Process: 457/2015-T

Date: January 26, 2016

Tax Type: Selo

Source: Original CAAD Decision

Summary

CAAD Process 457/2015-T addressed whether Stamp Tax under item 28.1 of the General Table applies to a building as a whole or to its independently usable units when the property is not constituted under horizontal property regime. Three co-owners challenged Stamp Tax assessments totaling €20,592.57 for 2014 on a property comprising 9 independently usable residential units. The Tax Authority assessed the tax based on the total property value of €2,059,260, despite each individual unit having a tax value below the €1 million threshold triggering item 28.1. The claimants argued that Article 67(2) of the Stamp Tax Code mandates subsidiary application of the Municipal Property Tax (IMI) Code, which under Article 12(3) requires separate assessment of each independently usable part of a property. They contended each unit should be evaluated individually for Stamp Tax purposes, and since none exceeded €1 million, item 28.1 should not apply. The claimants noted the Tax Authority's inconsistency in issuing separate Stamp Tax assessments for each unit while simultaneously aggregating values for taxation purposes. The Tax Authority defended its position by distinguishing between horizontal property (where fractions are separate properties under IMI Code Article 2(4)) and full/vertical ownership regimes. They argued the claimants owned a single property in vertical co-ownership, making the aggregate value relevant for item 28.1 application. This case presents fundamental questions about the proper unit of assessment for luxury property taxation when buildings contain multiple independently valuable units outside the horizontal property framework. The complete decision and tribunal's reasoning are not included in the available excerpt.

Full Decision

ARBITRAL DECISION

I – Report

  1. On 18.07.2015, the Claimants, A…, married, taxpayer no. …, resident at Rua…, no. …, …, municipality of Cascais, B…, married, taxpayer no. …, resident at…, …, in Alenquer, and C…, married, taxpayer no. …, resident at Avenida…, no. …, …, in Lisbon, requested the CAAD to constitute an arbitral tribunal, pursuant to article 10 of Decree-Law no. 10/2011, of 20 January (Legal Framework for Arbitration in Tax Matters, hereinafter referred to as "RJAT"), with the Tax and Customs Authority as Respondent, with a view to annulling the assessments for Stamp Duty (item no. 28.1 of the General Stamp Duty Table) relating to the year 2014, in the total amount of €20,592.57 (twenty thousand five hundred and ninety-two euros and fifty-seven cents), as per documents numbers 1 to 51, attached with the request for arbitral decision.

  2. The request to constitute the arbitral tribunal was accepted by the esteemed President of the CAAD and notified to the Tax and Customs Authority.

Pursuant to the terms and for the purposes of the provision of no. 1, of article 6 of the RJAT, by decision of the President of the Ethics Council, duly communicated to the parties within the legally applicable periods, the undersigned was appointed as arbitrator, who communicated his acceptance of the appointment to the Ethics Council and to the Centre for Administrative Arbitration within the regularly applicable period.

The Arbitral Tribunal was constituted on 5.10.2015.

  1. Given the absence of any situation provided for in article 18, no. 1, of the RJAT, which would make the arbitral meeting provided for therein necessary, its holding was dispensed with, on the grounds of the prohibition of useless acts and also on the principles of procedural efficiency, simplification and informality.

The holding of submissions was also dispensed with, pursuant to article 18, no. 2, of the RJAT, "a contrario".

  1. The grounds presented by the Claimant in support of her claim were, succinctly, the following:

a. The Claimants are co-owners, in the proportion of one-third each, of the property registered in the urban property register of the parish of … under article …, better identified in the urban property record attached as document no. 52, issued on 13 July 2015, a property which, although it is not constituted as horizontal property, by choice of the owners, is constituted by 9 units susceptible to independent use, which are individually leased or in a comodatum regime.

b. Each of the units with independent use was subject to autonomous valuation by the Tax Administration, which fixed the respective tax values, as appears in the property record already mentioned.

c. None of the apartments referred to above has a tax value exceeding 1 million euros.

d. However, despite having fixed the values described above autonomously for each apartment, it follows from the assessments now contested that the Tax Administration appears to have considered a "tax value of the property - total subject to tax: 2,059,260.00" for purposes of applying item no. 28 of the General Stamp Duty Table.

e. Law no. 55-A/2012, of 29 October, which introduced the above-mentioned item in the General Table, also amended article 67, no. 2, of the Stamp Duty Code, pursuant to which it was established that "to matters not regulated in this Code relating to item 28 of the General Table, the Municipal Property Tax Code shall apply subsidiarily".

f. For its part, article 12, no. 3, of the Municipal Property Tax Code provides that "Each storey or part of a property susceptible to independent use shall be considered separately in the property register entry, which also discriminates its respective tax value".

g. Similarly, article 119, no. 1, of the Municipal Property Tax Code clarifies that: "The services of the General Tax Directorate shall send to each taxpayer, by the end of the month preceding the month of payment, the competent collection document, with discrimination of the properties, their parts susceptible to independent use, respective tax value and the tax levied attributable to each municipality of the location of the properties."

h. In light of this reality, it is on each storey or part of a property susceptible to independent use that the Municipal Property Tax is applied, that is, it is the tax value, individually fixed, of each storey or part of a property susceptible to independent use that is relevant for the application of the Municipal Property Tax.

i. It is, therefore, on the basis of the tax value of each storey or part of a property susceptible to independent use that its subjection to tax is determined by item no. 28 of the General Table.

j. Indeed, as demonstrated, in the year to which the tax now contested relates – 2014 – the storeys in question constituted, all of them, autonomous units with independent use, as appears in their respective property register entries.

k. Now, constituting the storeys in question units susceptible to independent use with residential allocation, it cannot be overlooked that the tax value of each of these storeys is lower than the minimum threshold for the incidence of the tax – as, it should be emphasised, appears in their respective property register entries for purposes of the Municipal Property Tax.

l. Indeed, at this point, it is of marked relevance to note that the Tax Administration, despite applying item no. 28 to the amount resulting from the sum of the values of the apartments sub judice, does so, contradictorily with its position in this case, autonomously.

m. That is, the Tax Administration issues a Stamp Duty assessment for each unit of independent use, which shows that the Tax Administration recognizes that, for purposes of the incidence of Stamp Duty, as in the case of the Municipal Property Tax, the tax value of each unit with independent use is relevant.

n. In view of the above, the tax assessment acts sub judice, by making the taxation in the context of stamp duty fall on units susceptible to independent use, all with a tax value lower than one million euros, resorting to the sum of the same to fictionally create a global value of the property, are based on an error regarding the factual and legal presuppositions of taxation in the context of Stamp Duty, in violation of the provision of item no. 28 of the General Stamp Duty Table.

o. Indeed, each of the aforementioned units susceptible to independent use – the storeys subject to the assessments here in question – has a tax value clearly inferior to €1,000,000.00 according to the only admissible criterion, which is the legal criterion, in accordance with the rules of the Municipal Property Tax Code, by express reference of the Stamp Duty Code.

p. Being so, none of the apartments in question is covered by subjection to stamp tax by item no. 28 of the General Stamp Duty Table, a reason in itself sufficient to lead to the full annulment of the contested assessments.

  1. The Tax and Customs Authority, called upon to submit its response, contested the Claimant's claim, defending itself by way of objection, in summary, with the following grounds:

a. The property in question comprises 9 storeys and units with independent use, whose tax value was determined separately, with residential allocation, the tax value of each of the storeys being lower than the minimum threshold for the incidence of the tax.

b. The situation of the claimants' property subsumes itself, linearly, which is to say, literally, into the provision of item 28.1 of the General Stamp Duty Table.

c. The now-claimants are co-owners, in the proportion of one-third each, of a property in a regime of full or vertical ownership, and from the notion of property in article 2 of the Municipal Property Tax Code, only autonomous fractions of property in a regime of horizontal ownership are deemed to be properties - no. 4 of the cited article 2 of the Municipal Property Tax Code.

d. Thus, the now-claimants, for purposes of both the Municipal Property Tax and stamp tax, by force of the wording of the said item, are not owners of autonomous fractions, but rather of a single property.

e. Having admitted this fact, what the claimants seek is for the Tax Administration to consider, for purposes of assessment of the present tax, that there exists an analogy between the full ownership regime and that of horizontal ownership.

f. To contend that the interpreter and applicator of tax law apply, by analogy, to the full ownership regime, the regime of horizontal ownership is abusive and illegal.

g. The interpreter of tax law cannot equate these regimes, in accordance with the rule whereby the concepts of other branches of law have the meaning in tax law that is given to them in those branches of law, or in the words of article 11, no. 2 of the General Tax Law, on the interpretation of tax law: "Whenever tax standards employ terms peculiar to other branches of law, these shall be interpreted in the same sense as that which they have therein, unless otherwise derives directly from the law."

h. Being the property submitted to the regime of full ownership, but being physically constituted by parts susceptible to 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 Municipal Property Tax Code, each storey or part of a property susceptible to independent use is considered separately in the property register entry, but in the same register, with the Municipal Property Tax assessment being made taking into account the tax value of each part.

i. The unity of the urban property under vertical ownership composed of several storeys or units is not, however, affected by the fact that all or part of these storeys or units are susceptible to independent economic use and equally does not affect the application of item 28, no. 1, of the General Table.

j. Any other interpretation would violate 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 for in article 103, no. 2, of the Constitution of the Portuguese Republic.

k. In truth, horizontal ownership and vertical ownership are differentiated legal institutions.

l. The legislator may, however, submit to a different legal tax framework, and therefore discriminatory, properties in regimes of horizontal and vertical ownership, in particular, benefiting the legally more advanced institute of horizontal ownership, without such discrimination needing to be considered necessarily arbitrary.

m. This discrimination may also be imposed by the need to impose coherence to the tax system.

n. In this vein, the request of the claimants, even if indirect, does not succeed, that analogously the regime of horizontal ownership be applied to their property, considering that each of the fractions susceptible to independent use constitutes a property, as this would not be interpreting the norms of the Municipal Property Tax Code, and consequently of the Stamp Duty Code, but would be subverting the entire regime instituted therein, with the violations of the principles referred to above.

  1. The tribunal is materially competent and is regularly constituted pursuant to the RJAT.

The parties have legal personality and capacity, are legitimate and are legally represented.

The process does not suffer from defects that would invalidate it.

  1. It is necessary to resolve the following question:

Whether the assessments subject of the present process are illegal and consequently should be annulled.

II – Statement of Relevant Facts

  1. The following facts are considered proven:

a) The Claimants are co-owners, in the proportion of one-third each, of the urban property located at avenue…, no. …, in Lisbon, registered in the urban property register of the parish of…, Municipality of Lisbon, under article…, constituted by 9 units susceptible to independent use.

b) The property in question is not constituted as horizontal property.

c) The Respondent made and notified the Claimants of the Stamp Duty assessments (item no. 28.1 of the General Stamp Duty Table), relating to the year 2014, in the total amount of €20,592.57 (twenty thousand five hundred and ninety-two euros and fifty-seven cents), as per documents numbers 1 to 51, attached with the request for arbitral decision, which are considered fully reproduced, and pursuant to the said notifications, the 1st instalment should be paid in the month of April 2015.

d) The assessments in question relate to each of the following parts susceptible to independent use of the property identified in a):

  • Ground floor left;
  • Ground floor right;
  • 1st/2nd;
  • 3rd left;
  • 3rd right;
  • 4th left;
  • 4th right;
  • 5th;
  • Shed.

e) Each of the mentioned units with independent use was subject to autonomous valuation by the Tax Administration, which fixed the respective tax values, as appears in the property record already mentioned, and which are as follows:

  • Ground floor left - €163,870.00
  • Ground floor right - €170,070.00
  • 1st/2nd - €645,150.00
  • 3rd left - €186,190.00
  • 3rd right - €170,070.00
  • 4th left – €186,190.00
  • 4th right - €170,070.00
  • 5th - €333,810.00
  • Shed - €33,840.00

With interest for the decision of the case, there are no unproven facts.

  1. The tribunal's conviction regarding the decision of the statement of facts was based on the documents in the file, as well as on the statements submitted, and it should be noted that there is complete agreement between the parties regarding the facts, with disagreement being confined to matters of law.

III – Applicable Law

  1. Item 28 of the General Stamp Duty Table provides that property is subject to stamp duty as follows, in the case of properties with residential allocation having a tax value equal to or exceeding €1,000,000:

"Ownership, usufruct or right of superficies of urban properties whose tax value appearing in the property register, pursuant to the Municipal Property Tax Code, is equal to or exceeding €1,000,000 - on the tax value used for purposes of the Municipal Property Tax:

28.1 For a residential property or for land for construction whose building, authorized or provided for, is for residential purposes, pursuant to the provision of the Municipal Property Tax Code: 1%.

28.2 For a property, when the taxpayers who are not natural persons are resident in a country, territory or region subject to a clearly more favorable tax regime, appearing in the list approved by order of the Minister of Finance: 7.5%".

  1. Article 67, no. 2 of the Stamp Duty Code provides that "To matters not regulated in this Code relating to item no. 28 of the General Table, the provision of the Municipal Property Tax Code applies subsidiarily".

  2. Article 2, no. 4 of the Municipal Property Tax Code (hereinafter Municipal Property Tax Code) provides that "For purposes of this tax, each autonomous fraction, in the regime of horizontal ownership, is deemed to constitute a property".

It also provides in article 92 of the same Code:

"1 – Each building in the regime of horizontal ownership corresponds to only one entry in the property register.

2 – In the generic description of the building, mention shall be made of the fact that it is in the regime of horizontal ownership.

3 – Each of the autonomous fractions is described in detail and identified by the capital letter assigned to it according to alphabetical order."

  1. For its part, article 12, no. 3 of this Code provides that "Each storey or part of a property susceptible to independent use shall be considered separately in the property register entry, which also discriminates its respective tax value".[1]

Writing on this norm, J. Silvério Mateus and L. Corvelo de Freitas tell us: "An example that can illustrate this situation is the case of an urban property, not constituted as horizontal property, which is composed of several storeys. Legally, this property constitutes a single unit (…).

However, as each of these units may be the object of leasing or any other use by the respective owner, the register must evidence these units and a tax value must be assigned to each of them".[2]

It appears, thus, that article 12, no. 3, is applicable to situations of properties in conditions to satisfy the objective requirements for submission to the regime of horizontal ownership, provided for in article 1415 of the Civil Code, but in which the existence of a constitutive deed does not occur.

  1. With respect to urban properties in conditions to satisfy the objective requirements for submission to the regime of horizontal ownership, in substance, the economic reality subject to taxation ceases to be the same by the fact that the practice of the constitutive act of horizontal ownership may have occurred or not.

And, in the perspective of the taxation of these realities, there is found in the Municipal Property Tax Code no substantive difference of treatment of an immovable property as a function of the constitution of horizontal ownership.

  1. Indeed, in the regime of articles 38 and following of the Municipal Property Tax Code, which regulate the determination of the tax value of immovable properties, no substantive differentiation is detected between properties constituted as horizontal ownership and properties with objective conditions for such, but in which submission to such a regime did not occur[3], namely, such circumstances do not appear in the elements increasing or decreasing provided for in the tables of articles 43, no. 2 of the Code.

  2. The essential question to be resolved in the present process concerns the question of whether in properties with parts susceptible to independent use, but not submitted to the regime of horizontal ownership, the immovable property shall be considered as a unit for purposes of application of item 28 of the General Stamp Duty Table or whether its independent parts shall be considered individually.

  3. In the first case, the value relevant for purposes of the subsumption to item 28 shall be that resulting from the consideration of all of its parts and, in coherence, only one assessment shall be made, only with respect to the immovable property, and not as many assessments as there are parts or storeys susceptible to independent use.

  4. In the second case, the value to be considered for this purpose shall be that of each of the parts susceptible to independent use in a similar manner to what occurs with autonomous fractions of properties submitted to the regime of horizontal ownership, and as many assessments shall be made as there are parts susceptible to independent use, but only and solely, with respect to parts susceptible to independent use whose value is equal to or exceeding €1,000,000.

  5. The Tax Administration made as many assessments as there are parts susceptible to independent use, a procedure which, in our view, does not harmonize with its own thesis that, in these cases, the reality aimed at by Item 28 of the General Stamp Duty Table is the immovable property as a whole and not each of its autonomous parts.

  6. The question has already been considered in various arbitral decisions[4], which were in the sense of considering that the value to be considered for this purpose shall be that of each of the parts susceptible to independent use in a similar manner to what occurs with autonomous fractions of properties submitted to the regime of horizontal ownership, a solution which we consider to be correct.

  7. In a first interpretive moment of item 28 of the General Stamp Duty Table, the expression "urban properties", in conjunction with article 2, no. 4 of the Municipal Property Tax Code, which attributes the quality of urban property to autonomous fractions in the regime of horizontal ownership and apparently does not attribute it to parts susceptible to independent use, might point to the consideration of the property as a whole.

  8. But, still within the scope of the literal element, the item points in a different direction by referring to "residential property", in that, in cases of properties susceptible to independent use, the allocation can only be determined fraction by fraction[5] and not globally, in that it can happen, and frequently does happen in this type of immovable property, for there to be parts allocated to residential use and others allocated to other purposes.

Thus, the legislator, in referring to "residential property", with respect to properties with storeys or parts of property susceptible to independent use, could only have had in mind each of these fractions and not the property as a whole.

  1. This reading of the literal element is in complete harmony with the norms of the Municipal Property Tax Code mentioned above, as well as the other interpretive elements, as demonstrated in the various decisions of the CAAD on this matter and whose jurisprudence is adhered to without reservation.

  2. As written in the decision rendered in process 50/2013-T:

"the ratio legis underlying the rule of item 28 of the General Stamp Duty Table, introduced by Law no. 55-A/2012 of 29 October, and in obedience to the provision of article 9 of the Civil Code, according to which the interpretation of the legal norm should not be confined to the letter of the law, but reconstruct from the texts and other elements of interpretation the legislative thought, taking into account the unity of the legal system, the circumstances in which it was elaborated and the specific conditions of the time in which it is applied.

The legislator, in introducing this legislative innovation, considered as the determining element of contributive capacity urban properties, with residential allocation, of high value (luxury), more precisely, of value equal to or exceeding €1,000,000.00, on which it thereafter imposed a special tax rate of stamp duty, intending to introduce a principle of taxation on wealth manifested in the ownership, usufruct or right of superficies of urban properties of luxury with residential allocation. For this reason, the criterion was the application of the new rate to urban properties with residential allocation, whose tax value is equal to or exceeding €1,000,000.00.

This is confirmed by the analysis of the discussion of bill no. 96/XII in the Assembly of the Republic, available for consultation in the Parliamentary Assembly Gazette, Series I, no. 9/XII/2, of 11 October 2012.

The justification for the measure designated as "special tax on urban residential properties of highest value" is based on the invocation of the principles of social equity and fiscal justice, calling upon the holders of properties of high value intended for residence to contribute in a more intense way, making the new special tax rate fall on "properties valued at equal to or exceeding 1 million euros."

Clearly the legislator understood that this value, when attributable to a residence (house, autonomous fraction or storey with independent use) reflects an above-average contributive capacity and, as such, is capable of determining a special contribution to ensure fair distribution of the fiscal burden."

  1. The Respondent further contends that the interpretation of item 28.1 of the General Table, in the sense that the tax value on which its incidence depends is ascertained storey by storey or unit by unit and not globally, violates the principle of tax legality.

It appears to us that it is not correct, for the above reasons and, further, because we do not perceive how the principle of legality could interfere with the application of the interpretive criteria provided for in article 9 of the Civil Code.

  1. Furthermore, it is understood that the interpretation sustained here, in line with the peaceful arbitral jurisprudence mentioned above, is that which harmonizes with the constitutional principles of fiscal equality and contributive capacity, in that it would not be acceptable, in light of these principles, the unequivocal unequal taxation of substantially identical realities, merely because in some cases the constitution of horizontal ownership occurred and in others it did not.

  2. Along the same lines is the consideration of the principle of systematic coherence, which would also be affected by the consideration of these realities under the Municipal Property Tax in a manner substantially identical to that of fractions of properties formally constituted as horizontal ownership, rather than what would occur under stamp duty, in accordance with the solution sustained by the Respondent.

  3. In view of the foregoing, it is considered that in the case of urban properties with parts or storeys susceptible to independent use, the value to be considered for purposes of application of item 28 of the General Stamp Duty Table is the tax value of each of these independent parts, with only those parts susceptible to independent use whose own tax value exceeds €1,000,000 being subject to this tax.

  4. In the case at hand, the tax value of each of the parts susceptible to independent use being lower than that amount, they do not fall within the tax incidence norm, and therefore the assessments sub judice suffer from the defect of violation of law and consequently cannot fail to be annulled.

IV – Decision

Thus, the arbitral tribunal decides to declare the objection fully upheld, declaring the illegality and consequent annulment of the assessments subject of the present process.

Value of the action: €20,592.57 (twenty thousand five hundred and ninety-two euros and fifty-seven cents) pursuant to the provision of article 306, no. 2, of the Civil Procedure Code and article 97-A, no. 1, paragraph a), of the Tax Procedure Code and article 3, no. 2, of the Regulation of Costs in Arbitration Proceedings.

Costs against the Respondent in the amount of €1,224.00 (one thousand two hundred and twenty-four euros) pursuant to no. 4 of article 22 of the RJAT.

Let it be notified.

Lisbon, CAAD, 26.01.2016

The Arbitrator

Marcolino Pisão Pedreiro

[1] Also in the sense of the individual consideration of these parts susceptible to independent use, article 119, no. 1 of the Municipal Property Tax Code provides that the tax collection document shall contain the "discrimination of the properties, their parts susceptible to independent use, respective tax value".

Likewise pointing in the same direction, article 15-O of Decree-Law no. 287/2003, of 20 November, added by Law 60-A/2011 of 30/11, referring to the collection of Municipal Property Tax for purposes of the safeguard regime, mentions "property or part of urban property subject to the general valuation".

[2] TAXES ON IMMOVABLE PROPERTY, STAMP DUTY, Annotated and Commented, Engifisco, 1st Edition, 2005, pages 159-160.

[3] This was already the case under the Code of Property Tax and Tax on Agricultural Industry and the Code of Municipal Tax.

The circular communications nos. 40012, of 23.12.1999 and 40.025, of 11.08.2000 (which can be consulted in MUNICIPAL PROPERTY TAX CODE, Commented and Annotated, by Martins Alfaro, Áreas Editora, 2004, 589-592 and in the work cited by Silvério Mateus and Corvelo de Freitas, pages 294-295 and 259-261, and the second can still today be consulted on the website http://info.portaldasfinancas.gov.pt/pt/informacao_fiscal/legislacao/instrucoes_administrativas/oficios_circulados_contribuicao_autarquica.htm) even made explicit the understanding that unless in cases of reconstruction, modification or improvement of the property which implies some variation of the taxable value, the transition to the regime of horizontal ownership does not give rise to a new valuation.

[4] Among others, those rendered in processes 50/2013-T, 132-2013-T, 181/2013-T, 183/2013-T, 185/2013-T, 248/13, which can be consulted at https://caad.org.pt/.

[5] We use here the expression in the sense of part or storey susceptible to independent use.

Frequently Asked Questions

Automatically Created

How does Verba 28.1 of the Stamp Tax General Table apply to properties with independently usable units not under horizontal property?
Under Portuguese tax law, Verba 28.1 of the Stamp Tax General Table creates controversy when applied to properties with independently usable units not constituted under horizontal property regime. The claimants in Process 457/2015-T argued that Article 67(2) of the Stamp Tax Code requires subsidiary application of the Municipal Property Tax (IMI) Code, which treats each independently usable part separately with individual tax values under Article 12(3). This would mean each unit should be assessed individually for the €1 million threshold. However, the Tax Authority contended that under Article 2(4) of the IMI Code, only autonomous fractions under horizontal property are deemed separate properties, meaning a building in vertical/full ownership should be assessed as a single unit with aggregated value for Stamp Tax purposes.
Can the Portuguese Tax Authority levy Stamp Tax on a whole building when no individual unit exceeds the €1 million VPT threshold?
The Portuguese Tax Authority's position in Process 457/2015-T was that it could levy Stamp Tax on a building as a whole even when no individual unit exceeds the €1 million VPT (valor patrimonial tributário) threshold, provided the aggregate property value exceeds this amount. In this case, the Tax Authority assessed Stamp Tax on a total property value of €2,059,260, comprising 9 independently usable units each valued below €1 million. The Authority distinguished between properties under horizontal property regime (where fractions are separate) and full/vertical ownership (where the building remains a single property). The claimants contested this interpretation, arguing that subsidiary application of IMI rules requires individual assessment of each independently usable unit, and noted the Tax Authority's apparent inconsistency in issuing separate assessments for each unit.
What is the CAAD arbitration procedure for challenging Stamp Tax (Imposto de Selo) assessments in Portugal?
The CAAD (Centro de Arbitragem Administrativa) arbitration procedure for challenging Stamp Tax assessments in Portugal follows the Legal Framework for Arbitration in Tax Matters (RJAT - Decree-Law 10/2011). In Process 457/2015-T, the claimants submitted their request on July 18, 2015, which was accepted by the CAAD President and notified to the Tax Authority. An arbitrator was appointed by the President of the Ethics Council and communicated to both parties. The Arbitral Tribunal was constituted on October 5, 2015. The procedure dispensed with the arbitral meeting under Article 18(1) of RJAT based on procedural efficiency principles and the absence of circumstances requiring it. Oral submissions were also waived pursuant to Article 18(2). The process allows taxpayers to challenge tax assessments through binding arbitration as an alternative to traditional administrative and judicial review.
Are independently assessed property divisions treated separately for Stamp Tax purposes under Portuguese tax law?
The treatment of independently assessed property divisions for Stamp Tax purposes under Portuguese law is contested. Process 457/2015-T highlighted two competing interpretations: The claimants' position, supported by Article 67(2) of the Stamp Tax Code's subsidiary reference to the IMI Code, is that Article 12(3) of the IMI Code requires each independently usable part to be considered separately with discriminated tax values, making individual unit values relevant for Stamp Tax item 28.1 application. The claimants noted that the Tax Authority itself issued separate Stamp Tax assessments for each unit, suggesting recognition of their independence. Conversely, the Tax Authority argued that Article 2(4) of the IMI Code only treats horizontal property fractions as separate properties, meaning buildings in vertical/full ownership remain single properties for tax purposes despite having independently assessed parts, justifying aggregation of values for the €1 million threshold determination.
What was the outcome of CAAD Process 457/2015-T regarding Stamp Tax on co-owned property with multiple tenants?
The complete outcome of CAAD Process 457/2015-T regarding Stamp Tax on the co-owned property with multiple tenants is not provided in the available excerpt. The case involved three co-owners (A, B, and C) who owned one-third each of a property with 9 independently usable residential units, individually leased or under loan-for-use arrangements. They challenged €20,592.57 in Stamp Tax assessments for 2014 under item 28.1 of the General Table. The claimants argued each unit's individual tax value (all below €1 million) should determine tax liability, while the Tax Authority assessed based on the aggregate €2,059,260 total property value. The excerpt includes the parties' arguments but ends mid-sentence during the Tax Authority's defense, without presenting the arbitral tribunal's legal analysis, reasoning, or final decision on whether the assessments should be annulled or maintained.