Process: 399/2016-T

Date: December 9, 2016

Tax Type: Selo

Source: Original CAAD Decision

Summary

This CAAD arbitration case (Process 399/2016-T) addresses a critical dispute regarding Stamp Tax (Imposto do Selo) assessment under Verba 28.1 of the General Stamp Tax Table (TGIS) on buildings held in vertical property ownership. The claimant, a corporate property owner, challenged Stamp Tax assessments totaling €55,228.48 for 2015 on four multi-unit residential properties. The central legal issue concerns whether the €1,000,000 threshold triggering Stamp Tax liability applies to the aggregate taxable property value or to each independent housing unit individually. The claimant owned properties comprising multiple autonomous units allocated to housing—none individually exceeding €1,000,000 in taxable value, but with aggregate property values surpassing this threshold. The Tax Authority calculated Stamp Tax based on the total property value, treating vertical ownership properties as single taxable units. The claimant argued this constituted legal and factual error, contending that independent units should be taxed separately, analogous to Municipal Property Tax (IMI) treatment. The claimant invoked favorable arbitral precedents and Supreme Administrative Court rulings supporting individual unit valuation. Conversely, the Tax Authority maintained that in vertical ownership structures—distinct from horizontal ownership regimes—independent units lack legal autonomy for Stamp Tax purposes, requiring aggregation of values. This case exemplifies recurring disputes in Portuguese tax law regarding high-value residential property taxation, vertical versus horizontal ownership distinctions, and proper interpretation of tax incidence rules. The outcome impacts property holding companies and real estate investors structuring multi-unit assets, with significant implications for tax planning and compliance strategies regarding luxury residential portfolios subject to Verba 28.1 TGIS.

Full Decision

ARBITRAL DECISION

I. REPORT

A…, S.A., NIPC… , with registered office at …, no.…, in Lisbon, (hereinafter referred to only as Claimant), filed, on 14-07-2016, a request for constitution of a sole arbitral tribunal, under the terms of articles 2º and 10º of Decree-Law no. 10/2011, of 20 January (Legal Framework for Arbitration in Tax Matters, hereinafter referred to only as RJAT), in conjunction with subsection a) of article 99º of the Administrative Tax Procedure Code (CPPT), against which the Tax and Customs Authority (hereinafter referred to only as Respondent) is the defendant.

The Claimant requests the declaration of illegality of acts of assessment of Stamp Tax for the year 2015, item 28.1 of the General Table of Stamp Tax (hereinafter, TGIS), in the total amount of Euro 55,228.48, relating to the following urban properties in vertical ownership:

(i) property located at Rua …(and at … nos … to …) nos … to …, in Lisbon, registered in the urban property matrix of the parish of …, municipality of Lisbon, under article…;

(ii) property located at Rua …, no. … and …, in Lisbon, registered in the urban property matrix of the parish of …, municipality of Lisbon, under article …;

(iii) property located at Avenue …, no. … to …, in …, registered in the urban property matrix of the union of parishes of … and …, municipality of Vila Nova de Gaia, under article…; and

(iv) property located at Avenue …, no.…, in Lisbon, registered in the urban property matrix of the parish of…, municipality of Lisbon, under article … .

The Claimant further requests the condemnation of the Respondent to refund the tax improperly paid, plus compensatory interest.

The request for constitution of the arbitral tribunal was accepted by the President of CAAD on 15-07-2016 and notified to the Tax and Customs Authority on the same date.

Pursuant to the provisions of subsection a) of article 2, section 2 and subsection b) of article 11, section 1 of the RJAT, the Ethics Council designated as arbitrator of the sole arbitral tribunal the undersigned, who communicated acceptance of the assignment within the applicable timeframe.

On 19-09-2016 the Parties were duly notified of this designation, neither having manifested the will to refuse the arbitrator's designation, in accordance with the combined terms of article 11, section 1, subsections a) and b) of the RJAT and articles 6º and 7º of the Code of Ethics.

In accordance with the provisions of subsection c) of article 11, section 1 of the RJAT, the sole arbitral tribunal was constituted on 04-10-2016.

Notified to provide its response, the Respondent submitted the appropriate reply, arguing for the total inadmissibility of the claim filed by the Claimant.

By order of 03-11-2016, the meeting provided for in article 18º of the RJAT was dispensed with, and the parties were granted a period for presentation of successive written arguments, which both parties duly submitted.

+++

The Claimant alleges, in summary, that there was error of fact and of law in the assessment of the contested tax by taking as a tax incidence assumption the total aggregate value of the parts of independent utilization allocated to housing that compose each of the identified properties rather than the individual value of each of these same parts. Being properties in vertical ownership composed of units capable of independent utilization, the tax property value relevant for purposes of assessment of Stamp Tax will be that of each one of them individually considered and not their sum, similarly to what occurs with the IMI (Municipal Property Tax). This same matter has already been decided in various arbitral proceedings and in recent decisions of the Supreme Administrative Court that it enumerates. It therefore requests the declaration of illegality of the assessments made by the Respondent with reference to the year 2015 concerning the identified properties.

In response, the Respondent sustains, in summary, that in properties not subject to horizontal ownership, units capable of independent utilization have no autonomy; the autonomization for purposes of property registration and valuation does not contend with their respective legal-tax nature, the law determining that the value of the property will necessarily correspond to the sum of the value of the various independent units. The units of independent utilization cannot be considered as "properties" in accordance with the legal definition, so they cannot be relevant for purposes of the tax incidence of item 28.1 of the TGIS. For purposes of this provision, account must therefore be taken of the tax property value of the property in vertical ownership which will correspond, under the terms of law, to the sum of the values of each unit capable of independent utilization. In support of the position defended, the Respondent invokes the arbitral decision rendered in case 668/2015-T. It concludes, thus, for the legality of the contested assessments which, for this very reason, should be upheld.

III. PRELIMINARY EXAMINATION

The Arbitral Tribunal was regularly constituted and is competent.

The parties possess legal personality and capacity and are legitimate (articles 4º and 10º, section 2, of the same statute and article 1º of Ordinance no. 112-A/2011, of 22 March).

The proceeding does not suffer from any nullities and no obstacle is raised to the examination of the merits of the case.

IV. FACTUAL MATTERS

A. Proven Facts

The following facts are considered proven:

  1. The Claimant is the owner of the urban property located at Rua …, nos … to … and Rua …, nos … to …, registered in the urban property matrix of the parish of …, municipality of Lisbon, under article … .

  2. The identified property has a tax property value of € 1,960,080.00.

  3. The identified property is composed of 19 units capable of independent utilization, 15 of which are allocated to housing.

  4. None of the units capable of independent utilization allocated to housing has a tax property value exceeding € 1,000,000.

  5. In April 2016, the Claimant was notified of the Stamp Tax assessments corresponding to collection documents nos 2016…, 2016…, 2016…, 2016…, 2016…, 2016…, 2016…, 2016…, 2016…, 2016…, 2016…, 2016…, 2016…, 2016… and 2016…, in the total amount of € 17,936.90.

  6. The Claimant is the owner of the urban property located at Rua …, no. … and …, registered in the urban property matrix of the parish of …, municipality of Lisbon, under article … .

  7. The identified property has a tax property value of € 1,018,170.00.

  8. The identified property is composed of 12 units capable of independent utilization, all allocated to housing.

  9. None of the units capable of independent utilization has a tax property value exceeding € 1,000,000.

  10. In April 2016, the Claimant was notified of the Stamp Tax assessments corresponding to collection documents nos 2016…, 2016 … 2016…, 2016…, 2016…, 2016…, 2016…, 2016…, 2016…, 2016…, 2016 … and 2016…, in the total amount of € 10,181.70.

  11. The Claimant is the owner of the urban property located at Ave. …, no. … to…, registered in the urban property matrix of the union of parishes of … and …, municipality of Vila Nova de Gaia, under article … .

  12. The identified property has a tax property value of € 5,108,809.91.

  13. The identified property is composed of 68 units capable of independent utilization, 21 of which are allocated to housing.

  14. None of the units capable of independent utilization has a tax property value exceeding € 1,000,000.

  15. In April 2016, the Claimant was notified of the Stamp Tax assessments corresponding to collection documents nos 2016…, 2016…, 2016…, 2016…, 2016…, 2016…, 2016…, 2016…, 2016…, 2016…, 2016…, 2016…, 2016…, 2016…, 2016…, 2016…, 2016…, 2016…, 2016…, 2016 … and 2016…, in the total amount of € 13,386.88.

  16. The Claimant is the owner of the urban property located at Ave. ..., no.…, registered in the urban property matrix of the parish of …, municipality of Lisbon, under article … .

  17. The identified property has a tax property value of € 1,423,190.00.

  18. The identified property is composed of 29 units capable of independent utilization, 14 of which are allocated to housing.

  19. None of the units capable of independent utilization has a tax property value exceeding € 1,000,000.

  20. In April 2016, the Claimant was notified of the Stamp Tax assessments corresponding to collection documents nos 2016…, 2016…, 2016…, 2016…, 2016…, 2016…, 2016…, 2016…, 2016…, 2016…, 2016…, 2016…, 2016 … and 2016…, in the total amount of € 13,723.00.

  21. The collection notes indicated above, corresponding to the first installment of the tax, were paid on 22-04-2016, with the exception of collection note no. 2016 … which was paid on 07-07-2016.

B. Unproven Facts

No other facts with relevance to the arbitral decision were proven.

C. Basis of the Factual Matters

The factual matters given as proven rest upon the documentary evidence invoked and not contested.

V. LEGAL MATTERS

A. On the Illegality of the Stamp Tax Assessments

To determine the legality of the contested tax assessments, it must be determined what the basis of tax incidence is when it concerns a property in vertical ownership whose units capable of independent utilization are intended for housing.

Specifically, it must be decided whether the tax property value relevant as a criterion for tax incidence corresponds to (i) the sum of the value of each of the units capable of independent utilization, as the Respondent argues, or (ii) the individual tax property value of each of these units capable of independent utilization, considered autonomously and on their own, as the Claimant maintains.

The doubt results from the interpretation of items 28 and 28.1 of the TGIS, whose wording in force on 31 December 2015 was as follows:

"28. Ownership, usufruct or right of surface of urban properties whose tax property value recorded on the matrix, under the terms of the Code of Municipal Property Tax (CIMI), is equal to or greater than € 1,000,000 - on the tax property value used for purposes of IMI:

28.1 For residential property or for land for construction whose building, authorized or intended, is for residential purposes, under the terms of the provisions of the IMI Code – 1%".

The legislator did not establish the legal concept of "residential property," having expressly provided that to all matters not regulated in the Stamp Tax Code ("CIS") with reference to said item 28 of the TGIS the provisions of the CIMI would be applied subsidiarily (cf. section 2 of article 67º of the CIS). It is therefore necessary to seek this concept in the CIMI in order to conclude regarding the basis of tax incidence of item 28.1 of the TGIS.

The legal definition of "property" is contained in article 2º of the CIMI, clarifying in section 4 that "For purposes of this tax, each autonomous fraction, under the regime of horizontal ownership, is considered as constituting a property."

From the reading of this article, and in particular the aforementioned section 4, we would be led to conclude that, for purposes of IMI, an autonomous fraction of property in horizontal ownership assumes the nature of "property" whereas a unit capable of independent utilization of property in vertical or complete ownership will not assume such nature, having no legal-tax autonomy.

As a result of this difference in classification, it would be defensible that, for purposes of item 28.1 of the TGIS, each autonomous fraction should be considered as a "property," so that tax would only be due if, being intended for housing, it had a tax property value exceeding that indicated. In the case of property in complete ownership, the tax property value to be considered for purposes of determining tax incidence would result from the sum of the tax property values of each independent unit allocated to housing – cf. subsection b) of section 2 of article 7º of the CIMI. This is the position of the Respondent.

However, in a comparative analysis of the IMI regime applicable to autonomous fractions of property in horizontal ownership and to units capable of independent utilization of property in vertical ownership, it is concluded that there is no difference whatsoever. Indeed, notwithstanding the legal-formal nature being distinct, the tax regime of these figures is exactly the same. Materially, the law establishes no difference, as can be seen:

(i) properties in horizontal and complete ownership are subject to the same rules of registration in the property matrix, expressly providing in section 3 of article 12º of the CIMI that the parts capable of independent utilization are considered separately in the property registration that will discriminate their respective tax property value;

(ii) properties in horizontal and complete ownership are subject to the same rules and procedures of valuation, expressly determining in subsection b) of section 2 of article 7º of the CIMI that, where the parts composing the property in complete ownership are economically independent, each part is valued by application of the corresponding rules.

This identity of regime extends even further, having relevant repercussions at the level of the tax assessment itself, in that the legislator determined that the assessment of IMI should be made with discrimination of the properties, their parts capable of independent utilization and their respective tax property value – cf. section 1 of article 119º of the CIMI. It is therefore the legislator determining that tax assessment must be made individually, considering each economic reality (units capable of independent utilization) and not each legal reality (property or autonomous fraction of property in horizontal ownership).

From this it is concluded that, for purposes of IMI, the autonomous fractions of property in horizontal ownership and the parts capable of independent utilization composing a property in complete ownership have exactly the same tax treatment. But more important than that: for purposes of IMI, the basis of tax incidence is determined in exactly the same manner, corresponding to the own and individual value of each autonomous fraction or independent part, fixed in the valuation process and recorded in the property matrix; the assessment is made in individualized and autonomous form based on each of the independent parts of the property, whether or not autonomous fractions.

In the case of properties in complete ownership, the IMI is not assessed on the basis of the total tax property value of the property, but on the basis of the individual tax property value of each autonomous unit composing it; the total collection due corresponds to the sum of the individual collections for each autonomous unit, determined based on their respective individual tax property values. Everything proceeds in exactly the same manner as that applied for the autonomous fractions of property in horizontal ownership.

Indeed, it is this autonomy among the various independent units of a property in vertical ownership that permits, for example, the individualized application of the increased or reduced tax rates, under the terms provided in sections 3 and 7 of article 112º or 112º-A of the CIMI.

Furthermore, under the terms of item 28.1 of the TGIS, only "residential properties" are subject to taxation. Now, in properties composed of independent units with different purposes and uses - as occurs in the present case - the determination of allocation can only be made based on each of these units and not based on the property as a whole. This very matter results from subsection b) of section 2 of article 7º of the CIMI. On this aspect, it is appropriate to refer to J. Silvério Mateus and L. Corvelo de Freitas, Real Estate Property Taxes – Stamp Tax, Annotated and Commented, Engifisco, 1st Edition, 2005, p. 121, note 5, who understand that "The rules provided in this section 2, relating to the determination of the tax property value of urban properties with more than one allocation, concern the diversity of some of the valuation elements provided in articles 38º and following of the CIMI, namely (….). Furthermore, this provision is in consonance with the principle of autonomization of the independent parts of an urban property, even if not constituted in horizontal ownership, provided in section 3 of article 12º." (emphasis ours)

In a situation such as this, how would one conclude that the property would be "residential," where parts of it are allocated to other purposes?

In fact, in accordance with the valuation rules provided in the CIMI, what has allocation is not the property as a building in its entirety, but the independent units that compose it, whether they are autonomous fractions or not. It is on the basis of the effective and material use that the allocation of each independent unit or autonomous fraction is determined, the law not providing a specific allocation for the property as a building. Each independent unit – whether or not an autonomous fraction – has, therefore, its own allocation that does not "contaminate" the allocation of the property in its entirety.

Thus, it cannot be argued that "residential property" corresponds to the strict and proper concept of article 2º of the CIMI (encompassing only, for the purpose we are pursuing, buildings and autonomous fractions of properties in horizontal ownership) because, as demonstrated, it would have no concrete practical applicability (as stated, a property in vertical ownership may have more than one allocation or purpose). In our understanding, in using this expression the legislator wished to refer to the property as a reality susceptible to allocation, thus to the independent parts composing each property, whether or not they have the legal nature of autonomous fractions.

It is concluded, therefore, that, for purposes of application of item 28.1 of the TGIS, the units capable of independent utilization that comprise a property in the regime of complete ownership and autonomous fractions are, in substance, identical realities and that, therefore, they are subject to the same regime of tax incidence.

In that measure, the final part of item 28 of the TGIS, in determining that the tax will apply "(…) on the tax property value used for purposes of IMI:" expressly refers to the individual value of each independent part composing the property in complete ownership and not to the total value of the property (corresponding to the sum of the individual tax property values), since it is this individual value that is considered in IMI, for all purposes.

Furthermore, under the terms of the already mentioned section 7 of article 23º of the CIS, the assessment of tax due under item 28 of the TGIS is assessed annually, in accordance with the rules provided in the CIMI. And it was precisely these rules that led the Respondent to assess the tax individually for each independent unit and considering its respective individual tax property value. Hence various collection notes were issued.

If the Respondent's understanding were to apply here, there would be only one assessment of Stamp Tax per property and not as many assessments as there are units capable of independent utilization.

Finally, it is necessary to refer to the fact that this matter has been the subject of various decisions by the CAAD, all in this same sense, transcribing here, by way of example, the arbitral decision rendered in case 50/2013-T, in the part with which we agree:

"Well then, considering that the registration in the property matrix of properties in vertical ownership, constituted by different parts, floors or divisions with independent utilization, under the terms of the CIMI, follows the same registration rules as properties constituted in horizontal ownership, with their respective IMI, as well as the new IS, assessed individually in relation to each of the parts, it offers no doubt that the legal criterion for defining the incidence of the new tax must be the same.

Moreover, the AT [Tax Authority] admits that this is the criterion, which is why the assessment itself issued is very clear in its essential elements, from which it results that the value of incidence is that corresponding to the VPT [tax property value] of the 2nd floor and the individualized assessment on the part of the property corresponding to that same floor.

Thus, 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 unique and unequivocal, for defining the rule of incidence of the new tax.

Thus, there would only be room for incidence of the new stamp tax if one of the parts, floors or divisions with independent utilization presented a VPT 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 terms of the CIMI, and this is the code applicable to matters not regulated with respect to item 28 of the TGIS.

The criterion sought by the AT, of considering the value of the sum of the VPTs assigned to the parts, floors or divisions with independent utilization, 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 is applicable under the CIMI and, by referral, under IS.

In addition to this is the fact that the law itself expressly establishes, in the final part of item 28 of the TGIS, that the IS to apply to urban properties of value equal to or greater than €1,000,000.00 – "on the tax property value used for purposes of IMI."

In the same sense, reference should be made to the decision rendered in case 132/2013-T, from which we transcribe the part that we fully endorse:

"Indeed, it makes no sense to distinguish in the law what the law itself does not distinguish (ubi lex non distinguit nec nos distinguere debemus). Furthermore, to distinguish, in this context, between properties constituted in horizontal ownership and in complete ownership would be an "innovation" without associated legal support, especially because, as has been stated here, nothing indicates, either in item no. 28, or in the CIMI provisions, a justification for that particular differentiation. Note, for example, what article 12º, section 3, of the CIMI states: "each floor or part of property capable of independent utilization is considered separately in the property registration, which also discriminates its respective tax property value."

The uniform criterion that is required is, thus, the one that determines that the incidence of the provision in question only takes place when one of the parts, floors or divisions with independent utilization of property in horizontal or complete ownership with housing allocation, possesses a VPT exceeding €1,000,000.00. Setting as the reference value for the incidence of the new tax the global VPT of the property in question, as the now respondent intended, finds no basis in the applicable legislation, which is the CIMI, given the referral made by the cited article 67º, section 2, of the CIS.

Finally, as has been recalled in various Arbitral Decisions (see AD no. 48/2013-T and AD no. 50/2013-T), it is not perceived, in the works relating to the discussion of bill no. 96/XII in the Assembly of the Republic, the invocation of a different interpretative basis than that presented here. Indeed, such measure, termed the "special tax on residential urban properties of higher value," was justified by the need to comply with the principles of social equity and fiscal justice, burdening more significantly the holders of properties with high value intended for housing, and, in that measure, making the new "special tax" apply to "homes of value equal to or greater than 1 million euros."

Well then, if such logic seems to make sense when applied to «housing» - whether it be «home», «autonomous fraction» or «part of property with independent utilization» / «autonomous unit» -, because it is supposed to have above-average contributory capacity and, in that measure, justifies the need to achieve an additional contributory effort, it would make little sense to then disregard the determinations "unit by unit" when only through the sum of the VPTs of the same (because held by the same individual) would one surpass the million euros.".

In the judgment of 09-09-2015, rendered in case no. 047/15 (available at www.dgsi.pt), the Supreme Administrative Court came to confirm what had been the understanding of the arbitrators of the Center for Tax Arbitration, concluding that: "I. With respect to properties in vertical ownership, for purposes of incidence of Stamp Tax (Item 28.1 of the TGIS, in the wording of Law no. 55-A/2012, of 29 October), subjection is determined by the combination of two factors: housing allocation and VPT recorded in the matrix equal to or exceeding € 1,000,000. II. In the case of a property constituted in vertical ownership, the incidence of IS must be determined, not by the VPT resulting from the sum of the VPT of all divisions or floors capable of independent utilization (individualized in the property article), but by the VPT assigned to each of those floors or divisions intended for housing."

This decision of the Supreme Administrative Court has been upheld in subsequent judgments, of which examples are the judgments of 02-03-2016, case no. 01354/15, 27-04-2016, case no. 01534/15, 04-05-2016, case no. 01504/15, and 24-05-2016, case no. 01344/15, all available at www.dgsi.pt, which is why the arbitral decision rendered in case no. 668/2015-T invoked by the Respondent is not followed.

In light of all that is set forth above, the tribunal concludes that for purposes of application of item 28 of the TGIS to properties in complete ownership, the same rules of the CIMI provided for properties in horizontal ownership apply, so that the tax property value to be considered for purposes of incidence will be the own individual value of each unit capable of independent utilization.

The material substance is what is imposed as the determining criterion of contributory capacity and not the mere legal-formal reality of the property, so that, materially, the tax regime applicable to properties in complete ownership is exactly the same as that applied to properties under the regime of horizontal ownership.

None of the independent units composing the identified property presents a value exceeding € 1,000,000, so the minimum quantitative assumption for purposes of incidence of item 28.1 of the TGIS is not verified.

For all of this, this tribunal considers the Claimant's claim well-founded, concluding that the acts of assessment of Stamp Tax due under item 28.1 of the TGIS, with reference to the year 2015, suffer from the defect of violation of law, by error on the factual and legal assumptions, which justifies their annulment [article 135º of the Administrative Procedure Code, applicable by force of the provisions of article 2º, subsection c), of the General Tax Law].

B. On the Right to Compensatory Interest

It results from the proven facts that the first installment of Stamp Tax for the year 2015 was paid on 22-04-2016 and 07-07-2016.

Under the terms of section 1 of article 43º of the General Tax Law "Compensatory interest is due when it is determined, in gracious reclamation or judicial challenge, that there was error attributable to the services which resulted in payment of the tax debt in an amount greater than that legally due."

As Diogo Leite de Campos, Benjamim Silva Rodrigues and Jorge Lopes de Sousa state, General Tax Law - Annotated and Commented, Encontro da Escrita Publisher, 4th Edition, 2012, p. 342, note 2 "Error attributable to the services that effected the assessment is demonstrated when they proceed to gracious reclamation or challenge of that same assessment and the error is not attributable to the taxpayer (for example, there will be annulment for error attributable to the taxpayer when the assessment rests on erroneous factual assumptions, but the error has as its basis an incorrect indication in the statement that the taxpayer submitted)."

Now, in the concrete case, the request for payment of compensatory interest filed by the Claimant is unequivocally justified since the contested tax assessments are illegal and therefore should be annulled. Thus, beyond the refund of the tax improperly paid, the Claimant is entitled to payment of compensatory interest, at the legal rate in force, counted from the date of payment until the date of processing of the respective credit note, in which they are included – cf. article 43º of the General Tax Law and section 4 of article 61º of the CPPT.

VI. DECISION

In accordance with the foregoing, this Arbitral Tribunal decides to render the request for arbitral pronouncement well-founded and, consequently, to declare illegal the assessments of Stamp Tax for the year 2015 identified in the case file, ordering their annulment and condemning the Respondent to refund the tax improperly paid by the Claimant plus compensatory interest, from the date of payment until the date of processing of the respective credit note.

Case Value: In accordance with the provisions of article 306º, section 2, of the Code of Civil Procedure and article 97º-A, section 1, subsection a), of the CPPT and section 3, section 2, of the Regulations of Costs in Tax Arbitration Proceedings, the case value is set at € 55,228.48.

Costs: Under the terms of section 4 of article 22º of the RJAT, the amount of costs is set at € 2,142.00, in accordance with Table I attached to the Regulations of Costs in Tax Arbitration Proceedings, to be borne by the Respondent.

Let this arbitral decision be registered and notified to the parties.

Lisbon, 09-12-2016

The Sole Arbitrator

(Maria Forte Vaz)

Frequently Asked Questions

Automatically Created

Does Stamp Tax (Imposto do Selo) under Verba 28.1 apply to buildings held in vertical property (propriedade vertical)?
Yes, Stamp Tax under Verba 28.1 TGIS applies to buildings in vertical property ownership when the taxable property value exceeds €1,000,000. The dispute centers on whether this threshold applies to the aggregate property value or individual independent units. The Tax Authority's position treats vertical ownership properties as single taxable units regardless of internal division into independent housing units.
How is the taxable value calculated for Stamp Tax on multi-unit buildings — per independent unit or aggregate property value?
The taxable value calculation for Stamp Tax on multi-unit buildings is contested. The Tax Authority calculates based on aggregate property value—summing all independent units' taxable values. Taxpayers argue calculation should be per independent unit, with each unit assessed separately against the €1,000,000 threshold. This distinction is crucial: aggregation triggers tax liability on properties with multiple lower-value units, while individual assessment would exempt properties where no single unit exceeds the threshold.
Can taxpayers challenge Stamp Tax assessments on high-value residential properties through CAAD tax arbitration?
Yes, taxpayers can challenge Stamp Tax assessments on high-value residential properties through CAAD (Centro de Arbitragem Administrativa) tax arbitration under the Legal Framework for Arbitration in Tax Matters (RJAT). This case demonstrates such challenges, filed under Article 2 and Article 10 of Decree-Law 10/2011 in conjunction with Article 99(a) of the Administrative Tax Procedure Code (CPPT), providing an alternative to judicial courts for contesting tax assessments.
What are the legal grounds for claiming illegality of Stamp Tax liquidation on vertical property under Portuguese tax law?
Legal grounds for challenging Stamp Tax liquidation on vertical property include: (1) error of fact in determining the taxable base by aggregating independent unit values rather than treating them separately; (2) error of law in interpreting Verba 28.1 TGIS application to vertical ownership structures; (3) misapplication of tax incidence rules by failing to recognize autonomous units as separate properties; and (4) inconsistent treatment compared to other property taxes like IMI, supported by arbitral precedents and Supreme Administrative Court jurisprudence.
Are taxpayers entitled to a refund with compensatory interest (juros indemnizatórios) when Stamp Tax is unlawfully assessed?
Yes, taxpayers are entitled to refunds with compensatory interest (juros indemnizatórios) when Stamp Tax is unlawfully assessed. Portuguese tax law provides that improperly collected taxes must be refunded with compensatory interest to compensate taxpayers for the State's unjustified retention of funds. The claimant specifically requested condemnation of the Tax Authority to refund the improperly paid tax plus compensatory interest, which is standard relief in successful tax challenges.