Process: 238/2014-T

Date: October 3, 2014

Tax Type: Selo

Source: Original CAAD Decision

Summary

CAAD Arbitration Process 238/2014-T addresses a significant controversy regarding Stamp Tax (Imposto do Selo) application under Verba 28.1 of the General Table (TGIS) to vertical property ownership. The case involves the Estate of A challenging multiple Stamp Duty liquidation acts for 2012 (€14,999.00) and 2013 (€15,062.20) on residential units within a property located in vertical ownership regime. Verba 28.1 GTIS imposes annual Stamp Tax on properties with Taxable Patrimonial Value (VPT) exceeding €1,000,000 allocated to housing. The central legal dispute concerns whether individual floors or fractions should be assessed separately based on their individual VPT entries in the property registry, or whether the aggregate value of all units determines tax liability. The Claimant argues that since each autonomous unit has VPT below €1,000,000 (ranging from €16,980 to €266,010), they fall outside Verba 28.1 scope. The interpretation relies on CIMI provisions treating each floor or independently usable part as separate registry entries. The Claimant challenges the assessments on multiple grounds: incorrect application of the incidence rule, constitutional violation of equality principles (Article 13 CRP) since property concentration is not a valid taxation criterion, and violation of transitional regime under Law 55-A/2012 Article 6. The Tax Authority counters that the property exists in full ownership regime, constituting a single property for IMI and Stamp Tax purposes, not ten autonomous units. This arbitral decision has significant implications for vertical property taxation, distinguishing between horizontal property regimes with independent fractions versus vertical ownership structures, and clarifying whether tax incidence depends on individual unit values or aggregate property value for Stamp Tax purposes under the high-value property provisions.

Full Decision

ARBITRAL DECISION

REPORT

  1. On 7 March 2014, the Head of the Estate of A, with Tax Identification Number …, hereinafter referred to as the Claimant, resident in Portugal, requested the constitution of an arbitral tribunal and made a request for an arbitral pronouncement, pursuant to subparagraph a) of paragraph 1 of Article 2 and subparagraph a) of paragraph 1 of Article 10 of Decree-Law No. 10/2011, of 20 January (Legal Regime of Arbitration in Tax Matters, hereinafter designated only as LRAT), in which the Tax and Customs Authority (hereinafter designated as TA) is the Respondent.

  2. The Claimant is represented, in the scope of the present case, by its legal representative, Dr. …, and the Respondent is represented by the legal advisors, Dr. … and Dr. ….

  3. The request for constitution of the arbitral tribunal was accepted by the Esteemed President of CAAD and was notified to the Respondent on 10 March 2014.

  4. By means of the request for constitution of the arbitral tribunal and arbitral pronouncement, the Claimant seeks the annulment of the following acts of assessment of Stamp Duty, relating to the year 2012, in the total amount of €14,999.00, which are as follows:

a) Article No. ...-C.NAS, tax of €2,158.30 on the TPV of €215,830.00, (cf. doc. No. 3A);

b) Article No. ...-C.PAT, tax of €1,736.60 on the TPV of €173,660.00, (cf. doc. No. 3B);

c) Article No. ...-C.POE, tax of €1,254.10 on the TPV of €125,410.00, (cf. doc. No. 3C);

d) Article No. ...-C.POT, tax of €2,188.14 on the TPV of €218,814.00, (cf. doc. No. 3D);

e) Article No. ...-C.SUL, tax of €1,816.90 on the TPV of €181,690.00, (cf. doc. No. 3E);

f) Article No. ...-MOINH, tax of €2,660.10 on the TPV of €266,010.00, (cf. doc. No. 3F attached);

g) Article No. ...-R/C, tax of €990.20 on the TPV of €99,020.00, (cf. doc. No. 3G attached);

h) Article No. ...-1st, tax of €1,131.10 on the TPV of €113,110.00, (cf. doc. No. 3H attached);

i) Article No. ...-2nd, tax of €1,063.30 on the TPV of €106,330.00, (cf. doc. No. 3I attached);

  1. Having verified the formal regularity of the request presented, in accordance with the terms of subparagraph a) of paragraph 2 of Article 6 of the LRAT and having the Claimant not proceeded to appoint an arbitrator, the arbitrator Dr. Jorge Carita was appointed by the President of the Ethics Council of CAAD.

  2. The Arbitrator accepted the appointment made, and the arbitral tribunal was constituted on 14 May 2014, at the headquarters of CAAD, located at Avenida Duque de Loulé, No. 72-A, in Lisbon, as evidenced by the minutes of constitution of the arbitral tribunal which were drawn up and are attached to the present case file.

  3. On 22 May 2014, the Claimant requested the expansion of the claim, so as to encompass the assessment acts, relating to the year 2013, in the total amount of €15,062.20, which are indicated here:

"Article No. ...-MOINH, tax of €2,609.70 on the TPV of €260,970.00;

Article No. ...-2nd, tax of €1,160.30 on the TPV of €116,030.00;

Article No. ...-C.PAT, tax of €1,730.20 on the TPV of €173,020.00;

Article No. ...-C.POT, tax of €2,315.10 on the TPV of €231,510.00;

Article No. ...-C.SUL, tax of €1,810.10 on the TPV of €181,010.00;

Article No. ...-C.NAS, tax of €2,149.10 on the TPV of €214,910.00;

Article No. ...-1st, tax of €1,125.60 on the TPV of €112,560.00;

Article No. ...-R/C, tax of €984.20 on the TPV of €98,420.00;

Article No. ...-C.POE, tax of €1,177.90 on the TPV of €117,790.00;

  1. Having been duly notified, by order of 27 May 2014, to comment on the requested expansion of the claim, the TA stated nothing.

  2. Having, on 11 June 2014, the Respondent submitted its Response, arguing for the dismissal of the claims formulated by the Claimant, and consequently, for the acquittal of the Respondent regarding the claim presented against it.

  3. The first meeting of the arbitral tribunal did not take place, as it was dispensed with, in light of the Respondent's request of 30.07.2014, and with respect to which the Claimant presented no opposition, as evidenced by the request of 27.08.2014.

  4. The representatives of the Claimant and the Respondent declared that they waived the production of additional evidence and submissions.

  5. The Tribunal, in compliance with the provisions of paragraph 2 of Article 18 of the LRAT, designated 7 October 2014 as the date for rendering the arbitral decision, having advised the Claimant that they should proceed to payment of the subsequent arbitration fee, in accordance with paragraph 3 of Article 4 of the Regulation of Costs in Tax Arbitration Proceedings, and communicate the same payment to CAAD.

II. The Claimant's Submissions

The Claimant supports its requests, in summary, as follows:

The Claimant supports the request for annulment of the Stamp Duty assessment acts to which it was subject, with respect to the floors or parts capable of independent use, allocated to housing, of the property located at …, …, parish of …, municipality of …, which is in vertical ownership, as illegal, because:

a) The Taxpayer Patrimonial Value (TPV) contained in the registration, for purposes of applying the incidence rule contained in item No. 28 of the General Table of Stamp Duty (GTSD), can only be that of the property registry entry corresponding to each of the parts of the property with housing allocation and not that corresponding to the sum of all TPVs of the floors that compose it;

b) The TPVs of the floors that comprise the property in question in these proceedings oscillate between €16,980.00 and €266,010.00, being, therefore, all of them below €1,000,000.00, wherefore "the subjection to Stamp Duty is determined, not by the TPV of the property, but by the TPV of those floors or divisions" and that "in accordance with the CIMI, each floor or part of property capable of independent use is considered separately in the property registry entry, and it is precisely to the "TPV contained in the registry" that the text of the law directs attention to determine the incidence of Stamp Duty of item No. 28 of the GTSD. Therefore, they are not subject to the Stamp Duty referred to in item No. 28 of the GTSD";

c) The interpretation by the TA of the rule contained in item No. 28 of the GTSD has no correspondence with the letter and the spirit of the law, because it "aims to subject to tax not properties properly speaking, but the housing existing therein. For this reason it purposely disregards other properties, which do not have housing allocation";

d) "Since the concentration or dispersion of real property is not a criterion of taxpaying capacity or any other legitimate criterion of taxation, it must be concluded that the incidence rule of item No. 28 of the GTSD annexed to the CIS is unconstitutional, by violation of the principle of equality inscribed in Article 13 of the Constitution of the Portuguese Republic";

e) "Even if the Stamp Duty assessments here in litigation did not suffer from the illegality and unconstitutionality alleged above, they would still be illegal by violation of the transitional regime of Stamp Duty of item 28.1 of the GTSD, provided for in Article 6 of Law No. 55-A/2012, of 29 October, applicable to the year 2012, and they violate the provisions of paragraph 7 of Article 23 of the CIS combined with the provisions of paragraphs 1 and 2 of Article 6 of Law No. 55-A/2012, of 29.10.";

f) "The assessment acts here contested are illegal, by violating the incidence rule provided for in item No. 28 of the GTSD."

III. In Its Response the Respondent Invoked, In Summary, The Following:

For its part, the TA comes to allege, in its response:

a) "That the property of which the claimant is the owner is constituted in a regime of full ownership, wherefore, the Respondent understands that, "for purposes of IMI and also of Stamp Duty, by force of the wording of the said item, it is not the owner of 10 autonomous units, but rather of a single property";

b) "Horizontal ownership is a specific legal regime of property provided for in Article 1414 et seq. of the Civil Code, the mode of its constitution being provided therein, as well as the other rules on the rights and obligations of co-owners, and it must be recognized in this provision, the existence of a more evolved regime of property";

c) The application of analogy "to the regime of full ownership, the regime of horizontal ownership is that which is abusive and illegal, because the interpreter of tax law cannot equate these regimes, in accordance with the rule that the concepts of other branches of law have the meaning in tax law that is given to them in those branches of law, or in the words of Article 11, paragraph 2 of the LGT, on the interpretation of tax law, and on the other hand, even taking into account, that 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, as per Article 11, paragraph 1 of the LGT which refers thus to the Civil Code, its Article 10 on the application of analogy, determines that this shall only be applicable in case of gaps in the law";

d) The Respondent understands that tax law does not contain any gap, given that the CIMI "determines for which the cited item refers, that in the regime of horizontal ownership the units constitute properties. Not being the property subject to this regime, legally the units are parts capable of independent use, without there being common parts";

e) "We cannot, therefore, accept that it be considered, that for purposes of item 28.1 of the General Table annexed to the CIS, that the parts capable of independent use have the same tax regime as the autonomous units of the regime of horizontal ownership";

f) Moreover, further states the Respondent that "[t]he fact that IMI was calculated based on the Taxpayer Patrimonial Value of each part of property with independent economic use does not equally affect the application of item 28, paragraph 1, of the General Table.", given that this "applies to urban properties with housing allocation";

g) Moreover, the Respondent contends that "the Taxpayer Patrimonial Value equal to or greater than €1,000,000.00, upon which the application of that legal rule depends is, as clearly results from its letter, the Taxpayer Patrimonial Value of each property and not of its distinct parts, even if capable of independent use";

h) And that, "The taxable event of Stamp Duty of item 28.1 by consisting in the ownership of urban properties whose Taxpayer Patrimonial Value contained in the registry, in accordance with the C.I.M.I., is equal to or greater than €1,000,000.00, the Taxpayer Patrimonial Value relevant for purposes of the incidence of the tax is, therefore, the total Taxpayer Patrimonial Value of the urban property and not the Taxpayer Patrimonial Value of each of the parts that compose it, even when capable of independent use";

i) In light of the foregoing, the Respondent understands that "the taxation in question did not violate the principle of equality or the principle of non-retroactivity of taxes";

j) In summary, the TA contends that the "Stamp Duty of item 28 was correctly assessed".

IV. Preliminary Matters

The Tribunal is competent and is regularly constituted, in accordance with subparagraph a) of paragraph 1 of Article 2 and Articles 5 and 6, all of the LRAT.

The parties have legal personality and capacity, show themselves to be parties with standing, and are regularly represented.

There are no nullities, exceptions, or preliminary questions that prevent the Tribunal from determining the merits of the claim.

V. Factual Matter

As being of interest for the decision, the following facts are established as proven:

  • The undivided estate of A, in which six heirs are vested without distinction of share or right, includes, among others, the property located at …, …, parish of …, municipality of …, registered in the urban property registry under the following articles:

"Article No. ...-MOINH;

Article No. ...-2nd;

Article No. ...-C.PAT;

Article No. ...-C.POT;

Article No. ...-C.SUL;

Article No. ...-C.NAS;

Article No. ...-1st;

Article No. ...-R/C;

Article No. ...-C.POE.

  • The property comprises a total of ten floors and divisions with independent use whose Taxpayer Patrimonial Value (TPV), determined under the Code of Municipal Property Tax (CIMI), varies between €16,980.00 and €266,010.00 and totals, in all, €1,516,854.00, with only 9 being allocated to housing, totaling a TPV of €1,499,900.00.

  • The property in question is in a regime of vertical or full ownership.

  • On the floors and divisions with independent use allocated to housing, Stamp Duty was assessed, under item 28.1 of the General Table of Stamp Duties, for the year 2012 and 2013, in the amount of €14,999.00 and €15,062.20, respectively, totaling €30,061.20.

  • The Claimant filed a gracious objection on 04.07.2013 against the assessment acts of Stamp Duty, relating to the year 2012, in the total amount of €15,799.08, with the TA having issued a decision to the effect of its dismissal, and as a consequence, the Claimant appealed on 24.10.2013, an administrative appeal, on which a presumed tacit dismissal was made in accordance with the provisions of paragraph 5 of Article 57 of the General Tax Law.

  • The Claimant prepared a request, on 22 May 2014, to the Arbitral Tribunal to the effect that the legality of the assessment acts of Stamp Duty relating to the year 2013, in the amount of €15,062.60, be also examined in the present proceedings, of which it was, in the meantime, notified, that is, it requested the expansion of the claim initially made, which was granted by the arbitral tribunal, in an order of 28 August 2014, understanding that "the same tax (SD) is at issue, the same facts (urban articles and vertical ownership) and the application of the same rules of law (paragraph 7 of Article 29 of the CIS, combined with the provisions of paragraph 1 of Article 6 of Law No. 55-A/2012, of 29 October)".

VI. Reasoning on Factual Matters

For the conviction of the Arbitral Tribunal, with respect to the facts proven, the documents attached to the case file were relevant, as well as the administrative process, all analyzed and weighed in combination with the pleadings, from which results agreement as to the factuality presented by the Claimant in the request for arbitral pronouncement.

VII. Facts Found as Not Proven

There are no facts found as not proven, because all facts relevant to the determination of the claim were established as proven.

VIII. Legal Reasoning

In the present case, there are two contested questions of law:

  1. To know whether the subjection to Stamp Duty, in accordance with what is provided in item No. 28 of the GTSD, relating to the year 2012 and 2013, is determined by the TPV that corresponds to each of the parts of the property with housing allocation, or whether, instead, it is determined by the total TPV of the property, which would correspond to the sum of all TPVs of the floors that compose it - Incidence of item 28.1 of the GTSD;

  2. To know whether item No. 28 of the GTSD is unconstitutional by violation of the principle of equality, as well as the provisions of Article 104, paragraph 3, of the CRP, in the interpretation that the TA makes of it.

Let us see.

I – On the Incidence of Item 28.1 of the GTSD

  1. Law No. 55-A/2012, of 19 October (which hereinafter we shall designate as Law No. 55-A/2012 or simply the Law), amended, among others, various articles of the Code of Stamp Duty, more specifically 12 of its articles.

  2. The fundamental amendment, which conditions all others, is contained in Article 4 of Law No. 55-A/2012, which adds to the General Table of Stamp Duty (GTSD), annexed to the Code of Stamp Duty (CSD), a new item, No. 28, with the following wording:

"28. Ownership, usufruct or right of superficies of urban properties whose Taxpayer Patrimonial Value contained in the registry, in accordance with the Code of Municipal Property Tax (CIMI), is equal to or greater than (euro) 1,000,000 - on the Taxpayer Patrimonial Value used for IMI purposes:

28.1 Per property with housing allocation -------------------------------1%

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

  1. Thus, in accordance with the said item, and in that which is here of concern to us, only the ownership, usufruct, right of superficies of the following is subject to Stamp Duty:

a) "urban properties,

b) with housing allocation,

c) And whose Taxpayer Patrimonial Value contained in the registry, in accordance with the Code of Municipal Property Tax (CIMI), is equal to or greater than (euro) 1,000,000;" (our emphasis)

  1. The logic of taxation of wealth and fortune prevails, to a greater or lesser extent, within the framework of this statute, a conclusion that results from the generalized increase in the tax burden, in financial logic, exclusively directed to tax situations that would produce immediate revenue.

  2. The taxation of capital income is increased, the list of manifestations of fortune is expanded, the taxation of income obtained in Portugal by entities domiciled in tax havens is increased, and finally, to all of this is added the taxation of real property for housing, of value exceeding €1,000,000.00.

  3. And if the legislator includes in this statute real property for housing, setting a value above which they would become subject to another tax, such could only mean that the legislator considered that whoever is the owner of such property of that value expressed an element indicative of additional means of fortune, which could be called upon to participate in the collective effort of raising additional tax revenue.

  4. In truth, the legislator, in introducing this legislative innovation, considered as the determining element of tax capacity urban properties, with housing allocation, of high value (luxury), more precisely, of value equal to or greater than €1,000,000.00, on which a special rate of Stamp Duty came to apply, intending to introduce a principle of taxation on wealth externalized in the ownership, usufruct or right of superficies of luxury urban properties with housing allocation. Therefore, the criterion was the application of the new rate to urban properties with housing allocation, whose TPV is equal to or greater than €1,000,000.00.

  5. This very conclusion results from the analysis of the discussion of draft law No. 96/XII in the National Assembly, available for consultation in the Diário da Assembleia da República, I series, No. 9/XII/2, of 11 October 2012.

  6. The justification for the measure designated as "special tax on the highest value residential urban properties" is based on the invocation of the principles of social equity and fiscal justice, calling upon those holding properties of high value intended for housing to contribute in a more intense manner, imposing the new special rate on "houses of value equal to or greater than 1 million euros."

  7. Indeed, the legislator clearly considered that this value, when imputed to housing (house, autonomous unit or floor with independent use) translated into tax capacity above the average and, as such, capable of determining a special contribution to ensure fair distribution of the tax burden.

  8. Also following these considerations inspiring the legislative innovation under consideration, it must be concluded that the existence of a property in vertical or horizontal ownership cannot be, by itself, an indicator of tax capacity.

  9. On the contrary, it follows from the law that both types should receive the same tax treatment, in obedience to the principles of justice, fiscal equality and material truth.

  10. Indeed, the existence in each property of independent housing, under horizontal or vertical ownership, may be capable of triggering the incidence of the new tax, but only if the TPV of each of the parts or units is equal to or greater than the limit set by law: €1,000,000.00.

  11. It does not seem reasonable that one could categorize urban properties as a whole, i.e., constituted by independent units, with separate TPV evaluations.

  12. As referred to, the introduction of Law No. 55-A/2012, of 19 October, was intended to tax, in fact, luxury.

  13. Now, the property in question belongs to the undivided estate of A, and is composed of 9 divisions with independent use, all with housing allocation.

  14. It is the understanding of the TA that the sum of the TPVs relating to these 9 divisions with independent use that have housing allocation, totaling a global TPV of €1,499,900.00 (one million, four hundred ninety-nine thousand, and nine hundred euros), in the year 2012 and €1,506,220.00 (one million, five hundred six thousand, two hundred and twenty euros) in the year 2013, gives rise to the incidence of Stamp Duty, which is why it understood to proceed with the assessment of Stamp Duty contested in the present proceedings.

  15. Thus, from the TA's perspective, for a property in vertical ownership (or not constituted under horizontal ownership), the criterion for determining the incidence of Stamp Duty is the total TPV of the floors and divisions intended for housing.

  16. Let us see if the TA's thesis is convincing.

  17. Law 55-A/2012, of 29 October entered into force on the day following its publication, that is, on 30 October 2012.

  18. However, it says nothing regarding the qualification of the concepts at issue, in particular, regarding the concept of "property with housing allocation," which is of concern to us here.

  19. However, Article 67, paragraph 2 of the Code of Stamp Duty, added by the said Law, provides that "matters not regulated in the present code relating to item 28 of the General Table shall be governed subsidiarily by the CIMI."

  20. Thus, we have that the incidence rule refers to urban properties, the concept of which is that which results from the provisions of Article 2 of the CIMI, with the determination of the TPV being governed by the terms of the provisions of Article 38 et seq. of the same code.

  21. Consulting the CIMI, it is verified that its Article 6 only indicates the different types of urban properties, among which it mentions residential ones (see subparagraph a) of paragraph 1), clarifying in paragraph 2 of the same article that "residential, commercial, industrial or for services are the buildings or constructions licensed for such purpose or, in the absence of a license, that have as their normal purpose each of these ends."

  22. From this we can conclude that, in the perspective of the legislator, what matters is not the formal-legal rigor of the concrete situation of the property, but rather its normal use, the purpose to which the property is intended.

  23. Moreover, we find that, for the legislator the situation of the property in vertical or horizontal ownership did not matter, as no reference or distinction is made between them. What matters, yes, is the material truth underlying its existence as an urban property and its use.

  24. Indeed, subjection to the Stamp Duty contained in item No. 28.1 of the GTSD is determined by the combination of three facts, namely:

a) We are dealing with an urban property;

b) Housing allocation; and

c) The TPV contained in the registry equal to or greater than €1,000,000.00.

  1. Now, in the case of a property with the characteristics described above and which are contained in Annex V attached with the gracious objection, subjection to Stamp Duty must be determined, not by the TPV of the property "as a whole," but by the TPV assigned to each of the floors or divisions with independent use, allocated to housing.

  2. Therefore, the TA's understanding that the sum of the TPVs of the various units or divisions with independent use allocated to housing, resulting in a total TPV equal to or greater than €1,000,000, legitimizes the incidence of Stamp Duty, under item 28 of the GTSD, under the general rule, is manifestly illegal!

  3. Thus, there being no single unit or division with independent use, allocated to housing, with TPV equal to or greater than €1,000,000, the TA could never have subjected the Claimant to Stamp Duty, under item 28 of the GTSD, for the years 2012 and 2013, which are now contested, as it is illegal, and therefore unacceptable and nonconforming, among others, with the principle of fiscal legality, as well as with the principle of equality, provided for constitutionally in Article 13 of the Constitution of the Portuguese Republic (CRP).

II – On the Principle of Equality – Article 13 of the Constitution of the Portuguese Republic in the Application of Item 28.1 of the GTSD

  1. Indeed, the constitutional principle of fiscal equality, as a specific expression of the general structuring principle of equality (Article 13 of the CRP), is not limited to the rule of universality of taxes, according to which these apply to all those who have tax capacity, but also determines that all must be bound by the payment of taxes based on the same criterion - the rule of uniformity of taxes.

  2. According to this rule, what is equal should be taxed equally, and what is unequal should be taxed unequally, to the extent of that inequality.

  3. The tax legislator cannot treat equal situations in a different manner. Now, if the property were in the regime of horizontal ownership, none of its housing units would be subject to the incidence of the new tax.

  4. For this very reason, Article 12, paragraph 3 of the CIMI states that "each floor or part of property capable of independent use is considered separately in the property registry entry which similarly discriminates the respective Taxpayer Patrimonial Value."

  5. Consequently, the discrimination that is verified, and which is being operated by the TA in the concrete case, translates into an arbitrary and illegal discrimination. Nothing in the law imposes the obligation to constitute horizontal ownership.

  6. On the other hand, it is known that many of the properties existing in vertical ownership are old, with undeniable social utility, as in many cases they house residents with modest and more accessible rents, factors that necessarily must be taken into account. And, certainly, taking into account all of this social and economic reality, the tax legislator itself in the CIMI treated the two situations (horizontal and vertical ownership) in an equitable manner, applying the same criteria.

  7. The TA cannot distinguish where the legislator itself understood not to do so, under penalty of violating the coherence of the tax system, as well as the principle of fiscal legality, provided for in Article 103, paragraph 2 of the CRP, and still the principles of justice, equality and fiscal proportionality.

  8. Now, the failure to annul these assessments clearly violates this principle, as it implies unequal taxation of the now-Claimant, compared to a situation in which the property is in horizontal ownership of identical characteristics.

  9. In this manner, it is manifestly illegal and unconstitutional to consider as the reference value that which corresponds to the sum of the TPVs assigned to each part or division, because it is a clear violation, among others, of the principle of equality and proportionality in tax matters, with nothing legitimizing the interpretation that the TA makes of the applicable legal norms.

  10. Finally, it cannot fail to be mentioned the recent jurisprudence of CAAD, handed down on the topic "Stamp Duty – Item 28, vertical ownership," in proceedings No. 185/2013-T, No. 183/2013-T, No. 181/2013-T, No. 132/2013-T, No. 50/2013-T, No. 248/2013-T of CAAD, among others, whose legal reasoning, the present tribunal adheres to in full as to the matter of the incidence of item 28.1 of the GTSD.

  11. In light of the foregoing, there being no single unit or division with independent use, allocated to housing, with TPV equal to or greater than €1,000,000, the assessment acts of Stamp Duty relating to the years 2012 and 2013, in the amount of €14,999.90 and €15,062.20, respectively, are null and void, by violation of the provisions of item 28.1 of the GTSD and of Article 13 of the CRP.

DECISION

In accordance with the foregoing, it is decided:

  • To annul all assessment acts of Stamp Duty contested by the Claimant, relating to the year 2012 and 2013.

  • To declare illegal and annul the act of presumed tacit dismissal of the administrative appeal filed by the Claimant regarding the same assessment acts.

  • To declare the Tax Authority obligated, in accordance with subparagraph b) of paragraph 1 of Article 24 of the LRAT, to restore the situation that would have existed had the annulled assessment acts not been performed, adopting the necessary acts to this effect.

Value of the Case

The value of the case is fixed at €30,061.20 in accordance with Article 97-A, paragraph 1, a), of the Code of Administrative Tax Procedure, applicable by force of subparagraphs a) and b) of paragraph 1 of Article 29 of the LRAT and of paragraph 2 of Article 3 of the Regulation of Costs in Tax Arbitration Proceedings.

Costs

Costs to be borne by the Respondent in accordance with Article 22, paragraph 2 of the LRAT, Article 4 of the RCPAT, and Table I annexed to the latter, which are fixed in the amount of €1,836.00.

Let it be notified.

Lisbon, 3 October 2014

The Arbitrator

(Jorge Carita)

Frequently Asked Questions

Automatically Created

What is Verba 28.1 of the Tabela Geral do Imposto do Selo and how does it apply to high-value properties?
Verba 28.1 of the Tabela Geral do Imposto do Selo (TGIS) establishes an annual Stamp Tax on urban properties allocated to residential housing with Taxable Patrimonial Value (VPT) exceeding €1,000,000. This provision targets high-value residential properties by imposing a 1% annual tax rate on the VPT contained in the property registry. The tax applies specifically to housing allocation, purposely excluding properties without residential use. The incidence rule references 'VPT contained in the registry,' creating interpretative questions about whether this means individual registry entries for autonomous fractions or the aggregate value of all units within a single property structure. In vertical property ownership, where multiple floors or divisions exist under unified ownership rather than horizontal property regime with independent fractions, the application becomes contentious when individual unit values fall below the €1,000,000 threshold but collectively exceed it.
Can individual units of a vertical property (propriedade vertical) be separately assessed for Stamp Tax under Verba 28.1?
The CAAD arbitration Process 238/2014-T centers precisely on whether individual units of vertical property can be separately assessed under Verba 28.1. The Claimant argues that each floor or independently usable part with separate property registry entry should be assessed individually based on its own VPT. Since the Portuguese Property Registry Code (CIMI) treats each floor or division capable of independent use as a separate registry entry, and Verba 28.1 references 'VPT contained in the registry,' the Claimant contends that units with individual VPT below €1,000,000 should not be subject to this Stamp Tax. The Tax Authority opposes this interpretation, arguing that property in full vertical ownership constitutes a single property for tax purposes, not multiple autonomous units, requiring aggregate valuation. The resolution of this issue determines whether vertical property ownership permits individual unit assessment similar to horizontal property regimes or requires unified treatment based on total property value.
What was the outcome of CAAD arbitration process 238/2014-T regarding Stamp Tax on inherited property?
While the complete decision text is not provided in the excerpt, CAAD arbitration Process 238/2014-T involved the Head of Estate A challenging Stamp Tax liquidation acts totaling €14,999.00 for 2012 and €15,062.20 for 2013 on inherited property units. The arbitral tribunal, constituted on May 14, 2014, with arbitrator Dr. Jorge Carita, accepted an expanded claim to include 2013 assessments. The case proceeded without oral hearings as both parties waived additional evidence production. The procedural decision date was set for October 7, 2014. The Estate challenged the assessments on grounds that individual property fractions with VPT below €1,000,000 should not be subject to Verba 28.1 TGIS, that the Tax Authority's interpretation violated constitutional equality principles, and that transitional provisions under Law 55-A/2012 were breached. The outcome would establish important precedent for vertical property taxation and determine whether inherited estates with multiple units below the threshold face aggregate or individual assessment for high-value property Stamp Tax.
How does the CAAD arbitral tribunal handle requests to annul multiple Imposto do Selo liquidation acts?
The CAAD arbitral tribunal handles requests to annul multiple Imposto do Selo liquidation acts through a consolidated arbitration process under the Legal Regime of Arbitration in Tax Matters (LRAT - Decree-Law 10/2011). In Process 238/2014-T, the tribunal accepted the initial request challenging nine separate assessment acts for 2012, then permitted claim expansion to include nine additional acts for 2013, demonstrating procedural flexibility for related assessments. After tribunal constitution, the Tax Authority submitted its Response arguing for dismissal, while both parties waived oral proceedings and additional evidence. The tribunal follows LRAT Article 18 procedures, establishing decision deadlines and requiring payment of subsequent arbitration fees per the Regulation of Costs. This consolidated approach efficiently resolves multiple related tax disputes arising from the same legal interpretation issue, avoiding duplicative proceedings while ensuring comprehensive examination of all contested liquidation acts stemming from identical factual and legal circumstances across multiple tax years.
What are the legal grounds for challenging Stamp Tax assessments on vertical property fractions with individual VPT below €1 million?
The legal grounds for challenging Stamp Tax assessments on vertical property fractions with individual VPT below €1,000,000 include: (1) Incorrect interpretation of Verba 28.1 TGIS incidence rule - arguing the 'VPT contained in the registry' refers to individual registry entries for each autonomous fraction, not aggregate values, particularly since CIMI treats each independently usable floor or part as separate registry entry; (2) Constitutional violation of equality principle (Article 13 CRP) - contending that property concentration or dispersion is not a legitimate taxation criterion reflecting taxpaying capacity, making differential treatment between owners of separate properties versus consolidated ownership unconstitutional; (3) Violation of transitional regime under Law 55-A/2012 Article 6 provisions applicable to 2012 assessments; (4) Distinction between vertical and horizontal property ownership - arguing that just as horizontal property units are assessed individually, vertical property fractions with separate registry entries should receive similar treatment; (5) Legislative intent interpretation - asserting the law targets residential housing units, not property structures, justifying individual unit assessment based on actual housing allocation rather than ownership consolidation.