Process: 388/2016-T

Date: March 17, 2017

Tax Type: Selo

Source: Original CAAD Decision

Summary

This CAAD arbitration decision (Process 388/2016-T) addresses the application of Verba 28.1 of the General Stamp Duty Table (TGIS) to vertically divided property. The claimants—individual owners and representatives of three undivided estates (heranças ilíquidas e indivisas)—challenged Stamp Duty assessments totaling €31,782.20 for 2015 on 39 residential flats within a single building in Lisbon registered under article number in the urban property registry.

The central legal issue concerns whether the taxable property value (VPT) threshold of €1,000,000 under Verba 28.1 TGIS should apply to: (1) each individual flat as a separate autonomous unit, as argued by the claimants; or (2) the entire building in vertical ownership as a single property, as maintained by the Tax Authority (AT).

The claimants contended that the building comprises independent economic units, each with its own VPT below the €1,000,000 threshold, thus not subject to Stamp Duty under Verba 28.1. They argued the AT incorrectly summed the VPTs of all flats to reach the threshold, constituting an error in both factual and legal grounds. Additionally, they sought compensatory interest for errors attributable to tax services.

The Tax Authority defended its position by invoking Article 2 of the Municipal Property Tax Code (CIMI), distinguishing between horizontal property ownership (where each autonomous unit constitutes a separate property under CIMI Article 2(4)) and full ownership with divisions capable of independent use. The AT argued that since the building is registered under vertical/full ownership rather than horizontal property regime, the relevant VPT is the aggregate value of the entire property, not individual flats. The assessment was therefore lawful as it correctly applied the nature of the urban property registration.

This case illustrates the critical distinction in Portuguese tax law between propriedade horizontal and propriedade vertical for Stamp Duty purposes, particularly regarding inherited co-owned properties held through undivided estates.

Full Decision

ARBITRATION DECISION

1. REPORT

1.1. A…, taxpayer no. … in their own right and illiquid and indivisible inheritances opened by the death of B…, taxpayer no. … (represented by A…), C…, taxpayer no. … (represented by D…) and E…, taxpayer no. … (represented by A…), hereinafter referred to as the Claimants, filed on 12/07/2016 a request for arbitration ruling, in which they request the annulment of the acts of assessment of Stamp Duty, relating to the year 2015, in the total amount of € 31,782.20 by reason of error in factual and legal grounds.

1.2. The Honourable President of the Deontological Council of the Administrative Arbitration Centre (CAAD), appointed on 19/09/2016 as arbitrator, Francisco Nicolau Domingos.

1.3. On 17/10/2016 the arbitral tribunal was constituted.

1.4. In compliance with the provision of Article 17, No. 1 of Decree-Law No. 10/2011, of 20 January (RJAT), the Respondent was notified on 17/10/2016 to, if so wished, submit a response, request the production of additional evidence and attach the Administrative File (PA) to the case record.

1.5. On 16/11/2016 the Respondent submitted its response in which it argues that the assessments in question should be maintained in the legal order, since they correctly apply item 28.1 of the General Table of Stamp Duty (TGIS).

1.6. The Claimants on 16/11/2016 submitted a pleading in which they request the attachment to the case record of the documents proving payment of the 2nd instalment of the Stamp Duty assessments that are the subject matter of these proceedings.

1.7. The tribunal on 20/12/2016 determined the notification of the Respondent to, if so wished, exercise the right to reply regarding the documents referred to in 1.6 herein, decided to dispense with the holding of the meeting to which Article 18, No. 1 of RJAT refers, on the grounds of the principle of autonomy of the arbitral tribunal in conducting the proceedings and in determining the rules to be observed with a view to obtaining, within a reasonable time, a ruling on the merits of the claims formulated, cf. Article 16, letter c) of RJAT, granted a period of 10 days for the parties, if so wished, to present final written submissions and scheduled as the deadline for issuing the arbitration decision the day 17/03/2017.

1.8. By order dated 13/03/2017, the tribunal admitted the attachment to the case record of the documents described in 1.6 of this decision.

1.9. The parties did not submit final written submissions.

2. POSITION OF THE PARTIES

The Claimants argue as to the matter of fact that the tax holders of the building registered in the property register of urban properties of the parish of … – Lisbon under article no. … are as follows: a) 1/6 A…; b) 1/3 B… – head of the illiquid and indivisible inheritance; c) 1/3 C… – head of the illiquid and indivisible inheritance and d) 1/6 E… – head of the illiquid and indivisible inheritance.

As to the law, they argue that the assessments of Stamp Duty sourced from item 28.1 of the TGIS relating to the flats: 1st E; 1st EF; 2nd D; 2nd DF; 2nd E; 2nd EF; 3rd D; 3rd DF; 3rd E; 3rd EF; 4th D; 4th DF; 4th E; 4th EF; 5th D; 5th DF; 5th E; 5th EF; 6th D; 6th DF; 6th E; 6th EF; 7th D; 7th DF; 7th E; 7th EF; 8th D; 8th DF; 8th E; 8th EF; 9th D; 9th DF; 9th E; 9th EF; 10th D; 10th DF; 10th E; 10th EF and 11th P of such building and relating to the year 2015 are unlawful.

More specifically, they argue that the assessments in question embody an incorrect interpretation by the Tax and Customs Authority (AT) of item 28.1 of the TGIS, given that they are based on the understanding that the taxable property value (VPT) relevant for tax purposes will be that which results from the sum of the VPT of the divisions or flats capable of independent use and allocated to housing.

In fact, they conclude that the property subject to the scope of item 28.1 of the TGIS is, in the present case, each of the units with individual economic value and the VPT to be considered is that of each of those units, there being no case in the concrete situation of any one with a value exceeding € 1,000,000.00 and intended for housing.

Finally, they also petition for the payment of compensatory interest, given that the assessments in question relate to an error attributable to the services.

For its part, the Respondent argues that the Claimants have no basis for their claims, first and foremost, because the subjection to Stamp Duty results from the conjunction of two facts: i) the allocation for housing and ii) the taxable property value of the urban property registered in the property register being equal to or higher than € 1,000,000.00.

For this reason it states that the concept of property is provided for in Article 2, No. 1 of the Code of the Municipal Property Tax (CIMI), and it is provided in its No. 4 that in the regime of horizontal property ownership, each autonomous unit is deemed to constitute a property, a reality distinct in light of the article being that of "property in full ownership with flats or divisions capable of independent use". That is, the thesis that, although the assessments of Stamp Duty are processed in the situations provided for in item 28.1 of the TGIS, in accordance with the rules of CIMI, the legislator reserves the aspects that lack the necessary adaptations, as is the case of properties in full ownership where the divisions capable of independent use are not deemed to be properties, lacks legal support.

It further adds that Article 12, No. 3 of CIMI applies solely and exclusively to the manner of registering the property register data and if we are faced with properties in full ownership, the VPT that serves as the basis for its calculation will be that which the Claimants define as "global value of the property", since there are no autonomous units to which tax law attributes the qualification of property.

Now, if the immovable property in question is registered in the property register under the regime of full ownership, composed of 39 divisions intended for housing, it was on the basis of such circumstances that the assessments of Stamp Duty were made, taking into account the nature of the urban property and its divisions allocated to housing, at the date of the tax event.

Thus, if the assessments were made taking into account such factual elements, these do not suffer from any illegality.

In summary, it argues for the complete dismissal of the request for arbitration ruling.

Thus, the tribunal must decide the following issues:

i) whether the assessments of Stamp Duty are unlawful due to error in factual and legal grounds;

ii) whether the Claimants are entitled to compensatory interest.

3. PRELIMINARY MATTERS

The joinder of claimants and the accumulation of claims underlying these proceedings is admissible, as there is identity between the matter of fact and the determination thereof depends on the interpretation of the same principles and rules of law, cf. Article 3, No. 1 of RJAT. Furthermore, the subject matter of the proceedings encompasses the same tax, that of Stamp Duty.

The proceedings do not suffer from nullities, no issues were raised that prevent the consideration of the merits of the case, the arbitral tribunal is regularly constituted and is materially competent to hear and decide the claims, consequently, the conditions are met for the final decision to be issued.

4. FACTS

4.1. Facts considered proven

4.1.1. The building registered in the property register under the article - art. … – urban property, parish of …, Lisbon, has the following holders:

a) 1/6 in favour of A…, taxpayer no. …;

b) 1/3 in favour of the inheritance opened by the death of B…, taxpayer no. …;

c) 1/3 in favour of the inheritance opened by the death of C…, taxpayer no. …;

d) 1/6 in favour of the inheritance opened by the death of E…, taxpayer no….

4.1.2. Such building comprises, in particular, 39 flats with independent use, registered as follows:

a) 1st E, with a VPT of € 88,280.00, housing;

b) 1st EF, with a VPT of € 80,140.00, housing;

c) 2nd D, with a VPT of € 77,330.00, housing;

d) 2nd DF, with a VPT of € 85,450.00, housing;

e) 2nd E, with a VPT of € 85,040.00, housing;

f) 2nd EF, with a VPT of € 83,070.00, housing;

g) 3rd D, with a VPT of € 79,250.00, housing;

h) 3rd DF, with a VPT of € 83,070.00, housing;

i) 3rd E, with a VPT of € 85,040.00, housing;

j) 3rd EF, with a VPT of € 85,450.00, housing;

l) 4th D, with a VPT of € 77,330.00, housing;

m) 4th DF, with a VPT of € 85,450.00, housing;

n) 4th E, with a VPT of € 85,040.00, housing;

o) 4th EF, with a VPT of € 83,070.00, housing;

p) 5th D, with a VPT of € 79,250.00, housing;

q) 5th DF, with a VPT of € 83,070.00, housing;

r) 5th E, with a VPT of € 85,040.00, housing;

s) 5th EF, with a VPT of € 85,450.00, housing;

t) 6th D, with a VPT of € 77,330.00, housing;

u) 6th DF, with a VPT of € 85,450.00, housing;

v) 6th E, with a VPT of € 85,040.00, housing;

x) 6th EF, with a VPT of € 83,070.00, housing;

z) 7th D, with a VPT of € 79,250.00, housing;

aa) 7th DF, with a VPT of € 83,070.00, housing;

bb) 7th E, with a VPT of € 85,040.00, housing;

cc) 7th EF, with a VPT of € 77,330.00, housing;

dd) 8th D, with a VPT of € 77,330.00, housing;

ee) 8th DF, with a VPT of € 85,450.00, housing;

ff) 8th E, with a VPT of € 85,040.00, housing;

gg) 8th EF, with a VPT of € 83,070.00, housing;

hh) 9th D, with a VPT of € 79,250.00, housing;

ii) 9th DF, with a VPT of € 83,070.00, housing;

jj) 9th E, with a VPT of € 85,040.00, housing;

ll) 9th EF, with a VPT of € 85,450.00, housing;

mm) 10th D, with a VPT of € 74,210.00, housing;

nn) 10th DF, with a VPT of € 87,300.00, housing;

oo) 10th E, with a VPT of € 83,080.00, housing;

pp) 10th EF, with a VPT of € 84,080.00, housing;

qq) 11th P, with a VPT of € 34,450.00, housing.

4.1.3. The Claimant A… was notified of the assessments of Stamp Duty, relating to the year 2015, in relation to each of such flats, with allocation for housing, in the global amount of € 5,297.00 and which break down as follows:

a) 1st E, in the amount of € 147.13;

b) 1st EF, in the amount of € 133.57;

c) 2nd D, in the amount of € 128.88;

d) 2nd DF, in the amount of € 142.42;

e) 2nd E, in the amount of € 141.73;

f) 2nd EF, in the amount of € 138.45;

g) 3rd D, in the amount of € 132.08;

h) 3rd DF, in the amount of € 138.45;

i) 3rd E, in the amount of € 141.73;

j) 3rd EF, in the amount of € 142.42;

l) 4th D, in the amount of € 128.88;

m) 4th DF, in the amount of € 142.42;

n) 4th E, in the amount of € 141.73;

o) 4th EF, in the amount of € 138.45;

p) 5th D, in the amount of € 132.08;

q) 5th DF, in the amount of € 138.45;

r) 5th E, in the amount of € 141.73;

s) 5th EF, in the amount of € 142.42;

t) 6th D, in the amount of € 128.88;

u) 6th DF, in the amount of € 142.42;

v) 6th E, in the amount of € 141.73;

x) 6th EF, in the amount of € 138.45;

z) 7th D, in the amount of € 132.08;

aa) 7th DF, in the amount of € 138.45;

bb) 7th E, in the amount of € 141.73;

cc) 7th EF, in the amount of € 128.88;

dd) 8th D, in the amount of € 128.88;

ee) 8th DF, in the amount of € 142.42;

ff) 8th E, in the amount of € 141.73;

gg) 8th EF, in the amount of € 138.45;

hh) 9th D, in the amount of € 132.08;

ii) 9th DF, in the amount of € 138.45;

jj) 9th E, in the amount of € 141.73;

ll) 9th EF, in the amount of € 142.42;

mm) 10th D, in the amount of € 123.68;

nn) 10th DF, in the amount of € 145.50;

oo) 10th E, in the amount of € 138.47;

pp) 10th EF, in the amount of € 140.13;

qq) 11th P, in the amount of € 57.42.

4.1.4. Payment of the assessments described in 4.1.3. was made as follows:

i) Single instalment:

a) 1st E, € 147.13, on 27/04/2016;

b) 1st EF, € 133.57 on 27/04/2016;

c) 2nd D, € 128.88 on 27/04/2016;

d) 2nd DF, € 142.42 on 27/04/2016;

e) 2nd E, € 141.73 on 27/04/2016;

f) 2nd EF, € 138.45 on 27/04/2016;

g) 3rd D, € 132.08 on 27/04/2016;

h) 3rd DF, € 138.45 on 27/04/2016;

i) 3rd E, € 141.73 on 27/04/2016;

j) 3rd EF, € 142.42 on 27/04/2016;

l) 4th D, € 128.88 on 27/04/2016;

m) 4th DF, € 142.42 on 27/04/2016;

n) 4th E, € 141.73 on 27/04/2016;

o) 4th EF, € 138.45 on 27/04/2016;

p) 5th D, € 132.08 on 27/04/2016;

q) 5th DF, € 138.45 on 27/04/2016;

r) 5th E, € 141.73 on 27/04/2016;

s) 5th EF, € 142.42 on 27/04/2016;

t) 6th D, € 128.88 on 27/04/2016;

u) 6th DF, € 142.42 on 27/04/2016;

v) 6th E, € 141.73 on 27/04/2016;

x) 6th EF, € 138.45 on 27/04/2016;

z) 7th D, € 132.08 on 27/04/2016;

aa) 7th DF, € 138.45 on 27/04/2016;

bb) 7th E, € 141.73 on 27/04/2016;

cc) 7th EF, € 128.88 on 27/04/2016;

dd) 8th D, € 128.88 on 27/04/2016;

ee) 8th DF, € 142.42 on 27/04/2016;

ff) 8th E, € 141.73 on 27/04/2016;

gg) 8th EF, € 138.45 on 27/04/2016;

hh) 9th D, € 132.08 on 27/04/2016;

ii) 9th DF, € 138.45 on 27/04/2016;

jj) 9th E, € 141.73 on 27/04/2016;

ll) 9th EF, € 142.42 on 27/04/2016;

mm) 10th D, € 123.68 on 27/04/2016;

nn) 10th DF, € 145.50 on 27/04/2016;

oo) 10th E, € 138.47 on 27/04/2016;

pp) 10th EF, € 140.13 on 27/04/2016;

qq) 11th P, € 57.42 on 27/04/2016.

4.1.5. The illiquid and indivisible inheritance opened by the death of B… was notified of the assessments of Stamp Duty, relating to the year 2015, in relation to each of such flats, with allocation for housing, in the global amount of € 10,594.10 and which break down as follows:

a) 1st E, in the amount of € 294.27;

b) 1st EF, in the amount of € 267.13;

c) 2nd D, in the amount of € 257.77;

d) 2nd DF, in the amount of € 284.83;

e) 2nd E, in the amount of € 283.47;

f) 2nd EF, in the amount of € 276.90;

g) 3rd D, in the amount of € 264.17;

h) 3rd DF, in the amount of € 276.90;

i) 3rd E, in the amount of € 283.47;

j) 3rd EF, in the amount of € 284.83;

l) 4th D, in the amount of € 257.77;

m) 4th DF, in the amount of € 284.83;

n) 4th E, in the amount of € 283.47;

o) 4th EF, in the amount of € 276.90;

p) 5th D, in the amount of € 264.17;

q) 5th DF, in the amount of € 276.90;

r) 5th E, in the amount of € 283.47;

s) 5th EF, in the amount of € 284.83;

t) 6th D, in the amount of € 257.77;

u) 6th DF, in the amount of € 284.83;

v) 6th E, in the amount of € 283.47;

x) 6th EF, in the amount of € 276.90;

z) 7th D, in the amount of € 264.17;

aa) 7th DF, in the amount of € 276.90;

bb) 7th E, in the amount of € 283.47;

cc) 7th EF, in the amount of € 257.77;

dd) 8th D, in the amount of € 257.77;

ee) 8th DF, in the amount of € 284.83;

ff) 8th E, in the amount of € 283.47;

gg) 8th EF, in the amount of € 276.90;

hh) 9th D, in the amount of € 264.17;

ii) 9th DF, in the amount of € 276.90;

jj) 9th E, in the amount of € 283.47;

ll) 9th EF, in the amount of € 284.83;

mm) 10th D, in the amount of € 247.37;

nn) 10th DF, in the amount of € 291.00;

oo) 10th E, in the amount of € 276.93;

pp) 10th EF, in the amount of € 280.27;

qq) 11th P, in the amount of € 114.83.

4.1.6. Payment of the assessments described in 4.1.5. was made as follows:

i) 1st instalment:

a) 1st E, € 147.14 on 27/04/2016;

b) 1st EF, € 133.57 on 27/04/2016;

c) 2nd D, € 128.89 on 27/04/2016;

d) 2nd DF, € 142.42 on 27/04/2016;

e) 2nd E, € 141.74 on 27/04/2016;

f) 2nd EF, € 138.45 on 27/04/2016;

g) 3rd D, € 132.09 on 27/04/2016;

h) 3rd DF, € 138.45 on 27/04/2016;

i) 3rd E, € 141.74 on 27/04/2016;

j) 3rd EF, € 142.42 on 27/04/2016;

l) 4th D, € 128.89 on 27/04/2016;

m) 4th DF, € 142.42 on 27/04/2016;

n) 4th E, € 141.74 on 27/04/2016;

o) 4th EF, € 138.45 on 27/04/2016;

p) 5th D, € 132.09 on 27/04/2016;

q) 5th DF, € 138.45 on 27/04/2016;

r) 5th E, € 141.74 on 27/04/2016;

s) 5th EF, € 142.42 on 27/04/2016;

t) 6th D, € 128.89 on 27/04/2016;

u) 6th DF, € 142.42 on 27/04/2016;

v) 6th E, € 141.74 on 27/04/2016;

x) 6th EF, € 138.45 on 27/04/2016;

z) 7th D, € 132.09 on 27/04/2016;

aa) 7th DF, € 138.45 on 27/04/2016;

bb) 7th E, € 141.74 on 27/04/2016;

cc) 7th EF, € 128.89 on 27/04/2016;

dd) 8th D, € 128.89 on 27/04/2016;

ee) 8th DF, € 142.42 on 27/04/2016;

ff) 8th E, € 141.74 on 27/04/2016;

gg) 8th EF, € 138.45 on 27/04/2016;

hh) 9th D, € 132.09 on 27/04/2016;

ii) 9th DF, € 138.45 on 27/04/2016;

jj) 9th E, € 141.74 on 27/04/2016;

ll) 9th EF, € 142.42 on 27/04/2016;

mm) 10th DF, € 145.50 on 27/04/2016;

nn) 10th E, € 138.47 on 27/04/2016;

oo) 10th EF, € 140.14 on 27/04/2016.

ii) 2nd instalment:

a) 1st E, € 147.13, on 07/11/2016;

b) 1st EF, € 133.56 on 07/11/2016;

c) 2nd D, € 128.88 on 07/11/2016;

d) 2nd DF, € 142.41, on 07/11/2016;

e) 2nd E, € 141.73 on 07/11/2016;

f) 2nd EF, € 138.45 on 07/11/2016;

g) 3rd D, € 132.08 on 07/11/2016;

h) 3rd DF, € 138.45 on 07/11/2016;

i) 3rd E, € 141.73 on 07/11/2016;

j) 3rd EF, € 142.41 on 07/11/2016;

l) 4th D, € 128.88 on 07/11/2016;

m) 4th DF, € 142.41 on 07/11/2016;

n) 4th E, € 141.73 on 07/11/2016;

o) 4th EF, € 138.45 on 07/11/2016;

p) 5th D, € 132.08 on 07/11/2016;

q) 5th DF, € 138.45 on 07/11/2016;

r) 5th E, € 141.73 on 07/11/2016;

s) 5th EF, € 142.41 on 07/11/2016;

t) 6th D, € 128.88 on 07/11/2016;

u) 6th DF, € 142.41 on 07/11/2016;

v) 6th E, € 141.73 on 07/11/2016;

x) 6th EF, € 138.45 on 07/11/2016;

z) 7th D, € 132.06 on 07/11/2016;

aa) 7th DF, € 138.45 on 07/11/2016;

bb) 7th E, € 141.73 on 07/11/2016;

cc) 7th EF, € 128.88 on 07/11/2016;

dd) 8th D, € 128.88 on 07/11/2016;

ee) 8th DF, € 142.41 on 07/11/2016;

ff) 8th E, € 141.73 on 07/11/2016;

gg) 8th EF, € 138.45 on 07/11/2016;

hh) 9th D, € 132.08 on 07/11/2016;

ii) 9th DF, € 138.45 on 07/11/2016;

jj) 9th E, € 141.73 on 07/11/2016;

ll) 9th EF, € 142.41 on 07/11/2016;

mm) 10th DF, € 145.50 on 07/11/2016;

nn) 10th EF, € 140.13 on 07/11/2016.

iii) Single instalment:

a) 10th D, € 247.37 on 27/04/2016;

b) 11th P, € 114.83 on 27/04/2016.

4.1.7. The illiquid and indivisible inheritance opened by the death of C… was notified of the assessments of Stamp Duty, relating to the year 2015, in relation to each of such flats, with allocation for housing, in the global amount of € 10,594.10 and which break down as follows:

a) 1st E, in the amount of € 294.27;

b) 1st EF, in the amount of € 267.13;

c) 2nd D, in the amount of € 257.77;

d) 2nd DF, in the amount of € 284.83;

e) 2nd E, in the amount of € 283.47;

f) 2nd EF, in the amount of € 276.90;

g) 3rd D, in the amount of € 264.17;

h) 3rd DF, in the amount of € 276.90;

i) 3rd E, in the amount of € 283.47;

j) 3rd EF, in the amount of € 284.83;

l) 4th D, in the amount of € 257.77;

m) 4th DF, in the amount of € 284.83;

n) 4th E, in the amount of € 283.47;

o) 4th EF, in the amount of € 276.90;

p) 5th D, in the amount of € 264.17;

q) 5th DF, in the amount of € 276.90;

r) 5th E, in the amount of € 283.47;

s) 5th EF, in the amount of € 284.83;

t) 6th D, in the amount of € 257.77;

u) 6th DF, in the amount of € 284.83;

v) 6th E, in the amount of € 283.47;

x) 6th EF, in the amount of € 276.90;

z) 7th D, in the amount of € 264.17;

aa) 7th DF, in the amount of € 276.90;

bb) 7th E, in the amount of € 283.47;

cc) 7th EF, in the amount of € 257.77;

dd) 8th D, in the amount of € 257.77;

ee) 8th DF, in the amount of € 284.83;

ff) 8th E, in the amount of € 283.47;

gg) 8th EF, in the amount of € 276.90;

hh) 9th D, in the amount of € 264.17;

ii) 9th DF, in the amount of € 276.90;

jj) 9th E, in the amount of € 283.47;

ll) 9th EF, in the amount of € 284.83;

mm) 10th D, in the amount of € 247.37;

nn) 10th DF, in the amount of € 291.00;

oo) 10th E, in the amount of € 276.93;

pp) 10th EF, in the amount of € 280.27;

qq) 11th P, in the amount of € 114.83.

4.1.8. Payment of the assessments described in 4.1.7. was made as follows:

i) 1st instalment:

a) 1st E, € 147.14, on 27/04/2016;

b) 1st EF, € 133.57 on 27/04/2016;

c) 2nd D, € 128.89 on 27/04/2016;

d) 2nd DF, € 142.42, on 27/04/2016;

e) 2nd E, € 141.74 on 27/04/2016;

f) 2nd EF, € 138.45 on 27/04/2016;

g) 3rd D, € 132.09 on 27/04/2016;

h) 3rd DF, € 138.45 on 27/04/2016;

i) 3rd E, € 141.74 on 27/04/2016;

j) 3rd EF, € 142.42 on 27/04/2016;

l) 4th D, € 128.89 on 27/04/2016;

m) 4th DF, € 142.42 on 27/04/2016;

n) 4th E, € 141.74 on 27/04/2016;

o) 4th EF, € 138.45 on 27/04/2016;

p) 5th D, € 132.09 on 27/04/2016;

q) 5th DF, € 138.45 on 27/04/2016;

r) 5th E, € 141.74 on 27/04/2016;

s) 5th EF, € 142.42 on 27/04/2016;

t) 6th D, € 128.89 on 27/04/2016;

u) 6th DF, € 142.42 on 27/04/2016;

v) 6th E, € 141.74 on 27/04/2016;

x) 6th EF, € 138.45 on 27/04/2016;

z) 7th D, € 132.09 on 27/04/2016;

aa) 7th DF, € 138.45 on 27/04/2016;

bb) 7th E, € 141.74 on 27/04/2016;

cc) 7th EF, € 128.89 on 27/04/2016;

dd) 8th D, € 128.89 on 27/04/2016;

ee) 8th DF, € 142.42 on 27/04/2016;

ff) 8th E, € 141.74 on 27/04/2016;

gg) 8th EF, € 138.45 on 27/04/2016;

hh) 9th D, € 132.09 on 27/04/2016;

ii) 9th DF, € 138.45 on 27/04/2016;

jj) 9th E, € 141.74 on 27/04/2016;

ll) 9th EF, € 142.42 on 27/04/2016;

mm) 10th DF, € 145.50 on 27/04/2016;

nn) 10th E, € 138.47 on 27/04/2016;

oo) 10th EF, € 140.14 on 27/04/2016.

ii) 2nd instalment:

a) 1st E, € 147.13 on 07/11/2016;

b) 1st EF, € 133.56 on 07/11/2016;

c) 2nd D, € 128.88 on 07/11/2016;

d) 2nd DF, € 142.41, on 07/11/2016;

e) 2nd E, € 141.73 on 07/11/2016;

f) 2nd EF, € 138.45 on 07/11/2016;

g) 3rd D, € 132.08 on 07/11/2016;

h) 3rd DF, € 138.45 on 07/11/2016;

i) 3rd E, € 141.73 on 07/11/2016;

j) 3rd EF, € 142.41 on 07/11/2016;

l) 4th D, € 128.88 on 07/11/2016;

m) 4th DF, € 142.41 on 07/11/2016;

n) 4th E, € 141.73 on 07/11/2016;

o) 4th EF, € 138.45 on 07/11/2016;

p) 5th D, € 132.08 on 07/11/2016;

q) 5th DF, € 138.45 on 07/11/2016;

r) 5th E, € 141.73 on 07/11/2016;

s) 5th EF, € 142.41 on 07/11/2016;

t) 6th D, € 128.88 on 07/11/2016;

u) 6th DF, € 142.41 on 07/11/2016;

v) 6th E, € 141.73 on 07/11/2016;

x) 6th EF, € 138.45 on 07/11/2016;

z) 7th D, € 132.08 on 07/11/2016;

aa) 7th DF, € 138.45 on 07/11/2016;

bb) 7th E, € 141.73 on 07/11/2016;

cc) 7th EF, € 128.88 on 07/11/2016;

dd) 8th D, € 128.88 on 07/11/2016;

ee) 8th DF, € 142.41 on 07/11/2016;

ff) 8th E, € 141.73 on 07/11/2016;

gg) 8th EF, € 138.45 on 07/11/2016;

hh) 9th D, € 132.08 on 07/11/2016;

ii) 9th DF, € 138.45 on 07/11/2016;

jj) 9th E, € 141.73 on 07/14/2016;

ll) 9th EF, € 142.41 on 07/11/2016;

mm) 10th DF, € 145.50 on 07/11/2016;

nn) 10th E, € 138.46 on 07/11/2016;

oo) 10th EF, € 140.13 on 07/11/2016.

Single instalment:

a) 11th P, € 114.83 on 27/04/2016;

b) 10th D, € 247.37 on 27/04/2016.

4.1.9. The illiquid and indivisible inheritance opened by the death of E… was notified of the assessments of Stamp Duty, relating to the year 2015, in relation to each of such flats, with allocation for housing, in the global amount of € 5,297.00 and which break down as follows:

a) 1st E, in the amount of € 147.13;

b) 1st EF, in the amount of € 133.57;

c) 2nd D, in the amount of € 128.88;

d) 2nd DF, in the amount of € 142.42;

e) 2nd E, in the amount of € 141.73;

f) 2nd EF, in the amount of € 138.45;

g) 3rd D, in the amount of € 132.08;

h) 3rd DF, in the amount of € 138.45;

i) 3rd E, in the amount of € 141.73;

j) 3rd EF, in the amount of € 142.42;

l) 4th D, in the amount of € 128.88;

m) 4th DF, in the amount of € 142.42;

n) 4th E, in the amount of € 141.73;

o) 4th EF, in the amount of € 138.45;

p) 5th D, in the amount of € 132.08;

q) 5th DF, in the amount of € 138.45;

r) 5th E, in the amount of € 141.73;

s) 5th EF, in the amount of € 142.42;

t) 6th D, in the amount of € 128.88;

u) 6th DF, in the amount of € 142.42;

v) 6th E, in the amount of € 141.73;

x) 6th EF, in the amount of € 138.45;

z) 7th D, in the amount of € 132.08;

aa) 7th DF, in the amount of € 138.45;

bb) 7th E, in the amount of € 141.73;

cc) 7th EF, in the amount of € 128.88;

dd) 8th D, in the amount of € 128.88;

ee) 8th DF, in the amount of € 142.42;

ff) 8th E, in the amount of € 141.73;

gg) 8th EF, in the amount of € 138.45;

hh) 9th D, in the amount of € 132.08;

ii) 9th DF, in the amount of € 138.45;

jj) 9th E, in the amount of € 141.73;

ll) 9th EF, in the amount of € 142.42;

mm) 10th D, in the amount of € 123.68;

nn) 10th DF, in the amount of € 145.50;

oo) 10th E, in the amount of € 138.47;

pp) 10th EF, in the amount of € 140.13;

qq) 11th P, in the amount of € 57.42.

4.1.10. Payment of the assessments described in 4.1.9. was made as follows:

i) Single instalment:

a) 1st E, € 147.13, on 27/04/2016;

b) 1st EF, € 133.57 on 27/04/2016;

c) 2nd D, € 128.88 on 27/04/2016;

d) 2nd DF, € 142.42, on 27/04/2016;

e) 2nd E, € 141.73 on 27/04/2016;

f) 2nd EF, € 138.45 on 27/04/2016;

g) 3rd D, € 132.08 on 27/04/2016;

h) 3rd DF, € 138.45 on 27/04/2016;

i) 3rd E, € 141.73 on 27/04/2016;

j) 3rd EF, € 142.42 on 27/04/2016;

l) 4th D, € 128.88 on 27/04/2016;

m) 4th DF, € 142.42 on 27/04/2016;

n) 4th E, € 141.73 on 27/04/2016;

o) 4th EF, € 138.45 on 27/04/2016;

p) 5th D, € 132.08 on 27/04/2016;

q) 5th DF, € 138.45 on 27/04/2016;

r) 5th E, € 141.73 on 27/04/2016;

s) 5th EF, € 142.42 on 27/04/2016;

t) 6th D, € 128.88 on 27/04/2016;

u) 6th DF, € 142.42 on 27/04/2016;

v) 6th E, € 141.73 on 27/04/2016;

x) 6th EF, € 138.45 on 27/04/2016;

z) 7th D, € 132.08 on 27/04/2016;

aa) 7th DF, € 138.45 on 27/04/2016;

bb) 7th E, € 141.73 on 27/04/2016;

cc) 7th EF, € 128.88 on 27/04/2016;

dd) 8th D, € 128.88 on 27/04/2016;

ee) 8th DF, € 142.42 on 27/04/2016;

ff) 8th E, € 141.73 on 27/04/2016;

gg) 8th EF, € 138.45 on 27/04/2016;

hh) 9th D, € 132.08 on 27/04/2016;

ii) 9th DF, € 138.45 on 27/04/2016;

jj) 9th E, € 141.73 on 27/04/2016;

ll) 9th EF, € 142.42 on 27/04/2016;

mm) 10th D, € 123.68 on 27/04/2016;

nn) 10th DF, € 145.50 on 27/04/2016;

oo) 10th E, € 138.47 on 27/04/2016;

pp) 10th EF, € 140.13 on 27/04/2016;

qq) 11th P, € 57.42 on 27/04/2016.

4.1.11. The building identified in 4.1.1. was not constituted under the regime of horizontal property ownership as of 31/12/2015.

4.1.12. The request for arbitration ruling was filed on 12/07/2016.

4.2. Facts not considered proven

4.2.1. That the 2nd instalment of the assessment relating to the 10th E belonging to the inheritance opened by the death of B… is paid.

There are no other facts with relevance for the arbitration decision that have not been found proven.

4.3. Justification of the facts considered proven

The facts considered proven have their source in the documents used for each of the alleged facts and whose authenticity was not called into question.

4.4. Justification of the facts not considered proven

No document proving payment was attached to make proof of the fact.

5. LAW

The first issue that the tribunal must decide consists in determining whether the subjection to the norm of incidence of item 28.1 of the TGIS should be concretized by the VPT corresponding to each one of the divisions capable of independent use, or if, on the contrary, by the sum of the VPT of each of such divisions.

To accomplish this task it is necessary to seek the norm which the parties disagree on in its interpretation.

Article 1, No. 1 of the Code of Stamp Duty (CIS) and item 28 of the TGIS provide that the following are subject to taxation: "Ownership, usufruct or right of superficies of urban properties whose taxable property value registered in the property register, pursuant to the Code of the Municipal Property Tax (CIMI), is equal to or higher than € 1,000,000 – on the taxable property value used for IMI purposes:

28.1 - Per residential property (…) – 1%...".

Thus, it is necessary to investigate the concept of "residential property" to which the norm under interpretation refers and that of "taxable property value used for IMI purposes". Now, as it is not possible to resolve the issue by resorting to the CIS, it is by force of the provision of Article 67, No. 2 of such statute necessary to apply the norms of CIMI.

Consequently, Article 2 of CIMI provides on the concept of property:

"1 - For purposes of this Code, property is every plot of land, including waters, plantations, buildings and constructions of any kind incorporated or situated therein, with a character of permanence, provided that it forms part of the patrimony of a natural or legal person and, in normal circumstances, has economic value, as well as waters, plantations, buildings or constructions, in the circumstances aforesaid, endowed with economic autonomy in relation to the land where they are located, although situated in a plot of land that constitutes an integral part of a different patrimony or does not have a patrimonial nature.

2 - Buildings or constructions, even if movable by nature, are deemed to have a character of permanence when devoted to non-transitory purposes.

3 - The character of permanence is presumed when the buildings or constructions are situated in the same location for a period exceeding one year.

4 - For purposes of this tax, each autonomous unit, in the regime of horizontal property ownership, is deemed to constitute a property".

The concept of property in the context of IMI is, as we know, endowed with greater breadth in relation to that contained in Article 204, No. 2 of the Civil Code (CC) and comprises three elements, more specifically, one of a physical nature, the second of a legal character and the last of an economic nature, J. SILVÉRIO MATEUS/L. CORVELO DE FREITAS, Taxes on Real Property. Stamp Duty, Engisco, 2005, p. 101 to 103 and JOSÉ MARTINS ALFARO, Code of the Municipal Property Tax – Annotated and Commented, Áreas Editora, 2004, p. 118 to 123. The first requires reference to a plot of land, including, in particular, buildings and constructions incorporated therein with a character of permanence. The element of a legal character requires that the thing, movable or immovable, belongs to the patrimony of a natural or legal person. Thirdly, the element of an economic nature requires that the thing have an economic value.

With regard to the concept of urban property, Article 6 of CIMI describes its various categories, and fundamental for the subsumption in each of them is the nature of use, that is, the purpose to which it is intended. And nothing in the economy of Article 6, No. 1, letter a) of CIMI prevents the classification of the parts of a property in vertical ownership, with flats or divisions capable of independent use, with a housing use, as "residential property".

Relevant is, it is repeated, its use. And a different conclusion is not possible to reach from the interpretation of Article 2, No. 4 of CIMI which elevates each autonomous unit, in the regime of horizontal property ownership, to the category of property. In fact, also in this latter provision one cannot find any foundation for discriminating between properties in horizontal ownership and properties in vertical ownership, with flats or divisions capable of independent use, as regards their subsumption as urban and residential properties, in accordance with the entire economy of item 28 of the TGIS. In other words, if the legislator did not treat differently properties in vertical ownership in relation to those constituted in horizontal ownership, the interpreter should not do so[1].

On the contrary, the registration in the property register and the determination of the VPT demonstrate the similarity of legislative treatment. Indeed, the parts endowed with economic independence should, each of them, be the subject of separate registration in the property register and, consequently, the respective VPT should likewise appear separately, cf. Article 2, No. 4, Article 7, No. 2, letter b) and Article 12, No. 3, all of CIMI. Which has refraction in the matter of assessment, insofar as there will be one for each flat or division subject to separate use.

Reverting such interpretation to the present proceedings, there are 39 flats of the building with independent housing use which, at the date of the tax event, that is, 31 December 2015, was not constituted in horizontal property ownership and, consequently, from the outset, there is no doubt that they should be classified as residential properties of an urban nature.

It is also important to clarify the other graphic segment of the CIS item under interpretation, that is, the "taxable property value used for IMI purposes".

In this respect, as already described, CIMI provides for the autonomization of the parts of urban property capable of independent use as regards registration in the property register and the specification of the respective VPT. Such observation is equally valid regarding the consequent assessment, as provided by Article 113, No. 1 and Article 119, No. 1, both of the latter cited statute. Indeed, if the tax is assessed "...on the basis of the taxable property values of the properties (our emphasis) and in relation to the tax subjects appearing in the property registers (our emphasis)..." and the collection document must contain the "...discrimination of the properties, their parts capable of independent use, their respective taxable property value and the levy...", this means that, not only is the VPT for purposes of application of item 28.1 of the TGIS to be considered that which is subject to separate registration in the property register, but also nothing prevents the qualification as "residential property" of flats or divisions with independent use.

Now, if none of the flats with housing allocation exceeded the VPT of € 1,000,000.00, the rule of incidence in question cannot be applicable to the case sub judice, under penalty of illegality. It is repeated, relevant is, to delineate the scope of such rule, that the parties disagree on its interpretation: i) that the flat or division capable of independent use has a VPT exceeding € 1,000,000.00 and ii) that it has housing allocation.

This is also the conclusion of case law regarding the delimitation of the incidence of item 28.1 of the TGIS when it observes that: "When it comes to a property constituted in vertical ownership, the incidence of IS should be determined, not by the VPT resulting from the sum of the VPT of all divisions or flats capable of independent use (individualized in the article of the property register), but by the VPT attributed to each of those flats or divisions intended for housing", as per the Decision of the Supreme Administrative Court of 09/09/2015, issued in the framework of case no. 047/15 and in which Counsellor FRANCISCO ROTHES was the Reporting Judge.

Such interpretation is also found in the following: "I – Item 28 of the General Table of Stamp Duty (TGIS) added by Article 4 of Law No. 55-A/2012, of 29/10, does not apply to urban properties, with one article in the property register but composed of parts with independent allocation and use to which independent VPT were attributed, each of these with a value less than one million euros...", Decision of the Supreme Administrative Court of 04/05/2016, issued in the framework of case no. 0166/16 and in which Counsellor ANA PAULA LOBO was the Reporting Judge.

Consequently, the assessments that are the subject of these proceedings suffer from the defect of violation of law and, as such, cannot subsist in the legal order, which is hereby declared.

Finally, the Claimants petition for the payment of compensatory interest by the Respondent in consequence of an error attributable to the services.

In fact, Article 43, No. 1 of the General Tax Code (LGT) provides that: "Compensatory interest is due when it is determined, in a gracious reclamation or judicial impugnation, that there was an error attributable to the services from which results payment of the tax debt in an amount higher than that legally due". In other words, there are three requirements for the right to such interest: i) existence of an error in an act of tax assessment attributable to the services; ii) determination of such error in a process of gracious reclamation or judicial impugnation and iii) payment of tax debt in an amount higher than that legally due.

Thus, it is immediately possible to formulate a question: is it admissible to determine the payment of compensatory interest in a tax arbitration process? The answer to the question is affirmative. Indeed, Article 24, No. 5 of RJAT provides that: "Payment of interest, regardless of its nature, is due, in the terms provided for in the General Tax Code and in the Code of Tax Procedure and Process".

Deciding on the question, the illegality of the acts in question is attributable to the Respondent, given the lack of normative support when they were performed. Consequently, the petition for payment of compensatory interest is granted, calculated at the legal rate, in accordance with that provided in Article 43, No. 4 of the LGT, between the date on which the undue payment was made and until complete reimbursement.

6. DECISION

On these grounds and with the justification described above, it is decided to judge the request for arbitration ruling entirely granted, annulling the acts that are the subject matter of the ruling, with all legal consequences, including the return of the tax paid by the Claimants and the payment of compensatory interest, from the date of the undue payment until actual reimbursement.

7. VALUE OF THE PROCEEDINGS

The value of the proceedings is fixed at € 31,782.20 (corresponding to the sum of the assessments that are the subject of the ruling), pursuant to Article 97-A of the Code of Tax Procedure and Process (CPPT), applicable by force of the provision of Article 29, No. 1, letter a) of RJAT and Article 3, No. 2 of the Regulation of Costs in Tax Arbitration Proceedings (RCPAT).

8. COSTS

Costs to be borne by the Respondent, in the amount of € 1,836, cf. Article 22, No. 4 of RJAT and Table I annexed to RCPAT, insofar as the petition was entirely granted.

Notify.

Lisbon, 17 March 2017

The Arbitrator,

Francisco Nicolau Domingos

[1] Cf. in this sense the arbitration decision of 29/10/2013 issued in case no. 50/2013 – T and in which Dr. MARIA DO ROSÁRIO ANJOS performed the function of arbitrator.

Frequently Asked Questions

Automatically Created

How does Verba 28.1 of the Tabela Geral do Imposto do Selo apply to vertical property (propriedade vertical)?
Verba 28.1 of the TGIS applies to vertical property (propriedade vertical) by treating the entire building as a single taxable unit rather than assessing individual flats separately. The Tax Authority's position is that when property is registered under full ownership with divisions capable of independent use (not horizontal property regime), the taxable property value (VPT) threshold of €1,000,000 applies to the aggregate value of all residential divisions within the building, not to each unit individually. This contrasts with horizontal property ownership under CIMI Article 2(4), where each autonomous unit constitutes a separate property for tax purposes.
Can Imposto do Selo liquidations on individual units of a vertically divided building be challenged at CAAD?
Yes, Stamp Tax liquidations on individual units of a vertically divided building can be challenged at CAAD (Centro de Arbitragem Administrativa). The claimants in Process 388/2016-T successfully initiated arbitration proceedings under the RJAT (Regime Jurídico da Arbitragem Tributária) framework by filing a request for arbitration ruling on 12/07/2016. The arbitral tribunal has material competence to hear disputes concerning Stamp Duty assessments, including those involving interpretation of Verba 28.1 TGIS and the legal classification of property ownership structures. The joinder of multiple claimants and accumulation of claims is admissible when there is identity of factual matters and legal principles.
What are the legal grounds for annulling Stamp Tax assessments on inherited property shares in Portugal?
Legal grounds for annulling Stamp Tax assessments on inherited property shares in Portugal include: (1) error in factual grounds (erro nos pressupostos de facto), such as incorrect determination of the taxable property value or misidentification of the property structure; (2) error in legal grounds (erro nos pressupostos de direito), including misapplication of Verba 28.1 TGIS, incorrect interpretation of CIMI provisions distinguishing horizontal from vertical property, or erroneous legal qualification of the property ownership regime; and (3) attribution of errors to tax services, which may give rise to compensatory interest claims under Article 43 of the LGT (Lei Geral Tributária). The burden of proof regarding illegality rests with the claimants.
How is Imposto do Selo calculated for co-owned properties held through undivided estates (heranças ilíquidas e indivisas)?
Imposto do Selo for co-owned properties held through undivided estates (heranças ilíquidas e indivisas) is calculated based on the property's registration status and allocation. When representatives of undivided estates hold fractional interests (e.g., 1/3, 1/6) in a building alongside individual owners, the Tax Authority assesses Stamp Duty under Verba 28.1 TGIS if: (1) the property or its divisions are allocated to housing (habitação); and (2) the VPT equals or exceeds €1,000,000. The critical determination is whether the property registered under vertical ownership should be valued as a single unit (aggregate VPT of all divisions) or as separate autonomous units. The tax liability follows the property registration, not the fractional ownership structure of the heirs.
What is the arbitration procedure at CAAD for contesting Stamp Tax liquidations under Verba 28.1?
The CAAD arbitration procedure for contesting Stamp Tax liquidations under Verba 28.1 follows the RJAT framework: (1) file a request for arbitration ruling specifying the challenged acts and grounds (error in fact/law); (2) the CAAD President appoints an arbitrator; (3) the tribunal is constituted within statutory timeframes; (4) pursuant to RJAT Article 17(1), the Tax Authority is notified to submit a response, request additional evidence, and attach the administrative file; (5) the tribunal may dispense with an oral hearing under RJAT Article 16(c) based on procedural autonomy principles; (6) parties may submit final written statements; (7) the tribunal issues a decision within the scheduled deadline. The procedure accommodates multiple claimants and accumulated claims when factual and legal issues overlap.