Process: 21/2015-T

Date: July 14, 2015

Tax Type: Selo

Source: Original CAAD Decision

Summary

This CAAD arbitration case (Process 21/2015-T) addresses the application of Stamp Duty under item 28.1 of the General Table of Stamp Duty (GTSD) to properties held in vertical ownership with multiple independent units. The Applicant owned a building with 7 storeys and 10 independent divisions, with a total patrimonial value of €1,215,865.19. The Tax Authority assessed Stamp Duty on the aggregate value of all residential units, while the taxpayer argued each independent unit should be taxed separately, similar to autonomous fractions in horizontal co-ownership. The taxpayer's key argument relied on Article 12(3) of the Municipal Property Tax Code, which provides that each storey or part capable of independent use is registered separately with its own tax patrimonial value for MPT purposes. The taxpayer contended that systematic and historical interpretation of item 28.1 supports taxation by individual unit, and that treating vertical ownership differently from horizontal co-ownership violates constitutional principles of equality and contributory capacity. The Tax Authority countered that in vertical ownership regimes, there are no autonomous fractions recognized by tax law, making the owner the holder of a single unitary property rather than separate fractions. Therefore, the Tax Patrimonial Value subject to Stamp Duty under item 28.1 must be calculated as the sum of all residential units' values. The Authority argued that any alternative interpretation would violate the letter and spirit of the legislation and the constitutional principle of legality requiring essential tax elements to be established by law. The taxpayer also sought compensation for damages from providing a bank guarantee to suspend enforcement proceedings. This case highlights the tension between different property ownership structures and their treatment under the Stamp Duty regime introduced by Law 55-A/2012.

Full Decision

ARBITRAL DECISION[1]

  1.  Report

A - General

1.1. A, holder of the fiscal identification number …, resident in …, in ... (hereinafter referred to as "Applicant"), filed, on 12.01.2015, a request for the constitution of a single arbitral tribunal in tax matters, which was accepted, seeking, on the one hand, the annulment of the tax acts assessing Stamp Duty for the year 2013, notified in 2014, referring to item 28.1 of the General Table of Stamp Duty (hereinafter "GTSD"), relating to a property of which he is owner, as shall be seen below, and on the other, compensation for damages suffered by him due to the provision of an undue bank guarantee intended to suspend the tax enforcement proceedings that were instituted against him due to his failure to pay the assessed amounts.

1.2. Pursuant to the provisions of paragraph a) of Article 6(2) and paragraph b) of Article 11(1) of Decree-Law No. 10/2011, of 20 January, as amended by Article 228 of Law No. 66-B/2012, of 31 December, the Deontological Council of the Administrative Arbitration Centre (CAAD) appointed Nuno Pombo as arbitrator, and the parties, after being duly notified, did not express any objection to this appointment.

1.3. By order of 02.02.2015, the Tax and Customs Authority (hereinafter referred to as "Respondent") appointed Ms. … and Ms. … to act in the present arbitral proceedings, on behalf and in representation of the Respondent.

1.4. In accordance with the provision of paragraph c) of Article 11(1) of Decree-Law No. 10/2011, of 20 January, as amended by Article 228 of Law No. 66-B/2012, of 31 December, the arbitral tribunal was constituted on 25.03.2015.

1.5. On 08.04.2015, the head of the Respondent's service was notified to, if desired, present a reply within 30 days and request the production of additional evidence.

1.6. On 06.05.2015, the Respondent submitted its reply.

B – Applicant's Position

1.7. The Applicant is the owner of the property held in full or vertical ownership located at ..., nos. ..., in ..., with registration number ... in the new parish of ..., with 7 (seven) storeys and 10 (ten) divisions capable of independent use, with a total patrimonial value of € 1,215,865.19 (one million two hundred and fifteen thousand eight hundred and sixty-five euros and nineteen cents), which corresponds to the certificate that the Applicant attaches to his application as document no. 1, the contents of which are deemed to be reproduced herein.

1.8. The Applicant was notified of the Stamp Duty assessments (hereinafter referred to as "SD") which are listed in the collection notices list attached to the request for arbitral pronouncement as document no. 2, the contents of which are deemed to be reproduced herein, which were based on Article 1 of the Stamp Duty Code (hereinafter the "SDC") and on item 28.1 of the GTSD, added by Article 4 of Law No. 55-A/2012, of 29 October, whose final payment dates fell at the end of the months of April, July and November, all of 2014.

1.9. The Applicant did not proceed to pay the assessed amounts of which he became aware through the notifications referred to above, and consequently, the appropriate tax enforcement proceedings were instituted against him.

1.10. The Applicant, aiming to suspend said tax enforcement proceedings, provided a payment guarantee for the tax required by the assessments referred to above, as is evidenced by the document attached to the arbitral pronouncement request with no. 3, the contents of which are deemed to be reproduced herein, requesting compensation for damages suffered by him due to the provision of an undue bank guarantee.

1.11. The Applicant argues, first, that the contested SD assessments suffer from "error as to the legal prerequisites", since it would have been necessary to separate the storeys or divisions capable of independent use for purposes of SD assessment, as occurs in the case of autonomous fractions of properties in horizontal co-ownership, with the tax patrimonial value (hereinafter referred to as "TPV") of a property composed of several independent fractions not resulting from law as the sum of the TPV of the storeys or divisions capable of independent use, particularly because, pursuant to Article 12(3) of the Municipal Property Tax Code ("MPTC"), "each storey or part of a property capable of independent use is considered separately in the cadastral registration, which also discriminates the respective tax patrimonial value", and is consequently subject to a separate Municipal Property Tax ("MPT") assessment.

1.12. The Applicant further argues that "a systematic and historical interpretation" of item 28.1 of the GTSD allows it to be concluded that the legislator's intention was not to tax as a whole properties held in full ownership with parts or divisions capable of independent use, but rather to tax them as properties in horizontal co-ownership are taxed, namely by each part or division capable of independent use with residential purpose having a TPV equal to or greater than € 1,000,000.00 (one million euros).

1.13. The Applicant further defends the unconstitutionality of item 28.1 of the GTSD, for violation of the constitutional principles of equality and contributory capacity, when interpreted in the sense intended by the Respondent.

C – Respondent's Position

1.14. The Respondent, in its reply, expresses the view that the situation of the Property is literally subsumed under the provision in question, adding that in properties under a regime of full ownership there are no autonomous fractions to which tax law can attribute the qualification of property, the Applicant being consequently the owner of a single property considered unitarily, and not of each one of the parts or fractions capable of independent use of which it is composed, which is why the TPV on which the incidence of SD under item 28.1 of the GTSD depends had to be, as it was, the sum of the TPV of each one of the parts or divisions capable of independent use assigned to residential use (which does not even correspond to the total TPV of the Property, since one of these parts has commercial use) and not that of each one of its independent parts.

1.15. The Respondent further contends that it is prevented from interpreting item 28.1 of the GTSD in any manner other than it did, since any other interpretation would violate "the letter and spirit" of said item and the principle of legality of the essential elements of the tax provided for in Article 103(2) of the Constitution of the Portuguese Republic", since "it is the responsibility of law – Law of the Assembly of the Republic and an authorized Decree-Law – to establish the essential elements of tax incidence".

D – Conclusion of Report and Case Management

1.16. By order of 20.06.2015, the arbitral tribunal waived the meeting provided for in Article 18 of the Legal Regime for Arbitration in Tax Matters ("LRATM"), since the parties had already brought into the proceedings the necessary and sufficient factual elements for the pronouncement of the decision, which the Parties accepted.

1.17. The arbitral tribunal has material jurisdiction, pursuant to the provisions of Articles 2(1)(a) of the LRATM.

1.18. The Parties have legal personality and capacity and have standing pursuant to Article 4 and Article 10(2) of the LRATM, and Article 1 of Ordinance No. 112-A/2011, of 22 March.

1.19. The cumulation of claims made in the present request for arbitral pronouncement, in deference to the principle of procedural economy, is justified since the contested assessment acts are based on the same factual foundation and appeal to the application of the same legal rules, and the compensation claim formulated should also be accepted, in theory, insofar as, without prejudice to what is further stated in section 3.1.4 below, Article 3 of the LRATM, by expressly permitting the possibility of "cumulation of claims even if relating to different acts", accommodates, without hermeneutical abuse, the consideration of a claim that flows, in necessary terms, from the judgment that the arbitral tribunal reaches regarding the validity of the assessments in question.

1.20. The proceedings do not suffer from any nullity nor have the Parties raised any exceptions that prevent the consideration of the merits of the case, therefore the conditions are met for the pronouncement of the arbitral decision.

  1.  Findings of Fact

2.1. Proven Facts

2.1.1. The Applicant is the sole owner of the Property (doc. no. 1, attached with the request for arbitral pronouncement).

2.1.2. The Property is held in full or vertical ownership, having ten storeys or divisions capable of independent use (doc. no. 1, attached with the request for arbitral pronouncement).

2.1.3. Nine of the storeys or divisions capable of independent use that constitute the Property are assigned to residential use, with one storey assigned to commercial use (doc. no. 1, attached with the request for arbitral pronouncement).

2.1.4. None of the storeys or divisions capable of independent use has a TPV equal to or greater than € 1,000,000.00 (one million euros) – (doc. no. 1, attached with the request for arbitral pronouncement).

2.1.5. The Respondent, for purposes of applying item 28.1 of the GTSD, proceeded to arithmetically sum the TPV of each one of the storeys or divisions assigned to residential use (docs. nos. 1 and 2, attached with the request for arbitral pronouncement).

2.1.6. The Property has a total TPV of € 1,215,865.19 (one million two hundred and fifteen thousand eight hundred and sixty-five euros and nineteen cents) – (doc. no. 1, attached with the request for arbitral pronouncement).

2.1.7. The Respondent considered, for purposes of applying item 28.1 of the GTSD, a TPV of € 1,024,408.79 (one million twenty-four thousand four hundred and eight euros and seventy-nine cents) – (doc. no. 1, attached with the request for arbitral pronouncement).

2.1.8. The Applicant was notified of the SD assessments referred to in the collection notices list attached to the request for arbitral pronouncement under the designation of document no. 2.

2.1.9. On 22.08.2014, a bank guarantee with a value of € 11,000.00 (eleven thousand euros), dated 07.08.2014, was filed with the Respondent's services, and the presentation of this guarantee permitted the suspension of the enforcement proceedings instituted against the Applicant for non-voluntary payment of the tax required by the assessments now in question (doc. no. 3, attached with the request for arbitral pronouncement).

2.2. Unproven Facts

It was not proven that there were damages suffered by the Applicant by virtue of the provision of an undue bank guarantee.

  1.  Legal Matters

3.1.1. Questions to be Decided

It follows from what has been stated above that the questions to be considered are, in essence, two:

a) Whether a property held in full or vertical ownership, but with storeys or divisions with independent uses, is a "property with residential purpose" for purposes of the application of Article 1 of the SDC and of item 28.1 of the GTSD, added by Article 4 of Law No. 55-A/2012, of 29 October; and

b) Whether, if the claim for a declaration of illegality and consequent annulment of the contested assessments is upheld, the Applicant, within the scope of the present arbitral proceedings, may obtain a judgment condemning the Respondent to pay compensation for damages suffered by him due to the provision of an undue bank guarantee.

3.1.2. Item 28.1 of the GTSD

Law No. 55-A/2012, of 29 October, among several amendments it made to the SDC, added, by its Article 4, item 28 to the GTSD, which has the following wording:

"28 - Ownership, usufruct or surface right of urban properties whose tax patrimonial value contained in the matrix, in accordance with the Municipal Property Tax Code ("MPTC"), is equal to or greater than € 1,000,000 - on the tax patrimonial value used for purposes of MPT:

28.1 - For property with residential purpose - 1%;

28.2 - For property, when the taxable persons who are not natural persons are resident in a country, territory or region subject to a clearly more favorable tax regime, contained in the list approved by ordinance of the Minister of Finance - 7.5%."

As can be seen, item 28.1 refers to "properties with residential purpose". However, not only is this concept not defined in any provision of the SDC, but it is also not used in the MPTC, a statute to which Article 67(2) of the SDC expressly refers when matters not regulated in the SDC are at issue relating to item 28.

3.1.3. "Vertical ownership" and the application of item 28.1 of the GTSD

Without prejudice to the interest, not merely dogmatic, of establishing the meaning and scope of the concept of "property with residential purpose", it is necessary, first of all, to answer the question of whether, for purposes of applying item 28.1 of the GTSD, the TPV of each one of the storeys or divisions with independent use of a given building can be summed together, provided they are assigned to residential use, as the Respondent did with respect to the Property.

a) The property matrix of properties in full or vertical ownership and the collection of Municipal Property Tax

It is important to clarify from the outset that "each storey or part of a property capable of independent use is considered separately in the cadastral registration, which also discriminates the respective tax patrimonial value", as can be read in Article 12(2) of the MPTC. Also, the MPT, in properties subject to the regime of full ownership, gives typical importance to each storey or part of a property capable of independent use (Article 119(1) of the MPTC).

That is, it is clear that the legislator, in the MPTC, did not intend to adhere to the strictness of the legal form of real rights incident upon properties, but rather to the use given to them, namely in cases where a property, from a legal standpoint, is composed of different storeys or parts capable of independent use.

It may be said, not without reason, that the legislator, for purposes of taxation under MPT, chose to confer autonomy, independence, to each one of the parts or each one of the storeys of a single property, provided that such parts and storeys show themselves to be capable of independent use, to the point of providing for separate registration in the matrix of each one of these independent parts and of imposing on taxation under MPT a collection also autonomous in nature. In spite of the legal existence of a single property, it is the legislator itself that not only recommends but imposes the autonomous consideration of each one of the independent parts, for purposes of taxation of assets.

b) The application of item 28.1 of the GTSD to each one of the independent parts

If this is so for the MPT, as has been sought to be demonstrated, it cannot but also be so for the SD, namely for purposes of applying item 28.1 of the GTSD.

Besides, this problem, if the tax, MPT or SD, were purely proportional, would not exist or would be harmless, since the sum of the parts would necessarily have to correspond to the whole. This is not, however, the case in the proceedings at hand.

As has been seen, the SD to which item 28.1 of the GTSD appeals is only due with respect to properties with residential purpose and, in these, only those which present a TPV equal to or greater than € 1,000,000.00 (one million euros).

There is no reason for disregarding the autonomy of each one of the parts capable of independent use of the Property, nor can it be concluded that, for purposes of applying item 28.1 of the GTSD, a unity is required which, while indisputable in terms of real rights, is not so in matters of taxation on real estate assets.

Having regard to the letter and spirit of the law, it is not evident that it is the legislator's intention to apply item 28.1 of the GTSD to each one of the parts of a property when only from the sum of all of them results a TPV equal to or greater than the legal threshold.

c) The ratio legis of item 28.1 of the GTSD

What has been stated above does not ignore the confessed purpose of the proponent of the legislative amendment already referred to. The interpretation that is adopted here is in harmony with what appears to have been the unequivocal intention of the Government, author of the proposal that resulted in this legislative intervention.

When presenting and discussing in Parliament the draft law no. 96/XII (2nd), the Secretary of State for Tax Affairs expressly stated[2]:

"The Government proposes the creation of a special tax on high-value residential urban properties. It is the first time that Portugal has created a special taxation on high-value properties intended for residential use. This tax shall be 0.5% to 0.8% in 2012 and 1% in 2013, and shall apply to houses with a value equal to or greater than 1 million euros."

Now, the Secretary of State for Tax Affairs presents this draft law by referring, without hesitation, to the expression "houses". "Houses with a value equal to or greater than 1 million euros", note well.

Thus, in spite of the infelicity of the legislative technique adopted, it is abundantly clear that item 28.1 of the GTSD cannot be interpreted in the sense that each one of the storeys, divisions or parts capable of independent use is covered by it when only from the respective sum results a TPV equal to or greater than what is provided in the same item. In fact, none of the "houses" of the Property to which we have been referring presents, of itself, "a value equal to or greater than 1 million euros".

d) Conclusion

For the reasons stated, it is the understanding of the arbitral tribunal that the SD assessment based on item 28.1 of the GTSD is vitiated by illegality with respect to each one of the storeys or parts capable of independent use of the Property, since the aforementioned item cannot be interpreted in the sense that it may be applied to storeys or parts capable of independent use of a property in full or vertical ownership, when only from the sum of each one of these storeys or parts can a TPV equal to or greater than € 1,000,000.00 (one million euros) be obtained, not exceeding the TPV of each one of said storeys or parts this legal threshold.

The understanding of the arbitral tribunal rejects the judgment of unconstitutionality invoked by the Respondent. It is known that it is the responsibility of law – law of the Assembly of the Republic or an authorized Decree-Law – to establish the essential elements of tax incidence. However, the understanding adopted by the arbitral tribunal does not disregard the principle of legality provided for in Article 103(2) of the Constitution of the Portuguese Republic, because, as has been sought to be demonstrated by the arguments presented above, the solution that is advocated results from normative provisions that do not suffer from any organic unconstitutionality.

3.1.4. Compensation for undue provision of guarantee

The Applicant also presents a claim for compensation for the undue provision of guarantee.

Claims of this nature are not novelty in the CAAD, there being several decisions to the effect of admitting their cognizability by arbitral tribunals[3]. As has already been stated in summary terms, this arbitral tribunal also understands that it can know of this claim.

Paragraph b) of Article 1(1) of the LRATM provides that "the arbitral decision on the merits of the claim to which no appeal or challenge is available binds the tax administration from the end of the period provided for appeal or challenge, and must, in the exact terms of the substantiation of the arbitral decision in favor of the taxpayer and until the end of the period provided for the voluntary execution of decisions of tax tribunals, restore the situation that would have existed if the tax act that is the object of the arbitral decision had not been performed, adopting the acts and operations necessary for this purpose".

It is not overlooked that the legislative authorization granted to the Government by Article 124 of Law No. 3-B/2010, of 28 April, on the basis of which the LRATM was approved, determines that the tax arbitral process constitutes a procedural means alternative to the judicial challenge process and the action for the recognition of a right or legitimate interest in tax matters. Even though paragraphs a) and b) of Article 2(1) of the LRATM ground the jurisdiction of arbitral tribunals in "declarations of illegality", it appears reasonable the understanding that it encompasses the powers that in judicial challenge proceedings are attributed to tax tribunals, and it is certain that in judicial challenge proceedings, in addition to the annulment of tax acts, claims for compensation can be considered, whether they relate to indemnity interest or to the undue provision of guarantees.

In effect, the principle of cognizability of compensation claims, in a gracious reclamation or in judicial proceedings, is justified whenever the damage that is sought to be compensated results from a fact attributable to the tax and customs administration. Manifestations of this principle can be found in Article 43(1) of the General Tax Law ("GTL") and in Article 61(4) of the Code of Tax Procedure and Process ("CTPP").

Specifically regarding compensation in case of undue guarantee, Article 171 of the CTPP refers, and it is clear from this provision that the claim for compensation can be known in the proceedings in which the legality of the enforceable debt is contested, which is required for reasons of procedural economy, since the right to compensation for a guarantee unduly provided depends on what is decided regarding the legality or illegality of the assessment act. Thus, it is necessary to conclude that the arbitral process should also be deemed appropriate to consider the claim for compensation for a guarantee unduly provided.

The regime for the right to compensation for a guarantee unduly provided is contained, as the Applicant correctly points out, in Article 53 of the GTL, which establishes the following:

Article 53

Guarantee in case of undue provision

  1. The debtor who, to suspend enforcement, offers a bank guarantee or equivalent shall be compensated wholly or partially for damages resulting from its provision, if he has maintained it for a period exceeding three years in proportion to the outcome in administrative appeal, judicial challenge or opposition to enforcement that have as their object the debt guaranteed.

  2. The period referred to in the preceding number does not apply when it is verified, in a gracious reclamation or judicial challenge, that there was an error attributable to the services in the assessment of the tax.

  3. The compensation referred to in number 1 has as its maximum limit the amount resulting from the application to the amount guaranteed of the rate of indemnity interest provided in this law and can be requested in the very process of reclamation or judicial challenge, or autonomously.

(…)

In the case sub judice, as has been stated, the contested assessment acts are illegal, since the norms on which they are based do not show themselves to be applicable to the factuality of the proceedings, an error that cannot but be attributable to the Respondent since said assessments are of its sole initiative and responsibility.

However, the arbitral tribunal cannot condemn the Respondent to pay the Applicant compensation that is intended to compensate him for damages that he does not quantify nor even, in the proper sense, alleges.

3.1.5. Prejudiced question: unconstitutionality invoked by the Applicant

The Applicant raised the question of the unconstitutionality of item 28.1 of the GTSD, with the wording given to it by the same statute, if they were interpreted in the sense that the SD provided therein could apply to each one of the independent storeys or parts of the Property.

Since the arbitral tribunal did not adopt the understanding of the applicability of item 28.1 of the GTSD to the case at hand, the consideration of this question becomes prejudiced and procedurally useless, as well as any other defects that the contested assessments may suffer from.

  1.  Decision

On the basis of and with the grounds stated above, the arbitral tribunal decides:

a) To find the claim for arbitral pronouncement to be well-founded with the consequent annulment of the contested assessments, with all legal consequences;

b) To find the claim for compensation for undue provision of guarantee to be without merit, as it was not proven.

  1.  Case Value

In accordance with the provisions of Article 315(2) of the Code of Civil Procedure, Article 97-A(1)(a) of the Code of Tax Procedure and Process and also Article 3(2) of the Rules of Costs in Tax Arbitration Proceedings, the case value is set at € 10,244.09 (ten thousand two hundred and forty-four euros and nine cents).

  1.  Costs

For purposes of the provision of Article 12(2) and Article 22(4) of the LRATM and Article 4(4) of the Rules of Costs in Tax Arbitration Proceedings, the amount of costs is set at € 918.00 (nine hundred and eighteen euros), in accordance with Table I annexed to said Rules, to be borne entirely by the Respondent.

Lisbon, 14 July 2015

The Arbitrator

(Nuno Pombo)

[1] Text prepared by computer, pursuant to Article 131(5) of the Code of Civil Procedure, applicable by reference of Article 29(1)(e) of Decree-Law No. 10/2011, of 20 January.

[2] See Parliamentary Record ("DAR") I Series no. 9/XII -2, of 11 October, p. 32.

[3] See, by way of example, the decisions handed down in the context of case numbers 233/2013-T, 112/2013-T and 36/2013-T.

Frequently Asked Questions

Automatically Created

How does Verba 28.1 of the TGIS apply to properties held in vertical ownership (propriedade vertical)?
Verba 28.1 of the TGIS applies to properties held in vertical ownership (propriedade vertical) by considering the property as a single unitary asset, not as separate autonomous fractions. According to the Tax Authority's interpretation, when a building is owned under a full ownership regime with multiple storeys or divisions capable of independent use, the Tax Patrimonial Value (TPV) subject to Stamp Duty is calculated as the sum of the TPV of all parts assigned to residential use. This differs from horizontal co-ownership (condominiums), where each autonomous fraction is treated as a separate property. The taxpayer argued that independent units in vertical ownership should be treated similarly to horizontal property fractions under Article 12(3) of the Municipal Property Tax Code, which registers each independent unit separately. However, the Tax Authority maintained that vertical ownership lacks the legal qualification of autonomous fractions, requiring assessment on the aggregate property value.
Can a taxpayer claim compensation for providing an undue bank guarantee to suspend tax enforcement proceedings?
Yes, a taxpayer can claim compensation for providing an undue bank guarantee to suspend tax enforcement proceedings in Portugal. This claim is typically processed together with the principal request for annulment of the underlying tax assessment, in accordance with the principle of procedural economy. When a taxpayer challenges a tax assessment through arbitration at CAAD and provides a bank guarantee to suspend enforcement proceedings, if the tribunal subsequently determines that the tax assessment was illegal or unfounded, the taxpayer may seek compensation for damages suffered due to providing the guarantee. This includes costs incurred with the financial institution for issuing the guarantee. The compensation claim must demonstrate that the guarantee was provided as a direct consequence of the challenged tax assessment and that damages were actually incurred. The arbitral tribunal has jurisdiction to rule on both the annulment of the tax acts and the compensation claim in the same proceedings.
What are the conditions for annulling Stamp Tax (Imposto do Selo) assessments on high-value residential properties?
The conditions for annulling Stamp Tax assessments on high-value residential properties under item 28.1 of the GTSD include demonstrating legal error in the tax assessment. Common grounds for annulment include: (1) error as to legal prerequisites, such as incorrect determination of the taxable base or improper application of the tax provision; (2) violation of constitutional principles, particularly equality and contributory capacity; (3) incorrect interpretation of the property ownership structure affecting the calculation of Tax Patrimonial Value; (4) improper aggregation of values from multiple independent units when they should be assessed separately; and (5) failure to respect the principle of legality regarding essential tax elements. The taxpayer must file a request with CAAD within the legal deadline, provide evidence of the property's legal and factual situation, and demonstrate how the Tax Authority's assessment violates applicable law. The tribunal will examine whether the tax assessment complies with the literal, systematic, and teleological interpretation of item 28.1 and whether it respects constitutional constraints on taxation.
How is the taxable value determined for a building with multiple independent units under the Stamp Tax regime?
The taxable value for a building with multiple independent units under the Stamp Tax regime depends on the property ownership structure. For horizontal co-ownership (condominiums), each autonomous fraction is treated as a separate property, and item 28.1 of the GTSD applies individually to each fraction with a Tax Patrimonial Value (TPV) equal to or exceeding €1,000,000 for residential purposes. For vertical ownership (propriedade vertical), the Tax Authority's position is that the building constitutes a single unitary property, and the taxable base is the sum of the TPV of all storeys or divisions capable of independent use assigned to residential purposes. This means that even if no individual unit exceeds €1,000,000, the aggregate value may trigger Stamp Duty if it exceeds this threshold. The controversy centers on whether Article 12(3) of the Municipal Property Tax Code, which requires separate cadastral registration of each independent unit with its own TPV for Municipal Property Tax purposes, should also apply to Stamp Tax calculations. The determination involves analyzing whether tax law recognizes the independent units as separate properties or as parts of a single property.
What is the CAAD arbitral tribunal procedure for challenging Stamp Tax liquidations in Portugal?
The CAAD arbitral tribunal procedure for challenging Stamp Tax liquidations in Portugal begins with filing a request for constitution of an arbitral tribunal within the legal deadline (generally 90 days from notification of the assessment or rejection of administrative complaint). The request must identify the contested acts, present factual and legal grounds, and include supporting documentation. After acceptance, the Deontological Council appoints an arbitrator, and parties may object to the appointment. Once the tribunal is constituted, the Tax Authority is notified to submit a reply within 30 days and may request additional evidence. The arbitrator may waive the oral hearing if parties have provided sufficient elements for decision. The procedure follows the Legal Regime for Arbitration in Tax Matters (LRATM), which requires payment of an initial fee. The tribunal examines its own jurisdiction, parties' standing, and procedural requirements. After analyzing the merits, the tribunal issues an arbitral decision that has the same effects as a court judgment. The entire process typically takes several months from filing to decision. Appeals to administrative courts are limited to matters of law and specific procedural violations.