concluded that the norm of paragraph l) of paragraph 1 of Article 7 must be applied with the meaning that results from its terms.

Furthermore, it is also a solution of evident reasonableness, in light of the perceivable legislative purpose of facilitating access to own housing, for the application of the tax only to default interest on loans with this purpose would overburden the taxpayers who are presumed to be with greater difficulties in making the contracted payments, a fact which reveals lower contributive capacity.

On the other hand, the argument, referred to by the Tax and Customs Authority, that default interest has as its basis an unlawful act has no relevance for this purpose.

In fact, since interest is of various types, including that due to unlawful non-compliance, an omnipresent reality in tax law relationships, it is not defensible that the tax legislator, in using the expression "interest from loans", which potentially covers all types, would have "forgotten" that this formula covered those due to unlawful non-compliance.

On the other hand, it is well known that tax law, in the matter of objective incidence, pays more attention to economic reality than to legal qualifications, a principle which has an explicit expression in paragraph 3 of Article 11 of the LGT, which is a corollary of the constitutional principles of equality and taxation based on contributive capacity. From this perspective, there is no reasonable justification for giving more favorable tax treatment to remunerative interest than to default interest, since, in either case, we are faced with amounts that the debtor must pay to the creditor as consideration for the loan and the debtor of default interest will be, presumably and trendentially, in a situation especially less favorable in terms of contributive capacity than the debtor who only has to pay remunerative interest.

It is not, thus, in this interpretation, a matter of legislatively benefiting a situation originated by the occurrence of an unlawful act, but rather of giving it the same treatment that is given to other situations of payment of interest on loan.

On the other hand, this equality of tax treatment is justified by the fact that it applies to any type of interest due on loans for own housing the primacial reason which justifies the exemption, which is the fulfillment by the State of the obligation to stimulate access to own housing, which constitutes one of the constitutionally imposed incumbencies on the State regarding housing (Article 65, paragraph 2, paragraph b), of the CRP).

Based on the above, it is to be concluded that there is no place for taxation in Stamp Tax of default interest on loans intended for acquisition, construction, reconstruction or improvement of own housing, and therefore the assessed taxation violates what is prescribed in Article 7, paragraph 1, paragraph l), of the Stamp Tax Code, in conjunction with item 17.3.1. of the TGIS.

In the same terms, this Tribunal has already pronounced itself in a situation similar to that in dispute in the Judgment of 3 November 2016 issued in Process No. 292/2016-T.

In these terms, the analysis of the other questions relating to the assessment of IS on the aforementioned default interest is thus prejudiced.

4.2 On the assessment of IS on the Merchant Service Fee

As we have seen, the AT proceeded with a tax correction in the amount of 1,138,012.78 €, resulting from the application of the 4% rate in Stamp Tax to the "Merchant Service Fee" (TSC), based on the application of item 17.3.4 of the TGIS.

For the Claimant, this correction suffers, from the subjective point of view, from illegality due to error regarding responsibility for payment of IS.

For its part, as we have seen, from the objective point of view, the Claimant understands that this correction is also illegal because, according to it alleges, there is, in the first place, no basis for extracting from the norm contained in Article 1, paragraph 2, of the CIS, that operations exempt from VAT are necessarily subject to IS and, on the other hand, because it considers that the TSC is not a commission, considering that "we are not dealing with consideration for a financial service and the discount here in question [the TSC] does not have the same cause as commissions for service provision operations".

The Claimant further understands that if it were even so understood that the TSC corresponds to a "commission for the provision of financial services subject to Stamp Tax", item 17.3.4 of the TGIS should be considered materially unconstitutional, for violation of Articles 103 and 104 of the CRP.

Finally, it invokes that the reasoning and interpretation sustained by it is in no way prejudiced by the new wording given to item 13.3.4 of the TGIS by Article 153 of Law No. 7-A/2016, of 30 March, which approved the State Budget for 2016, which entered into force on 31 March 2016, upon having the following wording: "17.3.4 – Other commissions and considerations for financial services, including fees relating to payment operations based on cards".

According to it alleges, the TSC, not constituting a commission for the provision of financial services, in that there is no underlying provision of services, continues to not have a place in item 17.3.4 of the TGIS, also in light of the new wording of the norm. But, even if such reasoning were to be prejudiced by this new wording, according to the Claimant, there would still be no incidence of IS in the case at hand, under penalty of violation of the principle of retroactivity of tax law embodied in Article 103, paragraph 3, of the CRP, as well as the principle of protection of trust and legal security, which results from Article 2 of the CRP.

For the AT, differently from what is defended by the Claimant, this TSC is classifiable under item 17.3.4 of the TGIS by a combination of several factors: not only because it is exempt from VAT, but also because the underlying operation qualifies as a provision of financial services. In the understanding of the AT, the TSC is classifiable, without any doubt, under item 17.3.4 of the TGIS, in the part in which it refers to "other commissions and considerations for financial services". The AT also responds to the effect that there is no unconstitutionality in the interpretation sustained by it by alleged violation of the principles of Articles 103 and 104 of the CRP.

It is necessary to examine and decide.

a) On responsibility for payment of IS

The Claimant contests, in the first place that, from the subjective point of view, it is responsible for IS before the AT. The Claimant recognizes that, in accordance with Article 2, paragraph 1, paragraph c), of the CIS, it is a passive subject of IS. However, it considers that the burden of that tax falls on its customers, as holders of the economic interest in the underlying operation, in accordance with Articles 1 and 3, paragraphs 1 and 3, paragraph g) of the CIS.

The Claimant considers that the present situation configures a case of substitution without withholding, and therefore Article 28 of the LGT is not applicable, so that in its view there is no responsibility of the Claimant, as a tax substitute, for the payment of the unassessed tax. The Claimant states, in this context, that in the case at hand there is no commission, in that the TSC constitutes, in its view, a "discount" made by the Claimant upon payment to its customers of the credits which it acquires from them, the Claimant had no way of proceeding with the collection of the tax and, thus, not having the tax been collected, it is not exigible from it, as a tax substitute, rather constituting a burden on the debtors thereof, that is, its customers.

In sum, the Claimant defends the illegality of the tax act impugned in that it considers that the same results in its being burdened with the tax, in violation of Article 3, paragraph 3, paragraph g), of the CIS.

Let us look at the norms in question.

Article 3, paragraph 1, of the CIS, provides that the tax constitutes a burden on the holders of the economic interest in the situations referred to in Article 1. For its part, paragraph 3, paragraph g), specifies that it is considered a holder of the economic interest, in the remaining financial operations carried out by or with intermediation of credit institutions, financial societies or other financial institutions, the client of these.

In this case, it is the Claimant that is the passive subject of the tax, in accordance with paragraph b) of Article 2, paragraph 1 of the CIS, where it is provided that passive subjects of the tax are entities granting credit and guarantee or creditors of interest, premiums, commissions and other considerations;

In this context, it is necessary to distinguish the concepts of passive subject and tax burden and respective holder of economic interest and ascertain who is responsible for the tax.

Article 28 of the LGT addresses cases of responsibility in case of tax substitution, providing as follows:

"Article 28

Responsibility in case of tax substitution

1 - In case of tax substitution, the entity obliged to withhold is responsible for the amounts withheld and not delivered to the State Treasury, the substituted being released from any responsibility in its payment, without prejudice to the provisions of the following paragraphs.

2 - When the withholding has the nature of payment on account of the tax due ultimately, the responsibility lies with the substituted for the original tax not withheld and with the substitute for subsidiary responsibility, the latter still being subject to compensatory interest due from the end of the delivery period until the end of the period for submission of the statement by the party responsible or until the date of delivery of the tax withheld, if earlier.

3 - In the remaining cases, the substituted is only subsidiarily responsible for the payment of the difference between the amounts that should have been deducted and those which actually were."

Before that, however, it is necessary to look at the concept of tax substitution, provided for in Article 20 of the LGT, which is defined as the situation in which, by imposition of law, the tax obligation is exigible from a person different from the taxpayer (paragraph 1), the mechanism by which this substitution is effected being that of withholding at the source of the tax due (paragraph 2).

Now, in the case at hand of IS, it cannot be said that the tax obligation is exigible from a person different from the taxpayer, given that the taxpayer is the passive subject of the tax in accordance with the norms of subjective incidence. There is not, therefore, tax substitution. At most, there will exist what is commonly designated "taxpayer in fact" in the context of the distinction which is usually made between "taxpayer in law" and "taxpayer in fact" in light of the phenomenon of tax shifting occurring in taxation on consumption.

This distinction is well settled in jurisprudence. Thus, for example, in the Judgment of the Supreme Court of Justice (STJ) of 22-04-2004 (Rel. Oliveira Barros), Proc. 04B837, the following is stated: "While as fiscal responsible called to pay it (taxpayer in law), it is also responsible for the failure to timely assess and collect it from those who actually pay it (that is, to the taxpayer in fact). Like stamp tax, VAT is, in fact, a tax collected by some, but charged to and economically borne by others. [...] these latter are those who in reality come to be the taxpayers. [...] they are the primary and original debtors of that tax, and thus its passive subject proper."

As Diogo Leite de Campos, Benjamim da Silva Rodrigues and Jorge Lopes de Sousa defend, the person to whom the tax is shifted is not a passive subject of the tax and, the obligation of the person to whom the tax is shifted being a legal obligation, it is still in the hand of the passive subject to shift or not the tax in the legal sphere of that person within the scope of a legal relationship in which the figure of contractual waiver would be admitted (cf. General Tax Law - Annotated and Commented, 4th ed., 2012, pp. 188 to 189).

It is important, therefore, to make the distinction between the concepts of tax substitution and tax shifting. To cite, in this context, the following Judgment of the Central Administrative Court South (TCAS), of 30-04-2013 (Rel. Jorge Cortês):

"1) Whether by the constitution of the guarantee or by the use of the credit granted, Stamp Tax is due, the duty of assessment and payment of which falls on the appellant, an agricultural mutual credit association, passive subject of the tax, but not holder of the economic interest on which the burden of the tax falls.

1. Tax shifting of the tax is verified, in that the subject directly determined by law to pay the tax is not truly the holder of the wealth to be taxed, but only a subject on whom it is easier to execute collection."

In tax shifting, "[e]verything happens only between two private subjects, with the distancing of the active subject of the tax legal relationship" (cf. Diogo Feio, Tax substitution and withholding at the source: the specific case of income taxes, Coimbra Editora, 2001, p. 93).

In this sense, the only person responsible tax-wise, before the State, for the lack of assessed tax is, in case of divergence between the person who appears as passive subject and the one who appears as holder of the economic interest who bears the burden of the tax, the passive subject, and not the person to whom the tax is shifted or the holder of that economic interest.

It is also important to mention that since 2017, with the amendment of Law No. 22/2017, of 23 May, in situations such as those being discussed here, there is not even a divergence between the person who constitutes the passive subject and the person holder of the economic interest who should bear the burden of the tax. Indeed, although this norm is not in force at the date of the facts, it currently provides in paragraph h) of paragraph 3 of this Article 3 that in card-based payment operations, provided for in item 17.3.4. of the TGIS, the holders of the economic interest are credit institutions, financial societies or other entities legally equivalent to them and any other financial institutions to whom they are due. I.e., since this amendment, the concept of passive subject has correspondence with the concept of holder of the economic interest who bears the burden of the tax in this type of situation.

There is, thus, no illegality due to error regarding responsibility for payment of the tax, and therefore, in this respect and on this ground, the request of the Claimant does not proceed.

b) On objective incidence

Let us now look at the question of objective incidence of the tax.

In accordance with Article 1, paragraph 1, of the CIS, IS is objectively incidable on all acts, contracts, documents, titles, papers and other facts provided for in the General Table.

For its part, in conformity with what is stipulated in paragraph 2 of the same provision, which proceeds to the negative delimitation of the incidence of the tax, operations subject to VAT and not exempt from it are not subject to IS. This negative delimitation finds its basis, as is known, in the objective of avoiding double taxation.

The case at hand in the proceedings relating to the TSC, as the AT affirms, does not fit within this norm of negative delimitation. Indeed, although the operation in question is subject to VAT, in that it constitutes an onerous provision of services carried out in national territory, covered by the incidence norm adopted in paragraph a) of Article 1, paragraph 1 of the VAT Code, it is exempt from it in accordance with Article 9, paragraph 27, of the VAT Code.

Being so, it may or may not be subject to IS, and it is necessary to analyze the norms which positively delimit this tax to verify whether the TSC is or is not subject to IS, in particular the scope of item 17.3.4 of the TGIS.

Naturally, the argument a contrario that, because a particular operation is exempt from VAT, it is necessarily subject to IS does not hold. Nor does the AT assert that this is so. On this point, the AT asserts that this is not the only ground on which it relies to defend that the TSC is subject to IS, defending itself by saying that it is therefore a combination of several factors that sustains its understanding.

Specifically, positively the AT sustains that the TSC fits within item 17.3.4 of the TGIS which, in the wording at the date of the facts, referred to "Other commissions and considerations for financial services".

It is therefore necessary to determine whether this expression has the scope intended by the AT in understanding that, in the case at hand of the TSC, the same corresponds to a commission due as consideration for the provision of a financial service.

The crucial question of our analysis is the following: does the TSC constitute or not the consideration for a provision of financial services in light of the legislation and practice of the sector? The legal nature of the TSC is, therefore, determinative in order to ascertain its subjection or not to IS.

The Claimant admits that, in fact, the acquirer does provide the service of making available the automatic payment terminal (APT) and that for the provision of the aforementioned service it is remunerated by various considerations, invoiced to its customers, which include, in particular, the revenues from APT rental, the revenues from the connection rate and connection to DOV lines ("Data over Voice").

The Claimant begins by describing the mechanism of operation of the operations relating to APT ("Payment and Automatic Cash Terminals"), alleging that for the provision of services inherent to the making available of APT the merchant remunerates the Bank through various commissions, namely: rental and management commissions, line fees, registrations, connection fees and commissions for other additional services.

It asserts, however, that the TSC does not constitute a commission for the provision of this APT making-available service, presenting a different cause from those other commissions. That different cause is based, according to it alleges, on the fact that, in the relationship between the acquirer and the merchant which takes place within this operation, it is stipulated that the former pays to the latter the value of the credit which the latter holds over the final consumer, thus exonerating the latter. For the Claimant, this means that the acquirer acquires the credit from the merchant. It further asserts that, for its part, such acquisition is celebrated contemplating a discount on the nominal value of the credits ceded and it is that positive difference between the value of acquisition of the credits and the value of the credits ceded that is designated by TSC. In this sense, it asserts that the merchant does not receive the amount corresponding to the transactions in their entirety, receiving a lower amount than the price of the goods or services sold or provided – it is precisely this difference that corresponds to the TSC.

It understands, in this sense that, beyond the provision of services inherent to the making available of APTs, which is duly remunerated by other commissions, in the acquisition of the credits of the merchant with a discount there is no obligation of provision assumed by the acquirer.

In sum: the Claimant defends that the operation in question does not constitute, in the segment of the acquisition of the credits and payment of the same with a discount, a provision of services for purposes of Civil Law, and therefore the tax inspection services cannot understand that it is a provision of services, for purposes of Tax Law. It defends that an interpretation of "financial services" for purposes of subjection to Stamp Tax, without any correspondence with the concept of provision of services in Civil Law, would be vitiated by manifest error of law.

It concludes, therefore, that, instead of a provision of financial services, we are in fact faced with an operation which qualifies as an assignment of credits in accordance with Articles 577 et seq. of the Civil Code.

Is this so? Let us see the normative framework of the TSC. Before proceeding to the civil law concept on which the Claimant's argument is anchored, it is necessary to proceed to the concepts proper to the branches of Banking and Financial Law.

In fact, it constitutes a general criterion of interpretation of tax law, in accordance with Article 11, paragraph 2, of the LGT, that whenever, in tax norms, terms proper to other branches of law are employed, the same should be interpreted in the same sense which they have there, unless otherwise directly results from the law.

Directive 2007/64/EC of the European Parliament and of the Council, of 13 November, established the legal basis for the creation of an internal market for payments throughout the European Union by substantially facilitating the activity of payment service providers, creating uniform rules applicable to the provision of such services.

This Directive was transposed, at the level of domestic law, by Decree-Law No. 317/2009, of 30 October, currently in force and also in force at the date of the facts, which came to approve the legal regime relating to access to the activity of payment institutions and to the provision of payment services. In accordance with Article 4 of this Decree-Law, payment services constitute, in particular, activities which substantiate the execution of payment operations, including the transfer of funds deposited in a payment account opened with the user's payment service provider or of another payment service provider, such as the execution of payment operations through a payment card or a similar device.

In particular with respect to the TSC, the same is expressly provided for and regulated, since 2015, in European Union law legislation, specifically in Regulation (EU) 2015/751, of the European Parliament and of the Council, of 29 April 2015, on interchange fees applicable to card-based payment transactions. Being certain that, at the date of the facts with which we are concerned, this Regulation had not yet been approved, it cannot be ignored that this constitutes an essential interpretative aid in the definition of the concept of TSC.

From the outset, Article 2, paragraph 12, of this Regulation, defines the "Merchant Service Fee" as the fee paid by the beneficiary to the acquirer relating to card-based payment operations. It is therefore necessary to look at the notions of "beneficiary" and "acquirer", as well as of "card-based payment operations" in order to discern the scope of this legal definition.

The "beneficiary" is, in accordance with Article 2, paragraph 13, of the Regulation, a natural or legal person who is the intended recipient of the funds paid through a payment operation: it is the recipient of the funds in the payment operation. It will be the merchant in the sale and purchase of a product.

The "acquirer", for its part, is a payment service provider bound by contract to a beneficiary to accept and process card-based payment operations, which give rise to a transfer of funds to the beneficiary (Article 2, paragraph 1, of the Regulation).

Finally, the "payment operation based on a card" is, in accordance with Article 2, paragraph 7, of this Regulation, a service based on the infrastructure and commercial rules of a card payment system to carry out payment operations by means of cards, devices or telecommunications, digital or computer programs, which gives rise to an operation with debit or credit cards. Card-based payment operations exclude operations based on other types of payment services. I.e., the payment operation substantiates the financial operation by which, through the payment service providers, the funds are made available to the merchant (the funds are the price).

The card payment system may be three-party or four-party. The "four-party system" is a card payment system in which card-based payment operations are carried out from the payment account of an orderer to the payment account of a beneficiary through the system, a card-issuing provider (on the orderer's side) and an acquirer (on the beneficiary's side) (Article 2, paragraph 17, of the Regulation).

Thus, if the card is a credit card, the operation is four-party in accordance with this legal definition given that in the four-party system intervene, according to the legal definition, the orderer (holder of the account from which the payment is carried out), the beneficiary, recipient of the funds; the issuer of the card, on the orderer's side and the acquirer (on the beneficiary's side).

If payment is in cash, there is no intermediary, but if payment is by bank transfer or use of cards (debit or credit), the operation is intermediated. The intermediaries are payment service providers, that is, financial service providers in accordance with this Regulation and other sector legislation.

The TSC, to repeat, is paid by the beneficiary (of a payment through a credit card, typically, a merchant), to the acquirer. It respects a segment of the payment operation in a four-party system. The acquirer to whom the merchant fee is paid is a payment service provider by effect of the final part of paragraph 24 of Article 2 of Regulation No. 2015/751. In fact, this provision defines "payment service provider" as a natural or legal person authorized to provide the payment services listed in the annex of Directive 2007/64/EC or recognized as an electronic money issuer in accordance with Article 1, paragraph 1, of Directive 2009/110/EC. The payment service provider may be an issuer and/or an acquirer.

In this case, we verify that the operation underlying the TSC fits within the definition of provision of payment services, in that we are faced with execution of a payment operation in accordance with paragraph c) of Article 4 of that Decree-Law, specifically in the execution of payment operations through a payment card. This TSC aims, in particular, to remunerate the execution of the payment operation itself by virtue of the provision of that service, being this payment operation based on a card and not on cash, thus presupposing an intermediary financier, who is the service provider - in this case, the Claimant. It does not correspond, therefore, to any value due as consideration for an (alleged) assignment of credits.

In the relationship between the acquirer and the merchant which is established within this operation, the operation of making the payment terminal available entails, as we have seen, beyond the mere making available thereof, by means of a payment guarantee, the actual payment to the merchant by discounting an amount from the purchase price (the so-called "Merchant Service Fee"). The card-issuing bank reimburses the acquiring bank and this, in turn, pays the former an interchange fee, thus resulting from a set of provisions of services interconnected with each other, relating to a segment of the payment operation in a four-party system.

In light of the regulatory framework just set out, there are no doubts as to the existence of a provision of payment services in the case under analysis. And this provision of payment services falls, therefore, within the concept "Other commissions and considerations for financial services" where, as confirmed by the new wording of item 17.3.4 given by the State Budget Law for 2016, are included "fees relating to card-based payment operations", thus being subject to IS, through the application of item 17.3.4 of the TGIS.

c) On the unconstitutionalities invoked by the Claimant

The Claimant further defends that, even if it is considered that the TSC fits within item 17.3.4 of the TGIS, as is defended here, there should always be concluded the unconstitutionality of this norm for violation of the principle of contributive capacity.

Now, in the case at hand of item 17.3.4 of the TGIS, it is verified that, as the AT well defends, the merchant is a creditor of a certain amount, which it deposits in its bank, increasing the volume of capital deposited there and, by using a service of a financial institution for that purpose, pays a commission. In this sense, it is evident that the "increase of a bank account" is demonstrative of contributive capacity and, although the tax is incidable on the commission paid, this commission only exists in cases where there is a monetary growth in the sphere of the merchant. Furthermore, from the perspective of the acquiring bank, the commission paid to it constitutes also a patrimonial increase, so it is not seen how the application of a tax on this at the rate of 4% violates the principle of contributive capacity.

Sustains further, the Claimant the unconstitutionality of item 17.3.4 of the TGIS in the wording given Law No. 7-A/2016, of 30 March, for violation of Articles 103, paragraph 2 and 2 of the CRP, i.e., of the principles of prohibition of retroactivity of tax law and of protection of trust as a corollary of the Democratic Rule of Law.

On this matter, it is necessary to clarify from the outset that, in the interpretation sustained by this Tribunal which was set out with respect to item 17.3.4 of the TGIS, this new wording was not applied, which, as we have seen, came to make an express reference to "fees relating to card-based payment operations" as part of the concept "Other commissions and considerations for financial services".

In fact, the legislator did not substantively alter what already resulted from the previous legal formulation, but merely clarified that within that broader concept are included fees relating to card-based payment operations. The legislator, moreover, expressly declared in Article 154 of Law No. 7-A/2016, which approved the State Budget for 2016, that the wording attributed to item 17.3.4 of the TGIS has an interpretative character. But the legislator did not even need to do so, for a correct interpretation of the previously in force wording applicable at the date of the facts in this case would already have made it possible to consider the TSC as a commission due as consideration for the provision of financial services, as set out above. It is not even, consequently, a matter of any interpretative norm with an innovative character.

As the AT well defends, "the fees relating to card-based payment operations are, in effect, considerations for financial services [...] Hence the legislator even took care to place the expression «including» highlighting that such fees were already provided for in the «old wording», now only is there an explanation", which is evidenced and underscored "by the interpretative character that the legislator confers to the new wording".

In this sense, contrary to what the Claimant intends, this new wording does not have an innovative character, so the question of retroactivity of tax law or protection of trust is not raised for it to be possible to conclude the violation of these constitutional principles.

It does not proceed, therefore, what is requested by the passive subject, the additional assessments made by the AT and respective interest being valid, in this respect.

4.3 On the payment of compensatory interest

The Claimant accumulates with the request for annulment of the tax act which is the subject of the present proceedings, the request for condemnation of the AT in the payment of compensatory interest on the amount paid by it following the notification of the assessments now annulled.

It is a prerequisite of the attribution of compensatory interest that the error in which the AT labored be attributable to it (cf. the provision of Article 43 of the LGT).

In the case of the proceedings, it is manifest that, following the illegality of the tax assessment acts pointed out, for the reasons which were indicated, there is place for reimbursement of the tax paid by the Claimant, by force of the provision of the aforementioned Articles 24, paragraph 1, paragraph b), of the Legal Regime of Tax and Customs Violations (RJAT) and 100 of the LGT, for this is essential to "restore the situation which would exist if the tax act which is the subject of the arbitral decision had not been practiced".

It is also clear in the proceedings that the said illegality of the assessed tax act which is impugned is directly attributable to the Respondent which, on its own initiative, practiced it without legal support, being vitiated by an erroneous assessment of the legally relevant facts and consequent application of the legal norms to the case at hand.

Thus, the Claimant has the right to the receipt of compensatory interest, in accordance with the provisions of Articles 43, paragraph 1, of the LGT and 61 of the Code of Tax Procedure, as far as the part of the request which is judged to proceed.

Compensatory interest is due at the legal supplementary rate for civil debts, in accordance with Articles 35, paragraph 10, and 43, paragraphs 1 and 5, of the LGT, 61, of the Code of Tax Procedure, 559 of the Civil Code and of Ordinance No. 291/2003, of 8 April (or decree or decrees that may succeed it).

Compensatory interest is due to the Claimant from the date on which it made the payment of the tax in question in the proceedings, until the full reimbursement of the amount paid, at the legal rate.

IV. DECISION

In these terms, the Arbitrators agree in this Tribunal in:

– judging the request for arbitral opinion as well-founded as far as the assessment of IS in the amount of € 343,286.85, on default interest relating to housing credit relating to the 2012 fiscal year, annulling it and condemning the Tax and Customs Authority to the respective reimbursement as well as the corresponding compensatory interest;

– judging the request for arbitral opinion as unfounded as far as the assessment of IS in the amount of € 1,138,012.78 on the Merchant Service Fee, absolving the Tax and Customs Authority from the proceedings in what relates to this part;

• judging the request for arbitral opinion as well-founded regarding the request for compensatory interest in what relates to the request for arbitral opinion judged to be well-founded, at the legal rate, from the date on which the Claimant made the payment of the tax in question in the proceedings, until the full reimbursement of the amount paid.

V. VALUE OF THE PROCEEDINGS

In accordance with the provision of Article 315, paragraph 2, of the CPC and 97-A, paragraph 1, paragraph a), of the Code of Tax Procedure and 3, paragraph 2, of the Regulation of Costs in Tax Arbitration Proceedings, the value of the proceedings is set at € 1,621,732.40.

VI. COSTS

The costs are set at the amount of € 60,000.00, in accordance with Table II attached to the Regulation of Costs in Tax Arbitration Proceedings, to be borne by the Claimant in their entirety, in accordance with the provision of Article 5, paragraph 2, of that Regulation.

Lisbon, 7 December 2017

The Arbitrators

(Clotilde Celorico Palma)

(Luís Menezes Leitão,
dissenting as to the decision taken on the assessment of IS on the merchant service fee, in accordance with the attached dissenting vote)

(Manuel Pires,
dissenting as to the decision taken on default interest relating to housing credit, in accordance with the attached dissenting vote).

DISSENTING VOTE

I do not agree with the position that was carried regarding the incidence of stamp tax on the merchant service fee, since item 17.3.4 of the TGIS, in the previous wording, only provided for the incidence of stamp tax "on other commissions and considerations for financial services", not including therein "fees relating to card-based payment operations", which only came to be included in the incidence of stamp tax from the wording given by Law 7-A/2016, of 30 March. Given that retroactivity is not admitted in tax matters, this amendment cannot apply to situations before it.

I do not agree that it can be framed as a financial service a credit card payment by a customer, in which the Bank subsequently makes the value available to the merchant with a discount. In that case, what exists is an assignment of credits operation, in which the merchant receives as consideration for the assignment of its credit to the Bank an amount less than the value of the assigned credit. It is not seen how in this case the merchant can be considered as a beneficiary of any service, the actual beneficiary being the merchant's customer, who has the possibility of using the electronic payment service, and it is he who decides on such use. The merchant, by contrast, is prejudiced by such use, since if it did not occur, it would receive payment of that credit without any discount.

It does not seem to me that it is appropriate to invoke in this regard the Regulation (EU) 2015/751, of the European Parliament and of the Council, of 29 April 2015, on interchange fees applicable to card-based payment operations, which was not in force at the date of the facts and which therefore does not serve as an interpretative argument, the Directive 2007/64/EC of the European Parliament of 13 November 2007 on payment services in the internal market, which amends Directives 97/7/EC, 2002/65/EC, 2005/60/CE and 2006/48/CE and repeals Directive 97/5/CE should be invoked instead. Now, in light of Art. 4, no. 8 of the Directive, the beneficiary is only the recipient of the funds resulting from the payment operation, having therefore a merely passive position in this regard. But the service that is provided consists of the payment operation, which is defined in Art. 4, no. 5, of the Directive as "the act, carried out by the orderer or by the beneficiary, of depositing, transferring or withdrawing funds, regardless of any underlying obligations between the orderer and the beneficiary". Thus although both the orderer and the beneficiary are considered as users of payment services (Art. 4, no. 10) of the Directive), the consideration of the latter as counterparty to the payment service depended on its participation in the payment operation, which in this case does not occur.

The situation was subsequently altered by Regulation (EU) 2015/751, whose Art. 2, no. 26, came to define the payment operation in a broader manner as "an act carried out by the orderer, or on his behalf or by the beneficiary of the funds to be transferred, regardless of the underlying obligations existing between the orderer and the beneficiary". Furthermore, Art. 2, no. 12 of the Regulation defines the «Merchant Service Fee», as "a fee paid by the beneficiary to the acquirer relating to card-based payment operations". That decree, however, was not in force at the moment of the practice of the acts, so it does not seem to us that at that date the merchant service fee could be understood as a consideration for financial services, since the merchant is mere recipient of the funds, who receives them with a discount. For that reason, I dissent in this part of the decision.

(Luís Menezes Leitão)

DISSENTING VOTE

1.1 Article 7, paragraph 1, paragraph l) of the Stamp Tax Code (CIS) refers as benefiting from exemption "interest charged on loans...". Now "...the creditor has, in principle, entitlement only to the principal and the stipulated interest, not to default interest, which is intended only to repair the damage caused by delay... the creditor's indemnification is represented by default interest" (Vaz Serra, Default of the Debtor in Bulletin of the Ministry of Justice No. 48 - May - 1955, p. 213) and the same author, with regard to the scope of guarantees and citing doctrine, also wrote - which is equally relevant - that "compensatory interest, or other compensation, due as a result of non-compliance or default are not understood…, because these are benefits derived from circumstances alien to the cause of the credit..." (Privileges in cit. Bulletin No. 64 - March - 1957, p. 83 note 62). As Martinez Lafuente writes, within the tax sphere, default interest is an indemnity, "with the purpose of evident justice which it pursues", for gain obtained by the taxpayer, given that it has the use of foreign capital for a longer time, that it should have paid and did not pay, avoiding the unlawful enrichment of the debtor and guaranteeing patrimonial balance". (Interest on Default in Tax Relationships, in Studies of Tax Law, vol.I, p. 840). There exist, therefore, and as far as is now relevant, two types of interest, with different sources and purposes, as well as different rules, since one results from the normal availability of capital and the other from the delay in performance, the undue prolongation of the respective availability, one of a healthy source, another of a pathological source, because one constitutes remuneration which its respective holder obtains by allowing another to have the use of something that belongs to him, another which is the result of non-compliance with something agreed, of an unlawful act and hence aims at the indemnification of the prejudice of the use of capital in disagreement with the agreed. With the requirement of the borrowed capital, with the payment of the remuneration for the corresponding availability, the premise of the interest disappears, but, in its place, default interest begins to accrue and hence the conclusion of "increased by stamp tax at the rate in force at the date on which default interest was charged" (Judgment of the Court of Appeal of Porto, Process 4919/06.7YXLSB.P1). Both types of interest are included in the subjection, given that it covers interest broadly, given that the enumeration is not closed - the adverb "in particular" is used - differently in the exemption, where only the normal ones are understood, not derived "from circumstances alien to the cause of the credit" and, therefore, not the pathological ones. Even if it were not understood so - which is written merely so as not to omit another view of the problem and not because it could set aside the previous solution -, being, for a long time, obsolete principles such as in claris non fit interpretatio or ubi lex non distinguit nec nos distinguere debemus, it is not impossible, faced with a norm literally without distinction, to distinguish. In the case, given that it is a tax benefit, we would be faced with an exception, by departure from the principle of equality (any exception to the norm of subjection constitutes modification of equitable distribution, fair taxation is affected, the departure from the subprinciples of universality or generality and contributive capacity occurs), requiring also there the principialist methodology in interpretation, resisting the temptation of what could be denominated normativist orientation or pragmatism, albeit with commendable intentions. Thus the exception, with the consequences before mentioned, should not be applied, in the case, to something alien to the normal course of life of the loan, not forgetting the inconsistency that would occur if exception were established in favor of cases of violation of the assumed obligation. The conclusion, obeying the ratio of the provision, would be absolutely in conformity and would not collide with what is prescribed in the subjection norm, given the diversity of reasons for the amplitude of subjection - the rule - and for the limitation of its bar, as the law names it, exception whose ratio must be fully justified. The invocation, without more, of the rules of interpretation, the invocation, without more, of the fact that the legislator considered the most appropriate decisions and knew how to express its thought in adequate terms could lead to not going beyond the letter of the law, even if there existed justification otherwise, which would constitute an antiquated orientation, the time of odious restringenda favorabilia amplianda having also passed, not constituting Article 11 of the LGT and Article 10 of the EBF arguments invocable to the contrary because they only eliminate doubts as to the possibility of extensive interpretation and, in the field of integration, the prohibition of analogy, nothing being prescribed as to the possibility of restrictive interpretation which, in the field of tax law even in the field of benefits, is accepted by current doctrine, notably foreign, because the tax is not looked at as something which should be rejected, on the contrary, imbalances should be avoided, amplifications of non-satisfaction of the principle of equality, a principle which should only be set aside for very weighty reasons. The State should stimulate access to own housing [Article 65, paragraph 2, paragraph b) of the CRP] but should not benefit those who do not comply, equalizing the positions of the compliant and the non-compliant, on the basis of a presumption of otherness. Fairness, understood as the rule of adaptation to each concrete case, could provide a solution suitable for situations morally justified, but the arbitral tribunal does not have the possibility to apply it, moreover, casuistry constitutes an assay dangerous path. Concluding, default interest, within the scope of loans for own housing are subject to stamp tax and not exempt from it.

1.2. Being so, as it is, occurring, in the case, the tax substitution (Article 20, no. 1 of the LGT: "Tax substitution occurs when, by imposition of law, the tax obligation is exigible from a person different from the taxpayer") - and without entering into the discussion whether substitution comprises two legal relationships (Betti) or only one (Allorio), on the distinctions between the legal moment and the pre-legal and on formalism and atomism - and non-compliance with the respective obligation, the substitute, despite not being a case of withholding at the source, should respond, in first instance, for the non-compliance, given that it is the original passive subject (Article 18, no. 3 of the LGT: "The passive subject is the natural or legal person

...that, in accordance with the law, is bound to the fulfillment of the tax obligation, whether as...substitute…") and as such the obligation to comply with the tax obligation falls on it, not being an adjectum solutionis causa, is debtor in its own name and as principal, despite the manifestation of contributive capacity not being verified in its person, hence it should not bear the tax, it being necessary to be avoided, through the exercise of the right of recourse, the enrichment at the expense of another or the patrimonial imbalance. Hence everything established in the law in the substantive (principal obligation and auxiliary duties) and procedural aspects, constituting its patrimony, like any passive subject, the guarantee of the obligation (Andrea Parlato, The Substitute, p.91). The taxpayer, with respect to which the tax premise is verified, will be responsible if the active subject is not satisfied given the insufficiency of the assets that can be seized of the substitute, if the law establishes the responsibility of the taxpayer as subsidiary type, (differently from what would occur if the responsibility were of the solidary type), but never can the active subject opt for the exigency of the tax to the taxpayer, setting aside without more the substitute, given that it is not a matter of plurality of passive subjects, hence it has already been written that the substitute fits within the statutory provision and the taxpayer within the provision, hence it is also not correct to say that the substitute is formal passive subject and the taxpayer material passive subject. The substitute is the passive subject of the tax obligation and, in the case of non-compliance, its assets respond for the debt, although it must act, as written above, the principle of non-enrichment at the expense of another or the restoration of patrimonial balance.

1.3. Despite being in agreement with the judgment on the so-called responsibility of the so-called "acquirer", the grounds which I consider applicable is that which immediately follows: By force of Article 2, no. 1, paragraph b) of the Stamp Tax Code: "Passive subjects of the tax are: ... b) Entities granting credit, guarantee or creditors of interest, premiums, commissions and other considerations" (cf. also Article 23, no. 1 of the same Code). For its part, "The tax constitutes a burden on the holders of the economic interest in the situations referred to in Article 1 [provided for in the General Table]", it being considered, in the case under judgment, as holder of the economic interest, the client of the institution called acquirer [Article 3, no. 3, paragraph g) of the cited Code]. The binding of the credit institution to an obligation by a premise that does not occur with respect to it gives rise to the situation of substitution (Article 20, no. 1 of the LGT: "Tax substitution occurs when, by imposition of law, the tax obligation is exigible from a person different from the taxpayer"), making, in the case under judgment, the so-called acquiring institution the original passive subject and as principal of the tax obligation (Article 18, no. 3 of the LGT: "The passive subject is the natural or legal person, the patrimony or the organization of fact or law that, in accordance with the law, is bound to the fulfillment of the tax obligation, whether as direct taxpayer, substitute or responsible"), there being, in the case, withholding at the source, given that the merchant receives the amount of a credit diminished of the commission, of the Fee respective (Article 34 of the LGT: "Pecuniary deliveries made by deduction in income paid or made available to the holder by the tax substitute constitute withholding at the source"). Not having the substitute complied with the obligation, the question of responsibility arises and hence the application of Article 28 of the LGT disciplining this institute in case of tax substitution. According to that provision, it is necessary to distinguish depending on whether or not withholding took place, in the first case the substitute is completely released, in the second and not being a matter of the withholding having the nature of payment on account, which is the case under judgment, the responsibility of the substituted is only subsidiary "for the payment of the difference between the amounts that should have been deducted and those that actually were" (Article 28, no. 3 of the LGT), the reversal against the tax responsible depending on "well-founded insufficiency of the assets that can be seized of the principal debtor [in the case, the so-called acquiring institution] and without prejudice to the benefit of excussion" (Article 23, no. 2 of the LGT). This construction does not violate Articles 103 and 104 of the CRP, given that, as in all cases of substitution, it is in the substituted that the index of contributive capacity occurs, the substitute enjoying the right of recourse - although, in the case of withholding, it can be said to be effectuated by anticipation - in order to avoid enrichment at the expense of another or to restore patrimonial balance, as mentioned above.

I also dissent regarding the recognition of the competence of the Tribunal regarding the reimbursement of the tax - reimbursement which should not take place, given what was written above - given the limitation of competence established in the law (cf. Judgments 52/2012-T, 244/2013-T, 587/2014-T and 71/2015).

(Manuel Pires)