Process: 429/2016-T

Date: January 19, 2017

Tax Type: Selo

Source: Original CAAD Decision

Summary

CAAD Process 429/2016-T addresses whether Stamp Tax under Verba 28.1 TGIS applies to individual residential units within a building held in vertical ownership (propriedade vertical) versus horizontal ownership. A real estate investment company contested €26,902.63 in Stamp Tax assessments on 36 residential units within a 57-unit mixed-use building. The Claimant argued that Verba 28.1, targeting luxury properties over €1,000,000, should apply only when individual units exceed this threshold, not when assessed separately despite none individually reaching €1,000,000. The Tax Authority contended that for properties in full ownership regime, the entire property's patrimonial value is relevant, unlike horizontal ownership where each autonomous unit constitutes a separate property under CIMI Article 2(4). Key issues include the correct interpretation of CIMI Articles 6, 7, and 12 as referenced by Stamp Duty Code Article 67(2), the distinction between vertical and horizontal property regimes for tax purposes, treatment of mixed-use properties with both residential and commercial allocations, and potential violations of constitutional principles of tax equality and proportionality. Previous assessments for 2012 and 2013 on the same property were annulled by Lisbon Tax Court and CAAD arbitration, establishing relevant precedent for this 2015 tax year dispute.

Full Decision

ARBITRAL DECISION

1. REPORT

A… – REAL ESTATE INVESTMENT COMPANY, SA, with registered office at …, no. …, …, …-…, in Lisbon (area of the Lisbon Tax Service …), and with the NIPC … (hereinafter referred to as the Claimant), hereby, pursuant to the combined provisions of articles 2nd, no. 1, paragraph a), 3rd, no. 1, 5th, no. 2, paragraph a), and 10th, no. 1, paragraphs a) and 3rd, no. 1, of Decree-Law No. 10/2011, of 20 January, which approved the Legal Regime of Arbitration in Tax Matters (RJAT), requests the constitution of an Arbitral Tribunal, with the intervention of a sole arbitrator, in which the Tax and Customs Authority (AT) is the Respondent, with a view to the declaration of illegality and consequent annulment of the Stamp Duty assessments (Item 28.1., of the General Table of Stamp Duty (TGIS) for the year 2015, with numbers 2016…, 2016…, 2016…, 2016…, 2016…, 2016…, 2016…, 2016…, 2016…, 2016…, 2016…, 2016…, 2016…, 2016…, 2016…, 2016…, 2016…, 2016…, 2016…, 2016…, 2016…, 2016…, 2016…, 2016…, 2016…, 2016…, 2016…, 2016…, 2016…, 2016…, 2016…, 2016…, 2016…, 2016… and 2016…, in the total amount of € 26,902.63 (twenty-six thousand, nine hundred and two euros and sixty-three cents), referring to the various independent use divisions and residential allocation of the urban property in full ownership, registered in the property matrix of the parish of …, municipality and district of Lisbon, under article …, of which the Claimant is the owner.

1.1. Summary of the Parties' Positions:

1.1.1. Of the Claimant:

Considering that the prerequisites for the cumulation of claims provided for in no. 1 of article 3rd of the RJAT are met, as all the impugned assessments (i) were made by the Lisbon Tax Service …, (ii) on the basis of the same legal provisions, (iii) refer to floors susceptible of independent use of an urban property, allocated to housing and, (iv) the grounds for the challenge are common to all assessments, the Claimant invokes, in support of its claim, the following facts and legal grounds:

a. The urban property of which the Claimant is the legitimate owner is a property in full ownership, constituted by 57 floors or divisions susceptible of independent use, 21 of which allocated to commerce or services and the remaining 36 allocated to housing;

b. The Stamp Duty assessments subject to the request for arbitral pronouncement were made pursuant to item 28.1 of the General Table of Stamp Duty, amended by Law No. 55-A/2012, of 29/10 and were levied on each of the floors or divisions susceptible of independent use with residential allocation, of the property therein identified, which "is not 'an urban property with residential allocation'", but rather "an urban property with various and distinct allocations";

c. The total patrimonial value of the property is higher than that indicated in each of the payment notification documents for the impugned assessments and none of the floors or divisions susceptible of independent use, with residential allocation, has a tax patrimonial value equal to or exceeding € 1,000,000.00;

d. In the opinion of the Claimant, the Stamp Duty assessment acts are illegal due to error in the factual assumptions and incorrect application of the law;

e. From the conjunction of the provisions of articles 6th, 7th, no. 1 and 12th, no. 3, all of the IMI Code, applicable by reference of no. 2 of article 67th of the Stamp Duty Code, it results that, regarding matters relating to item 28.1., of the TGIS:

i. The said item covers only residential urban properties and not properties that fall within more than one of the categories provided for in no. 1 of article 6th of the CIMI;

ii. Regarding urban properties in full ownership, that item only applies to floors or divisions susceptible of independent use, with residential allocation, "in relation to which, separately, the condition of application of the said item is verified, in relation to its respective tax patrimonial value";

f. This is the only interpretation compatible with the ratio legis of the creation of item 28, of the TGIS, by Law No. 55-A/2012, which intended the taxation of luxury homes and the ownership of real estate by entities headquartered in tax havens;

g. This is evidenced by the fact that the AT issued separate assessments for each floor or division susceptible of independent use and residential allocation, by reference to the respective tax patrimonial value;

h. The option for the taxation of floors or divisions susceptible of independent use, as is the case in the present proceedings, would violate the constitutional principles of equality and proportionality in tax matters – unequal treatment of materially similar situations and the imposition of an "additional annual rate of 1%", regardless of income generated, a situation approaching confiscation;

i. The assessments for the year 2012 relating to the same property, issued under item 28.1., of the TGIS, in the interpretation given thereto by the AT, were annulled by judgment of the Lisbon Tax Court, subsequently confirmed by the Decision of the Central Administrative Court of the South, of 13/07/2016, in case No. 09450/16 and those for 2013 were annulled in the course of an arbitral process that took place at the CAAD.

The Claimant finally makes requests for the annulment of the Stamp Duty assessments, due to error in the factual and legal assumptions on which they were based or, if not understood in this manner, due to violation of the constitutional principles of tax equality and proportionality, requests to which it attributes the economic value of € 26,902.63.

1.1.2. Of the Respondent:

Notified in accordance with the terms and for the purposes provided for in article 17th of the RJAT, the AT presented a response and administrative file, in which it states that it does not agree with the Claimant and defends the lack of merit of the request for arbitral pronouncement, with the following grounds:

a. The assessment of Stamp Duty – item 28.1., of the TGIS, which was directed at the urban property of which the Claimant is the owner, in full ownership regime and with a tax patrimonial value exceeding € 1,000,000.00, "results from the direct application of the legal rule, which translates into objective elements, without any subjective or discretionary assessment";

b. According to article 2nd, no. 4, of the CIMI, in the horizontal property regime, each autonomous unit is deemed to constitute a property, a situation unequivocally different from that of a real estate in full ownership regime, with floors or divisions susceptible of independent use;

c. Although each of the floors or divisions susceptible of independent use is registered in the property matrix in accordance with no. 3 of article 12th of the CIMI, this rule relates exclusively to the manner of recording the property data, with the IMI assessment being carried out on the basis of the VPT "which the now Claimant defines as 'total value of the property'", with the collection document referred to in no. 1 of article 119th of the CIMI being required to discriminate the VPT of the floors or divisions susceptible of independent use;

d. The Claimant invokes the violation of the principles of legality, tax equality and contributive capacity, putting into question the VPT of the property, given that none of the floors or divisions susceptible of independent use that compose it has a VPT exceeding € 1,000,000.00 and argues the non-existence of a rule that defines the tax patrimonial value of a property composed of various floors or divisions susceptible of independent use as being the corresponding sum of their respective parts;

e. However, although the assessment, in the situations provided for in item no. 28.1., of the TGIS, is carried out in accordance with the rules of the CIMI, the legislator saves the aspects that require the necessary adaptations, as is the case of properties in full ownership, in which the property as a whole is relevant, because the divisions susceptible of independent use are not considered properties, unlike what occurs with regard to autonomous units of properties in horizontal property;

f. Neither is it conceded that the impugned assessments may violate the principles of tax equality and contributive capacity, as the rule of item 28.1., of the TGIS, is a general and abstract rule, applicable uniformly to all cases in which its factual and legal assumptions are met, namely, that the taxation incurs on the ownership, usufruct or right of superficies of urban properties with residential allocation, whose tax patrimonial value recorded in the property matrix, in accordance with the CIMI, is equal to or exceeding € 1,000,000.00;

g. "(…) the different valuation and taxation of a property in full ownership as opposed to a property constituted in horizontal property results from the different legal effects inherent to these two legal figures", in light of civil law;

h. The taxation, under Stamp Duty, of the ownership, usufruct and right of superficies of urban properties with residential allocation, whose tax patrimonial value recorded in the property matrix, in accordance with the CIMI, is equal to or exceeding € 1,000,000.00, obeys the criteria of suitability and proportionality, aiming to tax the wealth embodied in the ownership of real estate of high value, in a context of economic crisis.

Having not invoked exceptions and considering that "the facts on which the decision is requested are established", being at issue only a matter of law and that the documents attached by the Claimant and the Respondent are sufficient for the issuance of the arbitral decision, the AT ended by requesting the waiver of the holding of the meeting provided for in article 18th of the RJAT, and the submission of arguments, being able, if the Claimant did not object, to proceed "directly to the decision of the case".

2. PROCEDURAL HANDLING

2.1. The request for the constitution of the Arbitral Tribunal was filed at the CAAD on 25 July 2016, having been accepted by the esteemed President of the CAAD and automatically notified to the AT, on 19 August 2016;

2.2. The Claimant requested the constitution of the arbitral tribunal under the provisions of no. 2 of article 5th of the RJAT, whereby, under the provisions of no. 1 of article 6th of the said statute, the undersigned was appointed arbitrator by the esteemed President of the Deontological Council of the CAAD, a position which she accepted within the legally provided period, without objection from the Parties;

2.3. The Singular Arbitral Tribunal was regularly constituted on 19 October 2016;

2.4. The Parties have legal personality and capacity, are legitimate and are duly represented (articles 4th and 10th, no. 2, of the RJAT and article 1st of Ordinance No. 112-A/2011, of 22 March);

2.5. In its response, the Respondent did not invoke exceptions;

2.6. By arbitral dispatch of 21 November 2016, it was determined:

2.6.1. To waive the holding of the meeting referred to in article 18th of the RJAT;

2.6.2. To invite the Claimant to correct the identification of the author of the impugned acts (article 98th, no. 5, of the CPPT, applicable ex vi of article 29th, no. 1, paragraph a) of the RJAT);

2.6.3. To invite the Parties to submit successive written arguments within a period of 10 days, beginning with the Claimant;

2.6.4. To invite the Parties to pronounce themselves on the possibility of the sole arbitral tribunal pronouncing itself ex officio on its incompetence for the annulment of only one of the installments of the Stamp Duty assessments – item 28.1., of the TGIS, for the year 2015;

2.6.5. To set 9 January 2017 for the pronouncement of the arbitral decision, warning the Claimant of the payment of the subsequent arbitration fee;

2.7. By petition of 30 November, notified to the TA on 2 December 2016, the Claimant came to request clarification of the arbitral dispatch referred to in the preceding items;

2.8. Pursuant to the arbitral dispatch of 5 December 2016, notified to the Parties on the same date, the requested clarifications were provided, the restart of the period for written arguments being determined, in accordance with what was established in the previous arbitral dispatch, as well as the postponement of the arbitral decision to 22 January 2017;

2.9. On the same previous date, a petition from the Claimant was sent to the case file, in which the identification of the author of the impugned acts was corrected and arguments were presented reiterating the initial request, as well as pronouncement on the possibility of ex officio knowledge of the incompetence of the TA, in which it is argued that, "(…) As expressly stated in the Request, at the end of the petition, what is requested in the present proceedings is the 'Annulment of the Assessments' and not the annulment of the 1st installment of the assessments" and that "(…) As to the Competence of the CAAD to hear cases of challenge of Stamp Duty assessments under Item 28.1, having as documentary basis the assessment notification documents and for payment of the 1st Installment, the numerous cases of similar proceedings already decided by the CAAD attest (…)";

2.10. On 6 December 2016, the AT sent its arguments to the case file, in which it maintained in full the content of the Response, reiterating the conclusion that the request for arbitral pronouncement should be judged lacking in merit, absolving the Respondent of the claim.

3. GROUNDS FOR DECISION

A – FACTUAL MATTERS

3.1. Facts deemed established:

3.1.1. On 31 December 2015, the date of the tax event, the Claimant was the owner of the urban property registered under article … of the parish of …, municipality of Lisbon, corresponding to the former article … of the extinct parish of …, municipality of Loures, constituted by 57 floors or divisions susceptible of independent use, with the total tax patrimonial value of € 9,848,728.27;

3.1.2. Of the said floors or divisions susceptible of independent use, 36 have residential allocation, with the remaining ones allocated to commerce and services;

3.1.3. The sum of the VPT attributed to the floors or divisions susceptible of independent use and residential allocation is € 8,070,722.95, being that the value indicated in each of the payment notices for the first installment of the Stamp Duty assessments – item 28.1., for the year 2015, as "Tax Patrimonial Value of the property – total subject to tax";

3.1.4. The VPT attributed to each floor or division susceptible of separate rental and residential allocation varies between € 146,121.50 and € 328,285.75;

3.1.5. In the name of the Claimant, assessments for Stamp Duty for the year 2015 were made, on 5 April 2016, for voluntary payment in three annual installments, the first installments of which appear in the payment notices identified in the table below, based on the VPT of each of the divisions susceptible of independent use and the rate of 1%:

[Table with 36 rows showing Document Identification, Property Identification, VPT, Collection, and Value of 1st Installment]

3.1.6. The sum of the Stamp Duty assessments – item 28.1., for the year 2015, relating to the property identified in the case, is € 80,707.27, with the amount of € 26,902.63 corresponding to the sum of the first installments of the said assessments, with a period for voluntary payment in April 2016;

3.1.7. The Decision of the Central Administrative Court of the South, case 09450/16, confirming the judgment of the Lisbon Tax Court that annulled the 36 Stamp Duty assessments relating to the floors or divisions susceptible of independent use of the urban property registered under article … of the parish of …, municipality of Loures (former property registration of the property that is the subject of the present case), relates to the assessments for the year 2012.

3.2. Grounds for the factual matters deemed established:

The Tribunal's conviction regarding the factual matters deemed established resulted from the critical analysis of the documentary evidence attached to the request for arbitral pronouncement, expressly accepted by the Respondent.

3.3. Facts not established

It was not established that the arbitral decision identified by the Claimant on p. i., related to Stamp Duty assessments, item 28.1., of the TGIS, relating to the same property that is the subject of the present case.

B – LEGAL MATTERS

The Arbitral Tribunal timely raised before the Parties the possibility of ex officio knowledge of the dilatory exception of its incompetence to render a substantive decision in the present case, in light of the provisions of articles 2nd, no. 1, paragraph a) of the RJAT, 23rd, no. 7, of the Stamp Duty Code and 113th, no. 1, of the IMI Code, requesting that they pronounce themselves on the matter, within the period set for arguments.

Following the response to the Claimant's request for clarification regarding the content of the arbitral dispatch in which that matter had been raised, the Claimant came to argue, in arguments, that the subject matter of the present case is not the first installments of each of the Stamp Duty assessments – item 28.1., of the General Table of Stamp Duty (TGIS), relating to the identified real estate, but rather the assessments, in their entirety; that, although it is debatable the legal nature of the documents attached by it to the request for arbitral pronouncement and identified therein as "Assessments", it is clear from the initial petition that the Claimant seeks the annulment of the assessments embodied in the documents attached to the case, as these incorporate the notification of the assessment acts and not merely a notice for payment of the first installment, as is evidenced by the fact that they contain the express reference to their challengeability, form and periods for challenge.

The Respondent, notified to pronounce itself on the same matter, said nothing.

Since the incompetence of the tribunal is a dilatory exception subject to ex officio knowledge (article 578th of the Code of Civil Procedure (CPC), applicable subsidiarily to the arbitral tax process, ex vi of article 29th, no. 1, paragraph e) of the RJAT), which prevents the tribunal from deciding the merits of the case and gives rise to the dismissal of the instance (article 576th, no. 2, of the CPC), it must be analyzed as a priority matter, pursuant to no. 1 of article 608th of the same CPC.

Let us then proceed to its examination:

The competence of the arbitral tribunals that function within the CAAD is delimited according to (i) the subject matter (article 2nd, no. 1, paragraphs a) and b) of the RJAT and article 2nd of Ordinance No. 112-A/2011, of 22 March – Binding Ordinance), (ii) the value of the case (article 3rd of the Binding Ordinance) and (iii) the composition and functioning of the arbitral tribunal (article 5th of the RJAT).

Article 2nd, no. 1, paragraphs a) and b) of the RJAT provides that,

"1 — The competence of the arbitral tribunals comprises the assessment of the following claims:

a) The declaration of illegality of tax assessment acts, self-assessment acts, withholding acts and payment on account acts;

b) The declaration of illegality of acts establishing the taxable matter when it does not give rise to the assessment of any tax, of acts determining the collective taxable matter and of acts establishing tax patrimonial values.

2 — (…)."

Pursuant to no. 1 of article 3rd of the Binding Ordinance,

"1 — The binding of the services and organisms referred to in article 1st is limited to disputes with a value not exceeding € 10,000,000."

In turn, article 5th of the RJAT, relating to the composition of arbitral tribunals, provides that,

"1 — Arbitral tribunals function with a sole arbitrator or with the intervention of a collective of three arbitrators.

2 — Arbitral tribunals function with a sole arbitrator when:

a) The value of the request for pronouncement does not exceed twice the value of the jurisdiction of the Central Administrative Court; and

b) The taxpayer opts not to appoint an arbitrator.

3 — Arbitral tribunals function with the intervention of a collective of three arbitrators when:

a) The value of the request for pronouncement exceeds twice the value of the jurisdiction of the Central Administrative Court; or

b) The taxpayer opts to appoint an arbitrator, regardless of the value of the request for pronouncement."

As to the rule delimiting the competence of the arbitral tribunals in tax matters by subject matter, it is verified that such competence encompasses, in particular, the assessment of claims relating to the declaration of illegality of tax assessment acts (article 2nd, no. 1, paragraph a) of the RJAT).

The question that arises here is whether the Claimant challenges the Stamp Duty assessment acts – item 28.1., of the TGIS, relating to the floors or divisions of independent use of the property identified in the case and for the year 2015 or whether it challenges only the first installment of those assessments and if, being that the case, an installment in which the tax assessment was subdivided can itself be deemed to be an assessment for challenge purposes.

Both no. 7 of article 23rd of the Stamp Duty Code ("7 - In the case of the tax due by 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 the necessary adaptations, the rules contained in the CIMI") and no. 1 of article 113th of the IMI Code ("1 - The tax is assessed annually, in relation to each municipality, by the central services of the General Tax Directorate, on the basis of the tax patrimonial values of the properties and in relation to the taxpayers that appear in the property matrices on 31 December of the year to which it relates."), refer to the annual nature of the assessment of Stamp Duty – item 28.1., of the TGIS, given that it is a periodic tax, whose tax event, of successive production and generating the birth of the tax obligation, is completed on 31 December of each year.

On the other hand, the assessment act, as an administrative act of quantifying the tax obligation, consists of the application of a rate (in the case at hand, of 1%) to a taxable matter (here denominated as tax patrimonial value), from which results the determination of the value of the tax to be paid (collection amount).

The payment notices relating to the first installment of the Stamp Duty assessments – item 28.1., of the TGIS, with copy attached to the case, contain, among others, the elements indicated above in 3.1.5., such as the value of the collection for the year 2015 and the value of the first installment, payable in April 2016, the sum of which totals the amount of € 26,902.36.

With respect to the payment period, article 120th, no. 1, paragraph c) of the IMI Code, applicable subsidiarily to matters relating to item 28.1., of the TGIS, by reference of no. 2 of article 67th of the Stamp Duty Code, determines that tax (collection amount) of value exceeding € 500.00 must be paid in three installments, in the months of April, July and November.

It is, therefore, a payment divided by law, which does not conflict with the uniqueness of the annual assessment of the tax. Thus, the installments of a Stamp Duty assessment – item 28.1., of the TGIS, do not have autonomy with respect to the assessment, the tax act par excellence, as they relate to a single tax obligation whose performance was divided, with payment in installments being nothing more than a technique for collection of the tax.

As appears from the factuality deemed established, the value of the Stamp Duty assessments issued by the AT in the name of the Claimant for the year 2015 and for the property identified, total the amount of € 80,707.27.

And, as the Claimant rightly notes, the payment notices attached by it to the request for arbitral pronouncement embody the notification of the assessments, not being merely a notice for payment of their respective first installments, as is evidenced by the fact that they contain the express mention of their challengeability, form and periods for challenge.

However, having the Claimant attributed to the claim the economic value of € 26,902.63, equivalent to the sum of the values of the first installments of the said assessments, it is legitimate to conclude that the subject matter of the claim is the annulment of those first installments and not of the assessments, whose value totals the amount of € 80,707.27.

Not constituting each of the installments a tax act, for the purposes of the provision of article 2nd, no. 1, paragraph a) of the RJAT, it must be concluded that the Arbitral Tribunal is incompetent to assess the merits of the claim for its annulment.

The Claimant argues that, regarding the same property and Stamp Duty assessments – item 28.1., of the TGIS, for the year 2012, the Central Administrative Court already pronounced itself in the Decision rendered in case 09450/16, which confirmed the judgment of the Lisbon Tax Court, determining its annulment.

And the Claimant is correct, as demonstrated by the copy of the cited Decision attached to the case; however, the claim that was at issue in that judicial challenge process was the annulment of the tax assessment acts for Stamp Duty – item 28.1., of the TGIS, for the year 2012, carried out under the transitional provisions contained in no. 1 of article 6th of Law No. 55-A/2012, of 29 October, a situation in which the tax should be paid, in a single installment, by the taxpayers, by 20 December 2012 (paragraph e), in which the value of the assessment was equivalent to the value of the single installment.

Finally, as to the competence of the Tax Arbitral Tribunals in terms of their composition and functioning (article 5th of the RJAT), it should be stated that the Claimant expressly requested the constitution of the Arbitral Tribunal in accordance with no. 2 of article 5th of the RJAT (Sole Arbitral Tribunal) and that the competence of Sole Arbitral Tribunals is restricted to the assessment of requests for arbitral pronouncement whose value does not exceed twice the value of the jurisdiction of the Central Administrative Court, that is, € 60,000.00 (article 6th, no. 4, of the Statute of Administrative and Tax Courts, approved by Law No. 13/2002, of 19/02, in conjunction with no. 1 of article 44th of the Law of Organization of the Judicial System (Law No. 62/2013, of 26/08).

For that reason, even if it were understood that the claim of the Claimant was the annulment of the Stamp Duty assessments – item 28.1., of the TGIS, for the year 2015, whose value totals the amount of € 80,707.27, the Sole Arbitral Tribunal would still lack competence to decide the merits of the case, as this exceeds the legally established value for that purpose.

4. DECISION

Based on the factual and legal grounds stated above, it is decided, finding verified the dilatory exception of the incompetence of the Sole Arbitral Tribunal for the assessment of the claim of the Claimant, to absolve the Respondent of the instance.

VALUE OF THE CASE: In accordance with the provisions of article 306th, nos. 1 and 2, of the CPC, 97th-A, no. 1, paragraph a) of the CPPT and 3rd, no. 2, of the Regulation of Costs in Tax Arbitration Proceedings, the value of the case is set at € 26,902.63 (twenty-six thousand, nine hundred and two euros and sixty-three cents).

COSTS: Calculated in accordance with article 4th of the Regulation of Costs in Tax Arbitration Proceedings and Table I attached thereto, in the amount of € 1,530.00 (one thousand five hundred and thirty euros), to be borne by the Claimant.

Lisbon, 19 January 2017.

The Arbitrator,

/Mariana Vargas/

Text prepared by computer, pursuant to no. 5 of article 131st of the CPC, applicable by reference of paragraph e) of no. 1 of article 29th of DL 10/2011, of 20 January.

The wording of this decision complies with the spelling agreement of 1990.

Frequently Asked Questions

Automatically Created

Does Stamp Tax under Verba 28.1 of the TGIS apply to individual independent units in a building held in total ownership (propriedade vertical)?
Stamp Tax under Verba 28.1 TGIS applicability to individual independent units in vertical ownership depends on whether the property regime treats each unit separately or as a whole. Unlike horizontal ownership (propriedade horizontal) where Article 2(4) CIMI deems each autonomous unit a separate property, vertical ownership (propriedade vertical) maintains the building as a single property. The Tax Authority argues the entire property's patrimonial value determines tax liability when exceeding €1,000,000, while taxpayers contend Verba 28.1 should only apply to individual units exceeding this threshold, supported by Article 12(3) CIMI's separate matrix registration requirements and the provision's ratio legis targeting luxury housing.
How is the taxable value determined for Imposto do Selo when a building in total ownership has both residential and commercial units?
For Stamp Tax purposes on buildings in vertical ownership with mixed residential and commercial units, the taxable value determination is disputed. The Tax Authority applies the total patrimonial value (VPT) of the entire property under CIMI rules as referenced by Stamp Duty Code Article 67(2), treating all residential units collectively. Taxpayers argue that mixed-allocation properties fall outside Verba 28.1's scope, which targets 'residential urban properties' under CIMI Article 6, and that only units individually exceeding €1,000,000 should be taxed. Article 12(3) CIMI requires separate matrix registration for independent-use divisions, suggesting individual valuation, though the Tax Authority maintains this serves only administrative recording purposes.
Can the tax authority levy Stamp Tax on each residential unit separately when the property is not under horizontal ownership (propriedade horizontal)?
The Tax Authority can levy Stamp Tax on each residential unit separately in vertical ownership, issuing individual assessment notices per unit despite the property not being under horizontal ownership. This practice stems from interpreting Verba 28.1 TGIS in conjunction with CIMI Article 12(3)'s separate matrix registration requirements. However, this approach is legally contested on grounds including: (1) incorrect factual and legal assumptions treating vertical ownership units like horizontal property; (2) violation of constitutional equality principles creating disparate treatment versus horizontal ownership; (3) proportionality concerns imposing 1% annual tax regardless of income generation; (4) misapplication of the €1,000,000 threshold to aggregate rather than individual values. CAAD and tax court precedents from 2012-2013 assessments on identical properties have supported taxpayer challenges.
What legal grounds exist to challenge Stamp Tax assessments on independent divisions of a vertical property building under Verba 28.1 TGIS?
Legal grounds to challenge Stamp Tax assessments on independent divisions under Verba 28.1 TGIS include: (1) Error in factual assumptions - the property is vertical ownership with mixed allocation, not purely residential; (2) Incorrect legal application - CIMI Articles 6, 7, and 12(3) referenced by Stamp Duty Code Article 67(2) distinguish vertical from horizontal ownership, requiring individual unit valuation; (3) Violation of ratio legis - Law 55-A/2012 intended to tax luxury homes and tax haven ownership, not standard mixed-use properties; (4) Constitutional violations - tax equality principles (unequal treatment versus horizontal ownership) and proportionality (1% rate approaches confiscation without income consideration); (5) Precedent - prior annulments by Lisbon Tax Court and CAAD for the same property's 2012-2013 assessments establish authoritative interpretation favoring taxpayers.
What is the CAAD arbitral procedure for contesting multiple Stamp Tax assessments on the same urban property under the RJAT framework?
The CAAD arbitral procedure for contesting multiple Stamp Tax assessments under RJAT allows cumulation of claims when prerequisites under Article 3(1) are met: (1) assessments by the same tax service; (2) based on identical legal provisions; (3) relating to the same factual situation; (4) sharing common grounds for challenge. Taxpayers file a single arbitration request under Articles 2(1)(a), 3(1), 5(2)(a), and 10(1)(a) and (3) of Decree-Law 10/2011, requesting sole arbitrator constitution. The request must specify each contested assessment number, amounts, and legal/factual grounds. RJAT Article 17 provides for Tax Authority response and administrative file submission. This consolidated procedure offers efficiency versus individual challenges, particularly relevant for properties with multiple independent units receiving separate assessment notices, with total economic value determining procedural aspects.