Process: 357/2014-T

Date: November 28, 2014

Tax Type: Selo

Source: Original CAAD Decision

Summary

This arbitral decision (Process 357/2014-T) addresses stamp duty tax assessment under Item 28 of the General Stamp Duty Table and the limitation period for filing tax arbitration requests. The claimant, a real estate company, challenged a 2012 stamp duty assessment of €19,228.85 on urban property classified as a construction lot. The claimant argued that Item 28.1, which applies to 'properties with residential use,' does not cover construction lots destined for future building. Additionally, the claimant alleged the notification was null due to insufficient reasoning and that interpreting Item 28.1 to include construction lots would be unconstitutional. The Tax Authority raised a preliminary exception arguing the arbitration request was untimely. The procedural issue centered on calculating the 90-day deadline under Article 10(1)(a) of the Legal Framework for Tax Arbitration, which runs from the end of the voluntary payment deadline per Article 102 of the Tax Procedure Code. The assessment was notified on November 24, 2013, with payment due in November 2013, and the arbitration request was filed on April 28, 2014. The tribunal first addressed whether the Tax Authority's response was timely (filed September 24, 2014), finding it was submitted within the deadline after accounting for the judicial recess. The decision then turned to analyzing whether the claimant's arbitration request met the 90-day filing requirement, examining the interplay between stamp duty payment deadlines under the Municipal Property Tax Code and arbitration filing deadlines.

Full Decision

Arbitral Decision

CAAD: Tax Arbitration

Case No. 357/2014–T

Subject Matter: Stamp Duty Tax - Item 28 of the General Stamp Duty Table; Limitation of the Right of Action.

I – Report

  1. On 28.04.2014, the Claimant, A… Real Estate Portugal SA, taxpayer number …, applied to the CAAD for the constitution of an arbitral tribunal, in accordance with Article 10 of Decree-Law No. 10/2011, of 20 January (Legal Framework for Tax Arbitration, hereinafter referred to only as LFTA), in which the Tax and Customs Authority is the Respondent, with a view to annulling the stamp duty tax assessment act No. 2013 …, relating to the urban property registered in the urban property register of the parish of …, Municipality of …, under article …, concerning the year 2012, with respect to the amount of the third instalment, in the sum of € 19,228.85.

  2. The application for constitution of the arbitral tribunal was accepted by the Honourable President of the CAAD and notified to the Tax and Customs Authority.

In accordance with and for the purposes of the provisions of Article 6, paragraph 1 of the LFTA, by decision of the President of the Ethics Council, duly communicated to the parties within the legally applicable deadlines, the undersigned was appointed arbitrator, and communicated acceptance of the appointment to the Ethics Council and to the Administrative Arbitration Centre within the regularly applicable deadline.

The Arbitral Tribunal was constituted on 2.07.2014.

  1. The meeting provided for in Article 18 of the LFTA took place on 20.10.2014, at 10:50.

  2. The grounds presented by the Claimant in support of its claim were, in summary, as follows:

  • Nullity of the notification of the assessment due to lack of substantiation, since a simple reference to legal articles is insufficient.

  • Inapplicability of item 28.1 of the General Stamp Duty Table to the property in question, since the same is not a property with residential use, as it is a plot of land for construction.

  • Unconstitutionality of item 28.1 of the General Stamp Duty Table, in the interpretation that the concept of "property with residential use" includes plots of land for construction.

  1. The ATA – Tax and Customs Administration, called upon to respond, contested the Claimant's claim, defending itself by exception and by opposition.

In its defence by exception, the Respondent raised the limitation of the right of action, due to the untimeliness of the presentation of the application for arbitral pronouncement.

By opposition, the Respondent alleged that the property of the Claimant falls within the concept of "property with residential use" and that the interpretation of the item in question that supports such understanding does not suffer from unconstitutionality.

It concludes requesting the admissibility of the exception invoked and the absolution of the Respondent or, if such is not understood, that the application for declaration of illegality and consequent annulment of the disputed assessment be declared inadmissible, absolving the Respondent of the claim.

  1. Notified of the response presented by the Respondent, the Claimant submitted a written response to the exception raised, alleging that the application for arbitral pronouncement was timely presented, arguing for the inadmissibility of the exception. It further alleged that the response of the Respondent was presented beyond the legal deadline, being untimely, requesting, on such grounds, that the same be deemed not written in its entirety.

  2. The Claimant presented written submissions, in which it maintained its positions.

The Respondent did not present submissions.

  1. The tribunal is materially competent and is regularly constituted in accordance with the LFTA.

The parties have legal personality and capacity, are legitimate and are legally represented.

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

  1. A preliminary matter for decision is that of the untimeliness of the application for constitution and pronouncement of the arbitral tribunal, which is herein immediately considered.

II – Relevant Factual Matters

  1. The tribunal considers the following facts proven:

  2. The Claimant was notified of the stamp duty tax assessment act No. 2013 …, relating to the urban property registered in the urban property register of the parish of …, Municipality of …, under article …, concerning the year 2012, with respect to the third instalment to be paid in the month of November 2013, in the sum of € 19,228.85, such assessment having been sent to the Claimant on 30.10.2013, through the so-called VIACTT, with the Claimant being considered notified on 24.11.2013 (See Documents 1 and 2 presented by the Respondent with the Response).

  3. On 28.04.2014, the Claimant presented the present application for arbitral pronouncement.

  4. The Tribunal's conviction as to the decision on the factual matters was based on the documents contained in the proceedings, which were not subject to challenge.

III – Applicable Law

  1. Prior to the decision on the exception raised by the Respondent, it is necessary to decide the question of the alleged untimeliness of the presentation of the Response of the Respondent, invoked by the Claimant.

To this end, the Claimant alleges that the Respondent was notified, for the purposes of Article 17 of the LFTA, on 6.07.2014 and that, consequently, the deadline for Response ended on 22.09.2014, so that, having the same been presented on 24.09.2014, it would be untimely.

Let us examine this.

Article 248 of the Code of Civil Procedure, applicable by force of Article 29, paragraph 1, item e) of the LFTA, determines that electronic notifications made to the representatives of the parties are presumed made on the 3rd day following the day of elaboration or the 1st following business day thereafter, when such is not the case.

In the case at hand, it appears from the Case Management System that the notification was elaborated on 6.07.2014, so the notification is considered made on 9.07.2014, the 3rd business day following, with the counting of the deadline starting on 10.07.2014.

Accordingly, having the judicial recess begun on 16 July, six days elapsed from the start of the deadline until 15 July, with the counting of the deadline resuming on 1 September 2014, the day following the end of the judicial recess, the deadline thus ending on 24.09.2014.

Having the response been presented on 24.09.2014, the same was therefore timely presented, and the Claimant's claim does not prevail.

  1. In accordance with Article 10, paragraph 1, item a) of the LFTA, the application for constitution of an arbitral tribunal is presented within a period of 90 days from the facts provided for in paragraphs 1 and 2 of Article 102 of the Tax Procedure and Process Code ("TPPC").

In the situation sub judice, item a) of paragraph 1 of Article 102 of the TPPC is therefore applicable by reference, which establishes as the determining temporal criterion for the counting of the aforementioned period of 90 days the "end of the deadline for voluntary payment of tax instalments legally notified to the taxpayer".

Pursuant to Article 120, paragraph 1, item c) of the Municipal Property Tax Code ("MPTC"), applicable by force of Article 44, paragraph 5, of the Stamp Duty Tax Code ("SDTC"), the tax instalment in question should have been paid during the month of November 2013.

Furthermore, in accordance with Article 119, paragraph 1, of the "MPTC", applicable ex vi Article 46, paragraph 5 of the "SDTC", "The services of the Directorate-General of Taxes shall send to each liable person, until the end of the month preceding that of payment, the respective collection document".

On the other hand, paragraph 3 of the same article provides that "Should the liable person not receive the document mentioned in paragraph 1, he must request a duplicate copy at any finance office".

As writes Martins Alfaro in commentary to this article "We understand that the sending of the collection notice constitutes the sending of the notification of the assessment relating to periodic tax, made within the deadline provided for by law – cfr. Article 38, paragraph 4, of the Tax Procedure and Process Code" (Municipal Property Tax Code Annotated and Commented, Áreas Publisher, 2004, page 681). Having the collection document been sent by the end of the month preceding that of payment, in accordance with Article 38, paragraph 9, of the Tax Procedure and Process Code, the obligation to notify the assessment was fulfilled, whose payment deadline ended on the last day of November.

The Claimant alleges, however, that it was subsequently summoned in the following terms: "Within 30 days after the present summons, you must proceed to payment of the outstanding debt and accrued charges" and that "This clearly means that (...) a deadline was granted for voluntary settlement of the tax that was notified to it, with a final date of 28.02.2014".

However, manifestly, the Claimant is in error, since it confuses the notification of the assessment with the summons in the enforcement proceedings. The deadline of 30 days for making payment and accrued charges, contained in the summons, is not the deadline for voluntary payment (which ended on 30.11.2013) but rather the period within which the outstanding amount and accrued charges may still be paid, before proceeding to attachment of assets, in accordance with Article 215, paragraph 1 of the TPPC (in addition to being, also, the deadline for any potential opposition to enforcement, in accordance with Article 203, paragraph 1, item a), of the same code).

The deadline for presentation of the application for arbitral pronouncement had its beginning on 1.12.2013, having run until 28.02.2014, the date on which it ended.

Accordingly, having the Claimant presented the present application for arbitral pronouncement on 28.04.2014, the same is manifestly untimely, with the exception of limitation invoked by the Respondent being admissible and which, moreover, would always be subject to official cognisance, in accordance with Article 333, paragraph 1, of the Civil Code, since the tax obligation is a matter excluded from the availability of the parties.

This conclusion is not prevented by the invocation by the Claimant of "nullity of notification due to lack of substantiation". Even if it is understood that Article 102, paragraph 3, of the TPPC is to be applied to the arbitral proceedings (in this sense Jorge Lopes de Sousa, in "Guide to Tax Arbitration, Coord.: Nuno Villa-Lobos and Mónica Brito Vieira, Almedina, 2013, pages 168-169), the exception in question would still be admissible, since it is manifest that the absence of the substantiation legally required in the communication of the decision merely grants the interested party the right "within 30 days or within the deadline for the objection, appeal or challenge or other judicial remedy that may apply from this decision, if shorter, to request the notification of the requirements that have been omitted or the passage of a certified copy containing them, free of any payment" and, even if it were a matter of lack of substantiation of the tax act itself, such omission, in view of Articles 133 and 135 of the Administrative Procedure Code would only be generative of mere voidability. (Cfr. Diogo Leite de Campos, Benjamim Silva Rodrigues and Jorge Lopes de Sousa, "General Tax Law Annotated and Commented, Encontros da Escrita Publisher, 4th Ed., 2012, page 687).

Accordingly, there is no doubt as to the untimeliness of the application for arbitral pronouncement and that, in consequence, the exception raised by the Respondent is admissible.

IV – Decision

Thus, the arbitral tribunal decides:

To find admissible the exception of limitation raised by the Respondent and, in consequence, to find inadmissible the application for arbitral pronouncement.

Value of the action: 19,465.19 € (nineteen thousand four hundred and sixty-five euros and nineteen cents), in accordance with the provisions of Article 315, paragraph 2, of the Code of Civil Procedure and Article 97-A, paragraph 1, item a), of the TPPC and Article 3, paragraph 2, of the Regulation of Costs in Arbitration Proceedings.

Costs by the Claimant, in the sum of 1,224.00 € (one thousand two hundred and twenty-four euros) in accordance with paragraph 4 of Article 22 of the LFTA.

Lisbon, CAAD, 28 November 2014

The Arbitrator

Marcolino Pisão Pedreiro

Frequently Asked Questions

Automatically Created

Does Verba 28.1 of the Stamp Tax Table apply to construction lots classified as urban land?
The decision does not provide a final ruling on this substantive question, as the tribunal was first required to address the preliminary procedural exception raised by the Tax Authority regarding the timeliness of the arbitration request. The claimant argued that Item 28.1 should not apply to construction lots because they are not 'properties with residential use' but rather undeveloped land for construction. The Tax Authority defended that construction lots fall within the concept of 'property with residential allocation' under Item 28.1. The merits of this interpretation were not decided in the portion of the decision provided.
What is the deadline to file a tax arbitration request before the right of action expires (caducidade)?
Under Article 10(1)(a) of the Legal Framework for Tax Arbitration (LFTA), the deadline to file a tax arbitration request is 90 days from the facts provided in Article 102 of the Tax Procedure and Process Code (TPPC). Specifically, the 90-day period runs from the end of the deadline for voluntary payment of tax installments legally notified to the taxpayer. For stamp duty assessments on property, the payment deadline is governed by Article 120(1)(c) of the Municipal Property Tax Code, as made applicable by Article 44(5) of the Stamp Duty Tax Code. In this case, payment was due during the month of November 2013, and the claimant filed the arbitration request on April 28, 2014.
Can a construction lot be considered a 'property with residential allocation' for Stamp Tax purposes?
This is the central substantive dispute in the case. The Tax Authority contends that a construction lot constitutes a 'property with residential allocation' (prédio com afetação habitacional) and therefore falls within the scope of Item 28.1 of the General Stamp Duty Table. The claimant disagrees, arguing that a plot of land for construction, which has not yet been developed for residential purposes, cannot be classified as having residential allocation. The decision excerpt does not provide the tribunal's final ruling on this interpretive question, as it first addresses the procedural issue of whether the arbitration request was timely filed.
Is the interpretation of 'prédio com afetação habitacional' including construction lots unconstitutional?
The claimant raised an unconstitutionality argument, contending that interpreting the concept of 'property with residential allocation' under Item 28.1 of the General Stamp Duty Table to include construction lots would violate constitutional principles. The Tax Authority defended that such interpretation does not suffer from unconstitutionality. The tribunal's analysis of this constitutional question is not included in the decision excerpt provided, as the decision prioritizes resolving the preliminary procedural exception regarding the limitation period for filing the arbitration request.
What are the grounds for claiming nullity of a Stamp Tax assessment notification due to lack of reasoning?
The claimant alleged that the notification of the stamp duty assessment was null due to lack of substantiation (falta de fundamentação). Specifically, the claimant argued that a simple reference to legal articles in the notification is insufficient to meet the substantiation requirements. Under Portuguese tax law, tax assessment notifications must contain adequate reasoning explaining the factual and legal basis for the assessment. The claimant's position was that merely citing statutory provisions without further explanation fails to provide the required level of substantiation, thereby rendering the notification defective and null. The decision excerpt does not include the tribunal's ruling on this nullity claim.