Process: 273/2015-T

Date: October 2, 2015

Tax Type: Valor do pedido:

Source: Original CAAD Decision

Summary

CAAD Arbitration Process 273/2015-T addresses a critical issue regarding Stamp Tax (Imposto do Selo) under Item 28 of the General Stamp Tax Table (TGIS) for high-value residential properties in Portugal. The taxpayer, owner of an 8-story building in Lisbon with a total patrimonial value of €1,812,650, challenged the Tax Authority's assessment of €5,132.48 in Stamp Tax for 2014. The central legal issue concerns whether Item 28.1 TGIS, which imposes a 1% annual Stamp Tax on residential properties with patrimonial values of €1,000,000 or more, should apply to properties held under total ownership (propriedade total) with multiple independent units. The Tax Authority assessed Stamp Tax separately on seven residential floors, each valued between €194,350 and €224,230, treating them as individual taxable units. The taxpayer contested this interpretation, arguing that the property, despite comprising independent divisions, is registered as a single unit under total ownership regime and should be assessed as one entity. Since no individual floor exceeds the €1,000,000 threshold, the taxpayer contends no Stamp Tax is due. The arbitration tribunal was constituted under Decree-Law 10/2011 (RJAT - Legal Regime of Arbitration in Tax Matters) on July 7, 2015, following acceptance by CAAD's President. This case has significant implications for owners of multi-unit buildings held in total ownership, particularly pre-1951 properties in urban centers like Lisbon, where building values may exceed €1 million collectively but individual units fall below this threshold. The decision clarifies whether the patrimonial value assessment for Item 28 TGIS purposes should focus on the legal ownership structure or the physical configuration of independent units within a single property registration.

Full Decision

CAAD: Tax Arbitration

Process No. 273/2015

Subject: IS – Item 28

Arbitral Decision

I. REPORT

A..., NIF ..., domiciled at Rua ..., no. ..., in Lisbon, filed a request for constitution of a single Arbitral Tribunal, in accordance with the combined provisions of articles 2 and 10 of Decree-Law no. 10/2011, of 20 January (Legal Regime of Arbitration in Tax Matters, hereinafter referred to only as LRAT), in which the Tax and Customs Authority (hereinafter TA) is the respondent, with the objective of obtaining a declaration of illegality of the first instalment of the Stamp Tax levy relating to the year 2014, in the amount of €5,132.48.

The request for constitution of the Arbitral Tribunal was accepted by the Honourable President of CAAD on 28.04.2015 and automatically notified to the TA.

In accordance with the provisions of paragraph c) of article 11, no. 1 of the LRAT, the single Arbitral Tribunal was constituted on 07.07.2015.

The TA responded, arguing for the dismissal of the request.

The meeting referred to in article 18 of the LRAT was dispensed with and the holding of final arguments was foregone, given the nature of the matter contained in the case file.

The Arbitral Tribunal is regularly constituted and materially competent, in accordance with paragraph a) of article 2, no. 1 of the LRAT.

The parties possess legal personality and capacity, are legitimate and are represented (article 4, and article 10, no. 2 of the LRAT and article 1 of Regulation no. 112/2011, of 22 March).

No nullities, exceptions or preliminary matters exist which prevent the immediate consideration of the merits of the case.

II. FACTUAL MATTERS

Based on the elements contained in the case file, the following facts are considered proven:

A) The Applicant is the owner of the urban property located at Avenue ..., no. ..., in Lisbon, which is registered in the urban property register of the parish of ... under no. ..., constituted under the full ownership regime;

B) The said property is property under full ownership with storeys or divisions capable of independent use, described as "a property with ground floor and 7 storeys, the ground floor having a basement. Faced with stone, faced with marble up to the level of the 1st floor and the remainder of the façade with marmorite. Roof with tiles. It has on the ground floor a large opening with no. 95-A, and 2 more door openings. On the storeys per floor 4 openings in continuous balconies. 95-A, Garage - one large division, 3 divisions, toilet and washbasins and basement.

Ground floor porter – 1 division, kitchen and bathroom.

1st – 8 divisions, kitchen, 3 bathrooms and pantry

2nd – 8 divisions, kitchen, 3 bathrooms and pantry

3rd – 8 divisions, kitchen, 3 bathrooms and pantry

4th – 8 divisions, kitchen, 3 bathrooms and pantry

5th – 8 divisions, kitchen, 3 bathrooms and pantry

5th – 8 divisions, kitchen, 3 bathrooms and pantry

6th – 8 divisions, kitchen, 3 bathrooms and pantry

7th – 8 divisions, kitchen, 3 bathrooms and pantry

Number of storeys: 9

Number of storeys or divisions with independent use: 8 Total patrimonial value: €1,812,650.00".

C) The Applicant was notified of a total amount of €5,132.48 (Five thousand one hundred and thirty-two euros and forty-eight cents) relating to the first instalment of Stamp Tax, through the following letters:

· 2015 ..., of 20 March 2015, received on 31 March 2015, in the amount of €747.44 (seven hundred and forty-seven euros and forty-four cents);

· 2015 ..., of 20 March 2015, received on 31 March 2015, in the amount of €747.44 (seven hundred and forty-seven euros and forty-four cents), relating to the 2nd floor;

· 2015 ..., of 20 March 2015, received on 31 March 2015, in the amount of €747.44 (seven hundred and forty-seven euros and forty-four cents), relating to the 3rd floor;

· 2015 ..., of 20 March 2015, received on 31 March 2015, in the amount of €747.44 (seven hundred and forty-seven euros and forty-four cents), relating to the 4th floor;

· 2015 ..., of 20 March 2015, received on 31 March 2015, in the amount of €747.44 (seven hundred and forty-seven euros and forty-four cents), relating to the 5th floor;

· 2015 ..., of 20 March 2015, received on 31 March 2015, in the amount of €747.44 (seven hundred and forty-seven euros and forty-four cents), relating to the 6th floor;

· 2015 ..., of 20 March 2015, received on 31 March 2015, in the amount of €647.84 (six hundred and forty-seven euros and eighty-four cents), relating to the 7th floor;

D) The property in question comprises 8 storeys and divisions with independent use, more than 80 years old, having been built at the beginning of the last century, the taxpayer's patrimonial value of which was determined separately, in accordance with the provisions of article 7, no. 2, paragraph b) of the Municipal Tax Code on Property;

E) Being that seven of these divisions are devoted to residential use, the total taxpayer's patrimonial value (TPV) amounting to €1,539,730.00 (one million five hundred and thirty-nine thousand seven hundred and thirty euros):

F) It is a property constituted by divisions capable of independent use, with each division having the following TPV:

· 2015 ..., of 20 March 2015, received on 31 March 2015, with a TPV of €224,230.00 relating to the 1st floor;

· 2015 ..., of 20 March 2015, received on 31 March 2015, with a TPV of €224,230.00, relating to the 2nd floor;

· 2015 ..., of 20 March 2015, received on 31 March 2015, with a TPV of €224,230.00, relating to the 3rd floor;

· 2015 ..., of 20 March 2015, received on 31 March 2015, with a TPV of €224,230.00, relating to the 4th floor;

· 2015 ..., of 20 March 2015, received on 31 March 2015, with a TPV of €224,230.00, relating to the 5th floor;

· 2015 ..., of 20 March 2015, received on 31 March 2015, with a TPV of €224,230.00, relating to the 6th floor;

· 2015 ..., of 20 March 2015, received on 31 March 2015 with a TPV of €194,350.00, relating to the 7th floor.

G) The Applicant filed a request for arbitral decision on the Stamp Tax levy act relating to the year 2014, in the total amount of €15,397.30;

There are no facts with relevance for the decision of the case that should be considered as not proven.

This Tribunal formed its conviction by considering the documents attached to the case file by the Parties.

III. MATTERS OF LAW

The main question that arises in the present case concerns determining what is the relevant taxpayer's patrimonial value for the purposes of applying item 28 and 28.1 of the General Table of Stamp Tax (GTST) with respect to urban residential properties constituted under the vertical ownership regime, which comprise storeys or divisions capable of independent use.

To this end, the Applicant alleges in its request for arbitral decision the following:

  1. The Tax Authority (similarly to what it had done in the past year of 2014, with respect to the Stamp Tax of 2013), basing itself on item 28.1 of the Stamp Tax Code, is requesting the payment of this tax, which is configured in a manner inconsistent with the regulatory reality, subverting the meaning of the law;

  2. The regulation in question states that stamp tax shall be levied on: "Ownership, usufruct or right of superficies of urban properties whose taxpayer's patrimonial value recorded in the register, in accordance with the Code of Municipal Tax on Property (CMTP), is equal to or greater than €1,000,000 - on the taxpayer's patrimonial value used for the purpose of property tax:

28.1 - For residential property or for land for construction whose building, authorized or foreseen, is for residential purposes, in accordance with the provisions of the Code of Property Tax - 1%";

  1. The Applicant cannot agree (just as he did not agree with the levy of the previous year) with the acts of Stamp Tax levy both relating to the first instalment, as well as with the acts of levy that may be issued for collection of the 2nd and 3rd instalments, whose legality is questioned;

  2. Furthermore, it follows from article 6, no. 2 of Law no. 55-A/2012, that: "In 2013, the stamp tax levy provided for in item no. 28 of the respective General Table must be based on the same taxpayer's patrimonial value used for the purposes of levying municipal property tax to be carried out in that year";

  3. Therefore, the TA could only tax under Stamp Tax, in accordance with the same rules that apply to property tax;

  4. It can be concluded that there is incidence of the new Stamp Tax only in the case in which divisions with independent use present a TPV greater than €1,000,000.00 (one million euros), which clearly does not occur;

  5. And it is only this meaning that can be given to the application of the regulation, everything else is an extrapolated interpretation by the Tax Authority, without legal support, which is in effective contradiction with what is provided for in the Code of Municipal Tax on Property and, by reference, in the Stamp Tax Code;

  6. Therefore, for the purposes of taxation regarding item 28 of the General Table of Stamp Tax, the TA cannot consider as the reference value the total value of the property;

  7. The collection of Stamp Tax on the terms presented by the TA violates the spirit of the law, going in the opposite direction to the actual will of the legislator;

  8. Because what was intended, solely and exclusively, was a taxation on property considered to be luxury goods, which does not correspond at all to the present case, and the TA should reconsider its concepts of luxury goods;

  9. Also in the same sense, the Arbitral Decision in Process no. 50/2013-T, of the Administrative Arbitration Centre, concluded that: "The justification for the measure designated as 'special tax on urban residential properties of higher value' is based on the invocation of the principles of social equity and fiscal justice, calling upon to contribute in a more intense manner those holders of property ownership of high value intended for residential purposes, making the new special tax apply to 'properties of value equal to or greater than 1 million euros'";

  10. Clearly the legislator understood that this value, when attributed to a residential property (house, autonomous fraction or floor with independent use) reflects a taxpaying capacity above average and, as such, capable of determining a special contribution to ensure the fair distribution of the tax burden."

  11. Moreover, from the bill proposal it can be seen that the legislator intended to tax life situations that demonstrated a certain taxpaying capacity;

  12. That is, taxpaying capacity is the essential element by which we can only consider that there exists true equality of tax treatment of taxpayers if there is identical taxation for equal taxpaying capacities, which clearly does not happen in this case;

  13. In addition to the violation here evident of tax equality, we also have the violation of legal certainty, given the moment of creation and application of this law, which was created in 2012, more specifically in October, with effects in that same year;

  14. And further, the TA chooses what suits it to tax by cunningly removing from the whole property the Basement, which it could not by "magic" tax, but continues to tax what could only be done with great legislative gymnastics;

  15. Furthermore, it agrees with what follows from the judgment of CAAD in Process no. 218/2013-T which states: "First and foremost because it is not understood or explained the reason for taxation only of properties devoted to residential purposes, with exclusion, therefore, of those that, although of value greater than €1,000,000, are not devoted to this purpose.":

  16. Thus applying to the case of the Applicant here what comes from the same judgment: "(…) the Stamp Tax levy now under consideration clearly violates the principle of tax equality provided for in article 13 of the CRP, because: (i) it is based on a regulation that treats taxpayers who are in identical situations in very different ways, with the measure of the difference not being assessed by their real taxpaying capacity; (ii) it is based on an arbitrary legal solution devoid of any rational basis (…).";

  17. The request for annulment of the tax act of stamp tax levy will thus proceed, based on the violation of the principle of equality and taxpaying capacity.";

  18. With special relevance to the present case, the decision in Process no. 396/2014-T already referred to, which dealt exactly with this same property and with the same request and cause of action, where the position of the TA did not receive approval "(…) in attempting to establish as the reference value for the incidence of stamp tax, the global value of the property in question, by not being admitted by the CMTP which is, as already mentioned, the legal reference basis supporting that.

  19. Not having any of the storeys, capable of independent use, taxpayer's patrimonial value greater than one million euros, there is no place for the incidence of item 28.1 provided for in the GTST;

  20. It is therefore concluded that the levy which is the subject of the present arbitral request suffers from illegality, whereby its annulment is necessary.";

  21. In summary, in the present case, in which none of the storeys intended for residential purposes has a taxpayer's patrimonial value equal to or greater than €1,000,000.00 (one million euros), the legal condition for the incidence of Stamp Tax provided for in item 28 of the General Table is not met and consequently the acts of levy must be annulled;

  22. Consequently, the Applicant is entitled to indemnity interest, in accordance with article 43, no. 1 of the General Tax Code (GTC) and article 61 of the Code of Tax Procedure and Process (CTPP), calculated on €5,132.48 (Five thousand one hundred and thirty-two euros and forty-eight cents);

  23. Further should be considered for the present case, that there will still be two more instalments for levy of the item now in question, making up the 3 instalments the total value of €15,397.30 (fifteen thousand three hundred and ninety-seven euros and thirty cents), value corresponding to the entirety of the tax and that the TA, certainly, will not refrain from demanding.

For its part, the TA alleges, in summary, the following:

  1. The situation of the Applicant's property falls literally within the scope of item 28;

  2. The Applicant is owner of a property under the full ownership regime or vertical ownership. From the notion of property of article 2 of the CMTP, only autonomous fractions of property under horizontal ownership regime are considered property – article 2, no. 4 of the CMTP. Therefore,

  3. Being that the properties of which the Applicant is proprietor are under full ownership regime, it does not possess autonomous fractions, to which fiscal law attributes the qualification of property;

  4. Thus, the Applicant, for the purposes of property tax and also stamp tax, by force of the wording of the said item, is not the owner of 8 autonomous fractions, but rather of a property, according to his property deed;

  5. What the Applicant intends is that the TA consider, for the purposes of levying the present tax, that there is analogy between the regime of full ownership and that of horizontal ownership, since there should be no discrimination in the legal-fiscal treatment of these two ownership regimes, as that would be illegal;

  6. The fiscal law does not contain any gap, determining the Code of Property Tax, to which the cited item refers, that in the regime of horizontal ownership the fractions constitute properties. Not being the property subject to this regime, juridically the fractions are parts capable of independent use, without there being common parts;

  7. Being that the property is subject to the regime of full ownership, but being physically constituted by parts capable of independent use, fiscal law attributes relevance to this materiality, evaluating these parts individually, in accordance with article 12 and consequently, in accordance with article 12, no. 3, of the Code of Property Tax, each floor or part of property capable of independent use is considered separately in the property register, but in the same register, proceeding with the levy of property tax taking into account the taxpayer's patrimonial value of each part;

  8. The unity of the urban property in vertical ownership composed of various storeys or divisions is not, however, affected by the fact that all or part of those storeys or divisions are capable of independent economic use;

  9. Such property does not cease, by the fact that it is only one, not being thus, its distinct parts juridically equated to autonomous fractions in the horizontal ownership regime;

  10. It is what results from the fact that the determining factor in the application of that item of the General Table is the total patrimonial value of the property and not separately that of each one of its parcels;

  11. A type of incidence according to which the taxpayer's patrimonial value of urban properties on which the application of item 28.1 of the General Table depends is the patrimonial value of each floor or division capable of independent use and not the global taxpayer's patrimonial value of the urban property with residential application certainly has no expression in the law;

  12. It is, thus, unconstitutional, for being offensive of the principle of tax legality, the interpretation of item 28.1 of the General Table, in the sense that the patrimonial value on which its incidence depends is determined globally and not floor by floor or division by division.

Faced with the foregoing, regarding the position of the Parties and the arguments presented, to determine whether the act of Stamp Tax levy sub judice is or is not illegal it will be necessary to verify what is the interpretation that should be made of item 28 and 28.1 of the GTST, namely to know whether the TPV on which the Stamp Tax rate should apply is its sum or should the individual TPV of each floor or division capable of independent use be considered, in the manner that happens with properties in the horizontal ownership regime?

Let us see what should be understood.

It results from article 11 of the General Tax Code (GTC) that the interpretation of fiscal law should be carried out in accordance with the general principles of interpretation.

The general principles of interpretation are established in article 9 of the Civil Code (CC), in the following terms:

"1. Interpretation should not be confined to the letter of the law, but should reconstruct from the text the legislative thought, having regard especially to the unity of the legal system, the circumstances in which the law was drawn up and the specific conditions of the time in which it is applied.

  1. However, the legislative thought that has no minimum verbal correspondence in the letter of the law cannot be considered by the interpreter, even if imperfectly expressed.

  2. In fixing the meaning and scope of the law, the interpreter will presume that the legislator adopted the most appropriate solutions and was able to express his thought in adequate terms."

Having regard to the rules of interpretation of the Law, it is important to note that Law no. 55-A/2012, of 29 October, added item 28 and 28.1 to the GTST, creating the Stamp Tax rate on urban properties of high patrimonial value.

The creation of this new tax fact occurred in the context of economic crisis and grave crisis in public finances, with the purpose of increasing the fiscal revenue of the State, through the taxation of those who reveal greater indicators of wealth.

The special rate of Stamp Tax on properties of value exceeding €1,000,000.00, also known as the "luxury tax", aimed to ensure the distribution of sacrifices by all and not only by those who live from the income of their work.

In these circumstances, item 28 and 28.1 established the incidence of Stamp Tax in the following terms:

"Ownership, usufruct or right of superficies of urban properties whose taxpayer's patrimonial value recorded in the register, in accordance with the Code of Municipal Tax on Property (CMTP), is equal to or greater than €1,000,000 – on the taxpayer's patrimonial value used for the purpose of property tax:

28.1. – For residential property or for land for construction whose building, authorized or foreseen, is for residential purposes, in accordance with the provisions of the Code of Property Tax…… 1%."

It results, therefore, from the letter of the law that the rate provided for in item 28.1 is applicable to the right of ownership over property with residential use, whose TPV used for the purpose of property tax is equal to or greater than €1,000,000.00.

In accordance with the provisions of article 1, no. 6 of the Code of Stamp Tax, "For the purposes of this Code, the concept of property is the one defined in the Code of Municipal Tax on Property (CMTP)."

For its part, the Code of Property Tax determines in its article 2, the following:

Concept of property

"1 - For the purposes of this Code, property is any fraction of territory, encompassing waters, plantations, buildings and constructions of any nature incorporated or based therein, with a character of permanence, provided that it forms part of the assets of a natural or legal person and, in normal circumstances, has economic value, as well as waters, plantations, buildings or constructions, in the circumstances above, endowed with economic autonomy in relation to the land on which they are located, although situated in a fraction of territory that constitutes an integral part of a diverse patrimony or does not have patrimonial nature.

2 - Buildings or constructions, although movable by nature, are considered as having a character of permanence when devoted to non-transitory purposes.

3 - The character of permanence is presumed when buildings or constructions are based in the same location for a period exceeding one year.

4 - For the purposes of this tax, each autonomous fraction, in the horizontal ownership regime, is considered as constituting a property."

Having regard to the concept of property established in the Law, it is clear that properties constituted under vertical ownership regime constitute properties, for the purposes of item 28 of the GTST.

In the measure in which the property in analysis (hereinafter Property) constitutes a property, in the terms provided for in article 2 of the Code of Property Tax, this falls literally within the scope of item 28 and 28.1.

In truth, the law does not distinguish, at any moment, between property in horizontal ownership regime and property in vertical ownership regime, limiting itself no. 4 of article 2 to establish that in the regime of horizontal ownership each autonomous fraction is considered property.

From what is stated in no. 4 of article 2 it does not result, contrary to what is defended by the Respondent in the response presented, that only autonomous fractions of property under horizontal ownership regime are considered property.

Nevertheless, the special Stamp Tax rate established in the item in question applies only if the Property constitutes residential property, whose taxpayer's patrimonial value recorded in the register, in accordance with the Code of the CMTP, is equal to or greater than €1,000,000.

Since the Code of Stamp Tax does not establish what is meant by "residential", by force of the provisions of article 67, no. 2 of the said Code, the rules provided for in the Code of Property Tax are also applicable here, namely those established in articles 6 and 41 of that Code.

From the analysis of the said rules, it is also clear that the Property is encompassed by item 28.1, as an urban property with residential use.

It remains, therefore, to verify whether the TPV recorded in the register of the Property, in accordance with the Code of Property Tax, is equal to or greater than €1,000,000.

Now, as it follows from the letter of the Law, the TPV of the Property shall be that which is used for the purpose of property tax.

To this end, it is determined in article 7, no. 1 of the Code of Property Tax, applicable ex vi of article 23, no. 7 of the Code of Stamp Tax, that "The taxpayer's patrimonial value of properties is determined in accordance with the present Code.".

For its part, in articles 7, nos. 2 and 3 of the Code of Property Tax, the rules for determining the TPV of properties with two or more classifications are established.

Since the rate provided for in item 28 and 28.1 of the GTST applies only to properties with residential use, the rules established in article 7, nos. 2 and 3 of the Code of Property Tax are not applicable to the determination of the relevant TPV within the scope of the said item.

In truth, the TPV of properties with residential use, provided for in item 28 and 28.1, must be determined taking into account article 12, no. 3 of the Code of Property Tax, according to which:

"Each floor or part of property capable of independent use is considered separately in the property register, which also discriminates the respective taxpayer's patrimonial value."

Thus, having regard to the fact that the legislator does not attribute any relevance to the fact that the property is constituted under vertical ownership regime, the TPV must be attributed to each floor or part of property capable of independent use.

In fact, there is no regulation in the Code of Property Tax that allows us to conclude in the sense that the TPV of property in vertical ownership regime should be obtained by the sum of the TPVs that were attributed separately to the parts that constitute it (See, among others, the arbitral decisions rendered in Process 50/2013-T, 131/2013-T, 177/2014-T, 396/2014-T).

Having regard to the fact that the rules of incidence are subject to the principle of tax legality (Cf. Article 103 of the Constitution of the Portuguese Republic (CRP) and article 8 of the GTC), it seems there is no legal basis for the levy of Stamp Tax based on the sum of the TPVs of each one of the parts of the Property.

In fact, the TA cannot carry out a levy operation on the basis of a rule of incidence which does not expressly provide for the basis of incidence of the tax on the terms levied, because the rules of incidence of taxes must be interpreted in their exact terms, without recourse to analogy, making prevailing the certainty and security in their application (See Judgment of the Southern Central Administrative Court, rendered within the scope of proc. 7648/14, of 10.07.2014).

It is understood, thus, that there is no legal basis that permits the TA to add the taxpayer's patrimonial values of the floors or parts of property capable of independent use, in order to reach the eligible taxation threshold of €1,000,000.00, provided for in item 28 of the GTST.

In face of the foregoing, not having any of the floors, capable of independent use, taxpayer's patrimonial value greater than €1,000,000.00, there is no place for the incidence of the rate provided for in item 28 of the GTST.

Consequently, the annulment of the act of Stamp Tax levy sub judice is necessary, and the recognition of the right of the Applicant to indemnity interest regarding the instalments of Stamp Tax already paid, since the illegality of the levy act is attributable to error of the Respondent, in accordance with the provisions of article 43 of the GTC.

IV. DECISION

Accordingly, this Arbitral Tribunal decides:

A) To judge the request for annulment of the act of Stamp Tax levy relating to the urban property registered in the urban property register of the parish of ... under no. ..., relating to the year 2014, as wholly successful;

B) To condemn the Tax and Customs Administration to refund to the Applicant the amount of tax paid, plus indemnity interest;

C) To condemn the Respondent in the costs of the present process, as the losing party.

V. VALUE OF THE PROCESS

In accordance with the provisions of article 306, no. 2 of the Code of Civil Procedure, article 97-A, no. 1, paragraph a) of the CTPP and article 3, no. 2 of the Regulations of Costs in Tax Arbitration Processes, the value of the claim is fixed at €15,397.30.

VI. COSTS

In accordance with the provisions of articles 12, no. 2 and 22, no. 4, both of the LRAT, and article 4, no. 4 of the Regulations of Costs in Tax Arbitration Processes, the value of the arbitration fee is fixed at €918, in accordance with Table I of the mentioned Regulations, charged to the Respondent.

Notify.

Lisbon, 2 October 2015

The Arbitrator

Magda Feliciano

(The text of the present decision was drawn up on a computer, in accordance with article 131, no. 5, of the Code of Civil Procedure, applicable by reference to article 29, no. 1, paragraph e) of Decree-Law no. 10/2011, of 20 January (LRAT) with its drafting governed by the spelling prior to the 1990 Orthographic Agreement.)

Frequently Asked Questions

Automatically Created

What is the Stamp Tax (Imposto do Selo) under Verba 28 of the General Stamp Tax Table (TGIS) for properties valued over €1 million?
The Stamp Tax under Verba 28 of the TGIS is an annual tax introduced to tax high-value property ownership in Portugal. Item 28.1 specifically imposes a 1% rate on residential properties or land for residential construction where the taxpayer's patrimonial value (valor patrimonial tributário - VPT) recorded in the property register equals or exceeds €1,000,000. This tax applies to ownership, usufruct, or surface rights of urban properties, with the tax base being the patrimonial value used for Municipal Property Tax (IMI) purposes. The tax is payable in three installments throughout the year.
How does the CAAD tax arbitration process work for challenging Stamp Tax assessments in Portugal?
The CAAD (Centro de Arbitragem Administrativa) tax arbitration process allows taxpayers to challenge tax assessments as an alternative to judicial courts. Under Decree-Law 10/2011 (RJAT), taxpayers file a request for arbitration within the legal deadline (typically 90 days from notification). The CAAD President accepts the request and notifies the Tax Authority, which must respond. A single arbitrator or panel is appointed, and the tribunal reviews written submissions without necessarily holding hearings. The process is faster and less formal than court litigation, with decisions binding on both parties. Arbitration is available for most tax disputes, including Stamp Tax assessments, and has become increasingly popular for resolving Portuguese tax controversies.
Are properties held in total ownership (propriedade total) with independent units subject to Verba 28 TGIS Stamp Tax?
This is the central legal question in Process 273/2015-T. Properties held in propriedade total (total/full ownership) with independent units present interpretative challenges for Verba 28 TGIS. The Tax Authority's position treats each independent unit as a separate taxable object if registered with individual patrimonial values, applying the €1,000,000 threshold to each unit separately. However, taxpayers argue that when a building is legally held as a single property under total ownership (not horizontal property/condominium), the €1,000,000 threshold should apply to the entire building's value, not individual floors or divisions. If individual units are below €1,000,000, no Stamp Tax would be due under this interpretation, even if the building's total value exceeds the threshold.
Can a taxpayer challenge the Stamp Tax liquidation on high-value residential properties through arbitration under Decree-Law 10/2011 (RJAT)?
Yes, taxpayers can challenge Stamp Tax liquidations through arbitration under Decree-Law 10/2011 (RJAT). The Legal Regime of Arbitration in Tax Matters provides jurisdiction for arbitral tribunals to review the legality of tax assessments, including Stamp Tax under Verba 28 TGIS. Taxpayers must file the arbitration request within 90 days of notification of the tax assessment. The CAAD arbitration process is specifically designed to handle disputes over tax liquidations, including those involving high-value residential properties. This alternative dispute resolution mechanism offers a faster, more specialized forum than administrative courts for resolving technical tax law questions regarding property taxation.
What are the legal grounds for declaring the illegality of a Stamp Tax assessment on urban properties in Lisbon under Portuguese tax law?
Legal grounds for challenging Stamp Tax assessments on urban properties include: (1) incorrect interpretation of Item 28 TGIS regarding what constitutes the relevant 'property' for the €1,000,000 threshold when buildings have independent units under total ownership; (2) improper application of the taxpayer's patrimonial value, particularly whether values should be aggregated or assessed separately; (3) violation of the principle that taxes must have clear legal basis, requiring precise determination of the taxable object; (4) errors in property registration or valuation that affect tax liability; and (5) constitutional concerns about retroactive taxation or disproportionate tax burdens. In Process 273/2015-T, the applicant challenged the Tax Authority's fragmented approach to assessing a building held in total ownership, arguing it subverted the law's meaning by applying thresholds to individual floors rather than the legal ownership unit.