IMT Tax Exemption for Tourism Enterprises: Revocation Deadline and Legitimate Expectations

ARBITRATION DECISION

IMT - Tax Benefits Tourism Utility

I - REPORT

1. On 22 December 2014, A…, SA, with the NIPC … and registered with the Commercial Registry Office of Lisbon under the same number, with registered office at …, n.º … – Floor … – E1, …-… Lisbon came, in accordance with articles 2º, 3º, 10º et seq. of the Legal Framework for Arbitration in Tax Matters (RJAT), approved by Decree-Law no. 10/2011 of 20.01, to request the constitution of an arbitral tribunal for the annulment of the act of additional assessment of Municipal Tax on Onerous Transfer of Real Property (IMT) and Stamp Duty (IS), in the total amount of € 27,489.00 (twenty-seven thousand, four hundred and eighty-nine euros), and condemnation to restitution of the amounts wrongfully paid with added compensatory interest.

2. In the request for arbitral decision, the Claimant opted not to designate an arbitrator.

3. In accordance with article 6º, no. 1 of the RJAT, by decision of the President of the Deontological Council, Maria Manuela do Nascimento Roseiro, the signatory, was appointed as sole arbitrator, who accepted the appointment within the legally stipulated period.

4. After notification to the parties and absent any refusal of said appointment (article 11º, subsections a) and b) of the RJAT and articles 6º and 7º of the Deontological Code), the arbitral tribunal was constituted on 25 February 2015, in accordance with the provision in subsection c) of no. 1 of article 11º of Decree-Law no. 10/2011, of 20 January, in the wording introduced by article 228º of Law no. 66-B/2012, of 31 December.

5. On 30 March 2015, the Tax and Customs Authority (AT or Respondent) presented its Response and attached the administrative record.

6. With the consent of the Parties, notified for such purpose, an arbitral order was issued on 19 May 2015 dispensing with the holding of the meeting provided for in article 18º of the RJAT as well as written arguments, with the date of 25 August set for communication of the arbitral decision.

7. Request for Arbitral Decision

The Claimant alleges, in summary (for which we are responsible), that:

• The act of additional assessment of IMT and IS, subject of the present request, in attempting to disapply a tax benefit previously recognized by the Tax Authority (exemption from IMT and reduction to 1/5 of IS) on the grounds of an alleged error committed by the Finance Service when the initial assessment occurred, after the legal period for revocation of 1 (one) year, is illegal by disrespecting the protection of public confidence and violating legal norms that impose on the AT the respect for the period for revocation of acts recognizing the application of the tax benefits in question.

• Given the Declaration of Model 1 of IMT presented by the Claimant on 24 January 2013, at Finance Service 2 of Lisbon, requesting from the A.T. the issuance of guides or documents of assessment of IMT and IS, the Finance Service issued on the same date the assessment documents of IMT and IS, in which it expressly recognizes the application to the concrete cases of the tax benefit ("Benefits: 33 Tourism Utility (Art.º 20.º of D.L. 423/83) …").

• On 25.01.2013, the Claimant executed the public deed of acquisition, where reference was made to the filing of the receipt of IMT assessment, issued by Finance Service Lisbon 2 "in the amount of €0.00, by virtue of having been granted exemption from IMT under D.L. 423/83" and the receipt of IS assessment in the amount of € 616.00.

• On 23.07.2014, that is, after more than 1 (one) year following those facts, the Finance Service (through the contested acts) determined the collection of the taxes, through the said "additional assessment" and on the grounds that in the initial assessment the exemption and reduction of taxes was wrongly attributed or granted.

• Said act entails the revocation of acts constitutive of rights being practiced in violation of the limits peremptorily imposed by Law, namely the period of 1 (one) year defined by articles 136º and 141º of the Code of Administrative Procedure (CPA) and art.º 58º of the Code of Administrative Court Procedure (CPTA), ex vi art.º 2º of CPP.

• The "automatic" tax benefits (see art.º 10º, n.º 8 of the Code of Municipal Tax on Onerous Transfer of Real Property – CIMT), and the benefits "dependent on recognition", are structurally identical, depending their application and effectiveness always on verification by the AT of the fulfillment of their respective legal prerequisites.

• In the case of the tax benefits in question, relating to IMT and IS, the law expressly requires this verification by the services of the AT (art.º 10º, n.º 8 of the CIMT, applicable to IS through n.º 4 of art.º 23º of the IS Code); this verification gives rise to or is effected through a true innovative administrative act.

• The tax act of assessment of IMT and IS that expressly mentions the application of an exemption from IMT and reduction of IS effects a constitutive verification, is a true administrative act with tax effect.

• Inasmuch as the public deed of purchase and sale cannot be executed without prior assessment of IMT and IS, the AT verifies in the case, in concreto, the existence and application of the tax benefits set forth in art.º 20.º of D.L. no. 423/83, to the acquisition of the real property by the Claimant.

• In the case of exemptions of automatic recognition contained in legislation outside the CIMT, the existence of such control is mandatory (articles 10.º, n.º 8, subsection d), and 19º, nº 1, of the CIMT).

• That is, it is the responsibility of the Finance Service where the declaration for assessment was presented (Model 1), in accordance with art.º 19.º n.º 1 of the CIMT, to verify the legal requirements and declaration of the application of such benefits, prior to the execution of the deed of purchase and sale - the Claimant proceeded to self-assessment of IMT and IS, prior to the execution of the purchase and sale, delivering the respective Model 1 to the Finance Service, declaring the price and identifying the real property, and the Finance Service based on that information proceeded to the assessment of IMT and IS, with the issuance of guides where it declares the application of the tax benefits of exemption from IMT and reduction of IS enshrined in art.º 20.º of D.L. no. 423/83.

• This is a "declarative act with constitutive effects" or "of constitutive verification" - there existed an administrative act of recognition on the part of the AT, which created in the Claimant the certainty and conviction that the benefits in question were applicable to it.

• The initial assessments are acts constitutive of rights, which contain a constitutive verification, entailing the recognition of tax benefits, whereby the AT could only withdraw the benefits in question, on the basis of their illegality, within the period of 1 year, in accordance with articles 136º and 141º of the CPA and art.º 58º of the CPTA, ex vi art.º 2º of CPPT.

• The case sub judice cannot be treated as a simple additional assessment under art.º 31.º, n.º 2 of the CIMT, founded on a mere error, which permits the AT to assess additional taxes - the assessment relating to the calculation of IMT, which the AT improperly calls "additional", does not correspond to a mere correction of the previous assessment, not falling within the scope of the normative 31.º, n.º 2 of the CIMT, since it is not simply a correction of the quantum of tax to be paid, given that when the real property was acquired no amount of tax was assessed but the exemption was recognized (fact preventing the birth of the obligation) from IMT.

• The IMT was assessed and collected for the first time now, given the AT's understanding that the tax benefit provided in art.º 20.º of D.L. no. 423/83 would not be applicable to this acquisition, verifying an error in the factual premises, which in its view entails the annulment of the granting of the benefit.

• Even regarding IS there is not a mere additional assessment at issue, but rather a true revocatory revocation of the tax benefit previously recognized, of reduction to 1/5.

• The AT itself admits that it effects revocation of the act recognizing the tax benefit, by asserting that no. 4 of art.º 14º of the EBF applies, which regulates revocation, therefore the intention was indeed revocation, because it will understand that the benefit was wrongly granted.

• Although the acts subject to the present request for decision do not contain an express revocation, they undoubtedly entail a revocatory revocation of the recognition of the tax benefits of exemption from IMT and reduction to 1/5 of IS, in accordance with art.º 20.º of D.L. no. 423/83.

• But this revocation is unlawful, contrary to what is established in art.º 14.º, n.º 4 of the EBF, in conjunction with art.º 79.º of the LGT and art.º 141.º of the CPA ex vi articles 2.º, subsection c) of the LGT and 2.º, subsection d) of CPPT.

• The act of assessment is afflicted with the vice of violation of Law, by disrespect of art.ºs 141.º of the CPA and 58.º of the CPTA, ex vi art.os 2.º, subsection c) of the LGT and 2.º, subsection d) of CPPT, and art.º 14º, n.º 4 of the EBF, being subject to annulment, cf. art.º 135º of the CPA.

• The assessments of IMT and IS, subject of the present request for decision, violate the principle of good faith and protection of confidence, provided for in art.º 266.º, n.º 2 of the CRP, art.º 59.º, n.º 2 of the LGT and art.º 6.º A of the CPA, and the constitutional principles of confidence and legal certainty (of certainty and predictability), provided for in articles 2.º and 8.º of the CRP.

• The act should be annulled, with restitution to the Claimant herein of the amounts it was obliged to pay, plus the respective compensatory interest, in accordance with art.º 46.º of the LGT.

1. The Response of the Respondent

The Respondent responded, in summary (for which we are responsible), that:

• What is at issue is the order of the Head of the Finance Service, issued upon opinion and information preceding it, which considered that the exemption provided in art. 20º of Decree-Law no. 423/83, of 05/1, was not applicable to the situation of the present case, proceeding to the additional assessment of IMT and Stamp Duty.

• The present case relates to the acquisition by the Claimant, on 25 January 2013, from the real estate company B…, S.A., for the price of 385,000.00€, of an urban property composed of a one-story building in "C… ." located in …, municipality of ….

• The issue is to determine the meaning and scope of article 20º, no. 1, of Decree-Law no. 423/83, of 05/12, insofar as it refers to the phrase "acquisitions of real properties or autonomous fractions destined for the installation of projects qualified as tourism utility" by the transferring company, and it should be concluded that the legislator only intended to cover with that norm acquisitions destined for the "installation" of projects as results clearly from the literal and historical elements of interpretation.

• The question sub judice has already merited a clarifying and standardizing position by the jurisprudence of the STA, through the Decision of the Contentious Tax Section, of 23 January 2013, rendered in expanded judgment, in accordance with the provision of article 148.º of the CPTA, in case no. 968/12, and which gave rise to Jurisprudential Standardization Decision no. 3/2013 (O.G., 1st series, 04.03.2013).

• It is not a subjective exemption aimed at benefiting companies, whether owners or operators of the projects, but rather an objective one, since it aims to benefit the activity of installation, and only companies engaged in "installing" tourism projects may request and benefit from the exemption and not also those intending to engage in the activity of operating the same.

• Given the legal-tax framework of the facts, the acquisition in question does not benefit from the exemption from IMT and Stamp Duty provided in no. 1 of art. 20º of the cited Decree-Law 423/83, whereby it is correct the order of the Head of Finance of Lisbon-2, here put in issue by the Respondent.

• In this matter the judge should, in order to obtain a uniform interpretation and application of the law (no. 3 of article 8.º of the Civil Code), take into account the jurisprudence established in the Jurisprudential Standardization Decision no. 3/2013 of the STA, already reiterated in successive decisions of that superior court and in arbitral jurisprudence.

• In this case, it is found that the Real Estate Company B…, S.A., in its capacity as owner of the "Tourism Village C….", for which it requested tourism utility, which came to be recognized as a prior title on 15 November 2012, sold to the Claimant, on 25 January 2013, a real property forming part of that project, destined for tourism operation, whereby the acquisition of the fraction was not destined, as would be required by no. 1 of article 20.º of Decree-Law no. 423/83, of 5 December, for the installation of projects qualified as tourism utility, when for there to be an entity operating a tourism project, which effectively operates said project, the installation thereof must already be completed (AUJ no. 3/2013, already referred to).

• That is, the acquisition of the urban property by the Claimant took place at a time when the tourism project in which the property is integrated was already fully constructed and installed, and in operation, whereby the exemption from IMT and Stamp Duty violates what is provided in no. 1 of article 20.º of Decree-Law no. 423/83, of 5 December.

• The assessment acts practiced by the Respondent do not violate constitutionally enshrined principles, of confidence and legal certainty and good faith, because, given the provision of no. 1 of article 20.º of Decree-Law no. 423/83, of 5 December, the transfer of the property did not meet, ab initio, the legal requirements to benefit from exemption from IMT and Stamp Duty, there existing in the legal sphere of the Respondent any legitimate expectation worthy of protection.

• The undue reference, in the deed of acquisition of the fraction, to the exemption from IMT does not prevent the Respondent from promoting the restoration of legality, in accordance with the law, nor are the notary or the registrar absolute and indisputable screens of control of the legality of acts in which they participate, they are public authorities entrusted with a general duty of supervision, without competencies that permit them to ascertain the tax-legal situation of the taxpayer, substituting themselves for the AT, being admitted the rectification of their action, namely when there is the assumption of an incorrect interpretation and application of tax law resulting in non-collection of undue tax, as occurred in the case under discussion in the present case.

• Pursuant to no. 2 of article 31 of the CIMT "when it is verified in assessments that an error of fact or law has been committed, resulting in prejudice to the State, as well as in cases where evaluation is necessary, the head of the finance service where the assessment was made or the declaration was delivered for the purposes of the provision in no. 3 of art. 19, promotes the competent additional assessment."

• Nor does the assessment under discussion in the present case violate articles 149º and 141º of the CPA.

• The benefit in question has an automatic character, deriving direct and automatically from the law, without need of any administrative recognition, whereby it is subject to be reviewed and revoked by the AT in accordance with the terms and periods provided in the law, namely art. 35.º n.º 1 of the CIMT combined with art. 45.º of the LGT.

• There is no place for the application of article 141.º of the CPA nor is it a valid act and constitutive of rights, being to be rejected the application of article 140.º of the CPA and of no. 4 of article 14.º of the EBF, in the wording given by Decree-Law no. 108/2008, of 26 June, and in force at the time of the facts, because the application of both norms has as a condition the pre-existence of an administrative act, in the case of granting or recognition of a tax benefit.

• In this case, no administrative act was, in the first instance, practiced (art. 120º CPA), the Administration did not issue any decision of recognition or granting of a tax benefit to the Respondent in accordance with the terms provided in article 5.º of the EBF.

• When the deed of purchase and sale of the property was executed, it was wrongly considered that the Respondent would meet the legally foreseen requirements for the exemption from IMT and IS, which configured an incorrect interpretation and application of tax law in relation to which the Tax Administration and its organs are absolutely unrelated, and when the wrongful exemption from tax was verified, the due act of assessment of IMT and IS was determined to be practiced, in accordance with the law.

• Absent an administrative act of granting or recognition of a tax benefit, subject to revocation, prior to the practice of the act of assessment of tax, cannot be invoked for the discussion of the cause the provisions contained in articles 141.º of the CPA and 14.º, n.º 4, of the EBF, which presuppose it.

• It is concluded by the legality of the acts of assessment of IMT and IS, because the acquisition of the property by the Respondent is subject to tax in accordance with article 2.º, n.º 1, combined with articles 4.º, 5.º and 12.º, n.º 1, at the rate provided in the current subsection d) of article 17.º, all of the Code of IMT and of article 9.º of the Code of Stamp Duty (CIS) and of item 1.1. of the general table.

1. Issues to be Decided

Unlike other proceedings concerning situations identical to those of the present case already judged within the framework of the CAAD, the present arbitral tribunal is not requested to decide on the meaning and scope of art. 20º, no. 1 of Decree-Law no. 423/83, of 05/12, insofar as it refers to the segment of norm "acquisitions of real properties or autonomous fractions destined for the installation of projects qualified as tourism utility", so as to decide whether the acquisition by the Claimants of autonomous fractions followed by granting of an operation contract with another entity that operates the whole still configures as "installation".

In accordance with the Request for Decision, the present case has only as its object the appreciation of the legality of the act of assessment in light of the provision in articles 14º, n.º 4 of the EBF and 141.º of the CPA and 58.º of the CPTA, being therefore to appreciate and decide whether the act of assessment configures or presupposes a revocatory act of tax benefit and whether it was practiced outside the applicable legal period.

1. Cleansing

The Tribunal is materially competent and is regularly constituted, in accordance with articles 2.º, n.º 1, subsection a), 5º., nº 2, and 6.º, n.º 1, of the RJAT.

The parties have legal personality and capacity, are legitimate and are legally represented, in accordance with articles 4.º and 10.º, nº 2, of the RJAT and article 1.º of Order no. 112-A/2011, of 22 March.

The case does not suffer from vices that would invalidate it.

Whereby we proceed to the merits.

II. GROUNDS

1. Proven Facts

11.1. By public deed executed on 25 January 2013, the Claimant acquired from the real estate company B…, S.A. the urban property denominated lot 3.2 – Tourism Village 1 – "C… ." located in … – …, in the parish of …, municipality of …, described in the Land Registry Office of … under n.º …, and registered in the registry under article … of said parish, for the price of €385,000.00 (three hundred eighty-five thousand euros) (Documents nos. 2 and 3 attached to the Request) (article 6º of the Request for decision, article 3º of the Response, and Documents nos. 2 and 3 attached to the Request for decision and which are considered reproduced).

11.2. In the deed referred to in the preceding number were exhibited the permit for use, n.º …/12, issued on 2 November 2012 by the Municipal Council of … for the identified property, and an official letter (number DQO.2011.S…........../…) issued by Portugal Tourism, I.P, on 16.11.2011, evidencing approval of the constitutive title of Tourism Village 1, four stars, of C… . (article 7º of the Request Doc. n.º 2).

11.3. To the project qualified as a tourism complex "Tourism Village 1 – C… ." public utility was attributed as a prior title by Order n.º …-G/…, of the Secretary of State for Tourism, of 15 November 2012, published in the Official Gazette, 2nd series, No. 245, of 19 December 2012 (Document filed with deed, cf. Doc. n.º 2 submitted by the Claimant, and article 8º of the Response).

11.4. On 24 January 2013, the Claimant, through a representative, presented at the Lisbon 2 Finance Service a declaration for assessment of IMT (Model 1) and Stamp Duty, relating to the acquisition referred to above, which was registered with n.º … (field 70), where she indicated the name of the buyer and seller, the property transferred - property U-…, municipality of …, parish … – the value of the contract of €385,000.00 (field 45 and 61) and the application of tax benefit with code 33 (field 48) (cf. Doc. n.º 4 attached with the Request).

11.5. On 24 January 2013 Documents n.º … (Municipal Tax on Onerous Transfer of Real Property) and n.º … (Stamp Duty, item 1.1.) were issued, both referring to declaration also of 24 January 2013, taxable event "acquisition of the right of full ownership over real properties", indicating the property as property U-…., municipality of …, parish …, appearing in the tax identification, regarding the assessment (n.º ...) of IMT, "Benefits: 33 – Tourism Utility (art.º 20.º of D.L. 423/83), 100% of taxable income (…), Collection: € 0.00" and regarding the assessment (n.º …) of IS, in the amount of € 616.00, (five hundred ninety-two euros), Benefits: 33 Tourism Utility (art.º 20.º of D.L. 423/83), 80% of taxable income (…) Collection: € 616.00" assessment of IMT at "0" (zero) and of IS in the amount of € 616.00 (art. 9º of the Request, Doc. n.º 5 attached with the Request).

11.6. The Claimant was notified, through official letter n.º …, dated 26 February 2014, by the Lisbon Finance Service – 2, to be heard in prior hearing, regarding the additional assessment of IMT and IS referring to the acquisition referred to in number 1, being explicit, in particular: "Having been presented to this service the declaration for assessment of IMT identified below, in said assessment exemption from IMT and reduction of Stamp Duty to 1/5 were wrongly attributed, in accordance with article 20º of Decree-Law no. 423/83, of 5 December (tourism utility)", and that "in compliance with no. 2 of article 31º of the CIMT, since an error of fact or law has been verified in said assessment, it is the intention of this service to proceed with additional assessment, where the wrongly attributed exemption will not be considered to the taxable income of which will be applied the rate provided for in subsection d) of no. 1 of article 17º" and "Similarly, Stamp Duty shall be assessed without the reduction initially granted, from which the amount paid in the meantime shall be deducted" (Doc. n.º 6, attached with the Request, art. 14º of the Response and PA 2, fls. 13 et seq.).

11.7. On 17 March 2014, the Claimant, in the exercise of the right of hearing, delivered at the Lisbon 2 Finance Service a document where she stated her disagreement with the legal understanding notified, invoking lack of grounds, misinterpretation of Decree-Law no. 423/83 and violation of the principles of good faith and protection of confidence (Doc. n.º 6 attached with the Request).

11.8. On 23 July 2014, the Head of Finance of the Lisbon 2 Finance Service, agreeing with information and opinion submitted to him, dismissed the arguments produced in prior hearing, ordering the additional assessment of IMT and IS to proceed (Doc. n.º 1 attached to the request, fls. 6 to 12, and PA 1, fls. 26).

11.9. By official letter dated 19 August 2014[1], the Lisbon 2 Finance Service notified the Claimant that, following the right of prior hearing, an order had been issued (a copy of which was sent) which had dealt with the matter, deciding on the assessment of IMT and Stamp Duty due by the transfer of the real property registered in the registry under article … of the parish of …, "whose assessment of IMT occurred on 24.01.2013, having wrongly been granted exemption in accordance with no. 1 of art. 20º of Decree-Law no. 423/83, of 5 December (tourism utility), since the transfer in question does not fit the concept of installation of tourism project, but only its operation, which does not enjoy the benefits prescribed in said decree" and that she should within 30 days pay the taxes due in the amounts of € 25,025.00 IMT and € 2,464.00 of Stamp Duty, to which effect she should request guides from the Finance Service (Doc. n.º 1 attached with Request, fls. 4, and arts. 15º and 16º of the Response)

11.10. On 4 December 2014, D…, Lda, requested, in accordance with art. 24º, nos. 1 and 3 of the CPPT, from the Head of Lisbon 2 Finance Services "the issuance of a certificate of the notification for additional assessment of IMT and Stamp Duty as well as of the opinion that founded the assessment relating to the acquisition of the real property registered in the land registry of the parish of …" (Doc. n.º 1 attached to the Request).

11.11. On 9 December 2014, the Lisbon 2 Finance Service issued the requested certificate, attaching in addition to a copy of the notification for payment of the additional assessment, information subscribed by an employee of the same Service, which on 23 July 2014 had merited the agreement of the head of finance, rejecting the arguments invoked by the Claimant in the right of hearing (Doc. n.º 1 attached to the request and PA 1, fls. 26).

11.12. On 23 September 2014 Documents n.º … and n.º … were issued corresponding, respectively, to € 25,025.00 of Municipal Tax on Onerous Transfer of Real Property and € 2,464.00 of Stamp Duty, item 1.1., in the total amount of € 27,489.00 (twenty-seven thousand four hundred eighty-nine euros), amounts paid by the Claimant on 23.09.2014 and 24.09.2014, also respectively (Doc. n.º 8 attached with the Request).

1. Not Proven

The factual matters given as proven prove themselves sufficient for appreciation of the question of law, with no unproven facts relevant to the solution of the present dispute.

1. Grounds of Proof

The fixing of the factuality was done based on facts alleged by the parties and not contested, as well as on the documentation attached to the record, including the administrative file.

1. Application of Law

14.1. The Provision of article 20º of Decree-Law no. 423/83, of 5 December and the Object of the Case

The Parties have a different interpretation regarding the application to the transfer of real property, occurred by public deed of 25 January 2013 (proven facts, 11.1.), of the tax benefits provided for in no. 1 of art. 20.º of Decree-Law no. 423/83, of 05/12[2].

Such divergence of interpretation is apparent in the notification of assessment and information from the Lisbon 2 Finance Service (proven facts, 11.6 and 11.9), in the document delivered by the Respondent when exercising the right of hearing and in much of the content of the Response of the AT contained in the record.

Indeed, the documents referred to evidence a clear disagreement regarding the understanding of "installation" of projects declared of tourism utility, which for the Claimant includes the acquisition of properties of the tourism project already in conditions of functioning, while the Respondent considers that this type of acquisition, situated in a moment subsequent to the issuance of the permit for use of the project, does not integrate in the installation process, having as destination commercial operation.

As is known, this is a matter that was subject to controversy at the highest level of courts but after the Jurisprudential Standardization Decision of the STA, Tax Contentious Section (Decision no. 3/2013, published in the Official Gazette, 1st Series, of 4 March 2013) numerous decisions have been issued, namely at the level of the STA and the CAAD, in the same sense as said Decision.

The doctrine there established, regarding no. 1 of article 20.º of Decree-Law no. 423/83, of 5 December, coincides with the arguments defended by the Respondent when the assessment of IMT and IS (proven facts, 11.7).

But, as already referred to above, the present Request for Decision does not have as its object the appreciation of the substantive legality of the grounds sustained by the AT in the assessment made in 2014 to put in question the application of art. 20.º, nº1, of Decree-Law no. 423/83 to the transfer occurred in January 2013, but the legality of the practice of an administrative act, qualified as revocatory, after a period exceeding one year has elapsed on the date of the act granting the tax benefits provided for in that norm.

14.2. Tax Benefits and Revocation

That is, in the present case the Claimant maintains that the decision of 23 July 2014 constitutes an administrative act violating articles 136º and 141º of the Code of Administrative Procedure (CPA) and art.º 58º of the Code of Administrative Court Procedure (CPTA), ex vi art.º 2º of CPP, because revocatory of another administrative act, constitutive of rights, practiced such more than one year before, on 24 January 2013.

It defends that, although what is at issue is a tax benefit of automatic nature, without need of an act of recognition by the AT (art.º 5.º, n.º 1 of the EBF), the Finance Service certified, on 24 January 2013, in the sequence of the presentation by the Claimant of the declaration for assessment (Model 1), that the acquisition declared enjoyed the tax benefits declared in the Model 1 of IMT presented before the execution of the deed of purchase and sale.

The Respondent considers, by contrast, that there is no violation of constitutionally enshrined principles, of confidence and legal certainty and good faith because the transfer of the property did not meet, ab initio, the legal requirements to benefit from exemption from IMT and Stamp Duty, there existing in the legal sphere of the Respondent any legitimate expectation worthy of protection, because the undue reference, in the deed of acquisition of the fraction, to the exemption from IMT does not prevent the Respondent from promoting the restoration of legality, taking into account no. 2 of art. 31º of the CIMT.

And it maintains, namely that treating it as an automatic benefit, without need of any administrative recognition, is subject to being reviewed and revoked by the AT in accordance with the terms and periods provided in the law, namely art. 35.º, n.º 1, of the CIMT combined with art. 45.º of the LGT, not being applicable the provision in articles 140.º of the CPA. And that, there not having existed any administrative act of granting or recognition of a tax benefit, subject to revocation, prior to the practice of the act of assessment of the tax, not being invocable the application of article 141.º of the CPA and 14.º, n.º 4 of the EBF, which presuppose it.

14.3. The Cited Jurisprudence

The Claimant invokes in favor of its position the Decisions of the STA, of 15 May 2013, case 0566/12, and of the TCAS, of 1 February 2011, case 03893/10[3].

The first of the Decisions (STA, case 0566/12, Reporter Counselor Dulce Neto) appreciated the legality of an order, of 20/07/2007, of a manager of the AT that revoked a tax exemption previously recognized, regarding IRS of the year 2005, in light of art. 37º, n. 3, of the Statute of Tax Benefits.

In that case, it was taken into account that "(...) the IRS exemption provided in no. 3 of art. 37º of the EBF (in the wording introduced by Dec. Law no. 198/01, of 3/7), being dependent on recognition, was requested by the interested party regarding IRS of the year 2005 and granted by administrative act dated 3/07/2006" and that "this act came to be revoked by subsequent order issued on 20/07/2007, on the grounds of the untimeliness of the request in which the respective petition for exemption had been formulated and this having been, for such reason, wrongly granted", it being decided that, in accordance with art. 12.º, n. 4, of the EBF (corresponding to art. 14º, n. 4, after Dec. Law no. 108/2008, of 26/06), this means that "revocation of the administrative act that grants a tax benefit (as well as unilateral rescission of the respective granting agreement or diminution, by unilateral act of the tax administration, of acquired rights) is prohibited, unless there is non-fulfillment of the obligations imposed attributable to the beneficiary, or if the benefit was wrongly granted, in which case the act may be revoked".

Finally, bearing in mind that neither the EBF nor the CPPT contain any rule on the period for the said revocation, concluded that the period for revocation of such administrative act of granting the IRS exemption can only be one year, by application of articles 136.º and 141.º of the CPA, and art.º 58.º of the CPTA.

In the second Decision indicated (TCAS, case 03893/10, Reporter Judge Eugénio Sequeira), the legality of an assessment was under appreciation, made on 22 August 2003, of Municipal Contribution regarding the exercise of 1999, relating to a property that had been subject, in response to a request presented on 1 April 1996, to granting of exemption from Municipal Contribution for the period of ten years, commencing in 1996 and ending in 2005.

The learned decision concluded that "the period for revocation of such (administrative) act of granting the exemption from CA can only be that contained in the respective rules of the CPA, which is not that relating to the period provided for the respective assessment of the tax (...)", and came to decide formulating the following summary: "1. The municipal contribution was a municipal tax imposed on the taxable value of properties situated in the territory of each municipality; 2. Exemption from municipal contribution could be granted to acquirers of urban residential properties, acquired on onerous title, destined for the residence of the taxpayer or its family unit, at their request; 3. Once such exemption was granted, this paralyzed the rules of incidence of the contribution, being illegal by violation of law the assessments that did not respect it; 4. If such granting of the exemption were illegal due to error in its premises, it could be revoked in an order that would appreciate them, within the general period for revocation of illegal acts constitutive of rights – one year counted from its issue (art.º 141.º of the CPA); 5. If such order of granting the exemption were not revoked within this period, it became established in the legal order as a case decided or resolved, which the subsequent act of assessment could not violate under penalty of incurring the vice of violation of law".

In the same line, we will further add another Decision, of the STA, on 23 November 2011 (case 0590/11, Reporter Counselor Lino Ribeiro), which appreciated a situation in which the tax administration had granted exemption from municipal contribution by order of 7/10/2003, for the period of 2002 to 2011, under article 42º-1, of the EBF.

The taxpayers had had, from the beginning of the exemption, habitual, proper and permanent residence, in the exempt property, but did not update that address in the finance services; the tax administration having verified in 2007 that the address of the respondents contained in the database did not coincide with the address of the exempt property, revoked, for that reason, the exemption granted in 2003 and assessed IMI for the years 2003 to 2008.

In that case, the STA came to consider that the order of 07/10/2003 constitutes the act of recognition of the right of the respondents to the tax benefit, and that through this administrative act, practiced in the exercise of binding powers, the tax administration recognizes and declares that the factual premises fixed in the rule that attributes the tax benefit are verified. The fact that the address contained in the registry of taxpayers was different from the location of the situation of the property did not justify, by itself, that the respondents inhabited that other address, because with the act of recognition of the tax benefit there necessarily occurred the "change of domicile". In summary, the Decision synthesizes: "I - The administrative act that wrongly recognizes a tax benefit may only be revoked, with ex tunc effects, within the period provided in article 141º of the CPA, that is, within one year following its practice (…)".

Question to be faced from the start is whether the doctrine of the cited decisions is applicable to the case of the present case, it being verified that, in any of the situations appreciated therein, the taxpayer requested the recognition of an exemption and/or the application of a tax benefit.

In the first case, what was at issue was the application of the benefit provided in no. 3 of art. 37º of the EBF (in the wording introduced by Dec. Law no. 198/01, of 3/7), which provided that "The Minister of Finance may, at the request of the interested entities, grant exemption from IRS regarding income earned by people displaced abroad in the service of those entities, under contracts entered into with foreign entities, provided that the advantages of those contracts for the national interest are demonstrated." (underlining ours)

And in the two latter cases, of exemption from municipal contribution, provided for in the EBF, successively articles 52º, 42º and 46º, the recognition of the exemption, from the competence of the head of finance of the situation of the property, was equally dependent on the submission of a properly documented request[4].

Let us verify how the situation of the present case is characterized.

14.4. The Provision of no. 1 of art. 20º of D.L. 423/83 – Legal Qualification and Administrative Procedures

14.4.1. Type of Tax Benefit

No. 1 of Decree-Law no. 423/83, of 5 December, constitutes a tax relief with the characteristics of a tax benefit, that is, "an exceptional measure instituted for the protection of relevant extra-fiscal public interests superior to those of taxation itself that prevent" (no. 1 of article 2º of the Statute of Tax Benefits).

In providing for the exemption from sisa (later IMT) and reduction to one-fifth of stamp duty, there is a combination of a total exemption and another partial one.

This is a dynamic tax benefit, also designated incentive or tax stimulus, in which the cause of the benefit is the adoption of the benefited behavior or the exercise of the fostered activity". It integrates into an extra-fiscal policy, of pursuit of economic and social objectives through taxation[5] because, as results from D.L. 423/83, what is intended to be benefited is investment in tourism projects to which tourism utility is to be recognized, whether these are new (to be created), or existing, but which are subject to remodeling, improvement or re-equipping, or that increase their capacity (article 5º).

And bearing in mind article 5º of the EBF (art. 4º in the wording prior to republication by Decree-Law no. 108/2008, of 26/06), which provides that "Tax benefits are automatic or dependent on recognition; the former result directly and immediately from the law, the latter presuppose one or more subsequent acts of recognition", we are faced with "automatic benefits".

Thus expressly decided, for example, the Decisions rendered by the STA in cases 013016 (10/02/1991)[6] and 0937/09 (01/20/2010)[7], doctrine in no way contradicted by the Decision rendered on 23 January 2013[8], in expanded judgment in accordance with the provision of art. 148º of the CPTA, in case 968/12, and which gave rise to Jurisprudential Standardization Decision no. 3/2013).

That is, these benefits result immediate and directly from the law - article 20.º, no. 1 of D.L. 423/83, of 5/12 - once the premises of application are verified, which do not comprise acts of recognition except the qualification of tourism utility, although attributed as a prior title.

In the case of automatic verification "the benefits are not granted by the tax administration, but established directly in the law, being born the subjective right to the corresponding benefit, from the simple historical verification of the respective premises", there being, in this measure, need to prepare the Services in the direction of a desirable control of these automatic tax benefits, giving effective execution to the final part of no. 4 of art. 2º of the EBF[9].

The need for control of legality and quantification of tax expenditure implies a set of formal and instrumental obligations of the taxpayer[10]. The controls must, however, be compatible with the (desired) growing simplification of procedures.

The assessment of the tax on onerous transfer of real property (IMT, as previously sisa, and also Stamp Duty due) is at the initiative of the interested parties, obliged to present, in any finance service, a properly filled out declaration[11].

After the changes introduced in the State Budget for 2009[12], article 19º, no. 1, of the CIMT came to provide for the presentation of the declaration also by electronic means, and in no. 3, then added, the obligation of presentation of a declaration was extended to exemption situations.

14.4.2. Administrative Procedure in the Period Prior to Changes Introduced in State Budget 2009

Before the changes introduced by Law no. 64-A/2008, of 31 December, article 10º of the CIMT provided, in no. 1, that: "Exemptions are recognized at the request of the interested parties, to be presented before the act or contract that gave rise to the transfer, to the competent services for the decision, but always before the assessment that would have to be made" and, in the following numbers, distinguished several situations, corresponding to the exemptions provided for in articles 6º to 9º, some on the intervention of various entities in the procedure and others of automatic recognition.

The CIMT is (and remains) very clear in qualifying the intervention of the Notary and other public authorities as "cooperation" (art. 49º) with the Tax Administration – it is to verify (supervise) whether there was payment of tax or whether the premises provided for in exemption norms are invoked.

In the original wording, no. 3 of art. 49º provided "Where there is automatic exemption or dependent on prior recognition, the entities referred to in no. 1 must verify and note the exemption or demand the document evidencing such recognition, which they will file", distinguishing the two situations of exemption: while in situations dependent on prior recognition the Notary had to demand the document evidencing such recognition (by the competent services, of the tax administration, obviously) which it filed, in cases of automatic exemption, the entities referred to in no. 1 were to verify and note the exemption.

It has already been analyzed in various cases tried in the CAAD what the value of the behavior of these public authorities intervening in deeds where the application of the exemption from IMT provided for in art. 20º of Decree-Law no. 423/83 was invoked (case provided for in legislation outside the Code maintained in force after the approval of the Reform of Heritage Taxation[13]).

In previous cases – cases no. 103-2014-T and 648/2014-T decided in singular arbitral tribunal by the signatory of the present decision - analyzing the nature of the Notary's intervention in this type of "verification" of exemption by Notaries we considered that the same did not correspond to practice of any tax act[14].

And, within the framework of the CAAD, there are decisions issued by other arbitrators in identical sense.

Thus, in case no. 104/2014-T it was considered, on the matter: "(...) the Tribunal understands that only the Tax Administration, to which the administration of IMT is deferred, has competence to rule, namely in prior binding information under art. 68.º of the LGT, on the tax situation of taxpayers and, in particular, on the premises of tax benefits regarding the said tax. (...). The intervention of the notary and registrar regarding this matter relates only to the control of the regularity of the tax situations in which they participate, in accordance with art. 49.º of the Code of IMT. (...)".

And, in the same case, it was said as to the invocation of illegality of the act of assessment by presupposing the revocation of administrative act of granting of a tax benefit, in violation of the provision of art. 141º of the CPA, as to the period for revocation of the act: "However, we do not see that the Claimant's reasoning is sound. It is that the benefit in question has an automatic nature. Deriving direct and immediately from the law, its effectiveness is not dependent on an administrative act of recognition, subject to revocation in accordance with the terms and period provided in said legal norm."

In the decision issued in case no. 110/2014-T, it was considered that: "As to the eventual illegality of the act of assessment by the same presupposing the revocation of administrative act of granting of a tax benefit, alleged by the Claimant, it is understood, as concluded by the decision of the CAAD n.º 104/2014-T, that the benefit in question has an automatic nature. Deriving directly and immediately from the law, its effectiveness is not dependent on an administrative act of recognition, subject to revocation in accordance with the terms and period provided in said legal norm", and that: "Similarly the fact that the notary, first, and the registrar of the land registry, then, refer to the exemption from IMT is not opposable to the Tax Authority, in light notably of art.º 36.º, n.º 4 of the LGT, according to which the qualification of the legal transaction effected by the parties, even in an authentic document, does not bind the tax administration".

Also, in case 302/2014-T, it was decided: "In accordance with article 49.º of the Code of IMT the intervention of the notary and registrar aims only at the control of the regularity of the tax situations in which they intervene being bound to various obligations of cooperation with the AT. Only the AT has competence to rule, notably under article 68.º of the LGT, on the tax situation of taxpayers and on the premises of tax benefits. The fact that the deed declares the transfer of the property exempt from IMT payment does not prevent the AT from issuing an act of assessment regarding the same tax in the event it has concluded that, in accordance with the applicable legal norms, that tax benefit had been wrongly recognized".

In all these cases the deed had occurred between 2005 and 2006 and the assessments subject to decision in the present case had been notified in 2013, having in cases 104/2014, 110/2014 and 648/2014-T, the question of expiration of the right to assessment been expressly invoked, a question that was decided, in all those cases, in the sense of the special period of 8 years, provided for in art.º 35 n.º 1 of the Code of IMT, being applicable, combined with the provision in nos. 1 and 4 of article 45º of the LGT, counted from the date on which the taxable event occurs.

It is that, having been considered the assessment made by the Tax Administration, after verification of lack of premises, as a first assessment and not an additional assessment, the assessment notified in 2013 was considered validly made and notified to the taxpayer within said period of eight years[15][16].

14.4.3. Procedures After Amendment of CIMT Provisions (State Budget 2009)

Law no. 64-A/2008, of 31/12 (which approved the State Budget for 2009), introduced various amendments to the rules of the CIMT, including article 10º, regarding types of exemptions and respective procedures.

Do such legislative changes have effects on the interpretation of situations identical to those previously analyzed, as to the period for the Tax Administration to be able to evaluate the premises that were the basis for the assessment occurring at the time of the deed of transfer of properties, conditioning a subsequent assessment to the observance of the period of one year applicable to revocation of administrative acts constitutive of rights?

And, even if one understands that the period for revocation of administrative acts is not applicable but the period of the right to assessment provided for in the CIMT, are we faced with the period for additional assessment provided for in art. 31º or the special period provided for in art. 35º of the CIMT?

Let us see then.

With the wording given by Law no. 64-A/2008, of 31/12 (which approved the State Budget for 2009), article 10º distinguishes in more developed form cases of exemptions of prior recognition and of automatic recognition, including in its no. 8, the "exemptions contained in legislation outside the present code", as exemptions of automatic recognition, being their verification and declaration the responsibility of the finance service where the declaration provided for in no. 1 of article 19.º is presented.

And article 43º came to provide (in harmony with the provision in no. 8 of article 10º) that where there is exemption, the entities referred to in no. 1 must note the exemption and demand the evidencing document which they file[17].

Is it the case that with these changes it was intended to create a moment of assessment by the services at the request of taxpayers, configuring an act of granting of tax benefit, an administrative act, of a tax nature, constitutive of rights?

In a Report on "Simplification of the Tax System" prepared by the Working Group created for the purpose by order of 20 April 2005, of the Minister of State and Finance, it was proposed, regarding the CIMT, that further progress be made in the simplifications introduced by the new Code especially as to the procedures for assessment in onerous transfer of real property.

It was especially praised, the acceptance in the assessment regarding purchase and sale contracts, of the possibility of the declarative act being effected in front office, dispensing the taxpayer from filling in the respective declaration, with that same declaration being an output of the system itself.[18]

Going further, the Group recommended progress in the direction of original assessments of IMT payment being made in the notary offices themselves avoiding the displacement of taxpayers to two institutions, one to assess tax and another to make the public deed. And bearing in mind that all elements contained in Declaration model 1 of IMT are contained in the DUC, the Working Group further proposed that the hypothesis of dispensing with the presentation of Model 1 of IMT be considered, as an output of the system itself and element to be delivered to the entity intervening in the act or contract[19].

These suggestions, made at a time when the original wording of the CIMT was in force (described above in 14.4.2.), were not, at least in full, reflected in amendments subsequently introduced and, now, exemptions of automatic recognition are also subject to declaration, delivered at the finance service or by electronic means.

The explanation for such amendment may be found reflected, at least partially, in the Report of the Working Group for the Study of Tax Policy (Competitiveness, efficiency and justice of the Tax System), prepared in 2009.

This Report, in analyzing tax benefits regarding IMI and IMT, observes that "as to the quantification of tax expenditure associated with tax benefits granted regarding IMT, there are currently no available data. In fact, in this tax there exists a very broad set of benefits that operate automatically, having their non-requirement been verified, until 31 December 2008, by the entities that participated in making the instrument through which the legal transfer occurred, that is, the public deed. As from January 2009, all real property transactions, even if they benefit from exemption, are subject to the delivery of declaration model 1 of IMT before their legal transfer, which now takes place by public deed or authenticated private document. Thus, in the future, it will become possible to quantify that tax expenditure associated to IMT exemption benefits, by type of exemption, thus giving acceptance to one of the recommendations that in recent years has been presented by the Court of Accounts"[20].

According to this passage, the new procedure – delivery of declaration at the Finance Service – will have objectives of quantitative control[21]. And it may be added, possibly also of easier access to information by the Tax Administration.

But it does not appear that such amendment has eliminated the differences existing between automatic benefits and benefits dependent on recognition, making the respective effects identical and standardizing procedures.

That is, the tribunal does not consider proven the thesis of the Claimant that, because the "automatic" tax benefits (art.º 10º, n.º 8 of the CIMT) and the benefits "dependent on recognition" are structurally identical, in the concrete case of the existence and application of the tax benefits set forth in art.º 20.º of D.L. no. 423/83, in which the public deed of purchase and sale cannot be executed without prior assessment of IMT and IS, the AT verifies the tax act of assessment of IMT and IS, which expressly mentions the application of exemption of the first tax and reduction of the second, effecting a constitutive verification and practicing a true administrative act of tax effect.

According to our understanding, such interpretation, completely eliminating the difference between automatic benefits and dependent on recognition, is not the one that results from the law.

In fact, despite the amendments already referred to, introduced by Law no. 64-A/2008, of 31 December[22], there exists a clear distinction between these two types of benefits.

In article 10º of the CIMT whose heading is "recognition of exemptions", treatment differentiated of various types of exemptions is identified: those of prior recognition by decree of the government member responsible for the finance area based on information and opinion of the Tax and Customs Authority (no. 6); of prior recognition, by decree of the director-general of taxes based on information from competent services (no. 7) and those of automatic recognition, being their verification and declaration the responsibility of the finance service where the declaration provided for in no. 1 of article 19.º is presented (no. 8).

It is possible to verify from the comparison of successive wordings that, possibly for reasons of debureau​cratization, the number of situations included in automatic recognition has been increasing[23]. But, still, it can be said that no. 8 of article 10º[24] classifies as automatic recognition benefits situations in which the benefit is tied to objective elements, in some cases only confirming subsequently (case of acquisition of assets for certain purposes), and in which the State starts from the premise that the declaration of the taxpayer is a sufficient basis to be given as meeting the premise of exemption[25].

Now the CIMT includes in the list of automatic recognition exemptions the case of "exemptions of automatic recognition contained in legislation outside the present code" (subsection d) of no. 8 of art. 10º), despite classifying as exemptions subject to prior recognition in nos. 6 (recognition by government member) and 7 (recognition by decree of the general director of taxes) in the same article, other exemptions established in legislation outside the CIMT, distinguishing those "whose competence, in accordance with the terms of their respective decrees, is expressly attributed to the Minister of Finance" (subsection c) of no. 6) and those "whose competence, in accordance with the terms of their respective decrees, is expressly attributed to the director-general of the Tax and Customs Authority" (cf. subsection b) of no. 7).

On the other hand, the application of article 65º of the CPPT, regarding the procedure for Recognition of tax benefits, only concerns benefits dependent on recognition (article 5º of the EBF) and not automatic benefits.

Taking into account the set of provisions cited, we believe it results that, when the Claimant presented the declaration to the Finance Service, this limited itself to entering the respective data into the computer system, issuing, from that data, two documents – in one of them, referring to IMT, it is indicated, without speaking of assessment, as the total value of IMT € 0.00, in the other, referring to Stamp Duty, it is indicated assessment date and collection of € 616.00 (cf. proven facts – 11.5.).

Despite the intervention of the Finance Service, we are faced with a procedure not very different from that corresponding to the filling of declarations of IRC or VAT that end with self-assessment effected by taxpayers.

In the present case, although it appears that there is only self-assessment, all indicates that the declared elements serve for immediate introduction by the employee for purposes of obtaining from the system the DUC payment means, starting from the premise that the declared elements are verified and there existing no autonomous intervention of the Tax Administration on the data.

The Request for Decision appears to reveal that this is the perception of the taxpayers themselves when it is affirmed that "the Claimant proceeded to self-assessment of IMT and IS, prior to the execution of the purchase and sale by delivering the respective Model 1 to the Finance Service" (...) "with the Finance Service based on that information proceeded to the assessment of IMT and IS, with issuance of guides" (no. 32 of request).

And the assessment contained in the guides issued, which the Claimant considers to declare the application of the tax benefits of exemption from IMT and reduction of IS enshrined in art.º 20.º of D.L. no. 423/83, limits itself to reproducing the data declared by the claimant from the Declaration Model 1 IMT.

The difference compared to the practice prior to the 2009 amendments, is that the data immediately become in the possession of the administration, enabling more rapid supervision[26] to control the verification of the premises – of fact and of law – of the declared benefits.

On 23 September 2014 two documents were issued (proven facts - 11.12.), one referring to IMT and another to Stamp Duty and both identify themselves as additional assessment (to the assessment to which corresponds the declaration with registration n.º 17016/2013[27]), in accordance with article 31º, n. 2, of the CIMT.

That is, the Respondent considers that it is an additional assessment and the Claimant of a revocatory act of an administrative act.

14.4.4. Additional Assessment or Revocatory Act

Having considered that access to the tax benefits provided for in article 20º, no. 1 of Decree-Law no. 423/83 does not depend on prior recognition and that, currently the delivery of a declaration delivered at the finance service, whether in the case of partial exemption (IS) or total (IMT) from tax, configures a procedure of self-assessment/quasi-self-liquidation (with tax, in the first case, without tax, in the second), we conclude that the procedure occurring after the effective supervision of the premises indicated in the declaration as the grounds for the benefit configures as assessment and not administrative act revocatory of prior act granting tax benefit.

The doubt that arises is whether the period of expiration of the right to assessment regarding the amount corresponding to the invoked exemption from IMT, will be eight years (art. 35º CIMT) on the grounds that, at the time of presentation of the declaration, there was no assessment of tax nor payment, or four years, for being an additional assessment (art. 31º, n. 2, CIMT) that corrected, altered, the original assessment.

It is that in other cases referred to above, in which it was decided that article 35º of the CIMT applied, these were cases of deeds with declaration of exemption only by the notary without any registration directly in the Finance Service and without issuance of a document indicating collection of €0.00[28].

Now, as referred to, there is the introduction of data by the Finance Service for extraction of the payment guide. To what extent does that intervention truly translate a confirmation of the indicated data (in the self-assessment procedure, but so close to self-liquidation), which included the mention of the applicable legislation to obtain exemption?[29].

As to the act subsequently practiced by the Tax Administration, after critical analysis of the declared premises, is classified by the AT itself as additional assessment, presupposing a prior assessment, in any case of IMT and IS.

In that perspective, the applicable period of expiration of the right to assessment will be four years, a question that does not give rise to controversy in the present case but constitutes a different solution from that given to cases prior to the current wording of art. 10º of the CIMT.[30]

But does that mean that the regime deriving from the provision in articles 141º of the CPA and 58º of the CPTA will in no case be applicable? It is not a revocatory act of an act that granted a tax benefit (in a process of recognition of benefit) but an additional assessment that altered prior assessment, in which due to error in the legal premises, legislation not applicable to the concrete factual situation was applied.

This happens both as regards assessment of IMT and IS as happens, for example, regarding IRS (self-assessment system as a rule) and IRC (self-liquidation system as a rule) whose Codes provide for additional assessment (articles 89º CIRS, 99º of CIRC), to be exercised within the period provided for the exercise of the respective right to assessment.

That is, the assessment – original or additional - of each tax may be made during the period provided for the exercise of the right to assessment of the tax in question, and which in rule[31], is four years.

All things considered, the tribunal considers that the acts whose legality is the object of appreciation in the present case, are not revocatory acts of tax benefits[32] but assessments (additional?[33]), not violating legality, whereby the Request is dismissed.

The request being dismissed, there is no place for restitution of amounts paid nor right to compensatory interest.

1. Decision

With the grounds exposed, the arbitral tribunal decides:

a) To dismiss the request for declaration of illegality of the act of the Head of Finance Service that gave rise to the assessment of Municipal Tax on Onerous Transfer of Real Property (IMT) in the amount of €25,025.00 (twenty five thousand and twenty five euros) and Stamp Duty in the amount of €2,464.00 (two thousand four hundred and sixty four euros) relating to acquisition of real property in 2013.

b) To condemn the Claimant to costs.

1. Value of the Case

In accordance with the provision in no. 2 of article 315.º of the CPC, in subsection a) of no.1 of article 97.º-A of the CPPT and also of no. 2 of article 3.º of the Regulation of Costs in Processes of Tax Arbitration the case is assigned the value of € 27,489.00 (twenty-seven thousand, four hundred eighty-nine euros).

1. Costs

For purposes of the provision in no. 2 of article 12º and in no. 4 of article 22.º of the RJAT and of no. 4 of article 4.º of the Regulation of Costs in Processes of Tax Arbitration, the amount of costs is fixed at € 1,530.00 (one thousand five hundred thirty euros), in accordance with Table I attached to said Regulation, to be borne entirely by the Claimant.

Notify.

Lisbon, 21 August 2015.

The Arbitrator

(Maria Manuela Roseiro)

[1] At fls.25 to 29 of PA 2 there is an official letter dated 23-07-2014 but which, it is believed, was not received by the Claimant, provoking the subsequent notification (the official letter of 19/08/2014 refers to "matter - perfection of notification -article 39º n. 5 of the CPPT).

[2] Which provides: "1- There are exempted from sisa and the tax on successions and donations, being the stamp duty reduced to one-fifth, the acquisitions of real properties or autonomous fractions destined for the installation of projects qualified as tourism utility, even if such qualification be attributed as a prior title, provided that this remains valid and the period fixed for the opening to the public of the project be observed. 2 - The exemption and reduction established in the preceding number shall also apply in the transfer in favor of the operator company, in the case where the owner is a financial leasing company and the transfer operates under and in accordance with the terms of the financial leasing contract that determined the acquisition of the project by the transferring company."

[3] Also refers to the Decision of the TCAN of 29 February 2012, case 01147/06 but that judgment is invoked for defense of the application of the reasoning followed even regarding revocatory acts not explicit when the relevant question in the present case will be whether, in this case, one can speak of revocation of a prior administrative act.

[4] In the wording of the EBF, given by Law no. 39-B/94, of 27 December, article 52º provided that the request for exemption should be presented by taxpayers up to the end of 90 days following the period of six months provided for allocation of properties to proper and permanent residence of the taxpayer or its family unit. Having the EBF been subject to various amendments and renumbering, it is cited, for example, the subsequent provisions of no. 6 of art. 42º, in articulation with nos. 4, 5 and 6 of art. 58º; n. 5 of art. 42º, articulated with subsection d) of art. 88º of Law no. 53-A/2006, of 29/12; n. 6 of art. 46º.

[5] Casalta Nabais, Direito Fiscal, Almedina, 2012, 7th ed., p. 390. Also on the classification of tax reliefs lato sensu, ibidem, p. 391.

[6] "The tax exemptions successively provided in articles 13º of Law no. 2073, 13º, n. 8, of the CSISD and 20º, n. 1, of D.L. no 423/83 - provisions that succeeded one another - are automatic and binding" (point II of the summary).

[7] Cf. summary "II - Such tax benefits are of automatic application once the conditions provided in that same provision are verified: that the acquisition of the property is destined for the installation of a project qualified as tourism utility, even if such qualification is attributed as a prior title, provided that this remains valid and the period set for the opening to the public of the project is observed.
III - Given the nature of the benefits in question it is not a condition that the same appear in the decree attributing tourism utility".

[8] This Decision comes to adopt, by majority, a different understanding from prior STA decisions but as to the scope of the benefit. Cf. point IV of the summary "The legislator intended to drive tourism activity by providing for the exemption/reduction of payment of Sisa/Duty, for promoters intending to build/create establishments (or readapt and remodel existing fractions) and not when it is merely the acquisition of fractions (or accommodation units) integrated in the projects and destined for operation, even if acquired on a date prior to the installation/licensing itself of the project".

[9] Nuno Sá Gomes, Teoria Geral dos Benefícios Fiscais, CTF n. 359, p. 137.

[10] Exemplifying types of obligations - declarative, of assessment and collection, of calculation of the tax owed, of delivery within the prescribed period in the law - Report of the Working Group on Reassessment of Tax Benefits, 2005, no. 198 CTF Notebooks.

[11] Article 19º, n.1, of the CIMT, in its initial wording provided: "The assessment of IMT is at the initiative of the interested parties, for which they must present a declaration of official model, properly filled out".

[12] Article 97.º of Law no. 64-A/2008, of 31 December.

[13] No. 6 of art. 31º of D.L. 287/2003, of 12/11, kept in force "the tax benefits relating to municipal contribution, now reported to IMI, as well as those relating to the municipal sisa tax established in legislation outside the Code approved by Decree-Law no.41 969, of 24 November 1958, and in the Statute of Tax Benefits, which are now reported to IMT".

[14] Transcribing excerpt from the decision in case 648/2014-T: "When in the transaction subject to taxation no tax is applied, based on exemption, no assessment is verified. In the case under appreciation in the present case, the fact that the Notary intervening in the deed there declared the application of an exemption does not constitute a different premise from those existing in the cited judgments. Because from the conjunction of various provisions of the CIMT it is not possible to conclude that the non-requirement by the Notary, at the time of execution of a notarial deed, of the prior assessment of the tax, by accepting the interpretation that an exemption was applicable, constitutes the practice of a tax act. The CIMT is very clear in qualifying the intervention of the Notary and other public authorities as "cooperation" with the Tax Administration – it is to verify (supervise) whether there was payment of tax or whether the premises provided for in exemption norms are invoked. In the case of the present case, at the time of the deed, no. 3 of art. 49º provided, as an alternative, two situations of exemption: while in situations dependent on prior recognition the Notary had to demand the document evidencing such recognition (by the competent services, of the tax administration, obviously) which it filed, in cases of automatic exemption, it said "the entities referred to in no. 1 must verify and note the exemption". But this did not constitute any attribution to notaries of competence to interpret and apply tax norms, in all cases in which the enjoyment of a tax benefit did not depend (case of art. 20º, n. 1, of D.L. 423/83) on prior official recognition. At the time, article 10º of the CIMT also said, in no. 1, that: "Exemptions are recognized at the request of the interested parties, to be presented before the act or contract that gave rise to the transfer, to the competent services for the decision, but always before the assessment that would have to be made" but, in the following numbers, distinguished several situations, corresponding to the exemptions provided for in articles 6º to 9º, some on the intervention of various entities in the procedure and others of automatic recognition. The interpretation most in harmony with the remaining rules of the legal system (art. 9º of the Civil Code) is that, being the Notary's responsibility to verify the premises of application of the exemption rule, should collect the necessary elements to the qualification of the situation, accepting the declarations and characterization made by the parties to the transaction. If a more complex situation appears, dependent on interpretation of tax norms, should the Notary, in the absence of specific competence in tax matters, ask prior clarification of the situation from the competent services or suitably evidence the cases in the list subsequently sent to the Tax Administration. Not perceiving, nor the intervening authority, nor the parties, an erred legal characterization, taxpayers remain subject to possible detection of wrongful treatment as exemption, the situation being subject to a possible subsequent assessment. This is what happened: the AT, detecting through inspection action that the transfer of real property corresponded to an acquisition of a fraction in a tourism project, whose promotion had belonged to the selling company, understood that the tax situation corresponded not to an exemption but to assessment of IMT, having considered applicable the provision in art. 45º, n. 1 at the end of the LGT, combined with n. 1 of art. 35º of the CIMT, using the right to assessment of the tax within the period of 8 years counted from said transfer, occurred without any assessment of tax. In the case of the present case, there was no assessment of IMT at the time of the deed because it was accepted by the intervening Notary that, given the elements provided by the buyer, this was covered by an exemption norm, but, as we defend above, there was no assessment of tax".

[15] "As to the questioned act of assessment and the period to practice it, it is emphasized that, in the present case, we are faced with the exercise of an original assessment as is extracted from the elements of the case, which the Claimant, certainly by lapse, refers to as "additional assessment"" (case 104/2014).

[16] Seeming to confirm this distinction, see the observation of Alberto Xavier when, while defining additional assessment as "the act by which the Administration, verifying that by reason of omission, a provision inferior to the legal was defined, fixes the quantitative that this must add to so that there is an absolute conformity with the law", considers imperfect the inclusion in the concept of additional assessment of cases in which the act was not practiced at the time it legally should have been (by omission at assessment or for analogous reason) because in such cases "there is not additional assessment but simply a first assessment made outside the normal periods (in Conceito e Natureza do Acto Tributário, Almedina, 1972, pp. 128 and 129, note 57).

[17] The same Law no. 64-A/2008, of 31/12/2009, added a number to article 49º of the CIMT, providing that "Are jointly liable with the taxpayer for the payment of the tax the notaries who execute public deeds and the people who, in any other form, participate in authenticated private documents, or any other title, when that form is admitted as an alternative to public deed, provided that they have collaborated in the lack of assessment or collection of the tax or, on the date of such participation, reception or use, have not demanded the document evidencing payment or exemption, if applicable".

[18] And it was commented: "it is important that this practice becomes generalized to all other taxable events, whereby it may represent in terms of simplification for taxpayers who need to fill out the declaration and by the errors it may avoid in the respective declarations". (Report cited, CTF Notebooks n. 201, p. 282).

[19] Proposals formulated in said Report, ibidem, pp. 282 and 283.

[20] Report of the Working Group for the Study of Tax Policy, CTF Notebooks, n. 209, p. 522.

[21] No. 4 of article 2º of the EBF provides (since the original wording) that for purposes of control of tax expenditure relating to tax benefits granted, the interested parties may be required to declare the exempt income earned, except where these are generic and automatic tax benefits, cases in which tax services may obtain the necessary elements for calculating the total tax that would be due (underlining ours).

[22] The provision has since undergone further amendments (Law no. 55-A/2010, of 31 December, and Law no. 82-B/2014, of 31 December) but without structural change.

[23] For example, situations provided for in subsections d), e) and g) of article 6.º, previously subject to prior appraisal in accordance with no. 7, are today included in article 8.º (automatic recognition) (cf. subsection a).

[24] Article 8º currently includes: a) Those provided for in subsections a), c), d), e) and g) of article 6.º, in article 7.º and in subsections a) and b) of n. 2 of article 8.º, provided that the value that would serve as basis for the assessment of IMT, if this were due, determined in accordance with the 5th rule of article 12.º, is equal to or less than (euro) 300 000; c) Those established in accordance with n. 2 of article 12.º of Law no. 2/2007, of 15 January; d) Exemptions of automatic recognition contained in legislation outside the present code.

[25] In some cases that confidence seems to vary with the value at issue - in the case of acquisition of properties provided in article 8º of the CMIT, being a benefit dependent on decree of a government member or automatic depends on the value being or not exceeding € 300 (cf. subsection b) of n. 6 and a) of n. 1 of n. 8 of art. 10º of the CMIT).

[26] "All persons, natural or legal, of public or private law, to whom tax benefits are granted, automatic or dependent on recognition, are subject to supervision by the General Tax Authority and other competent entities, to control the verification of the premises of the respective tax benefits and the fulfillment of obligations imposed on the holders of the right to the benefits" (wording in force at the time).

[27] The description of the assessment regarding Stamp Duty, despite mentioning only the initial exemption from IMT, contains the correct references regarding the determination of the tax (IS) due, the amount already paid, and the amount to be paid.

[28] In case n. 648/2014-T, we considered (point 14.2.): "When in the transaction subject to taxation no tax is applied, based on exemption, no assessment is verified. And, absent an assessment in the transfer, it cannot be qualified as additional the assessment that may occur subsequently, since additional assessment presupposes that there has been a prior assessment deficient as a consequence of errors or omissions".

[29] Cf. Manuel Pires and Rita Calçada Pires, Direito Fiscal, Almedina p. 271, regarding cases of self-liquidation: "there follows a confirmatory act (express or tacit, although here doctrine diverges) by the administration, discussing also whether this act takes on the nature of assessment".

[30] Cf. cases, decided within the CAAD framework, referred to above (14.4.2.).

[31] Eight years in the cases provided for in article 35º of the CIMT and article 39º Code of Stamp Duty.

[32] Just as corrections made to IRC declarations do not lead to revocatory acts of tax benefits even though they have as their object realities covered by the concept of "tax benefit" (According to article 2º, n. 2 of the EBF, "tax benefits are exemptions, reductions of rates, deductions from taxable income and collection, accelerated depreciations and reintegrations and other tax measures that comply with the characteristics enunciated in the preceding number").

[33] This question may, despite the above considerations and the qualification assumed by the AT, merit more in-depth reflection.