Process: 345/2015-T

Date: December 17, 2015

Tax Type: Selo

Source: Original CAAD Decision

Summary

CAAD Case 345/2015-T addresses the critical question of how Stamp Duty under item 28.1 of the General Table of Stamp Duty (TGIS) applies to buildings in vertical property with multiple independent units. The claimant, representing an undivided inheritance, challenged €7,029.73 in Stamp Duty assessments for 2014 on a Porto building with 25 independent units. The core dispute centers on whether the tax threshold applies to the total taxable property value (VPT) of the entire building or separately to each independent unit's VPT. Since no individual unit exceeded the €1,000,000 threshold, the claimant argued that no Stamp Duty was due, invoking constitutional protections under Articles 13 and 104(3) of the Portuguese Constitution regarding equality and proportionality. The Tax Authority maintained that the aggregate VPT determines tax liability, not individual unit values. The claimant also asserted res judicata based on CAAD Decision 405/2014-T, which annulled similar 2013 assessments on the same property. However, the Tax Authority contested this, arguing lack of identity in parties, causes of action, and tax periods. This case is significant for owners of multi-unit buildings held in vertical property, as it determines whether Stamp Duty applies based on building-wide or per-unit valuation, with substantial implications for properties whose total value exceeds €1,000,000 but whose individual units fall below this threshold. The decision impacts how vertical property rights interact with Stamp Duty taxation and constitutional principles of tax equality.

Full Decision

Arbitral Decision

CAAD: Tax Arbitration

Case No. 345/2015 – T

Subject Matter: Stamp Duty – item 28.1 of the GIST

Applicant/Claimant: A…, IN THE CAPACITY OF HEAD OF ESTATE OF THE UNDIVIDED INHERITANCE DUE TO THE DEATH OF B…

Respondent: Tax Authority and Customs (hereinafter T.A.C.)

1. Report

On 01-06-2015, A…, in the capacity of head of estate of the undivided inheritance due to the death of B…, with the tax identification number …, and with residence at Street …, no. …, …, … Porto, hereinafter referred to as the Claimant, submitted to the Administrative Arbitration Centre (CAAD) the request for constitution of an arbitral tribunal with a view to declaring the illegality of the acts of assessment of Stamp Duty in the total amount of 7,029.73 €, relating to the year 2014 and to item 28.1 of the General Table of Stamp Duty. Said documents relate to the urban property located at Street … no. …/… and Street … no. …/…, of the parish of …, municipality of Porto, registered in the urban real estate register of the said parish under no. … and described in the Real Estate Registry Office of Porto under no. …, and is constituted in full ownership with 25 units capable of independent utilization.

The Claimant alleges that the subjection to stamp duty is determined, not by the global taxable property value (TPV) of the property, but by the TPV attributed to each of the floors or independent units. And since none of the floors with independent utilization has a taxable property value (TPV) exceeding one million euros (1,000,000 €), no Stamp Duty can be assessed or collected, wherefore item 28.1 of the GIST and articles 13 and 104 no. 3 of the Constitution of the Portuguese Republic (CPR) are violated. The Claimant further states that the T.A.C., in making stamp duty apply to the sum of the TPVs attributed to each part or unit, is violating the principle of equality and proportionality in tax matters.

The Claimant also alleges that proceedings were conducted at the CAAD under case no. 405/2014-T which found the request for declaration to be well-founded, with the consequent annulment, of the same assessment acts, relating to the same property and relating to the year 2013. The Claimant states that such decision issued by the CAAD has the effect of res judicata, wherefore it is valid for any future assessments of Stamp Duty under item 28.1 of the GIST of the property in question.

A sole arbitrator was appointed, on 27-07-2015, Suzana Fernandes da Costa. In accordance with the provisions of article 11 no. 1 paragraph c) of the RJAT, the singular arbitral tribunal was constituted on 11-08-2015.

The Tax Authority and Customs submitted a response, on 29-09-2015, defending the maintenance of the tax acts in question, requested the dismissal of the claim, and alleged that the taxable property value relevant for purposes of stamp duty incidence is the total taxable property value of the urban property and not the taxable property value of each one of the floors or units that compose it, even though they are capable of independent utilization.

In relation to res judicata, the T.A.C. states that the Claimant's argument is without merit. The T.A.C. alleges that verification of the repetition of the cause requires identity of parties, identity of the claim and identity of the ground of claim, and that none of these identities exists in the present case. First of all, the Claimant in case no. 405/2014-T was C…, in the capacity of head of estate of the inheritance of D… and E…. On the other hand, the annulment of 22 assessments of Stamp Duty from the year 2013 was petitioned in the said case. And finally, the assessments relate to the urban property located at Street …, no. …/… and Street … no. …/….

On 04-11-2015, a ruling was issued scheduling the meeting provided for in article 18 of the RJAT, for the day 24-11-2015 at 15:00 hours.

The following day, 05-11-2015, the T.A.C. filed a motion requesting exemption from holding the meeting and from the presentation of final arguments. The T.A.C. further states that, if it is deemed necessary to proceed with the production of final arguments, it should be decided that they be submitted in writing and in sequential form.

On 09-11-2015 a ruling was issued ordering the notification of the Claimant to state its position, within 10 days, on the T.A.C.'s request for exemption from the meeting and from arguments.

Since the Claimant did not state its position, a ruling was issued on 24-11-2015, exempting from the holding of the meeting provided for in article 18 of the RJAT, as well as from the production of arguments. And the day 17-12-2015 was set for the pronouncement of the arbitral decision. The Claimant was further warned to proceed with payment of the subsequent arbitral fee until the date of pronouncement of the decision.

The parties enjoy legal personality and capacity and are legitimate (articles 4 and 10 no. 1 and 2 of the RJAT and article 1 of Ordinance no. 112-A/2011 of 22 March).

The arbitral claim is timely, in accordance with article 10 no. 1 paragraph a) of Decree-Law no. 10/2011 of 20 January and article 102 no. 1 paragraph a) of the Code of Tax Procedure and Process.

The case does not suffer from nullities and no prior questions were raised.

2. Matter of Fact

2.1. Proven Facts:

Having analyzed the documentary evidence produced and the position of the parties contained in the procedural documents, the following facts are considered proven and of interest for the decision of the cause:

  1. The Claimant A… is head of estate of the inheritance left by the death of B…, undivided inheritance with the tax identification number …, as per documents 25 and 26 attached with the arbitral claim.

  2. The undivided inheritance identified above was, in 2014, co-owner of one-third of the urban property located at Street … no. …/… and Street … no. …/…, of the parish of …, municipality of Porto, registered in the urban real estate register of the said parish under no. … and described in the Real Estate Registry Office of Porto under no. …, and is constituted in full ownership with 25 units capable of independent utilization, as per the real estate record attached with the arbitral claim as document 28.

  3. The Claimant, in the capacity of head of estate of the inheritance of B…, was notified of the following assessments of Stamp Duty for the year 2014:

  • assessment no. 2015 … in the amount of 251.07 €, relating to floor … 2D of the above-mentioned property, whose TPV is of 75,320.00 €;

  • assessment no. 2015 … in the amount of 222.90 €, relating to floor … 3E of the above-mentioned property, whose TPV is of 66,870.00 €;

  • assessment no. 2015 … in the amount of 286.27 €, relating to floor … 1D of the above-mentioned property, whose TPV is of 85,880.00 €;

  • assessment no. 2015 … in the amount of 222.90 €, relating to floor … 3D of the above-mentioned property, whose TPV is of 66,870.00 €;

  • assessment no. 2015 … in the amount of 251.07 €, relating to floor … 2E of the above-mentioned property, whose TPV is of 75,320.00 €;

  • assessment no. 2015 … in the amount of 286.27 €, relating to floor … 1E of the above-mentioned property, whose TPV is of 85,880.00 €;

  • assessment no. 2015 … in the amount of 222.90 €, relating to floor … 3D of the above-mentioned property, whose TPV is of 66,870.00 €;

  • assessment no. 2015 … in the amount of 251.07 €, relating to floor … 2E of the above-mentioned property, whose TPV is of 75,320.00 €;

  • assessment no. 2015 … in the amount of 251.07 €, relating to floor … 2D of the above-mentioned property, whose TPV is of 75,230.00 €;

  • assessment no. 2015 … in the amount of 286.27 €, relating to floor … 1E of the above-mentioned property, whose TPV is of 85,880.00 €;

  • assessment no. 2015 … in the amount of 222.90 €, relating to floor … 3E of the above-mentioned property, whose TPV is of 66,870.00 €;

  • assessment no. 2015 … in the amount of 286.27 €, relating to floor … 1D of the above-mentioned property, whose TPV is of 85,880.00 €;

  • assessment no. 2015 … in the amount of 333.70 €, relating to floor … of the above-mentioned property, whose TPV is of 100,110.00 €;

  • assessment no. 2015 … in the amount of 333.70 €, relating to floor … of the above-mentioned property, whose TPV is of 100,110.00 €;

  • assessment no. 2015 … in the amount of 333.70 €, relating to floor … of the above-mentioned property, whose TPV is of 100,110.00 €;

  • assessment no. 2015 … in the amount of 333.70 €, relating to floor … of the above-mentioned property, whose TPV is of 100,110.00 €;

  • assessment no. 2015 … in the amount of 375.43 €, relating to floor … of the above-mentioned property, whose TPV is of 112,630.00 €;

  • assessment no. 2015 … in the amount of 375.43 €, relating to floor … of the above-mentioned property, whose TPV is of 112,630.00 €;

  • assessment no. 2015 … in the amount of 333.70 €, relating to floor … of the above-mentioned property, whose TPV is of 100,110.00 €;

  • assessment no. 2015 … in the amount of 333.70 €, relating to floor … of the above-mentioned property, whose TPV is of 100,110.00 €;

  • assessment no. 2015 … in the amount of 333.70 €, relating to floor … of the above-mentioned property, whose TPV is of 100,110.00 €;

  • assessment no. 2015 … in the amount of 333.70 €, relating to floor … of the above-mentioned property, whose TPV is of 100,110.00 €;

  • assessment no. 2015 … in the amount of 284.17 €, relating to floor … of the above-mentioned property, whose TPV is of 85,250.00 €;

  • assessment no. 2015 … in the amount of 284.17 €, relating to floor … of the above-mentioned property, whose TPV is of 85,250.00 €.

None of the floors or units with independent utilization possesses a taxable property value exceeding one million euros.

No other facts with relevance to the decision of the cause were proven.

2.2. Reasoning of the Proven Matter of Fact:

As regards the facts proven, the arbitrator's conviction was based on the documents attached to the case file by the Claimant, namely the assessments and the real estate record.

3. Matter of Law:

3.1. Object and Scope of the Present Case

The question to be decided in the present proceedings is whether item 28.1 of the General Table of Stamp Duty (GIST), in the case of properties not constituted in horizontal property, applies to the sum of the taxable property value attributed to the different parts or floors (global TPV), or rather to the taxable property value of each part of the property with independent economic utilization.

On this question have already ruled, among others, the CAAD decisions issued in cases number 280/2013-T, 26/2014-T, 88/2014-T, 206/2014-T, 290/2014-T, 428/2014-T, 451/2014-T, 457/2014-T, 458/2014-T and 567/2014-T, 724/2014-T, 152/2015-T, 174/2015-T, 236/2015-T, 311/2015-T, and the decision no. 047/15 of the Supreme Administrative Court (SAC).

3.2. Question of the Taxable Property Value Relevant for Application of Item 28.1 of the GIST and of the Alleged Violation of the Principle of Equality

According to the T.A.C., in a property in vertical ownership (or not constituted in horizontal property regime) the criterion for determining the incidence of stamp duty is the global taxable property value of the floors and units destined for housing.

For the Claimant, on the other hand, the subjection to stamp duty contained in item no. 28.1 of the GIST should be assessed not by the total value of the property but by the value attributed to each of the parts with independent utilization, depending on the respective TPV, and should follow the same criterion as the determination of the IMI.

Let us see:

Law no. 55-A/2012, of 29 October, added item 28 to the General Table of Stamp Duty (GIST), with the following wording:

"28 – Ownership, usufruct or right of superficies of urban properties whose taxable property value contained in the register, in accordance with the Code of Municipal Tax on Real Property (CMTRP), is equal to or greater than € 1,000,000 – on the taxable property value used for purposes of IMI:

28.1 – For property with residential purpose – 1% (…);

In the transitional provisions contained in article 6 of that Law no. 55-A/2012, the following rules were established:

c) The taxable property value to be used in the assessment of the tax corresponds to that which results from the rules provided in the Code of Municipal Tax on Real Property by reference to the year 2011; (…)

f) The applicable rates are as follows:

i) Properties with residential purpose assessed in accordance with the Code of IMI: 0.5%;

ii) Properties with residential purpose not yet assessed in accordance with the Code of IMI: 0.8%;"

Item 28.1 GIST and sub-paragraphs i) and ii) of paragraph f) of no. 1 of article 6 of Law no. 55-A/2012, contains a concept that is not used in any other tax legislation which is that of "property with residential purpose".

For its part, article 67, no. 2 of the Code of Stamp Duty, added by the said Law, provides that "to matters not regulated in the present code relating to item 28 of the General Table the CMTRP applies subsidiarily."

The rule of incidence refers to urban properties, whose concept is that which results from article 2 of the CMTRP, with the determination of TPV complying with the terms provided in article 38 and following of the same code.

For its part, art. 6 of the CMTRP indicates the different types of urban properties, and determines that "residential, commercial, industrial or for services are the buildings or constructions licensed for such purpose or, in the absence of license, that have as their normal destination each of these purposes." (see paragraph a) of no. 1 of art. 6 CMTRP).

There is thus reason to conclude that for the legislator it is irrelevant whether the property is in vertical ownership or in horizontal property, being relevant only the material truth underlying its existence as an urban property and its utilization.

Since the Code of Stamp Duty (CSD) refers to the Code of IMI, we should consider that registration in the real estate register of properties in vertical ownership, constituted by different parts, floors or units with independent utilization, follows the same registration rules as those constituted in horizontal property.

It follows that the respective IMI, as well as Stamp Duty, are assessed individually in relation to each of the parts. For this reason, the legal criterion for defining the incidence of the new tax must be the same.

Thus it is concluded as in decision no. 50/2013-T of the CAAD and in decision no. 047/15 of the SAC, according to which "if the legal criterion 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 ownership, it has clearly established the criterion, which must be unique and unambiguous, for the definition of the rule of incidence of item 28.1 of the GIST".

It follows thus from the law that stamp duty of item 28.1 of the GIST would only apply if some of the parts, floors or units with independent utilization presented a TPV exceeding one million euros (1,000,000.00 €), which does not occur in the present case.

The criterion defended by the T.A.C., which takes into account the sum of the parts, with the argument that the property would not be constituted in horizontal property regime, finds no legal support and is contrary to the criterion that results from the CMTRP and which applies by referral, in the matter of Stamp Duty.

Further, the law itself expressly establishes, in the final part of item 28 of the GIST, that Stamp Duty to apply to urban properties of value equal to or exceeding one million euros (1,000,000.00 €) is – "on the taxable property value used for purposes of IMI."

In conclusion, the taxable property value relevant for purposes of application of item 28.1 of the GIST is the TPV of the part, floor or unit with independent utilization with residential purpose, as concluded by decision no. 047/15 of the SAC.

The Claimant alleges that the application of item 28.1 of the GIST violates the principle of equality enshrined in articles 13 and 104 no. 3 of the Constitution of the Portuguese Republic.

In accordance with the interpretation upheld above, the taxation of parts with independent utilization of value less than one million euros is not covered by the rule of incidence; therefore, their taxation does indeed violate the principle of equality, more specifically in its corollaries of taxpaying capacity and tax proportionality.

Regarding the principle of equality, see the CAAD decisions no. 50/2012-T and 218/2013-T, and the decisions of the Constitutional Court no. 142/04 and 187/2013.

We conclude, as in the CAAD decision no. 218/2013-T, stating that "the assessment of Stamp Duty now under consideration manifestly violates the principle of tax equality provided for in article 13 of the CPR, because: i) it is based on a rule that treats taxpayers who find themselves in identical situations in a very different manner, the measurement of the difference not being assessed by their real taxpaying capacity; ii) it is based on an arbitrary legal solution devoid of any rational foundation."

In the case at hand, the property in question is in vertical ownership and contains several floors and units with independent utilization destined for housing, as was proven above. Given that none of the floors destined for housing has a taxable property value equal to or exceeding one million euros (1,000,000.00 €), as results from the documents attached to the case file, it is concluded that the legal requirement for incidence of Stamp Duty provided for in Item 28 of the GIST is not met.

Looking now at the legislative intent of the provision in question in item 28.1 GIST and citing the CAAD decision no. 50/2013-T "the legislator, when introducing this legislative innovation, considered as the determining element of taxpaying capacity urban properties, with residential purpose, of high value (luxury), more precisely, of value equal to or exceeding one million euros (1,000,000.00€), on which it began to impose a special rate of stamp duty, intending to introduce a principle of taxation on wealth displayed in the ownership, usufruct or right of superficies of urban properties of luxury with residential purpose. For this reason, the criterion was application of the new rate to urban properties with residential purpose, whose TPV is equal to or exceeding one million euros (1,000,000.00 €). Clearly the legislator understood that this value, when attributed to a residence (house, autonomous unit or floor with independent utilization) displays a taxpaying capacity above the average and, as such, capable of determining a special contribution to ensure fair distribution of the tax burden." Already when applied to a part or unit that does not exceed the said value of one million euros, the rule of incidence will not be met.

The principle of tax equality determines that what is equal should be treated fiscally in an equal manner and what is different should be treated differently. Now, there is no justification for different treatment of units or parts of a property solely because the same is already in horizontal property, provided that the units or parts have independent utilization.

As stated in the CAAD decision of case no. 218/2013-T, "The principle of tax equality has as its basis the general principle of equality provided for in article 13 of the CPR, from which results the principle of taxpaying capacity which, by constitutional imperative, is the presupposition and criterion of taxation."

Professor Casalta Nabais states that the principle of tax equality has inherent especially "the idea of generality or universality, according to which all citizens are subject to the obligation to pay taxes, and of uniformity, requiring that such obligation be assessed by a single criterion — the criterion of taxpaying capacity. This thus implies equal tax for those who have equal taxpaying capacity (horizontal equality) and different tax (in qualitative or quantitative terms) for those who have different taxpaying capacity in proportion to this difference (vertical equality)" (Casalta Nabais, Tax Law, 5th edition, Coimbra, 2009, p. 151-152).

In the CAAD decision of case no. 50/2013-T it can be read that "the tax legislator cannot treat equal situations differently. Now, if the property were in horizontal property regime, none of its residential units would be subject to incidence of the new tax."

Thus, and in line with the case law of the Constitutional Court and the CAAD, we conclude for violation of the principle of tax equality and taxpaying capacity.

4. Decision

In light of the foregoing, it is determined that the claim filed by the Claimant in the present tax arbitral case is fully well-founded, as to the illegality of the assessments of Stamp Duty, relating to the year 2014, no. 2015 … in the amount of 251.07 €, no. 2015 … in the amount of 222.90 €, no. 2015 … in the amount of 286.27 €, no. 2015 … in the amount of 222.90 €, no. 2015 … in the amount of 251.07 €, no. 2015 … in the amount of 286.27€, no. 2015 … in the amount of 222.90 €, no. 2015 … in the amount of 251.07 €, no. 2015 … in the amount of 251.07 €, no. 2015 … in the amount of 286.27 €, no. 2015 … in the amount of 222.90 €, no. 2015 … in the amount of 286.27 €, no. 2015 … in the amount of 333.70 €, no. 2015 … in the amount of 333.70 €, no. 2015 … in the amount of 333.70€, no. 2015 … in the amount of 333.70 €, no. 2015 … in the amount of 375.43 €, no. 2015 … in the amount of 375.43 €, no. 2015 … in the amount of 333.70 €, no. 2015 … in the amount of 333.70 €, no. 2015 … in the amount of 333.70 €, no. 2015 … in the amount of 333.70 €, no. 2015 … in the amount of 284.17 €, no. 2015 … in the amount of 284.17€.

5. Value of the Case:

In accordance with the provisions of article 306, no. 2, of the CPC and 97-A, no. 1, paragraph a) of the CPPT and 3, no. 2 of the Regulation of Costs in Tax Arbitration Cases, the value of the action is fixed at 7,029.73 €.

6. Costs:

In accordance with article 22, no. 4, of the RJAT, and Table I annexed to the Regulation of Costs in Tax Arbitration Cases, the amount of costs is fixed at 612.00 €, owed by the Tax Authority and Customs.

Notify.

Lisbon, 17 December 2015.

Text prepared by computer, in accordance with article 138, no. 5 of the Code of Civil Procedure (CCP), applicable by referral of article 29, no. 1, paragraph e) of the Tax Arbitration Regime, reviewed by me.

The sole arbitrator

Suzana Fernandes da Costa

Frequently Asked Questions

Automatically Created

Is Stamp Tax under verba 28.1 TGIS assessed on the total property value or on each independent unit's VPT?
Stamp Tax under verba 28.1 TGIS is assessed based on the taxable property value (VPT) that determines tax incidence. The central dispute in Case 345/2015-T involves whether this applies to the total VPT of a building or to each independent unit's VPT separately. The claimant argued that taxation should occur per independent unit, meaning that if no individual unit exceeds €1,000,000, no Stamp Duty is due. The Tax Authority contended that the relevant VPT is the aggregate value of the entire urban property, regardless of internal divisions into independent units. This interpretation significantly affects multi-unit buildings in vertical property, as aggregation can push total values above the threshold even when individual units remain below it.
Does a building in total ownership with independent divisions qualify for per-unit VPT assessment for Stamp Tax purposes?
Whether a building in total ownership with independent divisions qualifies for per-unit VPT assessment is the core issue in this case. The claimant maintained that buildings divided into independent units capable of autonomous utilization should be assessed unit-by-unit for Stamp Tax purposes. This would mean each unit's VPT is evaluated separately against the €1,000,000 threshold. The Tax Authority rejected this interpretation, arguing that the property's legal unity as a single registered urban asset determines taxation, not its physical or functional division into independent units. This distinction is crucial for vertical property arrangements where multiple independent units exist within a single building under unified ownership or co-ownership structures.
Can a prior CAAD arbitral decision on the same property create res judicata for subsequent Stamp Tax liquidations?
A prior CAAD arbitral decision can potentially create res judicata for subsequent tax liquidations if there is identity of parties, identity of cause of action, and identity of legal grounds. In Case 345/2015-T, the claimant invoked CAAD Decision 405/2014-T, which annulled 2013 Stamp Duty assessments on the same property. However, the Tax Authority contested res judicata applicability, arguing that: (1) different parties were involved (different inheritance estates as claimants), (2) different tax periods were at issue (2013 vs. 2014), and (3) potentially different property descriptions existed. Generally, res judicata requires complete identity of the essential elements of the legal dispute, and differences in tax years or taxpayer identities may preclude its application even when the same property and legal interpretation are involved.
What are the constitutional grounds for challenging Stamp Tax on vertical property under Articles 13 and 104(3) of the Portuguese Constitution?
The constitutional grounds for challenging Stamp Tax under Articles 13 and 104(3) of the Portuguese Constitution relate to equality and proportionality principles in taxation. Article 13 enshrines the general principle of equality, requiring that taxpayers in similar situations receive similar tax treatment. Article 104(3) specifically addresses tax matters, prohibiting retroactive taxation and requiring that taxes respect principles of equality, legality, and proportionality. The claimant argued that assessing Stamp Duty on aggregate building value rather than per independent unit violates these principles, creating unequal treatment between owners of single-unit properties valued below €1,000,000 (who pay no tax) and owners of multi-unit buildings whose individual units also fall below the threshold but whose aggregate value exceeds it. This constitutional challenge questions whether the aggregation method produces disproportionate and unequal tax burdens inconsistent with the constitutional framework.
How does the equality and proportionality principle apply to Stamp Tax on properties with multiple independent units below the €1,000,000 threshold?
The equality and proportionality principle applies to Stamp Tax on properties with multiple independent units below the €1,000,000 threshold by requiring that tax burdens be distributed fairly and proportionately to taxpayers' economic capacity. The claimant's argument centers on the unfairness of aggregating VPT values: an owner of 25 independent units, each valued at €75,000 (total €1,875,000), would pay Stamp Duty, while 25 separate owners each holding one €75,000 unit would pay nothing. This creates horizontal inequity—different treatment of economically similar situations based solely on ownership structure rather than actual wealth or property value. The proportionality concern involves whether taxing based on aggregate value, when individual units represent separate economic realities capable of independent utilization and separate transactions, exceeds what is necessary and appropriate for the tax's legitimate purpose, potentially imposing excessive burdens on multi-unit property owners compared to single-unit owners.