Process: 444/2017-T

Date: January 16, 2018

Tax Type: Selo

Source: Original CAAD Decision

Summary

This CAAD arbitration decision (Process 444/2017-T) addresses whether Stamp Tax under Item 28.1 of the General Stamp Tax Table applies to building land (terrenos para construção) with a tax patrimonial value exceeding €1,000,000. The case concerns a 2012 assessment under the transitional regime of Law 55-A/2012, Article 6(f)(i), which introduced stamp duty on high-value properties. The taxpayer challenged an assessment of €9,263.60 on building land with an initial TPN of €1,852,720, arguing three grounds: (1) the assessment exceeded the four-year statute of limitations under Article 45(1) of the General Tax Law (LGT); (2) building land cannot be classified as having 'residential use' as required by Item 28.1, since it doesn't meet the prerequisites in Articles 6(1) and 6(2) of the Municipal Property Tax Code (CIMI); and (3) the assessment notice lacked proper reasoning. The Tax Authority defended that the statute of limitations was respected, arguing that 'residential use' should be interpreted broadly to encompass building land destined for residential construction, not limited to already-built properties. The case involves complex timing issues, as the property was deleted from the register in 2008 when new construction was registered, then reactivated at the taxpayer's request in January 2017. The tribunal must determine whether the 2012 transitional stamp duty applies to undeveloped building land, how to calculate the limitation period when property registration is interrupted, and whether the assessment was properly justified. This decision has significant implications for property owners and developers holding high-value building land, clarifying the scope of Item 28.1 GSTD and the interpretation of 'residential use' for stamp tax purposes.

Full Decision

ARBITRAL DECISION

I – REPORT

A… Ltd., with NIPC[1]…, with headquarters at Rua …–…, …-… Vila Nova de Gaia, filed a request for arbitral decision, pursuant to paragraph a) of paragraph 1 of article 2, paragraph 1 of article 3, and paragraph a) of paragraph 1 of article 10, all of the RJAT[2], with the ATA[3] being required, for the assessment of the legality of the tax acts for the assessment of stamp duty, for the year 2012, transitional regime, provided for in paragraphs f) and i) of article 6 of Law 55-A/2012, incidental to the property which it owns, being land for construction registered in the urban property register of the parish of … under the …, area of the Vila Nova de Gaia Finance Service …, as per collection documents 2017…, in the amount of €9,263.60.

That the request was made without exercising the option to appoint an arbitrator, and was accepted by the Esteemed President of CAAD[4] and automatically notified to the ATA on 26/07/2017.

Pursuant to the provisions of paragraph 2 of article 6 of the RJAT, by decision of the Esteemed President of the Deontological Council, duly communicated to the parties within the legally applicable periods, on 13/09/2017, Arlindo José Francisco was appointed as the arbitrator of the tribunal, who communicated acceptance of the appointment within the legally prescribed period.

The tribunal was constituted on 28/09/2017 in accordance with the provisions contained in paragraph c) of paragraph 1 of article 11 of the RJAT, as amended by article 228 of Law No. 66-B/2012, of 31 December.

With its request, the claimant seeks the annulment of stamp duty for the year 2012, as per the collection notice already mentioned, relating to the real property also already identified whose TPN[5] is greater than €1,000,000.00, provided for in item 28.1 of the GSTD[6], transitional regime, as per article 6 paragraphs f) and i) of Law 55-A/2012 of 29 October, given that, in its understanding, it is illegal.

It supports its point of view, in summary, on the understanding that the illegality of the tax assessment act results from it having been performed beyond the period provided for in article 45 paragraph 1 of the TGL[7], that is, the right to assessment had already expired when performed.

It also considers that there was an error as to the prerequisites of the assessment, since land for construction, as such, is not susceptible to residential use, given that it does not meet the requirements set forth in article 6 paragraphs 1 and 2 of the MPRCT[8].

And also a defect in the statement of reasons, since the assessment notice is silent as to the reasoning that led to the performance of the assessment act, not allowing the taxpayer or a normal recipient to reconstitute the cognitive and evaluative process followed by its author.

For its part, and also in summary, the ATA understands that the claimant has no grounds, referring, as to the question of the expiration of the right to assessment, to the administrative process attached to the case file and in which the facts that led to the issue of the assessment in question are set out in detail.

As for the error as to the prerequisites of the assessment, it considers that the same constitutes a correct interpretation and application of law to the facts, insofar as the expression "residential use" used in item 28 of the GSTD appeals to a qualification that overlays the species provided for in paragraph 1 of article 6 of the MPRCT, and should be understood in a broader way that encompasses lands for construction.

As for the alleged defect in the statement of reasons, the same is not the case given that the claimant well knows the entire procedure and circumstances in concreto that were inherent to it, namely its request for reactivation of the property register with respect to the urban article … of the parish of ….

II – PRELIMINARY MATTERS

The tribunal was regularly constituted, the parties have legal standing and capacity, demonstrate themselves to be legitimate, and are regularly represented in accordance with articles 4 and 10, paragraph 2 of the RJAT and article 1 of Ordinance No. 112-A/2011, of 22 March.

In its response the ATA declared not to find any interest in the holding of the meeting provided for in article 18 of the RJAT and the unnecessary production of oral or written arguments.

On 24/10/2017, the tribunal issued the following order: "In the response it is raised the waiver of the meeting provided for in article 18 of the RJAT, as well as of the production of oral or written arguments, thus, notify the claimant, to, within 10 days, if it wishes, pronounce itself regarding the claim made by the defendant. Notify."

On 11/12/2017, the following order was issued: "Given the Order of 24/10/2017 and the silence of the claimant regarding the same, which the tribunal understands as agreement with the waiver of the meeting of article 18 of the RJAT and of the production of oral or written arguments, the conditions are considered to be met to issue a decision, designating 16 January 2018 for that purpose, and the claimant must until this date present proof, with the CAAD, of the payment of the subsequent court fee. Notify".

Thus, as the process does not suffer from voidness, it must decide.

III – REASONING

1 – The issues to be resolved, with interest for the case, are as follows:

- To assess whether the act of assessment of stamp duty in question here is illegal due to expiration of the right to assess.

- In the negative, whether the same suffers from illegality due to error as to the prerequisites or defect in statement of reasons.

2 – Matter of Fact

The impugned assessment, collection notice 2017…, concerns the year 2012 and the assessment with date of 03/03/2017, with payment deadline of 31 May 2017.

It was assessed on the TPN of €1,852,720.00 of article … of the urban register of the parish of …, area of the … Finance Service of Vila Nova de Gaia, of which the claimant is the owner.

In the property register in the item "description of the property" it states: Type of property: land for construction.

The urban article in question was deleted from the respective register on 10/09/2008, by virtue of the presentation of a model 1 form of IMT[9] concerning new property constructed thereon, as per official information attached to the AP[10].

By application of 11/01/2017, the claimants requested the reactivation of the urban article …, which occurred on 17/01/2017, and on 19/01/2017 a model 1 form of IMT was presented, with a view to its re-evaluation, with the result that, after evaluation, the article in question maintained its quality of land for construction, the area of 2,452.00m2 was established and the TPN of €327,580.00, as per the information already mentioned in the previous paragraph.

The tax services considered the effects of this evaluation to be attributed to 31/12/2013, the date on which they consider the 2nd phase of horizontal property ownership to be concluded, although paragraph 3 of article 130 of the MPRCT establishes that it is from the date of the request.

The matter of fact considered proven has its origin in documents filed with the case by the parties whose authenticity was not put into question by them or by the tribunal.

There is no factuality given as unproven that is relevant to the decision.

– Matter of Law

3.1 – Assessment whether the act of assessment of stamp duty in question here is illegal due to the expiration of the period for assessment.

Pursuant to paragraph 1 of article 45 of the TGL the right to assess taxes expires if the assessment is not validly notified to the taxpayer within four years, unless the law provides otherwise.

Paragraph 1 of article 39 of the SDC[11] states that stamp duty[12] can only be assessed within the periods and terms provided for in article 45 of the TGL, which allows us to conclude from the outset that the period fixed for the assessment in question is four years counted from the date on which the tax event occurred.

Paragraph a) of paragraph 1 of article 6 of Law No. 55-A/2012 of 29 October established the transitional regime for 2012 in which it considers that the tax event occurred on 31 October 2012.

Pursuant to paragraph 4 of the aforementioned article 45 of the TGL and since we are faced with a tax of single obligation, given that it is imposed on the taxpayer as an isolated obligation, in which the obligation to pay it is exhausted in a single temporal moment, the period that the ATA had to exercise its right to assess ran between 1 November 2012 to 31 October 2016.

Now from the matter of fact considered proven, the article … was deleted from the register on 10/09/2008 and was only reactivated on 17/01/2017, as per the request of the claimant, the article being deleted from the register, in a period that comprised all the time in which the ATA could exercise its right to assess and, having the impugned assessment occurred only on 03/03/2017, with payment deadline on 31/05/2017, it is evident that the same occurred beyond the period in which the ATA had the right to proceed thereto.

From the matter of fact proven there does not exist any suspensory cause of the period for assessment that meets the conditions established in article 46 of the TGL.

As already seen, having the assessment act been performed on 3 March 2017, it could only have been validly notified to the claimant at a later time, being therefore evident that it occurred with the period for assessment long expired.

3.2 – Error as to the prerequisites and defect in statement of reasons

The different decisions of the arbitral tribunals and of the STA have ruled on the non-taxation in stamp duty (item 28 of the GSTD, added by Law No. 55-A/2012) of lands for construction, a position with which the tribunal agrees, but which, in the specific case, it refrains from assessing, since it considers illegal the tax assessment act in question, given that the same occurred beyond the period provided for in paragraph 1 of article 45 of the TGL.

IV – DECISION

Given the above, the tribunal decides as follows:

- To declare wholly well-founded the request for arbitral decision with the consequent annulment of the act of assessment of stamp duty for the year 2012 in the overall amount of €9,263.60.

- To fix the value of the case at €9,263.60 in accordance with the provisions contained in article 299, paragraph 1, of the CPC[13], article 97-A of the CPPT[14], and article 3, paragraph 2, of the CCPAT[15].

- To fix the costs, pursuant to paragraph 4 of article 22 of the RJAT, in the amount of €918.00 in accordance with the provisions in Table I referred to in article 4 of the CCPAT, which are charged to the defendant.

Notify.

Lisbon, 16 January 2018

Text prepared by computer, pursuant to article 131, paragraph 5 of the CPC, applicable by reference of article 29, paragraph 1, paragraph e) of the RJAT, with blank spaces and reviewed by the tribunal.

The arbitrator

Arlindo José Francisco

[1] Acronym for Tax Identification Number for Legal Entities

[2] Acronym for Legal Regime for Arbitration in Tax Matters

[3] Acronym for Tax and Customs Authority

[4] Acronym for Administrative Arbitration Center

[5] Acronym for Taxable Property Value

[6] Acronym for General Table of Stamp Duty

[7] Acronym for General Tax Law

[8] Acronym for Municipal Property Tax Code

[9] Acronym for Municipal Property Tax

[10] Acronym for Administrative Process

[11] Acronym for Stamp Duty Code

[12] Acronym for Stamp Duty

[13] Acronym for Civil Procedure Code

[14] Acronym for Code of Tax Procedure and Process

[15] Acronym for Regulations on Costs in Tax Arbitration Proceedings

Frequently Asked Questions

Automatically Created

Does the Stamp Tax (Imposto do Selo) under Verba 28.1 apply to building land (terrenos para construção) with a tax value exceeding €1,000,000?
The central dispute in this case is whether Item 28.1 of the General Stamp Tax Table applies to building land (terrenos para construção) with a tax value exceeding €1,000,000. The taxpayer argues that building land cannot have 'residential use' as it doesn't meet the requirements of CIMI Articles 6(1) and 6(2), which define urban buildings for habitation. The Tax Authority contends that 'residential use' should be interpreted broadly to include land designated for residential construction, not just completed residential buildings. The tribunal must resolve whether the Stamp Tax on high-value properties under the 2012 transitional regime extends to undeveloped building land or only to actual habitable structures.
What is the statute of limitations for Stamp Tax assessments under Article 45(1) of the General Tax Law (LGT)?
Under Article 45(1) of the General Tax Law (LGT) and Article 39(1) of the Stamp Duty Code (SDC), the right to assess stamp tax expires if the assessment is not validly notified to the taxpayer within four years. The limitation period begins when the tax becomes due. In this case, the 2012 stamp tax was assessed on 03/03/2017 and notified via collection document 2017... with payment deadline of 31 May 2017. The taxpayer argued that this exceeded the four-year period from 2012, making the assessment time-barred. However, complications arose because the property was deleted from the register in 2008 and only reactivated in January 2017 at the taxpayer's request, affecting the calculation of when the limitation period began to run.
Can building land be classified as having a habitation purpose for Stamp Tax purposes under Articles 6(1) and 6(2) of the Municipal Property Tax Code (CIMI)?
This is a core legal question in the case. Articles 6(1) and 6(2) of the Municipal Property Tax Code (CIMI) define urban buildings for habitation with specific requirements regarding construction and habitability. The taxpayer argues that building land (terrenos para construção), by definition, is not a constructed building and therefore cannot meet these requirements for 'residential use' under Item 28.1 of the GSTD. The Tax Authority takes a broader interpretive approach, arguing that 'residential use' in Item 28 should encompass land destined for residential construction, not be limited to the narrow technical categories in CIMI Article 6. This interpretive conflict determines whether undeveloped land designated for future residential development falls within the scope of the high-value property stamp tax.
What are the legal grounds for challenging a Stamp Tax assessment before the CAAD arbitration tribunal?
This case demonstrates three primary grounds for challenging a Stamp Tax assessment before the CAAD arbitration tribunal under the RJAT (Legal Regime of Tax Arbitration): (1) Statute of limitations - arguing the assessment occurred beyond the four-year period under Article 45(1) LGT; (2) Error in prerequisites (erro sobre os pressupostos) - claiming the legal requirements for the tax don't apply to the specific situation, such as arguing building land doesn't qualify as 'residential use'; and (3) Defect in reasoning (vício de fundamentação) - asserting the assessment notice fails to adequately explain the basis for the assessment, preventing the taxpayer from understanding the administration's reasoning. Taxpayers can file for arbitration under Article 2(1)(a), Article 3(1), and Article 10(1)(a) of the RJAT without prior hierarchical appeal.
How did the transitional regime under Article 6(f)(i) of Law 55-A/2012 affect Stamp Tax obligations on high-value properties in 2012?
Law 55-A/2012 of 29 October introduced a transitional stamp tax regime for 2012 under Article 6, paragraphs (f) and (i), creating new tax obligations on properties with tax patrimonial values exceeding €1,000,000 under Item 28.1 of the General Stamp Tax Table. This was part of austerity measures during Portugal's financial crisis. The transitional regime meant that properties meeting the value threshold in 2012 became subject to stamp duty even though this tax hadn't previously applied to property ownership. The regime created complexity regarding assessment timing, particularly for properties with interrupted registration histories. In this case, the property was originally valued at €1,852,720 in 2012, triggering the tax, though it was later re-evaluated at €327,580 following reactivation in 2017, raising questions about which valuation applies and when the tax obligation crystallized.