Process: 406/2015-T

Date: March 21, 2016

Tax Type: Selo

Source: Original CAAD Decision

Summary

This CAAD arbitration case (406/2015-T) involved a challenge to thirteen Stamp Duty collection acts for 2014 under Verba 28.1 of the General Stamp Tax Table (TGIS), concerning real property forming part of an estate, along with claims for compensatory interest on unduly paid instalments. The claimant initially contested the first instalment's legality, then separately challenged the second and third instalments in parallel case 589/2015-T, which was decided favorably on 08.02.2016. Subsequently, the claimant filed a motion requesting extinction of case 406/2015-T due to supervening uselessness of the dispute. The arbitral tribunal determined that the situation constituted lis pendens rather than supervening uselessness, as two identical proceedings existed with the same parties, claim, and cause of action. Since the annulment of a tax collection act affects all instalments, the second decision rendered the first proceeding redundant. The tribunal declared the proceedings extinct under Article 580 of the Code of Civil Procedure, assigned a case value of €3,237.49, and ordered the claimant to bear costs of €612. Critically, the lis pendens was not attributable to the tax authority but resulted from the claimant's dual arbitration requests examining the same underlying tax liability through different collection documents.

Full Decision

ARBITRAL DECISION

1. A..., in the capacity of head of the estate of B..., holder of the tax identification number..., with residence at..., n.º..., ..., ...-... (hereinafter designated "Claimant"), submitted, on 02.07.2015, a request for the constitution of a singular arbitral tribunal in tax matters, which was accepted, aiming, on the one hand, at the declaration of illegality of thirteen tax collection acts of Stamp Duty for the year 2014, relating to item 28.1 of the General Table of Stamp Duty (hereinafter "GTSD"), relating to real property that forms part of the aforesaid estate, as will be seen hereinafter, and, on the other, the recognition of the right to indemnity interest for the unduly paid tax instalments.

2. Pursuant to the provisions of paragraph a) of no. 2 of art. 6º and of paragraph b) of no. 1 of art. 11º of Decree-Law no. 10/2011, of 20 January, as amended by art. 228º of Law no. 66-B/2012, of 31 December, the Deontological Council of the Administrative Arbitration Centre (CAAD) appointed as arbitrator Nuno Pombo, and the parties, after being duly notified, did not manifest opposition to that appointment.

3. In conformity with the provisions of paragraph c) of no. 1 of art. 11º of Decree-Law no. 10/2011, of 20 January, as amended by art. 228º of Law no. 66-B/2012, of 31 December, the arbitral tribunal was constituted on 24.09.2015.

4. On 01.10.2015 the highest official of the service of the Respondent was notified to send to the Arbitral Tribunal a copy of the administrative file that might exist and, if it so wished, within the period of 30 days, to submit a reply and request the production of additional evidence.

5. On 30.10.2015 the Respondent submitted its reply.

6. On 04.11.2015 the Claimant gave its position on the exception raised by the Respondent, considering that it could not proceed.

7. By order of 02.2.2016, the arbitral tribunal dispensed with the meeting provided for in art. 18º of the Legal Regime of Arbitration in Tax Matters (hereinafter, "LRATM"), since the parties had already brought to the file the facts necessary and sufficient for the pronouncement of the decision, which was foreseen could take place until 14.03.2016.

8. The arbitral decision was delivered on 06.03.2016, not having been notified to the Claimant as the payment of the subsequent arbitration fee had not yet been satisfied.

9. On 14.03.2016 the arbitral tribunal became aware of a motion presented by the Claimant, by which it requests "the extinction of the present proceedings by supervening futility of the dispute", and further requests that the invoked futility be imputable to the Respondent. It is therefore necessary to examine the said Motion and decide.

10. The Claimant, following the notification of the collection notice of the first instalment of the collection acts referred to in 1., submitted the request for arbitral pronouncement that gave rise to the present proceedings.

11. Subsequently, "also submitted to the consideration of the CAAD the legality of the collection in question materialized in the second and third instalments" (which gave rise to arbitral case no. 589/2015-T), the decision of which, which fully accepts the Claimant's claim, was delivered on 08.02.2016, more than a month before the submission of the Motion that now occupies us.

12. As the Claimant rightly points out, "the annulment of the tax collection act necessarily affects all the instalments, ceasing the obligation to pay them or imposing on the tax administration the obligation to refund the amounts possibly paid by the taxpayer".

13. The Claimant therefore acknowledges that both arbitral proceedings instituted at its request would have to proceed with the examination of the legality of the same tax collection acts, even if materialized in different collection documents.

14. More than supervening futility of the dispute, the Claimant's Motion reveals the existence of true lis pendens, since this arbitral tribunal would be placed in the alternative of contradicting or reproducing a decision previously delivered (article 580º of the Code of Civil Procedure).

15. We are in fact faced with two identical proceedings, as to the subjects, as to the claim (in both it is intended to obtain the same legal effect) and as to the cause of action (article 581º of the Code of Civil Procedure).

16. Thus, and without concern to know in which of the proceedings the lis pendens should have been invoked, the arbitral tribunal understands that the notification to the Parties of the decision delivered on 06.03.2016 is prejudiced.

17. However, this lis pendens cannot be imputed to the Respondent, as it is based exclusively on the existence of two requests for arbitral pronouncement which, in short, imply the examination of the same claim, founded on the same cause of action.

18. Consequently, the arbitral tribunal decides:

18.1. To declare the present proceedings extinct;

18.2. To fix to the file the value of € 3,237.49 (three thousand two hundred and thirty-seven euros and forty-nine cents) for the purposes of determining the procedural costs, in accordance with no. 1 and no. 2 of art. 3º of the Regulation of Costs in Tax Arbitration Proceedings, paragraph a) of no. 1 of art. 97º-A of the CPPT and with no. 2 of art. 306º of the CPC;

18.3. For the purposes of the provisions of no. 2 of art. 12º and no. 4 of art. 22º of the LRATM and no. 4 of art. 4º of the Regulation of Costs in Tax Arbitration Proceedings, to fix the amount of costs at € 612.00 (six hundred and twelve euros), in accordance with Table I attached to said Regulation, to be borne in full by the Claimant.

Lisbon, 21 March 2016

The Arbitrator

_______________________________
(Nuno Pombo)

Text prepared by computer, in accordance with no. 5 of art. 131º of the CPC, applicable by force of paragraph e) of no. 1 of article 29º of the LRATM, following the orthography prior to the said Orthographic Agreement of 1990.

Frequently Asked Questions

Automatically Created

What is Verba 28.1 of the Portuguese General Stamp Tax Table (TGIS) and how does it apply to high-value properties?
Verba 28.1 of the Portuguese General Stamp Tax Table (TGIS) imposes annual Stamp Duty on the ownership of real property (urban buildings or fractions and rural land) with taxable value exceeding €1 million. The tax rate is 1% of the property's taxable patrimonial value as determined for IMI purposes. This provision applies regardless of whether the property generates income, making it a wealth tax on high-value real estate holdings. Properties forming part of estates, as in this case, are also subject to this annual levy.
Can stamp tax (Imposto do Selo) liquidation acts on vertical property be challenged through CAAD tax arbitration?
Yes, Stamp Duty liquidation acts on vertical property can be challenged through CAAD (Administrative Arbitration Center) tax arbitration proceedings. Vertical property refers to separate ownership rights in buildings divided by horizontal planes (different floors or levels). As demonstrated in this case and the related case 589/2015-T, taxpayers can submit arbitration requests to CAAD contesting the legality of Stamp Tax collection acts under Verba 28.1 TGIS affecting real property, including vertically divided properties. CAAD has jurisdiction over Stamp Duty disputes pursuant to Decree-Law 10/2011.
What are the grounds for claiming compensatory interest (juros indemnizatórios) after unlawful stamp tax payments in Portugal?
Compensatory interest (juros indemnizatórios) can be claimed when tax authorities unlawfully collect taxes that are later annulled or declared illegal. Under Portuguese tax law, when a taxpayer pays tax amounts that are subsequently determined to be undue through administrative or judicial decisions, they are entitled to compensatory interest calculated from the payment date until reimbursement. In this case, the claimant specifically requested recognition of the right to indemnity interest for unduly paid instalments. The annulment of tax collection acts triggers the tax administration's obligation to refund amounts with compensatory interest.
How does the concept of 'propriedade vertical' (vertical property) affect stamp tax liability under Portuguese tax law?
Propriedade vertical (vertical property) refers to separate ownership of different horizontal sections within a building, typically different floors or levels, as opposed to propriedade horizontal (condominium ownership of units on the same level). Under Portuguese Stamp Tax law, each separately owned fraction or unit of vertical property with taxable value exceeding €1 million is independently subject to the annual Stamp Duty under Verba 28.1 TGIS. The tax is calculated based on each unit's individual patrimonial value (VPT), meaning owners of high-value fractions in vertically divided buildings face annual Stamp Duty liability on their specific property rights.
What happens when a CAAD arbitration case is terminated due to supervening uselessness (inutilidade superveniente da lide)?
When a CAAD arbitration case is terminated due to supervening uselessness (inutilidade superveniente da lide), the proceedings are declared extinct because the dispute has become moot or purposeless during the arbitral process. In this decision, although the claimant invoked supervening uselessness, the tribunal determined the actual ground was lis pendens (duplicate proceedings). The tribunal assigned costs based on the case value and ordered the claimant to bear procedural costs of €612. Importantly, the tribunal clarified that when identical proceedings exist examining the same tax collection acts, the subsequent annulment in one case affects all instalments, rendering parallel challenges redundant. Attribution of costs depends on which party caused the procedural defect.