Process: 292/2014-T

Date: February 2, 2015

Tax Type: Selo

Source: Original CAAD Decision

Summary

CAAD arbitration case 292/2014-T addressed the controversial application of item 28 of the Stamp Tax General Table (TGIS), introduced by Law 55-A/2012 of October 29, 2012. The claimant, owner of a residential property with multiple independent housing units, challenged 14 stamp duty assessments totaling €19,124.70 issued for the 2012 tax year. The central legal issue concerned whether stamp tax could be levied separately on individual divisions of a property when each division's tax patrimonial value (TPV) fell below the €1 million threshold established in item 28 TGIS. Item 28 imposes a 1% stamp tax on ownership of urban residential properties with TPV equal to or exceeding €1,000,000, rising to 7.5% for non-natural persons resident in tax havens. The claimant argued that since no individual division reached the €1 million minimum, the tax should not apply. Additionally, constitutional challenges were raised against item 28 itself, alleging violations of fundamental principles enshrined in the Portuguese Constitution: the principle of equality (Article 13 CRP), the principle of legality, the principle of proportionality, and the principle of legitimate expectations (protection of trust). The Tax Authority failed to submit a defense response. The arbitral tribunal, presided over by Prof. Dr. Jorge Bacelar Gouveia, examined both the constitutional validity of the provision and its correct interpretation regarding fragmented property ownership. The case raised significant questions about whether the €1 million threshold applies per autonomous division or to the property as a whole, with important implications for owners of high-value properties divided into multiple independent residential units.

Full Decision

ARBITRAL AWARD

CAAD: Tax Arbitration

Case No. 292/2014-T

Subject: Item No. 28 of GTSD/arts. 4 and 6 of Law No. 55-A/2012, of 29 October

I – Introduction

  1. On 27 March 2014, "A", holder of NIPC … and with registered office at …, hereinafter the Claimant, filed a request for the constitution of a sole arbitral tribunal, in accordance with the combined provisions of arts. 2 and 10 of Decree-Law No. 10/2011, of 20 January (Legal Framework for Tax Arbitration, hereinafter referred to only as LFTA), in which the Tax and Customs Authority is Respondent, hereinafter the Respondent or the TA.

  2. The request for a sole arbitral tribunal was accepted by His Excellency the President of CAAD on 31 March 2014 and the Deontological Council appointed Prof. Dr. Jorge Bacelar Gouveia as arbitrator of the Sole Arbitral Tribunal, who communicated acceptance of the appointment, which was not contested by the parties.

By agreement between the parties, the meeting provided for in art. 18 of the LFTA was waived.

The six-month period for the delivery of the SAT decision was extended until 2 February 2015.

II – Characterization of the Dispute

  1. With regard to the characterization of the dispute, the Claimant requested that the SAT declare null and void for illegality and unconstitutionality the following acts of stamp duty assessment relating to 2012, in the total amount of €19,124.70:
  • 2013 ...87
  • 2013 ...75
  • 2013 ...74
  • 2013 ...76
  • 2013 ...77
  • 2013 ...78
  • 2013 ...79
  • 2013 ...80
  • 2013 ...81
  • 2013 ...82
  • 2013 ...83
  • 2013 ...84
  • 2013 ...85
  • 2013 ...86.

These 14 assessments were issued individually on the tax patrimonial value of divisions or parts capable of independent use of the property, in the regime of full ownership, located in …, parish …, municipality of …, registered in the urban real property registry under no. ....

The Claimant, owner of the property in question, requests the annulment of these assessments on the grounds that, being they attributable to housing, they do not in themselves reach the minimum threshold of 1 million euros of tax patrimonial value, as provided for in item no. 28 of the General Table of Stamp Duty (GTSD) introduced by art. 4 of Law No. 55-A/2012, of 29 October, such provision being unconstitutional for violation of constitutional principles.

  1. Notified to respond, the Respondent made no submission.

  2. The SAT was duly constituted and is competent.

The parties enjoy legal personality and capacity and are legitimate (arts. 4 and 10, no. 2, of the same decree-law and art. 1 of Ordinance No. 112-A/2011, of 22 March).

The proceedings are free from defects of nullity.

It remains to decide.

III – Relevant Factual Matter

  1. The relevant factual matter is simple and consists in the verification of ownership, in favor of the claimant, of the property above identified, considering the following facts as proven:

a) The Claimant is "A", holder of NIPC ... and with registered office at …;

b) The Claimant is the owner of the property, in the regime of full ownership, located in ..., parish of ..., municipality of ..., registered in the urban real property registry under no. ...;

c) The Respondent issued 14 notices of stamp duty assessment relating to 2012, concerning divisions for independent residential use of such property, in the total amount of €19,124.70 and which are the following:

  • 2013 ...87
  • 2013 ...75
  • 2013 ...74
  • 2013 ...76
  • 2013 ...77
  • 2013 ...78
  • 2013 ...79
  • 2013 ...80
  • 2013 ...81
  • 2013 ...82
  • 2013 ...83
  • 2013 ...84
  • 2013 ...85
  • 2013 ...86.

The Tribunal's conviction as to the determination of the factual matter was based on the documents submitted by the Claimant.

IV – Applicable Law

A) Preliminary Matters

  1. The present dispute has as its focal aspect the validity and application of item no. 28 of the General Table of Stamp Duty, added by Law No. 55-A/2012, of 29 October, combined with the provision of art. 6, no. 2, al. f) and i), of the same decree-law.

This new provision establishes that stamp duty is levied on ownership of properties with residential designation with TPV equal to or exceeding €1,000,000, in the following exact terms:

"28 – Ownership, usufruct or surface right of urban properties whose tax patrimonial value contained in the registry, in accordance with the Code of Municipal Property Tax (CMPT), is equal to or exceeding 1,000,000 euros – on the tax patrimonial value used for the purposes of CMPT:

28.1 – For property with residential designation – 1%;

28.2 – For property, when the taxpayers who are not natural persons are resident in a country, territory or region subject to a clearly more favorable fiscal regime, contained in the list approved by ordinance of the Minister of Finance – 7.5%".

  1. The Claimant formulates its request for declaration of nullity of the 14 official stamp duty assessments on the basis of the erroneous application of such provision made by the Respondent to the aforementioned property, as well as on the unconstitutionality of such provision due to the violation of the constitutional principles of equality, legality and proportionality.

  2. From the perspective of applicable law, in the present dispute and in order to obtain the success of the request for annulment of the aforementioned stamp duty assessments, an examination of constitutionality is required, by force of the supremacy of the Constitution and the duty of courts to apply it, and the constitutionality of the provision that constitutes item no. 28 of the GTSD must be questioned in the following terms:

  • unconstitutionality for violation of the principle of equality; and

  • unconstitutionality for violation of the principle of trust.

However, the arguments put forward by the Claimant in relation to the factual matter set out above also include the error in the application of the new provision that created item no. 28 of the GTSD, since in its understanding it would not apply to the divisions of the property referred to in the said assessments, which would not meet the concept provided for in that provision.

Let us begin with the arguments regarding the constitutional validity of the provision that created item no. 28 of the GTSD, and then proceed to the examination of its application to the properties that were considered for the purposes of assessing stamp duty.

B) The Invalidity of Item No. 28 for Violation of the Principle of Equality

  1. Equality is a value and principle inherent to the paradigm of the Rule of Law that permeates the entire material Constitution of Portugal, which even becomes a component part of the very idea of Law or Legal Order as a Legal Cosmos.

The principle of equality is directly stated by the Portuguese constitutional text in its art. 13, in addition to its evident refraction in the plane of the principle of contributory capacity, which expresses a special orientation of equality in tax matters.

It is thus important to refer to this central constitutional provision of art. 13 of the CRP:

  • art. 13, no. 1: "All citizens have the same social dignity and are equal before the law";

  • art. 13, no. 2: "No one may be privileged, given benefits, prejudiced, deprived of any right or exempted from any duty on the grounds of descent, sex, race, language, territory of origin, religion, political or ideological convictions, education, economic situation, social condition or sexual orientation".

  1. The same applies to the GTL, which also formulates the principle of equality in the context of Portuguese tax legislation, as can be seen in its art. 5:

  • art. 5, no. 1: "Taxation aims to satisfy the financial needs of the State and other public entities and promotes social justice, equality of opportunity and the necessary corrections of inequalities in the distribution of wealth and income";

  • art. 5, no. 2: "Taxation respects the principles of generality, equality, legality and material justice".

  1. The principle of equality, in a Social State, is substantially different from the principle of equality that prevailed during the Liberal State period, with a whole set of new dimensions and modes of action to achieve material equality and equality of opportunity.

However, in matters of property taxation – not now addressing the theoretical question of the nature of stamp duty in the opposition between consumption taxes and property taxes – the very CRP establishes a central orientation in its art. 104, no. 3: "The taxation of property must contribute to equality among citizens".

In its simplicity, this constitutional provision, specifically established for this type of taxation, is precisely an example of a principle of fiscal equality that takes into account the new dimensions of the social principle.

  1. We are of the opinion that the provision in question, which added item no. 28 to the GTSD, is affected by material unconstitutionality for violation of the principle of equality.

It is important to note that the configuration of the tax fact, which operates a distinction between various uses and purposes of the properties in question, does not appear to be justified in the name of the purpose of the fiscal measure adopted.

If the concern is the taxation of higher-value properties, what is the reason that this taxation, in the case in question of real property of which the taxpayer is the holder, does not tax all these properties, in their multiple subdivisions?

If one looks carefully, there are various categories of properties that do not manage to subject themselves to this new taxation:

  • non-urban properties;

  • urban properties that do not correspond to the specifications of items nos. 28.1 and 28.2.

The rationality of not including all these uses and purposes is not apparent, and it is certain that if all of them were included, fiscal revenue would be greater and would equalize taxpayers on the basis of the same patrimonial value referred to.

Even considering the difference in economic value of rural and urban properties, or within these in their various uses and purposes, since the criterion is referred to the tax patrimonial value of the CMPT, by this mechanism the wealth in question would already have been objectively assessed, being different according to those different distinctions that are taken into account in the evaluation undertaken by the relevant provisions of the CMPT.

  1. With this differentiation, a perversion of values is even introduced into the Portuguese fiscal system, contrary to the general orientation that can be obtained from the CRP, which is that of greater sacrifice imposed on taxpayers who are owners of properties with residential designation to the detriment of other uses or purposes that are not so valuable in light of constitutional values and principles, and the following should be invoked in this sense:

  • not only the constitutional prominence of the right to housing, provided for in art. 65 of the CRP, which even being an economic and social right, offering legal efficacy inferior to that of rights, freedoms and guarantees, nonetheless has a privileged constitutional place that emerges as a standard for, at least, avoiding discrimination in relation to other uses that do not have the same constitutional importance;

  • but also one cannot forget the projection of the very principle of human dignity, the guiding principle of the Portuguese constitutional order and stated in art. 1 of the CRP, which certainly will imply the special valorization of the uses that citizens carry out in their life spheres, with here a concretization of that value in the greater protection that property affected or intended for housing – which is human housing – must have in relation to property that has other uses or purposes.

  1. There is another reason to consider that item no. 28 of the GTSD infringes the principle of fiscal equality, in this case considering the constitutional prohibition of legal double taxation, which is also here an economic double taxation.

Legal double taxation means that the same manifestation of wealth, which is expressed in the same tax fact, is taxed twice, which signifies a negative discrimination in relation to other taxpayers whose taxation was carried out only once on the same tax fact.

Although without literal expression in the constitutional text, the prohibition of legal double taxation not only is deduced from the principle of contributory capacity, being expressed in the field of Penal Constitutional Law through the principle non bis in idem.

The most authoritative Portuguese tax doctrine has insisted on this aspect of the principle of equality, as is the case of JOSÉ CASALTA NABAIS: "…by imposing intra-systemic limits, that is, coherence between the various taxes and coherence of the fiscal system as a whole, the principle in question should be invoked to solve problems such as internal double taxation, whether this is realized in a double taxation (legal double taxation) or in an overlapping of taxes (economic double taxation), multiple or plural taxation, which is expressed in the same assets, for example real property, being the object of various taxes, the conversion of taxes, which is materialized in the transformation of income taxes into property taxes by virtue of, for example, the inertia of the legislator in the face of the inflation phenomenon, etc." (JOSÉ CASALTA NABAIS, Direito Fiscal, 7th ed., Coimbra, 2012, p. 164).

  1. However, after all, what does this double taxation consist of? It consists in the fact that the holding of real rights is simultaneously taxed in the context of CMPT and in the context of SD, which falls on the same reality, which becomes all too evident when the terms of the taxation of item no. 28 of the GTSD are referred to the applicable rules of the CMPT.

We thus have two coinciding taxations in matters of urban properties, to which two taxes are applied, with their own rates:

  • the taxation established in art. 1 of the CMPT; and

  • the taxation established in item no. 28 of the GTSD.

It is not considered as a pertinent counter-argument the fact that the active subject of the tax legal relationship is different, the State in SD and the municipalities in CMPT, since only here the position of the passive subject is relevant.

  1. It no longer appears to us to be pertinent to defend the result of unconstitutionality the fact that the provision in question establishes a limit below which equivalent manifestations of wealth, also relating to properties with residential designation, remain untaxed, whether because they approach the threshold of 1,000,000 euros, or because in the same taxpayer various properties can accumulate which, together, exceed that limit, with taxation property by property and not a global taxation from the perspective of the taxpayer's tax situation in terms of property.

Obviously, the legislator has the need to work with limits in the quantification of taxation, a phenomenon that occurs in many other branches of Law, as in the age limit of Civil Law or in the speed limit in Traffic Law.

Although these limits, which always artificially divide the reality underlying the application of norms, are not arbitrary and are imposed by the need to regulate life situations, in addition to the need for security that Law also presupposes, they should be accepted and validated from the perspective of their constitutionality and legality.

On the other hand, this limit expresses the definition – within the freedom conferred by the Constitution on the ordinary legislator – of a criterion above which it is considered acceptable to tax more or even to tax at all in the name of a principle of contributory capacity that expresses a concern for social justice.

This means that the principle of equality today has inherent in it the admission of negative discrimination against those groups who, earning higher incomes or possessing more valuable properties, may be subjected to greater taxation, in two senses:

  • either through progressive taxation, as the same is carried out in personal income taxes;

  • or through proportional taxation, in this case only affecting property above 1 million euros.

This provision is not considered unconstitutional for violation of the principle of contributory capacity.

C) The Violation of the Principle of Protection of Trust

  1. Being evidently the SAT submitted to the principle of the claim, in the sense that the procedural object is necessarily defined by the parties, it is not bound, as to applicable law, by the legal arguments put forward by the parties.

This means that for the SAT the provision of item no. 28 of the GTSD raises another question of unconstitutionality, for violation of the principle of protection of trust, which can and should be examined.

  1. Not being literally enshrined in the text of the CRP, this principle is nonetheless affirmed in Portuguese constitutional normativity by deduction from the general formulation of the principle of the Rule of Law, referred to in art. 2 of the CRP.

Moreover, the references to and applications thereof by the Constitutional Court have been abundant – especially in these recent decisions issued in the context of measures to combat the economic-financial crisis.

The principle of protection of trust, in general terms, determines that public power – or legislative power in particular – is prevented from enacting legal measures whose effects signify a revocation or limitation of interests or expectations of citizens, legitimately constructed through preceding legal regimes, without there being a sufficient rational basis for doing so.

  1. One of the specific dimensions of the principle of trust is the retroactive application of laws, which is expressly prohibited in a set of cases enunciated in the constitutional text.

But the operability of this principle is not only connected with retroactivity, nor even with the mild version of retrospectivity, which has specific application in Tax Law when faced with periodic taxes.

This principle can also invalidate future changes to legislation, if these appear abrupt, arising as surprise decisions, with which citizens could not have counted and had the legitimate expectation that they would not arise in the manner in which the legislative decision-maker shaped them.

"The principle of trust, requiring that the regulatory framework in force not change in a way that frustrates the expectations generated in citizens regarding its continuity, implies the prohibition of an intolerable retroactivity of laws, as well as the need for their future alteration in accordance with the expectations that are constitutionally protected" (JORGE BACELAR GOUVEIA, Manual de Direito Constitucional, II, 5th ed., Coimbra, 2013, p. 726).

  1. The examination of the provision of item no. 28 of the GTSD does not raise, in this regard, a problem of retroactivity, nor even a problem of retrospectivity, being, in fact, a single-occurrence tax: the new tax fact is constructed for the future, more precisely, for the day following the entry into force of the provision that creates it.

It does, however, raise a problem of breach in the trust that should exist between the State-Legislator and the Citizen, who relied on the stability of the fiscal provisions on stamp duty, having been "caught by surprise" by a legislative measure that entered into force on the day following its publication.

This would be a fact that in itself would not have special significance if it were a measure that was economically neutral or if it fit into a legal context in which the prospective validity of legislative acts could indistinctly be established between the day following its publication or any other later day.

This is not the case because the placement of the validity of this new provision on the day following its publication comes to deeply undermine the predictability with which taxpayers had the right to rely on in the configuration of stamp duty, whose tax fact is always assessed on 31 December.

Suddenly, a substantial alteration arises in the relevant moment of that tax fact to 31 October, not giving them time to act in accordance with the new fiscal provision created. That is the purpose of art. 6 of Law No. 55-A/2012, of 29 October.

  1. What is most striking is that this alteration does not even assume any other rationality than that of suddenly catching an increase in revenue, through the anticipation of the tax fact from 31 December to 31 October: in that for the following year, the year 2013, since the provision of art. 6 only applies for the year 2012, the tax fact returns to being 31 December.

It is understandable why by the application of the general rule of CMPT there would no longer be in the following year any surprise factor. It is not considered that in a State of Law it is legitimate, in terms of protection of trust, for the legislator to act in this manner.

Such behavior on the part of the fiscal legislator violates the good faith that the citizen has placed in the State, trusting that on its part there would be no surprise measures without any adequate rational basis.

D) The Erroneous Application of the Concept of "Property with Residential Designation" Provided for in Item No. 28 of the GTSD

  1. Even with the conclusion regarding the unconstitutionality of the provision that added item no. 28 to the GTSD, for the reasons set out, it remains to examine the other issue at hand, which is the application to the stamp duty assessments carried out of the concept of "property with residential designation".

The provision in question expressly refers to item no. 28.1 of the GTSD falling on "property with residential designation", but nowhere does it concern itself with the elucidation of that concept.

  1. A reading of the CMPT does not allow one to find any provision in which the expression "property with residential designation" is used.

There we find the fundamental distinction between urban and rural properties, in addition to the category of mixed properties, and then it is explained that urban properties can be subdivided into various species, one of them being "residential properties", as established in art. 6, no. 1, al. a), of the CMPT.

A first distinction excludes from art. 4 of Law No. 55-A/2012 properties that are rural, or in mixed properties the part that is not urban, as well as excludes uses or purposes of urban properties that are not residential, as occurs with commercial or industrial destinations, in accordance with the various categories provided for in art. 6, no. 1, als. b) to d), of the CMPT.

  1. Proceeding with this analysis, there remains to be determined whether the fact of there being independent divisions is relevant for the purposes of calculating the minimum limit above which taxation becomes operative, which is the value of 1,000,000 euros.

The point is relevant because the 14 assessments, taken together, correspond to a tax patrimonial value of €1,912,470.00. If these assessments were considered in isolation, while always considering the 14 divisions with residential purpose, this value is never reached, with taxation not being due.

  1. It does not appear that the distinction is pertinent here, certainly legal but inadequate to the valuations of contributory capacity, between the regime of vertical property and the regime of horizontal property.

What matters, in the interpretation of the new provision included in the GTSD, is the consideration of the contributory capacity that underlies it, which takes into account the socio-economic conditions of each taxpayer by reason of the fraction or division, regardless of its property regime, for the purposes of subjection to a tax with these characteristics.

This is precisely what CAAD has decided – and rightly so – in Decision No. 50/2013-T: "Also following these considerations that inspired the legislative innovation under examination, it must be concluded that the existence of a property in vertical or horizontal ownership cannot be, by itself, an indicator of contributory capacity. On the contrary, from the law it follows that both should receive the same fiscal treatment in obedience to the principles of justice, fiscal equality and material truth. Already the existence in each property of independent dwellings, in horizontal or vertical property regime, may be capable of triggering the incidence of the new tax if the TPV of each of the parts or fractions is equal to or exceeding the limit defined by law: 1,000,000 euros."

These are, in fact, independent fractions, with separate registrations, as is evident from the 14 assessments that were carried out: in none of them does the tax patrimonial value reach that limit established in item 28 of the GTSD.

V – Decision

  1. For the reasons set out above, the Sole Arbitral Tribunal decides:

To declare the illegality, with its consequent annulment, of the 14 stamp duty assessments above identified relating to the property located in ..., parish of ..., municipality of ..., registered in the urban real property registry under no. ..., on the grounds that the same, having to be individually considered, do not reach the minimum limit established in the normative provision of item no. 28 of the General Table of Stamp Duty;

a) Not to apply the provision of item no. 28 of the General Table of Stamp Duty, for infringing the principle of equality and the principle of protection of trust enshrined in the Constitution of the Republic, in obedience to the provision enshrined in art. 204 of the CRP, with the stamp duty assessments carried out having no legal basis.

Value of the action: €19,124.70 (nineteen thousand, one hundred twenty-four euros and seventy cents).

Costs for the Respondent, in the amount of €1,224.00.

The Arbitrator

Jorge Bacelar Gouveia

Lisbon, CAAD, 2 February 2015.

Frequently Asked Questions

Automatically Created

What is the €1 million threshold under verba 28 of the Stamp Tax General Table (TGIS)?
Item 28 of the Stamp Tax General Table (TGIS), introduced by Article 4 of Law 55-A/2012 of October 29, 2012, establishes a €1 million tax patrimonial value (TPV) threshold for stamp tax liability. Specifically, it imposes a 1% annual stamp tax on ownership, usufruct, or surface rights of urban properties with residential designation whose TPV, as registered in accordance with the Municipal Property Tax Code (CIMI), equals or exceeds €1,000,000. For properties owned by non-natural persons resident in jurisdictions with clearly more favorable tax regimes (tax havens listed by ministerial order), the rate increases to 7.5%. This threshold represents the minimum property value that triggers the stamp tax obligation under this provision.
Can stamp tax be levied on individual parts of a property in total ownership that each fall below the €1 million limit?
This question formed the core dispute in case 292/2014-T. The claimant argued that stamp tax under item 28 TGIS cannot be levied on individual parts or divisions of a property when each autonomous division has a tax patrimonial value below €1 million, even if the total property value exceeds this threshold. The Tax Authority issued 14 separate assessments for individual divisions of a single property, each valued below €1 million. The claimant contended this application was legally incorrect because item 28 requires each taxable property unit to independently meet the €1 million threshold. The arbitral tribunal was tasked with interpreting whether the threshold applies to each autonomous division capable of independent use or to the property as a whole in cases of fragmented ownership.
What was the outcome of CAAD arbitration process 292/2014-T regarding stamp tax liquidations?
While the provided excerpt does not include the final decision of the arbitral award, the case document shows that the CAAD arbitral tribunal, presided over by Prof. Dr. Jorge Bacelar Gouveia, was constituted to decide on the claimant's request for annulment of 14 stamp duty assessments totaling €19,124.70. The tribunal accepted jurisdiction and proceeded to examine both the constitutional validity of item 28 TGIS (regarding alleged violations of equality, legality, proportionality, and legitimate expectations principles) and the correct application of the provision to individual property divisions. The Tax Authority notably failed to submit a defense. The tribunal's analysis focused on whether the €1 million threshold should be applied per autonomous division or to the entire property, a determination with significant consequences for property owners and tax administration practices.
How does Law 55-A/2012 apply to stamp tax on high-value residential properties in Portugal?
Law 55-A/2012 of October 29, 2012, introduced a new annual stamp tax targeting high-value residential real estate in Portugal through the addition of item 28 to the General Stamp Duty Table (TGIS). Article 4 of this law established that stamp tax is levied on ownership of properties with residential designation having a tax patrimonial value (TPV) equal to or exceeding €1,000,000 at a rate of 1% of the TPV used for Municipal Property Tax purposes. Article 6, paragraph 2, subparagraphs f) and i) of the same law provided complementary provisions. The law created a progressive tax mechanism: 1% for standard residential properties and 7.5% when owners are non-natural persons resident in countries, territories, or regions subject to clearly more favorable tax regimes (tax havens) as listed by ministerial order. This legislative measure aimed to increase tax revenue from luxury residential real estate holdings.
What constitutional principles were invoked to challenge the stamp tax liquidations in process 292/2014-T?
The claimant in process 292/2014-T invoked multiple constitutional principles to challenge the validity and application of the stamp tax liquidations. Primarily, the claimant alleged violation of the principle of equality (Article 13 of the Portuguese Constitution), which guarantees equal social dignity and equality before the law for all citizens and prohibits arbitrary discrimination. The arbitral tribunal's analysis specifically examined Articles 13(1) and 13(2) CRP, as well as Article 5 of the General Tax Law (LGT), which requires taxation to respect generality, equality, legality, and material justice principles. Additionally, the claimant invoked the principle of legitimate expectations (protection of trust), the principle of legality in taxation, and the principle of proportionality. These constitutional challenges questioned whether item 28 TGIS arbitrarily discriminated against certain property owners and whether it violated taxpayers' legitimate expectations regarding their tax obligations.