Process: 363/2015-T

Date: October 30, 2015

Tax Type: Selo

Source: Original CAAD Decision

Summary

This arbitral decision (Process 363/2015-T) addresses whether construction land (terrenos para construção) is subject to Stamp Tax under Verba 28.1 of the General Stamp Duty Table (TGIS). The claimant, a company in insolvency proceedings, challenged Stamp Tax assessments totaling €222,444.36 for 2012-2014, which the Tax Authority had levied based on Verba 28.1 combined with Article 6 of Law 55-A/2012 relating to 'properties with residential use.' The core legal dispute centers on whether undeveloped construction land can be classified as residential-use urban property for Stamp Tax purposes. The claimant argued that Verba 28.1 TGIS, which taxes 'properties with residential use,' cannot encompass construction land based on multiple grounds: (1) Supreme Administrative Court jurisprudence consistently ruled that construction land falls outside this concept; (2) CAAD arbitration case law reached identical conclusions; (3) the legislator's subsequent amendment through Law 83-C/2013 explicitly added construction land with authorized or planned residential buildings, thereby demonstrating the original wording's limited scope; and (4) this legislative modification had prospective effect only, not retroactive interpretative nature. The claimant also invoked constitutional challenges, alleging violations of equality principles (Articles 13 and 104(3) of the Portuguese Constitution), proportionality principles (Articles 18, 19, and 266), and prohibitions against double taxation. The procedural framework involved requesting official revision (revisão oficiosa), which was dismissed, followed by arbitration under the CAAD (Centro de Arbitragem Administrativa) pursuant to Decree-Law 10/2011. The arbitral tribunal was constituted with three arbitrators and proceeded without oral hearings, as the case file contained sufficient elements for decision. The case illustrates the critical distinction between completed residential buildings and bare construction land for Stamp Tax classification purposes under Portuguese tax law.

Full Decision

ARBITRAL DECISION

I – Report

1.1. A..., Lda., taxpayer number..., with registered office at Street..., no...., ... floor, Room..., ...-... Lisbon (hereinafter referred to as "Claimant"), represented herein by its Insolvency Administrator, having been notified of the dismissal of the request for official revision relating to Stamp Duty assessments for the years 2012 to 2014 (nos. 2012..., 2012..., 2012..., 2013..., 2013..., 2013..., 2013..., 2013..., ...., 2013...., 2013..., 2013..., 2013..., 2014..., 2014..., 2014..., 2014..., 2014..., 2014..., 2014..., 2014..., 2014..., 2014..., 2014..., 2014...), in the total amount of €222,444.36, filed on 4/6/2015 a request for the constitution of an arbitral tribunal and for an arbitral pronouncement, in accordance with the provisions of paragraph a) of no. 1 of article 2 and paragraph a) of no. 1 of article 10, both of Decree-Law no. 10/2011, of 20/1 (Legal Regime for Arbitration in Tax Matters, hereinafter referred to as "LRATM"), in which the Responding Party is the Tax and Customs Authority ("TCA"), with a view to, in summary, the "annulment of the Stamp Duty assessments" in question and the "extinction of fiscal execution proceedings due to non-payment of the Stamp Duty assessments".

1.2. On 13/8/2015, a Collective Arbitral Tribunal was constituted for the present proceedings, composed of Mr. Court of Appeal Judge Manuel Luís Macaísta Malheiros, Mr. Prof. Dr. Miguel Patrício and Mr. Dr. Augusto Vieira.

1.3. In accordance with the Order of the President of the Ethics Council of CAAD of 31/8/2015, Mr. Dr. Augusto Vieira was replaced by Mr. Dr. José Nunes Barata, who was appointed as arbitrator in this case on 24/9/2015.

1.4. On 14/8/2015, the TCA was cited as the responding party, to submit its response, in accordance with article 17, no. 1, of the LRATM. The TCA submitted its response on 29/9/2015, having argued, in summary, to the complete lack of merit of the claim by the now Claimant.

1.5. By order of 2/10/2015, the Tribunal considered the meeting provided for in article 18 of the LRATM to be unnecessary, because there was no evidence to be produced and because the proceedings contained all the necessary elements for the decision. By order dated 7/10/2015, the Tribunal fixed the pronouncement of the decision for 30/10/2015.

1.6. The Arbitral Tribunal was duly constituted, is materially competent, the proceedings do not suffer from defects that would invalidate them, and the Parties have legal personality and capacity, being legitimate.

II – Allegations of the Parties

2.1. The now Claimant alleges, in its initial petition, that: a) "the Disputed Assessments were issued in accordance with item 28.1 of the General Stamp Duty Table, combined with the provisions of article 6 of Law 55-A/2012, relating to 'properties with residential use'"; b) "all decisions issued on this matter by the Supreme Administrative Court rule that land for construction cannot be classified under the concept of urban properties with residential use for the purposes of applying Item 28.1 of the General Stamp Duty Table"; c) "Similarly, tax arbitration case law has ruled that land for construction is not subject to the Stamp Duty provided for in Item 28.1 of the General Stamp Duty Table, in the wording introduced by Law no. 55-A/2012, of 29 October"; d) "On the other hand, it is important to note that the legislator itself already recognized that the previous wording of item 28.1 of the General Stamp Duty Table, which referred to 'properties with residential use', could never encompass land for construction, having therefore proceeded with its amendment through Law no. 83-C/2013, of 31 December"; e) "And it should not be claimed that this amendment has a merely interpretative nature, with its effects retroacting to the date of the introduction of item 28 in the General Stamp Duty Table"; f) "In introducing this amendment, the legislator expressly recognized that the original wording of item 28.1 of the General Stamp Duty Table only comprises residential properties. However, because it intended for this taxation to extend further, it added the reference to land for construction whose building, authorized or foreseen, is for residential purposes"; g) "there can be no doubt that item 28.1 of the General Stamp Duty Table when referring to 'properties with residential use' does not encompass land for construction, and therefore the Disputed Assessments are manifestly illegal"; h) "since item 28.1 of the Stamp Duty Code is intended to tax exclusively properties with residential use, and land for construction cannot be integrated into that concept, in accordance with the rules provided for in the Property Tax Code, applicable by reference of article 67, no. 2, of the Stamp Duty Code, the Disputed Assessments must be considered illegal, by violation of the provisions of item 28.1 of the General Stamp Duty Table, interpreted in conformity with the provisions of article 6 of the Property Tax Code"; i) "even if it is understood that the concept of 'residential use' used in item 28.1 of the General Stamp Duty Table should be assessed based on Urban Planning Law (namely in articles 4, no. 5, and 77, no. 5, of the Urban Planning Legal Regime, and in article 8 of the General Urban Planning Regulation), it should be concluded, equally, to the illegality of the understanding adopted by the TCA in the decision dismissing the request [for revision] and, consequently, to the illegality of the Disputed Assessments, relating to land for construction, by violation of the aforementioned item, insofar as the land referred to in such assessments can never be considered as properties with residential use. Illegality which determines the voidability of the same in accordance with article 135 of the Administrative Procedure Code - current article 163 of the Administrative Procedure Code - applicable by virtue of article 29, paragraph d), of the LRATM [...], annulment which is hereby requested"; j) "the Disputed Assessments of 2013 must equally be considered illegal, by violation of the provisions of article 6, no. 1, of Law 55-A/2012, illegality which determines the voidability of the same in accordance with article 135 of the Administrative Procedure Code (which corresponds to the current article 163 of the Administrative Procedure Code) applicable by virtue of article 29, paragraph d), of the LRATM"; l) "Law no. 55-A/2012, in the part in which it introduced taxation under Stamp Duty on property be judged unconstitutional, by violation of the principle of equality, constitutionally enshrined, in particular in articles 13 and 104, no. 3, of the Constitution, which contaminates all the Disputed Assessments with illegality on the grounds of material unconstitutionality of the norm on the basis of which they were issued and determines the voidability of the same in accordance with article 135 of the Administrative Procedure Code (which corresponds to the current article 163 of the Administrative Procedure Code) applicable by virtue of article 29, paragraph d), of the LRATM"; m) "the taxation provided for in item 28.1 of the General Stamp Duty Table [...] violates the principle of proportionality, constitutionally enshrined and codified in several of its provisions, particularly in the context of fundamental rights - articles 18 and 19 of the Constitution - and in some provisions relating to the organization of political power - namely in article 266 of the Constitution"; n) "in light of the prohibition of double taxation (legal and economic) that results from the principle of equality and of taxable capacity, item 28.1 of the General Stamp Duty Table should be judged unconstitutional, which contaminates all the Disputed Assessments with illegality on the grounds of material unconstitutionality of the norm on the basis of which they were issued and determines the voidability of the same in accordance with article 135 of the Administrative Procedure Code (which corresponds to the current article 163 of the Administrative Procedure Code) applicable by virtue of article 29, paragraph d), of the LRATM"; o) "the tax introduced by Law 55-A/2012 violates the principle of legal certainty and of protection of legitimate expectations, constitutionally enshrined in article 2 of the Constitution, as well as the principle of prohibition of retroactivity of tax law enshrined in article 103, no. 3, of the Constitution".

2.2. The now Claimant concludes that, in view of the above, the "Stamp Duty assessments (previously contested in the request for official revision submitted), with all legal consequences, including the immediate extinction of the fiscal execution proceedings initiated due to non-payment of those debts" must be annulled.

2.3. For its part, the TCA alleges, in its defense, that: a) "it is the understanding of the TCA that the properties in question have the legal nature of property with residential use, and therefore the assessment acts which are the subject of the present request for arbitral pronouncement must be upheld, as they embody a correct interpretation of Item 28.1 of the General Stamp Duty Table, amended by Law no. 55-A/2012, of 29 October"; b) "in the absence of any definition of the concepts of urban property, land for construction and residential use, in the context of Stamp Duty, recourse must be made to the Property Tax Code in search of a definition that allows the determination of possible subjection to Stamp Duty, in accordance with the provisions of no. 2 of article 67 of the Stamp Duty Code, in the wording given by Law no. 55-A/2012, of 29 October"; c) "in accordance with the aforementioned legal provision [article 67, no. 2, of the Stamp Duty Code], to matters not regulated in the Code, concerning item 28.1 of the General Stamp Duty Table, the provisions of the Property Tax Code apply subsidiarily"; d) "for the purposes of determining the tax value of properties of land for construction, the application of the coefficient of use in the context of valuation is clear, and therefore its consideration for the purposes of applying item 28.1 of the General Stamp Duty Table cannot be ignored, being valid in this sense this order of considerations: [i)] in the application of the law to concrete cases, it is important to determine the exact meaning and scope of the rule, so that the rule contained therein is revealed, an indispensable condition for it to be applied, in accordance with the provisions of article 9 of the Civil Code, by virtue of article 11 of the General Tax Law; [ii)] no. 2 of article 67 of the Stamp Duty Code mandates the subsidiary application of the provisions of the Property Tax Code; [iii)] the use of the property (aptitude or purpose) is a coefficient that contributes to the valuation of the property, in the determination of the tax value of properties, applicable to land for construction; [iv)] item 28.1 itself of the General Stamp Duty Table refers to the expression 'properties with residential use', appealing to a classification that overlaps the species provided for in no. 1 of article 6 of the Property Tax Code"; e) "contrary to what is advocated by the Claimant, the TCA understands that the concept of 'properties with residential use', for the purposes of the provisions of item 28.1 of the General Stamp Duty Table, comprises both built properties and land for construction, beginning precisely considering the literal element of the rule"; f) "note that, restoring the mention already previously made to article 45 of the Property Tax Code, the mere constitution of a right of potential construction immediately increases the value of the property in question, hence the rule contained in that article which mandates separating the two parts of the land"; g) "[considering the legal regime of urbanization and building and, in particular, its article 77, it can be concluded that,] well before the actual building of the property, it is possible to ascertain and determine the use of the land for construction"; h) "[regarding the alleged illegality of the assessments issued in 2013, due to duplication of collection, for this to occur] the legislator would have had to expressly establish the non-occurrence, in 2012, of the taxable event resulting from the application of the general rules of the Property Tax Code. [...] one thing is the Stamp Duty relating to the exceptional and one-off regime levied under the said transitional provisions, which was based on the tax value of properties relating to 2011 and an applicable rate lower than the normal regime, another thing is the Stamp Duty relating to the normal regime resulting from the Stamp Duty Code whose obligation is constituted at the moment and in accordance with the rules provided for in the Property Tax Code (cf. no. 1, of article 113), that is, on 31 December of each year. [Therefore it is concluded] that, in the present case, no duplication of collection was verified"; i) [regarding the alleged unconstitutionality of the assessments,] "while acknowledging from the outset that it is not incumbent on the TCA, in the exercise of its functions and powers in the exercise of its administrative activity, to make considerations about the alleged unconstitutionality (but non-existent) of the norm contained in Item 28.1 of the General Stamp Duty Table, given its full binding to the law, we do not see that from the same results the violation of the principles of proportionality, legality, citizens' confidence and taxable capacity"; j) "since the differential treatment finds sufficient material justification, the principle of equality is shown to be respected, both per se and in its dimension of proportional equality"; l) "the TCA understands that the provision of item 28 of the General Stamp Duty Table does not constitute any violation of the principle of equality of article 13 of the Constitution"; m) [regarding the alleged violation of the prohibition of legal and economic double taxation invoked by the Claimant] "it is considered that there is no obstacle of a legal-constitutional nature to the legislator's choice to make the two taxes (Property Tax and Stamp Duty) cumulative on certain properties".

2.4. The TCA concludes, from the above, that "the assessments in question embody a correct interpretation and application of the law to the facts, not suffering from any defect of violation of law, whether of the Constitution or of the Stamp Duty Code, and therefore, judgment should be rendered against the Claimant and the Responding Party should be absolved from the claim."

III – Proven Facts, Unproven Facts and Respective Justification

3.1. The following facts are considered proven:

i) The now Claimant is a commercial company constituted in the form of a limited liability company, whose corporate purpose consists of the trade in real estate, purchase, sale of properties and resale of those acquired for that purpose, provision of services, exercise of civil construction, distribution and sale of news, photos and other material inherent to journalistic and press activity (v. doc. 20 attached to the request for arbitral pronouncement).

ii) The now Claimant was declared insolvent, by judgment pronounced within the scope of case no. .../12....TYLSB, by the Commercial Court of Lisbon, 2nd Court of Lisbon, of 15/7/2014 (see doc. 21 attached to the request for arbitral pronouncement). Within the scope of that insolvency case, the TCA claimed various credits, including those relating to the assessments now in question (except the assessments relating to the second and third installments of the 2014 assessments, which were issued at a moment subsequent to the submission of such claim), as verified by doc. 22 attached to the request for arbitral pronouncement.

iii) In accordance with the aforementioned doc. 22, the assessments now in question, relating to the years 2012 to 2014 (assessment nos. 2012..., 2012..., 2012..., 2013..., 2013..., 2013..., 2013..., 2013..., ..., 2013..., 2013..., 2013..., 2013..., 2014..., 2014..., 2014..., 2014..., 2014..., 2014..., 2014..., 2014..., 2014..., 2014..., 2014..., 2014...), in the total amount of €222,444.36, concern the taxation, in accordance with item 28.1 of the General Stamp Duty Table, of the ownership of "urban properties with residential use" (in the wording in force at the date of the occurrence of the respective taxable events) with a tax value of equal to or exceeding €1,000,000.00.

iv) The above-mentioned assessments relate exclusively to land for construction held by the now Claimant, as verified by the description of the properties contained in their respective property records (v. docs. nos. 23 to 26 attached to the request for arbitral pronouncement).

v) The Claimant did not voluntarily pay the aforementioned assessments, and therefore various fiscal execution proceedings were initiated against it for coercive collection of the same, as can be seen from doc. 19 attached to the request for arbitral pronouncement.

vi) Disagreeing with the aforementioned assessments, the Claimant submitted, on 25/9/2014, a request for official revision, on the grounds of error attributable to the services (see doc. 27 attached to the request for arbitral pronouncement). The Claimant was notified, through Official Letter no...., of 5/3/2015, of the Order dismissing the request for official revision issued by the Head of the Tax Services of ... (see doc. 1 attached to the request for arbitral pronouncement).

vii) Disagreeing with the aforementioned Order of dismissal, the now Claimant submitted the present request for arbitral pronouncement on 4/6/2015.

3.2. There are no facts not proven that are relevant to the decision of the case.

3.3. The facts considered pertinent and proven (v. 3.1) are founded on the analysis of the positions presented by the parties and the documentary evidence attached to the proceedings.

IV – On the Law

The essential question raised in the present case concerns the definition of the scope of application of item 28.1 of the General Stamp Duty Table, in the wording given to it by Law no. 55-A/2012, of 29/10, namely to know whether in this rule land for construction should be included and, concretely, whether land for construction with a tax value equal to or exceeding €1,000,000 comes within, or not, the species of urban properties "with residential use".

Now, this is a question which, regardless of the constitutional questions it raises, particularly regarding the principle of equality and the possibility of the existence of taxation in Stamp Duty on real estate from a purely patrimonial taxation perspective without any connection with the principle of equivalence or benefit (the fundamental principle of Property Tax), has been extensively dealt with in the case law of CAAD and the Supreme Administrative Court.

Indeed, it has been the unanimous interpretation of the aforementioned adjudicating bodies to exclude from the scope of application of Stamp Duty land for construction which has not yet had any type of use defined, since it has not yet been applied or intended for residential purposes.

In fact, land for construction, whether from the perspective of urban planning law or from the perspective of tax law, has a different nature from properties with residential purposes, since, at the moment before the realization of the improvement (the construction itself) it has no defined use, constituting itself as a simple land asset, and therefore cannot be considered "properties with residential use".

It should be noted that the legislator's intention was clearly restrictive. By using the expression "residential purposes", the legislator expressed, clearly, a will to include only residential properties within the scope of application of the rule, clearly excluding those with commercial and industrial vocations (even if integrated into urban areas which, in a limiting situation of realization that is translated into the existence of an Approved Urban Plan or Detailed Plan), given that its concrete use depends on its definitive building.

In this context, various case law concluded that the attacked assessments suffer from error regarding the premises of fact and law, since the properties to which Stamp Duty was levied under the aforementioned item 28.1 are constituted as "land for construction", without any building or construction, required to fulfill that concept of "residential properties".

The TCA alleges that, for the purposes of the provisions of item 28.1 of the General Stamp Duty Table, the concept of "properties with residential use" comprises not only built properties but also land for construction, since the legislator does not refer to "properties intended for residential purposes", but has instead opted for the notion "residential use", an expression which it considers different and broader, integrating other realities beyond those identified in article 6, no. 1, paragraph a), of the Property Tax Code.

Concluding that residential use, for the purposes of applying item 28.1, does not necessarily imply the existence of buildings or constructions – thus applying to land for construction with that use.

This does not appear to be correct for the reasons already advanced. In fact, the question under consideration is, even in its factual premises, entirely identical to the question which was considered and decided in the Supreme Administrative Court in the recent judgments of 9/4/2014, issued in cases nos. 1870/13 and 48/14, and of 23/4/2014, issued in cases nos. 270/14, 271/14 and 272/14, in which it was decided that "land for construction" cannot be considered, for the purposes of the incidence of Stamp Duty, provided for in item 28.1 of its General Table (in the wording given to it by Law no. 55-A/2012, of 29 October), as "urban properties with residential use".

This is case law which is also accepted here, as it is agreed entirely with its respective justification, and therefore we will limit ourselves to reproducing what was said on the question in the aforementioned Judgment issued in case no. 1870/13:

"The concept of 'property (urban) with residential use' was not defined by the legislator. Neither in Law no. 55-A/2012, which introduced it, nor in the Property Tax Code, to which no. 2 of article 67 of the Stamp Duty Code (also introduced by that Law), refers by way of subsidiary provision. And it is a concept which, probably owing to its imprecision – a fact all the more grave insofar as on it depends the scope of the objective incidence of the new taxation –, had a short life, since it was abandoned when Law no. 83-C/2013 (of 31 December), the State Budget Law for 2014, came into force, which gave new wording to that item no. 28 of the General Table, and which now circumscribes its objective scope of incidence through the use of concepts that are legally defined in article 6 of the Property Tax Code.

This amendment - which the legislator did not attribute an interpretative character to, nor does it appear to us that it did –, merely makes unequivocal for the future that land for construction whose building, authorized or foreseen, is for residential purposes is included in the scope of item 28.1 of the General Stamp Duty Table (provided that its respective tax value is of value equal to or exceeding 1 million euros), clarifying nothing, however, regarding past situations (assessments of 2012 and 2013), such as that in question in the present case.

Now, as to these, it does not appear possible to follow the interpretation of the appellant, since it does not result unequivocally either from the letter or from the spirit of the law that the intention of the latter was, ab initio, to encompass in its objective scope of incidence land for construction for which authorization or foresight of the construction of residential buildings had been made, as results unequivocally today from item 28.1 of the General Stamp Duty Table.

Nothing unequivocal results from the letter of the law, moreover, since it itself, by using a concept which it did not define and which was also not defined in the statute to which it referred by way of subsidiary provision, lent itself, unnecessarily, to equivocations, in a matter – of tax incidence – in which certainty and legal security should also be paramount concerns of the legislator.

And from its "spirit", apprehensible in the explanatory statement of the bill that is at the origin of Law no. 55-A/2012 (Bill no. 96/XII – 2nd, Journal of the Parliament of the Republic, series A, no. 3, 21/09/2012, p. 44, available at www.parlamento.pt) nothing more derives than the concern of generating new tax revenues, from sources of wealth "more spared" in the past from the tax authority's reach than labor income, in particular income from capital, security gains and property, reasons which bring no relevant contribution to the clarification of the concept of "properties (urban) with residential use", since they take it as settled, without any concern to clarify it. Such clarification did, however, emerge - as informed in the Arbitral Decision issued on 12 December 2013, in case no. 144/2013-T, available in the CAAD database -, when that bill was presented and discussed in the Parliament of the Republic, in the words of the Secretary of State for Tax Affairs, who is reported to have stated expressly, as gathered from the Journal of the Parliament of the Republic (DAR I Series no. 9/XII – 2, of 11 October, p. 32) that: "The Government proposes the creation of a special tax on urban residential properties of higher value. It is the first time that in Portugal a special tax is created on properties of high value intended for residential purposes. This tax will be 0.5% to 0.8% in 2012 and 1% in 2013, and will apply to houses with a value equal to or exceeding 1 million euros" (our emphasis), from which it is gathered that the reality to be taxed that was had in view is, after all, and despite the imprecision in terminology of the law, "urban residential properties", in common language "houses", and not other realities.

The fact that it can be considered that in determining the tax value of urban properties classified as land for construction the use that the building authorized or foreseen for it would have should be taken into account in determining the value of the area of implantation (cfr. nos. 1 and 2 of article 45 of the Property Tax Code), does not determine that land for construction can be classified as "properties with residential use", since "residential use" always appears in the Property Tax Code referred to "buildings" or "constructions", existing, authorized or foreseen, since only these can be inhabited, which does not occur in the case of land for construction, which does not itself have conditions for that, not being susceptible to being used for residential purposes unless and when the construction authorized and foreseen for it is built thereon (but in that case they will not be "land for construction" but another species of urban properties – "residential", "commercial, industrial or for services" or "other" – article 6 of the Property Tax Code).

It would be strange, moreover, if the determination of the scope of the norm of tax incidence of item no. 28 of the General Stamp Duty Table were to be found, after all, in the norms of determination of the tax value of properties of the Property Tax Code, and that the imprecision in terminology of the legislator in the wording of that rule were, after all, elucidated and finally clarified by way of an indirect and equivocal reference, to the coefficient of use established by the legislator in relation to built properties (article 41 of the Property Tax Code).

Thus, taking into account that land for construction – whatever the type and purpose of the building that will be, or may be, erected thereon – does not satisfy, by itself, any condition for being licensed as such or for it being possible to define residential purposes as its normal destination, and the norm of incidence of stamp duty referring to urban properties with "residential use", without any specific concept being established for the purpose, cannot it be extracted therefrom that it contains a future potentiality, inherent to a distinct property that may possibly be built on the land.

It is therefore concluded, in accordance with what was decided in the judgment under appeal, that, resulting from article 6 of the Property Tax Code a clear distinction between urban properties "residential" and "land for construction", these cannot be considered as "properties with residential use" for the purposes of the provisions of item no. 28.1 of the General Stamp Duty Table, in its original wording, which was given to it by Law no. 55-A/2012, of 29 October". (end of quotation).

It is this case law that is accepted here and reiterated, bearing in mind the rule contained in no. 3 of article 8 of the Civil Code – which imposes on the judge the duty to consider all cases that merit analogous treatment, in order to obtain a uniform interpretation and application of the law, and the Respondent has not adduced new justification that would overturn such jurisprudential orientation.

Finally, in the same sense as the Supreme Administrative Court judgments mentioned, see also, in the arbitration context and by way of mere example, the Decisions that were issued in the following cases, with which there is agreement: no. 301/2013-T, of 31/7/2014; no. 308/2013-T, of 28/4/2014; no. 384/2014-T, of 8/2/2015; and no. 516/2014-T, of 12/1/2015.

Showing that the understanding of the now Claimant is well-founded regarding the aforementioned essential question, it becomes unnecessary, for that reason, to verify the merit of other alleged defects in the Stamp Duty assessments now being attacked.

V – DECISION

In view of the above, the decision is:

  • To uphold the request for arbitral pronouncement.
  • To annul the Stamp Duty assessments identified with the nos. 2012..., 2012..., 2012..., 2013..., 2013..., 2013..., 2013..., 2013..., ..., 2013..., 2013..., 2013..., 2013..., 2014..., 2014..., 2014..., 2014..., 2014..., 2014..., 2014..., 2014..., 2014..., 2014..., 2014..., 2014... .

The value of the case is set at €222,444.36 (two hundred and twenty-two thousand four hundred and forty-four euros and thirty-six cents), in accordance with article 32 of the Code of Administrative Court Procedure and article 97-A of the Code of Tax Court Procedure, applicable by force of the provisions of article 29, no. 1, paragraphs a) and b), of the LRATM, and article 3, no. 2, of the Regulation of Costs in Tax Arbitration Proceedings (RCAPM).

Costs at the charge of the Respondent, in the amount of €4,284.00, in accordance with Table I of the RCAPM, and in compliance with the provisions of article 12, no. 2, and article 22, no. 4, both of the LRATM, as well as the provisions of article 4, no. 4, of the cited Regulation.

Notice to be given.

Lisbon, 30 October 2015.

The Arbitrators,

Manuel Macaísta Malheiros (President)

Miguel Patrício

José Nunes Barata

Text drawn up by computer, in accordance with the provisions of article 131, no. 5, of the Code of Civil Procedure, applicable by reference of article 29, no. 1, paragraph e), of the LRATM.

The wording of this decision is governed by the orthography prior to the 1990 Orthographic Agreement.

Frequently Asked Questions

Automatically Created

Are construction land plots subject to Stamp Tax under Verba 28.1 of the Tabela Geral do Imposto do Selo?
No, construction land plots (terrenos para construção) are not subject to Stamp Tax under Verba 28.1 of the TGIS in its original wording from Law 55-A/2012. Verba 28.1 initially referred to 'properties with residential use,' which Supreme Administrative Court jurisprudence and CAAD arbitration decisions consistently interpreted as excluding undeveloped construction land. The legislator recognized this limitation and amended the provision through Law 83-C/2013 to explicitly include construction land with authorized or planned residential buildings, demonstrating that the original text did not encompass such properties. This amendment had prospective effect only, meaning assessments issued under the original wording for construction land were considered illegal.
Can terrenos para construção be classified as residential-use urban properties for Stamp Tax purposes in Portugal?
No, terrenos para construção cannot be classified as residential-use urban properties for Stamp Tax purposes under the original wording of Verba 28.1 TGIS. The concept of 'residential use' requires actual residential occupation or completed buildings, not merely land designated for future construction. This interpretation is supported by: (1) Property Tax Code (Código do IMI) definitions applicable by reference under Article 67(2) of the Stamp Duty Code; (2) Urban Planning Law provisions in Articles 4(5) and 77(5) of the Urban Planning Legal Regime; and (3) consistent judicial interpretation distinguishing between developed residential property and bare construction land. Only after Law 83-C/2013's amendment did construction land with residential building authorization fall within Verba 28.1's scope.
What is the CAAD arbitral tribunal procedure for challenging Imposto do Selo assessments on real estate?
The CAAD arbitral tribunal procedure for challenging Imposto do Selo assessments involves: (1) First requesting revisão oficiosa (official revision) from the Tax Authority; (2) If dismissed, filing a request for arbitration within the statutory deadline under Article 10(1)(a) of Decree-Law 10/2011 (RJAT); (3) The Tax Authority is cited to submit a response (Article 17(1) RJAT); (4) A tribunal is constituted with one or three arbitrators depending on the claim amount; (5) The tribunal may dispense with hearings under Article 18 RJAT if the file contains sufficient elements; and (6) A decision is rendered within the statutory timeframe. This procedure allows taxpayers to challenge both the legality of assessments and seek extinction of enforcement proceedings for multiple tax years simultaneously.
How did the STA rule on the application of Verba 28.1 TGIS to construction land versus completed residential properties?
The Supreme Administrative Court (STA) ruled that Verba 28.1 TGIS applies exclusively to completed residential properties, not construction land. Multiple STA decisions established that 'properties with residential use' requires actual residential character, which undeveloped construction land lacks. This jurisprudential line distinguishes between: (1) buildings already constructed and occupied or suitable for residential habitation, which fall under Verba 28.1; and (2) bare land plots designated for future construction, which do not meet the 'residential use' criterion regardless of planning authorization. The STA's interpretation was so consistent that it prompted legislative intervention through Law 83-C/2013 to expand Verba 28.1's scope to expressly include construction land with residential building permits, confirming the original provision's narrower application.
Can a taxpayer request revisão oficiosa to annul multiple years of Stamp Tax liquidations on construction plots?
Yes, a taxpayer can request revisão oficiosa to annul multiple years of Stamp Tax liquidations on construction plots. The procedure allows challenging all assessments that share the same legal grounds simultaneously, as demonstrated in this case where 24 assessments spanning 2012-2014 totaling €222,444.36 were challenged together. After the Tax Authority dismisses the revisão oficiosa request, the taxpayer may escalate all contested assessments to CAAD arbitration in a single proceeding under Article 10(1)(a) of the RJAT. This consolidated approach is procedurally efficient when the illegality argument (such as misapplication of Verba 28.1 TGIS to construction land) applies uniformly across multiple assessment years, allowing for comprehensive resolution and potential extinction of related enforcement proceedings.