Process: 369/2014-T

Date: October 17, 2014

Tax Type: Selo

Source: Original CAAD Decision

Summary

CAAD Process 369/2014-T addressed whether Stamp Tax under Verba 28.1 of the General Table of Stamp Tax (TGIS) applies to undeveloped land for construction (terrenos para construção) without residential buildings. The claimant company challenged a 2013 Stamp Tax assessment of €27,456.50 (1% of property value €2,745,650) on urban land classified as 'land for construction' with no implanted structures. The taxpayer argued that Verba 28.1 in 2013 only applied to 'properties with residential purpose,' and since their land lacked any residential building or designation, it should be exempt. The claimant cited the 2014 Budget Law amendment to Verba 28.1 as evidence that the legislature broadened the scope only from 2014 onwards, supported by Ombudsman communications and four prior favorable CAAD decisions. The Tax Authority (AT) defended the assessment, arguing that 'properties with residential purpose' includes both constructed properties and land for construction based on property valuation methodology under the CIMI (Municipal Property Tax Code). AT contended that the purpose coefficient from Article 41 CIMI applies when determining tax value for land under Article 45(2) CIMI, making the residential purpose classification inherent to valuation. The arbitration proceeded under the simplified procedure dispensing with oral hearings due to the repetitive nature of similar disputes. The tribunal constituted on July 31, 2014, accepted written submissions only. The provided excerpt concludes with AT's defense but does not include the final arbitral decision, leaving the outcome undetermined in the available documentation.

Full Decision

ARBITRAL DECISION

THE PARTIES

Claimant: A..., LDA., NIPC PT ..., with registered office at Rua …, ….

Respondent: Tax and Customs Authority (AT).

DECISION

REPORT

a) On 06.05.2014, the limited company A..., LDA., NIPC PT ..., (hereinafter referred to as the Claimant) submitted to CAAD a request seeking, under the Legal Regime of Arbitration in Tax Matters (RJAT), the constitution of a Singular Arbitral Tribunal (TAS).

b) The request was presented by a lawyer whose power of attorney was attached.

THE REQUEST

c) The Claimant petitions for the annulment of the assessment of Stamp Tax (IS) of item 28.1 of the TGIS, for the year 2013, identified by document 2014 ..., dated 17.03.2014, which generated a collection in the amount of 27,456.50 €, relating to the urban property of which it is the owner, of the type "land for construction," registered in the urban property register of the District of …, Municipality and Parish of …, under article U ….

d) It states that the tax act under scrutiny suffers from illegality embodied in an erroneous reading of item 28.1 of the TGIS, noting that, in 2013, "only owners of properties with residential purpose are subject to this stamp tax."

e) And for the reason that the urban property of the type "land for construction" "does not have any construction implanted thereon, whether intended for residential, commercial and/or service purposes," therefore "it does not have any residential purpose that would determine the application of the tax in question."

f) It concludes by requesting the annulment of the aforementioned assessment in the amount of 27,456.50 euros and the condemnation of AT to refund the installments already paid, the first being 9,152.18 euros, plus the respective interest accrued from the dates of payment until effective reimbursement.

OF THE ARBITRAL TRIBUNAL

g) The request for an arbitral decision was accepted by the President of CAAD and was immediately notified to AT on 09.05.2014.

h) By the Ethics Council of CAAD, the signatory of this decision was appointed as arbitrator, with the parties being notified thereof on 16.07.2014.

i) Whereby the Singular Arbitral Tribunal (TAS) has been, since 31.07.2014, duly constituted to hear and decide on the subject matter of this dispute.

j) All these acts are documented in the communication of constitution of the TAS dated 31.07.2014, which is hereby reproduced.

k) Since questions are raised in this proceeding that are identical to those already raised in many other cases already decided at CAAD, the TAS by order of 02.10.2014 decided to dispense with the hearing of parties to which article 18 of the RJAT refers, following a proposal presented by AT in its filing of 30.09.2014, provided that the Claimant did not object.

l) In the aforementioned order it was further decided that no pleadings would be filed, provided that the Claimant did not object.

m) The Claimant and AT gave their express or implied consent to the non-holding of the hearing of parties referred to in article 18 of the RJAT and likewise, as to the unnecessary production of pleadings.

n) Whereby the hearing provided for in article 18 of the RJAT was not held, nor were pleadings filed by the parties.

PROCEDURAL REQUIREMENTS

o) Capacity, standing and representation - the parties have legal personality and capacity, are properly entitled to participate, and are duly represented.

p) Right to be heard - AT filed its response to the request for an arbitral decision submitted by the Claimant on 30.09.2014. All orders of the TAS and all filings and documents submitted by the parties were duly notified to the respective other party.

q) Dilatory exceptions - the proceeding is free of nullities and the request for an arbitral decision is timely inasmuch as it was submitted within the deadline prescribed in paragraph a) of article 10(1) of the RJAT, taking into account the deadline for payment of the assessment notice.

SUMMARY OF THE CLAIMANT'S POSITION

Regarding the illegality embodied in a possible erroneous reading of item 28.1 of the TGIS

r) The Claimant takes the position that item 28.1 is inapplicable to the aforementioned property, arguing that "only owners of properties with residential purpose are subject to this stamp tax."

s) For the reason that its urban property of the type "land for construction" "does not have any construction implanted thereon, whether intended for residential, commercial and/or service purposes," therefore "it does not have any residential purpose that would determine the application of the tax in question."

t) Such subjection may only occur in the year 2014 given the change in wording introduced to item 28.1 of the TGIS by article 194 of Law 83-C/2013 of 31.12 (Budget Act for 2014).

u) It invokes in support of its position a communication addressing the subject matter in question, sent by the Ombudsman to the State Secretary for Tax Affairs, available on the Ombudsman's website, and the guidance adopted in 4 cases decided at CAAD in 2013.

SUMMARY OF THE TAX AND CUSTOMS AUTHORITY'S POSITION

Regarding the illegality embodied in a possible erroneous reading of item 28.1 of the TGIS

v) AT contends, in the first place, that the request for an arbitral decision concerns only the first installment of IS payable as of the date of submission of the request for an arbitral decision, in the amount of 9,152.18 euros, and not the product of the application of the ad valorem rate of 1% on the tax value of the property of 2,745,650.00 euros, from which resulted a collection of 27,456.50 euros, invoking what is reported to have been decided in a case that ran at CAAD.

w) AT contends that the real property of which the Claimant is the owner "has the legal nature of a property with residential purpose" in the sense that the "notion of the purpose of the urban property is found in the section relating to the valuation of property, which is well understood because the valuation of the property (purpose), incorporates value to the property, constituting a determining fact of distinction (coefficient) for purposes of valuation."

x) "As results from the expression 'value of authorized buildings,' contained in article 45(2) of the CIMI, the legislator opted to determine the application of the property valuation methodology in general to the valuation of land for construction, being applicable to them, consequently, the purpose coefficient provided for in article 41 of the CIMI."

y) And alleges that "for purposes of determining the tax value of land for construction it is clear that the purpose coefficient applies in the context of valuation, whereby its consideration for purposes of applying item 28-1 of the TGIS cannot be disregarded."

z) It clarifies that "the purpose of the property (aptitude or intended use) is a coefficient that contributes to the valuation of the property, in determining the tax value, applicable to land for construction."

aa) Summarizing its reasoning, it ultimately expresses that "Item 28 itself of the TGIS refers to the expression 'properties with residential purpose,' calling for a classification that supersedes the types provided for in article 6(1) of the CIMI."

bb) AT takes the position that "the concept of 'properties with residential purpose,' for purposes of the provision in item 28 of the TGIS, includes both constructed properties and land for construction, based on the literal element of the rule," inasmuch as "the legislator does not refer to 'properties intended for residential use,' having opted for the notion of 'residential purpose,' an expression different and broader whose meaning is to be found in the necessity to integrate other realities beyond those identified in article 6(1)(a) of the CIMI."

cc) It concludes by upholding the legality of the assessment act in light of the CIMI and the Constitution, whereby the disputed assessment should be maintained in the legal order, as it constitutes a correct application of the law to the facts.

II - QUESTIONS FOR THE TRIBUNAL TO RESOLVE

The questions before the Tribunal concern only the interpretation and application of rules of law.

On this matter, in particular, CAAD has already ruled in several decisions in which the underlying question is the same, as has the Supreme Administrative Court itself, namely, the discussion concerns the scope of the provision of the rule of incidence of items 28 and 28-1 of the TGIS.

The limit of interpretation is the letter, the text of the rule. What remains is the "task of interconnection and evaluation that escapes the literal domain."

Starting from the principle that every rule has a provision and a consequential part, the question posed here is to ascertain, by delimiting, whether the rule of incidence, as it is drafted – in its provision - (urban properties … with residential purpose), encompasses or not the legal-fiscal reality defined in law as "land for construction."

In this connection, it appears to the TAS that the question it should resolve is the following:

Does the tax act of assessment of IS now disputed suffer from any non-conformity with the law, namely "error in the qualification of the tax fact" that would affect its maintenance in the tax legal order?

AT did not submit the administrative file, in essence accepting that the documents submitted by the Claimant with the request for an arbitral decision comprise what would be its content.

III. PROVEN AND UNPROVEN FACTS. REASONING

The following facts are considered proven as being relevant to the decision to be adopted, with indication of the respective documents and/or the articles of the Claimant's request and AT's response regarding facts admitted by agreement, as the basis:

Proven Facts

  1. The Claimant is registered as the owner in full of the urban property of the type "land for construction," registered in the urban property register of the District of …, Municipality and Parish of ..., under article U ...º - As per the urban property record attached to the request for an arbitral decision.

  2. The description of the urban property is made as follows: "Type of property: land for construction"; Description: "Plot of land for urban construction" – As per the urban property record attached to the request for an arbitral decision.

  3. In the urban property record attached to the request for an arbitral decision, in "valuation data" it is stated: "type of location coefficient: residential" and contains a box indicating: "Ca – 1.00."

  4. The urban property in question has a tax value (CIMI) of 2,745,650.00 euros determined in 2012 - As per the urban property record attached to the request for an arbitral decision.

  5. And such tax value resulted from "Form 1 of IMI no. ... submitted on 2013.01.28, valuation form ..., valued on 2013.03.11" – As per the urban property record attached to the request for an arbitral decision.

  6. The Claimant was notified by notification received on 26.03.2014 of the assessment of Stamp Tax (IS) of item 28.1 of the TGIS, for the year 2013, identified by document 2014 ..., dated 17.03.2014, which generated a collection in the amount of 27,456.50 € - Article 2 of the request for an arbitral decision and Document No. 1 attached with the request for an arbitral decision.

  7. This tax was assessed solely on the basis of item 28.1 of the TGIS, as amended by Law 55-A/2012, of 29 October - article 1 of the request for an arbitral decision, Document No. 1 attached with the request for an arbitral decision, and AT's overall position in its response.

  8. On 30.04.2013 the Claimant paid the first installment of the assessed tax, with payment deadline "April/2014," in the amount of 9,152.18 euros, as per the stamp … affixed to document no. 1 attached with the request for an arbitral decision – Article 25 of the request for an arbitral decision, Document No. 1 attached with the request for an arbitral decision, and AT's lack of contest regarding the evidentiary value of the document.

  9. On 30.09.2014 and 30.11.2014, respectively, the remaining installments for payment of the IS collection fell due or will fall due – Article 26 of the request for an arbitral decision.

Unproven Facts

There is no other factual allegation that is relevant to the proper resolution of the dispute. The probative value of the documents submitted to the proceeding by the Claimant was not contested.

IV. EVALUATION OF THE QUESTIONS FOR THE TRIBUNAL TO RESOLVE

It is necessary to address the first question raised by AT, expressed in section v) of the Report, that the request for an arbitral decision would concern only the first installment of IS payable as of the date of submission of the request to CAAD, in the amount of 9,152.18 euros, and not the product of the application of the ad valorem rate of 1% on the tax value of the property of 2,745,650.00 euros, from which resulted a collection of 27,456.50 euros, invoking what is reported to have been decided in another case that ran at CAAD.

It is not possible to adopt this thesis. What is at issue here is not the challenge of the first installment in payment of the value of the assessed collection.

What is at issue here is the annulment of the assessment carried out by AT (the operation of applying a rate to a determined taxable base, generating a collection). That is, as results from the assessment notice, what is at issue is the annulment of the assessment that gave rise to the IS collection of 27,456.50 euros.

It appears to us that with the creation of a new item in the TGIS, item 28, (by article 4 of Law 55-A/2012, of 29.10), essentially creating a new "fact or legal situation" subject to tax, the intention was only to extend the incidence of stamp tax to a new legal-factual reality, without altering the division of the various types of urban properties existing.

It was not intended, in our view, to create a new classification of urban properties superimposed on the types provided for in article 6(1) of the Property Tax Code (CIMI).

The tax act in question occurred during the period when the earlier wording of item 28.1 of the TGIS was in force, whereby the current wording given to it by article 194 of Law No. 83-C/2013, of 31 December (State Budget for 2014) is not applicable here, since it only comes into effect as of 01 January 2014.

We are thus, as above stated, solely and only, within the scope of the activity of interpretation and application of rules, that is, in the task of delimiting the legal-factual situations that should be understood as comprised in the rule of incidence of this new tax and which results from the conjunction of items 28 and 28-1 of the TGIS.

However, the law, in its literal element which is always the limit of any interpretation, in item 28-1 TGIS, adds "… for a property with residential purpose."

That is, this concrete rule of incidence of the tax should not then be interpreted, delimited, as if it had the literalness of "residential urban properties," because the interpreter, in respect of the command of article 9(3) of the Civil Code, cannot start from the assumption that the legislator was unaware of the exact terms of article 6(1) of the CIMI that divides the various types of urban properties.

But it also does not appear that it can be understood that in the rule of incidence automatically falls, beyond the type of urban properties "residential," the type "land for construction."

It appears to us, therefore, that in light of the literal element of the rule of incidence (revealing the legislator's intent) chosen by the legislator: "urban properties … with residential purpose," the intention was to reach other types of urban properties, beyond "urban properties … residential" according to the division in article 6(1) of the Property Tax Code (CIMI).

We do not, however, wish to convey by this that the type of urban property "land for construction" (or another type of urban property) is clearly and without more (that is, "by operation of law"), encompassed in the rule of incidence of item 28-1 of the TGIS.

To this end, we transcribe, aiming at simplification and standardization, what is stated in the arbitral decision CAAD Case 48/2013-T (by way of example), in the part to which we adhere:

"The subjection to stamp tax of properties with residential purpose resulted from the addition of item 28 of the General Table of Stamp Tax, carried out by article 4 of Law 55-A/2012, of 29/10, which typified the following tax facts:

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

28-1 – For a property with residential purpose- 1%;

28-2 – For a property, when the taxpayers that are not natural persons are resident in a country, territory or region subject to a clearly more favorable tax regime, included in the list approved by ordinance of the Minister of Finance – 7.5%.

…

With respect to the situations typified in item 28.1 only properties with residential purpose are subject.

Law No. 55-A/2012, of 29 October, in no place clarifies what properties with residential purpose are. However, in article 67(2) of the Stamp Tax Code, added by the aforementioned law, it was stipulated that 'to matters not regulated in this Code relating to item 28 of the General Table, the CIMI applies, as subsidiary law.'

The CIMI also does not clarify what properties with residential purpose are, but only what the various types of properties are, qualifying article 6(2) as 'residential, commercial, industrial or for services the buildings licensed as such or, in the absence of a license, which have as their normal intended use each of these purposes.'

That is, for the CIMI, both properties licensed for residential use are considered residential, even if they are not being used for that purpose, and, in the case of absence of a license, which have as their normal intended use that purpose.

As for land for construction, which is of interest in the present case, given the assessment made and now disputed on land for construction, the CIMI, in article 6(3), tells us that "they are those located within or outside an urban agglomeration, for which authorization has been granted for subdivision or construction operation, and also those which have been declared as such in the deed of acquisition, with the exception of plots on which the competent entities forbid any of those operations, namely those located in green spaces, protected areas or which, in accordance with municipal territorial planning plans, are allocated to public spaces, infrastructure or facilities."

From the two aforementioned rules it is not possible to extract what the legislator intended to say when it speaks of properties with residential purpose.

Law No. 55-A/2012, of 29/10, has no preamble, therefore from it is not possible to extract the intention of the legislator.

This law of the Parliament originated from bill no. 96/XII (2nd), which, in its statement of reasons speaks of the introduction of fiscal measures inserted in a broader set of measures to combat budget deficits.

In the statement of reasons of the aforementioned bill, it is said that, 'these measures are fundamental to reinforce the principle of social equity in austerity, guaranteeing an effective distribution of the necessary sacrifices to meet the adjustment program. The Government is strongly committed to ensuring that the distribution of these sacrifices will be made by all and not only by those who live on the income of their work. In accordance with that objective, this law extends the taxation of capital and property, equitably covering a broad set of sectors of Portuguese society.'

In that statement of reasons it is also said that, apart from the increase in taxation of capital income and securities gains, a tax is created in the context of stamp tax relating to urban properties of residential purpose whose tax value is equal to or greater than one million euros.

That is, in such statement of reasons, it is also not clarified what is understood by urban properties with residential purpose.

…

In his intervention in Parliament, in the presentation and discussion of the aforementioned bill, the State Secretary for Tax Affairs stated the following:

'The Government has chosen as the priority principle of its fiscal policy social equity. This is even more important in times of rigor as a way to ensure the just distribution of the fiscal burden.

In the demanding period that the country is going through, during which it is obliged to comply with the economic and financial assistance program, it becomes even more pressing to affirm the principle of equity. It cannot always be the same – employees and pensioners – bearing the fiscal burden.

For the fiscal system to be more just it is decisive to promote the expansion of the tax base requiring an increased effort from taxpayers with higher income and thus protecting Portuguese families with lower income.

For the fiscal system to promote more equality it is fundamental that the effort of budget consolidation be distributed among all types of income covering with special emphasis capital income and high-value properties. This matter, it is recalled, was extensively addressed in the Constitutional Court decision.

Finally, for the fiscal system to be more equitable, it is crucial that all be called to contribute according to their ability to pay, giving the tax administration strengthened powers to control and oversee situations of fraud and tax evasion.

In this sense the Government presents, today, a set of measures that effectively reinforce a just and equitable distribution of the effort of adjustment by a broad and comprehensive set of sectors of Portuguese society.

This proposal has three essential pillars: the creation of special taxation on urban properties valued above 1 million euros; the increase in taxation on capital income and securities gains and the strengthening of rules to combat fraud and tax evasion.

First, the Government proposes the creation of a special tax on the highest-value residential urban properties. This is the first time in Portugal that special taxation is created on high-value properties intended for residential use. This tax will be 0.5% to 0.8% in 2012, and 1% in 2013, and will apply to houses valued at or above 1 million euros. With the creation of this additional tax the fiscal burden required of these owners will be significantly increased in 2012 and 2013.'

In his interventions, in the discussion of such a bill, deputies Pedro Filipe Soares, of the BE, and Paulo Sá, of the PCP, speak of the taxation of luxury real property, even making references to previous bills on the same subject that were not approved."

First, it must be noted that there is no doubt that the type of urban properties considered "residential" (article 6(1)(a) of the CIMI) which are "… buildings or constructions licensed as such or, in the absence of a license, which have as their normal intended use that purpose," fall automatically into the provision of the rule of incidence of items 28 and 28-1 of the TGIS.

But from the simple consideration of the literal element of the law it will result that the intention was to encompass more than this legal-fiscal reality encompasses.

Given that, as already stated, by virtue of the command of article 9(3) of the Civil Code, it does not appear possible for the interpreter to understand that the expression "urban properties … with residential purpose" has the same practical scope (field of application) as if it said "residential urban properties," starting from the principle that the intention was to encompass more than would be encompassed through the use of the first literal element.

In the case before us AT argues that "the notion of the purpose of the urban property is found in the section relating to the valuation of property, which is well understood because the valuation of the property (purpose), incorporates value to the property, constituting a determining fact of distinction (coefficient) for purposes of valuation" and therefore recourse should be had to article 41 (purpose coefficient) of the Property Tax Code (CIMI).

And further states: "the tax law considers as an element forming part for purposes of valuation of land for construction the value of the built-upon area, which varies between 15% and 45% of the value of authorized or planned buildings based on the urbanization and construction project."

But then does the expression "urban properties … with residential purpose," encompass or can it encompass "land for construction" as unbuilt urban properties but with constructive capacity for residential buildings?

Now, only with the elements contained in the property register, as is the case, wherein only a mere constructive or developmental potential is demonstrated, it appears to us that without additional substantiation of the tax act, without demonstration that the type of urban property "land for construction" already has some form of economic utility at the level of residential purpose, it will not be possible to consider it encompassed in the rule of incidence of items 28 and 28-1 of the TGIS.

Does this mean that the expression "urban properties … with residential purpose," cannot encompass "land for construction" as unbuilt urban properties but with constructive capacity for residential buildings?

It appears to us that situations of subjection can occur in the immense complexity of the economy, of economic utility, even informal, in light of the commands placed before the interpreter contained in article 9(3) of the Civil Code and article 11(3) of the General Tax Law (LGT).

But as for "land for construction" as unbuilt urban properties but with constructive capacity for residential buildings, it appears to us that it is not sufficient to demonstrate "residential purpose" the elements contained in the property register. Another basis will be necessary, another factual matter, beyond what is contained in the register, which evidences the economic utility with that specific purpose.

We do not believe it is possible through extensive interpretation, using the reasoning of parity of reasons with constructions considered residential urban properties, to conclude, without more, that the type of urban property considered "land for construction" falls "by operation of law" into the tax rule of incidence, being sufficient to allege the legal-formal qualification and the elements of the register, given that, we emphasize, there must be demonstrated its "residential purpose" in concrete.

The Claimant alleges the non-conformity of the tax act with the law of erroneous qualification of the tax fact, apart from lack of substantiation.

In truth, even if it is understood, as it appears to us to be understood, in general and abstract terms, that a "land for construction" as well as any other urban property apart from the type of urban property "residential" (because these always have residential purpose by definition) can have, in terms of practical, economic and functional utility a "residential purpose" in concrete (even in the informal economy), the truth is that its consideration "by operation of law" as having "residential purpose" starting only from the elements of the register and from the fact that its valuation is made with reference to the coefficients applicable to residential urban properties, constitutes non-conformity with the rule of incidence of items 28 and 28-1 of the TGIS, whereupon the illegality provided for in article 99(a) of the Tax Code occurs, and there is further verified the illegality provided for in article 99(c) of the Tax Code by occurring a lack of substantiation that the law, in the reading which above was expressed, requires.

The disputed act contains no substantiation in the sense that above was stated, beyond the consideration that it is an urban property of the type "land for construction" "with constructive capacity for residential buildings" in hypothetical terms, which is configured as being insufficient.

As a consequence of the above, the request formulated by the Claimant before the TAS must be judged as well-founded, since the IS assessment carried out by AT is not in conformity with the law.

Request for Interest

In the legislative authorization in which the Government based itself to approve the RJAT, granted by article 124 of Law No. 3-B/2010, it is stated that "the tax arbitration proceeding must constitute an alternative procedural means to the judicial challenge proceeding and to the action for recognition of a right or legitimate interest in tax matters."

Although paragraphs a) and b) of article 2(1) of the RJAT use the expression "declaration of illegality" to define the competence of the arbitral tribunals operating at CAAD and do not make reference to constitutive (annulment) and condemnatory decisions, it should be understood, in harmony with the aforementioned legislative authorization, that their competences include the powers that in challenge proceedings are attributed to tax tribunals regarding acts whose appraisal of legality falls within their competences.

Whereby a judgment of condemnation of the tax administration to payment of indemnificatory interest may be issued here.

Article 43 of the General Tax Law (LGT) "does nothing but establish an expeditious and, so to speak, automatic means of indemnifying the aggrieved party. Independently of any allegation and proof of damages suffered, he has the right to the indemnification therein established, reflected in indemnificatory interest in the cases included in the provision (…)" Supreme Administrative Court Decision of 2-11-2006, case 604/06, available at www.dgsi.pt"

In the case at hand, the Claimant proved that it paid on 30.04.2014, the first installment of the disputed assessment in the amount of 9,152.18 euros (section 8 of the established factual matter) and alleged that it would pay the remaining due installments on 30.09.2014 and 30.11.2014, as of the date of submission of the request for an arbitral decision to CAAD, whereby it has the right to indemnificatory interest accrued from the date of payment, total or partial, of the tax assessment now annulled until the date of issuance of the respective credit note, counting the deadline for that payment from the beginning of the deadline for voluntary performance of the present decision (article 61, nos. 2 to 5, of the Tax Procedure Code), at the rate ascertained in accordance with the provision of article 43(4) of the General Tax Law (LGT).

V. DECISION

In view of and on the basis of the grounds set forth above, the request of the Claimant seeking the annulment of the assessment of Stamp Tax (IS) of item 28.1 of the TGIS, for the year 2013, identified by document 2014 ..., dated 17.03.2014, which generated a collection in the amount of 27,456.50 €, relating to the urban property of which it is the owner, of the type "land for construction," registered in the urban property register of the District of …, Municipality and Parish of ..., under article ...º, is judged as well-founded, annulling the tax act expressed in this document, for being in non-conformity with the rule of incidence of IS contained in items 28 and 28-1 of the TGIS;

AT is further condemned to proceed to refund what has been paid in whole or in part.

The request for condemnation of AT to payment of indemnificatory interest to the Claimant is further judged as well-founded, accrued from the date of payment of the installments of IS tax, in whole or in part, until the date of issuance of the respective credit note, counting the deadline for that payment from the beginning of the deadline for voluntary performance of the present decision (article 61, nos. 2 to 5, of the Tax Procedure Code), at the rate ascertained in accordance with the provision of article 43(4) of the General Tax Law (LGT).

Process value: in accordance with the provision of article 3(2) of the Regulation of Costs in Tax Arbitration Proceedings (and article 97A(1)(a) of the Tax Procedure Code), the process is assigned a value of 27,456.50 €.

Costs: in accordance with the provision of article 22(4) of the RJAT, the amount of costs is fixed at 1,530.00 €, according to Table I attached to the Regulation of Costs in Tax Arbitration Proceedings, at the expense of the Respondent.

Notify.

Lisbon, 17 October 2014

The Singular Arbitral Tribunal,

Augusto Vieira

Text prepared by computer in accordance with the provision of article 131(5) of the Code of Civil Procedure, applicable by reference to article 29 of the RJAT.

The drafting of the present decision is governed by the orthography preceding the 1990 Orthographic Agreement.

Frequently Asked Questions

Automatically Created

Is Stamp Tax under Verba 28.1 TGIS applicable to land for construction (terrenos para construção) with no residential building?
The applicability of Stamp Tax under Verba 28.1 TGIS to land for construction without residential buildings was disputed in this case. The taxpayer argued that in 2013, only properties with actual residential purpose were taxable, and undeveloped land lacked such purpose. The Tax Authority countered that 'properties with residential purpose' encompasses land for construction based on property valuation rules (CIMI Articles 41 and 45), where the purpose coefficient applies to determine tax value. The authority argued this classification is broader than constructed residential properties and includes land designated for future construction. The final decision is not included in the provided excerpt.
Can a taxpayer challenge Imposto de Selo assessments on undeveloped land through CAAD tax arbitration?
Yes, taxpayers can challenge Imposto de Selo assessments on undeveloped land through CAAD tax arbitration. Process 369/2014-T demonstrates that challenges to Stamp Tax under Verba 28.1 TGIS for terrenos para construção can be brought under the Legal Regime of Arbitration in Tax Matters (RJAT). The claimant submitted a request for constitution of a Singular Arbitral Tribunal within the deadline prescribed in Article 10(1)(a) RJAT following the assessment notice. CAAD accepted the request, appointed an arbitrator, and constituted the tribunal to hear the dispute, confirming that administrative tax arbitration is available for such Stamp Tax controversies involving undeveloped urban land.
What is the legal basis for contesting Verba 28.1 TGIS on properties without housing designation (afectação habitacional)?
The legal basis for contesting Verba 28.1 TGIS on properties without housing designation includes: (1) Literal interpretation of Verba 28.1's 2013 wording referring to 'properties with residential purpose' - arguing that land without residential buildings lacks the required purpose/designation; (2) CIMI property classification rules (Article 6) distinguishing property types, where land for construction is separate from residential properties; (3) Legislative history showing that Law 83-C/2013 (2014 Budget Act) amended Verba 28.1 to broaden its scope, implying the prior version was narrower; (4) Constitutional principles of tax legality requiring clear statutory basis for taxation; (5) Prior CAAD jurisprudence favoring taxpayers in similar circumstances; and (6) Ombudsman communications questioning the tax application to undeveloped land.
How does CAAD arbitration process work for Stamp Tax disputes involving urban land parcels valued above €1 million?
CAAD arbitration for Stamp Tax disputes on high-value urban land follows this process: (1) Taxpayer submits arbitration request to CAAD under RJAT within statutory deadline after assessment notice; (2) CAAD President accepts request and notifies Tax Authority; (3) CAAD Ethics Council appoints arbitrator(s); (4) Singular Arbitral Tribunal (TAS) constitutes within specified timeframe; (5) Tax Authority files response; (6) For repetitive legal issues, parties may consent to dispense with oral hearing under Article 18 RJAT and waive pleadings, as occurred in this case; (7) Tribunal reviews written submissions and evidence; (8) Arbitral decision issued with findings of fact and law. The process provides expedited tax dispute resolution with legal certainty, and no special procedures apply based on property value thresholds exceeding €1 million.
What was the outcome of CAAD Process 369/2014-T regarding Stamp Tax on terrenos para construção?
The final outcome of CAAD Process 369/2014-T regarding Stamp Tax on terrenos para construção is not provided in the available excerpt. The document presents the factual background, procedural history, claimant's arguments seeking annulment of the €27,456.50 assessment, and the Tax Authority's defense of the assessment's legality. The text concludes mid-sentence during AT's final arguments stating the assessment 'constitutes a correct application of th...' without continuing to the tribunal's reasoning, legal analysis, or final decision on whether to annul or uphold the Stamp Tax assessment. To determine whether the tribunal ruled in favor of the taxpayer or Tax Authority, the complete arbitral decision document would be required.