Stamp Tax on Pension Fund Management Fees: CAAD Arbitration 9/2017-T Decision

ARBITRATION AWARD

The Arbitrators José Pedro Carvalho (President Arbitrator), José Coutinho Pires and José Nunes Barata, appointed by the Ethics Council of the Administrative Arbitration Centre to form an Arbitral Court, hereby agree:

I – REPORT

On 3 January 2017, A…, S.A, NIPC…, with registered office at …, no. …, …-… Lisbon, filed a request for constitution of an arbitral tribunal, under the combined provisions of articles 2 and 10 of Decree-Law no. 10/2011, of 20 January, which approved the Legal Framework for Arbitration in Tax Matters, as amended by article 228 of Law no. 66-B/2012, of 31 December (hereinafter, abbreviated as RJAT), seeking the declaration of illegality of the acts of Stamp Tax Assessment no. 2016… of 2013, no. 2016… of 2014 and no. 2016… of 2015, in the total amount of € 365,024.01.

To substantiate its request, the Claimant alleges, in summary, that the remuneration it received for the management of the Funds is not subject to Stamp Tax under item 17.3.4 of the General Stamp Tax Table (TGIS), since the Claimant does not fall within the legal concept of "credit institutions, financial companies or other entities legally equivalent to them and any other financial institutions", nor does the management of the Funds constitute a financial operation in the strict sense under that item.

The Claimant further alleges that, even if the position that it is subject to stamp tax is accepted, it would be exempt therefrom.

On 4 January 2017, the request for constitution of the arbitral tribunal was accepted and automatically notified to the Tax Authority (AT).

The Claimant did not appoint an arbitrator, whereby, under the provisions of paragraph a) of section 2 of article 6 and paragraph a) of section 1 of article 11 of the RJAT, the President of the Ethics Council of the CAAD appointed the signatories as arbitrators of the collective arbitral tribunal, who communicated acceptance of the appointment within the applicable period.

On 27 February 2017, the parties were notified of these appointments and did not manifest any objection thereto.

In accordance with the provision of paragraph c) of section 1 of article 11 of the RJAT, the collective Arbitral Court was constituted on 16 March 2017.

On 2 May 2017, the Respondent, duly notified for that purpose, filed its reply, defending itself solely by means of objection.

Under the provisions of paragraphs c) and e) of article 16 and section 2 of article 29, both of the RJAT, the holding of the meeting referred to in article 18 of the RJAT was waived.

Following the granting of a period for the submission of written pleadings, these were submitted by the parties, pronouncing on the evidence produced and reiterating and developing their respective legal positions.

A period of 30 days was set for the rendering of the final award, after the submission of pleadings by the AT.

The Arbitral Court is substantively competent and is regularly constituted, under the terms of articles 2, section 1, paragraph a), 5 and 6, section 1, of the RJAT.

The parties have legal personality and capacity, are legitimately interested and are legally represented, under the terms of articles 4 and 10 of the RJAT and article 1 of Ordinance no. 112-A/2011, of 22 March.

The proceedings are not affected by any nullity.

Thus, there is no obstacle to the examination of the merits of the case.

Everything having been duly considered, it is appropriate to render

II. AWARD

A. FACTS

A.1. Facts Established as Proven

1. A… S.A is a pension fund management company, governed by the provisions of Decree-Law no. 12/2006, of 20 January, which regulates the constitution and operation of pension funds and pension fund management entities and transposes into national law Directive no. 2003/41/EC of the European Parliament and of the Council, of 3 June, on the activities and supervision of institutions for occupational retirement provision.

2. In that capacity, it is responsible for the management of C…– … (…) and C…– … (…).

3. Following inspection procedures nos. OI 2016…, OI 2016… and OI 2016…, conducted for the years 2013, 2014 and 2015, corrections were made under Stamp Tax, item 17.3.4 of the General Stamp Tax Table (TGIS).

4. Under paragraph d) of Clause 3 and Clause 7 of the management contracts concluded between D… and A…, this entity collects directly from D… a management commission for the administration of the funds (management remuneration), which is established by D… at the beginning of each year, on the proposal of A….

5. During the year, this management remuneration may be revised by agreement between the parties.

6. The management remuneration is invoiced by A… in accordance with clauses 6 and 7 of the management contracts signed with D….

7. Upon issuance of the invoice for management remuneration, A… recognises the income from commissions approved annually (and any revisions), with reference to each month, credited to account 721 – "Pension Fund Management", against account 27811 – "Management Remuneration".

8. In the course of its activity, A… uses workers provided by D…, whereby, under clause 6 of the workers' loan agreement, reimbursement of personnel loan costs is made through account settlement.

9. For each month, the Claimant recognises expenses by means of invoicing issued by D… relating to the provision of personnel, debiting account 63 – "Personnel Expenses", against account 27811 – "Management Remuneration".

10. In this manner, the cash flow corresponds to the difference between these two items: the management remuneration, less the amounts invoiced to A… by D… for provision of personnel.

11. It is on account 27811 – "Management Remuneration" that the account settlement is realised, whereby these amounts are collected when A… recognises on this account the amounts owed under "Personnel Expenses", causing a decrease in the amount of credit to be received from D…, thus constituting the moment of collection of these amounts.

12. The remaining balance of amounts to be received is collected through banks (recorded as a debit to account 12111 – "B…") and is reflected in account 2789 – "Other Debtors and Creditors in Transition".

13. The Claimant does not proceed with the settlement of VAT or Stamp Tax on these Management Remuneration commissions.

14. Having considered that the commissions charged to a Fund by an A… cumulatively meet the objective and subjective elements contained in Item 17.3.4 of the TGIS, and are accordingly subject to stamp tax by virtue of the provisions of section 1 of article 1 of the Stamp Tax Code (CIS), and that these management and administration commissions charged by the Management Entities to their respective Funds do not benefit from the exemption provided in paragraph e) of section 1 of article 7 of the CIS, the tax inspection services proceeded to determine the Stamp Tax owed, taking into account the date of effective collection of the management remuneration commissions and, in cases of account settlement, the date of registration of the account settlement with Personnel Expenses.

15. A… was notified of the inspection report draft, by means of letter no. …, dated 4 July 2016, registered with CTT under no. RD … PT, and was granted a period to exercise its right to be heard, which it did.

16. The AT considered that the Claimant did not present facts capable of altering the corrections proposed in the Draft Reports, which gave rise to the subsequent Final Reports.

17. In implementation of the corrections made by the tax inspection services, the following assessments were issued and notified to the Claimant:

a. Stamp Tax Assessment no. 2016… of 2013, relating to commissions charged by the Claimant in 2013, in the amount of € 110,210.75, plus compensatory interest in the amount of € 13,003.38;

b. Stamp Tax Assessment no. 2016… of 2014, relating to commissions charged by the Claimant in 2014, in the amount of € 111,427.15, plus compensatory interest in the amount of € 10,512.04;

c. Stamp Tax Assessment no. 2016… of 2015, relating to commissions charged by the Claimant in 2015, in the amount of € 113,655.65, plus compensatory interest in the amount of € 6,215.04.

1. The Claimant paid the above-mentioned assessments within the prescribed period.

A.2. Facts Not Established as Proven

With relevance to the decision, there are no facts that should be considered as not proven.

A.3. Justification of the Proven and Unproven Facts

With respect to the facts, the Court need not pronounce on everything that was alleged by the parties, but rather has the duty to select the facts that matter for the decision and distinguish between proven and unproven matters (cf. article 123, section 2, of the Tax Procedure Code and article 607, section 3 of the Civil Procedure Code, applicable by virtue of article 29, section 1, paragraphs a) and e), of the RJAT).

Thus, the relevant facts for the judgment of the case are selected and determined according to their legal relevance, which is established in light of the various plausible solutions to the legal question(s) (cf. former article 511, section 1, of the Civil Procedure Code, corresponding to current article 596, applicable by virtue of article 29, section 1, paragraph e), of the RJAT).

Thus, taking into account the positions adopted by the parties, in light of article 110/7 of the Tax Procedure Code, the documentary evidence and the procedural file attached to the record, the facts listed above were considered proven, with relevance to the decision, bearing in mind that, as was written in the Judgment of the Administrative Court of the South of 26 June 2014, rendered in case 07148/13[1], "the probative value of the tax inspection report (...) may have probative force if the assertions contained therein are not disputed".

Allegations made by the parties and presented as facts were neither proven nor unproven, consisting of strictly conclusive statements, incapable of proof, whose truthfulness must be assessed in relation to the concrete facts established above.

B. LAW

At issue in the present arbitration proceedings is, in the first place, the application of item 17.3.4 of the TGIS, which subjects to Stamp Tax:

"17.3 Operations carried out by or with intermediation of credit institutions, financial companies or other entities legally equivalent to them and any other financial institutions - on the amount charged: (...)

17.3.4 Other commissions and compensation for financial services 4%"

With respect to this matter, the Claimant contends that it is not covered by the provision of such a rule, inasmuch as it does not fall within any of the concepts of "credit institutions, financial companies or other entities legally equivalent to them and any other financial institutions", nor does the management of the Funds constitute a financial service for purposes of the said item.

With regard to the qualification, or lack thereof, of entities managing pension funds as financial institutions, this is a question that has already been addressed, in depth and with accuracy, in the context of the arbitration proceedings nos. 348/2016T, 633/2016T and 667/2016T, all of the CAAD[2], and the following can be read in the first of these, in terms adopted by the remainder, among other things:

"6. For purposes of tax imposition, the legislator elects a single criterion: the fact that commissions and compensation for financial services are charged by certain types of entities, provided that these are financial operations, since non-financial operations in general are subject to VAT and not to Stamp Tax. The type of operations that are concretely covered is given to us by the rules that define the competence of the entities referred to.

1. The Claimant alleges that it is not covered by the scope of the rule inasmuch as the General Framework for Credit Institutions and Financial Companies (RGICSF), approved by Decree-Law no. 298/92, of 31 December, expressly provides, in article 6, section 3, that pension fund management entities 'are not considered financial companies'.

2. This argument does not, however, have the scope that the Claimant seeks to extract from it.

3. In fact, it should be noted that the legislator of the RGICSF, while taking care to expressly state that this statement applies exclusively for purposes of that decree, does not exclude that pension fund management entities may be considered financial institutions in other contexts and for other purposes. In this sense, Carlos Costa Pina states (Financial Institutions and Markets, Coimbra, 2005, p. 249) that this limitation of the concept of financial companies is merely formal, solely for the purpose of the application of the RGICSF: in fact, insurance companies and pension fund management companies are materially financial institutions, comprising, as such, two relevant institutional subsectors of the financial sector: the insurance sector and the pension funds sector, since their purpose consists in the carrying out of operations materially and formally financial. A situation that is not unrelated to the trend observed of the 'progressive disappearance of barriers and distinctions between the three traditional financial sectors (banking, securities and insurance)', with the consequent merger of interests and activities between the various types of institutions in the financial area, in particular between monetary and non-monetary financial institutions, and the emergence of new concepts such as universal banking, bancassurance, or assurfinance, etc., which tend to express formulas of cooperation between financial institutions of distinct but similar objects competing with each other.

4. In the absence of an express definition of the concept of a financial institution, the existence of a concept in the strict sense (that contained in the RGICSF - monetary financial institutions) has always been admitted alongside a broad concept (non-monetary financial institutions). This distinction finds support both in the understanding of the financial sector in the broad sense, which comprises the banking, securities and insurance subsectors, and in national and European Union legislation.

5. In Portuguese law we do not find a definition of 'financial institution', the legislator limiting itself, following what happens at the level of Union Law in various instances, to list entities that it qualifies on a case-by-case basis as 'credit institutions', 'financial companies' and 'financial institutions', for purposes of applying a particular regime.

6. Under Regulation (EU) no. 575/2013 of the European Parliament and of the Council of 26 June, 'Financial Institution' means: 'an undertaking which is not an institution, the principal activity of which is the acquisition of holdings or the carrying on of one or more of the activities listed in Annex I, points 2 to 12 and 15 of Directive 2013/36/EU[4], including a financial company, a mixed financial holding company, a payment institution as defined in Directive 2007/64/EC of the European Parliament and of the Council of 13 November 2007 on payment services in the internal market, and an asset management company, but excluding insurance holding companies and mixed insurance holding companies as defined in article 212, section 1, point g) of Directive 2009/138/EC.'

7. In point 27, a 'Financial sector entity' comprises:

a) An institution;

b) A financial institution;

c) An auxiliary service undertaking included in the consolidated financial situation of an institution;

d) An insurance undertaking;

e) A third-country insurance undertaking;

f) A reinsurance undertaking;

g) A third-country reinsurance undertaking;

h) An insurance holding company;

i) (…)".

1. For purposes of applying the regime of Directive 2009/138/EC of the Parliament and of the Council of 25 November, on taking up and pursuit of the activities of insurance and reinsurance (Solvency II) (recast), article 13, under the heading 'Definitions', point 25, 'Financial institution' means any of the following entities:

a) A credit institution, a financial institution or an auxiliary banking service undertaking as referred to, respectively, in points 1, 5 and 21 of article 4 of Directive 2006/48/EC;

b) Insurance undertakings, reinsurance undertakings or insurance holding companies as referred to in paragraph f) of section 1 of article 112;

c) An investment firm or a financial institution as referred to in point 1 of section 1 of article 4 of Directive 2004/39/EC:

d) (…)".

1. It follows from this that an insurance holding company falls, in the perspective of this Regulation, within 'financial sector entities' and, consequently, within a broad concept of financial institution.

2. In turn, in Directive 2003/41/EC of the European Parliament and of the Council of 3 June 2003[5], on the activities and supervision of institutions for occupational retirement provision, we find several references pointing to the framing of these entities within the concept of financial institution in the broad sense.

3. In Recital (1) it is stated that the objective is the creation of 'a genuine internal market in financial services', and important progress has already been made 'towards the creation of that internal market, which enables financial institutions to develop activities in other Member States and to ensure a high level of consumer protection for financial services' (Recital (2)).

4. Recital (4) also reaffirms the idea that we are dealing with 'financial institutions' that provide relevant 'financial services', which requires a harmonised legal framework as regards prudential supervision of such entities.

5. The said Recital contains the following content:

'The Financial Services Action Plan considers it necessary to draw up a directive on the prudential supervision of institutions for occupational retirement provision, since these important financial institutions, which have a key role to play in the integration, efficiency and liquidity of financial markets (…)'.

1. This directive was transposed into Portuguese law by Decree-Law no. 12/2006 of 20 January, which regulates the constitution and operation of pension funds and pension fund management entities, providing in article 32 that '[p]ension funds may be managed either by companies established exclusively for that purpose, referred to in this Decree-Law as management companies, or by insurance companies that operate in the 'Life' class and have an establishment in Portugal.'

2. Section 4 of the same provision states that '[m]anagement entities carry out all their acts in the name and for the account of the members, participants, contributors and beneficiaries and, in their capacity as fund administrators, may trade in securities or immovable property, make bank deposits in the name of the fund and exercise all rights or perform all acts that directly or indirectly relate to the fund's assets.' However, these management entities are also prohibited from certain activities when acting as pension fund managers, such as acquiring own shares, taking out loans, except where justified by a clear need for liquidity of the pension fund and granting loans, with the exception of mortgage loans to their employees (article 36, section 2, of Decree-Law no. 12/2016, as amended by Law no. 147/2015 of 9 September).

3. With regard to the prudential rules to be observed, article 38, section 2, of Decree-Law no. 12/2006, as amended by article 4 of Law no. 147/2015 of 9 September, which establishes the legal framework for access to and pursuit of insurance and reinsurance activities and the procedural regime applicable to specific crimes in the insurance sector and pension funds and administrative infractions whose processing is the responsibility of the Insurance and Pension Funds Supervisory Authority, provides that:

'The legal provisions applicable to management companies for insurance activities and reinsurance activities, approved by Law no. 147/2015 of 9 September, shall apply to pension fund management companies, with the necessary adjustments, in relation to:

a) Control of holders of qualified shareholdings;

b) Registration of persons who effectively direct the company, supervise it or are responsible for key functions;

c) Professional qualification and integrity requirements for persons who effectively direct the company, supervise it, are responsible for key functions or exercise key functions;

d) Accumulation of positions and incompatibilities;

e) Registration of parasocial agreements;

f) Illegal use of naming.'

1. As regards prudential rules, it is important to note that pension fund management companies are also required 'to have sufficient available solvency margin in relation to the sum of their activities' (article 45 of Decree-Law no. 12/2006 - as amended by Law no. 147/2015), such margin being determined on the basis of the commitments undertaken established under article 46 of the same decree.

2. Furthermore, under the provisions of article 7 of the Statutes of the Insurance and Pension Funds Supervisory Authority (ASF) (approved by Decree-Law no. 1/2015 of 6 March), its duties include, in particular, 'supervising and regulating insurance, reinsurance, insurance brokerage and pension fund activities, as well as related or supplementary activities' [section 1 paragraph a)].

3. Pension fund management entities not only approximate the comparable management companies operating in the insurance and reinsurance sector from the point of view of the formal and material requirements of their activity, but are also subject to supervision by the ASF (cf. in particular, articles 17, 19, 20, 24, 30, 32, and 38, section 2, of Decree-Law no. 12/2006, as amended by article 4 of Law no. 147/2015).

Given the foregoing, it follows directly from the applicable legal regime, in particular from Union law, that pension fund management entities carry out operations materially and formally financial, approximating by the characteristics of their activity insurance and reinsurance companies. Hence the natural conclusion of their framing within the broad concept of an institution operating in the financial system.

1. Having reached this point, it is necessary to determine the meaning of financial institution received by the legislator in item 17.3.4 of the TGIS.

2. Recall that the provision refers to operations 'carried out by or with the intermediation of credit institutions, financial companies or other entities legally equivalent to them and any other financial institutions' (emphasis ours).

3. Beginning with the literal wording of the provision, it should be noted that the legislator, after referring to 'credit institutions, financial companies or other entities legally equivalent to them' adds 'and any other financial institutions' which expressly points to a broader set of financial institutions than that comprised by credit institutions and financial companies, on pain of such reference being devoid of meaning.

4. In other words, the letter of the law necessarily points to a concept of financial institution broader than those of credit institutions and financial companies that are expressly referred to.

5. It appears, thus, unequivocal that it can be drawn from the letter of the provision that pension fund management companies fill the type of any other financial institutions provided for in item 17.3 of the TGIS."

To this is added that in the preamble to Decree-Law no. 298/92, of 31 December, it is stated that 'in proceeding with the reform of the general regulation of the Portuguese financial system, with the exclusion of the insurance sector and pension funds'[3], from which it appears that, for a long time, pension funds have been considered to be part of the Portuguese financial system, and which results from article 1 of the General Framework for Collective Investment Undertakings, approved by [the relevant decree-law], that pension funds, although subject to a special regime, are financial institutions of the type 'collective investment undertaking'.

It is concluded, thus, that the Claimant is covered by the provision of item 17.3.4 of the TGIS, in the part in which it refers to 'any other financial institutions'.

With regard to the Claimant's allegation that the management of the Funds did not constitute a financial service for purposes of the said item, it is also considered not to have merit.

In fact, and from the outset, given that, as has been seen, pension fund management entities are financial institutions, it naturally follows that the activity proper to such entities – the management of pension funds – cannot fail to be considered as a financial activity.

On the other hand, article 68 of the General Framework for Collective Investment Undertakings already cited provides, among other things, that:

'1 - The management company for securities investment funds has as its habitual activity the management, alternatively or cumulatively, of collective investment undertakings in securities, alternative collective investment undertakings in securities and of collective investment undertakings in non-financial assets.

2 - Without prejudice to the foregoing, the management company for securities investment funds whose habitual activity is the management of collective investment undertakings in securities may, by means of prior registration with the Securities Market Commission, also engage in the following activities:

a) Discretionary and individualised portfolio management on behalf of third parties, including those corresponding to pension funds and institutions for occupational retirement provision, based on a mandate granted by the participants, to be exercised under the terms of Decree-Law no. 163/94, of 4 June, as amended by Decree-Laws nos. 17/97, of 21 January, and 99/98, of 21 April, provided that the portfolios include financial instruments listed in Section C of Annex I to Directive no. 2004/39/EC of the European Parliament and of the Council, of 21 April 2004;

b) Investment advice relating to the financial instruments referred to in the preceding paragraph;

c) Registration and deposit of units of participation of collective investment undertakings.

3 - When the habitual activity of the securities investment fund management company encompasses the management of alternative collective investment undertakings in securities or of collective investment undertakings in non-financial assets:

a) The activities referred to in paragraphs a) and b) of the preceding section may relate to other assets;

b) The company may also engage in the activity of reception and transmission of orders relating to financial instruments.'

From the normative provision transcribed it also follows that the activities proper to the management of pension funds, mentioned therein, should be qualified as financial operations, if only because they are proper and reserved to financial institutions, and are subject to their own regulation within such sector.

Finally, it is further noted that for VAT purposes, 'the administration or management of investment funds' is exempt, under point 27 of article 9, a provision clearly dedicated to operations of a financial nature.

Thus, and for all the foregoing, here, as in the arbitral jurisprudence previously cited, it is concluded that the conditions of incidence of Stamp Tax are met, in particular those provided for in item 17.3.4 of the TGIS.

Having reached this point, it is necessary to determine whether, as the Claimant contends, the conditions of the exemption provided for in paragraph e) of article 7 of the CIS are met, or whether, as the Respondent contends, this is not the case.

In the applicable wording (Law no. 107-B/2003, of 31 December), the content of that rule is as follows:

'The interest and commissions charged, the guarantees provided and, likewise, the use of credit granted by credit institutions, financial companies and financial institutions to venture capital companies, as well as to companies or entities whose form and object fill the types of credit institutions, financial companies and financial institutions provided for in Community law, all of them domiciled in the Member States of the European Union or in any State, with the exception of those domiciled in territories with a privileged tax regime, to be defined by order of the Minister of Finance.'

This matter was also the subject of careful analysis in the arbitral jurisprudence cited above, and it was concluded in case 348/2016T, in terms adopted in the subsequent awards that:

'34. The exemption provided for in paragraph e) of article 7 of the CIS is of mixed nature, partly objective and partly subjective. It is objective insofar as it encompasses all the operations provided therein 'the interest and commissions charged, the guarantees provided and likewise the use of credit granted by a credit institution'. It is, on the other hand, subjective in that the exemption of such operations is limited to those carried out between certain entities: credit institutions, financial companies and financial institutions to venture capital companies, as well as to companies or entities whose form and object fill the types of credit institutions, financial companies and financial institutions.

1. The application of this rule has given rise to divergences as to the type of entities covered and as to the nature of the operations benefiting from the exemption.

2. As to the subjective scope

3. The application of this rule to the case at hand presupposes that both pension fund management companies may be qualified as and pension funds may be qualified as financial institutions.

4. We concluded above that pension fund management companies are part of the broad concept of financial institutions, and there are no reasons to exclude that the same broad concept of financial institution also applies here.

5. In fact, in the absence of an indication from the law to the contrary, one must understand, by virtue of the principles of legal certainty and security and the very unity of the tax system, that the same concept of financial institution has a uniform meaning and scope throughout the Code and General Table and not a different meaning and scope, broader in the case of rules of incidence and narrower in rules of exemption: The same must be said, moreover, of the concept of financial operations or financial services, to which item 17.3.4 of the General Table refers.

6. In any case, it is also important that the same subjective requirements are met in relation to pension funds, since only the operations mentioned carried out between these entities would be exempt. The application of the exemption to commissions charged to funds by management companies depends on both the management companies charging the management commissions and the funds owing them being considered financial institutions.

7. According to article 2, paragraph c), of Decree-Law no. 12/2006, as amended by Law no. 147/2015 of 9 September, 'Pension Fund' means: 'autonomous assets exclusively allocated to the realisation of one or more pension plans and or health benefit plans, and may also simultaneously be allocated to financing an equivalent mechanism under the terms of Law no. 70/2013, of 30 August'.

8. Although we are dealing with autonomous assets devoid of legal personality, pension funds are recognised as having legal personality for tax purposes and, on the other hand, they are integrated, as are their respective management entities, into the concept of financial institutions in the broad sense.

9. First, the qualification of pension funds as financial institutions is recognised in the inspection report, from which results the assessment that is the subject of the present request for arbitral ruling, based on the said Opinion no. 25/2013 of the Tax Studies Centre, which qualifies as financial institutions collective investment undertakings in general, regardless of whether or not they are covered by Directive no. 2009/65/EC of the European Parliament and of the Council, in particular alternative investment funds which are venture capital funds. By identity of grounds, such qualification of financial institutions would be extended to pension funds.

10. The same qualification would also be found in the draft decision notified to the Claimant for purposes of exercise of the right to be heard.

11. On the other hand, the qualification of financial institutions, both of pension funds and of management companies, is based on article 30, section 1, paragraphs e) and f), of the Securities Code and other Community legislation abundantly referred to in the draft decision and in the mentioned Opinion no. 25/2013 of the Tax Studies Centre, which expressly group together in the same concept of financial institution pension funds and respective management companies.

12. In particular, it follows from that article 30, section 1, paragraphs e) and f), of the Securities Code that all qualified investors referred to in paragraphs a) to l) are financial institutions subject to the intervention of the Securities Market Commission, and among these qualified investors are pension funds.

13. It should be noted that the express qualification of pension funds and respective management companies as financial institutions would only be carried out by Decree-Law no. 66/2004, of 24 March, the article 1 of which would amend article 30 of the Securities Code, since the original wording of that article 30 was limited to qualifying as qualified investors the management companies of pension funds and not the pension funds themselves.

14. By virtue of that legal amendment, however, paragraph e) of section 1 of article 30 of the Securities Code would define as qualified investors both pension funds and management companies.

15. The subsequent paragraph f) of that section 1, in identifying financial institutions with the characteristics of qualified investors, would expressly mention, among these financial institutions, pension funds and management companies, credit securitisation funds and management companies and venture capital funds and management companies.

16. Such qualification of pension funds as financial institutions also results from the fact that, under article 32, section 4, of Decree-Law no. 12/2006, of 20 June, the management company acts not only on behalf of the common interest but in the name of the funds, whereby the acts performed by it cannot fail to be reflected directly in the sphere of the funds, for purposes of their qualification as financial institutions. A similar situation obtains with investment funds, which are regarded as financial institutions, as such, subject to IRC, under article 22, section 1, of the [Income Tax Code]. However, because investment funds, like pension funds, do not have legal capacity and act through the management company, which acts independently of investors, it is not the funds but the management company that is subject to the provisions of the RGICSF.

17. It follows, thus, from both Union and Portuguese legislation that pension funds are part of the broad concept of financial institutions being equated to their respective management entities, under the terms and for purposes of the subjective incidence provided for in item 17.3.4 of the TGIS.

18. As to the objective scope

19. In this regard, the question that concretely arises is whether the scope of the exemption rule is restricted, within the universe of financial services, to operations and services typically banking, from which would be excluded in particular the commissions charged by pension fund management entities to their respective funds. It should be noted, however, that, in the design of the rule of incidence of item 17.3.4, as previously occurred in the former General Table, the legislator did not limit himself to including banking services, but the entire universe, today much broader, of financial services.

20. To answer this question, one must interpret the rule by resorting to the criteria of legal interpretation, in particular the historical, literal and teleological elements.

21. Historical and Literal Element

22. It is to be noted that initially there was no provision in the rule inscribed in the Table annexed to the Stamp Tax Regulation relating to 'banking operations' for any exemption of the operations identified therein.

23. Under article 120-A of the former General Table, approved by article 1 of Decree no. 21,916 of 28 November 1932, the taxation of financial operations not subject to or exempt from VAT, excluded from the incidence of stamp tax, under article 3 of Law no. 3/86, of 7 February, was regulated by paragraph e) of article 120-A, save when they were for guarantees provided, in which case it was regulated by paragraph f).

24. Dispatch of the Sub-Director-General of Contributions and Taxes of 19 November 1992, issued in Case no. 12/120-A, Book 10/3376, of the 6th Service Direction of the Directorate-General of Contributions and Taxes (transcribed in Madeira Curvelo and Joaquim dos Ramos Costa, 'Stamp Tax - Annotated and Commented Regulation and Table', Coimbra, 1994, p. 433), on the grounds that the incidence of paragraph c) of article 120-A of the General Table depends on the operations that gave rise to the collection of commissions being carried out or intermediated by credit institutions or financial companies, would clarify that the commissions charged to pension funds by management companies were not subject to stamp tax under paragraph c) of article 120 of the General Table.

25. This position would be confirmed by a dispatch of the Sub-Director-General of Contributions and Taxes of 12 March 1999, addressed to the President of the Portuguese Banking Association, cited by the mentioned Opinion of the Tax Studies Centre. According to this dispatch, management companies, because, like insurance companies, they are expressly excluded from the scope of application of the RGICSF by section 3 of its article 6, and thus are not susceptible of being qualified as financial companies for purposes of applying the rules of that Framework, were not taxpayers of stamp tax. There was, thus, no exemption of the commissions charged by management companies to pension funds; such commissions were not subject to stamp tax, and thus the question of exemption did not arise.

26. Consulting article 120-A, section 2, of the General Table of Stamp Tax, for example, in the wording of 1979 in which the wording of Decree-Law no. 16732 of 1929.04.13 was still maintained, it is observed that financial operations subject to stamp tax – inscribed in only 2 sections – did not benefit from any exemption.

27. Only later were exemptions provided, but solely limited to interest, as follows: 'Interest on loans granted for the acquisition of own housing is exempt from the tax, as well as that owed by credit institutions or parabancary institutions to institutions of the same nature' (wording of section 1 of article 120-A given by Decree-Law no. 154/84, of 16.05).

28. Decree-Law 223/91, which amended articles 13, 15, 27-A, 94, 120-A, 120-B, 141 and 145 of the General Table of Stamp Tax, approved by Decree 21,916 of 28 November 1932, in addition to interest, other exemptions are provided, but there is no reference to commissions.

29. Subsequently, section 2, paragraph b), 1st part, of article 120-A, in the wording given by article 1 of Law no. 24/94, of 18 July, adapting the former section 1 to the new terminology introduced by the RGICSF, would come to exempt from stamp tax the interest charged by credit institutions, financial companies or other entities legally equivalent to institutions, companies or entities of the same nature, all domiciled in Portuguese territory.

30. With the approval of the Stamp Tax Code of the Table annexed by article 1 of Law no. 150/99, of 11 September, under the heading 'Other Exemptions', article 6 of the CIS, paragraphs e) and f), provided:

'e) Interest charged and the use of credit granted by credit institutions …'

'f) Commissions charged by credit institutions …'

1. In summary, under the terms of paragraph e), section 1 of article 6, in the original numbering of article 1 of Law no. 150/99, of 11 September, exempt from stamp tax were the interest charged and the use of credit granted by credit institutions and financial companies to institutions, companies or entities whose form and object filled the types of credit institutions and financial companies provided for in Community law, all domiciled in the Member States of the European Union, or in any State complying with the principles arising from the Code of Conduct approved by the Resolution of the Council of the European Union of 1 December 1997.

2. Paragraph f) of that section 1 would broaden the exemption to the commissions charged by credit institutions to other institutions of the same nature or entities whose form and object filled the types of credit institutions provided for in Community law, domiciled in the Member States of the European Union or in any State, provided it also complied with the principles arising from the Code of Conduct approved by the Resolution of the Council of the European Union of 1 December 1997.

3. With this amendment, the exemption from stamp tax, previously limited to interest, would come to also encompass the granting of credit and the interest and commissions charged, under the terms defined in those paragraphs e) and f) of section 1 of article 6, which appeared to be a clear incentive to financial activity, with the consequent mitigation of the cascading taxation that, unlike VAT, characterises this type of tax (it should be noted that the review of stamp tax with a view to ensuring greater neutrality of the tax and of the taxation of commissions charged was foreseen in the Resolution of the Council of Ministers no. 119/97, of 14 July, which contained the general lines for the reform of stamp tax (see also the Report 'Structuring the Tax System for Developed Portugal', published by the Ministry of Finance, Coimbra, 1998, pp. 282 and 283).

4. The framing of the exemptions from stamp tax of financial operations in which exclusively credit institutions and financial companies intervened would consist of separate paragraphs, given that the conditions for the exemptions applicable respectively to the use of credit and to the interest and commissions charged were distinct: in the first case, the exemption benefited credit institutions and financial companies, in the second case, exclusively credit institutions.

5. The exemption of those paragraphs e) and f) of section 1 of article 6 of the Stamp Tax Code, however, as previously referred, applied only respectively to the granting of credit and interest charged by credit institutions and financial companies to entities of the same nature, that is, other credit institutions and financial companies, and to the commissions charged by credit institutions to other credit institutions and not to financial companies and other financial institutions.

6. However, article 37 of Law no. 30-C, of 29 December 2000 (State Budget for 2001), came to introduce to article 6 of the Stamp Tax Code the following amendments:

Article 6

'[...]

'e) The interest charged and the use of credit granted by credit institutions and financial companies to institutions, companies or entities whose form and object fill the types of credit institutions and financial companies provided for in Community law, all domiciled in the Member States of the European Union, or in any State, with the exception of those domiciled in territories with a privileged tax regime to be defined by order of the Minister of Finance;

f) The commissions charged by credit institutions to other institutions of the same nature or entities whose form and object fill the types of credit institutions provided for in Community law, domiciled in the Member States of the European Union, or in any State, with the exception of those domiciled in territories with a privileged tax regime to be defined by order of the Minister of Finance.

2 - The provisions of paragraphs e) and f) apply only to financial operations directly aimed at the granting of credit, within the activity carried out by the institutions and entities referred to in those paragraphs.

[...]'.

1. With the new wording given to section 2 of article 6 of the Stamp Tax Code, the legislator determined that the exemptions provided for in these two paragraphs would be restricted to 'financial operations directly aimed at the granting of credit'.

2. The legislator expressly stated that the application of the exemption rule was limited precisely to the granting of credit and to the interest and commissions associated with it, such that the exemption would only apply to commissions of item 17 when they were directly linked to credit-granting operations, within the activity carried out by the institutions and entities referred to in the preceding paragraphs.

3. As results from the expression 'directly aimed', it was the purpose of the legislator to limit the exemption referred to in paragraphs e) and f), to operations directly linked with the granting of credit and, even within credit operations, those linked to the financing of the credit-granting activity developed by the borrowing credit institutions.

4. Outside the exemption would fall, for example, credit obtained by credit institutions with a view to financing the acquisition of other credit institutions or companies in general, for the acquisition of the registered office or for the adoption of business restructuring plans.

5. The exemption in question would thus be limited to credit, its respective interest and commissions associated with the contract, with a view to financing the traditional activity of credit institutions, the granting of credit.

6. It is not in question, thus, what the legislator intended to say: section 2 introduced in article 6 aims to limit the meaning and scope of the exemptions of paragraphs e) and f) of section 1.

7. The legislator, however, would not formally give any interpretive character to such provision, leaving open its interpretive or innovative character.

8. It is to be noted, however, that until the entry into force of Law no. 30-C/2000, the Tax Administration, despite the abundant clarifications given on the application of the new Code and General Table of Stamp Tax to banking activity (see in particular Circular no. 15/2000 of 5 July) never declared that the exemptions of paragraphs e) and f) would apply only to operations directly related to the granting of credit within the activity carried out by credit institutions and financial companies. Nor is any litigation on the subject known, motivated by the Tax Administration having acted in accordance with that interpretation of the law which, moreover, it never publicly expressed.

9. Article 30 of Law no. 32-B/2002, of 31 December (State Budget for 2003) would abolish section 2 of article 6 of the Stamp Tax Code, in the wording introduced by article 37, section 1, of Law no. 30-C/2000, sections 3 and 4 of the former wording becoming sections 2 and 3 of the new wording. It would merge, on the other hand, into a single paragraph, e), the former paragraphs e) and f).

10. The referred new paragraph e), resulting from the merger of the former paragraphs e) and f), came to exempt from stamp tax the interest and commissions charged as well as the use of credit granted by credit institutions and financial companies to venture capital companies, as well as to companies whose form and object filled the types of credit institutions and financial companies provided for in Community law, all domiciled in the Member States of the European Union or in any State, with the exception of those domiciled in territories with a privileged tax regime, to be defined by order of the Minister of Finance.

11. Such legal rule would thus broaden, firstly, the exemption from stamp tax, then limited to credit, including the respective interest, granted by credit institutions and financial companies to entities of the same nature, to credit, including the respective interest granted by credit institutions and financial companies to venture capital companies, then regulated by Decree-Law no. 319/2002, of 29 December.

12. The exemption would be broadened, secondly, to the commissions charged by credit institutions and financial companies to financial companies and venture capital companies.

13. It was thus expressly and not merely tacitly eliminated the limitation of the exemption to operations directly aimed at the granting of credit, within the activity carried out by credit institutions and financial companies.

14. According to the Tax Administration, the elimination of section 2 of article 6 of the Stamp Tax Code would have no practical scope. For the Respondent entity, the limitation of the exemption to operations directly aimed at the granting of credit, within the activity carried out by credit institutions and financial companies resulted from the new paragraph e), resulting from the merger between the former paragraphs e) and f). On the other hand, the elimination of the former section 2 was due to the fact that with the merger of those paragraphs that legal provision ceased to be necessary for that limitation, thus becoming superfluous.

15. The letter of the provision, taking into account the new wording given to it, and the reason for the amendment introduced contradict, however, this thesis.

16. Let us see.

17. The first substantial innovation introduced in article 6 of the CIS would result from the remodelling of the investment regime in venture capital in the meantime operated by Decree-Law no. 319/2002 of 29 December, which this latter legislative instrument would strongly encourage, namely through new tax incentives.

18. That innovation would consist in the broadening of the exemption to commissions and interest charged and credit used by venture capital companies within operations carried out between venture capital companies and credit institutions or financial companies. Because they are not credit institutions, venture capital companies did not benefit from the benefits provided for in the former wording of those paragraphs.

19. On the other hand, the exemption would come to encompass the commissions charged by credit institutions and financial companies to financial companies, including venture capital companies.

20. The legislator would harmonise the conditions of the exemption of paragraph e) with those of paragraph f): just as the exemption of paragraph e), the exemption of paragraph f) would come to encompass operations in which were exclusively intervening parties credit institutions, financial companies and venture capital funds and not only operations in which the recipient was a credit institution. Standardising the regimes into one, obvious reasons of simplicity and clarity imposed that they cease to be contained in separate paragraphs, which was done.

21. Thus, the reason for the merger of the paragraphs has nothing to do with the incorporation into the new paragraph e) of section 1 of the expressly repealed section 2 of article 6, but with the standardisation of the conditions of the exemption from stamp tax of credit granted and interest charged with those of commissions charged in operations in which were exclusively intervening parties credit institutions and financial companies.

22. In the same sense as that advocated is the letter of the provision.

23. In fact, the expression 'well as', which means 'likewise', 'also' and 'in the same manner', used in the new wording of paragraph e), clearly indicates that the exemption of interest and commissions charged applies in terms identical to the use of credit. It draws attention to the uniformity of the conditions of the exemption from stamp tax of credit granted and interest charged with those of commissions charged, in operations in which were exclusively intervening parties credit institutions and financial companies, having no restrictive scope.

24. The expression 'use of credit' does not thus limit retroactively the scope of the exemption of interest and commissions previously referred to, in the sense of only encompassing interest and commissions relating to credit operations.

25. The Tax Administration interprets this paragraph e) as if it stated: 'The following are exempt from stamp tax: interest and commissions charged, as well as the use of credit granted by credit institutions and financial companies to venture capital companies, as well as to companies whose form and object filled the types of credit institutions and financial companies provided for in Community law, all domiciled in the Member States of the European Union or in any State, with the exception of those domiciled in territories with a privileged tax regime, to be defined by order of the Minister of Finance, in operations directly aimed at the granting of credit within the activity carried out by the previously referred entities'.

26. Now, such interpretation, besides having no legal support, is all the more absurd when the object of venture capital companies is not the granting of credit but the acquisition of own capital and third-party capital instruments in activities of high development potential.

27. As results from articles 2 and 7, sections 1 and 2, of Decree-Law no. 319/2002, venture capital companies could not, and still cannot, grant credit.

28. Credit obtained by venture capital companies cannot thus be used by these companies to grant credit.

29. The production of effects of section 2 of the then article 6 of the Stamp Tax Code, beyond its express repeal, would imply venture capital companies being subject to stamp tax under the general terms, with the consequent uselessness of article 30 of Law no. 32-B/2002, which obviously one should not presume to have been the will of the legislator.

30. It is to be noted, even so, that the new wording of the rule would continue not to exempt from stamp tax the credit granted and the interest and commissions charged by credit institutions and financial companies to other financial institutions, that is, financial institutions not covered within the scope of application of the RGICSF, such as insurance companies, save when the borrowing entity was a venture capital company.

31. Thus, the previous framing was maintained of the commissions charged to pension funds by management companies, as well as, moreover, of the commissions charged by management companies to venture capital funds.

32. Subsequently, however, article 36, section 1, of Law no. 107-B/2003, of 31 December (State Budget for 2004), would give new wording to article 6, section 1, paragraph e), which would come to exempt from stamp tax the guarantees provided, the interest and commissions charged and, likewise, the use of credit granted by credit institutions, financial companies and financial institutions to venture capital companies and to other companies whose form and object fill the types of credit institutions, financial companies and financial institutions provided for in Community law, all domiciled in the Member States of the European Union or in any State, with the exception of those domiciled in territories with a privileged tax regime, to be defined by order of the Minister of Finance.

33. With this amendment, the objective scope of the exemption would be broadened to the guarantees provided and in the subjective plane to the types of financial institutions provided for in Community law, which include pension funds regulated in Directive 2003/41/EC of the European Parliament and of the Council, and not exclusively the credit institutions and financial companies regulated in the RGCSF.

34. The principal object of the activity of financial institutions excluded from the application of the RGICSF is not the granting of credit. Nor is it, moreover, of the financial companies themselves regulated in the RGICSF.

35. The limitation of the exemption to operations directly aimed at the granting of credit within the activity carried out, advocated by the Tax Administration, would thus render completely useless the amendment of article 36, section 1, of Law no. 107-B/2003 which would broaden to financial institutions that were not credit institutions and financial companies including pension funds and venture capital funds, the subjective universe of the beneficiaries of the exemption of paragraph e) of section 1 of article 6, everything happening as if such wording had not been amended.

36. In summary, the historical evolution of the provision points clearly that only in the period in which the wording given by article 37 of Law no. 30-C of 29 December was in force (which added a section 2 to article 6), the exemption had clearly as its catalytic element the credit granted under the terms mentioned in such rule, in the sense of credit obtained by credit institutions from credit institutions to subsequently lend to their customers.

37. With regard in particular to commissions charged, the exemption could only apply to those that had underlying operations aimed at the granting of credit, by virtue of the restriction introduced in the mentioned section 2 of article 6.

38. From the moment when by express will of the legislator that section 2 was repealed and the merger of paragraphs e) and f) into a single paragraph e) takes place, the provision lost initial homogeneity, with the consequent erosion of the catalytic element of the granting of credit. Loss of homogeneity that is accentuated with the amendments introduced by Law no. 107-B/2003, going in the same direction the reason for which, as we have seen, the successive amendments the provision underwent. That initial homogeneity would only be maintained if it were admissible, in light of the general criteria for the interpretation of laws, the after-effect of a repealed rule and never re-enacted.

39. For the reasons set out we cannot fail to conclude that the exemption of article 7, section 1, paragraph e), of the Stamp Tax Code was not restricted, prior to the entry into force of Law no. 7-A/2016, to operations directly aimed at the granting of credit within the activity carried out by credit institutions, financial companies and other financial institutions, as is defended in the inspection report on which the assessment was based.

40. That restriction was only expressly re-established by Law no. 7-A/2016.'

This understanding is subscribed to in general terms, in this part also.

In fact, and although the argument sustained in the regime relating to venture capital is not deemed conclusive (which was not emptied by the regime emerging from Law no. 7-A/2016), in view of the express repeal of section 2 of article 6, it is considered that the understanding that the exception enshrined in that repealed new provision (and restored by the said Law no. 7-A/2016) remained in force has no literal or systemic support whatsoever.

Furthermore, the non-arbitral jurisprudence known [4], relating to the exemption at issue, is not only not conclusive in the sense that the AT seeks to extract from it, but even points in the opposite direction.

Indeed, although frequently summarised in the sense that 'The exemption granted by article 7, section 1, paragraph e) of the Stamp Tax Code, in the wording of Decree-Law no. 287/2003NOV12, amended by Law no. 107-B/2003DEC31, has as its catalytic element - to which refer the interest, the commissions charged, the guarantees provided or its mere use - the credit granted under the terms mentioned in the same provision'[5], the fact is that such jurisprudence is sustained in doctrine that asserts that:

'Under the terms of this rule, exempt from the tax referred to in sections 10 and 17 of the Table are the guarantees provided and the financial operations carried out by credit institutions and financial companies to venture capital companies and to other companies and entities of the same nature domiciled in the European Union or in another State, save if domiciled in countries, territories or regions considered "tax havens". The exemption encompasses, besides the granting of credit, other financial operations not necessarily connected with it carried out by credit institutions and financial companies, within the scope of their activity, provided that they have as recipients the entities referred to in this rule'[6].

Thus, the referred jurisprudence, which determines the non-coverage in the exemption of paragraph e) of section 1 of article 7 of the CIS, now in question, of situations subject to item 22 of the TGIS, will have underlying the understanding that such exemption encompasses the situations subject to sections 10 and 17 of the TGIS – as is the present case – and that the exemption encompasses, besides the granting of credit, other financial operations not necessarily connected with it, as is also the case.

In light of the above, it is thus concluded that the exemption of paragraph e) of section 1 of article 7 of the CIS encompasses the commissions subject under item 17.3.4 of the TGIS, provided that they are charged and refer to services rendered between the entities provided for therein.

Having reached this point, it is necessary to assess the applicability to the case of the provisions of article 154 of Law no. 7-A/2016, which qualifies as an interpretive rule section 7 of article 7 of the CIS, introduced by article 152 of the same law.

On this matter, the following was written in the above-cited award rendered in arbitration case 348/2016T:

'112. In accordance with the provisions of paragraph e) of section 1 of article 7 of the CIS, the following are exempt from tax:

'The interest and commissions charged, the guarantees provided and likewise the use of credit granted by credit institutions, financial companies and financial institutions to venture capital companies, as well as to companies or entities whose form and object fill the types of credit institutions, financial companies and financial institutions provided for in Community law, all domiciled in the Member States of the European Union or in any State, with the exception of those domiciled in territories with a privileged tax regime, to be defined by order of the Minister of Finance.' (…)

1. In turn, section 7 of the same provision contains the following content:

'The provisions of paragraph e) of section 1 apply only to guarantees and financial operations directly aimed at the granting of credit, within the activity carried out by the institutions and entities referred to in that paragraph.'

1. The wording of paragraph e) was given, as we have seen, by Law no. 107-B/2003, of 31 December, and section 7 was added by article 152 of Law no. 7-A/2016 of 30 March (State Budget Law for 2016), with article 154 in turn qualifying as an interpretive rule the said section 7.

2. As is known, the interpretive law is integrated in the law interpreted (article 13 of the Civil Code), applying to situations and facts prior to it. However, by fixing one of the possible interpretations of the earlier law with which the interested parties could and should have reckoned, and a solution the courts might have adopted, it is not capable of violating the safe and legitimately founded expectations of citizens.

3. The problem emerges when the legislator designates a rule as 'interpretive law' when in fact an innovative law is at issue, in many situations being a disguise for the retroactivity of the new law.

4. For Baptista Machado a new law is truly interpretive if two requirements are met:' that the solution of prior law be disputed or at least uncertain; and that the solution defined by the new law is within the framework of the dispute and is such that the judge or the interpreter could arrive at it without exceeding the limits normally imposed on the interpretation and application of the law. If the judge or the interpreter, in the face of old texts, could not feel authorised to adopt the solution that the New Law comes to consecrate, then this is decidedly innovative'.

5. Applying the criteria exposed to the case at hand, the explanation made above [A)2-] appears clear as to the uncertain character of the legal solution contained in the rule in question, at least in the sense that the AT seeks to attribute to it. Equally, it was also demonstrated that the new law came to consecrate a meaning which at least after the amendments introduced by Law no. 32-B/2002, is clearly innovative. So much so that the new law came precisely to reintroduce a wording for this section 7 of article 7 of the CIS very similar to the wording that had been instituted by the State Budget Law for 2001 for the then article 6 of the CIS and that remained in force until it was expressly repealed by Law no. 32-B/2002 (State Budget Law for 2003).

6. In the sense of the innovative character of section 7 of article 7 of the CIS, it is repeated that, if at a first moment, that of Law no. 30-C/2000, the legislator intended to restrict the exemption of the then article 6, section 1, paragraph e), to operations directly aimed at the granting of credit, at a second moment, that of Law no. 32-B/2002, the same legislator wished to abolish that limitation, restoring the prior regime, through the express repeal of section 2 of article 6 of the CIS. Finally, at a third moment, through the amendments introduced by Law no. 107-B/2003, the legislator further broadened that exemption, in the sense of encompassing, among other operations, the commissions charged by financial institutions, even if they are not credit institutions or financial companies, to institutions of the same nature.

7. The literal content of the expression 'well as', which has unequivocally an expansive and not restrictive scope of the 1st part of article 6, section 1, paragraph e), cannot be drawn from, as the Respondent contends, the intention of the legislator of article 36, section 1, of Law no. 107-B/2003, to restore the exclusion from the exemption of commissions to operations directly related to the granting of credit that had been repealed the previous year by Law no. 32-B/2002. Such interpretation is, moreover, incompatible with the general sense of the new wording of article 7, section 1, paragraph e), of the CIS, which goes in the direction of broadening the exemption to the commissions charged by financial institutions to other financial institutions.

8. The 2016 Budget Law came thus to restrict the field of application of the exemption from stamp tax provided for in paragraph e) of section 1 of article 7 of the CIS, and, being designated by the legislator as interpretive, will be applied from the validity of the rule interpreted. The taxpayers will thus be confronted with the imposition of a tax burden that they did not anticipate and could not in principle foresee, in accordance with the applicable rules of interpretation.

9. And it is not argued in the sense of the non-innovative nature of Law no. 7-A/2016, the jurisprudence of the superior tax courts, initiated by Judgment of the Central Administrative Court South of 21 September 2010, case 2754/08, and confirmed, although with oscillations in reasoning, by later and recent Judgments of the Supreme Administrative Court, namely, among others that of 18 January 2016, case 0835/16, of 15 June 2016, case 770/15, of 9 June 2016, case 01630/15, and of 3 November 2016, case 0976/16. It should be noted that the argument of the Public Treasury in all those cases was not any restrictive interpretation of paragraph e) of section 1 of article 7 of the Stamp Tax Code, but that insurance intermediation is not a financial activity. The placement of insurance with the public would not, thus, be a financial operation and therefore would not be covered by the incidence of item 17.3.4 of the General Table. It would be subject to a different taxation, that of item 22.2.

10. According to that jurisprudence, the commissions charged to insurance companies by credit institutions or other financial entities legally authorised, such as mere individuals, to carry on insurance intermediation activity, under Decree-Law no. 144/2006 of 31 July, would be subject to and not exempt from stamp tax, without it resulting from this that their renamed as financial institutions.

11. Now, the referred jurisprudence does not, however, encompass, contrary to what appears to result from the argument of the Respondent, directly or indirectly, the management commissions of pension funds charged to funds by management companies and, in general, commissions or other compensation resulting from the provision of financial services, subject to item 17.3.4.

12. The commissions to which that jurisprudence refers are, in fact, the commissions charged for the exercise of the insurance intermediation activity, taxed by item 22.2, which distinguishes itself from the provision of financial services encompassed by item 17.3.4, both of the TGIS.

13. The stamp tax on those commissions has a different nature from that which refers to item 17.3.4 of the General Table: in fact, as refers to the Judgment of 15 June 2016 above cited, these commissions are not the consideration for any financial service but a service that, although connected with a financial activity, in this case insurance activity and therefore exempt from VAT under section 29, now 28, of the VAT Code and subject to specific regulation in Decree-Law no. 144/2006, is not materially a financial service, even when provided by a credit institution, as article 11 of the said Decree-Law admits.

14. That tax is not, contrary to that provided in that sub-item 17.3.4, an indirect tax, but a direct tax, affecting the gross profit of the intermediary, through the system of withholding at source carried out by the insurance company.

15. This is what directly results from the already referred paragraph o) of section 3 of article 3 of the Stamp Tax Code, which considers that tax a burden on the intermediary and not on the insurance company, which merely deducts the tax from the commissions paid to the intermediary.

16. In summary, the mediation commissions, in addition to their cause being the exercise of an activity substantially not financial, are not, according to that jurisprudence, charged to the client of the intermediary, which is why they are not subject to the stamp tax of item 17.3.4 nor are they covered by the exemption of article 6 [now article 7, section 1, paragraph e)], of the Stamp Tax Code.

17. It is not, thus, legitimate the extrapolation of that jurisprudence on the meaning and scope of the mentioned provision to the case at issue and in order to exclude from the exemption from stamp tax the commissions charged by virtue of the exercise of the activity of pension fund management. Nor can that jurisprudence be invoked as established jurisprudential trend consecrating a univocal meaning which resulted clearly from the old law and which the new law had merely limited itself to embracing[18].

18. In summary, for the reasons set out above, it is considered that Law no. 7-A/2016 came, through the interpretation combined with its articles 152 and 154, to delimit the material scope of the exemption provided for in article 7, section 1, paragraph e), of the CIS, in an innovative manner. Those provisions, by instituting a wording that has not been part of the legal system since 2003, must be considered retroactive and, as such, unconstitutional, for violation of the principle of protection of confidence and legal certainty. (...)

19. Even if we were to understand that we were dealing with a genuine interpretive rule (interpretive law material and not merely formal), the legitimacy of the interpretive scope of article 7, section 1, paragraph e), of the CIS conferred by articles 152 and 154 of Law no. 7-A/2016 would always be affected by unconstitutionality, for violation of the prohibition contained in article 103, section 3, of the Constitution.

20. Let us see.

21. Since the constitutional revision of 1997, there has been express constitutional recognition of the principle of non-retroactivity of taxes, article 103, section 3, of the Constitution stating that 'no one can be obliged to pay taxes that have not been created in accordance with the law, that are retroactive in nature or whose assessment and collection are not made in accordance with the law.'

22. As Nuno M. Morujão states, 'the majority tax doctrine that specifically addresses the problem of interpretive rules does not oppose them, provided they are 'authentic' interpretive rules.'

23. However, for other authors, 'in the tax field, there being an express constitutional rule prohibiting retroactivity, it matters little to evaluate whether the interpretive law is so in the material sense or merely in the formal sense (in the case of being an innovative law)'. Saldanha Sanches, in annotation to the Constitutional Court Judgment no. 275/98, of 9/3/1998 (case no. 370/97), considers that 'the constitutional change must be interpreted as a kind of criticism by the legislator of constitutional jurisprudence: the constitutional legislator, by modifying the law and by adding another guarantee in the constitutional text, is implicitly asserting that in this field constitutional jurisprudence did not grant effective protection of the fundamental rights of the taxpayer', concluding that 'it does not seem to us that interpretive law can take place in tax matters: if until now what was in question were the falsely interpretive laws, the constitutional revision came to prevent the retroactive effects of any rule, in tax matters, including those caused by an interpretive rule'.

24. In the same sense, Jónatas Machado and Paulo Nogueira da Costa[22] state that interpretive rules 'do not only have a declarative nature, producing constitutive effects. Insofar as they bind the courts to a particular interpretation, among various in the abstract possible and already adopted by other courts, they inevitably imply a retroactive application of the law interpreted'.

25. The mentioned doctrine goes, in substance, to meet the jurisprudence affirmed, among others, in Constitutional Court Judgment no. 172/2000, case 762/98, relating to the constitutionality of article 28, section 7, of Law no. 10-B/96, of 23 March, on the deductibility of the levy as a cost of IRC exercise. It should be noted that the sense of the Judgment is not contradicted by the dissenting votes, which differ only on the justification of the decision.

26. That Judgment would consider interpretive laws that retroactively bind the interpreter to be incompatible with the prohibition on the creation of retroactive taxes introduced by the Fourth Revision.

27. Being certain, for the Constitutional Court, that genuinely interpretive laws do not truly undermine the concrete prior expectations of their addressees, in the case of the interpretation rendered binding being already known and even having been applied. However, even in such cases, the interpretive binding that such laws entail, by becoming the exclusive legal criterion for the application of the prior wording of the law, in cases in which constitutional law prohibits its retroactivity, modifies the relationship of the State, emitter of rules, with its addressees.

28. The exclusion by the interpretive law of other interpretations advocated, following that Judgment still, leads to the State being able to afterwards prevent the Right it created from functioning through its intrinsic logic communicable to the addressees of the rules, allowing an imperative and immediate power to interfere in legal interpretation that alters the framework of the relevant elements of legal interpretation, with the consequent frustration of the constitutional principle of non-retroactivity of taxes.

29. In this measure, the Judgment would continue, one might understand that the interpretive law, albeit genuine, in pretending to apply for the period prior to its issuance, under the terms of section 1 of article 13 of the Civil Code, alters the context of self-binding of the organs of application of the Law to the Law and, consequently, affects the security of the addressees of the rules protected by a (constitutional) prohibition of retroactivity.

30. There would, consequently, in this latter situation, be a stronger security guarantee inherent in the prohibition of retroactivity.

31. In the present case, there did not exist, before the issuance of the interpretive rule, any doctrinal or even jurisprudential current sustaining the position adopted, and the reasoning of the impugned act cannot be considered as such, it is evident.

32. In that measure, as concerns the new section 7 of article 7 of the Stamp Tax Code, the interpretation given to paragraph e) of the prior section 1 by article 152, with the scope of article 154, both of Law no. 7-A/2016, cannot be considered genuinely authentic. The authenticity of the interpretation is a prerequisite for the application of any and all formally interpretive rules.

33. In fact, the only doctrinal guidance prior to the entry into force of Law no. 7-A/2016, in the sense that the commissions exempt under paragraph e) of section 1 of article 7 of the Stamp Tax Code are limited to those directly related to credit operations, is that on which the assessments disputed were based, whereby it cannot be considered, unless one legitimises the practice of legislatively, by issuing rules merely formally interpretive, resolving the disputes between the Tax Administration and taxpayers.

34. Even if it were, as results from the jurisprudence of the Constitutional Court, the interpretive rule contained in article 154, by implying retroactive tax, would always violate section 3 of article 103 of the Constitution, whereby, under its article 204, it could not be applied in the case sub judice.

35. For all the foregoing, the Tax Authority was wrong in not considering the commissions charged by the Claimant exempt from Stamp Tax in conformity with the provisions of article 7, section 1, paragraph e), of the CIS.

36. In these terms, the request for declaration of illegality of the additional Stamp Tax assessments and compensatory interest that are the subject of the arbitration request is proper, due to error of law as to the meaning and scope of the mentioned provisions, with the consequent annulment thereof.'

This decision is also subscribed to, finally.

Indeed, as was written in the recent Judgment 267/2017, of 31-05-2017, of the Tribun[al]...

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