Process: 441/2014-T

Date: November 11, 2014

Tax Type: Selo

Source: Original CAAD Decision

Summary

CAAD Process 441/2014-T addresses the application of Stamp Tax (Imposto do Selo) under Verba 28.1 of the General Stamp Tax Table (TGIS) to building plots (terrenos para construção). Company A, S.A. challenged 24 Stamp Tax assessments levied on building plots located in a Portuguese municipality, all related to the 2013 tax year. The assessments applied a 1% rate on Tax Property Values (VPT) equal to or exceeding €1,000,000, totaling over €900,000 in annual tax. The core legal issue concerns whether undeveloped building plots fall within the scope of Verba 28.1 TGIS, which was introduced to tax high-value real estate. All 24 properties were officially classified in urban property records as 'building plots' (lotes para construção), indicating land designated for construction but not yet developed. The taxpayer initiated arbitration proceedings before CAAD (Centro de Arbitragem Administrativa) in June 2014, exercising their right to judicial review of tax assessments through the arbitration mechanism established by Decree-Law 10/2011 (RJAT). A collective arbitral tribunal was constituted comprising three arbitrators. The company provided a bank guarantee of €400,927.39 to suspend tax execution proceedings under Article 169 CPPT, and subsequently requested compensation for guarantee costs. The tribunal's analysis focuses on interpreting the legislative scope of Verba 28.1, examining whether the lawmakers intended to include undeveloped construction land or only completed buildings within the taxable base. This case has significant implications for real estate developers and landowners holding valuable building plots, as it clarifies the boundaries of Stamp Tax obligations on land assets versus constructed properties.

Full Decision

ARBITRAL DECISION

  1. Report

On 23-06-2014, company A, S.A., NIPC ..., filed a request for constitution of a collective arbitral tribunal, pursuant to the combined provisions of articles 2 and 10 of Decree-Law No. 10/2011, of 20 January (Legal Regime of Arbitration in Tax Matters, hereinafter referred to only as RJAT), in which the Tax and Customs Authority is the Respondent.

The request for constitution of the arbitral tribunal was accepted by the President of CAAD and automatically notified to the Tax and Customs Authority on 25-06-2014.

Pursuant to the provisions of article 6(2)(a) and article 11(1)(b) of RJAT, the Deontological Council appointed the arbitrators of the collective tribunal Counsellor Jorge Lino Ribeiro Alves de Sousa, Prof. Dr. Carlos Lobo and Dr. Maria Manuela do Nascimento Roseiro, who communicated their acceptance within the applicable deadline.

The Parties were notified of this appointment on 07-08-2014 and raised no objections.

Thus, pursuant to article 11(1)(c) of RJAT, the collective arbitral tribunal was constituted on 25-08-2014.

By order of the President of the Deontological Council of CAAD, in light of the situation of temporary impediment due to illness of Counsellor Jorge Lino Ribeiro Alves de Sousa, Counsellor Jorge Lopes de Sousa was appointed to temporarily replace him as President of the Arbitral Tribunal.

The Applicant seeks to have declared illegal the Stamp Tax assessments Nos. 2014...; 2014...; 2014..., 2014..., 2014..., 2014..., 2014..., 2014..., 2014..., 2014..., 2014..., 2014..., 2014..., 2014..., 2014..., 2014..., 2014..., 2014..., 2014..., 2014..., 2014..., 2014... and 2014 ....

The Applicant further requests that recognition be given to the right to compensation for expenses incurred in providing the guarantee.

The Tax and Customs Authority filed its response, arguing for the dismissal of the claim.

By order of 24-09-2014, the Arbitral Tribunal waived the holding of the meeting provided for in article 18 of RJAT and announced that it would issue a final decision in the case by 28-11-2014.

The Arbitral Tribunal was duly constituted.

The parties have legal personality and capacity and are legitimate (arts. 4 and 10(2) of the same decree and article 1 of Ordinance No. 112-A/2011, of 22 March).

The Parties are duly represented and no nullity occurs.

  1. Statement of Facts

2.1. Proven Facts

The following facts are considered proven:

a) The Applicant was, on 31 December 2013, the owner of 24 building plots, located in the Municipality of ..., parishes of ... (extinct parish of ...) (article 10 of the request for arbitral pronouncement, the contents of which are hereby reproduced, and documents Nos. 1, 2 and 3);

b) The Applicant sold, on 10 January 2014, several of these plots to the Company "B, SA", by which reason the respective property records indicate as owner the name of the current proprietor, but the Stamp Tax at issue in these proceedings relates to 2013 when the Applicant was the owner of the building plots (Liquidation documents attached as No. 1 and document No. 3);

c) The Applicant was notified of assessments concerning 24 urban properties, of Stamp Tax, relating to the year 2013, in accordance with Item 28.1 of the General Table of Stamp Tax (TGIS), applying to them the rate of 1% on the Tax Property Values (VPT) equal to or exceeding €1,000,000.00 (one million euros), in force in the year 2013 (Document No. 1);

d) All these properties are identified in the respective "urban property record", in the "description of property" section as "building plot" (Records attached as Document No. 3);

e) The deadline for payment of the 1st instalment of the Stamp Tax assessments was 30 April 2014 and the collection documents had the following numbering:

2014...; 2014...; 2014...; 2014...; 2014...; 2014...; 2014...; 2014...; 2014..., 2014..., 2014..., 2014...; 2014..., 2014..., 2014..., 2014...; 2014..., 2014..., 2014..., 2014...; 2014..., 2014..., 2014..., 2014 ... (Document No. 1 attached with the request for arbitral pronouncement, the contents of which are hereby reproduced);

f) The aforementioned assessments concern the properties, hereinafter listed, indicating the matrix article, parish, Tax Property Value determined in 2012, Stamp Tax collection article 28 TGIS (2013) and value of the 1st instalment (April 2014):

· U-..., VPT of €13,945,822.50, Collection of €139,458.23, 1st instalment of €46,486.09;

· U-..., parish of ..., VPT of €20,960,805.05; Collection of €209,608.05; 1st instalment of €69,859.35;

· U-..., parish of ..., VPT of €3,326,073.78; Collection of €33,260.74; 1st instalment of €11,086.92;

· U-..., parish of ..., VPT of €3,522,743.98; Collection of €35,227.44; 1st instalment of €11,742.48;

· U-..., parish of ..., VPT of €15,502,768.79; Collection of €155,027.69; 1st instalment of €51,675.91;

· U-..., parish of ..., VPT of €4,053,533.25; Collection of €40,535.33; 1st instalment of €13,511.79;

· U-..., parish of ..., VPT of €3,514,759.00; Collection of €35,147.60; 1st instalment of €11,715.88;

· U-..., parish of ..., VPT of €3,514,759.00; Collection of €35,147.60; 1st instalment of €11,715.88;

· U-..., parish of ..., VPT of €1,094,334.25; Collection of €10,943.34; 1st instalment of €3,647.78;

· U-..., parish of ..., VPT of €1,380,902.13; Collection of €13,809.02; 1st instalment of €4,603.02;

· U-..., parish of ..., VPT of €1,380,902.13; Collection of €13,809.02; 1st instalment of €4,603.02;

· U-..., parish of ..., VPT of €1,189,659.75; Collection of €11,896.60; 1st instalment of €3,965.54;

· U-..., parish of ..., VPT of €1,189,659.75; Collection of €11,896.60; 1st instalment of €3,965.54;

· U-..., parish of ..., VPT of €1,380,902.13; Collection of €13,809.02; 1st instalment of €4,603.02;

· U-..., parish of ..., VPT of €1,729,024.88; Collection of €17,290.25; 1st instalment of €6,763.43;

· U-..., parish of ..., VPT of €1,380,902.13; Collection of €13,809.02; 1st instalment of €4,603.02;

· U-..., parish of ..., VPT of €1,380,902.13; Collection of €13,809.02; 1st instalment of €4,603.02;

· U-..., parish of ..., VPT of €1,189,659.75; Collection of €11,896.60; 1st instalment of €3,965.54;

· U-..., parish of ..., VPT of €1,189,659.75; Collection of €11,896.60; 1st instalment of €3,965.54;

· U-..., parish of ..., VPT of €1,380,902.13; Collection of €13,809.02; 1st instalment of €4,603.02;

· U-..., parish of ..., VPT of €5,198,487.13; Collection of €51,984.87; 1st instalment of €17,328.29;

· U-..., parish of ..., VPT of €4,053,533.25; Collection of €40,535.33; 1st instalment of €13,511.79;

· U-..., parish of ..., VPT of €1,380,902.13; Collection of €13,809.02; 1st instalment of €4,603.02;

· U-..., parish of ..., VPT of €1,380,902.13; Collection of €13,809.02; 1st instalment of €4,603.02.

g) On 30 April 2014, the Applicant addressed a request to the Head of Service of the ... Tax District of ..., requesting, under article 169 of CPPT, suspension of the execution of the tax execution process to be raised due to non-payment of the amount of the assessments due by 30/04/2014, in a total of €320,741.91, presenting a guarantee issued by BANK X in the amount of €400,927.39 (Document No. 4 attached with the request for arbitral pronouncement, the contents of which are hereby reproduced).

2.2. Unproven Facts

There are no facts relevant to the assessment of the merits of the case that have been given as unproven.

2.3. Substantiation of the Proven Statement of Facts

The proven facts are based on the documents indicated for each of the points, whose authenticity and correspondence to reality have not been questioned by the parties.

  1. Statement of Law

The essential question in the present case comes down to defining the scope of application of item 28.1 of the General Table of Stamp Tax as amended by Law No. 55-A/2012 of 29.10, namely whether building plots should be included in that provision and, specifically, whether building plots with a tax property value equal to or exceeding €1,000,000 fall, or do not fall, within the category of urban properties "with residential purpose".

This is a question which, regardless of the constitutional questions it raises, particularly at the level of the principle of equality and the possibility of the existence of Stamp Tax taxation on real estate from a purely heritage taxation perspective without any connection to the principle of equivalence or benefit (the fundamental principle of IMI), is extensively addressed, both in the jurisprudence of CAAD and in the jurisprudence of the Supreme Administrative Court.

In fact, it is today the unanimous interpretation of the judicial entities that the Stamp Tax scope of application should exclude building plots that do not yet have any defined use, since they are not yet applied to or intended for residential purposes.

In fact, building plots, whether from the perspective of planning law or from the perspective of tax law, have a different nature from properties with residential purposes, since at the moment prior to the realization of the improvement (the construction itself) they do not have a defined use, constituting themselves as simple land assets, and therefore cannot be considered properties with residential purpose.

It should be noted that the legislator's intention was clearly restrictive. When using the expression "residential purposes" it clearly expresses an intention to include only residential properties within the scope of the provision, clearly excluding those with commercial and industrial purposes (even if integrated in urban areas that, in a limiting situation of implementation which is reflected in the existence of an Approved Urbanization Plan or Detailed Plan), given that their concrete purpose depends on their permanent construction.

In this context, the various jurisprudence has concluded that the disputed assessments suffer from error regarding the factual and legal assumptions, since the properties for which Stamp Tax was assessed under the aforementioned item No. 28.1 constitute building plots, without any building or construction, required to meet that concept of "residential properties".

The Public Treasury alleges that the concept of "properties with residential purpose" for the purposes of item No. 28.1 of TGIS includes both constructed properties and building plots, since the legislator does not refer to "properties intended for residence" but instead has opted for the notion of "residential purpose", an expression it considers different and broader, encompassing other realities beyond those identified in article 6(1)(a) of CIMI.

Concluding that residential purpose, for the purposes of application of item No. 28, does not necessarily imply the existence of buildings or constructions, and therefore applies to building plots with such purpose.

This does not appear to be correct for the reasons already advanced. In fact, the question under consideration is, even in its factual assumptions, entirely identical to the question that was examined and decided in the Supreme Administrative Court in the recent past, by decisions of 09.04.2014, issued in cases 1870/13 and 48/14, and of 23.04.2014, issued in cases 270/14, 271/14 and 272/14, in which it was decided that "building plots" cannot be considered, for the purposes of the scope of Stamp Tax provided for in Item 28.1 of the respective General Table (as amended by Law No. 55-A/2012, of 29 October), as urban properties with residential purpose.

This is jurisprudence that is also adopted here, as we fully agree with its substantiation, for which reason we will limit ourselves to reproducing what was said on the question in the aforementioned Decision 1870/13:

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

This amendment – to which the legislator did not attribute an interpretative character, nor does it seem to us that it did – merely makes clear for the future that building plots for which the authorized or planned construction is for residential purposes are covered by the scope of item 28.1 of the General Table of Stamp Tax (provided that their respective tax property value is equal to or greater than 1 million euros), while clarifying nothing, however, regarding previous situations (assessments of 2012 and 2013), such as the one at issue in the present proceedings.

Now, as to these, it does not seem possible to accept the interpretation of the appellant, as it does not result unequivocally either from the letter or from the spirit of the law that the intention of the latter was, ab initio, to cover in its objective scope building plots for which the construction of residential buildings had been authorized or planned, as is now unequivocally evident from item 28.1 of the General Table of Stamp Tax.

From the letter of the law nothing unequivocal results, furthermore, as it itself, when using a concept that it did not define and which also was not defined in the decree to which it referred on a subsidiary basis, lent itself, unnecessarily, to equivocation, in a matter – of tax scope of application – in which certainty and legal security should also be paramount concerns of the legislator.

And from its 'spirit', ascertainable in the statement of reasons of the bill that is at the origin of Law No. 55-A/2012 (Bill No. 96/XII – 2nd, Diário da Assembleia da República, series A, No. 3, 21/09/2012, p. 44, available at www.parlamento.pt) nothing more results than the concern with gathering new tax revenues from sources of wealth 'more spared' in the past from the voraciousness of the Tax Authority than labor income, in particular capital income, capital gains on securities and property, reasons which bring no relevant contribution to the clarification of the concept of 'properties with residential purpose', as they take it as settled, without any concern to clarify it. Such clarification was, however, to emerge – as reported in the Arbitral Decision issued on 12 December 2013, in case No. 144/2013-T, available in the CAAD database – when presenting and discussing in the Parliament that bill, in the words of the Secretary of State for Tax Affairs, who reportedly stated expressly, as appears from the Diário da Assembleia da República (DAR I Series No. 9/XII – 2, of 11 October, p. 32) that: 'The Government proposes the creation of a special tax on residential urban properties of higher value. It is the first time that Portugal creates a special taxation on high-value properties intended for residence. This rate will be 0.5% to 0.8% in 2012 and 1% in 2013, and will apply to houses valued at equal to or exceeding 1 million euros' (our underlining), from which it can be understood that the reality to be taxed envisaged is, after all, and despite the terminological imprecision of the law, 'urban residential properties', in common language 'houses', and not other realities.

The fact that one can consider that in determining the tax property value of urban properties classified as building plots one should take into account the purpose that the construction authorized or planned for it will have for determining the respective value of the implantation area (cf. articles 45(1) and (2) of CIMI), does not determine that building plots can be classified as 'properties with residential purpose', since 'residential purpose' always appears in the IMI Code referred to 'buildings' or 'constructions', existing, authorized or planned, since only these can be inhabited, which does not occur in the case of building plots, which do not have, in themselves, conditions for such, being capable of being used for residence only if and when the construction authorized and planned for them is erected on them (but in that case they will no longer be 'building plots' but another type of urban properties – 'residential', 'commercial, industrial or for services' or 'other' – article 6 of CIMI).

It would be strange, furthermore, if the determination of the scope of the tax incidence rule of item No. 28 of the General Table of Stamp Tax were found, after all, in the rules for determining the tax property value of the IMI Code, and that the terminological imprecision of the legislator in drafting that rule were, in fact, clarified and finally explained through an indirect and equivocal reference to the purpose coefficient established by the legislator in relation to constructed properties (article 41 of the IMI Code).

Thus, considering that a building plot – whatever the type and purpose of the construction that will, or may, be erected on it – does not, by itself, satisfy any condition to be licensed as such or to define residence as its normal destination, and the rule of incidence of stamp tax referring to urban properties with 'residential purpose', without any specific concept being established for that purpose, cannot from it be extracted that the same contains a future potentiality, inherent in a distinct property that may possibly be erected on the plot.

It is therefore concluded, in accordance with what was decided in the judgment under appeal, that, as results from article 6 of the IMI Code a clear distinction between 'residential' urban properties and 'building plots', the latter cannot be considered as 'properties with residential purpose' for the purposes of item No. 28.1 of the General Table of Stamp Tax, in its original wording, as given to it by Law No. 55-A/2012, of 29 October." (end of quotation)

It is this jurisprudence that is adopted here and reiterated, taking into account the rule contained in article 8(3) of the Civil Code – which imposes on the judge the duty to consider all cases that merit analogous treatment, in order to obtain a uniform interpretation and application of the law, being that the appellant puts forward no new substantiation that undermines such judicial orientation.

Thus, the aforementioned acts of assessment suffer from a defect of violation of law, by which reason the claim for declaration of their illegality succeeds.

  1. Compensation for Undue Guarantee

The Applicant also formulates a claim for compensation for undue guarantee.

In accordance with the provisions of article 24(b) of RJAT, the arbitral decision on the merits of the claim from which no appeal or challenge may be made binds the tax administration as from the end of the period provided for appeal or challenge, and must, in the exact terms of the success of the arbitral decision in favor of the taxpayer and until the end of the period provided for voluntary compliance with sentences of judicial tax courts, "restore the situation that would exist if the tax act subject to the arbitral decision had not been performed, adopting the acts and operations necessary for that purpose".

In the legislative authorization on which the Government based its approval of RJAT, granted by article 124 of Law No. 3-B/2010, of 28 April, is proclaimed, as a primary guideline of the institution of arbitration as an alternative form of jurisdictional resolution of conflicts in tax matters, that "the tax arbitral process must constitute an alternative procedural means to the process of judicial challenge and to the action for recognition of a right or legitimate interest in tax matters".

Although article 2(1), subparagraphs a) and b), of RJAT uses the expression "declaration of illegality" to define the competence of the arbitral tribunals operating in CAAD and makes no reference to constitutive (annulling) and condemnatory decisions, should be understood, in harmony with the aforementioned legislative authorization, that it includes in its competences the powers which in the process of judicial challenge are attributed to tax courts in relation to acts whose assessment of legality falls within their competences.

Although the process of judicial challenge is essentially a process of mere annulment (arts. 99 and 124 of CPPT), in it may be issued a condemnation of the tax administration to pay indemnificatory interest and compensation for undue guarantee.

In fact, although there is no express rule to that effect, it has long been peacefully understood in tax courts, since the entry into force of the codes of the tax reform of 1958-1965, that in a process of judicial challenge the claim for condemnation to payment of indemnificatory interest can be combined with the claim for annulment or declaration of nullity or non-existence of the act, as in those codes it is stated that the right to indemnificatory interest arises when, in a gracious complaint or judicial process, the administration is convinced that there was a factual error attributable to the services. This regime was subsequently generalized in the Tax Procedure Code, which established in article 24(1) that "there shall be a right to indemnificatory interest in favor of the taxpayer when, in a gracious complaint or judicial process, it is determined that there was an error attributable to the services", then, in the General Tax Law, in whose article 43(1) it is established that "indemnificatory interest is due when it is determined, in a gracious complaint or judicial challenge, that there was an error attributable to the services resulting in payment of the tax debt in an amount greater than that legally due" and, finally, in the CPPT in which it was established, in article 61(2) (which corresponds to article 61(4) in the wording given by Law No. 55-A/2010, of 31 December), that "if the decision recognizing the right to indemnificatory interest is judicial, the payment period is counted from the beginning of the period for voluntary compliance".

Regarding the claim for condemnation to payment of compensation for provision of undue guarantee, article 171 of CPPT establishes that "compensation in case of a bank guarantee or equivalent unduly provided shall be claimed in the process in which the legality of the enforceable debt is disputed" and that "compensation must be requested in the complaint, challenge or appeal or if its grounds are subsequent within 30 days of its occurrence".

Thus, it is unequivocal that the process of judicial challenge encompasses the possibility of condemnation to payment of undue guarantee and is, in principle, the appropriate procedural means for formulating such a claim, which is justified by obvious reasons of procedural economy, as the right to compensation for undue guarantee depends on what is decided regarding the legality or illegality of the assessment act.

The request for constitution of the arbitral tribunal has as a corollary that it be in the arbitral process that the "legality of the enforceable debt" will be discussed, by which, as results from the express wording of that article 171(1) of CPPT, it is also the arbitral process that is appropriate for assessing the claim for compensation for undue guarantee.

Moreover, the cumulation of claims relating to the same tax act is implicitly presupposed in article 3 of RJAT, when speaking of "cumulation of claims even if relating to different acts", which makes clear that the cumulation of claims is also possible regarding the same tax act and the claims for compensation for indemnificatory interest and condemnation for undue guarantee are susceptible of being encompassed by that formula, by which an interpretation in this sense has, at least, the minimum of verbal correspondence required by article 9(2) of the Civil Code.

The regime of the right to compensation for undue guarantee is contained in article 53 of the General Tax Law, which establishes the following:

Article 53

Guarantee in Case of Undue Provision

  1. The debtor who, in order to suspend enforcement, offers a bank guarantee or equivalent shall be compensated wholly or partially for the losses resulting from its provision, should he have maintained it for a period exceeding three years in proportion to the favorable outcome in administrative appeal, judicial challenge or opposition to enforcement that have as their object the guaranteed debt.

  2. The period referred to in the preceding number does not apply when it is verified, in a gracious complaint or judicial challenge, that there was an error attributable to the services in the assessment of the tax.

  3. The compensation referred to in number 1 has as its maximum limit the amount resulting from the application to the guaranteed amount of the rate of indemnificatory interest provided for in the present law and may be requested in the very process of complaint or judicial challenge, or independently.

  4. Compensation for provision of undue guarantee shall be paid by offset against the tax revenue of the year in which payment is made.

In the case at hand, the defect of violation of law from which the acts of assessment of Stamp Tax whose declaration of illegality was requested suffer is attributable to the Tax and Customs Authority, as it was at its initiative that the assessments were issued and the Applicant in no way contributed to that error being made.

For this reason, the Applicant has the right to be compensated for the expenses in which it incurred with the provision of the guarantee.

As there are no elements that allow determining the amount of compensation, the condemnation shall have to be made with reference to what is liquidated in execution of the present decision (article 609(2) of the Code of Civil Procedure of 2013, and article 565 of the Civil Code).

  1. Decision

In accordance with the foregoing, this Arbitral Tribunal agrees:

a) To find the claim well-founded for declaration of illegality of the Stamp Tax assessments Nos.:

2014..., 2014..., 2014..., 2014..., 2014..., 2014..., 2014..., 2014..., 2014..., 2014..., 2014..., 2014..., 2014..., 2014..., 2014..., 2014..., 2014..., 2014..., 2014..., 2014..., 2014..., 2014... and 2014 ...;

b) To find the claim well-founded for recognition of the right of the Applicant to compensation for undue guarantee and to condemn the Tax and Customs Authority to pay the Applicant the compensation that is liquidated in execution of the present decision, relating to the expenses with the guarantee provided to suspend enforcement relating to the aforementioned assessments.

  1. Value of the Claim

In accordance with the provisions of article 306(2) of the CPC and 97-A(1)(a) of CPPT and 3(2) of the Regulation of Costs in Tax Arbitration Processes, the value of the claim is set at €858,873.25.

  1. Costs

Under the terms of article 22(4) of RJAT, the amount of costs is fixed at €12,240.00, in accordance with Table I annexed to the Regulation of Costs in Tax Arbitration Processes, to be borne by the Tax and Customs Authority.

Lisbon, 11 November 2014

The Arbitrators

(Jorge Lopes de Sousa)

(Carlos Lobo)

(Maria Manuela Roseiro)

Frequently Asked Questions

Automatically Created

Is Stamp Tax (Imposto do Selo) applicable to land for construction under Verba 28.1 of the TGIS?
The applicability of Stamp Tax under Verba 28.1 TGIS to land for construction (terrenos para construção) is the central legal question in Process 441/2014-T. The case examines whether building plots—land officially designated for construction but not yet developed—fall within the scope of this tax provision. Verba 28.1 applies a 1% annual rate to properties with Tax Property Values of €1,000,000 or more. The tribunal must interpret whether the legislature intended to tax undeveloped building land or only completed constructions. The taxpayer argues that building plots should not be subject to this tax, while the Tax Authority defends the assessments' legality.
Can taxpayers challenge Stamp Tax liquidations on building land through CAAD arbitration?
Yes, taxpayers can challenge Stamp Tax liquidations on building land through CAAD (Centro de Arbitragem Administrativa) arbitration. Process 441/2014-T demonstrates this procedural right under Decree-Law 10/2011 (RJAT - Legal Regime of Arbitration in Tax Matters). The taxpayer filed a request for constitution of a collective arbitral tribunal on June 23, 2014, which was accepted and properly constituted. CAAD provides an alternative dispute resolution mechanism to traditional courts for tax matters, offering faster resolution. Taxpayers can request suspension of tax execution by providing appropriate guarantees (as done in this case with a bank guarantee of €400,927.39), allowing them to contest assessments without immediate payment while proceedings continue.
What are the legal grounds for contesting Verba 28.1 TGIS assessments on terrenos para construção?
The legal grounds for contesting Verba 28.1 TGIS assessments on terrenos para construção include challenging the legal interpretation and scope of application of the tax provision. Key arguments may include: (1) that Verba 28.1 was not intended by the legislature to apply to undeveloped building plots but only to completed buildings; (2) that the property classification as 'building plot' (lote para construção) indicates unfinished land not subject to this tax category; (3) constitutional principles requiring strict interpretation of tax laws and legal certainty; (4) that taxing undeveloped land creates inequitable treatment compared to developed properties; and (5) potential violations of proportionality principles given the significant tax burden on land held for future development.
Are property owners entitled to compensation for guarantee costs when disputing Stamp Tax liquidations?
According to the case file, the Applicant specifically requested recognition of the right to compensation for expenses incurred in providing the guarantee. Under Portuguese tax procedure law, when taxpayers successfully challenge tax assessments after having posted guarantees to suspend execution, they may be entitled to reimbursement of guarantee costs (such as bank guarantee fees and commissions). Article 53 of the General Tax Law (LGT) and Article 171 of CPPT provide the legal framework for such compensation. However, this right depends on the taxpayer prevailing in the substantive challenge. The tribunal must rule on both the legality of the assessments and, if found illegal, whether compensation for guarantee expenses is warranted.
How does CAAD process 441/2014-T interpret the scope of Verba 28.1 for undeveloped construction plots?
Process 441/2014-T's interpretation of Verba 28.1 for undeveloped construction plots addresses whether terrenos para construção fall within the taxable scope. The case presents 24 properties all officially registered as 'building plots' (lotes para construção) in urban property records, indicating designated but undeveloped construction land. The tribunal must determine if the legislature intended Verba 28.1 to encompass such properties or if it applies exclusively to completed buildings. This interpretation has major practical implications: if building plots are excluded, significant tax relief follows for real estate developers and land investors; if included, substantial tax obligations attach to holding undeveloped high-value land. The decision will establish important precedent for interpreting the boundaries between taxable urban buildings and exempt or differently-taxed land parcels.