Process: 288/2015-T

Date: November 12, 2015

Tax Type: Selo

Source: Original CAAD Decision

Summary

Process 288/2015-T addresses whether Verba 28 of the General Stamp Tax Table (TGIS), introduced by Law 55-A/2012, applies to building land (terrenos para construção) valued at €1,000,000 or more. The applicant company challenged stamp tax assessments totaling €9,281.53 for 2012, arguing that land for construction should not be subject to the tax designed for properties with housing use. The company contended that building land, despite having a 'housing' location coefficient in cadastral records, lacks the conditions to be inhabited and remains distinct from actual housing properties under CIMI Article 6. The Tax Authority raised preliminary objections regarding tribunal competence, arguing that one contested document was merely a collection note for an installment payment rather than a tax assessment act, which falls outside CAAD's jurisdiction under Article 2 of RJAT. On the merits, the AT defended that Item 28 properly applies to urban properties meeting the €1,000,000 threshold based on cadastral values under CIMI. The case highlights critical distinctions between property classifications for stamp tax purposes and establishes important precedent regarding what constitutes a contestable tax act versus a payment instrument. The tribunal addressed both jurisdictional questions about CAAD competence and substantive questions about whether undeveloped land designated for future construction falls within the scope of stamp tax on high-value urban properties.

Full Decision

ARBITRAL DECISION

  1. REPORT

1.1. A…, a company with registered office at Street …, … …, …th floor, unit …, in Lisbon, registered at the Commercial Registry of Lisbon with the unique number of registration and identification of legal person …, filed on 05/05/2015 a request for arbitral pronouncement, in which it petitions for a declaration of illegality of the stamp tax assessment acts of the year 2012, corresponding to documents numbered 2012 … and 2013 …, in the amounts of € 5,486.61 and € 3,794.92, respectively.

1.2. His Excellency the President of the Deontological Council of the Centre for Administrative Arbitration (CAAD) designated, on 12/05/2015, as sole arbitrator the signatory of this decision.

1.3. On 20/07/2015 the arbitral tribunal was constituted.

1.4. In compliance with the provisions of Article 17(1) of the Legal Framework for Tax Arbitration (RJAT), the Tax and Customs Authority (AT) was notified on 20/07/2015 to, if it so wished, submit a reply and request the production of additional evidence.

1.5. On 29/09/2015 the AT submitted a reply, defending itself by exception and by contestation.

1.6. On 29/09/2015 the arbitral tribunal decided to dispense with the holding of the meeting referred to in Article 18(1) of the RJAT, on the grounds of the principle of arbitral tribunal autonomy in the conduct of proceedings, inviting both parties to, if they so wished, submit optional written pleadings and scheduled the date for pronouncement of the final decision.

1.7. The Applicant did not submit optional written pleadings.

1.8. The AT did not submit optional written pleadings.

  1. CASE MANAGEMENT

The arbitral tribunal was duly constituted.

The parties have legal personality and capacity and are legitimate, with no defects in representation.

The proceedings do not suffer from defects affecting their validity.

Consequently, the conditions for pronouncement of the final decision are met.

  1. POSITIONS OF THE PARTIES

There are two positions in confrontation: that of the Applicant, set out in the request for arbitral pronouncement, and that of the AT in its reply.

To substantiate its request, the Applicant alleges, in summary:

a) "The Applicant was notified of the tax assessment acts for stamp tax (…)" identified above;

b) "The assessments relate to the year 2012 and the rule of incidence on which they are based is Item 28 of the General Stamp Tax Table (TGIS), which was amended by Law no. 55-A/2012, of 29 October.";

c) "The assessments refer to the property located at Place of … or …, …-… …, Porto district, Municipality of …, Parish of …, with property registration number …." [emphasis of the Applicant];

d) "(…) the property in question, in 2006 (year of registration in the cadastre), was described in the respective Property Booklet as 'Land for Construction', with the 'Evaluation Data' showing 'Type of Location Coefficient: Housing' (…)" [emphasis of the Applicant];

e) "The approval of Law no. 55-A/2012, of 29/10 entailed an amendment to the General Stamp Tax Table, namely through the implementation of said Item 28, which subjected to stamp tax urban properties whose tax patrimonial value contained in the cadastre, in accordance with the Code of Municipal Property Tax (CIMI), is equal to or greater than € 1,000,000 (one million euros";

f) "As such, and with regard to the year 2012, (as is the case here), the transitional regime provided for in Article 6 of Law no. 55-A/2012, of 29/10 was considered applicable, with owners, usufructuaries or surface rights holders of properties on 31 December of the year to which the tax relates being considered as taxable persons and debtors of said tax (…).";

g) "A mere reading of the (…) legal provisions makes it clear that the criterion that should be considered relevant in the distinction between 'rustic properties' and 'urban' should essentially focus on their use or normal purpose (…),";

h) "as well as that land for construction is expressly excluded from the concept of rustic properties, constituting instead an autonomous species of urban properties (…).";

i) "Now, the Applicant believes that the legislator's intention lies in a definition of 'land for construction', based on assumptions of an objective and subjective nature, because, according to the Law, land for construction is considered as all land for which a construction or subdivision license or authorization has been granted, or even when prior notification regarding those operations has been admitted or favorable prior information has been issued." [emphasis of the Applicant];

j) "It results, both from general knowledge and from legislation applicable to urban buildings, that the purpose of 'housing' must presume the existence of minimum conditions that preserve personal intimacy and family privacy (…)." [emphasis and highlighting of the Applicant];

k) "Now, land for construction – regardless of the type and purpose of the building that will be, or may be, erected on it – does not satisfy, by itself, any condition to be licensed as such or to define housing as its normal purpose." [emphasis and highlighting of the Applicant];

l) "The norm in question should not be interpreted to mean, as the Tax Authority interprets it, that the legislator's choice of the expression 'housing use' is intended to encompass other realities beyond those identified in Article 6(1)(a) of the CIMI.";

m) "On the other hand, '(…) the fact that for a given piece of land for construction building of a property intended for housing is authorized, even though this should be considered in its evaluation, does not determine any change in the classification of the land which, for tax purposes, continues to be considered as such." [emphasis and highlighting of the Applicant];

n) "Now, since Article 6 of the CIMI establishes a clear distinction between urban properties 'for housing' and 'land for construction', these cannot be considered, for purposes of the incidence of item 28 of the TGIS stamp tax, as 'properties with housing use'!" [emphasis and highlighting of the Applicant];

o) "In fact, '(…) land for construction without buildings does not itself satisfy this housing use (i) either because it lacks a certificate of use or (ii) because, in the nature of things, it is not in conditions to be inhabited, its normal purpose being the object of construction to be built." [emphasis and highlighting of the Applicant];

In contrast, the AT, defending itself by exception and by contestation, argues, in summary, the following:

By exception:

a) With regard to the collection note no. 2013 …, the Applicant is not contesting a tax act, but rather the payment of an installment of a tax act contained in a document that is a collection note;

b) The object of the proceedings is the annulment not of a tax act, but rather of one of these collection notes, relating to the payment of the 1st installment of a tax;

c) This matter is not included in the rule that delimits the competence of arbitral tribunals, namely Article 2 of the RJAT;

d) The stamp tax provided for in Item 28 of the General Stamp Tax Table is levied annually;

e) The tax assessment act is only one and only it constitutes an act capable of being contested and can only be the subject of a single contestation;

f) In light of the foregoing, the request for arbitral pronouncement exceeds the competence of the arbitral tribunal, with this tribunal being incompetent to assess the legality of a mere collection note, as it is not a tax assessment act.

By contestation:

a) "Law no. 55-A/2012, of 29/10/2012 amended Article 1 of the Stamp Tax Code and added Item 28 to the TGIS.";

b) "With this legislative amendment, stamp tax would also apply to the ownership, usufruct, or surface right of urban properties whose tax patrimonial value contained in the cadastre, in accordance with the Code of Municipal Property Tax (CIMI) is equal to or greater than € 1,000,000.00.";

c) "The notion of use of urban property will be found in the part relating to the valuation of immovable properties, because the use of the property (purpose) will incorporate value to the property, constituting a determining factor of distinction (coefficient) for valuation purposes.";

d) "As results from the expression '…value of authorized buildings', contained in Article 45(2) of the CIMI, the legislator opted to determine the application of the methodology for valuation of properties in general to the valuation of land for construction, and accordingly the location coefficient provided for in Article 41 of the CIMI is applicable to them.";

e) "(…) the AT understands that the concept of 'properties with housing use', for purposes of Item 28 of the TGIS, comprises both built properties and land for construction, not least when considering the literal element of the rule.";

f) "Note that the legislator does not refer to 'properties intended for housing', having opted for the notion 'housing use' - an expression different and broader whose meaning must be found in the need to encompass other realities beyond those identified in Article 6(1)(a) of the CIMI.";

g) "According to the AT, '(…) the part of the land where the building to be constructed will be implanted is considered, and on the other hand the area of free land. Once the amount of the first part is determined, the value determined is reduced to a percentage between 15% and 45% (…) because the construction has not yet been carried out.'";

g) "'In these terms, long before the actual building of the property, it is possible to determine and establish the use of the land for construction.';

h) "'Item 28 of the TGIS applies to the ownership, usufruct, or surface right of urban properties with housing use, whose tax patrimonial value contained in the cadastre, in accordance with the CIMI, is equal to or greater than € 1,000,000.00, that is, it applies to the value of the property.'";

i) "'It is a general and abstract rule, applicable indistinctly to all cases in which the factual and legal requirements are met.'";

j) "'It is also worth noting that taxation under stamp tax follows criteria of appropriateness, applying indistinctly to all holders of properties with housing use valued in excess of € 1,000,000.00, focusing on the wealth embodied and manifested in the value of properties.'";

k) "'By all of the foregoing, the assessment in question constitutes a correct interpretation and application of law to facts, not suffering from a defect of violation of law, whether of the Constitution or the Stamp Tax Code, and consequently the claim put forward should be judged unfounded and the Respondent Entity should be absolved from the claim.'"

  1. ISSUES TO BE DECIDED

In the present case, the issues to be decided are:

a) To rule on the exception of incompetence of the arbitral tribunal;

b) To determine whether, for purposes of the application of Item no. 28 of the General Table, in the wording in force at the time of the facts, land for construction is considered, or not, as a "property with housing use".

  1. FACTS

5.1. FACTS DEEMED PROVEN

In light of the documents submitted to the proceedings, it is deemed proven that:

5.1.1. The Applicant is the owner of an urban property of the species "land for construction" registered in the respective property cadastre of the parish of … under property registration number U-… (currently, U-…).

5.1.2. At the date of said assessments, the tax patrimonial value (VPT) of the urban property in question amounted to € 1,097,322.25 and € 1,138,471.83, respectively.

5.1.3. The voluntary payment deadline for the 2012 stamp tax assessment (document no. 2012 …), in the amount of € 5,486.61, ended on 20/12/2012.

5.1.4. The Applicant made the voluntary payment of the 2012 stamp tax assessment (document no. 2012 …) on 19/12/2012.

5.1.5. The voluntary payment deadline for the 2012 stamp tax assessment, 1st installment (document no. 2013 …), in the amount of € 3,794.92, ended on 30/04/2013.

5.1.6. The Applicant made the voluntary payment of the 2012 stamp tax assessment, 1st installment (document no. 2013 …) on 29/04/2013.

5.1.7. The Applicant filed, on 18/04/2013, a complaint based on equity against the stamp tax assessment acts no. 2012 … and no. 2013 …, requesting their annulment, which was dismissed by the AT on 17/07/2013.

5.1.8. On 31/07/2013, the Applicant exercised the respective right of hearing, reiterating the request for annulment of all the assessments in question.

5.1.9. On 13/08/2013, the Applicant was notified of the decision dismissing the complaint based on equity identified in 5.1.7.

5.1.10. The Applicant filed, on 12/09/2013, a hierarchical appeal in the exact terms of the complaint previously filed against the stamp tax assessment acts no. 2012 … and no. 2013 …, which was dismissed by the AT.

5.1.11. On 05/12/2014, the Applicant filed with the Tax Office of … 1 Form 1 declaration of Municipal Property Tax (IMI), requesting the change of the "Property Description" in light of the new purpose "Services" assigned to it.

5.1.12. Consequently, property registration number U-… was extinguished, property registration number U-… was created and its respective VPT updated to € 1,999,640.00.

5.2. FACTS NOT DEEMED PROVEN

There are no facts relevant to the decision that have not been deemed proven.

  1. THE LAW

6.1. ON THE INCOMPETENCE OF THE ARBITRAL TRIBUNAL

The AT bases its claim regarding the exception of incompetence of the arbitral tribunal on the fact that it is not contesting a tax act, but rather the payment of an installment of stamp tax embodied in collection note no. 2013 ….

The object of the proceedings thus corresponds, in the AT's view, not to the annulment of a tax act, but rather to the annulment of a mere collection note.

Now, according to the AT, this matter does not fall within the scope of competence of tax arbitral tribunals, provided for in Article 2 of the RJAT, and thus the object of the request for arbitral pronouncement exceeds the scope of competence of the arbitral tribunal.

Let us examine this.

Article 2(1)(a) of the RJAT establishes that arbitral tribunals are competent to assess claims for declaration of illegality of tax assessment acts, self-assessment acts, withholding at source acts, and payment on account acts.

In turn, regarding the AT's binding to the jurisdiction of arbitral tribunals, Article 4(1) of the RJAT provides that this depends on a regulatory decree of the government members responsible for the areas of finance and justice.

To this extent, the competence of the arbitral instance is thus delimited by the regulatory decree binding the Tax Administration to the jurisdiction of the Centre for Administrative Arbitration. [1]

In accordance with Article 2 of said Regulatory Decree, the General Directorate of Taxes and the General Directorate of Customs and Special Consumption Taxes (currently, AT) bind themselves to the jurisdiction of the arbitral tribunals operating in the CAAD that have as their object the assessment of claims relating to taxes whose administration is entrusted to them, in accordance with Article 2(1) of the RJAT, which expressly include claims for declaration of illegality of tax assessment acts, self-assessment acts, withholding at source acts, and payment on account acts.

It is thus concluded that the tax arbitral proceedings have as their object, directly or indirectly, the tax assessment act, as the act of determining the amount of tax to be paid (tax liability), by application of a rate to the taxable matter.

Now, the assessment of the exception raised depends, therefore, on the question of whether the Applicant contests the stamp tax assessment act or whether, on the contrary, it merely contests each one of the stamp tax installments individually.

In cases where the tax must be paid in installments, the assessment is notified to the taxable person together with the notification for payment of each installment, and can only be contested in its entirety and not installment by installment. [2]

On this matter, José Casalta Nabais argues that "Assessment in the broad sense, that is, as the set of all operations aimed at determining the amount of the tax, comprises: 1) The subjective assessment aimed at determining or identifying the taxpayer or taxable person of the tax legal relationship, 2) The objective assessment through which the taxable or taxable matter of the tax is determined and, likewise, the rate to be applied is determined, in the case of plurality of rates, 3) Assessment in the strict sense translated in the determination of tax liability through the application of the rate to the taxable or taxable matter, and 4) (possible) deductions from tax liability." [3]

For each taxable fact there will, in principle, be a single assessment, by which the tax liability to be paid will be determined.

Article 23(7) of the Stamp Tax Code further provides that "in the case of tax owed under the situations provided for in Item no. 28 of the General Table, the tax is assessed annually (…)" with the rules contained in the CIMI being applied, with necessary adjustments".

In the same sense, Article 44(5) of the Stamp Tax Code establishes that "where assessment of the tax referred to in Item no. 28 of the General Table takes place, the tax is paid in the time limits, terms and conditions established in Article 120 of the CIMI".

That is, in light of Article 113(2) of the IMI Code, "the assessment (…) is made in the months of February and March of the following year", with the tax being paid in three installments, in the months of April, July and November, respectively, depending on its amount. [4]

In sum, and from the combination of the legal provisions mentioned above, it is possible to conclude that stamp tax is assessed annually, with payment in installments being nothing more than a collection technique for the tax and not a partial payment thereof. [5]

Accordingly, the assessment is only one and only it constitutes a harmful act, susceptible to being contested.

That said,

From the analysis of the request for arbitral pronouncement it results that the Applicant requires the establishment of the arbitral tribunal with a view to "(…) annulment of the stamp tax assessment acts carried out in accordance with Item 28 of the TGIS and relating to the year 2012 (…)", petitioning, ultimately, the declaration of "(…) illegality (…) on the grounds that it rests on a basis that suffers from deficient interpretation of the concrete applicable rules (…)".

That is, it requests the declaration of illegality of the stamp tax assessment acts, to which the respective payment installments correspond.

By all of the foregoing, it results that, contrary to what the AT states, the object of the request for arbitral pronouncement is the tax assessment act and not each one of the stamp tax installments individually considered.

So much so that the Applicant itself, in the delimitation of the object of the arbitral action, confines the institution of the respective proceedings to the annulment of the stamp tax assessment acts relating to the year 2012, indicating as the value of the economic benefit of the request the overall value of the assessment in the amount of € 9,281.53.

Thus, even though the Applicant associates the tax assessment act with the stamp tax installments, proceeding to join and identify them, the fact is that it does not confine the object of the request for arbitral pronouncement to any of the stamp tax installments in particular, but rather to the stamp tax assessment considered as a whole.

The argument invoked by the AT regarding the incompetence of the arbitral tribunal thus fails, and the exception in question is judged unfounded.

6.2. ON THE ILLEGALITY OF THE 2012 STAMP TAX ASSESSMENT ACT

In the case at hand, the fundamental question before the arbitral tribunal consists of determining whether within the scope of incidence of Item no. 28 of the General Table, in its wording at the date of the tax facts, land for construction is included, or not. That is, for this purpose, are lands of this species, or are they not, capable of being considered "urban properties with housing use"?

On this matter, there is already abundant jurisprudence of the Supreme Administrative Court (STA) and arbitral jurisprudence to the contrary. [6] [7]

This is jurisprudence that is also accepted here, as we continue to agree with it entirely, and thus we shall limit ourselves to reproducing what was said on the question in the said STA Judgment of 9 April 2014, handed down in Case no. 1870/13, as follows: [8]

"The concept of 'property (urban) with housing use' was not defined by the legislator. Neither in Law no. 55-A/2012, which introduced it, nor in the IMI Code, to which Article 67(2) of the Stamp Tax Code (likewise introduced by that Law) refers as a subsidiary measure. And it is a concept that, probably due to its imprecision – a fact all the more serious as it is in function of it that the scope of objective incidence of the new taxation is circumscribed –, had a short life, as it was abandoned when the Law of the State Budget for 2014 (Law no. 83-C/2013, of 31 December) came into force, which gave new wording to that Item no. 28 of the General Table, and which now circumscribes its scope of objective incidence through the use of concepts that are legally defined in Article 6 of the IMI Code." [our emphasis].

"This amendment – to which the legislator did not attribute an interpretive character, nor does it appear that it did –, merely makes unequivocal for the future that land for construction whose authorized or intended building is for housing is covered within the scope of Item 28.1 of the General Stamp Tax Table (provided that its respective tax patrimonial value is equal to or greater than 1 million euros), but clarifies nothing, however, in relation to prior situations (…), such as the one at issue in the present case." [our emphasis].

"Now, as to these, it does not seem that the interpretation of the (…)" AT "(…) can be endorsed, as it does not result unequivocally either from the letter, or from the spirit of the law that the intention of the latter was, ab initio, to encompass within its scope of objective incidence land for construction for which authorization or authorization of the construction of residential buildings had been granted, as now results unequivocally from Item 28.1 of the General Stamp Tax Table.

In fact, "From the letter of the law nothing unequivocal results, indeed, as it itself, by using a concept that it did not define and which was also not defined in the statute to which it referred as a subsidiary measure, unnecessarily lent itself to ambiguities, in a matter – of tax incidence – in which certainty and legal security should also be paramount concerns of the legislator." [our emphasis].

"And from its 'spirit', apprehensible in the statement of reasons of the bill that is at the origin of Law no. 55-A/2012 (Bill no. 96/XII – 2nd., Journal of the Assembly of the Republic, series A, no. 3, 21/09/2012, p. 44, available at www.parlamento.pt) nothing more emerges than the concern of garnering new tax revenues, from sources of wealth 'more spared' in the past from the voracity of the Tax Administration than income from employment, in particular income from capital, securities gains and property, reasons which bring no relevant contribution to the clarification of the concept of 'properties (urban) with housing use', as it takes it for granted, without any concern to clarify it. Such clarification should, however, have emerged - as reported in the Arbitral Decision handed down on 12 December 2013, in case no. 144/2013-T, available in the CAAD database –, when presenting and discussing in the Assembly of the Republic that bill, in the words of the Secretary of State for Tax Affairs, which should have expressly referred, as gleaned from the Journal of the Assembly of the Republic (DAR I Series no. 9/XII – 2, of 11 October, p. 32) that: 'The Government proposes the creation of a special tax on high-value urban residential properties. It is the first time in Portugal that a special tax has been created on high-value properties intended for housing. This tax will be 0.5% to 0.8% in 2012 and 1% in 2013, and will apply to houses valued at equal to or in excess of 1 million euros" (our emphasis), from which it is evident that the reality intended to be taxed is, after all, and notwithstanding the terminological imprecision of the law, "urban residential properties", in common language "houses", and not other realities." [9]

"The fact that it may be considered that in determining the tax patrimonial value of urban properties classified as land for construction the use to be had by the building authorized or intended for it must be taken into account for determining the respective value of the implementation area (see Articles 45(1) and (2) of the CIMI), does not determine that land for construction may be classified as 'properties with housing use', because 'housing use' is always in the IMI Code referred to 'buildings' or 'constructions', existing, authorized or intended, because only these can be inhabited, which is not the case with land for construction, which does not, in itself, have conditions for this, and is not susceptible to being used for housing unless and when the construction authorized and intended for it is built on it (but in that case it will no longer be 'land for construction' but another species of urban property – 'residential', 'commercial, industrial or services' or 'other' – Article 6 of the CIMI)."

"It would be strange, moreover, if the determination of the scope of the tax incidence rule of Item no. 28 of the General Stamp Tax Table were found, in the end, in the rules for determining the tax patrimonial value of the IMI Code, and if the terminological imprecision of the legislator in the wording of that rule was, in the end, clarified and finally explained by way of a remission, indirect and equivocal, to the location coefficient established by the legislator with respect to built properties (Article 41 of the IMI Code)."

To this extent, "(…) given that land for construction – regardless of the type and purpose of the building that will be, or may be, erected on it – does not satisfy, by itself alone, any condition to be licensed as such or to define housing as its normal purpose, and the tax incidence rule of stamp tax refers to urban properties with 'housing use', without any specific concept being established for this purpose, it cannot be extracted from it that it contains a future potentiality, inherent in a distinct property that may possibly come to be built on the land." [our emphasis].

"It is therefore concluded, in accordance with what was decided in the judgment under appeal, that, given that Article 6 of the IMI Code establishes a clear distinction between urban properties 'residential' and 'land for construction', the latter cannot be considered as 'properties with housing use' for purposes of Item no. 28.1 of the General Stamp Tax Table, in its original wording, as conferred by Law no. 55-A/2012, of 29 October."

This jurisprudence is reiterated, once more, as no new grounds have been presented that would undermine the jurisprudential orientation espoused.

By all of the foregoing, if the Applicant's property was registered in the property registration records as "land for construction" at the date of the tax fact relating to the year 2012, the rule of incidence in question cannot be applicable to the case sub judice, on penalty of illegality. For which reason, the stamp tax assessments of 2012 must be annulled, with all legal consequences.

Indeed, the assessment of the other issues raised by the Applicant is thus rendered moot, in particular the alleged defect of unconstitutionality, as the illegality of the assessments identified above has been declared, due to a substantive defect that prevents the renewal of the acts, ensuring effective protection of the Applicant's rights, in accordance with the provision of Article 124 of the CPPT. [10]

  1. DECISION

With the grounds set forth, the arbitral tribunal decides:

a) To judge the request for arbitral pronouncement well-founded and, consequently, declare illegal the stamp tax assessments contained in the identified collection documents, with all legal consequences;

b) To judge well-founded the request for recognition of the Applicant's right to payment of indemnitary interest;

c) To condemn the AT to restore to the Applicant the stamp tax indeequately paid, in the amount of € 9,281.53;

d) To condemn the AT to pay costs.

  1. VALUE OF THE CASE

The value of the case is fixed at € 9,281.53 (nine thousand two hundred eighty-one euros and fifty-three cents), in accordance with Article 97-A of the Code of Tax Procedure and Process (CPPT), applicable by virtue of Article 29(1)(a) and (b) of the RJAT and Article 3(2) of the Regulation of Costs in Tax Arbitration Proceedings (RCPAT).

  1. COSTS

Costs to be borne by the AT, in the amount of € 918 (nine hundred eighteen euros), in accordance with Table I of the Regulation of Costs of Tax Arbitration Proceedings, in accordance with Article 22(2) of the RJAT.

Notice hereof.

Lisbon, 12 November 2015

The arbitrator,

(Hélder Filipe Faustino)

Text prepared by computer, in accordance with Article 131(5) of the Code of Civil Procedure, applicable by remission of Article 29(1)(e) of the RJAT. The wording of this decision follows the spelling prior to the 1990 Orthographic Agreement.

[1] See Regulatory Decree no. 112-A/2011, of 22 March.

[2] See arbitral decision handed down in case no. 27/2015-T, available at www.caad.org.pt.

[3] See "Tax Law", 3rd Edition, Almedina, 2005, p. 318 by virtue of the arbitral decision handed down in case no. 736/2014-T, available at www.caad.org.pt.

[4] See Article 120(1)(c) of the IMI Code.

[5] In this sense, see the arbitral decision handed down in case no. 408/2014-T, available at www.caad.org.pt.

[6] See Andreia Gabriel Pereira, "The 'Luxury Homes' and Stamp Tax. Commentary on the Judgment of the Supreme Administrative Court (2nd Section), of 5 February 2015, handed down in case no. 0993/14, Rapporteur Cons. Francisco Rothes", Journal of Public Finances and Tax Law, Year VII, No. 4, July 2015, pp. 235 et seq.

[7] See, by way of example, the arbitral decisions handed down in cases numbered 218/2013-T, 247/2013-T, 66/2014-T and 202/2014-T, available at https://caad.org.pt/.

[8] Ex vi of the STA Judgment of 29 April 2015, handed down in Case no. 021/15, both available at www.dgsi.pt.

[9] As noted by Andreia Gabriel Pereira, "(…) it was aimed at creating specific taxation for holders of so-called 'luxury homes', which, moreover, is possible to infer from the fact that Item no. 28 of the General Stamp Tax Table applies only to properties intended for housing (and, marginally, to properties held by residents of tax havens). Thus was that Item presented to public opinion and perceived by it." Op. Cit. p. 237.

[10] Subsidiarily applicable by virtue of Article 29(1)(a) of the RJAT.

Frequently Asked Questions

Automatically Created

Does Verba 28 of the Tabela Geral do Imposto do Selo apply to building land (terrenos para construção)?
Verba 28 of the TGIS generally does not apply to building land (terrenos para construção) classified as such in the cadastre. Building land is an autonomous category of urban property under CIMI Article 6, distinct from properties with housing use. Land for construction, even when designated for future housing development and bearing a 'housing' location coefficient for valuation purposes, does not itself satisfy housing use requirements since it lacks buildings, habitability conditions, and licensing for occupation. The stamp tax under Item 28 targets properties actually used for housing, not undeveloped land awaiting construction, regardless of its intended future purpose.
Can the CAAD arbitral tribunal rule on Stamp Tax (Imposto do Selo) liquidation disputes?
The CAAD arbitral tribunal has competence to rule on stamp tax liquidation acts (atos de liquidação) but not on mere collection notes (notas de cobrança) for installment payments. Under Article 2 of RJAT, arbitral tribunals can assess the legality of tax assessment acts. A stamp tax assessment constitutes a single contestable act, while collection notes for installment payments are derivative documents that cannot be independently challenged. Taxpayers must contest the underlying liquidation act itself, not subsequent payment instruments. If a request challenges only collection notes without properly identifying the assessment act, the tribunal may lack competence ratione materiae.
What are the grounds for challenging Stamp Tax assessments on properties valued over €1,000,000?
Grounds for challenging Stamp Tax assessments on properties valued over €1,000,000 under Item 28 TGIS include: (1) incorrect property classification (challenging whether property qualifies as urban property with housing use versus land for construction or other categories); (2) disputing the cadastral valuation under CIMI that places the property above the €1,000,000 threshold; (3) arguing the property doesn't meet the 'housing use' requirement because it lacks buildings or habitability conditions; (4) procedural defects in the assessment notification; and (5) transitional regime application errors under Article 6 of Law 55-A/2012 for assessments in 2012.
How does the classification of a property as building land affect Stamp Tax liability under Portuguese law?
Classification as building land (terreno para construção) significantly affects Stamp Tax liability because such land constitutes a separate category under CIMI Article 6, distinct from properties for housing use. Building land without constructed buildings lacks the essential characteristics of housing use—it cannot be inhabited, has no use license, and its normal purpose is future construction rather than current occupation. Even when cadastral evaluation uses a 'housing' location coefficient (reflecting permitted future development), this valuation methodology does not transform the land's legal classification. Courts have recognized that authorization to build housing on land does not change its cadastral classification as building land, which should exempt it from Item 28 taxation designed for existing housing properties.
What is the procedure for filing an arbitral claim against Stamp Tax liquidation acts at CAAD?
To file an arbitral claim against Stamp Tax liquidation acts at CAAD: (1) Submit a request for arbitral pronouncement (pedido de pronúncia arbitral) within the legal deadline; (2) Clearly identify the contested liquidation acts by document number and amounts, not merely collection notes; (3) Pay required procedural fees; (4) The CAAD President designates an arbitrator who has 90 days from constitution to decide; (5) The Tax Authority is notified to submit a reply (resposta) within the statutory period; (6) The tribunal may dispense with hearings under RJAT Article 18 based on procedural autonomy principles; (7) Parties may submit optional written pleadings; (8) Ensure standing by demonstrating legitimate interest as the taxable person identified in the assessment act.