Process: 399/2015-T

Date: November 10, 2015

Tax Type: Selo

Source: Original CAAD Decision

Summary

This CAAD arbitral decision (Process 399/2015-T) addresses the application of Verba 28 of the General Stamp Tax Table (TGIS) to vertical property ownership. The taxpayer, representing an undivided succession, contested 17 Stamp Tax assessment acts totaling €4,337.01 on an urban property held in vertical (full) ownership with multiple independent units. The central legal dispute concerns whether Verba 28.1, which applies to residential properties with tax equity value (TEV) exceeding €1,000,000, should assess the property as a whole or each independent unit separately. The Applicant argued that distinguishing between horizontal and vertical ownership lacks legal basis under CIMI provisions, and since no individual unit exceeds €1,000,000 TEV, the tax should not apply. The Tax Authority countered that only fractions under the horizontal ownership regime (Article 1417 Civil Code) constitute separate 'properties' under Article 2(4) CIMI. In vertical ownership, independent units without formal horizontal division cannot be treated as distinct properties for Stamp Tax purposes, meaning the entire building's TEV determines tax liability. This case illustrates critical interpretative issues regarding property taxation concepts, the intersection of civil property law and tax law, and the different fiscal treatment of horizontal versus vertical ownership structures in Portuguese tax legislation.

Full Decision

ARBITRAL DECISION

REPORT

A - PARTIES

A, with domicile in ..., ..., bearing tax identification number ..., and in the capacity of legal representative of an Undivided Succession with Tax Identification Number ..., hereinafter referred to as the Applicant or Taxpayer.

TAX AND CUSTOMS AUTHORITY (which succeeded the Directorate-General of Taxes, by means of Decree-Law No. 118/2011, of 15 December) hereinafter referred to as the Respondent or AT.

The request for constitution of the arbitral tribunal was accepted by the President of the CAAD, and the Arbitral Tribunal was duly constituted on 15-09-2015, to examine and decide on the subject matter of the present case, and automatically notified the Tax and Customs Authority on 15-09-2015, as appears in the respective minutes.

The Applicant did not proceed with the appointment of an arbitrator, and therefore, pursuant to Article 6, paragraph 1 and Article 11, paragraph 1, subparagraph b) of Decree-Law No. 10/2011, of 20 January, as amended by Article 228 of Law No. 66-B/2012, of 31 December, the Deontological Council appointed Mr. Dr. Arbitrator Paulo Ferreira Alves, the appointment having been accepted in the manner legally provided for.

On 12-08-2015 the parties were duly notified of such appointment and did not express any intention to refuse the appointment of the arbitrators, in accordance with Article 11, paragraph 1, subparagraphs a) and b) of the RJAT and Articles 6 and 7 of the Deontological Code.

In accordance with the provision in Article 11, paragraph 1, subparagraph c) of Decree-Law No. 10/2011, of 20 January, as amended by Article 228 of Law No. 66-B/2012, of 31 December, the singular arbitral tribunal is duly constituted on 15-09-2015.

Both parties agree with the waiver of the meeting provided for in Article 18 of the RJAT.

The arbitral tribunal is duly constituted. It is materially competent, pursuant to Articles 2, paragraph 1, subparagraph a), and 30, paragraph 1, of Decree-Law No. 10/2011, of 20 January.

The parties have legal personality and capacity, are legitimate and are legally represented (Articles 4 and 10, paragraph 2, of the same decree and Article 1 of Order No. 112-A/2011, of 22 March).

The case does not suffer from defects that would invalidate it.

B - REQUEST

  1. The now Applicant seeks the declaration of illegality of the tax assessment acts in the matter of Stamp Tax: No. 2015 ...57, No. 2015 ...58, No. 2015 ...15, No. 2015 ...21, No. 2015 ...30, No. 2015 ...65, No. 2015 ...37, No. 2015 ...38, No. 2015 ...51, No. 2015 ...16, No. 2015 ...11, No. 2015 ...84, No. 2015 ...92, No. 2015 ...43, No. 2015 ...65, No. 2015 ...05, No. 2015 ...44, which set a total tax payable of €4,337.01€ (four thousand three hundred and thirty-seven euros and one cent).

C - GROUNDS FOR CLAIM

  1. To support its request for arbitral pronouncement, the Applicant alleged, with a view to the declaration of illegality of the tax assessment acts in the matter of Stamp Tax, already described in point 1 of this Award, in summary, the following:

  2. The applicant alleges that the tax was assessed through the application of item 28.1 of the General Table of Stamp Tax (TGIS), in the capacity of co-owner of an urban property situated in ..., municipality of ..., registered in the real estate register under article U-....

  3. The Applicant understands that the stamp tax in question is not due, since the urban property consists of a set of independent units with separate use, but in vertical or full ownership.

  4. Precisely because it is not constituted in horizontal ownership does the property in question have a set of owners, such owners being holders of independent units.

  5. The applicant maintains that item 28.1 of the TGIS was established for properties with residential purpose presenting a tax equity value superior to €1,000,000.00, and there being doubt as to the scope of the said item, it is therefore justified to observe what the CIMI says.

  6. The applicant further argues that from the CIMI it follows that autonomous parts of properties in vertical ownership with residential purpose should be considered as residential urban properties.

  7. It alleges that, in this context, distinguishing between properties constituted in horizontal ownership and in full ownership has no legal support whatsoever, especially since nothing indicates, either in item No. 28 of the TGIS or in the CIMI provisions, a justification for this particular differentiation.

  8. The applicant contends that the uniform criterion that is necessary is thus the one that determines that the incidence of the norm in question only takes place when any of the parts, floors or divisions with independent use of property in horizontal or full ownership, with residential purpose, has a TEV exceeding €1,000,000.00.

  9. And thus, setting the global TEV of the property in question as the reference value for the incidence of the new tax finds no basis in the applicable legislation, which is the CIMI, given the reference made by the cited paragraph 2 of Article 67 of the CIS.

  10. It maintains that, if there is no aggregation of the TEVs of the fractions of properties in horizontal ownership, there is no plausible reason for the same logic not to be applied to the autonomous units of properties in full ownership.

  11. In this case, it is found that the TEVs of the independent units with residential purpose are all of value inferior to €1,000,000.00.

  12. The applicant concludes that stamp tax to which item No. 28 of the TGIS refers cannot apply to such units, and therefore the assessment acts contested here are illegal, and the ratio legis of the norm, which causes additional taxation, applies to luxury properties, which is manifestly not the case.

  13. The applicant concludes by arguing for the illegality and voidability of the assessment acts in the matter of Stamp Tax for violation of law.

D - RESPONSE OF THE RESPONDENT

  1. The Respondent, duly notified to that effect, presented its response on time in which, in abbreviated summary, it alleged the following:

  2. It results from the Code of Municipal Property Tax (hereinafter "CIMI") constitutes the normative framework of reference regarding the taxation of the ownership of urban properties with tax equity value exceeding one million euros, assuming in this context a relevant role the concept of property contained in Article 2 of that code.

  3. By interpretation a contrario sensu, it is easily concluded that urban fractions which are not subject to the regime of horizontal ownership, as precisely occurs in the present case, do not constitute urban properties.

  4. The respondent alleges that full ownership and horizontal ownership do not constitute, at all, substantially identical legal realities.

  5. In fact, it was the fiscal legislator itself, and no other, who understood that only fractions subject to the regime of horizontal ownership could acquire the status of property.

  6. The respondent contends that, having the Applicant not opted to submit to the regime of horizontal ownership the floors or divisions capable of independent use of the urban property where they are located, despite their architectural potential for such, naturally that, in light of the principle of tax legality, it cannot wish that the same enjoy a legal status for which they do not meet one of its legal presuppositions and in contravention of the basic principle of equality.

  7. Therefore, unless there is a change in the legal nature of the urban property (i.e., the constitution of horizontal ownership - Article 1417 of the Civil Code), its floors or divisions capable of independent use cannot be considered as urban properties in accordance with and for the purposes of Article 2/4 of the CIMI and, consequently, of item No. 28.1 of the Stamp Tax Code itself.

  8. The respondent maintains that the registration of the floors capable of independent use and the attribution of an individual tax equity value not only does not remove the tax equity value of the respective property where they are located, but also ends up concurring or determining the property's own tax equity value.

  9. Concluding that the tax equity value of the urban property results necessarily from the sum of the tax equity values of the floors capable of independent use.

E - FACTUAL BASIS

  1. Before proceeding to examine these issues, it is necessary to present the factual matter relevant to its understanding and decision, which was carried out based on documentary evidence, and taking into account the facts alleged.

  2. As to the factual matter of relevance, the present tribunal establishes as certain the following facts:

  3. The Applicant is a co-owner of an urban property corresponding to a property in full ownership (not horizontal), composed of a sub-basement, basement, ground floor and 11 upper floors, with 14 (fourteen) storeys and 22 (twenty-two) divisions capable of independent use, of which 17 (seventeen) divisions have residential purpose, situated at ... No. ... bordering on ... No. 1 No.: 45, in District: ... - ... Municipality: ... - ... Parish: ... - ... (Extinct) With the Register Article ....

  4. The tax equity value of the property is €6,753,805.53, and the value of the fractions with independent use and residential purpose of the property is €3,469,628.83.

  5. The applicant holds the share of 1250/10000 of the 17 fractions with independent use and residential purpose of the property, indicated below.

  6. The assessment notices for the respective property concern the following floors and divisions, whose tax equity value of the said divisions with independent use that make up the urban property, was determined separately, in accordance with Article 7, paragraph 2, subparagraph b), of the Code of Municipal Property Tax (CIMI), resulting in the issuance of the following assessment acts, contested here, respectively:

1- Document No. 2015 ...57, of 2015-03-20, for payment of the single installment of Stamp Tax of item TGIS 28.1, on the property ... ... U-..., corresponding to Fraction 4th RIGHT, with the tax equity value of €150,691.03, which resulted in a collection and tax payable of €188.36, with payment date April/2015.

2- Document No. 2015 ...58, of 2015-03-20, for payment of the 1st installment of Stamp Tax of item TGIS 28.1, on the property ... ... U-..., corresponding to Fraction 8th LEFT, with the tax equity value of €246,585.32, which resulted in a collection of €308.23 and tax payable of €154.12, with payment date April/2015.

3- Document No. 2015 ...15, of 2015-03-20, for payment of the single installment of Stamp Tax of item TGIS 28.1, on the property ... ... U-..., corresponding to Fraction 2nd, with the tax equity value of €44,832.69, which resulted in a collection and tax payable of €56.04, with payment date April/2015.

4- Document No. 2015 ...21, of 2015-03-20, for payment of the 1st installment of Stamp Tax of item TGIS 28.1, on the property ... ... U-..., corresponding to Fraction 3rd LEFT, with the tax equity value of €246,585.32, which resulted in a collection of €308.23 and tax payable of €154.12, with payment date April/2015.

5- Document No. 2015 ...30, of 2015-03-20, for payment of the 1st installment of Stamp Tax of item TGIS 28.1, on the property ... ... U-..., corresponding to Fraction 4th LEFT, with the tax equity value of €246,585.32, which resulted in a collection of €308.23 and tax payable of €154.12, with payment date April/2015.

6- Document No. 2015 ...65, of 2015-03-20, for payment of the 1st installment of Stamp Tax of item TGIS 28.1, on the property ... ... U-..., corresponding to Fraction 9th LEFT, with the tax equity value of €246,585.32, which resulted in a collection of €308.23 and tax payable of €154.12, with payment date April/2015.

7- Document No. 2015 ...37, of 2015-03-20, for payment of the 1st installment of Stamp Tax of item TGIS 28.1, on the property ... ... U-..., corresponding to Fraction 5th LEFT, with the tax equity value of €246,585.32, which resulted in a collection of €308.23 and tax payable of €154.12, with payment date April/2015.

8- Document No. 2015 ...38, of 2015-03-20, for payment of the single installment of Stamp Tax of item TGIS 28.1, on the property ... ... U-..., corresponding to Fraction 7th RIGHT, with the tax equity value of €123,292.66, which resulted in a collection and tax payable of €154.12, with payment date April/2015.

9- Document No. 2015 ...51, of 2015-03-20, for payment of the 1st installment of Stamp Tax of item TGIS 28.1, on the property ... ... U-..., corresponding to Fraction 7th LEFT, with the tax equity value of €246,585.32, which resulted in a collection of €308.23 and tax payable of €154.12, with payment date April/2015.

10- Document No. 2015 ...16, of 2015-03-20, for payment of the 1st installment of Stamp Tax of item TGIS 28.1, on the property ... ... U-..., corresponding to Fraction 11th, with the tax equity value of €273,983.70, which resulted in a collection of €342.48 and tax payable of €171.24, with payment date April/2015.

11- Document No. 2015 ...11, of 2015-03-20, for payment of the single installment of Stamp Tax of item TGIS 28.1, on the property ... ... U-..., corresponding to Fraction 6th RIGHT, with the tax equity value of €150,691.03, which resulted in a collection and tax payable of €188.36, with payment date April/2015.

12- Document No. 2015 ...84, of 2015-03-20, for payment of the single installment of Stamp Tax of item TGIS 28.1, on the property ... ... U-..., corresponding to Fraction 5th RIGHT, with the tax equity value of €150,691.03, which resulted in a collection and tax payable of €188.36, with payment date April/2015.

13- Document No. 2015 ...92, of 2015-03-20, for payment of the single installment of Stamp Tax of item TGIS 28.1, on the property ... ... U-..., corresponding to Fraction 9th RIGHT, with the tax equity value of €150,691.03, which resulted in a collection and tax payable of €188.36, with payment date April/2015.

14- Document No. 2015 ...43, of 2015-03-20, for payment of the single installment of Stamp Tax of item TGIS 28.1, on the property ... ... U-..., corresponding to Fraction 3rd RIGHT, with the tax equity value of €150,691.03, which resulted in a collection and tax payable of €188.36, with payment date April/2015.

15- Document No. 2015 ...65, of 2015-03-20, for payment of the single installment of Stamp Tax of item TGIS 28.1, on the property ... ... U-..., corresponding to Fraction 8th RIGHT, with the tax equity value of €150,691.03, which resulted in a collection and tax payable of €188.36, with payment date April/2015.

16- Document No. 2015 ...05, of 2015-03-20, for payment of the 1st installment of Stamp Tax of item TGIS 28.1, on the property ... ... U-..., corresponding to Fraction 10th, with the tax equity value of €397,276.36, which resulted in a collection of €496.60 and tax payable of €248.30, with payment date April/2015.

17- Document No. 2015 ...44, of 2015-03-20, for payment of the 1st installment of Stamp Tax of item TGIS 28.1, on the property ... ... U-..., corresponding to Fraction 6th LEFT, with the tax equity value of €246,585.32, which resulted in a collection of €308.23 and tax payable of €154.12, with payment date April/2015.

  1. The value of the tax equity value of the fractions with independent use and residential purpose of the property at the date of the assessments is €3,469,628.83, and none of the parts or floors with residential purpose and independent use has a tax equity value exceeding €1,000,000.00.

  2. The stamp tax assessment acts mentioned above concern only the applicant's respective share of 1250/10000.

  3. The AT assessed the stamp tax provided for in items 28 and 28.1 of the General Table of Stamp Tax (TGIS), in the wording introduced by Article 4 of Law No. 55-A/2012, of 29/10, at the rate of 0.5% and 1%, considering as "TEV - total subject to tax", the stamp tax assessments resulted in a collection and total tax payable in the amount of €4,337.01.

  4. The respondent was notified for payment of stamp tax, composed of seventeen (17) individual notifications calculated on the overall value of the seventeen (17) fractions with residential purpose and taxed individually on each fraction.

  5. The Applicant proved that it proceeded with the payment of the tax in the amount of €2,838.70 (two thousand eight hundred and thirty-eight euros and seventy cents), corresponding to the single installment and the 1st installment.

F - UNPROVEN FACTS

  1. Of the facts with interest for deciding the case, contained in the contested challenge, all objects of concrete analysis, those not contained in the factuality described above were not proven.

G - ISSUES TO BE DECIDED

  1. Given the positions of the parties assumed in the arguments presented, the central issues to be decided are the following, which must be examined and decided:

a. That alleged by the Applicant:

(i) The alleged declaration of illegality of the tax assessment acts in the matter of Stamp Tax, No. 2015 ...57, No. 2015 ...58, No. 2015 ...15, No. 2015 ...21, No. 2015 ...30, No. 2015 ...65, No. 2015 ...37, No. 2015 ...38, No. 2015 ...51, No. 2015 ...16, No. 2015 ...11, No. 2015 ...84, No. 2015 ...92, No. 2015 ...43, No. 2015 ...65, No. 2015 ...05, No. 2015 ...44, which set a total tax payable of €4,337.01 (four thousand three hundred and thirty-seven euros and one cent).

(ii) To the payment of indemnificatory interest, for the payment of undue tax.

b. The preliminary question as to the determination of the value of the present arbitral proceedings.

H. - REGARDING THE VALUE OF THE REQUEST

  1. Given the formulation of the applicant's request, it seeks the annulment of the stamp tax assessment acts determined under item 28, year 2014, regarding the 17 fractions with independent use and residential purpose, of the sole property in question, already identified, regarding its share.

  2. From the Urban Property Register of the property, there are 17 fractions with independent use and residential purpose, the applicant submitted 17 assessment notices concerning each of the fractions with independent use and residential purpose of the property.

  3. However, it results that from the sum of the collection of the stamp tax assessment acts contested here by the applicant, the total value of €4,337.01 and not €4,779.43 as requested by the applicant.

  4. Given the above, the present tribunal, dealing exclusively with an arithmetic error, sets the value of the case at €4,337.01, corresponding to the sum of the collections of the assessment acts contested.

I - MATTER OF LAW

  1. Given the positions of the parties assumed in the pleadings presented, the central issue to be resolved by the present arbitral tribunal consists in examining the legality of the stamp tax assessment acts, which fell on the residential fractions of the applicant in the urban property described above, for violation of law, through the erroneous interpretation and application of item 28.1 of the TGIS in the amendments introduced by Article 4 of Law No. 55-A/2012, of 29 October.

  2. In the case sub judice, it must be determined whether the fractions subject to the tax are covered by the criteria for stamp tax incidence, in accordance with item No. 28 of the TGIS, in the amendments introduced by Article 4 of Law No. 55-A/2012, of 29 October.

  3. It is necessary to first verify whether the fractions have residential purpose, and secondly whether the TEV of the fractions contained in the register is equal to or exceeding €1,000,000.00, for this it is necessary to examine the fundamental question, what is the TEV of a property in vertical ownership (i.e., not horizontal) to be considered for purposes of the said item. Whether the TEV corresponds individually to each of the parts of the property with residential purpose, or whether, instead, it is determined by the overall TEV of the property, which would correspond to the sum of all TEVs of the residential fractions that compose it.

  4. The factual matter is established and proven, reason for which we shall now determine the law applicable to the disputed facts, giving priority, in compliance with the provision in subparagraph a) of paragraph 2 of Article 124 of the CPPT, to defects whose merits would determine a more stable and effective protection of the interests of the Applicant, regarding the defect of law due to error regarding the presuppositions of the assessment right, regarding the question of the framework of urban properties under the regime of full or vertical ownership, within the scope of Article 28 paragraph 1 of the TGIS, introduced by the Regime of Law No. 55-A/2012, of 29 October.

  5. The change in the regime regarding the subjection to stamp tax of properties with residential purpose through 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 and amended by Law No. 83-C/2013, of 31 December, came to typify the following tax facts, through the following wording:

"28 - Ownership, usufruct or surface rights of urban properties whose tax equity value contained in the register, in accordance with the Code of Municipal Property Tax (CIMI), is equal to or exceeding (euro) 1,000,000 - on the tax equity value used for IMI purposes:

28.1 - For residential property or for construction land whose authorized or planned building is for residential use, in accordance with the Code of IMI provisions - 1%;

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

  1. The transitional provisions of Law No. 55-A/2012 are contained in Article 6, which established the rules relating to the assessment of the tax provided for in that item:

" 1 - In 2012, the following rules must be observed with reference to the assessment of stamp tax provided for in item No. 28 of the respective General Table:

a) The tax event occurs on 31 October 2012;

b) The taxpayer of the tax is the one mentioned in paragraph 4 of Article 2 of the Stamp Tax Code on the date referred to in the preceding subparagraph;

c) The tax equity value to be used in the assessment of the tax corresponds to what results from the rules provided for in the Code of Municipal Property Tax with reference to the year 2011;

d) The assessment of the tax by the Tax and Customs Authority must be carried out by the end of November 2012;

e) The tax must be paid in a single installment by the taxpayers by 20 December 2012;

f) The applicable rates are as follows:

i) Properties with residential purpose assessed in accordance with the Code of IMI: 0.5%;

ii) Properties with residential purpose not yet assessed in accordance with the Code of IMI: 0.8%;

iii) Urban properties when the taxpayers who are not natural persons are resident in a country, territory or region subject to a clearly more favorable tax regime, listed in the list approved by order of the Minister of Finance: 7.5%.

2 - In 2013, the assessment of stamp tax provided for in item No. 28 of the respective General Table must fall on the same tax equity value used for the purposes of assessing municipal property tax to be effected in that year.

3 - The non-delivery, in whole or in part, within the indicated time period, of the amounts assessed as stamp tax constitutes a tax infraction, punished in accordance with the law."

  1. On the interpretation of this decree, decision 53/2013-T has already pronounced itself, which writes:

"In the said item 28.1 and in subitems i) and ii) of subparagraph f) of paragraph 1 of Article 6 of Law 55-A/2012, a concept was used that is not used in any other tax legislation in these precise terms, which is that of 'property with residential purpose.' Namely in the CIMI, which in several norms of the CIS introduced by that Law is indicated as the subsidiary application decree regarding the tax provided for in the said item No. 28 [Articles 2, paragraph 4, 3, paragraph 3, subparagraph u), 5, subparagraph u), 23, paragraph 7, and 46 and 67 of the CIS], a concept defined in those terms is not used."

  1. As to the concepts of property, it is necessary for this purpose to resort to the concepts of property used in the CIMI, in which the species of properties are enumerated in its Articles 2 to 6, which is transcribed:

Article 2

Concept of Property

1 – For purposes of this Code, property is every fraction of territory, including waters, plantations, buildings and constructions of any nature incorporated or based therein, with a character of permanence, provided it is part of the assets of a natural or legal person and, under normal circumstances, has economic value, as well as waters, plantations, buildings or constructions, in the circumstances above, endowed with economic autonomy in relation to the land on which they are based, although located in a fraction of territory that constitutes an integral part of a different property or does not have a property nature.

2 - Buildings or constructions, although movable by nature, are regarded as having a character of permanence when intended for non-transitory purposes.

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

4 - For purposes of this tax, each autonomous fraction, under the regime of horizontal ownership, is regarded as constituting a property.

Article 3

Rural Properties

1 - Rural properties are land situated outside an urban agglomeration that are not to be classified as construction land, in accordance with paragraph 3 of Article 6, provided that:

a) They are intended or, in the absence of concrete allocation, have as normal destination a use generating agricultural income, such as are considered for purposes of income tax on natural persons (IRS);

b) Not having the allocation indicated in the preceding subparagraph, they are not built or have only buildings or constructions of an accessory nature, without economic autonomy and of reduced value.

2 - Rural properties are also land situated within an urban agglomeration, provided that, by virtue of a legally approved provision, they cannot be used to generate any income or can only be used to generate agricultural income and are in fact having this allocation.

3 - The following are also rural properties:

a) Buildings and constructions directly intended for the production of agricultural income, when located on the land referred to in the preceding paragraphs;

b) Waters and plantations in the situations referred to in paragraph 1 of Article 2.

4 - For purposes of this Code, urban agglomerations are considered, in addition to those located within legally fixed perimeters, nuclei with a minimum of 10 dwellings served by public-use streets, with their perimeter delimited by points 50 m from the axis of the streets, in the transversal direction, and 20 m from the last building, in the direction of the streets.

Article 4

Urban Properties

Urban properties are all those that should not be classified as rural, without prejudice to the provision of the following article.

Article 5

Mixed Properties

  1. Whenever a property has rural and urban parts it is classified, in its entirety, according to the main part.

  2. If neither part can be classified as main, the property is regarded as mixed.

Article 6

Species of Urban Properties

1 - Urban properties are divided into:

a) Residential;

b) Commercial, industrial or for services;

c) Construction land;

d) Others.

2 - Residential, commercial, industrial or for services are buildings or constructions licensed for such purposes or, in the absence of a license, that have such purposes as their normal destination.

3 - Construction land is considered to be land situated within or outside an urban agglomeration for which a license or authorization has been granted, admitted prior notification or issued favorable prior information of a subdivision or construction operation, and also those that have been so declared in the acquisition title, except for land on which the competent entities prohibit any of those operations, namely those located in green zones, protected areas or which, in accordance with municipal land use plans, are intended for spaces, public infrastructure or equipment. (Wording of Law No. 64-A/08, of 31-12)

4 - Encompassed in the provision of subparagraph d) of paragraph 1 are land situated within an urban agglomeration that are not construction land nor are covered by the provision of paragraph 2 of Article 3, and also buildings and constructions licensed or, in the absence of a license, that have as their normal destination other purposes than those referred to in paragraph 2, and also those in the exception of paragraph 3.

  1. On the interpretation of tax regulations, for the case sub judice, Article 11 of the General Tax Law tells us, which establishes the essential rules for the interpretation of tax laws, in the following terms:

Article 11

Interpretation

In determining the meaning of tax norms and in qualifying the facts to which they apply, the general rules and principles of interpretation and application of laws are observed.

Whenever terms peculiar to other branches of law are used in tax norms, they must be interpreted in the same sense that they have there, unless otherwise directly follows from the law.

Whenever doubt persists as to the meaning of the incidence norms to be applied, the economic substance of the tax facts must be considered.

The gaps resulting from tax norms covered by the reserve of law of the Assembly of the Republic are not susceptible to analogical integration.

  1. To this provision, it is also necessary to resort to the general principles of interpretation of laws, to which paragraph 1 of Article 11 of the LGT refers, which are established in Article 9 of the Civil Code, which establishes the following:

Article 9

Interpretation of Law

1 - The interpretation should not be limited to the letter of the law, but should reconstruct from the texts the legislative thought, taking especially into account the unity of the legal system, the circumstances in which the law was drafted and the specific conditions of the time in which it is applied.

2 - However, the interpretation cannot consider the legislative thought that does not have in the letter of the law a minimum of verbal correspondence, although imperfectly expressed.

3 - In fixing the meaning and scope of the law, the interpreter shall presume that the legislator established the most appropriate solutions and knew how to express his thought in adequate terms.

  1. Given the legal basis already exposed, and taking into account the articles transcribed and listed, the following hypotheses of interpretation of the concept of "property with residential purpose" emerge, regarding the Concept of "property with residential purpose" as referring to residential properties, and regarding the Concept of "property with residential purpose" as a concept distinct from "residential properties."

  2. It results from Articles 2 to 6 CIMI transcribed above, the concept of "property with residential purpose" is not used by the legislator in the classification of properties, nor is this concept found, with this terminology, in any other decree.

  3. The lack of exact terminological correspondence of the concept of "property with residential purpose" with any other used in other decrees may give rise to various interpretative hypotheses.

  4. The text of the law, being the starting point for the interpretation of the expression "properties with residential purpose," it is on the basis of it that the "legislative thought" must be reconstructed, as required by paragraph 1 of Article 9 of the Civil Code, applicable by virtue of the provision of Article 11, paragraph 1, of the LGT, already transcribed.

  5. On the interpretation of the concept of "property with residential purpose," it is important to cite decision 53/2013-T, which has already pronounced itself on this matter. That decision, which also supports two interpretative hypotheses regarding the concept of "property with residential purpose," respectively in the same sense of the present decision, regarding the concept of "property with residential purpose" as referring to residential properties, and regarding the Concept of "property with residential purpose" as a concept distinct from "residential properties."

  6. Decision 53/2013-T writes, regarding the concept of "property with residential purpose" as referring to residential properties:

"The concept closest to the literal tenor of this expressed concept is manifestly that of 'residential properties,' defined in paragraph 2 of Article 6 of the CIMI as encompassing 'buildings or constructions' licensed for residential purposes or, in the absence of a license, that have residential purposes as their normal destination.

If it is understood that the expression 'property with residential purpose' coincides with that of 'residential properties,' it is manifest that the assessments will be defective due to error regarding the factual and legal presuppositions, as all properties regarding which Stamp Tax was assessed under the said item No. 28.1 are construction land, without any building or construction, required to meet that concept of 'residential properties.'

For this reason, adopting the interpretation that 'property with residential purpose' means 'residential property,' the assessments for which the declaration of illegality is sought will be illegal, because there is no building or construction in any of the properties.

However, the non-coincidence of the terms of the expression used in item No. 28.1 of the TGIS with that which is drawn from paragraph 2 of Article 6 of the CIMI points in the sense that it was not intended to use the same concept."

  1. On the interpretation of the second hypothesis: Concept of "property with residential purpose" as a concept distinct from "residential properties," decision 53/2013-T is again cited, in which it writes:

"The word 'purpose,' in this context of use of a property, has the meaning of 'action of designating something for a determined use.' (...)

"When, as is the rule, norms (legislative formulas) have more than one meaning, then the positive function of the text translates into giving stronger support to or suggesting more strongly one of the possible senses. For among the possible senses, some will correspond to the more natural and direct meaning of the expressions used, while others can only fit into the verbal framework of the norm in a forced, affected manner. Now, in the absence of other elements that induce the choice of the less immediate sense of the text, the interpreter should choose in principle that sense which best and most immediately corresponds to the natural meaning of the verbal expressions used, and especially to its technical-legal meaning, in the assumption (not always accurate) that the legislator knew how to express its thought correctly." (...)

The relevance of the text of the law is especially emphasized in the interpretation of the incidence norms of Stamp Tax, which are reduced to an amalgam, under a common denomination, of an incongruous set of taxes of completely distinct natures (on income, on expenditure, on property, on acts, etc.), which leaves little room for application of the primary interpretative criterion, which is the unity of the legal system, which requires its global coherence.

The recognized lack of coherence of Stamp Tax is particularly exuberant in the case of this item No. 28.1, hastily included outside the General State Budget, by a fiscal legislator without perceptible global fiscal guidance, who is successively implementing norms of fiscal aggravation in accordance with the vicissitudes of budget execution, the impositions of international institutional creditors (represented by the 'troika') and the supervision of the Constitutional Court.

In fact, although in the "Statement of Reasons" of the Proposal for Law No. 96/XII/2nd (on which Law No. 55-A/2012 was based), reference is made to the laudable concern of the Government to "strengthen the principle of social equity in austerity, ensuring an effective distribution of the necessary sacrifices for the fulfillment of the adjustment program" and to its commitment "to ensure that the distribution of these sacrifices will be made by all and not only by those who live on the income of their work," it is manifest, on the one hand, that these reasons of equity, certainly existing, did not begin to count in mid-2012, already existing at the beginning of the year, when the General State Budget came into force, and, on the other hand, that the scope of item No. 28.1, when taxing additionally properties with residential purpose and not also properties that do not have it, reveals that the concerns with social equity and the proclaimed intention of distribution of sacrifices by all, affect much more some than truly all.

In this context, in the absence of secure interpretative elements that allow detecting legislative coherence in the solution adopted in the said item No. 28.1 or the correctness or incorrectness of the adopted solution (relevant for interpretative purposes in the light of paragraph 3 of Article 9 of the Civil Code), the text of the law must be the primary element of interpretation, in accordance with the presumption, imposed by the same paragraph 3 of Article 9, that the legislator knew how to express its thought in adequate terms.

In light of those meanings of the words 'purpose' and 'to purpose,' which are 'to give destination' or 'to apply,' the formula used in that item No. 28.1 of the TGIS clearly encompasses properties that are already applied to residential purposes, and so it is important to inquire whether it will also encompass properties that, although not yet applied to residential purposes, are destined to these, and those whose destination is unknown. (...)

For this reason, it must be clarified when it can be understood that a property is intended for a residential purpose, namely if it is when such destination is fixed for it in a licensing act or similar, or only when the effective assignment of such destination is concretized. (...)

From the outset, the confrontation of item No. 28.1 of the TGIS with paragraph 2 of Article 6 of the CIMI, which defines the concept of residential properties, clearly points in the sense that an actual allocation is necessary.

In fact, a building or construction licensed for residential use or, even without a license, but that has residential use as its normal destination, is, in light of paragraph 2 of that Article 6, a residential property.

For this reason, on the assumption that the legislator of Law No. 55-A/2012 knew how to express its thought in adequate terms (as Article 9, paragraph 3, of the Civil Code requires to be presumed), if it intended to refer to those properties already licensed for residential use or that have residential use as their normal destination, it would certainly have used the concept of 'residential properties,' which would express perfectly and clearly its thought, in light of the definition given by that paragraph 2 of Article 6 of the CIMI.

Consequently, it must be presumed that the use of a different expression is intended to refer to a distinct reality, and therefore, in good hermeneutics, 'property with residential purpose' cannot be a property merely licensed for residential use or destined for such purpose (i.e., it will not be enough to be a 'residential property'), and must be a property that already has actual residential purpose.

That this is the sense of the expression 'purpose,' in the same context of property classification that the CIMI makes, is confirmed by Article 3, in which, regarding rural properties, reference is made to those 'intended or, in the absence of concrete allocation, have as normal destination a use generating agricultural income,' which shows that the allocation is concrete, effective. In fact, as is seen from the final part of this text, a property can have a determined use as its destination and be or not be intended for it, which shows that the allocation is, at the level of a property's connection to a determined use, something more intense than mere destination and may or may not occur, downstream of this and not upstream. (...)

The correctness of this interpretation in the sense that only properties that are actually intended for residential use are within the scope of application of item No. 28.1 of the TGIS is also confirmed by the perceptible ratio legis of the restriction of the scope of application of the norm to properties with residential purpose, in the context of the 'circumstances in which the law was drafted and the specific conditions of the time in which it is applied,' which Article 9, paragraph 1, of the Civil Code also elevates to interpretative elements. (...)

From the outset, the limitation of Stamp Tax taxation to 'properties with residential purpose' reveals that it was not intended to encompass within the scope of application of the tax properties intended for services, industry or commerce, that is, properties intended for economic activity, which is understood in a context in which, as is notorious, the economy finds itself in a deflationary spiral, publicly proclaimed at the highest level, with unemployment rates reaching maximum historical levels, with an avalanche of business closures derived from economic unsustainability. (emphasis in original)

Having this situation in mind and being known and public that the revival of economic activity and the increase of exports are the ways out of the crisis, it is understood that legislative measures were not taken that would hinder economic activity, namely the increase of the tax burden that hinders and affects competitiveness in international terms.

For this reason, it must be concluded that the available interpretative elements, including the 'circumstances in which the law was drafted and the specific conditions of the time in which it is applied,' point clearly in the sense that it was not intended to encompass within the scope of application of item No. 28.1 situations of properties that are not yet intended for residential use, namely construction land held by companies. (...)"

  1. Given the above, it is found that the 39 fractions intended for residential use are covered by the incidence norm of item 28.1, as they are urban properties and properties with residential purpose, the concept of which results from Article 2 of the CIMI.

  2. The issue now to be decided, however, is, for purposes of applying item No. 28 of the TGIS, what TEV is to be considered in properties under vertical (i.e., not horizontal) ownership regime if determined individually by the TEV corresponding to each of the parts of the property with residential purpose, or if determined by the overall TEV of the property, which would correspond to the sum of all TEVs of the residential fractions that compose it.

  3. On this subject, the Tax Arbitration Tribunal of CAAD has already decided through decision No. 50/2013-T, and 132/2013 - T.

  4. It is important for purposes of the case sub judice to refer, as to decision 50/2013-T, which tells us about the treatment to be conferred for purposes of item 28.1 of the TGIS to properties in vertical ownership and cumulatively which TEV (individual or overall) to consider:

"From this we can conclude that, in the legislator's view, what matters is not the legal-formal rigor of the concrete situation of the property but rather its normal use, the purpose to which the property is intended. We also conclude that for the legislator the situation of the property in vertical or horizontal ownership did not matter, as no reference or distinction is made between them. What matters is the material truth underlying its existence as an urban property and its use."

  1. It is also important to refer from the respective decision:

"Using the criterion that the law itself introduced in Article 67, paragraph 2 of the Stamp Tax Code, 'to matters not regulated in the present code regarding item 28 of the General Table, the following is applied subsidiarily' (...)

Now, being thus, considering that the registration in the property register of properties in vertical ownership, constituted by different parts, floors or divisions with independent use, in accordance with the CIMI, obeys the same rules of registration of properties constituted in horizontal ownership, the respective IMI, as well as the new IS, are assessed individually in relation to each of the parts, there is no doubt that the legal criterion for defining the incidence of the new tax must be the same. (...)

Accordingly, if the legal criterion imposes the issuance of individualized assessments for the autonomous parts of properties in vertical ownership, in the same manner as it establishes for properties in horizontal ownership, it clearly established the criterion, which must be single and unequivocal, for the definition of the rule of incidence of the new tax.

Thus, the new stamp tax would only apply if any of the parts, floors or divisions with independent use had a TEV exceeding €1,000,000.00.

The AT cannot thus consider as the reference value for the incidence of the new tax the total value of the property, when the legislator itself established a different rule under the CIMI, and this is the code applicable to matters not regulated regarding item 28 of the TGIS.

The criterion intended by the AT, of considering the value of the sum of the TEVs attributed to the parts, floors or divisions with independent use, with the argument that the property is not constituted under the regime of horizontal ownership, finds no legal support and is contrary to the criterion that applies under the CIMI and, by reference, under IS.

To which is added the fact that the law itself expressly establishes, in the final part of item 28 of the TGIS, that the IS falling on urban properties of value equal to or exceeding €1,000,000.00 – "on the tax equity value used for IMI purposes."

Thus, the adoption of the criterion advocated by the AT violates the principles of legality and fiscal equality, as well as the prevalence of material truth over legal-formal reality.

The tax legislator in Article 12, paragraph 3 of the CIMI states that 'each floor or part of a property capable of independent use is considered separately in the property registration which also separately discriminates the respective tax equity value,' does not make any distinction as to the regime of properties that are in horizontal or vertical ownership, if the property were in the horizontal ownership regime, none of its residential fractions would suffer the incidence of the new tax, so the AT cannot treat equal situations differently.

  1. Similarly, the decision of the tax arbitration tribunal of CAAD, No. 132/2013-T decided:

"Furthermore, it is also to be noted that admitting the differentiation of treatment could produce results incomprehensible from a legal point of view and detrimental to the objectives that the legislator said it had for adding item No. 28. As an example, suppose the following hypothesis, which seems plausible in light of the interpretation made by the now respondent: a citizen who is the owner of a property constituted in full ownership intended for residential use, with the overall value of the autonomous units equal to or exceeding €1,000,000.00 and the TEV of each one inferior to €1,000,000.00, is subject to an annual taxation of 1% of that value (as occurred in the situation under analysis); already another citizen who holds a property with the exact same characteristics as the previous one but which has been constituted in horizontal ownership, also with the overall value of the autonomous fractions equal to or exceeding €1,000,000.00 and the TEV of each one inferior to €1,000,000.00, will not be subject to taxation in accordance with the mentioned item No. 28...

On the other hand, one could ask: if such fractions have the same owner, why does it not make sense to aggregate, for purposes of taxation, the respective TEVs? The answer can be illustrated through another hypothesis: a citizen who is the owner of a property in horizontal ownership, in which each of its 20 fractions has a TEV inferior to €1,000,000.00, would be subject to taxation if – if such aggregation were admitted – the overall TEV exceeded that value; already another citizen with identical 20 fractions distributed among 5, 10 or 20 properties would not be subject to any taxation in accordance with the mentioned item No. 28...

If this line of reasoning makes sense – thus justifying the non-aggregation of the TEVs of fractions of properties in horizontal ownership – there is no plausible reason why the same is not applied to the autonomous units of properties in full ownership.

Observing now the case under analysis, it is found that the TEVs of the floors (autonomous units) of the property with residential purpose vary between €104,140.00 and €113,780.00, and therefore any one of them is inferior to €1,000,000.00. From this it follows, as a result of what was referred to, that the stamp tax to which item No. 28 of the TGIS refers cannot apply to the same, and therefore the assessment acts contested by the applicant are illegal."

  1. Given the above, and applying what is told to us by the decisions transcribed above, to the present case, it results that for purposes of applying item 28 of the TGIS to properties in vertical ownership, the same rules of the CIMI apply as to properties in horizontal ownership, and in the same sense the TEV for purposes of applying item is the individual TEV of each independent residential fraction, and in the present case none of the fractions exceeds the criterion of incidence of €1,000,000.00.

  2. Material truth is what is imposed as the determining criterion of tax capacity and not mere legal-formal reality of the property, since the constitution of horizontal ownership implies a mere legal alteration of the property without even imposing a new assessment which now, such a finding does not appear coherent with the decision of the AT to tax the residential parts of a property in vertical ownership, based on the overall TEV of the property and not on what is effectively attributed to each part.

  3. The current legal regime does not impose the obligation of constitution of horizontal ownership and therefore the action of the AT translates itself into an arbitrary and illegal discrimination. The AT cannot distinguish where the legislator itself understood not to do so, under penalty of violating the coherence of the tax system, as well as the principle of tax legality provided for in Article 103, paragraph ... of the CRP, and still the principles of justice, equality and fiscal proportionality.

  4. Since none of the fractions intended for residential use has a tax equity value equal to or exceeding €1,000,000.00, as results from the documents attached to the case file, it is concluded that the legal presupposition for the incidence of IS provided for in Item 28 of the TGIS is not met.

  5. Thus, the present tribunal concludes with the declaration of illegality of the assessments sub judice, as they are defective due to violation of that item No. 28.1, by error regarding the legal presuppositions, which justifies the declaration of its illegality and annulment (Article 135 of the CPA).

J - REGARDING INDEMNIFICATORY INTEREST

The applicant further petitions the payment of indemnificatory interest.

  1. Given the above, the IS assessment, in the part covered by the annulment to be decreed, results from errors of fact and law attributable exclusively to the tax administration, inasmuch as the Applicant fulfilled its duty of declaration and such errors were committed by the administration and the same could not be unaware of different understandings.

  2. In truth, it being demonstrated that the applicant paid the tax contested in the part exceeding what is due, by virtue of the provisions of Articles 61 of the CPPT and 43 of the LGT, the Applicant has the right to the indemnificatory interest owed, such interest to be counted from the date of payment of the undue (annulled) tax until the date of issuance of the respective credit note, counting the period for this payment from the beginning of the period for the voluntary execution of the present decision (Article 61, paragraphs 2 to 5, of the Tax Procedural Code), all at the rate ascertained in accordance with the provision of paragraph 4 of Article 43 of the LGT.

  3. The applicant's request is granted.

L - DECISION

Therefore, in view of all the above, the present Arbitral Tribunal decides:

To uphold the petition for declaration of illegality of the tax assessment acts in the matter of Stamp Tax, No. 2015 ...57, No. 2015 ...58, No. 2015 ...15, No. 2015 ...21, No. 2015 ...30, No. 2015 ...65, No. 2015 ...37, No. 2015 ...38, No. 2015 ...51, No. 2015 ...16, No. 2015 ...11, No. 2015 ...84, No. 2015 ...92, No. 2015 ...43, No. 2015 ...65, No. 2015 ...05, No. 2015 ...44, which set a total tax payable of €4,337.01 (four thousand three hundred and thirty-seven euros and one cent), due to a violation of law regarding the norm contained in item 28, paragraph 1, for error regarding the legal presuppositions, which justifies the declaration of its illegality and annulment.

To condemn the Respondent to restore to the Applicant such amount improperly assessed and paid, plus payment of indemnificatory interest already accrued regarding the period between the date of payment of the tax and its return, as well as payment of indemnificatory interest accruing from such last date, all in accordance with paragraphs 2 to 5 of Article 61 of the CPPT and at the rate ascertained in accordance with the provision of paragraph 4 of Article 43 of the LGT, until full reimbursement.

The value of the case is set at €4,337.01 from the amount of the assessment, taking into account the economic value of the case determined by the value of the tax assessments contested, and in accordance the court costs are set at the respective amount of €612.00 (six hundred twelve euros), to be borne by the Respondent in accordance with Article 12, paragraph 2 of the Tax Arbitration Regime, Article 4 of the RCPAT and Table I annexed to the latter – paragraph 10 of Article 35, and paragraphs 1, 4 and 5 of Article 43 of the LGT, Articles 5, paragraph 1, subparagraph a) of the RCPT, 97-A, paragraph 1, subparagraph a) of the CPPT and 559 of the CPC).

Notify.

Lisbon, 10 November 2015.

The Arbitrator

Paulo Ferreira Alves

[1] On this matter, the Arbitral Tribunal of CAAD decisions No. 42/2013-T, 48/2013-T, 49/2013-T have already decided.

[2] On the interpretation of the concept of "property with residential purpose" for purposes of item 28.1 of the TGIS, see the decisions issued by the Arbitral Tribunal of CAAD in proceedings No. 42/2013; 48/2013; 49/2013; 53/2013; 75/2013; 158/2013; 251/2013; 310/2013.

[3] Dictionary of Contemporary Portuguese Language of the Academy of Sciences of Lisbon, Volume I, page 102.

[4] BAPTISTA MACHADO, Introduction to Law and Legitimating Discourse, page 182.

[5] Proposal for Law No. 99/XII/2nd is available at http://www.parlamento.pt/ActividadeParlamentar/Paginas/DetalheIniciativa.aspx?BID=37245

[6] Other CIMI norms show that the term "allocation" is used to reference situations already existing and not merely future ones, even if foreseeable, such as "destination." This is the case with Article 9 of the CIMI, which, after establishing that "the tax is due from" "the 4th year following, inclusive, that in which construction land has entered the inventory of a company that has as its object the construction of buildings for sale" or "the 3rd year following, inclusive, that in which a property has entered the inventory of a company that has as its object its sale" [subparagraphs d) and e) of paragraph 1], determines that "for purposes of the provision of subparagraphs d) and e) of paragraph 1, the taxpayers must communicate to the tax service of the area of the property's situation, within 60 days from the verification of the fact determining its application, the allocation of the properties to such purposes." The "allocation of the properties to such purposes," in the context of this Article 9, is reduced to the concrete attribution to the properties of the purpose "for sale," materialized by their inventory, not being sufficient that they have been constructed or acquired with a view to their sale.

[7] This approach does not take into account the special cases provided for in item No. 28.2, of ownership of the properties by legal persons resident in a country, territory or region subject to a clearly more favorable tax regime, listed in the list approved by order of the Minister of Finance, to which, as in other norms, strong tax penalization is assigned, as these are situations normally associated with tax evasion.

[8] Outside the special cases provided for in item No. 28.2.

Frequently Asked Questions

Automatically Created

What is Verba 28 of the Tabela Geral do Imposto de Selo and how does it apply to property taxation?
Verba 28 of the Tabela Geral do Imposto de Selo (General Stamp Tax Table) establishes an annual stamp tax on the ownership of urban properties with residential purpose that have a patrimonial tax value (VPT) exceeding €1,000,000. This provision, introduced to tax high-value residential properties, requires determining what constitutes a 'property' for tax purposes. The application involves reference to the Municipal Property Tax Code (CIMI), particularly Article 2, which defines urban properties. The key interpretative issue is whether properties in vertical ownership should be assessed as a single unit based on the building's total VPT, or whether independent units within the building should be assessed separately. The tax rate and calculation depend on this fundamental characterization, making the distinction between horizontal and vertical ownership regimes crucial for determining Stamp Tax liability under this provision.
How does the concept of vertical property affect Stamp Tax (Imposto de Selo) liability in Portugal?
The concept of vertical property (propriedade vertical or plena) significantly affects Stamp Tax liability under Verba 28 of TGIS. Unlike horizontal property ownership (propriedade horizontal), where each fraction is legally recognized as an independent property under Article 1417 of the Civil Code and Article 2(4) of CIMI, vertical ownership does not create separate legal properties from independent units. The Tax Authority's position maintains that only fractions formally constituted under the horizontal ownership regime qualify as distinct 'urban properties' for tax purposes. Consequently, in vertical ownership structures, even if a building contains multiple independent units with separate TEV assessments, the entire building is treated as a single property for Stamp Tax purposes. This means if the aggregate TEV exceeds €1,000,000, Verba 28 applies to the whole property, whereas in horizontal ownership, each fraction is assessed independently, and the tax only applies to fractions individually exceeding the threshold. This distinction creates significantly different tax outcomes depending on the property's legal structure.
Can taxpayers challenge Stamp Tax liquidations through CAAD arbitral proceedings?
Yes, taxpayers can challenge Stamp Tax liquidations through CAAD (Centro de Arbitragem Administrativa) arbitral proceedings. This case demonstrates the procedural mechanism: the taxpayer filed a request for constitution of an arbitral tribunal, which was accepted by the CAAD President. The tribunal was constituted under the RJAT (Legal Regime of Tax Arbitration, Decree-Law 10/2011 of 20 January, as amended). CAAD has material competence over Stamp Tax disputes pursuant to Articles 2(1)(a) and 30(1) of the RJAT. The arbitral process allows taxpayers to contest the legality of tax assessment acts, presenting legal arguments regarding interpretation and application of tax law. In this case, the taxpayer contested 17 separate Stamp Tax assessment acts simultaneously through a single arbitral proceeding. The tribunal examines issues of legal interpretation, statutory application, and assessment validity. Both parties present written submissions, and the process can proceed without an oral hearing if both parties waive it, as occurred here. This arbitral route provides an alternative to judicial courts for resolving tax disputes.
What are the legal grounds for contesting multiple Stamp Tax assessments on inherited property?
Legal grounds for contesting multiple Stamp Tax assessments on inherited property include several arguments demonstrated in this case: (1) incorrect legal interpretation of Verba 28 of TGIS regarding the definition of 'property' for tax purposes; (2) improper aggregation of tax equity values when the property contains independent units with separate use; (3) violation of the Municipal Property Tax Code (CIMI) principles, particularly the distinction between properties in horizontal versus vertical ownership; (4) lack of legal basis for differential treatment between horizontal and vertical ownership structures; (5) misapplication of the €1,000,000 threshold when individual units fall below this value; (6) violation of tax legality principles and equality principles; and (7) improper characterization of the property's legal nature. When representing an undivided succession, the legal representative can act on behalf of all heirs to contest assessment acts affecting inherited property. The challenge must demonstrate that the assessments violate applicable legal provisions, either through misinterpretation or misapplication, making the liquidation acts illegal and subject to annulment.
How does CAAD process arbitral disputes involving Imposto de Selo on undivided inheritances?
CAAD processes arbitral disputes involving Imposto de Selo on undivided inheritances through its established arbitral procedure under RJAT. The legal representative of the undivided succession, bearing the succession's tax identification number, has standing to file the arbitral request and represent the succession's interests. After the request is filed and accepted, the arbitral tribunal is constituted—in this case as a singular tribunal since the applicant did not appoint an arbitrator, leading to appointment by the Deontological Council under Article 11(1)(b) of RJAT. Both parties (the succession's representative and the Tax Authority) are notified and can present their positions: the applicant submits the request with legal grounds, and the Tax Authority files a response. The parties must have legal personality, capacity, and legitimacy, verified under Articles 4 and 10(2) of the decree. Both parties can waive the hearing under Article 18 of RJAT, allowing the tribunal to decide based on written submissions. The tribunal examines the legality of the assessment acts, considering legal arguments regarding property characterization, tax law interpretation, and applicable CIMI provisions, ultimately issuing a binding arbitral decision on whether the contested liquidations are legal or should be annulled.