Process: 226/2014-T

Date: November 10, 2014

Tax Type: Selo

Source: Original CAAD Decision

Summary

This arbitration case (Process 226/2014-T) addresses whether Stamp Tax under item 28.1 of the General Stamp Tax Table (TGIS) applies to undeveloped building land (terrenos para construção). The taxpayer, A Lda., challenged a €12,910.50 Stamp Tax assessment on an urban construction plot in Aveiro with a tax patrimonial value (VPT) of €1,291,050, acquired in February 2012. Law 55-A/2012 introduced item 28.1 TGIS, imposing a 1% annual tax on urban properties with residential allocation valued at or above €1,000,000. The central dispute concerns whether construction plots without existing buildings qualify as 'property with residential allocation' under the original 2012 legislative wording. The taxpayer argued that construction plots cannot meet this definition, citing parliamentary preparatory works and CAAD precedents (cases 43/2013-T and 48/2013-T). The taxpayer further contended that the subsequent amendment by Law 83-C/2013, which clarified the inclusion of building land, only took effect January 1, 2014, and lacked interpretive retroactive effect. The Tax Authority countered that the property's allocation coefficient under CIMI and the legal expectation to construct residential buildings justify inclusion under item 28.1. This case represents typical challenges to the 2012 luxury property tax, implemented during Portugal's financial emergency to strengthen budgetary revenues. The arbitration proceeded under the RJAT framework (Decree-Law 10/2011), with the tribunal constituted on May 12, 2014. This dispute reflects broader constitutional and interpretive controversies surrounding the application of item 28.1 TGIS to various property types, particularly regarding the 2012 tax year before legislative clarifications.

Full Decision

ARBITRAL DECISION

Report

A, Lda., Tax Number ..., more fully identified in the proceedings, filed a petition for an arbitral pronouncement, pursuant to article 2(1) of Decree-Law No. 10/2011, of January 20 (RJAT) and Ordinance No. 112-A/2011, of March 22, for a declaration of illegality and consequent annulment of the additional assessment of Stamp Duty (relating to item 28.1 of the corresponding General Table) for 2012 in the amount of € 12,910.50 (twelve thousand, nine hundred and ten euros and fifty cents).

The respondent is the Tax and Customs Authority (AT).

The applicant failed to designate an arbitrator. For this purpose, the President of the Deontological Council of the Administrative Arbitration Center appointed the undersigned, who expressly accepted this appointment. The parties were duly notified of this appointment and did not manifest any intention to refuse it.

The arbitral tribunal was thus constituted on May 12 of this year.

The AT timely filed its reply, arguing for the complete lack of merit of the petition, with consequent absolution of the respondent.

The parties waived the holding of the meeting provided for in article 18 of the RJAT.

The Tribunal was regularly constituted and is materially competent.

The parties have legal personality and judicial capacity and are legitimate.

The proceedings do not suffer from any nullities, nor have any questions been raised that could prevent the examination of the merits of the case.

Subject Matter of the Dispute and Statement of Facts

In 2012, the applicant was the owner of an urban property located in the parish of ..., in the Municipality of Aveiro, registered in the corresponding property matrix under article ..., to which corresponded a total tax patrimonial value (VPT) of € 1,291,050, which it had acquired by deed dated February 1, 2012.

Said property corresponds to a construction plot with no building erected on it.

The assessment in question, in the amount of € 12,910.50, dated December 7, 2013 and duly notified to the applicant on December 20, 2013, arises from the application of the aforesaid Stamp Duty (IS) item to said property, by reference to the year 2012 and had as payment deadline the month of February 2014, incorrectly referred to as 2013 in the notification document to the applicant.

There are no facts with relevance to the examination of the merits of the case that have not been proven.

The proven facts are based on documents provided by the parties, the correspondence of which to reality is not disputed.

Legal Matters

Position of the Parties

The question in the proceedings thus corresponds to the application of the new taxation in IS affecting urban properties with residential allocation and VPT equal to or exceeding one million euros, introduced in 2012 to strengthen budgetary control measures on the revenue side, within a framework of financial emergency.

As is well known, this taxation has raised strong doubts and considerable contestation. This is not only for specific cases of its application (e.g., vertical ownership, construction plots, or its application to the year 2012), but also in general terms, due to its possible unconstitutionality (see Luís Menezes Leitão, On Stamp Duty Taxation of Luxury Properties (item 28.1 TGIS), in Tax Arbitration No. 1, pages 44 et seq.).

Now, the applicant comes, precisely, to contest the application of said taxation arising from the application of the new item 28.1 of the TGIS to urban properties corresponding to construction plots.

In effect, the applicant argues, in summary, that construction plots can never fall within the concept of "property with residential allocation" provided for in the applicable rule. In support of this thesis, it invokes the preparatory work for the parliamentary approval of said Law and the decisions of the CAAD in proceedings 43 and 48/2013-T. Additionally, the applicant further argues that the amendment to the wording of the item in question, introduced by Law No. 83-C/2013 of 31/12, only came into force on January 1, 2014 and does not have an interpretive nature.

The respondent, for its part, came to dispute this understanding, arguing for the maintenance of the assessment. For this purpose, it briefly emphasizes that the property subject to taxation has the legal nature of a property with residential allocation, given its respective allocation coefficient. For the respondent, the reference to the CIMI, the literal element, and the potential value of the property arising from the "legal expectation, embodied in a right to construct thereon a property with certain characteristics" (in Decision 4950/11 of 14/2/12 of the Southern Court of Appeals), are determining elements for including in item 28.1 construction plots, whenever the construction authorized thereon includes property intended for housing.

Summary of the Disputed Issue

Thus, in the case at hand, the disputed issue between the parties corresponds only to determining whether construction plots can meet the scope of application of item 28.1 of the TGIS, in the event that among the potential buildings authorized for it include future properties with residential allocation.

Legislative Overview

For ease of exposition, it is considered useful to previously transcribe the legal provisions most relevant to the examination of the case.

Rules of the CIS (2012)

Law No. 55-A/2012, of October 29 (which amended the Personal Income Tax Code, the Corporate Income Tax Code, the Stamp Duty Code and the General Tax Code):

Article 3

Amendment to the Stamp Duty Code

Articles 1, 2, 3, 4, 5, 7, 22, 23, 44, 46, 49 and 67 of the Stamp Duty Code, approved by Law No. 150/99, of September 11, shall have the following wording:

(…)

Article 2

[...]

1 - ...

2 - ...

3 - ...

4 - In the situations provided for in item No. 28 of the General Table, the passive subjects of the tax are those referred to in article 8 of the CIMI.

Article 23

[...]

1 - ...

2 - ...

3 - ...

4 - ...

5 - ...

6 - ...

7 - In the case of tax due for the situations provided for in item 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 the necessary adaptations, the rules contained in the CIMI.

Article 67

[...]

1 - (Previous body of the article.)

2 - For matters not regulated in this Code relating to item No. 28 of the General Table, the provisions of the CIMI shall apply, subsidiarily.

Article 4

Addition to the General Table of Stamp Duty

Item No. 28 is added to the General Table of Stamp Duty, attached to the Stamp Duty Code, approved by Law No. 150/99, of September 11, with the following wording:

"28 - Ownership, usufruct or right of superficies of urban properties whose tax patrimonial value shown in the property matrix, pursuant to the Municipal Property Tax Code (CIMI), is equal to or greater than (euro) 1,000,000 - on the tax patrimonial value used for IMI purposes:

28.1 - For property with residential allocation - 1%;

28.2 - For property, when the passive subjects that are not individuals are resident in a country, territory or region subject to a clearly more favorable tax regime.

Article 6

Transitional Provisions

1 - In 2012, the following rules shall be observed with reference to the assessment of stamp duty provided for in item No. 28 of the respective General Table:

a) The taxable event occurs on October 31, 2012;

b) The passive subject of the tax is the one mentioned in article 2(4) of the Stamp Duty Code on the date referred to in the previous subparagraph;

c) The tax patrimonial value to be used in the assessment of the tax corresponds to that resulting from the rules provided for in the Municipal Property Tax Code with reference to the year 2011;

d) The assessment of the tax by the Tax and Customs Authority must be made by the end of November 2012;

e) The tax must be paid, in a single installment, by the passive subjects by December 20, 2012;

f) The applicable rates are the following:

i) Properties with residential allocation assessed pursuant to the CIMI Code: 0.5%;

ii) Properties with residential allocation not yet assessed pursuant to the CIMI Code: 0.8%;

iii) Urban properties when the passive subjects that are not individuals are resident in a country, territory or region subject to a clearly more favorable tax regime, shown in the list approved by ordinance of the Minister of Finance: 7.5%.

2 - In 2013, the assessment of stamp duty provided for in item No. 28 of the respective General Table must be based on the same tax patrimonial value used for the purposes of assessing municipal property tax to be made in that year.

3 - The failure to deliver, in whole or in part, within the prescribed period, of the amounts assessed for stamp duty constitutes a tax infraction, punished in accordance with the law.

Article 7

Entry into Force and Effectiveness

1 - This law enters into force on the day following its publication.

2 - The amendments to article 72 of the Personal Income Tax Code and to article 89-A of the General Tax Code take effect as of January 1, 2012.

CIS: 2013 Amendment

Law No. 83-C/2013, of December 31 amended that item No. 28.1, which now has the following wording:

"28.1 - For residential property or for construction plots whose building, authorized or planned, is for residential purposes, pursuant to the provisions of the Municipal Property Tax Code – 1%."

The CIMI

In its articles 3 to 6, the CIMI lists the species of properties, as follows.

Article 2

Concept of Property

1 – For the purposes of this Code, property is any fraction of territory, encompassing waters, plantations, buildings and constructions of any nature incorporated therein or thereupon, with a character of permanence, provided that it forms part of the patrimony of an individual or legal entity and, in normal circumstances, has economic value, as well as waters, plantations, buildings or constructions, in the previous circumstances, endowed with economic autonomy in relation to the land where they are located, although situated in a fraction of territory that constitutes an integral part of a different patrimony or does not have patrimonial nature.

2 – Buildings or constructions, even if mobile in nature, are deemed to have a character of permanence when devoted to non-transitory purposes.

3 – The character of permanence is presumed when the buildings or constructions have been placed in the same location for a period exceeding one year.

4 – For the purposes of this tax, each autonomous fraction, under the horizontal property regime, is deemed to constitute a property.

Article 3

Rural Properties

1 – Rural properties are lands situated outside an urban agglomeration that are not to be classified as construction plots, pursuant to article 6(3), provided that:

a) They are devoted or, in the absence of concrete allocation, have as their normal purpose an activity generating agricultural income, as considered for the purposes of the personal income tax (IRS);

b) Not having the allocation indicated in the previous subparagraph, they are not built upon or have only buildings or constructions of an accessory nature, without economic autonomy and of reduced value.

2 – Also considered rural properties are lands situated within an urban agglomeration, provided that, by force of legally approved provision, they cannot have an activity generating any income or can only have an activity generating agricultural income and are actually having this allocation.

3 – Also considered rural properties are:

a) Buildings and constructions directly devoted to the generation of agricultural income, when situated on the lands referred to in the previous numbers;

b) Waters and plantations in the situations referred to in article 2(1).

4 – For the purposes of this Code, urban agglomerations are considered, in addition to those situated within legally fixed perimeters, settlements with a minimum of 10 dwellings served by public use roadways, with their perimeter delimited by points distanced 50 m from the axis of the roadways, in the transversal direction, and 20 m from the last building, in the direction of the roadways.

Article 4

Urban Properties

Urban properties are all those that should not be classified as rural, without prejudice to the provisions in the following article.

Article 5

Mixed Properties

1 – Whenever a property has rural and urban parts, it is classified, in its entirety, according to the main part.

2 – If neither of the parts can be classified as main, the property is deemed mixed.

Article 6

Species of Urban Properties

1 – Urban properties are divided into:

a) Residential;

b) Commercial, industrial or for services;

c) Construction plots;

d) Others.

2 – Residential, commercial, industrial or for services are buildings or constructions for such licensed or, in the absence of a license, that have as their normal purpose each of these uses.

3 – Construction plots are considered lands situated within or outside an urban agglomeration, for which a construction or subdivision license or authorization has been granted, prior notice admitted or favorable prior information issued for subdivision or construction operations, and also those that have been declared as such in the acquisition title, excepting lands where the competent entities prohibit any of those operations, namely those located in green areas, protected areas or that, according to municipal territorial planning plans, are devoted to public spaces, infrastructure or equipment. (Wording of Law No. 64-A/08, of 31-12)

4 – Included in the provision of subparagraph d) of number 1 are lands situated within an urban agglomeration that are not construction plots nor are covered by article 3(2) and also buildings and constructions licensed or, in the absence of a license, that have as their normal purpose other uses than those referred to in number 2 and also those in the exception of number 3.

Rules Relating to the Interpretation of Laws

Article 11 of the General Tax Code establishes the essential rules for interpretation of tax laws as follows:

Article 11

Interpretation

  1. In determining the meaning of tax rules and in qualifying the facts to which they apply, the general rules and principles of interpretation and application of laws are observed.

  2. Whenever, in tax rules, terms specific to other branches of law are used, they should be interpreted in the same sense as they have there, unless otherwise directly provided by law.

  3. If doubt persists about the meaning of the applicable rules of scope, account should be taken of the economic substance of the taxable facts.

  4. Gaps resulting from tax rules covered by the constitutional reservation of law are not susceptible to analogical integration.

The general principles for interpretation of laws, to which article 11(1) of the LGT refers, are established in article 9 of the Civil Code, which establishes the following:

Article 9

Interpretation of Law

  1. Interpretation should not be limited to the letter of the law, but should reconstruct from the texts the legislative thought, taking especially into account the unity of the legal system, the circumstances in which the law was developed and the specific conditions of the time in which it is applied.

  2. However, the interpreter cannot consider the legislative thought that does not have in the letter of the law a minimum of verbal correspondence, even if imperfectly expressed.

  3. In fixing the meaning and scope of the law, the interpreter shall presume that the legislator adopted the most correct solutions and knew how to express its thought in adequate terms.

Construction Plots

The rules of the CIMI do not use the concept of "property with residential allocation" for the classification of properties, nor is this concept found, with this terminology, in any other statute. The innovative character of that concept thus permits several interpretive hypotheses.

Now, as is well noted in Decision 231/2013-T of the CAAD, given this interpretive uncertainty, the understanding of the rule should begin with its literal element, and only subsequently should one proceed to the reconstruction of "legislative thought" (cf. article 9(1) of the Civil Code, by virtue of article 11(1) of the LGT).

The concept of "residential properties" contained in article 6(2) of the CIMI, encompassing "buildings or constructions" licensed for residential purposes or, in the absence of a license, that have as their normal purpose residential uses, is, unequivocally, something very similar to the concept of "property with residential allocation," even though it need not coincide with it.

Should it be understood that the expressions "property with residential allocation" and "residential properties" are coincident, the tax act would suffer from error regarding the assumptions of fact and law, and would therefore be illegal, since construction plots (still) without a building or construction thereon do not meet the concept of "residential properties" (in this sense, cf. Decision 247/2013-T of the CAAD).

But the conclusion is not unequivocal, since the use of different terminology by the legislator makes it permissible to admit that by "property with residential allocation" it intended to refer to a reality different from "residential property."

The word "allocation," in the context of use of a property, has the meaning of "action of designating something for a particular use." In a way relevant to this decision, Baptista Machado, cited in the Decision to which reference has been made, states that "When, as is usually the case, rules (legislative formulas) can bear more than one meaning, then the positive function of the text is expressed in giving stronger support to or more strongly suggesting one of the possible meanings. For, of the possible meanings, some will correspond to the more natural and direct meaning of the expressions used, while others can fit into the verbal framework of the rule only in a forced, artificial manner. Now, in the absence of other elements that induce the choice of the less immediate sense of the text, the interpreter should choose, in principle, that meaning which best and most immediately corresponds to the natural meaning of the verbal expressions used, and in particular to their technical-legal meaning, on the assumption (not always accurate) that the legislator knew how to express its thought correctly."

Now, the incongruent and incoherent mixture of taxes with distinct natures (on income, on expenditure, on patrimony, on acts, etc.) of the Stamp Duty Code, in which item 28.1 is included, imposes an interpretation with a strong literal component, since it is not possible for the interpreter to base its interpretation on the unity of the legal system and the overall coherence thereof, as is well noted in Decision 213/2013-T of the CAAD.

A literal interpretation based on the meaning of the words "allocation" and "allocate" ("to designate" or "to apply"), imposes recognition that the rule encompasses, at least, properties to which housing has already been designated as a use, that is, those which are already applied to residential purposes.

The doubt is, therefore, whether, in addition to those, also properties that are not yet applied to residential purposes, but are already wholly or partially designated for such purposes, namely in a subdivision license, should be considered, themselves as well, already applied to residential purposes, for the purposes of the rule in question.

To answer this question, it is necessary to know when a property should be understood to be allocated to a residential purpose and whether this occurs when such purpose is fixed for it in a subdivision license, licensing act or in another similar act, or whether, on the contrary, this condition is only met upon the actual realization of the (residential) purpose previously attributed (i.e., after construction, since only at that moment will there exist a habitable property).

Now, from a comparison of item 28.1 of the TGIS with article 6(2) of the CIMI, which defines the concept of residential properties, it follows that an actual allocation is necessary, as is noted in the cited Decision. Moreover, the said meaning of the expression "allocation" is confirmed by article 3 of the CIMI, also in the context of classification of properties, since regarding rural properties reference is made to those "that are allocated or, in the absence of concrete allocation, have as their normal purpose an activity generating agricultural income," which shows that allocation is concrete, actual and not a mere potential purpose to be realized in the future.

Finally, the adoption in the text of the law of the formula "property with residential allocation" and not "urban properties with residential allocation," which appears in the aforesaid "Explanatory Statement," also suggests that residential allocation must already be realized, for only then will the property have that allocation (cf. the same Decision).

Now, in the case sub judice we are dealing with a reality prior to residential allocation, since there is no building or construction whatsoever, wherefore one cannot consider as already actually existing an allocation that presupposes a physical reality (the prior construction of the property), being insufficient mere licensing or authorization. Or, as is stated in Decision 247/2013-T, reiterating the tenor of Decision 27/2014, both of the Arbitral Tribunal of the CAAD, only should be considered relevant "an actual and realized allocation, and not merely a mere potentiality," so that a construction plot, even though licensed for residential purposes, "does not offer residential allocation, lacking that mentioned realization with regard to its use."

On the other hand, as is concluded in Decision 42/2013-T of the Arbitral Tribunal of the CAAD, it is evident that article 45 of the CIMI has no relation to the classification of properties, indicating only the factors that should be weighed in the evaluation of construction plots: the purpose of the land of the "building to be constructed," something which, in the context of the CIMI, does not imply allocation and occurs before it.

Moreover, if literal interpretation is not considered conclusive, as is well noted in Decision 48/2013-T of the CAAD, the intention of the formal and material legislators also points unequivocally in the sense resulting from literal interpretation. This is because in the presentation of Bill 96-XII in the Plenary of the Assembly of the Republic, the Secretary of State for Tax Affairs stated that "the Government proposes the creation of a special rate to tax residential urban properties of higher value. It is the first time in Portugal that special taxation has been 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 valued at equal to or greater than 1 million euros. With the creation of this additional rate, the tax burden required of these proprietors will be significantly increased in 2012 and 2013." The express reference to "houses" as the target of the scope of the new item is thus unequivocal of the legislator's intent, especially since there is found in the discussion of said Bill no reference whatsoever to "construction plots."

Finally, as is equally concluded in the already extensively cited Decision 213/2013, Law No. 83-C/2013, of December 31 does not aim to clarify the logical element underlying the initial wording of item 28.1, but rather came to confirm, indirectly, the interpretation that it did not encompass construction plots. In truth, if the initial wording of item 28.1, in mentioning "property with residential allocation," already intended to encompass not only the buildings and constructions that constituted "residential properties" (pursuant to article 6(2) of the CIMI), but also construction plots for which housing construction was already authorized or planned, it would be natural that an interpretive nature had been attributed to the new wording, as the same Law did in other provisions (article 177(7), regarding subparagraphs a) and b) of article 17-A(3) of the Personal Income Tax Code, and article 185(1), regarding article 3-A of the Value Added Tax Code) and is frequent to occur in budgetary laws, when it is intended that the new wording applies to situations potentially encompassed by the prior wordings. For that reason, the fact that an interpretive nature was not attributed to the new wording should be valued. And this fact leads to the conclusion that it was not intended to clarify the meaning of the rule to maintain it, but rather to alter the scope of application of said item 28.1 of the TGIS.

By the foregoing, the assessment regarding which the applicant petitions a declaration of illegality suffers from the defect of error regarding the assumptions of law, embodied in violation of item 28.1 of the TGIS, which grounds its annulment (article 135 of the Code of Administrative Procedure).

Ruling

In accordance with the foregoing, this Single Tribunal decides to judge as well-founded the petition for an arbitral pronouncement for a declaration of illegality of the contested assessment of Stamp Duty, in the amount of € 12,910.50, due to the defect of violation of law.

Value of the Proceedings

In accordance with article 306(1) and (2) of the CPC and 97-A(1)(a) of the CPPT and 3(2) of the Regulations for Costs in Tax Arbitration Proceedings, the value of the proceedings is fixed at € 12,910.50.

Costs

Pursuant to article 22(4) of the RJAT, the amount of costs is fixed at € 918.00 (nine hundred and eighteen euros), pursuant to Table I attached to the Regulations for Costs in Tax Arbitration Proceedings, at the expense of the Tax and Customs Authority.

Lisbon, November 10, 2014

Document prepared by computer, pursuant to the Civil Procedure Code (CPC), applicable by reference of article 29(1)(e) of the RJAT, governed by the spelling prior to the Orthographic Agreement of 1990, with blank verses and reviewed by the undersigned arbitrator.

The Arbitrator

(Jaime Carvalho Esteves)

[1] Dictionary of Contemporary Portuguese Language of the Academy of Sciences of Lisbon, Volume I, page 102.

The Houaiss Dictionary of the Portuguese Language defines "allocation," in a context close to this one, as "act that designates a public asset."

The Great Dictionary of the Portuguese Language, by JOSÉ PEDRO MACHADO, indicates as "to designate" and "to apply" among the meanings of "allocate."

[2] BAPTISTA MACHADO, Introduction to Law and the Legitimizing Discourse, page 182.

[3] Page 32 of the Journal of the Assembly of the Republic, No. 9 of the 2nd Legislative Session of the XII Legislature, relating to the Plenary Meeting of October 10, 2012, available at http://app.parlamento.pt/darpages/dardoc.aspx?doc=6148523063446f764c324679626d56304c334e706447567a4c31684a5355786c5a79394551564a4a4c305242556b6c42636e463161585a764c7a497577716f6c4d6a42545a584e7a77364e764a5449775447566e61584e7359585270646d4576524546534c556b744d4441354c6e426b5a673d3d&nome=DAR-I-009.pdf

Frequently Asked Questions

Automatically Created

Does Stamp Tax (Imposto do Selo) under Verba 28.1 of the TGIS apply to building land (terrenos para construção) with no existing construction?
Based on arbitration precedent from CAAD (cases 43/2013-T and 48/2013-T), Stamp Tax under Verba 28.1 of the TGIS generally does NOT apply to building land (terrenos para construção) without existing construction for the 2012 tax year. The original wording of item 28.1 referred to 'property with residential allocation' (prédios com afetação habitacional), which tribunals interpreted as requiring an actual residential building to exist. Construction plots, despite having potential for future residential development, were not considered to have residential allocation under the 2012 legislation. Law 83-C/2013 subsequently amended item 28.1 to explicitly include building land, but this amendment only took effect from January 1, 2014, and was not applied retroactively to 2012 assessments.
What is the threshold property value (VPT) that triggers Stamp Tax liability under Verba 28.1 of the General Stamp Tax Table?
The threshold tax patrimonial value (VPT - valor patrimonial tributário) that triggers Stamp Tax liability under Verba 28.1 of the General Stamp Tax Table is €1,000,000 (one million euros). Properties with a VPT equal to or greater than this amount are subject to an annual Stamp Tax rate of 1% of the tax patrimonial value shown in the property matrix (matriz predial) pursuant to the Municipal Property Tax Code (CIMI). This threshold applies to urban properties with residential allocation where the taxpayer holds ownership (propriedade), usufruct (usufruto), or right of superficies (direito de superfície). The VPT is determined according to CIMI rules, and for 2012 assessments, the transitional provisions required using the tax patrimonial value from the 2011 reference year.
Can a taxpayer challenge the additional Stamp Tax assessment on urban properties through CAAD arbitration proceedings?
Yes, taxpayers can challenge additional Stamp Tax assessments on urban properties through CAAD (Centro de Arbitragem Administrativa) arbitration proceedings. The legal framework is established by Decree-Law 10/2011 of January 20 (RJAT - Regime Jurídico da Arbitragem em Matéria Tributária) and Ordinance 112-A/2011 of March 22. To file an arbitral request (pedido de pronúncia arbitral), the taxpayer must submit a petition under Article 2(1) of RJAT seeking a declaration of illegality and annulment of the contested assessment. The petition should identify the taxpayer and Tax Authority (AT) as parties, specify the contested act and legal grounds, and may include arbitrator designation. If the taxpayer fails to designate an arbitrator, the President of the CAAD Deontological Council appoints one. The arbitral tribunal examines jurisdictional competence, standing, and merits before issuing a binding decision.
How does the 2012 fiscal emergency legislation affect Stamp Tax on residential-designated urban properties valued at or above one million euros?
The 2012 fiscal emergency legislation introduced a new Stamp Tax regime on high-value residential properties through Law 55-A/2012 of October 29, which added item 28 to the TGIS. This legislation imposed a 1% annual tax on urban properties with residential allocation having a tax patrimonial value of €1,000,000 or more, aimed at strengthening budgetary revenues during Portugal's financial crisis. For 2012, special transitional provisions applied: the taxable event occurred on October 31, 2012; the tax assessment used the 2011 VPT; and assessments had to be completed by end of November 2012. The legislation incorporated CIMI provisions by reference for procedural matters, designating CIMI Article 8 taxpayers as passive subjects. This taxation generated significant legal controversy regarding constitutionality and application scope, particularly concerning construction plots, vertical ownership, and retroactive application to the 2012 tax year.
What procedural steps are required to file an arbitral request (pedido de pronúncia arbitral) under Decree-Law 10/2011 (RJAT) against a Stamp Tax assessment?
To file an arbitral request (pedido de pronúncia arbitral) under Decree-Law 10/2011 (RJAT) against a Stamp Tax assessment, taxpayers must follow these procedural steps: (1) Submit a written petition to CAAD pursuant to Article 2(1) of RJAT and Ordinance 112-A/2011, identifying the Tax and Customs Authority (AT) as respondent; (2) Specify the contested assessment act, including tax type, amount, assessment date, and notification date; (3) State the legal grounds for contesting illegality and requesting annulment; (4) Optionally designate an arbitrator from the CAAD list, or allow the President of the Deontological Council to appoint one; (5) Pay applicable arbitration fees; (6) Ensure compliance with applicable deadlines for challenging the assessment. Once filed, the AT receives notification and must file a reply (contestação). The arbitral tribunal is constituted upon arbitrator acceptance, and parties may waive the preliminary hearing under Article 18 RJAT. The tribunal issues a binding arbitral decision on legality and merit.