Stamp Tax on Vertical Property and Land for Construction Under Entry 28.1 TGIS – CAAD 328/2014-T

ARBITRAL DECISION

Claimant: A S.A.

Respondent: Tax and Customs Authority.

I - REPORT

1. On 10 April 2014, the company A S.A. with tax identification number (NIPC) … in its capacity as administrator of the pension fund of B, with tax number (NIF) …, requested the constitution of a collective arbitral tribunal, pursuant to the provisions of Articles 2 and 10 of Decree-Law No. 10/2011 of 20 January (Legal Regime for Arbitration in Tax Matters, hereinafter referred to only as "RJAT").

2. The request for constitution of the arbitral tribunal was accepted by the Honorable President of CAAD on 14 April 2014, and immediately notified to the Tax and Customs Authority (hereinafter designated as "TA" or the "Respondent").

3. The Claimant seeks the pronouncement of the Arbitral Tribunal with a view to declaring the illegality of the acts of assessment of Stamp Duty (SD) levied on four urban properties, in the total value of € 154,946.90 (one hundred and fifty-four thousand, nine hundred and forty-six euros and ninety cents), pursuant to item 28.1 of the General Table of Stamp Duty ("GTSD") annexed to Law No. 150/99 of 11 September, which approves the Stamp Duty Code ("SD Code"). The Claimant also seeks the condemnation of the TA to the restitution of all amounts paid relating to the assessments of SD and the payment of indemnity interest on the amounts of tax paid, from the date of payment respectively, in accordance with paragraph 1 of Article 43 of the General Tax Law and paragraph 5 of Article 61 of the Code of Administrative Tax Procedure.

4. In the request for arbitral pronouncement, the Claimant chose not to appoint an arbitrator. Pursuant to subparagraph a) of paragraph 2 of Article 6 and subparagraph b) of paragraph 1 of Article 11 of the RJAT, as amended by Article 228 of Law No. 66-B/2012 of 31 December, the Deontological Council of CAAD appointed as arbitrators of the collective arbitral tribunal His Excellency Judge Manuel Luís Macaísta Malheiros, Her Excellency Professor Doctor Maria do Rosário Anjos and His Excellency Dr. Olívio Mota Amador who, within the applicable period, communicated acceptance of the appointment.

5. The parties were notified on 3 June 2014 of the appointment of the arbitrators, and expressed no intention to refuse the appointment of the arbitrator, in accordance with the combined provisions of Article 11, paragraph 1, subparagraphs a) and b) of the RJAT and Articles 6 and 7 of the Deontological Code.

6. In accordance with the provisions of subparagraph c) of paragraph 1 of Article 11 of the RJAT, as amended by Article 228 of Law No. 66-B/2012 of 31 December, the Collective Arbitral Tribunal was constituted on 20 June 2014.

7. On 20 June 2014, the Respondent was duly notified of the order of the Arbitral Tribunal for the purposes of the provisions of Article 17 of the RJAT. The Respondent did not file a Response.

8. The Claimant, on 5 August 2014, submitted the collection documents for the 2nd Installment of SD/2013 and corresponding proof of payment of SD. The Arbitral Tribunal, on 17 September 2014, issued an order admitting the petition.

9. On 13 November 2014, at 2:00 p.m., at the facilities of CAAD, the meeting provided for in Article 18 of the RJAT was held, attended by the appointed arbitrators and representatives of the Claimant and the Respondent. The Tribunal notified the Claimant and the Respondent to present, in that order and successively, written arguments within a period of 10 days, with the period for the Respondent commencing upon notification of the filing of the Claimant's arguments, as recorded in the respective minutes, which are hereby incorporated in their entirety for the proper legal purposes.

10. The written arguments were submitted by the Claimant on 14 November 2014, and by the Respondent on 27 November 2014.

11. The position of the Claimant, in accordance with the provisions of the petition for constitution of the Arbitral Tribunal and in the written arguments, is, in summary, as follows:

11.1. Regarding the incidence of SD on properties with floors or parts susceptible to independent use, the Claimant submits:

11.1.1. The assessments of SD on the independent divisions that comprise the urban property, relating to the years 2012 and 2013, better identified in Tables I.A and I.B of the initial petition, are illegal by virtue of considering, for purposes of SD assessment, the Tax Patrimonial Value (TPV) resulting from the sum of the different floors or divisions susceptible to independent use that make up the property.

11.1.2. As the tax patrimonial value relevant is that used for purposes of Property Tax (IMI), and as Property Tax is the framework of reference for this new incidence, the assessment of Stamp Duty should obey the same assessment rules in force regarding Property Tax. In this context, the individualization of floors or fractions susceptible to independent use for purposes of assessment of the aforementioned tax was required, as indeed occurs in the case of autonomous fractions of properties in horizontal co-ownership.

11.1.3. Indeed, the rules for assessment of Property Tax (see paragraph 1 of Article 113 of the Property Tax Code) provide that the tax is assessed based on the tax patrimonial values recorded in the property registers as of 31 December of the year in question. Now, within the scope of Property Tax, the registration in the property register of properties in full ownership, constituted by floors or divisions susceptible to independent use, is effected separately, individually discriminating the tax patrimonial value of each part of the property (see paragraph 3 of Article 12 of the Property Tax Code). Additionally, and as provided in paragraph 1 of Article 119 of the Property Tax Code, immediately applicable in Stamp Duty by virtue of the reference contained in paragraph 5 of Article 46 of the SD Code, individualized collection documents are issued for each part or division susceptible to independent use.

11.1.4. In sum, taking into account that the assessment of Stamp Duty should obey the tax patrimonial value resulting from the rules contained in the Property Tax Code, and that the objective incidence of the tax constitutes the ownership of urban property intended for housing whose tax patrimonial value recorded in the register equals or exceeds € 1,000,000, in the assessment of Stamp Duty on properties in full ownership, the individualization made in the register with respect to each floor or fraction susceptible to independent use should be respected.

11.1.5. Disregarding the existence of independent units properly segregated and individualized in the property register creates a situation of manifest inequality in relation to properties in horizontal co-ownership, since, as stated, the ownership of a property in horizontal co-ownership is precisely equal (for patrimonial purposes) to the holding of the entirety of a property in full ownership. Such interpretation proves to be manifestly illegal, but also unconstitutional, in light of the principle of equality.

11.1.6. The non-existence of any substantial difference between full ownership and horizontal co-ownership would dictate that the owner of a property in full ownership pays tax only to the extent that each of the divisions has a tax patrimonial value equal to or exceeding € 1,000,000. The very rationale underlying the introduction of this item regarding SD imposes this.

11.1.7. The assessments in question would only be admissible if each of the parts or divisions of the property, susceptible to independent use, had a tax patrimonial value equal to or exceeding € 1,000,000, which is not the case.

11.2. Regarding the timeliness of the Administrative Review concerning the 1st and 2nd installment of Stamp Duty on the urban property with registration number U ..., the Claimant submits:

11.2.1. As stated in the draft decision of Administrative Review, the TA services further understand that the same is untimely regarding the first and second installment of SD, as the 120-day period counted from the deadline for payment of the respective collection notes has been exceeded. Thus, and contrary to the TA, we understand that the relevant period for the start of the counting of the period is the deadline for voluntary payment of the last installment, as only in this way can the rights and guarantees of taxpayers be ensured.

11.2.2. Only with the last collection document does the taxpayer become aware of the data relating to the last installment of Stamp Duty. This understanding is, moreover, confirmed by the fact that in the very collection document the taxpayer's rights of opposition or review are mentioned.

11.2.3. Thus, we conclude that the Administrative Review is also timely with respect to the 1st and 2nd installment of Stamp Duty, and it is necessary to annul them in light of the illegality that both suffer.

11.3. Regarding the assessments of Stamp Duty on the urban property with registration number U-... (Ex-...) and on the urban property with registration number U-... (Ex-...), the Claimant states:

11.3.1. With respect to the assessments of SD levied on the urban properties corresponding to registration numbers U-... and U-..., the illegality of the same stems from the fact that the urban properties in question do not have "housing use" as established by the provision of the tax incidence rule in question.

11.3.2. In light of item 28 of the GTSD, only properties that cumulatively satisfy the following requirements are subject to SD: (a) Be urban properties; (b) Have a tax patrimonial value exceeding € 1,000,000; (c) Have housing use.

11.3.3. Conversely, urban properties that do not have housing use will be excluded from the scope of SD taxation. This is understandable in light of the teleology underlying the aforementioned rule and common to the package of fiscal measures introduced by Law No. 55-A/2012 of 29 October, within the scope of the austerity program launched by the Government. Thus, the following will be excluded from the aforementioned incidence rule: (a) Rural properties; (b) Urban properties with TPV below 1 million euros; (c) Urban properties intended for other purposes, namely commerce, services, industry or land for construction.

11.3.4. Now, focusing specifically on urban properties that constitute land for construction, as is the case here, one cannot assert that the destination of this type of property is housing. On the one hand, because its concrete destination is construction for which "a license or authorization has been granted, prior notice admitted, or favorable prior information issued for a subdivision or construction operation". And on the other hand, because there is no construction susceptible to being normally intended for that purpose.

11.3.5. In such terms, given the spirit that presided over the introduction of the incidence rule in question, it will always be concluded that land for construction is not covered by the taxation under Stamp Duty pursuant to item 28.1.

11.3.6. That land for construction was not covered by item 28.1 of the SD Code is, moreover, confirmed by the fact that only with the amendment introduced by Law No. 83-C/2013 of 31 December is the express mention of land for construction included in the item in question, a rule introduced without any interpretive character. Indeed, in accordance with Article 194 of the aforementioned Law, the wording of item 28.1 of the GTSD was amended to include, this time, the incidence of SD on land for construction, taking on the following wording: "28.1 — For a residential property or for land for construction whose construction, authorized or intended, is for housing, in accordance with the provisions of the Property Tax Code — 1%"

11.3.7. The amendment referred to in the preceding paragraph has no interpretive character whatsoever, constituting a genuine expansion of the tax incidence rule for the future. Furthermore, since this is not an amendment with interpretive character, and due to the constitutional prohibition of retroactive application of tax incidence rules, it will be completely inadmissible to claim that item 28.1, as amended by Law No. 83-C/2013 of 31 December, is applicable to tax facts occurring before its entry into force.

11.3.8. In this regard, it should be noted that in accordance with paragraph 1 of Article 113 of the Property Tax Code, applicable within the scope of SD assessment pursuant to item 28.1, as provided in paragraph 7 of Article 23 of the SD Code, the tax fact occurs on 31 December of the year to which it relates. Now, as Law No. 83-C/2013 of 31 December commenced producing effects only on 1 January 2014, the amendment introduced by it will only produce effects from that date.

11.3.9. Thus, in light of the amendment suffered by the item in question, we can conclude that until the entry into force of Law 83-C/2013 of 31 December, that is until 1 January 2014, the item in question applied only to urban properties

11.4. Regarding the assessment of Stamp Duty on the Urban Property with registration number U-..., the Claimant submits:

11.4.1. With respect to the property in question, the Claimant understands that it is not subject to SD pursuant to item 28.1 since it does not have the necessary "housing use" advocated by the respective incidence item. Indeed, the urban property in question is not devoted to housing, as the Tax and Customs Authority services are well aware.

11.4.2. As is properly described in the updated Urban Property Register (Caderneta Predial Urbana) of the urban property in question, we are dealing with a "urban property entirely intended for the activity of its owner". In truth, in said property are installed, certainly since its acquisition by the Pension Fund of B, various departments and services of B, S.A., a financial institution that heads Group C and is the promoter of the Pension Fund that owns the urban property in question.

11.4.3. Given the above, taking into account the necessary housing use and the fact that the property in question does not have said housing use, the assessment of Stamp Duty in question will be inadmissible, and its declaration of illegality is required.

11.5. Finally, even if all of the above is unfounded, all the assessments challenged should be annulled in light of the unconstitutionality of item 28.1 of the General Table of Stamp Duty, in light of the principle of equality and taxpaying capacity.

1. The position of the Respondent, expressed in the written arguments, can be summarized as follows:

12.1. Although the present request for arbitral pronouncement configures absolutely distinct circumstances or factual situations and, for that reason, does not meet all the requirements provided in paragraph 1 of Article 3 of the RJAT which permits the joinder of claims, the Respondent will nonetheless pronounce itself.

12.2. Regarding the urban property registered under article U ... of the property register of the parish of ... (article U ... of the extinct parish of ...), municipality of Lisbon, and the urban property registered under article U ... of the property register of the parish of ... (article ... of the extinct parish of ...), municipality of Lisbon, the TA states the following:

12.2.1. Horizontal co-ownership is a specific legal regime of property ownership provided for in Article 1414 et seq. of the Civil Code, which provides for and regulates the manner of constitution as well as other rules on the rights and obligations of co-owners.

12.2.2. To claim that the interpreter and applicant of tax law apply, by analogy, to the regime of full ownership the regime of horizontal co-ownership would be, at minimum, abusive and illegal. These two regimes of ownership are regimes of civil law, which were imported into tax law, specifically in the terms referred to in Article 2 of the Property Tax Code. The interpreter of tax law is prohibited from equating the two regimes of ownership, in consonance with the rule according to which concepts from other branches of law have the sense in tax law that is given to them in those branches of law, or as referred to in Article 11, paragraph 2 of the General Tax Law, on the interpretation of tax law; "Whenever terms peculiar to other branches of law are employed in tax rules, they should be interpreted in the same sense as they have there, unless otherwise directly provided by law."

12.2.3. Tax law contains no lacuna. The Property Tax Code, to which item 28.1 of the GTSD refers, provides that in the regime of horizontal co-ownership, fractions constitute properties. The property not being subject to this regime, legally the fractions are parts susceptible to independent use, without there being common parts.

12.2.4. One cannot accept that it be considered, for purposes of item 28.1 of the General Table attached to the SD Code, that parts susceptible to independent use have the same tax regime as autonomous fractions of the horizontal co-ownership regime, at the risk of open violation of the principle of legality.

12.2.5. The property being subject to the regime of full ownership, but being physically constituted by parts susceptible to independent use, tax law assigned relevance to such materiality, evaluating individually, pursuant to Article 12, paragraph 3, of the Property Tax Code, each floor or part of property susceptible to independent use considered separately in the property register, but integrated in the same register, with the assessment of Property Tax taking into account the tax patrimonial value of each part.

12.2.6. Floors or independent divisions, evaluated in accordance with Article 12, paragraph 3, of the Property Tax Code, are considered separately in the property register, which also discriminates the respective tax patrimonial value on which Property Tax is assessed.

12.2.7. The unity of the urban property in vertical ownership composed of several floors or divisions is not affected by the fact that all or some of those floors or divisions are susceptible to independent economic use.

12.2.8. The fact that Property Tax was determined based on the tax patrimonial value of each part of property with independent economic use does not equally affect the application of item 28.1 of the General Table. This is what results from the determining fact for the application of that item of the General Table being the total tax patrimonial value of the property and not separately that of each of its parcels.

12.2.9. Any other interpretation would violate the letter and spirit of item 28.1 of the General Table and the principle of legality of the essential elements of the tax provided for in Article 103, paragraph 2, of the Constitution of the Portuguese Republic (CRP). A type of incidence in accordance with which the tax patrimonial value of urban properties on which the application of item 28.1 of the General Table depends is the tax patrimonial value of each floor or division susceptible to independent use and not the overall tax patrimonial value of the urban property with housing use that certainly has no expression whatsoever in the law.

12.2.10. It is, thus, unconstitutional, as offensive to the principle of tax legality, the interpretation of item 28.1 of the General Table, to the effect that the tax patrimonial value on which its incidence depends be determined floor by floor or division by division, and not globally.

12.2.11. In truth, horizontal co-ownership and vertical ownership are differentiated legal institutes.

12.2.12. Finally, it should be noted that the property register entry of each part susceptible to independent use is not autonomous per register, but appears in a description in the register of the property in its entirety — see the property record of this property which represents the owner's document containing the property register elements of the property.

12.2.13. The tax fact of the stamp duty of item 28.1, as it consists in the ownership of urban properties whose tax patrimonial value recorded in the register, in accordance with the Property Tax Code, is equal to or exceeding € 1,000,000.00, the tax patrimonial value relevant for purposes of the incidence of the tax is, thus, the total tax patrimonial value of the urban property and not the tax patrimonial value of each of the parts that compose it, even when susceptible to independent use. And this interpretation of the tax incidence rule of stamp duty results from the combination of the other incidence rule in the Property Tax Code which is Article 1.

12.2.14. In sum, the tax acts challenged do not thus violate, in terms of substance, any legal or constitutional provision, and should be maintained in the legal order.

12.3. Regarding the urban property registered under article U ...° of the property register of the Union of Parishes of ... and ... (article U ...° of the extinct parish of ..., municipality of ...) and the urban property registered under article U ...° of the property register of the Union of Parishes of ... and ... (article U ...° of the extinct parish of ...), municipality of .... Land for construction. The TA states the following:

12.3.1. Contrary to what is argued by the Claimant, the TA understands that the concept of "properties with housing use", for purposes of the provisions of item 28 of the GTSD, comprises both built properties and land for construction, beginning with consideration of the literal element of the rule.

12.3.2. With respect to the alleged violation of the constitutional principle of equality provided for in Article 13 of the CRP, it is known that "it requires equal treatment of what is necessarily equal and different treatment of what is essentially different, not preventing differentiation of treatment, but only arbitrary discriminations, that is, distinctions of treatment that have no justification and sufficient material foundation". Therefore, the TA understands that the provision of item 28 of the GTSD does not constitute any violation of the principle of equality of Article 13 of the CRP.

12.3.3. Item 28 of the GTSD applies to the ownership, usufruct or right of superficies of urban properties with housing use, whose tax patrimonial value recorded in the register, in accordance with the Property Tax Code, is equal to or exceeding € 1,000,000.00, that is, it applies to the value of the property. This is a general and abstract rule, applicable uniformly to all cases in which the factual and legal prerequisites are met.

12.3.4. With respect to the alleged unconstitutionality due to violation of the principle of proportionality, it should be noted that taxation under stamp duty complies with the criterion of suitability, applying uniformly to all holders of properties with housing use of value exceeding € 1,000,000.00, applying to the wealth embodied and manifested in the value of properties.

12.3.5. Such measure should be applied uniformly to all holders of properties with housing use of value exceeding €1,000,000.00.

12.3.6. For all the above reasons, the assessment in question will constitute a correct interpretation and application of the law to the facts, not suffering from a defect of violation of law, either of the CRP or of the SD Code, and consequently, the claims formulated by the claimant in the request for arbitral pronouncement should be judged unfounded and the Entity Respondent should be absolved of the same.

II – DISMISSAL OF PRELIMINARY OBJECTIONS

1. The arbitral tribunal is materially competent and is regularly constituted, in accordance with Articles 2, paragraph 1, subparagraph a), 5, paragraph 2, and 6, paragraph 1 of the RJAT.

The parties have legal personality and capacity, are legitimate and are duly represented, in accordance with Articles 4 and 10 of the RJAT and Article 1 of Administrative Order No. 112-A/2011 of 22 March.

The proceedings do not suffer from any defects that would invalidate them.

The Tribunal understands that there is no obstacle, in light of Articles 3 of the RJAT and 104 of the Code of Administrative Tax Procedure, to the joinder of claims verified herein.

In these terms, there is no obstacle to consideration of the merits of the case.

III – FACTUAL MATTERS

A) Proven Facts

On the basis of documentary evidence submitted to the record, the following facts are considered proven:

1. The Claimant is the financial services company integrated in Group C, which is dedicated to the administration, management and representation of Life Insurance and Pension Funds and, in that context, is the Administrator of the Pension Fund of B.

2. The Pension Fund of B ("FPC") is the autonomous patrimony devoted to the fulfillment of pension plans for employees of B, a credit institution subject to supervision by the Bank of Portugal that heads Group C.

3. The FPC is the owner of the urban property in full ownership composed of 29 divisions, distributed among 7 floors, susceptible to independent use, and devoted to mixed use for housing and commerce, registered under article U ... of the property register of the parish of ... (formerly U ... of the extinct parish of ...) of the municipality of ..., in accordance with the property record attached to the record as document No. 1 annexed to the petition for constitution of the Arbitral Tribunal.

4. The Claimant was notified of the assessments of SD, dated 22 March 2013, relating to the three installments of the year 2012, on the divisions susceptible to independent use of the urban property identified in the preceding paragraph, in the total amount of € 29,512.70 (twenty-nine thousand five hundred and twelve euros and seventy cents), which are attached to the petition for constitution of the Arbitral Tribunal as document No. 5, and whose collection notes are as follows:

17.1. Collection notes for SD relating to the 1st Installment of the year 2012

i) Collection note No. 2013..., relating to article U-000...-1st Right, in the amount of €1,613.84.

ii) Collection note No. 2013..., relating to article U-000...-1st Left, in the amount of €1,296.14.

iii) Collection note No. 2013..., relating to article U-000...- 2nd Right, in the amount of €1,414.20.

iv) Collection note No. 2013..., relating to article U-000...- 2nd Left, in the amount of €1,296.14.

v) Collection note No. 2013..., relating to article U-000...- 3rd Right, in the amount of €1,414.20.

vi) Collection note No. 2013..., relating to article U-000...-3rd Left, in the amount of €1,296.14.

vii) Collection note No. 2013..., relating to article U-000...-Ground Floor Right, in the amount of € 718.18.

viii) Collection note No. 2013..., relating to article U-000...-Ground Floor Left, in the amount of €788.78.

17.2. Collection notes for SD relating to the 2nd Installment of the year 2012:

i) Collection note No. 2013..., relating to article U-000...-1st Right, in the amount of €1,613.83.

ii) Collection note No. 2013..., relating to article U-000...-1st Left, in the amount of €1,296.13.

iii) Collection note No. 2013..., relating to article U-000...-2nd Right, in the amount of €1,414.20.

iv) Collection note No. 2013..., relating to article U-000...-2nd Left, in the amount of €1,296.13.

v) Collection note No. 2013..., relating to article U-000...-3rd Right, in the amount of €1,414.20.

vi) Collection note No. 2013..., relating to article U-000...-3rd Left, in the amount of €1,296.13.

vii) Collection note No. 2013...2, relating to article U-000...-Ground Floor Right, in the amount of € 718.16.

viii) Collection note No. 2013...5, relating to article U-000...-Ground Floor Left, in the amount of €788.76.

17.3. Collection notes for SD relating to the 3rd Installment of the year 2012:

i) Collection note No. 2013...5, relating to article U-000...-1st Right, in the amount of €1,613.83.

ii) Collection note No. 2013...18, relating to article U-000...-1st Left, in the amount of €1,296.13.

iii) Collection note No. 2013..., relating to article U-000...-2nd Right, in the amount of €1,414.20.

iv) Collection note No. 2013..., relating to article U-000...-2nd Left, in the amount of €1,296.13.

v) Collection note No. 2013..., relating to article U-000...-3rd Right, in the amount of €1,414.20.

vi) Collection note No. 2013..., relating to article U-000...-3rd Left, in the amount of €1,296.13.

vii) Collection note No. 2013...3, relating to article U-000...-Ground Floor Right, in the amount of € 718.16.

viii) Collection note No. 2013...6, relating to article U-000...-Ground Floor Left, in the amount of €788.76.

1. The Claimant was notified of the assessments of SD, dated 17 March 2014, relating to the first installment of the year 2013, on the divisions susceptible to independent use of the urban property identified in paragraph 16, in the total amount of € 9,837.62 (nine thousand eight hundred and thirty-seven euros and sixty-two cents), which are attached to the petition for constitution of the Arbitral Tribunal as document No. 11, and whose collection notes are as follows:

i) Collection note No. 2014...42, relating to article U-00...- 1st Right, in the amount of €1,613.84.

ii) Collection note No. 2014...45, relating to article U-00...- 1st Left, in the amount of €1,296.14.

iii) Collection note No. 2014...48, relating to article U-00...- 2nd Right, in the amount of €1,414.20.

iv) Collection note No. 2014...51, relating to article U-00...- 2nd Left, in the amount of €1,296.14.

v) Collection note No. 2014...54, relating to article U-00...- 3rd Right, in the amount of €1,414.20.

vi) Collection note No. 2014...57, relating to article U-00...- 3rd Left, in the amount of €1,296.14.

vii) Collection note No. 2014...60, relating to article U-00...- Ground Floor Right, in the amount of € 718.18.

viii) Collection note No. 2014...61, relating to article U-00...- Ground Floor Left, in the amount of €788.78.

1. The Claimant was notified of the assessments of SD, dated 17 March 2014, of the second installment of the year 2013, which were attached to the record as document No. 1 of the Claimant's petition of 5 August 2014, and whose collection notes are as follows:

i) Collection note No. 2014...43, relating to article U-00...- 1st Right, in the amount of €1,613.83.

ii) Collection note No. 2014...45, relating to article U-00...- 1st Left, in the amount of €1,296.13.

iii) Collection note No. 2014...49, relating to article U-00...- 2nd Right, in the amount of €1,414.20.

iv) Collection note No. 2014...52, relating to article U-00...- 2nd Left, in the amount of €1,296.13.

v) Collection note No. 2014...55, relating to article U-00...- 3rd Right, in the amount of €1,414.20.

vi) Collection note No. 2014...58, relating to article U-00...- 3rd Left, in the amount of €1,296.13.

vii) Collection note No. 2014...61, relating to article U-00...- Ground Floor Right, in the amount of € 718.16.

viii) Collection note No. 2014...64, relating to article U-00...- Ground Floor Left, in the amount of €788.76.

1. The Claimant proceeded to pay all installments of SD identified in paragraphs 17, 18 and 19 in accordance with receipts which are attached to the record respectively as documents Nos. 6 and 11 annexed to the petition for constitution of the Arbitral Tribunal and as document No. 1 annexed to the Claimant's petition of 5 August 2014.

2. The Claimant, on 11 December 2013, filed an Administrative Review, which received No. ...00, directed to the Director of the Unit for Large Taxpayers against the acts of SD assessment identified in paragraph 17, that is, the three installments of SD relating to the year 2012.

3. Through letter No. ..., of 25 March 2014, the Administrative Justice Division of the Finance Office of ... notified the Claimant of the order of 24 March 2014, dismissing the Administrative Review identified in the preceding paragraph.

4. The FPBC is the owner of the urban property registered under article U ... of the property register of the Union of Parishes of ... and ... (formerly U ... of the extinct parish of ...), municipality of ..., in accordance with the property record attached to the record as document No. 2 annexed to the petition for constitution of the Arbitral Tribunal.

5. The Claimant was notified of the assessments of SD, dated 21 March 2013, relating to the three installments of the year 2012, on the property identified in the preceding paragraph, in the total amount of € 19,705.10 (nineteen thousand seven hundred and five euros and ten cents), and which are attached to the petition for constitution of the Arbitral Tribunal as document No. 13, and whose collection notes are as follows:

i) Collection note No. 2013...04, relating to article U-00..., in the amount of €6,568.38.

ii) Collection note No. 2013...05, relating to article U-00..., in the amount of €6,568.36.

iii) Collection note No. 2013...06, relating to article U-00..., in the amount of €6,568.36.

1. The Claimant was notified of the assessment of SD, dated 18 March 2014, relating to the second installment of the year 2013, of the property identified in paragraph 23, through collection note No. 2014...55, in the amount of € 6,568.36 (six thousand five hundred and sixty-eight euros and thirty-six cents), which was attached to the record as document No. 1 of the Claimant's Petition of 5 August 2014.

2. The Claimant was notified of the assessment of SD, dated 21 March 2014, relating to the third installment of 2013, of the property identified in paragraph 23, through collection note No. 2013...06 in the amount of €6,568.36 (six thousand five hundred and sixty-eight euros and thirty-six cents).

3. The Claimant was notified of the assessment of SD, dated 18 March 2014, relating to the first installment of SD of the year 2013, of the property identified in paragraph 23, in accordance with collection note No. 2014...54 in the amount of € 6,568.38 (six thousand five hundred and sixty-eight euros and thirty-eight cents), and which is attached to the petition for constitution of the Arbitral Tribunal as document No. 20.

4. The Claimant proceeded to pay all installments of SD identified in paragraphs 24, 25, 26 and 27 in accordance with receipts which are attached to the record respectively as documents Nos. 14 and 21 annexed to the petition for constitution of the Arbitral Tribunal and as document No. 1 annexed to the Claimant's petition of 5 August 2014.

5. The Claimant filed, on 30 August 2013, an Administrative Review, directed to the Director of the Unit for Large Taxpayers, against the acts of assessment notified through collection documents numbers 2013...04 and 2013...05, corresponding respectively to the first and second installment of SD of 2012 which are identified in paragraph 24.

6. The Claimant filed an Administrative Review, which received No. ..., of the act of assessment identified in paragraph 26, that is, the assessment of SD for the third installment of 2013.

7. Through letter No. 03432 of 24 March 2014, the Finance Office of ... 3, Finance Office of the Porto notified the Claimant of the order of 5 March 2014, dismissing the administrative review identified in the preceding paragraph.

8. The FPBC is the owner of the urban property registered under article U ... of the urban property register of the Union of Parishes of ... and ... (formerly U ... of the extinct parish of ...) municipality of ..., in accordance with the property record attached to the record as document No. 3 annexed to the petition for constitution of the Arbitral Tribunal.

9. The Claimant was notified of the assessment of SD, dated 18 March 2014, of the first installment of the year 2013, relating to the urban property identified in the preceding paragraph, through collection note No. 2014...57, in the amount of €13,316.14 (thirteen thousand three hundred and sixteen euros and fourteen cents), and which is attached to the petition for constitution of the Arbitral Tribunal as document No. 22.

10. The Claimant was notified of the assessments of SD, dated 18 March 2014, of the second installment of SD of the year 2013, through collection note No. 2014...58 in the amount of € 13,316.43 (thirteen thousand three hundred and sixteen euros and forty-three cents) which was attached to the record as document No. 1 of the Claimant's petition of 5 August 2014.

11. The Claimant proceeded to pay the installments of SD identified in paragraphs 33 and 34 in accordance with receipts which are attached to the record respectively as document No. 23 annexed to the petition for constitution of the Arbitral Tribunal and as document No. 1 annexed to the Claimant's petition of 5 August 2014.

12. The FPBC is the owner of the urban property in full ownership, without floors or divisions susceptible to independent use, registered under article U ... of the property register of the parish ... (formerly U ... of the extinct parish of ...) municipality of ..., in accordance with the property record attached to the record as document No. 4 annexed to the petition for constitution of the Arbitral Tribunal.

13. The Claimant was notified of the assessment of SD, dated 17 March 2014, of the first installment of SD of the year 2013, of the property identified in the preceding paragraph, through collection note No. 2014...0, in the amount of € 5,520.68 (five thousand five hundred and twenty euros and sixty-eight cents), and which is attached to the petition for constitution of the Arbitral Tribunal as document No. 24.

14. The Claimant was notified of the assessment of SD, dated 17 March 2014, of the second installment of the year 2013, through collection note No. 2014...1 in the amount of €5,520.66 (five thousand five hundred and twenty euros and sixty-six cents) which was attached to the record as document No. 1 of the Claimant's petition of 5 August 2014.

15. The Claimant proceeded to pay the installments of SD identified in paragraphs 37 and 38 in accordance with receipts which are attached to the record respectively as document No. 25 annexed to the petition for constitution of the Arbitral Tribunal and as document No. 1 annexed to the Claimant's Petition of 5 August 2014.

16. The facts stated in paragraphs 14 to 39 comprise matters not contested and documentarily proven in the record.

B) Unproven Facts

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

IV – LEGAL MATTERS

1. With the factual matters established, it is necessary to address the legal questions at issue in the present proceedings, corresponding in summary to the questions of illegality raised by the Claimant in the present arbitral petition. It must decide.

2. The question that is the object of the present action is whether the urban properties referenced in the present proceedings fall within the scope of item 28.1 of the General Table of Stamp Duty (GTSD).

The following properties are at issue:

• Urban property registered under article U ... of the property register of the parish of ... (article U ... of the extinct parish of ...), municipality of ..., composed of 29 divisions, distributed among 7 floors susceptible to independent use in full ownership and devoted to mixed use for housing and commerce located at ...;

• Urban property registered under article U ... of the property register of the Parish of ... (article ... of the extinct parish of ...), devoted to "other purposes", located at Rua de S. Julião, No. 125 to 137, ...;

• Urban property registered under article U ... of the property register of the Union of Parishes of ... and ... (article U ...° of the extinct parish of ..., municipality of ...), and urban property registered under article U ..., of the property register of the Union of Parishes of ... and ... (article U ...° of the extinct parish of ...), municipality of ..., described as land for construction.

1. There are two fundamental legal questions to decide, which have a relationship of logical precedence between them, which this Tribunal must address:

• the first is to determine what is meant by "property with housing use," a question common to all properties at issue in the present proceedings;

• the second question is to determine how to determine the reference value for the incidence of Stamp Duty for urban properties with housing use in vertical or full ownership, composed of several parts, floors or divisions susceptible to independent use.

Let us, therefore, examine the legal framework of reference for the correct analysis of this question.

1. Taxation under Stamp Duty of urban properties "with housing use" was introduced by Law No. 55-A/2012 of 29 October (Budget Law) which made several amendments to the Stamp Duty Code and added to the GTSD item 28, which has the following wording:

"28 - Ownership, usufruct or right of superficies of urban properties whose tax patrimonial value recorded in the register, in accordance with the Property Tax Code (CIMI), is equal to or exceeding € 1,000,000 – regarding the tax patrimonial value used for purposes of Property Tax:

28.1 – For property with housing use – 1%;

28.2 – For property, when the taxpayers who are not individuals are resident in a country, territory or region subject to a clearly more favorable tax regime, on the list approved by order of the Finance Minister – 7.5%."

1. In the transitional provisions contained in Article 6 of that Law No. 55-A/2012, the following rules were established regarding the assessment of the tax provided for in that item:

"1 – In 2012, the following rules must be observed with reference to the assessment of stamp duty provided for in item 28 of the respective General Table:

a) The tax fact occurs on 31 October 2012;

b) The taxpayer of the tax is the one mentioned in paragraph 4 of Article 2 of the Stamp Duty Code on the date referred to in the preceding subparagraph;

c) The tax patrimonial value to be used in the assessment of the tax corresponds to what results from the rules provided in the Property Tax Code with reference to the year 2011;

d) The assessment of the tax by the Tax and Customs Authority must be effected by the end of November 2012;

e) The tax must be paid, in a single installment, by taxpayers by 20 December 2012;

f) The applicable rates are as follows:

i) Properties with housing use evaluated in accordance with the Property Tax Code: 0.5%;

ii) Properties with housing use not yet evaluated in accordance with the Property Tax Code: 0.8%;

iii) Urban properties when the taxpayers who are not individuals are resident in a country, territory or region subject to a clearly more favorable tax regime, on the list approved by order of the Finance Minister: 7.5%.

2 – In 2013, the assessment of stamp duty provided for in item 28 of the respective General Table must apply to the same tax patrimonial value used for the purposes of assessing property tax in that year.

3 – The non-payment, in whole or in part, within the indicated period, of the amounts assessed by way of stamp duty constitutes a tax offense, punished in accordance with the law."

1. In the aforementioned item 28.1 and in subitems i) and ii) of subparagraph f) of paragraph 1 of Article 6 of Law No. 55-A/2012, the legislator used the concept of "property with housing use," which finds reference in no other legislative instrument. It is therefore necessary to specify this concept taking into account, among others, the possible elements existing in the fiscal instruments in force.

Thus, it is necessary to consider the Property Tax Code (CIMI), which is mentioned in several rules of the Stamp Duty Code introduced by the aforementioned Budget Law, and is indicated as a diploma of subsidiary application regarding the tax provided for in the aforementioned item 28, as occurs in Articles 2, paragraph 4, 3, paragraph 3, subparagraph u), 5, subparagraph u), 23, paragraph 7, and 46 and 67 of the SD Code. However, in none of these normatives is a concept with that designation used.

1. For its part, Law No. 83-C/2013 of 31 December (Budget Law for 2014) amended that item 28.1, giving it the following wording:

"28.1 - For residential property or for land for construction whose construction, authorized or intended, is for housing, in accordance with the provisions of the Property Tax Code – 1%"

Such formulation naturally applies only from 1 January 2014, but it may be said in advance that it has done nothing to clarify the qualification of the concept in question, that is, "property with housing use."

It will be necessary to verify the possible contribution to be extracted from the concepts of properties used in the CIMI, in its Articles 3 to 6. Thus, according to Article 2 of the CIMI, property is understood as:

"1 – For purposes of this Code, property is any fraction of territory, encompassing waters, plantations, buildings and constructions of any nature incorporated or situated thereon, with a character of permanence, provided 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 aforementioned circumstances, endowed with economic autonomy in relation to the land on which they are located, although situated in a fraction of territory that forms an integral part of a different patrimony or does not have a patrimonial nature.

2 – Buildings or constructions, although movable by nature, are deemed to have a character of permanence when devoted to non-transitory purposes.

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

4 – For purposes of this tax, each autonomous fraction, in the regime of horizontal co-ownership, is deemed to constitute a property."

1. For its part, Article 3 adds that rural property is understood as:

"1 – Rural property is land situated outside an urban area that should not be classified as land for construction, pursuant to paragraph 3 of Article 6, provided that:

a) They are devoted or, in the absence of specific devotion, have as normal destination a use generating agricultural income, such as is considered for purposes of personal income tax (PIT);

b) Not having the devotion indicated in the preceding subparagraph, do not have buildings or have only buildings or constructions of an accessory character, without economic autonomy and of reduced value.

2 – Rural property also includes land situated within an urban area, provided that, pursuant to legally approved disposition, it cannot have a use generating any income or can only have a use generating agricultural income and is in fact having this devotion.

3 – Also rural property are:

a) Buildings and constructions directly devoted to the production of agricultural income, when situated on land 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 areas are considered, in addition to those situated within legally fixed perimeters, settlements with a minimum of 10 dwellings served by public roads, with its perimeter delimited by points 50 m from the axis of the roads, in the transverse direction, and 20 m from the last building, in the direction of the roads."

1. Article 4 of the same code qualifies as urban property "all those that should not be classified as rural, without prejudice to the provisions of the following article"; and Article 6 indicates the types of urban property, in the following terms:

"1 – Urban property is divided into:

a) Residential;

b) Commercial, industrial or for services;

c) Land for construction; (underlined)

d) Other.

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

3 – Land for construction is considered land situated within or outside an urban area for which a license or authorization has been granted, prior notice admitted, or favorable prior information issued for a subdivision or construction operation, and also those declared as such in the acquisition title, except land in respect of which competent entities prevent any of those operations, namely those located in green areas, protected areas or which, in accordance with municipal land management plans, are devoted to spaces, infrastructure or public facilities. (Amended by Law No. 64-A/08, of 31-12)

4 – The provision of subparagraph d) of paragraph 1 includes land situated within an urban area that is not land for construction nor is covered by paragraph 2 of Article 3 and also buildings and constructions licensed or, in the absence of a license, that have as normal destination other purposes than those referred to in paragraph 2 and also those covered by the exception in paragraph 3."

1. Given the legal framework set out above, and considering the rules on the interpretation of legal norms, namely those resulting from Article 11 of the General Tax Law (LGT), it is necessary to conclude that the general principles of interpretation of laws, to which paragraph 1 of Article 11 of the LGT refers, are established in Article 9 of the Civil Code, which provides as follows:

"1. Interpretation should not be confined to the letter of the law, but should reconstruct from the texts the legislative intent, paying particular attention to the unity of the legal system, the circumstances under which the law was enacted and the specific conditions of the time at which it is applied.

1. However, the interpreter cannot consider legislative intent that does not have in the letter of the law a minimum of verbal correspondence, even if imperfectly expressed.

2. In determining the meaning and scope of the law, the interpreter will presume that the legislator adopted the most appropriate solutions and knew how to express its intent in adequate terms."

3. Thus, it is necessary to determine the meaning and scope of the concept of "property with housing use," a task that is fundamental to the interpretation and correct application of the provision contained in items 28 and 28.1 of the GTSD. This question is crucial for the decision regarding the aforementioned properties, respectively, land for construction and urban property devoted to purposes other than housing. The other fundamental question to be analyzed is whether, in the case of urban property in full ownership, the tax patrimonial value (TPV) to be considered for purposes of the incidence of SD is that corresponding to the TPV of each independent division individually considered or that corresponding to the sum of the TPV of all the parts or independent divisions globally considered.

4. As the first question is common to all the properties at issue and the second applies only to one of them, for reasons of greater clarity of exposition, it is deemed appropriate to address them in the order stated. Let us, therefore, see the most appropriate understanding for each of these questions.

A) Regarding Land for Construction Located in the Parish of ... – ..., Described with Register Numbers U-... and U-...

1. As noted above, the CIMI does not use in the classification of properties it adopts the concept of "property with housing use." Nor is this concept, with this terminology, found in any other instrument. Thus, following the reasoning already pursued in previous arbitral decisions, particularly those issued in proceedings Nos. 53/2013-T and 144/2013-T "in the absence of exact terminological correspondence of the concept of "property with housing use" with any other used in other instruments, various interpretative hypotheses can be ventured."

2. The starting point for the interpretation of that expression "properties with housing use" is, naturally, the text of the law, and it is on the basis of this that the "legislative intent" must be reconstructed, as required by paragraph 1 of Article 9 of the Civil Code, applicable by virtue of the provisions of Article 11, paragraph 1 of the LGT. The concept closest to the literal meaning of this expression used is manifestly that of "residential properties," defined in paragraph 2 of Article 6 of the CIMI as encompassing "buildings or constructions" licensed for residential purposes or, in the absence of a license, that have as normal purpose residential purposes.

3. If one understands that the expression "property with housing use" coincides with "residential properties," it is manifest that the assessments of SD relating to the land for construction referred to in the present proceedings will suffer from error regarding the factual and legal prerequisites, since the properties for which Stamp Duty was assessed pursuant to the aforementioned item 28.1 are land for construction, without any building or construction required by that paragraph 2 of Article 6, to meet that concept of "residential properties." Therefore, it would suffice to adopt the interpretation that "property with housing use" means "residential property" and the assessments contained in Table II of the Initial Petition, relating to urban properties with registration articles Nos. U-... and U-..., of the Parish of ..., ..., whose declaration of illegality is sought, would appear to be illegal, as there is no building or construction with housing use in said properties.

4. Furthermore, a more in-depth interpretation, as to the meaning to be given to the concept in question, leads to the conclusion that "use," in this context, means "action of directing something to a determined purpose." And, if we take into account the objectives defined in the declaration of principles made in Parliament on the intention of the legislator to introduce taxation on "luxury homes," there is no doubt that the purpose or underlying ratio legis is to tax the "use" of the property considered in the fullness of the degree of comfort it provides.

5. As BAPTISTA MACHADO rightly notes, "when, as is the rule, the norms (legislative formulas) bear more than one meaning, then the positive function of the text translates into giving stronger support to or more strongly suggesting one of the possible meanings. That is, among the possible meanings, some will correspond to the more natural and direct meaning of the expressions used, while others will only fit within the verbal framework of the norm in a forced, artificial manner. Now, in the absence of other elements that induce the choice of the less immediate meaning of the text, the interpreter should opt in principle for that meaning which best and most immediately corresponds to the natural meaning of the verbal expressions used, and particularly to its technical-legal meaning, on the assumption (not always exact) that the legislator knew how to express its intent correctly."

6. The relevance of the text of the law is especially emphasized in the interpretation of tax incidence rules, so the guiding thread must be, in the first instance, the principle of unity of the legal system, trying to impose some coherence of application.

And, in this line of thinking, we cannot dispense with recourse to the Explanatory Memorandum of Bill No. 96/XII/2nd, on which Law No. 55-A/2012 was based. In this explanatory memorandum, the Government's concern to strengthen the principle of social equity in austerity is evident, ensuring an effective distribution of the necessary sacrifices to comply with the adjustment program and its commitment to ensuring that the distribution of these sacrifices will be made by all and not just those who live from labor income.

1. In this context, in the absence of other interpretative coordinates, the content of the legal text must be the primary element of interpretation, in accordance with the presumption imposed by the same paragraph 3 of Article 9, that the legislator knew how to express its intent in adequate terms. Now, taking into account the meaning of the words "use" and "use," which are "to give destination" or "to apply," the formula used in that item 28.1 of the GTSD clearly encompasses properties that are already being used as housing, and cannot encompass properties that, although not yet applied to housing purposes, may eventually be intended for these purposes, as occurs with land for construction for housing.

2. As for the version of the law introduced by the Budget Law for 2014, it may be said that the same is irrelevant to the decision of the case in question, because its production of effects occurs only for tax facts verified in the year 2014, by force of the principle of prohibition of retroactive application of tax law regarding tax incidence rules. As already mentioned, this amendment was not given an interpretive character, constituting a genuine expansion of the tax incidence rule, so it can only produce effects for the future, that is, after 1 January 2014.

All tax facts at issue in the present proceedings relate to 2012 and 2013, and are therefore not affected by the application of the new version introduced for item 28.1 of the GTSD.

1. Thus, and in accordance with all that has been stated, it is considered that a property is devoted to a housing purpose, not when that destination is fixed for it in a subdivision order or by licensing act or similar, but when the effective attribution of that destination is concretized. The confrontation of item 28.1 of the GTSD with paragraph 2 of Article 6 of the CIMI, which defines the concept of residential properties, points to the necessity of an "actual use."

Thus, a building or construction licensed for housing or, even without a license, but which has as normal purpose housing, is, given the provisions of paragraph 2 of Article 6 of the CIMI, a residential property, because it is the legislator itself who considers as such "buildings or constructions licensed for such purposes or, in the absence of a license, that have as normal destination each of these purposes."

1. Therefore, on the assumption that the legislator of Law No. 55-A/2012 knew how to express its intent in adequate terms if it intended to refer also to properties only licensed for housing or that have housing as normal destination, it would certainly not have used the expression "properties with housing use." In these terms, it must be presumed that the use of a different expression by the legislator was intended to reach a different reality, so "property with housing use," cannot be a property only licensed for housing or intended for that purpose, but must be a property that already has actual use for that purpose.

2. In the case of land with the capacity for construction of housing, this is merely a potential, whose realization will depend on obtaining the necessary building license, which depends on numerous variables to be considered by the competent entity, and which may even never occur. Therefore, the only possible meaning for the expression "use" is that of an "actual use."

See, moreover, that Article 3 of the CIMI, regarding rural property, makes reference to those that "are devoted or, in the absence of concrete devotion, have as normal destination a use generating agricultural income," which shows that the use is concrete, actual. As is also seen from the latter part of this text, a property may have as destination a determined use and be or not be devoted to it, which shows the legal assumption of an actual use. This is the interpretation that appears to conform to the principle of uniformity of the legal system.

1. In the case in question, regarding the two properties described in item 43. C) as land for construction (U – ... and U- ... – ... – ...), from the documents attached to the record it is clear that there is no building or construction implanted in them and it is not certain that there may come to be, so we cannot consider that the property in question has an actual use for housing, whereby the assessments of SD challenged in the present proceedings, with reference to the years 2012 and 2013, appear to be illegal as they suffer from error regarding the factual and legal prerequisites.

2. It should also be noted that the legislative intention not to extend the scope of incidence to land for construction was expressly mentioned by the Government when presenting Bill 96-XII at the Plenary of Parliament, saying, by the voice of the Secretary of State for Tax Affairs, namely: "First, the Government proposes the creation of a special rate to tax high-value residential urban properties. This is the first time that Portugal has created a special taxation on high-value properties intended for housing. This rate will be 0.5% to 0.8% in 2012, and 1% in 2013, and will apply to homes valued at or above 1 million euros. With the creation of this additional tax, the tax effort required from these owners will be significantly increased in 2012 and 2013."

The express reference to "homes" as the target of the incidence of the new tax leaves no room for doubt about the legislative intent.

1. On the other hand, no reference to "land for construction" is found in the discussion of the aforementioned Bill.

As for the use of the user coefficient for the evaluation of these properties, as the TA argues, it has no relation to the classification of properties, only indicating the factors to be considered in the evaluation of land for construction. What is considered there, when making reference to "building to be constructed," is the consideration of the destination of the land, which, as we have seen, is something that, in the context of the CIMI, does not imply use and occurs before it. As the Claimant rightly refers to in their Initial Petition, it cannot be admitted that housing use can be determined with reference to the projected construction, because it will always be potential until the completion of the construction is verified.

1. Finally, it is important to note that Law No. 83-C/2013 of 31 December also contradicts the position here defended by the TA, as it did not come to clarify the logical element underlying the original wording of item 28.1, but came to indirectly confirm the interpretation that it did not encompass land for construction.

Indeed, if the primitive wording of item 28.1 under analysis, when speaking of "property with housing use," intended to encompass buildings and constructions that constituted "residential properties" and land for construction for which housing was authorized or intended, then it would be natural to attribute to the new wording an interpretive nature, similar to what is done in other provisions contained therein, such as for example Article 177, paragraph 7, regarding subparagraphs a) and b) of paragraph 3 of Article 17-A of the Personal Income Tax Code. Now, as we have seen, this did not occur.

1. For all that has been stated, it is the understanding of this Tribunal that item 28.1 does not apply to land for construction, even though it reveals potential for construction of housing. It should be noted that on this same question some arbitral decisions have already been issued, among which we highlight those issued in arbitral proceedings Nos. 42/2013 T, 48/2013-T, 53/2013-T, 144/2013-T, 180/2013 – T, 189/2013-T and, more recently, the decision issued in arbitral proceeding No. 306/2014-T (of 1/12/2014) and the Arbitral Award issued in proceeding No. 559/2014 – T (of 28/11/2014), among others.

2. Also the Supreme Administrative Court has already pronounced on this question, particularly in Awards issued, namely, on 9 and 23 April 2014 (in which the reporter was Isabel Marques da Silva) and 9 May 2014 (in which the reporter was Dulce Neto). In this regard, the Supreme Administrative Court award of 9 April 2014 (which makes express reference to arbitral decision No. 144/2013-T) concludes that "the legislator having not defined the concept of "urban properties with housing use," and resulting from Article 6 of the Property Tax Code - subsidiary applicable to the Stamp Duty provided for in the new item 28 of the General Table - a clear distinction between "residential urban properties" and "land for construction," these cannot be considered, for purposes of the incidence of Stamp Duty (Item 28.1 of the GTSD, as worded in Law No. 55-A/2012 of 29 October), as urban properties with housing use."

3. As a consequence of all that has been stated, it results that the assessments challenged, relating to SD assessed with reference to the two properties identified with registration articles Nos. U-... and U-..., of the Parish of ... - ..., are illegal, suffer from a defect of violation of law due to error regarding the legal prerequisites, constituting a violation of the provision in item No. 28.1 of the GTSD, whereby they must be subject to annulment, in accordance with Article 135 of the Administrative Procedure Code.

B) Regarding the Urban Property Identified with the Register Article No. U-..., of the Parish of ..., ...

1. As is proven in the present proceedings, in this case it is a matter of an urban property that also does not have actual housing use. For the reasons and grounds set out above regarding the determination of the concept of property "with housing use," as it is proven in the present proceedings that the property in question is devoted to the activity of its owner, in this case to A SA, then it is necessary to conclude that the property does not have an actual dedication to housing.

2. It is proven in the record that in this property operate the services of B, SA, a financial institution that heads Group C. This fact, which is alleged by the Claimant and is accepted by the TA, which recognizes this place as the headquarters of the claimant. Now, the activity exercised by the latter is of a commercial nature, and it is therefore a notorious fact that this property is not actually devoted to housing. And, being thus, in accordance with the terms already set forth in a reasoned and exhaustive manner above, the factual prerequisite necessary for the incidence of SD does not exist, in accordance with the terms provided in item 28.1 of the GTSD.

3. As mentioned above, the resort to the expression "housing use," to the detriment of the mention of "residential properties," should be understood as a clear option of the legislator for a more concrete reality, namely the actual use for housing. Consequently, it should be presumed that the use of a different expression aims at a different reality, so in proper hermeneutics, "property with housing use," cannot be a property only licensed for housing or intended for that purpose (that is, it will not suffice to be a "residential property"), but must be a property that already has actual use for that purpose.

4. In this regard, recall once again the meaning of the expression "use," in the same context of classification of properties as does the CIMI, in its Article 3, regarding rural property, considering as such those that "are devoted or, in the absence of concrete use, have as normal destination a use generating agricultural income," which shows that the use is concrete, actual. In fact, as is seen from the latter part of this text, a property may have as destination a determined use and be or not be devoted to it, which shows that use is, at the level of the connection of a property to a determined use, something more intense than mere destination.

5. Moreover, the text of the law when adopting the formula "property with housing use," instead of "urban properties of housing use," which appears in the aforementioned "Explanatory Memorandum," points strongly to the fact that it is required that the housing use already be realized, because only then will the property be with that use. – In this sense, see Arbitral Award No. 53/2014 – T, of 2/10/2013 and, more recently, arbitral decisions Nos. 178/2013 – T, of 28/07/2014 and 285/2014 – T of 28/11/2014.

6. As a consequence, and without need for further reasoning, also the assessment challenged relating to SD assessed with reference to the year 2013 and the property identified with registration article No. U-..., of the Parish of ... - ..., is illegal as it suffers from a defect of violation of law due to error regarding the legal prerequisites, constituting a violation of the provision in item No. 28.1 of the GTSD, whereby it must be subject to annulment, in accordance with Article 135 of the Administrative Procedure Code.

C) Regarding the Urban Property in Vertical Ownership, Identified with the Register Article No. U – ..., of the Parish of ..., ...

1. In this case, it is a matter of an urban property in vertical or full ownership, composed of several floors or divisions susceptible to independent use (four floors with right and left), with housing use. In this case, it is undisputed that the divisions or independent parts of the property in question are devoted to housing, as this is their actual use and because the Claimant so configures the factual situation that is proven in the present proceedings. The problem that arises is whether for purposes of the incidence of SD, the overall value of the property should be considered, corresponding to the sum of the tax patrimonial values assigned to each part, or whether each floor or independent division should be considered individually, based on the TPV assigned to it for purposes of the incidence of Property Tax.

2. The essential question to decide is, with reference to properties in full ownership, that is, not constituted in the regime of horizontal co-ownership, integrated by various floors and divisions with independent use, with housing use, which TPV is relevant for purposes of the incidence of SD. The answer to this question requires analysis of the applicable legal framework and reference principles in order to determine which interpretation is consistent with the Law and the Constitution, with the care that requires assessment of a tax incidence prerequisite, by force of the principle of fiscal legality resulting from the provision of Article 103, paragraph 2 of the Constitution.

3. On this matter, specifically, the CAAD has already pronounced in various decisions in which the substantive question is the same, dealing with the scope of the provision of the tax incidence rule of items 28 and 28-1 of the GTSD. Some of the arbitral decisions already issued on the matter are invoked by the Respondent in its arbitral request.

On the fundamental question in hand, it will be said that the first limit of interpretation is the letter of the law, but not the only one. The interpretative task requires something more, that is, from the text of the norm it is necessary to discover the underlying ratio legis, "a task of interconnection and valuation that escapes the literal domain." – (In this sense, see Arbitral Decision No. 30/2014-T of 20/06/2014 and Arbitral Decision No. 50/2013-T of 29/10/2013; also in the same sense, see Arbitral Decisions issued in proceedings Nos. 132/2013, 181/2013 and 183/2013, among others)

1. The tax incidence rule, as expressed in the provision of items 28 and 28.1 of the GTSD, refers to "ownership, usufruct or right of superficies of urban properties, with housing use (28.1) whose tax patrimonial value recorded in the register, in accordance with the CIMI is equal to or exceeding 1,000,000.00 euros – regarding the tax patrimonial value used for purposes of Property Tax." Considering this provision, the question arises whether for "properties with housing use" in vertical ownership, with floors or divisions susceptible to independent use, held by an entity, the TPV on which the stamp duty tax rate should apply is the individual TPV of each floor or division susceptible to independent use (similar to what occurs with properties in the horizontal co-ownership regime) or, differently, whether it should be considered as such the sum of all the TPV of all its parts.

2. In other words, as has already been considered in the arbitral decisions mentioned above (Arbitral Decision No. 50/2013-T and 30/2014-T), what is at issue is the adoption of an adequate reading of the scope of the provision of the tax incidence rule of items 28 and 28.1 of the GTSD, given what paragraph 7 of Article 23 of the SD Code says regarding the determination of taxable matter and consequent operation of tax assessment: "In the case of the tax due for the situations provided for in item 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 CIMI."

3. Now, once again it is necessary to take into account the provision of paragraph 3 of Article 11 of the General Tax Law, regarding the interpretation of the legal-tax incidence rule: "if doubt persists about the meaning of the incidence rules to be applied, the economic substance of the tax facts should be considered."

In the case in hand, the "economic substance of the tax facts" should be considered to appropriately specify the "necessary adaptations of the rules contained in the CIMI," for the adequate consideration of the legal matter under discussion. Having said this, the delimitation of the scope of the tax incidence rule of this new tax should follow the orientation of the letter and spirit of the law. In the first instance, therefore, what is provided in items 28 and 28-1 of the GTSD should be considered, with the necessary adaptations of the rules contained in the CIMI, as results from paragraph 7 of Article 23 of the SD Code.

1. It is thus important to take into account what was set out above regarding the introduction of the subjection to stamp duty of properties with housing use resulting from the addition of item 28 of the GTSD, effected by Article 4 of Law 55-A/2012 of 29/10, which typified the respective tax facts, namely: "ownership, usufruct or right of superficies of urban properties whose tax patrimonial value recorded in the register, in accordance with the Property Tax Code (CIMI), is equal to or exceeding € 1,000,000.00 – regarding the tax patrimonial value for purposes of Property Tax:

28-1 – For property with housing use – 1% (…)"

1. This law entered into force on the day following its publication, that is, on 30 October 2012. From the transitional provisions contained in its Article 6, it follows that the tax fact is considered to occur on 31 October 2012 and that "the tax patrimonial value to be used in the assessment of the tax corresponds to what results from the rules of the Property Tax Code with reference to the year 2011."

We have already seen that Law 55-A/2012 says nothing about the qualification of the concepts at hand, but Article 67, paragraph 2 of the Stamp Duty Code, added by the aforementioned Law, provides that "to matters not regulated in this Code relating to item 28 of the General Table, the CIMI applies subsidiarily."

1. The tax incidence rule refers, therefore, to urban properties, whose concept is that resulting from the provision of Article 2 of the CIMI, with the determination of the TPV obeying the terms provided in Article 38 et seq. of the same Code. Consulting the CIMI, it is found that its Article 6 only indicates the different types of urban properties, among which it mentions residential (see subparagraph a) of paragraph 1), clarifying in paragraph 2 of the same article that "residential, commercial, industrial or for services are buildings or constructions licensed for such purposes or, in the absence of a license, that have as normal destination each of these purposes."

From the aforementioned normatives we can conclude, once again and in harmony with the conclusion we reached in the response to the first legal question considered, that from the legislator's perspective what matters is not the legal-formal rigor of the concrete situation of the property but rather its normal use, that is, the purpose to which the property is actually devoted.

1. We further conclude that for the legislator the situation of the property in vertical or horizontal co-ownership did not matter, as no reference or distinction is made between one and the other. An identical conclusion is drawn from the referral that the legislator introduced regarding SD to the CIMI.

Now, this tax establishes as a criterion for properties in vertical ownership the assignment of a TPV to each of the parts or independent divisions, ordering that each one of them possesses the respective record or Property Tax Form with TPV determined individually in accordance with the characteristics of each independent division. In truth, everything proceeds as it would proceed in the case of fractions of a property that was constituted in the regime of horizontal co-ownership. What matters is, therefore, the material truth underlying its existence as an urban property and its use, that is, "with housing use," in the exact and strict measure of its use. Whether the property is or is not in the regime of horizontal co-ownership, the truth is that the actual and concrete use must be measured for and by each of its parts or independent fractions.

1. It is in light of these principles that the question now under analysis must be resolved, and which has to do with the determination of the relevant value for the incidence of SD on properties in vertical ownership, as occurs in the present proceedings, which the TA considers to be the value of the sum of the TPV of all the parts or divisions, and in this way easily exceed the reference value, that is, one million euros. Well, the criterion of opportunity adopted by the TA does not appear to be acceptable, nor consistent with the constitutional principles of legality, proportionality and fiscal equality.

2. But, it is the law itself in force that, as a whole, prevents such understanding from proceeding. Thus, using the criterion that the law itself introduced in Article 67, paragraph 2 of the Stamp Duty Code, "to matters not regulated in this Code relating to item 28 of the General Table, the CIMI applies subsidiarily." Given that, considering the provision of paragraph 4 of Article 2 of the CIMI, it results that: "For purposes of this tax, each autonomous fraction, in the regime of horizontal co-ownership, is deemed to constitute a property."

It also adds in paragraph 3 of Article 12 of the CIMI that: "Each floor or part of property susceptible to independent use is considered separately in the property register, which also determines the respective tax patrimonial value."

1. Thus, considering that the registration in the property register of properties in vertical ownership, constituted by different parts, floors or divisions with independent use, in accordance with the CIMI, obeys the same registration rules as properties constituted in horizontal co-ownership, and that the respective Property Tax, as well as the new SD, are assessed individually in relation to each of the parts, it is beyond doubt that the legal criterion for defining the incidence of the new tax must be the same.

2. Therefore, if the legal criterion under Property Tax imposes the issuance of individualized assessments for the autonomous parts of properties in vertical ownership, in the same manner as it establishes for properties in horizontal co-ownership, it has clearly established the criterion, which must be unique and unequivocal, for the definition of the rule of incidence of the new stamp duty contained in item 28 of the GTSD.

3. It is the legislator itself who in the letter of the law tells us that this is the criterion when it makes an unequivocal referral to the CIMI for purposes of the application of the aforementioned item 28 of SD.

Thus, the TA cannot consider as the reference value for the incidence of the new tax the total value of the property (total TPV), when the legislator itself established a different rule under the CIMI, and this is the Code applicable to matters not regulated regarding item 28 of the GTSD.

1. Having said this, it is clear that there would only be a place for incidence of the new stamp duty if some of the parts, floors or divisions with independent use presented a TPV exceeding € 1,000,000.00, which is not the case. [Document truncated at this point]