Process: 127/2015-T

Date: September 11, 2015

Tax Type: Selo

Source: Original CAAD Decision

Summary

CAAD Process 127/2015-T addresses a fundamental dispute regarding the application of Stamp Tax (Imposto do Selo) under item 28.1 of the General Table of Stamp Tax (TGIS) to vertical property ownership. The claimant, A..., S.A., challenged seventeen Stamp Tax assessment notices totaling €4,699.21 related to an urban property in Lisbon, arguing that the Tax Authority incorrectly calculated the tax basis by using the total patrimonial value of the entire property rather than the individual values of each independent unit. The core legal issue centers on whether properties held in vertical condominium ownership should be taxed as a single unit or as separate independent fractions. The claimant contends that by statutory reference, Stamp Tax under item 28.1 must follow the same taxation rules as IMI (Municipal Property Tax), which treats each independent unit separately regardless of whether the property is in horizontal or vertical condominium. Additionally, the claimant argues that the Tax Authority's interpretation violates constitutional principles of equality, proportionality, and taxable capacity under Articles 13, 18, and 104(3) of the Portuguese Constitution. The Tax Authority raised two procedural exceptions: first, that the payment notices for tax installments are not independently challengeable acts since they derive from a single assessment; and second, that res judicata applies because the same Stamp Tax assessments for 2013 were already annulled in a prior arbitral decision (case 480/2014-T) concerning the identical property. This case highlights critical questions about the proper interpretation of tax assessment rules for complex property structures and whether subsequent tax periods relating to previously adjudicated properties are barred by res judicata principles in Portuguese tax arbitration proceedings.

Full Decision

ARBITRAL DECISION

CAAD: Tax Arbitration
Case No. 127/2015-T

Claimant: A…, S.A.
Respondent: Tax and Customs Authority

I. REPORT

A…, S.A., Tax ID Number …, with registered office at Av. …, No. … – …, in Lisbon (hereinafter referred to only as Claimant), filed on 24-02-2015 a request for constitution of a sole arbitrator tribunal, pursuant to articles 2nd and 10th of Decree-Law No. 10/2011, of January 20 (Legal Regime for Arbitration in Tax Matters, hereinafter referred to only as LRATM), in conjunction with item a) of article 99th of the CPTA, in which the Tax and Customs Authority is Respondent (hereinafter referred to only as Respondent).

The Claimant requests the declaration of illegality and unconstitutionality of the assessment acts for Stamp Tax of item 28.1 of the General Table of Stamp Tax (hereinafter, GTST), due by reference to the urban property registered under article … in the urban property register of the parish of ..., municipality of Lisbon, in the total amount of € 4,699.21, which gave rise to payment documents Nos. 2014 …, 2014 …, 2014 …, 2014 …, 2014 …, 2014 …, 2014 …, 2014 …, 2014 …, 2014 …, 2014 …, 2014 …, 2014 …, 2014 …, 2014 …, 2014 … and 2014 ….

The request for constitution of the arbitral tribunal was accepted by His Excellency the President of CAAD on 26-02-2015 and notified to the Tax and Customs Authority on that same date.

Pursuant to the provision in item a) of no. 2 of article 6th and item b) of no. 1 of article 11th of the LRATM, the Ethics Council appointed as arbitrator of the sole arbitrator tribunal the undersigned, who communicated acceptance of the appointment within the applicable deadline.

On 15-04-2015 the Parties were duly notified of that appointment, having manifested no will to refuse the designation of the arbitrators, pursuant to the combined articles 11th no. 1, items a) and b) of the LRATM and articles 6th and 7th of the Code of Ethics.

In accordance with the provision in item c) of no. 1 of article 11th of the LRATM, the sole arbitrator tribunal was constituted on 30-04-2015.

In the response presented, Respondent raised the exceptions of non-challengeability of the tax assessment acts that are the object of the request for arbitral pronouncement and of res judicata which would prevent knowledge of the claim presented.

Notified for this purpose, the Claimant presented written response to the exceptions invoked by the Respondent, concluding that they were unfounded.

By order of 24-06-2015, the meeting provided for in article 18th of the LRATM was dispensed with, and a deadline was granted to the Parties to present written arguments, which only the Respondent did.

II. OF THE CLAIMANT'S CLAIM

The Claimant alleges, briefly, the illegality of the assessments that gave rise to the collection notices for the second and third installments of Stamp Tax identified because they took as the basis for taxation the total patrimonial value of the property and not the individual values of each of the independent parts allocated to housing. By express statutory reference, the basis for taxation of Stamp Tax of item 28.1 of the GTST should be the same as the IMI. In that measure, being a property in vertical condominium ownership composed of units capable of independent use "(…) the value to be considered for purposes of application of item No. 28 of the GTST must always be that which appears in the register of each of the independent units that compose the property and not the overall value thereof, resulting from the sum of those values taken as individual" (see article 25th of the p.i.). This same would result from the fact that in IMI there is no distinction between properties in horizontal and vertical condominium ownership, being all subject to the same rules for registration in the register, valuation and assessment.

The Claimant further understands that the norms that underlie the assessment of the tax now contested, in the interpretation given by the Respondent, would be unconstitutional due to violation of the principles of equality, proportionality and taxable capacity, pursuant to articles 13th, 18th and 104th, no. 3, of the CRP.

Finally, the Claimant invokes the decision rendered on 17/12/2014 in arbitral case No. 480/2014-T, which has already become final, which considered well-founded the request for annulment of the Stamp Tax assessments of item 28 of the GTST for the year 2013, relating to the property identified.

The Claimant concludes, then, briefly that:

"a) the Stamp Tax assessments now contested – embodied in the 17 Stamp Tax assessment notices identified above in items 6th and 7th of this request – are illegal, by violation of the rule of taxation provided for in item No. 28 of the GTST, combined with articles 2nd, 4th, 6th, no. 1, item a), 6th, no. 2, and 12th, no. 3, all of the IMI Code (applicable by virtue of no. 2 of article 67th of the Stamp Tax Code) and also by violation of the provision in no. 2 of article 6th of Law No. 55-A/2012, of October 29;

b) item No. 28 of the GTST is unconstitutional, by violation of the principles of equality and taxable capacity, contained in articles 13th and 104th, no. 3 of the CRP;

c) the interpretation of the Tax Authority in the sense that the assessment of stamp tax provided for in item No. 28 of its General Table, with respect to the year 2013, may be done without regard to the patrimonial value of each division with independent use is also unconstitutional, by offense of the principles of equality and taxable capacity, contained in articles 13th and 104th, no. 3 of the CRP;

d) It is necessary to declare the illegality of the aforementioned rule of taxation and the consequent annulment of the Stamp Tax assessment acts now contested, by virtue of the authority of the res judicata of the arbitral decision rendered in case No. 480/2014-T of that CAAD."

III. OF THE RESPONDENT'S RESPONSE

In the response presented, the Respondent invokes, in the first place, the exception of non-challengeability of the object of the request for arbitral pronouncement by considering that the payment notes for the second and third installments of Stamp Tax identified by the Claimant are not independently challengeable assessment acts. The Respondent argues that the assessment of Stamp Tax of item 28 of the GTST is single and only it constitutes a harmful act susceptible of being challenged, regardless of whether the tax can be paid in several installments. The Stamp Tax installments, by reference to the regime of the IMI, originate from a single assessment act and constitute installments of the same tax obligation which, for payment purposes, was divided. The different payment notes now contested, not embodying true assessment acts, will not, therefore, be susceptible of challenge.

On the other hand, the Respondent understands that the exception of res judicata is applicable here, as provided in item i) of no. 1 of article 89th of the CPTA, insofar as the Stamp Tax assessment acts of item 28 of the GTST for the year 2013 with reference to the property identified were annulled, as illegal, by arbitral decision No. 480/2014-T, attached by the Respondent, and has already become final. And there will be res judicata insofar as there is identity of claim and cause of action.

The Respondent concludes, thus, that "(…) the object of the request for arbitral pronouncement concretized in the third installments of the assessment acts of item 28 of the Stamp Tax, relating to the year 2013, of the identified units is not challengeable, both by the verification of the exception of res judicata, because the same tax assessment acts were annulled under case No. 480/2014-T, which has become final, and the Respondent did not cause this case, the costs to be fixed pursuant to no. 5, of article 4th of the Regulation of Costs in Administrative Arbitration Proceedings are the responsibility of the Author of the request for arbitral pronouncement."

IV. OF THE RESPONSE TO THE EXCEPTIONS

Notified to pronounce itself on the exceptions raised by the Respondent, the Claimant pleaded for their unfoundedness.

With regard to the exception of non-challengeability of the acts that are the object of the present request for arbitral pronouncement, the Claimant understands that the challengeability of such acts was expressly recognized by the Respondent since in the payment documents sent contains the express reference "You may lodge a complaint or challenge the assessment according to the terms and deadlines set out in articles 70th and 102nd of the CPTA". The payment guides sent to the Claimant and now contested presented themselves with evident autonomy in relation to the previous installments so that it was in the interest and convenience of the Claimant to make use of this procedural means to contest the legality of the assessment act underlying them.

On the other hand, the Claimant understands that there is no identity of claims since in arbitral case 480/2014-T the annulment of the assessment acts underlying the first and second installments of Stamp Tax was requested, the value of the arbitral action corresponding to the sum of these payment guides. In this case, the claim made by the Claimant has as its object the assessment act underlying the payment notes for the second and third installments identified.

The exceptions invoked should, therefore, be considered unfounded, and this tribunal should rule on the claim presented.

V. RULING ON PROCEDURAL MATTERS

The Arbitral Tribunal was regularly constituted and is competent.

The parties have tax and judicial capacity and are qualified to litigate (articles 4th and 10th, no. 2, of the same statute and article 1st of Regulation No. 112-A/2011, of March 22).

The proceedings do not suffer from nullities.

VI. FACTUAL MATTERS

A. Proven Facts

The following facts are considered proven:

  1. The Claimant is a commercial company whose purpose is the conduct of real estate investments.

  2. On December 31, 2013, the Claimant was the owner of the urban property located at Av. …, No. …, in Lisbon, registered in the urban property register of the parish of ..., under article …, described in the Property Registry of Lisbon under No. … of the parish of ….

  3. The property referred to in the preceding point has 19 units capable of independent use;

  4. Of the units capable of independent use, 17 are allocated to residential use;

  5. None of the units capable of independent use has a patrimonial value exceeding € 1,000,000.00;

  6. In November 2014, the Claimant was notified to proceed with payment of the second and third installments of Stamp Tax of item 28.1 of the GTST, for the year 2013, which are as follows:

(a) Doc. No. 2014 … – U-…-… – Patrimonial Value € 66,820.00 - Collection: € 668.20; Third installment: € 222.73;

(b) Doc. No. 2014 … – U-…-… – Patrimonial Value € 66,820.00 - Collection: € 668.20; Third installment: € 222.73.

(c) Doc. No. 2014 … – U-…-… – Patrimonial Value € 68,770.00 – Collection: € 687.70; Third installment: € 229.23.

(d) Doc. No. 2014 … – U-…-… – Patrimonial Value € 68,770.00 – Collection: € 687.70; Third installment: € 229.23.

(e) Doc. No. 2014 … – U-…-… – Patrimonial Value € 68,770.00 – Collection: € 687.70; Third installment: € 229.23.

(f) Doc. No. 2014 … – U-…-… – Patrimonial Value € 68,770.00 – Collection: € 687.70; Third installment: € 229.23.

(g) Doc. No. 2014 … – U-…-… – Patrimonial Value € 69,460.00 – Collection: € 694.60; Third installment: € 231.53.

(h) Doc. No. 2014 … – U-…-… – Patrimonial Value € 69,460.00 – Collection: € 694.60; Third installment: € 231.53.

(i) Doc. No. 2014 … – U-…-… – Patrimonial Value € 69,460.00 – Collection: € 694.60; Third installment: € 231.53.

(j) Doc. No. 2014 … – U-…-… – Patrimonial Value € 69,460.00 – Collection: € 694.60; Third installment: € 231.53.

(k) Doc. No. 2014 … – U-…-… – Patrimonial Value € 112,190.00 – Collection: € 1,121.90; Third installment: € 373.96.

(l) Doc. No. 2014 … – U-…-… – Patrimonial Value € 112,190.00 – Collection: € 1,121.90; Third installment: € 373.96.

(m) Doc. No. 2014 … – U-…-… – Patrimonial Value € 112,190.00 – Collection: € 1,121.90; Third installment: € 373.96.

(n) Doc. No. 2014 … – U-…-… – Patrimonial Value € 112,190.00 – Collection: € 1,121.90; Third installment: € 373.96.

(o) Doc. No. 2014 … – U-…-… – Patrimonial Value € 99,920.00 – Collection: € 999.20; Third installment: € 333.06.

(p) Doc. No. 2014 … – U-…-… – Patrimonial Value € 99,920.00 – Collection: € 999.20; Third installment: € 333.06.

(q) Doc. No. 2014 … – U-…-… – Patrimonial Value € 49,430.00 – Collection: € 494.30. Second installment: € 247.15.

  1. From the payment documents listed in the preceding point, it results that the tax assessment was carried out on March 17, 2014.

  2. On 17/12/2014, an arbitral decision was rendered in case No. 480/2014-T which ordered the annulment of the assessment acts which gave rise to the payment guides for the first and second installments of Stamp Tax of item 28.1 of the GTST, for the year 2013, relating to the property described in point 2, which had been sent to the Claimant in April and June 2014, respectively.

B. Unproven Facts

No other facts with relevance to the arbitral decision were proven.

C. Basis for the Factual Matters

The factual matters given as proven are based on documentary evidence presented and not contested.

VII. LEGAL MATTERS

A. Of the Non-Challengeability of the Object of the Request for Arbitral Pronouncement

For an adequate assessment of this exception, it is first necessary to determine and delimit in concreto the object of the request for arbitral pronouncement.

Thus, according to the terms of the claim presented, it is concluded that the Claimant seeks the annulment of the Stamp Tax assessment acts of item 28 of the GTST which gave rise to the payment documents identified. This same results from the content of the petition submitted and the final prayer in which the Claimant expressly declares seeking "(…) pronouncement on the illegality of the Stamp Tax assessment acts that are the object of this challenge and their consequent annulment, with all other consequences".

Contrary to what the Respondent seems to conclude, the Claimant did not request the annulment of the payment guides identified – although that annulment is a consequence of the founding of the declaration of illegality of the contested assessment acts – but rather the annulment of the tax assessments that underlie them. Insofar as this tribunal can conclude from the Claimant's request, what is at issue is the illegality of the assessment underlying the payment notes for the Stamp Tax installments identified and not the illegality of the payment documents themselves.

The object of the present action is, in the understanding of this tribunal, the set of assessment acts that gave rise to the payment notes attached to the file. And as assessment acts they are, they can be the object of judicial challenge under item a) of no. 2 of article 95th of the GTC and item a) of no. 1 of article 97th of the CPTA, or of a request for arbitral pronouncement under item a) of no. 1 of article 2nd of the LRATM, with a view to assessing their legality.

In light of the foregoing, by considering that the object of the present request for arbitral pronouncement are actual assessment acts, it is concluded that the exception of non-challengeability of the object of the request for arbitral pronouncement raised by the Respondent is unfounded.

B. Of Res Judicata

Concluding that the present request for pronouncement has as its object the assessment acts that gave rise to the payment documents identified, it is necessary to analyze the existence of res judicata in light of the decision rendered in arbitral case 480/2014-T.

According to the certificate of the decision attached to the file, it is concluded that in the case identified the Claimant requested the annulment of the Stamp Tax assessments of item 28 of the GTST for the year 2013, with reference to the property at Av. …, No. …, identified above.

In the decision rendered, and which has already become final, the arbitral tribunal decided "to judge the request for arbitral pronouncement well-founded, with the consequent annulment, with all legal effects, of the contested assessment acts" (emphasis ours).

Now, as the Respondent rightly points out, just as occurs with the IMI, with reference to Stamp Tax of item 28 of the GTST, the Tax Authority performs only one assessment act, between February and March of the following year, as results from article 113th of the IMI Code applicable by reference from no. 7 of article 23rd of the Stamp Tax Code.

The fact that the tax debt can be paid in installments - pursuant to article 120th of the IMI Code, applicable by reference from no. 5 of article 44th of the Stamp Tax Code – does not mean that there are as many assessments as installments. Just as with the IMI, the Stamp Tax assessment act is, therefore, unique, although it may give rise to different payment documents.

In the specific case, the assessments were carried out on 17/03/2014, as results from the payment notes attached to the file, in a total of € 13,847.50, with payment being divided into installments, pursuant to article 120th of the IMI Code. From that installment arrangement resulted the payment notes which gave rise to the present proceedings and to arbitral case No. 480/2014-T.

Thus, it is concluded that the assessment acts underlying the payment notes for the first and second installments annulled by the arbitral decision rendered in case No. 480/2014-T are exactly the same as those which gave rise to the payment guides for the second and third installments attached to the file.

In that measure, the Claimant's claim in the present proceedings coincides with that presented in the arbitral case identified given that it has as its object the same assessment act, originating in the same legal facts.

Pursuant to articles 580th and 581st of the CPC, there is identity of cause whenever there is identity of parties, claim and cause of action.

In the understanding of this tribunal, all these elements are verified given that the parties are the same as in arbitral case No. 480/2014-T, the claim is the same (annulment of the Stamp Tax assessment act of item 28 of the GTST for the year 2013 relating to the property at Av. …, No. …) and the cause of action is exactly the same because it is based on the same legal facts (the tax assessed concerns the same property and the same tax period).

In light of the foregoing, this tribunal concludes that the exception of res judicata exists, pursuant to item i) of article 89th of the CPTA, as alleged by the Respondent.

VII. DECISION

In accordance with the foregoing, this Arbitral Tribunal decides to judge the exception of res judicata well-founded and, consequently, to absolve the Tax and Customs Authority from the suit, pursuant to item i) of no. 1 of article 89th of the CPTA, applicable by reference from article 29th of the LRATM.

Value of the case: In accordance with the provision in article 306th, no. 2, of the CPC and 97th-A, no. 1, item a), of the CPTA and 3rd, no. 2, of the Regulation of Costs in Tax Arbitration Proceedings, the value of the case is corrected to € 13,847.50, corresponding to the total of the Stamp Tax assessment acts for the year 2013 with reference to the property identified in the file.

Costs: Pursuant to no. 4 of article 22nd of the LRATM, the amount of costs is fixed at € 918.00, in accordance with Table I attached to the Regulation of Costs in Tax Arbitration Proceedings, borne by the Claimant.

Let this arbitral decision be registered and notice thereof be given to the parties.

Lisbon, 11-09-2015

The Sole Arbitrator

(Maria Forte Vaz)

Frequently Asked Questions

Automatically Created

Is Stamp Tax under Verba 28.1 of the TGIS applicable to the total value of a vertical property or to each independent unit separately?
According to the claimant's interpretation supported by IMI Code provisions, Stamp Tax under item 28.1 of the TGIS should be applied to each independent unit separately, not to the total property value. The claimant argues that properties in vertical condominium ownership consist of independent units capable of separate use, and since item 28.1 references IMI taxation rules, the tax basis should be the individual patrimonial value registered for each independent unit. The Tax Authority, however, assessed the tax on the total aggregate value of the property, leading to the dispute. The proper interpretation depends on whether vertical property ownership creates separate taxable units or a single taxable property for Stamp Tax purposes.
Can a taxpayer challenge Stamp Tax assessments on vertical properties through CAAD tax arbitration proceedings?
Yes, taxpayers can challenge Stamp Tax assessments on vertical properties through CAAD tax arbitration proceedings under the Legal Regime for Arbitration in Tax Matters (RJAT - Decree-Law 10/2011). However, the Tax Authority raised the exception of non-challengeability, arguing that individual payment notices for tax installments are not independently challengeable acts since they derive from a single assessment act. The Authority contends that only the original assessment act can be challenged, not the subsequent payment installments. Additionally, the Authority invoked res judicata based on a prior arbitral decision (480/2014-T) that already addressed Stamp Tax assessments for the same property for 2013, arguing this prevents re-litigation of identical issues.
What are the legal grounds for contesting Imposto do Selo liquidations based on the patrimonial value of independent parts of a building?
The legal grounds for contesting Imposto do Selo liquidations based on patrimonial values of independent property units include: (1) violation of item 28 of the GTST combined with Articles 2, 4, 6(1)(a), 6(2), and 12(3) of the IMI Code, which are applicable by reference under Article 67(2) of the Stamp Tax Code; (2) violation of Article 6(2) of Law 55-A/2012; (3) unconstitutionality of item 28 GTST for violating equality and taxable capacity principles under Articles 13 and 104(3) of the Portuguese Constitution; and (4) unconstitutionality of the Tax Authority's interpretation that disregards individual unit values, violating the same constitutional principles. The fundamental argument is that the statutory reference to IMI rules requires application of the same valuation methodology used for IMI, which treats independent units separately.
How does CAAD process 127/2015-T address the exceptions of non-challengeability and res judicata raised by the Tax Authority?
CAAD Process 127/2015-T addressed two principal exceptions raised by the Tax Authority. First, the exception of non-challengeability argued that payment notices for the second and third installments are not independent assessment acts subject to challenge, since Stamp Tax assessment under item 28 GTST is a single act, with installments being merely payment divisions of one tax obligation following IMI regime rules. Second, the res judicata exception claimed that the Stamp Tax assessments for 2013 regarding the identified property were already annulled by final arbitral decision 480/2014-T, creating identity of claim and cause of action that prevents re-litigation. The claimant filed written responses arguing both exceptions were unfounded, though the excerpt does not reveal the tribunal's final ruling on these procedural matters.
What is the impact of property classification as vertical property on Stamp Tax obligations under Portuguese tax law?
Classification of property as vertical property (propriedade vertical) has significant implications for Stamp Tax obligations under Portuguese law. Vertical property involves independent units within a building, each capable of separate use and ownership, similar to condominium arrangements. The key impact is determining whether the tax basis under item 28.1 GTST should be calculated on the aggregate property value or individual unit values. If vertical property units are treated as separate taxable entities following IMI principles, each unit would be taxed based on its individual registered patrimonial value, potentially resulting in lower overall tax liability compared to taxation on the total property value. This classification affects not only the tax calculation methodology but also registration requirements, valuation procedures, and assessment practices for Stamp Tax purposes.