Process: 110/2015-T

Date: August 27, 2015

Tax Type: Selo

Source: Original CAAD Decision

Summary

Process 110/2015-T addresses a critical interpretation issue regarding Stamp Tax (Imposto do Selo) under Entry 28.1 of the General Stamp Tax Table (TGIS), which taxes urban properties with a taxable property value (valor patrimonial tributário - VPT) equal to or exceeding €1,000,000. The dispute concerns a building in Porto comprising multiple independent floors held in vertical/total ownership, where the Tax Authority assessed €8,674.08 in Stamp Tax for 2013 by aggregating the VPT of all independent units. The taxpayers challenged this methodology, arguing that Entry 28.1 should apply only when individual units independently meet the €1,000,000 threshold, not through artificial aggregation. They invoked Article 23(7) of the Stamp Tax Code, which mandates application of Municipal Property Tax (IMI) valuation rules, and Article 113(1) of the IMI Code, which requires separate assessment of each independent unit. The taxpayers emphasized that prior CAAD decision 204/2014-T on the same property for 2012 annulled similar assessments, establishing that Entry 28.1 cannot be applied to individual units in vertical ownership merely because their sum exceeds the threshold. They also raised constitutionality concerns, arguing the law arbitrarily discriminates between condominium ownership and vertical ownership, violating the equality principle. Additionally, they contended that certain floors lacked residential allocation and payment documents failed to identify the underlying assessments. The Tax Authority defended that Entry 28.1 targets the total property VPT regardless of internal divisions, asserting that vertical and condominium ownership constitute distinct legal regimes warranting different tax treatment. The case reflects established CAAD jurisprudence favoring taxpayers in similar disputes, consistently holding that aggregation of independent unit values to trigger Entry 28.1 constitutes legal error when individual units fall below the statutory threshold.

Full Decision

ARBITRAL DECISION

Applicants/Claimants:

  • A…;
  • B…;
  • C…;
  • D…;
  • E…; and
  • Estate Representative of F….

Respondent: Tax Authority and Customs Authority

I – REPORT

  1. On 19 February 2015 the taxpayers A…, B…, C…, D…, E… and Estate Representative of F…, holders of tax identification numbers …, …, …, ..., … and …, respectively, (hereinafter referred to as the "Applicants"), submitted to the Administrative Arbitration Centre (CAAD) a request for constitution of an arbitral tribunal for the purpose of obtaining an arbitral decision, pursuant to the provisions of articles 2, no. 1, paragraph a) and 10 of Decree-Law no. 10/2011, of 20 January (hereinafter referred to as RJAT), following the tax assessment acts of Stamp Tax (IS) for the year 2013, dated 18 March 2014, for each of the floors with independent use that comprise the urban property registered under article …, in the urban property register of the Union of Parishes of …, …, …, …, … and …, municipality of Porto, in the global amount of € 8,674.08 (eight thousand, six hundred and seventy-four euros and eight cents).

  2. In the request for arbitral decision, the Applicants chose not to appoint an arbitrator.

  3. Pursuant to no. 1 of article 6 and paragraph b) of no. 1 of article 11 of RJAT, as amended by article 228 of Law no. 66-B/2012, of 31 December, the Ethics Council appointed the undersigned Jorge Carita as sole arbitrator, who accepted the appointment within the legally prescribed period.

  4. The arbitral tribunal was constituted on 30 April 2015.

  5. On 3 June 2015, the Respondent, duly notified for that purpose, submitted its response.

  6. The hearing provided for in article 18 of RJAT, as well as oral arguments were waived by the parties.

  7. The position of the Applicants, as expressed in the request for arbitral decision, is, in summary, as follows:

7.1. The assessment acts which are the subject of the present arbitral decision are vitiated by error as to the legal prerequisites, error as to the factual prerequisites and violation of law.

7.2. The Applicants consider that the fiction of the existence of a taxable property value corresponding to the sum of the taxable property values of the various parts capable of independent use does not find support, either in the letter or in the spirit of the Law.

7.3. Since it is a tax due by the situation provided for in Entry 28 of the Stamp Tax Table, as well as its respective assessment, the rules contained in the Municipal Property Tax Code apply, in accordance with article 23, no. 7 and paragraph u) of no. 1 of article 5, both of the Stamp Tax Code.

7.4. Since the Municipal Property Tax is assessed in relation to each part capable of independent use considered separately in the property register which also discriminates the respective taxable property value (cf. article 113, no. 1 and 12, no. 3, both of the Municipal Property Tax Code), the Respondent cannot make the taxable property value of a property composed of several floors or divisions with independent use correspond to the sum of the taxable property values of the various floors or divisions capable of independent use, thereby causing Entry 28.1 of the Stamp Tax Code to apply to the Applicants' property.

7.5. Indeed, the Applicants emphasize that the factual circumstances and legal framework underlying the request for arbitral decision were already subject to review by this Tribunal in case no. 204/2014-T, regarding Stamp Tax assessments under Entry 28.1, for the year 2012, concerning the property in question. Accordingly, the Arbitral Tribunal annulled the said assessments by concluding "(…) that the assessment of Stamp Tax based on Entry 28.1 of the General Stamp Tax Table is vitiated by illegality with respect to each of the floors or parts capable of independent use of the Property, as the said Entry cannot be interpreted in the sense that it can be applied to floors or parts capable of independent use of a property in full or vertical ownership, when only from the sum of each of these floors or parts is a taxable property value equal to or greater than € 1,000,000.00 (one million euros) obtained, and the taxable property value of each of the said floors or parts does not exceed this legal threshold.".

7.6. Such decision is in accordance with the uniform and abundant case law of the Administrative Arbitration Centre on this legal issue.

7.7. Moreover, the Applicants further consider that article 1, no. 1 of the Stamp Tax Code, in conjunction with Entry 28.1, added by Law no. 55-A/2012, of 29 October, in the wording in force at the time of the facts, is unconstitutional by violation of the constitutionally protected principle of equality, since the Tax Authority makes a distinction between properties that have been established in condominium ownership and properties in full ownership with floors or divisions capable of independent use, representing a totally arbitrary distinction. Causing the acts that apply unconstitutional rules to be vitiated by invalidity, suffering those inequivocally from nullity, and therefore cannot be maintained in the legal order of the Applicants.

7.8. Furthermore, the Stamp Tax assessments relating to the first, second and fourth floor with independent use are tainted by error as to the factual prerequisites, since only properties with residential allocation are covered by the Stamp Tax incidence rule. In this sense, the Applicants understand that the Law aims only to cover those properties that, from a functional perspective, are allocated to residential use, which is not the case of the first, second and fourth floors capable of independent use which are not functionally allocated to residential use.

7.9. Nevertheless, the Applicants were notified of several documents for payment, but those do not contain the number of the assessment that underlies them. Therefore, the absence of the essential element that is the identification of the assessment act that underlies the payment document, taints the act with illegality due to absence of legally required reasoning.

7.10. For all the foregoing, the Stamp Tax assessments, referring to the year 2013, under Entry 28.1 of the respective General Stamp Tax Table, dated 18.03.2014, corresponding to the property in question, must be annulled, with all legal consequences.

  1. The position of the Respondent as expressed in its response, is, in abbreviated summary, as follows:

8.1. The taxable event of Stamp Tax Entry 28.1 consists of the ownership, usufruct or surface right of urban properties whose taxable property value as recorded in the register, pursuant to the Municipal Property Tax Code, is equal to or greater than € 1,000,000.00. Accordingly, the taxable property value relevant for the purposes of tax incidence is the total taxable property value of the urban property and not the taxable property value of each of the independent parts that compose it.

8.2. The Respondent considers that the fact that the Municipal Property Tax was calculated based on the taxable property value of each part of the property with independent economic use does not affect the application of Entry 28.1 of the General Stamp Tax Table, which is intended for the total taxable property value of the property and not separately for each of its parcels.

8.3. Indeed, any other interpretation would violate the principle of legality constitutionally established.

8.4. Nevertheless, condominium ownership and vertical ownership are differentiated legal institutes, and therefore, there is no arbitrary discrimination when the legislator chooses to grant differentiated tax treatment to two different realities.

8.5. In this sequence, the Respondent concludes that the request for arbitral decision is entirely without merit, the act being subject to these proceedings being evidently in legal conformity.

II – ISSUES TO BE DECIDED

  1. In light of the foregoing, the principal issue to be decided is as follows:

a) Are the tax assessment acts of Stamp Tax Entry 28.1 of the General Table, Annex to the Stamp Tax Code, referring to the year 2013 and dated 18 March 2014, on each of the floors with independent use that comprise the urban property registered under article …, in the urban property register of the Union of Parishes of …, …, …, …, … and …, municipality of Porto, in the global amount of € 8,674.08 (eight thousand, six hundred and seventy-four euros and eight cents), by the Tax Authority and Customs Authority, vitiated by error as to the factual and legal prerequisites and also by violation of law?

III – CLARIFICATION

  1. The Tribunal is regularly constituted and is materially competent, pursuant to articles 2, no. 1, paragraph a), 5, no. 2, and 6, no. 1, of RJAT.

The request for arbitral decision is timely, in accordance with no. 1 of article 10 of RJAT.

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

The proceedings are not affected by any vices that would invalidate it.

All being duly considered, it is appropriate to render judgment.

IV – FACTUAL FINDINGS

  1. Taking into account the tax administrative proceedings and the documentary evidence attached to the file, it is now appropriate to present the factual matter relevant to understanding the decision, which is established as follows:

The Applicants are legitimate owners of the urban property registered under article …, in the urban property register of the Union of Parishes of …, …, …, …, … and …, in the municipality of Porto, established in full ownership with floors or divisions capable of independent use, although they are not the sole owners (cf. document attached to these proceedings as doc. no. 2 attached to the Arbitral Petition).

The property identified in the preceding paragraph, in light of building permit no. …/…, has a basement intended for the caretaker's establishment and residence, first, second and fourth floors intended for offices, and finally, a third floor intended for residential use (cf. document attached to these proceedings as doc. no. 4 attached to the Arbitral Petition).

The Tax Authority assigned to the property in question, for purposes of applying Entry 28.1 of the General Stamp Tax Table, the "taxable property value of the property – total subject to tax" of € 1,115,229.52 (one million one hundred and fifteen thousand two hundred and twenty-nine euros and fifty-two cents) – (cf. document attached to these proceedings as doc. no. 1 attached to the Arbitral Petition).

In conformity with the taxable property value assigned to the property in question, the Tax Authority proceeded with the respective Stamp Tax assessments based on Entry 28.1 of the General Stamp Tax Table, dated 18 March 2014, notified to the Applicants, in the global amount of € 8,674.08 (eight thousand, six hundred and seventy-four euros and eight cents) – (cf. document attached to these proceedings as doc. no. 1 attached to the Arbitral Petition).

The assessments referenced in the preceding paragraph were not subject to complaint or challenge and the Applicants, in the months of payment in April and November 2014, proceeded to pay them in full (cf. document attached to these proceedings as doc. no. 3 attached to the Arbitral Petition).

  1. The facts enumerated in the preceding number constitute uncontested matter and are documentarily proved in the file.

  2. There are no facts deemed unproven, as all facts relevant to the assessment of the request were deemed proven.

V – LEGAL GROUNDS

  1. We now proceed to determine the applicable law to the underlying facts, in accordance with the issue already stated (see above no. 10).

  2. Accordingly, the issue that arises consists of determining the legality of the understanding according to which Entry 28.1 of the General Stamp Tax Table should be interpreted as providing, within its scope, that properties in full ownership with parts or divisions capable of independent use, with residential allocation, which are characterized by the fact that none of these parts or divisions has been assigned a taxable property value equal to or greater than € 1,000,000.00, although the sum of the taxable property values relating to each part or division individually considered is already equal to or greater than the same value of € 1,000,000.00, should be subject to taxation.

  3. The subjection to Stamp Tax of properties with residential allocation resulted from the addition of Entry 28 of the General Stamp Tax Table, effected by article 4 of Law 55-A/2012, of 29 October, which typified the following taxable events:

"28 – Ownership, usufruct or surface right of urban properties whose taxable property value as recorded in the register, in accordance with the Municipal Property Tax Code, is equal to or greater than € 1,000,000.00 – on the taxable property value for purposes of Municipal Property Tax:

28-1 – For property with residential allocation – 1%

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

This law entered into force on the day following its publication, that is, on 30 October 2012.

  1. First and foremost, it should be said that it is now settled that tax laws are interpreted like any others, requiring the determination of their true meaning, in accordance with the techniques and interpretative elements generally accepted by legal doctrine, in accordance with article 9 of the Civil Code and article 11 of the General Tax Law.

  2. Now, Law 55-A/2012 says nothing regarding the qualification of the concepts in question, namely, regarding the concept of "property with residential allocation", contained in Entry 28.1.

  3. In this respect, regard should be had to the concept of property that results from the provisions of article 2 of the Municipal Property Tax Code – "any portion of land, including waters, plantations, buildings and constructions of any nature incorporated or situated therein, with a character of permanence, provided that it forms part of the patrimony of a natural or legal person and, in normal circumstances, has economic value, as well as waters, plantations, buildings or constructions, in the circumstances above, endowed with economic autonomy in relation to the land on which they are located, although located in a portion of land that constitutes an integral part of a different patrimony or does not have patrimonial nature." –, by reference in article 67, no. 2 of the Stamp Tax Code, added by the said Law, which provides that "to matters not regulated in the present code concerning Entry 28 of the General Table, the CPII shall apply subsidiarily.", thus complying with the determination of taxable property value in accordance with the provisions of article 38 and following of the same code.

  4. In the Municipal Property Tax Code, we must also make reference to article 6, which indicates the different types of urban properties, among which it mentions residential ones in paragraph a) of its no. 1, clarifying in its no. 2 that "residential, commercial, industrial or for services are buildings or constructions licensed for such purpose or, in the absence of a license, that have as their normal destination each of these purposes.".

  5. We can already conclude that the legislator was concerned with the normal use of the property, the purpose to which it is allocated, and not with the strictness of the concept itself. Which, having regard to the factual circumstances subject to these arbitral proceedings (see point B of no. 12), it is important to note that the property in question, in light of building permit no. 199/63, has a basement intended for the caretaker's establishment and residence, first, second and fourth floors intended for offices, and finally, a third floor intended for residential use.

  6. In this sense, we may further add that we agree with the understanding expressed in the Arbitral Decision rendered in case no. 50/2013-T, when it states that "We further conclude that for the legislator the situation of property in vertical or condominium ownership was irrelevant, as no reference or distinction is made between one and the other. What is relevant is the material truth underlying its existence as an urban property and its use.".

  7. Thus, the legislator, in the rule of incidence of Entry 28.1 of the General Stamp Tax Table, did not consider it relevant to distinguish between properties in condominium ownership and properties in vertical ownership. Therefore, we advance that the argument put forward by the Respondent as stated in article 15 of its Response does not hold, when it states that "The urban property in question in these proceedings is not in a regime of condominium ownership, in which case each autonomous unit would be regarded as an urban property, including for purposes of subjection to Stamp Tax Entry 28.1 of the General Table, but in a regime of vertical ownership.".

  8. It is also important to have regard to article 12, no. 3, of the Municipal Property Tax Code, which provides that "each floor or part of property capable of independent use is considered separately in the property register, which also discriminates the respective taxable property value.".

  9. And also the provision of article 119, no. 1 of the Municipal Property Tax Code, which determines that "The services of the General Tax Directorate send to each taxpayer, by the end of the month prior to the month of payment, the competent collection document, with discrimination of the properties, their parts capable of independent use, respective taxable property value and the tax payable to each municipality of the location of the properties.".

  10. Now, considering that the registration in the property register of real property in vertical ownership, constituted by different parts, floors or divisions with independent use, pursuant to the Municipal Property Tax Code, using the criterion already referred to in article 67, no. 2 of the Stamp Tax Code – "to matters not regulated in the present code concerning Entry 28 of the General Table, the CPII shall apply subsidiarily." – is subject to the same registration rules as real property established in condominium ownership, and the respective Municipal Property Tax as well as the Stamp Tax Entry 28.1 are assessed individually in relation to each of the parts, it is clear that if the legal criterion imposes the issuance of individualized assessments for the autonomous parts of properties in vertical ownership, in the same manner as it establishes for properties in condominium ownership, the same must be observed for the definition of the rule of incidence of the Stamp Tax Entry 28.1.

  11. Considering what has been stated in the preceding points, the incidence of stamp tax occurs only if one of the parts, floors or divisions with independent use presents a taxable property value greater than € 1,000,000.00, which in the present case does not occur, as appears from the urban property record of the property in question (see point A of no. 12).

  12. Therefore, the Tax Authority can never consider as the reference value for the incidence of stamp tax the total value of the property, when the legislator itself established a different rule under the Municipal Property Tax Code. As stated, pursuant to that code, there is no difference between a building in condominium ownership and a building in vertical or full ownership constituted by parts or divisions capable of independent use – this being the code applicable to matters not regulated with regard to Entry 28 of the General Stamp Tax Table (cf. article 67, no. 2 of Law 55-A/2012, of 29/10).

  13. This equal treatment which the legislator did not consider including in the rule of incidence set forth in Entry 28.1 of the General Stamp Tax Table, it also did in article 119 of the Municipal Property Tax Code, when it establishes that the tax should be assessed individually on each part or division capable of independent use, taking into account the taxable property value of each of these parts or divisions capable of independent use, individually considered. From which it follows that the taxable property value that should be considered in the application of Entry 28.1 of the General Stamp Tax Table is that which results from the letter and purpose of articles 2, 6 no. 1 paragraph a), 12 and 119, all of the Municipal Property Tax Code.

  14. On what we have just expounded, and in the exact terms in which it is presented here, the decision rendered in case no. 204/2014-T pronounced, which has the same factuality and legal framework underlying the present request for arbitral decision, but with reference to the Stamp Tax assessments under Entry 28.1 for the year 2012. Since we see no reason to depart from the solution adopted there, which annulled the said assessments of the year 2012, we transcribe what was stated there regarding the equal treatment given by the legislator.

  15. Now, "it is clear that the legislator, in the Municipal Property Tax Code, did not intend to adhere to the strictness of the legal form of real property rights incident on the properties, but rather to the use given to them, namely in cases where a property, in legal terms, is composed of different floors or parts capable of independent use.

It may be said, not without reason, that the legislator, for purposes of taxation under the Municipal Property Tax, chose to confer autonomy, independence, to each of the parts or each of the floors of a single property, provided that some and others show themselves capable of independent use, to the point of providing for the individualized registration in the register of each of these independent parts and of imposing on taxation under the Municipal Property Tax a collection also autonomous. Despite the legal existence of a single property, it is the legislator itself that not only recommends but imposes the autonomous consideration of each of the independent parts, for purposes of taxation of property.".

  1. On this issue, regarding the duty to apply indifferently – to both types of residential urban properties, those established in condominium ownership and those in full or vertical ownership – the rule of incidence set forth in Entry 28.1 of the General Stamp Tax Table, we agree with the understanding expressed in the Arbitral Decision rendered in case no. 35/2014-T when it states that "thus, this should apply to the taxable property value assigned by the Respondent, through general appraisal, to each of the parts or divisions capable of independent use.".

  2. In light of what we have just expounded, we cannot agree with, with due respect, the position of the Respondent, insofar as it is not acceptable that the criterion intended, of considering the value of the sum of the taxable property values assigned to the parts, floors or divisions with independent use, with the argument that the property is not established in a regime of condominium ownership, does not find legal support and is contrary to the criterion applicable under the Municipal Property Tax Code and, by reference, under Stamp Tax.

  3. In the case at hand, the property in question is in full ownership and contains 6 floors and/or divisions with independent use, of which only the ground floor and third floor are intended for residential use, as was proven by document no. 4 attached to the Request for Arbitral Decision, and none of these floors has a taxable property value equal to or greater than €1,000,000.00, as results from the documents attached to the file, whereby it is concluded that there is no verification of the legal prerequisite for Stamp Tax incidence provided in Entry 28.1 of the General Stamp Tax Table.

  4. Since the Arbitral Tribunal did not accept the Respondent's understanding, given the illegality of the assessment acts subject to the present decision, the tribunal refrains from analyzing the issues relating to any possible unconstitutionality of the application of the rule in question and, likewise, the subsidiary request presented by the Applicants, as manifestly unnecessary.

VI – DECISION

Therefore, this Arbitral Tribunal decides:

a) In favor of the Applicants' request, considering illegal the aforementioned Stamp Tax assessment acts, due to error as to the factual and legal prerequisites and violation of article 1, no. 1 of the Stamp Tax Code and Entry 28.1 of the General Stamp Tax Table, said acts being annulled, given the fact that none of the parts or divisions capable of independent use, subject to the assessment acts which are the subject of the arbitral decision, have a taxable property value greater than € 1,000,000.00, as was demonstrated in these proceedings.

b) Condemn the Respondent to refund the amount wrongfully assessed and paid in the amount of € 8,674.08 (eight thousand, six hundred and seventy-four euros and eight cents).

c) Further condemn the Respondent, since we are dealing with a defect relating to the tax legal relationship, as the existence of this defect implied the injury of a subjective legal situation, embodied in the imposition on the Applicants of the performance of a patrimonial obligation contrary to law, to the payment of compensatory interest, in accordance with the terms and conditions provided by law (cf. articles 43 and 100 of the General Tax Law and article 61 of the Tax Procedure and Process Code).

The value of the case is fixed at € 8,674.08, pursuant to article 97-A, no. 1, a), of the Tax Procedure and Process Code, applicable by virtue of paragraphs a) and b) of no. 1 of article 29 of RJAT and no. 2 of article 3 of the Regulation of Costs in Tax Arbitration Proceedings.

The amount of costs is fixed at € 918.00, pursuant to Table I of the Regulation of Costs of Tax Arbitration Proceedings, to be paid by the Tax Authority and Customs Authority, since the request was entirely successful, pursuant to articles 12, no. 2, and 22, no. 4, both of RJAT, and article 4, no. 4, of the said Regulation.

Notify the parties accordingly.

Lisbon, 27 August 2015.

The Arbitrator

(Jorge Carita)

Frequently Asked Questions

Automatically Created

Is Stamp Tax under Verba 28.1 of the TGIS applicable to each independent unit or to the total value of a building in vertical ownership?
Based on consistent CAAD arbitral jurisprudence, Stamp Tax under Entry 28.1 of the TGIS applies to each independent unit individually, not to the aggregated total value of a building in vertical or total ownership. Article 23(7) of the Stamp Tax Code mandates application of IMI valuation rules, and Article 113(1) of the IMI Code requires assessment of each independent unit separately as registered in the property matrix with its respective VPT. The €1,000,000 threshold must be met by each individual unit's VPT to trigger Entry 28.1 taxation. The Tax Authority cannot artificially aggregate the VPT of multiple independent units to reach the statutory threshold when each unit individually falls below €1,000,000. This interpretation respects the legal framework governing property valuation and prevents distortion of the legislative intent behind Entry 28.1, which targets high-value individual properties rather than creating fictitious property values through mathematical aggregation of separately registered units.
How are IMI valuation rules applied to Stamp Tax liquidation on high-value urban properties under Article 23(7) of the Código do IS?
Article 23(7) of the Stamp Tax Code (Código do IS) establishes a mandatory integration mechanism whereby IMI (Municipal Property Tax) valuation rules apply to Stamp Tax assessment under Entry 28.1. Specifically, Article 5(1)(u) of the Stamp Tax Code defines the taxable property value as that determined under the IMI Code. Consequently, Article 113(1) of the IMI Code governs the liquidation process, requiring that IMI be assessed separately for each part capable of independent use as individually registered in the property matrix (matriz predial) with its discriminated VPT. Since IMI operates on a per-unit basis for properties with independent fractions, Stamp Tax under Entry 28.1 must follow the same methodology. The legislator's explicit cross-reference to IMI rules prevents the Tax Authority from adopting alternative valuation methods. This legal integration ensures consistency between property tax regimes and means the VPT relevant for Entry 28.1 purposes is the value attributed to each independent unit in the property register, not an aggregated figure that lacks legal foundation in either the Stamp Tax Code or the IMI Code.
Can the tax authority aggregate the patrimonial values of independent units to trigger the Verba 28 threshold for Stamp Tax purposes?
No, the Tax Authority cannot lawfully aggregate the patrimonial values of independent units to trigger the Entry 28.1 threshold for Stamp Tax purposes. Such aggregation constitutes legal error (erro sobre os pressupostos de direito) because it lacks statutory foundation and violates the mandatory application of IMI valuation principles under Article 23(7) of the Stamp Tax Code. Entry 28.1 taxes 'urban properties' (prédios urbanos) with VPT equal to or exceeding €1,000,000, but when a building comprises multiple independent units separately registered in the property matrix, each unit constitutes the relevant property unit for tax purposes. The IMI framework treats each independent fraction as a distinct taxable object with its own VPT, and this individualized treatment must carry through to Stamp Tax assessment. Aggregation creates a fictional property value not recognized in the legal register and contradicts the principle of legality in taxation. Abundant CAAD jurisprudence, including the precedent decision 204/2014-T referenced in this case, consistently annuls assessments based on such aggregation, establishing that Entry 28.1 cannot apply to individual units merely because their mathematical sum exceeds the threshold when each unit individually remains below €1,000,000.
What legal grounds can taxpayers invoke to challenge Stamp Tax assessments on buildings held in total or vertical ownership?
Taxpayers can invoke multiple legal grounds to challenge Stamp Tax assessments on buildings in total or vertical ownership: (1) Error as to legal prerequisites (erro sobre os pressupostos de direito) - arguing the Tax Authority misapplied Entry 28.1 by aggregating VPT of independent units contrary to IMI valuation rules mandated by Article 23(7) of the Stamp Tax Code; (2) Error as to factual prerequisites (erro sobre os pressupostos de facto) - contesting that specific units lack residential allocation when Entry 28.1 targets residential properties; (3) Violation of law (violação de lei) - asserting the assessment contradicts Articles 5(1)(u), 23(7) of the Stamp Tax Code and Article 113(1) of the IMI Code; (4) Unconstitutionality - claiming the law violates the equality principle by arbitrarily discriminating between condominium ownership and vertical ownership with identical economic substance; (5) Defective reasoning - challenging payment documents that fail to identify the underlying assessment acts; (6) Precedent - citing uniform CAAD jurisprudence annulling similar assessments, including prior decisions on the same property. Taxpayers should emphasize that IMI rules require per-unit assessment and that Entry 28.1's threshold applies to each independent unit's individual VPT, not artificially aggregated totals.
What is the CAAD arbitral procedure for contesting multiple Stamp Tax liquidations on a single urban property with independent units?
The CAAD arbitral procedure for contesting multiple Stamp Tax liquidations on a single property with independent units follows the framework established in Decree-Law 10/2011 (RJAT). Taxpayers submit a request for constitution of an arbitral tribunal under Articles 2(1)(a) and 10 of RJAT, identifying all contested assessment acts (typically one per independent unit), the total amount in dispute, and legal grounds for annulment. The request should reference applicable legal provisions (Entry 28.1 TGIS, Articles 23(7) and 5(1)(u) of the Stamp Tax Code, Article 113(1) of the IMI Code) and relevant CAAD precedents. Taxpayers may choose to appoint an arbitrator or allow the Ethics Council to designate a sole arbitrator per Article 6(1) and 11(1)(b) of RJAT. After tribunal constitution, the Tax Authority submits its response. Parties may waive the hearing under Article 18 of RJAT if the matter involves purely legal interpretation without disputed facts. The arbitrator issues a decision addressing whether Entry 28.1 applies to individual units or aggregated values, typically examining prior CAAD jurisprudence on vertical ownership properties. Given consistent favorable precedents, taxpayers have strong grounds for obtaining annulment of assessments based on improper VPT aggregation.