Process: 239/2013-T

Date: March 24, 2014

Tax Type: Selo

Source: Original CAAD Decision

Summary

This CAAD arbitration decision (Process 239/2013-T) addresses whether stamp tax under Item 28 of the General Stamp Tax Table (TGIS) applies to undeveloped construction land (terreno para construção) that has been assigned a housing allocation coefficient for property valuation purposes. The claimant, A, SA, challenged stamp tax assessments totaling €19,872.24 for 2012 on urban property valued at €2,980,838.10. The property consists of undeveloped land covered with brambles and scrub, with no existing buildings, yet the Tax Authority (AT) applied a housing allocation coefficient when determining its patrimonial value in 2007. Following amendments to Item 28 TGIS by Law 55-A/2012, stamp tax became applicable to ownership of urban properties with housing allocation and patrimonial values equal to or exceeding €1,000,000. The claimant argued three grounds for annulment: (1) lack of substantiation because payment notifications did not reference assessment identification numbers; (2) the property is merely undeveloped land without any buildings and no immediate construction plans; and (3) double taxation violation since both IMI (property tax) and stamp tax were levied on the same economic reality. The AT defended its position, asserting that the property's legal classification as housing allocation, regardless of actual physical development, triggers Item 28 obligations. The AT further argued that collection documents contained sufficient identifying information (assessment date, tax year, property identification, patrimonial value, rate, and installment number) to satisfy substantiation requirements. The arbitral tribunal was constituted on December 26, 2013, with arbitrator Arlindo José Francisco presiding. The case raises important questions about the scope of stamp tax obligations on undeveloped properties and whether allocation coefficients used for valuation purposes should determine tax liability independently of actual property use or development status.

Full Decision

ARBITRAL DECISION

I - REPORT

1 – A, SA with the NIPC …, with registered office at Rue …, nos … to …, in … filed, on 28/10/2013, a petition for constitution of the single arbitral tribunal, in accordance with the combined provisions of articles 2 and 10 of Decree-Law 10/2011 of 20 January (RJAT)[1] in which the AT[2] is called upon.

2 – The petition for constitution of the Arbitral Tribunal was filed without exercising the option of designation of arbitrator, and was accepted by His Excellency the President of CAAD[3] and immediately notified to the respondent on the same date.

3 – In accordance with and for the purposes of article 6, no. 1 of RJAT, by decision of the President of the Deontological Council, duly communicated to the parties within the legally applicable deadlines, Arlindo José Francisco was designated as arbitrator, who communicated to the Deontological Council of Administrative Arbitration his acceptance of the appointment within the legally stipulated deadline.

4 – The tribunal was constituted on 26/12/2013 and on 27/12/2013, the Order referred to in article 17, no. 1 of RJAT was issued.

5 – With its petition the claimant intends that the illegality be declared and thereby the annulment of the tax acts of assessment of stamp tax levied under item 28 of the TGIS[4], relating to the year 2012, dated 21/03/2013, in accordance with the collection documents of the second and third installment in the total amount of €19,872.24;

6 – The claimant proved the payments; the second installment proof was attached to the petition and the third installment by request of 18/02/2014 in which she requested its attachment to the proceedings which was granted and notified to the respondent at the meeting referred to in article 18 of RJAT, held on 20/02/2014.

7 – In the first instance the claimant attacks the assessment on the grounds that there is lack of substantiation, given that when notified of various payment documents, identified with different numbers, the notifications did not indicate the number that would reference the respective assessment, an element considered essential for its identification.

8 – Subsequently, she considers that in addition to the lack of substantiation, the assessment in question concerns the urban property described in the Land Registry Office of … under the number … and registered in the corresponding urban property tax register under article …, being a plot of land for construction upon which there is no building whatsoever, consisting of a piece of land covered with brambles and scrub and for which no building is foreseen in the near future.

9 – The property in question was assessed in 2007 by the AT as a plot of land for construction to which a total patrimonial value of €2,980,838.01 was assigned, and in the respective assessment, the AT applied the allocation coefficient of "housing", in accordance with article 41 of CIMI[5].

10 – In view of the patrimonial value assigned and the allocation coefficient, the AT understood that the objective requirements for the assessment of stamp tax provided for in item 28 of the respective table were met.

11 – Finally, she considers that on the same economic reality two different taxes apply – stamp tax and IMI[6] – there being, through the interpretation of the Law made by the AT, double taxation.

12 – She concludes by requesting the annulment of the assessment acts and the consequent reimbursement of the amounts wrongly paid plus the respective indemnity interest.

13 – In its response the AT considers that the property in question has the legal nature of a property with housing allocation and therefore, in accordance with item 28 of the General Table of Stamp Tax, amended by Law 55-A/2012 of 29 December, the assessment act subject to the present decision should be maintained as it embodies the correct interpretation of the amended item.

14 – In fact, with this amendment, stamp tax started also to apply to the ownership, usufruct or right of superficies of urban properties whose tax patrimonial value assigned in accordance with the CIMI is equal to or greater than €1,000,000.00 and provided that its allocation is housing.

15 – On the other hand, it considers that the interpretation of the rule made by the AT is adequate to the legislative purpose in view and will not violate constitutional principles, namely of equality and proportionality.

16 – It also does not consider there to have been a defect of lack of substantiation given that the collection documents contain the date of the assessment, the year of the tax, the property, the tax to pay, the patrimonial value, the rate and the number of the installment to pay, being revealing the fact that the claimant correctly identified the property, the tax, its global value, as well as the value relative to each installment and has deduced the petition.

II - PROCEDURAL MATTERS

The tribunal was regularly constituted and is competent ratione materiae, in accordance with article 2 of RJAT.

The parties have legal personality and capacity, show themselves to be legitimate and are regularly represented in accordance with articles 4 and 10, no. 2 of RJAT and article 1 of Order no. 112-A/2011, of 22 March.

On 20/02/2014, the tribunal meeting took place, in accordance with article 18 of RJAT and, having heard the parties, the production of oral or written submissions was dispensed with as unnecessary. The proceedings do not suffer from any nullities and no issues were raised that would prevent the examination of the merits of the case, and the conditions are met for a final decision to be rendered.

III – SUBSTANTIVE GROUNDS

1 - The issues to be decided with interest for the case are the following:

a) To determine whether the assessment is illegal due to lack of substantiation, inasmuch as the notifications did not contain the identification numbers thereof;

b) To determine whether a plot of land for construction, in which there are no buildings whatsoever, but to which in determining its tax patrimonial value was applied the allocation coefficient for housing, resulting in a value equal to or greater than €1,000,000.00 falls within the scope of subjection to stamp tax provided for in item 28 of the TGIS; and

c) To determine whether we are faced with double taxation of the same economic reality, putting into question the principles of equality and proportionality; and

d) To determine whether, in case the illegality of the assessment is declared, there will be entitlement or not to the payment of the indemnity interest requested.

2 – Statement of Facts

The relevant facts proven on the basis of the elements attached to the proceedings are the following:

a) The claimant is the owner of the urban property described in the Land Registry Office of … under the number … and registered in the corresponding tax register under article … of the parish of …;

b) The identified property has no building whatsoever on its land;

c) For the purposes of tax patrimonial assessment carried out in 2007 it was assigned the value of €2,980,838.10, and in determining such value the housing allocation coefficient was used, which the claimant did not contest at the time of the assessment;

d) For the area where the land is situated a detailed plan is being prepared, there being no certainty yet as to whether the buildings to be constructed will have exclusively housing allocation;

e) In the notification of the assessment no reference is made to the number of the assessment, but in the collection document all the necessary data for its identification are contained;

f) On the tax patrimonial value of the property there was taxation in IMI and stamp tax in the year 2012;

g) The claimant made payment of the 2nd and 3rd installment in the total value of €19,872.24 whose annulment she seeks and consequent reimbursement.

3 - Of the Law

3.1 - As regards the illegality of the assessment due to lack of substantiation established in article 77 of the LGT[7], the tribunal understands that the assessment act was, albeit succinctly, substantiated, inasmuch as the claimant identified all elements necessary for the filing of the present petition for decision, from the legal basis, identification of the property, the tax, its total amount, division into installments, timing of payment, paying it within the stipulated time.

Now, an act is sufficiently substantiated whenever a reasonable recipient placed before it becomes aware of the reasons supporting the decision rendered therein (see to this respect the Judgment of the STA[8], case 42180 of 20 November 2002).

3.2 - As regards taxation in stamp tax of a plot of land for construction, in which there are no buildings whatsoever, but to which in determining its tax patrimonial value was applied the allocation coefficient for housing, resulting in a value equal to or greater than €1,000,000.00 falls within the scope of subjection to stamp tax provided for in item 28 of the TGIS amended by article 4 of Law 55-A/2012 of 29 December we shall undertake an analysis of this provision of incidence with a view to reaching conclusions:

3.2.1 – The amended provision establishes, with relevance for the case under consideration, that urban properties with housing allocation become subject to the payment of stamp tax at the rate of 1% which is charged on the patrimonial value considered for the purposes of IMI;

3.2.2 – The CIS[9] refers to the CIMI Code the regulation of the concept of property and of matters not regulated as to item 28 of the TGIS (no. 6 of article 1 and no. 2 of article 67 both of the CIS);

3.2.3 – If we pay attention to article 6 of the CIMI, therein it is established that urban properties are divided into:

a) Housing
b) Commercial, industrial or for services
c) Plots for Construction
d) Others

From its number two it appears that housing properties "are buildings or constructions licensed for such purpose, or in the absence of a license, which have such purpose as their normal destination" and, its number three says that plots for construction "are those situated within or outside an urban agglomeration, for which a license or authorization of a subdivision or construction operation has been granted, and also those which have been declared as such in the acquisition title…"

3.2.4 – The concepts enumerated in this normative allow us to conclude from the outset that urban housing properties are those licensed or which may be destined for such purpose, whereas plots for construction also urban properties, their destination can only be construction and not anything else;

3.2.5 - The tribunal understands that the formulation "housing allocation" contained in item 28 of the TGIS, amended by Law 55-A/2012 of 29 October, can only encompass the housing properties referred to in subsection a) of no. 1 of article 6 of the CIMI and cannot be interpreted to encompass plots for construction whose destination will always be the construction of urban properties which could have, in the future, housing, commercial or services allocation. In the case at hand in the proceedings there is no certainty yet as to whether the buildings to be constructed will have exclusively housing allocation;

3.2.6 – To intend that the expression "housing allocation" used by the legislator has the integrating purpose of other realities beyond those identified is, in the tribunal's view, contrary to the provision of number two of article 9 of the Civil Code. If the legislator intended it, he would have said so expressly and did not do so.

3.2.7 – Corroborating this our understanding is the recent visit by the legislator, through Law 83-C/2013 of 31 December, to item 28.1 of the TGIS giving it new wording, maintaining the terminology "housing" introducing now "the plot for construction", which proves that in the prior wording plots for construction were outside taxation, given that the provision of incidence did not contemplate them.

3.2.8 – It is the tribunal's understanding that article 6 of the CIMI establishes a clear distinction between urban housing properties and urban property plots for construction, these latter not being within the scope of the provision of incidence of stamp tax provided for in item 28 of the TGIS, in the original wording of Law 55-A/2012 of 29 October.

3.3 - As regards the possible double taxation and violation of the principles of equality and proportionality, the tribunal understands that its knowledge is impaired inasmuch as from what has been stated it is clear the illegality of the assessment brought into question in the present proceedings, by a defect preventing the renewal of the act, supporting this position on article 124 of the CPPT[10] applicable ex vi article 29 of RJAT.

3.4 – As regards the request for indemnity interest requested in accordance with the terms provided for in nos. 1 and 2 of article 43 of the LGT, examining the request the tribunal understands it to be evident, in view of the illegality of the assessment act, that there is entitlement to reimbursement of the stamp tax paid and, having in view the provisions contained in numbers 1 subsection b) and 5 of article 24 of RJAT and article 100 of the LGT, the claimant is entitled to the payment of indemnity interest under no. 1 of article 43 of the LGT and article 61 of the CPPT.

V - OPERATIVE PART

In view of the foregoing the tribunal decides as follows:

a) To declare the petition for arbitral decision well founded with the consequent annulment of the stamp tax assessment in question and respective reimbursement to the claimant;

b) To declare the obligation of the AT to pay indemnity interest to the claimant, at the legal rate, from the date on which payment of the installments occurred and the date on which reimbursement takes place;

c) Value of the case: €19,872.24 in accordance with article 299, no. 1 of the CPC[11], 97-A of the CPPT and article 3, no. 2 of RCPAT[12];

d) Costs to be borne by the respondent, under the terms of no. 4 of article 22 of RJAT, the respective amount being fixed at €1,224.00 in accordance with Table I of RCPAT.

Register and Notify.

Lisbon, 24 March 2014

The single arbitrator

Arlindo José Francisco

Text prepared by computer, in accordance with article 131, no. 5 of the CPC, applicable by referral of article 29, no. 1, subsection e) of RJAT, with blank lines and revised by me.

The wording of the present decision follows the spelling prior to the orthographic agreement.

[1] Acronym for Legal Regime of Arbitration in Tax Matters.

[2] Acronym for Tax and Customs Authority.

[3] Acronym for Administrative Arbitration Centre.

[4] Acronym for General Table of Stamp Tax.

[5] Acronym for Code of Municipal Tax on Real Property.

[6] Acronym for Municipal Tax on Real Property.

[7] Acronym for General Tax Law.

[8] Acronym for Supreme Administrative Court.

[9] Acronym for Code of Stamp Tax.

[10] Acronym for Code of Procedure and Tax Process.

[11] Acronym for Code of Civil Procedure.

[12] Acronym for Regulation of Costs in Tax Arbitration Proceedings.

Frequently Asked Questions

Automatically Created

Is stamp tax under Verba 28 of the TGIS applicable to undeveloped land for construction classified with a housing coefficient?
Yes, according to the Tax Authority's interpretation, stamp tax under Item 28 of TGIS applies to undeveloped construction land (terreno para construção) if it has been assigned a housing allocation coefficient (coeficiente de afetação habitação) and its patrimonial value equals or exceeds €1,000,000. This interpretation follows Law 55-A/2012 amendments, which extended stamp tax to ownership, usufruct, or surface rights of urban properties with housing allocation meeting the value threshold. The key factor is the legal classification for valuation purposes rather than the actual physical state or current use of the property. However, taxpayers may challenge this interpretation through CAAD arbitration, arguing that undeveloped land without buildings should not be subject to stamp tax designed for developed housing properties.
What are the grounds for challenging a stamp tax assessment for lack of proper justification (falta de fundamentação)?
Grounds for challenging stamp tax assessments for lack of proper justification (falta de fundamentação) include: (1) failure to include essential identifying elements such as the assessment number (número da liquidação) in notifications; (2) insufficient information to allow the taxpayer to understand the basis and calculation of the tax; and (3) inability to properly identify which specific assessment corresponds to payment demands. In Process 239/2013-T, the claimant argued that payment notifications identified only with document numbers, without referencing the underlying assessment numbers, constituted a substantiation defect. However, the Tax Authority countered that collection documents containing the assessment date, tax year, property identification, tax amount, patrimonial value, applicable rate, and installment number provided sufficient data for proper identification, particularly since the claimant successfully identified the property and amounts when filing the arbitration petition.
How does the property valuation coefficient of 'habitação' affect stamp tax liability on terrenos para construção?
The property valuation coefficient of 'habitação' (housing) is determinative for stamp tax liability under Item 28 of TGIS on terrenos para construção (construction land). When the Tax Authority applies a housing allocation coefficient during patrimonial valuation under CIMI (Property Tax Code), this classification establishes the property's legal nature for tax purposes. Item 28 TGIS, as amended by Law 55-A/2012, imposes stamp tax on urban properties with housing allocation and patrimonial values equal to or exceeding €1,000,000. The AT's position is that this coefficient, once applied and unchallenged during the valuation process, creates the legal basis for stamp tax liability regardless of whether buildings actually exist on the land or whether future construction will have housing allocation. This interpretation means that the administrative classification for valuation purposes, rather than physical reality or intended use, determines tax obligations—a position that taxpayers may contest as extending beyond legislative intent.
Can a taxpayer request CAAD arbitration to annul stamp tax assessments made under Verba 28 da Tabela Geral do Imposto do Selo?
Yes, taxpayers can request CAAD (Centro de Arbitragem Administrativa) arbitration to annul stamp tax assessments made under Item 28 of the General Stamp Tax Table (Verba 28 da Tabela Geral do Imposto do Selo). The procedure follows Decree-Law 10/2011 (RJAT - Legal Regime of Administrative Arbitration). Process 239/2013-T demonstrates this: the claimant filed a petition on October 28, 2013, without exercising the option to designate an arbitrator; the CAAD President accepted and notified the Tax Authority; an arbitrator was appointed; and the tribunal was constituted within the statutory timeframes. Taxpayers must pay the contested amounts before filing (as evidenced by proof of payment attached to the petition) and can challenge assessments on substantive grounds (incorrect application of law, double taxation, constitutional violations) and procedural grounds (lack of substantiation). CAAD arbitration provides an alternative to judicial tax courts for resolving disputes over stamp tax on high-value properties.
What is the procedure for contesting multiple stamp tax payment notices that lack proper liquidation reference numbers?
The procedure for contesting multiple stamp tax payment notices lacking proper liquidation reference numbers involves: (1) filing a petition for arbitral tribunal constitution under RJAT within the statutory deadline; (2) attaching proof of payment for all contested installments (if paid at different times, subsequent proofs can be submitted during proceedings with court authorization); (3) identifying the contested assessments through available data such as property identification, tax year, assessment date, patrimonial value, and installment numbers; (4) arguing the substantiation defect as grounds for illegality while demonstrating that insufficient identification prevented proper understanding or verification of the tax basis; and (5) requesting annulment and reimbursement of amounts paid plus compensatory interest. In Process 239/2013-T, the claimant attached second installment proof with the initial petition and later requested (granted on February 18, 2014) attachment of third installment proof. The key is demonstrating that missing assessment numbers constitute a material defect that violates taxpayer rights, though courts may find sufficient substantiation if other identifying elements allow clear correspondence between payments and underlying tax obligations.