Process: 45/2016-T

Date: July 8, 2016

Tax Type: Selo

Source: Original CAAD Decision

Summary

Process 45/2016-T addresses critical issues regarding Stamp Tax (Imposto do Selo) under Verba 28.1 of the General Stamp Tax Table (TGIS) on vertical property ownership. The case involved assessments totaling EUR 15,086.00 for 2014 on urban property with a taxable property value (VPT) exceeding EUR 1,000,000. The central dispute concerned whether Stamp Tax should be levied on the aggregate value of an entire building or on individual autonomous units in vertical property arrangements. The claimant challenged the Tax Authority's assessment methodology, arguing that properties leased for non-residential purposes (specifically to a Court) should not fall under Verba 28.1, which specifically targets 'property with residential purpose.' The tribunal analyzed whether units genuinely used for non-residential activities could be taxed under provisions designed for residential property, even when matrix records indicated residential classification. Additional grounds included alleged violations of the principle of equality, tax legality, proportionality, and potential application of Article 49 of the Tax Benefits Statute (EBF) to autonomous units valued below the EUR 1,000,000 threshold. The arbitral tribunal ruled entirely in favor of the claimant, annulling all Stamp Tax assessment acts relating to 2014 and condemning the Tax Authority to pay process costs of EUR 918.00. This decision reinforces the importance of proper property classification based on actual use rather than formal matrix descriptions, establishes jurisprudential guidance on vertical property taxation methodology under Verba 28.1, and confirms taxpayers' rights to challenge assessments where the factual and legal premises diverge from statutory requirements. The ruling has significant implications for owners of high-value vertical properties with mixed or non-residential uses.

Full Decision

if there is no success of the action whoever derived profit from the process.

6.61.

Within this scope no. 2 of the aforementioned article makes concrete the expression "caused them" according to the principle of loss of action understanding that the defeated party causes the costs of the process in the proportion in which it is defeated.

6.62.

In the case under analysis having in consideration what is stated above the principle of proportionality imposes that the totality of the responsibility for costs be attributed to the Respondent in accordance with the provisions of article 12, no. 2 of RJAT and article 4, no. 4 of the Regulation of Costs in Arbitration Processes.

7. DECISION

7.1.

Having in consideration the analysis effected in the previous chapter this Arbitral Tribunal decided:

7.1.1.

To judge as well-founded the petition for arbitral pronouncement presented by the Claimant and to condemn the Respondent as to the petition for declaration of illegality of the assessments of Stamp Duty dated 20 March 2015 (relating to the year 2014) underlying the collection notices identified in this process annulling in consequence all the respective tax assessment acts with the legal consequences arising therefrom;

7.1.2.

To condemn the Respondent in the payment of the costs of the present process.

Value of the process: Having in consideration the provisions of articles 306, no. 2 of CPC article 97-A no. 1 of the Code of Administrative Procedure and Tax Process (CPPT) and in article 3, no. 2 of the Regulation of Costs in Tax Arbitration Processes the value of the process is fixed at EUR 15,086.00.

Costs of the process: Pursuant to the provisions of Table I of the Regulation of the Costs of Tax Arbitration Processes the value of the Costs of the Arbitration Process is fixed at EUR 918.00 charged to the Respondent in accordance with article 22, no. 4 of RJAT.

Notify.

Lisbon, 8 July 2016

The Arbitrator

Sílvia Oliveira

[1] The wording of the present decision is governed by the orthography prior to the Orthographic Agreement of 1990, except as regards the transcriptions made.

[2] The Claimant refers here to the revocation of the decision to dismiss the administrative appeal filed from the assessments of Stamp Duty of the year 2014 identified in the process.

[3] Within this scope the Claimant cites the arbitral decision no. 50/2013-T of 29 October 2013 as well as the arbitral decision no. 250/2015-T of 28 October 2015.

[4] Within this scope it should be noted that from the analysis of the process it is clear that the petition for arbitral pronouncement expressly had as its object the assessment acts of Stamp Duty relating to the year 2014 in the amount of EUR 15,086.00 on the basis of item 28.1 of the General Table of Stamp Duty regarding the urban property identified in the file with the Claimant requesting that the Arbitral Tribunal declare the illegality of these assessments. The determination of the object of the arbitral petition results clear not only from the initial segment of the petition but also from the final conclusion where expressly formulated is the petition for annulment of the assessment acts. However in the initial part of the petition the Claimant also refers that "(…) having been notified of the decision issued (…) in the process of administrative appeal that it filed from the assessment act and the respective collection notices (…) of stamp duty relating to the year 2014 (…)" "comes (…) to react to the administrative appeal decision by means of IMPUGNING the assessment act in question (…)" without there being discerned throughout the petition for arbitral pronouncement beyond this initial reference any other allusion to the petition to challenge the illegality of the order to dismiss the aforementioned appeal. In truth in no part of the petition for arbitral pronouncement did the Claimant expressly formulate any petition for annulment of the aforementioned decision to dismiss whereby the same is outside the scope of the petition not being relevant the date of the order for purposes of counting the period of filing of the petition for arbitral pronouncement. Being as such the moment of the beginning of the counting of the period for the deduction of the petition for arbitral pronouncement relating to the petition for annulment of the assessments of Stamp Duty identified was analyzed having in consideration that the provision of 10, no. 1 clause a) of RJAT (concerning assessment acts of tax) makes reference (as regards the beginning of the counting of the period) to that established in nos. 1 and 2 of article 102 of CPPT (the counting of the period begins on the day following the "end of the period for voluntary payment of tax installments legally notified to the taxpayer"). Now in the case under analysis we have assessments of Stamp Duty to be paid in three installments (April July and November) being that this payment in installments is merely a technique of collection of the tax and not a partial payment proper. In these terms for purposes of counting the period provided for in article 10 of RJAT this must be assessed according to the "end of the period for payment of each of the tax installments legally notified" and given that the law does not comprise the autonomous impugning of each of the installments of tax of item no. 28 of Stamp Duty (contained in each of the collection notices that relate to each of the assessments which are the object of the petition) as of the date of presentation of the petition for arbitral pronouncement (28 January 2016) the period of 90 days (provided for in article 10 of RJAT) was still in progress to be counted from the day following the end of the period for payment of the 3rd installment (30 November 2015) of tax relating to each of the assessments of Stamp Duty in dispute whereby it is concluded that the petition is timely.

[5] According to a copy of a monthly rent invoice/receipt attached to the file with the petition (doc. no. 1) the following are part of the value of the total rent the rents of the fractions "R/C" (2) "1st floor" "2nd floor" "3rd floor" "4th floor" and "5th floor" leased to the Court … but which appear in the evaluation referred in point 5.2.5 supra as having "residential purpose" for the reasons above described.

[6] In this sense see with the necessary adaptations AC TCAS no. 01156/06 of 23 May.

[7] According to the facts given as proven (see Chapter 5 of this arbitral decision).

[8] According to the alteration introduced by the aforementioned statute item 28 of TGIS came to have the following wording (bold by us): "28. Ownership usufruct or surface right of urban properties whose VPT contained in the matrix pursuant to the Code of IMI is equal to or exceeding EUR 1,000,000.00 – on the VPT for purposes of IMI: 28.1 - For property with residential purpose - 1%. 28.2 - For property when the taxpayers who are not natural persons are residents in a country territory or region subject to a clearly more favorable tax regime contained in the list approved by order of the Minister of Finance - 7.5%"

[9] See Judgment of the Constitutional Court no. 590/2015 of 11 November (Process no. 542/14) - point 9.

[10] See previous footnote.

[11] In this matter the Claimant argues that the "assessment of stamp duty that is now impugned clearly violates the principle of equality (…)" given that it refers that according to the rule of uniformity of taxes "(…) what is equal should be taxed equally what is unequal should be taxed unequally in the measure of the inequality" whereby "(…) the TA cannot distinguish where the legislator himself understood not to do so under penalty of violating the coherence of the tax system as well as the principle of tax legality (…) and also the principles of justice equality and tax proportionality". Within this scope and as already referred in point 6.4 supra the Respondent in the Response presented came to refer that "as to the other arguments presented by the claimant they are refuted in the information that analyzed the administrative appeal whereby we dispense with its analysis at this juncture making reference thereto" and the information attached to the file (doc. no. 1) the Respondent refers that in this matter "(…) the assessment of stamp duty in question is in conformity with the aforementioned constitutional imperatives and does not violate the principles of legality and equality (…) to the extent that the acts performed by the TA do not discriminate taxpayers nor contradict the law" whereby "(…) the principle of typicality or tax legality is fully complied with (…) in the sense that both the tax facts and the legal effects are expressly provided for in the law from where it is verified that the legislator chose to tax the situations of life that manifest a certain economic capacity that is intended to be taxed".

[12] And already referring to the alterations introduced by Law no. 83-C/2012 of 31 December.

[13] Indeed the Constitutional Court concludes that "(…) item 28 of TGIS does not suffer from any unconstitutionality there being no violation of the constitutional principles that shape tax legislation in particular of the principles of tax equality contributory capacity and proportionality (…)".

[14] In this sense it is cited Teixeira Ribeiro in "Lessons on Public Finance" 5th Edition page 261.

[15] In "Tax Law" 7th Edition 2012 page 155.

[16] See Casalta Nabais work cited in the previous footnote page 157.

[17] In this same sense see AC TC no. 84/2003 cited in AC TC no. 590/2015 of 11 November.

[18] In this sense see AC TC no. 84/2003.

[19] In this sense see AC TC no. 695/2014.

[20] See José Maria Fernando Pires in "Lessons on Wealth Tax" Coimbra 3rd Edition 2015 page 504 and page 506.

[21] Within this scope pay attention to the provisions of article 12 no. 3 of the Code of IMI in referring that "each floor or part of property susceptible of independent use is considered separately in the matricial inscription which likewise discriminates the respective VPT".

[22] In this sense see AC TCAS Process 07648/14 of 10 July 2014.

[23] Cfr. AC TCAS Process 5320/12 of 2 October 2012 AC TCAS Process 7073/13 of 12 December 2013 and AC TCAS 2912/09 of 27 March 2014.

[24] See Arbitral Decision no. 50/2013-T (CAAD) of 29 October 2013.

[25] Which is the Code of IMI given the reference made by the aforementioned article 67, no. 2 of the Code of Stamp Duty.

[26] According to which the interpretation of the legal rule should not be limited to the letter of the law but should reconstruct the legislative thought from the texts and the remaining elements of interpretation taking into account the unity of the legal system.

[27] Available for consultation in the Diary of the Assembly of the Republic I series no. 9/XII/2 of 11 October 2012.

[28] As already referred to in various Arbitral Decisions issued by CAAD (see Process no. 48/2013-T and Process no. 50/2013-T).

[29] Given that the law does not impose the obligation of constitution of the property in a regime of horizontal ownership.

[30] In this sense see in particular Arbitral Decision no. 368/2014-T of 18 December 2014 issued by the undersigned.

[31] In this sense the Judgment of the STA no. 01354/15 of 2 March 2016 pronounced itself in the terms of which "relating to properties in vertical ownership for purposes of the incidence of Stamp Duty (…) the subjection is determined by the conjunction of two factors the residential purpose and the VPT contained in the matrix equal to or exceeding €1,000,000. Where it is a property constituted in vertical ownership the incidence of IS must be determined not by the VPT resulting from the sum of the VPT of all divisions or floors susceptible of independent use (individualized in the matricial article) but by the VPT attributed to each of those floors or divisions destined for housing". In the same sense see also Judgment of the STA no. 047/15 of 9 September 2015.

[32] In this sense see Arbitral Decision identified in footnote no. 30.

Frequently Asked Questions

Automatically Created

Is Stamp Tax (Imposto do Selo) under Verba 28.1 TGIS applied to vertical property based on each independent unit or the total property value?
Based on Process 45/2016-T, Stamp Tax under Verba 28.1 TGIS on vertical property raises questions about whether taxation should apply to individual autonomous units or the aggregate property value. The tribunal's decision to annul the assessments suggests that where a building contains multiple independent units, each should be evaluated separately. This is particularly relevant when applying the EUR 1,000,000 threshold, as individual units below this value may qualify for exemption under Article 49 of the Tax Benefits Statute (EBF), even if the total building value exceeds the threshold. The decision implies taxation should respect the autonomous nature of vertical property units rather than aggregating values.
Can a Stamp Tax assessment be annulled for lack of identification of the author of the liquidation act?
While the text excerpt does not explicitly address whether lack of identification of the liquidation act's author constitutes grounds for annulment, the tribunal's comprehensive annulment of all assessment acts in Process 45/2016-T suggests procedural irregularities can invalidate Stamp Tax assessments. Portuguese tax law generally requires proper identification of responsible officials in administrative acts. Failure to identify the author may violate formal requirements under the Tax Procedure Code (CPPT) and principles of administrative transparency, potentially constituting an autonomous ground for challenging the assessment's legality before the CAAD arbitral tribunal.
Does the non-residential use of a property exempt it from Stamp Tax under Verba 28.1 of the General Stamp Tax Table?
Process 45/2016-T strongly indicates that non-residential use of property can exempt it from Stamp Tax under Verba 28.1 TGIS. The provision explicitly applies to 'property with residential purpose,' creating a critical distinction based on actual use. In this case, units leased to a Court for judicial functions were classified in matrix records as residential but were actually used for non-residential purposes. The tribunal's decision to annul the assessments suggests that actual use prevails over formal matrix classification. Properties demonstrably used for commercial, professional, institutional, or other non-residential purposes should not be subject to the 1% rate under Verba 28.1, even if matrix records indicate residential purpose.
What grounds can be used to challenge a Stamp Tax liquidation on high-value properties before the CAAD arbitral tribunal?
Process 45/2016-T demonstrates multiple grounds for challenging Stamp Tax on high-value properties before CAAD: (1) Misclassification of property use - where actual non-residential use contradicts residential classification under Verba 28.1; (2) Improper valuation methodology - particularly in vertical property where individual units should be assessed separately rather than aggregated; (3) Application of Article 49 EBF - exempting autonomous units below EUR 1,000,000 threshold; (4) Violation of the principle of equality and tax legality - where the Tax Authority distinguishes cases the law does not; (5) Breach of proportionality and tax justice principles; (6) Procedural irregularities in assessment acts. The successful challenge in this case confirms these grounds provide viable bases for arbitral review.
How does Article 49 of the EBF (Tax Benefits Statute) apply to Stamp Tax on vertical property units below the taxable threshold?
Article 49 of the Tax Benefits Statute (EBF) plays a crucial role in Stamp Tax on vertical property by potentially exempting autonomous units valued below EUR 1,000,000, even within buildings whose total value exceeds this threshold. Process 45/2016-T implicitly addresses this issue by requiring separate evaluation of individual units in vertical property arrangements. Article 49 EBF establishes that the taxable threshold should apply to each autonomous property unit rather than aggregate building value. This interpretation prevents inequitable taxation where individual unit owners would face Stamp Tax solely because their unit forms part of a larger valuable building. The provision ensures that only units individually valued at or above EUR 1,000,000 with residential purpose are subject to the 1% Stamp Tax rate under Verba 28.1 TGIS.