Process: 137/2015-T

Date: June 30, 2015

Tax Type: Selo

Source: Original CAAD Decision

Summary

In Process 137/2015-T, the CAAD arbitral tribunal addressed procedural challenges regarding Stamp Tax assessments under Verba 28.1 of the General Stamp Tax Table (TGIS) on high-value real estate for 2013. The claimant challenged the second and third installments of Stamp Tax totaling €39,804.54, arguing the Tax Authority illegally aggregated the Tax Property Value (VPT) of individual floors and divisions within buildings to exceed the €1,000,000 threshold, rather than assessing each autonomous unit separately. The claimant contended this violated legality and constitutional equality principles under Articles 13 and 104(3) of the Portuguese Constitution. However, the Tax Authority raised two critical exceptions: first, a dilatory exception based on the lack of independent challengeability of installment payments, arguing that installments cannot be contested separately from the underlying assessment act; and second, a res judicata exception, noting that case 467/2014-T had already granted a final decision declaring the same 2013 Stamp Tax assessment illegal and annulled, with that decision currently in execution phase. The prior case concerned the first installment of the identical assessment. The tribunal had to determine whether the subsequent installments could be independently challenged when the original assessment act had already been definitively annulled in prior proceedings, and whether the claimant's attempt to file a separate challenge for remaining installments was procedurally viable or barred by res judicata principles and the indivisible nature of tax assessment acts.

Full Decision

Case No. 137/2015-T

I – Report

1.1. A, a legal entity no. …, with registered address at … (hereinafter referred to as the "claimant"), submits to the appreciation of this Court, on 27/2/2015, a request for an arbitral ruling "with a view to the declaration of illegality and unconstitutionality and consequent annulment of the acts of assessment of Stamp Duty, item 28.1 of the GSTD, relating to the year 2013", concerning the second and third instalments, with final payment date of 30/11/2014, in the total amount of €39,804.54, and relating to urban properties described in the urban property register: of the SF of ..., … (...), Parish of ..., under article ....º; of the SF of … (...), Parish of ..., under article ....º; of the SF of … (...), Parish of …, under article 462.º; and of the SF of Oeiras (...), ..., under article ….º.

1.2. On 7/5/2015 the present Singular Arbitral Tribunal was constituted.

1.3. Pursuant to article 17, no. 1, of the RJAT, the Tax Authority was cited, as the respondent party, to submit a reply, in accordance with the terms and for the purposes of the aforementioned article. The Tax Authority presented its reply on 9/6/2015, having argued, in summary, the following exceptions: i) a dilatory exception on grounds of "manifest lack of independent challengeability of the instalments of the assessment acts contained in the collection notices which constitute the subject matter of this request for an arbitral ruling"; and ii) an exception of res judicata, "to the extent that the tax assessment acts contested by the Claimant in this request for an arbitral ruling, although relating to the second and third instalments, were declared illegal and annulled in the decision handed down in case no. 467/2014-T, which has already become final, and is in the execution phase".

1.4. The claimant, notified of the Tax Authority's reply, responded, in writing, to the exceptions invoked, in a motion of 19/6/2015, which was notified to the respondent.

1.5. Considering that the claimant had already pronounced itself in writing on any exceptions, this Court considered, pursuant to article 16, point c), of the RJAT, that the meeting provided for in article 18 of the RJAT was dispensable and that the proceedings should proceed to decision, having set the date of 30/6/2015 for the pronouncement thereof.

1.6. The Arbitral Tribunal was duly constituted.

1.7. In its request for a ruling, the claimant states that it seeks to obtain "a declaration that the aforementioned acts of assessment of stamp duty are illegal and unconstitutional (and the rules hereinafter mentioned, with the interpretive dimension conferred by the Tax Authority), on the real estate property, listed in item no. 28 of the GSTD, in the manner in which it was applied by the Tax Authority". In summary, it invokes that: a) "contrary to [what the] Tax Authority understands, [...] the sum of the TPV of each floor and division should not be taken into account in order to determine whether or not the stamp duty is applicable"; b) "the subjection [to the stamp duty contained in item no. 28.1 of the GSTD], in the case of properties with the characteristics already described, [...] is determined not by the TPV of the properties, but by the TPV attributed to each of these floors or divisions capable of independent use"; c) "there would only be reason for a new stamp duty assessment if any of the parts, floors or divisions with independent use presented a TPV exceeding €1,000,000.00"; d) "in conclusion, the criteria adopted by the Tax Authority violate the principles of legality and tax equality, as well as the prevalence of material truth over legal-formal reality"; and e) "from what has been said, it follows that the cited rules, with the interpretation that the Tax Authority gave them [...], are unconstitutional, by violation of the principle of equality (article 13 of the CRP), as well as what is provided in article 104, no. 3, of the CRP".

1.8. The herein claimant concludes by requesting: "the declaration of illegality of the acts of assessment of stamp duty above identified, and the consequent annulment, with all legal consequences, as they violate the normative provisions contained in item no. 28.1 of the GSTD; and are manifestly unconstitutional, as resulting from an unconstitutional interpretation of the rules cited above, to be recognized, by violation of the principle of equality, provided for in articles 13 and 104, no. 3, of the CRP; furthermore, it is requested the reimbursement of the amounts paid, relating to the concrete amounts of Stamp Duty hereby contested, plus default interest and compensatory interest."

1.9. For its part, the Tax Authority alleges, in its reply, and in summary, that: a) "given the manifest lack of independent challengeability of the instalments of the assessment acts contained in the collection notices which constitute the subject matter of this request for an arbitral ruling, the dilatory exception provided for in point c) of no. 1 of article 89 of the ATPC applies, subsidiarily applicable by article 29, no. 1, point c), of the RJAT, which prevents the examination of the merits and results in the dismissal of the Tax Authority from the action"; b) "to the extent that the tax assessment acts contested by the Claimant in this request for an arbitral ruling, although relating to the second and third instalments, were declared illegal and annulled in the decision handed down in case no. 467/2014-T, which has already become final, and is in the execution phase, the exception of res judicata provided for in point i) of no. 1 of the aforementioned article 89 of the ATPC applies, which equally prevents the examination of the merits and leads to the dismissal of the Tax Authority from the action."

1.10. The Tax Authority concludes that "the [exceptions invoked] should be judged well-founded, as demonstrated, both the lack of challengeability of the subject matter of this request for an arbitral ruling, and the exception of res judicata, dismissing the respondent entity from the action, with all legal consequences."

1.11. In July 2014, the herein claimant filed a request for an arbitral ruling at the Court of Arbitration for Tax Disputes, to which the registration number ... was assigned, and it was validated and accepted, on 8/7/2014, as a case in the arbitration procedure phase.

1.12. In that request, which would subsequently be filed under case no. 467/2014-T, the claimant requested, as it refers in its present motion, "the declaration of illegality and unconstitutionality, and consequent annulment of the acts of assessment of Stamp Duty, item 28.1 of the GSTD" [...], all relating to "the first instalment of stamp duty assessed by reference [to 2013]".

1.13. In its present motion, the claimant further informs that case no. 467/2014-T was awaiting an arbitral decision and that, in order to "prevent a possible understanding that sees in that request an ability to annul only partially the assessment of Stamp Duty item 28.1 of the GSTD of the year 2013, in relation to the aforementioned properties, restricting it to the amount of the first of the instalments due on this account", it presents, "out of a duty of representation and in compliance with a duty of care and caution, [...] a new request for an arbitral ruling [which is what is now under analysis]."

1.14. As per the information from the Tax Authority, in its reply of 9/6/2015, "the tax assessment acts contested by the Claimant in this request for an arbitral ruling, although relating to the second and third instalments, were declared illegal and annulled in the decision handed down in case no. 467/2014-T, which has already become final, and is in the execution phase".

1.15. The Tax Authority's information was confirmed by the claimant's reply to the exceptions invoked, by stating that, "in the meantime, a learned decision was handed down in that case no. 467/2014-T, granting relief to the pretension of the herein claimant". Furthermore, the claimant states that, "despite having admitted that it could be understood differently (which justified the [present] request for the constitution of the arbitral tribunal), the truth is that the claimant's understanding, expressed in the introduction of the request for the constitution of the arbitral tribunal, is to the effect of affirming that the decision handed down in Case 467/2014-T exhausts the subject matter of the decision to be handed down on the act truly contested – the assessment relating to each independent unit –, with which, by reference to all and each of the units allocated to housing, the respective stamp duty assessment was declared illegal and annulled, with all and each of the instalments constituting only a technique for collecting the tax. In light of this understanding, and even in accordance with the understanding also expressed by the Tax Authority [in its reply], the due consequences cannot fail to be admitted."

II – On the Exception of Lack of Independent Challengeability of Instalments

Having in mind that the exceptions mentioned above were invoked by the Tax Authority, it is justified, previously, to examine them (see article 608, no. 1, of the CPC, by application of article 29, no. 1, point e), of the RJAT). In these terms, it is now necessary to ascertain whether, as the respondent alleges, there is the "manifest lack of independent challengeability of the instalments of the assessment acts contained in the collection notices which constitute the subject matter of this request for an arbitral ruling".

In fact, reading the provisions of the Stamp Duty Code, it is verified that the tax in question is assessed annually (article 23, no. 7) and that it must be paid in the terms, deadlines and conditions defined in article 120 of the MPTC (article 44, no. 5). In turn, the aforementioned article 120 of the MPTC provides, in its no. 4, that "the non-payment of an instalment [...] within the established deadline implies the immediate maturity of the remaining ones".

From the above it follows that we are dealing with a case where, similarly to what happens with Municipal Property Tax instalments, the payment of each of the instalments of the tax does not constitute partial payment of the assessment, but rather a mere technique for collecting the tax (which is recognized by the claimant in its reply to the exceptions invoked by the Tax Authority).

Also in this sense, see, for example, the Arbitral Decision handed down in case no. 726/2014-T, of 10/3/2015: "an instalment does not equate to a tax assessment, since, pursuant to no. 7, of article 23 of the Stamp Duty Code, in the wording given to it by article 3 of Law no. 55-A/2012, of 29 October, '7 - In the case of tax due for the situations provided for in item no. 28 of the General Table, the tax is assessed annually, in relation to each urban property, by the central services of the Tax and Customs Authority, applying, with the necessary adaptations, the rules contained in the MPTC' (emphasis ours). Now, the expression 'the tax is assessed annually' indicates that a single annual assessment is made, although it may be divided, for payment purposes, into instalments, and not as many assessments as there are instalments in which the debt must be satisfied – the division of an assessment into instalments will thus be nothing more than a mere technique for revenue collection. [...]. The payment instalments of a Municipal Property Tax assessment or, in the situation under analysis, of a Stamp Duty assessment, pursuant to Item 28 of the GSTD, are not independently reviewable, as they originate from a single annual obligation, in accordance with the teaching of Braz Teixeira: 'It is necessary not to confuse periodic instalments, which, although being realized by successive acts, at different moments, originate from the same obligation and constitute the various portions of the same instalment that was divided, with instalments that must be made periodically, not due to a division of the overall instalment, but rather due to the birth, also periodic, of new obligations, by the continuance of the factual assumptions of taxation.'"

See also the Arbitral Decision handed down in case no. 205/2013-T, of 7/3/2014: "From the circumstance that the value of the [Stamp Duty] assessment may be paid in various instalments, it does not follow that there are three assessments. It is, differently, a single assessment that may be paid in several instalments". Equally in the sense of non-divisibility, but now of Municipal Property Tax assessment acts (which is also relevant here, given the referral provided for in article 67, no. 2, of the Stamp Duty Code), see, for example, the Arbitral Decision handed down in case 120/2012-T, of 12/6/2013.

In summary: as each of the instalments relating to Stamp Duty assessment is not independently challengeable, it is concluded, for the reasons indicated above, that this Tribunal lacks competence to examine and decide on the request which is the subject of the dispute sub judice, pursuant to the provisions of article 89, no. 1, point c), of the ATPC, by application of article 29, no. 1, point c), of the RJAT, as a dilatory exception preventing examination of the merits of the case exists, pursuant to the provisions of article 576, nos. 1 and 2, of the CPC, by application of article 2, point e), of the TPPC, and article 29, no. 1, points a) and e), of the RJAT, which prevents examination of the request and results in the dismissal of the Tax Authority from the action, pursuant to articles 576, no. 2, and 577, point a), of the CPC, by application of article 29, no. 1, points a) and e), of the RJAT.

III – On the Exception of Res Judicata

Pursuant to the provisions of article 608, no. 2, of the CPC, applicable by application of article 29, no. 1, point e), of the RJAT, "the judge must resolve all questions which the parties have submitted to his appreciation, excepting those whose decision is prejudiced by the solution given to others".

Now, considering the solution given to the question of the lack of competence of this Tribunal by reason of the lack of independent challengeability of the instalments, it becomes unnecessary to examine the question relating to the exception of res judicata (see article 89, no. 1, point i), of the ATPC, by application of article 29, no. 1, point c), of the RJAT; and article 580, no. 1, of the CPC, by application of article 29, no. 1, point e), of the RJAT) – however, it must be recognized that this exception is also well-founded, since the arbitration case no. 467/2014-T already has a final decision, being in the execution phase.

It should be noted, finally, that the repetition of the cause is evident as, as the Tax Authority points out, "the cause of action in the present proceedings and in case no. 467/2014-T proceeds from the same concrete juridical facts – the acts of assessment of Stamp Duty, item 28, issued on 17/03/2014, relating to the year 2013, with the same rate and the same TPVs, relating to the same floors of the same urban properties – and legally supports the pretension of the Claimant, consisting in the annulment of the assessment acts expressed in all first, second and third instalments." It is also for this reason that the claimant recognizes, in its reply to the exceptions invoked, that "the claimant's understanding, expressed in the introduction of the request for the constitution of the arbitral tribunal, is to the effect of affirming that the decision handed down in Case 467/2014-T exhausts the subject matter of the decision to be handed down on the act truly contested".

IV – Decision

In view of the above, it is decided:

  • To uphold the dilatory exception on grounds of lack of independent challengeability of the instalments, and the exception of res judicata, invoked by the respondent;

  • To dismiss the respondent from the action (articles 96 and 278 of the Civil Procedure Code, by application of article 29, no. 1, points a), c) and e), of the RJAT).

The case is valued at €39,804.54 (thirty-nine thousand eight hundred and four euros and fifty-four cents), pursuant to article 32 of the ATPC and article 97-A of the TPPC, applicable by virtue of the provisions of article 29, no. 1, points a) and b), of the RJAT, and article 3, no. 2, of the Regulation of Costs in Tax Arbitration Proceedings.

Costs to be borne by the claimant, in the amount of €1,836.00 (one thousand eight hundred and thirty-six euros), pursuant to Table I of the Regulation of Costs in Tax Arbitration Proceedings, given the exceptions noted above, and in compliance with the provisions of articles 12, no. 2, and 22, no. 4, both of the RJAT, and the provisions of article 4, no. 4, of the aforementioned Regulation.

Notify.

Lisbon, 30 June 2015.

The Arbitrator

(Miguel Patrício)

Document prepared by computer, pursuant to the provisions of article 131, no. 5, of the CPC, applicable by referral of article 29, no. 1, point e), of the RJAT.

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

Frequently Asked Questions

Automatically Created

Does the CAAD arbitral tribunal have jurisdiction to rule on Stamp Tax (Imposto de Selo) disputes under Verba 28.1 of the TGIS?
Yes, the CAAD arbitral tribunal has jurisdiction to rule on Stamp Tax (Imposto de Selo) disputes under Verba 28.1 of the TGIS concerning high-value real estate properties. The tribunal accepted the case, constituted itself properly under RJAT provisions, and proceeded to analyze the merits and exceptions raised. The jurisdictional competence over Stamp Tax matters was not contested by either party.
Can the Portuguese tax authority aggregate the VPT (Valor Patrimonial Tributário) of individual units in a building to determine Stamp Tax liability on high-value properties?
The Tax Authority aggregated the VPT (Valor Patrimonial Tributário) of individual floors and divisions within buildings to determine whether the €1,000,000 threshold was exceeded for Stamp Tax purposes under Verba 28.1. However, the claimant challenged this methodology as illegal and unconstitutional, arguing that each autonomous floor or division with independent use should be assessed separately, and only those individual units exceeding €1,000,000 should be subject to Stamp Tax, not the aggregate building value.
What happens when a prior arbitral decision has already annulled the same Stamp Tax assessment in a related CAAD proceeding?
When a prior arbitral decision has already annulled the same Stamp Tax assessment in case 467/2014-T (which became final and entered execution phase), the Tax Authority raised a res judicata exception under Article 89(1)(i) of the ATPC. This exception prevents re-litigation of the same matter and should result in dismissal of the subsequent action, as the underlying 2013 assessment act was already declared illegal and annulled in its entirety in the prior proceeding, covering all installments of that assessment.
Can taxpayers challenge individual Stamp Tax installment payments autonomously before the CAAD arbitral tribunal?
No, taxpayers generally cannot challenge individual Stamp Tax installment payments autonomously before the CAAD. The Tax Authority raised a dilatory exception arguing there is a 'manifest lack of independent challengeability of installments' under Article 89(1)(c) of the ATPC. Installment payments are not separate assessment acts but merely fractional collection of a single underlying assessment, meaning the challenge must address the original assessment act itself, not individual payment installments.
What are the grounds for declaring Stamp Tax assessments on real estate under Verba 28.1 TGIS illegal and unconstitutional?
Grounds for declaring Stamp Tax assessments under Verba 28.1 TGIS illegal and unconstitutional include: (1) violation of the legality principle by incorrectly aggregating VPT values instead of assessing autonomous units separately; (2) violation of the tax equality principle under Article 13 of the Portuguese Constitution; (3) violation of Article 104(3) CRP concerning taxation principles; (4) failure to respect material truth over legal formalism; and (5) arbitrary discrimination between taxpayers with similar situations based on whether property is divided into autonomous units or held as a single registration.