Summary
Full Decision
Arbitral Decision
Process No.: 193/2014-T
I - REPORT
A - PARTIES
A…, widower, acting in his own name and as heir, NIF …, residing at Avenida …, No. … in Lisbon, B…, single, of legal age, …, residing at Avenida … in Lisbon, C…, NIF …, married under the community of acquired property regime with D…, residing at Rua …, No. …, in Lisbon, E…, NIF …, married under the community of acquired property regime with F…, residing at Avenida …, No. …, in Lisbon, G…, NIF …, divorced, residing at Rua …, No. …, in Lisbon, H…, NIF … … …, single, of legal age, residing at Avenida …, No. …, in Lisbon, I…, married in community of acquired property with J…, NIF … … …, residing at Rua …, Block E-1. Lot E, ground floor, right, in Lisbon and K…, married in community of acquired property with L…, NIF …, residing at Avenida …, No. …, in Lisbon, hereinafter referred to as Claimant or taxpayer.
TAX AND CUSTOMS AUTHORITY (which succeeded the General Directorate of Taxes, through Decree-Law No. 118/2011, of December 15) hereinafter referred to as Respondent or AT.
The request for constitution of the arbitral tribunal was accepted by the President of CAAD, and the Arbitral Tribunal was duly constituted on February 27, 2014, to assess and decide the subject matter of this proceeding, and the Tax and Customs Authority was automatically notified on March 3, 2014, as stated in the respective minutes.
The Claimant did not proceed with the appointment of an arbitrator, therefore, under the provisions of No. 1 of Article 6 and subparagraph b) of No. 1 of Article 11 of Decree-Law No. 10/2011, of January 20, as amended by Article 228 of Law No. 66-B/2012, of December 31, the Ethics Council designated Dr. Paulo Ferreira Alves, whose appointment was accepted in accordance with legally prescribed terms.
On March 15, 2014, the parties were duly notified of this designation and did not express their wish to refuse the designation of the arbitrators, pursuant to Article 11, No. 1, subparagraphs a) and b), of RJAT and Articles 6 and 7 of the Code of Ethics.
In accordance with the provisions of subparagraph c) of No. 1 of Article 11 of Decree-Law No. 10/2011, of January 20, as amended by Article 228 of Law No. 66-B/2012, of December 31, the sole arbitral tribunal is duly constituted on March 18, 2014.
The Tax and Customs Authority responded to the claimant's request, arguing that the request for arbitral ruling should be dismissed as unfounded.
Both parties agree to waive the meeting provided for in Article 18 of RJAT.
The arbitral tribunal is duly constituted. It has material jurisdiction, pursuant to Articles 2, No. 1, subparagraph a), and 30, No. 1, of Decree-Law No. 10/2011, of January 20.
The parties have legal personality and capacity, are legitimate and are legally represented (Articles 4 and 10, No. 2, of the same diploma and Article 1 of Ordinance No. 112-A/2011, of March 22).
The proceeding does not suffer from defects that would invalidate it.
B - REQUEST
The Claimant seeks a declaration of illegality of the tax assessment acts in relation to Stamp Duty, No. 2013: 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00........ which set a total tax payable of €31,782.20 (thirty-one thousand seven hundred and eighty-two euros and twenty cents).
C - CAUSE OF ACTION
To support its request for arbitral ruling, the Claimant alleged, with a view to declaring the illegality of the tax assessment acts in relation to Stamp Duty, No. 2013: 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00....... in summary, the following:
The contested assessment act, in relation to taxation under item 28.1 of the General Stamp Duty Table on the thirty-nine floors or divisions with independent use, intended for housing, lies in the fact that the sum of the patrimonial value of said floors or divisions with independent use of said property amounts to the total of €3,178,220.00, which is manifestly illegal and therefore its annulment should be declared.
The claimant alleges that the property consists of forty-six floors or divisions with independent use and that of these, thirty-nine floors or divisions have independent use and are intended for housing.
Thus, it is a property with an independent and autonomous economic utility from the others and from the property itself as a whole, and all were individually assessed for CIMI purposes.
The claimant argues that the individualized assessment of each division for CIMI purposes of the forty-six floors or divisions with independent use demonstrates to the Tax Authority itself that they are qualified as units with independent economic value.
Now, since the aforementioned forty-six floors constitute economic units with individual economic value, they cannot simultaneously be considered as a single property in the part allocated to housing merely because they are not in horizontal property and/or because their total patrimonial value exceeds €1,000,000.00.
Thus, since the thirty-nine floors or divisions with independent use and allocated to housing constitute units with independent economic value, they are not subject to taxation under item 28.1 of the General Stamp Duty Table.
The claimant also alleges that as results from the matrix description of urban property … of the parish of …, all floors were assessed in 2013, however the stamp duty relates to 2012 but was assessed using the patrimonial value determined in 2013.
Now, the application of the patrimonial value determined in 2013 to tax relating to December 31, 2012 constitutes an erroneous determination of the taxable base insofar as the taxable base on which the tax is levied on December 31, 2012 cannot be other than the patrimonial value in force in 2012.
But if this is not understood, it will always be said that the application of a patrimonial value determined in 2013 to a taxable event of 2012 amounts to a retroactive application of tax law, which is illegal.
The claimant thus argues for the annulment of the Stamp Duty assessment acts for violation of law.
D- RESPONDENT'S ANSWER
The Respondent, duly notified for this purpose, timely presented its response in which, in brief summary, it alleged the following:
Although the assessment of Stamp Duty, in the situations provided for in item No. 28.1 of TGIS, is processed according to the assessment made according to CIMI rules, the truth is that the legislator reserves aspects that require appropriate adaptations, as is the case of properties in total property, even if with floors or divisions capable of independent use, because, although IMI is assessed in relation to each part capable of independent use.
The respondent alleges that for Stamp Duty purposes the property as a whole is relevant because divisions capable of independent use are not regarded as a property, but only autonomous fractions under the horizontal property regime, according to No. 4 of Article 2 of CIMI.
The respondent argues that with the entry into force of the horizontal property regime (Civil Code of 1966), and its express reference in the delimitation of the concept of "property" provided for in Article 2, No. 4 of CIMI, determine the relevance of such figure in matters of tax incidence. Thus, that provision of Article 2 of CIMI constitutes the reaffirmation of the importance attributed to the horizontal property regime in the classification of property, for purposes of taxation under IMI and Stamp Duty.
And what expressly results from the letter of the law is that the legislator wanted to tax with item 28.1 under discussion the properties as a single legal-tax reality.
Regarding the alleged violation of the constitutional principle of equality, the respondent sustains its position in the understanding that the provision of item 28.1 of TGIS does not constitute any violation of that principle, there being no discrimination in the taxation of properties constituted in horizontal property and properties in total property with floors or divisions capable of independent use, or between properties with residential allocation and properties with other allocations.
And that item 28.1 levies on the ownership, usufruct or surface right of urban properties with residential allocation, whose tax patrimonial value appearing in the matrix, under CIMI terms, is equal to or greater than €1,000,000.00.
It is a general and abstract norm, applicable in an indistinct manner to all cases in which the respective factual and legal prerequisites are met.
The respondent alleges that the result of a different valuation and taxation of a property in total property compared to a property constituted in horizontal property derives from the different legal effects inherent to these two figures.
Indeed, the constitution in horizontal property determines the division/split of total property and the independence or autonomy of each of the fractions that constitute it, for all legal purposes, under the terms of No. 2 of Article 4 of CIMI and Article 1414 and following of the Civil Code, whereas a property in total property constitutes, for all purposes, a single legal-tax reality.
Thus, one cannot conclude an alleged discrimination in violation of the principle of equality when, in truth, we are faced with distinct realities, valued by the legislator in different ways.
Furthermore, it argues that taxation under Stamp Duty obeys the criterion of adequacy, to the exact extent that it aims to tax the wealth embodied in the ownership of high-value properties, arising in a context of economic crisis that cannot be ignored at all.
Thus, the option for this revenue-obtaining mechanism is legitimized, which would only be censurable, in view of the principle of proportionality, if it were manifestly indefensible.
The respondent further argues that this is verified insofar as such measure is applicable in an indistinct manner to all holders of properties with residential allocation of value exceeding €1,000,000.00.
The respondent, in its response, alleges that the provision in question does not violate the principle of non-retroactivity of tax law, since the taxable event occurred on a date after the law came into force, so there is no retroactivity here.
A conclusion that in the reasoning is drawn from Article 6 of Law No. 55-A/2012 of October 29, combined with No. 4, Article 2, subparagraph u) of Article 3, subparagraph u) of No. 1 of Article 5 and No. 6 of Article 4, the taxable event having occurred on October 31, 2012 (cf. subparagraph a), of No. 1 of that article).
The Stamp Duty assessments in question were made under the provisions of No. 2 of Article 6 of Law 55-A/2012 of October 29 and not, as is invoked, under the transitional regime provided for in No. 1 of the cited diploma.
Thus, the respondent understands that this is a Stamp Duty assessment made in 2013, which levied on the same tax patrimonial value used for purposes of municipal property tax to be effected in 2013, and whose taxable event occurred on December 31, 2012, applying the rate provided for in item 28 of TGIS annexed to the Stamp Duty Code.
The respondent concludes that the defects of lack of incidence and unconstitutionality should be dismissed as unfounded, the contested assessments remaining in the legal order, as they configure a correct application of the law to the facts.
E- FACTUAL GROUNDS
Before addressing these issues, it is necessary to present the relevant factual matter for their understanding and decision, based on documentary evidence, and taking into account the alleged facts.
In terms of relevant facts, this tribunal considers the following facts established:
The Claimants are owners of an urban property corresponding to a property in total property (not horizontal) with floors or divisions capable of independent use, composed of basement, ground floor and eleven floors, intended for commerce and housing, located at Avenida …, No. …, with a total land area of 1,000.0000 m2, building footprint area of 960.8750 m2, total private gross area of 7,230.0000 m2, under article 1176 of the said parish, which is registered in the Lisbon Land Registry Office under No. ….
The property is composed of the following floors and whose patrimonial value of the said divisions with independent use, which make up the urban property, was determined separately, pursuant to Article 7, No. 2, subparagraph b), of the Municipal Property Tax Code (CIMI), with a tax patrimonial value being attributed to each one, respectively:
1 - Floor/Division: 1d, intended for services, with private gross area of 129.2500 m2 and dependent gross area of 13.0000 m2, with the tax patrimonial value, assessed on 02/12/2013, according to the assessment made according to CIMI rules, was assigned the value of €94,740.00,
2 - Floor/Division: 1df, intended for services, with private gross area of 96.9000 m2 and dependent gross area of 12.6000 m2, with the tax patrimonial value, assessed on 02/10/2013, according to the assessment made according to CIMI rules, was assigned the value of €73,460.00,
3 - Floor/Division: 1e, intended for housing, with private gross area of 102.0000 m2 and dependent gross area of 33.7000 m2, with the tax patrimonial value, assessed on 02/12/2013, according to the assessment made according to CIMI rules, was assigned the value of €88,280.00,
4 - Floor/Division: 1ef, intended for housing, with private gross area of 96.9000 m2 and dependent gross area of 12.6000 m2, with the tax patrimonial value, assessed on 02/10/2013, according to the assessment made according to CIMI rules, was assigned the value of €80,140.00,
5 - Floor/Division: 10d, intended for housing, with private gross area of 89.3000 m2 and dependent gross area of 13.1000 m2, with the tax patrimonial value, assessed on 02/12/2013, according to the assessment made according to CIMI rules, was assigned the value of €74,210.00,
6 - Floor/Division: 10df, intended for housing, with private gross area of 107.0000 m2 and dependent gross area of 12.5000 m2, with the tax patrimonial value, assessed on 02/10/2013, according to the assessment made according to CIMI rules, was assigned the value of €87,300.00,
7 - Floor/Division: 10e, intended for housing, with private gross area of 102.1000 m2 and dependent gross area of 9.2000 m2, with the tax patrimonial value, assessed on 02/12/2013, according to the assessment made according to CIMI rules, was assigned the value of €83,080.00,
8 - Floor/Division: 10ef, intended for housing, with private gross area of 102.5000 m2 and dependent gross area of 12.5000 m2, with the tax patrimonial value, assessed on 02/12/2013, according to the assessment made according to CIMI rules, was assigned the value of €84,080.00,
9 - Floor/Division: 11d, intended for services, with private gross area of 39.8800 m2 and dependent gross area of 0.0000 m2, with the tax patrimonial value, assessed on 02/12/2013, according to the assessment made according to CIMI rules, was assigned the value of €29,100.00,
10 - Floor/Division: 11p, intended for housing, with private gross area of 43.2800 m2 and dependent gross area of 0.0000 m2, with the tax patrimonial value, assessed on 02/12/2013, according to the assessment made according to CIMI rules, was assigned the value of €34,450.00,
11 - Floor/Division: 2d, intended for housing, with private gross area of 93.2500 m2 and dependent gross area of 13.0000 m2, with the tax patrimonial value, assessed on 02/12/2013, according to the assessment made according to CIMI rules, was assigned the value of €77,330.00,
12 - Floor/Division: 2df, intended for housing, with private gross area of 107.0000 m2 and dependent gross area of 3.9000 m2, with the tax patrimonial value, assessed on 02/12/2013, according to the assessment made according to CIMI rules, was assigned the value of €85,450.00,
13 - Floor/Division: 2e, intended for housing, with private gross area of 106.0000 m2 and dependent gross area of 5.3000 m2, with the tax patrimonial value, assessed on 02/12/2013, according to the assessment made according to CIMI rules, was assigned the value of €85,040.00,
14 - Floor/Division: 2ef, intended for housing, with private gross area of 102.5000 m2 and dependent gross area of 7.8000 m2, with the tax patrimonial value, assessed on 02/12/2013, according to the assessment made according to CIMI rules, was assigned the value of €83,070.00,
15 - Floor/Division: 3d, intended for housing, with private gross area of 96.8000 m2 and dependent gross area of 9.2000 m2, with the tax patrimonial value, assessed on 03/01/2013, according to the assessment made according to CIMI rules, was assigned the value of €79,250.00,
16 - Floor/Division: 3df, intended for housing, with private gross area of 102.5000 m2 and dependent gross area of 7.8000 m2, with the tax patrimonial value, assessed on 02/12/2012, according to the assessment made according to CIMI rules, was assigned the value of €83,070.00,
17 - Floor/Division: 3e, intended for housing, with private gross area of 106.0000 m2 and dependent gross area of 5.3000 m2, with the tax patrimonial value, assessed on 02/12/2013, according to the assessment made according to CIMI rules, was assigned the value of €85,040.00,
18 - Floor/Division: 3ef, intended for housing, with private gross area of 107.0000 m2 and dependent gross area of 3.9000 m2, with the tax patrimonial value, assessed on 02/12/2013, according to the assessment made according to CIMI rules, was assigned the value of €85,450.00,
19 - Floor/Division: 4d, intended for housing, with private gross area of 93.2500 m2 and dependent gross area of 13.0000 m2, with the tax patrimonial value, assessed on 02/12/2013, according to the assessment made according to CIMI rules, was assigned the value of €77,330.00,
20 - Floor/Division: 4df, intended for housing, with private gross area of 107.0000 m2 and dependent gross area of 3.9000 m2, with the tax patrimonial value, assessed on 02/12/2013, according to the assessment made according to CIMI rules, was assigned the value of €85,450.00,
21 - Floor/Division: 4e, intended for housing, with private gross area of 106.0000 m2 and dependent gross area of 5.3000 m2, with the tax patrimonial value, assessed on 02/12/2013, according to the assessment made according to CIMI rules, was assigned the value of €85,040.00,
22 - Floor/Division: 4ef, intended for housing, with private gross area of 102.5000 m2 and dependent gross area of 7.8000 m2, with the tax patrimonial value, assessed on 02/12/2013, according to the assessment made according to CIMI rules, was assigned the value of €83,070.00,
23 - Floor/Division: 5d, intended for housing, with private gross area of 96.8000 m2 and dependent gross area of 9.2000 m2, with the tax patrimonial value, assessed on 02/12/2013, according to the assessment made according to CIMI rules, was assigned the value of €79,250.00,
24 - Floor/Division: 5df, intended for housing, with private gross area of 102.5000 m2 and dependent gross area of 7.8000 m2, with the tax patrimonial value, assessed on 02/12/2013, according to the assessment made according to CIMI rules, was assigned the value of €83,070.00,
25 - Floor/Division: 5e, intended for housing, with private gross area of 106.0000 m2 and dependent gross area of 5.3000 m2, with the tax patrimonial value, assessed on 02/12/2013, according to the assessment made according to CIMI rules, was assigned the value of €85,040.00,
26 - Floor/Division: 5ef, intended for housing, with private gross area of 107.0000 m2 and dependent gross area of 3.9000 m2, with the tax patrimonial value, assessed on 02/12/2013, according to the assessment made according to CIMI rules, was assigned the value of €85,450.00,
27 - Floor/Division: 6d, intended for housing, with private gross area of 93.2500 m2 and dependent gross area of 13.0000 m2, with the tax patrimonial value, assessed on 02/12/2013, according to the assessment made according to CIMI rules, was assigned the value of €77,330.00,
28 - Floor/Division: 6df, intended for housing, with private gross area of 107.0000 m2 and dependent gross area of 3.9000 m2, with the tax patrimonial value, assessed on 02/12/2013, according to the assessment made according to CIMI rules, was assigned the value of €85,450.00,
29 - Floor/Division: 6e, intended for housing, with private gross area of 106.0000 m2 and dependent gross area of 5.3000 m2, with the tax patrimonial value, assessed on 02/12/2013, according to the assessment made according to CIMI rules, was assigned the value of €85,040.00,
30 - Floor/Division: 6ef, intended for housing, with private gross area of 102.5000 m2 and dependent gross area of 7.8000 m2, with the tax patrimonial value, assessed on 02/12/2013, according to the assessment made according to CIMI rules, was assigned the value of €83,070.00,
31 - Floor/Division: 7d, intended for housing, with private gross area of 96.8000 m2 and dependent gross area of 9.2000 m2, with the tax patrimonial value, assessed on 02/12/2013, according to the assessment made according to CIMI rules, was assigned the value of €79,250.00,
32 - Floor/Division: 7df, intended for housing, with private gross area of 102.5000 m2 and dependent gross area of 7.8000 m2, with the tax patrimonial value, assessed on 02/12/2013, according to the assessment made according to CIMI rules, was assigned the value of €83,070.00,
33 - Floor/Division: 7e, intended for housing, with private gross area of 106.0000 m2 and dependent gross area of 5.3000 m2, with the tax patrimonial value, assessed on 02/12/2013, according to the assessment made according to CIMI rules, was assigned the value of €85,040.00,
34 - Floor/Division: 7ef, intended for housing, with private gross area of 93.2500 m2 and dependent gross area of 13.0000 m2, with the tax patrimonial value, assessed on 02/12/2013, according to the assessment made according to CIMI rules, was assigned the value of €77,330.00,
35 - Floor/Division: 8d, intended for housing, with private gross area of 93.2500 m2 and dependent gross area of 13.0000 m2, with the tax patrimonial value, assessed on 02/12/2013, according to the assessment made according to CIMI rules, was assigned the value of €77,330.00,
36 - Floor/Division: 8df, intended for housing, with private gross area of 107.0000 m2 and dependent gross area of 3.9000 m2, with the tax patrimonial value, assessed on 02/12/2013, according to the assessment made according to CIMI rules, was assigned the value of €85,450.00,
37 - Floor/Division: 8e, intended for housing, with private gross area of 106.0000 m2 and dependent gross area of 5.3000 m2, with the tax patrimonial value, assessed on 02/12/2013, according to the assessment made according to CIMI rules, was assigned the value of €85,040.00,
38 - Floor/Division: 8ef, intended for housing, with private gross area of 102.5000 m2 and dependent gross area of 7.8000 m2, with the tax patrimonial value, assessed on 02/12/2013, according to the assessment made according to CIMI rules, was assigned the value of €83,070.00,
39 - Floor/Division: 9d, intended for housing, with private gross area of 96.8000 m2 and dependent gross area of 9.2000 m2, with the tax patrimonial value, assessed on 02/12/2013, according to the assessment made according to CIMI rules, was assigned the value of €79,250.00,
40 - Floor/Division: 9df, intended for housing, with private gross area of 102.5000 m2 and dependent gross area of 7.8000 m2, with the tax patrimonial value, assessed on 02/12/2013, according to the assessment made according to CIMI rules, was assigned the value of €83,070.00,
41 - Floor/Division: 9e, intended for housing, with private gross area of 106.0000 m2 and dependent gross area of 5.3000 m2, with the tax patrimonial value, assessed on 02/12/2013, according to the assessment made according to CIMI rules, was assigned the value of €85,040.00,
42 - Floor/Division: 9ef, intended for housing, with private gross area of 107.0000 m2 and dependent gross area of 3.9000 m2, with the tax patrimonial value, assessed on 02/12/2013, according to the assessment made according to CIMI rules, was assigned the value of €85,450.00,
43 - Floor/Division: anun, intended for services, with private gross area of 20.0000 m2 and dependent gross area of 0.0000 m2, with the tax patrimonial value, assessed on 02/12/2013, according to the assessment made according to CIMI rules, was assigned the value of €14,600.00,
44 - Floor/Division: cave, intended for warehouses and industrial activity, with private gross area of 960.8750 m2 and dependent gross area of 0.0000 m2, with the tax patrimonial value, assessed on 02/12/2013, according to the assessment made according to CIMI rules, was assigned the value of €378,100.00,
45 - Floor/Division: loj d, intended for services, with private gross area of 372.8950 m2 and dependent gross area of 0.0000 m2, with the tax patrimonial value, assessed on 02/12/2013, according to the assessment made according to CIMI rules, was assigned the value of €252,070.00,
46 - Floor/Division: loj e, intended for services, with private gross area of 386.8740 m2 and dependent gross area of 0.0000 m2, with the tax patrimonial value, assessed on 02/12/2013, according to the assessment made according to CIMI rules, was assigned the value of €261,350.00.
The holders of the property right, in the land registry, are as follows:
1/6 - A…, NIF ..., registered, by presentation 6 of July 1, 1959, in the name of
(A…, currently widower of L…, with whom he was married under the separation of property regime, according to permanent certificate with access code ...
1/6 registered, by presentation 4392 of September 24, 2010, in the name of
-
B…, single, of legal age,
-
E…, married in community of acquired property with F…,
-
A…, widower,
-
C…, married in community of acquired property with D…
-
H…, single, of legal age and
-
G…, divorced, according to permanent certificate with access code …, whose written text is attached as document one hundred and fifty-eight,
1/6 registered, by presentation 4465 of September 24, 2010 in the name of
-
B…, single, of legal age,
-
E…, married in community of acquired property with F…,
-
A…, widower,
-
C…, married in community of acquired property with D…,
-
H…, single, of legal age and
-
G…, divorced, according to permanent certificate with access code …, whose written text is attached as document one hundred and fifty-eight,
1/3 registered, by presentation 4101 of September 24, 2010 in the name of
-
K…, married in community of acquired property with M…,
-
I… married in community of acquired property with J…, according to permanent certificate with access code …., whose written text is attached as document one hundred and fifty-eight,
1/6 registered, by presentation 4466 of September 24, 2010 in the name of
-
K…, married in community of acquired property with M…,
-
N…, widow and
-
I…, married in community of acquired property with J…, according to permanent certificate with access code …, whose written text is attached as document one hundred and fifty-eight,
The total value of the urban property, corresponding to the sum of the VPT of the forty-six divisions, is respectively €4,084,340.00.
The sum of the value of fractions intended for housing is €3,178,220.00, with none of the parts or floors with residential allocation having a tax patrimonial value exceeding €1,000,000.00.
The value of fractions intended for warehouses and industrial activity or other non-residential function is €906,120.00.
The Tax Authority assessed the stamp duty provided for in item No. 28 and 28.1 of the General Stamp Duty Table (TGIS), as amended by Article 4 of Law No. 55-A/2012, of 10/29, at the rate of 1%, considering as "VPT - total subject to tax", the value of €3,178,220.00, which corresponds to the sum of the VPT of the twelve independent residential fractions.
The respondent was notified for payment of stamp duty, composed of thirty-nine individual notifications calculated on the total value of the thirty-nine fractions and taxed individually on each fraction, with the exception of the fraction intended for warehouses and industrial activity which was not subject to taxation and calculation of the property's VPT.
The Claimants proceeded with payment of the total tax in the amount of €31,782.20 (thirty-one thousand seven hundred and eighty-two euros and twenty cents), corresponding to:
From the claimant José Lopes Alves, in the amount of €5,297.00, corresponding to 1/6 of the property right of the property, not exceeding 1,000.00€.
From the unliquidated and undivided estate opened by death of L…, in the amount of €5,297.00, corresponding to 1/6 of the property right of the property, not exceeding 1,000.00€.
From the unliquidated and undivided estate opened by death of I…, in the amount of €10,594.10 corresponding to 2/6 of the property right of the property, not exceeding 1,000.00€.
From the unliquidated and undivided estate opened by death of I..., in the amount of €10,594.10, corresponding to 2/6 of the property right of the property, not exceeding 1,000.00€.
F- FACTS NOT PROVEN
Of the facts of interest for the decision of the case, contained in the challenge, all subject to concrete analysis, those not included in the factuality described above were not proven.
G- ISSUES TO BE DECIDED
Given the positions of the parties assumed in the arguments presented, the following central issues to be resolved constitute, which must therefore be assessed and decided:
a) The declaration of illegality alleged by the Claimant of the tax assessment acts in relation to Stamp Duty, No. 2013: 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00......., 00.......
H- MATTERS OF LAW
Given the positions of the parties assumed in the pleadings presented, the central question to be resolved by this arbitral tribunal consists in assessing the legality of the stamp duty assessment acts, in the total amount of €31,782.20, which levied on the thirty-nine residential fractions of the claimant in the urban property described above, for violation of law, due to erroneous interpretation and application of item 28.1 of TGIS in the amendments introduced by Article 4 of Law No. 55-A/2012, of October 29.
In the case sub judice, it is necessary to determine whether the fractions subject to tax are covered by the stamp duty incidence criteria, under the terms of item No. 28 of TGIS, in the amendments introduced by Article 4 of Law No. 55-A/2012, of October 29.
It is necessary to verify firstly whether the fractions have residential allocation, and secondly whether the VPT of the fractions appearing in the matrix is equal to or greater than €1,000,000.00, for which it is necessary to assess the fundamental question of what is the VPT of a property in vertical property (i.e., not horizontal) to be considered for purposes of said item. Whether the VPT that corresponds to each of the parts of the property with residential allocation individually, or whether, instead, it is determined by the total VPT of the property, which would correspond to the sum of all VPTs of the residential fractions that compose it.
The Tax Authority's position understands that the fractions with independent use of residential allocation is the sum of the respective VPTs (total) that amount to the value of €3,178,220.00, thus there is incidence of stamp duty, since for a property in vertical property the criterion for determining stamp duty incidence is the VPT corresponding to the sum of the VPTs of floors and divisions intended for housing.
The Respondent's position understands that the property under vertical or total property regime is equivalent for CIMI purposes to a property under horizontal property regime, so the VPT for purposes of provision 28 is the individual VPT of each fraction and not the VPT of the sum of all fractions.
The factual matter is fixed and proven, which is why we will now determine the applicable law to the controverted facts, giving priority, in compliance with the provisions of subparagraph a) of No. 2 of Article 124 of CPPT, to the defects whose validity determines a more stable and effective protection of the Claimant's interests, regarding the defect of law due to error regarding the prerequisites of the right to assessment, regarding the question of the framework of urban properties under total or vertical property regime, within the scope of incidence of Article 28, No. 1 of TGIS, introduced by the Regime of Law No. 55-A/2012, of October 29.
The alteration of the regime regarding the subjection to stamp duty of properties with residential allocation by the addition of item 28 of the General Stamp Duty Table, made by Article 4 of Law 55-A/2012, of 10/29, began to typify the following taxable events, through the following wording:
"28 - Ownership, usufruct or surface right of urban properties whose tax patrimonial value appearing in the matrix, under the terms of the Municipal Property Tax Code (CIMI), is equal to or greater than €1,000,000 - on the tax patrimonial value used for IMI purposes:
28.1 - Per property with residential allocation - 1%;
28.2 - Per property, when taxpayers who are not natural persons are resident in a country, territory or region subject to a clearly more favorable tax regime, appearing on the list approved by ordinance of the Minister of Finance - 7.5%."
Article 6 of Law No. 55-A/2012 contains transitional provisions that established the rules pertaining to the assessment of tax provided for in that item:
"1 - In 2012, the following rules must be observed in reference to the assessment of stamp duty provided for in item No. 28 of the respective General Table:
The taxable event occurs on October 31, 2012;
The taxpayer is the one mentioned in No. 4 of Article 2 of the Stamp Duty Code on the date referred to in the previous paragraph;
The tax patrimonial value to be used in the tax assessment corresponds to that resulting from the rules provided for in the Municipal Property Tax Code in reference to the year 2011;
The tax assessment by the Tax and Customs Authority must be made by the end of November 2012;
The tax must be paid, in a single installment, by taxpayers by December 20, 2012;
The applicable rates are as follows:
i) Properties with residential allocation assessed under the IMI Code: 0.5%;
ii) Properties with residential allocation not yet assessed under the IMI Code: 0.8%;
iii) Urban properties when taxpayers who are not natural persons are resident in a country, territory or region subject to a clearly more favorable tax regime, appearing on the list approved by ordinance of the Minister of Finance: 7.5%.
2 - In 2013, the assessment of stamp duty provided for in item No. 28 of the respective General Table must levy on the same tax patrimonial value used for purposes of municipal property tax to be effected in that year.
3 - The total or partial non-delivery, within the indicated deadline, of amounts assessed as stamp duty constitutes a tax offense, punished under the law."
Regarding the interpretation of this diploma, ruling 53/2013-T has already pronounced, which writes:
"The aforementioned item 28.1 and subparagraphs i) and ii) of subparagraph f) of No. 1 of Article 6 of No. 55-A/2012 used a concept that is not used in any other tax legislation in these precise terms, which is 'property with residential allocation'. Particularly in CIMI, which in various provisions of the Stamp Duty Code in the resources introduced by that Law is indicated as a diploma of subsidiary application in relation to the taxes provided for in the aforementioned item No. 28 [Articles 2, No. 4, 3, No. 3, subparagraph u), 5, subparagraph u), 23, No. 7, and 46 and 67 of the Stamp Duty Code], a concept defined in those terms is not used."
Regarding the concept of properties, it is necessary to resort to the concepts of properties used in CIMI, which lists the types of properties in its Articles 2 to 6, which is transcribed:
Article 2
Concept of Property
1- For purposes of this Code, property is any fraction of territory, including waters, plantations, buildings and constructions of any nature incorporated or seated therein, with a character of permanence, provided that it forms part of the assets of a natural or legal person and, under normal circumstances, has economic value, as well as waters, plantations, buildings or constructions, under the previous circumstances, endowed with economic autonomy in relation to the land where they are located, although situated in a fraction of territory that constitutes an integral part of a diverse patrimony or does not have a patrimonial nature.
2 - Buildings or constructions, even if movable by nature, are considered to have a character of permanence when allocated to non-transitory purposes.
3 - The character of permanence is presumed when buildings or constructions have been seated in the same location for a period exceeding one year.
4 - For purposes of this tax, each autonomous fraction, in the horizontal property regime, is regarded as constituting a property.
Article 3
Rustic properties
1 - Rustic properties are lands located outside an urban agglomeration that are not to be classified as construction lands, under the terms of No. 3 of Article 6, provided that:
They are allocated to or, in the absence of concrete allocation, have as normal destination a use generating agricultural income, as considered for purposes of personal income tax (IRS);
Not having the allocation indicated in the previous paragraph, they are not built or have only buildings or constructions of an accessory character, without economic autonomy and of reduced value.
2 - Lands located within an urban agglomeration are also rustic properties, provided that, by force of legally approved provision, they cannot have use generating any income or can only have use generating agricultural income and are, in fact, having this allocation.
3 - The following are also rustic properties:
Buildings and constructions directly allocated to the production of agricultural income, when located on the lands referred to in the previous numbers;
Waters and plantations in the situations referred to in No. 1 of Article 2
4 - For purposes of this Code, urban agglomerations are considered, in addition to those located within legally fixed perimeters, nuclei with a minimum of 10 dwellings served by public roads, their perimeter being delimited by points 50 m from the axis of roads, in the transversal direction, and 20 m from the last building, in the direction of roads.
Article 4
Urban properties
Urban properties are all those that should not be classified as rustic, without prejudice to the provisions of the following article.
Article 5
Mixed properties
-
Whenever a property has rustic and urban parts, it is classified, in its entirety, according to the main part.
-
If neither of the parts can be classified as main, the property is regarded as mixed.
Article 6
Types of urban properties
1 - Urban properties are divided into:
Residential;
Commercial, industrial or for services;
Construction lands;
Others.
2 - Residential, commercial, industrial or for services are buildings or constructions licensed for such purposes or, in the absence of a license, whose normal destination is each of these purposes.
3 - Construction lands are lands located inside or outside an urban agglomeration, for which a license or authorization has been granted, prior communication has been admitted or favorable prior information of a subdivision or construction operation has been issued, and also those that have been declared as such in the acquisition title, excepting lands on which competent entities prohibit any of those operations, namely those located in green zones, protected areas or which, according to municipal territorial planning plans, are allocated to spaces, infrastructures or public facilities. (Wording of Law No. 64-A/08, of 12-31)
4 - Falling within the provision of subparagraph d) of No. 1 are lands located within an urban agglomeration that are not construction lands nor are covered by the provisions of No. 2 of Article 3 and also buildings and constructions licensed or, in the absence of a license, whose normal destination is purposes other than those referred to in No. 2 and also those of the exception of No. 3.
Regarding the interpretation of Tax Norms, for the case sub judice, Article 11 of the General Tax Law tells us, which establishes the essential rules for the interpretation of tax laws, which it does in the following terms:
Article 11
Interpretation
In determining the meaning of tax provisions and in qualifying the facts to which they apply, the general rules and principles of interpretation and application of laws are observed.
Whenever, in tax provisions, terms proper to other branches of law are used, they must be interpreted in the same sense as they have there, unless another sense results directly from the law.
If doubt persists about the meaning of incidence provisions to be applied, the economic substance of the taxable facts should be attended to.
Gaps resulting from tax provisions covered by the Assembly of the Republic's reserve of law are not susceptible to analogical integration.
To this precept, it is also necessary to resort to the general principles of interpretation of laws, to which No. 1 of Article 11 of LGT refers, are established in Article 9 of the Civil Code, which establishes the following:
Article 9
Interpretation of law
Interpretation should not be limited to the letter of the law, but should reconstruct from the texts the legislative thought, taking into account above all the unity of the legal system, the circumstances in which the law was elaborated and the specific conditions of the time in which it is applied.
However, the legislative thought that does not have in the letter of the law a minimum of verbal correspondence, even if imperfectly expressed, cannot be considered by the interpreter.
In fixing the sense and scope of the law, the interpreter will presume that the legislator enshrined the most accurate solutions and knew how to express his thought in adequate terms.
Given the legal reasoning already exposed, and attending to the articles transcribed and enunciated, the following hypotheses of interpretation of the concept of "property with residential allocation" arise, regarding the Concept of "property with residential allocation" as referring to residential properties, and regarding the Concept of "property with residential allocation" as a concept distinct from "residential properties".
It results from Articles 2 to 6 of CIMI transcribed above, the concept of "property with residential allocation" is not used by the legislator in the classification of properties, nor is this concept found, with this terminology, in any other diploma.
The lack of exact terminological correspondence of the concept of "property with residential allocation" with any other used in other diplomas, may originate various interpretative hypotheses.
The text of the law, being the starting point for the interpretation of the expression "properties with residential allocation", being based on it that the "legislative thought" must be reconstructed, as required by No. 1 of Article 9 of the Civil Code, applicable by force of the provisions of Article 11, No. 1, of LGT, already transcribed.
Regarding the interpretation of the concept of "property with residential allocation", it is important to cite ruling 53/2013-T which has already pronounced on this matter. That ruling also sustains two interpretative hypotheses to the concept of "property with residential allocation", respectively in the same sense as this decision, regarding the concept of "property with residential allocation" as referring to residential properties, and regarding the Concept of "property with residential allocation" as a concept distinct from "residential properties"
CAAD ruling 53/2013-T writes, on the concept of "property with residential allocation" as referring to residential properties:
"The concept closest to the literal content of this expression used is manifestly that of 'residential properties', defined in No. 2 of Article 6 of CIMI as covering 'buildings or constructions' licensed for residential purposes or, in the absence of a license, whose normal destination is residential purposes.
If it is understood that the expression 'property with residential allocation' coincides with 'residential properties', it is manifest that the assessments will suffer from error regarding the factual and legal prerequisites, as all properties in relation to which Stamp Duty was assessed under the aforementioned item No. 28.1 are construction lands, without any building or construction, required to fulfill that concept of 'residential properties'.
Therefore, adopting the interpretation that 'property with residential allocation' means 'residential property', the assessments whose declaration of illegality is requested will be illegal, as there is no building or construction on any of the lands.
However, the non-coincidence of the terms of the expression used in item No. 28.1 of TGIS with that extracted from No. 2 of Article 6 of CIMI, points to the sense that the same concept was not intended to be used."
Regarding the interpretation of the second hypothesis: Concept of "property with residential allocation" as a concept distinct from "residential properties", citing again ruling 53/2013-T, which writes:
"The word 'allocation', in this context of use of a property, has the meaning of 'action of destining something to a certain use'.
'When, as is the rule, provisions (legislative formulas) carry more than one meaning, then the positive function of the text translates into giving stronger support to or more strongly suggesting one of the possible senses. It is that, among the possible senses, some will correspond to the most natural and direct meaning of the expressions used, whereas others will only fit into the verbal framework of the provision in a forced, contrived manner. Now, in the absence of other elements that induce the election of the less immediate sense of the text, the interpreter should in principle opt for that sense which best and most immediately corresponds to the natural meaning of the verbal expressions used, and namely to their technical-legal meaning, on the assumption (not always exact) that the legislator knew how to correctly express his thought'."
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