Process: 253/2017-T

Date: October 31, 2017

Tax Type: Selo

Source: Original CAAD Decision

Summary

This CAAD arbitration case (Process 253/2017-T) addresses whether Stamp Duty under item 28.1 of the General Stamp Duty Table (TGIS) applies to buildings in vertical ownership where individual units fall below the minimum taxable threshold but their aggregate value exceeds it. The claimant owned an 18-unit residential building in Lisbon with total VPT of €1,436,440, though individual units ranged from €51,500 to €87,130. The Tax Authority assessed €14,364.40 in stamp duty (1% of total VPT) for 2012. The claimant argued that since each division has separate matrix registration with individual VPT below the threshold, the tax should not apply, and that aggregating separate registrations violates the equality principle compared to condominium properties. The Tax Authority countered that vertical ownership constitutes a single property, making the total VPT relevant for tax incidence, not individual divisions. The Authority argued that distinguishing vertical ownership from condominium regimes does not violate constitutional principles, as the legislature may favor more advanced legal structures. The tribunal must determine whether the relevant VPT for stamp duty purposes is the aggregate value of all divisions or each division's individual value, and whether different treatment of vertical versus condominium ownership violates equality principles under Portuguese constitutional law.

Full Decision

ARBITRAL DECISION

1. REPORT

The Head of the Estate of A..., NIF..., pursuant to article 2, no. 1, letter a) of Decree-Law no. 10/2011, of January 20th (hereinafter RJAT) and Portaria no. 112-A/2011, of March 22nd, requested the establishment of an arbitral tribunal.

The TAX AND CUSTOMS AUTHORITY is the Respondent in these proceedings.

The Deontological Council of the Administrative Arbitration Center (CAAD) designated the present signatory to form the Single Arbitral Tribunal, notifying the parties accordingly, and the Tribunal was constituted on July 19, 2017.

The request for an arbitral decision concerns the dismissal of the hierarchical appeal which was based on the dismissal of the administrative review relating to stamp duty assessments for 2012, in the total amount of €14,364.40, assessments, review and appeal which are better identified in the Claimant's request and in the documents attached thereto, to which reference is made here.

The Claimant invokes the illegality of the assessment acts, contesting the application of the new item 28.1 of the General Stamp Duty Table (TGIS) to urban properties not constituted in condominium ownership, but which include divisions susceptible of independent use, in which the minimum value of incidence fixed by law is reached by the sum of the taxable property value (VPT) of the separate matricular registrations (or autonomous) corresponding to those various divisions, but not by any one of them individually considered.

She contends that by virtue of the fact that the property, despite not being constituted in condominium ownership, is composed of parts susceptible of independent use, the VPT relevant for assessing the fulfillment of the requirement upon which the incidence of the said item depends is not met, since each of the parts of the property susceptible of independent use has a separate registration in the corresponding matrix and, therefore, individualized VPT inferior to the stated minimum limit.

The Claimant thus maintains that she is not the owner of a property with VPT equal to or greater than the said minimum amount, but rather the owner of a property in vertical ownership in which the VPT exceeding that value is only achieved by the sum of the VPT of the divisions susceptible of independent use intended for housing, without any of them, considered individually, reaching that minimum amount of tax relevance. For that reason, according to the Claimant, the assessments in issue suffer from the defect of violation of law, which renders them voidable.

The Claimant further alleges that an interpretation of the norm in a different sense would put into question the principle of equality.

The TAX AND CUSTOMS AUTHORITY responded, defending itself by way of objection, maintaining the assessments, stressing, in summary, that total or vertical ownership corresponds to a property, this being the reality to be taken into account in determining the fulfillment of the minimum value contained in the norm of incidence.

For the Respondent, the VPT relevant for purposes of tax incidence is, therefore, the VPT of the urban property and not the VPT of each of the parts that compose it, even though these are susceptible of independent use, inasmuch as they are intended for housing. In support of this thesis, the Respondent also points out that the unity of the property is not affected, and its distinct parts cannot be legally equated to the autonomous fractions of a property constituted in condominium ownership, not least because their ownership is necessarily attributed only to a single owner (or more than one, but in cases of co-ownership).

The Respondent adds that a different understanding (i.e., that the VPT relevant for the norm of incidence would correspond to the VPT of each floor or division susceptible of independent use) would be unconstitutional, by violation of the principle of fiscal legality (inherent in art. 103, no. 2 of the CRP), by distinguishing where the legislator did not distinguish.

For the Respondent, the legislator could have intended to favor a legally more advanced regime (condominium ownership), submitting it to a distinct legal tax framework, and therefore, discriminatory, without that discrimination being able to be considered necessarily arbitrary. Consequently, the Respondent concludes that the request should be judged inadmissible.

Notified of the Tribunal's intention to dispense with the meeting of the arbitral tribunal provided for in article 18 of the RJAT, as well as the pleadings, the parties did not object.

2. PROCEDURAL ASSESSMENT

The Tribunal was regularly constituted and is competent.

The parties have legal personality and capacity, are shown to be legitimate and are regularly represented.

The proceedings do not suffer from any defects that would invalidate them.

3. MATTERS OF FACT

With relevance for the decision on the merits, the Tribunal considers the following facts as proven:

  • In the year 2012, the undivided estate of A... included the urban property in vertical ownership, located on Rua..., number..., in Lisbon;

  • That property corresponds to a residential building, in full ownership, not constituted in condominium ownership, composed of 18 divisions of independent use, all intended for housing, registered in the urban land registry of the respective parish under article...,;

  • The taxable property value (VPT) of each of those divisions, determined pursuant to the Code of Municipal Property Tax (CIMI), varies between a minimum of €51,500.00 and a maximum of €87,130.00 and totals, in total, €1,436,440.00;

  • The assessments in question result from the application of stamp duty provided for in item no. 28.1 of the General Stamp Duty Table (TGIS) attached to the Stamp Duty Code (CIS) as worded by art. 4 of Law no. 55-A/2012, of October 29th, at the rate of 1% to the taxable property value of €1,436,440.00 corresponding to all independent divisions intended for housing of the said property with reference to the year 2013.

  • On January 30, 2014, the Claimant submitted a request for official revision of the 18 stamp duty assessments relating to 2012 in issue;

  • On June 26, 2014, notification was sent to the Claimant of the decision dismissing the administrative review, dated the 24th of that month;

  • On July 22, 2014, the Claimant submitted a hierarchical appeal of that dismissal decision;

  • By means of an official letter dated January 9, 2017, notification was sent to the Claimant of the decision dismissing the hierarchical appeal;

  • The request for establishment of the Arbitral Tribunal was submitted on April 7, 2017.

Unproven Facts

No other facts with relevance to the assessment of the merits of the case were alleged by the parties that were not proven.

Reasoning for the Decision on Matters of Fact

The conviction regarding the facts taken as proven was based on the pleadings of the Claimant and the Respondent not contradicted by the opposing party, supported in the documentary evidence presented both by the Claimant and by the Respondent, whose authenticity and correspondence to reality were also not questioned.

4. MATTERS OF LAW - ISSUES TO BE DECIDED

The issues to be decided are the following:

  • With reference to properties not constituted in the regime of condominium ownership, composed of various floors and divisions with independent use, some of which intended for housing, is the VPT relevant as a criterion for the incidence of the tax the one corresponding to the sum of the taxable property values assigned to the different parts or floors (global VPT) or, rather, the VPT assigned to each of the parts or residential floors individually.

  • Constitutionality:

The application of the new item 28.1 of the TGIS to urban properties not constituted in condominium ownership, but which include divisions susceptible of independent use, in which the minimum value of incidence fixed by law is reached by the sum of the VPT of the separate matricular registrations (or autonomous) corresponding to those various divisions, but not by any one of them individually considered, for which the Revenue Authority contends, is unconstitutional by violation of the principle of equality?

It is necessary to decide:

In properties not constituted in the regime of condominium ownership, composed of various floors and divisions with independent use, some of which intended for housing, what is the VPT relevant as a criterion for the incidence of stamp duty for the purposes of applying item 28.1 of the TGIS?

The first issue to be decided corresponds to the application, in situations of so-called vertical ownership, of the new taxation in stamp duty affecting urban properties intended for housing with VPT equal to or greater than one million euros. This new taxation was introduced in 2012 to reinforce budgetary control measures on the revenue side, in a context of financial necessity.

On this issue of determining the (minimum) VPT relevant for the application of item 28.1 of the TGIS in cases of vertical ownership, decisions of the CAAD have already pronounced, among others, in proceedings numbers 50/2013-T, 132/2013, 181/2013-T, 183/2013-T, 272/2013-T, 280/2013-T, 26/2014-T, 30/2014-T, 88/2014-T, 177/2014-T, 206/2014-T and 349/2015-T.

In all of them, the issue was, as in these proceedings, to determine whether the VPT relevant for the norm of incidence (28.1 of the TGIS) is the VPT corresponding to each of the divisions susceptible of independent use separately considered in the matrix or whether, on the contrary, the relevant VPT should correspond to the sum of all those divisions susceptible of independent use, but forming part of the same property and that are intended for housing.

And the answer, in those decisions, was always for the first option, with which we agree.

It is important to bear in mind that each floor or part of property susceptible of independent use is considered separately in the registration of the total property, which also discriminates the taxable property value of those (no. 2 of art. 12 of the CIMI), and property tax (IMI) is assessed individually in relation to each floor or part of property susceptible of independent use (art. 119, no. 1 of the CIMI).

And, if that is the case with IMI, it should also be the case with Stamp Duty, not least because the Stamp Duty Code refers to the CIMI.

As stated in the decision rendered in proceeding 206/2014-T: "Given that the Stamp Duty Code refers to the CIMI, it must be concluded that the registration in the property matrix in vertical ownership, composed of different parts, floors or divisions with independent use, follows the same registration rules as horizontal ownership". Being property tax (IMI) and Stamp Duty "assessed individually in relation to each of the parts", the "legal criterion for defining the incidence of the new tax must also be the same". Consequently, there will be incidence of item 28.1 of the TGIS (only) if any of those parts, floors or divisions with independent use presents a VPT, at least, equal to the amount provided for in the norm of incidence.

As the decision rendered by the Arbitral Tribunal in proceeding 349/2015-T well explains, "Thus, property will be the independent area, considered separately and autonomously in the matrix, being subject to stamp duty if two requirements are met: being intended for housing purposes and having a VPT equal to or greater than one million euros, the criterion for assessing 'luxury' residential properties. Otherwise, a reality not envisioned by the legislator would be created: that of a, so to speak, 'residential property', possibly inserted within a larger property, possibly with various purposes, in which the VPT of that, spurious to the matricular registrations, would consist of the fiction of a VPT given by the addition of the autonomous VPT of each independent division (and with housing purpose) considered in the matricular registration. In other words, where the legislator considered two realities, the interpreter would now, without support in the legislative text, have to fictionally create a third reality, hybrid, halfway between the urban property and its independent divisions to which the legislator of property tax (IMI), and of stamp duty by reference to the CIMI, chose to give tax relevance.

Also in the decision rendered in proceeding 272/2013-T (CAAD), reference is made to the fact that "considering that the registration in the property matrix of properties in vertical ownership, composed of different parts, floors or divisions with independent use, in accordance with the CIMI, follows the same registration rules of properties constituted in condominium ownership, with their respective property tax (IMI), as well as the new Stamp Duty, being assessed individually in relation to each of the parts, there is no doubt whatever that the legal criterion for defining the incidence of the new tax must be the same". In fact, it is stated, the position of the Tax Authority "finds no legal support and is contrary to the criterion that applies in the context of property tax (CIMI) and, by reference, in the context of Stamp Duty", which is why "the adoption of the criterion defended by the Tax Authority violates the principles of legality and fiscal equality, as well as the principle of the prevalence of material truth over legal-formal reality".

And in the same sense it is stated in the arbitral decision of proceeding 30/2014-T that in the doctrine of the Tax Authority there is a "non-conformity with the literal element of the final part of the norm of incidence (item 28 of the TGIS) which states that the tax applies to 'the taxable property value used for purposes of property tax (IMI)' and therefore should not apply to the sum of taxable property values of properties, parts of properties or floors, having no legal support the operation of adding taxable property values of floors or parts of property susceptible of independent use, intended for housing, severed from the VPT of the others with different purposes, so as to reach the threshold of eligible taxation of €1,000,000.00 or more".

As also stated in that arbitral decision, what happens with respect to urban properties intended for housing, in vertical ownership, with floors or divisions susceptible of independent use, is that the Tax Authority proceeds, in the operations of assessing stamp duty, to adapt the rules of the CIMI (adding the taxable property values of the same property, without considering those that correspond to parts of the property with non-housing purposes, thus giving rise to a new and hybrid VPT). In fact, that "adaptation" corresponds to "summing the VPT of each floor or independent division intended for housing purposes (severed from the VPT of the floors or divisions intended for other purposes), creating a new legal reality, without legal support, which is a global VPT of urban properties in vertical ownership, intended for housing", which violates "the literal element of the norm of incidence".

Thus, "in urban properties intended for housing, in vertical ownership, with floors or divisions susceptible of independent use", the taxable property value "that results exclusively from no. 3 of article 12 of the CIMI" should be considered. "Both for property tax (IMI) and for this stamp duty".

Specifically, as concluded in the decision rendered in proceeding 26/2014-T of the CAAD, "for purposes of applying item 28 of the TGIS to properties in vertical ownership, the same rules of the CIMI apply that apply to properties in condominium ownership, and in the same sense the VPT for purposes of applying the item is the individual VPT of each independent residential fraction, and in the present case none of the fractions exceeds the incidence criterion of €1,000,000.00", the same occurring in the case of these proceedings.

Starting from the same position, the arbitral decision rendered in proceeding 349/2015-T concludes that "as clearly follows from the decisions cited, the literal interpretation of the new item of the TGIS cannot be anything other than different from that sustained by the Tax Authority, in fact, the opposite, given the clear and indisputable reference made with respect to the new item of the TGIS to the rules of the CIMI, and the interpreter of the norm cannot 'create' a new concept of property so as to obtain a hybrid VPT, not recognized in the matrix and without any support in the text of the law."

And it did so by also invoking the criterion of the economic substance of tax facts: "the expression 'each urban property' used in no. 7 of article 23, for identical reasons, encompasses not only urban properties in condominium ownership, but also floors, divisions or parts of urban properties in vertical ownership, provided they are intended for housing purposes, always starting, in any of the cases, from a single tax base for all legal purposes: the taxable property value used for purposes of property tax (IMI) (...). The economic reality of the ownership of independent parts, e.g. susceptible of independent use or autonomous leasing, as with autonomous fractions in the case of condominium ownership, and therefore capable of allowing use or obtaining income in a similar manner and thus exteriorizing, for that reason, equal contributive capacity (as the sum of the VPT of several autonomous fractions of the same property in condominium ownership or of various properties that together exceeded one million euros would externalize, without that having been considered by the legislator as an externalization of contributive capacity relevant for purposes of stamp duty)."

Additionally, as stated in the Decision rendered in proceeding 26/2014-T of the CAAD, there is no indication whatsoever of the legislator's disapproval of vertical ownership. In fact, "it will be said, not without reason, that the legislator, for purposes of property tax (IMI) taxation, chose to confer autonomy, independence, on each of the parts or on each of the floors of a single property, provided that each and all show independent use, to the point of providing for individualized registration in the matrix of each of those independent parts and of imposing on property tax (IMI) taxation a collection also autonomous. Notwithstanding the legal existence of a single property, it is the legislator itself who not only recommends but imposes the autonomous consideration of each of the independent parts, for purposes of taxation of assets".

In fact, as decided in proceedings 26/2014-T, 272/2014-T and 349/2015-T, "the legislator is indifferent as to one or another form of structuring the ownership of urban properties in the CIMI, it would not be understood that he now intended to favor one over the other, namely by considering one form of structuring more advanced than the other". "The current legal regime does not impose the obligation to constitute condominium ownership", which is why "the discrimination carried out by the Tax Authority translates to an arbitrary and illegal discrimination", since "the Tax Authority cannot distinguish where the legislator itself chose not to do so, under penalty of violating the coherence of the fiscal system, as well as the principle of fiscal legality provided for in article 103, no. 2 of the CRP, and also the principles of fiscal justice, equality and proportionality."

And it is certain that nothing suggests to the interpreter the conclusion that the specific legislator of the new item of the TGIS, contrary to the legislator of property tax (IMI), which moreover remains unchanged, intended to discriminate vertical ownership as opposed to horizontal ownership. As well recalled in the Decision rendered in the already mentioned proceeding 26/2014-T of the CAAD, also referred to in the already cited decision of proceeding 349/2015-T, "when presenting and discussing, in Parliament, bill no. 96/XII (2nd), the Secretary of State for Tax Affairs expressly stated: 'The Government proposes the creation of a special rate on high-value residential urban properties. For the first time in Portugal, a special taxation is being created on properties of high value intended for housing. This rate will be 0.5% to 0.8% in 2012 and 1% in 2013, and will apply to houses valued at one million euros or more' (cf. DAR I Series no. 9/XII-2, of October 11, p. 32). Now, as is emphasized in that Decision, "the Secretary of State for Tax Affairs presents this bill referring without hesitation to the expression 'houses'... valued at one million euros or more", which means "it is abundantly clear that item 28.1 of the TGIS cannot be interpreted to mean that each of the floors, divisions or parts susceptible of independent use are included when only from their sum results a VPT exceeding what is provided for in the same item".

Being, therefore, clear, as stated in the said decision 272/2014-T, that for the legislator only that value of one million euros, provided it is intended "for a dwelling (house, autonomous fraction or floor with independent use), translates a contributive capacity above average and, as such, capable of determining a special contribution to ensure the fair distribution of the fiscal burden".

And if that is the case, we must then attend to the concept of "house" as a physical reality that enables a housing purpose, a unit capable of independent use, including its leasing, for it is in that economic reality that we will find the externalization of the contributive capacity associated with "luxury dwellings" that the legislator considered relevant. Moreover, if it were not so, the legislator would proceed to a discrimination that would not be justified, for as already seen there is no condemnation in the system of vertical ownership when compared with horizontal ownership. Moreover, that distinction would clash with a necessary equity between identical externalizations of the same contributive capacity.

Now, the contributive capacities externalized by the ownership of a property composed of a set of autonomous fractions in condominium ownership or a set of independent divisions in vertical ownership regime cannot but be considered identical, if not even, possibly, smaller in the case of the second hypothesis. That is, a property surely does not have a greater market value for being organized as vertical ownership. It is worth the same (allowing equal benefit from its use or equal income through its leasing, as mentioned above), or will even have a smaller value, since the alternatives of transferability will possibly be fewer. And we know that the VPT is meant to be an approximation, precisely, to the market value of properties and will, therefore, be the measure and limit of the contributive capacity relevant for the new item of the TGIS. (cf. the decision we just cited, rendered in proceeding 349/2015-T).

Thus, the interpretation advocated by the Tax Authority, finding no hermeneutical justification, as has been seen so far, would also lead to a manifest inequality between owners of properties in condominium ownership and in vertical ownership (and it has also been seen that no intention whatsoever is discerned of penalizing the latter, even if it were admitted that such would be constitutionally permissible).

In that same sense, as well noted in the decision of proceeding 272/2014-T of the CAAD, the "existence of a property in vertical or horizontal ownership cannot be, in itself, an indicator of contributive capacity. On the contrary, the law makes clear that both must receive the same fiscal treatment in obedience to the principles of justice, fiscal equality and material truth".

Concluding, "material truth is what imposes itself as the determining criterion of contributive capacity and not the mere legal-formal reality of the property, since the constitution of condominium ownership implies a mere legal alteration of the property not even imposing a new appraisal", and that fact "does not appear coherent with the Tax Authority's decision to tax the residential parts of a property in vertical ownership, based on the global VPT of the property and not what is effectively attributed to each part." Thus, "the Tax Authority cannot distinguish where the legislator itself chose not to do so, under penalty of violating the coherence of the fiscal system, as well as the principle of fiscal legality... and also the principles of justice, fiscal equality and proportionality" (cf. the decision rendered in proceeding 26/2014-T of the CAAD).

In conclusion, in the terms set forth, the tax acts in issue are affected by the defect of violation of law, due to error in the legal and factual assumptions, since no part of the property has a VPT of value equal to or greater than the threshold arising from the applied norm, which renders the said tax acts voidable.

Constitutionality:

As regards the second issue to be decided, the conclusion reached above renders moot the analysis of the unconstitutionality of the norm, whether on the basis of a violation of the principle of equality, or also on the basis of the principle of legality (grounds that would lead to opposite conclusions).

This is because the interpretation advocated results precisely from the text of the law, and not from an application divergent from its immediate normative command, through mediate and subsequent intervention of some constitutional principle, or through innovatory intervention by the interpreter.

The illegality of the acts results from the norm invoked not being applicable to the situation in question, since none of the assessments relate to the minimum threshold required by the said item no. 28, and should thus be annulled on that ground, which constitutes a conclusion prior to the analysis of the constitutionality of the norm.

And, on the other hand, it corresponds to the choice of the legislator, not to that of the interpreter who would substitute himself for the legislator with a different interpretation, and therefore the observance of the principle of legality is likewise not at issue.

None of the parties raised any issue that corresponds to what the Constitutional Court has, in its case law and in a consistent manner, been considering as constituting an issue of normative constitutionality.

In fact, in accordance with the settled case law of the Constitutional Court, for it to be possible to consider that an issue of constitutionality is at stake, it is not sufficient to refer that the interpretation of a certain legal provision in the sense contrary to that advocated by the interested party violates the Constitution.

It is necessary that the autonomization of the issue of constitutionality of the norm be discernible in relation to the topic of its interpretation and application to the facts of the case.

Which is clearly not the case here.

In fact, neither the Claimant nor the Respondent raised an issue of unconstitutionality of the norm in question, which it would be necessary to appraise; rather, they merely limited themselves, both, albeit in inverse sense, to defending that an interpretation different from the one they uphold would be contrary to the principle of equality, one, and of legality, the other.

Whereby it is understood that no issue of unconstitutionality of the norm in question was raised that it falls to the Tribunal to appraise.

5. DECISION

In these terms and with the reasoning above, it is decided:

To render totally admissible the Claimant's request and, in consequence, to annul the assessment acts in issue, on the ground of violation of law, arising from error in the assumptions.

To condemn the Respondent to indemnify the Claimant for the amounts that the latter has borne as a result of the assessments now annulled, plus indemnitory interest calculated from payment until effective and full reimbursement at the legal rates in force.

The amount in dispute is fixed at €14,364.40 (fourteen thousand three hundred and sixty-four euros and forty cents) in accordance with the provisions of articles 3, no. 2 of the Regulation of Costs in Tax Arbitration Proceedings (RCPAT), 97-A, no. 1, letter a) of the Code of Tax Procedure (CPPT) and 306 of the Code of Civil Procedure (CPC).

The amount of costs is fixed at €918.00 (nine hundred and eighteen euros) pursuant to article 22, no. 4 of the RJAT and Table I attached to the RCPAT, at the charge of the Respondent, in accordance with the provisions of articles 12, no. 2 of the RJAT and 4, no. 4 of the RCPAT and 527 of the Code of Civil Procedure (CPC).

Let notice be given.

Lisbon, October 31, 2017,

The Arbitrator,

(Eva Dias Costa)

Text prepared by computer, in accordance with article 131, no. 5 of the Code of Civil Procedure, applicable by reference from article 29, no. 1, letter e) of the RJAT.

Frequently Asked Questions

Automatically Created

Does Stamp Tax (Verba 28.1 TGIS) apply to buildings in vertical property when no individual unit reaches the minimum taxable value?
Yes, according to the Tax Authority's position, Stamp Tax under Verba 28.1 TGIS applies to vertical property buildings even when no individual unit reaches the minimum taxable value, provided the aggregate VPT of all units exceeds the threshold. The Tax Authority argues that vertical ownership constitutes a single property, making the total VPT relevant for determining tax incidence rather than individual unit values.
How is the VPT (Valor Patrimonial Tributário) calculated for vertical property buildings with independently usable divisions?
For vertical property buildings with independently usable divisions, the VPT calculation is disputed. The Tax Authority position is that the VPT should be the total aggregate value of all divisions (€1,436,440 in this case), as vertical ownership represents a single property with one owner. The taxpayer argues each division with separate matrix registration should have its VPT calculated individually (ranging €51,500-€87,130), as they are independently usable units.
Can the tax authority aggregate the VPT of separate matrix registrations to meet the Stamp Tax incidence threshold?
Yes, the Tax Authority aggregates the VPT of separate matrix registrations to meet the Stamp Tax incidence threshold under Verba 28.1 TGIS. The Authority maintains that despite separate registrations for each division, vertical ownership is legally a single property owned by one entity, making the total VPT the relevant criterion. This differs from condominium ownership where each autonomous fraction has different owners.
Does taxing vertical property differently from horizontal property violate the constitutional principle of equality?
The claimant argues that taxing vertical property differently from horizontal property violates the constitutional principle of equality, as it creates disparate treatment based solely on property structure rather than economic capacity. The Tax Authority counters that differential treatment does not constitute arbitrary discrimination, as the legislature may legitimately favor more advanced legal regimes like condominium ownership, and such distinction does not violate Article 103(2) of the Portuguese Constitution regarding fiscal legality.
What is the procedure to challenge Stamp Tax assessments on vertical property through CAAD arbitration?
To challenge Stamp Tax assessments on vertical property through CAAD arbitration: (1) Submit administrative review request to the Tax Authority within the legal deadline; (2) If dismissed, file a hierarchical appeal; (3) Upon dismissal of the hierarchical appeal, request establishment of an arbitral tribunal under Article 2(1)(a) of Decree-Law 10/2011 and Portaria 112-A/2011; (4) The CAAD Deontological Council designates an arbitrator; (5) The tribunal reviews legality of assessments, with parties submitting written arguments and supporting documentation.