Stamp Tax on Vertical Property Under Verba 28.1 TGIS: CAAD Arbitration Decision 451/2014-T

ARBITRAL DECISION

Process no. 451/2014-T

I. REPORT

1. A, LDA, legal entity no. ..., with headquarters in … (hereinafter referred to as the Claimant), filed on 27.06.2014, under articles 2, no. 1, paragraph a) and 10 of Decree-Law no. 10/2011, of 20 January, as subsequently amended (hereinafter Tax Arbitration Legal Regime or TALR), a request for an arbitral ruling with a view to declaring the illegality of the assessments relating to Stamp Duty (SD) for the year 2013 with reference nos. 2014 ..., 2014 ..., 2014 ..., 2014 ..., 2014 ..., 2014 ..., 2014 ..., 2014 ..., 2014 ..., with the amount payable relating to the first instalment in the total amount of €4,317.60 and total collection amount of €12,952.70, with the Tax and Customs Authority (hereinafter Respondent or TCA) as the defendant.

a) Constitution of the Arbitral Tribunal

1. In accordance with articles 5, no. 2, paragraph a), 6, no. 1 and 11, no. 1, paragraph a) of the TALR, the Deontological Council of this Centre for Administrative Arbitration (CAAA) appointed the undersigned as sole arbitrator, who accepted the appointment.

2. Pursuant to the provisions of paragraph c) of no. 1 and of no. 8 of article 11 of the TALR, as communicated by the President of the Deontological Council of the CAAA, the Sole Arbitral Tribunal was constituted on 01.09.2014.

b) Procedural History

1. In the request for arbitral ruling (hereinafter initial petition or IP), the Claimant requests the declaration of illegality of the nine assessments relating to Stamp Duty for the year 2013 with reference nos. 2014 ..., 2014 ..., 2014 ..., 2014 ..., 2014 ..., 2014 ..., 2014 ..., 2014 ..., 2014 ..., resulting in a total collection amount of €12,952.70, with the total amount relating to the first instalment of €4,317.60, requesting, consequently, that "in their entirety, the said assessments be annulled, and that it be paid the respective indemnity interest to which it is entitled, in view of the amounts wrongfully paid in the respective enforcement proceedings, solely and exclusively due to fault attributable to the Tax Administration".

2. The TCA filed a reply requesting the rejection of the claims filed by the Claimant, sustaining the legal conformity of the acts which are the subject matter of the request for arbitral ruling.

3. By order of 6.10.2014, the Sole Arbitral Tribunal, pursuant to the provisions of paragraph c) of article 16 of the TALR, decided, without opposition from the parties, that it was not necessary to hold the meeting referred to in article 18 of the TALR, as the circumstances provided for in the various paragraphs of no. 1 of this provision were not present. It further decided, in accordance with no. 2 of article 18 of the TALR, to dispense with oral submissions, as the positions of the parties were perfectly set out in their respective submissions.

Finally, 6 January 2015 was set as the date for the delivery of the arbitral decision.

c) Matter to be Decided

1. The matter to be resolved on the merits of the dispute concerning the claim for declaration of illegality of the challenged assessments turns on determining whether, for purposes of the application of item 28.1 of the General Table of Stamp Duty (GTSD), in cases of a property in full ownership with storeys or divisions capable of independent use, regard should be had to the total value of the property resulting from the sum of the tax asset values of the various storeys or divisions with housing use, as underlies the assessments in question, or whether regard should instead be given to the tax asset value of each storey or division with housing use, as the Claimant invokes in its IP, with consequent violation of law, by error as to the presuppositions, of the controversial assessments.

II. SANATION

1. The Tribunal was regularly constituted and is competent to examine the matter indicated above (article 2, no. 1, paragraph a) of the TALR), the parties enjoy legal personality and capacity and have standing (articles 4 and 10, no. 2 of the TALR and article 1 of Administrative Order no. 112-A/2011, of 22 March) and are properly represented.

2. The cumulation of claims relating to the challenged assessments is admissible under article 3, no. 1 of the TALR, given that the merits of the claims depend on the examination of the same factual circumstances and the interpretation and application of the same rules of law, especially the provisions of item 28.1 of the GTSD.

3. The case does not suffer from nullities and no issues were raised which prevent the examination of the merits of the case, so that the conditions are in place for a final decision to be delivered.

III. DECISION OF THE MATTERS OF FACT AND ITS REASONING

1. Having examined the documentary evidence produced, the Tribunal finds proved, with relevance to the decision of the case, the following facts:

I. The Claimant is the owner of the urban property, not subject to the horizontal property regime, located in the street ..., in ..., registered in the property register of the parish of ... under article ... (see the urban property record attached as PA and as doc. no. 11).

II. The said urban property constitutes a "property in full ownership with storeys or divisions capable of independent use", with the "total tax asset value" of €1,374,720.00, being composed of 6 floors and 11 divisions with independent use, namely: … with use for commerce, with a tax asset value of €22,800.00; … with use for commerce, with a tax asset value of €56,650.00; …, with housing use, with a tax asset value of €165,180.00; …, with housing use, with a tax asset value of €142,420.00; …, with housing use, with a tax asset value of €165,180.00; …, with housing use, with a tax asset value of €142,420.00; …, with housing use, with a tax asset value of €165,180.00; …, with housing use, with a tax asset value of €142,420.00; …, with housing use, with a tax asset value of €165,180.00; … floor, with housing use, with a tax asset value of €142,420.00; … floor, with housing use, with a tax asset value of €64,870.00, all as shown in the aforementioned property record.

III. With reference to the year 2013, Stamp Duty assessments with reference nos. 2014 ..., 2014 ..., 2014 ..., 2014 ..., 2014 ..., 2014 ..., 2014 ..., 2014 ... and 2014 ... were made on 17.03.2014 with respect to the nine divisions capable of independent use intended for housing identified above in II, based on the total tax asset value of the nine floors with housing use, which corresponds to €1,295,270.00, by applying the rate of 1% established by item 28.1 of the GTSD to the tax asset value of each of the floors, all as shown in the collection notices attached as docs. nos. 2 to 10 to the IP which are hereby reproduced.

IV. In all the collection notices indicated above there is the mention: "Tax Asset Value of the property - total subject to tax: 1,295,270.00".

V. The Claimant made payment on 23.5.2014 of the 1st instalment of the tax resulting from the assessments which are the subject of the aforementioned collection notices, in the total amount of €4,317.60, as evidenced by the receipts contained in the collection notices attached as docs. nos. 2 to 10 to the IP.

1. There is no other factual matter relevant to the decision on the merits in view of the possible legal solutions that might be considered as not proved.

2. The Tribunal's conviction regarding the factual matters found to be proved resulted from the examination of uncontested documents, which are in the record, as specified in each of the points of the evidence above stated, the factual matter not being, moreover, the subject of any disagreement between the parties.

IV. ON THE LAW

a) Legal Framework

1. The legal framework immediately relevant for the decision concerns item no. 28 of the GTSD, which was introduced by article 4 of Law no. 55-A/2012, of 29.10, in the version applicable ratione temporis (prior to the amendment made by Law no. 83-C/2013, of 31.12), the content of which is as follows:

"28 - Ownership, usufruct or surface rights of urban properties whose tax asset value contained in the register, pursuant to the Municipal Property Tax Code (MPTC), is equal to or greater than (euro) 1,000,000 - on the tax asset value used for purposes of MPT:

28.1 - Per property with housing use - 1%".

1. In addition to this directly applicable normative provision, the following precepts are also relevant, in hermeneutic terms:

• in no. 5 of article 46 of the STC, pursuant to which: "Where assessment of the tax referred to in item no. 28 of the General Table is made, the collection document is issued in the timeframes, terms and conditions defined in article 119 of the MPTC, with the necessary adaptations";

• in no. 2 of article 67 of the STC, according to which: "Matters not regulated in this Code relating to item no. 28 of the General Table shall be governed, subsidiarily, by the provisions of the MPTC".

1. Considering, firstly, the references contained in the precepts cited in the previous point, it is important also to invoke here the following provisions of the MPTC:

• no. 4 of article 2 of the MPTC: "For purposes of this tax, each autonomous fraction, in the horizontal property regime, is deemed to constitute a property";

• paragraph b) of no. 2 of article 7 of the MPTC: "The tax asset value of urban properties with parts falling within more than one of the classifications of no. 1 of the preceding article is determined: b) Where the different parts are economically independent, each part is assessed by applying the corresponding rules, and the value of the property is the sum of the values of its parts".

• no. 3 of article 12 of the MPTC: "Each storey or part of property capable of independent use is considered separately in the matricial registration which also determines the respective tax asset value";

• article 92 of the MPTC, whose nos. 1, 2 and 3 establish, respectively, the following: "Each building in the horizontal property regime corresponds to a single registration in the register"; "In the generic description of the building, mention should be made of the fact that it is in the horizontal property regime"; "Each of the autonomous fractions is described in detail and individualized by the capital letter that corresponds to it according to alphabetical order";

• no. 1 of article 119 of the MPTC which establishes that: "The services of the Directorate-General of Taxes send to each taxpayer, by the end of the month prior to the month of payment, the respective collection document, with a breakdown of the properties, their parts capable of independent use, the respective tax asset value and the collection attributed to each municipality of the location of the properties".

b) Arguments of the Parties

1. To support its request for declaration of illegality of the controversial assessments, the Claimant, in its IP, alleges, in essence, the following:

i) "the TCA wrongly interprets the cited rule (item 28 of the GTSD), in that whether the property is registered in the property register in horizontal property, or in vertical property, the taxable base subject to MPT is always the tax asset value of each of the divisions capable of separate leasing, as was already the case under Property Tax and Municipal Tax" (no. 8; see also nos. 9, 25 and 26), as "the legislator would never have had any thought other than the taxation of 'luxury homes' and 'high tax asset value'" (no. 17) and "if the legislator said nothing regarding the manner of taxation of such properties under stamp duty at the rate of 1% and made no distinction between properties in vertical property and properties in horizontal property, with housing use and with tax asset values below such € 1,000,000.00, per storey or division capable of separate leasing, as in the present case occurred and occurs, it is well known that it intended to give them the same treatment in terms of stamp duty taxation, similar to what occurred and occurs in terms of MPT taxation and before, in Municipal Tax and Property Tax" (no. 21);

ii) "the Tax Authority, disregarding the tax asset value relating to each of the autonomous housing units of the property in the assessment of the stamp duty of item no. 28 of the General Table, clearly disrespected the 'ratio juris' of the precept, which can only provide for the incidence of the tax with respect to 'luxury homes' with tax asset value equal to or greater than € 1,000,000" (no. 37);

iii) "it is not credible that, knowing the legislator the reality of matricial registrations, the Law would appear suddenly and be applied to taxpayers in such circumstances (as in the case of the claimant), clearly breaching, among others, the principles of legal certainty and good faith that should exist in the conduct between the Administration and private parties, enshrined, especially, in articles 59 of the GTL and 7 of the Code of Administrative Procedure, provisions which had their origin in articles 22, 266 and 267 of the Constitution of the Portuguese Republic" (no. 31);

iv) "the TCA, with such conduct ended up giving, with or without intention, relevance to form, downplaying substance" (no. 10) because "subjecting such housing units to Stamp Duty, solely because of the absence of the legal instrument that formalized and formalizes horizontal property, is to totally deny the principle that governs in Tax Law of 'Substance over Form'" (no. 40).

1. For its part, in its reply, the TCA argues, in essence, the following:

i) "from the notion of property of article 2 of the MPTC, only autonomous fractions of property in the horizontal property regime are deemed to be properties - no. 4 of the cited article 2 of the MPTC"; but the Claimant is owner of a property in the regime of full or vertical property (articles 19 to 22);

ii) "what the (...) claimant seeks is that the TCA consider, for purposes of assessment of the present tax, that there exists analogy between the full property regime and the horizontal property regime", but "to seek that the interpreter and applier of tax law apply, by analogy, to the full property regime, the horizontal property regime is what is abusive and illegal" because "the interpreter of tax law cannot equate these regimes, in accordance with the rule that the concepts of other branches of law have the meaning in tax law that is given to them in those branches of law", so one cannot accept "that it be considered that, for purposes of item 28.1 of the General Table attached to the STC, that the parts capable of independent use have the same tax regime as autonomous fractions of the horizontal property regime" (articles 22 to 29);

iii) "Finding that the property is subject to the full property regime, but being physically constituted by parts capable of independent use, tax law attributed relevance to this materiality, evaluating these parts individually, pursuant to article 12 and consequently, pursuant to article 12, no. 3, of the MPTC, each storey or part of property capable of independent use is considered separately in the matricial registration, but in the same register, proceeding with the assessment of MPT taking into account the tax asset value of each part" (article 30);

iv) "The unity of the urban property in vertical property composed of several storeys or divisions is not, however, affected by the fact that all or part of those storeys or divisions are capable of economically independent use", such property continuing to be merely one, "thus the parts thereof are not distinct legally equated to autonomous fractions in the horizontal property regime" (articles 36 and 37);

v) "The fact that the MPT was determined based on the tax asset value of each part of property with economically independent use does not similarly affect the application of item 28, no. 1, of the General Table", which results from the "fact determining the application of that item of the General Table being the total tax asset value of the property and not separately that of each of its portions" (articles 40 and 41);

vi) "Any other interpretation would violate, that is, the letter and spirit of item 28.1 of the General Table and the principle of legality of the essential elements of the tax provided in article 103, no. 2, of the Portuguese Republic Constitution (PRC)", because "A type of incidence according to which the tax asset value of urban properties on which the application of item 28.1 of the General Table depends is the tax asset value of each storey or division capable of independent use and not the total tax asset value of the urban property with housing use does not certainly have any expression in the law", so it is "unconstitutional, by being offensive to the principle of tax legality, the interpretation of item 28.1 of the General Table, in the sense that the tax asset value on which its incidence depends is ascertained globally and not storey by storey or storey or division by division" (articles 43 to 45).

c) Appraisal by the Tribunal

1. To resolve the crucial question for the resolution of the dispute (see above no. 7) of the definition of the "tax asset value contained in the register" "equal to or greater than €1,000,000" which should be applicable in cases of properties in full ownership with storeys or divisions capable of independent use, it is evidently necessary to proceed with the due interpretation of the rule of objective incidence (see article 1, no. 1 of the STC) contained in item 28.1 of the GTSD, so as to determine, based on the hermeneutic guidelines resulting from article 11 of the General Tax Law (GTL) and article 9 of the Civil Code, the exact meaning and scope of the said normative proposition.

As is well known, pursuant to those hermeneutic guidelines, it is appropriate to invoke, as relevant factors in the operation of concretization of the Law, the classic elements of grammatical, historical, systematic and teleological interpretation.

1. Given the recent and even conjunctural character of the normativity in question, it seems useful to begin by inquiring into the options underlying it by investigating a possible will of the historical legislator regarding the legal matter here being judged. Let us begin, then, by attending to the historical element of interpretation, seeking in the preparatory works possible subsidies on the legislative choices.

Law no. 55-A/2012, of 29 October was based on Bill no. 96/XII/2ª, whose Explanatory Memorandum, after referring to the fact that: "The pursuit of the public interest, in view of the country's economic and financial situation, requires an effort of consolidation which will require, beyond permanent activism in reducing public expenditure, the introduction of fiscal measures inserted in a broader set of measures to combat budgetary deficit" and adding that: "These measures are fundamental to reinforce the principle of social equity in austerity, ensuring an effective distribution of the sacrifices necessary to fulfill the adjustment program" and that: the "Government is strongly committed to ensuring that the distribution of those sacrifices will be made by all and not only by those who live on their work income" so "taxation of capital and property income is extended, equitably covering a broad set of sectors of Portuguese society", limits itself to referring, regarding the taxation here under consideration, that: "a rate is created under Stamp Duty applicable to urban properties with housing use whose tax asset value is equal to or greater than one million euros".

In the general debate (see PAR, I Series, no. 9/XII/2, of 11/10/2012, p. 32) it is only possible to glean, with interest for the matter here at issue, the following statements by the State Secretary for Tax Affairs (Paulo Núncio), representing the proposing Government, about the "creation of a special rate to tax urban residential properties of higher value": "First of all the Government proposes the creation of a special rate on urban residential properties of higher value. This is the first time that in Portugal a special taxation is created on properties of high value intended for housing. This rate will be 0.5% to 0.8% in 2012, and 1%, in 2013, and will apply to houses of value equal to or greater than 1 million euros. With the creation of this additional rate the tax burden required of these owners will be significantly increased in 2012 and 2013".

Well, it cannot be overlooked in these statements the simultaneous use, with synonymous value, of the formulations "urban residential properties of higher value", "properties of high value intended for housing" and "houses of value equal to or greater than 1 million euros". Now, one of the socially typical meanings of "house" is precisely that of a place or housing unit, so one could immediately understand that the legislator had in mind, and hence the resort to all those formulations, a separate and specific consideration of housing units, whether they are properties, autonomous fractions or independent storeys or divisions. From this it would follow that the incidence for purposes of item 28.1 of the GTSD and the assessment of the "tax asset value contained in the register" "equal to or greater than €1,000,000" would be governed by the particular consideration of each "housing" in order to tax the "luxury homes" (properties, detached houses, apartments) that the legislator seems to have had in mind in its stated objective of "effective distribution of the sacrifices necessary to fulfill the adjustment program".

It is thought, however, that the interpreter-applier cannot fail to recognize that this reading appears as semantically excessive, by associating particular normative solutions with the mere use of imprecise linguistic words by the historical legislator, and it is also important to bear in mind what was written in the decision of this CAAA of 2.10.2013, delivered in case no. 53/2013-T: "The recognized lack of coherence of Stamp Duty is particularly exuberant in the case of this item no. 28.1, hastily included outside of the General State Budget (sic), by a tax legislator without perceptible global tax orientation, who is successively implementing norms of tax aggravation in accordance with the setbacks in budget execution, the impositions of international institutional creditors (represented by the 'troika') and the scrutiny of the Constitutional Court".

Thus, it does not seem that, in this context, it is possible to gather from the preparatory works elements capable of, in the matter sub judice, providing a solid basis for the interpretation of the provision in question.

1. Let attention be directed, then, to the letter of the law, the primordial and decisive element for fixing the "legislative thought", although interpretation should not be confined simply to the legal text (article 9, no. 1 of the Civil Code and 11, no. 1 of the GTL).

By reason of the literal element, the crucial point that should be initially highlighted is that the references in item 28 of the GTSD to "urban properties whose tax asset value contained in the register, pursuant to the Municipal Property Tax Code (MPTC), is equal to or greater than (euro) 1,000,000" and to "tax asset value used for purposes of MPT" imply that this rule has a character fundamentally referential, so that the relevant regulatory content depends on the normativity ad quam contained in the MPTC.

In fact, whether as to the objective incidence, with the reference to the "tax asset value contained in the register, pursuant to the Municipal Property Tax Code", or as to the fixing of the taxable matter, with the reference to the "tax asset value used for purposes of MPT", the regulatory content of this item 28 of the GTSD results from the devolution – in terms of a general reference – to the regulatory set that is found in the MPTC.

This is, moreover, a legislative technique that characterizes incisively the functioning of this item 28 of the GTSD, as results from the legislator having even determined, in generic terms, that "matters not regulated in this Code relating to item no. 28 of the General Table shall be governed, subsidiarily, by the provisions of the MPTC" (no. 2 of article 67 of the STC), as well as, in various precepts of the STC relating to this item, there are particular references to provisions of the MPTC (see articles 2, no. 4, 5, no. 1, paragraph u), 23, no. 7, 44, no. 5, 46, no. 5 and 49, no. 3 of the MPTC).

1. Well, when considering the real estate reality of urban properties in full ownership with storeys or parts capable of independent use it is essential to take into account, in view of those references contained in item 28.1 of the GTSD, the provisions of the cited article 12, no. 3 of the MPTC, pursuant to which: "Each storey or part of property capable of independent use is considered separately in the matricial registration which also determines the respective tax asset value".

It results, then, from this provision that storeys or parts of property capable of independent use possess a specific and own tax asset value, which is the subject of autonomous registration in the property register (see, moreover, the example constituted by the property of the case at hand as results from the property record referred to in point no. II of the evidence). There is thus a clear autonomization for purposes of MPT of storeys or parts of property capable of independent use, which, although integrated in the same matricial article, are the subject of specific evaluation (article 7, no. 2, paragraph b) of the MPTC), of separate and autonomous matricial registration and of distinct and autonomous tax asset value (referred to in no. 3 of article 12 of the MPTC). The importance of this autonomization of the tax asset values of storeys or parts of property capable of independent use is so assumed by the legislator of the MPTC that it is specifically provided as a ground for challenging the incorrectness of matricial registrations the "non-discrimination of the tax asset value of urban properties by storeys or divisions of autonomous use" (paragraph h) of no. 3 of article 130 of the MPTC).

Now, taking into account that item 28.1 of the GTSD establishes, in terms of the references it incorporates, that, in the taxation of urban properties with housing use, regard is had, for purposes of incidence, "to the tax asset value contained in the register, pursuant to the Municipal Property Tax Code", and, for purposes of taxable matter, to the "tax asset value used for purposes of MPT", then, in urban properties in full ownership with storeys or divisions capable of independent use, one cannot fail to take into account the tax asset value specific to each storey, in conformity with what is provided in no. 3 of article 12 of the MPTC, as it is that both the tax asset value contained in the register in terms of the MPTC and the tax asset value used for purposes of MPT.

From this it follows, and with this the systematic element of interpretation is invoked, that it results from article 119, no. 1 of the MPTC, applicable by force of no. 5 of article 46 of the STC, that the collection documents of the tax discriminate the storeys or parts of property with independent use, reporting in individualized terms to the parts capable of autonomous use and not to the property as a single whole.

Thus, given that the parts of a property in full property ownership with independent use and housing use are the subject of autonomous evaluation, have separate registration in the property register, possess own tax asset value contained in the register and are the subject of assessment and issuance of collection document in an individualized manner, all as determined by the terms of the MPTC (respective articles 7, no. 2, paragraph b), 13, no. 2 and 119, no. 1), the same must hold for the SD of item 28 of the GTSD, given the express reference, made in this item (without even incorporating the traditional caveat "with the necessary adaptations"), to the provisions of the MPTC regarding the tax asset value contained in the register and to the tax asset value used for purposes of MPT.

It is understood, therefore, that the interpretation of item 28.1 of the GTSD implies that the value relevant for purposes of the incidence of SD corresponds to the tax asset value that is contained in the register with respect to each storey or part of property capable of independent use, as provided in no. 3 of article 12 of the GTSD.

Thus, pursuant to item 28 of the GTSD, the incidence in stamp duty, in cases of urban properties in full ownership with storeys or divisions capable of independent use, applies to each storey or division with independent use for housing use with tax asset value equal to or greater than €1,000,000.

1. This interpretation appears to be particularly confirmed in a case such as the present one in which the property in question has parts capable of independent use with housing use and parts capable of independent use with commercial use (see the factuality at issue in point no. II of the evidence).

That is, in such circumstances, there is not contained in the register nor is used for purposes of MPT a "tax asset value" that corresponds to the sum of the tax asset values of the storeys of independent use with housing use (see in the fact proved sub no. IV of the evidence the mention in the collection documents of "Tax Asset Value of the property - total subject to tax: 1,295,270.00"). In fact, what the MPTC establishes, according to the cited article 7, no. 2, paragraph b), and is contained in the register (see in the fact reported in no. II of the evidence the reference to the "total tax asset value" of €1,374,720.00) is that the "value of the property" is "the sum of the values of its parts", therefore, of all its parts, whatever their use.

Consequently, the "tax asset value of the property - total subject to tax" (see point no. IV of the evidence) on which the challenged assessments are based does not have correspondence with the legal category enshrined in item 28 of the GTSD of the "tax asset value contained in the register, pursuant to the Municipal Property Tax Code".

It must be insisted, in fact, that the MPTC only refers, as results from article 7, no. 2, paragraph b) above cited, to the "value of the property" as sum of all its parts which are the subject of autonomous evaluation, thus not legitimizing the configuration of partial values of the property by attending only to certain economically independent parts of the property (those which have housing use), disregarding parts with other uses (for commerce, industry or for services). In such context, the value of the property as provided in article 7, no. 2, paragraph b) of the MPTC is not realized, but rather the value of the set of certain parts of the property, a value which is not the subject of any provision in terms of the Municipal Property Tax Code nor is it tax asset value used for purposes of MPT.

It is therefore submitted that it is considered that in the challenged assessments there is the adoption, for purposes of the fixing of the incidence of item 28.1 of the GTSD, of a tax asset value that finds no accommodation in the law.

1. Furthermore, it is considered that the interpretation thus made of item 28.1 of the GTSD, according to which, in cases of properties in full ownership with storeys or divisions capable of independent use, regard should be had to the tax asset value specific to each storey or division with housing use contained in the competent register, is that which best accords with the principles of equality and contributory capacity (see article 13 and article 104, no. 3 of the PRC), and that, therefore, better adequately fits to the ratio legis that seems to preside over the creation of this item in SD of "distribution of sacrifices" through taxation in SD of "properties of high value intended for housing" (see above no. 20).

That is, for purposes of the regulatory logic proper to the MPTC and, therefore, of this item 28.1 of the GTSD, in view of the legal reference to that diploma (see above no. 21), it is unquestionable a normative equation of properties in full or vertical ownership, with storeys capable of independent use, with properties in horizontal ownership, with autonomous fractions, as is demonstrated by the following: i) the rules for registration of the Standard Declaration Model 1 approved by Administrative Order no. 1282/2003, of 13.11 – table V lines 49 and 50 and Annex II – involve a filling out in identical terms of properties in full ownership with storeys or divisions capable of independent use and of properties subject to the horizontal property regime; ii) specific tax asset values are attributed to each part capable of independent use of a property in full ownership in the same manner as this occurs for each autonomous fraction of a property in the horizontal property regime (articles 7, no. 2, paragraph b), 12, no. 3 and 93 of the MPTC); iii) they are the subject of individualized discrimination in the respective collection documents of the parts of properties capable of independent use in the same terms as this occurs with autonomous fractions (articles 119, no. 1 and 4, no. 2 of the MPTC).

In these terms, since it is the MPTC itself, to which in general terms the regulation relating to item 28 of the GTSD refers (see above no. 21), that equates the situation of parts of properties capable of independent use with autonomous fractions, the normative sense above attributed to item 28.1 of the GTSD is that which duly respects the principle of equality, as it is important to recognize, from a perspective of contributory capacity for purposes of the property taxation in question, there is no relevant difference between the ownership of a property with independent units with certain own tax asset values and a property in horizontal ownership with autonomous fractions with the same own tax asset values.

1. It is concluded, in view of the foregoing, that, with respect to properties in full ownership with storeys or divisions capable of independent use, regard should be had exclusively to the tax asset value specific to each storey or division with housing use contained in the register for purposes of the application of item 28.1 of the GTSD.

It should be noted that the meaning thus ascertained of the provision contained in item 28.1 of the GTSD, contrary to what is alleged by the Respondent (see above no. 18, v)), does not violate the principle of tax legality established in no. 2 of article 103 of the PRC, first of all because it finds adequate verbal correspondence in the legal text (article 9, no. 2 of the Civil Code) in conformity with the hermeneutic guidelines applicable, but especially because the constitutional principle of tax legality relates to the plane of creation of tax norms regarding the "essential elements" of the tax, not to the plane of its interpretation and application.

d) Application to the Case Sub Judice

1. It is now necessary to proceed with the application to the case sub judice of the legal solution to which it has been reached regarding the interpretation of item 28.1 of the GTSD.

In this respect, in view of the factuality found to be proved in no. II of the evidence, it must be recognized that none of the storeys of independent use with housing use of the property identified in no. I of that same evidence possesses a tax asset value equal to or greater than €1,000,000.00.

Consequently, as the tax asset value of each of the said storeys of independent use with housing use is less than the value provided for in item 28.1 of the GTSD, it follows that such storeys do not fall within the tax incidence rule contained in this item 28.1, so that the challenged assessments suffer from the defect of violation of law, by error as to the presuppositions of law regarding item 28.1 of the GTSD, which implies the declaration of their illegality and consequent annulment in terms of article 135 of the Code of Administrative Procedure, which is decided.

The declaration of illegality of the assessments which are the subject of the present case by reason of the defect of violation of law as set out makes unnecessary the consideration of the other grounds invoked by the Claimant.

e) Indemnity Interest

1. The Claimant further seeks the condemnation of the TCA to the reimbursement of the tax wrongfully paid in the amount, regarding the first instalment, of €4,317.60 (see fact found to be proved in no. V of the evidence), as well as the respective indemnity interest.

Article 24, paragraph b) of the TALR prescribes that the arbitral decision on the merits of the claim as to which no appeal or challenge is possible binds the tax administration from the end of the period set for appeal or challenge, and the latter must, in the exact terms of the success of the arbitral decision in favor of the taxpayer and until the end of the period set for the voluntary execution of the decisions of the tax courts, restore the situation that would have existed if the tax act which is the subject of the arbitral decision had not been made, adopting the acts and operations necessary for that purpose, which should be understood, in conformity with article 100 of the GTL, applicable ex vi paragraph a) of no. 1 of article 29 of the TALR, as encompassing the payment of indemnity interest, in accordance, moreover, with the provisions of no. 5 of this same article 24 of the RGTA.

Article 43, no. 1, of the GTL provides that "indemnity interest is due when it is determined, in amicable reclamation or judicial challenge, that there was an error attributable to the services which resulted in payment of the tax debt in an amount higher than legally due", establishing no. 4 of article 61 of the TCPP, that "if the decision recognizing the right to indemnity interest is judicial, the payment period is counted from the beginning of the period of its voluntary execution".

1. Given that, in the case under consideration, the illegality of the challenged assessments is verified, by error as to the presuppositions of Law, which is attributable to the Tax Administration, which, by its own initiative, in the assessments made, proceeded with the incorrect interpretation and application to the case of the provision contained in item 28.1 of the GTSD, the Claimant has the right, in conformity with articles 24, no. 1, paragraph b) of the TALR and 100 of the GTL, to the reimbursement of the tax installments paid in excess in the total amount of €4,317.60, and to indemnity interest, in terms of article 43, no. 1 of the GTL and 61 of the TCPP, calculated on the mentioned amount of €4,317.60 from 23.5.2014 (see fact proved sub no. V), at the rate resulting from no. 4 of article 43 of the GTL, until complete reimbursement of the total amount paid.

V. DECISION

In these terms it is decided:

i) to find entirely in favor of the claim formulated in the present arbitral tax proceeding and, consequently, to declare illegal and annul the Stamp Duty assessments nos. 2014 ..., 2014 ..., 2014 ..., 2014 ..., 2014 ..., 2014 ..., 2014 ..., 2014 ..., 2014 ...;

ii) to find in favor of the claim for condemnation of the Tax and Customs Authority to reimburse to the Claimant the amount of the tax wrongfully paid, increased by indemnity interest in accordance with the law, from the date the payment was made until the date of its complete reimbursement;

iii) to condemn the TCA in the costs of the proceeding.

VI. VALUE OF THE CASE

In accordance with the provisions of article 306, nos. 1 and 2 of the Code of Civil Procedure, in article 97-A, no. 1, paragraph a), and no. 3 of the Code of Tax Procedure and Process, applicable by force of paragraphs a), c) and e) of no. 1 of article 29 of the TALR and of no. 2 of article 3 of the Regulation of Costs in Tax Arbitration Proceedings (RCTAP), the value of the proceeding is fixed at €12,952.70, which constitutes the total amount of the tax resulting from the challenged assessments whose annulment was sought.

It is made explicit, in view of the Claimant's request of 09.12.2014, that it is this amount of €12,952.70 that is relevant in conformity with the indicated article 97-A of the TCPP, applicable by force of article 3, no. 2 of the RCTAP. In fact, notwithstanding that the identified collection documents relate to the total value of €4,317.60, this value relates only to the amount of the 1st instalment, in conformity with the provisions of articles 44, no. 5 of the STC and 120 of the MPTC regarding the timeframes and terms of payment of the tax. Now, the subject matter of the present proceeding, as results from the claim contained in the IP, is the challenge of the nine assessments identified whose total collection is the mentioned amount of €12,952.70, so that it is this amount whose annulment was sought (article 97-A, no. 1, paragraph a) of the TCPP).

VII. COSTS

In accordance with the provisions of articles 12, no. 2, and 22, no. 4, both of the TALR, and article 4, no. 4 of the Regulation of Costs of Tax Arbitration Proceedings, the amount of the arbitration fee is fixed at €918.00, in terms of Table I of the mentioned Regulation, to be borne by the Respondent, given the success of the claim for annulment of the tax acts which are the subject matter of the record.

Notify.

Lisbon, 6 January 2015.

The Arbitrator

(João Menezes Leitão)

[1] The spelling resulting from the Orthographic Agreement of the Portuguese Language of 1990 is adopted, and the spelling contained in the citations made has been updated accordingly.

[2] This proposal, entitled "Introduces amendments to the Personal Income Tax Code, the Corporate Income Tax Code, the Stamp Duty Code and the General Tax Law" can be consulted at:

http://www.parlamento.pt/ActividadeParlamentar/Paginas/DetalheIniciativa.aspx?BID=37245.

[3] Also available at:

http://www.parlamento.pt/ActividadeParlamentar/Paginas/DetalheIniciativa.aspx?BID=37245.