Process: 179/2017-T

Date: January 30, 2018

Tax Type: Selo

Source: Original CAAD Decision

Summary

CAAD Process 179/2017-T addresses the application of Stamp Tax Item 28.1 (TGIS) to a Lisbon urban property containing 10 independent residential units. The central legal issue concerns whether the €1,000,000 property value threshold applies to each independent unit individually or to the aggregate property value. Five co-owners challenged stamp tax assessments totaling €11,057.99 for 2015, arguing that since no individual unit exceeded €1,000,000 in property value, Item 28.1 should not apply. They contend that Article 67 CIS requires subsidiary application of CIMI rules, which assess IMI individually per unit, and that the AT inconsistently issued individual collection notices while applying the tax to the aggregate value. The taxpayers paid under protest and requested reimbursement with compensatory interest under Article 43(1) LGT, claiming manifest error by the tax administration. The case involved arbitrator replacement under Article 16(c) RJAT after the initial arbitrator failed to meet statutory deadlines. The AT defended the assessments, arguing Item 28.1 combines two requirements: residential use and property value equal to or exceeding €1,000,000 for the registered urban property as a whole.

Full Decision

ARBITRAL DECISION

I – Report

1.1. A…, taxpayer no. …, B…, taxpayer no. …, C…, taxpayer no.…, D…, taxpayer no. …, and E…, taxpayer no. …, having been notified of the rejection of the administrative claim filed against the corporate income tax assessments in question, in the total amount of €11,057.99, submitted, on 17/3/2017, a request for constitution of an arbitral tribunal and arbitral pronouncement, pursuant to the provisions of article 99 of the CPPT and articles 2, no. 1, subparagraph a), 3, no. 1, and 10, no. 1, subparagraph a), and no. 2, all of Decree-Law no. 10/2011, of 20/1 (Legal Framework of Arbitration in Tax Matters, hereinafter designated as «RJAT»), in which the Tax and Customs Authority (AT) is requested, with a view to the "declaration of illegality of the tax assessment acts regarding Stamp Tax Item 28.1 of the General Schedule of Stamp Tax, relating to floors and divisions with independent use of the urban property located at Avenue …, no. … to …, district and municipality of Lisbon and parish of …, registered in the respective urban property cadastre under article … (article ... of the extinct Parish of…), and for the year 2015". The now Requesters also request, "the restitution to the Requesters of the amounts unduly paid, increased by the competent compensatory interest calculated in accordance with the legal terms."

1.2. On 29/5/2017 the Single Arbitral Tribunal was constituted with Arbitrator Dr. Andrea Firmino.

1.3. Pursuant to article 17, no. 1, of the RJAT, the AT was served, as the defendant party, to present a response, in accordance with and for the purposes of the aforementioned article. The AT presented its response (and the administrative file) on 27/6/2017, having argued, in summary, the complete lack of merit of the request of the now Requesters.

1.4. Pursuant to the Order of 20 December 2017, from the President of the Deontological Council of CAAD, after the Arbitrator in office was notified to provide information and having said nothing, and since the Arbitrator in question "did not respect the deadlines legally and regularly established, it was determined [...] the termination of the mandate of Dr. Andrea Firmino as arbitrator in the aforementioned process, and her replacement, in those same functions, by Professor Dr. Miguel Patrício."

1.5. The appointment of the new Arbitrator took place on 4/1/2018.

1.6. By order dated 17/1/2018, the Tribunal considered, pursuant to the provisions of article 16, subparagraph c), of the RJAT, that the meeting of article 18 of the RJAT could be dispensed with, and that the process should proceed to decision. In these terms, the Tribunal set the date of 30/1/2018 for the pronouncement of the arbitral decision.

1.7. The Arbitral Tribunal was regularly constituted, is materially competent, the process does not suffer from defects that invalidate it, and the Parties have standing and legal capacity, presenting themselves as legitimate.

II – Allegations of the Parties

2.1. The now Requesters allege, in their initial petition, that: a) "the material question in dispute underlying the assessment of the legality of the acts under claim – acts relating to the year 2015 –, and, consequently, the verification or not of the erroneous qualification of the tax fact in the assessment, amounts to determining whether the property value relevant for purposes of determining the applicability of Item 28 of the TGIS, in force at the date of the facts, when there is a property not constituted in horizontal ownership, is that of each unit considered autonomously or the sum of the property value attributed to each of those units"; b) "with nothing being provided in the CIS or Law no. 55-A/2012, of 29 October, regarding what is meant by 'urban property with residential use', the meaning of that concept should be interpreted in accordance with article 67 of the CIS, which requires that 'To matters not regulated in this Code relating to item no. 28 of the General Schedule the provisions of CIMI are applied subsidiarily', with the determination of the PV being subject to the terms provided in articles 38 et seq. of that code"; c) "additionally, no. 6 of article 1 of the CIS points in a similar direction when providing that the concept of property for Stamp Tax purposes is that defined in CIMI"; d) "since IMI is assessed individually in relation to each of the parts, no reasons are apparent, given the referral resulting from the aforementioned article 67 of the CIS, for why the legal criterion for defining the incidence of item 28 should not be the same. Indeed, it is the AT itself that implicitly recognizes that inevitability, by issuing the collection notices for that tax individually for each part, floor or division with independent use based on the PV set in accordance with the IMI rules (Cf. cited Documents nos. 2 to 45). What, coherently, should determine that, when there was a property in vertical ownership, there would only be incidence of item 28 of the TGIS if any of the divisions with independent use presented a PV exceeding €1,000,000.00"; e) "the interpretation and application that the AT is making of the norm in question also manifestly conflicts with what, if we understand it correctly, consists of the spirit of the legislature"; f) "the existence in each property of independent dwellings, under horizontal or vertical ownership, may be capable of triggering the incidence of this Item 28 of the TGIS, only if the PV of each of the parts or fraction equals or exceeds €1,000,000.00"; g) "in the present case, the property in question is in full ownership and contains 10 divisions with independent use. Considering that none of the said independent units intended for dwelling present a PV equal to or exceeding €1,000,000.00, the property in question is simply not subject to Stamp Tax on Item 28 of the TGIS"; h) "being, therefore, manifest the error of law, attributable to the services, regarding the assumptions of the norm of incidence, from which the assessments subject to the present review request suffer, which must therefore be, immediately, annulled"; i) "despite the full conviction of the illegality of the assessments contested, the now Claimants, considering the consequences arising from non-payment of the assessed taxes, proceeded, as a precaution, with the payment of the entire tax and interest assessed [...]. In that measure, with the present [...] the Claimants should be reimbursed of what they unduly paid"; j) "it also follows that, since the assessments in question result from manifest error attributable to the services of the Tax Administration, whose recognition is expressly requested, the Claimants also have, pursuant to article 43, no. 1, of the LGT, the right to compensatory interest calculated on that amount"; l) "in this way, being revoked [...] the assessment acts subject to the present claim, the amounts unduly paid must be restituted to the Claimants, increased by compensatory interest calculated at the legal rate, pursuant to article 43, no. 1, of the LGT, counted from the date that payment occurred until full reimbursement."

2.2. In conclusion, the now Requesters request that the present petition be granted, "being, consequently, annulled the Stamp Tax assessment acts identified in article 2 of the present [petition] and attached as Documents nos. 2 to 46, and second and third installments relating to the same tax, with the necessary legal consequences, in particular, the restitution to the Requesters of the amounts unduly paid, increased by the competent compensatory interest calculated in accordance with the legal terms."

2.3. For its part, the AT alleges, in its response, that: a) "the subjection to stamp tax of item 28.1 of the General Schedule results from the combination of two facts: residential use and the property value of the urban property registered in the cadastre being equal to or exceeding € 1,000,000.00"; b) "the property is described in the cadastre under the regime of full ownership, constituted by divisions or floors capable of independent use"; c) "what is at issue here are assessments that result from the direct application of the legal norm, which translates into objective elements, without any subjective or discretionary assessment"; d) "for the calculation of the PV, the coefficient varies according to its destination, and since the total property value for housing divisions exceeds €1,000,000.00, the use coefficient applied was 1.00. Being this the cadastral information, in accordance with article 23, no. 7, of the CIS, the assessment of stamp tax in question was carried out by the Tax Administration, taking into account the nature of the urban property, in particular its divisions intended for residential use, on the date of the tax fact, applying, with the necessary adaptations, the rules contained in CIMI"; e) "thus, taking into account the cadastral information contained in the property ledger, the Requesters do not succeed, with the documents they now attach to the file, in proving that contradicts the nature of the divisions with residential character. Therefore, the stamp tax assessments contested were issued in accordance with the information contained in the property ledger of the property, therefore, they are valid and do not suffer from any illegality"; f) "on the date the Requesters held full ownership of the urban property in question, assessed in accordance with CIMI, within the scope of the general assessment of urban properties, described as 'property in full ownership with floors or divisions capable of independent use', with property value (PV) exceeding € 1,000,000.00. In compliance and in accordance with the provisions of article 6, no. 2, of Law no. 55-A/2012, of 29/10, which added item no. 28 to the TGIS, with the amendment made by Law no. 83-C/2013 of 31/12, and whose respective norm of incidence refers to urban properties, assessed in accordance with CIMI, with PV equal to or exceeding € 1,000,000.00, and, pursuant to its no. 28.1, residential use, the AT proceeded with notification of the collection documents for payment of the assessments in question"; g) "for properties in full ownership, the PV that serves as the basis for its calculation will, without question, be the PV that the now Requester defines as 'global value of the property'. In compliance with the provisions of article 119, no. 1 of CIMI, the collection document is sent to the tax subject with itemization of the parts capable of independent use, their respective property value and the tax assessed for each municipality of the location of the properties"; h) "the assessment being correct and the tax being due, compensatory interest is not due, starting by the non-existence of any error attributable to the Services, which merely acted, as they should, in strict compliance with the legal norm"; i) "although the assessment of Stamp Tax, in the situations provided for in item no. 28.1 of the TGIS, takes place in accordance with CIMI rules, the truth is that the legislator reserves the aspects that require proper adaptations, namely, those in which, as is the case with properties in full ownership, although with floors or divisions capable of independent use (even though IMI is assessed in relation to each part capable of independent use), for Stamp Tax purposes the property in its entirety is relevant, since the divisions capable of independent use are not considered property, but only autonomous fractions under horizontal ownership, as provided in no. 4 of article 2 of CIMI"; j) "what, expressly, results from the letter of the law is that the legislator intended to tax with item 28.1 in question properties as a single legal-fiscal reality"; l) "being the properties in a regime of full ownership, not possessing autonomous fractions, to which fiscal law attributes the qualification of property, because from the notion of property of article 2 of CIMI, only autonomous fractions of property under horizontal ownership are considered properties – no. 4 of the cited article 2 of CIMI"; m) "from the above, the defect of violation of law due to error as to the assumptions of law should be judged unmerited, keeping in the legal order the assessments challenged as they constitute a correct application of the law to the facts"; n) "no violation of the principle of equality appears"; o) "it is [...] a consequence of the tax fact of stamp tax on item 28.1 consisting of the ownership of urban properties whose property value registered in the cadastre, in accordance with CIMI, is equal to or exceeding € 1,000,000.00, that the property value relevant for purposes of the incidence of the tax is, thus, the total property value of the urban property and not the property value of each of the parts that compose it, even when capable of independent use"; p) "item 28.1 thus incides on the ownership, usufruct or right of surface of urban properties with residential use, whose property value registered in the cadastre, in accordance with CIMI, is equal to or exceeding € 1,000,000.00"; q) "the notifications made of the payment installments of the tax did not violate any legal or constitutional principle, and should, therefore, be upheld"; r) "the right to compensatory interest provided for in no. 1 of article 43 of the LGT, derived from the judicial annulment of an assessment act, depends on it having been demonstrated in the process that such fact is affected by error regarding the assumptions of fact or law attributable to the Tax Administration. The error that supports the right to compensatory interest is not any defect or illegality but that which is concretized in defective assessment of relevant factuality or in erroneous application of legal norms. Since, at the date of the facts, the Tax Administration made the application of the law in the terms to which as an executive body it is constitutionally bound, one cannot speak of error of the services in accordance with the provisions of article 43 of the LGT."

2.4. In summary, the AT considers that "the present request for arbitral pronouncement should be judged unmerited, as not proven, keeping in the legal order the tax assessment acts challenged, absolvinghereby the requested entity from the request."

III – Proven, Unproven Facts and Respective Grounds

3.1. The following facts are considered proven:

i) The Stamp Tax (ST) assessments identified in Docs. 2 to 46 attached to the present file are at issue (which are considered, given their length, reproduced here) – being all relating to floors and divisions with independent use of the urban property located at Avenue …, no. … to …, district and municipality of Lisbon and parish of …, registered in the respective urban property cadastre under article … (article … of the extinct Parish of …), and for the year 2015.

ii) The urban property in question, as observed from its respective property ledger (see fls. 130 to 133 of the attached PA), is a property in full ownership with floors or divisions capable of independent use. It is composed of 6 floors, with 10 divisions, all with independent use (see fl. 130). All 10 divisions are functionally and economically independent. To each of these 10 divisions corresponds its own cadastral article.

iii) Through the reading of Docs. 2 to 46 attached (and of fls. 130 to 133 of the attached PA), it can be verified that the PV attributed to each of the said 10 fractions does not exceed, for any of them, the one million euros referred to in item no. 28 of the TGIS.

iv) The now Requesters were notified of the assessments referred to above (issued on 5 April 2016), all by reference to the year 2015, in the amount of €7,744.29 (which was paid by the Requesters: see PA attached to the file). To that amount is added, further, the value of €3,313.70, referring to second and third installments – thus making, the global amount now in question of €11,057.99 (see Docs. 1 to 46 attached to the present file).

v) The Requesters filed administrative claim no. …2016… against the assessments identified above (see PA attached to the present file), having been notified of the decision that was rendered on 12/12/2016 (see fl. 147 of the attached PA), which fully rejected the mentioned administrative claim. Disagreeing, the Requesters submitted the present request for arbitral pronouncement on 17/3/2017.

3.2. There are no unproven facts relevant to the decision of the case.

3.3. The facts considered pertinent and proven (v. 3.1) are based on the analysis of the positions presented by the parties and the documentary evidence attached to the present file.

IV – On the Law

In the case now under analysis, the essential questions that arise are: 1) whether the subjection to Stamp Tax, in terms of the provision in item no. 28 of the TGIS, is determined by the PV that corresponds to each of the parts of the property with residential use, or whether, instead, it is determined by the global PV of the property, which would correspond to the sum of all PVs of the floors or independent units that compose it; 2) whether the requested compensatory interest is due.

Let us then examine.

  1. At the origin of the first question is item no. 28 of the TGIS, added by article 4 of Law no. 55-A/2012, of 29/10, which provides as follows:

"28 – Ownership, usufruct or right of surface of urban properties whose property value registered in the cadastre, in accordance with the Code for the Municipal Property Tax (CIMI), is equal to or exceeding € 1,000,000.00 – on the property value for purposes of IMI: 28.1 – For property with residential use – 1%. 28.2 – For property, when the tax subjects that are not natural persons are residents in a country, territory or region subject to a clearly more favorable tax regime, listed in the approved list by ministerial order of the Minister of Finance – 7.5%."

Law no. 55-A/2012, which entered into force on 30/10/2012, did not define the concepts contained in the said item no. 28, in particular, the concept of "property with residential use". However, observing what is provided in article 67, no. 2, of the Stamp Tax Code (CIS), also added by the cited Law no. 55-A/2012, it appears that "to matters not regulated in this code relating to item 28 of the General Schedule the CIMI is applied subsidiarily." Given doubt as to the scope of the said item, it is justified, therefore, to observe what CIMI states.

From the reading of CIMI it is understood that the concept of "property with residential use" refers, naturally, to the concept of "urban property" which is defined in articles 2 and 4. On the other hand, it is noted that the determination of PV is subject to articles 38 et seq. of CIMI.

Among the various types of "urban properties" (article 6), "residential urban properties" are expressly mentioned [see no. 1, al. a)], adding then, no. 2 of the same article of CIMI, that these "are buildings or constructions licensed for such or, in the absence of license, that have as their normal destination each of these purposes."

If it is true that no. 4 of article 2 of CIMI states that, "for purposes of this tax, each autonomous fraction under horizontal ownership is deemed to constitute a property", it is also true that there is nothing in the law that points to discrimination between properties in horizontal and vertical ownership as regards their identification as "residential urban properties". From this it is concluded that autonomous parts of properties in vertical ownership with residential use should be considered as "residential urban properties".

Indeed, it makes no sense to distinguish in law what the law itself does not distinguish (ubi lex non distinguit nec nos distinguere debemus). Indeed, nothing indicates, neither in item no. 28, nor in the provisions of CIMI, a justification for that particular differentiation. Note, in this regard, what article 12, no. 3, of CIMI provides: "each floor or part of property capable of independent use is considered separately in cadastral registration, which also discriminates the respective property value."

The uniform criterion that is imposed is, thus, that which determines that the incidence of the norm in question only takes place when some of the parts, floors or divisions with independent use of property in horizontal or full ownership with residential use, possesses a PV exceeding €1,000,000.00. Fixing as the reference value, for the incidence of the new tax, the global PV of the property in question, finds no basis in the applicable legislation, which is CIMI, considering the referral made by the aforementioned article 67, no. 2, of CIS.

Thus, and observing the case under analysis, it appears that, as noted by the Requesters, "none of the [...] independent units intended for dwelling present a PV equal to or exceeding €1,000,000.00" (see point iii) of the proven facts). From this it is concluded, in light of what has been stated above, that Stamp Tax as referred to in item no. 28 of the TGIS should not incide on them, being, consequently, illegal the assessment acts challenged by the now Requesters.

Indeed, and as well noted in the DA rendered in proc. no. 552/2015-T, of 27/1/2016, in a process identical to the one now under analysis, "the main question brought to the file [...] is to know whether the subjection to Stamp Tax (item 28 of the TGIS) of an urban property not constituted in horizontal ownership is determined by the PV that corresponds to each of the divisions of independent use and with residential use [...], or whether it is determined by the global PV of the property, which would correspond to the sum of all PVs of the floors or divisions of independent use and with residential use that comprise it [...]. Effectively, from a formal point of view, the AT is right in referring that a property constituted in horizontal ownership is a distinct legal-fiscal reality from an urban property in vertical or full ownership. However, if no. 4 of article 2 of CIMI establishes the legal fiction that each of the autonomous fractions of a property constituted in horizontal ownership embodies a property, from this does not necessarily follow that a part of independent use of an urban property not constituted in horizontal ownership should be considered property. If the legislator used, in the norm of item 28.1 of the TGIS, the expression "urban property with residential use", it does not appear legitimate that the AT intends to include in it the floors or divisions of independent use of properties not constituted in horizontal ownership which, as it itself acknowledges, are not properties, and therefore cannot be equated with autonomous fractions of properties constituted in horizontal ownership. With respect to the determination of the property value of properties not constituted in horizontal ownership, article 7, no. 2, of CIMI applies, but only as to "urban properties with parts classifiable in more than one of the classifications of no. 1 of the previous article", in which case, in accordance with its subparagraph b) "(…) each part is evaluated by application of the corresponding rules, being the value of the property the sum of the values of its parts". And this is the only norm of CIMI in which reference is made to the "[global] value of the property", without, however, this having any relevance at the level of tax assessment. Thus, from the combination of the provisions of no. 2 of article 7 and of no. 1 of article 6, both of CIMI, it results that, if an urban property not constituted in horizontal ownership integrates exclusively parts or divisions intended for dwelling, the value of the property is not equivalent to the sum of its parts."

It should be noted, finally, that this understanding (of an infra-constitutional nature), which has been defended here, has been supported by the STA, as can be seen from the recent Judgment no. 47/15, of 9/9/2015, in which it was noted, in a clear manner, that, "where it concerns a property constituted in vertical ownership, the incidence of Stamp Tax should be determined, not by the PV resulting from the sum of the PV of all divisions or floors capable of independent use (individualized in the cadastral article), but by the PV attributed to each of those floors or divisions intended for dwelling."

See, also, in this regard, what was pertinently observed in the following recent judgment of the STA (Judgment of 24/5/2016, rendered in appeal 1344/15): "the question that it is incumbent to decide concerns the interpretation of items 28 and 28.1 of the General Table of Stamp Tax (TGIS) added by article 4 of Law no. 55-A/2012, of 29/10, in order to define whether it applies to urban properties, with one cadastral article but constituted by parts with use and independent use to which independent PVs were attributed, each of these of value less than one million euros. This question is no longer new in this Supreme Court and has received a uniform response in the sense advocated in the judged sentence [namely, and as this judgment summarizes: "Where it concerns a property constituted in vertical ownership, the incidence of Stamp Tax should be determined, not by the PV resulting from the sum of the PV of all divisions or floors capable of independent use (individualized in the cadastral article), but by the PV attributed to each of those floors or divisions intended for dwelling."], in all, the judgment dated 04.05.2016, appeal no. 0166/16. Also, the Constitutional Court has already pronounced itself on the constitutional dimension of this norm in light of the principles of tax equality, contributory capacity and proportionality, having concluded that the norm contained in items 28 and 28.1 of the General Table of Stamp Tax, added by article 4 of Law no. 55-A/2012, of 29 October, insofar as it imposes annual taxation on the ownership of urban properties with residential use, whose property value is equal to or exceeding €1,000,000.00, is not unconstitutional, in all the judgment 247/2016, dated 04.05.2016. In the present appeal there is no need to assess the norm in question in light of such principles and constitutional parameters, instead imposing a teleological and systematic interpretation of it, so that, the jurisprudential orientation that has been followed by the common Courts, and which will now be followed, does not detract from the good doctrine imposed by that Constitutional Court."

  1. In light of what is provided in no. 5 of article 24 of the RJAT – "interest payments are due, regardless of their nature, in accordance with the terms provided for in general tax law and in the Code of Tax Procedure and Process" –, it has been understood that this norm allows recognition of the right to compensatory interest in arbitral processes. Thus, analysis of the present request is justified.

Compensatory interest is due when it is determined, in administrative claim or judicial challenge, that there has been error attributable to the services from which results payment of the tax debt in an amount greater than legally due (see article 43, no. 1, of the LGT). It is, therefore, a necessary condition for the award of the mentioned interest the demonstration of the existence of error attributable to the services: "The right to compensatory interest provided for in no. 1 of article 43 of the LGT [...] depends on it having been demonstrated in the process that such act is affected by error regarding the assumptions of fact or law attributable to the AT." (Judgment of the STA of 30/5/2012, proc. 410/12); "The right to compensatory interest provided for in no. 1 of article 43 of the General Tax Law presupposes that the process determines that in the assessment 'there was error attributable to the services', understood as the 'error regarding the assumptions of fact or law attributable to the Tax Administration'" (Judgment of the STA of 10/4/2013, proc. 1215/12).

Having occurred – as follows from what has been said above, in point 1) – error attributable to the services, this determines the success of the request for payment of compensatory interest to the Requesters.

V – DECISION

In light of the above, it is decided:

– To declare the illegality of the Stamp Tax assessments challenged, due to error in the assumptions of law, determining their annulment, as well as the return of the amount unduly paid by the requesters.

– To judge the request successful also in the part concerning the recognition of the right to compensatory interest in favor of the requesters.

The value of the case is set at €11,057.99 (eleven thousand and fifty-seven euros and ninety-nine cents), pursuant to article 32 of the CPTA and article 97-A of the CPPT, applicable by force of the provisions of article 29, no. 1, subparagraphs a) and b), of the RJAT, and article 3, no. 2, of the Regulation of Costs in Tax Arbitration Procedures (RCPAT).

Costs charged to the defendant, in the amount of €918.00 (nine hundred and eighteen euros), pursuant to Table I of the RCPAT 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. 5 [former no. 4], of the cited Regulation.

Notify.

Lisbon, 30 January 2018.

The Arbitrator

(Miguel Patrício)

Text prepared by computer, in accordance with the provisions of article 131, no. 5, of the CPC, applicable by referral from article 29, no. 1, subparagraph e), of the RJAT.

The drafting of this decision follows the spelling prior to the Orthographic Agreement of 1990.

Frequently Asked Questions

Automatically Created

What is Verba 28.1 of the Portuguese Stamp Tax General Table and how does it apply to high-value urban properties?
Verba 28.1 of the Portuguese Stamp Tax General Table (TGIS) imposes annual stamp tax on urban properties with residential use where the property value (valor patrimonial) registered in the cadastre equals or exceeds €1,000,000. Introduced by Law 55-A/2012, this provision targets high-value residential real estate. The key interpretative dispute is whether the threshold applies to properties registered as a single cadastral unit containing multiple independent divisions, or to each division separately. Article 67 CIS provides that matters not regulated in the Stamp Tax Code relating to Item 28 are subsidiarily governed by CIMI (Municipal Property Tax Code) provisions, creating arguments that the property value assessment should follow IMI individualization principles per independent unit rather than aggregate property value.
Can Stamp Tax be challenged when levied on individual independent units of a single registered property?
Yes, Stamp Tax levied on individual independent units of a single registered property can be challenged through administrative claim and subsequent tax arbitration at CAAD. The legal basis for challenge typically involves arguing that the €1,000,000 threshold under Item 28.1 TGIS should apply per independent division with autonomous use rather than to the aggregate property value. Taxpayers can invoke Article 67 CIS, which requires subsidiary application of CIMI rules for matters not regulated in the Stamp Tax Code, arguing that since IMI is assessed individually per unit, the same criterion should apply to Item 28. The challenge requires demonstrating either incorrect legal interpretation of the incidence rule or erroneous qualification of the taxable event. Taxpayers may pay the assessed tax as a precautionary measure while pursuing the challenge to avoid enforcement consequences, later requesting reimbursement with compensatory interest if successful.
What is the arbitration procedure at CAAD for contesting Stamp Tax (Imposto do Selo) assessments in Portugal?
The CAAD arbitration procedure for Stamp Tax disputes follows RJAT (Decree-Law 10/2011). After exhausting administrative remedies (rejected administrative claim), taxpayers file a request for arbitral tribunal constitution under Articles 2(1)(a), 3(1), and 10 of RJAT. The tribunal is constituted with appointed arbitrators, and the Tax Authority is served to present a response with the administrative file (Article 17 RJAT). The tribunal may dispense with the hearing under Article 18 if deemed unnecessary (Article 16(c) RJAT). Arbitrators failing to meet statutory deadlines may have their mandate terminated by the CAAD Deontological Council President, with replacement by a new arbitrator. The process concludes with an arbitral decision addressing the legality of the contested tax assessments. Decisions are binding and subject to limited judicial review on specific grounds.
Are taxpayers entitled to compensatory interest (juros indemnizatórios) when Stamp Tax liquidations are declared illegal?
Yes, taxpayers are entitled to compensatory interest (juros indemnizatórios) when Stamp Tax liquidations are declared illegal, pursuant to Article 43(1) of the General Tax Law (LGT). Compensatory interest applies when tax payments result from manifest errors attributable to tax administration services, including erroneous legal interpretation or incorrect application of tax law. The interest is calculated at the legal rate from the date of payment until full reimbursement. To obtain compensatory interest, taxpayers must demonstrate: (1) the tax assessment suffered from illegality attributable to the tax administration; (2) payment was made; and (3) the error was manifest, meaning objectively verifiable and not merely a debatable legal interpretation. Taxpayers should explicitly request recognition of manifest error and compensatory interest in their arbitration petition. The right to compensatory interest represents compensation for the financial cost of having funds unduly retained by the State due to incorrect tax assessment.
How does the replacement of an arbitrator under Article 16(c) of the RJAT affect the validity of a tax arbitration decision?
Arbitrator replacement under Article 16(c) RJAT, which occurs when an arbitrator fails to meet legally established deadlines, does not affect the validity of the subsequent arbitral decision. The RJAT specifically provides for termination of an arbitrator's mandate and replacement by the CAAD Deontological Council President when statutory deadlines are not respected. In Process 179/2017-T, the original arbitrator was removed after failing to meet deadlines, and a new arbitrator was appointed. The replacement arbitrator proceeds with the case in its current procedural stage, reviewing all filed documents and the administrative file. The tribunal's regular constitution is confirmed in the decision, and the process continues to conclusion. This mechanism ensures procedural efficiency and protects parties' rights to timely resolution, preventing indefinite delays caused by non-performing arbitrators. The validity of the final decision depends on the new arbitrator's compliance with procedural requirements and substantive law, not on the replacement itself, which is a lawful procedural safeguard.