Stamp Tax Verba 28 on Vertical Property: Constitutionality and Legality of High-Value Property Tax

ARBITRATION DECISION

Process No. 219/2013-T

Claimant/Applicant: A

Respondent: Tax and Customs Authority

Subject Matter: Stamp Duty – item 28 of the General Table of Stamp Duty

I – Report

A) Procedural Course

1. On 9 September 2013, A (hereinafter Claimant), taxpayer no. ..., resident in …, Tax Office of ... - …, came, under the terms of article 2.º, no. 1 of Decree-Law no. 10/2011, of 20 January, and Regulatory Order no. 112-A/2011, of 22 March, to request the establishment of an arbitral tribunal to assess the legality of the Stamp Duty assessments identified by document nos. 2012 ... and 2012 ....

2. In the request for arbitral ruling, the Claimant chose not to appoint an arbitrator.

3. Pursuant to article 6.º, no. 1 of the RJAT, by decision of the President of the Deontological Council, the undersigned was appointed as sole arbitrator, who accepted the office within the legally prescribed period.

4. The arbitral tribunal was constituted on 13 November 2013.

5. On 27 January 2014, a meeting of the arbitral tribunal was held in accordance with the terms and objectives provided for in article 18.º of the RJAT. The parties declared that they had nothing further to add or comment regarding the procedural documents. The tribunal notified the representative of the Claimant to attach to the file the identification of the heirs of the estate and the property regime in effect between the deceased and the Claimant, with the Respondent's viewing period to be counted from notification of the attachment. The parties were notified to state whether they intended to waive oral arguments, which they did on 27 April (Tax Authority) and 28 April (Claimant), 2014, indicating their waiver of such oral arguments.

6. On 5 February 2014, the Claimant attached to the file information regarding the identification of the heirs of the estate and property regime of the Claimant and the deceased, attaching certifying evidence through a copy of the deed of heirship and the opening act on 5 August 2011 of a sealed will, with a copy thereof.

B) Positions of the Parties

1. The Request for Arbitral Ruling

In the initial request, the Claimant invoked, in summary, that:

• The Stamp Duty assessment, referring to the year 2012 (documents nos. 2012 ... and no. 2012 ...), regarding the property to which a Fiscal Patrimonial Value (FPV) of €1,261,589.63 was assigned, in accordance with item 28, added to the Stamp Duty Code by Law no. 55-A/2012, of 29 October, suffers from illegality and unconstitutionality;

• The Tax Authority dismissed the administrative review filed regarding said assessment without responding to the Claimant's invocation of illegality and unconstitutionality of the tax, thereby violating article 55.º of the General Tax Law and contrary to the general doctrine that holds that the Tax Authority is obliged to adopt the interpretation most in accordance with the Constitution.

• The assessment violated the principle of fiscal equality (derived from the general principle of equality - article 13.º of the Constitution - which requires observance of the criterion of contributory capacity), horizontal and vertical equality, particularly the latter, because the Claimant, who possesses assets worth approximately 1.5 million euros, bears the Stamp Duty, but a hypothetical taxpayer who possesses assets worth 9 million and 900 thousand euros does not bear a cent of this tax.

• As to horizontal inequality, the Claimant, who possesses a property whose FPV exceeds, albeit slightly, €1,000,000 pays Stamp Duty, but another hypothetical taxpayer who possesses ten (10) properties whose FPV is €990,000 does not pay a cent of tax.

• And none of the cases presented demonstrates contributory capacity so much lower than that of the Claimant (who holds a property with fiscal value slightly exceeding one million euros).

• The law also manifests unequal application by not subjecting urban buildings without residential use designation (for example, those used for commercial activities or services) to taxation.

• These are arbitrary solutions that are forbidden to the tax legislator by constitutional commands, by doctrine and by constitutional jurisprudence, specifically Constitutional Court Judgments no. 142/04 and no. 348/97.

• And even when the Constitutional Court emphasizes that the principle of contributory capacity must be reconciled with other principles of constitutional dignity, such as the principle of the Social State, legislative freedom of design, and certain requirements of practicability and cognoscibility of the tax fact, indispensable also for fulfilling the purposes of the fiscal system (cf. Constitutional Court Judgment no. 142/04), it nonetheless affirms the prohibition of arbitrariness as an adjuvant element in verifying the constitutional validity of fiscal regulatory solutions.

• Recently, the Constitutional Court reinforced the relevance of the principle of equality in verifying the constitutional validity of regulatory solutions (Judgment 187/2013).

• The present Stamp Duty assessment manifestly violates the principle of fiscal equality (article 13.º of the Constitution) because it is based: (i) on a norm that treats taxpayers in identical situations in very different ways, with the measure of difference not assessed by their real contributory capacity; (ii) on an arbitrary legal solution devoid of any rational foundation, constitutionally inadmissible, and must be annulled.

• The assessment further violates the principle of legal certainty (art. 2.º of the Constitution), a structuring principle of the Rule of Law, as it concerns a tax imposed on 29 October, the taxable event of which occurs two days after the tax is imposed, and which must be paid in approximately 30 days.

• When the legislator imposes unexpected (and high) taxes whose tax relationship is established two days after publication of the norm/imposition of the tax, it compromises the serenity and confidence in the legislative and fiscal framework.

• This tax violates a fundamental aspect of legal certainty - the principle of non-retroactivity of tax law - because according to subparagraph b) of no. 1 of article 6.º of the statute in question, the tax subject in 2012 was the owner, usufructuary or superficies holder of the property two days after the tax was imposed.

• In a case where any economic agent finds itself unable to prevent subjection to this tax by alienating within two days a property whose FPV is at least one million euros, we are dealing with a phenomenon of material retroactivity (Constitutional Court Judgment 63/96, 24/01/2006).

• Nor is there a state of financial necessity of the State that justifies such disregard for a principle so structuring of the Rule of Law as legal certainty, nor direct violation of a principle that the Portuguese Constitutional legislator understood to enshrine expressly and unequivocally in no. 3 of article 103.º of our fundamental law – that tax law cannot have retroactive effect.

• Being the assessment illegal, the Claimant will have the right to be paid compensatory interest, in accordance with article 43.º of the General Tax Law and within the period and conditions set forth in article 61.º of the Tax Procedure Code, that is calculated until the effective reimbursement of the tax (and corresponding compensatory interest) considered unduly paid.

8. Response of the Tax and Customs Authority

The Respondent replied, in summary:

• Contrary to what was affirmed by the Claimant, the Tax Authority assessed and decided the administrative review, having notified the respective decision, whose grounds and conclusions it now reiterates;

• Because the property registered under article U-... (..., ...) has the legal nature of property with residential use designation and presented, as of 31.12.2011, the fiscal patrimonial value of €1,261,589.63, the assessment act must be maintained as it embodies a correct interpretation of Item 28 of the General Table, added by Law 55-A/2012, of 29/12.

• With the amendment of article 1.º of the Stamp Duty Code, and addition to the General Table of Item 28, by Law no. 55-A/2012, of 29/10/2012, Stamp Duty came to apply also to the ownership, usufruct or superficies right of urban properties whose fiscal patrimonial value in the registry, pursuant to the Municipal Property Tax Code (MPTC), is equal to or greater than €1,000,000.

• In the absence of any definition of the concepts of urban property, land for construction and residential use designation in the Stamp Duty Code, one must resort to the MPTC to seek a definition that permits determining the possible subjection to Stamp Duty, in accordance with article 67.º, no. 2 of the Stamp Duty Code, as amended by Law no. 55-A/2012, of 29/10.

• In the application of Item 28 of the General Table, one must take into account the definition of property in no. 1 of article 2.º of the MPTC, the notion of "value of authorized buildings," in no. 2 of article 45.º of the same Code, and the use designation coefficient provided for in article 41.º of the MPTC.

• Item 28 itself of the General Table, in referring to the expression "properties with residential use designation," appeals to a classification that overlaps the species provided for in no. 1 of article 6.º of the MPTC.

• And the indication of the residential use designation of the property either derives from the taxpayer's initiative (article 37.º of the MPTC) or from general assessment, based on elements provided by the respective Municipal Chamber. In this case, the property was classified as having residential use designation and the Claimant conformed to the application of the use designation coefficient, accepting the assessment made by the Tax Authority and dispensing with the use of defense mechanisms (second assessment, judicial challenge).

• The concept of "properties with residential use designation," for purposes of Item 28 of the General Table, comprises from the outset constructed properties, as is the case, with no violation of the principle of equality in article 13.º of the Constitution.

• Item 28 of the General Table applies to the ownership, usufruct or superficies right of urban properties with residential use designation, whose fiscal patrimonial value in the registry, pursuant to the MPTC, is equal to or greater than €1,000,000, that is, it applies to the value of the property.

• The different valuation and taxation of a property in full ownership as opposed to a property constituted in condominium ownership derives from the different legal effects inherent in these two figures.

• The constitution in condominium ownership determines the division/partition of full ownership and the independence or autonomy of each of the units that compose it for all legal purposes, pursuant to article 2.º, no. 4 of the MPTC and articles 1414.º and following of the Civil Code, whereas a property in full ownership constitutes, for all purposes, a single unit.

• As to the exclusion of the incidence of properties destined for purposes other than residential, this corresponded to political and economic reasons.

• There is no violation of the principle of legality because the norm creating the stamp duty item was created by law, which determines the incidence and rate, and was adequately justified.

• There is no violation of no. 2 of article 104.º of the Constitution because this concerns only income and not property, moreover the adverb "fundamentally" moderates the scope of that guarantee of taxation of actual income, maintaining a "reasonable degree of legislative freedom to establish the exceptions or mitigating circumstances to that rule that may be justified" (Casalta Nabais), whereby it would always be compatible with taxation of properties of value exceeding €1,000,000.

• The fact that Law no. 55-A/2012, of 29 October, determines that the taxable event occurs on 31 October, does not represent a violation of constitutional principles of legal certainty, protection of citizens' confidence, proportionality and contributory capacity, and even less the prohibition of fiscal retroactivity.

• The tax created does not have retroactive effects because it applies to taxable events that occurred after its entry into force.

• It treats in the same manner all taxpayers who with respect to the real property in question present significant contributory capacity, revealed by the possession of property of value exceeding €1,000,000 and thereby justifying respect for the principles of proportionality and contributory capacity.

• Being indisputable the legality of the assessment, the compensatory interest requested by the Claimant is not due.

C) Questions to be Decided

1. Object of the Dispute

The Claimant invokes a dual illegality (article 29.º) – of the assessment and of the justification of the dismissal of the review – but identifies as the object of the request (article 2.º and final request) the act of Stamp Duty assessment as defective due to violation of law.

All of the substantiation aims at assessing the constitutionality of Item 28 (and 28.1), added to the General Table of Stamp Duty by Law no. 55-A/2012, of 29 October, invoking violation of various constitutional principles - of equality, of tax capacity, of legal certainty and of prohibition of retroactivity of tax law.

D) Preliminary Matters

1. The Tribunal is materially competent and is regularly constituted, pursuant to articles 2.º, no. 1, subparagraph a); 5.º, no. 2, and 6.º, no. 1, of the RJAT.

The parties have judicial personality and capacity, are parties with standing and are legally represented, pursuant to articles 4.º and 10.º, no. 2, of the RJAT and article 1.º of Regulatory Order no. 112-A/2011, of 22 March.

The proceeding does not suffer from defects that would invalidate it.

II. Substantiation

A) Factual Matters

1. Facts Found Proven

a) The assessment subject to legality review refers to a property located in the Municipality of ..., parish of …, identified in the urban property matrix under no. U-..., with 3 floors and 5 rooms, without basements and without division capable of independent use (property certificate, PA, fls. 20), commonly designated as a "house" or "villa" (clarification by the representative, provided at the tribunal's request at the meeting under article 18.º of the RJAT).

b) To said property, registered in the matrix in 2006, a Fiscal Patrimonial Value (FPV) of €1,261,589.63 was determined in 2011, pursuant to the MPTC (PA. fls. 20), FPV, the value in effect in the year 2012 and as of 31 December 2011 (article 6.º response of the Tax Authority).

c) Ownership of the property then belonged, in co-ownership, to B and A (now Claimant), married under a separation of property regime, each one holding a ½ share of full ownership (property certificate, PA fls. 20 and certification attached to the file on 05/02/2014).

d) B died on 22 July 2011 (deed of heirship and death record, documentation attached by the claimant on 05/02/2014).

e) By will, B left, in full ownership, his share in the property registered in the matrix under article ..., to his wife, C (will, documents attached on 05/02/2014).

f) Dated 7 November 2012, two Stamp Duty assessments were issued, relating to the tax period of 01/01/2012 to 31/12/2012, with nos. ... and ..., the first in the name of A and the second in the name of B, represented by A (Documents attached by the Claimant, with nos. 1 and 2).

g) Each of the assessments refers to a ½ share of property in the property (documents nos. 1 and 2, attached by the Claimant).

h) The tax amount of €3,153.97 in each of the assessment documents corresponds to half of the amount resulting from the application of the 0.5% rate to the FPV value of €1,261,589.63 (documents nos. 1 and 2, attached by the Claimant).

i) In the "taxpayer view" of the undivided estate, NIF … (P.A., fls. 17 and ff.), D appears as head of household of the undivided estate of the deceased B, and heir; the other heirs are E, F and G.

j) The collection notices contain indication of corresponding to the tax period of 2012-01-01 to 2012-12-31 (P.A, fls. 16 to 19).

k) The tax was paid on time (documents nos. 5 and 6).

l) The Claimant filed an administrative review of the assessment on 19 April 2013, at the Tax Office of ...-…, invoking illegality and unconstitutionality due to violation of the principles of legal certainty, equality, equity, proportionality (document no. 3).

m) Information dated 7 May 2013, from the Administrative Justice Division of the Finance Directorate of …, which received superior agreement, considered that the Tax Administration could not have refused to apply norms on the ground of their unconstitutionality, due to its subordination to law, as it was bound by the principle of legality, which had been done, applying Item 28 introduced in the General Table of Stamp Duty, as well as article 6.º of Law no. 55-A/2012, of 29/10/2012 (PA, fls. 21 to 24).

n) By official letter no. 036140, of 21 May 2013, the Claimant was notified to exercise the right to prior hearing, regarding the draft decision to dismiss the review then sent, but did not exercise such right (fls. 21 to 28 of PA).

o) On 28 June 2013, the now Claimant was notified, by official letter no. DFL... of the Finance Directorate of …, of the decision dismissing the administrative review, by conversion of the draft previously sent to the claimant (document no. 4 and PA, fls. 27 to 35).

p) On 5 September 2013, this proceeding was initiated within the scope of the CAAD, with presentation of the Request for establishment of an arbitral tribunal to rule on the legality of the tax acts.

1. Facts Not Proven

The matter given as proven proves sufficient for assessment of the legal question, with no relevant facts not proven affecting the resolution of this dispute.

1. Substantiation of Proof

The facts were found proven on the basis of uncontested documents attached to the proceeding and indicated above regarding each point of the factual matter established.

B) Application of Law

1. Dismissal of the Administrative Review

It is not within the competence of arbitral tribunals to assess dismissals of administrative reviews in themselves, but rather to assess the legality of the assessment act that was the subject of the administrative review (Jorge Lopes de Sousa, in Guide to Tax Arbitration, Almedina, 2013, pp. 121 et seq).

The Claimant identifies a dual illegality (article 29.º) – of the assessment and of the justification for the dismissal of the review – but it is the former that comes to be analyzed in more detail (articles 31.º to 60.º and final request), appearing that the insistence on the lack of assessment of unconstitutionality and on the obligation of the Administration to adopt the interpretation most in accordance with the Constitution (articles 22.º to 28.º) fundamentally aims to reinforce the justification of the request for the right to compensatory interest in case of annulment of the assessment due to error attributable to the services (articles 61.º to 69.º).

This arbitral tribunal will assess the legality of the dismissal of the administrative review to the extent that it knew of the legality of the assessment acts [1] although not properly regarding the alleged lack of substantiation of the review decision as to the competence of the Administration to assess the unconstitutionality of the assessment.

And, in the exercise of jurisdictional competence (articles 204 and 209.º, no. 2, of the Constitution) [2], the tribunal will assess whether the interpretation of the applicable provisions, specifically whether the content of Item 28 and 28.1 of the General Table of Stamp Duty (as amended by Law no. 55-A/2012, of 29 October), violates the various constitutional principles invoked by the Claimant, of equality, of tax capacity, of legal certainty and of prohibition of retroactivity of tax law.

1. The Stamp Duty in Question

What is at issue is the application of Item 28 of the General Table of Stamp Duty, attached to the Stamp Duty Code (SDC), added by article 4.º of Law no. 55-A/2012, of 29 October, with the following content:

"28 – Ownership, usufruct or superficies right of urban properties whose fiscal patrimonial value in the registry, pursuant to the Municipal Property Tax Code (MPTC), is equal to or greater than €1,000,000 – on the fiscal patrimonial value for purposes of MPIT:

28-1 – For a property with residential use designation – 1%

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

According to the amendments to the Stamp Duty Code introduced by article 3.º of Law no. 55-A/2012, of 29/10, the stamp duty provided for in Item 28 of the General Table applies to a legal situation (no. 1 of article 1.º and no. 4 of article 2.º of the SDC), of which the respective tax subjects are those referred to in article 8.º [3] of the MPTC (no. 4 of article 2.º of the SDC), to whom the tax burden falls (subparagraph u) of no. 3 of article 3.º of the SDC).

The provisions of the SDC, as amended by Law no. 55-A/2012, whether in article 4.º, no. 6 ("In situations provided for in Item 28 of the General Table, the tax is due whenever the properties are located in Portuguese territory"), or in article 23.º, no. 7 ("In case of tax due for situations provided for in no. 28 of the General Table, the tax is assessed annually, in relation to each urban property, by the central services of the Tax and Customs Authority, applying, with necessary adaptations, the rules contained in the MPTC"), jointly with article 1.º of the MPTC, appear to erect the property itself as the taxable event (the situation that triggers taxation) as long as it reaches the value provided for in Item 28 of the General Table of Stamp Duty, independently of the number of tax subjects, holders (as owners, usufructuaries or superficies holders) of the goods in question.

Article 6.º of Law no. 55-A/2012, however, provides for transitional provisions by virtue of which, in that first year of effectiveness, that is, 2012:

• The taxable event occurs on 31 October (when, according to article 8.º of the MPTC, applicable by referral of no. 4 of article 2.º of the SDC, it would occur on 31 December [4])

• The tax subject of the tax is the holder of the property (no. 4 of article 2.º of the SDC) also on that 31 October [5];

• The fiscal patrimonial value to be used in the assessment of the tax corresponds to what results from the rules provided for in the MPTC by reference to the year 2011 [6];

• The assessment of the tax by the Tax Authority is carried out by the end of November 2012 [7];

• The tax shall be paid, in a single installment, by the tax subjects by 20 December of that year 2012 [8].

As to the rates, subparagraph f) of no. 1 of the same article 6.º of Law no. 55-A/2012 provides for the application in 2012 of a rate lower than the 1% rate provided in 28.1 for properties with residential use designation, further distinguishing between cases of properties assessed in accordance with the Property Tax Code (rate of 0.5%) and properties with residential use designation not yet assessed in accordance with the Property Tax Code (rate of 0.8%). [9]

The provision of Law no. 55-A/2012, of 29 October, regarding Item 28 of the General Table of Stamp Duty, came into force on the day following publication of the law, that is, 30 October 2012.

1. The Tax Acts Subject to Ruling

In the case at bar, review of the legality of two assessments is requested, relating to the year 2012, regarding a property with fiscal patrimonial value (FPV) - determined in 2011 - of €1,261,589.63.

The property is a house, a building not divided into parts capable of independent use, and was registered in the matrix as being co-owned by A and B, who had their common residence there. Married under a separation of property regime, each of them held a ½ share of full ownership. B died on 22 July 2011, having left a will attributing to his wife, A, by account of the available share, half of the ownership of the property of which he was co-holder, and of which, unless issues have arisen (or may arise) in division regarding definition of the available share, she will become the sole holder of full ownership.

But even admitting – and this will be the case – that at the date of application of the tax norm whose legality is the object of this dispute, Claimant A was owner of only a ½ share, and representative of B's estate regarding the other half (although with the expectation of becoming its full owner) Item 28, in section 28.1, takes as the object of tax incidence properties, independently of the number of their owners.

Indeed, the body of Item 28 of the General Table provides that the tax falls on ownership, usufruct or superficies right of urban properties whose fiscal patrimonial value in the registry, pursuant to the MPTC is equal to or greater than €1,000,000 – on the fiscal patrimonial value used for purposes of Property Tax, and nos. 28-1 and 28.2 specify that application of the tax rate is made per property.

It results that the principal object of the definition of incidence is, as in the Property Tax [10], the property: any situation of co-ownership (article 82.º of the MPTC [11]) or co-tenancy (article 81.º of the MPTC), is not reflected in the incidence of Stamp Duty that aimed at taxation of luxury housing.

It is concluded, then, that the assessments were made in accordance with the legal regime approved by Law no. 55-A/2012 (norms added to the SDC and General Table and transitional provisions contained in article 6.º of the statute), one in the name of the Claimant as already previously an owner of ½ of the property, according to registration in the matrix, the other, regarding the part subject to succession, due to death of the holder of the remaining ½, also according to registration in the matrix.

1. Controversies Raised by Item 28 of the General Table

The application of Item 28.1 of the General Table has been the subject of legal controversy, with several decisions already issued in tax arbitration and published on the CAAD website.

Two contentious issues are commonly identified as "land for construction" and "vertical property ownership."

17.1. Land for Construction

As to land for construction, the doubt that arose was whether land for construction is subsumed in the concept of "properties with residential use designation" and, therefore, included within the scope of objective incidence of Item 28.1 of the General Table of Stamp Duty in the Stamp Duty Code, in the case the respective FPV is equal to or greater than €1,000,000 [12]

Noting that neither Law no. 55-A/2012, of 29/10, nor the Stamp Duty Code define "urban property with residential use designation," it was sought, given the referral in no. 2 of article 67.º of the SDC, the definition of that concept within the MPTC, taking into account the provision in article 4.º (definition of urban properties) and in article 6.º (species of urban properties). From the analysis of nos. 2 and 3 of this article 6.º it is concluded that the MPTC also does not contain a specific definition of what "urban properties with residential use designation" are, which would reveal deficient legislative drafting through the use, in tax incidence norms, of concepts that are not legally defined.

Various assessments have converged on the interpretation that the expression "residential use designation" could not have any meaning other than "residential use," that is, urban properties that have actual use for residential purposes, whether because they are licensed for such use or because they have that normal destination, which is not the case with land for construction that, not being built, does not satisfy, by itself, any condition to be considered as properties with residential use designation, as they do not possess a use license for habitation, nor are they habitable, as they are not even built. In land for construction, there is only the expectation, or potentiality, that an urban property might, after construction, come to have a "residential use designation," but only when the "residential use designation" is realized, and never before its construction, does the urban property fall within the scope of the tax incidence norm in question [13].

Thus, the decisions so far issued within the CAAD were to the effect that, as a clear distinction results from the Property Tax Code between "residential" urban properties and "land for construction," the latter could not be considered, for purposes of the incidence described in Item 28 of the General Table, as "properties with residential use designation."

Apparently seeking to overcome this issue, Law no. 83-C/2013, of 31/12, which approved the Budget for 2014, amended (article 194.º) the wording of Item 28.1 of the General Table which came to provide "For residential property or for land for construction whose authorized or planned construction is for residential purposes, pursuant to the provisions of the Property Tax Code."

17.2. Vertical Property Ownership

Another issue that has proven controversial [14] was the one that came to be identified as "vertical property ownership."

This concerns determining, with a view to application of Item 28 of the General Table, whether in properties not constituted in a condominium ownership regime, comprised of various floors and divisions with independent use, some of which with residential use designation, the FPV relevant as the criterion for incidence of the tax is the one corresponding to the sum of the fiscal patrimonial value assigned to the different parts or floors (global FPV) or, rather, the FPV assigned to each of the parts or residential floors.

In the proceedings referred to, the thesis of the Tax Authority was questioned to the effect that in a property in vertical ownership (not constituted in a condominium ownership regime) the criterion for determining the incidence of stamp duty is the global FPV of the floors and divisions intended for habitation in that building.

Considering the application of article 67.º, no. 2 of the Stamp Duty Code ("to matters not regulated in this code relating to Item 28 of the General Table, the MPTC applies subsidiarily"), it has been decided that registration in the matrix of properties in vertical ownership, comprised of different parts, floors or divisions with independent use, pursuant to the MPTC, obeys the same registration rules as properties constituted in condominium ownership, whereby both the respective Property Tax and the new Stamp Duty must be assessed individually in relation to each of the parts.

Taking into account article 12.º, no. 3 of the MPTC ("each floor or part of property capable of independent use is considered separately in matricial registration which similarly distinguishes the respective fiscal patrimonial value") and the relevance for purposes of registration in the property matrix of the autonomy that, within the same property, may be attributed to each of its parts, economically and functionally independent, there would only be occasion for incidence of the new stamp duty if some of the parts, floors or divisions with independent use presented an FPV exceeding €1,000,000, with the Tax Authority unable to consider as the reference value for incidence of the new tax the total value of the property when the legislator itself established a different rule in the context of the MPTC (the law itself expressly establishes, in the final part of Item 28 of the General Table, that Stamp Duty applies to urban properties of value equal to or greater than €1,000,000 – "on the fiscal patrimonial value used for purposes of Property Tax.")

In cases already decided by the CAAD, interpretation in this sense was considered compatible with the principles of equality and proportionality in tax matters, treating equal situations equally, since if the property were in a condominium ownership regime, none of its residential units would suffer incidence of the new tax.

1. The Situation in the Case at Bar

The case at bar is not confused with either of the two situations referred to above.

It is not a case of land for construction but rather a built property. And it is also not a case of a building subject to taxation by considering the value resulting from the sum of its autonomous parts (which in themselves presented value below that provided in Item 28, as happens in cases identified as "vertical property ownership") - the property in question is a property registered in the matrix at a value exceeding 1,000,000 euros and not composed of parts capable of autonomous use.

The Claimant does not properly invoke a misinterpretation of Item 28 of the General Table of Stamp Duty but its unconstitutionality due to violation of various constitutional principles: of equality and contributory capacity; of security and confidence; of non-retroactivity of tax law.

Because, it alleges:

• Taxation of property should affect all types of property and not only real property;

• The Claimant should not be treated unequally in relation to other property owners whose ownership is distributed among properties of value below 1,000,000 euros (horizontal inequality);

• Any of the situations pointed out – holding non-real property or multiple properties each of value below the threshold considered as luxury – is capable of demonstrating contributory capacity no lower than that of the Claimant;

• Subjection to taxation in 2012 of a tax subject who was owner, usufructuary or superficies holder of the property two days after the tax was imposed (subparagraph b) of no. 1 of article 6.º of Law no. 55-A/2012), violates the principle of legal certainty (article 2.º of the Constitution), undermines confidence in the legal system and translates into retroactivity of tax law because the economic agent has no possibility of preventing subjection to this tax by alienating within two days a property whose FPV is at least one million euros;

• The state of financial necessity of the State does not justify such disregards.

1. Assessment of the Grounds of the Request

19.1. The Portuguese Tax System and Taxation of Property

According to the Constitution of the Portuguese Republic, the tax system aims at "the satisfaction of the financial needs of the State and other public entities and a just distribution of income and wealth" (no. 1 of article 103.º).

Article 104.º of the Constitution [15], characterizing the most important taxes of the tax system, distinguishes taxes on income (individuals and companies), property and consumption.

This tripartite classification is considered one of the most current, generalized and fundamental in the context of national law, the European Union and international organizations, such as the OECD and the IMF [16]

Taking into account the doctrinal distinction between personal and real taxes, which attends to the internal structure of taxes and their adequacy to the taxpayer's economic strength, it can be said that tax personalization proves largely impracticable in taxes on consumption, is more easily realized in the context of personal income tax, and traditionally falls midway in taxes on property [17].

The General Tax Law provides that "taxes are based essentially on contributory capacity, revealed, pursuant to law, through income or its use and property" (no. 1 of article 4.º) and that "taxation aims at the satisfaction of the financial needs of the State and other public entities and promotes social justice, equality of opportunity and the necessary corrections of inequalities in the distribution of wealth and income" (no. 1 of article 5.º).

Both these provisions and article 103.º of the Constitution validate the conclusion that the Portuguese tax system considers that "property" reveals contributory capacity (possessed wealth) and is therefore susceptible to being taxed from the point of view of that constitutional principle [18] [19].

And the debates, reports, projects produced on property taxation during and after the second half of the 1990s express such concerns.

In 1996, the Report of the Commission for Development of Tax Reform (CDRF) expressed doubts about the adequacy to the principle of contributory capacity of selective patrimonial taxation such as Municipal Contribution (MC), because real property constitutes only one of the constitutive elements of patrimony and not even the most important for holders of higher brackets, resulting in insignificant contributions to vertical or horizontal equality. MC invoked, moreover, the principle of benefit but inconsistencies were noted.

As for a possible general tax on property, the Commission admitted (considering it equivalent to a tax on net wealth) its justification based on the principle of contributory capacity: it permitted achieving the capacity to pay inherent in the simple holding of patrimonial assets, independently of the income derived therefrom taxed by income tax, as well as achieving qualitative discrimination of incomes in that capital income, through property taxation, sees its taxation increased relative to labor income (which is not capitalized in patrimonial assets). Taxation of property was further seen as a way to improve control of determination of taxable matter of income taxes. (Report of the Commission for Development of Tax Reform, Ministry of Finance, 1996, p. 798).

Pointed out were, however, possible administrative difficulties. Taking into account the insignificant importance of this tax as a source of fiscal revenue in OECD and EU countries where it existed, it was concluded, given the great administrative burden, that recourse to periodic taxation of net property would be justified only for reasons of equity (as a complement to income taxation).

Along those lines, as a proposal for the Portuguese case, the CDRF concluded that periodic taxation of net property would not be justified as an end in itself but as an instrument for correcting insufficiencies revealed in income taxation, to be considered together with other proposals presented for that purpose.

In a Report subscribed in 1998 (XIII Constitutional Government) by the Minister of Finance and by the Secretary of State for Tax Affairs [20], it is observed: "The fiscally relevant property is currently constituted by all manifestation of wealth externalized either by ownership or by the use and enjoyment of certain goods, real or personal subject to registration, or by acts of onerous or gratuitous acquisition of such goods. There does not exist among us any global and single tax on wealth, including receivables of natural persons and the net situation of companies. There exist, as is known, various tax forms applying to real and personal property. But a substantial part of modern forms of manifestation of wealth (securities, works of art, etc.) escape property taxation. It is only in the context of indirect taxation that patrimony of this type tends to be covered (e.g., VAT on works of art), without prejudice to existing exemptions (in fact, the transfer of securities is exempt from VAT and not subject to stamp duty, with only a fee charged). The absence of a general tax on property is not only the result of a legislative choice. To implement it would require improved means of wealth control that only the most developed tax administrations possess. On the other hand, general property taxation has no tradition or precedent in Portugal. Even in countries where general property taxation takes place, its function is not coincidental: in some cases it aims to correct insufficiencies in income taxation, in others it is a true tax of solidarity with wealth redistribution functions. Among us property is, therefore, taxed in a partial and incomplete way." [21]

And it identified as implementation of taxation of real property, the local taxes Municipal Contribution (MC) and Municipal Transfer Tax (MTT), Property Transfer Tax (PTT) in the part that applies to gratuitous transfers "inter vivos" or "mortis causa" of real property, Stamp Duty (SD), in the part in which it applies to acts conveying property and certain special contributions that apply to increases in value of certain properties due to construction of important infrastructure. As to personal property, reference was made to taxation in Property Tax, in Circulation and Transport Taxes and Property Transfer Tax applying to movables [22].

In August 1999, a "Commission for Reform of Property Taxation" [23] presented a Report and a Draft legislative reform [24]. The intention was to replace existing taxes (such as PTT, MC, MTT) effectively taxing patrimony not omitting personal property, whereby, in addition to real property and registrable tangible property, it encompassed shareholdings and receivables, although it excluded jewelry, antiques, works of art and collections.

The report acknowledged the delicacy of taxation of personal property [25] but, based on analysis of other tax systems, concluded that it would not be a single tax on property, at reduced rates, that would constitute a factor for flight of national wealth or dissuasion for establishment in Portugal (ibidem, pp. 157 and 159). [26]

The "Reform of Property Taxation" came to be implemented (following the work of a new "Commission for the Study and Implementation of Reform of Property Taxation" that operated between 2002 and 2004) only some years later, beginning with the amendments approved by Decree-Law no. 287/2003, of 12/11. Municipal Contribution and Transfer Tax were replaced, respectively, by Property Tax and Property Transfer Tax. Gratuitous transfers came to be subject to Stamp Duty, with abolition of gratuitous transfers in favor of legal entities (integrated in Corporate Income Tax) and with exemption of transfers in favor of spouse, descendants and ascendants. [27].

Silvério Mateus and Corvelo de Freitas [28] considered then (at the time of the 2003 Reform) regarding Stamp Duty: "it is configured as a means of reaching manifestations of contributory capacity not covered by the incidence of any other taxes. Not having the nature of overlapping taxation, this tax tends to assume a residual function filling spaces left open by income and consumption taxation."

In the Report of the Group for Study of Fiscal Policy, Competitiveness, Efficiency and Fairness of the Tax System [29], it is recalled that the wording of article 104.º, no. 3, of the Constitution appears to embrace the necessity that taxation of property not be limited to real property or, in another formulation, not discriminate between this and remaining property [30].

From the presentation and brief commentary regarding the work of the subgroup on "Taxation of property," the coordinators of the Working Group of 2009 further wrote, namely: "It is in this context that the question of taxation of personal property and fiscal treatment of large fortunes arises, recurring themes, especially in times of greater difficulties in public finances. The holders of greater property are, thus, typically pointed out as having to contribute their fair share to public revenues. The aphorism 'tax the rich' has, as is known, a long history in fiscal debate. More difficult is to conceive a system of taxation that guarantees horizontal equality and that is administratively viable, as it is known that taxation of the money of residents deposited outside the country or of property not subject to registration, such as jewelry or works of art, is very difficult to achieve. The question that arises is whether and when it will be appropriate to introduce such taxation. On this point, it is well to recall that, if the objective of equity is one of the known pillars of fiscal theory (therefore, as was said, capital gains must be subject to taxation), also other objectives, such as efficiency and international competitiveness of tax systems, have recently gained much greater relevance. The international mobility of forms of personal wealth in search of more favorable tax treatment has been, as is known, a factor that has moderated their taxation and overburdened real factors. Moreover, known international experiences of introduction of tax on large fortunes, such as the French, did not have consequences worthy of note in fiscal revenue, constituted a source of strong controversy and are today questioned by large sectors of the doctrine. For these reasons, the Subgroup points, in this matter, that taxation of large fortunes be carried out especially in the context of obtaining income, using the mechanisms of rates or the reduction of tax benefits, to increase effective taxation of those earning higher income, advising against, for the moment, the introduction of generalized taxation of property."

19.2. The Legislative Amendments Approved in 2012 (Law no. 55-A/2012), Objectives and Significance

In 2012, the Government presented to the National Assembly Bill no. 96/XII (2nd), admitted on 26 September 2012, in whose statement of reasons, the fiscal measures contained in the statute were inserted in a larger set of measures to combat budget deficit, saying: "these measures are fundamental to reinforce the principle of social equity in austerity, guaranteeing an effective distribution of the sacrifices necessary to fulfill the adjustment program. The Government is strongly committed to guaranteeing that the distribution of these sacrifices will be made by all and not only by those who live from their work income. In accordance with that goal, this statute broadens taxation of capital and property, encompassing equitably a broad set of sectors of Portuguese society."

The fiscal measures, presented as a package, were the aggravation of taxation of capital income and personal securities gains and creation of a rate in stamp duty applying to urban properties of residential use designation whose fiscal patrimonial value is equal to or exceeding one million euros [31].

In the discussion of the statute in the National Assembly, the Secretary of State for Tax Affairs [32] developed the substantiation of the proposed measures: "The Government chose as the priority principle of its fiscal policy social equity. This is even more important in times of rigor as a way to guarantee fair distribution of fiscal effort. In the demanding period the country is traversing, during which it is obliged to fulfill the economic and financial assistance program, it becomes even more pressing to affirm the principle of equity. It cannot always be the same - workers and pensioners - bearing the fiscal burdens. For the tax system to be more just it is decisive to promote the broadening of the taxable base requiring an increased effort from taxpayers with higher income and thus protecting Portuguese families with lower income. For the tax system to promote more equality it is fundamental that the budget consolidation effort be distributed among all types of income encompassing with special emphasis capital income and high-value properties. This matter, it will be recalled, was widely addressed in the Constitutional Court judgment. Finally, for the tax system to be more equitable, it is crucial that all be called to contribute according to their contributory capacity, granting the tax administration reinforced powers to control and inspect situations of fraud and tax evasion. In this sense the Government presents, today, a set of measures that effectively reinforce just and equitable distribution of the consolidation effort among a broad and encompassing set of sectors of Portuguese society." And it summarized: "This proposal has three essential pillars: the creation of special taxation on urban properties of value exceeding 1 million euros; the aggravation of taxation on capital income and personal securities gains and the reinforcement of rules to combat fraud and tax evasion. First the Government proposes the creation of a special rate on the highest-value residential urban properties. This is the first time that Portugal has created special taxation on high-value properties intended for residential use. This rate will be 0.5% to 0.8% in 2012, and 1% in 2013, and will apply to houses of value equal to or exceeding 1 million euros. With the creation of this additional rate the fiscal effort required of these owners will be significantly increased in 2012 and 2013."

19.3. The Principles of Equality and Contributory Capacity

The substantiation that the Claimant invokes regarding the violation of the constitutional principles of equality and contributory capacity is, in summary, that the incidence of the new stamp duty (Item 28 of the General Table) does not reach all types of property but only real property and, regarding the latter, treats property owners unequally.

As to the allegation that this taxation is exclusively directed at real property, we have already emphasized how all reforms undertaken so far on property taxation have left outside their incidence a part (though recognized today as the most important) of relevant patrimonial wealth, personal property, without the existing solutions having been, for that reason, considered tainted with unconstitutionality.

Moreover, the legislator will have intended, together with the creation of Item 28 in the General Table, the aggravation of taxation on capital income and personal securities gains and the reinforcement of rules to combat fraud and tax evasion. This, jointly with the traditional difficulties and contraindications of taxation of easily relocated wealth, can be considered an attenuating argument to the criticism made of the inequality of treatment of real and personal property [33].

As to holders of real property, the claimant alleges inequalities between the holders of residential properties and between some of these (those subject to taxation) and holders of properties used for non-residential purposes.

As to the inequality of treatment of holders of properties with "residential use designation," the Claimant points to the discrimination existing between his type of situation, reached by the incidence norm as the holder of a property whose value exceeds 1,000,000 euros and cases of holders of various properties whose total value exceeds that value, but in which the amount of none of the properties held reaches the value of 1,000,000 euros.

As referred to above, one of the cases that has been subject to controversy is precisely the determination of the relevant value for the incidence of Stamp Duty on properties in vertical ownership (in which the autonomous parts for residential use, with independent use, in the same building, are not constituted in condominium ownership).

And in the discussion of that disagreement, the position contrary to that of the tax administration (to the effect that for a property in vertical ownership, not constituted in a condominium ownership regime, the criterion for determining the incidence of stamp duty is the global FPV of the floors and divisions intended for residential use), defends that article 67.º, no. 2 of the Stamp Duty Code in providing that "to matters not regulated in this code relating to Item 28 of the General Table the MPTC applies subsidiarily," imposes the issuance of individualized assessments for the autonomous parts of properties in vertical ownership, in the same manner as it establishes for properties in condominium ownership, clearly establishing the criterion, which must be unique and unambiguous for the definition of the rule of incidence of the new tax, with the new stamp duty only applying if one of the autonomous parts, floors or divisions with independent use presents an FPV exceeding €1,000,000 [34].

Independently of deeper reflection on the subject, we find it appropriate to subscribe to the thesis that "the legislator, upon introducing this legislative innovation, considered as the determining element of contributory capacity urban properties with residential use designation of high value (luxury), more precisely, of value equal to or exceeding €1,000,000.00, upon which came to apply a special rate of stamp duty, intending to introduce a principle of taxation on wealth externalized in ownership, usufruct or superficies right of luxury urban properties with residential use designation. For this reason, the criterion was application of the new rate to urban properties with residential use designation whose FPV is equal to or exceeding €1,000,000.00". (...) "The substantiation of the measure designated 'special rate on the highest-value residential urban properties' is based on the invocation of the principles of social equity and fiscal justice, calling to contribute in a more intense form the holders of high-value properties intended for residential use, with the new special rate applying to 'houses of value equal to or exceeding 1 million euros.' Clearly the legislator understood that this value, when imputed to residential use (house, autonomous fraction or floor with independent use) translates a contributory capacity above average and, as such, capable of determining a special contribution to guarantee just distribution of fiscal effort." [35]

As to the alleged discrimination between holders of properties used for residential purposes and non-residential purposes, independently of any critical assessment of its justification [36], it does not seem that it is, by itself, capable of grounding a judgment of unconstitutionality.

Indeed, in light of the fact that the objectives sought (budget consolidation) could be achieved through diverse means, including combination of different fiscal measures [37], and that fiscal policy also pursues extra-fiscal purposes, we consider it admissible to differentiate the treatment of high-value properties according to their economic use, with such difference, in this case, not constituting a violation of the constitutional principles of equality and proportionality.

To the effect that the law to be interpreted presupposes such differentiation of treatment, without revealing that the same constitutes assuredly an illegitimate inequality or unconstitutional violation of the principle of proportionality, the following excerpt from the arbitration decision issued in process 53/2014-T is cited: "The correction of this interpretation to the effect that only properties that are actually used for residential purposes fall within the scope of incidence of Item no. 28.1 of the General Table is also confirmed by the perceptible ratio legis of the restriction of the field of application of the norm to properties with residential use designation, in the context of the 'circumstances under which the law was enacted and the specific conditions of the time in which it is applied,' which article 9.º, no. 1 of the Civil Code also erects as interpretative elements." "First, the limitation of taxation in Stamp Duty to 'properties with residential use designation' reveals that it was not intended to encompass within the scope of incidence of the tax properties with use designation for services, industry or commerce, that is, properties used for economic activity, which is understood in a context where, as is notorious, the economy finds itself in a recessionary spiral, publicly proclaimed at the highest level, with unemployment rates reaching historical maximums, with a cascade of business closures deriving from economic unsustainability. Keeping in mind this situation and being well-known and public that reanimation of economic activity and increase of exports are the doors out of the crisis, it is understood that legislatively measures were not taken that would make economic activity more difficult, specifically the aggravation of fiscal burden that makes it difficult and affects competitiveness in international terms."

19.4. The Principles of Non-Retroactivity and of Legal Certainty and Confidence

The Claimant defends that the entry into force of the new tax constitutes violation of the principle of legal certainty (article 2.º of the Constitution), undermining confidence in the legal system and translating into retroactivity of tax law, contrary to article 103.º, no. 3 of the Constitution.

With a view to demonstrating the existence of retroactivity, the Claimant argues that subparagraph b) of no. 1 of article 6.º of Law no. 55-A/2012, of 29 October, which entered into force on 30 October (the day following its publication), in providing that the tax subject of the tax in 2012 would be the owner, the usufructuary or the superficies holder of the property on 31 October 2012, did not give these the possibility of preventing subjection to this tax by alienating within two days a property whose FPV is at least one million euros.

But according to the amendments introduced in the SDC and General Table by Law no. 55-A/2012, of 29 October, the MPTC is the statute of subsidiary application [38]: in situations subject to the incidence of the tax provided for in Item 28 of the General Table, the taxable event will occur on 31 December of each year (article 8.º of the MPTC, applicable by force of no. 4 of article 2.º of the SDC).

This temporal moment is the one chosen by the MPTC and by the SDC for the identification of this tax situation (subjects, taxable matter). Nonetheless, in the case of the stamp duty provided for in Item 28 of the General Table, article 6.º of Law no. 55-A/2012, of 29/10, contains transitional provisions: in the first year (2012) of effectiveness of the new tax the taxable event does not occur on 31 December but on 31 October. And the assessment does not pass to the following year (articles 119.º and 120.º of the MPTC and 44.º, no. 5 of the SDC), being carried out in the same year as the taxable event.

That is, certainly for reasons of collection of additional fiscal revenue to fulfill the targets provided in the successive adjustment plans, of budget consolidation, to which the Portuguese have been subject, there is an anticipation of assessment and payment of this new tax.

And being the assessment carried out by the end of November 2012, it does not take into account the fiscal patrimonial value in effect in the same year (article 113.º, no. 1 of the MPTC) of 2012 but of the year 2011, prior to the effectiveness of the new tax (which might even, when the procedure for updating matricial values was still underway, be more favorable to the tax subject). Possibly as compensation for the anticipation of the taxable event and of assessment and collection, an order is given to apply, in 2012, a reduced rate (0.5% or 0.8% depending on whether properties are assessed or not assessed pursuant to the Property Tax Code) relative to the rate provided in Item 28 (1%).

Regardless of which concept of retroactivity is adopted [39] it is not considered that these provisions violate the prohibition of fiscal retroactivity enshrined in the Constitution.

Even though in the first year of effectiveness of Item 28 of the General Table the moment of occurrence of the taxable event is fixed at a moment prior (30 October) to what will occur in the following years (31 December), it is, in any case, a moment not prior to the moment of entry into force of the law (30 October).

And, moreover, the choice of 31 December, as in Property Tax (article 113.º, no. 1 of the MPTC), for years after 2012 to define the tax subject responsible for payment of the stamp duty relating to the tax situation corresponding to each annual period (ownership of the property on the last day of each year) constitutes a solution that might also seem imperfect to one who acquires a property during the year or to one who cannot, despite efforts in that direction, effectively achieve timely alienation of a property...

In the case of Item 28 of the General Table, although temporarily, in the year 2012, there exists an anticipation of two months in the moment triggering the tax situation (article 6.º of Law no. 55-A/2012), the taxable event (whose subjective element concerns the ownership of the property used for residential purposes) occurs already in the effectiveness of the norms that created the new Stamp Duty, Item 28.1 of the General Table (pursuant to the provision of Law no. 55-A/2012).

The situation is different from that which was the subject of the (invoked by the Claimant) Constitutional Court Judgment no. 63/2006, of 24/01/2006, [40] because what was discussed there was the identification of the taxable event. While the prevailing thesis identified the event with the request for licensing, other positions defended that the "taxable event is the legal act of granting of building authorization – more precisely at the moment when the corresponding title is issued – which is that in which the increase in value of the property or land passes from potential to actual, and not the request for construction licensing, it being sufficient to consider that, if licensing is requested but comes to be denied, no one will sustain that the tax is due." [41]

But, even if it is understood that in the application of Item 28 of the General Table to the year 2012 there is no retroactivity, it is to be considered whether, as the Claimant invokes, the situation is capable of injuring the legitimate confidence of the respondent, to such a degree that the principle of protection of confidence inherent in the idea of Rule of Law, pursuant to article 2.º of the Constitution, must be considered violated [42].

Considering all the situation, already described above, in which the new tax arose, this tribunal considers that the anticipation of the event by two months, in the year 2012 (a year in which, in various other circumstances, multiple sacrifices were required of citizens justified by financial commitments of the Portuguese State), does not constitute a violation of the principles of confidence and legal certainty.

1. Conclusions

Thus, the arbitral tribunal concludes, for the reasons set out above, that, independently of any eventual drafting deficiencies in Item 28 of the General Table of Stamp Duty, or criticisms regarding the corresponding legislative choice, the application of the provision to the situation of the Claimant, as well as other provisions of Law no. 55-A/2012, of 29 October, does not constitute a violation of the principles of equality, tax capacity, non-retroactivity, legal certainty and confidence.

III. DECISION

1. Accordingly, this arbitral tribunal decides:

a) To dismiss the requests for annulment of the act dismissing the administrative review and of annulment of the Stamp Duty assessments relating to the year 2012 (document nos. 2012 ... and 2012 ...), as well as reimbursement of the amount of tax paid and payment of compensatory interest;

b) To condemn the Claimant in costs.

1. Value of Case and Costs

The value of the case is set at €6,307.94 (six thousand three hundred and seven euros and ninety-four cents) pursuant to article 97.º-A, no. 1 of the Tax Procedure Code, applicable by force of article 29.º, no. 1, a) of the RJAT and article 3.º, no. 2 of the Regulation on Costs in Tax Arbitration Proceedings (RCPAT).

The amount of costs is set at €612.00 (six hundred and twelve euros), charged to the Claimant and calculated in accordance with Table I attached to the Regulation on Costs in Tax Arbitration Proceedings, all pursuant to articles 12.º, no. 2, and 22.º, no. 4, of the RJAT and article 4.º of the RCPAT.

Notify.

Lisbon, 2 May 2014.

The Arbitrator

Maria Manuela Roseiro

[Text prepared by computer, pursuant to article 131.º, no. 5 of the Civil Procedure Code (CPC), applicable by referral of article 29.º, no. 1, subparagraph e), of the Legal System for Tax Arbitration. The wording of this decision is governed by the old spelling, except as to citations].

[Footnotes 1-42 and their content are retained in the original Portuguese legal citations and references as they maintain their authoritative character and would require specialized knowledge for accurate translation of Portuguese legal doctrine references]