Process: 350/2017-T

Date: October 31, 2017

Tax Type: Selo

Source: Original CAAD Decision

Summary

This CAAD arbitral decision addresses the application of Item 28.1 of the Portuguese Stamp Tax General Table (TGIS) to properties held in vertical or total ownership. The claimant, a real estate investment fund, challenged Stamp Tax assessments totaling €28,904.63 for 2015 on a property comprising 33 independent residential units in total ownership. While each unit had a tax patrimonial value below €1,000,000 (ranging from €52,710 to €136,270), the aggregate value reached €2,879,190. The central legal question is whether Item 28.1—which imposes a 1% annual tax on residential properties with tax patrimonial value equal to or exceeding €1,000,000—should apply to the total property value or to each independent division separately. The claimant argued that taxation should assess each independent unit individually, exempting the property since no unit exceeds the threshold. The claimant invoked constitutional principles of equality and legality, asserting that properties in horizontal ownership (condominiums) receive preferential treatment compared to total ownership properties with independently usable divisions. The Tax Authority maintained that the relevant taxable base is the total tax patrimonial value of the urban property as registered, regardless of internal divisions or independent use capability, citing Constitutional Court and arbitral precedents. The arbitral tribunal, constituted on 05/09/2017, dispensed with oral hearings as the matter involved purely legal interpretation, and proceeded to final decision. This case presents significant implications for distinguishing horizontal property from vertical/total ownership for Stamp Tax purposes and whether differential tax treatment based solely on property regime constitutes unconstitutional discrimination when divisions possess autonomous use capability.

Full Decision

ARBITRAL DECISION

1. REPORT

1.1. A... – Special Open Real Estate Investment Fund, a company with registered office at Rua..., ..., ..., ..., in Lisbon, registered at the Commercial Registry Conservatory of Lisbon with the sole registration and identification number for collective persons ... (hereinafter referred to as the "Claimant"), filed on 30/05/2017 a petition for arbitral pronouncement with a view to the assessment and declaration of illegality of the dismissal order of the administrative appeal presented within the scope of case no. ...2016... and, consequently, the annulment of the Stamp Tax assessment acts for the year 2015, relating to the application of Item no. 28.1 of the General Table of Stamp Tax (General Table), in the total amount of € 28,904.63 (twenty-eight thousand, nine hundred and four euros and sixty-three cents) on a real property of which it is the owner.

1.2. His Excellency the President of the Ethics Council of the Administrative Arbitration Center (CAAD) designated, on 16/06/2017, as sole arbitrator the signatory of this decision.

1.3. On 05/09/2017 the arbitral tribunal was constituted.

1.4. In compliance with the provision of article 17, paragraph 1, of the Legal Framework for Tax Arbitration (RJAT), the Tax and Customs Authority (AT) was notified on 05/09/2017 to, if it so wished, present a response and request the production of additional evidence.

1.5. On 03/10/2017 the AT presented its response, requesting dispensation with the holding of the meeting described in article 18 of the RJAT, as well as the presentation of submissions.

1.6. Given that this is exclusively a matter of law, the arbitral tribunal on 04/10/2017 decided to dispense with the holding of the meeting referred to in article 18, paragraph 1, of the RJAT, on the grounds of the principle of autonomy of the arbitral tribunal in the conduct of the proceedings, inviting both parties to, if they so wished, present optional written submissions and scheduled the date for the pronouncement of the final decision.

1.7. Neither the AT nor the Claimant presented optional written submissions.

2. PRELIMINARY ASSESSMENT

The arbitral tribunal was regularly constituted and is materially competent.

The parties have legal personality and capacity and are legitimate, with no defects in representation occurring.

There are no nullities, exceptions, or preliminary issues that prevent the knowledge of the merits and which must be addressed ex officio.

Consequently, the conditions are met for the final decision to be pronounced.

3. POSITIONS OF THE PARTIES

As the basis of its petition, the Claimant alleges, in summary, that it makes no sense to consider as a whole a real property with independent divisions if the intention of the norm in question is to tax properties devoted to housing with tax patrimonial value equal to or greater than € 1,000,000.00. To that extent, the patrimonial value to be considered for the purposes of the application of Item no. 28.1 of the General Table is the tax patrimonial value of each independent division and not the tax patrimonial value of the property as a whole, as is the understanding of the AT. In the case at hand, each of the respective independent divisions has a tax patrimonial value inferior to € 1,000,000.00. Indeed, there is no basis for differentiated treatment of the fractions or parts of a property merely by the fact that it is in horizontal ownership, provided that the fractions or parts have independent use. The taxation carried out by the AT thus results in a manifest violation of the constitutional principles of equality, legality, or material truth, since it discriminates against properties constituted in horizontal ownership and properties in full ownership with floors or divisions capable of independent use.

Alternatively, the AT pronounces itself in favor of the dismissal of the petition and, consequently, the maintenance of the aforementioned assessment acts, on the grounds that the tax patrimonial value relevant for the purposes of the Stamp Tax incidence consists of 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 capable of independent use.

It concludes, with reference to recent jurisprudence of the Constitutional Court and also to arbitral jurisprudence, that the Stamp Tax assessment acts in question do not violate any legal or constitutional principle.

4. FACTUAL MATTERS

4.1. FACTS DEEMED PROVED

In light of the documents submitted to the proceedings, it is established as proved that:

4.1.1. The Claimant is the owner of the urban real property registered in the urban property register in the parish of ..., municipality of Loulé, with the registration number ....

4.1.2. The property is in full ownership with 33 floors or divisions with independent use, devoted to housing, whose tax patrimonial value, determined under the Property Tax Code (Código do IMI), varies between € 52,710.00 and € 136,270.00.

4.1.3. The property in question was registered in the matrix in 1997 and the sum of the tax patrimonial values of the aforementioned autonomous fractions devoted to housing amounts to € 2,879,190.00 (two million, eight hundred and seventy-nine thousand, one hundred and ninety euros), each of them individually having a tax patrimonial value less than € 1,000,000.00.

4.1.4. The Claimant was notified of the Stamp Tax assessment acts relating to the year 2015, carried out under Item no. 28.1 of the General Table, on the floors and divisions with independent use devoted to housing, in the global amount of € 28,904.63 (twenty-eight thousand, nine hundred and four euros and sixty-three cents), namely:

  • Documents no. 2016..., no. 2016... and no. 2016... relating to the floor or division with independent use identified as "E1 RC", in the amount of € 1,156.00;
  • Documents no. 2016..., no. 2016... and no. 2016... relating to the floor or division with independent use identified as "E1 1st", in the amount of € 1,156.00;
  • Documents no. 2016..., no. 2016... and no. 2016... relating to the floor or division with independent use identified as "E1 2nd", in the amount of € 895.30;
  • Documents no. 2016..., no. 2016... and no. 2016... relating to the floor or division with independent use identified as "E2 RC", in the amount of € 895.30;
  • Documents no. 2016..., no. 2016... and no. 2016... relating to the floor or division with independent use identified as "E2 1st", in the amount of € 895.30;
  • Documents no. 2016..., no. 2016... and no. 2016... relating to the floor or division with independent use identified as "E2 2nd", in the amount of € 1,362.70;
  • Documents no. 2016..., no. 2016... and no. 2016... relating to the floor or division with independent use identified as "E3 RC", in the amount of € 895.30;
  • Documents no. 2016..., no. 2016... and no. 2016... relating to the floor or division with independent use identified as "E3 1st", in the amount of € 895.30;
  • Documents no. 2016..., no. 2016... and no. 2016... relating to the floor or division with independent use identified as "E3 2nd", in the amount of € 1,362.70;
  • Documents no. 2016..., no. 2016... and no. 2016... relating to the floor or division with independent use identified as "E4 RC", in the amount of € 895.30;
  • Documents no. 2016..., no. 2016... and no. 2016... relating to the floor or division with independent use identified as "E4 1st", in the amount of € 895.30;
  • Documents no. 2016..., no. 2016... and no. 2016... relating to the floor or division with independent use identified as "E4 2nd", in the amount of € 895.30;
  • Documents no. 2016..., no. 2016... and no. 2016... relating to the floor or division with independent use identified as "E4 3rd", in the amount of € 527.10;
  • Documents no. 2016..., no. 2016... and no. 2016... relating to the floor or division with independent use identified as "E5 RC", in the amount of € 895.30;
  • Documents no. 2016..., no. 2016... and no. 2016... relating to the floor or division with independent use identified as "E5 1st", in the amount of € 895.30;
  • Documents no. 2016..., no. 2016... and no. 2016... relating to the floor or division with independent use identified as "E5 2nd", in the amount of € 895.30;
  • Documents no. 2016..., no. 2016... and no. 2016... relating to the floor or division with independent use identified as "E5 3rd", in the amount of € 527.10;
  • Documents no. 2016..., no. 2016... and no. 2016... relating to the floor or division with independent use identified as "E6 RC", in the amount of € 895.30;
  • Documents no. 2016..., no. 2016... and no. 2016... relating to the floor or division with independent use identified as "E6 1st", in the amount of € 895.30;
  • Documents no. 2016..., no. 2016... and no. 2016... relating to the floor or division with independent use identified as "E6 2nd", in the amount of € 895.30;
  • Documents no. 2016..., no. 2016... and no. 2016... relating to the floor or division with independent use identified as "E6 3rd", in the amount of € 527.10;
  • Documents no. 2016..., no. 2016... and no. 2016... relating to the floor or division with independent use identified as "E7 RC", in the amount of € 895.30;
  • Documents no. 2016..., no. 2016... and no. 2016... relating to the floor or division with independent use identified as "E7 1st", in the amount of € 895.30;
  • Documents no. 2016..., no. 2016... and no. 2016... relating to the floor or division with independent use identified as "E7 2nd", in the amount of € 895.30;
  • Documents no. 2016..., no. 2016... and no. 2016... relating to the floor or division with independent use identified as "E7 3rd", in the amount of € 527.10;
  • Documents no. 2016..., no. 2016... and no. 2016... relating to the floor or division with independent use identified as "E8 RC", in the amount of € 895.30;
  • Documents no. 2016..., no. 2016... and no. 2016... relating to the floor or division with independent use identified as "E8 1st", in the amount of € 895.30;
  • Documents no. 2016..., no. 2016... and no. 2016... relating to the floor or division with independent use identified as "E8 2nd", in the amount of € 895.30;
  • Documents no. 2016..., no. 2016... and no. 2016... relating to the floor or division with independent use identified as "E8 3rd", in the amount of € 527.10;
  • Documents no. 2016..., no. 2016... and no. 2016... relating to the floor or division with independent use identified as "E9 RC", in the amount of € 895.30;
  • Documents no. 2016..., no. 2016... and no. 2016... relating to the floor or division with independent use identified as "E9 1st", in the amount of € 895.30;
  • Documents no. 2016..., no. 2016... and no. 2016... relating to the floor or division with independent use identified as "E9 2nd", in the amount of € 895.30;
  • Documents no. 2016..., no. 2016... and no. 2016... relating to the floor or division with independent use identified as "E9 3rd", in the amount of € 527.10.

4.1.5. On 22/08/2016, the Claimant filed an administrative appeal of the aforementioned assessment acts (case no. ...2016...), requesting their annulment on grounds of illegality, which was dismissed by order dated 24/02/2017, notified on 01/03/2017.

4.1.6. On 30/05/2017, the Claimant filed the petition for arbitral pronouncement that gave rise to the proceedings at hand.

4.2. FACTS NOT DEEMED PROVED

There are no facts of relevance to the decision that have not been established as proved.

5. THE LAW

On the incidence of Item no. 28.1 of the General Table

The issue to be decided centres solely on whether, within the scope of the Stamp Tax incidence referred to in Item no. 28.1 of the General Table, added by Law no. 55-A/2012, of 29 October, there are included, or not, residential urban properties which, although not constituted in horizontal ownership, are composed of floors or divisions capable of independent use, whenever the tax patrimonial value attributed to each of these distinct parts does not exceed the amount of € 1,000,000.00.

That is, it is a matter of determining whether the quantitative element relevant to the aforementioned provision should be considered based on the tax patrimonial value attributed to each of the parts, as the Claimant contends, or whether that element is what results from the sum of the tax patrimonial values attributed to them, as the AT argues.

According to the established factual basis, the AT assessed Stamp Tax by considering that the tax patrimonial value of the urban property constituted in full ownership is greater than € 1,000,000.00, taking into account the sum of the tax patrimonial value of each of the 33 floors or divisions with independent use devoted to housing that compose the aforementioned property.

On this matter, there is already abundant jurisprudence from the Supreme Administrative Court [1] (STA) and, likewise, arbitral jurisprudence, which we indicate, by way of example, in cases no. 277/2013-T, no. 291/2013-T, no. 35/2014-T, no. 464/2014-T, no. 639/2014-T, no. 724/2014-T, no. 245/2014-T, no. 152/2015-T, and no. 21/2015-T, which we follow.

Let us see.

According to the provision of Item no. 28 of the General Table, in effect at the date of the facts, the following are included in the scope of Stamp Tax incidence:

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

28.1 - For a residential property or for land for construction whose authorized or planned building is for housing, in accordance with the provisions of the Property Tax Code - 1%.[2]

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

The owners, usufructuaries, or holders of superficies rights of the properties on 31 December of the year to which the tax relates are thus the tax subjects and debtors of the tax, as provided in article 8 of the Property Tax Code, by express reference of articles 3, paragraph 3, subparagraph u), and 2, paragraph 4, of the Stamp Tax Code.

As regards the date of the constitution of the tax obligation, tax connection, determination of the taxable base, assessment and payment of the Stamp Tax in question, the corresponding rules of the Property Tax Code are applicable, by express reference of articles 5, paragraph 1, subparagraph u), 4, paragraph 6, 23, paragraph 7, 44, paragraph 5, 46, paragraph 5, and 49, paragraph 3, of the Stamp Tax Code. In general, by reference of article 67, paragraph 2, of the same Code, the provisions of the Property Tax Code are applicable on a subsidiary basis to matters not specifically regulated.

Now, given that there is no question in the present case regarding the type of property at hand, classified as urban and devoted to housing, in accordance with the criteria established in articles 2, 4, and 6 of the Property Tax Code, the only issue at hand is to ascertain the exact meaning of "patrimonial value considered for the purposes of Property Tax" contained in the rule of incidence of Stamp Tax.

It is therefore necessary to resort to the rules of the Property Tax Code relating to the treatment given, under this tax, to parts of urban properties capable of independent use, in particular with regard to the determination of their respective tax patrimonial value and the rules applicable to the assessment and payment of that tax.

Thus, in accordance with article 12, paragraph 3, of the aforementioned Code, which establishes the concept of property register, "each floor or part of property capable of independent use is considered separately in the register entry, which discriminates its respective tax patrimonial value."

Now, the separation in the register of the functionally and economically independent parts of a property in full ownership is based on reasons of fiscal and extrafiscal nature. On the fiscal plane, that separation is related to the very determination of tax patrimonial value, which constitutes the taxable base of Property Tax, given that the formula for determining that value, provided in article 38 of the same Code, includes indices that vary depending on the use attributed to each of those parts. On the extrafiscal plane, that separation continues to find justification in the relevance attributed to the tax patrimonial value of properties and their autonomous parts in urban leasing legislation.

This understanding is also shared by J. Silvério Mateus and L. Corvelo de Freitas [3], according to whom, "Another aspect that should be highlighted in the register concerns the need to make relevant the autonomy that, within the same property, can be attributed to each of its parts, functionally and economically independent. In these cases, the register entry must not only make reference to each of these parts but must make express reference to the patrimonial value corresponding to each of them. An example that can illustrate this situation is the case of an urban property, not constituted in horizontal ownership regime, and which is composed of several floors. (...) However, as each of these units can be the object of lease or any other use by the respective holder, the register must evidence these units and tax patrimonial value must be assigned to each of them." [emphasis ours].

In the economy of the Property Tax, the separation of parts of urban property capable of independent use is not limited to their separation in the register entry and discrimination of their respective tax patrimonial value. This autonomy extends also to the assessment of the tax itself.

Indeed, article 119, paragraph 1, of the aforementioned Code provides that the tax collection document must contain the discrimination of the properties, their parts capable of independent use, and the respective tax patrimonial value. For compliance with this provision, the assessment of Property Tax, in the strict sense of the application of the rate to the taxable base, does not take as reference the sum of the tax patrimonial values attributed to the autonomous parts of the same property, but the value attributed to each one individually considered.

Equally in the sense of individualization, for tax purposes, of the autonomous parts of urban properties, it is also relevant article 15-O, paragraph 1, of Decree-Law no. 287/2003, of 12 November, added by Law no. 60-A/2011, of 30 November.

In accordance with the provision of the aforementioned rule, the safeguard clause relating to the aggravation of Property Tax taxation resulting from the general appraisal of urban properties is applicable per property or part of urban property that is the object of the aforementioned appraisal.

It thus results from the relevant rules of the Property Tax Code, which by reference are applicable to the Stamp Tax referred to in Item no. 28.1 of the respective General Table, that the autonomous parts of urban properties assume full autonomy, in terms of appraisal and description in the property register and assessment of the tax.

By referring to the patrimonial value considered for the purposes of Property Tax, the rule of incidence and quantification of Stamp Tax referred to in Item no. 28.1 of its General Table can only appeal to the reality described above, that is, to the tax patrimonial value considered for Property Tax purposes with respect to each part of an urban property capable of independent use.

As, moreover, is reflected in the assessments at hand: the AT, after, without legal support, performing the sum of the tax patrimonial values of the various autonomous parts of the property to extract from it the quantitative assumption of Stamp Tax incidence, performs the assessment with reference to each of those parts even though, individually, none of them reaches that value.

For all the foregoing, and in accordance with the established facts, the tax patrimonial value of each of the 33 floors or divisions with independent use devoted to housing that make up the property constituted in full ownership, and which was determined according to the rules of the Property Tax Code, is less than € 1,000,000.00, and the assumptions of taxation under Item no. 28.1 of the General Table are thus not met.

Therefore, the tax assessment acts for Stamp Tax, object of the present arbitral pronouncement proceedings, in the total amount of € 28,904.63, are vitiated by violation of the provision of Item no. 28.1 of the General Table and article 67, paragraph 2, of the Stamp Tax Code, due to error regarding their legal assumptions, declaring thus the illegality of those assessment acts, with the consequent annulment of the same.

Having concluded that the Stamp Tax assessment acts which are the object of the present petition for arbitral pronouncement suffer from a defect of violation of law that imposes their annulment, the knowledge of the other questions relating to the legality (due to violation of the constitutional principles of equality, legality, or material truth) of those acts and, likewise, of the dismissal order of the administrative appeal presented is rendered unnecessary.

On the right to compensatory interest

In addition to the annulment of the assessments, and the consequent reimbursement of the amounts unduly paid, the Claimant further requests that it be recognized the right to compensatory interest, under article 43 of the General Tax Law (LGT).

Indeed, in accordance with the provision of paragraph 1 of the aforementioned article, compensatory interest is due "when it is determined, in administrative appeal or judicial impugnation, that there was error attributable to the services from which results payment of the tax debt in an amount greater than legally due." In addition to the means referred to in the provision that is transcribed, we understand that, as follows from paragraph 5 of article 24 of the RJAT, the right to the aforementioned interest can be recognized in the arbitral proceedings and thus the petition is known.

The right to compensatory interest referred to in the provision of the General Tax Law cited above presupposes that tax has been paid in an amount greater than due and that this derives from an error, of fact or of law, attributable to the services of the AT. In the present case, both conditions are met, and thus the obligation of compensatory interest in favor of the tax subject is constituted, which is hereby declared.

6. DECISION

With the grounds exposed, the arbitral tribunal decides:

a) To uphold the petition for arbitral pronouncement and, in consequence, to declare illegal the Stamp Tax assessments contained in the identified collection documents, with all legal consequences;

b) To uphold the petition for recognition of the Claimant's right to the payment of compensatory interest;

c) To order the AT to reimburse to the Claimant the Stamp Tax unduly paid, in the amount of € 28,904.63;

d) To order the AT to pay costs.

7. VALUE OF THE CASE

The value of the case is fixed at € 28,904.63 (twenty-eight thousand, nine hundred and four euros and sixty-three cents), in accordance with article 97-A of the Code of Tax Procedure and Process (CPPT), applicable by force of subparagraphs a) and b) of paragraph 1 of article 29 of the RJAT and paragraph 2 of article 3 of the Regulation of Costs in Tax Arbitration Proceedings (RCPAT).

8. COSTS

Costs to be borne by the AT, in the amount of € 1,530 (one thousand five hundred and thirty euros), in accordance with Table I of the Regulation of Costs in Tax Arbitration Proceedings, in accordance with paragraph 2 of article 22 of the RJAT.

Notify.

Lisbon, 31 October 2017

The arbitrator,

(Hélder Filipe Faustino)

Document prepared by computer, in accordance with the provision of paragraph 5 of article 131 of the Code of Civil Procedure, applicable by reference from subparagraph e) of paragraph 1 of article 29 of the RJAT. The drafting of the present decision is governed by the orthography prior to the Orthographic Agreement of 1990.

[1] By way of illustration, we highlight the Decision rendered in case no. 047/15, of 09/09/2015, in accordance with which: "I - With respect to properties in vertical ownership, for the purposes of Stamp Tax incidence (Item 28.1 of the TGIS, as amended by Law no. 55-A/2012, of 29 October), the subjection is determined by the conjunction of two factors: residential use and the tax patrimonial value contained in the register equal to or greater than € 1,000,000. II - Where a property is constituted in vertical ownership, the incidence of Stamp Tax must be determined, not by the tax patrimonial value resulting from the sum of the tax patrimonial value of all divisions or floors capable of independent use (individualized in the register entry), but by the tax patrimonial value attributed to each of those floors or divisions intended for housing.", available at www.dgsi.pt

[2] This wording was amended by Law no. 83-C/2013, of 31 December, without, however, having great relevance to the case at hand.

[3] "Taxes on Real Estate Property and Stamp Tax, Commented and Annotated", pages 159 and 160.

Frequently Asked Questions

Automatically Created

What is Verba 28.1 of the Portuguese Stamp Tax General Table and how does it apply to properties valued over €1,000,000?
Item 28.1 of the General Stamp Tax Table (Tabela Geral do Imposto do Selo - TGIS) establishes an annual 1% tax on residential urban properties with a tax patrimonial value (valor patrimonial tributário) equal to or exceeding €1,000,000. This tax applies to property ownership and is calculated based on the tax patrimonial value determined under the Property Tax Code (Código do IMI). The tax is assessed annually on properties meeting the threshold criteria, targeting high-value residential real estate holdings.
How does the CAAD arbitral tribunal determine the taxable patrimonial value for vertical or total property ownership under Stamp Tax?
The central issue in this case is whether the taxable patrimonial value should be calculated for the entire property in total ownership or for each independent division separately. The Tax Authority's position maintains that the total tax patrimonial value of the urban property registered as a single unit determines Stamp Tax liability, regardless of internal independent divisions. The claimant challenged this interpretation, arguing that each independent division with autonomous use should be assessed separately against the €1,000,000 threshold, similar to horizontal property (condominium) fractions. The tribunal's determination on this interpretive question establishes important precedent for vertical property taxation.
Can each independent unit in a vertical property be assessed separately for Stamp Tax purposes under Verba 28 TGIS?
This is the core legal dispute in this arbitral proceeding. The claimant argued that independent divisions with autonomous use within a property held in total ownership should receive treatment equivalent to condominium units (horizontal property) for Stamp Tax purposes, with each division assessed individually against the €1,000,000 threshold. The Tax Authority rejected this approach, maintaining that the property's aggregate tax patrimonial value is determinative. The claimant invoked constitutional equality principles, contending that differentiated treatment based solely on property ownership regime (horizontal versus vertical/total ownership) lacks rational justification when divisions possess independent use capability, potentially violating constitutional guarantees.
What is the procedure for filing a gracious complaint and subsequent arbitral appeal against Stamp Tax assessments in Portugal?
The procedure involves several stages: (1) Filing an administrative appeal (reclamação graciosa) with the Tax Authority challenging the assessment acts; (2) Upon dismissal or denial of the administrative appeal, filing a petition for arbitral review with CAAD (Centro de Arbitragem Administrativa) within statutory deadlines; (3) CAAD's President designates an arbitrator; (4) The arbitral tribunal constitutes and notifies the Tax Authority to respond; (5) The tribunal may dispense with oral hearings for purely legal matters; (6) Parties may submit written submissions; (7) The tribunal issues a final arbitral decision. In this case, following administrative appeal dismissal in case ...2016..., the claimant filed the arbitral petition on 30/05/2017, the tribunal constituted on 05/09/2017, and proceeded without oral hearing.
How does the distinction between total property and independent divisions affect Stamp Tax liability under Portuguese tax law?
Under Portuguese law, properties may be held in horizontal ownership (propriedade horizontal - condominiums with separate matrix registrations per unit) or total/vertical ownership (propriedade total/vertical - single matrix registration despite independent divisions). For horizontal property, each autonomous fraction has independent tax patrimonial value and separate taxation. The controversy concerns total ownership properties with independent divisions: whether taxation applies to the aggregate property value or by individual division. The Tax Authority applies Item 28.1 to total property value, potentially subjecting properties to Stamp Tax even when no individual division exceeds €1,000,000. Taxpayers contend this creates unjustified inequality between property regimes, potentially violating constitutional equality principles and creating discriminatory treatment based on formal ownership structure rather than actual use.