Process: 35/2016-T

Date: June 15, 2016

Tax Type: Selo

Source: Original CAAD Decision

Summary

Process 35/2016-T addresses whether building land classified as 'land for construction' (terreno para construção) is subject to Stamp Tax under Item 28.1 of the General Table at the 1% rate applicable to properties with residential designation. The applicant, A... S.A., challenged a €44,000 stamp tax assessment on urban property in Vila do Conde with a patrimonial tax value of €8,800,000. The land, covering 32,138 square meters acquired in 2009, had no construction erected at the assessment date. Law 55-A/2012 of October 29 introduced Item 28 to the General Table, subjecting urban properties with patrimonial tax values equal to or exceeding €1,000,000 to annual stamp tax at rates of 1% for residential designation or 7.5% for properties held by entities in tax haven jurisdictions. The Tax Authority applied the 1% rate based on a residential designation coefficient used in calculating the property's patrimonial value under article 45 of the Municipal Property Tax Code (CIMI). The applicant argued that raw building land cannot be equated with properties having residential designation merely because a residential coefficient was applied in the valuation process. The arbitral tribunal cited extensive jurisprudence from both administrative arbitration tribunals and the Supreme Administrative Court, referencing over 30 precedent decisions from 2013-2015. The case examines the critical distinction between (1) designation coefficients used for property valuation purposes under IMI regulations and (2) actual property classification for stamp tax incidence. This interpretation question has significant implications for landowners holding high-value undeveloped plots, determining whether stamp tax obligations arise before construction commences or only upon completion of residential buildings.

Full Decision

ENGLISH TRANSLATION

The arbitrator Nuno Cunha Rodrigues, designated by the Ethics Council of the Administrative Arbitration Center (CAAD) to compose the present Arbitral Tribunal, constituted on 30.03.2016, decides as follows:

I. REPORT

A…, S.A., taxpayer no.…, with registered office on Rua…, no.…, … floor, room…, in Porto, requested the constitution of an arbitral tribunal in tax matters with a view to declaring the illegality of the stamp duty assessment act, in the amount of €44,000 (forty-four thousand euros), relating to urban real property, of the kind "land for construction", registered in the respective property register of the parish of … under article U-… .

The aforementioned assessment was carried out on the basis of the provisions of article 1 of the Stamp Tax Code (CIS), combined with Item 28 of the respective General Table and transitional provisions enshrined in article 6 of Law no. 55-A/2012, of 29 October, relating to the year 2012.

As grounds for the request, the Applicant alleges, in summary, that the property in question, notwithstanding having a patrimonial value exceeding €1,000,000 (one million euros), is "land for construction" and item no. 28.1 of the General Table of Stamp Tax refers to properties with "residential designation – 1%".

For its part, the Respondent – Tax and Customs Authority (AT) – in response to the allegations, contested the claim of the Applicant, presenting a defence by impugnation, pronouncing itself on the lack of merit of the request, that is, for the maintenance of the questioned assessment acts.

The request for constitution of the arbitral tribunal, presented on 26 January 2016, was accepted by the President of CAAD and automatically notified to the Respondent (AT) on 12 February following.

Pursuant to the provisions of paragraph a) of article 2, paragraph 2 of article 6 and paragraph b) of article 1 of article 11 of Decree-Law no. 10/2011, of 20 January, with the wording introduced by article 228 of Law no. 66-B/2012, of 31 December, the Ethics Council designated the signatory as arbitrator of the singular arbitral tribunal, who communicated acceptance of the appointment within the applicable time period, and notified the parties of such designation on 30 March 2016.

Duly notified of such designation, the parties did not manifest a will to refuse the designation of the arbitrator pursuant to the combined provisions of article 11, paragraph 1, subparagraphs a) and b) of the RJAT and articles 6 and 7 of the Ethics Code.

Thus, in accordance with the provision set out in paragraph c) of article 1 of article 11 of the RJAT, with the wording introduced by article 228 of Law no. 66-B/2012, of 31 December, the singular arbitral tribunal was constituted on 14 April 2016.

Duly constituted, the arbitral tribunal is materially competent, in light of the provisions of articles 2, paragraph 1, subparagraph a), of the RJAT.

The parties have legal personality and capacity and have standing (see articles 4 and 10, paragraph 2, of the RJAT, and article 1 of Ordinance no. 112-A/2011, of 22/03).

Given the knowledge derived from the procedural documents that make up the present case, which is deemed sufficient, the Tribunal decided to dispense with the meeting referred to in article 18 of the RJAT as well as the production of testimonial evidence.

No oral arguments were presented as unnecessary. The case is not affected by any nullities and no other matters were raised that would prevent consideration of the merits of the case, with the conditions being present for a final decision to be rendered.

II. FACTUAL MATTERS:

Relevant to the assessment of the issues raised, the following factual elements stand out, which are deemed entirely proven in light of the documents that make up the present case:

1.1. The Applicant is the owner of urban real property, of the kind "land for construction", situated on Avenue… and…, no.…, in Vila do Conde, registered in the respective property register of the Parish of…, under article U-….

1.2. The aforementioned property, classified in the register as "land for construction", has a total area of 32,138 square metres, and a patrimonial tax value, in 2012, of €8,800,000, having been acquired by the Applicant in 2009;

1.3. From the documents attached to the present case, namely from the copy of the respective property notebook and certificate of property registration, it is extracted that, on the date to which the challenged assessment relates, the land had no building or construction erected on its soil.

1.4. In determining the patrimonial value of the land in question, various relevant elements were considered, including a designation coefficient corresponding to the residential use of the property to be constructed, in accordance with the provisions of article 45 of the Municipal Property Tax Code (CIMI).

1.5. Given the patrimonial tax value finally ascertained and the designation coefficient considered in the evaluation of the land, the Tax and Customs Authority (AT) understood that the requirements for the incidence of stamp tax provided for in Item 28 of the respective Table were met, with the corresponding assessment relating to the year 2012.

1.6. In these terms, the Applicant was duly notified of assessment no. 2012…, of 08-11-2012, carried out on the basis of article 6, paragraph 1, subparagraph f), sub-item i), of Law no. 55-A/2012, of 29 October, with an amount of €44,000 ascertained, the payment of which was made by the Applicant on 26 November 2012.

1.7. A petition for administrative review was presented against this stamp tax assessment and subsequently a hierarchical appeal was made from the decision dismissing the same.

1.8. The hierarchical appeal was subject to a dismissal decision.

1.9. There are no facts relevant to the decision on the merits that have not been proven.

III. ON THE MERITS OF THE REQUEST:

Considering the factual matter set out above, it is important first of all to conduct an analysis of the requirements for the incidence of stamp tax on urban properties with residential designation, using the relevant tax rules for defining the respective legal concepts.

To this end, we rely on abundant, consistent and uniform jurisprudence of the arbitral tribunals, namely, and inter alia, of decisions 14/2015-T, 28/2015-T, 54/2015-T, 57/2015-T, 61/2015-T, 78/2015-T, 80/2015-T, 84/2015-T, 86/2015-T, 87/2015-T, 94/2015-T, 111/2015-T, 117/2015-T, 125/2015-T, 130/2015-T, 134/2015-T, 135/2015-T, 143/2015-T, 154/2015-T, 155/2015-T, 156/2015-T, 172/2015-T, 184/2015-T, 185/2015-T, 186/2015-T, 224/2015-T, 229/2015-T, 232/2015-T, 235/2015-T, 266/2015-T, 288/2015-T, 290/2015-T, 367/2015-T and 652/2015-T, the latter of which we follow closely in the present decision.

It should also be noted the following set of judgments of the Supreme Administrative Court, which we follow in the case sub judice: cases 1870/13, 1871/13, 46/14, 48/14, 55/14, 270/14, 197/14, 271/14, 274/14, 317/14, 467/14, 396/14, 425/14, 676/14, 707/14, 739/14, 740/14, 796/14 and 1338/15.

Let us examine:

Following the approval of Law no. 55-A/2012, of 29/10, Item 28 was added to the General Table of Stamp Tax, which came to subject to this tax urban properties whose patrimonial tax value recorded in the register, in accordance with the Municipal Property Tax Code (CIMI), is equal to or greater than €1,000,000.

The taxable basis is constituted by the patrimonial tax value considered for purposes of IMI, and that tax is annually assessed by the AT with respect to each urban property (Stamp Tax Code (CIS), see article 23, paragraph 7), at the rate of:

  • 1%, for urban property with residential designation;

  • 7.5%, for property, when the taxpayers, not being natural persons, are residents in a country, territory or region subject to a clearly more favourable tax regime, as listed in an ordinance approved by the Minister of Finance.

With respect to the years 2012 and 2013, the transitional regime provided for in article 6 of Law no. 55-A/2012, of 29/10 is applicable, with the following specificities:

a) The taxable event occurs on 31 October 2012;

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

c) The patrimonial tax value to be used in the assessment of the tax corresponds to that which results from the rules provided for in the Municipal Property Tax Code by reference to the year 2011;

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

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

f) The applicable rates are as follows:

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

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

iii) Urban properties when taxpayers who are not natural persons are residents in a country, territory or region subject to a clearly more favourable tax regime, as listed in an ordinance approved by the Minister of Finance: 7.5%.

2 - In 2013, the assessment of stamp tax provided for in item no. 28 of the respective General Table must apply to the same patrimonial tax value used for purposes of assessing municipal property tax to be carried out in that year.

Within the scope of the tax legal relationship in question, the owners, usufructuaries or holders of surface rights of properties as of 31 December of the year to which the tax relates are taxpayers and holders of the economic interest (debtors of the tax) - with respect to 2012, in accordance with the transitional regime referred to in the previous point, this date was moved forward to 31 October - as follows from article 8 of the CIMI, by express reference in articles 3, paragraph 3, subparagraph u), and 2, paragraph 4, of the CIS.

On the other hand, and with regard to the date of constitution of the tax obligation, fiscal connection, assessment and payment of the stamp tax in question, the corresponding rules of the CIMI are applicable, also by express reference in articles 5, paragraph 1, subparagraph u), 4, paragraph 6, 23, paragraph 7, 44, paragraph 5, 46, paragraph 5 and 49, paragraph 3, of the CIS. In general, by reference to article 67, paragraph 2, of the same Code, the provisions of the CIMI are of supplementary application to matters not specially regulated.

As the provision on the incidence of stamp tax refers to urban properties, it is important to note that the relevant concept is found in article 2 of the CIMI, as indeed provided for in paragraph 6 of article 1 of the CIS.

Invoking elements of a physical, patrimonial and economic nature, this provision of the CIMI defines as property "every fraction of land, including waters, plantations, buildings and constructions of any kind incorporated therein or built thereon, with a character of permanence, provided that it forms part of the assets of a natural or legal person and, in normal circumstances, has economic value..."

For IMI purposes, properties are classified as rural, urban or mixed, and this classification is particularly relevant both for the purposes of applying the rules for determining their respective patrimonial tax value and for applying the tax rates.

Thus, the CIMI establishes, in article 3, a positive definition of rural property, defining urban and mixed property, in its articles 4 and 5 in merely residual terms: thus classified are all those realities which, integrating the tax concept of property, are not to be classified as rural properties.

According to that provision, rural properties are those which, situated outside an urban agglomeration, meet one of the following requirements:

  • Are not to be classified as land for construction;

  • Are used for, or have as their normal use, the production of agricultural income, as considered for purposes of PIT;

  • Not having agricultural use, are not built or have only buildings or constructions that are merely accessory, without economic autonomy and of reduced value.

Properties situated within an urban agglomeration are also classified in this manner if, by force of legal provision, they cannot have use that generates income (in the case of green spaces, gardens, etc.) or can only be used in agricultural activities and effectively have that specific designation.

A property that does not meet the aforementioned requirements is, consequently, classified as urban.

It can thus be concluded that, for purposes of IMI and, in this case, stamp tax, land for construction is urban property, as it meets the requirements that make up the concept of property - physical reality, patrimonial character and economic value - and, whatever the designation or use it is having, in the case of expectant lands, is expressly excluded from the concept of rural property.

Referring to urban properties, paragraph 1 of article 6 of the CIMI distinguishes various types, dividing them into residential, commercial, industrial or service properties, land for construction and others, in accordance with the following criteria:

  • "residential, commercial, industrial or service": buildings or constructions licensed for such purpose or, in the absence of a license, which have as their normal destination each of those purposes (see article 6, paragraph 2 of the CIMI).

  • "land for construction", lands situated within or outside an urban agglomeration for which a license or authorization has been granted, prior notification or favorable preliminary information issued for a subdivision or construction operation, and also those that have been declared as such in the acquisition title, except lands where the competent authorities prohibit any of those operations, namely those located in green zones, protected areas or which, in accordance with municipal land planning plans, are assigned to spaces, infrastructure or public facilities (see article 6, paragraph 3 of the CIMI, as amended by Law no. 64-A/2008, of 31/12).

  • "Others", are as such considered lands situated within an urban agglomeration that are not land for construction nor are classified as rural property, in accordance with their respective legal concept, and also buildings and constructions licensed, or in the absence of a license, which have as their normal destination other purposes than those mentioned above (see article 6, paragraph 4 of the CIMI).

In the definition of the scope of incidence provided for in Item 28 of the TGIS, the legislator considers, as a relevant element of contributory capacity, high-value properties that, in the segment relating to taxpayers resident in Portuguese territory, are held for residential purposes.

However, by making the taxation apply to urban properties "with residential designation", the legislator does not establish, in the Stamp Tax Code, any specific concept that should be considered for this purpose, instead referring the application of the tax regime for properties referred to in that Item 28 to the rules of the CIMI.

It shall, then, be in the context of this Code that the meaning of that expression must be found, an understanding that, moreover, is shared by both the Applicant and the Respondent, albeit with different conclusions.

With regard to the definition of the different types of urban properties, the aforementioned Code, as referred to above, establishes a clear distinction between "residential" properties and "land for construction".

The former are classified based on their municipal license, or, if this does not exist, as a result of normal use.

The latter are defined based on their legal potential.

Considering the legislation relating to urban construction and building, namely with respect to the various types of licensing, the classification of a property as "residential", for tax purposes, presents no particular feature: those which, under the law, are so classified are residential.

In the absence of licensing, the normal destination of the property is relevant for classification. Here too the tax law does not offer any specific concept. However, it follows both from general knowledge and from the legislation applicable to urban buildings that the destination of housing presupposes the existence of a minimum of conditions that preserve personal privacy and family intimacy (see article 65 of the CRP).

The licensing, by the competent entity, or the normal use of a property, the destination of which is housing, refer, as could not otherwise be, to built properties that meet the characteristics required for them to be so classified.

Land for construction - whatever the type and purpose of the building that will be, or may be, erected thereon - does not satisfy, of itself, any condition for it to be licensed as such or for housing to be defined as its normal destination.

Thus, referring the provision on the incidence of stamp tax to urban properties with "residential designation", without any specific concept being established for this purpose, cannot it be extracted therefrom that the same contains a future potentiality, inherent to a distinct property that may possibly be built on the land.

The expression "with residential designation" conveys, in a simple reading, an idea of real and present functionality. From the provision in question it is not possible to extract, by interpretation, that, as is affirmed in the Respondent's response, the legislator's choice of that expression has in view integrating "other realities beyond those identified in article 6, paragraph 1, subparagraph a), of the CIMI." (see article 20 of the Respondent's response). Such interpretation has no legal support, given the principles contained in articles 9 of the Civil Code and 11 of the General Tax Law.

Indeed, if the legislator intended to include within the scope of incidence of the tax other realities than those resulting from the classification governed by article 6 of the CIMI, it would have said so expressly. But it did not, instead referring, in bulk, to the concepts and procedures provided for in the said Code.

On the other hand, neither can the Respondent's understanding be accepted that the concept of "residential designation" derives from the provision of article 45 of the CIMI.

This article refers to the rules applicable in determining the patrimonial value of land for construction, establishing that this is that which results from the value of the area of implantation of the building to be constructed added to the land adjacent to the implantation. In fixing the value of that area, a percentage, variable between 15% and 45%, of the value of the authorized or planned buildings is considered.

According to the Respondent, in fixing the value of the authorized or planned buildings on the land to be evaluated, the coefficients applicable in determining the patrimonial tax value are used, namely the designation coefficient provided for in article 1 of that Code.

Concluding therefrom that the consideration of such a coefficient, dependent on the type of use planned for the property to be built on the land, will be determinative for purposes of applying Item 28 of the TGIS (see article 18 of the Respondent's response).

This conclusion is supported on the assumption that the expression "properties with residential designation" calls for a classification that overlaps the types provided for in paragraph 1 of article 6 of the CIMI.

It is not possible, however, to follow such conclusion.

On one hand, because nothing in the law allows one to conclude that the legislator of stamp tax intended to broaden, for purposes of the incidence of this tax, the types provided for in paragraph 1 of article 6 of the CIMI, as already mentioned above; on the other hand, because the application of a designation coefficient relates to one of the elements to be considered in the evaluation of the land, that is, in determining the value of the authorized or planned buildings.

Independently of whether or not, in determining the value of buildings authorized or planned for land for construction, a designation coefficient should be considered, it is admitted, as it is obvious and of general knowledge, that the value of land is determinatively influenced by the type and characteristics of those buildings. However, this is a matter that goes beyond the question on which the present request for arbitral pronouncement turns.

In the circumstances referred to, the fact that, for a given piece of land for construction, the construction of a property intended for housing, or for any other purpose, is authorized, even if it should be considered in its evaluation, does not determine any change in the classification of the land which, for tax purposes, continues to be considered as such.

In these terms, given that article 6 of the CIMI establishes a clear distinction between, on the one hand, "residential" urban properties and, on the other hand, "land for construction", the latter cannot be considered, for purposes of the incidence of stamp tax, as "properties with residential designation".

Indeed, jurisprudence has been oriented in this sense, as referred to earlier in the present decision.

It is true that article 194 of Law no. 83-C/2013, of 31/12, amended the wording of paragraph 1 of Item 28 of the TGIS, providing that the taxation in question applies, at a rate of 1% "For residential property or for land for construction the building of which, authorized or planned, is for housing".

This is, however, an innovative provision, applicable as of the date of entry into force of the aforementioned Law - 1 January 2014 - therefore not covering the situation that is the subject of the present case, in which a taxable event occurred at a moment prior to the beginning of its validity.

It would only be otherwise if that amendment had an interpretive nature, applying, then to past facts. But, if the legislator intended to confer such a nature on the amended provision, it would not fail to make this clear in its text.

Now, not only did the legislator not do so, but no reference to its interpretive nature can be extracted from the text of the provision. On the contrary, the use, in the text of the new wording, of the disjunctive "or" expresses, in this context, a sense of alternative.

On the other hand, no controversy generated by the previous legal solution is known, as the possible interpretation of the provision in question, in its previous wording, has been peacefully and invariably affirmed by the jurisprudence referred to above.

Now, as Baptista Machado states (in "Introduction to Law and the Legitimizing Discourse", Almedina, Coimbra, 2014, p. 267), "for the new law to be interpretive, by its nature, it is necessary that there be matter for interpretation. If the rule of law was certain in the previous legislation, or if the jurisprudential practice had long been given a particular meaning that remained constant and peaceful, the new law that comes to resolve the respective legal problem in different terms should be considered an innovative law".

Thus, considering the literality of the new law, as well as the constant and peaceful jurisprudence known, we cannot fail to conclude that we are not faced with an interpretive law, but with an innovative law, applicable only for the future.

In these terms, it cannot be concluded otherwise than that the stamp tax assessment that is the subject of the present request for arbitral pronouncement is illegal, and it is also concluded that, at its origin, is an error attributable to the Tax Authority.

DECISION:

In these terms, and with the grounds set out, it is decided to judge the request for arbitral pronouncement procedent, as concerns the illegality of the challenged assessment, determining, consequently, its annulment and restitution to the Applicant of the amount unduly paid, increased by the corresponding compensatory interest, calculated in accordance with legal terms.

VALUE OF THE CASE:

It is fixed at €44,000, pursuant to article 97-A, paragraph 1, subparagraph a) of the CPPT, applicable by reference to article 29, paragraph 1, subparagraphs a) and b), of the RJAT and article 3, paragraph 2, of the Regulation of Costs in Tax Arbitration Proceedings.

COSTS:

Under article 22, paragraph 4, of the RJAT, and in accordance with Table I appended to the Regulation of Costs in Tax Arbitration Proceedings, the amount of costs is fixed at €2,142.00, entirely to the charge of the Respondent (AT).

Notify

Lisbon, 15 June 2016,

The Arbitrator,

Nuno Cunha Rodrigues

Frequently Asked Questions

Automatically Created

Is building land (terreno para construção) subject to Stamp Tax under Verba 28.1 of the General Table?
Building land (terreno para construção) classification creates interpretive challenges under Item 28.1 of the Stamp Tax General Table. While Law 55-A/2012 subjects urban properties valued over €1,000,000 to stamp tax, the critical question is whether undeveloped construction land qualifies as property with 'residential designation' warranting the 1% rate. The Tax Authority argued that because a residential designation coefficient was applied under article 45 CIMI when calculating the patrimonial value, the land falls within Item 28.1. However, extensive arbitral tribunal jurisprudence (including decisions 14/2015-T through 652/2015-T) and Supreme Administrative Court rulings distinguish between valuation coefficients and actual property classification, generally holding that raw building land without constructed improvements does not constitute property with residential designation for stamp tax purposes.
Does the 1% Stamp Tax rate for properties with housing use apply to land plots valued over €1,000,000?
The 1% Stamp Tax rate under Item 28.1 applies specifically to 'urban property with residential designation' (prédio urbano com afetação habitacional). Controversy arises when building plots valued over €1,000,000 have residential designation coefficients applied during IMI valuation but remain undeveloped land. The Tax Authority's position treats the coefficient used in patrimonial value calculation as determinative of residential designation. However, legal interpretation must distinguish between (1) technical valuation methodologies under CIMI that project future use and (2) actual current property classification. Raw land for construction lacks the defining characteristics of residential property—namely, habitable structures. The mere potential for residential development, reflected in valuation coefficients, does not transform undeveloped land into residential property. Courts have consistently held that stamp tax incidence should depend on actual property status, not prospective designations embedded in valuation formulas.
How did Law 55-A/2012 change Stamp Tax obligations for high-value urban properties in Portugal?
Law 55-A/2012 of October 29, 2012, fundamentally expanded Stamp Tax obligations by introducing Item 28 to the General Table. This legislation subjected high-value urban properties to annual stamp tax where the patrimonial tax value registered under the Municipal Property Tax Code (CIMI) equals or exceeds €1,000,000. The taxable base corresponds to the IMI patrimonial value, with the Tax Authority conducting annual assessments. Two rate tiers apply: 1% for properties with residential designation and 7.5% for properties held by non-natural persons resident in countries, territories, or regions with clearly more favorable tax regimes (tax havens) as defined by ministerial ordinance. Article 6 of Law 55-A/2012 established transitional provisions for 2012-2013 implementation. This created new compliance obligations for owners of luxury residences, high-value land, and investment properties, generating significant litigation regarding property classification, particularly concerning whether building land qualifies as residential designation merely because residential use coefficients informed the valuation.
Can taxpayers challenge Stamp Tax assessments on building land through CAAD arbitration proceedings?
Yes, taxpayers can challenge Stamp Tax assessments through CAAD (Centro de Arbitragem Administrativa) arbitration proceedings under the Legal Framework for Administrative Arbitration in Tax Matters (RJAT - Decree-Law 10/2011 of January 20). In Process 35/2016-T, the applicant filed for arbitral tribunal constitution on January 26, 2016, following unsuccessful administrative review and hierarchical appeal. The CAAD President accepted the request, notified the Tax Authority, and the Ethics Council designated an arbitrator who constituted the singular arbitral tribunal on April 14, 2016. Articles 2 and 10 of RJAT establish material competence and standing requirements for tax arbitration. The process offers an alternative to judicial courts for resolving tax disputes, with arbitrators applying the same legal framework while providing specialized expertise and potentially faster resolution. Administrative arbitration has become the primary forum for challenging Item 28 stamp tax assessments, producing extensive case law on building land classification issues.
What is the distinction between housing-designated properties and building land for Stamp Tax purposes under Portuguese law?
Portuguese tax law distinguishes between 'housing-designated properties' (prédios com afetação habitacional) and 'building land' (terrenos para construção) despite potential overlap in valuation methodologies. Housing-designated properties under Item 28.1 are completed urban buildings actually used or available for residential purposes, subject to 1% stamp tax when valued over €1,000,000. Building land consists of undeveloped plots zoned and authorized for future construction but lacking habitable structures. The confusion arises because article 45 CIMI requires applying designation coefficients during patrimonial valuation that reflect intended future use. A residential coefficient may increase building land's assessed value based on development potential. However, this valuation technique does not transform the property's legal classification. The designation coefficient is a mathematical component of value calculation, while residential designation for stamp tax purposes requires actual residential character. Courts and arbitral tribunals have consistently held that classification depends on current property status—raw land remains building land regardless of valuation coefficients, avoiding premature stamp tax liability before development occurs.