Process: 263/2015-T

Date: October 14, 2015

Tax Type: Selo

Source: Original CAAD Decision

Summary

CAAD arbitral decision 263/2015-T addressed whether Stamp Tax under item 28.1 of the Portuguese General Stamp Tax Table (TGIS) applies to properties held under vertical ownership (propriedade vertical) when individual autonomous units have taxable property values (VPT) below €1,000,000 but their aggregate exceeds this threshold. The applicants, co-owners of a building in Lisbon comprising five residential floors under vertical ownership, challenged Stamp Tax assessments totaling €10,750 for the 2013 tax year. Item 28.1, introduced by Law 55-A/2012, imposes annual Stamp Tax at 1% on urban properties with residential allocation and VPT equal to or exceeding €1,000,000. The Tax Authority issued separate assessments for each floor, but calculated tax based on the aggregate VPT of €1,075,080 for all five floors combined, despite each individual floor having a VPT below the €1,000,000 threshold (ranging from €154,180 to €234,050). The applicants argued this interpretation violated the legal framework, contending that Stamp Tax should only apply when an individual property unit exceeds €1,000,000. The Tax Authority defended its position by asserting that the statutory language referring to 'urban properties' justified aggregating values of floors within a single vertical ownership structure. The core legal question centered on whether vertical property creates multiple independent taxable units or constitutes a single property for Stamp Tax purposes. Under Portuguese law, vertical ownership (propriedade plena ou de propriedade vertical) establishes autonomous units capable of independent use and separate registration, suggesting each floor should be treated as a distinct property. The case exemplifies how property co-owners can utilize Portuguese tax arbitration (CAAD) under the RJAT regime to challenge allegedly unlawful tax assessments, providing an efficient alternative to traditional judicial appeals for resolving tax disputes involving complex property ownership structures.

Full Decision

ARBITRAL DECISION

Applicants: A… and B…

Respondent: Tax and Customs Authority

Subject: Stamp Tax, item no. 28.1 of the General Stamp Tax Table, vertical ownership

I - STATEMENT OF FACTS

A… and B… requested, on 17 April 2015, pursuant to Articles 2, No. 1, lit. a) and Article 10, No. 1 of Decree-Law No. 10/2001, of 20 January, which regulates the Legal Regime of Tax Arbitration (LRTA), the establishment of an Arbitral Tribunal to review the legality of the Stamp Tax assessments issued pursuant to item no. 28.1 of the General Stamp Tax Table (GSTT) attached to the Stamp Tax Code (STC), for the year 2013, which gave rise to documents numbered 2014 …, 2014 …, 2014 …, 2014 …, 2014 …, 2014 …, 2014 …, 2014 …, 2014 … and 2014 …, in the total amount of € 10,750.00, in accordance with the 10 documents attached.

In their request for arbitral pronouncement, the Applicants chose not to appoint an arbitrator.

Pursuant to Article 6, No. 2, lit. a) and Article 11, No. 1, lit. b) of the LRTA, the Ethics Council appointed as sole arbitrator the undersigned hereto, who accepted the appointment within the legally prescribed period.

The Arbitral Tribunal was constituted on 29 June 2015.

The Respondent submitted its response on 9 September 2015.

In its response, the Respondent requested that the hearing referred to in Article 18 of the LRTA be waived due to lack of interest and utility in its holding, as well as waiver of oral arguments since the position of the parties had been clearly set forth in their pleadings.

As the Applicants raised no objection, the Tribunal decided to waive the hearing referred to in Article 18, as well as the oral arguments.

The date of 30 October 2015 was set for the final decision.

The Applicants allege, in summary, that:

  • They are co-owners, in the proportion of 1/2 each, of the property located at Av. … No. … to … and Av. … No. … to …, registered in the land registry of Arroios under article U-….

  • This property is constituted in full or vertical ownership with five storeys and divisions capable of independent use, the total taxable property value of which is € 1,075,080, although the taxable property value of each storey allocated to residential use varies between € 154,180.00 and € 234,050.00.

  • The Tax Authority assessed Stamp Tax on the taxable property value of the storeys, with reference to the year 2013, pursuant to Article 6, No. 1, lit. f), sub-item i), of the STC, item no. 28.1 of the GSTT, as amended by Article 4 of Law No. 55-A/2012, of 29 October.

  • They proceeded to pay the assessments on 29 January 2015.

  • The assessments in question are based on the understanding that Stamp Tax applies whenever the sum of the taxable property values of the storeys, individually considered, exceeds € 1,000,000.00.

  • They conclude that the illegality of the assessments in question is evident, due to illegal interpretation by the Tax Authority of item no. 28 of the GSTT.

  • The Applicants finally request that the Respondent be condemned to refund the amount of tax paid, plus compensatory interest and litigation costs.

Notified to respond, the Respondent alleges, in summary, as follows:

  • That it proceeded with the assessments which are the subject of this request for arbitral pronouncement in compliance with Article 6, No. 2 of Law No. 55-A/2012, of 29/10, which added item no. 28 to the GSTT and whose respective rule of incidence refers to urban properties, assessed pursuant to the Real Property Tax Code (RPTC), with taxable property value (TPV) equal to or greater than € 1,000,000.00, with residential allocation.

  • That in the assessments carried out, relating to the year 2013, only the taxable property value of the 5 storeys/portions with residential allocation was taken into account, which corresponds to a TPV of € 1,075,080.00, resulting in a total value of € 10,750.00 for the two co-owners.

  • It contends that the application of item no. 28 of the General Table is legal.

  • It concludes that the assessments in question do not suffer from the defect of illegality, do not violate any legal or constitutional principle, and should therefore be upheld.

C – Proven Facts

Based on the facts alleged by the parties, and not contested by the Respondent, as well as on the documentation attached to the proceedings, the following relevant facts are established for the decision of the case:

  • The Applicants were, in 2013, co-owners, in the proportion of 1/2 each, of the urban property, under the regime of full or vertical ownership, located at Av. … No. … to … and Av. … No. … to …, in Lisbon, registered in the urban property register of the parish of Arroios, under the registration article …;

  • The registration certificate shows that the property consists of "shops and 1st, 2nd, 3rd and 4th floors, allocated to commercial and residential use, No. … 1st to 4th floor with 12 divisions (...). Attic with seven divisions. (...)".

  • It also appears from the registration certificate that each of the five storeys, allocated to residential use, capable of independent utilization, has an individual Taxable Property Value lower than € 1,000,000.00.

  • On 06-12-2014, Stamp Tax assessments were issued, levied on the property identified in A) and individually for each of the co-owners and each of the storeys that comprise it.

  • In the name of Applicant A… the following assessments were issued:

    • assessment corresponding to document No. 2014 …, dated 6/12/2014, relating to registration article U-… (1st floor), from which resulted a tax of € 1,137.45;

    • assessment corresponding to document No. 2014 …, dated 6/12/2014, relating to registration article U-… (2nd floor), from which resulted a tax of € 1,137.45;

    • assessment corresponding to document No. 2014 …, dated 6/12/2014, relating to registration article U-… (3rd floor), from which resulted a tax of € 1,159.35;

    • assessment corresponding to document No. 2014 …, dated 6/12/2014, relating to registration article U-… (4th floor), from which resulted a tax of € 1,170.25;

    • assessment corresponding to document No. 2014 …, dated 6/12/2014, relating to registration article U-… (5th floor), from which resulted a tax of € 770.90.

  • In the name of Applicant B… the following assessments were issued:

    • assessment corresponding to document No. 2014 …, dated 6/12/2014, relating to registration article U-… (1st floor), from which resulted a tax of € 1,137.45;

    • assessment corresponding to document No. 2014 …, dated 6/12/2014, relating to registration article U-… (2nd floor), from which resulted a tax of € 1,137.45;

    • assessment corresponding to document No. 2014 …, dated 6/12/2014, relating to registration article U-… (3rd floor), from which resulted a tax of € 1,159.35;

    • assessment corresponding to document No. 2014 …, dated 6/12/2014, relating to registration article U-… (4th floor), from which resulted a tax of € 1,170.25;

    • assessment corresponding to document No. 2014 …, dated 6/12/2014, relating to registration article U-… (5th floor), from which resulted a tax of € 770.90.

  • The assessments described in the preceding item contain, among other things, the following statement: "Taxable Property Value of the property – total subject to tax: € 1,075,080.00".

  • The Applicants were notified to proceed with payment of the single installment relating to the above-mentioned assessments by the end of January 2015.

  • The Applicants proceeded to pay those assessments on 29 January 2015.

II – PRELIMINARY ASSESSMENT

The Tribunal is competent and is regularly constituted, pursuant to Articles 2, No. 1, lit. a), 5, No. 2, and 6, No. 1, all of the LRTA.

The parties possess legal personality and capacity, are entitled to participate and are legally represented, pursuant to Articles 4 and 10, No. 2 of the LRTA and Article 1 of Ordinance No. 112-A/2011, of 22 March.

The proceedings do not suffer from defects that would invalidate them, nor have the parties raised any exceptions that would prevent consideration of the merits of the case, and therefore the conditions are met for the issuance of the final decision.

III. GROUNDS

The issue to be decided in the present proceedings concerns the application of item no. 28 of the General Table attached to the STC, as amended by Law No. 55-A/2012, of 29 October, to the property of which the Applicants are co-owners, more specifically, it consists in determining whether in the case of properties in full or vertical ownership, with storeys or divisions capable of independent use, the taxable property value to be considered for the purposes of the incidence of item no. 28.1 of the GSTT is the individual taxable property value of each storey or division capable of independent use, with residential allocation, as the Applicants contend; or whether it is the total value of the property resulting from the sum of the taxable property values corresponding to the storeys or divisions capable of independent use with residential allocation, as the Respondent contends.

That is, it must be determined whether the TPV relevant for purposes of Stamp Tax incidence (item no. 28 of the GSTT, as amended by Law No. 55-A/2012, of 29 October) is the one corresponding to the sum of the taxable property value attributed to the different divisions or storeys (total TPV) or, rather, the TPV attributed to each of the residential divisions or storeys.

The question has already been considered in various proceedings within tax arbitration, in which it was decided that where each of the storeys comprising a property in vertical ownership has a taxable property value below one million euros, the legal presupposition for the incidence of Stamp Tax provided for in item no. 28.1 of the GSTT is not met and, consequently, the illegality of the respective assessment acts was pronounced (cf. decisions rendered in proceedings numbered 51/2015-T, 391/2014-T, 451/2014-T, 153/2015-T, among others[1]). More recently, the Supreme Administrative Court, by judgment of 9-09-2015, proceeding No. 47/15, with Judge Francisco Rothes as reporting judge, decided that in the case of a property in vertical ownership, the incidence of Stamp Tax (item no. 28.1 of the GSTT, as amended by Law No. 55-A/2012, of 29 October) must be determined, not by the TPV resulting from the sum of the TPV of all divisions or storeys capable of independent use (individualized in the registration article), but by the TPV attributed to each of those storeys or divisions intended for residential use[2].

No arguments have been identified so far that would break the unanimity achieved by the decisions rendered, and it is therefore important to reiterate the jurisprudence already established[3].

Item no. 28 of the GSTT, attached to the STC, was added by Article 4 of Law No. 55-A/2012, of 29 October, and initially had the following wording:

"28 – Ownership, usufruct or right of superficies of urban properties whose taxable property value recorded in the register, pursuant to the Real Property Tax Code, is equal to or greater than € 1,000,000 – on the taxable property value for Real Property Tax purposes:

28.1 – Per property with residential allocation – 1%;

28.2 – Per property, when the taxable persons who are not individuals are resident in a country, territory or region subject to a clearly more favorable tax regime, listed in the ordinance approved by the Ministry of Justice – 7.5%."

The wording of item no. 28.1 was subsequently amended by Law No. 83-C/2013, of 31 December, which approved the State Budget for 2014, with item no. 28.1 adopting the concept of residential property, now providing as follows: "28.1 Per residential property or per land for construction whose intended construction, authorized or planned, is for residential purposes, as provided in the Real Property Tax Code – 1%". However, the legislative amendment made does not apply to the present proceedings, which have reference to the year 2013. In fact, as already noted by the STA Judgment of 29-04-2015, this amendment does not apply to past situations (assessments from 2012 and 2013), such as the one at issue herein.

The question raised in the present proceedings is what is the scope of incidence of item no. 28.1 of the GSTT as amended by Law No. 55-A/2012, of 29 October, i.e., whether item no. 28.1 of the GSTT applies to urban properties in full ownership, but with storeys capable of independent use, with residential allocation, when the taxable property value attributed to each of those storeys is less than 1,000,000.00, although the sum of the storeys with independent use allocated to residential use has a total value equal to or greater than that amount.

With regard to the provision in question – item no. 28.1 of the GSTT – the legislative thinking that underlay it may be ascertained from the presentation and discussion in Parliament of draft law No. 96/XII (2nd), in which the Secretary of State for Tax Affairs expressly stated[4]:

"The Government proposes the creation of a special tax on high-value residential urban properties. This is the first time in Portugal that special taxation has been created on high-value properties intended for residential use. This tax will be 0.5% to 0.8% in 2012 and 1% in 2013, and will be levied on properties valued at one million euros or more."

From the semantic variety of the discussion, the undifferentiated use of expressions such as "residential urban properties", "high-value properties intended for residential use" and "properties valued at one million euros or more" immediately stands out, all seeming to point to the intention to tax single-family units of greater economic value, parameterized through their respective taxable property value equal to or greater than one million euros.

However, from the preparatory work it is not possible to gather, with the necessary precision, as has already been emphasized in previous decisions, what the concept of property underlying that provision is (cf. decisions 21/2015-T and 451/2014), namely, whether a residential urban property is, in the meaning of item no. 28 of the GSTT, an autonomous unit (self-sufficient for the purpose it is intended for), distinct and isolated in which the life of each individual or family unit resident is conducted, in single-family or multi-family buildings; or whether it covers multi-family properties with autonomous units, but without juridical autonomy, a characteristic of the autonomous fractions that compose properties constituted in condominium ownership.

In the case of the present proceedings, the property in full ownership is composed, similarly to what occurs with identical properties constituted in condominium ownership, of five storeys capable of independent use allocated to residential use.

The taxable property values of the five storeys capable of independent use allocated to residential use vary between € 227,490.00 (1st and 2nd floor), € 231,870.00 (3rd floor), € 234,050.00 (4th floor) and € 154,180.00 (5th floor), with the units allocated to residential use totaling the total value of € 1,075,080.00.

The wording of item no. 28.1 provides that "Ownership, usufruct or right of superficies of urban properties whose taxable property value recorded in the register, pursuant to the Real Property Tax Code, is equal to or greater than € 1,000,000 – on the taxable property value for Real Property Tax purposes."

It is therefore necessary to determine what taxable property value is to be considered for Real Property Tax purposes, since from item no. 28.1 it follows that stamp tax is levied on the "Ownership, usufruct or right of superficies of property whose taxable property value recorded in the register, pursuant to the Real Property Tax Code (RPTC), is equal to or greater than € 1,000,000 (...)".

Reference is thus made, in its entirety, to the Real Property Tax Code for all regulatory content regarding the incidence of "urban properties with taxable property value recorded in the register", pursuant to the Real Property Tax Code, and regarding the taxable matter "taxable property value for Real Property Tax purposes". A reference which, moreover, is contained, on a subsidiary basis, in Article 67, No. 2 of the STC which refers to the Real Property Tax Code the "matters not regulated in this Code relating to item no. 28 of the General Table".

We highlight from the Real Property Tax Code, with respect to storeys or divisions capable of independent use, the following rules:

  • each property corresponds to a single registration article (– cf. Article 82, No. 2 of the Real Property Tax Code);

  • each storey capable of independent use is considered separately in the registration entry, which also discriminates its respective taxable property value (cf. Article 12, No. 3 of the Real Property Tax Code);

  • the determination of taxable property value is ascertained for each storey or division capable of independent use, in accordance with the allocation of each unit, being assessed separately based on its use and areas (cf. Article 38 of the Real Property Tax Code);

  • the collection document must necessarily contain the discrimination of the properties, their portions capable of independent use, their respective taxable property value (cf. Article 119, No. 1 of the Real Property Tax Code);

  • The failure to discriminate the taxable property value of urban properties by storeys or divisions capable of autonomous use constitutes grounds for appeal against incorrect registration (cf. Article 130, No. 3, lit. h) of the Real Property Tax Code).

In doctrine, Silvério Mateus and Freitas Corvelo emphasize that one of the aspects that should be highlighted in the register concerns the need to make evident the autonomy that, within each property, can be attributed to each of its parts, functionally and economically independent[5].

The Real Property Tax Code establishes fiscal relevance – at the level of registration, determination of taxable property value, discrimination of taxable property value, assessment, grounds for appeal – to the individualization in the register of each part of a property capable of independent use.

It follows from the Real Property Tax Code that the parts of a property in full ownership endowed with autonomy, that is, self-sufficient for the purpose they are intended for, are the object of individual and separate assessment, are individualized in their respective registration entry, possess their own taxable property value recorded in the register and are the object of individualized assessments (all as set forth in Articles 7, No. 2 lit. b), 13, No. 2 and 119, No. 1 of the Real Property Tax Code). This autonomy must be respected and is relevant for purposes of application of item no. 28 of the GSTT.

Item no. 28 of the GSTT makes reference to "urban properties with taxable property value recorded in the register, pursuant to the Real Property Tax Code" and to "taxable property value used for Real Property Tax purposes".

For its part, Article 12, No. 3 of the RPTC provides that "each storey or part of a property capable of independent use is considered separately in the registration entry, which also discriminates its respective taxable property value".

Wherefore, to the storeys capable of independent use – as is the case herein – a specific and individual taxable property value is attributed which is the object of autonomous registration in the respective property register.

Thus, an individualization is carried out for Real Property Tax purposes of the storeys capable of independent use which are the object of specific assessment, pursuant to Article 7, No. 2, lit. b) of the RPTC, of individual registration entry and with taxable property value for Real Property Tax purposes that is autonomous.

In the case of properties in vertical or full ownership with storeys or divisions capable of independent use, but without being constituted in condominium ownership, there is clear tax autonomy which is evidenced by the different units (assessed with distinct parameters depending on the specific allocation of each unit), indication of the floor/storey, including with specification of the private gross area and dependent gross area, all as if they were true autonomous fractions, as occurs in the present case – cf. doc. 2.

There is therefore no reason – in the context of the incidence of Stamp Tax, provided for in item no. 28.1 of the General Table –, to give the storeys/divisions capable of independent use (integrated in properties in vertical ownership) a treatment different from that given to properties in condominium ownership.

Thus, for purposes of the incidence of stamp tax provided for in item no. 28.1 of the GSTT, "the taxable property value recorded in the register" and the "taxable property value used for Real Property Tax purposes" corresponds to the taxable property value that appears in the register in relation to each storey or part of a property capable of independent use, as follows from Article 12, No. 3 of the Real Property Tax Code.

In view of the foregoing, it is reiterated, in line with the decisions already rendered, that the application in the present case of item no. 28.1 of the GSTT regarding the property of which the Applicants are co-owners is illegal because the aforementioned item cannot be interpreted to encompass each of the storeys capable of independent use when only from the sum of the taxable property values does a TPV equal to or greater than 1,000,000.00 result. Since none of the independent units that comprise the property has a taxable property value greater than one million euros, item no. 28.1 of the GSTT does not apply.

On Compensatory Interest

The Applicants petition for the condemnation of the Tax Authority to refund the illegally paid tax in the amount of € 10,750.00, as well as the respective compensatory interest.

Article 43, No. 1 of the General Tax Law provides that compensatory interest is "due when it is determined, in gracious complaint or judicial challenge, that there was an error attributable to the services resulting in payment of the tax debt in an amount greater than that legally due."

For its part, Article 24, No. 1, lit. b) of the LRTA provides that the "arbitral decision on the merits of a claim for which no appeal or challenge is available binds the tax administration from the end of the period provided for appeal or challenge, and the latter must, in the exact terms of the substantiation of the arbitral decision in favor of the taxpayer and until the end of the period provided for voluntary execution of judgments of judicial tax tribunals, restore the situation that would have existed if the tax act which is the object of the arbitral decision had not been undertaken".

Given that, in the case sub iudice, the illegality of the disputed assessments is verified, due to error in the legal presuppositions, attributable to the Tax Authority that proceeded with the disputed assessments, due to incorrect application and interpretation of the provision in item no. 28.1 of the GSTT, the Applicants are entitled to the refund of the tax paid in the amount of € 10,750.00 and to compensatory interest calculated from the date of payment until full payment, at the rate of interest resulting from Article 43, No. 4 of the General Tax Law.

Decision:

For the reasons set forth, the arbitral tribunal decides:

  • To declare the petition for arbitral pronouncement well-founded and, consequently, to declare illegal the Stamp Tax assessments, relating to the year 2013, contained in documents numbered 2014 …, 2014 …, 2014 …, 2014 …, 2014 …, 2014 …, 2014 …, 2014 …, 2014 … and 2014 …, in the total amount of € 10,750.00, with the legal consequences;

  • To declare the petition for condemnation of the Tax and Customs Authority to refund the Applicants the amount of tax paid (€ 10,750.00), plus compensatory interest in accordance with law, from the date of payment until full refund, well-founded.

  • To condemn the Respondent to bear the costs of the present proceedings.

Case Value:

Pursuant to Article 315, No. 2 of the Code of Civil Procedure, read in conjunction with Article 97-A, No. 1, lit. a) of the Code of Tax Procedure and No. 2 of Article 3 of the Regulation of Costs in Tax Arbitration Proceedings, the case is valued at € 10,750.00.

Costs:

For the purposes of Article 12, No. 2 and Article 22, No. 4 of the LRTA and Article 4, No. 4 of the Regulation of Costs in Tax Arbitration Proceedings, the amount of costs is set at € 918.00, in accordance with Table I attached to the regulation, to be borne by the Respondent.

Lisbon, 14 October 2015

The Arbitrator

(Alexandra Gonçalves Marques)

[1] All available in the CAAD database (www.caad.pt).

[2] Available at www.dgsi.pt

[3] We shall follow closely the jurisprudence already established and the text of the decision rendered in the context of the CAAD in proceeding No. 153/2015-T, written by the undersigned.

[4] Cf. DAR I Series No. 9/XII-2, of 11 October, page 32.

[5] Silvério Mateus and Freitas Corvelo (2005), Taxes on Real Property and Stamp Tax, Commented and Annotated, Engifisco, pp. 159-160.

Frequently Asked Questions

Automatically Created

What is Stamp Tax (Imposto de Selo) under Verba 28.1 of the Portuguese General Stamp Tax Table (TGIS)?
Stamp Tax under Verba 28.1 of the Portuguese General Stamp Tax Table (TGIS) is an annual tax introduced by Law 55-A/2012 of October 29, 2012. It applies to urban properties with residential allocation that have a taxable property value (valor patrimonial tributário or VPT) equal to or exceeding €1,000,000, as assessed under the Real Property Tax Code (Código do IMI). The tax rate is 1% of the VPT per year. This provision was implemented as part of fiscal austerity measures and targets high-value residential real estate. The tax is assessed and collected by the Portuguese Tax and Customs Authority (Autoridade Tributária e Aduaneira) based on property valuations maintained in the property tax registry. Properties are evaluated according to IMI rules, and the Stamp Tax becomes due annually on properties meeting the €1,000,000 threshold.
How does vertical property (propriedade vertical) affect the application of Stamp Tax on properties valued over €1,000,000?
Vertical property (propriedade vertical or propriedade plena) significantly affects Stamp Tax application because it creates autonomous units within a single building structure, each capable of independent use and separate property registration. In vertical ownership regimes, a building is divided into distinct floors or sections that function as independent properties, each with its own registration article and separate VPT. The critical interpretative question is whether item 28.1 applies to each autonomous unit individually or to the aggregate value of all units within the vertical property structure. If each unit is treated separately, Stamp Tax only applies when an individual floor exceeds €1,000,000. If aggregated, units collectively exceeding this threshold would trigger taxation even when no single unit reaches €1,000,000. This distinction is crucial because vertical ownership legally creates multiple distinct properties rather than a single unified property, supporting the interpretation that each unit should be evaluated independently for Stamp Tax purposes.
Can the Portuguese Tax Authority aggregate the taxable heritage values (VPT) of independent units in a vertical property for Stamp Tax purposes?
The Portuguese Tax Authority's ability to aggregate taxable heritage values (VPT) of independent units in vertical property for Stamp Tax purposes under item 28.1 is legally contested. In case 263/2015-T, the Tax Authority argued that aggregation was justified because the units comprised a single vertical ownership structure. However, this interpretation conflicts with fundamental property law principles. Under Portuguese property registration and tax law, vertical ownership creates juridically autonomous units, each with separate registration articles and individual VPT assessments. The legal concept of 'urban properties' (prédios urbanos) in item 28.1 refers to individually registered property units, not aggregated collections of separate properties. Furthermore, Article 2 of the Real Property Tax Code (CIMI) defines each autonomous fraction as a distinct property for tax purposes. Aggregating values of legally independent properties would contradict the statutory framework that treats each unit as a separate taxable entity. Consequently, the correct legal interpretation prohibits aggregation, requiring that the €1,000,000 threshold be applied to each autonomous unit individually.
What was the outcome of CAAD arbitral decision 263/2015-T regarding Stamp Tax on co-owned vertical property?
CAAD arbitral decision 263/2015-T concerned Stamp Tax assessments totaling €10,750 on a vertical property co-owned by two applicants, where the Tax Authority aggregated the values of five residential floors (total €1,075,080) despite each individual floor having VPT below €1,000,000. The applicants challenged these assessments as illegal misinterpretations of item 28.1 of the General Stamp Tax Table. They argued that Stamp Tax should apply only when an individual property unit exceeds €1,000,000, not when autonomous units are artificially aggregated. The arbitration tribunal was constituted on June 29, 2015, with a sole arbitrator appointed by the Ethics Council. The Tax Authority defended its aggregation methodology, contending it complied with Law 55-A/2012. While the complete decision text is not fully provided in this excerpt, the legal framework and established CAAD jurisprudence on vertical property strongly support the taxpayers' position that each autonomous unit must be evaluated independently. Similar cases have resulted in favorable decisions for taxpayers, ordering refunds of improperly assessed Stamp Tax plus compensatory interest.
How can property co-owners challenge unlawful Stamp Tax assessments through Portuguese tax arbitration (RJAT)?
Property co-owners can challenge unlawful Stamp Tax assessments through Portuguese tax arbitration (RJAT - Regime Jurídico da Arbitragem em Matéria Tributária) established by Decree-Law 10/2011 of January 20. The process involves filing an arbitration request with CAAD (Centro de Arbitragem Administrativa) within the legally prescribed timeframes, typically the same deadlines applicable to judicial appeals. Co-owners may choose to appoint an arbitrator or allow the Ethics Council to make the appointment. The request must identify the contested tax assessments, specify the legal grounds for challenge, and include supporting documentation. Applicants can request refund of taxes paid plus compensatory interest and litigation costs. Unlike judicial proceedings, tax arbitration offers faster resolution (typically 6 months), lower costs, and specialized arbitrators with tax law expertise. The arbitration tribunal examines the legality of tax assessments, and decisions are binding and enforceable. For Stamp Tax on vertical property, co-owners should argue that item 28.1 applies only when individual autonomous units exceed €1,000,000, not through aggregation of separate property values, citing property law principles recognizing each unit as a distinct taxable entity.