ARBITRAL DECISION

I. Report

1. ... (hereinafter referred to as "Claimant"), taxpayer with tax identification number ("TIN") ..., married, resident in ..., filed, on 9 June 2014, pursuant to the combined provisions of Articles 2 and 10 of Decree-Law No. 10/2011, of 20 January, i.e., Legal Framework for Arbitration in Tax Matters ("RJAT"), a request for the constitution of an arbitral tribunal in order to declare the following assessments illegal (see Documents 1 to 20 attached by the Claimant):

• No. 2014 ...;
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• No. 2014 ...

relating to the 1st installment of Stamp Duty ("Imposto do Selo"), in the total amount of € 4,976.02, of a total collection amount of € 14,927.38, with the Tax and Customs Authority ("Respondent" or "ATA") being the defendant.

A) Constitution of the Arbitral Tribunal

1. Pursuant to the provisions of Article 6(1) and Article 11(1)(b) of the RJAT, the Ethics Council of this Centre for Administrative Arbitration ("CAAD") appointed the undersigned as sole arbitrator, who communicated acceptance of the appointment within the applicable period, and notified the parties of that appointment on 29 July 2014.

2. Thus, in accordance with the provision in Article 11(1)(c) of the RJAT, and by means of communication from the President of the Ethics Council of the CAAD, the Sole Arbitral Tribunal was constituted on 13 August 2014.

B) Procedural History

1. In the request for arbitral decision, the Claimant petitioned for the declaration of illegality of the Stamp Duty assessments detailed above, relating to the year 2013 (namely the 1st installment), by reference to an urban property, located in ..., registered in the urban property register of the parish of ..., municipality of ..., under article ..., "composed of 10 apartments on the 1st floor and another 10 on the 2nd floor, all of them independent from each other and susceptible to separate lease and numbered, on the 1st floor from 101 to 110, and on the 2nd floor from 201 to 210".

2. The ATA filed a response, petitioning for the dismissal of the request for arbitral decision, on the grounds that there is no breach of law whatsoever, requesting that the tax acts under analysis, as they do not violate any legal or constitutional provision, be maintained in the legal order.

3. By order of 27 January 2015, the Sole Arbitral Tribunal, having the positions of the parties been perfectly defined in their respective pleadings, set 9 February 2015 as the deadline for rendering the respective arbitral decision.

4. The Tribunal has been regularly constituted and is competent to consider the questions indicated (Article 2(1)(a) of the RJAT), the parties have legal personality and capacity and have full standing (Articles 4 and 10(2) of the RJAT and Article 1 of Order No. 112-A/2011, of 22 March). No nullities occur and no exceptions have been raised, and therefore nothing prevents judgment on the merits.

5. The present case is thus in a position for a final decision to be rendered therein.

II. Question to be Decided

1. The central question to be considered and decided with respect to the merits of the case, as it emerges from the parties' procedural documents, is the following: with reference to properties not constituted under the horizontal property regime, comprising various floors and divisions susceptible to independent use (and with residential purpose), what is the Tax Patrimonial Value ("VPT") relevant for purposes of calculating the Stamp Duty to be paid, pursuant to Item No. 28 of the General Stamp Duty Table ("TGIS").

2. That is, this tribunal seeks to assess whether, as the Claimant alleges, the amount to be considered is the VPT attributed, individually, to each of the parts susceptible to autonomous use, or, alternatively, the total value resulting from the sum of the VPTs of those autonomous fractions, as the Respondent suggests.

III. Decision on Facts and Its Justification

1. Having examined the documentary evidence produced, the tribunal deems the following facts as proven, with relevance to the decision of the case:

I. The Claimant is the owner of an urban property, registered under article ... in the urban property register of the parish of ..., municipality of ..., in vertical property, composed of 20 apartments, independent from each other and numbered 101 to 110 on the 1st floor and 201 to 220 on the 2nd floor.

II. The individual VPT of each of the autonomous fractions is as follows:

[table data]

III. The Claimant, with respect to the tax year 2013 and as a result of the provisions in Item No. 28 of the TGIS, received the Stamp Duty assessment notices from the ATA, mentioned above, relating to the first installment of Stamp Duty, in the amount of € 4,976.02.

1. The Tribunal's conviction regarding the proven facts resulted from the documents attached to the case and from the uncontested allegations of the parties, as specified in the points of the facts stated above.

2. There is no factual relevance for the decision of the case deemed as not proven.

IV. On the Law

A) Legal Framework

1. Given that the legal question to be decided in this case requires the interpretation of the relevant legal texts, it is important, firstly, to set out the rules that comprise the relevant legal framework, as of the date of occurrence of the facts.

2. The subjection to Stamp Duty of properties with residential purpose resulted from the addition of Item No. 28 to the TGIS, carried out by Article 4 of Law 55-A/2012, of 29 October, which established the following taxable events:

"28 – Ownership, usufruct or right of superficies of urban properties whose tax patrimonial value as recorded in the register, pursuant to the Code of Municipal Property Tax (CIMI), is equal to or greater than € 1,000,000.00 – on the tax patrimonial value for purposes of Municipal Property Tax:

28.1 – For property with residential purpose – 1%

28.2 – For property, when the passive subjects who are not natural persons are residents in a country, territory or region subject to a clearly more favourable tax regime, appearing on the list approved by ministerial order of the Minister of Finance – 7.5%."

1. The aforementioned law also added, to the Stamp Duty Code, Article 23(7), concerning the assessment of Stamp Duty: "in the case of tax due for the situations provided for in Item No. 28 of the General Table, the tax is assessed annually, in relation to each urban property, by the central services of the Tax and Customs Authority, applying, with necessary adaptations, the rules contained in the CIMI", and Article 67(2) which provides that "to matters not regulated in this code concerning Item 28 of the General Table the CIMI shall apply subsidiarily".

2. In this context, and taking into account the indication above, let us now focus on the Code of Municipal Property Tax ("CIMI").

3. Firstly, note Article 2(4) of the CIMI Code, which tells us that "for purposes of this tax, each autonomous fraction, under the horizontal property regime, is deemed to constitute a property".

4. In turn, Article 12(3) of the CIMI Code establishes that "each floor or part of property susceptible to independent use is considered separately in the property registration, which also sets out the respective tax patrimonial value".

5. Thus, it is within this legal framework that it is important to decide whether, in cases where the horizontal property division of an urban property with various autonomous fractions is not constituted, the VPT, for purposes of Item No. 28 of the TGIS, is calculated, individually, per fraction susceptible to autonomous use, or, alternatively, determined by the sum of the VPTs of those fractions.

B) Arguments of the Parties

1. In this regard, the Claimant in its request alleged, in summary, the following:

2. The present Claimant is the owner of an urban property, located in ..., registered in the property register of the parish of ..., under article ..., composed of apartments susceptible to separate lease, identified with the numbers 101 to 110, on the first floor and with the numbers 201 to 210, on the second floor.

3. As previously mentioned, in 2014, and with reference to the tax year 2013, the present Claimant was notified, by the ATA, of the assessments to be paid, under Stamp Duty, pursuant to Item No. 28 of the TGIS, as detailed above.

4. However, the present Claimant considers the aforementioned assessment illegal, since the property in question meets, in its view, the "conditions necessary for the constitution of horizontal property", and therefore, the determination of its respective VPT, for purposes of the application of Item No. 28 of the TGIS, is done individually (that is, per autonomous fraction) and not, as the ATA intends, by its global VPT (which could only be accounted for through the sum of individual VPTs).

5. This is because, in the view of the present Claimant, "the aforementioned property, regardless of whether it is registered in the property register in vertical property or in horizontal property, at the level of Municipal Property Tax taxation had the same treatment, that is, the Municipal Property Tax collection, in both cases, was calculated on the tax patrimonial value of each of the apartments, and for this reason, it is totally irrelevant, for the applicant, whether the property was registered in the said register in vertical property, as it was and is, or in horizontal property".

"Otherwise, that is, if its taxation under Municipal Property Tax depended on one of those modes of property registration and if the more favourable taxation depended on its registration in horizontal property, as is evident, the applicant would not have failed to submit it to horizontal property".

1. In this way, the Claimant believes that the ATA is "making a wrong interpretation of the cited rule (Item 28 of the TGIS), insofar as, whether the properties are registered in the property register in vertical property or horizontal property, for purposes of Municipal Property Tax taxation, the effect is precisely the same, since taxation occurs, in this case, apartment by apartment, on the basis of the tax patrimonial value of each one and, if this is so with respect to Municipal Property Tax, equal treatment should apply with respect to the 1% Stamp Duty and, since Stamp Duty is based on tax patrimonial value equal to or greater than € 1,000,000.00 and none of the apartments has that value, the questioned assessment, was and is illegal".

2. Reinforcing that, "if the VPT of each of the divisions susceptible to separate lease is valid for calculating the Municipal Property Tax collection, it should be equally valid for purposes of assessing the said Stamp Duty and, if it is valid, this tax cannot be assessed precisely because none of the apartments has a value equal to or greater than the one previously announced".

3. In fact, in the Claimant's opinion, "it seems evident and clear that (…) the legislator's thinking could not have been other than to give properties in vertical property the same treatment it gave to properties in horizontal property, that is, the idea that emerges is that the legislator gave weight to substance and underestimated form".

4. And as such, "it cannot be accepted that for purposes of taxation under Stamp Duty, within Item No. 28 of the General Table, what has always been the golden rule regarding the autonomy of parts of urban properties susceptible to separate lease is now disregarded…".

5. To defend its thesis, the present Claimant relies on three distinct arguments, which it considers crucial in the context of this discussion.

6. Firstly, the Claimant believes that its position was already the most correct within the framework of the Real Property Tax Code and the Tax on Agricultural Industry, "(…) already Rule 8 of Article 144 of the Real Property Tax Code and the Tax on Agricultural Industry, in effect until 2004, provided: «in the description and appraisal of properties, floors and divisions susceptible to separate lease shall be distinguished»".

7. In parallel, the present Claimant also highlights what follows from Article 12(3) of the CIMI Code, according to which: "each floor or part of property susceptible to independent use is considered separately in the property registration, which also sets out the respective VPT".

8. Finally, it believes that the subjection "of such dwellings to tax, solely due to the non-existence of the legal instrument that formalized and formalizes horizontal property, is to completely deny the principle that prevails in Tax Law of «Prevalence of Substance over Form»".

9. In conclusion, in the Claimant's opinion, there is no doubt that, "with reference to the property identified in this petition, the VPT, necessarily discriminated by each of its parts susceptible to separate lease and with complete economic autonomy between themselves, produces exactly the same effects, whether or not the deed constituting horizontal property is executed, both with respect to the 1% Stamp Duty and with respect to Municipal Property Tax (…)".

10. Additionally, the Claimant also made reference to two arbitral decisions, namely those concerning Case No. 50/2013-T, of 29 October and No. 95/2013-T (on which we shall elaborate below), which, in its view, are part of a broad set of decisions that are in line with the understanding set forth by it in the aforementioned initial petition.

11. For its part, the Respondent, after being duly notified for that purpose, filed its response in which, in summary, alleged the following:

12. The Claimant bases its request for arbitral decision on the fact that the criterion for the taxation of the autonomous parts of properties in vertical property must follow the same lines as the taxation of properties in horizontal property.

13. However, in its opinion, "according to Item 28.1, in the case of urban properties with residential purpose, the tax is based on the tax patrimonial value used for purposes of Municipal Property Tax".

"According to Article 2(4) of the Stamp Duty Code, the passive subjects of the tax are the passive subjects of Municipal Property Tax, pursuant to Article 8 of the CIMI".

"According to Article 3(3)(u) of the CIMI, it is also on the passive subjects referred to in Article 8 of the CIMI that the burden of Stamp Duty falls".

"From these legal rules results the taxable event of the Stamp Duty of Item 28.1, consisting of ownership, usufruct or right of superficies of urban properties whose VPT as recorded in the register, pursuant to the CIMI, is equal to or greater than € 1,000,000.00".

"The tax patrimonial value relevant for purposes of the incidence of the tax is, thus, the total tax patrimonial value of the urban property and not the tax patrimonial value of each of the parts that compose it, even when susceptible to independent use".

"It is thus not apparent how the assessment of Municipal Property Tax being contested could have violated the literal wording of Item 28.1 of the General Table".

1. Moreover, the ATA considers that Article 80(2) of the CIMI Code provides that each property corresponds to a single article registered in the register, and clarifies that "the principle that each property corresponds to only one property registration article is only excepted (…) with respect to properties constituted in horizontal property in which, although pursuant to Article 2(4) of the CIMI, each autonomous fraction is deemed to constitute a property, each building in horizontal property regime corresponds to a single property registration".

2. In these terms, for the present Respondent "the urban property in question in the present case is not in horizontal property regime, in which case each of the autonomous fractions would be deemed a property, including for purposes of the subjection to Stamp Duty of Item 28.1 of the General Table, but in vertical property regime".

3. Especially since, in its understanding, "the unity of the urban property in vertical property composed of several floors or divisions is, however, not affected by the fact that all or part of those floors or divisions are susceptible to independent economic use".

"Such property does not cease, by the fact that it is only one, not being, thus, its parts juridically distinct and equated to autonomous fractions in horizontal property regime".

1. It concludes, saying that, "in the present case, the VPT upon which the incidence of the Stamp Duty of Item 28.1 of the General Table depends had to be, as it was, the global tax patrimonial value of the property and not that of each of its independent parts".

2. Thus, the Respondent believes that the assessments it made result from a correct interpretation and application of the law to the facts, requesting, in this way, that the claim made be judged unfounded.

C) Court's Assessment

1. In the understanding of this tribunal, and having regard to the legal framework previously presented, the essential normative proposition to be taken into account for the decision of the case is that which results from Item No. 28 of the TGIS.

2. It should also be noted that, in the eyes of the arbitral tribunal, the question to be decided concerns, exclusively, matters of law, namely to understand, for purposes of the application of the aforementioned Item, how the relevant VPT is determined.

3. Firstly, it should be clarified that it is clear, from the letter of the law, that the VPT to be considered, for purposes of the application of Item No. 28 of the TGIS, can only be that which is determined within the framework of the CIMI Code.

4. This is, moreover, what the aforementioned Item tells us, ipsis verbis, "(…) whose tax patrimonial value as recorded in the register, pursuant to the Code of Municipal Property Tax (CIMI), is equal to or greater than € 1,000,000.00".

5. Thus being the case, note once again what follows from Article 2(4) of the CIMI Code which tells us that "for purposes of this tax, each autonomous fraction, under the horizontal property regime, is deemed to constitute a property".

6. Reinforced, nevertheless, by Article 12(3) of the same Code, which establishes that "each floor or part of property susceptible to independent use is considered separately in the property registration which also determines the respective tax patrimonial value".

7. It is concluded, thus, that, for purposes of the calculation of Municipal Property Tax to be paid, the VPT is considered, individually, for each floor or part susceptible to independent use.

8. And if this is the method of determination followed for Municipal Property Tax, it will necessarily have to be the model equally applied within the scope of Item No. 28 of the TGIS, as explained above.

9. Nevertheless, and should doubts raised still subsist, this tribunal relies on some arbitral decisions previously rendered, which addressed the matter under analysis.

10. Thus, firstly, let us note Decision No. 50/2013-T, of 29 October, mentioned even by the Claimant, which provides the following.

11. "Law No. 55-A/2012 says nothing about the qualification of the concepts in question, namely, about the concept of «property with residential purpose». However, Article 67(2) of the Stamp Duty Code, added by the said Law, provides that «to matters not regulated in this code concerning Item 28 of the General Table the CIMI shall apply subsidiarily».

The rule of incidence thus refers to urban properties, the concept of which is what results from the provision of Article 2 of the CIMI, with the determination of the VPT following the terms of the provision of Article 38 and following of the same code.

Consulting the CIMI it is verified that its Article 6 only indicates the different types of urban properties, among which it mentions residential ones (…)

From this we can conclude that, in the legislator's view, the juridical-formal rigor of the concrete situation of the property does not matter but rather its normal use, the purpose for which the property is intended. We also conclude that for the legislator the situation of the property in vertical property or horizontal property was not relevant, since no reference or distinction is made between one and the other. What is relevant is the material truth underlying its existence as an urban property and its use.

(…)

Using the criterion that the law itself introduced in Article 67(2) of the Stamp Duty Code, «to matters not regulated in this code concerning Item 28 of the General Table the CIMI shall apply subsidiarily»" (emphasis in original).

1. That is, having in mind that the registration in the property register of immovables in vertical property, for purposes of the CIMI Code, follows the same registration rules as immovables constituted in horizontal property, being their respective Municipal Property Tax, as well as the new Stamp Duty, assessed individually in relation to each of the parts, it does not appear, to this tribunal, that there is any doubt that the legal criterion for defining the incidence of the new tax has to be the same.

2. In this context, if the law requires, with respect to Municipal Property Tax, the issuance of individualized assessment notices for the autonomous parts of properties in vertical property, in the same way as it establishes for properties in horizontal property, it will require, in the same terms, with respect to the rule of incidence of Item No. 28 of the TGIS.

3. Therefore, Stamp Duty, within the scope of Item No. 28 of the TGIS, could only apply to a given fraction if this, possibly, had a VPT greater than €1,000,000.00.

4. And, it may furthermore be said, that this was moreover the understanding adopted by the ATA.

5. Indeed, the ATA also issued individualized assessment notices, relating to each of the fractions susceptible to autonomous use, demonstrating that, in its opinion, the said fractions, although juridically not constituted in horizontal property, would, for all purposes, be independent from each other.

6. However, the ATA overlooked that it could not, by virtue of the framework previously set out, proceed to the sum of the individual VPTs of the fractions previously mentioned, aiming at a value that would already fall within the tax base of Item No. 28 of the TGIS.

7. This when the legislator itself established a different rule within the scope of the CIMI Code which, as previously mentioned, is the code applicable to matters not regulated in the Stamp Duty Code, with respect to Item No. 28 of the TGIS.

8. In summary, the criterion established by the ATA, of considering the value of the sum of individual VPTs attributed to the parts, floors or divisions with independent use, taking advantage of the fact that the property is not constituted in horizontal property regime, does not find, in the eyes of this tribunal, legal support, being, in particular, contrary to the criterion applicable under Municipal Property Tax and, by referral (as mentioned above), under Stamp Duty.

9. In this context, this tribunal considers that the criterion defended by the ATA violates the principles of legality and fiscal equality, and, likewise, that of the prevalence of material truth over juridical-formal reality.

10. In parallel, note that Article 12(3) of the CIMI Code makes no distinction as to the regime of properties that are in horizontal or vertical property.

11. As such, and given that if the property were in horizontal property regime, none of its residential fractions would be subject to the incidence of the new tax, the ATA cannot treat materially equal situations differently.

12. In this regard, see what was said on this subject in the Arbitral Decision handed down within Case No. 132/2013-T, of 16 December, an understanding which this tribunal adopts.

"Indeed, it does not make sense to distinguish in law what the law itself does not distinguish (ubi lex non distinguit nec nos distinguere debemus).

It may be added that distinguishing, in this context, between properties constituted in horizontal property and in full property would be an «innovation» without associated legal support, especially because, as has been stated here, nothing suggests, neither in Item No. 28, nor in the provision of the CIMI, a justification for that particular differentiation.

Note, for example, what Article 12(3) of the CIMI says: «each floor or part of property susceptible to independent use is considered separately in the property registration, which also sets out the respective tax patrimonial value».

The uniform criterion that is necessary is, thus, the one that provides that the incidence of the rule in question only takes place when one of the parts, floors or divisions with independent use of property in horizontal or full property with residential purpose, has a VPT greater than €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 respondent then intended, does not find basis in the applicable legislation, which is the CIMI, given the referral made by the cited Article 67(2) of the Stamp Duty Code".

(…)

"It may furthermore be added that accepting such differentiation of treatment could produce results incomprehensible from a legal point of view and contrary to the objectives which the legislator said it had for adding Item No. 28. By way of example, suppose the following hypothesis, which seems plausible in light of the interpretation made by the respondent: a citizen who owns a property constituted in full property intended for dwelling, with the global value of autonomous units equal to or greater than €1,000,000.00 and the VPT of each one less than €1,000,000.00, is subject to annual taxation of 1% of that value (as happened in the situation under analysis); already another citizen who owns a property with the exact same characteristics as the previous one but which has been constituted in horizontal property, and equally with the global value of the autonomous fractions equal to or greater than €1,000,000.00 and the VPT of each one less than €1,000,000.00, will not be subject to taxation under the aforementioned 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, their respective VPTs? The answer can be illustrated through another hypothesis: a citizen who owns a property in horizontal property, in which each of its 20 fractions has a VPT less than €1,000,000.00, would be subject to taxation if – if such aggregation were admitted – the global VPT exceeded that value; already another citizen with identical 20 fractions distributed across 5, 10 or 20 properties would not be subject to any taxation under the aforementioned Item No. 28.

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

Observing, now, the case under analysis, it is noted that the VPTs of the floors (autonomous units) of the property with residential purpose vary between (…), whereby any one of them is less than €1,000,000.00.

From this it is concluded, as a result of what has been stated, that Stamp Duty referred to in Item No. 28 of the TGIS cannot apply to them, and therefore, the assessment acts contested by the claimant are illegal" (emphasis in original).

1. One final point of interest to highlight (notwithstanding the previous framework being quite sufficient to recognize the illegality of the assessment acts performed by the ATA), rests on the understanding advocated, both by the legislator and by the government itself, when adding Item No. 28 to the TGIS.

2. In this regard, let us now focus on the arbitral decision handed down within Case No. 48/2013-T, of 9 October, which extensively analyzes the objectives underlying the addition of the aforementioned Item.

3. "Law No. 55-A/2012, of 29/10, has no preamble whatsoever, from which it is not possible to extract the legislator's intention.

This law from the National Assembly had its origin in bill No. 96/XII (2nd), which, in the explanatory memorandum speaks of the introduction of fiscal measures inserted in a broader set of measures to combat budgetary deficit.

In the explanatory memorandum of the said bill, it is said that, «these measures are fundamental to reinforce the principle of social equity in austerity, ensuring an effective distribution of the necessary sacrifices to comply with the adjustment program. The Government is strongly committed to ensuring that the distribution of these sacrifices will be done by all and not only by those who live from their labor income. In accordance with this objective, this law expands the taxation of capital and property, encompassing equitably a broad set of sectors of Portuguese society».

In that explanatory memorandum it is also said that, in addition to the increase in taxation on capital income and capital gains, a rate is created under Stamp Duty applying to urban properties of residential purpose whose tax patrimonial value is equal to or greater than one million euros.

That is, in such explanatory memorandum, it is also not clarified what is understood by urban properties with residential purpose.

In his intervention in the National Assembly, in the presentation and discussion of the said bill, the Secretary of State for Tax Affairs stated the following:

«The Government has chosen social equity as the priority principle of its fiscal policy. This is even more important in times of rigor as a way to ensure just distribution of the fiscal effort.

In the demanding period that the country is going through, during which it is obliged to comply with the program of economic and financial assistance, it becomes even more pressing to assert the principle of equity. It cannot always be the same – employees and pensioners – bearing the tax burdens.

For the tax system to be more just it is decisive to promote the broadening of the tax base requiring increased effort from taxpayers with higher incomes and thus protecting Portuguese families with lower incomes in this way.

For the tax system to promote more equality it is fundamental that the effort of budgetary consolidation be shared by all types of income encompassing with special emphasis capital income and properties of high value. This matter, it is recalled, was extensively addressed in the Constitutional Court ruling.

Finally, for the tax system to be more equitable, it is crucial that all be called upon to contribute according to their contributive capacity, giving the tax administration strengthened powers to control and supervise situations of fraud and tax evasion.

In this sense, the Government presents, today, a set of measures that effectively reinforce a just and equitable distribution of the adjustment effort by a broad and comprehensive set of sectors of Portuguese society.

This proposal has three essential pillars: the creation of special taxation on urban properties of value exceeding 1 million euros; the increase in taxation on capital income and capital gains and the reinforcement of rules to combat fraud and tax evasion.

First, the Government proposes the creation of a special rate on high-value residential urban properties. It is the first time in Portugal that special taxation has been created on properties of high value intended for dwelling. This rate will be 0.5% to 0.8% in 2012, and 1% in 2013, and will apply to houses of value equal to or exceeding 1 million euros. With the creation of this additional rate the fiscal effort required from these owners will be significantly increased in 2012 and 2013»".

1. Next, it is necessary to gather the conclusions that allow, without room for doubt, to decide on the subject under discussion (that is, whether, for purposes of the application of Item No. 28 of the TGIS, in cases where a property with various autonomous fractions, susceptible to independent use, is not constituted in horizontal property, the relevant VPT is determined by the sum of individual VPTs, or, alternatively, is individually considered).

2. In this sense, it should be noted, first, that the present subject matter is, from the outset by virtue of Article 67(2) of the Stamp Duty Code, subject to the rules of the CIMI Code, "to matters not regulated in this code concerning Item 28 of the General Table the CIMI shall apply subsidiarily".

3. As such, and as has been mentioned so many times, in the understanding of this tribunal, the mechanism for determining the relevant VPT for purposes of the aforementioned Item, is that which is established in the CIMI Code.

4. Now, Article 12(3) of the CIMI Code establishes that "each floor or part of property susceptible to independent use is considered separately in the property registration, which also determines the respective tax patrimonial value".

5. The legislator downplaying, in the terms previously mentioned, any prior constitution of horizontal or vertical property.

6. Indeed, for the legislator, what matters is the material truth underlying its existence as an urban property and its use.

7. It should be noted that the ATA itself seems to agree with the criterion set out, which is why the assessments it itself issues are very clear in their essential elements, from which results that the value of incidence corresponds to the VPT of each of the floors and the assessments are individualized.

8. Therefore, if the legal criterion imposes the issuance of individualized assessments for the autonomous parts of properties in vertical property, in the same way as it establishes for properties in horizontal property, it clearly established the criterion, which must be unique and unequivocal, for defining the rule of incidence of the new tax.

9. Thus, there would only be grounds for incidence of Stamp Duty (within the scope of Item No. 28 of the TGIS) if one of the parts, floors or divisions with independent use presented a VPT greater than € 1,000,000.00.

10. 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 Municipal Property Tax (and, as previously mentioned, this is the code applicable to matters not regulated concerning Item No. 28 of the TGIS).

11. In conclusion, the current legal framework does not impose the obligation to constitute horizontal property, and therefore the ATA's action results in arbitrary and illegal discrimination.

12. Indeed, 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 tax legality provided for in Article 103 of the Constitution of the Portuguese Republic, and also the principles of tax justice, equality and proportionality.

13. In the case in question, the property in question is constituted in vertical property and contains 20 fractions with independent use, as was proven above.

14. Given that none of these fractions has tax patrimonial value equal to or greater than €1,000,000.00, as results from the documents filed with the case, it is concluded that the legal assumption of incidence is not met.

V. Request for Reform of the Decision

1. After the arbitral decision on this case has been rendered, the Claimant, pursuant to Article 669(2)(b) of the Code of Civil Procedure, requested the reform of the aforementioned decision, "in order to have it stated therein that the annulment of the assessments for Stamp Duty, in the total amount of the assessment (14,927.38 €) and not only the totality of the first installment, as was contested and requested, in the initial petition" (see request presented by the Claimant).

2. The Claimant justified its request on the ground that the assessment of Stamp Duty, resulting from Item No. 28 of the TGIS is not applicable "and therefore, each of the installments cannot be separately contested, with all due respect, that is proof that, saving better opinion, the learned decision should have contemplated and did not contemplate, the total annulment of the assessment, as appears in the assessment notices identified above (…)".

3. Now this tribunal, under the principles of cooperation and procedural good faith, pursuant to Article 16(a) of the RJAT, and, likewise, with a view to promoting the dispatch of this matter and the reduction of unnecessary cases (since the subject matter is exactly the same, only extending the same to the remaining assessments of the tax year 2013), decided to accept the expansion of the Claimant's request and, accordingly, to alter its decision.

VI. Decision (Following Reform of the Decision)

1. In these terms, this Arbitral Tribunal decides:

A) To uphold the request for arbitral decision and, consequently, to declare illegal and annul the Stamp Duty assessments mentioned above, and likewise, the 2nd and 3rd installments, received subsequently, with reference to 2013, from which resulted tax to be paid in the total amount of € 14,927.38, relating to the taxation of urban properties with VPT equal to or greater than €1,000,000, pursuant to the provision in Item No. 28 of the TGIS;

B) To condemn the Respondent in the costs of the case.

VII. Value of the Case (Following Reform of the Decision)

1. The value of the case is set at € 14,927.38, pursuant to Article 97-A(1)(a), of the Code of Tax Procedure, applicable by virtue of Article 29(1)(a) and (b) of the RJAT and Article 3(2) of the Rules of Costs in Tax Arbitration Proceedings ("RCPAT").

VIII. Costs (Following Reform of the Decision)

1. In accordance with the provision in Article 22(4) of the RJAT, the arbitration fee is set at € 918, pursuant to Table I of the aforementioned Rules, to be borne by the Respondent, given the full upholding of the request.

Let notification be made.

Lisbon, CAAD, 27 March 2015

The Arbitrator

(Sérgio Santos Pereira)