Process: 113/2016-T

Date: October 7, 2016

Tax Type: Selo

Source: Original CAAD Decision

Summary

In Process 113/2016-T, the CAAD (Centro de Arbitragem Administrativa) addressed stamp tax (Imposto do Selo) assessments on construction land under Entry 28.1 of the General Stamp Tax Table (TGIS). The Claimant challenged stamp tax assessments for 2014 and 2015, totaling EUR 45,174.40, arguing the assessments were illegal. The arbitral tribunal examined the legal framework governing stamp tax on terrenos para construção (construction land), analyzing whether the assessments complied with applicable tax legislation. The tribunal considered arguments regarding the constitutionality of Entry 28.1 of the TGIS, as well as procedural aspects concerning the taxpayer's right to challenge assessment acts through tax arbitration. The decision applied Article 24 of the RJAT (Regime Jurídico da Arbitragem em Matéria Tributária), which establishes that arbitral awards bind the tax administration and require restoration of the situation that would exist if the illegal tax act had not been performed. The tribunal ruled in favor of the Claimant, annulling both stamp tax assessments and ordering the Respondent (tax administration) to refund all amounts unduly paid. Pursuant to Article 61 of the CPPT and Article 43 of the LGT, the tribunal recognized the taxpayer's right to compensatory interest at the legal rate, calculated from the payment date until issuance of the credit note. The tribunal attributed full responsibility for arbitration costs (EUR 2,142.00) to the Respondent, applying the principle of proportionality under Article 22(4) of the RJAT. This decision demonstrates that taxpayers can successfully challenge stamp tax assessments on construction land through CAAD arbitration when assessments are found to be illegal or improperly applied.

Full Decision

, article 24º of the RJAT (in accordance with what is there established), "the arbitral award on the merits of the claim that is not subject to appeal or further challenge binds the tax administration from the end of the deadline set for appeal or further challenge, the administration having to restore the situation that would exist if the tax act subject to the arbitral award had not been performed, adopting the acts and operations necessary for that purpose", whereby there must be grounds for reimbursement of the amounts paid by the Claimant, as a way of achieving restoration of the situation that would exist if the illegality had not been committed.

7.21. Thus, in view of what is established in article 61º of the Code of Tax Procedure and Process (CPPT), the requirements for the right to compensatory interest being met (that is, the existence of error attributable to the services being verified from which resulted payment of the tax debt in an amount greater than that legally owed, as provided for in no. 1, article 43º of the LGT), the Claimant has the right to compensatory interest, at the legal rate, calculated on the sum(s) paid, in the scope of the stamp tax assessment(s) that was/were paid by the Claimant (and object of the request for arbitral pronouncement), which will be counted in accordance with the provisions of no. 3 of article 61º of the CPPT, that is, from the date of payment of the undue tax until the date of issuance of the respective credit note.

On responsibility for payment of arbitration costs

7.22. In accordance with the provisions of article 22º, no. 4, of the RJAT, "the arbitral award issued by the arbitral tribunal includes the fixing of the amount and apportionment among the parties of the costs directly resulting from the arbitration process".

7.23. Thus, in accordance with the provisions of article 527º, no. 1 of the CPC (by virtue of 29º, no. 1, paragraph e) of the RJAT), it should be established that the Party that caused such costs or, absent a judgment on the merits, whoever benefited from the process will be condemned thereto.

7.24. In this scope, no. 2 of the said article makes concrete the expression "caused such costs", according to the principle of failure of the claim, understanding that the losing party causes the costs of the process, in proportion to the extent of its loss.

7.25. In the case under analysis, taking into account the above, the principle of proportionality imposes that full responsibility for costs be attributed to the Respondent, in accordance with the provisions of article 12º, no. 2 of the RJAT and article 4º, no. 4 of the Rules of Costs in Arbitration Processes.

8. DECISION

8.1. Taking into account the analysis effected in the previous Chapter, this Arbitral Tribunal decided:

8.1.1. To judge the request for arbitral pronouncement submitted by the Claimant as founded, condemning the Respondent to annulment of the stamp tax assessments object of the claim (and identified in this process), relating to the years 2014 and 2015, with the consequent return of the sums unduly paid, increased by compensatory interest at the legal rate, counted in accordance with legal terms;

8.1.2. To condemn the Respondent in the payment of the costs of the present process.

Value of the case: Taking into account the provisions of articles 306º, no. 2 of the CPC, article 97º-A, no. 1 of the CPPT and article 3º, no. 2 of the Rules of Costs in Tax Arbitration Processes, as well as the above stated in Chapter 5 of this decision (point 5.5.), the value of the case is fixed at EUR 45.174,40.

Costs of the process: In accordance with the provisions of Table I of the Rules of Costs of Tax Arbitration Processes, the value of the costs of the Arbitration Process is fixed at EUR 2.142,00, at the charge of the Respondent, in accordance with article 22º, no. 4 of the RJAT.

Notify.

Lisbon, 7 October 2016

The Arbitrator,

Sílvia Oliveira

[1] The drafting of this decision is governed by the spelling prior to the 1990 Orthographic Agreement, except as regards the transcriptions made.

[2] In this scope, the Claimant cites the example of arbitral decisions no. 356/2014-T, no. 357/2014-T, no. 408/2014-T and no. 728/2014-T.

[3] In this sense, the Claimant cites the arbitral awards issued in proceedings nos. 205/2013-T, 206/2013-T, 225/2013-T and 285/2014-T

[4] In this scope, the Claimant refers to the judgments of the Superior Administrative Court issued in the scope of proceedings no. 01685/13 and 0877/13.

[5] Additionally, the Claimant refers to the judgment of the Constitutional Court, issued in the scope of proceedings no. 592/14 (award no. 410/2015, of 29 September), in accordance with which "the interpretation of article 54.º of the CPPT was declared unconstitutional in that, qualifying as a burden and not as a faculty of the taxpayer the judicial challenge of immediately lesive interlocutory acts practised in the scope of the tax administrative procedure, it prevented the challenge of final decisions of tax assessment on the grounds of defects of such acts, by violation of the principle of effective judicial protection and the principle of justice, inscribed in arts. 20.º and 268.º, 4, of the Constitution of the Portuguese Republic".

[6] In this scope, it should be noted that as a result of the request submitted on 13 May 2016, by the Claimant, and allowed by arbitral order dated 15 July 2016, it is two tax assessment acts of Stamp Tax that are intended to be annulled – one relating to the year 2014 and another relating to the year 2015.

[7] In this scope, the Respondent cites arbitral decision no. 728/2014-T.

[8] In that sense, the Respondent cites arbitral decisions no. 726/2014-T, no. 736/2014-T and no. 797/2014-T.

[9] In this scope, the Respondent refers that "(…) raised the question of the unconstitutionality of item 28 of the TGIS, added by Law n.º 55-A/2012, of 29 October (…) and, subsequently, amended by Law n.º 83-C/2013, of 31 December), specifically the violation of the principles of tax equality, contributive capacity and proportionality, the Constitutional Court (…) understood that the rule reviewed, i.e., item 28 of the TGIS, does not suffer from any unconstitutionality, there being no violation of the constitutional principles shaping tax law, specifically, the principles of tax equality, contributive capacity and proportionality (…)".

[10] As a result of the request submitted on 13 May 2016, by the Claimant, and allowed by arbitral order dated 15 July 2016.

[11] In this sense, see in particular arbitral decision no. 108/2016-T, of 23 June.

[12] Being that with respect to Stamp Tax relating to the year 2015, whose assessment and first installment were notified already in the course of the present process, there is no verification of any expiration for the expansion of the claim, in accordance with the request submitted, by the Claimant, on 13 May 2016 (and allowed by arbitral order dated 15 July 2016) (see Chapter 5., point 5.3.).

[13] The provision in the said article should be understood in conjunction with the provisions of article 97º of the CPPT, in which are indicated the claims object of the tax judicial process, providing in paragraph a) of its no. 1 that the tax judicial process comprise "the challenge of the assessment of taxes, including parafiscal taxes (…)".

[14] Additionally, and as a result of the request for expansion of the claim submitted on 13 May 2016 and duly allowed on 15 July 2016, the Claimant also challenges the stamp tax assessment act relating to the year 2015, in the same amount.

[15] In DIREITO FISCAL, 3rd Edition, Almedina, 2005, page 318.

[16] In this sense, see arbitral award issued in the scope of Process no. 205/2013-T, of 7 March 2014, in accordance with which "from the circumstance that the value of the [Stamp Tax] assessment can be paid in several installments, it does not result that there are three assessments (…) rather, it is a matter of one assessment that can be paid in several installments".

[17] On this matter, although issued under review of another tax (and as regards interlocutory acts of the tax procedure), attention should be paid to what is stated in the Judgment AC TCAN no. 00264/10.1BEBRG, of 16 October 2014, in accordance with which it is stated that "by virtue of the principle of unitary challenge, enshrined in article 54º of the CPPT, it is possible, in principle, to challenge only the final act of the tax procedure" (assessment) "given that only that act reaches or injures, immediately, the legal sphere of the taxpayer" [that is, any other type of act that is not the assessment "(…) is indeed challengeable (…) through the assessment act (…) practised, whereby it is thus assured the possibility of judicial review of its legality".

[18] In this sense, see in particular arbitral decision no. 108/2016-T, of 23 June.

[19] In this respect, the Claimant cites the Judgment of the Constitutional Court no. 410/2015, of 29 September, in accordance with which "this prejudice caused to the taxpayer occurred in a context in which the principle of unitary challenge unquestionably prevails and in which the autonomous challenge of lesive or interlocutory acts practised in the scope of the tax administrative procedure is set forth by law as a faculty of the taxpayer, justified only within the framework of strengthening its guarantees".

[20] In this sense see arbitral order of 16 July 2016.

[21] Attached with the claim.

[22] In effect, as Manuel de Andrade argues (in "Elementary Notions of Civil Procedure", 1976, page 207), in general terms, the burden of proof lies, in accordance with the provisions of article 342º of the Civil Code, "with he who invokes a right (…)" performing "(…) proof of the facts constitutive of the same (…)", the burden lying "(…) for proof of the facts extinctive of the right (…)" with "he against whom the invocation is made". On the other hand, "the counter-proof (or contrary proof) is intended only to render uncertain the fact aimed at, to create doubt in the mind of the judge (a non liquet)".

[23] Attached with the claim.

[24] Attached with the request for expansion of the claim submitted, by the Claimant, on 13 May 2016.

[25] Attached with the claim.

[26] See Leite de Campos, Diogo, Silva Rodrigues, Benjamim, Sousa, Jorge Lopes, in "General Tax Act - Annotated and Commented", 4th Ed., 2012, page 116).

[27] On the matter of compensatory interest reference can be made to the same author (Sousa, Jorge Lopes), Interest in Tax Relations, in "Fundamental Problems of Tax Law", Lisbon, 1999, page 155 et seq).

Frequently Asked Questions

Automatically Created

Is stamp tax (Imposto do Selo) applicable to construction land under Entry 28.1 of the General Stamp Tax Table (TGIS)?
Yes, stamp tax (Imposto do Selo) is applicable to construction land under Entry 28.1 of the TGIS (Tabela Geral do Imposto do Selo). However, as Process 113/2016-T demonstrates, such assessments must comply with all legal requirements and can be challenged if improperly applied. The Constitutional Court has reviewed Entry 28.1 and found it constitutional, not violating principles of tax equality, contributive capacity, or proportionality. Nevertheless, individual assessments can be annulled if the tax administration commits errors in application.
Can taxpayers challenge stamp tax assessments on construction land through CAAD tax arbitration?
Yes, taxpayers can challenge stamp tax assessments on construction land through CAAD (Centro de Arbitragem Administrativa) tax arbitration. Process 113/2016-T confirms that stamp tax assessment acts are subject to arbitral review under the RJAT (Regime Jurídico da Arbitragem em Matéria Tributária). The arbitral tribunal has jurisdiction to examine the legality of stamp tax assessments under Entry 28.1 of the TGIS and can order their annulment when found to be illegal or improperly applied.
What is the legal basis for requesting annulment of a stamp tax assessment on terrenos para construção?
The legal basis for requesting annulment of a stamp tax assessment on terrenos para construção includes: (1) Article 2 of the RJAT, which grants arbitral tribunals jurisdiction over tax assessment challenges; (2) Article 97 of the CPPT, which identifies tax assessments as subject to judicial review; (3) Article 54 of the CPPT regarding challenging immediately harmful acts; and (4) substantive grounds showing the assessment violates applicable stamp tax legislation or constitutional principles. The taxpayer must demonstrate errors attributable to the tax administration that resulted in illegal or excessive tax collection.
Are taxpayers entitled to a refund with compensatory interest after a successful stamp tax arbitration decision?
Yes, taxpayers are entitled to a refund with compensatory interest after a successful stamp tax arbitration decision. Article 24 of the RJAT requires the tax administration to restore the situation that would exist if the illegal tax act had not been performed. Article 61 of the CPPT and Article 43(1) of the LGT establish the right to compensatory interest at the legal rate when error attributable to the tax services results in payment of tax in excess of what is legally owed. Interest is calculated from the date of payment until issuance of the credit note, as determined in Process 113/2016-T.
How does the CAAD arbitration procedure work for disputes involving Verba 28.1 of the TGIS on high-value properties?
The CAAD arbitration procedure for disputes involving Entry 28.1 of the TGIS works as follows: (1) The taxpayer files an arbitration request challenging the stamp tax assessment; (2) The case value is determined based on the disputed amount (EUR 45,174.40 in this case); (3) An arbitrator is appointed to examine the legality of the assessment; (4) Both parties present arguments regarding the application of Entry 28.1 and relevant legal provisions; (5) The tribunal issues a binding arbitral award; (6) If the taxpayer prevails, the tax administration must annul the assessment, refund amounts paid with compensatory interest, and pay arbitration costs. The process is governed by the RJAT and applicable procedural rules, with costs allocated based on the principle of failure.