Process: 141/2015-T

Date: June 30, 2015

Tax Type: Selo

Source: Original CAAD Decision

Summary

Process 141/2015-T addressed whether Stamp Tax under Item 28.1 of the General Stamp Duty Table (GSDT) applies to undeveloped land for construction. The claimant challenged a €7,529.06 assessment (third installment for 2013) on land valued at €2,258,720. Item 28.1 imposes a 1% annual tax on 'property with residential use' exceeding €1 million in value. The Tax Authority (AT) argued this provision covers both built residential property and land designated for construction, interpreting 'residential use' broadly to tax wealth manifested in high-value property holdings. The claimant contended the tax assessment was illegal due to lack of a proper taxable event, as undeveloped land lacks actual residential use. This case followed arbitral decision 293/2014-T, which annulled a similar 2012 assessment on the same land. AT raised procedural exceptions including lack of jurisdiction (arguing the tribunal cannot annul payment receipts) and res judicata (claiming the 2013 assessment was already decided in the prior case). The case demonstrates critical interpretation issues regarding Stamp Tax application to construction land versus completed residential properties, with significant implications for property owners holding high-value undeveloped land. The legal framework involves Decree-Law 10/2011 (RJAT) governing tax arbitration procedures, requiring arbitral tribunal constitution within specific timeframes and allowing challenges to tax assessments deemed illegal. The outcome depends on whether 'afetação habitacional' (residential allocation) requires actual housing or merely intended residential purpose.

Full Decision

CAAD: Tax Arbitration

Case No. 141/2015

Arbitral Decision

I. REPORT

A, Tax ID …, with registered office at ..., ..., … filed a request for the constitution of a single Arbitral Tribunal, in accordance with the combined provisions of articles 2 and 10 of Decree-Law No. 10/2011, of 20 January (Legal Regime of Arbitration in Tax Matters, hereinafter referred to only as RJAT), against the Tax and Customs Authority (hereinafter AT), with the aim of obtaining a declaration of illegality of the third installment of the Stamp Duty assessment for 2013 in the amount of € 7,529.06.

The Claimant bases its request on the following grounds:

a) The tax in dispute was assessed at the rate of 1% on the taxable property value (TPV) of €2,258,720 of the land for construction registered in the urban property register of the parish ..., municipality of ... under number U-..., property of the present claimant at the date of the facts and hereinafter referred to simply as "land for construction" (property record attached as Exhibit No. 2 and hereby incorporated herein in full);

b) The tax now in dispute was paid in full by the present Claimant in November 2014 (see the payment receipt affixed to Exhibit No. 1);

c) The assessment notice served on the present Claimant makes reference to "Item 28.1 of the GSDT", suggesting that its basis lies in the provision of Item 28.1 of the General Stamp Duty Table (GSDT) attached to the Stamp Duty Code (SDC), in the wording given to it by article 4 of Law No. 55-A/2012, of 29 October, to which are subsidiarily applied the provisions of the Municipal Property Tax Code (MPTC);

d) That rule provides the following: "For property with residential use - 1%";

e) The challenged act is therefore, forthwith, illegal due to lack of the tax trigger;

f) The tax administration had, moreover, in 2013, assessed a similar stamp duty in the amount of € 22,587.20, with identical basis, although relating to 2012;

g) Such assessment was annulled in full by arbitral decision of 3 December 2014, rendered in case No. 293/2014 heard in this CAAD (see arbitral decision attached as Exhibit No. 3 and hereby incorporated herein in full for all purposes);

h) In those proceedings, the present Claimant requested the enlargement of the claim so that the proceedings would continue for annulment of the 2013 stamp duty assessment, whose third installment is being challenged herein;

i) However, by manifest error, the Honourable Arbitrator admitted the enlargement, but found meritorious the claims for declaration of illegality of the assessments numbered 2013 ..., of 14 July 2013, 2014 ... and 2014 ..., leaving out the third and final installment for the reasons which she set forth in her ruling of 19 February 2015 which is attached hereto as Exhibit No. 4 and which addressed the motion for correction which is likewise attached hereto as Exhibit No. 5.

The request for constitution of the Arbitral Tribunal was accepted by the Honourable President of CAAD on 05.03.2015 and automatically notified to AT.

In accordance with the provision in paragraph c) of article 11(1) of the RJAT, the single Arbitral Tribunal was constituted on 07.05.2015.

AT responded, defending its dismissal from the proceedings, in view of the exception of lack of jurisdiction of the tribunal or, should that not be the case, the exception of res judicata, further alleging the lack of merit of the claim having regard, in summary, to the following grounds:

a) The present request for arbitral decision has as its object the annulment of the payment receipt that corresponds to the third installment of the Stamp Duty assessment (SD) for the year 2013, identified in the request for arbitral decision, in the amount of €7,529.06;

b) The same assessment, supported by the payment receipts relating to the first and second installments was already subject to examination in arbitral case No. 293/2014-T, which found meritorious the annulment of the tax assessments duly documented in the payment receipts submitted by the Claimant in those proceedings;

c) For that reason, the Arbitral Tribunal should conclude by its lack of jurisdiction to examine the request for annulment of a payment receipt;

d) Moreover, should that not be the case, the Arbitral Tribunal should acknowledge, still in line with the indivisibility of the tax assessment, that, having the Arbitral Tribunal constituted to hear the subject matter of case No. 293/2014-T issued a decision on the tax assessment, from which emerged the payment receipt now in question in these proceedings, the Claimant is already furnished with an executory title for annulment of the tax assessment underlying the present payment receipt, whereby as to the same res judicata has already been formed;

e) Thus, the Tribunal should find that the exception of res judicata is established, dismissing the Respondent Entity accordingly.

f) Should that not be the case, and by way of Counter-Argument, AT emphasizes that it contends that the concept of "property with residential use", for the purposes of Item 28 of the GSDT, includes both built property and land for construction, starting from the literal wording of the rule;

g) Taxation under stamp duty follows adequacy criteria, applying in a different manner to all holders of property with residential use of value exceeding €1,000,000, bearing on wealth embodied and manifested in the value of the property;

h) The assessment in question constitutes a correct interpretation and application of law to the facts, suffering from no defect of violation of law, whether of the Constitutional Law or of the Stamp Duty Code, should, consequently, be found to lack merit in the claim advanced and the Respondent should be dismissed from the claim.

The hearing referred to in article 18 of the RJAT and the making of final submissions were dispensed with in view of the nature of the matter contained in the file, with the examination of the exceptions invoked by the Respondent in its response being relegated to the final decision to be rendered.

II. FINDINGS OF FACT

Based on the elements contained in the file and in the administrative proceedings attached thereto, the following facts are considered proven:

A) The Claimant filed a request for arbitral decision on the Stamp Duty assessment for the year 2013;

B) Such assessment was annulled in full by arbitral decision of 3 December 2014, rendered in case No. 293/2014 heard in this CAAD, which found meritorious the claims for declaration of illegality of the assessments numbered 2013 ..., of 14 July 2013, 2014 ... and 2014 ...;

C) The Stamp Duty for the year 2013 was paid in full by the present Claimant in November 2014;

D) The Claimant intends to obtain the declaration of illegality of the third installment of the stamp duty assessment for 2013 in the amount of € 7,529.06.

There are no facts with relevance to the decision of the case that should be considered unproven.

This Tribunal based its conviction on the examination of the documents submitted to the file by the Parties.

III. MATTERS OF LAW

In the response filed, AT invokes exceptions which, if established, will lead to dismissal from the proceedings. Let us examine:

· ABSOLUTE LACK OF MATERIAL JURISDICTION

In accordance with the provisions of article 16 of the Tax Procedure and Process Code ("TPPC"), article 13 of the Code of Administrative Court Procedure ("CACP") and article 101 of the Civil Procedure Code (CPC), subsidiarily applicable by virtue of article 29(1) of the RJAT, the determination of material jurisdiction of the courts is of public order and its examination precedes that of any other matter.

Consequently, taking into account that the merit of the exception invoked by AT, if established, prevents the examination of the other questions raised, it is important to delimit the scope of jurisdiction of tax arbitral jurisdiction and to ascertain whether the jurisdiction of the tribunal covers or not the third installment of the Stamp Duty assessment for the year 2013.

The question of the lack of material jurisdiction of the arbitral tribunals has been addressed in various arbitral cases decided within the CAAD. See in this regard the decisions rendered in cases Nos. 48/2012, of 06.07.2012, 73/2012, of 23.10.2012 and 76/2012, of 29.10.2012, whose decisions we follow.

Thus, first and foremost, it is important to note the provisions of article 124(1) of Law No. 3-B/2010, of 28 April, according to which the Government was authorized "to legislate in order to establish arbitration as an alternative form of jurisdictional resolution of conflicts in tax matters", which should, according to its paragraph 2, "constitute an alternative procedural means to the judicial challenge process and to the action for recognition of a right or legitimate interest in tax matters."

Implementing the said legislative authorization, Decree-Law No. 10/2011, of 20 January, "established tax arbitration limited to certain matters, listed in its article 2" making "the binding of the tax administration dependent on an order of the Government members responsible for the areas of finance and justice" (see the reasoning of the arbitral decision rendered in Case No. 76/2012 referred to above).

The scope of tax arbitral jurisdiction was thus delimited in the first place by the provision of article 2 of the RJAT which sets forth, in its paragraph 1, the criteria for material division, encompassing the examination of claims which are directed at the declaration of illegality of tax assessment acts (paragraph a)).

By means of the Binding Order (Order No. 112-A/2011, of 20 April), the Government, through the Ministers of State and of Finance and Justice, bound the services of the General Tax Authority and of the General Customs Authority and Excise Taxes to the jurisdiction of the arbitral tribunals that operate in CAAD, it being that to these services corresponds presently the Tax and Customs Authority, under Decree-Law No. 118/2011, of 15 December, which approves the organic structure of this Authority, resulting from the merger of various entities.

In this Order, are established additional conditions and limits of binding taking into account the specificity of the matters and the value at issue.

Article 2 of the Binding Order provides:

Article 2

Scope of Binding

The services and entities referred to in the preceding article bind themselves to the jurisdiction of the arbitral tribunals that operate in CAAD that have as their object the examination of claims relating to taxes whose administration is entrusted to them referred to in article 2(1) of Decree-Law No. 10/2011, of 20 January, with the exception of the following:

a) Claims relating to the declaration of illegality of self-assessment acts, withholding at source and payment on account that have not been preceded by recourse to the administrative route under articles 131 to 133 of the Tax Procedure and Process Code;

b) Claims relating to acts of determination of taxable subject matter and acts of determination of tax-liable matter, both by indirect methods, including decisions of the revision procedure;

c) Claims relating to customs duties on imports and other indirect taxes that bear on goods subject to import duties; and

d) Claims relating to tariff classification, origin and customs value of goods and to tariff quotas, or whose resolution depends on laboratory analysis or on steps to be taken by another Member State within the scope of administrative cooperation in customs matters."

Now, the request presented by the Claimant concerns the declaration of illegality of payment receipt No. 2014 ..., relating to the third installment of the Stamp Duty assessment, issued on 17 March 2014, in the amount of €22,587.20.

Considering that the Stamp Duty assessment underlying the payment receipt that is the object of the present arbitral petition could be challenged only with the notification of the last tax installment of Stamp Duty, it is understood that the Tribunal is competent to examine the claim of the Claimant which is embodied in the declaration of illegality of the Stamp Duty assessment already identified, concluding by the lack of merit of the exception raised by AT relating to the absolute lack of jurisdiction of this Arbitral Tribunal ratione materiae.

· RES JUDICATA

AT further alleges in its Response that "having the Arbitral Tribunal constituted to hear the subject matter of case No. 293/2014-T issued a decision on the tax assessment, from which emerged the payment receipt in question in these proceedings, the Claimant is already furnished with an executory title for annulment of the tax assessment underlying the present payment receipt, whereby as to the same res judicata has already been formed."

In this regard, article 24(2) of the RJAT provides the following:

"Without prejudice to other effects provided for in the Tax Procedure and Process Code, the arbitral decision on the merits of the claim against which no appeal or objection lies precludes the right to, on the same grounds, claim, object, request revision or initiate revision ex officio, or raise for arbitral decision on the acts that are the subject of those requests or on the resulting tax assessments."

Thus, from the said rule emerges that the operativeness of the exception of res judicata depends thus, on the existing relationship between what has already been decided and what is submitted for decision in the new action, in this case, the new request for arbitral decision.

In essence, the objective limits of res judicata are defined by reference to the subject matter of the proceedings, which is delimited through the claim and the cause of action (See Decision of the Supreme Administrative Court rendered in case 419/11 of 7.12.2011).

Now, in the situation under analysis, the claim of the Claimant is directed to the removal from the legal order of an invalid legal act, in this case, the Stamp Duty assessment already identified, with the same grounds accepted by the Arbitral Tribunal in the decision rendered in case No. 293/2014.

It is thus understood that the present arbitral petition seeks the same effect as the arbitral petition presented in case No. 293/2014. In fact, through the decision rendered in case No. 293/2014, the Claimant was ordered to receive reimbursement of the amount relating to assessment No. 2013 ..., in the amount of €22,587.20 – the total amount of the Stamp Duty assessment for the year 2013.

Although the decision did not expressly indicate that the payment receipt corresponding to the third installment of the annulled Stamp Duty assessment which is the subject of the present request for arbitral decision would be covered by the declaration of illegality, the truth is that the tax assessment examined was only one, AT being ordered to annul the entire Stamp Duty assessment in question and to return the total amount of the assessment, including the amount that is now the object of a new request for arbitral decision.

In fact, under article 23(7) of the Stamp Duty Code, "When the tax owed by the situations provided for in Item 28 of the General Table, the tax is assessed annually,(…), applying, with the necessary adaptations, the rules contained in the Municipal Property Tax Code."

From this it follows that as the tax is assessed annually, there is only one annual assessment act, although such act may be divided into several installments for the purpose of revenue collection (See Decision of CAAD rendered in case No. 726/2014).

Although assessment acts, such as the Stamp Duty assessment underlying the present proceedings, may be divisible whether by nature as they relate to a monetary obligation or by definition (See Decisions of the Supreme Administrative Court rendered in case No. 298/12 of 10.04.2013, No. 5874, of 9.07.1997, No. 24101, of 22.09.1999, No. 287/05, of 27.09.2005 and No. 583/10, of 12.01.2011, among others), the partial annulment of the Stamp Duty assessment sub judice could only occur if the illegality of the act were only partial.

Now, in this regard it has already been decided in various decisions that "The criterion for determining whether the act should be totally or partially annulled passes through determining whether the illegality affects the tax act in its entirety, in which case the act should be annulled in full or only in part, in which case partial annulment is justified." - See, among others, the Decision of the Supreme Administrative Court rendered in case No. 298/12 of 10 April.

In the case under analysis, the illegality of the Stamp Duty assessment for the year 2013 is indubitable, this act being indivisible, insofar as the illegality of the tax act of Stamp Duty assessment affects it in its entirety.

Just as has already been clarified in various CAAD decisions (See decision rendered in cases No. 205/2013 and 726/2014), "From the circumstance that the amount of the assessment may be paid in several installments, does not mean that there are three assessments. It is, rather, one assessment that may be paid in several installments, the taxpayer not being prevented from challenging it due to the fact that only the payment period of one of them has elapsed."

Consequently, having the Stamp Duty assessment been annulled which underlies the third installment of Stamp Duty which is the subject of the present request for arbitral decision, by means of the CAAD decision rendered in case No. 293/2014, and there being no other matter to discuss in the proceedings, it necessarily must be found meritorious the exception of res judicata, thus avoiding that there be renewed indefinitely disputes among the same persons on the same grounds and on the same subject matter that put at risk confidence and social peace and increase the possibility of contradictory decisions with discredit to justice.

IV. DECISION

Hereby this Arbitral Tribunal decides to find meritorious the exception of res judicata and, consequently, to dismiss the Tax and Customs Authority from the proceedings.

V. VALUE OF THE CASE

In conformity with the provisions of article 306(2) of the Civil Procedure Code, 97-A(1)(a) of the TPPC and article 3(2) of the Regulation on Costs in Tax Arbitration Proceedings, the value of the claim is adjusted to €22,587.20.

VI. COSTS

Under the provisions of articles 12(2) and 22(4), both of the RJAT, and article 4(4) of the Regulation on Costs of Tax Arbitration Proceedings, the arbitration fee is set at €1,224.00, in accordance with Table I of the aforementioned Regulation, at the expense of the Claimant.

Let it be served.

Lisbon, 30 June 2015

The Arbitrator

Magda Feliciano

(The text of this decision was prepared by computer, under article 131(5) of the Civil Procedure Code, applicable by referral of article 29(1)(e) of Decree-Law No. 10/2011, of 20 January (RJAT) with its wording governed by the spelling prior to the Orthographic Agreement of 1990.)

Frequently Asked Questions

Automatically Created

Does Verba 28.1 of the Stamp Tax General Table apply to building land (terrenos para construção)?
Based on arbitral precedent cited in this case (Process 293/2014-T), Item 28.1 of the GSDT should not apply to undeveloped land for construction. The provision taxes 'property with residential use' at 1%, which requires actual residential allocation (afetação habitacional), not merely land designated for future construction. The literal interpretation suggests built property with current residential function, not potential future use. However, the Tax Authority argues the concept encompasses land for construction based on broad wealth taxation principles.
What is the legal basis for challenging Stamp Tax assessments on properties valued above €1 million?
The legal basis for challenging Stamp Tax assessments on properties exceeding €1 million is Decree-Law 10/2011 (Legal Regime of Arbitration in Tax Matters - RJAT), combined with Articles 2 and 10. Taxpayers can request constitution of an arbitral tribunal at CAAD to declare assessments illegal. Challenges must identify specific grounds such as lack of taxable event (facto tributário), misapplication of Item 28.1 GSDT, or violation of the Stamp Duty Code. Subsidiary application of the Municipal Property Tax Code provisions also provides interpretative framework for challenging assessments.
Can a taxpayer request annulment of Stamp Tax when the property lacks housing allocation (afetação habitacional)?
Yes, taxpayers can request annulment of Stamp Tax when property lacks actual housing allocation (afetação habitacional). The key argument is that Item 28.1 GSDT requires 'property with residential use,' which implies current residential purpose, not future potential. Undeveloped land for construction lacks this allocation. Process 293/2014-T established precedent for annulling such assessments. The challenge proceeds through RJAT arbitral proceedings, arguing the tax assessment suffers from illegal application of law due to absence of the essential taxable event - actual residential use.
How does CAAD tax arbitration handle cases previously decided on similar Stamp Tax liquidations?
CAAD tax arbitration applies res judicata principles when previous decisions addressed the same tax assessment. In this case, AT argued the 2013 assessment was already decided in Process 293/2014-T, creating res judicata. However, the tribunal must examine whether the specific installment (third payment) was actually covered by the prior decision. If the previous arbitral decision only addressed certain installments, remaining installments may require separate proceedings. The tribunal also considers whether indivisibility of tax assessments means one decision covers all related payments, potentially granting executory title for the entire assessment.
What are the procedural requirements for contesting Stamp Tax assessments under Decreto-Lei 10/2011 (RJAT)?
Under Decreto-Lei 10/2011 (RJAT), taxpayers must file a request for arbitral tribunal constitution identifying the contested tax assessment, grounds for illegality, and supporting documentation. The CAAD President accepts or rejects the request, then automatically notifies the Tax Authority. The tribunal constitutes within prescribed timeframes (here, constituted May 7, 2015). AT files a response raising exceptions or merit defenses. Article 18 hearings and final submissions may be dispensed with depending on case nature. Procedural exceptions (jurisdiction, res judicata) are examined before merit. The system provides an alternative to judicial tax courts for efficient resolution of tax disputes.