Process: 123/2014-T

Date: August 16, 2014

Tax Type: Selo

Source: Original CAAD Decision

Summary

This CAAD arbitration case (Process 123/2014-T) concerns the application of Stamp Tax under item 28.1 of the TGIS to urban land classified as 'land for construction.' The claimant company challenged a 2012 assessment totaling €36,574.90, arguing that item 28.1 should not apply to building land since it is not inherently habitable property. The company contended that the land, intended for their real estate development business, would produce multiple dwellings each valued below €1,000,000 and constituted raw material rather than a luxury asset. Additionally, the claimant alleged unconstitutionality, arguing that taxing companies owning land for residential construction while exempting those with land for commercial buildings violated the constitutional principle of equality. The Tax Authority countered that 'properties with residential use' is a broader concept than 'properties intended for housing,' encompassing both built properties and building land. The AT argued that the valuation methodology under the IMI Code applies use coefficients to building land based on authorized construction capacity, making item 28.1 applicable. The AT maintained that the legislation is general, abstract, and constitutional. The Singular Arbitral Tribunal was established on April 1, 2014, with both parties waiving the oral hearing and witness testimony. The tribunal proceeded to decision based on written submissions, though the final ruling is not included in this excerpt.

Full Decision

ENGLISH TRANSLATION

THE PARTIES

Claimant: ..., Lda., NIPC PT ..., with address at Praça ..., ….

Respondent: Tax and Customs Authority (AT).

DECISION

REPORT

a) On 13.02.2014, the limited liability company ..., Lda., NIPC PT ..., (hereinafter referred to as Claimant) submitted to CAAD a request seeking, under the Legal Regime of Arbitration in Tax Matters (RJAT), the establishment of a Singular Arbitral Tribunal.

b) The request is signed by a lawyer whose power of attorney was attached.

THE REQUEST

c) The Claimant petitions for the annulment of the assessment of Stamp Tax (IS) of item 28.1 of the TGIS, for the year 2012, identified by documents 2013 ... (1st installment) 2013 ... (2nd installment) and 2013 ... (3rd installment), generating a total collection in the amount of 36,574.90 €, relating to the urban property of which it is the owner, of the type "land for construction", registered in the urban real property register of the Municipality-Parish of … (extinct) under article ... … (E-U-...) – current registration article ...º of the same Municipality – Union of Parishes of ….

d) It concludes that the tax act under scrutiny suffers from illegality embodied in an erroneous reading of item 28.1 of the TGIS;

e) and that even if the reading of the law implemented by the AT is considered correct, it suffers from illegality (in a more serious form) because it "was founded on an unconstitutional norm".

OF THE ARBITRAL TRIBUNAL

f) The request for arbitral pronouncement was accepted by the President of CAAD on 14.02.2014 and notified to the AT on 17.02.2014.

g) By the CAAD Deontological Council, the signatory of this decision was appointed as arbitrator, and the parties were notified thereof on 01.04.2014.

h) Therefore, the Singular Arbitral Tribunal (TAS) has been, since 01.04.2014, regularly established to examine and decide on the subject matter of this dispute.

i) All these acts are documented in the communication of establishment of the TAS dated 16.04.2014 which is hereby incorporated herein.

j) Since this case raises questions identical to those already raised in many other cases already decided at CAAD, the TAS by order of 22.05.2014 decided to waive the meeting of parties referred to in article 18º of the RJAT, unless they objected to it.

k) Having a witness been listed by the Claimant, following a request by the AT, by order of the TAS of 22.05.2014, a decision was made regarding the unnecessary nature of her examination, after hearing the Claimant.

l) By order of the TAS of 30.05.2014, the parties were invited to pronounce themselves on whether they also waived the holding of submissions.

m) Both the Claimant and the AT gave their consent to the non-holding of the meeting referred to in article 18º of the RJAT and likewise, specifically, to the non-examination of the witness listed and production of complementary submissions.

n) Therefore, the meeting provided for in article 18º of the RJAT did not take place, no submissions by the parties were made, in addition to the witness listed in the request for arbitral pronouncement not being examined.

PROCEDURAL REQUIREMENTS

o) Capacity, legitimacy and representation - the parties enjoy legal personality and capacity, are legitimate and are duly represented.

p) Adversarial procedure - the AT attached to the case, on 22.05.2014, the response to the request for pronouncement presented by the Claimant. All orders of the TAS and all requests and documents attached by the parties were regularly notified.

q) Dilatory exceptions - the case does not suffer from nullities and the request for arbitral pronouncement is timely since it was presented within the time limit prescribed in paragraph a) of no. 1 of article 10º of the RJAT.

SUMMARY OF THE CLAIMANT'S POSITION

As to the illegality embodied in possible erroneous reading of item 28.1 of the TGIS

r) The Claimant understands that item 28.1 is inapplicable to the ownership of the property indicated above, being land for construction, since "although it has the capacity for buildings to be constructed on it – as with other types of buildings – it is not, in itself, a property susceptible to being inhabited".

s) And that "given its area and high construction capacity, buildings exclusively intended for housing will not arise". Concluding: "an important part of the property will have other purposes" and that "construction will produce buildings with a plurality of dwellings, each worth less than 1,000,000.00 €".

t) It further argues that, given the object of the Claimant's business (purchase for resale of real estate), the real estate asset under taxation constitutes "mere raw material" and a "production factor", concluding that this taxation is equivalent to taxing "reproductive investment rather than taxing luxury goods".

As to the illegality embodied in possible non-conformity with the constitutional text in the reading implemented by the AT of item 28.1 of the TGIS

u) The Claimant furthermore claims non-conformity with the constitutional text of item 28.1 of the TGIS, in the reading implemented in the disputed tax act, to the extent that it would encompass "land for construction of companies that intend to build housing" nibbling at the principle of equality in the dimension set forth in the Fundamental Law, to the extent that "companies owning land for construction of housing would be taxed and companies owning land for construction of buildings for commerce and services would not be, without any reason for this".

SUMMARY OF THE TAX AUTHORITY'S POSITION

As to the illegality embodied in possible erroneous reading of item 28.1 of the TGIS

v) The AT contends that the "notion of use of the urban property is based on the part relating to the valuation of property, which makes sense since the valuation of the property (purpose) incorporates value to the property, constituting a determining fact of distinction (coefficient) for purposes of valuation".

w) "As results from the expression "value of authorized buildings", contained in article 45º-2, of the IMI Code, the legislator opted to determine the application of the valuation methodology of properties in general, to the valuation of land for construction, being therefore applicable to them the use coefficient provided for in article 41º of the IMI Code".

x) And it argues that "for purposes of determining the tax value of land for construction it is clear the application of the use coefficient in the context of valuation, so its consideration for purposes of applying item 28-1 of the TGIS cannot be ignored".

y) It clarifies that "the use of the property (capacity or purpose) is a coefficient that contributes to the valuation of the property, in the determination of tax value, applicable to land for construction".

z) Summarizing its reasoning it ultimately expresses: "that the very item 28 of the TGIS refers to the expression "properties with residential use", appealing to a classification that overlaps the species provided for in no. 1 of article 6º of the IMI Code."

aa) The AT understands "that the concept of "properties with residential use", for purposes of what is provided in item 28 of the TGIS, comprises both built properties and land for construction, given the literal element of the norm", since "the legislator does not refer to "properties intended for housing", having opted for the notion of "residential use", an expression different and broader whose meaning must be found in the need to integrate other realities beyond those identified in article 6º-1, paragraph a), of the IMI Code".

As to the illegality embodied in possible non-conformity with the constitutional text in the reading implemented by the AT of item 28.1 of the TGIS

bb) The AT argues that there is no non-conformity with constitutional principles in the reading of the law that led to the implementation in the disputed act, either because the tax law in this case is general and abstract and respects the principle of isonomia (treating equally what is equal and differently what is different), applying itself indistinctly to all holders of properties with residential use of value exceeding € 1,000,000.00.

cc) It concludes for the legality of the assessment act against the CIS and the CRP, so the disputed assessment should be maintained in the legal order, as it constitutes a correct application of the law to the facts.

II - QUESTIONS FOR THE TRIBUNAL TO RESOLVE

The questions that arise for the Tribunal are solely related to the interpretation and application of rules of law.

On this matter, in particular, CAAD has already pronounced itself in various decisions in which the fundamental question is the same and likewise the STA itself, that is, the scope of the provision of the norm of incidence of items 28 and 28-1 of the TGIS is discussed.

The limit of interpretation is the letter, the text of the norm. What follows is the "task of interconnection and valorization that escapes the literal domain".

Starting from the principle that every norm has a provision and a ruling, the question that arises here is to determine, delimiting, whether the norm of incidence, as it is written – in its provision - (urban properties … with residential use), encompasses or not the legal-tax reality defined in law as "land for construction".

Or rather, in the case of this case, given how the Claimant frames the grounds of the request, namely:

It petitions for the annulment of the stamp tax assessment, based on the illegality of the assessment/inapplicability of item 28.1 of the TGIS … to land for construction, as it is not included in its scope of incidence, understanding that the reading of the law adopted by the AT is erroneous (sections c) and d) of the Report);

and that even if the reading of the law implemented by the AT is considered correct, the same assessment suffers from illegality (in a more serious form) because it "was founded on an unconstitutional norm" (section e) of the Report);

what must be determined is, in the first place, whether the tax assessment act of IS now disputed suffers from any illegality, any non-conformity with the law, namely "error in the qualification of the tax fact" that affects its maintenance in the tax legal order.

The other ground that could lead to the sanction of annulment (non-conformity with the "grundsnorm"), being presented as it was, should only be appreciated if it is concluded that there is no non-conformity of the disputed tax act with the ordinary law in itself, which affects its maintenance in the tax legal order.

It appears to the TAS that the question it must resolve, in the first place, is the following:

Does the tax assessment act of IS now disputed suffer from any non-conformity with the law, namely "error in the qualification of the tax fact" that affects its maintenance in the tax legal order?

The AT did not attach the PA, essentially accepting that documents 2 to 5 attached by the Claimant with the request for pronouncement form what would be its content.

III. PROVEN AND UNPROVEN FACTS. REASONING

The facts that are considered proven for the decision to be adopted are these, indicating the respective documents and/or articles of the Claimant's request and the AT's response regarding the facts admitted by agreement, as reasoning:

  1. The Claimant appears as the owner of full ownership of the urban property of the type "land for construction" registered in the urban real property register of the Municipality-Parish of … (extinct) under article ... … (E-U-...) – current registration article ...º of the same Municipality – Union of Parishes of … – Document no. 2 (urban property record) attached with the request for pronouncement and article 2º of the request for pronouncement and article 1º of the AT's response;

  2. The description of the urban property is made as follows: "Type of property: land for construction" - Document no. 2 (urban property record) attached with the request for pronouncement;

  3. Document no. 2 (urban property record) attached with the request for pronouncement in "valuation data" refers to "type of location coefficient: housing" and contains a grid indicating "Ca – 1,00";

  4. The property has a current tax value (CIMI) of 3,849,508.23 euros determined in 2013 - Document no. 2 (urban property record) attached with the request for pronouncement; and it appears from the payment slips indicated in 1) that in 2012 it had a TPS of 36,574.90 Euros – Documents 3 to 5 attached with the request for pronouncement;

  5. And such tax value resulted from "IMI Form 1 no. ... filed on 2010.02.04, valuation sheet 3082760, valued on 2010.09.21" - Document no. 2 (urban property record) attached with the request for pronouncement;

  6. The Claimant was notified on an undetermined date of the assessment of Stamp Tax (IS) of item 28.1 of the TGIS, for the year 2012, identified by documents 2013 ... (1st installment) 2013 ... (2nd installment) and 2013 ... (3rd installment), generating a total collection in the amount of 36,574.90 € - articles 4º, 5º and 7º of the request for pronouncement and Documents nos. 3 to 5 attached with the request for pronouncement;

  7. This tax assessed on the exclusive basis (without any other type of reasoning) on item 28.1 of the TGIS, with the wording given to it by Law 55-A/2012, of 29 October - articles 4º, 5º, 7º and 8º of the request for pronouncement and Documents nos. 3 to 5 attached with the request for pronouncement.

There is no other factuality alleged that is relevant for the correct composition of the dispute.

IV. APPRECIATION OF THE QUESTIONS FOR THE TRIBUNAL TO RESOLVE

It appears to us that with the creation of a new item in the TGIS, item 28, (by article 4º of Law 55-A/2012, of 29.10) essentially creating a new "fact or legal situation" subject to tax, it was only intended to broaden the incidence of stamp tax to a new legal-factual reality, but without altering the division of the various species of urban properties existing.

It was not intended, as it appears to us, to create a new classification of urban properties in overlay of the species that are provided for in no. 1 of article 6º of the IMI Code.

The tax act in question occurred during the validity of the previous wording of item 28.1 of the TGIS so the current wording given to it by article 194º of Law no. 83-C/2013, of 31 December, (State Budget for 2014) is not applicable here, since it only applies as of 1 January 2014.

We are thus, only and solely, within the scope of the activity of interpretation and application of norms, that is, in the task of delimiting the legal-factual situations that should be considered as comprised in the norm of incidence of this new tax and which results from the combination of items 28 and 28-1 of the TGIS.

But then the law, its literal element which is always the limit of any interpretation, in item 28-1 TGIS, adds "… for property with residential use".

That is, this concrete norm of incidence of the tax should not then be interpreted, delimited, as if it had the literalness of "residential urban properties", this is because the interpreter, in respect of the command of no. 3 of article 9º of the Civil Code, cannot start from the assumption that the legislator did not know the exact terms of no. 1 of article 6º of the IMI Code that makes the division of the various species of urban properties.

But it also does not seem that it can be understood that in the norm of incidence there fits automatically beyond the species of urban properties "residential", the species "land for construction".

It seems to us, therefore, that given the literal element of the norm of incidence (revealing the will of the legislator) chosen by the legislator: "urban properties … with residential use" it was intended to reach other species of urban properties, beyond the "urban properties …residential" according to the division of no. 1 of article 6º of the IMI Code.

We do not, however, mean by this that the species of urban properties "land for construction" (or another species of urban properties) is clearly and plainly (that is, "ope legis") comprised in the norm of incidence of item 28-1 of the TGIS.

To this end we transcribe, aiming at simplification and standardization, what is referred to in the arbitral decision CAAD Case 48/2013-T (by way of exemplification), in the part to which we adhere:

"The subjection to stamp tax of properties with residential use resulted from the addition of item 28 of the General Table of Stamp Tax, effected by article 4º of Law 55-A/2012, of 29/10, which typified the following tax facts:

28 – Ownership, usufruct or right of superficies of urban properties whose tax value contained in the matrix, according to the terms of the Real Property Tax Code (IMI Code), is equal to or greater than € 1,000,000 – on the tax value used for purposes of IMI:

28-1 – For property with residential use - 1%;

28-2 – For property, when the taxpayers who are not individuals are resident in a country, territory or region subject to a clearly more favorable tax regime, contained in the list approved by order of the Minister of Finance – 7.5%.

…

Regarding the situations typified in item 28.1 only properties with residential use are subject.

Law no. 55-A/2012, of 29 October, nowhere clarifies what are properties with residential use. However, in no. 2 of article 67º of the Stamp Tax Code, added by the said law, it was stipulated that "to matters not regulated in this Code relating to item 28 of the General Table, the IMI Code applies, subsidiarily".

The IMI Code also does not clarify what are properties with residential use, but only what are the various types of properties, qualifying in no. 2 of article 6º as "residential, commercial, industrial or service buildings as such licensed or, in the absence of license, that have as their normal purpose each of these purposes".

That is, for the IMI Code, both are residential properties licensed for housing, even if they are not having that use, as well as, in the case of lack of license, that have as their normal purpose that purpose.

As for land for construction, which are of interest in this case, given the assessment effected and disputed over land for construction, the IMI Code, in no. 3 of article 6º, tells us that "they are those located within or outside an urban agglomeration, for which a license or authorization for land subdivision or construction operations has been granted, and also those that have been so declared in the acquisition title, excepting lands in which the competent entities prohibit any of those operations, namely those located in green areas, protected areas or that, in accordance with municipal spatial planning plans, are intended for spaces, infrastructure or public facilities".

From the two norms transcribed above it is not possible to extract what the legislator intended to say when it speaks of properties with residential use.

Law no. 55-A/2012, of 29/10, has no preamble, so from it it is not possible to withdraw the intention of the legislator.

Such law of the National Assembly originated from the bill no. 96/XII (2nd), which, in the statement of grounds speaks of the introduction of fiscal measures inserted in a broader set of measures to combat the budget deficit.

In the statement of grounds of the said bill, it is said that, "these measures are fundamental to strengthen the principle of social equity in austerity, ensuring an effective distribution of the sacrifices necessary to fulfill the adjustment program. The Government is strongly committed to ensuring that the distribution of those sacrifices will be made by all and not just by those who live on income from their work. In accordance with that objective, this law extends the taxation of capital and property, equitably encompassing a broad set of sectors of Portuguese society".

In that statement of grounds it is further said that, in addition to the increase in taxation of capital income and securities capital gains, a tax is created under stamp tax affecting urban properties with residential use whose tax value is equal to or greater than one million euros.

That is, in such statement of grounds, neither is it clarified what is meant by urban properties with residential use.

…

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

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

In the demanding period the country is going through, during which it is obliged to comply with the economic and financial assistance program, it becomes even more pressing to assert the principle of equity. It cannot always be the same - employees and pensioners, bearing the fiscal charges.

For the tax system to be more just it is decisive to promote the expansion of the tax base requiring increased effort from taxpayers with higher incomes and thus protecting Portuguese families with lower incomes.

For the tax system to promote more equality it is fundamental that the effort of budget consolidation is distributed among all types of income encompassing with special emphasis capital income and high-value properties. This matter, recall, was extensively addressed in the Constitutional Court ruling.

Finally, for the tax system to be more equitable, it is crucial that everyone be called upon to contribute according to their capacity to contribute, giving the tax administration strengthened powers to control and audit situations of fraud and tax evasion.

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

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

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

In their interventions, in the discussion of such bill, the deputies Pedro Filipe Soares, from BE, and Paulo Sá, from PCP, speak of the taxation of luxury real estate assets, with references being made to previous bills on the same subject that were not approved."

First of all, it must be noted that there is no doubt that the species of urban properties considered "residential" (paragraph a) of no. 1 of article 6º of the IMI Code) which are "… buildings or constructions licensed for such or, in the absence of license, that have as their normal purpose that purpose", fit automatically in the provision of the norm of incidence of items 28 and 28-1 of the TGIS.

But from the simple consideration of the literal element of the law it will result that it was intended to encompass more than this legal-tax reality encompasses.

Given that, as already referred, by force of the command of no. 3 of article 9º of the Civil Code, it does not seem possible for the interpreter to understand that the expression "urban properties … with residential use" has the same practical scope (scope of application) as if it said "residential urban properties", starting from the assumption that it was intended to encompass more than would be encompassed through the use of the first literal element.

In the case of the files the AT argues that "the notion of use of the urban property is based on the part relating to the valuation of property, which makes sense since the valuation of the property (purpose) incorporates value to the property, constituting a determining fact of distinction (coefficient) for purposes of valuation" and therefore should resort to article 41º (use coefficient) of the IMI Code.

And it further expresses: "the tax law considers as an integrating element for purposes of valuation of land for construction the value of the implantation area, which varies between 15% and 45% of the value of authorized or forecast buildings based on the urbanization and construction project."

That is, it understands that the "residential use" of the urban property in question is clear given what is contained in the property record that resulted from a taxpayer's statement (IMI form 1 statement) – matter which was above taken to the proven facts (sections 2), 3) and 5)).

But then does the expression "urban properties … with residential use" encompass or can it encompass "land for construction" as unbuilt urban properties but with constructive capacity for housing properties?

Well, only with the elements contained in the property matrix, as is the case, where only a mere constructive or building potential is demonstrated, it seems to us that without additional reasoning of the tax act, without demonstration that the species of urban property "land for construction" already has some economic utility at the level of residential use, it will not be possible to consider it encompassed in the norm of incidence of items 28 and 28-1 of the TGIS.

Does this mean that the expression "urban properties … with residential use", cannot encompass "land for construction" as unbuilt urban properties but with constructive capacity for housing properties?

It seems to us that in the immense complexity of the economy, of economic utility, even informal, situations of subjection can occur, given the commands that are placed on the interpreter contained in no. 3 of article 9º of the Civil Code and no. 3 of article 11º of the LGT.

But as for "land for construction" as unbuilt urban properties but with constructive capacity for housing properties, it seems to us that it is not sufficient to demonstrate the "residential use" the elements contained in the matrix. There will be a need for another reasoning, another factual matter, beyond what is contained in the matrix that evidences the economic utility with that specific purpose.

It does not seem to us possible through extensive interpretation, using the reasoning by parity with buildings considered residential urban properties, to conclude, without more, that the species of urban properties considered "land for construction" fit "ope legis" in the fiscal norm of incidence, sufficing to allege the legal-formal qualification and the elements of the matrix, given that, it is repeated, there will need to be demonstration of its "residential use" in concreto.

The Claimant alleges the non-conformity of the tax act against the law of erroneous qualification of the tax fact.

In fact, even if one understands, as it seems to us to be understood, in general and abstract terms, that a "land for construction" as indeed any other urban property beyond the species of urban properties "residential" (because these always have residential use by definition) can have, in terms of practical, economic and functional utility a "residential use" in concreto (even in the informal economy), the truth is that its consideration "ope legis" as having "residential use" starting only from the elements of the matrix and the fact of its valuation being done with reference to the coefficients applicable to residential urban properties, constitutes non-conformity with the norm of incidence of items 28 and 28-1 of the TGIS, occurring, therefore, the illegality provided for in paragraph a) of article 99º of the CPPT and the one provided for in paragraph c) of article 99º of the CPPT is also verified by occurring an absence of reasoning that the law, in the reading that was expressed above, requires.

The disputed act contains no reasoning in the sense referred to above, beyond the consideration that it is an urban property of the species "land for construction" "with constructive capacity for housing properties" in hypothetical terms, which is configured to be insufficient.

As a consequence of the above, it will be necessary to judge the request formulated by the Claimant before the TAS to be well-founded, since the IS assessment carried out by the AT is not in accordance with the law.

Since the first ground of the request formulated by the Claimant in the request for pronouncement (section d) of the Report) is well-founded, there is no need to examine the other ground (section e) of the Report).

V. DECISION

In terms and with the grounds set forth above, the request of the Claimant seeking the annulment of the assessment of Stamp Tax (IS) of item 28.1 of the TGIS, for the year 2012, identified by documents 2013 ... (1st installment) 2013 ... (2nd installment) and 2013 ... (3rd installment), generating a total collection in the amount of 36,574.90 €, relating to the urban property of which it is the owner, of the type "land for construction", registered in the urban real property register of the Municipality-Parish of … (extinct) under article ... … (E-U-...) – current registration article ...º of the same Municipality – Union of Parishes of …, is judged to be well-founded, annulling the tax act expressed in these documents, for being in non-conformity with the norm of incidence of IS contained in items 28 and 28-1 of the TGIS.

Value of the case: in accordance with what is provided in article 3º, no. 2, of the Regulation of Costs in Tax Arbitration Proceedings (and paragraph a) of no. 1 of article 97ºA of the CPPT), the value of 36,574.90 € is fixed to the case.

Costs: pursuant to what is provided in article 22º, no. 4, of the RJAT, the amount of costs is fixed at 1,836.00 €, according to Table I attached to the Regulation of Costs in Tax Arbitration Proceedings, at the charge of the Respondent.

Notify.

Lisbon, 16 August 2014

The Singular Arbitral Tribunal,

Augusto Vieira

Text prepared on computer in accordance with the provisions
of article 138º, no. 5, of the CPC, applicable by referral of article 29º of the RJAT.

The wording of this decision is governed by the spelling prior to the Orthographic Agreement of 1990.

Frequently Asked Questions

Automatically Created

Does Stamp Tax (Imposto de Selo) under Verba 28.1 of the TGIS apply to building land (terrenos para construção)?
According to the Tax Authority's position in this case, Stamp Tax under Verba 28.1 of the TGIS does apply to building land (terrenos para construção). The AT argues that 'properties with residential use' encompasses both built properties and land for construction, as the valuation methodology under articles 41 and 45 of the IMI Code applies use coefficients to building land based on the authorized construction capacity. However, the taxpayer contested this interpretation, arguing that building land is not inherently habitable and should not fall within item 28.1's scope, particularly when intended for business purposes as raw material for real estate development.
Can a taxpayer challenge a Stamp Tax assessment on urban property through CAAD tax arbitration?
Yes, a taxpayer can challenge a Stamp Tax assessment on urban property through CAAD tax arbitration. This case demonstrates the procedure: the claimant submitted a request on February 13, 2014, under the Legal Regime of Arbitration in Tax Matters (RJAT), which was accepted by the CAAD President on February 14, 2014. The request must be signed by a lawyer with proper power of attorney and submitted within the time limits prescribed in article 10(1)(a) of the RJAT. The case was assigned to an arbitrator, and a Singular Arbitral Tribunal was established on April 1, 2014, to examine and decide the dispute.
Is the application of Verba 28.1 of the TGIS to building land unconstitutional under Portuguese law?
The constitutionality of applying Verba 28.1 of the TGIS to building land was disputed in this case. The claimant argued that the application violates the constitutional principle of equality because it would tax companies owning land for residential construction while exempting those with land for commercial or service buildings, without justifiable reason for this distinction. The Tax Authority countered that no constitutional violation exists because the tax law is general and abstract in nature. However, the final tribunal decision on the constitutionality question is not provided in this excerpt, so the definitive ruling on this constitutional challenge remains unclear from the available text.
What is the procedure for requesting a singular arbitral tribunal at CAAD for Stamp Tax disputes?
The procedure for requesting a singular arbitral tribunal at CAAD for Stamp Tax disputes involves several steps: (1) Submit a written request under the RJAT regime within statutory time limits, signed by a lawyer with attached power of attorney; (2) The CAAD President reviews and accepts the request; (3) The Tax Authority is notified; (4) The CAAD Deontological Council appoints an arbitrator; (5) Parties are notified of the appointment; (6) The Singular Arbitral Tribunal is formally established; (7) The tribunal may waive the oral hearing under article 18 of the RJAT if both parties consent; (8) Parties submit written responses and any evidence; (9) The tribunal issues orders and conducts proceedings; (10) The tribunal renders a final decision on the dispute.
How is the taxable value determined for Stamp Tax on building land registered in the urban property matrix?
For Stamp Tax purposes on building land registered in the urban property matrix, the taxable value is determined using the IMI Code valuation methodology. According to the Tax Authority's explanation in this case, article 45(2) of the IMI Code requires applying the general property valuation methodology to land for construction, using the expression 'value of authorized buildings.' This includes applying the use coefficient provided in article 41 of the IMI Code, which considers the property's capacity or intended purpose. The valuation incorporates coefficients based on the residential use classification, as this adds value to the property and serves as a determining factor for valuation purposes. The 'use of the property' functions as a coefficient that contributes to determining the property's tax value for purposes of item 28.1 of the TGIS.