Stamp Tax on Vertical Property Under Verba 28 TGIS: CAAD Arbitration 766/2015-T

ARBITRAL DECISION

I. REPORT

1. A…, (hereinafter "Claimant"), with tax identification number ("NIF") …, with tax residence at …, n.º …, … Esq. … – … …, presented, in the capacity of head of the estate of B… (with NIF …), on 22 December 2015, pursuant to the combined provisions of articles 2 and 10 of Decree-Law no. 10/2011, of 20 January, i.e., Legal Regime for Arbitration in Tax Matters ("RJAT"), a request for constitution of an arbitral tribunal, in order to declare illegal the assessments of Stamp Duty ("IS"), listed below, by reference to the year 2014, in the total amount of € 2,157.66, with the Tax and Customs Authority named as defendant (hereinafter "Respondent" or "TA"):

A) Constitution of the Arbitral Tribunal

1. Pursuant to the provisions of subparagraph a) of paragraph 2 of article 6 and subparagraph b) of paragraph 1 of article 11 of the RJAT, the Deontological Council of this Centre for Administrative Arbitration ("CAAD") designated the undersigned as sole arbitrator, who communicated acceptance of the engagement within the applicable period, and notified the parties of this designation on 16 February 2016.

2. Thus, in accordance with the provisions of subparagraph c) of paragraph 1 of article 11 of the RJAT, and through communication from the President of the Deontological Council of CAAD, the Sole Arbitral Tribunal was constituted on 2 March 2016.

B) Procedural History

1. In the request for arbitral pronouncement, the Claimant petitioned for the declaration of illegality of the IS assessments mentioned above, relating to the year 2014, by reference to an urban property constituted in vertical ownership regime, located at … nº …, registered in the property register of the parish of … under article U-…, municipality of ….

2. The TA submitted its answer petitioning for dismissal of the request for arbitral pronouncement, considering that the tax acts in question, in substance, did not violate any legal or constitutional provision and should be upheld.

3. By order of 13 May 2016, the Sole Arbitral Tribunal, under the provisions of subparagraph c) of article 16 of the RJAT, decided, without opposition from the parties, that it was not necessary to hold the meeting referred to in article 18 of the RJAT, given the simplicity of the questions at issue, and considering that it had at its disposal all necessary elements to make a clear and impartial decision.

4. It likewise decided, in accordance with paragraph 2 of article 18 of the RJAT, that oral submissions were not necessary, given that the positions of the parties were fully defined in their respective pleadings, and set 15 June 2016 as the deadline for issuing the arbitral decision.

5. In the context of the order, it also requested the parties to submit their final submissions. In this regard, it is important to note that both the Claimant and the Respondent chose not to submit.

6. The Tribunal was properly constituted and is competent to review the questions indicated (article 2, paragraph 1, subparagraph a) of the RJAT), the parties have legal personality and capacity and possess full standing (articles 4 and 10, paragraph 2 of the RJAT and article 1 of Ordinance no. 112-A/2011, of 22 March). There are no grounds for invalidity, and nothing prevents judgment on the merits.

7. The present proceeding is thus in a position for a final decision to be rendered.

II. QUESTION TO BE DECIDED

1. As a preliminary matter, the possibility of declaring the voidability of the aforementioned acts shall be analyzed, as requested by the Claimant, for lack of reasoning.

2. Subsequently, and if necessary, it shall be assessed, by reference to properties not constituted under a horizontal co-ownership regime, comprised of various apartments and divisions capable of independent use (and with residential purpose), what is the Tax Patrimonial Value ("VPT") relevant for purposes of calculating the IS due pursuant to Item no. 28 of the General Table of IS ("TGIS").

3. That is, this tribunal will assess whether, as alleged by the Claimant, the amount to be considered is the VPT attributed individually to each of the parts capable of autonomous use, or, conversely, the total value resulting from the sum of the VPTs of those autonomous fractions, as suggested by the Respondent.

III. DECISION ON FACTS AND THEIR MOTIVATION

1. Having examined the documentary evidence produced, the tribunal finds proven, with relevance to the decision of the case, the following facts:

I. The Claimant is the head of an estate that includes, in particular, an urban property constituted in vertical ownership regime, located at …, n.º …, registered in the property register of the parish of … under article U-…, municipality of …, the VPT of which is € 1,254,349.

II. The Claimant received, with respect to the fiscal year 2014, and as a result of Item no. 28 of the TGIS, the documents mentioned above, relating to adjustments of IS due, totaling the amount of € 2,157.66, which it paid on 30 November 2015.

1. The Tribunal's conviction regarding the facts found proven resulted from the documents attached to the file and contained in the pleadings and uncontested allegations of the parties, as specified in the points of the facts stated above.

2. This tribunal does not find proven the alleged lack of reasoning in the assessments now challenged.

IV. ON THE LAW

A) Legal Framework

1. Taking into account the subject matter of discussion in this proceeding, it is necessary, first, to set forth the provisions that comprise the relevant legal framework, at the time the facts occurred.

2. First and foremost, it is necessary to refer to the scope of jurisdiction of arbitral tribunals, established in article 2 of the RJAT:

"1 - The jurisdiction of arbitral tribunals comprises the assessment of the following claims:

a) the declaration of illegality of acts of assessment of taxes, self-assessment, withholding at source and payment on account;

b) the declaration of illegality of acts fixing the taxable base when they do not result in the assessment of any tax, acts of determination of the taxable income and acts of fixing patrimonial values.

2 - Arbitral tribunals decide in accordance with established law, and recourse to equity is prohibited".

1. In parallel, it should be noted that the subjection to IS of properties with residential purpose resulted from the addition of Item no. 28 to the TGIS, made by article 4 of Law 55-A/2012, of 29 October, which defined the following taxable events:

"28 – Ownership, usufruct or right of surface of urban properties whose tax patrimonial value recorded in the registry, pursuant to the Municipal Property Tax Code (CIMI), is equal to or greater than € 1,000,000.00 – on the tax patrimonial value for purposes of IMI:

28.1 – For property with residential purpose – 1%

28.2 – For property, when the taxpayers who are not individuals are residents in a country, territory or region subject to a clearly more favorable tax regime, included in the list approved by ordinance of the Minister of Finance – 7.5%".

1. The aforementioned law also added, to the IS Code, paragraph 7 of article 23, regarding the assessment of IS: "in the case of tax due for the situations provided in item no. 28 of the General Table, the tax is assessed annually, in relation to each urban property, by the central services of the Tax and Customs Authority, applying, with the necessary adaptations, the rules contained in the CIMI", and article 67, paragraph 2, which provides that "for matters not regulated in this code relating to item 28 of the General Table, the CIMI applies subsidiarily".

2. In this context, and taking into account the above indication, let us now focus on the Municipal Property Tax Code ("IMI").

3. First, consider article 2, paragraph 4 of the IMI Code, which states that "for purposes of this tax, each autonomous fraction, under the horizontal co-ownership regime, is deemed to constitute a property".

4. In turn, paragraph 3 of article 12 of the IMI Code establishes that "each apartment or part of a property capable of independent use is considered separately in the property registration, which also specifies its respective tax patrimonial value".

5. Thus, it is within this legal framework that the previously listed questions will be decided.

B) Arguments of the Parties

1. The Claimant first argued that the tax acts in question "are voidable for lack of reasoning. Indeed, as jurisprudence has consistently stated, reasoning, to be valid, must be: i) express; ii) explicit; iii) contextual and iv) accessible".

2. The Claimant thus understands that "in the case sub judice, and with respect, the tax acts in question do not comply with the obligation referred to above. In fact, according to their content, the tax acts in question relate to 'adjustments of previous documents', 'reversals of assessments' and 'corrections of assessments'. However, at no time was the Claimant notified of the assessments and documents referred to as having been 'reversed', 'adjusted' or 'corrected'".

3. In this sense, the Claimant requests, from the outset, the voidability of said acts, since they "do not meet the minimum requirements demanded by article 77 of the General Tax Law regarding the duty of reasoning (…)".

4. Additionally, the Claimant further argued that it is illegal and unconstitutional to consider that "the reference value be the corresponding sum of the VPTs attributed to each part or division and would thus be, from the outset, because such would be a clear violation of the principle of equality and proportionality in tax matters.

The legislator cannot treat equal situations differently: if the property were under a horizontal co-ownership regime, none of its housing fractions would be subject to the incidence of the new tax".

1. Therefore, the Claimant considers that "the discrimination operated by the TA constitutes arbitrary and illegal discrimination since nothing in the Law imposes an obligation to constitute horizontal co-ownership. The Tax Authority cannot therefore distinguish where the legislator itself chose not to, under penalty of violating the coherence of the tax system, as well as the principle of tax legality provided in article 103, paragraph 2 of the CRP, and also the principles of justice, equality and tax proportionality".

2. The Claimant concludes its request by requesting that the illegality of the aforementioned assessments be declared, proceeding with the restitution of the amount already paid, plus compensatory interest, pursuant to article 43 of the General Tax Law ("LGT").

3. For its part, the Respondent, after being duly notified for this purpose, presented its answer in which it warned, as a preliminary matter, that "the facts reported were not unequivocally demonstrated by the Claimant, through the documents it presents (…), and the Claimant should be invited to remedy the deficiencies and to explain the reason (…) nevertheless, as a matter of procedural efficiency, we shall proceed with the answer on the merits".

4. In this way, the Respondent considers that "the unity of the urban property in vertical ownership comprised of several apartments or divisions is not (…) affected by the fact that all or some of those apartments or divisions are capable of independent economic use. Such property does not cease to be one, and therefore its distinct parts are not legally equivalent to autonomous fractions under a horizontal co-ownership regime".

5. Thus, "the fact that the IMI was calculated based on the tax patrimonial value of each part of a property with independent economic use does not equally affect the application of Item no. 28, paragraph 1 of the General Table.

This is because the decisive factor for the application of that item of the General Table is the total tax patrimonial value of the property and not separately that of each of its parts.

Any other interpretation would violate, instead, the letter and spirit of Item 28.1 of the General Table and the principle of legality of the essential elements of tax provided in article 103, paragraph 2 of the Constitution of the Portuguese Republic".

1. In this context, the Respondent understands that it is unclear how "the taxation in question could have violated the principle of equality referred to by the claimants. In truth, horizontal co-ownership and vertical co-ownership are differentiated legal institutes".

2. The Respondent thus concludes its answer, stating that "the tax acts in question, in substance, did not violate any legal or constitutional provision, and should therefore be upheld".

C) Assessment by the Tribunal

1. First, this tribunal must make a preliminary note, regarding the preliminary point raised by the Claimant.

2. Indeed, the Claimant requested the annulment of the assessments at issue, on the grounds that they are not properly reasoned, as established by relevant jurisprudence.

3. However, this tribunal understands that it does not have knowledge of all the necessary details to assess the alleged lack of reasoning indicated above, due to failure of the Claimant, and must thus focus on understanding, for purposes of application of Item no. 28 of the TGIS, how the relevant VPT of the property is calculated (the merits of the claim that the tribunal understands is in a position to assess).

4. First, it should be clarified that it is clear, from the letter of the law, that the VPT to be considered, for purposes of applying Item no. 28 of the TGIS, can only be that calculated pursuant to the IMI Code.

5. This is indeed what the aforementioned item states, in the exact words: "(…) whose tax patrimonial value recorded in the registry, pursuant to the Municipal Property Tax Code (CIMI), is equal to or greater than € 1,000,000.00".

6. Thus, consider once again what follows from article 2, paragraph 4 of the IMI Code, which states that "for purposes of this tax, each autonomous fraction, under a horizontal co-ownership regime, is deemed to constitute a property".

7. Reinforced, nevertheless, by article 12, paragraph 3 of the same Code, which establishes that "each apartment or part of a property capable of independent use is considered separately in the property registration, which also determines its respective tax patrimonial value".

8. It is concluded, therefore, that, for purposes of calculating the IMI due, the VPT is considered individually for each apartment or part capable of independent use.

9. And if this is the method of calculation followed for the IMI, it must necessarily be the same model equally applied in the context of Item no. 28 of the TGIS, in the terms explained above.

10. Nevertheless, and should any doubts raised still persist, this tribunal relies on some arbitral decisions previously rendered, which addressed the subject under analysis.

11. Thus, first, consider decision no. 50/2013-T, of 29 October, which states the following.

12. "Law no. 55-A/2012 says nothing regarding the definition of the concepts in question, in particular, the concept of 'property with residential purpose'. However, article 67, paragraph 2 of the IS Code, added by said Law, provides that 'for matters not regulated in this code relating to item 28 of the General Table, the CIMI applies subsidiarily'.

The rule of incidence refers, therefore, to urban properties, the concept of which is that resulting from the provisions of article 2 of the CIMI, with the determination of the VPT complying with the terms provided in article 38 and following of the same code.

Consulting the CIMI, it is verified that its article 6 only indicates the different types of urban properties, among which it mentions residential ones (…)

From this we can conclude that, in the view of the legislator, what matters is not the juridical-formal precision of the specific situation of the property but rather its normal use, the purpose to which the property is destined. We further conclude that for the legislator the situation of the property in vertical or horizontal co-ownership did not matter, since no reference or distinction is made between one and the other.

What matters is the substantive truth underlying its existence as an urban property and its use.

(…)

Using the criterion that the law itself introduced in article 67, paragraph 2 of the IS Code, 'for matters not regulated in this code relating to item 28 of the General Table, the CIMI applies subsidiarily'".

1. That is, taking into account that the registration in the property matrix of properties in vertical ownership, for purposes of the IMI Code, follows the same registration rules as properties constituted in horizontal co-ownership, with the respective IMI, as well as the new IS, being assessed individually in relation to each of the parts, it does not appear to this tribunal that there is any doubt that the legal criterion for defining the incidence of the new tax must be the same.

2. In this context, if the law requires, regarding the assessment of IMI, the issuance of individualized assessment notices for the autonomous parts of properties in vertical ownership, in the same manner as it establishes for properties in horizontal co-ownership, it will require, in the same terms, regarding the rule of incidence of Item no. 28 of the TGIS.

3. Therefore, the IS, within Item no. 28 of the TGIS, could only apply to a given fraction if it, possibly, had a VPT greater than €1,000,000.00.

4. And, moreover, this was indeed the understanding adopted by the TA.

5. Indeed, the TA also issued individualized assessment notices, referring to each of the fractions capable of autonomous use, demonstrating that, in its opinion, said fractions, despite not being legally constituted in horizontal co-ownership, would be, for all purposes, independent of one another.

6. However, the TA overlooked that it could not, by virtue of the framework previously stated, proceed to sum the individual VPTs of the fractions previously mentioned, seeking a value that would fall within the tax base of Item no. 28 of the TGIS.

7. This when the legislator itself established a different rule in the context of the IMI Code, which, as previously mentioned, is the applicable code for matters not regulated in the IS Code, regarding Item no. 28 of the TGIS.

8. In summary, the criterion established by the TA to consider the value of the sum of individual VPTs attributed to parts, apartments or divisions with independent use, taking advantage of the fact that the property is not constituted under a horizontal co-ownership regime, does not, in the eyes of this tribunal, find legal support, being, in particular, contrary to the criterion applicable in the context of IMI and, by implication (in the terms mentioned above), in the context of IS.

9. In this context, this tribunal considers that the criterion defended by the TA violates the principles of legality and tax equality, as well as the prevalence of substantive truth over juridical-formal reality.

10. In parallel, note that article 12, paragraph 3 of the IMI Code does not make any distinction regarding the regime of properties in horizontal or vertical co-ownership.

11. Accordingly, and since if the property were under a horizontal co-ownership regime, none of its housing fractions would be subject to incidence of the new tax, the TA cannot treat materially equal situations differently.

12. In this respect, see what was said on this subject in the arbitral decision rendered in Case no. 132/2013-T, of 16 December, an understanding which this tribunal embraces.

"Indeed, it makes no sense to distinguish in law what the law itself does not distinguish (ubi lex non distinguit nec nos distinguere debemus).

Moreover, distinguishing, in this context, between properties constituted in horizontal and in full co-ownership would be an 'innovation' without associated legal support, especially because, as has been stated here, nothing indicates, either in item no. 28, or in the provisions of the CIMI, a justification for that particular differentiation.

Note, for example, what article 12, paragraph 3, of the CIMI provides: each apartment or part of a property capable of independent use is considered separately in the property registration, which also specifies its respective tax patrimonial value.

The uniform criterion that is necessary is thus the one that determines that the incidence of the rule in question only takes place when some of the parts, apartments or divisions with independent use of a property in horizontal or full co-ownership with residential purpose, possesses a VPT greater than €1,000,000.00.

Setting as the reference value for the incidence of the new tax the global VPT of the property in question, as the now respondent intended, finds no basis in the applicable legislation, which is the CIMI, given the reference made by the aforementioned article 67, paragraph 2 of the IS Code.

(…)

Moreover, admitting differentiation of treatment could produce results incomprehensible from a legal standpoint and contrary to the objectives that the legislator stated it had in adding item no. 28. By way of example, suppose the following hypothesis, which seems plausible in light of the interpretation made by the now respondent: a citizen who owns a property constituted in full co-ownership intended for residential use, with the global value of the autonomous units equal to or greater than €1,000,000.00 and the VPT of each one less than €1,000,000.00, is subject to annual taxation of 1% of that value (as occurred in the situation under analysis); whereas another citizen who holds a property with the exact same characteristics as the previous one but which has been constituted in horizontal co-ownership, with likewise the global value of the autonomous fractions equal to or greater than €1,000,000.00 and the VPT of each one less than €1,000,000.00, will not be subject to taxation under the aforementioned item no. 28.

On the other hand, one could ask: if such fractions have the same owner, why does it not make sense to aggregate, for purposes of taxation, their respective VPTs? The answer can be illustrated through another hypothesis: a citizen who owns a property in horizontal co-ownership, in which each of its 20 fractions has a VPT less than €1,000,000.00, would be subject to taxation if – should such aggregation be admitted – the global VPT exceeded that amount; whereas another citizen with identical 20 fractions distributed across 5, 10 or 20 properties would not be subject to any taxation under said item no. 28.

If this line of reasoning makes sense – thus justifying the non-aggregation of the VPTs of fractions of properties in horizontal co-ownership – no plausible reason is seen why the same should not be applied to the autonomous units of properties in full co-ownership.

Observing now the case under analysis, it is found that the VPTs of the apartments (autonomous units) of the property with residential purpose vary between (…), and therefore each one is less than €1,000,000.00.

From this it is concluded, as a result of what has been stated, that the IS referred to in item no. 28 of the TGIS cannot apply to them, and therefore the assessment acts challenged by the claimant are illegal".

1. One final point worthy of emphasis (despite the previous framework being sufficient to recognize the illegality of the assessment acts performed by the TA), concerns the understanding advocated both by the legislator and by the government itself, when adding Item no. 28 to the TGIS.

2. In this regard, let us focus now on the arbitral decision rendered in Case no. 48/2013-T, of 9 October, which extensively analyzes the objectives underlying the addition of said item.

3. "Law no. 55-A/2012, of 29/10, has no preamble, therefore from it, it is not possible to extract the legislator's intent.

Such Law of the Assembly of the Republic originated from bill no. 96/XII (2nd), which, in its statement of reasons, speaks of the introduction of tax measures inserted in a broader set of measures to combat budget deficit.

In the statement of reasons of said bill, it is stated that, 'these measures are fundamental to reinforce the principle of social equity in austerity, ensuring an effective distribution of the sacrifices necessary to comply with the adjustment program. The Government is firmly committed to ensuring that the distribution of these sacrifices will be made by all and not just by those who live from the income of their labor. In accordance with this objective, this act expands the taxation of capital and property, equitably covering a broad set of sectors of Portuguese society'.

It is also stated in that statement of reasons that, in addition to the increase in taxation of capital income and stock market gains, a rate is created under stamp duty tax affecting urban properties with residential purpose whose tax patrimonial value is equal to or greater than one million euros.

That is, in such statement of reasons, it is also not clarified what is meant by urban properties with residential purpose.

In his intervention in the Assembly of the Republic, in the presentation and discussion of said bill, the Secretary of State for Tax Affairs stated the following:

'The Government has elected social equity as a priority principle of its fiscal policy. This is even more important in times of rigor as a way to ensure fair distribution of fiscal effort.

In the demanding period the country is going through, during which it is obliged to comply with the program of economic and financial assistance, it becomes even more pressing to affirm the principle of equity. It cannot always be the same – employees and retirees – bearing the tax burden.

For the tax system to be fairer, it is decisive to promote the broadening of the tax base, demanding increased effort from taxpayers with higher incomes and thereby protecting Portuguese families with lower incomes.

For the tax system to promote more equality, it is fundamental that the effort of budget consolidation be shared by all types of income, covering with special emphasis capital income and high-value properties. This matter, it is recalled, was extensively addressed in the Constitutional Court decision.

Finally, for the tax system to be more equitable, it is crucial that all be called to contribute according to their ability to pay, giving the tax authority reinforced powers to control and supervise situations of tax fraud and evasion.

In this sense, the Government presents today a set of measures that effectively reinforce fair and equitable distribution of the effort of adjustment by a broad and comprehensive set of sectors of Portuguese society.

This proposal has three essential pillars: the creation of special taxation on urban properties worth more than 1 million euros; the increase in taxation on capital income and stock market gains; and the strengthening of rules to combat tax fraud and evasion.

First, the Government proposes the creation of a special rate on high-value residential urban properties. It is the first time that Portugal has created special taxation on high-value properties intended for residential use. This rate will be 0.5% to 0.8% in 2012, and 1%, in 2013, and will apply to properties worth equal to or greater than 1 million euros. With the creation of this additional rate, the fiscal effort demanded of these owners will be significantly increased in 2012 and 2013'".

1. Next, it is necessary to gather the conclusions that will allow, without margin for doubt, to decide on the subject under discussion (that is, whether, for purposes of applying Item no. 28 of the TGIS, in cases where a property with various autonomous fractions, capable of independent use, is not constituted in horizontal co-ownership, the relevant VPT is calculated by summing the individual VPTs, or, alternatively, is individually considered).

2. In this sense, note first that this subject matter is, from the outset by virtue of article 67, paragraph 2 of the IS Code, subject to the rules of the IMI Code, "for matters not regulated in this code relating to item 28 of the General Table, the CIMI applies subsidiarily".

3. As such, and as has been mentioned many times, in the understanding of this tribunal, the mechanism for calculating the relevant VPT for purposes of said item, is that found in the IMI Code.

4. Now, article 12, paragraph 3 of the IMI Code establishes that "each apartment or part of a property capable of independent use is considered separately in the property registration, which also specifies its respective tax patrimonial value".

5. The legislator, in the terms previously mentioned, disregarding any prior constitution of horizontal or vertical co-ownership.

6. Indeed, for the legislator, what matters is the substantive truth underlying its existence as an urban property and its use.

7. It should be noted that the TA itself seems to agree with the criterion set forth, which is why the assessments that it itself issues are very clear in their essential elements, from which it follows that the value of incidence corresponds to the VPT of each of the apartments and the assessments are individualized.

8. Therefore, if the legal criterion requires the issuance of individualized assessments for the autonomous parts of properties in vertical ownership, in the same manner as it establishes for properties in horizontal co-ownership, it has clearly established the criterion, which must be unique and unequivocal, for defining the rule of incidence of the new tax.

9. Thus, there would only be a place for IS incidence (within Item no. 28 of the TGIS) if some of the parts, apartments or divisions with independent use had a VPT exceeding € 1,000,000.00.

10. The TA cannot consider as the reference value for the incidence of the new tax the total value of the property (i.e., the sum of all fractions with residential purpose), when the legislator itself established a different rule in the context of IMI (and, as previously mentioned, this is the code applicable to matters not regulated regarding Item no. 28 of the TGIS).

11. In conclusion, the current legal regime does not impose an obligation to constitute horizontal co-ownership, and therefore the TA's action constitutes arbitrary and illegal discrimination.

12. Indeed, the TA cannot distinguish where the legislator itself chose not to, under penalty of violating the coherence of the tax system, as well as the principle of tax legality provided in article 103 of the Constitution of the Portuguese Republic, and also the principles of justice, equality and tax proportionality.

13. In the case at hand, the property in question is constituted in vertical ownership, comprised of fractions with independent use (of which 16 have residential purpose), as was proven.

14. Given that none of these fractions, individually considered, has a patrimonial value equal to or greater than €1,000,000.00, as follows from the documents attached to the file, it is concluded that the legal condition for incidence was not met.

V. DECISION

1. By this decision, this Arbitral Tribunal:

A) Finds the request for arbitral pronouncement well-founded and, consequently, declares illegal and annuls the IS assessment acts mentioned above, by reference to 2014, from which tax due in the amount of € 2,157.66 resulted, pursuant to Item no. 28 of the TGIS;

B) Condemns the Respondent, pursuant to article 43, paragraph 1 of the LGT and 61, paragraphs 2 and 5 of the Code of Tax Procedure and Process ("CPPT"), to refund the tax paid, plus compensatory interest at the rate resulting from paragraph 4 of article 43 of the LGT, calculated on the amount paid from the day the aforementioned assessment was paid until the date of full reimbursement of the referred amount; and

C) Condemns the Respondent in the costs of the proceeding.

VI. VALUE OF THE CASE

1. The value of the case is fixed at € 2,157.66, pursuant to article 97-A, paragraph 1, subparagraph a), of the CPPT, applicable by virtue of subparagraphs a) and b) of paragraph 1 of article 29 of the RJAT and paragraph 2 of article 3 of the Regulation of Costs in Tax Arbitration Proceedings.

VII. COSTS

1. In accordance with the provisions of article 22, paragraph 4, of the RJAT, the arbitration fee is fixed at € 612, pursuant to Table I of said Regulation, to be borne by the Respondent, given the complete success of the claim.

Notify accordingly.

Lisbon, CAAD, 3 June 2016

The Arbitrator

(Sérgio Santos Pereira)