Process: 246/2016-T

Date: November 2, 2016

Tax Type: Selo

Source: Original CAAD Decision

Summary

This arbitration decision (Process 246/2016-T) addresses a critical interpretive issue regarding Stamp Tax (Imposto de Selo) under Item 28 of the General Table (Verba 28 TGIS) for properties not constituted under horizontal property regime. The claimant company challenged stamp tax assessments totaling €16,268.40 for fiscal year 2015, arguing that the Tax Authority illegally aggregated the individual taxable property values (VPT) of separate floors and divisions to exceed the €1,000,000 threshold.

The central legal question was whether the relevant VPT for stamp tax incidence should be: (a) the sum of all individual unit VPTs within a single building, as the Tax Authority contended, or (b) the VPT of each independent floor or division separately, as the claimant argued. The claimant maintained that Article 67(2) of the Stamp Tax Code mandates subsidiary application of the Municipal Property Tax Code (CIMI), which treats properties in vertical ownership identically to horizontal property for IMI purposes—assessing each independent unit individually. The claimant emphasized that stamp tax should only apply when a single unit's VPT exceeds €1,000,000, not when aggregated values cross this threshold.

The Tax Authority defended its aggregation methodology, asserting that Item 28.1 taxes the property as a whole based on total VPT used for IMI purposes, arguing that the claimant's interpretation would improperly shift taxation from properties to individual dwellings. The claimant countered that aggregation violates constitutional principles of tax legality, equality, and proportionality, noting that the Tax Authority itself issued individualized assessments per division, contradicting its own aggregation theory. The claimant cited unanimous arbitral jurisprudence supporting the individualized approach and requested annulment of the assessments plus compensatory interest under Article 43 of the General Tax Law (LGT).

Full Decision

ARBITRAL DECISION

I – REPORT

1.1. A…, S.A., (hereinafter designated as "claimant"), with Tax Number…, having been notified of the tax assessments identified in point 10 of its petition, filed on 27/4/2016 a request for constitution of an arbitral tribunal and arbitral pronouncement, pursuant to Decree-Law no. 10/2011, of 20/1 (Legal Regime of Arbitration in Tax Matters, hereinafter designated only as "RJAT"), in which the Tax and Customs Authority (AT) is requested, with a view to declaring "illegal and annull[ing] the above-mentioned stamp tax assessments, by reference to the year 2015, from which results tax payable in the amount of €16,268.40", and condemning the Respondent to "pay indemnity interest".

1.2. On 14/7/2016 the present Sole Arbitral Tribunal was constituted.

1.3. Pursuant to art. 17, no. 1, of the RJAT, the AT was cited, as the respondent party, to submit a reply, in accordance with the terms and effects of the aforementioned article. The AT submitted its reply on 20/9/2016, having argued, in summary, the total lack of merit of the claimant's request.

1.4. By order of 26/10/2016, the Tribunal considered, pursuant to art. 16, para. c), of the RJAT, that the meeting referred to in art. 18 of the RJAT was dispensable, and that the process was ready for decision. The date of 2/11/2016 was further set for the issuance of the arbitral decision.

1.5. The Arbitral Tribunal was properly constituted, is materially competent, the process is not affected by vices that would invalidate it and the Parties have legal personality and capacity, configuring themselves as legitimate.

II – ALLEGATIONS OF THE PARTIES

2.1. The claimant alleges in its initial petition that: a) "it has been unanimous jurisprudence of administrative arbitral tribunals that in the case sub iudice stamp tax should not be applied, and there have already been annulments of assessments whereby, in the narrow principle of tax equality, appraisal of the legality of the tax assessments is required"; b) "the essential question to be decided is whether, by reference to properties not constituted in a horizontal ownership regime, as in the present case, integrated by various floors and divisions with independent use, some with residential purpose, what is the relevant TPC [taxpayer property value]"; c) "that is, whether the relevant TPC as the criterion for the incidence of the tax is the one corresponding to the sum of the taxable property value attributed to the different parts or floors (global TPC) as occurred in the case "sub iudice" with the assessments whose revision is requested, in which only by adding the various independent divisions would one arrive at a TPC value exceeding €1,000,000, or rather, the TPC attributed to each one of the parts or residential floors"; d) "Law no. 55-A/2012 says nothing regarding the qualification of the concepts at issue, in particular, regarding the concept of 'property with residential purpose'"; e) "using the criterion which the law itself introduced in article 67, no. 2, of the Stamp Tax Code, 'to matters not regulated in the present code relating to item 28 of the General Table, the Municipal Property Tax Code (CIMI) is subsidiarily applied'"; f) "now, being so, considering that registration in the property register in vertical ownership, constituted by different parts, floors or divisions with independent use, in accordance with the CIMI, obeys the same registration rules of properties constituted in horizontal ownership, and the respective Municipal Property Tax (IMI), as well as the new stamp tax, are individually levied in relation to each one of its parts, it offers no doubt that the legal criterion for defining the incidence of the new tax must be the same"; g) "furthermore, the AT acknowledges that this is the criterion, which is why the assessment itself issued is very clear in its essential elements, from which results that the incidence value corresponds to the TPC of each one of the individualized fractions and the assessment documents are individualized on the part of the property corresponding to the various floors"; h) "stamp tax shall only apply if any one of the parts, floors or divisions with independent use presented a TPC exceeding €1,000,000.00, which does not occur in the case "sub iudice""; i) "the criterion intended by the AT, of considering the value of the sum of the TPC attributed to the parts, floors or divisions with independent use, with the argument that the property is not constituted in a horizontal ownership regime, finds no legal support and is contrary to the criterion resulting from application in the context of CIMI and, by referral, in the context of stamp tax"; j) "the adoption of the criterion defended by the AT violates the principles of legality and tax equality, as well as the prevalence of material truth over legal-formal reality, in clear prejudice to the taxable person"; l) "it is illegal and unconstitutional to consider as reference value [...] the one corresponding to the sum of the TPC attributed to each part or division. First and foremost, because that would be a clear violation of the principle of equality and proportionality in tax matters."

2.2. The herein Claimant requests that: "a) the request for arbitral pronouncement be upheld and, in consequence, [it be] declared illegal and [the] stamp tax assessments above mentioned [be] annull[ed], by reference to the fiscal year 2015, from which results tax payable in the amount of €16,268.40, concerning the taxation of urban properties with TPC equal to or exceeding €1,000,000, in accordance with the provisions of Item no. 28 of the General Stamp Tax Table; b) [the] Respondent [be] condemn[ed], pursuant to article 43, no. 1, of the General Tax Law, and 61, nos. 2 and 5, of the Tax Code of Procedure and Process, to pay indemnity interest, at the rate resulting from no. 4 of article 43 of the General Tax Law, calculated on the amount paid in excess, from the day on which the above-mentioned assessments were and are paid and until complete reimbursement of the aforementioned amount; and c) [the] Respondent [be] condemn[ed] to pay the costs of the process."

2.3. For its part, the AT alleges in its reply: a) that "the taxable property value of all those floors with independent use and residential purpose that make up the referred urban property was determined separately, in accordance with art. 7, no. 2, para. b), of the Municipal Property Tax Code (CIMI)"; b) that "the sum of the taxable property value of those floors and divisions subject to stamp tax exceeds € 1,000,000.00"; c) that "it would be on this value that the A.T. would levy, in accordance with arts. 6, no. 1, para. f), sub-para. i), the aforementioned stamp tax of item 28.1 of the General Table, in the wording given by art. 4 of Law no. 55-A/2012, of 29 October, at the rate of 1%"; d) that, "according to the Author of the request for arbitral pronouncement, when the urban property is composed of floors or divisions, subjection to stamp tax is determined, not as a function of the total taxable property value of the property, but as a function of the taxable property value of each floor or division. This interpretation has no correspondence with the wording of item 28.1 of the General Table"; e) that "neither does it have correspondence with the meaning of that legal norm which, according to the author of the request for arbitral pronouncement, would be the subjection to tax, not of properties proper, but of the dwellings existing therein"; f) that, "according to item 28.1, in the case of urban properties with residential purpose, the tax falls on the taxable property value used for purposes of municipal property tax (IMI)"; g) that, "according to art. 2, no. 4, of the Stamp Tax Code, the passive subjects of the tax are the passive subjects of IMI, in accordance with art. 8 of the CIMI"; h) that, "according to art. 3, no. 3, para. u), of the CIMI, it is equally on the passive subjects referred to in art. 8 of the CIMI that the burden of stamp tax falls"; i) that "from these legal norms results the fact that the stamp tax of item 28.1 comprises ownership, usufruct or surface rights of urban properties whose taxable property value registered in the property register, in accordance with the Municipal Property Tax Code (CIMI), is equal to or exceeding €1,000,000.00"; j) that "the taxable property value relevant for purposes of the incidence of the tax is, thus, the total taxable property value of the urban property and not the taxable property value of each one of the parts that comprise it, even when capable of independent use"; l) that "the unity of the urban property in vertical ownership composed of several floors or divisions is not, however, affected by the fact that all or part of those floors or divisions are capable of independent economic use. Such property ceases not to be just one, and thus its distinct parts are not legally equated to autonomous fractions in a horizontal ownership regime", m) that, "in the present case, the taxable property value on which the incidence of the stamp tax of item 28.1 of the General Table depends had to be, as it was, the global taxable property value of the property and not that of each one of its independent parts"; n) that "a type of incidence according to which the taxable property value of urban properties on which the application of item 28.1 of the General Table depends is the taxable property value of each floor or division capable of independent use and not the global taxable property value of the urban property with residential purpose certainly has no whatsoever expression in the law."

2.4. In conclusion, the AT argues that "the present request for arbitral pronouncement should be judged totally lacking in merit, absolving the AT therefrom."

III – PROVEN FACTS, UNPROVEN FACTS AND RESPECTIVE REASONING

3.1. The following facts are considered proven:

i) The acts in question are stamp tax assessments of item 28 of the General Stamp Tax Table, relating to the year 2015, on the sum of the TPC of the floors with residential purpose that make up the urban property located on Rua da …, no.… and …, Lisbon, registered in the property register of the parish … under article … (see doc. 1), to which correspond the collection documents of the 3 installments with payment deadline in April, July and November 2015, in the total amount now at issue of €16,268.40.

ii) The referred property is constituted by basement, shops and 5 floors and has an aggregate taxable property value of €2,287,080.00, distributed as follows: 1st right: TPC €112,930; 1st left: TPC €112,930; 1st front: TPC €99,500; 2nd right: TPC €112,930; 2nd left: TPC €112,930; 2nd front: TPC €99,500; 3rd right: TPC €112,930; 3rd left: TPC €112,930; 3rd front: TPC €99,500; 4th right: TPC €112,930; 4th left: TPC €112,930; 4th front: TPC €99,500; 5th right: TPC €112,930; 5th left: TPC €112,930; 5th front: TPC €99,500; Shop AB: TPC €325,560; Shop DE: TPC €334,720. These last two have commercial purpose, the remainder have residential purpose.

iii) The AT considered that the criterion for determining the incidence of stamp tax would be the sum of the individualized TPC of each one of the divisions intended for residential use. Thus, it levied in 2016, relating to the year 2015, 1% on the property in vertical ownership above identified, in accordance with no. 7 of article 23 of the Stamp Tax Code, having issued tax assessments payable in accordance with article 120 of the CIMI, applicable ex vi article 23 of the Stamp Tax Code, as per the list contained in point 10 of the petition (see, also, docs. 1 to 15).

iv) As stated by the herein Claimant (statements not contested by the Respondent) in its petition, "regarding the 1st installment of the assessments made, the claimant has already proceeded to pay it" and "regarding this same property, but concerning the fiscal years 2012 and 2013, in the process that ran its course in this tribunal under the number 320/2015-T, already final [, it was decided in favor of the herein Claimant]."

v) The Claimant filed the present request for arbitral pronouncement on 27/4/2016.

3.2. There are no material unproven facts for the decision of the case.

IV – ON THE LAW

In the case now under analysis, the essential questions that arise are: 1) whether subjection to stamp tax, in accordance with what is provided in item no. 28 of the General Stamp Tax Table, is determined by the TPC that corresponds to each one of the parts of the property with residential purpose, or whether, conversely, it is determined by the global TPC of the property, which would correspond to the sum of all TPCs of the floors that comprise it; 2) whether, as the Claimant alleges, "the adoption of the criterion defended by the AT violates the [principle of] [...] tax equality"; 3) whether the indemnity interest requested by the Claimant is due.

Let us then see.

  1. At the origin of the first question is item no. 28 of the General Stamp Tax Table, added by art. 4 of Law no. 55-A/2012, of 29/10, which provides as follows:

"28 – Ownership, usufruct or surface rights of urban properties whose taxable property value registered in the property register, in accordance with the Municipal Property Tax Code (CIMI), is equal to or exceeding € 1,000,000.00 – on the taxable property value for purposes of IMI: 28.1 – Per property with residential purpose – 1%. 28.2 – Per property, when the passive subjects that are not natural persons are residents in a country, territory or region subject to a tax regime clearly more favorable, listed in the list approved by decree of the Minister of Finance – 7.5%."

Law no. 55-A/2012, which entered into force on 30/10/2012, did not proceed with the qualification of the concepts contained in said item no. 28, in particular, the concept of "property with residential purpose". However, observing what is provided in art. 67, no. 2, of the Stamp Tax Code (Código do Imposto de Selo), also added by the cited Law no. 55-A/2012, it is verified that "to matters not regulated in the present code relating to item 28 of the General Table, the Municipal Property Tax Code (CIMI) is subsidiarily applied." Existing doubt as to the scope of said item, it is therefore justified to observe what the CIMI says.

From reading the CIMI it becomes clear that the concept of "property with residential purpose" refers, naturally, to the concept of "urban property" which is defined in arts. 2 and 4. For its part, it is observed that the determination of the TPC obeys articles 38 et seq. of the CIMI.

Among the various species of "urban properties" (art. 6), there is expressly mentioned "residential urban properties" [see no. 1, para. a)], adding then, no. 2 of the same article of the CIMI, that these "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."

If it is true that no. 4 of art. 2 of the CIMI states that, "for purposes of this tax, each autonomous fraction, in the horizontal ownership regime, is deemed to constitute a property", it is equally true that there is nothing in the law that points to a distinction between properties in horizontal and vertical ownership as regards their identification as "residential urban properties". From this it is concluded that autonomous parts of properties in vertical ownership with residential purpose should be considered as "residential urban properties".

Indeed, it makes no sense to distinguish in the law what the law itself does not distinguish (ubi lex non distinguit nec nos distinguere debemus). Indeed, nothing indicates, neither in item no. 28, nor in the CIMI, a justification for that particular differentiation. Note, in this regard, what is provided in article 12, no. 3, of the CIMI: "each floor or part of property capable of independent use is considered separately in the property register entry, which also discriminates its respective taxable property value."

The uniform criterion that is required is, thus, the one that determines that the incidence of the norm in question takes place only when any one of the parts, floors or divisions with independent use of a property in horizontal or full ownership with residential purpose possesses a TPC exceeding €1,000,000.00. Setting as the reference value, for the incidence of the new tax, the global TPC of the property in question, finds no basis in the applicable legislation, which is the CIMI, considering the referral made by the above-mentioned art. 67, no. 2, of the Stamp Tax Code.

Thus, and observing now the case under analysis, it is observed that the TPCs of the divisions of the property with residential purpose vary between €99,500.00 and €112,930.00 (thus, any one of them has a TPC below €1,000,000.00). From this it is concluded, as a result of what was stated above, that stamp tax as referred to in item no. 28 of the General Stamp Tax Table should not apply thereto, and thus, the tax assessment acts challenged by the Claimant are illegal.

Indeed, and as is correctly noted in the Arbitral Decision issued in proc. no. 552/2015-T, of 27/1/2016, in a proceeding identical to the one now under analysis, "the main question brought to the case [...] is whether subjection to Stamp Tax (item 28 of the General Stamp Tax Table) of an urban property not constituted in horizontal ownership is determined by the TPC that corresponds to each one of the divisions of independent use and with residential purpose [...], or whether it is determined by the global TPC of the property, which would correspond to the sum of all TPCs of the floors or divisions of independent use and with residential purpose that compose it [...]. Effectively, from a formal point of view, the AT rightly points out that a property constituted in horizontal ownership is a distinct legal-tax reality from an urban property in vertical or full ownership. However, if no. 4 of article 2 of the CIMI establishes a legal fiction that each one of the autonomous fractions of a property constituted in horizontal ownership embodies a property, it does not necessarily follow from this that a part of independent use of an urban property not constituted in horizontal ownership is to be considered a property. If the legislator used, in the norm of item 28.1 of the General Stamp Tax Table, the expression "urban property with residential purpose", it does not seem legitimate that the AT intends to include therein the floors or divisions of independent use of properties not constituted in horizontal ownership which, as it itself acknowledges, are not properties, and cannot, therefore, be equated to autonomous fractions of properties constituted under the horizontal ownership regime. As regards the determination of the taxable property value of properties not constituted in horizontal ownership, article 7, no. 2, of the CIMI applies, but only as to "urban properties with parts classifiable in more than one of the classifications of no. 1 of the preceding article", in which case, in accordance with its para. b) "(...) each part is evaluated by application of the corresponding rules, and the value of the property is the sum of the values of its parts". And this is the only norm of the CIMI in which reference is made to the "[global] value of the property", without, however, this having any relevance at the level of tax levy. Thus, from the combination of the norms of no. 2 of article 7 and no. 1 of article 6, both of the CIMI, it results that, if an urban property not constituted in horizontal ownership integrates exclusively parts or divisions intended for residential use [as occurs in the present case], the [global] value of the property does not equate to the sum of its parts."

It should be noted, finally, that this understanding (of infra-constitutional order), which has been defended here, has been supported by the Supreme Administrative Court (STA), as can be seen from the recent Decision no. 47/15, of 9/9/2015, in which it was clearly pointed out that, "where it is a property constituted in vertical ownership, the incidence of stamp tax should be determined, not by the TPC resulting from the sum of the TPC of all divisions or floors capable of independent use (individualized in the property register article), but by the TPC attributed to each one of those floors or divisions intended for residential use."

  1. On this matter, the following is adhered to here, because it is entirely agreed with, from the following decision of the STA (Decision of 24/5/2016, issued in appeal 1344/15): "the question that is incumbent to decide concerns the interpretation of items 28 and 28.1 of the General Table of Stamp Tax (General Stamp Tax Table) added by art. 4 of Law no. 55-A/2012, of 29/10, in the sense of defining whether it applies to urban properties, with a single property register article but constituted by parts with purpose and independent use to which were attributed independent TPCs, each one of these of value below one million euros. This question is no longer new in this Supreme Court and has received a uniform response in the sense advocated in the appealed decision [or that is, and as is synthesized by this decision: 'Where it is a property constituted in vertical ownership, the incidence of stamp tax should be determined, not by the TPC resulting from the sum of the TPC of all divisions or floors capable of independent use (individualized in the property register article), but by the TPC attributed to each one of those floors or divisions intended for residential use.'], by all, the decision dated 04.05.2016, appeal no. 0166/16. The Constitutional Court has also ruled on the constitutional dimension of this norm in light of the principles of tax equality, contributive capacity and proportionality, and has concluded that the norm contained in items 28 and 28.1 of the General Table of Stamp Tax, added by article 4 of Law no. 55-A/2012, of 29 October, insofar as it imposes annual taxation on the ownership of urban properties with residential purpose, whose taxable property value is equal to or exceeding €1,000,000.00, is not unconstitutional, by all the decision 247/2016, dated 04.05.2016. In the present appeal it is not necessary to appraise the norm in question in light of such principles and constitutional parameters, rather it is required an teleological and systematic interpretation of the same, whereby the case law orientation that has been followed by the common courts, and which will now be followed, does not scratch the good doctrine imposed by that Constitutional Court."

  2. In light of what is provided in no. 5 of art. 24 of the RJAT – "interest payment is due, regardless of its nature, as provided for in the general tax law and in the Tax Code of Procedure and Process" –, it is understood that this norm allows the recognition of the right to indemnity interest in arbitral proceedings. It is thus justified to analyze the present request.

Indemnity interest is due when it is determined, in gracious objection or judicial challenge, that there has been an error attributable to the services from which results payment of the tax debt in an amount greater than that legally due (see art. 43, no. 1, of the General Tax Law). It is therefore a necessary condition for the attribution of said interest the demonstration of the existence of an error attributable to the services: "The right to indemnity interest provided for in no. 1 of art. 43 of the General Tax Law [...] depends on having been demonstrated in the process that that act is affected by error in the factual or legal presuppositions attributable to the AT." (Decision of the STA of 30/5/2012, proc. 410/12); "The right to indemnity interest provided for in no. 1 of article 43 of the General Tax Law presupposes that it be determined in the process that in the assessment "there was an error attributable to the services", understood as the "error in the factual or legal presuppositions attributable to the Tax Administration"" (Decision of the STA of 10/4/2013, proc. 1215/12).

Having occurred, as results from what was stated in point 1), an error attributable to the services, this determines the merits of the Claimant's request for payment of indemnity interest.

V – DECISION

In light of the above, it is decided:

– To declare the illegality of the Stamp Tax assessments challenged, on grounds of error in the legal presuppositions, determining their annulment, with all legal effects.
– To judge the request well-founded also in the part concerning the recognition of the right to indemnity interest in favor of the claimant.

The value of the case is set at €16,268.40 (sixteen thousand two hundred and sixty-eight euros and forty cents), pursuant to art. 32 of the Administrative Court Procedure Code and art. 97-A of the Tax Code of Procedure and Process, applicable by force of the provisions of art. 29, no. 1, paras. a) and b), of the RJAT, and art. 3, no. 2, of the Regulation of Costs in Tax Arbitration Proceedings.

Costs to be borne by the respondent, in the amount of €1,224.00 (one thousand two hundred and twenty-four euros), in accordance with Table I of the Regulation of Costs in Tax Arbitration Proceedings, given that the present request was judged meritorious, and in compliance with the provisions of articles 12, no. 2, and 22, no. 4, both of the RJAT, and the provisions of art. 4, no. 4, of the cited Regulation.

Notify.

Lisbon, 2 November 2016.

The Arbitrator

(Miguel Patrício)

Text prepared by computer, pursuant to the provisions of article 131, no. 5, of the Civil Procedure Code, applicable by referral of art. 29, no. 1, para. e), of the RJAT.

The drafting of the present decision is governed by the orthography prior to the Orthographic Agreement of 1990.

Frequently Asked Questions

Automatically Created

How is the VPT calculated for Stamp Tax under Verba 28 TGIS when a property is not constituted under horizontal property regime?
For Stamp Tax under Verba 28 TGIS on properties not constituted under horizontal property regime, the VPT calculation follows the subsidiary application of CIMI rules per Article 67(2) of the Stamp Tax Code. Each independent floor or division with autonomous use must have its VPT determined separately pursuant to Article 7(2)(b) CIMI, applying the same methodology as for horizontal property fractions. The relevant VPT for stamp tax incidence is the individual VPT of each independent unit, not the aggregated sum of all units within the building. This interpretation aligns with CIMI's treatment of vertical ownership properties, which are registered and taxed individually per division, identical to horizontal property regime. Arbitral jurisprudence has consistently held that aggregating individual unit VPTs to reach the €1,000,000 threshold violates tax equality principles when the property lacks formal horizontal ownership constitution.
Can the tax authority aggregate individual unit VPTs to exceed the €1,000,000 Stamp Tax threshold on non-horizontal property buildings?
No, the Tax Authority cannot legally aggregate individual unit VPTs to exceed the €1,000,000 threshold on buildings not constituted under horizontal property regime. Arbitral tribunals have unanimously rejected this aggregation methodology as contrary to Article 67(2) of the Stamp Tax Code, which mandates subsidiary application of CIMI for matters not regulated in the Stamp Tax Code. Since CIMI treats properties in vertical ownership (various floors and divisions with independent use) identically to horizontal property for registration and IMI taxation purposes—assessing each unit individually—the same individualized criterion must apply for Verba 28 stamp tax. Aggregation violates constitutional principles of tax legality (Article 103 CRP) and equality (Article 13 CRP), creating arbitrary distinctions between economically identical situations based solely on the formal legal constitution of the property. Each independent unit is taxed only if its individual VPT reaches or exceeds €1,000,000.
What is the relevant VPT for Stamp Tax incidence on buildings with independent units but no horizontal property title?
The relevant VPT for Stamp Tax incidence under Verba 28 on buildings with independent units but no horizontal property title is the individual VPT attributed to each separate floor or division with autonomous use, not the aggregate VPT of the entire building. This interpretation derives from Article 67(2) of the Stamp Tax Code, which establishes subsidiary application of CIMI rules. Under CIMI Article 7(2)(b), properties comprising various floors and divisions with independent use have VPT determined separately for each unit, following the same registration and taxation regime as horizontal property fractions. The Stamp Tax Code provides no basis for differential treatment between formally constituted horizontal property and vertical ownership with independent units. Accordingly, the €1,000,000 threshold in Verba 28.1 applies to each individual unit's VPT. This ensures tax equality and prevents discrimination based on purely formal property constitution differences when the material reality—multiple independent residential units—remains identical.
How does CAAD arbitration process work for challenging Imposto de Selo liquidations under Verba 28?
The CAAD (Centro de Arbitragem Administrativa) arbitration process for challenging Imposto de Selo liquidations under Verba 28 follows the Legal Regime of Tax Arbitration (RJAT - Decree-Law 10/2011). Taxpayers must file a request for arbitral tribunal constitution within 90 days of notification of the tax assessment (or notification date of express rejection of administrative claim if previously filed). The request must identify the contested assessments, state the factual and legal grounds, and specify requested relief. After payment of initial fees, the arbitral tribunal is constituted (typically a sole arbitrator for values under €100,000). The Tax Authority is cited to submit a reply within 30 days per RJAT Article 17. The tribunal may schedule an Article 18 hearing or, if deemed unnecessary, proceed directly to decision. Decisions must be issued within 6 months of tribunal constitution (extendable once). Arbitral decisions have the same force as court judgments and are binding, with limited appeal grounds to administrative courts.
Are taxpayers entitled to compensatory interest when Stamp Tax liquidations under Verba 28 TGIS are annulled?
Yes, taxpayers are entitled to compensatory interest (juros indemnizatórios) when Stamp Tax liquidations under Verba 28 TGIS are annulled, pursuant to Article 43(1) of the General Tax Law (LGT) and Articles 61(2) and 61(5) of the Tax Procedure Code (CPPT). Compensatory interest accrues on amounts paid in excess from the payment date until complete reimbursement, calculated at the legal rate established in Article 43(4) LGT (currently the ECB reference rate plus 0.15% monthly, with 5% annual minimum and 10% maximum per Article 559 Civil Code as referenced by Article 35(10) LGT). This indemnity compensates taxpayers for the State's unlawful retention of funds. Interest begins accruing from the date of each payment of the illegal tax and runs until the Tax Authority effectuates full reimbursement. Taxpayers must specifically request compensatory interest in their arbitration petition or administrative claim. The right to compensatory interest is independent of demonstrating fault by the Tax Authority—it arises automatically from the illegality of the assessment.