Process: 472/2014-T

Date: December 15, 2014

Tax Type: Selo

Source: Original CAAD Decision

Summary

Process 472/2014-T addresses a critical Stamp Tax dispute concerning the application of item 28.1 of the General Stamp Tax Table (TGIS) to multi-unit residential properties not constituted as horizontal property. The claimant, a co-owner holding a ¼ share of an urban property in Lisbon comprising 12 independent residential units, challenged €2,940.01 in Stamp Tax assessments for 2012. The central legal question concerns whether item 28.1 TGIS—which imposes annual taxation on residential properties with taxable property values (VPT) of €1,000,000 or more—should apply based on individual unit valuations or the aggregate property value. The Tax Authority assessed each independent unit separately, with VPT ranging from €61,100 to €125,290, despite none individually exceeding the €1 million threshold. The claimant argued that since the property was not horizontally divided and her proportional share (€293,997.50) fell well below the statutory threshold, the assessments violated principles of tax legality and equality. The dispute highlights the interpretative challenge of applying CIMI Article 7(2)(b), which provides for separate valuation of economically independent units, to Stamp Tax obligations. The arbitration tribunal must determine whether separate VPT assessments for IMI purposes automatically trigger independent Stamp Tax liability under item 28.1, or whether the global property value should govern taxation for properties lacking formal horizontal property status, with significant implications for co-owners of multi-unit buildings across Portugal.

Full Decision

ARBITRAL DECISION

I – REPORT

a) Subject Matter of the Dispute:

  1. A, taxpayer with the TIN …, resident at Rua …, in Lisbon, filed a request with the Administrative Arbitration Centre (CAAD) for the constitution of a singular arbitral tribunal, pursuant to the articles combined Articles 2 and 10 of the Legal Regime for Arbitration in Tax Matters (RJAT), in which the Tax and Customs Authority (AT) is the Respondent, for declaration of illegality and consequent annulment of Stamp Duty assessments – item 28.1 of the TGIS, with a global value of € 2,940.01, relating to the year 2012 and twelve units for independent use, intended for housing, of the urban property located at Avenida …, in Lisbon, registered in the property matrix of the parish of … under article …(former article …), of which she is a co-owner in the proportion of ¼;

  2. The request for arbitral decision was filed with CAAD on 7 July 2014, with the AT being automatically notified thereof on 10 July 2014;

  3. The Claimant chose not to appoint an arbitrator, whereby, under the provisions of Article 6, paragraph 2, subsection a), of the RJAT, the undersigned was appointed by the President of the CAAD Deontological Council to serve on the present arbitral tribunal, a duty which she accepted in accordance with legally established terms.

b) Factual Matters:

In summary, the Claimant supports her claim on the following facts:

a) The claimant is a co-owner, in the proportion of ¼, of the urban property located at Avenida …, in Lisbon, registered in the property matrix of the parish of … under article … (former article …);

b) The said property was, in the year to which the assessments relate, composed of thirteen floors or units for independent use, twelve of which intended for housing, and was not at that time constituted as horizontal property;

c) The taxable property value (TPV) of the various units for independent use was determined separately, in accordance with the provisions of Article 7, paragraph 2, subsection b), of the Municipal Property Tax Code (hereinafter, CIMI), with the TPV of the parts or units intended for housing, on 31 December 2011, varying between € 61,100.00 and € 125,290.00, totalling a global value of € 1,175,990.00;

d) The Stamp Duty assessments referred to in this case were issued on 14 July 2013, for payment in a single instalment during the month of November of the same year, containing the following identification elements:

Description of Property TGIS Item Patrimonial Value (€) Quota-Share Exempt Value Rate (%) Collection (€)
… RC D 28.1 81,410.00 ¼ 0.00 1.00 203.53
… RC E 28.1 119,800.00 ¼ 0.00 1.00 299.50
… RC F 28.1 61,100.00 ¼ 0.00 1.00 152.75
… 1st D 28.1 86,890.00 ¼ 0.00 1.00 217.23
… 1st E 28.1 92,380.00 ¼ 0.00 1.00 230.95
… 1st F 28.1 125,290.00 ¼ 0.00 1.00 313.23
… 2nd D 28.1 86,890.00 ¼ 0.00 1.00 217.23
… 2nd E 28.1 92,380.00 ¼ 0.00 1.00 230.95
… 2nd F 28.1 125,290.00 ¼ 0.00 1.00 313.23
… 3rd D 28.1 86,890.00 ¼ 0.00 1.00 217.23
… 3rd E 28.1 92,380.00 ¼ 0.00 1.00 230.95
… 3rd F 28.1 125,290.00 ¼ 0.00 1.00 313.23

e) The assessed tax was paid by the Claimant on 30 November 2013;

f) Not agreeing with the Stamp Duty assessments of which she was notified, the Claimant filed, on 6 February 2014, a voluntary claim, which was processed by the Lisbon Finance Service 8 under number …;

g) At the prior hearing stage, the Claimant clarified that what was at issue was to clarify which TPV should be considered for purposes of Stamp Duty under item 28 of the TGIS, given that the various units for independent use are valued in accordance with paragraph 2 of Article 7 of the CIMI, and should obey the same rules as properties constituted as horizontal property, with IMI and Stamp Duty being assessed individually in relation to each part, under penalty of violation of the principles of legality and fiscal equality;

h) Through memorandum no. …, from the Lisbon Finance Service 8, dated 31 March 2014, the Claimant was notified, through her Representative, on 8 April 2014, of the rejection of the voluntary claim.

Proven Facts: The Tribunal's conviction regarding the facts stated above, which are considered proven, derives from critical analysis of the arbitral petition and the documents attached thereto, as well as from the response provided by the AT.

Unproven Facts: There are no facts that should be considered unproven.

II – SANITATION:

The parties possess legal personality and capacity, are legitimate and are duly represented (Articles 4 and 10, paragraph 2, of the RJAT and Article 1 of Ordinance no. 112-A/2011, of 22 March).

The Singular Arbitral Tribunal was regularly constituted at CAAD on 7 October 2014, and is materially competent to hear and decide on the dispute which is the subject of the present proceedings.

Notified to file a reply, pursuant to Article 17 of the RJAT, the AT timely submitted its response, in which it contends for the dismissal of the claim and the maintenance of the tax acts subject to the arbitral petition, requesting a waiver of the meeting referred to in Article 18 of the RJAT.

No exceptions were raised and the claim is timely.

By arbitral decision dated 10 November 2014, of which the parties were notified on the following day, the waiver of the meeting provided for in Article 18 of the RJAT was decided, and it was determined that the proceedings proceed with successive written submissions, with 15 December 2014 being set for the issuance of the arbitral decision.

In a request dated 13 November 2014, the AT requested a waiver of written submissions, as futile for the decision of the case.

By arbitral decision dated 17 November 2014, notified to the parties on the following day, taking into account that submissions are optional in nature and, even if not presented, the proceedings continue its course, the previous decision was maintained.

Both parties submitted written submissions, in which they reiterated the positions already assumed.

III – REASONING:

With the factual matter fixed as above, a decision is now required.

In the judgment, the judge must rule on all issues that must be examined, refraining from ruling on issues of which it should not take cognizance (final segment of paragraph 1 of Article 125 of the Code of Tax Procedure and Process – CPPT, applicable subsidiarily to tax arbitral proceedings, by virtue of the provisions of Article 29, paragraph 1, subsection a), of the RJAT).

The issues brought before this Tribunal, both by the Claimant and by the Respondent AT, had already been the subject of the voluntary claim, that is, the issues of whether, in an urban property not subject to the horizontal property regime, subjection to stamp duty, under item no. 28 of the TGIS, is determined by the Taxable Property Value (TPV) that corresponds to each part of the property, economically independent and with housing use, as the Claimant argues, or whether, on the contrary, it is determined by the global TPV of the property, which would correspond to the sum of all TPVs of the floors or units for independent use and with housing use that compose it, as the AT maintains, and whether either of the interpretations in conflict is unconstitutional due to violation of the principles of legality and fiscal equality.

The Claimant's understanding is, in summary, the following:

• "subjection to the application of stamp duty, provided for in item 28.1 is determined by the combination of two factors: housing use and TPV, shown in the matrix, equal to or greater than € 1,000,000.00";

• "applying the criterion that the Law itself enumerates in Article 67, paragraph 2, of the Stamp Duty Code 'to matters not regulated in the present code relating to item 28 of the General Table, the CIMI is applied subsidiarily'" (bold and underlined in original);

• "Pursuant to the CIMI, and taking into account the registration in the property matrix of the property in question, which at the date of the facts was constituted as vertical property (…), we should conclude that these properties obey the same rules as properties constructed (sic) as horizontal property, since their respective IMI, and likewise, the new Stamp Duty, are assessed individually in relation to each part" (bold and underlined in original);

• " (…) any other interpretation would be contradictory, since it is the AT itself that assumes the application of the said criterion when, in the assessments issued of the tax in question, it results that the value of incidence corresponds to the TPV of each independent unit, with the assessment of this item of Stamp Duty being individualized on the part of the property to which it relates and not to its entirety";

• " (…) the claimant cannot but conclude that there would only be incidence of the new Stamp Duty (item 28.1 of the TGIS) if any of the independent units of the property in question presented a TPV exceeding € 1,000,000.00";

• "The criterion applied by the AT is not supported by the applicable legislation which determines that the Stamp Duty to incide in the application of item 28 of the TGIS 'on the taxable property value for purposes of IMI.'" (bold in original);

• " (…) the criterion adopted by the AT in determining the incidence of Stamp Duty violates the principles of fiscal legality, resulting from Article 103, paragraph 2, of the Constitution of the Portuguese Republic (CRP), in the interpretation that should be made of the legal norms in question, regarding the incidence of the tax applied, as well as that of fiscal equality and also the prevalence of material truth over formal legal reality"(bold and underlined in original).

For its part, the position of the AT, in the wake of "binding information from the AT, with agreement decision of 11.2.2013 of the Legal Deputy of the Director-General of the Tax Authority" and defending the dismissal of the arbitral decision petition, is, briefly, as follows (although by manifest error reference is made to assessments from the year 2013, when the case under analysis relates to Stamp Duty assessments from the year 2012):

• " (…) the Claimant incorrectly seeks to assimilate vertical property to horizontal property (…);

• " (…) the CIMI constitutes the normative framework of reference regarding the taxation of urban property ownership with taxable property value exceeding one million euros, assuming in this context the relevant role the concept of property contained in Article 2 of that code, which establishes in its paragraph 1 that '(…) property is any portion of territory, encompassing (…) buildings and structures of any nature incorporated therein or built upon it, with a character of permanence (…)'";

• " (…) paragraph 4 of that article establishes that '(…) each autonomous fraction, under the horizontal property regime, is considered to constitute a property'";

• "Thus, and by interpretation a contrario sensu, it is easily concluded that there do not constitute urban properties the fractions of the latter that are not subject to the horizontal property regime, as precisely occurs in the present case" (underlined by us);

• "The thesis defended by the Claimant lacks, however, legal support, for although the assessment of Stamp Duty, in the situations provided for in item no. 28.1 of the TGIS, proceeds in accordance with the rules of the CIMI, the truth is that the legislator reserves the aspects that require proper adaptation, namely those in which, as is the case with properties in full ownership, even though with floors or units susceptible of independent use (although IMI is assessed in relation to each part susceptible of independent use) for purposes of Stamp Duty the property in its entirety is relevant, since the units susceptible of independent use are not considered as property, but only autonomous fractions under the horizontal property regime, in accordance with paragraph 4 of Article 2 of the CIMI" (underlined by us);

• " (…) being a property in full ownership, the TPV that serves as the basis for its calculation will unquestionably be the TPV which the Claimant herein defines as the global property value";

• "However (…) the property register entry of the floors susceptible of independent use and the attribution of an individual patrimonial value not only does not remove the patrimonial value of the respective property where they are situated, but actually contributes to or determines the very taxable property value of the urban property";

• " (…) this conclusion is drawn unequivocally from Article 7, paragraph 2-b) of the CIMI itself ('(…) each part is valued by application of the corresponding rules, the value of the property being the sum of the values of its parts')";

• "Consequently, the interpretation of item 28.1 of the General Table in the sense now propounded by the Claimant must be held unconstitutional, for offense to the aforementioned principles of tax legality and equality";

• " (…) the AT considers that the provision of item 28.1 of the TGIS does not constitute any violation of the principle of equality, there being no discrimination in the taxation of properties constituted as horizontal property and properties in full ownership with floors or units susceptible of independent use, or between properties with housing use and properties with other uses";

• "(…) 'The constitution of horizontal property implies a mere legal alteration of the property, but the legislator may, nevertheless, subject to a different legal tax framework properties under horizontal and vertical property regimes, in particular, benefiting the more legally evolved institution of horizontal property, without such discrimination having to be considered necessarily arbitrary'";

• "'This discrimination may also be imposed by the need to impose coherence to the fiscal system.'";

• "It is also important to emphasize that taxation under Stamp Duty obeys the criterion of adequacy, insofar as it aims at the taxation of wealth embodied in the ownership of real estate of high value, arising in a context of economic crisis that cannot at all be ignored";

• "Thus, the option for this mechanism of revenue collection is justified, which would only be censurable, in light of the principle of proportionality, if it resulted in being manifestly indefensible".

It should first be noted that the AT is correct in stating that a property constituted as horizontal property is a legal-tax reality distinct from an urban property in "full ownership".

The rules of interpretation require this, which have the text as a starting point, with the negative function of eliminating any meaning that has no support in the letter of the law[1].

This is because paragraph 4 of Article 2 of the CIMI establishes the legal fiction that each of the autonomous fractions of a property constituted as horizontal property constitutes a property, while a part of independent use of an urban property not constituted as horizontal property continues to be only that – a part of a property and not a property, as, moreover, the AT recognizes in stating in its response that "units susceptible of independent use are not considered as property".

This alone would suffice to conclude that, having the legislator established distinct tax qualifications for legally different realities (properties and parts of properties), it will not be legitimate for the norm-applier, in the name of "necessary adaptations" referred to in Article 23, paragraph 7 of the Stamp Duty Code (CIS), to create a new norm of incidence of that tax, a matter subject to the principle of tax legality inherent in Article 103, paragraph 2, of the Constitution of the Portuguese Republic, according to which the essential elements of taxes – incidence, rate, tax benefits and taxpayer guarantees – are established by law of the Assembly of the Republic.

Now, item 28 of the TGIS, added by Article 4 of Law no. 55-A/2012 of 29 October, came to determine, in its original wording, applicable to the case at hand, the objective incidence of stamp duty on urban residential properties, whose taxable property value for purposes of IMI is equal to or greater than € 1,000,000.00 (and not, as the AT understands, on parts of properties or on the global TPV of a property not constituted as horizontal property, corresponding to the sum of the TPVs of the parts that compose it), by establishing that stamp duty is incurred on:

"28 — Ownership, usufruct or right of superficies of urban properties whose taxable property value shown in the matrix, in accordance with the Municipal Property Tax Code (CIMI), is equal to or greater than € 1,000,000 — on the taxable property value used for purposes of IMI:

28.1 — For property with housing use — 1%;

28.2 — For property, when the taxpayers who are not natural persons are residents in a country, territory or region subject to a clearly more favourable tax regime, listed in the list approved by ordinance of the Minister of Finance — 7.5%."

Here too the literal element of the norm must be the starting point for its interpretation and, "in the absence of other elements that induce the choice of the less immediate meaning of the text, the interpreter should in principle opt for that meaning which best and most immediately corresponds to the natural meaning of the verbal expressions used, and in particular to its legal-technical meaning, in the assumption (not always accurate) that the legislator knew how to express its thinking correctly"[2].

That the AT's action goes beyond the norm of incidence of item 28 of the TGIS appears evident, by not respecting the TPV for purposes of IMI, which, for properties not constituted as horizontal property is individualized in relation to each of the parts or units for independent use that compose them, with no assessment of tax being made on the sum of the TPVs attributed to the parts. Hence, for purposes of IMI, no relevance is attributed to the global TPV.

The AT argues, however, that, pursuant to Article 7, paragraph 2, subsection b), of the CIMI, "((…) each part is valued by application of the corresponding rules, the value of the property being the sum of the values of its parts')".

It happens, however, that the CIMI does not always make the whole correspond to the sum of the parts. As, indeed, derives from the systematic of the same paragraph 2 of Article 7 of the CIMI, whose subsections a) and b) have application only in the determination of the taxable property value "of urban properties with parts that may be classified in more than one of the classifications of paragraph 1 of the previous article".

In accordance with paragraph 1 of Article 6 of the CIMI, urban properties are divided into a) Residential; b) Commercial, industrial or service; c) Land for construction; d) Other.

From the combination of the norms of paragraph 2 of Article 7 and Article 6, paragraph 1, both of the CIMI, it follows that if an urban property not constituted as horizontal property comprises exclusively parts or units of housing use, the value of the property does not equal the sum of its parts. The same as saying that each of the parts is autonomous and that, regardless of the TPV that has been attributed to it, it is excluded from the incidence of the stamp duty provided for in item 28 of the TGIS.

Having arrived here, it becomes necessary to question the taxation of a part or unit for independent use, with housing use, of an urban property not constituted as horizontal property, in which are integrated parts or units for independent use, that may be classified under another of the classifications of paragraph 1 of Article 6 of the CIMI, for example, units intended for commerce, industry or services.

Well, the answer must be negative, notwithstanding the provision of subsection b) of paragraph 2 of Article 7 of the CIMI, according to which the value of the property is the sum of the values of its parts or units for independent use, that may be classified under more than one of the classifications of paragraph 1 of Article 6 of the same Code.

This is because here, note well, two legally distinct realities are not being compared, such as parts or units for independent use of an urban property not constituted as horizontal property with autonomous fractions of properties subject to that regime, which, for purposes of IMI, are themselves properties.

Here, what is in comparison are identical realities in every way, namely, parts or units for independent use and housing use, integrated in urban properties not constituted as horizontal property.

And the answer to the question must be negative, for nothing would justify the legislator wanting to tax parts or units for independent use and housing use of an urban property not constituted as horizontal property, composed of other parts or units for independent use intended for other purposes and not tax parts or units for independent use and housing use of an urban property not constituted as horizontal property, composed exclusively of parts or units for independent use, intended for housing. If the legislator intended to treat identical realities in every way differently, it would have to be concluded that there is a flagrant violation of the principle of equality.

Not appearing to be the legislative intention, it cannot be accepted that the AT formulates a norm of incidence ex novo, different from that created by the legislator, seeking to tax the "global TPV", corresponding to the sum of the parts that compose properties in "full ownership", even though economically and functionally independent and, as such, separately registered in the property matrix, which also discriminates its respective taxable property value (see paragraph 3 of Article 12 of the CIMI), for the law is clear in subjecting to stamp duty of item 28 of the TGIS urban residential properties whose TPV for purposes of IMI is greater than € 1,000,000.00.

Different would be the case of a part or unit for independent use and housing use, inserted in an urban property not constituted as horizontal property, but with a TPV for purposes of IMI equal to or greater than € 1,000,000.00, taking into account the ratio legis of the norm of incidence.

In fact, as the Claimant mentions in her submissions and has already served as grounds for other arbitral decisions, notably that issued in case no. 50/2013-T, "The ratio legis underlying the rule of item 28 of the TGIS, introduced by Law no. 55-A/2012 of 29 October, in obedience to Article 9 of the Civil Code, according to which the interpretation of a legal norm should not be limited to the letter of the law, but should reconstruct from the texts and the remaining elements of interpretation the legislative thinking, taking into account the unity of the legal system, the circumstances in which it was drafted and the conditions specific to the time in which it is applied.

The legislator, when introducing this legislative innovation, considered as a determining element of contributory capacity urban properties with housing use of high value, more precisely, of value equal to or exceeding € 1,000,000.00, on which a special rate of stamp duty was passed, intending to introduce a principle of taxation on wealth manifested in the ownership, usufruct or right of superficies of luxury urban residential properties. The criterion was the application of the new rate to urban residential properties whose TPV is equal to or greater than € 1,000,000.00.

Such logic seems to make sense when applied to "housing", whether it be "house", "autonomous fraction" or "part of property with independent use" "autonomous unit", because one assumes a contributory capacity above average and, to that extent, justifies the need to realize an additional contributory effort, little would it make sense to stop disregarding the "unit by unit" calculations when only through the sum of their TPVs, because held by the same individual, would the million euros be exceeded.

This is concluded from the analysis of the discussion of Bill no. 96/XII in the Assembly of the Republic, available for consultation in the Diary of the Assembly of the Republic, First series, no. 9/XII/2, of 11 October 2012.".

We thus have that, in addition to the grammatical element of the interpretation of the norm of incidence contained in item 28 of the TGIS, also its rational or teleological element, the ratio legis or purpose aimed at by the legislator in drawing up that norm, points toward taxation being incurred on urban residential properties with TPV for purposes of IMI greater than € 1,000,000.00 and not on parts of urban properties not constituted as horizontal property, even though those parts are susceptible of independent use and intended for housing.

In light of the reasons stated, the consideration of issues relating to the alleged unconstitutionality of the interpretations given by the Claimant and the Respondent to the norm of item 28.1 of the TGIS, for violation of the principles of legality and fiscal equality, is prejudiced, since this norm does not admit the interpretation that was given to it, in this case, by the AT, when it issued the assessments subject to the arbitral decision petition.

IV – DECISION

Based on the reasons stated above and, pursuant to Article 2 of the RJAT, it is decided:

− To declare the illegality of the Stamp Duty assessments challenged, due to error in the legal assumptions, determining their annulment;

− To condemn the AT to the restitution of the amount of € 2,940.01, value unduly paid by the Claimant, equivalent to the sum of the values of the Stamp Duty assessments declared illegal;

− Not to condemn the AT to the payment of indemnity interest, as this was not requested.

VALUE OF THE CASE: In accordance with the provisions of Article 306, paragraph 2, of the CPC and Article 97-A, paragraph 1, subsection a), of the CPPT and paragraph 3, paragraph 2, of the Regulation on Costs in Tax Arbitration Proceedings, the value of the case is fixed at € 2,940.01.

COSTS: Calculated in accordance with Article 4 of the Regulation on Costs in Tax Arbitration Proceedings and Table I attached thereto, in the amount of € 612.00, at the charge of the AT.

Lisbon, 15 December 2014.

The Arbitrator,

/Mariana Vargas/

Text prepared by computer, in accordance with paragraph 5 of Article 131 of the CPC, applicable by reference of subsection e) of paragraph 1 of Article 29 of Decree-Law 10/2011, of 20 January.

The wording of this decision is governed by the spelling agreement of 1991.

[1] In this sense, see MACHADO, J. Baptista, "Introduction to Law and Legitimizing Discourse", Almedina, Coimbra, 1995, pp. 182 to 185.

[2] See the cited Author, ibid.

Frequently Asked Questions

Automatically Created

What is the Stamp Tax (Imposto de Selo) under Verba 28.1 of the TGIS and how does it apply to residential properties in Portugal?
Stamp Tax under Verba 28.1 of the TGIS is an annual tax imposed on residential properties (or portions thereof) with a taxable property value (VPT) equal to or exceeding €1,000,000 as reflected in the property tax matrix. The tax rate is 1% of the VPT. This provision targets high-value residential real estate and applies based on the property's classification and valuation on December 31st of the preceding year. The key interpretative issue in Process 472/2014-T concerns whether this threshold applies to each independent housing unit separately or to the property as a whole when the building contains multiple economically independent residential units but is not formally constituted as horizontal property under Portuguese law.
How is the taxable value (VPT) calculated for independently used housing units in a non-horizontal property regime under Article 7(2)(b) of CIMI?
Under Article 7(2)(b) of the Municipal Property Tax Code (CIMI), when a building is divided into distinct parts or units for independent use—even without formal horizontal property constitution—the taxable property value (VPT) is determined separately for each economically independent unit. This separate valuation occurs for IMI purposes based on each unit's specific characteristics, area, location, and quality. In Process 472/2014-T, the 12 residential units had individual VPT assessments ranging from €61,100 to €125,290, totaling €1,175,990. The legal controversy centers on whether this CIMI valuation methodology, designed for IMI assessment purposes, automatically extends to Stamp Tax calculations under item 28.1 TGIS, or whether different criteria apply for determining the tax base for Stamp Tax obligations.
Can a co-owner challenge Stamp Tax assessments on multiple independent housing divisions through CAAD arbitration?
Yes, co-owners can challenge Stamp Tax assessments through the Administrative Arbitration Centre (CAAD) under the Legal Regime for Arbitration in Tax Matters (RJAT). Process 472/2014-T demonstrates this right, where a taxpayer holding a ¼ co-ownership share successfully initiated arbitration proceedings against Stamp Tax liquidations totaling €2,940.01 on 12 independent residential units. The arbitration request was filed after the Tax Authority rejected a prior voluntary administrative claim. CAAD arbitration is available for disputes concerning the legality of tax assessments, including constitutional challenges based on alleged violations of tax legality and equality principles. Co-owners may contest assessments individually regarding their proportional share, and the arbitral tribunal has jurisdiction to review the substantive legal interpretation of tax provisions applicable to co-owned properties with multiple independent units.
What are the legal grounds for annulment of Stamp Tax liquidations on co-owned urban properties with independent units below the taxable threshold?
Legal grounds for annulment include: (1) Incorrect application of the €1,000,000 VPT threshold under item 28.1 TGIS when individual units fall below this amount and the property lacks horizontal property status; (2) Violation of the principle of tax legality (tipicidade fiscal) if the assessment methodology lacks clear legal foundation in the applicable statutes; (3) Breach of fiscal equality principles when properties in similar circumstances receive different tax treatment; (4) Misapplication of CIMI Article 7(2)(b) valuation rules to Stamp Tax contexts without proper legal basis; and (5) Improper assessment against co-owners for amounts exceeding their proportional ownership share. In Process 472/2014-T, the claimant argued that applying item 28.1 to each unit independently—when neither individual units nor the proportional ownership share reached the statutory threshold—constituted an illegal expansion of the tax base beyond legislative intent, warranting complete annulment of the challenged liquidations.
How does the proportional ownership share (quota-parte) affect Stamp Tax liability under Verba 28.1 of the Portuguese General Stamp Tax Table?
The proportional ownership share (quota-parte) directly affects Stamp Tax liability calculation when the tax base is properly determined. In Process 472/2014-T, the claimant held a ¼ co-ownership share, and the Tax Authority applied this proportion to each independent unit's VPT before calculating the 1% tax rate. For example, a unit valued at €125,290 generated tax of €313.23 (¼ × €125,290 × 1%). The fundamental dispute concerns whether this methodology is legally correct. If item 28.1 applies based on global property value rather than individual units, the claimant's proportional share (¼ of €1,175,990 = €293,997.50) would fall below the €1,000,000 threshold, resulting in zero tax liability. This highlights how the interaction between co-ownership proportions and the determination of the relevant taxable unit (individual apartments versus entire building) can dramatically alter tax obligations under Verba 28.1 TGIS.