Process: 224/2015-T

Date: October 15, 2015

Tax Type: Selo

Source: Original CAAD Decision

Summary

CAAD Arbitral Decision 224/2015-T addresses whether land plots classified as 'terrenos para construção' (land for construction) are subject to Stamp Tax under Verba 28.1 of the Tabela Geral do Imposto do Selo (TGIS). The case involved Fund A challenging three Stamp Tax assessments totaling €541,962.42 for tax year 2012. The central legal question concerns the interpretation of 'prédio com afectação habitacional' (property with residential use) under Law 55-A/2012. The claimant argued that Verba 28.1 should only apply to built properties with actual residential use, not undeveloped land with merely potential future residential use. The fund contended that according to CIMI definitions, residential properties must correspond to buildings or constructions, and land for construction under Article 6(3) of CIMI contains no construction conferring real residential use. Additional grounds included improper application of the use coefficient from Article 41 CIMI (arguing it applies only to built properties per Article 45 CIMI), double taxation (previous payment already made), and constitutional violations of equality and proportionality principles. The Portuguese Tax Authority countered that Article 67(2) of the Stamp Tax Code (CIS) requires subsidiary application of CIMI provisions, and that land for construction qualifies as property with residential use for Stamp Tax purposes. The dispute highlights fundamental tensions in Portuguese tax law regarding whether tax incidence should be based on actual current use versus intended or licensed future use, and whether undeveloped land should bear the same tax burden as completed residential buildings. The arbitral procedure followed Decree-Law 10/2011 (RJAT), with the tribunal constituted on June 12, 2015.

Full Decision

CAAD ARBITRAL DECISION No. 224/2015-T

Process no. 224/2015-T

I – Report

1.1. Fund A…, with tax identification number …, and with address at Avenue …., …, …, ….º Floor, Lisbon (hereinafter referred to as "Claimant"), represented and managed by B…, S.A., with tax identification number …, and address at the same location, having been notified of the Stamp Tax assessments for the year 2012 (assessments with numbers 2012 …, 2012 … and 2012 …), in the total amount of €541,962.42, filed, on 31/3/2015, a request for constitution of an arbitral tribunal and for an arbitral decision, in accordance with the provisions of paragraph a) of no. 1 of art. 2, and of paragraph a) of no. 1 of art. 10, both of Decree-Law no. 10/2011, of 20/1 (Legal Regime of Arbitration in Tax Matters, hereinafter referred to as "LRAT"), in which the Tax and Customs Authority ("TCA") is the Requested Entity, with a view to, in summary, the "declaration of illegality of the Stamp Tax assessments for the year 2012 and item 28.1 of the General Table of Stamp Tax".

1.2. The present Claimant invokes, in its initial petition, that: a) "urban properties qualified as 'land for construction' for IMI purposes are not subject to the Stamp Tax provided for in item 28 of the GTST"; b) "the CIS does not contain a definition of the concept of 'property with residential use' used in item 28 of the GTST, merely referring to the concept of 'property' provided for in the CIMI"; c) "it follows [...] from the definition of residential, commercial, industrial or service properties provided for in the CIMI that the same must, necessarily, correspond to a building or construction. The same is to say that, for IMI purposes, only buildings and other constructions may be considered as residential, commercial, industrial or service properties"; d) "furthermore, the tax law does not provide the concept of each of the types of urban properties listed in no. 1 of article 6 of the CIMI, merely referring, in the first place, to the use attributed by licensing and, in the absence of a license, to the criterion of normal use"; e) "the concept of 'properties with residential use' provided for in said item 28.1 of the GTST is not defined in Law no. 55-A/2012, of 29 October, which introduced it, nor in the CIMI, to which no. 2 of article 67 of the CIS, equally introduced by that law, refers subsidiarily"; f) "for taxation purposes under item 28.1 of the GTST, the residential use of urban properties refers to the concrete and current use of a built building, and not to an abstract, future and merely potential or projected use, under penalty of violation of the applicable legal and constitutional rules"; g) "from the understanding set out [in Draft Law no. 96/XII, which gave rise to Law no. 55-A/2012, of 29/10,] it follows that [...] the special taxation provided for in item 28.1 should apply only to properties intended for housing, specifically 'houses', whose patrimonial value exceeds the limit provided for in that item"; h) "from the [...] definition [contained in no. 3 of art. 6 of the CIMI] it follows that properties classified as 'land for construction' do not include (yet) any 'construction' that could confer on them a real 'residential use'"; i) "in light of the wording of item 28.1 of the GTST in force at the date of the facts in question, and considering the legal succession set out above, the Claimant understands that, with regard to the Stamp Tax assessments which are the subject of this request for arbitral decision, there is no rule of incidence that enables the Tax Administration to tax land for construction under item 28.1 of the GTST [, therefore] [...] the assessments in question, as well as the decision of the TCA that sustained them, violate the provisions of item 28.1 of the GTST and article 6 of the CIMI"; j) "all coefficients provided for in the formula enshrined in article 38 of the CIMI should not be taken into consideration, in particular the use coefficient provided for in article 41 of that Code"; l) "in determining the patrimonial value of land for construction there is no place for consideration of the use coefficient because the same, not only is not provided for in article 45 of the CIMI, but is only applicable to already built properties"; m) "in light of the case law [...] set out, it must be concluded that the use coefficient does not apply, indiscriminately, to all urban properties, being excluded, by force of the wording of articles 45 and 41 of the CIMI, from the methodology for calculating the patrimonial value of land for construction [, therefore] [...] the assessments in question also violate the provisions of articles 41 and 45 of the CIMI"; n) "with regard to the year 2012, Stamp Tax assessments provided for in item 28.1 of the respective General Table with regard to the properties identified above have already been made and paid by the Claimant [on 20/12/2012, in accordance with docs. 14 to 16 attached to the arbitral decision petition], therefore the assessments which are the subject of this request, referring to the same tax period and the same taxable fact, are infected with illegality due to a defect of duplication of collection"; o) "[should] any of the illegalities invoked above [not apply], [...] the Claimant understands that item 28.1 of the GTST is manifestly unconstitutional due to violation of the principles of equality and proportionality"; p) "by treating in an identical manner situations that are materially and manifestly distinct, the assessments in question manifestly violate the principle of equality, a defect capable of determining their annulment"; q) "item 28.1 is also unconstitutional due to violation of the principle of proportionality, inherent in article 266, no. 2, of the CRP, in article 5, no. 2, of the CPA and, within the scope of tax law, in article 55 of the LGT"; r) "in accordance with the provisions of nos. 1 and 2 of article 53 of the LGT, in case of success in this arbitral decision, indemnification for damages resulting from guarantees provided is requested".

The Claimant concludes that "this arbitral decision petition should be judged to have merit as proven, declaring the illegality of the Stamp Tax assessments of the year 2012, made under item 28.1 of the GTST, with all legal consequences". It further requests "indemnification for damages resulting from the improper provision of guarantee, in accordance with article 53 of the LGT."

1.3. On 12/6/2015 the present Collective Arbitral Tribunal was constituted.

1.4. In accordance with art. 17, no. 1, of the LRAT, the TCA was cited, as the requested party, to file a response, in accordance with the said article, on 14/6/2015. The TCA filed its response on 3/9/2015, having argued for the total dismissal of the Claimant's request.

1.5. The TCA invokes, in its response, that: a) "it is the understanding of the TCA that the property on which each of the assessments challenged falls, has the legal nature of a property with residential use, therefore the assessment acts which are the subject of this arbitral decision petition should be maintained, as they embody a correct interpretation of Item 28 of the General Table, added by Law 55-A/2012, of 29/12"; b) "in the absence of any definition of the concepts of urban property, land for construction and residential use, in the context of Stamp Tax, it is necessary to resort to the CIMI, in search of a definition that permits ascertaining the eventual subjection to Stamp Tax, in accordance with the provisions of art. 67, no. 2, of the CIS, in the wording given by Law no. 55-A/2012, of 29/10"; c) "in accordance with the said legal provision [art. 67, no. 2, of the CIS], to matters not regulated in the Code, concerning item no. 28 of the GTST, the provisions of the CIMI shall apply subsidiarily"; d) "for the purposes of determining the patrimonial value of land for construction, the application of the use coefficient in the context of valuation is clear, therefore its consideration for the purposes of applying item 28 of the GTST cannot be ignored, being valid, in this sense, this order of considerations: [i)] in the application of the law to specific cases it is important to determine the exact meaning and scope of the rule, so that the rule contained therein is revealed, an indispensable condition for it to be applied, in accordance with the provisions of art. 9 of the CC, ex vi art. 11 of the LGT; [ii)] art. 67, no. 2, of the CIS orders the application, subsidiarily, of the provisions of the CIMI; [iii)] the use of the property (aptitude or purpose) is a coefficient that contributes to the valuation of the property, in determining the patrimonial value, applicable to land for construction; [iv)] item 28 itself of the GTST refers to the expression 'properties with residential use', appealing to a classification that overlays the species provided for in no. 1 of art. 6 of the CIMI"; e) "contrary to what is advocated by the Claimant, the TCA understands that the concept of 'properties with residential use', for the purposes of the provisions of item 28 of the GTST, comprises both built properties and land for construction, first and foremost in view of the literal element of the rule"; f) "the mere constitution of a right of potential construction immediately increases the value of the property in question, hence the rule contained in art. 45 of the CIMI which orders the separation of the two parts of the land"; g) "[taking into account the legal regime of urbanization and construction and, in particular, its art. 77, it is concluded that,] well before the construction of the property it is possible to ascertain and determine the use of the land for construction"; h) "with regard to the alleged violation of constitutional principles, the TCA cannot fail to point out that the Constitution of the Republic requires that what is necessarily equal be treated equally and what is essentially different be treated as different, not preventing differentiation of treatment, but only arbitrary, unreasonable discriminations, that is, distinctions of treatment that do not have justification and sufficient material basis [therefore it is understood that] the provision of item 28 of the GTST does not constitute violation of any constitutional command"; i) "the different aptitude of properties (housing/services/commerce) sustains the different treatment, having constituted an option of the legislator, for political and economic reasons, to exclude from the incidence of Stamp Tax properties intended for purposes other than residential"; j) "[the legal choice of application is not manifestly indefensible] because such a measure will be applied indiscriminately to all holders of properties with residential use of value exceeding €1,000,000.00"; l) "by all the above, the assessments in question embody a correct interpretation and application of the law to the facts, not suffering from any defect of violation of law, whether of the CRP or the CIS, and should, consequently, be judged to lack merit, and the Requested Entity absolved of the request."

The TCA concludes that "the request for declaration of illegality and consequent annulment of the controversial assessments [should] be judged to lack merit, absolving the TCA of the request."

1.6. By order of 10/9/2015, the Tribunal considered the meeting of article 18 of the LRAT to be unnecessary, given the circumstance that no exceptions were raised and no production of evidence was requested.

1.7. By means of the aforementioned order, the Tribunal also granted the parties the possibility of offering, if they so wished, successive written submissions, within the period of 10 days from notification of the said order. It was also, and finally, fixed the date of 30/10/2015 as the deadline for the pronouncement of the arbitral decision.

1.8. On 11/9/2015, the present Claimant filed a motion requesting the attachment to the record of the documents which it had protested attaching under art. 116 of its request for arbitral decision, evidencing the expenses incurred, to the present date, with the bank guarantees provided to the TCA for suspension of the execution proceedings, in the total amount of €79,005.91. The said motion was granted by arbitral order of 30/9/2015.

1.9. On 24/9/2015, the present Claimant filed its written submissions, in which, in summary, it reiterates the arguments presented in its request for arbitral decision, which are summarized below. The Requested Party did not pronounce itself within the established period.

1.10. The Arbitral Tribunal was duly constituted, is materially competent, the process does not suffer from defects that invalidate it and the Parties have personality and judicial capacity, being legitimate.

II – Proven Facts, Unproven Facts and Respective Reasoning

2.1. The following facts are considered proven:

i) The present Claimant is a closed real estate investment fund, owner of three urban properties registered in the urban property register of the parish of …, municipality and district of Lisbon, under the property registration numbers …, … and … (whose property records are contained, respectively, in docs. 1, 2 and 3, attached to the arbitral decision petition).

ii) The properties referred to are registered in their respective property registers as land for construction and the current patrimonial value for CIMI purposes is, respectively, €6,844,261.62, €1,205,199.23 and €93,398,800.00 (see docs. 1 to 3, attached to the said arbitral decision petition).

iii) On 28/3/2013, the present Claimant was notified of the 2013 Stamp Tax assessments, made on 21/3/2013, under item 28.1 of the GTST and referring to the aforementioned three properties, having been ascertained a total collection amount of €1,010,467.43. The Claimant was also notified for payment of the 1st installment, as evidenced by the collection documents no. 2013 …, 2013 … and 2013 … (see docs. 4 to 6, attached to the said arbitral decision petition).

iv) On 4/7/2013, the present Claimant was notified to proceed with payment of the 2nd installment of the said Stamp Tax assessments, as evidenced by the Collection Documents no. 2013 …, 2013 … and 2013 … (see docs. 7 to 9, attached to the said arbitral decision petition).

v) The present Claimant was notified to proceed with payment of the 3rd installment of the said Stamp Tax assessments, as evidenced by the Collection Documents no. 2013 …, 2013 … and 2013 … (see docs. 10 to 12, attached to the said arbitral decision petition).

vi) On 7/8/2013, the Claimant filed a gracious complaint (complaint proceedings no. …) of the assessments in question. On 16/3/2015, the Claimant was notified of the decision of partial granting of the complaint, by order contained in doc. 13 attached to the arbitral decision petition as well as the PA attached. As a result of the said order, assessment no. 2012 …, in the amount of €933,988.00, was partially revoked (it became €465,482.99), the total collection amount becoming €541,962.42 (see information that supports the opinion contained in the partial granting order, attached to the record).

vii) On 10/3/2015, the present Claimant filed a gracious complaint regarding the 3rd installment of the Stamp Tax assessments, the TCA having filed it away, concluding that the intended effects regarding the 3rd installment were already being analyzed in the complaint regarding the 1st and 2nd installments of the same assessments.

viii) Not satisfied with the decision of the gracious complaint, as regards the part in which it maintained the assessments in question, the Claimant deduced the present request for arbitral decision on 31/3/2015.

ix) With a view to suspending the execution proceedings instituted for the coercive collection of the Stamp Tax assessments which were the subject of the prior gracious complaint and the present request for arbitral decision, the present Claimant provided bank guarantees nos. N00 … and N00 … (see docs. 17 and 18, attached to the arbitral decision petition).

x) For the maintenance of the aforementioned guarantees, the Claimant incurred commissions that were being charged to it, which was demonstrated by the presentation, in a motion of 11/9/2015, of the documents which it had protested attaching under art. 116 of its request for arbitral decision – documents that evidence the expenses incurred, to the present date, with these guarantees, in the total amount of €79,005.91. The motion of 11/9/2015 was granted by arbitral order of 30/9/2015.

2.2. There are no unproven facts relevant to the resolution of the case.

2.3. The facts considered pertinent and proven (see 3.1) are based on the analysis of the positions set out by the parties and the documentary evidence and PA attached to the record.

III – The Law

The essential question in the present case translates into the definition of the scope of incidence of item 28.1 of the General Table of Stamp Tax, in the wording given to it by Law no. 55-A/2012 of 29/10, namely whether in that rule should be included land for construction and, in concrete, whether land for construction with patrimonial value equal to or exceeding €1,000,000 subsume, or not, in the species of urban properties "with residential use".

Now, this is a question which, regardless of the constitutionality issues that it raises, namely at the level of the principle of equality and the possibility of the existence of taxation in Stamp Tax on real estate in a pure patrimonial taxation perspective without any connection to the principle of equivalence or benefit (the fundamental principle of IMI), has been extensively treated, both in the case law of CAAD, and in the case law of STA.

Indeed, it is today a unanimous interpretation of the adjudicating entities that it is to be excluded from the scope of incidence of Stamp Tax land for construction which has not yet had any type of use defined, as it is not yet applied or intended for residential purposes.

In fact, land for construction, whether from the perspective of urbanistic law or from the perspective of tax law, has a nature distinct from properties with residential purposes, since, in the moment prior to the realization of the improvement (the construction itself) it has no defined use and constitutes itself as a mere land asset, and cannot, therefore, be considered properties with residential use.

It should be noted that the legislator's intention was clearly restrictive. When it uses the expression "residential purposes" it clearly expresses a desire to include only residential properties in the scope of incidence of the rule, clearly excluding those with commercial and industrial purposes (even if integrated in urban areas that, in a limit situation of realization that translates into the existence of an approved Urbanization Plan or Detailed Plan), given that their actual use depends on their definitive construction.

In this context, various case law has concluded that the assessments challenged suffer from error as to the factual and legal assumptions, as the properties in relation to which Stamp Tax was assessed under the said item no. 28.1 constitute themselves as land for construction, without any building or construction, required to fill that concept of "residential properties".

The Public Treasury has been arguing that, for the purposes of the provision of item no. 28.1 of the GTST, the concept of "properties with residential use" comprises not only built properties but also land for construction, since the legislator does not refer to "properties intended for housing" but has instead opted for the notion of "residential use", an expression which it considers different and more broad, integrating other realities beyond those identified in art. 6, no. 1, letter a), of the CIMI.

Concluding that residential use, for the purposes of applying item no. 28, does not necessarily imply the existence of buildings or constructions – thus applying to land for construction with that use.

This does not appear to be correct for the reasons already advanced. In fact, the question under consideration is, even in its factual assumptions, entirely identical to the question that was considered and decided in the STA in the recent judgments of 9/4/2014, issued in proceedings nos. 1870/13 and 48/14, and of 23/4/2014, issued in proceedings nos. 270/14, 271/14 and 272/14, in which it was decided that "land for construction" cannot be considered, for the purposes of the incidence of Stamp Tax, provided for in Item 28.1 of the respective General Table (in the wording of Law no. 55-A/2012, of 29 October), as "urban properties with residential use".

This is case law which is also accepted here, as we agree entirely with its respective reasoning, therefore we shall merely reproduce what was said on the question in the above-mentioned Judgment issued in proceedings no. 1870/13:

"The concept of 'property (urban) with residential use' was not defined by the legislator. Neither in Law no. 55-A/2012, which introduced it, nor in the Code of IMI, to which no. 2 of article 67 of the Code of Stamp Tax (equally introduced by that Law), refers on a subsidiary basis. And it is a concept which, probably owing to its imprecision – a fact all the more serious since it is a function of it that the scope of the objective incidence of the new taxation is defined –, had a short life, since it was abandoned when the State Budget Law for 2014 came into force (Law no. 83-C/2013, of 31 December), which gave new wording to that item no. 28 of the General Table, and which now defines its objective scope of incidence through the use of concepts that are legally defined in article 6 of the Code of IMI.

This change - to which the legislator did not attribute an interpretative character, nor do we think it did –, merely makes unequivocal for the future that land for construction whose construction, authorized or planned, is for housing is comprised within the scope of item 28.1 of the General Table of Stamp Tax (provided that its respective patrimonial value is of a value equal to or exceeding 1 million euros), but clarifies nothing, however, regarding past situations (assessments of 2012 and 2013), such as the one at issue in these proceedings.

Now, as to these, it does not appear to be possible to follow the interpretation of the appealing party, since it does not follow unequivocally either from the letter or from the spirit of the law that its intention has been, ab initio, to encompass within its objective scope of incidence land for construction for which the construction of residential buildings was authorized or planned, as now follows unequivocally from item 28.1 of the General Table of Stamp Tax.

From the letter of the law nothing unequivocal follows, indeed, since it itself, in using a concept that it did not define and that was also not defined in the statute to which it referred on a subsidiary basis, lent itself, unnecessarily, to ambiguities, in a matter – of tax incidence – in which certainty and legal security should also be paramount concerns of the legislator.

And from its "spirit", discernible in the statement of reasons of the draft law that gave rise to Law no. 55-A/2012 (Draft Law no. 96/XII – 2nd, Journal of the Assembly of the Republic, series A, no. 3, 21/09/2012, p. 44, available at www.parlamento.pt) nothing more follows than the concern to raise new tax revenue, on sources of wealth "more spared" in the past from the voracity of the Tax Authority than labor income, in particular capital income, securities gains and property, reasons which bring no relevant contribution to the clarification of the concept of "properties (urban) with residential use", as they take it as settled, without any concern to clarify it. Such clarification did, however, emerge - as reported in the Arbitral Decision issued on 12 December 2013, in proceedings no. 144/2013-T, available in the CAAD database -, when that draft law was presented and discussed in the Assembly of the Republic, in the words of the Secretary of State for Tax Affairs, who reportedly stated explicitly, as gathered from the Journal of the Assembly of the Republic (DAR I Series no. 9/XII – 2, of 11 October, p. 32) that: "The Government proposes the creation of a special rate on high-value residential urban properties. It is the first time in Portugal that a special taxation is created on high-value properties intended for housing. This rate will be 0.5% to 0.8% in 2012 and 1% in 2013, and will apply to houses with a value equal to or exceeding 1 million euros" (underlined), from which it follows that the reality to be taxed had in view is, after all, and notwithstanding the imprecision of the terminology of the law, "residential (urban) properties", in current language "houses", and not other realities.

The fact that it may be considered that in determining the patrimonial value of urban properties classified as land for construction, the use that the building authorized or planned for it will have should be taken into account for determining the respective value of the implantation area (cf. nos. 1 and 2 of article 45 of the CIMI), does not determine that land for construction can be classified as "properties with residential use", since "residential use" always appears in the Code of IMI referred to "buildings" or "constructions", existing, authorized or planned, since only these can be inhabited, which does not occur in the case of land for construction, which do not have, in themselves, conditions for such, not being capable of being used for housing unless and until a building is constructed on them for them authorized and planned (but in that case they will no longer be "land for construction" but another species of urban properties – "residential", "commercial, industrial or for services" or "other" – art. 6 of the CIMI).

It would be strange, indeed, if the determination of the scope of the rule of tax incidence of item no. 28 of the General Table of Stamp Tax were found, after all, in the rules for determining the patrimonial value of the Code of IMI, and that the imprecision of terminology of the legislator in the wording of that rule were, after all, elucidated and finally clarified by way of an indirect and ambiguous referral, to the use coefficient established by the legislator in relation to built properties (article 41 of the Code of IMI).

Thus, taking into account that a land for construction – whatever the type and purpose of the building that will be, or may be, erected on it – does not satisfy, by itself, any condition to be licensed as such or for one to be able to define as its destination the use of housing, and the rule of incidence of stamp tax referring to urban properties with "residential use", without it being established any specific concept for the purpose, cannot it be extracted from the same that it contains a future potentiality, inherent in a distinct property that perhaps may be built on the land.

It is concluded therefore, in conformity with what was decided in the sentence under appeal that, resulting from article 6 of the Code of IMI a clear distinction between urban properties "residential" and "land for construction", these cannot be considered as "properties with residential use" for the purposes of the provision of item no. 28.1 of the General Table of Stamp Tax, in its original wording, which was conferred on it by Law no. 55-A/2012, of 29 October". (end of citation).

This is the case law which is accepted here and reiterated, taking into account the rule contained in no. 3 of article 8 of the Civil Code – which imposes on the judge the duty to consider all cases that merit analogous treatment, in order to obtain a uniform interpretation and application of the law, it being that the Requested Party did not adduce new reasoning that would undermine such jurisprudential orientation.

Finally, in the same sense of the STA judgments mentioned, see also, in arbitral proceedings and merely by way of example, the Decisions that were issued in the following proceedings: no. 301/2013-T, of 31/7/2014; no. 308/2013-T, of 28/4/2014; no. 384/2014-T, of 8/2/2015; and no. 516/2014-T, of 12/1/2015.

IV – Indemnification for Improper Guarantee

The Claimant formulated a request for indemnification for the provision of improper guarantee, having for such purpose attached documents evidencing this.

The arbitral process is an adequate means for the recognition of the right to indemnification for improperly provided guarantee, as it applies, subsidiarily, art. 171 of the CPPT, by force of the provision of art. 29, no. 1, letter c), of the LRAT.

The regime of the right to indemnification for improper guarantee is contained in art. 53 of the LGT and establishes the following:

Article 53

Guarantee in case of improper provision

1 - The debtor who, in order to suspend execution, offers bank guarantee or equivalent shall be indemnified in whole or in part for the damages resulting from its provision, if it has maintained it for a period exceeding three years in proportion to the success in administrative appeal, impugnation or opposition to execution that have as their object the debt guaranteed.

2 - The period referred to in the previous number does not apply when it is verified, in gracious complaint or judicial impugnation, that there was error attributable to the services in the assessment of the tax.

3 - The indemnification referred to in no. 1 has as its maximum limit the amount resulting from the application to the guaranteed amount of the rate of indemnificatory interest provided for in this law and may be requested in the proper process of complaint or judicial impugnation, or autonomously.

4 - The indemnification for provision of improper guarantee shall be paid by offset against the revenue of the tax of the year in which payment was made.

The present Claimant provided bank guarantees to suspend execution proceedings instituted for the collection of the amounts assessed by the acts which are the subject of the present proceedings. In the case in question, the errors of the assessments are attributable to the Tax and Customs Authority since it made them on its own initiative and the present Claimant in no way contributed to those errors being committed. Therefore, the Claimant has the right to indemnification for the guarantees provided.

In this respect, it is verified that the Claimant brought to these proceedings documents (not contradicted by the Requested Party) relating to the expenses incurred, to the present date, with the bank guarantees provided to the TCA for suspension of execution proceedings (in the total amount of €79,005.91, in accordance with docs. 1 to 11 contained in the motion of 11/9/2015).

However, since it is not possible to definitively fix the total amount of indemnification (because it must include all expenses incurred and to be incurred until the cancellation of the said guarantees), the condemnation of the Tax and Customs Authority shall have to be carried out with reference to what comes to be assessed in execution of the present judgment (see art. 609 of the CPC and art. 565 of the Civil Code).

V – DECISION

In light of the above, it is decided:

  • To judge the request for arbitral decision to have merit.
  • To annul the Stamp Tax assessments to which the collection documents nos. 2012 …, 2012 … and 2012 … refer.
  • To judge the request for condemnation in indemnification for improper guarantee to have merit and to condemn the Tax and Customs Authority to pay to the Claimant the amount that comes to be assessed in execution of this judgment.

The case value is fixed at €541,962.42 (five hundred and forty-one thousand nine hundred and sixty-two euros and forty-two cents), in accordance with articles 32 of the CPTA and 97-A of the CPPT, applicable by force of the provision of art. 29, no. 1, letters a) and b), of the LRAT, and art. 3, no. 2, of the Regulation of Costs in Tax Arbitration Proceedings (RCPAT).

Costs against the Requested Party, in the amount of €8,262.00, in accordance with Table I of the RCPAT, and in compliance with the provisions of articles 12, no. 2, and 22, no. 4, both of the LRAT, and the provision of art. 4, no. 4, of the said Regulation.

Notify.

Lisbon, 15 October 2015.

The Arbitrators,

Fernanda Maçãs (President)

Jorge Carita

Miguel Patrício (Reporter)

Text prepared by computer, in accordance with the provision of art. 131, no. 5, of the CPC, applicable by referral of art. 29, no. 1, letter e), of the LRAT.

The writing of this decision is governed by the spelling prior to the Orthographic Agreement of 1990.

Frequently Asked Questions

Automatically Created

Are land plots classified as 'terrenos para construção' subject to Stamp Tax under Verba 28.1 of the TGIS?
The central dispute in Process 224/2015-T concerned whether 'terrenos para construção' (land for construction) qualify as 'prédios com afectação habitacional' under Verba 28.1 of the TGIS. The claimant argued that land for construction is not subject to this Stamp Tax because it lacks actual residential use, containing no buildings or constructions. According to the fund's interpretation, Verba 28.1 should apply only to properties with concrete, current residential use (actual houses), not abstract, future, or merely potential use. The claimant emphasized that Article 6(3) of CIMI defines land for construction as not yet including any construction that could confer real residential use, and that residential properties under CIMI must necessarily correspond to buildings or constructions.
What is the legal definition of 'prédio com afectação habitacional' for Stamp Tax purposes under Portuguese law?
Under Portuguese law, 'prédio com afectação habitacional' (property with residential use) for Stamp Tax purposes lacks a specific definition in the Stamp Tax Code (CIS). Article 67(2) of CIS, introduced by Law 55-A/2012, requires subsidiary application of CIMI (IMI Code) provisions for matters not regulated in the Stamp Tax Code concerning Verba 28 of the TGIS. According to CIMI, residential properties must correspond to buildings or constructions, with classification based primarily on use attributed by licensing and, absent a license, on normal use criteria. The legislative history of Law 55-A/2012 indicates the intention was to tax properties intended for housing, specifically 'houses' (casas) with patrimonial value exceeding specified thresholds. However, the precise scope remains contested, particularly regarding whether undeveloped land qualifies.
Can the Portuguese Tax Authority levy Stamp Tax on properties without an existing residential building?
This was the core controversy in Process 224/2015-T. The Portuguese Tax Authority (TCA) took the position that land for construction qualifies as property with residential use for Stamp Tax purposes under Verba 28.1, even without existing residential buildings. The TCA argued that pursuant to Article 67(2) of the Stamp Tax Code, CIMI provisions apply subsidiarily, and that the use coefficient should be applied in determining patrimonial value of land for construction. The claimant vigorously contested this interpretation, arguing there is no legal basis for taxing land for construction under Verba 28.1 because: (1) residential use requires actual buildings, not merely potential future use; (2) the use coefficient under Articles 41 and 45 of CIMI applies only to built properties; and (3) taxation violates constitutional principles of equality and proportionality by treating materially distinct situations identically.
How did CAAD Process 224/2015-T interpret the scope of Verba 28.1 of the Tabela Geral do Imposto do Selo?
While the complete decision text is not provided in the excerpt, Process 224/2015-T addressed several critical interpretative issues regarding Verba 28.1: (1) Whether 'prédio com afectação habitacional' encompasses land for construction or only built properties with actual residential use; (2) The proper subsidiary application of CIMI definitions to Stamp Tax matters under Article 67(2) of CIS; (3) Whether the use coefficient from Article 41 CIMI applies to land for construction when calculating patrimonial value; (4) Whether taxation of undeveloped land under the same provision as residential buildings violates constitutional equality and proportionality principles; and (5) Double taxation concerns where assessments were allegedly duplicated. The tribunal had to reconcile the legislative intent behind Law 55-A/2012 with the technical CIMI classifications and constitutional tax law principles.
What is the arbitral procedure to challenge Stamp Tax liquidations before the CAAD in Portugal?
The arbitral procedure to challenge Stamp Tax liquidations before CAAD (Centro de Arbitragem Administrativa) follows the Legal Regime of Arbitration in Tax Matters (RJAT - Decree-Law 10/2011 of January 20). The claimant filed a request for constitution of an arbitral tribunal and arbitral decision on March 31, 2015, pursuant to Article 2(1)(a) and Article 10(1)(a) of RJAT. The Portuguese Tax and Customs Authority (TCA) was cited as the requested party to file a response under Article 17(1) of RJAT. The arbitral tribunal was constituted on June 12, 2015. The TCA was formally cited on June 14, 2015, and filed its response on September 3, 2015. The procedure allows taxpayers to challenge tax assessments through binding arbitration as an alternative to judicial review, with specific timelines and procedural rules governing the constitution of tribunals and submission of pleadings.