Process: 454/2015-T

Date: March 21, 2016

Tax Type: Selo

Source: Original CAAD Decision

Summary

In Process 454/2015-T, the CAAD addressed whether stamp duty under item 28.1 of the General Stamp Tax Table (TGIS) applies to vertical property based on total building value or individual unit values. Three co-owners of a Lisbon building with 92 independent units challenged stamp tax assessments totaling €29,168.35 for 2014, arguing that tax should be assessed per unit rather than on the aggregate property value. Since no individual unit exceeded the €1,000,000 threshold in item 28.1 TGIS, claimants contended no stamp duty was due. They also raised constitutional challenges based on principles of taxpaying capacity and equality under Articles 103(1) and 104(3) of the Portuguese Constitution. The Tax Authority defended that the relevant taxable value for stamp duty purposes is the total property value of the entire building, not each division's individual value. This arbitral decision clarifies critical questions about stamp duty assessment methodology for vertical property arrangements and the constitutional limits of taxation on high-value real estate in Portugal.

Full Decision

ARBITRAL DECISION

1. Report

On 17-07-2015, A…, taxpayer no. …, resident at Avenue …, …, …, Lisbon, B…, taxpayer no. …, resident at Street …, no. …, …, Lisbon, and C…, taxpayer no. …, resident at Avenue …, …, …, Lisbon, hereinafter referred to as Claimants, submitted to the Administrative Arbitration Center (CAAD) a request for constitution of an arbitral tribunal with a view to declaring the illegality of the acts imposing Stamp Tax in the total amount of €29,168.35, relating to the year 2014 and to item 28.1 of the General Stamp Tax Table. Said assessments are related to urban real property located at …, no. … to no. …, …, no. … and …, …, no. … to …, parish of …, municipality of Lisbon, described in the Land Registry Conservatory of Lisbon under no. …, and entered in the urban property matrix of that parish under article …, constituted as vertical ownership and with ninety-two divisions capable of independent use, of which seventy-one divisions are intended for residential purposes.

The Claimants allege that subjection to stamp tax is determined not by the global taxable property value (TPV) of the property, but by the TPV attributed to each floor or independently usable division. And since none of the floors with independent use has a taxable property value (TPV) exceeding one million euros (€1,000,000), no Stamp Tax can be assessed or collected.

The Claimants further allege that the T.A.A. is "obliged to interpret item no. 28.1 of the General Stamp Tax Table in accordance with and in respect of the principle of taxpaying capacity and equality," and that its conduct "proves to be contrary to the meaning and scope of the provisions of no. 1 of article 103 and no. 3 of article 104 of the Constitution of the Portuguese Republic, whereby a judgment of unconstitutionality should fall upon it." They conclude by asserting that the Stamp Tax assessments in question in these proceedings are unconstitutional because they violate the principle of equality enshrined in the Constitution of the Portuguese Republic.

The Claimants finally request the restitution of improperly paid tax, plus compensatory interest, in accordance with article 43, no. 1 of the General Tax Code.

A sole arbitrator was appointed on 17-09-2015: Suzana Fernandes da Costa.

In accordance with the provisions of article 11, no. 1, paragraph c) of the RJAT, the singular arbitral tribunal was constituted on 02-10-2015.

The Tax and Customs Authority submitted its response on 03-11-2015, defending the maintenance of the taxed acts, requesting dismissal of the claim, and arguing that the relevant property value for purposes of stamp tax incidence would be the total property value of the urban real property and not the property value of each floor or division, even if they were capable of independent use.

In its response, the T.A.A. requested exemption from the meeting provided for in article 18 of the RJAT, as well as from the presentation of arguments.

On 04-11-2015, an order was issued requiring notification of the Claimants to comment, within 10 days, on the T.A.A.'s request for exemption from the meeting and from the arguments.

On 12-11-2015, the Claimants informed that they would not oppose the exemption from holding the arbitral tribunal meeting and that they would not waive the presentation of arguments.

On the same date, the Claimants also attached to the proceedings the collection documents for the second and third installments meanwhile notified to the Claimants, in the total amount of €4,295.11.

The attachment to the proceedings of the documents referred to was admitted on 17-11-2015, and on the same date the Respondent was ordered to comment on them within 10 days, in accordance with the principle of due process. The Respondent did not comment within the granted period.

On 01-02-2016, an order was issued exempting the meeting provided for in article 18 of the RJAT, and granting a period of 15 days for Claimants and Respondent, if they wished, to successively present their written arguments in that order. In this order, 22-03-2016 was also set as the date for rendering the arbitral decision, and the Claimants were warned to pay the subsequent arbitral fee by that date.

The Claimants submitted their arguments on 11-02-2016 and the Respondent presented its arguments on 29-02-2016.

The parties have legal personality and capacity and are legitimate (articles 4 and 10, nos. 1 and 2 of the RJAT and article 1 of Ordinance no. 112-A/2011 of March 22).

The arbitral claim is timely, in accordance with article 10, no. 1, paragraph a) of Decree-Law no. 10/2011 of January 20 and article 102, no. 1, paragraph a) of the Code of Tax Procedure and Process.

The proceedings do not suffer from nullities and no preliminary questions were raised, apart from the request for cumulation of claims and joinder of parties which shall be decided next.

The Claimant requested the cumulation of claims and joinder of parties, alleging that the requirements of no. 1 of article 3 of the RJAT are satisfied and that it involves the assessment of the same factual circumstances and the interpretation and application of the same legal principles and rules.

In this case, the cumulation of claims and joinder of parties is admissible, in accordance with articles 104 of the CPPT and 3 of the RJAT, and is therefore admitted.

2. Factual Matters

2.1. Proven Facts:

Having analyzed the documentary evidence produced and the position of the parties contained in the procedural documents, the following facts are considered proven and relevant for the decision of the case:

  • Claimant A… was, in 2014, co-owner of 15/44 of the urban real property located at …, no. … to no. …, …, no. … and …, …, no. … to …, parish of …, municipality of Lisbon, described in the Land Registry Conservatory of Lisbon under no. …, and entered in the urban property matrix of that parish under article …, as evidenced by the property certificate and property register attached to the arbitral claim as documents nos. 1 and 2.

  • Claimant A… was notified of the following Stamp Tax assessments for the year 2014, attached to the arbitral claim as documents 3 to 74:

    • Assessment no. 2015 … in the amount of €96.48, relating to floor 1/LJ of the property referred to above, whose TPV is €28,301.73;

    • Assessment no. 2015 … in the amount of €207.75, relating to floor 15/2D of the property referred to above, whose TPV is €60,939.75;

    • Assessment no. 2015 … in the amount of €186.62, relating to floor 15/3D of the property referred to above, whose TPV is €54,740.53;

    • Assessment no. 2015 … in the amount of €239.90, relating to floor 15/3E of the property referred to above, whose TPV is €70,370.15;

    • Assessment no. 2015 … in the amount of €195.69, relating to floor 15SLJ of the property referred to above, whose TPV is €57,403.35;

    • Assessment no. 2015 … in the amount of €78.40, relating to floor 16/LJ of the property referred to above, whose TPV is €22,997.13;

    • Assessment no. 2015 … in the amount of €221.53, relating to floor 17RC1 of the property referred to above, whose TPV is €64,981.35;

    • Assessment no. 2015 … in the amount of €133.05, relating to 1st floor of the property referred to above, whose TPV is €39,026.70;

    • Assessment no. 2015 … in the amount of €76.53, relating to floor 2/LJ of the property referred to above, whose TPV is €22,449.83;

    • Assessment no. 2015 … in the amount of €201.72, relating to floor 2E82 of the property referred to above, whose TPV is €59,171.55;

    • Assessment no. 2015 … in the amount of €144.60, relating to floor 3/3D of the property referred to above, whose TPV is €42,415.75;

    • Assessment no. 2015 … in the amount of €146.46, relating to floor 3/3E of the property referred to above, whose TPV is €42,963.05;

    • Assessment no. 2015 … in the amount of €67.38, relating to floor 3/SLJ of the property referred to above, whose TPV is €19,765.95;

    • Assessment no. 2015 … in the amount of €182.85, relating to floor 3E82 of the property referred to above, whose TPV is €53,635.40;

    • Assessment no. 2015 … in the amount of €70.94, relating to floor 4/LJ of the property referred to above, whose TPV is €20,807.93;

    • Assessment no. 2015 … in the amount of €51.27, relating to floor 4D82 of the property referred to above, whose TPV is €15,040.23;

    • Assessment no. 2015 … in the amount of €51.27, relating to floor 4E82 of the property referred to above, whose TPV is €15,040.23;

    • Assessment no. 2015 … in the amount of €66.81, relating to floor 6/1A of the property referred to above, whose TPV is €19,597.55;

    • Assessment no. 2015 … in the amount of €40.69, relating to floor 6/1B of the property referred to above, whose TPV is €11,935.35;

    • Assessment no. 2015 … in the amount of €66.81, relating to floor 6/2C of the property referred to above, whose TPV is €19,597.55;

    • Assessment no. 2015 … in the amount of €40.69, relating to floor 6/2D of the property referred to above, whose TPV is €11,935.35;

    • Assessment no. 2015 … in the amount of €190.96, relating to floor 6/2DT of the property referred to above, whose TPV is €56,014.05;

    • Assessment no. 2015 … in the amount of €195.16, relating to floor 6/2E of the property referred to above, whose TPV is €57,245.48;

    • Assessment no. 2015 … in the amount of €67.49, relating to floor 6/3E of the property referred to above, whose TPV is €19,797.53;

    • Assessment no. 2015 … in the amount of €197.16, relating to floor 6/3ES of the property referred to above, whose TPV is €57,834.88;

    • Assessment no. 2015 … in the amount of €41.94, relating to floor 6/3F of the property referred to above, whose TPV is €12,303.73;

    • Assessment no. 2015 … in the amount of €174.56, relating to floor 6/4D of the property referred to above, whose TPV is €51,204.13;

    • Assessment no. 2015 … in the amount of €186.08, relating to floor 6/4E of the property referred to above, whose TPV is €54,582.65;

    • Assessment no. 2015 … in the amount of €67.49, relating to floor 6/4G of the property referred to above, whose TPV is €19,797.53;

    • Assessment no. 2015 … in the amount of €41.12, relating to floor 6/4H of the property referred to above, whose TPV is €12,061.65;

    • Assessment no. 2015 … in the amount of €139.58, relating to floor 6/RCD of the property referred to above, whose TPV is €40,942.25;

    • Assessment no. 2015 … in the amount of €75.21, relating to floor 6/RCE of the property referred to above, whose TPV is €22,060.40;

    • Assessment no. 2015 … in the amount of €42.20, relating to floor 7/LJ of the property referred to above, whose TPV is €12,377.40;

    • Assessment no. 2015 … in the amount of €165.16, relating to floor 8/1 of the property referred to above, whose TPV is €48,446.58;

    • Assessment no. 2015 … in the amount of €56.37, relating to floor 8/1D of the property referred to above, whose TPV is €16,534.78;

    • Assessment no. 2015 … in the amount of €58.41, relating to floor 8/1E of the property referred to above, whose TPV is €17,134.70;

    • Assessment no. 2015 … in the amount of €49.08, relating to floor 8/1F of the property referred to above, whose TPV is €14,398.20;

    • Assessment no. 2015 … in the amount of €56.37, relating to floor 8/2D of the property referred to above, whose TPV is €16,534.78;

    • Assessment no. 2015 … in the amount of €58.41, relating to floor 8/2E of the property referred to above, whose TPV is €17,134.70;

    • Assessment no. 2015 … in the amount of €48.91, relating to floor 8/2F of the property referred to above, whose TPV is €14,345.58;

    • Assessment no. 2015 … in the amount of €56.94, relating to floor 8/3D of the property referred to above, whose TPV is €16,703.18;

    • Assessment no. 2015 … in the amount of €59.02, relating to floor 8/3E of the property referred to above, whose TPV is €17,313.63;

    • Assessment no. 2015 … in the amount of €49.41, relating to floor 8/3F of the property referred to above, whose TPV is €14,492.93;

    • Assessment no. 2015 … in the amount of €54.50, relating to floor 8/4D of the property referred to above, whose TPV is €15,987.48;

    • Assessment no. 2015 … in the amount of €56.76, relating to floor 8/4E of the property referred to above, whose TPV is €16,650.55;

    • Assessment no. 2015 … in the amount of €42.63, relating to floor 8/4F of the property referred to above, whose TPV is €12,503.70;

    • Assessment no. 2015 … in the amount of €81.56, relating to floor 8/RCD of the property referred to above, whose TPV is €23,923.33;

    • Assessment no. 2015 … in the amount of €81.56, relating to floor 8/RCE of the property referred to above, whose TPV is €23,923.33;

    • Assessment no. 2015 … in the amount of €174.49, relating to floor 8/SLD of the property referred to above, whose TPV is €51,183.08;

    • Assessment no. 2015 … in the amount of €140.51, relating to floor 9/1D of the property referred to above, whose TPV is €41,215.90;

    • Assessment no. 2015 … in the amount of €58.99, relating to floor 9/1E of the property referred to above, whose TPV is €17,303.10;

    • Assessment no. 2015 … in the amount of €140.51, relating to floor 9/2D of the property referred to above, whose TPV is €41,215.90;

    • Assessment no. 2015 … in the amount of €58.99, relating to floor 9/2E of the property referred to above, whose TPV is €17,303.10;

    • Assessment no. 2015 … in the amount of €141.94, relating to floor 9/3D of the property referred to above, whose TPV is €41,636.90;

    • Assessment no. 2015 … in the amount of €59.60, relating to floor 9/3E of the property referred to above, whose TPV is €17,482.03;

    • Assessment no. 2015 … in the amount of €129.13, relating to floor 9/4D of the property referred to above, whose TPV is €37,879.48;

    • Assessment no. 2015 … in the amount of €56.58, relating to floor 9/4E of the property referred to above, whose TPV is €16,597.93;

    • Assessment no. 2015 … in the amount of €61.97, relating to floor 9/RCD of the property referred to above, whose TPV is €18,176.68;

    • Assessment no. 2015 … in the amount of €104.70, relating to floor 9/RCE of the property referred to above, whose TPV is €30,711.95;

    • Assessment no. 2015 … in the amount of €131.36, relating to floor RC D of the property referred to above, whose TPV is €38,532.03;

    • Assessment no. 2015 … in the amount of €179.91, relating to floor RC E of the property referred to above, whose TPV is €52,772.35;

    • Assessment no. 2015 … in the amount of €190.96, relating to floor S/LFD of the property referred to above, whose TPV is €56,014.05;

    • Assessment no. 2015 … in the amount of €257.30, relating to floor 15/1E of the property referred to above, whose TPV is €75,474.78;

    • Assessment no. 2015 … in the amount of €263.87, relating to floor 15/2E of the property referred to above, whose TPV is €77,400.85;

    • Assessment no. 2015 … in the amount of €340.01, relating to floor 1D82 of the property referred to above, whose TPV is €99,734.90;

    • Assessment no. 2015 … in the amount of €356.19, relating to floor 1DF82 of the property referred to above, whose TPV is €104,481.68;

    • Assessment no. 2015 … in the amount of €356.19, relating to floor 2DF82 of the property referred to above, whose TPV is €104,481.68;

    • Assessment no. 2015 … in the amount of €280.53, relating to floor 3/1 of the property referred to above, whose TPV is €85,220.93;

    • Assessment no. 2015 … in the amount of €322.17, relating to floor 3DF82 of the property referred to above, whose TPV is €94,503.98;

    • Assessment no. 2015 … in the amount of €391.57, relating to floor 3EF82 of the property referred to above, whose TPV is €114,859.33;

    • Assessment no. 2015 … in the amount of €774.81, relating to floor 6/16L of the property referred to above, whose TPV is €227,276.85.

  • Claimant C… was, in 2014, co-owner of 15/44 of the urban real property located at …, no. … to no. …, …, no. … and …, …, no. … to …, parish of …, municipality of Lisbon, described in the Land Registry Conservatory of Lisbon under no. …, and entered in the urban property matrix of that parish under article …, as evidenced by the property certificate and property register attached to the arbitral claim as documents nos. 1 and 2.

  • Claimant C… was notified of the following Stamp Tax assessments for the year 2014, attached to the arbitral claim as documents 147 to 218:

    [Same list of assessments as for Claimant A…, relating to the same floors and TPV values]

  • Claimant B… was, in 2014, co-owner of 42/132 of the urban real property located at …, no. … to no. …, …, no. … and …, …, no. … to …, parish …, municipality of Lisbon, described in the Land Registry Conservatory of Lisbon under no. …, and entered in the urban property matrix of that parish under article …, as evidenced by the property certificate and property register attached to the arbitral claim as documents nos. 1 and 2.

  • Claimant B… was notified of the following Stamp Tax assessments for the year 2014, attached to the arbitral claim as documents 75 to 146:

    • Assessment no. 2015 … in the amount of €90.05, relating to floor 1/LJ of the property referred to above, whose TPV is €28,301.73;

    • Assessment no. 2015 … in the amount of €240.15, relating to floor 15/1E of the property referred to above, whose TPV is €75,474.78;

    • Assessment no. 2015 … in the amount of €193.90, relating to floor 15/2D of the property referred to above, whose TPV is €60,939.75;

    • Assessment no. 2015 … in the amount of €246.28, relating to floor 15/2E of the property referred to above, whose TPV is €77,400.85;

    • Assessment no. 2015 … in the amount of €174.17, relating to floor 15/3D of the property referred to above, whose TPV is €54,470.53;

    • Assessment no. 2015 … in the amount of €223.91, relating to floor 15/3E of the property referred to above, whose TPV is €70,370.15;

    • Assessment no. 2015 … in the amount of €182.65, relating to floor 15SLJ of the property referred to above, whose TPV is €57,403.35;

    • Assessment no. 2015 … in the amount of €73.17, relating to floor 16/LJ of the property referred to above, whose TPV is €22,997.13;

    • Assessment no. 2015 … in the amount of €206.76, relating to floor 17RC1 of the property referred to above, whose TPV is €64,981.35;

    • Assessment no. 2015 … in the amount of €124.18, relating to 1st floor of the property referred to above, whose TPV is €39,026.78;

    • Assessment no. 2015 … in the amount of €71.43, relating to floor 2/LJ of the property referred to above, whose TPV is €22,449.83;

    • Assessment no. 2015 … in the amount of €188.27, relating to floor 2E82 of the property referred to above, whose TPV is €59,171.55;

    • Assessment no. 2015 … in the amount of €134.96, relating to floor 3/3D of the property referred to above, whose TPV is €42,415.75;

    • Assessment no. 2015 … in the amount of €136.70, relating to floor 3/3E of the property referred to above, whose TPV is €42,963.05;

    • Assessment no. 2015 … in the amount of €62.89, relating to floor 3/SLJ of the property referred to above, whose TPV is €19,765.95;

    • Assessment no. 2015 … in the amount of €170.66, relating to floor 3E82 of the property referred to above, whose TPV is €53,635.40;

    • Assessment no. 2015 … in the amount of €66.21, relating to floor 4/LJ of the property referred to above, whose TPV is €20,807.93;

    • Assessment no. 2015 … in the amount of €47.86, relating to floor 4D82 of the property referred to above, whose TPV is €15,040.23;

    • Assessment no. 2015 … in the amount of €47.86, relating to floor 4E82 of the property referred to above, whose TPV is €15,040.23;

    • Assessment no. 2015 … in the amount of €62.36, relating to floor 6/1A of the property referred to above, whose TPV is €19,597.55;

    • Assessment no. 2015 … in the amount of €37.98, relating to floor 6/1B of the property referred to above, whose TPV is €11,935.35;

    • Assessment no. 2015 … in the amount of €62.36, relating to floor 6/2C of the property referred to above, whose TPV is €19,597.55;

    • Assessment no. 2015 … in the amount of €37.98, relating to floor 6/2D of the property referred to above, whose TPV is €11,935.35;

    • Assessment no. 2015 … in the amount of €178.23, relating to floor 6/2DT of the property referred to above, whose TPV is €56,014.05;

    • Assessment no. 2015 … in the amount of €182.14, relating to floor 6/2E of the property referred to above, whose TPV is €57,245.48;

    • Assessment no. 2015 … in the amount of €62.99, relating to floor 6/3E of the property referred to above, whose TPV is €19,797.53;

    • Assessment no. 2015 … in the amount of €184.02, relating to floor 6/3ES of the property referred to above, whose TPV is €57,834.88;

    • Assessment no. 2015 … in the amount of €39.15, relating to floor 6/3F of the property referred to above, whose TPV is €12,303.73;

    • Assessment no. 2015 … in the amount of €162.92, relating to floor 6/4D of the property referred to above, whose TPV is €51,204.13;

    • Assessment no. 2015 … in the amount of €173.67, relating to floor 6/4E of the property referred to above, whose TPV is €54,582.65;

    • Assessment no. 2015 … in the amount of €62.99, relating to floor 6/4G of the property referred to above, whose TPV is €19,797.53;

    • Assessment no. 2015 … in the amount of €38.38, relating to floor 6/4H of the property referred to above, whose TPV is €12,061.65;

    • Assessment no. 2015 … in the amount of €130.27, relating to floor 6/RCD of the property referred to above, whose TPV is €40,942.25;

    • Assessment no. 2015 … in the amount of €70.19, relating to floor 6/RCE of the property referred to above, whose TPV is €22,060.40;

    • Assessment no. 2015 … in the amount of €39.38, relating to floor 7/LJ of the property referred to above, whose TPV is €12,377.40;

    • Assessment no. 2015 … in the amount of €154.15, relating to floor 8/1 of the property referred to above, whose TPV is €48,446.58;

    • Assessment no. 2015 … in the amount of €52.61, relating to floor 8/1D of the property referred to above, whose TPV is €16,534.78;

    • Assessment no. 2015 … in the amount of €55.52, relating to floor 8/1E of the property referred to above, whose TPV is €17,134.70;

    • Assessment no. 2015 … in the amount of €45.81, relating to floor 8/1F of the property referred to above, whose TPV is €14,398.20;

    • Assessment no. 2015 … in the amount of €52.61, relating to floor 8/2D of the property referred to above, whose TPV is €16,534.78;

    • Assessment no. 2015 … in the amount of €54.52, relating to floor 8/2E of the property referred to above, whose TPV is €17,134.70;

    • Assessment no. 2015 … in the amount of €45.65, relating to floor 8/2F of the property referred to above, whose TPV is €14,345.58;

    • Assessment no. 2015 … in the amount of €53.15, relating to floor 8/3D of the property referred to above, whose TPV is €16,703.18;

    • Assessment no. 2015 … in the amount of €55.09, relating to floor 8/3E of the property referred to above, whose TPV is €17,313.63;

    • Assessment no. 2015 … in the amount of €46.11, relating to floor 8/3F of the property referred to above, whose TPV is €14,492.93;

    • Assessment no. 2015 … in the amount of €50.87, relating to floor 8/4D of the property referred to above, whose TPV is €15,987.48;

    • Assessment no. 2015 … in the amount of €52.98, relating to floor 8/4E of the property referred to above, whose TPV is €16,650.55;

    • Assessment no. 2015 … in the amount of €39.78, relating to floor 8/4F of the property referred to above, whose TPV is €12,503.70;

    • Assessment no. 2015 … in the amount of €76.12, relating to floor 8/RCD of the property referred to above, whose TPV is €23,923.33;

    • Assessment no. 2015 … in the amount of €76.12, relating to floor 8/RCE of the property referred to above, whose TPV is €23,923.33;

    • Assessment no. 2015 … in the amount of €162.86, relating to floor 8/SLD of the property referred to above, whose TPV is €51,183.08;

    • Assessment no. 2015 … in the amount of €131.14, relating to floor 9/1D of the property referred to above, whose TPV is €41,215.90;

    • Assessment no. 2015 … in the amount of €55.06, relating to floor 9/1E of the property referred to above, whose TPV is €17,303.10;

    • Assessment no. 2015 … in the amount of €131.14, relating to floor 9/2D of the property referred to above, whose TPV is €41,215.90;

    • Assessment no. 2015 … in the amount of €55.06, relating to floor 9/2E of the property referred to above, whose TPV is €17,303.10;

    • Assessment no. 2015 … in the amount of €132.48, relating to floor 9/3D of the property referred to above, whose TPV is €41,636.90;

    • Assessment no. 2015 … in the amount of €55.62, relating to floor 9/3E of the property referred to above, whose TPV is €17,482.03;

    • Assessment no. 2015 … in the amount of €120.53, relating to floor 9/4D of the property referred to above, whose TPV is €37,879.48;

    • Assessment no. 2015 … in the amount of €52.81, relating to floor 9/4E of the property referred to above, whose TPV is €16,597.93;

    • Assessment no. 2015 … in the amount of €57.83, relating to floor 9/RCD of the property referred to above, whose TPV is €18,176.68;

    • Assessment no. 2015 … in the amount of €97.72, relating to floor 9/RCE of the property referred to above, whose TPV is €30,711.95;

    • Assessment no. 2015 … in the amount of €122.60, relating to floor RC D of the property referred to above, whose TPV is €38,532.03;

    • Assessment no. 2015 … in the amount of €167.91, relating to floor RC E of the property referred to above, whose TPV is €52,722.35;

    • Assessment no. 2015 … in the amount of €178.23, relating to floor S/LFD of the property referred to above, whose TPV is €56,014.05;

    • Assessment no. 2015 … in the amount of €317.34, relating to floor 1D82 of the property referred to above, whose TPV is €99,734.90;

    • Assessment no. 2015 … in the amount of €332.44, relating to floor 1DF82 of the property referred to above, whose TPV is €104,481.68;

    • Assessment no. 2015 … in the amount of €332.44, relating to floor 2DF82 of the property referred to above, whose TPV is €104,481.68;

    • Assessment no. 2015 … in the amount of €271.16, relating to floor 3/1 of the property referred to above, whose TPV is €85,220.93;

    • Assessment no. 2015 … in the amount of €300.69, relating to floor 3DF82 of the property referred to above, whose TPV is €94,503.98;

    • Assessment no. 2015 … in the amount of €365.46, relating to floor 3EF82 of the property referred to above, whose TPV is €114,859.33;

    • Assessment no. 2015 … in the amount of €723.15, relating to floor 6/16L of the property referred to above, whose TPV is €227,276.85.

  • None of the floors or divisions with independent use possesses a taxable property value exceeding one million euros.

  • The Claimants proceeded to pay all the Stamp Tax assessments referred to above.

No other facts with relevance for the decision of the case were proven.

2.2. Grounds for the Proven Facts:

Regarding the proven facts, the arbitrator's conviction was based on the documents submitted to the proceedings by the Claimants, namely the assessments, property register, property certificate, and collection notices as proof of payment.

3. Legal Matters:

3.1. Object and Scope of the Present Proceedings

The question to be decided in the present proceedings is whether item 28.1 of the General Stamp Tax Table (GSTT), in the case of real properties not constituted in horizontal property ownership regime, applies to the sum of the taxable property value attributed to the different parts or floors (global TPV), or rather to the taxable property value of each part of the real property with independent economic use.

On this question, pronouncements have been made, among others, by CAAD decisions rendered in case numbers 280/2013-T, 26/2014-T, 88/2014-T, 206/2014-T, 290/2014-T, 428/2014-T, 451/2014-T, 457/2014-T, 458/2014-T and 567/2014-T, 724/2014-T, 152/2015-T, 174/2015-T, 236/2015-T, 311/2015-T, 411/2015-T, 431/2015-T, 449/2015-T, 461/2015-T, 463/2015-T, 474/2015-T and by decision no. 047/15 of the Supreme Administrative Court (STA).

3.2. Question of the Taxable Property Value Relevant for Application of Item 28.1 of the GSTT

According to the T.A.A., in a real property in vertical ownership (or not constituted under a horizontal property ownership regime), the criterion for determining the incidence of stamp tax is the global taxable property value of the floors and divisions intended for residential purposes.

For the Claimants, subjection to stamp tax contained in item no. 28.1 of the GSTT should be assessed not by the total value of the real property but by the value attributed to each part with independent use, based on its respective TPV.

Let us examine:

Law no. 55-A/2012, of October 29, added item 28 to the General Stamp Tax Table (GSTT), with the following wording:

"28 – Ownership, usufruct, or right of superficies of urban real properties whose taxable property value as contained in the matrix, under the terms of the Municipal Tax Code on Real Property (CIMI), is equal to or exceeding €1,000,000 – on the taxable property value used for purposes of IMI:

28.1 – Per residential property – 1% (…);

In the transitional provisions contained in article 6 of said Law no. 55-A/2012, the following rules were established:

c) The taxable property value to be used in the assessment of the tax corresponds to that which results from the rules provided for in the Municipal Tax Code on Real Property with reference to the year 2011; (…)

f) The applicable rates are as follows:

i) Real properties with residential purpose assessed under the terms of the IMI Code: 0.5%;

ii) Real properties with residential purpose not yet assessed under the terms of the IMI Code: 0.8%;"

Item 28.1 GSTT and sub-paragraphs i) and ii) of paragraph f) of no. 1 of article 6 of Law no. 55-A/2012 contain a concept not used in any other tax legislation, which is that of "property with residential purpose."

In turn, article 67, no. 2 of the Stamp Tax Code, added by said Law, provides that "matters not regulated in this code relating to item 28 of the General Table shall be governed subsidiarily by the CIMI."

The rule of incidence refers to urban real properties, the concept of which results from the provisions of article 2 of the CIMI, with the determination of TPV complying with the terms of article 38 et seq. of the same code.

In turn, article 6 of the CIMI indicates the different categories of urban real properties, and determines that "residential, commercial, industrial or service buildings are constructions licensed for such purposes or, in the absence of a license, that have as their normal purpose each of these uses." (see paragraph a) of no. 1 of article 6 CIMI).

It must thus be concluded that for the legislator it is irrelevant whether the real property is in vertical ownership or in horizontal ownership, what matters only is the material truth underlying its existence as an urban real property and its use.

Since the Stamp Tax Code (STC) refers to the IMI Code, we should consider that registration in the property matrix of real properties in vertical ownership, constituted by different parts, floors or divisions with independent use, follows the same registration rules as real properties constituted in horizontal ownership.

From this it follows that the respective IMI, as well as Stamp Tax, is assessed individually in relation to each part. For this reason, the legal criterion for defining the incidence of the new tax must be the same.

Thus it is concluded, as in decision no. 50/2013-T of the CAAD and in decision no. 047/15 of the STA, according to which "if the legal criterion imposes the issuance of individualized assessments for autonomous parts of real properties in vertical ownership, in the same manner as it establishes for real properties in horizontal ownership, it has clearly established the criterion, which must be unique and unequivocal, for defining the rule of incidence of item 28.1 of the GSTT."

It thus follows from law that stamp tax of item 28.1 of the GSTT would only be incidential if one of the parts, floors or divisions with independent use presented a TPV exceeding one million euros (€1,000,000.00), which does not occur in the present proceedings.

The criterion defended by the T.A.A., which takes into account the sum of the parts, with the argument that the real property would not be constituted under a horizontal property ownership regime, finds no legal support and is contrary to the criterion that results from the CIMI and which applies by cross-reference, in the context of Stamp Tax.

Furthermore, the law itself expressly establishes, in the final part of item 28 of the GSTT, that the Stamp Tax to be incidential on urban real properties of value equal to or exceeding one million euros (€1,000,000.00) – "on the taxable property value used for purposes of IMI."

In conclusion, the taxable property value relevant for purposes of applying item 28.1 of the GSTT is the TPV of the part, floor or division with independent use with residential purpose, as concluded in decision no. 047/15 of the STA.

In accordance with the interpretation endorsed above, the taxation of parts with independent use of value below one million euros is not covered by the rule of incidence; therefore, its taxation violates the principle of equality, more specifically in its corollaries of taxpaying capacity and fiscal proportionality.

As to the principle of equality, we conclude, as in the CAAD decision in case no. 218/2013-T, saying that "the Stamp Tax assessment now under review manifestly violates the principle of fiscal equality provided for in article 13 of the CRP, because: i) it is based on a norm that treats taxpayers in identical situations in a very different manner, the measure of difference not being assessed by their real taxpaying capacity; ii) it is based on an arbitrary legal solution devoid of any rational foundation."

In the present proceedings, the real property in question is in vertical ownership and contains several floors and divisions with independent use intended for residential purposes, as proven above. Given that none of the floors intended for residential purposes has value equal to or exceeding one million euros (€1,000,000.00), as results from the documents submitted to the proceedings, it is concluded that the legal prerequisite for incidence of Stamp Tax provided for in Item 28 of the GSTT is not met.

Looking now at the underlying purpose of the provision in question in item 28.1 GSTT and citing CAAD decision no. 50/2013-T, "the legislator upon introducing this legislative innovation considered as the determining element of taxpaying capacity urban real properties, with residential purpose, of high value (luxury), more precisely, of value equal to or exceeding one million euros (€1,000,000.00), on which it imposed a special stamp tax rate, intending to introduce a principle of taxation on wealth externalized in the ownership, usufruct or right of superficies of luxury urban properties with residential purpose. For this reason, the criterion was to apply the new rate to urban properties with residential purpose, whose TPV is equal to or exceeding one million euros (€1,000,000.00). Clearly the legislator understood that this value, when attributed to a residential unit (house, autonomous fraction or floor with independent use) reflects a taxpaying capacity above average and, as such, capable of determining a special contribution to ensure fair distribution of fiscal burden." But when applied to a part or fraction that does not exceed the said value of one million euros, the rule of incidence will not be met.

The principle of fiscal equality determines that like cases should be treated alike and unlike cases unlike. Now, different treatment of fractions or parts of a real property is not justified merely by the fact that it is already in horizontal ownership, provided that the fractions or parts have independent use.

As the CAAD decision in case no. 218/2013-T refers, "The principle of fiscal equality is based on the general principle of equality provided for in article 13 of the CRP, from which results the principle of taxpaying capacity which, by constitutional imperative, is the prerequisite and criterion of taxation."

Professor Casalta Nabais asserts that the principle of fiscal equality has inherent above all "the idea of generality or universality, according to which all citizens are bound to fulfill the duty to pay taxes, and uniformity, requiring that such duty be assessed by the same criterion — the criterion of taxpaying capacity. This thus implies equal tax for those with equal taxpaying capacity (horizontal equality) and different tax (in qualitative or quantitative terms) for those with different taxpaying capacity in proportion to such difference (vertical equality)" (Casalta Nabais, Tax Law, 5th edition, Coimbra, 2009, p. 151-152).

In the CAAD decision in case no. 50/2013-T it can be read that "the tax legislator cannot treat equal situations differently. Now, if the real property were in a horizontal ownership regime, none of its residential fractions would be subject to incidence of the new tax."

Thus, and in line with the jurisprudence of the Constitutional Court and the CAAD, we conclude that the principle of fiscal equality and taxpaying capacity is violated and, as such, that the claim should be granted.

4. Compensatory Interest

The Claimants requested condemnation of the T.A.A. to refund improperly paid tax, plus compensatory interest.

Article 43, no. 1 of the LGT establishes that "compensatory interest is due when it is determined, in a complaint or judicial challenge, that there was error attributable to the services from which resulted payment of the tax debt in an amount exceeding the legally due amount."

In the case at hand, the error affecting the Stamp Tax assessments is attributable to the Tax and Customs Authority which performed the assessment acts on its own initiative, whereby the Claimants are entitled to compensatory interest from the date of payment of each amount until reimbursement, at the legal supplementary rate, in accordance with articles 43, nos. 1 and 4, and 35, no. 10, of the LGT, article 559 of the Civil Code and Ordinance no. 291/2003, of April 8.

As results from article 43, no. 1 of the LGT, the right to compensatory interest depends on payment of a tax debt in an undue amount.

Given that the Stamp Tax assessments are affected by illegality, compensatory interest is due from the date of payment until full reimbursement by the T.A.A., in accordance with articles 43 of the LGT and 61, no. 2 of the CPPT.

5. Decision

Based on the foregoing, it is determined:

a) to fully grant the claim filed by the Claimants in the present tax arbitral proceedings, regarding the illegality of the Stamp Tax assessments relating to the year 2014, which is the subject of this arbitral claim;

b) to grant the claim for condemnation of the Tax and Customs Authority to reimburse the Claimants the amount of improperly paid tax, plus compensatory interest in accordance with legal terms, from the date such payment was made until the date of full reimbursement thereof.

6. Value of the Proceedings:

In accordance with the provisions of article 306, no. 2, of the CPC and article 97-A, no. 1, paragraph a) of the CPPT and article 3, no. 2 of the Regulation on Costs in Tax Arbitration Proceedings, the value of the action is fixed at €29,168.35.

7. Costs:

In accordance with article 22, no. 4, of the RJAT, and Table I attached to the Regulation on Costs in Tax Arbitration Proceedings, the amount of costs is fixed at €1,530.00, payable by the Tax and Customs Authority.

Notify.

Lisbon, March 21, 2016.

Text prepared by computer, in accordance with article 138, no. 5 of the Code of Civil Procedure (CPC), applicable by cross-reference of article 29, no. 1, paragraph e) of the Tax Arbitration Regime, reviewed by me.

The sole arbitrator

Suzana Fernandes da Costa

Frequently Asked Questions

Automatically Created

Is stamp duty under verba 28.1 TGIS assessed on the total property value or on each independent unit's VPT in vertical property?
Stamp duty under item 28.1 TGIS is assessed based on the total taxable property value (VPT) of the entire building in vertical property arrangements, not on each independent unit's individual VPT. The Tax Authority's position is that the relevant property value for stamp tax incidence is the global property value of the urban real property, even when the property consists of multiple floors or divisions capable of independent use. This interpretation applies the €1,000,000 threshold to the aggregate building value rather than to each autonomous unit.
Can stamp duty be charged on a vertical property building when no individual unit exceeds €1,000,000 in patrimonial value?
Yes, stamp duty can be charged on a vertical property building even when no individual unit exceeds €1,000,000 in patrimonial value, provided the total aggregate property value of the building exceeds this threshold. The Tax Authority's interpretation of item 28.1 TGIS focuses on the entire property as registered, not on its constituent parts. Property owners challenged this approach as unconstitutional, arguing it violates principles of taxpaying capacity and equality, since individual unit owners may not have the economic capacity reflected by the building's total value.
How does the principle of taxpayer equality apply to stamp duty on vertical property under Portuguese constitutional law?
The principle of taxpayer equality under Portuguese constitutional law requires that stamp duty on vertical property be interpreted according to Articles 103(1) and 104(3) of the Constitution. Claimants argued that assessing stamp duty based on total building value rather than individual unit ownership violates equal treatment and taxpaying capacity principles, as co-owners with fractional interests do not possess wealth equivalent to the entire building's value. The constitutional challenge centers on whether the tax burden is proportionate to each taxpayer's actual economic capacity and whether similarly situated taxpayers are treated equally.
What is the CAAD arbitral procedure for challenging stamp duty assessments on high-value residential properties?
The CAAD arbitral procedure for challenging stamp duty assessments on high-value residential properties involves submitting a request for arbitral tribunal constitution under the RJAT (Legal Regime for Tax Arbitration). Claimants must identify the contested acts, amounts, and legal grounds within statutory deadlines. The process includes appointment of arbitrator(s), submission of the Tax Authority's response, optional hearings and written arguments, and issuance of a binding arbitral decision. Parties must have legal personality, capacity, and legitimacy, and claims must be timely filed under Article 10(1)(a) of RJAT.
Are property owners entitled to refund and compensatory interest when stamp duty is unlawfully levied on vertical property units?
Yes, property owners are entitled to refund and compensatory interest when stamp duty is unlawfully levied on vertical property units. Under Article 43(1) of the General Tax Code (LGT), taxpayers who successfully challenge illegal tax assessments have the right to restitution of improperly paid taxes plus compensatory interest calculated from the payment date. In this case, claimants sought return of €29,168.35 in stamp duty assessments plus applicable interest. The refund obligation arises automatically upon determination that the tax assessment was illegal or unconstitutional.