Process: 428/2016-T

Date: January 8, 2017

Tax Type: Selo

Source: Original CAAD Decision

Summary

This CAAD arbitration decision (Process 428/2016-T) addresses the critical issue of Stamp Tax (Imposto do Selo) assessment under item 28.1 of the General Stamp Duty Table (TGIS) for vertical property buildings containing multiple independent residential units. The dispute centered on whether the €1,000,000 threshold triggering the 1% Stamp Tax should apply to (i) each independent unit individually or (ii) the aggregate taxable property value of all units combined. The applicant, representing two undivided estates co-owning a Lisbon property with 19 independent residential units totaling €1,762,846.56 in taxable value, argued that each unit should be assessed separately—similar to Municipal Property Tax (IMI) methodology. Since no individual unit exceeded €1,000,000, they contended no Stamp Tax liability arose. The Tax Authority countered that vertical property units lack legal autonomy unlike horizontal ownership (condominium) arrangements, requiring assessment based on the aggregate property value. The Authority assessed €17,628.47 in Stamp Tax for 2015. The legal analysis required interpretation of the CIMI (Municipal Property Tax Code) provisions, which apply subsidiarily to Stamp Tax matters per item 28 TGIS. This decision has significant implications for property taxation in Portugal, particularly affecting multi-unit buildings not structured as horizontal ownership condominiums, and establishes important precedent for distinguishing between individual unit valuation and aggregate building assessment for Stamp Tax purposes.

Full Decision

ARBITRAL DECISION

I. REPORT

A..., Tax Identification Number..., resident at Avenue..., no.... – floor..., in Lisbon, in the capacity of head of household of the undivided estates of B..., Tax Identification Number... and of C..., Tax Identification Number... (hereinafter referred to as Applicants), filed, on 24-07-2016, in the capacity of legal representative of the identified undivided estates, a request for constitution of a sole arbitrator tribunal, pursuant to Articles 2 and 10 of Decree-Law no. 10/2011, of 20 January (Legal Framework for Tax Arbitration, hereinafter referred to as RJAT), in conjunction with paragraph a) of Article 99 of the Tax Procedure Code, whereby the Tax and Customs Authority is the Respondent (hereinafter referred to as Respondent).

The Applicant requests the declaration of illegality of the Stamp Duty assessment acts of item 28.1 of the General Stamp Duty Table (hereinafter, GSDT), for the year 2015, concerning the urban property located at Avenue..., no...., in Lisbon, registered in the urban property registry of the parish of..., municipality of Lisbon, under article.... The Applicant further requests the condemnation of the Respondent to reimburse the unlawfully paid tax, plus compensatory interest.

The request for constitution of the sole arbitrator tribunal was accepted by the President of CAAD on 25-07-2016 and notified to the Tax and Customs Authority on that same date.

Pursuant to the provisions of paragraph a) of Article 6, no. 2 and paragraph b) of Article 11, no. 1 of the RJAT, the Ethics Council appointed the herein signatory as arbitrator of the sole arbitrator tribunal, who communicated acceptance of the appointment within the applicable period.

On 30-09-2016, the parties were duly notified of such appointment and did not manifest the intent to refuse the appointment of the arbitrator, in accordance with the combined provisions of Article 11, no. 1, paragraphs a) and b) of the RJAT and Articles 6 and 7 of the Code of Ethics.

In conformity with the provisions of paragraph c) of Article 11, no. 1 of the RJAT, the sole arbitrator tribunal was constituted on 18-10-2016.

Notified to respond, the Respondent submitted the appropriate response in which it concludes by the total lack of merit of the request submitted by the Applicant.

By order of 17-11-2016, the meeting provided for in Article 18 of the RJAT was dispensed with, and the parties were granted a period to submit successive written arguments.

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The Applicant alleges, summarily, that there was error of fact and of law in the assessment of the contested tax by taking as the assumption of incidence the aggregate total value of the parts of independent use assigned to residential purposes that compose the identified property and not the individual value of each one of these same parts. Being concerned with properties in vertical ownership composed of units susceptible to independent use, the taxable property value relevant for the purposes of Stamp Duty assessment shall be that of each one of them individually considered and not their sum, similarly to what occurs with the Municipal Property Tax. It therefore requests the declaration of illegality of the assessments made by the Respondent in 2016, with reference to the year 2015, concerning the identified property.

In response, the Respondent maintains, summarily, that in properties not subject to horizontal ownership, the units susceptible to independent use have no autonomy; the individualization for the purposes of property registry registration and assessment does not conflict with its legal-tax nature, with the law determining that the value of the property shall necessarily correspond to the sum of the value of the various independent units. The units of independent use cannot be considered as "properties" in accordance with the legal definition and therefore cannot be relevant for the purposes of incidence of item 28.1 of the GSDT. For the purposes of this provision, one must therefore take into account the taxable property value of the property in vertical ownership that shall correspond, in accordance with the law, to the sum of the values of each unit susceptible to independent use. It concludes, thus, by the legality of the identified assessments which, for that very reason, should be maintained.

II. INTERLOCUTORY JUDGMENT

The Arbitral Tribunal was regularly constituted and is competent.

The parties have legal standing and capacity and are entitled to bring the action (Articles 4 and 10, no. 2, of the same decree and Article 1 of Order no. 112-A/2011, of 22 March).

The proceeding does not suffer from procedural defects.

III. MATTER OF FACT

A. Proven Facts

The following facts are considered proven:

  1. The urban property located at Avenue..., no...., in Lisbon, registered in the urban property registry of the parish of..., municipality of Lisbon, under article..., has as owners the undivided estate of B..., in the proportion of 3/4 and the undivided estate of C..., in the proportion of 1/4.

  2. The identified property has a taxable property value of €1,762,846.56.

  3. The identified property is composed of 19 units susceptible to independent use intended for residential purposes.

  4. None of the units susceptible to independent use has a taxable property value exceeding €1,000,000.

  5. In April 2016, the Applicant was notified of the Stamp Duty assessments of item 28.1 of the GSDT, for the year 2015, concerning the identified property, in the name of the undivided estate of B..., in the total amount of €13,221.35.

  6. In April 2016, the Applicant was notified of the Stamp Duty assessments of item 28.1 of the GSDT, for the year 2015, concerning the identified property, in the name of the undivided estate of C..., in the total amount of €4,407.12.

  7. The total amount of the Stamp Duty of item 28.1 of the GSDT assessed with reference to the year 2015 thus amounts to €17,628.47.

  8. On 24-07-2016, the Applicant filed the present request for arbitral pronouncement.

B. Unproven Facts

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

C. Grounds for the Matter of Fact

The matter of fact given as proven is based on the documentary evidence invoked and not contested.

IV. MATTER OF LAW

A. On the Illegality of the Stamp Duty Assessments

To determine the legality of the contested tax assessments, it is necessary to establish what the tax base of this tax is when concerned with a property in vertical ownership whose units susceptible to independent use are intended for residential purposes.

In concrete terms, it is necessary to decide whether the taxable property value relevant as the criterion of tax incidence shall correspond to (i) the sum of the value of each of the units susceptible to independent use, as the Respondent claims, or (ii) the individual taxable property value of each one of these units susceptible to independent use, considered autonomously and by itself, as the Applicant argues.

The doubt results from the interpretation of items 28 and 28.1 of the GSDT, whose wording in force on 31-12-2015 (date of occurrence of the tax event) was as follows:

"28. Ownership, usufruct or surface right of urban properties whose taxable property value contained in the registry, in accordance with the Municipal Property Tax Code (CIMI), equals or exceeds (euros) 1,000,000 - on the taxable property value used for the purpose of Municipal Property Tax:

28.1. For a residential property or for land intended for construction whose building, authorized or foreseen, is for residential purposes, in accordance with the provisions of the Municipal Property Tax Code - 1%".

The legislator did not establish the legal concept of "residential property", having expressly provided that all matters not regulated in the Stamp Duty Code (CIS) with reference to said item 28 of the GSDT would be subsidiarily applicable the provisions of the Municipal Property Tax Code (see no. 2 of Article 67 of the CIS). It is therefore necessary to search in the CIMI such a concept in order to be able to conclude on the tax base of item 28.1 of the GSDT.

The legal definition of "property" is contained in Article 2 of the CIMI, clarifying in no. 4 that "For the purposes of this tax, each autonomous fraction, under the horizontal ownership regime, is deemed to constitute a property".

From the reading of this article, and especially of the mentioned no. 4, we would be led to conclude that, for the purposes of Municipal Property Tax, an autonomous fraction of a property in horizontal ownership assumes the nature of "property" whereas a unit susceptible to independent use of a property in vertical or full ownership shall not assume such nature, having no legal-tax autonomy.

As a result of this difference in framework, it would be defensible that, for the purposes of item 28.1 of the GSDT, each autonomous fraction should be considered as a "property" and therefore there would only be Stamp Duty if, being intended for residential purposes, it had a taxable property value exceeding that indicated. In the case of a property in full ownership, the taxable property value to be considered for the purposes of determining incidence would result from the sum of the taxable property values of each independent unit intended for residential purposes – see paragraph b) of no. 2 of Article 7 of the CIMI. This is the position of the Respondent.

However, it turns out that in a comparative analysis of the Municipal Property Tax regime applicable to autonomous fractions of a property in horizontal ownership and to units susceptible to independent use of a property in vertical ownership, one concludes that there is no difference whatsoever. Indeed, notwithstanding the legal-formal nature being distinct, the tax regime of these figures is exactly the same. Materially, the law establishes no difference, as we shall see:

(i) properties in horizontal and full ownership are subject to the same rules of registration in the property registry, expressly providing in no. 3 of Article 12 of the CIMI that parts susceptible to independent use are considered separately in the property registry registration which shall discriminate the respective taxable property value;

(ii) properties in horizontal and full ownership are subject to the same rules and procedures of assessment, with no. b) of no. 2 of Article 7 of the CIMI expressly determining that, should the parts that compose the property in full ownership be economically independent, each part is assessed by application of the corresponding rules.

This identity of regime goes even further, having relevant repercussions at the level of tax assessment itself inasmuch as the legislator determined that the assessment of Municipal Property Tax should be made with discrimination of properties, their parts susceptible to independent use and respective taxable property value – see no. 1 of Article 119 of the CIMI. It is therefore the legislator determining that tax assessment should be made individually, considering each economic reality (units susceptible to independent use) and not each legal reality (property or autonomous fraction of a property in horizontal ownership).

From this it follows that, for the purposes of Municipal Property Tax, the autonomous fractions of a property in horizontal ownership and the parts susceptible to independent use that compose a property in full ownership have exactly the same tax treatment. But more relevant than that: for the purposes of Municipal Property Tax, the tax base is determined in exactly the same manner, corresponding to the own and individual value of each autonomous fraction or independent part, fixed in assessment and contained in the property registry; assessment is made in an individualized and autonomous manner in function of each of the independent parts of the property, whether or not autonomous fractions.

In the case of properties in full ownership, Municipal Property Tax is not assessed in accordance with the total taxable property value of the property, but in accordance with the individual taxable property value of each autonomous unit that composes it; the total amount of tax due corresponds to the sum of the individual tax amounts for each autonomous unit, determined in accordance with their respective individual taxable property values. Everything proceeds in exactly the same manner as that applied to the autonomous fractions of a property in horizontal ownership.

It is, moreover, this autonomy among the various independent units of a property in vertical ownership that permits, for example, the individualized application of increased or reduced tax rates, in accordance with the provisions of nos. 3 and 7 of Article 112 or of Article 112-A of the CIMI.

Furthermore, pursuant to item 28.1 of the GSDT, only "residential properties" are subject to taxation. Now, in properties composed of independent units with different purposes and uses, the determination of the allocation can only be effected in accordance with each one of these units and not in accordance with the property as a whole. This very result follows from paragraph b) of no. 2 of Article 7 of the CIMI. On this aspect, it is important to note J. Silvério Mateus and L. Corvelo de Freitas, Taxes on Immovable Property – Stamp Duty, Annotated and Commented, Engifisco, 1st Edition, 2005, page 121, note 5, who understand that "The rules provided for in this no. 2, relating to the determination of the taxable property value of urban properties with more than one allocation, have to do with the diversity of some of the assessment elements provided for in Articles 38 and following of the CIMI, namely (….). On the other hand, this provision is in accordance with the principle of individualization of the independent parts of an urban property, even if not constituted in horizontal ownership, provided for in no. 3 of Article 12". (emphasis ours)

In a situation such as this, how would one conclude that the property would have "residential allocation", with parts thereof allocated to other purposes?

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

Thus, one cannot defend that "property with residential allocation" corresponds to the strict and specific concept of Article 2 of the CIMI (comprising only, for the purpose we intend, buildings and autonomous fractions of properties in horizontal ownership) inasmuch as, as demonstrated, it would have no practical concrete applicability (as mentioned, a property in vertical ownership may have more than one allocation or purpose). In our view, by using this expression the legislator intended to refer to the property as a reality susceptible to allocation, therefore to the independent parts that compose each property, whether or not they have the legal nature of autonomous fractions.

It is concluded, therefore, that, for the purposes of application of item 28.1 of the GSDT, the units susceptible to independent use that integrate a property in full ownership regime and autonomous fractions are, in substance, identical realities and that, therefore, they are subject to the same regime of incidence.

In that measure, the final part of item 28 of the GSDT, in determining that the tax shall incide "(…) on the taxable property value used for the purpose of Municipal Property Tax:" expressly refers to the individual value of each independent part that composes the property in full ownership and not to the total value of the property (corresponding to the sum of the individual taxable property values), since it is this individual value that is considered in Municipal Property Tax, for all purposes.

Furthermore, pursuant to the aforementioned no. 7 of Article 23 of the CIS, the assessment of tax due pursuant to item 28 of the GSDT is assessed annually, in accordance with the rules provided for in the CIMI. And it was precisely these rules that led the Respondent to assess the tax individually for each independent unit and considering its respective individual taxable property value. Hence, various assessment notices were issued.

Should the Respondent's understanding apply here, there would be only one Stamp Duty assessment notice per property and not as many assessment notices as units susceptible to independent use.

Finally, it should be noted that this matter has been the subject of various decisions of CAAD, all in this same sense, transcribing here, by way of example, the arbitral decision rendered in case 50/2013-T, in the part to which we adhere:

"Now, being thus, considering that the registration in the property registry of immovable property in vertical ownership, composed of different parts, floors or divisions with independent use, pursuant to the CIMI, obeys the same registration rules of immovable property constituted in horizontal ownership, with their respective Municipal Property Tax, as well as the new Stamp Duty, assessed individually in relation to each one of the parts, there is no doubt whatsoever that the legal criterion to define the incidence of the new tax must be the same.

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

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

Thus, there would only be incidence of the new Stamp Duty if some of the parts, floors or divisions with independent use presented a Taxable Property Value exceeding €1,000,000.00.

The Tax Authority cannot, therefore, 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 pursuant to the CIMI, and this is the code applicable to matters not regulated regarding item 28 of the GSDT.

The criterion sought by the Tax Authority, of considering the value of the sum of the Taxable Property Values attributed to the parts, floors or divisions with independent use, with the argument that the property is not constituted in the horizontal ownership regime, finds no legal support and is contrary to the criterion that applies pursuant to the CIMI and, by reference, pursuant to the Stamp Duty Code.

To which is added the fact that the law itself expressly establishes, in the final part of item 28 of the GSDT, that the Stamp Duty to incide on urban properties of value equal to or exceeding €1,000,000.00 – 'on the taxable property value used for the purpose of Municipal Property Tax.'"

In the same sense, refer to the decision rendered in case 132/2013-T, of which we transcribe the part to which we subscribe entirely:

"Indeed, it makes no sense to distinguish in law that which the law itself does not distinguish (ubi lex non distinguit nec nos distinguere debemus). Moreover, to distinguish, in this context, between properties constituted in horizontal and full ownership would be an "innovation" without an associated legal support, especially because, as has been stated here, nothing denotes, neither in item no. 28, nor in the provisions of the CIMI, a justification for that particular differentiation. Note, exemplarily, what Article 12, no. 3, of the CIMI states: "each floor or part of property susceptible to independent use is considered separately in the property registry registration, which also discriminates the respective taxable property value."

The uniform criterion that is imposed is, thus, that which determines that the incidence of the provision in question only takes place when some of the parts, floors or divisions with independent use of a property in horizontal or full ownership with residential allocation, possesses a Taxable Property Value exceeding €1,000,000.00. To set as the reference value for the incidence of the new tax the global Taxable Property Value of the property in question, as the herein respondent claimed, finds no basis in the applicable legislation, which is the CIMI, given the reference made by the cited Article 67, no. 2, of the CIS.

Finally, as already recalled in various Arbitral Decisions (see Arbitral Decision no. 48/2013-T and Arbitral Decision no. 50/2013-T), one does not perceive, in the works relating to the discussion of bill no. 96/XII in the Parliament, the invocation of an interpretive rationale different from that presented here. Indeed, such measure, called the "special tax on urban residential properties of higher value", was justified with the need to comply with the principles of social equity and fiscal justice, burdening more significantly the holders of properties of elevated value intended for residential purposes, and, in that measure, making the new 'special tax' incide on 'houses valued equal to or exceeding 1 million euros.'

Now, if such logic appears to make sense when applied to 'residential purposes' - whether it be 'house', 'autonomous fraction' or 'part of property with independent use' / 'autonomous unit' -, because it is presumed to have above-average contributory capacity and, in that measure, justifies the need for realizing an additional tax effort, it would make little sense to then proceed to disregard the determinations 'unit by unit' when only through the sum of the Taxable Property Values of the same (because held by the same individual) would the one million euros be exceeded.".

In the judgment of 09-09-2015, rendered in case no. 047/15 (available at www.dgsi.pt), the Supreme Administrative Court came to confirm what had been the understanding of the arbitrators of the Center for Tax Arbitration concluding that: "I. Regarding properties in vertical ownership, for the purposes of incidence of Stamp Duty (Item 28.1 of the GSDT, in the wording of Law no. 55-A/2012, of 29 October), subjection is determined by the combination of two factors: residential allocation and the Taxable Property Value contained in the registry equal to or exceeding €1,000,000. II. In the case of a property constituted in vertical ownership, the incidence of Stamp Duty should be determined, not by the Taxable Property Value resulting from the sum of the Taxable Property Value of all divisions or floors susceptible to independent use (individualized in the property registry article), but by the Taxable Property Value attributed to each one of these floors or divisions intended for residential purposes."

This decision of the Supreme Administrative Court was maintained in subsequent judgments, of which examples are the judgments of 02-03-2016, case no. 01354/15, of 27-04-2016, case no. 01534/15, of 04-05-2016, case no. 01504/15, and of 24-05-2016, case no. 01344/15, all available at www.dgsi.pt.

In view of all that has been set out above, the tribunal concludes that for the purposes of application of item 28 of the GSDT to properties in full ownership, the same rules of the CIMI provided for properties in horizontal ownership apply, and therefore the taxable property value to be considered for the purposes of incidence shall be the individual value proper to each unit susceptible to independent use.

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

None of the independent units that compose the identified property presents a value exceeding €1,000,000 and therefore the minimum quantitative assumption for the purposes of incidence of item 28.1 of the GSDT is not verified.

For all of this, this tribunal considers the Applicant's request well-founded, concluding that the acts of assessment of Stamp Duty of item 28.1 of the GSDT, for the year 2015, are affected by the defect of violation of law, by error on the assumptions of fact and of law, which justifies their annulment [Article 135 of the Code of Administrative Procedure, applicable by force of the provisions of Article 2, paragraph c), of the General Tax Law].

B. On the Right to Compensatory Interest

Pursuant to no. 1 of Article 43 of the General Tax Law "Compensatory interest is due when it is determined, in administrative complaint or judicial challenge, that there was error attributable to the services from which results payment of the tax debt in an amount exceeding that legally owed".

As stated by Diogo Leite de Campos, Benjamim Silva Rodrigues and Jorge Lopes de Sousa, General Tax Law - Annotated and Commented, Editora Encontro da Escrita, 4th Edition, 2012, page 342, note 2 "The error attributable to the services that carried out the assessment is demonstrated when they proceed with an administrative complaint or challenge of that same assessment and the error is not attributable to the taxpayer (for example, there will be annulment by error attributable to the taxpayer when the assessment is based on incorrect assumptions of fact, but the error is based on incorrect information in the statement that the taxpayer submitted)".

Now, in the concrete case, the Applicant's request for payment of compensatory interest is justified since the contested tax assessments are illegal and therefore should be annulled. Thus, the Applicant shall have the right to payment of compensatory interest, at the legal rate in force, counted from the date of payment until the date of processing of the respective credit note, in which they are included – see Article 43 of the General Tax Law and no. 4 of Article 61 of the Tax Procedure Code.

V. DECISION

Pursuant to what has been set out above, this Arbitral Tribunal decides to hold the request for arbitral pronouncement well-founded and, in consequence, declares illegal the assessments of Stamp Duty of item 28.1 of the GSDT relating to the year 2015, made in the name of the undivided estates of B..., Tax Identification Number... and of C..., Tax Identification Number..., ordering their annulment and condemning the Respondent to reimburse the unlawfully paid tax plus compensatory interest, from the date of payment until the date of processing of the respective credit note.

Value of the Case: In accordance with the provisions of Article 306, no. 2, of the Code of Civil Procedure and Article 97-A, no. 1, paragraph a), of the Tax Procedure Code and no. 3, no. 2, of the Regulation of Costs in Tax Arbitration Proceedings, the case is assigned a value of €17,628.47 corresponding to the total amount of the Stamp Duty assessed and whose annulment is hereby ordered.

Costs: Pursuant to no. 4 of Article 22 of the RJAT, the amount of costs is set at €1,224.00, in accordance with Table I attached to the Regulation of Costs in Tax Arbitration Proceedings, at the expense of the Respondent.

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

Lisbon, 08-01-2017

The Sole Arbitrator

(Maria Forte Vaz)

Frequently Asked Questions

Automatically Created

How is Stamp Tax (Imposto do Selo) under verba 28.1 TGIS applied to vertical property buildings with independent units?
Stamp Tax under verba 28.1 TGIS applies a 1% annual tax to residential properties with taxable property value (VPT) equal to or exceeding €1,000,000. For vertical property buildings with independent units, the central dispute is whether the €1,000,000 threshold applies to each independent unit separately or to the aggregate value of all units. The Tax Authority's position treats vertical property (where units are not under horizontal ownership regime) as a single taxable property, summing all unit values to determine if the threshold is met. The tax incidence occurs annually on December 31st, with assessment based on the VPT registered for Municipal Property Tax purposes according to CIMI provisions.
Can each independent unit in a vertical property be assessed separately for Stamp Tax purposes, similar to IMI?
The legal controversy in vertical property cases is whether each independent unit can be assessed separately for Stamp Tax purposes, mirroring IMI methodology. Applicants argue that units susceptible to independent use should be treated as individual properties for tax purposes, with the €1,000,000 threshold applied to each unit's VPT separately. This interpretation would exempt properties where individual units fall below the threshold, even if aggregate value exceeds €1,000,000. However, the Tax Authority maintains that in vertical property (as opposed to horizontal ownership condominiums), units lack legal autonomy despite having separate property registry entries and IMI assessments. The resolution depends on interpreting what constitutes a 'residential property' (prédio urbano habitacional) under item 28.1 TGIS.
What is the legal basis for challenging Stamp Tax liquidation on aggregated property values at CAAD arbitration?
The legal basis for challenging Stamp Tax liquidation at CAAD (Administrative Arbitration Center) is established under Decree-Law 10/2011 (RJAT - Legal Framework for Tax Arbitration) in conjunction with Article 99(a) of the Tax Procedure Code. Taxpayers can request constitution of an arbitral tribunal to declare illegality of tax assessment acts and seek reimbursement of unlawfully paid taxes plus compensatory interest. The challenge must specify the contested assessment acts, identify the property, state legal and factual grounds, and demonstrate error in tax incidence assumptions. In vertical property cases, challenges typically argue the Tax Authority incorrectly aggregated independent unit values rather than assessing each unit separately, resulting in improper application of the €1,000,000 threshold under item 28.1 TGIS.
How does the patrimonial tax value (VPT) of independent units affect Stamp Tax liability in vertical property cases?
The patrimonial tax value (VPT - valor patrimonial tributário) directly determines Stamp Tax liability under item 28.1 TGIS, as the tax base is explicitly the VPT used for Municipal Property Tax purposes. In vertical property with independent units, if each unit's VPT is below €1,000,000 but the aggregate exceeds this threshold, the assessment methodology becomes critical. Under the Tax Authority's aggregate approach, a building with 19 units totaling €1,762,846.56 in VPT triggers the 1% tax (€17,628.47), even though no individual unit exceeds €1,000,000. Under the individual unit approach, no tax would be due. The VPT determination follows CIMI provisions, and item 28(2) TGIS expressly requires subsidiary application of CIMI rules for matters not specifically regulated in the Stamp Duty Code.
What procedural steps are required to file a CAAD arbitral tribunal request against the Tax Authority for Stamp Tax disputes?
To file a CAAD arbitral tribunal request against the Tax Authority for Stamp Tax disputes, taxpayers must: (1) Submit a formal request for constitution of sole arbitrator tribunal under Articles 2 and 10 RJAT, identifying all parties with tax identification numbers and addresses; (2) Specify the contested tax assessment acts by year, tax type (Imposto do Selo), item (28.1 TGIS), property identification, and assessed amounts; (3) State factual and legal grounds for illegality, including alleged errors in tax incidence assumptions; (4) Request specific relief (declaration of illegality, reimbursement, compensatory interest); (5) Pay applicable tribunal fees. The CAAD President accepts or rejects the request, notifies the Tax Authority, and appoints an arbitrator. Parties may refuse the arbitrator appointment within the statutory period. The tribunal is constituted after this period expires, followed by the Tax Authority's response and procedural phases including potential oral hearings and written arguments before final decision.