Process: 424/2014-T

Date: February 27, 2015

Tax Type: Selo

Source: Original CAAD Decision

Summary

This arbitral decision (Process 424/2014-T) addressed whether Verba 28.1 of the General Stamp Tax Table (TGIS) applies to building land (terrenos para construção). The claimant owned an urban property valued at €1,158,830.00 and was assessed Stamp Tax totaling €21,245.19 for fiscal years 2011-2013 under Item 28.1 TGIS, which taxes 'properties with residential purpose' valued above €1,000,000 at 1% annually. The claimant challenged these assessments, arguing the property was undeveloped construction land without any buildings, thus not qualifying as property with residential purpose under Item 28.1. The claimant invoked Supreme Administrative Court precedents establishing that Item 28.1 does not encompass construction sites, only built residential properties. Additionally, constitutional grounds were raised, alleging violations of legality, equality, and proportionality principles, citing that taxing vacant land at the same rate as luxury residences creates arbitrary discrimination unrelated to actual contributive capacity. The Tax Authority contested procedurally, claiming some assessments were time-barred under the 90-day arbitration request deadline, and substantively argued that 'properties with residential purpose' includes both built properties and construction sites based on literal interpretation. The Authority maintained no constitutional violation existed, as differential treatment requires material justification. The claimant expanded the request during proceedings to cover all future Stamp Tax assessments until final decision and requested determination of adequate security for suspension of enforcement. This case represents典型 litigation challenging the expansive application of Stamp Tax on high-value properties post-2012 fiscal reforms, with significant implications for owners of undeveloped land classified for urban purposes but lacking residential structures.

Full Decision

ARBITRAL DECISION

  1. REPORT

1.1 A..., married, with NIF ..., resident at Rua ..., in the municipality of Vila Nova de Gaia, hereinafter also referred to as "Claimant", filed a request for arbitral pronouncement, under the terms set out in article 10 of Decree-Law no. 10/2011, of 20 January (Legal Framework for Tax Arbitration, hereinafter "LFTA"), with "Respondent" being the Tax and Customs Authority (hereinafter "TCA").

The Claimant seeks the declaration of illegality of the Stamp Duty (SD) assessments for the tax years 2011, 2012 and 2013 (which are contained in documents 2 to 6 attached to the request for arbitral pronouncement, which refer to the payment slips for this tax).

The Claimant further seeks to condemn the TCA to reimburse the Claimant the amounts unduly paid with respect to those assessments in the amount of €21,245.19, plus interest on arrears.

Additionally, during the meeting referred to in art. 18 of the LFTA, the Claimant requested the expansion of its request to all Stamp Duty assessment acts that the TCA may issue pending this process until the arbitral decision becomes final, further requesting that the Court rule on the amount of adequate security to obtain suspension of the tax enforcement proceedings for any amounts that continue to be assessed in Stamp Duty, having expressed its willingness to provide security through monetary deposit of the amount to be fixed.

1.2 As the basis for its request, the Claimant alleges in summary that:

(a) The Claimant is the owner and legitimate possessor of the urban property with registration article U-..., with property value of €1,158,830.00, assessed for IMI purposes in 2008.

(b) In November 2012, the Claimant was notified of the Stamp Duty assessment act, under the terms and pursuant to article 6 of Law 55-A/2012, to pay the amount of Stamp Duty for the tax year 2011, in the amount of €5,794.15.

(c) In March 2013, the Claimant was notified by the TCA of the Stamp Duty assessment act, under the terms and pursuant to Item 28.1 of the General Stamp Duty Table (GSDT), to pay the amount of Stamp Duty for the tax year 2012, in three equal installments, in the total amount of €11,588.30.

(d) In March 2014, the Claimant was notified by the TCA of the Stamp Duty assessment act, under the terms and pursuant to Item 28.1 of the GSDT, to pay the amount of Stamp Duty for the tax year 2013, in three equal installments, in the total amount of €11,580.30.

(e) The Claimant up to the present date – 07/06/2014 – paid to the TCA the total amount of €21,245.19, which includes the Stamp Duty assessments for the tax year 2011, in the amount of €5,794.15, for 2012, in the amount of €11,588.30 (in 3 installments) and the 1st installment of the assessment for the tax year 2013, in the amount of €3,862.78.

(f) The Claimant became aware of the illegality of the aforementioned Stamp Duty assessments, either due to erroneous interpretation and application of the General Stamp Duty Table (GSDT), in the version given to it successively by Law 55-A/2012 and 83-C/2013, or also because the interpretation by the respondent in the sense of requiring taxation under Stamp Duty based on such legal provision is, in itself, unconstitutional.

(g) The Supreme Administrative Court (SAC) decided in the judgments handed down on 09/04/2010 in proceedings nos. 1870/13 and 48/14, which were cited in a Judgment of the Arbitral Court, that "it was held that the concept of 'property with residential purpose' contained in item 28.1 of the GSDT does not encompass properties for construction of any type".

(h) The Claimant's land is nothing more than an extension of arable soil, devoid of any urban building, making it impossible to consider it as dedicated to any type of residential use.

(i) An interpretation of the provision in question, as advocated by the TCA, in addition to being morally and socially unjust, is unconstitutional by violation of the principles of legality, equality and proportionality, enshrined in the provisions of articles 266 no. 2, 13 and 104 no. 3, all of the Constitution of the Portuguese Republic (CPR).

(j) The Claimant invokes the arbitral decision rendered in process no. 218/2013 of 24/02/2014 which concludes that "the Stamp Duty assessment now under review clearly violates the principle of fiscal equality provided for in article 13 of the CPR, because: (i) it is based on a rule that treats taxpayers in identical situations very differently, with the measure of the difference not being assessed by their actual contributive capacity; (ii) it is based on an arbitrary legal solution devoid of any rational basis (...)".

(k) The Claimant, finally, requests the annulment of all Stamp Duty assessments for the tax years 2011, 2012 and 2013 (which are contained in documents 2 to 6 attached to the request for arbitral pronouncement), for unconstitutionality of the provisions contained in Laws 55-A/2012 and 83-C/2013 and, subsidiarily, for defect of law in its application, taking into account that Item 28.1 of the GSDT did not apply until 31/12/2013 to construction sites.

(l) At the meeting referred to in art. 18 of the LFTA, the Claimant expanded its request to all Stamp Duty assessment acts that the TCA may issue pending this process until the arbitral decision becomes final, further requesting that the Court rule on the amount of adequate security to obtain suspension of the tax enforcement proceedings for any amounts that continue to be assessed in Stamp Duty, having expressed its willingness to provide security through monetary deposit of the amount to be fixed.

1.3 The Tax and Customs Authority contested by alleging that:

1.3.1 By way of exception:

(a) The deadline for filing the request for arbitral pronouncement is provided for in article 10 of the LFTA is 90 days, being computed under the terms of article 279 of the Civil Code (as is also evident from the case law emanating from the arbitral decision rendered in process 83/2012-T), thus starting on the day following the end of the deadline for voluntary payment of the taxes.

(b) In the case at hand, and specifically, with respect to the collection documents whose voluntary payment deadline ended 20.12.2012, 30.04.2013, 31.07.2013 and 30.11.2013, the said deadline ended before the date of filing with CAAD of the request for arbitral pronouncement that gave rise to the present proceedings.

(c) In consequence, it must necessarily be concluded that, with respect to those assessments, the request is manifestly untimely, and consequently the TCA, in that segment of the request, should be absolved.

1.3.2 By way of challenge, cautiously, without waiving, and with respect to the 2013 assessment, whose payment deadline of the collection document ended on 30.04.2014:

(a) The property on which the contested assessment falls has the legal nature of property with residential purpose, so the assessment act that is the subject of this request for arbitral pronouncement should be maintained, as it embodies the correct interpretation of Item 28 of the General Table, added by Law 55-A/2012, of 29/12.

(b) The TCA understands that the concept of "properties with residential purpose", for the purposes of the provision in item 28 of the GSDT comprises both built properties and construction sites, particularly given the literal element of the rule.

(c) With respect to the alleged violation of constitutional principles, the TCA cannot fail to emphasize that the Constitution of the Republic requires that what is necessarily equal be treated equally and what is essentially different be treated as different, not preventing differential treatment, but only arbitrary, unreasonable discriminations, that is, distinctions of treatment that do not have sufficient material justification and basis.

(d) The TCA understands that the provision of item 28 of the GSDT does not constitute a violation of any constitutional command.

(e) The contested assessment embodies a correct interpretation and application of the law to the facts, not suffering from a defect of violation of law, whether of the CPR or the CSD, and should, therefore, be judged to uphold the invoked exception and, furthermore, judge the claim put forward to be without merit and absolve the Respondent Entity from the request.

(f) In its arguments the TCA refers that the arbitral court is incompetent to decide on the request formulated by the Claimant regarding the fixation of the amount of adequate security to obtain suspension of the proceedings.

1.4 The Arbitral Court is properly constituted, is materially competent, the process does not suffer from defects that would invalidate it and the Parties have legal personality and capacity, showed themselves to be legitimate and the Claimant is properly represented by an Attorney, it is therefore necessary to appreciate and decide.

  1. FACTUAL MATTER

2.1. Facts considered proven

(a) The Claimant is the owner of the urban property with registration article U-..., which is a construction site, with property value of €1,158,830.00, assessed for IMI purposes in 2008.

(b) The Claimant was notified of the Stamp Duty assessment, under the terms and pursuant to article 6 of Law 55-A/2012, to pay the Stamp Duty assessment for the tax year 2011, in the amount of €5,794.15, with payment deadline of 20/12/2012, document identification 2012 ....

(c) The Claimant was notified of the Stamp Duty assessment, under the terms and pursuant to Item 28.1 of the GSDT, to pay the 1st installment of the Stamp Duty assessment for the tax year 2012, in the amount of €3,862.78, with payment deadline until the end of April 2013, document identification 2013 ....

(d) The Claimant was notified of the Stamp Duty assessment, under the terms and pursuant to Item 28.1 of the GSDT, to pay the 2nd installment of the Stamp Duty assessment for the tax year 2012, in the amount of €3,862.76, with payment deadline until the end of July 2013, document identification 2013 ....

(e) The Claimant was notified of the Stamp Duty assessment, under the terms and pursuant to Item 28.1 of the GSDT, to pay the 3rd installment of the Stamp Duty assessment for the tax year 2012, in the amount of €3,862.76, with payment deadline until the end of November 2013, document identification 2013 ....

(f) The Claimant was notified of the Stamp Duty assessment, under the terms and pursuant to Item 28.1 of the GSDT, to pay the 1st installment of the Stamp Duty assessment for the tax year 2013, in the amount of €3,862.78, with payment deadline until the end of April 2014, document identification 2014 ..., having made the payment on 21 April 2014.

2.2 Facts not considered proven and respective reasoning

The payment of the Stamp Duty assessments with document identification no. 2012 ..., relating to the Stamp Duty assessment with reference to the tax year 2011, no. 2013 ..., relating to the 1st installment of the Stamp Duty assessment, with reference to the tax year 2012, no. 2013 ..., relating to the 2nd installment of the Stamp Duty assessment, with reference to the tax year 2012 and no. 2013 ..., relating to the 3rd installment of the Stamp Duty assessment, with reference to the tax year 2012, is not considered proven, as the documents attached to the proceedings evidencing these payments are illegible.

2.3 Reasoning of the proven factual matter

The proven facts are based on the documents indicated for each point, whose authenticity and correspondence were not questioned.

  1. LEGAL MATTER

3.1 On the Untimeliness of the Request

A preliminary issue to be decided is the exception raised by the TCA regarding the untimeliness of the request for constitution and arbitral pronouncement, with respect to the Stamp Duty assessments for the tax years 2011 and 2012, embodied in the collection documents no. 2012 ..., relating to the Stamp Duty assessment with reference to the tax year 2011, no. 2013 ..., relating to the 1st installment of the Stamp Duty assessment, with reference to the tax year 2012, no. 2013 ..., relating to the 2nd installment of the Stamp Duty assessment, with reference to the tax year 2012 and no. 2013 ..., relating to the 3rd installment of the Stamp Duty assessment, with reference to the tax year 2012 (which are contained in documents 2 to 5 attached to the request for arbitral pronouncement).

Pursuant to article 10, no. 1, paragraph a) of the LFTA, the request for constitution of Arbitral Court is filed within 90 days from the facts provided for in nos. 1 and 2 of article 102 of the Tax Procedure and Process Code ("TPPC").

In the situation sub judice, therefore, paragraph a) of no. 1 of article 102 of the TPPC is applicable by reference, which establishes as the determining temporal criterion for counting the aforementioned 90-day period the "end of the deadline for voluntary payment of the tax installments legally notified to the taxpayer".

The Claimant was notified of the Stamp Duty assessment, under the terms and pursuant to article 6 of Law 55-A/2012, to pay the amount of Stamp Duty for the tax year 2011, in the amount of €5,794.15, with payment deadline of 20/12/2012.

The Claimant was notified of the Stamp Duty assessment, under the terms and pursuant to Item 28.1 of the GSDT, to pay the 1st installment of the amount of Stamp Duty for the tax year 2012, in the amount of €3,862.78, with payment deadline until the end of April 2013, with the payment deadline for the 2nd installment until the end of July 2013 and the 3rd installment until the end of November 2013.

The request for constitution of the arbitral court and arbitral pronouncement was only filed on 12/06/2014, that is, after more than 90 days from the end of the deadline for voluntary payment of the mentioned Stamp Duty assessments for the tax years 2011 and 2012.

Considering the aforementioned regulation, the exception of untimeliness of the request for arbitral pronouncement is upheld, resulting in the absolution of the Respondent with respect to the Stamp Duty assessments for the tax years 2011 and 2012, identified above (which are contained in documents 2 to 5 attached to the request for arbitral pronouncement).

Given the merits of this exception, it becomes irrelevant to determine whether or not the Stamp Duty payment slips for the tax years 2011 and 2012 were actually paid, whose payment evidence documents attached to the proceedings were illegible.

3.2 Issues Raised by the Claimant at the Meeting of art. 18 LFTA

3.2.1 Expansion of the Request

At the meeting referred to in art. 18 of the LFTA, the Claimant requested the expansion of the initial request for arbitral pronouncement to all Stamp Duty assessment acts that the TCA may issue pending this process and until the arbitral decision becomes final.

The Claimant does not indicate with precision which Stamp Duty assessment acts it is referring to, nor was the Court able to understand the scope and intention of the present request, rejecting its consideration, therefore.

It should be noted, however, that, if the Claimant's intention had been to include the review of the legality of the payment slips for the 2nd and 3rd installments of the Stamp Duty assessment for the tax year 2013, with reference to the urban property with registration article U-..., with property value of €1,158,830.00, object of the present process, it is hereby noted that such a claim is not prejudiced.

In fact, the Claimant is clear in requesting the declaration of illegality of the Stamp Duty assessment for the tax year 2013, notwithstanding only attaching to the proceedings a copy of the assessment slip no. 2014 ..., referring to the payment slip for the 1st installment of Stamp Duty for the tax year in question (the only one notified to the Claimant at the date of submission of the claim).

However, there is no doubt to this Court that the Claimant is requesting arbitral pronouncement on the illegality of the Stamp Duty assessment referring to the tax year 2013.

Within the scope of the process at hand, the legality of the administrative-tax act of Stamp Duty assessment for the tax year 2013 is discussed, with the installments assessed to the Claimant, by virtue of the assessment slips, being mere consequences of the tax act that is the subject of the request for arbitral pronouncement.

Moreover, under article 133, no. 2, paragraph i) of the Administrative Code, acts are null "that are consequent on previously annulled or revoked administrative acts (...)".

Therefore, if the illegality of the Stamp Duty assessment act in the amount of €11,588.30, with reference to the tax year 2012, by application of Item 28.1 of the GSDT, with reference to the urban property with registration article U-..., with property value of €1,158,830.00, is declared, consequently the payment slips referring to the 2nd and 3rd installment must be considered illegal.

3.2.2 Fixation of the Amount of Security

At the meeting referred to in art. 18 of the LFTA, the Claimant further requested the "fixation of the amount of adequate security to obtain suspension of the tax enforcement proceedings of any amounts that continue to be assessed in Stamp Duty, expressing from now on its willingness to provide security through monetary deposit of the amount to be fixed".

This is a matter of which no notice is taken, as it exceeds the scope of competence of this Court, as defined in art. 2 of the LFTA, approved by Decree-Law no. 10/2011, of 20 January, as amended.

3.3 Question of the Classification of Construction Sites within the Scope of Item 28.1 of the GSDT

The disputed issue is reduced to the classification, or not, of construction sites within the concept of property with residential purpose, as stated in Item no. 28.1 of the GSDT.

Law no. 55-A/2012, which entered into force on 30/10/2012, did not proceed to qualify the concepts contained in the aforementioned item no. 28, namely, the concept of "property with residential purpose".

This is an innovative concept in tax legislation that requires concretization in the Stamp Duty Code (SDC).

However, observing what is provided for in art. 67, no. 2, of the Stamp Duty Code (SDC), also added by the aforementioned Law no. 55-A/2012, it is verified that "to matters not regulated in this code relating to item 28 of the General Table, the IMI Code shall apply subsidiarily".

Thus, given the doubt as to the scope of the aforementioned concept, it is justified to observe what is stated in the IMI Code.

From a careful reading of the provisions of the IMI Code (cf. articles 2, 4 and 6), there is no glimpse, in the classification of "properties", of the concept of "property with residential purpose".

In the absence of exact terminological correspondence of this concept, therefore, no alternative remains but to consider interpretative hypotheses, in light of the provisions of art. 9, no. 1, of the Civil Code.

On this matter – concept of property with residential purpose - there are various Decisions handed down by CAAD and by the Supreme Administrative Court (SAC), whose understanding I follow.

By way of example, for all, reference is made to the arbitral decision no. 53/2013-T, of 2/10/2013, which I fully endorse, which referring to the concept of property with residential purpose as referring to residential properties states that "The concept closest to the literal content of this expression used is manifestly that of 'residential properties', defined in no. 2 of article 6 of the IMI Code as encompassing 'buildings or constructions' licensed for residential purposes or, in the absence of a license, which have as their normal purpose residential purposes.

If it is to be understood that the expression 'property with residential purpose' coincides with that of 'residential properties', it is manifest that the assessments will suffer from error regarding the factual and legal presuppositions, since all properties with respect to which Stamp Duty has been assessed under the aforementioned item no. 28.1 are construction sites, without any building or construction, required to fulfill that concept of 'residential properties'.

For this reason, if one adopts the interpretation that 'property with residential purpose' means 'residential property', the assessments whose declaration of illegality is requested will be illegal, because there is no building or construction on any of the sites".

However, one must also analyze the concept of property with residential purpose as a concept distinct from residential properties, but what concept would this be?

Also with reference to this matter, for all, we resort to the arbitral decision no. 231/2013-T, of 03/02/2014, which I fully endorse and which states that there being no coherent sense in item no. 28.1, only the interpretation route remains, framed by art. 9, no. 3, of the Civ. Code.

And it continues by noting that "in light of those meanings of the words 'purpose' and 'to apply', which are 'to give destiny' or 'to apply', the formula used in that item no. 28.1 of the GSDT manifestly encompasses properties that have already been given a destination for residence, properties that are already applied to residential purposes, so that it is important to inquire whether it will also encompass properties that, although not yet applied to residential purposes, are intended for these, namely in a subdivision permit. To do so, it will be necessary to clarify when a property can be understood to be dedicated to a residential purpose, namely if it is when such purpose is fixed for it in a subdivision permit or licensing act or similar, or only when the effective attribution of such purpose is concretized. [...]. The text of the law, by adopting the formula 'property with residential purpose', instead of 'urban properties with residential purpose', which appears in the [...] 'Statement of Reasons', points strongly towards the sense that it is required that residential purpose already be concretized, because only then will the property be with such purpose."

And it continues by noting that "one is faced with a reality even more distant in relation to residential purpose, which is that there is not even any building or construction and, therefore, it cannot be considered that there is a purpose that presupposes its existence. On the other hand, as the Claimant rightly points out [and the current claimant, in the same exact terms], the legislative intention not to extend the scope of coverage to construction sites was expressly stated by the Government when presenting to the Plenary of the Parliament Proposal for Law 96-XII, saying, through the voice of the Secretary of State for Tax Affairs: 'First, the Government proposes the creation of a special tax to tax residential urban properties of higher value. It is the first time that in Portugal a special taxation is created on properties of high value intended for residence. This rate will be 0.5% to 0.8%, in 2012, and 1%, in 2013, and will affect houses of value equal to or greater than 1 million euros. With the creation of this additional tax, the fiscal effort required of these owners will be significantly increased in 2012 and 2013'. The express reference to 'houses' as the target of the incidence of the new tax leaves no room for doubt about the legislative intention. On the other hand, no reference to 'construction sites' is found in the discussion of the aforementioned Proposal for Law".

So that there is no doubt on this matter, another reference to the case law of CAAD on the matter disputed here, making reference, this time, to Arbitral Decision no. 49/2013-T, of 18/9/2013, which, equally, I fully endorse by noting that: "A construction site - whatever the type and purpose of the building that will be, or may be, erected on it - does not satisfy, by itself, any condition for it to be licensed as such or for it to be possible to define residence as its normal purpose. Referring, therefore, the provision establishing the incidence of stamp duty to urban properties with 'residential purpose', without any specific concept being established for this purpose, cannot it be extracted from the same that it contains a future potentiality, inherent in a distinct property that may possibly be built on the land."

Finally, the case law of the Supreme Administrative Court (SAC) is highlighted, fully adhering to the above-mentioned thesis, with reference by way of example to the Judgments handed down in the context of proceedings no. 1870/13, of 9 April 2014, no. 48/14 also of 9 April 2014, no. 272/14 of 23 April 2014, no. 317/2014 of 14 May 2014 and no. 467/14 of 2 July 2014.

For this reason, the Stamp Duty assessment for the tax year 2013, in the amount of €11,588.30, with reference to the application of Item 28.1 of the GSDT to the urban property with registration article U-..., with property value of €1,158,830.00, whose declaration of illegality is requested, suffers from a defect of violation of that item no. 28.1, for error regarding the legal presuppositions, which justifies the declaration of its illegality and annulment (article 135 of the Administrative Code).

3.4 Issues Whose Review is Prejudiced

Resulting from the foregoing the declaration of illegality of the Stamp Duty assessment for the tax year 2013, in the amount of €11,588.30, for a defect that prevents the renewal of the acts, the review of the remaining defects imputed to them by the Claimants becomes prejudiced (cf. art. 124 of the TPPC, subsidiarily applicable by force of the provision in article 29, no. 1, of the LFTA).

From the foregoing, no notice is taken of the remaining defects imputed by the Claimant to the acts whose declaration of illegality was requested.

3.5 Reimbursement of Amounts Paid and Interest on Arrears

The Claimant requests the reimbursement of the amount paid relating to the 1st installment of Stamp Duty due with reference to the tax year 2013, in the total of €3,862.78, plus interest on arrears.

It is manifest that, following the illegality of the identified assessment act, reimbursement of the paid tax - €3,862.78 - is due, by force of the aforementioned articles 24, no. 1, paragraph b), of the LFTA and 100 of the General Tax Code, as this is essential to "restore the situation that would exist if the tax act that is the subject of the arbitral decision had not been carried out".

Moratory interest in favor of the taxpayer and indemnifying interest have the same purpose, however indemnifying interest is intended to compensate the taxpayer for the loss caused by the unduly paid tax installment and moratory interest aims to repair losses presumptively suffered (by the taxpayer), derived from the unavailability of the amount not paid on time (See Judgment of the Supreme Administrative Court, process no. 01008/12, of 22 May 2013).

Now, because what is at issue is not the timely payment of any amount, no moratory interest is due and, as indemnifying interest has not been requested by the Claimant, this Court cannot review and decide on this matter.

  1. DECISION

In light of the foregoing, the Arbitral Court decides:

(a) To uphold the exception raised by the Respondent, and in consequence, the request for annulment of the Stamp Duty assessments for the tax years 2011 and 2012, in the total amount of €17,382.41 is dismissed.

(b) To uphold the request for declaration of illegality of the Stamp Duty assessment for the tax year 2013, in the amount of €11,588.30, with reference to the application of Item 28.1 of the GSDT to the urban property with registration article U-..., with property value of €1,158,830.00.

(c) To dismiss the request for interest on arrears.

(d) To condemn the Tax and Customs Authority to reimburse the amount of €3,862.78 to the Claimant.

  1. VALUE OF THE PROCESS

Pursuant to the provision of art. 315, no. 2, of the Civil Procedure Code and 97-A, no. 1, paragraph a), of the TPPC and 3, no. 2, of the Regulation of Costs in Tax Arbitration Proceedings, the value of the process is fixed at €21,245.19.

  1. COSTS

The amount of the arbitration fee is fixed at €1,224.00, pursuant to Table I of the Regulation of Costs of Tax Arbitration Proceedings, to be paid by the Respondent and by the Claimant, in the proportion of their respective defeats (81.82% for the Claimant and 18.18% for the Respondent), since the request was only partially upheld, pursuant to articles 12, no. 2, and 22, no. 4, both of the LFTA, and article 4, no. 4, of the aforementioned Regulation.

Notify accordingly.

Lisbon, Administrative Arbitration Center, 27 February 2015

The Arbitrator,

André Gonçalves

Frequently Asked Questions

Automatically Created

Does Verba 28.1 of the General Stamp Tax Table apply to building land (terrenos para construção)?
According to the Supreme Administrative Court precedents cited in this case (decisions from proceedings 1870/13 and 48/14), Verba 28.1 of the General Stamp Tax Table does not apply to terrenos para construção (construction sites). The Court established that the concept of 'property with residential purpose' contained in Item 28.1 does not encompass properties designated for construction of any type. This means vacant building land, even if classified as urban property and intended for future residential development, falls outside the scope of Item 28.1 taxation, which targets actual residential properties valued above €1,000,000.
Can property owners challenge Stamp Tax (Imposto do Selo) assessments on high-value construction plots through tax arbitration?
Yes, property owners can challenge Stamp Tax assessments on high-value construction plots through tax arbitration under the Legal Framework for Tax Arbitration (RJAT - Decree-Law 10/2011). However, the challenge must be filed within 90 days from the end of the voluntary payment deadline for each assessment, as established in Article 10 of RJAT. In this case, the Tax Authority raised time-bar exceptions for assessments where the 90-day period had expired before the arbitration request was filed. Taxpayers can also request expansion of the arbitration to cover future assessments issued during the proceedings and request determination of adequate security to suspend tax enforcement.
What were the grounds for contesting Stamp Tax assessments on building land valued above €1,000,000?
The grounds for contesting Stamp Tax assessments on building land valued above €1,000,000 included: (1) Incorrect interpretation and application of Item 28.1 TGIS, arguing it applies only to built residential properties, not vacant construction sites; (2) Constitutional violations including breach of legality principle (Article 266(2) CPR), equality principle (Article 13 CPR), and proportionality principle (Article 104(3) CPR); (3) Supreme Administrative Court precedent establishing construction sites are excluded from Item 28.1; (4) Violation of fiscal equality by treating taxpayers in identical situations differently without relation to actual contributive capacity; and (5) The arbitrary and irrational nature of taxing undeveloped land at the same rate as luxury residential properties.
Is a taxpayer entitled to a refund of Stamp Tax amounts unduly paid on construction land under Verba 28.1 TGIS?
Yes, taxpayers are entitled to a refund of Stamp Tax amounts unduly paid on construction land under Verba 28.1 TGIS when assessments are declared illegal. In this case, the claimant requested reimbursement of €21,245.19 in unduly paid Stamp Tax for fiscal years 2011-2013, plus interest on arrears. The legal basis for reimbursement is that when an assessment is annulled due to incorrect application of tax law or unconstitutionality, the taxpayer has the right to recover amounts paid without legal basis, with compensatory interest from the date of payment until reimbursement. The arbitral court has jurisdiction to order such reimbursement as part of the arbitral decision.
How did CAAD rule on the application of Stamp Tax to terrenos para construção for fiscal years 2011, 2012, and 2013?
While the full decision text is not provided, CAAD (Centro de Arbitragem Administrativa) applied established Supreme Administrative Court jurisprudence holding that Item 28.1 of the General Stamp Tax Table does not apply to terrenos para construção. The arbitral court analyzed: (1) timeliness of the arbitration request for each fiscal year's assessment; (2) whether the property constituted 'property with residential purpose' or construction land; (3) constitutional challenges regarding equality, legality, and proportionality; and (4) Supreme Administrative Court precedents excluding construction sites from Item 28.1. The court likely ruled in favor of the taxpayer for timely challenged assessments, following the principle that undeveloped construction land, despite urban classification and high valuation, does not qualify as residential property subject to the 1% annual Stamp Tax on properties exceeding €1,000,000.