Process: 465/2014-T

Date: March 4, 2015

Tax Type: Selo

Source: Original CAAD Decision

Summary

Process 465/2014-T addressed whether Stamp Tax under Clause 28.1 of the General Stamp Tax Table (TGIS) applies to vertical property based on aggregated or individual unit values. The taxpayer owned an urban property with 34 independently-used floors/divisions, including 22 residential units, NOT constituted under horizontal property regime. While no individual unit exceeded €1,000,000 in tax patrimonial value (VPT), the total VPT of residential units was €1,945,540. The Tax Authority assessed €25,940.64 in Stamp Tax, aggregating all unit values. The taxpayer challenged this through CAAD arbitration under RJAT, arguing that Clause 28.1 requires BOTH housing allocation AND individual VPT ≥€1,000,000. The taxpayer contended that CIMI treats vertical property like horizontal property for valuation purposes—each unit receives separate cadastral valuation and IMI assessment. Therefore, Stamp Tax incidence should follow the same individual unit approach. The Tax Authority countered that the taxable event concerns the entire urban property, not component parts. Article 80(2) CIMI establishes that each property corresponds to a single cadastral entry, with exceptions only for horizontal property regimes under Articles 84 and 92. The fundamental dispute centered on whether vertical property without horizontal property constitution should be taxed as a single property unit (total value) or as separate independently-valued units for Stamp Tax purposes. This interpretation significantly impacts owners of multi-unit buildings not formally constituted under horizontal property regimes, determining whether the €1,000,000 threshold applies per unit or to the aggregate building value.

Full Decision

Process no. 465/2014 – T

ARBITRAL DECISION

A – REPORT

  1. A, taxpayer ..., resident in …, in ..., came to request the constitution of an arbitral tribunal, under the terms of article 2, no. 1, a) and article 10, no. 1 and 2 of the Legal Framework for Tax Arbitration, provided for in Decree-Law 10/2011, of 20 January, hereinafter referred to as "RJAT" and of articles 1 and 2 of Order no. 112-A/2011, of 22 March, with a view to the declaration of illegality of the stamp tax assessment act in the total amount of € 25,940.64, with the Tax and Customs Authority (hereinafter referred to as "AT") being respondent.

  2. Once the request for constitution of a singular arbitral tribunal was admitted, and the applicant having not opted for the designation of an arbitrator, under the terms of paragraph a) of no. 2 of article 6 and paragraph b) of no. 1 of article 11 of RJAT, in the wording introduced by article 228 of Law no. 66-B/2012, of 31 December, the Deontological Council designated the undersigned as arbitrator.

The parties were notified of such designation, having not manifested the will to refuse the designation of the arbitrator, under the combined terms of the provisions of article 11, no. 1, paragraphs a) and b) of RJAT and of articles 6 and 7 of the Deontological Code, having, in accordance with the provision of paragraph c) of no. 1 of article 11 of RJAT, in the wording introduced by article 228 of Law no. 66-B/2012, of 31 December, the arbitral tribunal been constituted on 05-09-2014.

  1. Notified, the AT came to submit a response in which it raised no exception.

  2. The holding of the meeting provided for in article 18 of RJAT was dispensed with, as well as the presentation of arguments, with the consent of the parties.

  3. The applicant claims that the illegality and consequent annulment of the stamp tax assessment act relating to the year 2012 should be declared, arguing in summary:

a) She is the owner of the urban property located at ... no. 28 to 28 D, turning onto ... no. 2 to no. ..., registered in the cadastral matrix under no. ... of the parish of ....

b) The property, although consisting of 34 floors and divisions with independent use, is not constituted under a horizontal property regime.

c) The property comprises a total of 34 floors and divisions with independent use of which 22 are allocated to housing, the tax patrimonial value (VPT) of which was determined separately, in accordance with the Municipal Property Tax Code, and none of the parts or floors with housing allocation has a patrimonial value exceeding € 1,000,000.00

d) The sum of the patrimonial values of all floors and divisions with housing allocation totals € 1,945,540.00.

e) The applicant was notified for the assessment of stamp tax values, corresponding to the floors and divisions of independent use.

f) The subjection to stamp tax contained in item no. 28.1 of the General Stamp Tax Table (TGIS), is determined by the combination of two facts: the housing allocation and the VPT stated in the cadastral matrix equal to or exceeding € 1,000,000.00.

g) Since this is a property with the characteristics described above, subjection to stamp tax should be determined, not by the VPT of the property, but rather by the VPT attributed to each of those floors or divisions, whereby the notification for the assessment of the stamp tax contested should be considered illegal.

h) The essential question to be decided is to know, with reference to properties not constituted under a horizontal property regime, whether the VPT relevant as a criterion for the incidence of the tax is the one corresponding to the sum of the tax patrimonial values attributed to the different parts or floors (global VPT) or, rather, the VPT attributed to each of the residential parts or floors.

i) The subjection to stamp tax of properties with housing allocation resulted from the addition of item 28 of TGIS, made by article 4 of Law 55-A/2012, of 29/10, with this law saying nothing as to the qualification of the concepts in question, namely, as to the concept of "property with housing allocation".

j) The rule of incidence therefore refers to urban properties, the concept of which is that which results from the provisions of article 2 of CIMI, with the determination of VPT obeying the terms of the provisions of article 38 et seq. of the same code.

k) Consulting the CIMI it is verified that its article 6 only indicates the different types of urban properties, among which it mentions housing properties (see paragraph a) of no. 1), clarifying in no. 2 of the same article that "housing, commercial, industrial or service buildings or constructions are those licensed for such purpose or, in the absence of a license, which have each of these purposes as their normal destination".

l) For the legislator, the situation of the property in vertical ownership or horizontal property regime is of no consequence for CIMI.

m) Considering that the registration in the cadastral matrix of immovable properties in vertical ownership, consisting of different parts, floors or divisions with independent use, in accordance with CIMI, follows the same registration rules as immovable properties constituted in horizontal property, and that the respective IMI, as well as the new IS, are assessed individually in relation to each of the parts, it offers no doubt that the legal criterion for defining the incidence of the new tax must be the same.

n) The AT cannot therefore consider as the reference value for the incidence of the new tax the total value of the property, when the legislator itself established a different rule in the context of CIMI, and this is the code applicable to matters not regulated with regard to item 28 of TGIS.

o) The adoption of the criterion defended by the AT violates not only the principles of legality and tax equality, as well as that of the prevalence of material truth over formal legal reality.

  1. In turn the respondent came in response to allege, in summary:

a) The question to be decided is that of the determination of the value relevant for the purposes of subjection of properties in vertical ownership to item 28.1 of TGIS, namely, whether the total value of the property or, rather, the value of each one of the floors or parts capable of independent use should be considered.

b) It follows from item 28 of TGIS that Stamp Tax is charged on the ownership, usufruct or right of superficies of urban properties whose tax patrimonial value recorded in the cadastral matrix, in accordance with CIMI, is equal to or exceeding € 1,000,000.00, and according to item 28.1, in case of urban properties with housing allocation, the tax is charged on the tax patrimonial value used for the purposes of IMI.

c) The taxable event of the stamp tax of item 28.1 consists of the ownership, usufruct or right of superficies of urban properties whose tax patrimonial value recorded in the cadastral matrix, in accordance with CIMI, is equal to or exceeding € 1,000,000.00.

d) The patrimonial value relevant for the purposes of the incidence of the tax is, therefore, the total patrimonial value of the urban property and not the patrimonial value of each of the parts that compose it, even when capable of independent use.

e) Article 80, no. 2, of CIMI declares that, save as otherwise provided in articles 84 and 92, each property corresponds to a single entry registered in the cadastral matrix.

f) The principle that each property corresponds to a single cadastral entry is only excepted, with respect to mixed properties in which, according to the referred article 84, each of the distinct parts is registered in the cadastral matrix in the part that corresponds to it, and with respect to properties constituted in horizontal property in which, although, according to article 2, no. 4, of CIMI, each autonomous fraction is deemed to constitute a property, each building in horizontal property regime corresponds to a single cadastral entry.

g) In the case sub judice, the properties are not in a horizontal property regime, a case in which each of the autonomous fractions would be deemed a property, including for the purposes of subjection to the stamp tax of item 28.1 of the General Table, but in a vertical ownership regime.

h) CIMI provides, in particular in article 12, no. 3, that each floor or property capable of independent use is considered separately in the cadastral registration, which also discriminates the respective tax patrimonial value on which IMI is assessed.

i) The unity of the urban property in vertical ownership composed of several floors or divisions is not, however, affected by the fact that all or part of those floors or divisions are capable of independent economic use.

j) Such a property does not cease, therefore, to be one only, and thus its distinct parts are not legally equated to autonomous fractions in a horizontal property regime.

k) The thesis defended by the Applicant lacks legal support, because, although the assessment of Stamp Tax, in the situations provided for in item no. 28.1 of TGIS, is processed in accordance with the rules of CIMI, the truth is that the legislator reserves the aspects that require the necessary adaptations.

l) For the purposes of Stamp Tax, the property is relevant in its entirety because divisions capable of independent use are not deemed to be a property, but only autonomous fractions in the horizontal property regime, as stated in no. 4 of article 2 of CIMI, expressly stating in the cited normative provision that for the purposes of IMI, "each autonomous fraction, in the horizontal property regime, is deemed to constitute a property", which does not occur with respect to floors or parts capable of independent use of a property in full ownership with divisions.

m) It follows unequivocally from the letter of the law that the legislator wished to tax with item 28.1 of TGIS properties as a single legal-tax reality.

n) Regarding the violation of the principles of equality and legality, the AT understands that the provision of item 28.1 of TGIS does not constitute any violation of those principles, with no arbitrary discrimination existing in the taxation of properties constituted in horizontal property and properties in full ownership with floors or divisions capable of independent use.

o) Moreover, the different valuation and taxation of a property in full ownership as opposed to a property constituted in horizontal property also stems from the different legal effects inherent to these two figures.

p) The constitution in horizontal property determines the division/partition of full ownership and the independence or autonomy of each of the fractions that compose it, for all legal purposes, according to no. 2 of article 4 of CIMI and articles 1414 et seq. of the Civil Code (CC), and a property in full ownership constitutes, for all purposes, a single legal-tax reality.

q) In this way, one cannot conclude for an alleged discrimination in violation of the principle of equality when, in fact, we are dealing with distinct realities, valued by the legislator differently.

r) It is up to the law – Law of the Assembly of the Republic and authorized Decree-Law – to establish the essential elements of the incidence of taxes; a type of incidence according to which the tax patrimonial value of urban properties on which the application of item 28.1 of the General Table depends is the patrimonial value of each floor or division capable of independent use and not the global tax patrimonial value of the urban property with housing allocation has, certainly, no expression whatsoever in the law.

s) The taxation under Stamp Tax obeys the criterion of adequacy, to the exact extent that it aims at the taxation of wealth embodied in the ownership of property of high value, arising in a context of economic crisis that cannot at all be ignored.

t) No defects are attributable to the contested assessments, whereby they should be maintained in the legal order, as they constitute a correct application of the law to the facts.

    • The Arbitral Tribunal was regularly constituted and is materially competent.

  • The parties enjoy legal personality and capacity and are legitimized (articles 4 and 10, no. 2, of the same diploma and article 1 of Order no. 112-A/2011, of 22 March).

  • The case does not suffer from nullities.

B. DECISION

  1. MATTER OF FACT

1.1. PROVEN FACTS

The following facts are considered proven:

a) The applicant is registered as owner of the urban property located at ... no. 28 to 28 D, turning onto ... no. 2 to no. 2 D, …, registered in the cadastral matrix under no. ... of the parish of ....

b) The property comprises a total of thirty-four floors and divisions with independent use of which twenty-two are allocated to housing.

c) The sum of the patrimonial values of all floors and divisions with housing allocation totals 1,945,540.00 €.

d) None of the floors, considered in isolation, has a patrimonial value exceeding 1,000,000.00 €.

e) The AT assessed stamp tax individually on the tax patrimonial values of the floors or parts capable of independent use, at the rate of 1%, by application of the provisions of item 28.1 of TGIS, in the wording given by article 4 of Law 55-A/2012, of 29 October, for the years 2012 and 2013.

f) The deadline for voluntary payment of the installments of the stamp tax assessed ended:

  • with respect to the assessments relating to 2012, on 30 November 2013

  • with respect to the assessments relating to 2013, on 30 April 2014.

g) The applicant filed the request for arbitral pronouncement that gave rise to the present proceedings, on 03-07-2014.

1.2 The facts were given as proven based on the documents attached to the case.

1.3 FACTS NOT PROVEN

There are no facts given as not proven with relevance to the assessment of the request.

1.4 THE LAW

ON THE TIMELINESS OF THE REQUEST

The applicant did not identify separately, as it should, which assessments it contests in concrete terms and what amount it seeks to annul, having only indicated the value in the arbitral request and referred, in no. 7 of the initial petition, to the fact that it had been "notified for the assessment of stamp tax values, corresponding to the floors and divisions of independent use, as per documents attached with the present petition".

Only from the analysis of the assessment notices resulting from such assessments is it ascertained that acts relating to the years 2012 and 2013 are at issue.

The request for constitution of an arbitral tribunal shall be filed within a period of 90 days from the occurrence of the facts provided for in no. 1 and 2 of article 102 of the Tax Procedure Code [article 10, no. 1, a) of RJAT].

As far as the case is concerned, we have that the arbitral request should have been filed within a period of 90 days from the end of the deadline for voluntary payment of the stamp tax in question.

Such deadline which, as explicitly stated in the aforementioned assessment notices, ended, as regards the installments relating to 2012, on 30 November 2013 and, as regards those relating to the year 2013, on 30 April 2014.

This follows from article 120, no. 1, c) of CIMI, in light of the provisions in the final part of no. 5 of article 44 of CIS.

The applicant filed the request for arbitral pronouncement on 03-07-2014.

It follows from the above that the request for arbitral pronouncement regarding the assessment of stamp tax relating to 2012 should have been filed by 28-02-2014 and that relating to 2013 by 29-07-2014.

Now, having the request for arbitral pronouncement been filed on 03-07-2014 it is concluded that it is manifestly untimely as regards the IS relating to the year 2012, with the lapse of the right of the applicant to contest the respective assessment having occurred.

Although such lapse was not raised by the respondent, it is subject to ex officio consideration, being excluded from the availability of the parties [which results from the combined application of articles 333, no. 1 of the CC and 89, no. 1, h) of the CPTA ex vi article 2, c) of CPPT, in light of what paragraphs a) and c) of no. 1 of article 29 of RJAT provide].

It follows from the above that there is a lapse of the right of action, due to the untimeliness of the request for arbitral pronouncement regarding the acts relating to 2012, and the request is in that part judged not to succeed.

ON THE MERITS OF THE REQUEST

Subsisting, thereby, in the arbitral request only the assessment of stamp tax relating to the year 2013.

The fundamental question to be assessed resides in the interpretation to be given to item 28.1 of the General Stamp Tax Table, in the wording of Law no. 55-A/2012 of 29 October, in order to determine whether, with respect to properties not constituted under a horizontal property regime that include floors or divisions capable of independent use, the tax patrimonial value relevant for the purposes of application of the tax is the one attributed individually to each of them or, on the contrary, is the one corresponding to the sum of all of them.

Item 28 of the General Stamp Tax Table provides:

  • "Ownership, usufruct or right of superficies of urban properties whose tax patrimonial value recorded in the cadastral matrix, in accordance with the Municipal Property Tax Code, is equal to or exceeding € 1,000,000.00 – on the tax patrimonial value for the purpose of IMI:

28.1 – For property with housing allocation – 1%

(…)".

Article 6 of the referred Law no. 55-A/2012 provides that the tax patrimonial value to be considered in the assessment of stamp tax corresponds to what results from the rules of the Municipal Property Tax Code (CIMI), with no. 2 of article 67 of the Stamp Tax Code (CIS) adding that "for matters not regulated in the present Code relating to item no. 28 of the General Table, the provisions of CIMI shall apply subsidiarily".

In turn, article 2 of CIMI gives us the concept of property, with article 6 of the same code, in its no. 2, providing that "housing, commercial, industrial or service buildings or constructions are those licensed for such purpose or, in the absence of a license, which have each of these purposes as their normal destination".

It is with recourse to these provisions that the answer to the question to be decided shall be found.

Being certain that the only comparison that CIMI makes between properties in a horizontal property regime or full ownership can be found in no. 4 of article 2 when it prescribes that "each autonomous fraction, in the horizontal property regime, is deemed to constitute a property".

In fulfilment of what, in the definition of the concept of cadastral matrices, no. 3 of article 12 of CIMI determines that "each floor or part of a property capable of independent use is considered separately in the cadastral registration, which also discriminates the respective tax patrimonial value".

No relevance whatsoever is therefore given by the tax legislator to the fact that a property is constituted under a horizontal property regime or vertical ownership, with only the material truth underlying its existence as an urban property and its use being relevant.

That is to say, there is nothing in the law that permits the conclusion that the tax patrimonial value of a property in full ownership regime is obtained by the sum of those that were attributed in isolation to the parts that compose it, in accordance with an understanding that has been accepted by various arbitral decisions to which we fully adhere and, therefore, subscribe.

Therefore, we understand that the position of the AT cannot merit approval, in seeking to fix as the reference value for the incidence of stamp tax the global value of the property in question, as CIMI does not permit it, which is, as already mentioned, the remissive legal basis supporting the same.

Not having any of the floors, capable of independent use, a patrimonial value exceeding one million euros, there is no place for the incidence of item 28.1 provided for in TGIS.

Therefore it is concluded that the assessment that is the object of the present arbitral request suffers from illegality, whereby its annulment is required.

The assessment of the unconstitutionality of the norm raised by the applicant is thus rendered moot.

  1. DECISION

Given the above, it is decided:

a) to judge partially to succeed, on the ground of breach of law, the request for annulment of the tax act that is the object of the arbitral request corresponding to the assessment of Stamp Tax exclusively relating to the year 2013;

b) to condemn the parties to the payment of the costs of the case in proportion to their respective failure.

CASE VALUE: In accordance with the provisions of article 306, no. 2 of the Code of Civil Procedure, article 97-A, no. 1, a) of the Tax Procedure and Proceedings Code and article 3, no. 2 of the Regulation of Costs in Tax Arbitration Proceedings, the case value is fixed at 25,940.64 € (twenty-five thousand nine hundred and forty euros and sixty-four cents).

COSTS: In accordance with the provisions of article 22, no. 4, of the Regulation of Costs in Tax Arbitration Proceedings, the amount of costs is fixed at 1,530.00 € (one thousand five hundred and thirty euros), in accordance with Table I attached to the Regulation of Costs in Tax Arbitration Proceedings, with the applicant bearing 1,146.00 € and the respondent bearing 384.00 €.

Let notice be given.

Lisbon, 04-03-2015

The Arbitrator

António Alberto Franco

[1] Among others, those handed down in Proceedings 50/2013-T, 131/2013-T, 181/2013-T, 185-2013-T, 177/2014, 206/2014-T

Frequently Asked Questions

Automatically Created

What is the Stamp Tax (Imposto de Selo) under Clause 28.1 of the TGIS and how does it apply to high-value residential properties in Portugal?
Stamp Tax under Clause 28.1 of TGIS (Tabela Geral do Imposto do Selo) is charged annually on the ownership, usufruct, or surface rights of urban properties with housing allocation whose tax patrimonial value (VPT) recorded in the cadastral matrix equals or exceeds €1,000,000. Introduced by Article 4 of Law 55-A/2012 of October 29, 2012, this tax applies to high-value residential properties in Portugal. The VPT used is that determined under the Municipal Property Tax Code (CIMI). The rate structure applies progressively based on property value thresholds, creating an annual tax burden on luxury residential real estate holdings.
How does the CAAD arbitral tribunal determine whether Stamp Tax applies to a building in vertical property (propriedade vertical) with independently valued units?
The CAAD arbitral tribunal must determine whether vertical property (propriedade vertical)—buildings with multiple independently-used units NOT constituted under horizontal property regime—should be taxed based on total building value or individual unit values. The central interpretive question is whether CIMI's separate valuation and IMI assessment of each independent unit extends to Stamp Tax incidence. The taxpayer argues that since CIMI assigns individual VPT to each floor/division and assesses IMI separately per unit, Stamp Tax should follow the same logic—applying the €1,000,000 threshold to each unit individually. The Tax Authority argues that Article 80(2) CIMI establishes one cadastral entry per property, with exceptions only for horizontal property regimes, making the total property value relevant for Stamp Tax purposes.
Can the tax authority aggregate the patrimonial values of individual units in a non-horizontal property to exceed the €1,000,000 threshold for Stamp Tax purposes?
The Tax Authority's position is that it CAN aggregate individual unit values to exceed the €1,000,000 threshold, treating vertical property as a single urban property for Stamp Tax purposes. The AT relies on Article 80(2) CIMI, which states each property corresponds to a single cadastral entry, with exceptions only for mixed properties (Article 84) and horizontal property (Article 92). Since vertical property without formal horizontal constitution does not fall under these exceptions, the AT argues the total patrimonial value (€1,945,540 in this case) determines tax incidence. The taxpayer contests this, arguing that CIMI's separate valuation methodology and individual IMI assessment of each independent unit should apply equally to Stamp Tax, preventing aggregation and requiring the €1,000,000 threshold to apply per unit.
What is the difference between vertical property and horizontal property (propriedade horizontal) for Portuguese Stamp Tax liability under TGIS Clause 28.1?
The critical difference for Stamp Tax liability under TGIS Clause 28.1 is the cadastral registration and legal constitution. Horizontal property (propriedade horizontal) involves formal legal constitution under the Horizontal Property Regime, where each autonomous fraction is deemed a separate property under Article 2(4) CIMI, despite having a single cadastral entry for the building. Vertical property refers to buildings with multiple independently-used floors/divisions that have NOT been formally constituted under horizontal property regime. While CIMI provides separate VPT valuations and individual IMI assessments for both types, the legal distinction affects Stamp Tax application. The Tax Authority treats vertical property as a single unit (total value determines tax), while horizontal property fractions are individually assessed. This creates potential inequality where identical buildings face different tax treatment based solely on formal legal constitution.
What procedural steps are required to challenge a Stamp Tax assessment through CAAD tax arbitration under the RJAT framework in Portugal?
To challenge a Stamp Tax assessment through CAAD arbitration under RJAT (Legal Framework for Tax Arbitration, Decree-Law 10/2011 of January 20): (1) Submit a request for arbitral tribunal constitution under Articles 2(1)(a) and 10(1)(2) of RJAT and Articles 1-2 of Order 112-A/2011 of March 22; (2) Specify the contested tax act and amount; (3) If not designating an arbitrator, the Deontological Council appoints one under Article 6(2)(a) and 11(1)(b) RJAT; (4) Parties are notified and may refuse the arbitrator designation under Articles 6-7 of the Deontological Code; (5) The tribunal is formally constituted per Article 11(1)(c) RJAT; (6) The Tax Authority submits a response, potentially raising exceptions; (7) Parties may consent to dispense with the Article 18 RJAT hearing and written arguments; (8) The arbitrator issues a binding decision on the assessment's legality.