Stamp Tax on Building Land: Housing Cooperatives and TGIS Table 28 (CAAD 322/2016-T)

ARBITRAL DECISION

I. REPORT

1. A…, CRL (hereinafter referred to as "Applicant"), with tax identification number…, tax domicile at Rua do …, nos … to…, …-… …, filed on 11 June 2016, pursuant to the combined provisions of Articles 2 and 10 of Decree-Law No. 10/2011 of 20 January, i.e., Legal Framework for Arbitration in Tax Matters ("RJAT"), a request for the establishment of an Arbitral Tribunal in order to declare illegal the stamp duty assessment act ("IS"), pursuant to Item 28 of the General Table of IS ("GTIS"), relating to the tax year 2015, in the amount of € 11,594.13 identified by number 2016…, with the Tax and Customs Authority ("Respondent" or "TA") being the defendant.

A) Establishment of the Arbitral Tribunal

1. Pursuant to the provisions of paragraph a) of paragraph 2 of Article 6 and paragraph b) of paragraph 1 of Article 11 of the RJAT, the Deontological Council of the Administrative Arbitration Center ("CAAD") appointed the undersigned as arbitrator of the single arbitral tribunal, who communicated acceptance of the assignment within the applicable period, and notified the parties of that appointment on 16 August 2016.

2. Thus, in accordance with the requirement of paragraph c) of paragraph 1 of Article 11 of the RJAT, and through the communication of the President of the Deontological Council of CAAD, the Single Arbitral Tribunal was established on 31 August 2016.

B) Procedural History

1. In the request for arbitral determination, the Applicant petitioned for the illegality of the IS assessment act indicated above, with respect to a building plot registered in the urban property register, under number…, of the Union of Parishes of …, in the municipality of ….

2. The TA presented a response, petitioning for the dismissal of the request for arbitral determination, on the grounds that no violation of law was found, requesting that the tax act under analysis, having violated no legal or constitutional provision, be maintained in the legal order.

3. By order of 21 December 2016, the Single Arbitral Tribunal, under the provisions of paragraph c) of Article 16 of the RJAT, decided, without opposition from the parties, that it was not necessary to hold the meeting referred to in Article 18 of the RJAT, as a result of the simplicity of the issues at hand, as well as considering that it had at its disposal all the elements necessary to make a clear and impartial decision.

4. It also decided, in accordance with paragraph 2 of Article 18 of the RJAT, that oral submissions were not necessary, as the positions of the parties were clearly defined in their respective pleadings, granting a successive period of 10 days for the parties, if they so wished, to submit final submissions (which did not occur), setting 28 February 2017 as the deadline for issuing the arbitral decision.

5. The Tribunal was properly established and is competent to determine the issues indicated (Article 2, paragraph 1, paragraph a) of the RJAT), the parties have legal personality and capacity and have full standing (Articles 4 and 10, paragraph 2 of the RJAT and Article 1 of Regulatory Decree No. 112-A/2011 of 22 March). No defects exist and no exceptions were raised, whereby nothing prevents judgment on the merits.

6. Thus, the present proceeding is in a condition to have the final decision rendered.

II. QUESTIONS TO BE DECIDED

1. The key issues to be assessed and decided regarding the merits of the case, as derived from the procedural documents of the parties, are: i) to determine to what extent the benefits conferred, pursuant to Article 66-A of the Tax Benefits Code ("TBC"), on cooperatives, also extend to Item 28.1 of the GTIS, with the same being excluded from the incidence of that item; and, as well, should such not be applicable, ii) to determine whether the property in dispute falls within the scope of the said Item, in its wording as of the relevant date of the facts, namely whether it is a "building plot the erection of which, authorized or provided for, is for housing, in accordance with the provisions of the Property Tax Code".

III. DECISION ON THE FACTS AND ITS RATIONALE

1. Having examined the documentary evidence produced, this tribunal finds as proven, for purposes relevant to the decision of the case, the following facts:

I. The Applicant is a housing cooperative and has as its principal purpose the construction, promotion and acquisition of dwellings for housing its members, as evidenced by its permanent certificate, valid until 9 November 2016, with access code …-…-….

II. The Applicant is the sole owner of an urban property, namely a building plot, registered in the urban property register of the Union of Parishes of …, municipality of …, under number…, with a Tax Property Value ("TPV") of € 1,159,412.95 and with Urban Plot Permit No. …/… issued by the Municipal Council of ….

III. According to the Property Notebook of the property in question, it has enjoyed, since 2010, exemption from Municipal Property Tax ("MPT"), as it is a property for constructing the Applicant's headquarters and for the exercise of its activity.

IV. The Applicant, with respect to the tax year 2015 and as a result of what is stated in Item 28.1 of the GTIS, received the assessment act from the TA indicated above, in the total amount of € 11,594.13.

1. The conviction of this tribunal regarding the facts found as proven resulted from the documents attached to the file and contained in the request and response, not contested by the parties, as specified in the points of the factual matter set out above.

2. It is not found as proven that the Applicant submitted a Gracious Complaint with respect to the said assessment, contrary to what is stated in the initial petition, nor that it effected payment of the IS in question or, alternatively, provided a guarantee.

IV. ON THE LAW

A) Legal Framework

1. Given that the legal issue to be decided in the present proceeding requires the interpretation of the relevant legal texts, it is important, first of all, to set out the norms that compose the relevant legal framework, as of the date of the occurrence of the facts.

2. The subjection to IS of properties with housing allocation resulted from the addition of Item 28 to the GTIS, effected by Article 4 of Law 55-A/2012 of 29 October, which typified the following tax facts:

"28 – Ownership, usufruct or surface right of urban properties whose tax property value contained in the register, pursuant to the Property Tax Code (PTC), is equal to or greater than € 1,000,000.00 – on the tax property value used for the purpose of MPT:

28.1 – Per property with housing allocation – 1%

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

1. The said law also expanded, in the IS Code, the scope of paragraph 1 of Article 1 to legal situations, "IS is levied on all acts, contracts, documents, titles, papers and other facts or legal situations provided for in the General Table, including gratuitous transfers of goods".

2. It also added paragraph 7 of Article 23 of the IS Code, concerning the assessment of IS: "where the tax is owed for situations provided for in item No. 28 of the General Table, the tax is assessed annually, in relation to each urban property, by the central services of the Tax and Customs Authority, applying, with the necessary adaptations, the rules contained in the PTC", and Article 67, paragraph 2 which provides that "for matters not regulated in this Code concerning item 28 of the General Table, the PTC applies, subsidiarily". Having introduced, finally, to Article 7 of that code, its paragraph 6, from which it follows that "the exemptions provided for in Article 44 of the TBC are also applicable to the situations provided for in item No. 28 of the General Table".

3. Additionally, and taking into account the legislative amendment introduced by Law No. 83-C/2013 of 31 December, it is also important to transcribe the wording of the said item as of 1 January 2014, "per residential property or per building plot the erection of which, authorized or provided for, is for housing, in accordance with the provisions of the Property Tax Code".

4. In this context, and taking into account the indication above, let us now focus on the Property Tax Code.

5. In the Property Tax Code, the types of properties are enumerated (in Articles 2 to 6) as follows:

"Article 2 - Concept of Property

1 – For the purposes of this Code, property is any portion of territory, encompassing waters, plantations, buildings and constructions of any nature incorporated or situated therein, with a permanent character, provided that it forms part of the patrimony 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 where they are situated, although located in a portion of territory that constitutes an integral part of a diverse patrimony or does not have a patrimonial nature.

2 – Buildings or constructions, even though movable by nature, are considered as having a permanent character when allocated to non-transitory purposes.

3 – The permanent character is presumed when the buildings or constructions are situated in the same location for a period exceeding one year.

4 – For purposes of this tax, each autonomous fraction, under the horizontal property regime, is considered as constituting a property.

Article 3 - Rural Properties

1 – Rural properties are lands situated outside an urban settlement that are not to be classified as building plots, pursuant to paragraph 3 of Article 6, provided that:

a) They are allocated or, in the absence of concrete allocation, have as their normal purpose a use generating agricultural income, such as are considered for purposes of personal income tax (PIT);

b) Not having the allocation indicated in the preceding paragraph, they are not constructed or have only buildings or constructions of an accessory character, without economic autonomy and of reduced value.

2 – Also rural properties are lands situated within an urban settlement, provided that, by force of legally approved provision, they cannot have a use generating any income or can only have a use generating agricultural income and are actually having this allocation.

3 – Also rural properties are:

a) Buildings and constructions directly allocated to the production of agricultural income, when situated on the lands referred to in the preceding paragraphs;

b) Waters and plantations in the situations referred to in paragraph 1 of Article 2.

4 – For purposes of this Code, urban settlements are considered, in addition to those situated within legally fixed perimeters, nuclei with a minimum of 10 dwellings served by streets of public use, with their perimeter delimited by points distanced 50 m from the axis of the streets, in the transverse direction, and 20 m from the last building, in the direction of the streets.

Article 4 - Urban Properties

Urban properties are all those that should not be classified as rural, without prejudice to the provisions of the following article.

Article 5 - Mixed Properties

1 – Whenever a property has rural and urban parts it is classified, in entirety, according to the main part.

2 – If neither of the parts can be classified as main, the property is considered as mixed.

Article 6 - Types of Urban Properties

1 – Urban properties are divided into:

a) Residential;

b) Commercial, industrial or for services;

c) Building plots;

d) Others.

2 – Residential, commercial, industrial or for services are buildings or constructions licensed for such or, in the absence of a license, that have as their normal purpose each of these uses.

3 – Building plots are considered to be lands situated inside or outside an urban settlement, for which a license or authorization has been granted, admission of prior notification or favorable prior information issued for subdivision or construction operation, and also those that have been declared as such in the acquisition title, except for lands where the competent entities prohibit any of those operations, namely those located in green areas, protected areas or that, in accordance with municipal territorial planning plans, are allocated to spaces, infrastructures or public equipment.

4 – Subsume in the provision of paragraph d) of paragraph 1 lands situated within an urban settlement that are not building plots nor are covered by the provision of paragraph 2 of Article 3, and also buildings and constructions licensed or, in the absence of a license, that have as their normal purpose purposes other than those referred to in paragraph 2 and also those of the exception of paragraph 3".

1. In another perspective, it is important to transcribe the norms contained in the TBC, relevant for this purpose, namely:

"Article 66-A - Cooperatives

1 - The following are exempt from Corporate Income Tax, with the exception of results arising from operations with third parties and activities unrelated to their own purposes:

(…)

d) Housing and construction cooperatives;

(…)

12 - Cooperatives are exempt from stamp duty on acts, contracts, documents, titles and other facts, including gratuitous transfers of goods, when this tax constitutes their burden".

1. Already in 2016, with Law No. 7-A/2016 of 30 March, paragraph 14 was added to the said article, in which it is provided that "housing and construction cooperatives are exempt from Stamp Duty provided for in item 28.1 of the General Table of Stamp Duty".

2. Finally, note as well the norms on the interpretation of laws.

3. Article 11 of the General Tax Law ("GTL") establishes the essential rules for the interpretation of tax laws as follows:

"Article 11 - Interpretation

1. In determining the meaning of tax norms and in qualifying the facts to which they apply, the general rules and principles of interpretation and application of laws are observed.

2. Whenever tax norms employ terms specific to other branches of law, they must be interpreted in the same sense as they have there, unless otherwise directly derived from law.

3. If doubt persists about the meaning of the applicable incidence norms, regard shall be had to the economic substance of the tax facts.

4. Gaps resulting from tax norms covered in the reservation of law of the Assembly of the Republic are not susceptible to analogical integration".

5. The general principles for the interpretation of laws, to which paragraph 1 of Article 11 of the GTL refers, are set out in Article 9 of the Civil Code, which establishes the following:

"Article 9 - Interpretation of Law

1. Interpretation must not be limited to the letter of the law, but must reconstruct from the texts the legislative thought, taking especially into account the unity of the legal system, the circumstances in which the law was elaborated and the specific conditions of the time in which it is applied.

2. The interpreter cannot, however, take into account the legislative thought that does not have in the letter of the law a minimum of verbal correspondence, even if imperfectly expressed.

3. In fixing the meaning and scope of the law, the interpreter shall presume that the legislator adopted the most correct solutions and knew how to express his thought in adequate terms".

4. Thus, it is within this legal framework that the issues to be decided must be assessed, in accordance with the terms previously set out.

B) Arguments of the Parties

1. In the context of its submissions, the Applicant argued, in summary, that, being a cooperative, it was, pursuant to paragraph 12 of Article 66-A of the TBC, exempt "from stamp duty on acts, contracts, documents, titles and other facts, including gratuitous transfers of goods, when this tax constitutes its burden".

2. For it, "it is an exemption from stamp duty that does not depend on the category of acts or situations from which it derives, constituting a subjective exemption, applicable to cooperatives, with respect to all acts, contracts, documents, titles and any other facts".

3. In its opinion, the arguments of the TA, which "has sustained in similar cases that only the exemptions established in Article 44 of the TBC would be applicable to Item 28 of the GTIS", do not have any acceptance, "neither in the spirit of the law, nor in its letter. Indeed, paragraph 6 of Article 7 of the IS Code, establishes that 'the exemptions provided for in Article 44 of the TBC are also applicable to the situations provided for in item No. 28 of the General Table' (…) the legislative intention that is the origin of the norm of paragraph 6 of Article 7 of the IS Code is to extend to the situations covered by Article 44 of the TBC, which contemplates only the exemption of MPT, the exemption of item No. 28".

4. For the Applicant, "Article 7, paragraph 6 of the IS Code does not imply that only the exemptions of Article 44 of the TBC remain; rather it highlights that other exemptions remain, such as the exemption provided for in Article 66-A, paragraph 12 of the TBC, which specifically concerns the exemption of IS. If the legislative intention had been to withdraw the exemption of IS with respect to item No. 28 of the Table it could not fail to establish that restriction in the proper place, that is, in the same Article 66-A.

(…)

The intention of paragraph 6 of Article 7 of the IS Code was manifestly to expand and not to restrict the scope of exemption.

In fact, thanks to that norm, entities not exempt of IS came to be exempt with respect to item No. 28 of the Table, which without it would not occur (…)".

1. The Applicant, in the context of this issue, invokes the decision rendered in arbitral proceeding No. 357/2015-T, where it was held that "it would have no logic to apply an exemption from taxation to all entities provided for in Article 44 of the TBC and exclude from that taxation cooperatives, which benefit from a privileged tax status".

2. In another perspective, the Applicant also considered that the illegality of the assessment in question also resulted from the fact that the Item in dispute "has as its object urban properties 'with housing allocation', excluding 'building plots', which, by nature, do not have housing aptitude".

3. In the Applicant's view, it results "from Article 6 of the Property Tax Code a clear distinction between urban properties 'residential' and 'building plots', these not being able to be considered, for tax purposes, as 'properties with housing allocation'. Whence also results the illegality of the assessments in question".

4. In turn, the Respondent, after being duly notified for this purpose, presented its response in which it began by making a historical review of the said item, "it is important, in these terms, to make, pedagogically, a synopsis of the historical and legal circumstances in which Item 28.1 of the GTIS arose".

5. Subsequently, and as concerns the exemption granted by Article 66-A of the TBC to cooperatives, the Respondent understands that it does not extend to Item 28.1 of the GTIS, since, pursuant to that norm, "cooperatives are exempt from stamp duty on acts, contracts, documents, titles and other facts, including gratuitous transfers of goods, when this tax constitutes their burden", but are not exempt from IS on legal situations (as is the case with Item 28 of the GTIS).

6. "It is that when the legislator came to add Item 28 to the GTIS it felt obliged to alter the wording of Article 1 of the IS Code adding to the 'acts, contracts, documents, titles, papers and other facts' the 'legal situations'. I.e., the new 'legal situations' that the legislator seeks to tax in the IS with the introduction of the new item are the: 'ownership, usufruct or surface right of urban properties whose tax property value contained in the register, in accordance with the Property Tax Code, is equal to or greater than € 1,000,000'."

7. In summary, for the Respondent "this norm of incidence (objective) does not aim at documents or operations, rather, and against the philosophy of the Code, it is concerned with taxing 'static legal situations', with the tax being levied on the property value of the properties, entirely similar to the Property Tax Code, but without the revenue obtained reverting in favor of the municipalities", and therefore,

"from this specificity resulted that, with respect to the exemption provided for in paragraph 12 of Article 66-A of the TBC – 'acts, contracts, documents, titles and other facts, including gratuitous transfers of goods' – the legislator did not proceed in the same way as it did with respect to the alteration of the wording effected in Article 1 of the IS Code where it added to the 'acts, contracts, documents, titles, papers and other facts' the 'legal situations', nor expressly provided in Article 7 of the IS Code the application of the exemption and consequent exclusion of the norm of incidence of Item 28 of the GTIS to the realities set out in Article 66-A, as an example of what it did with Article 44 of the TBC.

Thus, it results from the foregoing that it is necessary to conclude that cooperatives are subject and not exempt from IS of Item 28 of the GTIS, and therefore all the arguments raised by the Applicant fail completely, the Respondent having exercised its functions and attributions in strict compliance with the legality to which it is bound".

1. On the other hand, and as regards the argument put forward by the Applicant that building plots cannot be considered, for tax purposes, properties with housing allocation, the Respondent understands that the first has no grounds, requesting that it refute, from now on, the totality of the arguments adduced by it.

2. From the Respondent's point of view, "the concept of 'properties with housing allocation', for purposes of the provision of Item 28.1 of the GTIS, comprises both constructed properties and building plots, from the outset taking into account the literal element of the norm".

3. For the latter, the legislator "does not refer to 'properties intended for housing', having opted for the notion 'housing allocation', an expression different and broader whose meaning must be found in the need to integrate other realities beyond those identified in paragraph a) of paragraph 1 of Article 6 of the Property Tax Code.

(…)

Thus, it is clear that in the evaluation of the building plot, regard is necessarily had to the authorized area to be built and to the use to be given to that construction, that is, to the characteristics of the urban property that will be constructed therein".

1. In the Respondent's opinion, "the mere establishment of a right of potential for construction immediately increases the value of the property in question, hence the rule contained in Art. 45 of the PTC which requires the separation of the two parts of the land. On one side, the part of the land where the building to be constructed will be situated is considered, and on the other the free land area (…)".

2. Therefore, for the Respondent, "long before the actual construction of the property, it is possible to ascertain and determine the allocation of the building plot".

3. The Respondent concludes that, "even though this has always been the understanding of the TA, and on which there should be no doubt, as regards the assessments of 2015, nor, either, can any interpretive question of the letter of the law be invoked, a question which, from the TA's perspective and in light of all that has been stated above, does not exist either for assessments prior to 2014, because, with Law No. 83-C/2013 of 31 December 2013, the wording of that provision was altered to expressly include building plots as an objective element of incidence of the norm".

4. In conclusion, the Respondent requests that the request for declaration of illegality and consequent annulment of the disputed assessment be judged to be without merit, thereby absolving itself of the request.

C) Assessment by the Tribunal

1. As a preliminary matter, it should be noted that, in the eyes of this Arbitral Tribunal, the issues to be decided concern defining, based on the facts found as proven, whether i) the Applicant, as a cooperative, is or is not exempt from IS, pursuant to Item 28 of the GTIS; and, should such exemption not be applicable, ii) whether the property in dispute is or is not subject to IS, pursuant to Item 28.1 of the GTIS.

2. Thus, this tribunal will seek to assess, in a first phase, whether the Applicant is or is not exempt from the said tax.

3. As a preliminary matter, it should be noted that the last legislative amendment, within the scope of the tax regime for cooperatives, occurred with Law No. 64-B/2011 of 30 December, which approved the State Budget for 2012.

4. Within that diploma, Article 66-A was introduced into the TBC, under the heading Benefits to Cooperatives, transposing into that statute the tax framework of cooperatives, previously provided for in the Cooperative Tax Code (which would be repealed by force of Law No. 64-B/2011 of 30 December).

5. Thus, that norm came to protect the exemptions applicable to cooperatives, which are generally exempt from taxation, in the context of Corporate Income Tax, MPT and IS, among other taxes.

6. For its part, the introduction of Item 28 of the GTIS occurs only on 29 October, with the publication of Law No. 55-A/2012. It was also within that context that, pursuant to Article 7, paragraph 6 of the IS Code, it was established that "the exemptions provided for in Article 44 of the Tax Benefits Code are also applicable to the situations provided for in item No. 28 of the General Table".

7. Still within the scope of that Law, the wording of paragraph 1 of Article 1 of the IS Code was altered to provide for legal situations. Indeed, "IS is levied on all acts, contracts, documents, titles, papers and other facts or legal situations provided for in the General Table (…)" (our emphasis).

8. Now, the TA argues that the alteration in the legal text of paragraph 1 of Article 1 of the IS Code occurs with the purpose of including in that wording Item 28 of the GTIS.

9. In fact, this tribunal also understands that the said item intends to tax not a fact, but, more properly, a legal situation, on an annual basis (in this case, properties with housing allocation whose TPV exceeds € 1,000,000).

10. Indeed, this was the legislator's intention. And it was also the legislator's intention to extend the exemptions provided for in Article 44 of the TBC to Item 28 of the GTIS, having legislated, at the same time, in that sense "the exemptions provided for in Article 44 of the Tax Benefits Code are also applicable to the situations provided for in Item No. 28 of the General Table".

11. In this tribunal's understanding, it could not have been by oversight that the legislator did not seek to safeguard the situation of cooperatives.

12. The legislator could have, on the same date, promoted an amendment to the text of Article 66-A of the TBC, with a view to including legal situations. However, it chose not to do so.

13. As is known, the integration of gaps is prohibited in our legal order as concerns matters integrated in the reservation of law.

14. Indeed, pursuant to Article 103, paragraph 2 of the Constitution of the Portuguese Republic ("CPR"), "taxes are created by law, which determines the incidence, the rate, the tax benefits and the guarantees of taxpayers" (our emphasis).

15. That norm reflects the principle of typicality, which requires that taxes be expressly provided for in law. And we derive a similar understanding for tax benefits.

16. For the exemption of Item 28 of the GTIS to be granted to cooperatives, pursuant to Article 66-A of the TBC, it was necessary that this be expressly enshrined.

17. And even if it were argued that in this situation we were faced with an extensive interpretation of paragraph 12 of Article 66-A of the TBC (rather than an analogical integration), deducing that that norm would have to also provide for the exemption of Item 28 of the GTIS, it is certain that this argument fails with the entry into force of Law No. 7-A/2016 of 30 March.

18. Indeed, with the introduction of that Law the legislator came to add paragraph 14 to Article 66-A of the TBC, where it came to provide that "housing and construction cooperatives are exempt from Stamp Duty provided for in item 28.1 of the General Table of Stamp Duty".

19. Now, this tribunal has no doubt that the legislator intended, from that moment, to exempt housing and construction cooperatives from that item.

20. Nevertheless, if the legislator wanted to resolve this question ab initio, that is, to make clear that, from the entry into force of Item 28 of the GTIS, housing cooperatives, such as the Applicant, were always outside the scope of that norm, it could (and should have done so) by conferring an interpretive character on the norm.

21. Indeed, that was a year in which the legislator introduced various norms of an interpretive character.

22. In this case, by choosing not to do so, the legislator excluded any possible scenario of extensive interpretation of the Law, namely of paragraph 12 of Article 66-A of the TBC.

23. In the eyes of this tribunal it is clear that the ratio legis of that norm could not encompass Item 28 of the GTIS, and, as analogical integration is also prohibited by our constitution, as referred to above, it remains to conclude that housing cooperatives, as of the relevant date of the facts, were taxable persons for IS purposes, as concerns the said item.

24. In light of the foregoing, it now becomes important to ascertain whether the property in question falls within the scope of the said Item, as of the relevant date of the facts, namely whether it is a "building plot the erection of which, authorized or provided for, is for housing, in accordance with the provisions of the PTC".

25. The property notebook of the property, updated in 2013 (the last evaluation known of the building plot), defines the property as a building plot with the location coefficient type of housing.

26. Furthermore, being the Applicant a cooperative for housing purposes, it could be considered that its lands could only have construction, even if merely provided for, of a housing nature.

27. Nevertheless, from the elements provided, it also appears that the property will construct the headquarters of the Applicant, where it will exercise its activity.

28. Thus, this Tribunal considers that if there is a housing allocation, this will, in principle, be partial (since part of the land will be used for the construction of the Applicant's headquarters).

29. Now, the first difficulty faced by this Tribunal concerns clarifying whether that norm (Item 28.1 of the GTIS) concerns building plots totally allocated to housing construction or, if instead, that allocation may be only partial.

30. It is because if so, the legislator also did not provide tools to taxpayers and the TA, to ascertain that partial allocation. Note that that allocation could place the TPV corresponding to the housing part of the land below €1,000,000, and, thus, exclude the incidence of Item 28 of the GTIS.

31. It should be emphasized that the legislator is bound by the principle of legality in the sense of clearly typifying the tax facts that are subject to tax.

32. Paragraph 2 of Article 6 of the Property Tax Code clarifies what is meant by "residential" properties for purposes of paragraph a) of paragraph 1, classifying as such constructions licensed for housing or that in the absence of a license, have that normal use.

33. Thus, it seems clear that that norm refers to constructions already completed that will be residential when they are for such purposes and those are licensed or when, in the absence of a license, that is their normal use (and not to building plots).

34. This tribunal understands that the criterion of "normal use", in the absence of a license, cannot be extrapolated with the objective of guessing the constructions that may be made on building plots, a type of property provided for in paragraph c) of paragraph 1 of the same article, as the Respondent suggests.

35. It cannot be overlooked that in the evaluation of the land the TA used the location coefficient of the housing type, and the taxable person could, in fact, have objected against the application of this coefficient, it not having been demonstrated that it did so by the end of 2015.

36. However, the legislator did not attribute to the use of that coefficient any relevance in the qualification of the property, only in its respective evaluation.

37. Therefore, in light of the foregoing, it is necessary to establish the following.

38. It is clear that, pursuant to Item 28.1 of the GTIS, are subject to tax, in addition to residential properties, building plots, provided that construction has been authorized or is provided for and intended for housing.

39. Pursuant to the said item it is not, however, clear whether the construction intended for housing must be total or partial, and it being necessary that, in case of doubt, only be subject to it, the cases in which the construction is, in entirety, intended for housing.

40. Now, in the case at hand, the Respondent, on whom the burden of proof fell, failed to demonstrate with facts that the building plot in question had, as of the date of the relevant facts, authorization, project or provision of construction intended only for housing, so as to be subject to IS, pursuant to Item No. 28 of the GTIS.

41. And, according to the property notebook of the property, it seems that at least part of the property will be intended for the construction of the cooperative's headquarters, which will not have a housing purpose.

42. Thus, this tribunal does not understand how it could succeed in including the present building plot within the scope of Item 28.1 of the GTIS, since the Respondent failed to prove that the allocation of the land, authorized or provided for, was only for housing.

43. It is not said that the Applicant proved the contrary.

44. However, pursuant to Article 74 of the GTL, the burden of proof that the property in question, a building plot, had construction, expressly or provided for, only for housing, rested on the Respondent.

45. A duty it was not capable of fulfilling.

46. In addition, from the scant information available, it is concluded that the land may even have, even if partially, an allocation other than housing.

47. Thus, and without need for further consideration, the assessment act is considered voidable, on the grounds of illegality, for Item 28.1 of the GTIS not being applicable to the property on which it was levied.

48. Therefore, and based on the reasons set out above, this tribunal understands that, although the Applicant, as of the date of the facts, was a taxable person for IS purposes, pursuant to Item 28.1 of the GTIS, it is certain that the property in question does not fit within the definition provided for in that item.

V. DECISION

1. It is therefore decided by this Arbitral Tribunal:

A) To judge the request for arbitral determination to be well-founded and, in consequence, to declare illegal and annul the Stamp Duty assessment act mentioned above, by reference to 2015, from which resulted tax to be paid in the amount of € 11,594.13, concerning the taxation of building plots, pursuant to the provision of Item 28.1 of the GTIS;

B) To condemn the Respondent to pay the costs of the proceeding.

VI. VALUE OF THE PROCEEDING

1. The value of the proceeding is fixed at € 11,594.13, pursuant to Article 97-A, paragraph 1, paragraph a), of the Code of Administrative Procedure in Tax Matters, applicable by force of paragraphs a) and b) of paragraph 1 of Article 29 of the RJAT and of paragraph 2 of Article 3 of the Regulation of Costs in Tax Arbitration Proceedings ("RCPAT").

VII. COSTS

1. In accordance with the provision of Article 22, paragraph 4, of the RJAT, the value of the arbitration fee is fixed at € 918, pursuant to Table I of the mentioned Regulation, at the expense of the Respondent, given the well-foundedness of the request.

Let it be notified.

Lisbon, CAAD, 21 February 2017

The Arbitrator

(Sérgio Santos Pereira)