Summary
This arbitration case (Process 472/2015-T) concerns the legality of stamp duty levied under Verba 28.1 of the TGIS on a building plot owned by the taxpayer in 2014. The Tax Authority assessed €13,746.80 in stamp duty (1% of the property's taxable value of €1,374,680) payable in two installments. The taxpayer challenged both payment notices, arguing the land should not be subject to stamp duty as no construction was authorized or foreseen, violating principles of legality and typicality enshrined in the Portuguese Constitution (Article 268(3) CRP) and tax law. The Tax Authority raised a preliminary procedural objection, asserting that collection notices (notas de cobrança) are inherently non-challengeable as they merely represent payment instruments rather than assessment acts themselves. Citing Article 2(1)(a) RJAT, which limits arbitration jurisdiction to tax assessment acts, the defendant argued only one assessment exists even when payable in installments per Article 120 MPIT. The Authority invoked the dilatory exception under Article 89(c) CPTA, requesting dismissal without examining the merits. On the substantive issue, the Tax Authority contended that Law 83-C/2013 of 31 December explicitly expanded Verba 28.1 to include building plots, thereby establishing lawful incidence. The taxpayer countered that the assessment lacked proper factual and legal reasoning required by Article 77 LGT and Articles 124-125 CPA. The tribunal had to resolve whether: (1) collection notices are independently challengeable; (2) if so, whether taxing building plots without authorized construction violates constitutional and administrative law principles; and (3) whether refund plus compensatory interest was warranted if the assessment was annulled.
Full Decision
ARBITRAL DECISION
I – REPORT
1 A… Ltd., NIPC[1] …, with registered office at … Street nº …, … …-…, filed a request for arbitral determination, under the terms of paragraph a) of no. 1 of article 2º, of no. 1 of article 3º and paragraph a) of no. 1 of article 10º, all of the RJAT[2], with AT[3] being required, with a view to the annulment of the tax acts levying stamp duty on the property of an immovable registered in the matrix under the urban article nº … of the parish of … area of the … Tax Service Office, relating to a building plot, as per collection documents 2015… in the amount of €4,582.28 relating to the 1st instalment and 2015… in the amount of €4,582.26 relating to the 2nd instalment, taxes relating to 2014.
2 Which was made without exercising the option of appointing an arbitrator, having been accepted by His Excellency the President of the CAAD[4] and automatically notified to AT on 24/07/2015.
3 In accordance with and for the purposes of no. 2 of article 6º of the RJAT, by decision of His Excellency the President of the Deontological Council, duly communicated to the parties within the legally applicable time periods, Arlindo José Francisco, arbitrator of the tribunal, was appointed on 21/09/2015, who communicated his acceptance of the appointment within the legally stipulated period.
4 The tribunal was constituted on 06/10/2015 in accordance with the provisions contained in paragraph c) of no. 1 of article 11º of the RJAT, in the wording introduced by article 228º of Law nº 66-B/2012, of 31 December.
5 With its petition, the claimant seeks the annulment of the stamp duty assessment act, relating to the year 2014 which fell upon the TPV[5] of the immovable already identified
6 It supports its point of view, in summary, on the understanding that the said immovable could not be covered by the rule of incidence to which item 28.1 of the TGIS[6] refers, combined with no. 1 of article 1º of the SIC[7] in the wording of Law 83-C/2013 of 31 December given that no construction was foreseen or authorized, whether for housing or for other purposes.
7 Concluding that such assessment violates the principle of legality and typicality, alongside the violation of article 268º no. 3 of the CRP[8], of articles 124 and 125º of the CPA[9] and article 77º of the LGT[10], due to lack of factual and legal reasoning.
8 In its response, the defendant, in the first place, considers it manifest that the instalments of the assessment acts contained in the collection notes which are the subject of the present request for arbitral determination are inherently unimpugnable, thus occurring, in its view, the dilatory exception provided for in paragraph c) of no. 1 of article 89º of the CPTA[11], applicable ex vi article 29º no. 1 paragraph c) of the RJAT, which if verified leads to the impossibility of appreciating the merits of the case and the absolution of AT from the instance.
9 It cites various decisions already delivered within the scope of tax arbitration which in similar situations accepted the point of view defended by AT, since the collection notes are not impugnable per se, given that they do not constitute tax assessment acts, and are thus outside the scope of article 2º no. 1 paragraph a) of the RJAT.
10 Even so, by way of objection, it states that with the amendment promoted by the aforementioned Law 83-C/2013 of 31 December, to item 28.1 of the TGIS, building plots came to be covered by the incidence provided for in the said item
II - CASE MANAGEMENT
The tribunal was regularly constituted and is competent ratione materiae, in accordance with article 2º of the RJAT.
The parties have legal personality and capacity, are shown to be legitimate and are regularly represented in accordance with articles 4º and 10º, no. 2 of the RJAT and article 1º of Ordinance nº 112-A/2011, of 22 March.
The parties agreed to waive the hearing referred to in article 18º of the RJAT, the lack of necessity of joining the Administrative Process and the production of written or oral submissions.
Given the coinciding positions, the process not being affected by any nullities and despite the exception of unimpugnability of the subject matter of the present request for arbitral determination having been raised in the response of AT, the tribunal considers that the conditions are met to render a decision, in which the exception will be addressed in the first place.
III - REASONING
1 – The issues to be resolved, with relevance for the case, are the following:
a) To determine whether the stamp duty collection notes, subject of the present request for arbitral determination are or are not impugnable per se.
b) If affirmatively, to determine whether the assessment in question violates the principle of legality and typicality, alongside the violation of article 268º no. 3 of the CRP, of articles 124 and 125 of the CPA and article 77º of the LGT.
c) And if the defects of the assessment are confirmed with the consequent annulment, whether there will or will not be grounds for the refund of the amounts unduly paid plus indemnity interest.
2 – Matter of Fact
The matter of fact considered relevant and proven on the basis of the elements joined to the case file is the following:
a) The claimant was, in the year 2014, the owner of a building plot registered under article … of the urban matrix of the parish of …, municipality of Tavira.
b) She was notified to proceed with the payments of the SD[12] in the amount of € 4,582.28 and € 4,582.26, in both the total value of the assessment is mentioned. € 13,746.80
c) The claimant proceeded to pay the aforementioned instalments
d) The TPV of the immovable is € 1,374,680.00.
e) The economic value attributed by the claimant to the case is € 9,164.54 which corresponds to the sum of the amounts of the instalments challenged here.
There is no matter of fact given as not proven that is relevant to the decision.
3 – Matter of Law
Regarding the exception of unimpugnability of the subject matter of the proceedings, presented by the defendant.
The AT comes, in its response, to raise the aforesaid exception, stating, in summary, that the arbitral tribunals are competent to appreciate the tax assessment acts, under article 2º, no. 1 paragraph a) of the RJAT, but will no longer be competent to appreciate the SD collection notes in question here, given that these are not tax assessment acts, but merely the form of their payment
That due to the fact that the SD in question can be paid in instalments there is only one assessment and not several assessments, supporting its point of view on article 120º of the MPIT[13], here applicable by force of no. 7º of article 23º of the SIC, in the arbitral decisions already delivered on this matter and in the doctrine expounded on the tax assessment act by Professor Casalta Nabais, to conclude that being the collection notes the subject of the present request for arbitral determination, the dilatory exception provided for in paragraph c) of no. 1 of article 89º of the CPTA occurs, applicable ex vi article 29º no. 1 paragraph c) of the RJAT.
In the request for arbitral determination, the claimant treats the notifications it received for payment of the 1st and 2nd instalments as tax assessments, see articles 2º, 3º and 4º of the petition.
Even though in article 7º of the petition it refers that "the assessment now in question still stems from the regime created by Law nº 55-A/2012 of 29 October" which could lead one to think that, despite what is referred to in the previous articles, it would be intended to challenge the assessment act, the tribunal must dismiss that possibility, given that the economic value attributed to the petition by the claimant is € 9,164.54 which corresponds to the sum of the 2 instalments paid.
It should be noted that the claimant, despite having been notified of the response of AT, of the order of 12 November 2015, as the SGP[14] shows, came on the 19th of the same month to attach a request agreeing with the proposals of AT, to the effect that the joining of the AP[15] be waived, that the hearing of article 18º of the RJAT be waived, as well as the waiver of production of written submissions
In light of the foregoing the tribunal considered the conditions met for the rendering of the decision, and it is thus necessary to decide:
The declaration of illegality of the tax assessment acts falls within the scope of paragraph a) of no. 1 of article 2º of the RJAT, however, the subject matter of the petition under examination here is directed not at the assessment act proper, as already seen, but at the instalments legally permitted, in this case three, but only two are being challenged.
The assessment act of the SD provided for in item 28 of the TGIS is the sole act of determination of the total amount of the tax to be paid, the possibility of that determined amount being paid in instalments does not mean that as many assessments occur as there are instalments. We follow the position advocated within the scope of case 736/2014 of the CAAD, which, with due respect, is transcribed:
"… In order to give an answer to the question at hand it is relevant to keep in mind the concept of tax assessment (art. 97º, no. 1, al. a) of the CPPT) or tax assessment acts (art. 2º, no. 1, al. a) of the RJAT).
In the teaching of José Casalta Nabais "assessment lato sensu, namely as the set of all operations intended to determine the amount of the tax, comprises: 1) Subjective assessment intended to determine or identify the taxpayer or passive subject of the tax legal relationship, 2) Objective assessment through which the taxable or taxable matter of the tax is determined and, likewise, the rate to be applied in case of plurality of rates is determined. 3) Assessment stricto sensu translated in the determination of the collection through the application of the rate to the taxable or taxable matter, and 4) the (possible) deductions from the collection. As follows from the notion of assessment that is given to us by the illustrious professor, for each tax event there will, in principle, be a single assessment, by which the collection to be paid will be determined. Such is, moreover, what follows from art. 23º, no. 7, of the Stamp Duty Code in providing that "in the case of the Duty owed for the situations provided for in item nº 28 of the general table, the duty is assessed annually (…)" applying, with the necessary adaptations, the rules contained in the MPIT". For its part, article 113º, no. 2 of the MPIT provides, applicable by reference to that provision of the Stamp Duty Code, that "the assessment (…) is carried out in the months of February and March of the following year" From the circumstance that, by force of law, the same may be paid in several instalments, it does not follow that several assessments have occurred. The assessment is only one and only constitutes a harmful act, susceptible to being challenged which can, obviously, only be the subject of a single challenge. Naturally, when the law provides for the payment of the amount of the assessment in several instalments, staggered in time, the annulment of the tax act will have consequences with respect to all of them, ceasing the obligation to pay or imposing the obligation to refund and interest at the charge of the ATA, in case of payment by the passive subject. What the law does not provide for, neither in the arbitral sphere nor in the sphere of judicial impugnation proceedings, is the pretension to annul the payment of instalments per se since such effect will only result from the annulment of the tax assessment act, which as we have seen, consists in the quantification of the total amount to be paid and which is only and solely a single tax act"
Sharing in this perspective, it is necessary to conclude that it is manifest the unimpugnability per se of the instalments contained in the collection notes subject of the request for arbitral determination, thus proceeding with the exception adduced, being thereby prejudiced the consideration of the remaining issues.
IV – DECISION
In light of the foregoing, the tribunal decides as follows:
a) To declare the exception adduced by the defendant well-founded, absolving it from the instance.
b) To fix the value of the case at € 9,164.54 in accordance with the provisions contained in article 299º, no. 1, of the CPC[16], article 97º-A of the CPPT[17], and article 3º, no. 2, of the RCAT[18].
c) To fix the costs, under no. 4 of article 22º of the RJAT, in the amount of € 918.00 in accordance with the provisions in Table I referred to in article 4º of the RCAT, which are charged to the claimant.
Notify.
Lisbon 15 January 2016
Text prepared by computer, in accordance with, in accordance with article 131º, no. 5 of the CPC, applicable by reference to article 29º, no. 1, paragraph e) of the RJAT, with blank lines and reviewed by the tribunal.
The Arbitrator
Arlindo José Francisco
[1] Acronym for Tax Identification Number of a Legal Entity
[2] Acronym for Legal Regime for Arbitration in Tax Matters
[3] Acronym for Tax and Customs Authority
[4] Acronym for Administrative Arbitration Centre
[5] Acronym for Tax Patrimonial Value
[6] Acronym for General Table of Stamp Duty
[7] Acronym for Stamp Duty Code
[8] Acronym for Constitution of the Portuguese Republic
[9] Acronym for Code of Administrative Procedure
[10] Acronym for General Tax Law
[11] Acronym for Code of Procedure in Administrative Courts
[12] Acronym for Stamp Duty
[13] Acronym for Municipal Tax Code on Real Estate
[14] Acronym for Case Management System
[15] Acronym for Administrative Process
[16] Acronym for Code of Civil Procedure
[17] Acronym for Code of Tax Procedure and Process
[18] Acronym for Regulation on Costs in Tax Arbitration Proceedings
Frequently Asked Questions
Automatically Created
Is stamp tax under Verba 28.1 of the TGIS applicable to building land (terrenos para construção) with no authorized construction?
Following Law 83-C/2013 of 31 December, stamp tax under Verba 28.1 of the TGIS became explicitly applicable to building plots (terrenos para construção), calculated at 1% of their taxable patrimonial value annually. The Tax Authority's position is that this legislative amendment extended the tax base to include building land regardless of whether construction is authorized or foreseen. However, taxpayers argue this violates the principle of legality and typicality, contending that without authorized construction potential, land should not be classified as 'building plots' subject to taxation. The legal dispute centers on whether the mere classification as building land in cadastral records suffices for tax incidence, or whether actual construction authorization is required to trigger the tax obligation under constitutional and administrative law principles.
Can payment notices (notas de cobrança) for stamp tax be autonomously challenged in CAAD tax arbitration proceedings?
Payment notices (notas de cobrança) for stamp tax face significant challenges to autonomous contestation in CAAD proceedings. The Tax Authority consistently argues these notices are not impugnable per se because they do not constitute tax assessment acts but merely payment instruments for an already-determined tax obligation. Under Article 2(1)(a) RJAT, tax arbitration jurisdiction is limited to challenging assessment acts themselves. When stamp tax is payable in installments, only one assessment act exists even though multiple payment notices are issued, per Article 120 MPIT applied via Article 23(7) SIC. The Tax Authority invokes the dilatory exception under Article 89(c) CPTA to dismiss such cases without merit review. However, taxpayers often treat payment notifications as challengeable acts, particularly when contesting the underlying assessment's legality. The tribunal must determine whether substance prevails over form when payment notices reference the total assessment amount.
What are the legal grounds for contesting stamp tax levied on property based on its taxable asset value (VPT)?
Legal grounds for contesting stamp tax based on taxable asset value (VPT) include: (1) violation of the principle of legality and typicality, arguing the tax base does not meet statutory requirements for Verba 28.1 TGIS incidence; (2) constitutional violations under Article 268(3) CRP requiring proper legal grounds and reasoning for administrative acts; (3) procedural defects under Articles 124-125 CPA for insufficient factual and legal reasoning; (4) violation of Article 77 LGT mandating adequate grounds in tax assessment acts; (5) substantive challenges that the property classification (e.g., as building land) is incorrect or that statutory conditions for taxation are not met; and (6) challenges to the VPT determination itself if incorrectly calculated. Taxpayers must demonstrate how the assessment exceeds statutory authority or fails to meet constitutional and administrative law requirements for valid tax determinations.
How do the principles of legality and typicality apply to stamp tax incidence on real estate under Portuguese tax law?
The principles of legality and typicality (legalidade e tipicidade) are fundamental constitutional constraints on stamp tax incidence under Portuguese tax law. Article 268(3) CRP requires that administrative acts, including tax assessments, have proper legal grounds and adequate reasoning. These principles mandate that: (1) tax incidence must be clearly defined by statute without administrative discretion to extend tax bases beyond legislative intent; (2) all elements of tax obligation (taxable persons, taxable base, rates, exemptions) must be explicitly prescribed by law; (3) tax authorities cannot apply analogical interpretation to expand tax incidence; (4) property classifications triggering taxation must meet precise statutory definitions; and (5) taxpayers are entitled to detailed reasoning explaining how factual circumstances meet legal requirements for taxation. When applied to Verba 28.1 TGIS, these principles require clear statutory authority to tax building plots and transparent reasoning showing how specific property characteristics satisfy legislative criteria for stamp duty incidence.
What procedural exceptions can the Tax Authority raise to block arbitration of stamp tax liquidation acts?
The Tax Authority can raise several procedural exceptions to block arbitration of stamp tax assessments: (1) the dilatory exception of unimpugnability under Article 89(c) CPTA, applicable via Article 29(1)(c) RJAT, arguing the challenged act does not constitute a tax assessment act subject to arbitration jurisdiction; (2) lack of jurisdiction ratione materiae if the dispute falls outside Article 2(1)(a) RJAT's scope limited to assessment acts; (3) distinction between assessment acts (liquidação) and collection instruments (cobrança), with only the former being challengeable; (4) arguments that installment payment notices are merely execution acts deriving from a single prior assessment, not independent challengeable determinations; and (5) precedential arbitration decisions supporting dismissal without merit examination when collection notices rather than assessment acts are challenged. These exceptions aim to obtain absolution from the instance (absolvição da instância), preventing substantive review of the tax's legality while preserving procedural efficiency by requiring proper identification of challengeable administrative acts.