Process: 415/2015-T

Date: January 14, 2016

Tax Type: Selo

Source: Original CAAD Decision

Summary

This CAAD arbitration case (Process 415/2015-T) addresses a critical dispute regarding Stamp Tax liability under Item 28.1 of the General Stamp Tax Table (TGIS) for properties in total ownership. The claimant, A... SA, challenged 38 separate Stamp Tax assessments levied on individual fractions of an urban property located in Vila Nova de Gaia. Item 28.1 imposes Stamp Tax on urban properties with residential designation having a tax property value (VPT) equal to or exceeding €1,000,000. The central legal issue concerns whether the €1,000,000 threshold applies to each fraction individually or to the property as a whole. The claimant argued that since each fraction is assessed individually for Municipal Property Tax (IMI) purposes, the same criterion should apply for Stamp Tax, and therefore only fractions with individual VPTs exceeding €1,000,000 should be taxed. Additionally, the claimant contended the property lacks exclusive residential use and that taxing based on aggregate value violates constitutional principles of legality, tax equality, and proportionality enshrined in Article 103(2) of the Portuguese Constitution. The Tax Authority countered that properties in total ownership differ fundamentally from horizontal ownership regimes. Under CIMI Article 2(4), only autonomous fractions in horizontal ownership constitute separate properties; divisions in total ownership remain part of a single legal-tax entity. Consequently, the Tax Authority maintained that the relevant VPT for determining Stamp Tax incidence is the total property value, not individual fraction values. This case illustrates the complex interplay between property law concepts and tax assessment rules, particularly the distinction between total ownership and horizontal ownership regimes in Portuguese tax law.

Full Decision

ARBITRAL DECISION

I – REPORT

  1. Request

A..., SA, a legal person and taxpayer no. ..., with registered office at Rua .... no...., ...-... Aveiro, hereinafter referred to as the Claimant, submitted, on 07-07-2015, pursuant to the provisions of paragraph a) of item 1 of article 2 and article 10 of Decree-Law no. 10/2011, of 20 January, which approves the Legal Regime for Arbitration in Tax Matters (RJAT), a request for an arbitral ruling, in which the Respondent is the AT - Tax and Customs Authority, with a view to:

  • The annulment of the acts of assessment of Stamp Tax levied under item 28.1 of the General Table of Stamp Tax, embodied in the following documents:

· 2015 ..., in the amount of 289.00 euros, fraction … 01
· 2015 ..., in the amount of 272.70 euros, fraction … 02
· 2015 ..., in the amount of 272.70 euros, fraction … 03
· 2015 ..., in the amount of 287.70 euros, fraction … 04
· 2015 ..., in the amount of 469.70 euros, fraction … 05
· 2015 ..., in the amount of 338.70 euros, fraction … 06
· 2015 ..., in the amount of 287.70 euros, fraction … 07
· 2015 ..., in the amount of 469.70 euros, fraction … 08
· 2015 ..., in the amount of 338.70 euros, fraction … 09
· 2015 ..., in the amount of 287.70 euros, fraction … 10
· 2015 ..., in the amount of 469.70 euros, fraction … 12
· 2015 ..., in the amount of 257.50 euros, fraction … 14
· 2015 ..., in the amount of 288.90 euros, fraction … 15
· 2015 ..., in the amount of 281.30 euros, fraction … 17
· 2015 ..., in the amount of 278.60 euros, fraction … 18
· 2015 ..., in the amount of 278.60 euros, fraction … 19
· 2015 ..., in the amount of 279.40 euros, fraction … 20
· 2015 ..., in the amount of 279.40 euros, fraction … 21
· 2015 ..., in the amount of 278.60 euros, fraction … 22
· 2015 ..., in the amount of 278.60 euros, fraction … 23
· 2015 ..., in the amount of 281.30 euros, fraction … 24
· 2015 ..., in the amount of 279.40 euros, fraction … 25
· 2015 ..., in the amount of 273.90 euros, fraction … 26
· 2015 ..., in the amount of 273.90 euros, fraction … 27
· 2015 ..., in the amount of 281.30 euros, fraction … 28
· 2015 ..., in the amount of 279.40 euros, fraction … 29
· 2015 ..., in the amount of 278.60 euros, fraction … 30
· 2015 ..., in the amount of 278.60 euros, fraction … 31
· 2015 ..., in the amount of 281.30 euros, fraction … 32
· 2015 ..., in the amount of 405.20 euros, fraction … 33
· 2015 ..., in the amount of 224.20 euros, fraction … 34A
· 2015 ..., in the amount of 398.20 euros, fraction … 34B
· 2015 ..., in the amount of 398.00 euros, fraction … 35
· 2015 ..., in the amount of 398.00 euros, fraction … 36
· 2015 ..., in the amount of 398.00 euros, fraction … 37
· 2015 ..., in the amount of 398.00 euros, fraction … 38
· 2015 ..., in the amount of 398.00 euros, fraction … 39
· 2015 ..., in the amount of 398.00 euros, fraction … 40

  • The reimbursement to the Claimant of the amounts improperly paid relating to the challenged assessments, plus the corresponding compensatory interest.

To support its request, the Claimant alleges, in summary:

  • The Claimant is the owner of the urban real property in full ownership located at Avenue ... and ..., numbers .../.../..., Vila Nova de Gaia, registered in the tax urban property register under article no. ... of the Union of Civil Parishes of ... and ...;

  • The Claimant was notified of the aforementioned assessments, based on Item 28.1 of the General Table of Stamp Tax (TGIS);

  • This item imposes Stamp Tax on urban properties with residential designation, which have a tax property value equal to or greater than 1 million euros;

  • As the Stamp Tax Code (CIS) does not define what should be understood by "property with residential designation", the same Code refers to the Municipal Property Tax Code (CIMI) for this purpose.

  • Article 6 of the CIMI establishes that buildings or constructions are "residential, commercial, industrial, (...) [if they are] licensed for such purpose or, in the absence of a license, [if they are] intended normally for each of these purposes";

  • From this it follows that, for the legislator, what effectively matters is the normal use of the property, which excludes from the scope of the tax rule the property in question, since it is not intended exclusively for residential use;

Furthermore:

  • For IMI purposes, properties in vertical ownership consisting of parts capable of independent use are subject to the same rules as the registration of properties constituted in horizontal ownership, with IMI being assessed individually in relation to each of the parts, based on their respective tax property values (VPT);

  • Given that the respective IMI, as well as the Stamp Tax to which they may be subject, are assessed individually in relation to each of the parts, the criterion for defining the incidence of item 28 must be the same;

  • The AT – Tax and Customs Authority admits that this is so, since in the assessment and collection notices it indicates as the base value for the assessment the VPT of each fraction;

  • Therefore, the value to be used as the base for the incidence of Stamp Tax must be the VPT of each fraction;

  • The interpretation underlying the challenged assessments, to the effect that, for purposes of determining the incidence of Stamp Tax on the fractions, the sum of the VPT of the fractions is taken as a basis, violates the principles of legality and tax equality enshrined in article 103, item 2 of the Constitution of the Portuguese Republic (CRP), as well as the principle of the prevalence of substantive truth over formal legal truth, and further the principles of justice and proportionality;

  • The same interpretation is contrary to the teleological element of the norm, knowing that the legislator's intention in establishing the taxation of item 28.1 of the TGIS was to tax luxury residences;

  1. Response

In its Response, the Respondent AT – Tax and Customs Authority, alleges, in summary:

  • The concept of property is defined in article 2, item 1, of the CIMI, and it is established in its item 4 that, in the regime of horizontal ownership, each autonomous fraction is considered as constituting a property;

  • It follows from the analysis of the normative provision that a "property in full ownership with storeys or divisions capable of independent use" is, unequivocally, different from a property in the regime of horizontal ownership, constituted by autonomous fractions, that is, by several properties;

  • As for the assessment of IMI, in the case of a property in full ownership, the VPT that serves as the basis for its calculation will, undoubtedly, be the VPT that the now Claimant defines as "global value of the property";

  • In the case of properties in full ownership, even with storeys or divisions capable of independent use (although IMI is assessed in relation to each part capable of independent use), for Stamp Tax purposes what is relevant is the property in its entirety since the divisions capable of independent use are not considered as a property, but only the autonomous fractions in the regime of horizontal ownership, as per item 4 of article 2 of the CIMI;

  • What, expressly, results from the letter of the law is that the legislator, through item 28.1, wished to tax properties as a single legal-tax entity, as further stated below;

  • The subjection to Stamp Tax of item 28.1 of the TGIS results from the combination of two facts: the residential designation of the property and the tax property value of the urban property registered in the matrix being equal to or greater than € 1,000,000.00;

  • In accordance with the rules of the CIMI, specifically article 113, item 1, the assessment is carried out on the basis of the tax property values and in relation to the taxpayers registered in the matrices on 31 December of the year to which they relate (in the case of the 2014 tax);

  • Regarding the alleged violation of the constitutional principle of tax equality, the AT considers that the provision of item 28.1 of the TGIS does not constitute any violation of the constitutional principle of equality, with no discrimination existing in the assessment of properties constituted in horizontal ownership and properties in full ownership with storeys or divisions capable of independent use, nor between properties with residential designation and properties with other designations;

  • The constitution of horizontal ownership implies, it is a fact, a mere legal alteration of the property, with no revaluation (office - circular no. 40,025, of 11.08.2008, of the DSCA), but the legislator can, nevertheless, subject to a different legal-tax framework, and therefore discriminatory, properties in the regime of horizontal and vertical ownership, in particular benefiting the legally more advanced institute of horizontal ownership, without such discrimination being considered necessarily and solely on that basis, arbitrary;

  • The standards and procedures for valuation, the standards regarding property registration, and further the standards regarding the assessment of parts capable of independent use, do not permit asserting that there should be an assimilation of the property in the regime of full ownership to the regime of vertical ownership, since, and as already mentioned, it would be illegal and unconstitutional;

  • The taxable event of Stamp Tax of item 28.1 consists in the ownership (or usufruct) of urban properties whose tax property value registered in the matrix, in accordance with the CIMI, is equal to or greater than € 1,000,000.00, and the tax value relevant for purposes of the incidence of the tax is the total tax property value of the urban property and not the tax property value of each of the parts that compose it, even when capable of independent use;

  • Item 28.1 therefore applies to the ownership, usufruct or right of superficies of urban properties with residential designation, whose tax property value registered in the matrix, in accordance with the CIMI, is equal to or greater than € 1,000,000.00;

  1. Meeting provided for in article 18 of the RJAT and allegations

With the agreement of the parties, the Tribunal determined the waiver of the meeting provided for in article 18 of the RJAT.

The parties submitted no final allegations.

II. PRELIMINARY EXAMINATION

The singular Arbitral Tribunal was duly constituted on 14-09-2015, with the Arbitrator appointed by the Deontological Council of CAAD, with the respective legal and regulatory formalities having been complied with (articles 11, item 1, paragraphs a) and b) of the RJAT and 6 and 7 of the Deontological Code of CAAD), and is competent ratione materiae, in accordance with article 2 of the RJAT.

The parties have legal personality and capacity and are duly represented.

No procedural defects were identified.

III. GROUNDS

  1. Questions to be decided

The following are the questions to be decided by the Tribunal:

  • The applicability of item 28.1 of the TGIS to urban properties in vertical ownership formed by parts capable of independent use considered as a whole, with the consequence that the tax property value to be taken into account for purposes of the incidence of the tax will be, in case of an affirmative answer, the tax property value of the property;

  • In case of an affirmative answer to the previous question, the constitutionality of the incidence norm contained in item 28.1 of the TGIS, if interpreted in the sense of including land for construction, in light of the constitutional principle of equality.

  1. Facts

The following are the facts considered proven as relevant to the decision:

  • The Claimant was, at the date of the alleged taxable event, the owner of the urban real property in full ownership located at Avenue ... and ..., numbers .../... /..., Vila Nova de Gaia, registered in the tax urban property register under article no. ... of the Union of Civil Parishes of ... and ...;

  • This is a property described as urban, in full vertical ownership, composed of parts capable of independent use;

  • The tax property value of the totality of the parts of the property with residential designation is 1,220,800.00 euros;

  • The Claimant was notified of the following Stamp Tax assessments, under item 28.1 of the TGIS, on the independent parts of the aforementioned property with residential designation:

¾ 2015 ..., in the amount of 289.00 euros, fraction … 01
¾ 2015 ..., in the amount of 272.70 euros, fraction … 02
¾ 2015 ..., in the amount of 272.70 euros, fraction … 03
¾ 2015 ..., in the amount of 287.70 euros, fraction … 04
¾ 2015 ..., in the amount of 469.70 euros, fraction … 05
¾ 2015 ..., in the amount of 338.70 euros, fraction … 06
¾ 2015 ..., in the amount of 287.70 euros, fraction … 07
¾ 2015 ..., in the amount of 469.70 euros, fraction … 08
¾ 2015 ..., in the amount of 338.70 euros, fraction … 09
¾ 2015 ..., in the amount of 287.70 euros, fraction … 10
¾ 2015 ..., in the amount of 469.70 euros, fraction … 12
¾ 2015 ..., in the amount of 257.50 euros, fraction … 14
¾ 2015 ..., in the amount of 288.90 euros, fraction … 15
¾ 2015 ..., in the amount of 281.30 euros, fraction … 17
¾ 2015 ..., in the amount of 278.60 euros, fraction … 18
¾ 2015 ..., in the amount of 278.60 euros, fraction … 19
¾ 2015 ..., in the amount of 279.40 euros, fraction … 20
¾ 2015 ..., in the amount of 279.40 euros, fraction … 21
¾ 2015 ..., in the amount of 278.60 euros, fraction … 22
¾ 2015 ..., in the amount of 278.60 euros, fraction … 23
¾ 2015 ..., in the amount of 281.30 euros, fraction … 24
¾ 2015 ..., in the amount of 279.40 euros, fraction … 25
¾ 2015 ..., in the amount of 273.90 euros, fraction … 26
¾ 2015 ..., in the amount of 273.90 euros, fraction … 27
¾ 2015 ..., in the amount of 281.30 euros, fraction … 28
¾ 2015 ..., in the amount of 279.40 euros, fraction … 29
¾ 2015 ..., in the amount of 278.60 euros, fraction … 30
¾ 2015 ..., in the amount of 278.60 euros, fraction … 31
¾ 2015 ..., in the amount of 281.30 euros, fraction … 32
¾ 2015 ..., in the amount of 405.20 euros, fraction … 33
¾ 2015 ..., in the amount of 224.20 euros, fraction … 34A
¾ 2015 ..., in the amount of 398.20 euros, fraction … 34B
¾ 2015 ..., in the amount of 398.00 euros, fraction … 35
¾ 2015 ..., in the amount of 398.00 euros, fraction … 36
¾ 2015 ..., in the amount of 398.00 euros, fraction … 37
¾ 2015 ..., in the amount of 398.00 euros, fraction … 38
¾ 2015 ..., in the amount of 398.00 euros, fraction … 39
¾ 2015 ..., in the amount of 398.00 euros, fraction … 40

  • The total amount of tax assessed in the aforementioned assessments is 12,208.00 euros;

  • The Claimant proceeded to pay the tax relating to the following challenged assessments;

  • At the date of submission of the request for arbitral ruling, the Claimant had proceeded to pay the first instalment of the assessed amounts, totalling 6,216.10 Euros;

The facts indicated were considered proven on the basis of the documentation attached to the case file.

  1. On the law

3.1. On the question of the legality of the assessment acts

The question to be decided in the present proceedings has until now been the subject of numerous arbitral decisions.

The jurisprudential orientation of these arbitral decisions is not entirely uniform.

Part of this jurisprudence proceeds in the direction of considering contrary to the constitutional principle of equality the interpretation that the Respondent makes of item 28.1 of the TGIS, in the case of vertical properties in full ownership composed of parts capable of independent use, which consists in taking the sum of the tax property values of the parts with residential designation to determine the incidence of item 28.1 of the TGIS. This orientation has been echoed in, among others, the arbitral decisions handed down in cases 181/2013-T, 182/2013-T, 183/2013-T, 218/2013-T, 14/2014-T, among others.

Recently, the Constitutional Court, in judgment no. 692/2015, of 16 December 2015 (case no. 51/2014), ruled in the sense of the constitutionality of the incidence norm contained in item 28.1 of the General Table of Stamp Tax, when interpreted in the sense that it includes urban residential properties in full ownership composed of parts capable of independent use and considered separately in the property register.

Meanwhile, the Supreme Administrative Court ruled on this same question, in the judgment of 09-09-2015, handed down in case no. 47/15.

In this judgment, which we take as the basis of our decision in the present proceedings, the STA states:

"The concept of 'property (urban) with residential designation' was not defined by the legislator. Neither in Law no. 55-A/2012, which introduced it, nor in the IMI Code, to which item 2 of article 67 of the Stamp Tax Code (also introduced by that Law) refers on a subsidiary basis. And it is a concept which, probably due to its imprecision – a fact all the more grave given that it is by reference to it that the objective scope of the new taxation is delimited –, had a short life, since it was abandoned when the State Budget Law for 2014 entered into force (Law no. 83-C/2013, of 31 December), which gave new wording to item no. 28 of the General Table, and which now delimits its objective scope of incidence through the use of concepts that are legally defined in article 6 of the IMI Code.

From the letter of the law nothing unequivocal follows, moreover, for it itself, by using a concept which it did not define and which was also not defined in the instrument to which it referred on a subsidiary basis, lent itself, unnecessarily, to ambiguities, in a matter – of tax incidence – in which certainty and legal security should also be paramount concerns of the legislator."

And the Court continues:

"(...) The present subject-matter is, from the outset by force of article 67, item 2 of the Stamp Tax Code, subject to the norms of the IMI Code – 'to matters not regulated in the present code concerning item 28 of the General Table, the CIMI applies on a subsidiary basis'.

As such, and as has been mentioned so many times, in the understanding of the present court, the mechanism for determining the VPT relevant for purposes of the aforementioned item, is that which is set out in the IMI Code.

Now, article 12, item 3 of the IMI Code establishes that 'each storey or part of a property capable of independent use is considered separately in the property register, which also discriminates its respective tax property value'.

The legislator devaluing, in accordance with the terms previously mentioned, any prior constitution of horizontal or vertical ownership.

In effect, for the latter (legislator), what is relevant is the substantive truth underlying its existence as an urban property and its use.

It should be noted that the ATA itself appears to agree with the criterion set out, which is why the assessments that it itself issues are very clear in their essential elements, from which it follows that the incidence value is the one corresponding to the VPT of each of the storeys and the assessments are individualized.

Therefore, if the legal criterion requires the issue 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 the definition of the rule of incidence of the new tax.

Thus, there would only be incidence of Stamp Tax (within the scope of Item no. 28 of the TGIS) if any of the parts, storeys or divisions with independent use presented a VPT exceeding € 1,000,000.00.

The ATA cannot 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 IMI (and, as previously mentioned, this is the code applicable to matters not regulated regarding Item no. 28 of the TGIS).

In conclusion, the current legal regime does not require the obligation of constituting horizontal ownership, whereby the action of the ATA translates into arbitrary and illegal discrimination.

In fact, the ATA 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 fiscal legality provided for in article 103 of the Constitution of the Portuguese Republic, and further the principles of justice, equality and fiscal proportionality.

In the case at hand, the property[ies] in question [was][were], on the date relevant to the facts, constituted in full ownership and had [...] fractions with independent use, as results from the documents [...].

Given that none of these fractions has a tax property value equal to or greater than € 1,000,000.00, as results from the documents attached to the case, it is concluded that the legal prerequisite of incidence does not exist."

Thus, following closely the jurisprudence of the cited judgment:

The incidence of item 28.1 of the TGIS is composed of several elements:

i) The qualification of the property as urban

ii) The residential designation (in the wording in force at the date of the taxable event)

iii) The tax property value equal to or greater than 1,000,000 euros.

A property, for purposes of item 28.1 of the TGIS, is the same as a property for purposes of the Municipal Property Tax, by force of article 1, item 6 of the CIS.

As the Stamp Tax Code does not define what should be understood by "property with residential designation", the interpretation of the concept should be based on the letter of the law itself, as a starting point. Based on the letter of the law, property with residential designation is that whose normal destination is residential use.

If, to assess the residential designation, the Respondent – interpreting the law – takes as a basis each part of the property in full ownership, as if it were a property, it cannot take as a basis the entire property, to assess the fulfilment of the element relating to the tax property value.

But in fact the Respondent does not even take as a basis the tax property value of the property, but rather the sum of the tax property values of the various parts with residential designation, a procedure that has no support in the letter of the law, nor is it logical.

Faced with the uncertainty of the legal formulation, the interpreter must decide whether the unit to be considered to assess incidence is the part or the whole. If it is the part, all the criteria must be verified in relation to the part. If it is the whole, all the criteria will have to be verified in relation to the whole.

For all the foregoing, it must be concluded that the Stamp Tax assessments challenged are illegal, by violation of tax law, in that they apply to independent parts of properties in full ownership but based on the tax property value of the sum of those parts.

3.2. On the question of the right to compensatory interest

The Claimant further petitions for the payment of compensatory interest.

In light of the grounds set out, it must be concluded that the illegality of the challenged assessments results from errors attributable exclusively to the Tax Authority.

In fact, it being demonstrated that the claimant paid undue tax, by force of the provisions of articles 61 of the CPPT and 43 of the LGT, the Claimant is entitled to compensatory interest on the amounts paid, such interest to be calculated from the date of payment of the undue tax until the date of issuance of the respective credit note, with the period for such payment being calculated from the beginning of the period for voluntary execution of the present decision (article 61, items 2 to 5, of the CPPT), all at the rate determined in accordance with the provisions of item 4 of article 43 of the LGT.

IV. DECISION

For the grounds stated:

1st: The petition for annulment of the challenged assessment acts is adjudged wholly founded;

3rd: The Respondent is condemned, under article 24, item 1, paragraph b), to refund the amount of 6,216.10 Euros (six thousand, two hundred and sixteen Euros and ten cents), plus the corresponding compensatory interest.

The value of the economic benefit of the case is fixed at 12,208.00 euros.

Costs: In accordance with article 22, item 4, of the RJAT, the amount of costs is fixed at 918.00 euros, in accordance with Table I annexed to the Regulation on Costs in Tax Arbitration Proceedings, to be borne by the Respondent.

This arbitral decision is to be recorded and notified to the parties.

Lisbon, Administrative Arbitration Centre, 14 January 2016

The Arbitrator

(Nina Aguiar)

Frequently Asked Questions

Automatically Created

What is Stamp Tax (Imposto de Selo) under Clause 28.1 of the General Stamp Tax Table in Portugal?
Stamp Tax under Item 28.1 of the General Stamp Tax Table (Tabela Geral do Imposto do Selo) is an annual tax levied on urban properties with residential designation that have a tax property value (valor patrimonial tributário) equal to or greater than €1,000,000. Introduced to target luxury residences, this tax applies when two cumulative conditions are met: the property must have residential designation as defined in the Municipal Property Tax Code (CIMI Article 6), and its registered tax property value must reach the €1,000,000 threshold. The tax is assessed annually based on values registered in the property tax matrix as of December 31st of the relevant tax year. The concept of 'residential designation' refers to properties licensed for residential purposes or, absent a license, normally intended for residential use.
How does the concept of 'prédio em propriedade total' (property in total ownership) affect Stamp Tax liability?
A 'prédio em propriedade total' (property in total ownership) is fundamentally distinct from horizontal ownership (propriedade horizontal) under Portuguese law, which significantly affects Stamp Tax liability. Under CIMI Article 2(4), only autonomous fractions in horizontal ownership are considered separate properties; in total ownership, even when a building contains storeys or divisions capable of independent use, it remains a single legal-tax entity. For Stamp Tax purposes under Item 28.1, the Tax Authority's position is that the entire property's aggregate tax property value determines whether the €1,000,000 threshold is met, not the individual values of each division. While Municipal Property Tax (IMI) may be assessed separately for each division capable of independent use pursuant to CIMI Article 6(6), this administrative convenience does not transform divisions into autonomous properties for Stamp Tax purposes. This distinction is crucial: if the total VPT of all divisions exceeds €1,000,000, Stamp Tax applies to each division, even if individual division values fall below the threshold.
Can property owners challenge Stamp Tax assessments on individual fractions through tax arbitration at CAAD?
Yes, property owners can challenge Stamp Tax assessments through tax arbitration at the Centro de Arbitragem Administrativa (CAAD) under the Legal Regime for Arbitration in Tax Matters (RJAT - Decree-Law 10/2011). As demonstrated in Process 415/2015-T, taxpayers may request annulment of multiple assessment acts in a single arbitration proceeding. Common grounds for challenge include: (1) incorrect interpretation of 'property' for purposes of the €1,000,000 threshold; (2) violation of constitutional principles of legality and tax equality under Article 103(2) of the Portuguese Constitution; (3) misapplication of the residential designation requirement; (4) errors in determining the relevant tax property value; and (5) violation of proportionality and justice principles. Taxpayers may also argue that the teleological purpose of Item 28.1—taxing luxury residences—is not fulfilled when assessments target properties lacking exclusive residential use or when individual fractions do not constitute luxury units. The CAAD arbitral tribunal has jurisdiction to review both legal interpretations and factual determinations underlying Stamp Tax assessments, and successful challenges result in annulment of the contested acts plus reimbursement of improperly paid amounts with compensatory interest.
What are the grounds for annulment of Stamp Tax liquidation acts on real estate fractions in Portuguese tax law?
Grounds for annulment of Stamp Tax liquidation acts on real estate fractions in Portuguese tax law include several substantive and procedural arguments. First, taxpayers may challenge the legal interpretation of what constitutes a 'property' (prédio) for purposes of Item 28.1, arguing that in properties with divisions capable of independent use, each division should be assessed individually rather than aggregating values. Second, challenges may invoke violation of the constitutional principle of tax equality (Article 103(2) CRP), contending that identical treatment of horizontal ownership fractions and total ownership divisions is required. Third, taxpayers may argue the property lacks the requisite 'residential designation' under CIMI Article 6, particularly when mixed-use or not exclusively residential. Fourth, annulment may be sought based on violation of the legality principle if the Tax Authority's interpretation extends beyond statutory language. Fifth, arguments invoking substantive truth over formal classification challenge assessments that ignore actual property use. Sixth, proportionality and justice principles support challenges where tax burden appears excessive relative to legislative intent. Finally, procedural grounds include calculation errors, incorrect VPT determination, or assessment of properties below the €1,000,000 threshold. The burden of proof regarding factual matters generally rests with the Tax Authority, while legal interpretation issues are subject to full judicial review.
How does the CAAD arbitral tribunal process disputes involving multiple Stamp Tax assessments on the same property?
The CAAD arbitral tribunal processes disputes involving multiple Stamp Tax assessments on the same property through consolidated proceedings that efficiently address all related assessment acts. In Process 415/2015-T, the tribunal accepted jurisdiction over 38 separate assessment acts for different fractions in a single arbitration request. The procedural framework follows RJAT provisions: the claimant files one request identifying all contested acts, specifying the amounts and assessment documents for each fraction, and presenting unified legal arguments applicable to all assessments. The Tax Authority submits a consolidated response addressing the common legal issues. This approach recognizes that when multiple assessments arise from the same legal interpretation issue—such as whether the €1,000,000 threshold applies to individual fractions or the aggregate property—judicial economy favors joint resolution. The tribunal examines whether each assessment meets legal requirements, considering both common issues (interpretation of 'property in total ownership,' application of the value threshold) and fraction-specific factors (individual VPT, residential designation). The decision addresses all assessments collectively where legal reasoning is uniform, but may differentiate outcomes if factual distinctions exist between fractions. Upon finding assessments unlawful, the tribunal orders annulment of all affected acts and reimbursement of amounts paid plus compensatory interest calculated individually for each fraction based on payment dates.