Process: 478/2016-T

Date: March 3, 2017

Tax Type: Selo

Source: Original CAAD Decision

Summary

CAAD arbitration case 478/2016-T addresses whether Stamp Tax under item 28.1 of the General Table (TGIS) applies to construction land designated for mixed-use development combining housing with commercial/service areas. The claimant company challenged a 2015 Stamp Tax assessment on urban land with a taxable property value of €1,852,340, arguing that item 28.1—introduced by Law 83-C/2013—only covers land 'whose building, authorized or planned, is for housing,' not mixed-use projects. The company contended the literal wording excludes properties combining residential with commercial purposes, making the assessment legally improper. Additionally, constitutional challenges were raised, alleging violations of equality, legality, and justice principles under Articles 13, 104(3), and 266(2) of the Portuguese Constitution. The claimant argued the tax unconstitutionally discriminates against businesses holding construction land as part of their economic activity, treating them as luxury asset holders when the land serves commercial purposes. The Tax Authority countered that assessment methodology under IMI Code Article 45(2) requires applying housing coefficients to construction land based on authorized or planned buildings, making the tax legally sound. The Authority emphasized that item 28.1 properly applies when housing is among planned uses, regardless of mixed designation. This case highlights critical interpretive questions regarding Stamp Tax scope on construction land, the interaction between TGIS item 28.1 and IMI valuation rules, and constitutional limits on taxing business assets under residential property tax regimes.

Full Decision

ARBITRAL DECISION

Author / Claimant: A…, LDA

Respondent: Tax and Customs Authority (hereinafter A.T.A.)

1. REPORT

On 29-07-2016, the limited liability company A…, LDA., legal entity no.…, with registered office in …, …, …, …-… Lisbon, registered in the Commercial Registry Office of Lisbon under no.…, hereinafter referred to as the Claimant, submitted to the Administrative Arbitration Centre (CAAD) a request for constitution of an arbitral tribunal with a view to annulling the tax assessment act for Stamp Tax relating to the year 2015 and relating to the urban property registered in the urban property matrix of the parish of … under article …, with a taxable property value of 1,852,340.00 € and described as land for construction.

The Claimant alleges that the assessment in question suffers from the material defects of: (i) violation of the tax incidence rule contained in item 28.1 of the General Table of Stamp Tax (TGIS), and (ii) unconstitutionality of the aforementioned item 28.1 due to violation of the constitutional principles of legality, justice, equality and impartiality.

The Claimant begins by stating that its parcel of land is not subsumable to the provision of the rule contained in item 28.1 of the TGIS. Firstly because, according to the Claimant, the wording of item 28.1 introduced by article 194º of Law no. 83-C/2013 of 31 December (State Budget Law for 2014) came to include land for construction whose building, authorized or planned, is for housing. And the land owned by the Claimant subject to taxation is intended for the construction of housing, jointly with commerce/services, so it does not fall directly within the provision of item 28.1.

For the Claimant, even though the taxable property values are concretely determinable, the property matrix contains no taxable property value (TPV) of the part intended for housing, another TPV of the part intended for commerce and yet another TPV of the part intended for services, nor is it used for purposes of Municipal Property Tax (IMI). And it concludes that therefore it is not possible to adopt a TPV that does not find support in law.

The Claimant alleges that the challenged act violates the rule provided for in item 28.1 of the TGIS, in that the same does not provide for the taxation of land for construction whose building, authorized or planned, is jointly for housing and commerce/services, but only those "whose building, authorized or planned, is for housing", and as such, should be annulled.

On the other hand, the Claimant alleges that the wording of item 28.1 of the TGIS introduced by Law no. 83-C/2013 of 31 December is unconstitutional on various grounds.

For the Claimant the wording given by the aforementioned law to item 28.1 appears to be unconstitutional due to violation of the constitutional principles of legality, justice, equality and impartiality, enshrined in no. 2 of article 266º and in articles 13º and 104º no. 3 of the Constitution of the Portuguese Republic.

First, the Claimant states that by taxing land for construction intended for housing, the law may be taxing assets affected by the development of an economic activity, in this case the construction of residential buildings, a taxation which, in its view, is unconstitutional. The Claimant alleges that it acquired the land in the context of its economic activity, and is being taxed as if it had a tax capacity at the level of the highest standards of Portuguese society, to which does not correspond to reality.

The Claimant states that the taxation provided for by item 28.1 of the TGIS, viewed as a taxation of ownership of residential urban properties and land for construction whose building is for housing, of value equal to or greater than one million euros, even in cases where this does not correspond to a manifestation of luxury of its holders, but only to the mere development of their economic activity, cannot fail to be considered unconstitutional because it corresponds to an unjustified negative discrimination of those holders, which implies its material unconstitutionality, due to breach of the principle of equality. This discrimination, says the Claimant, also occurs when comparing the type of companies referred to with others that, for their economic activity, hold in portfolio land for construction of buildings intended for commerce, services or industry, which are not subject to taxation provided for in item 28.1 of the TGIS.

The Claimant states that there is no legal basis for treating differently the situation of taxpayers who hold land for construction, by the mere fact that the building that may be constructed on one parcel of land is to be affected to housing and on another is to have any affectation other than housing. In this sense, for the Claimant item 28.1 must be considered unconstitutional, in the part relating to land for construction whose building, authorized or planned, is for housing, due to violation of the constitutional principle of equality.

The Claimant also considers that, in light of arbitral jurisprudence, the Claimant's land should only be taxed by item 28.1 if and to the extent that any of those autonomous fractions or independent residential units provided for or authorized there had a TPV equal to or greater than one million euros.

The Claimant further understands that the violation of the principle of equality is also evident in cases such as a five-star hotel in Lisbon, even if it has a TPV much higher than one million euros, will not be subject to the Stamp Tax of item 28.1 for being a property intended for services, despite providing luxury accommodation to its clients. This, unlike what happens with land for construction that does not provide housing but which is subject to the Stamp Tax of item 28.

Finally, the Claimant states that it proceeded to pay the assessment in question in these proceedings, and requests the reimbursement of the amount paid plus compensatory interest, in accordance with article 43º of the General Tax Law (LGT).

A single arbitrator, Suzana Fernandes da Costa, was appointed on 19-10-2016.

In accordance with the provisions of article 11º no. 1, paragraph c) of the RJAT, the singular arbitral tribunal was constituted on 14-11-2016.

The A.T.A. submitted a response on 13-12-2016 (within the legal deadline for that purpose).

The A.T.A. argues that the request for declaration of illegality and consequent annulment of the disputed assessment should be judged unfounded, since the assessment in question constitutes a correct interpretation of item 28.1 of the General Table of Stamp Tax, since the aforementioned property in question is a "land for construction whose building, authorized or planned, is for housing".

The A.T.A. begins by stating that in the assessment of land for construction, the legislator intended that the assessment methodology of urban properties in general be applied, taking into account all coefficients, namely the affectation coefficient provided for in article 41º of the IMI Code, the legal imposition resulting from no. 2 of article 45º of the IMI Code, referring to the value of buildings authorized or planned on the same land for construction. Thus, for purposes of determining the TPV of land for construction, it is clear application of the housing coefficient in the context of assessment, according to the Respondent.

On the other hand, the Respondent alleges that there is no violation of constitutionally enshrined principles.

As for the Claimant's request for payment of compensatory interest, the Respondent states that it applied the law as the executive body is constitutionally bound to do, so there was no error by the services that could support the request for compensatory interest, in accordance with article 43º of the LGT.

The A.T.A. further requested, in its response, exemption from holding the meeting provided for in article 18º of the Tax Arbitration Regime, and states that it does not intend to submit arguments.

On 14-12-2016, an order was issued ordering the notification of the Claimant to, within 10 days, state its position on the A.T.A.'s request for exemption from holding the meeting and exemption from presenting arguments.

On 15-12-2016, the Claimant communicated that it agreed to the exemption from the meeting provided for in article 18º of the RJAT.

An order was issued on 21-12-2016, exempting from holding the meeting provided for in article 18º of the RJAT, and granting the Claimant and Respondent the opportunity to present, if they wish, their arguments in writing. The date for rendering the decision was also set as 03-03-2016, and the Claimant was warned to pay the subsequent arbitral fee by that date.

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

This request for arbitral ruling was presented in a timely manner, in accordance with article 10º no. 1 paragraph a) of Decree-Law no. 10/2011 of 20 January.

The proceedings do not suffer from nullities and preliminary issues were not raised.

2. FACTS

2.1. Proven facts:

After analyzing the documentary evidence produced, the following facts are considered proven and relevant for the resolution of the case:

1. The Claimant A…, Lda was, in 2015, owner of the urban property designated as lot …/…, located at …, near Rua …, in the parish of …, municipality of Lisbon, registered in the property matrix under article … of the parish of …, with a taxable property value of 1,852,340.00 €, as per the property record attached to the proceedings as document 2.

2. The aforementioned urban property is land for construction, and corresponds to lot no. …/…, of the Municipal Initiative Subdivision License no. …/2005, with an area of 1,998 m2, for which the Municipality of Lisbon authorized the construction of two blocks, designated as Block 1 and Block 2, with a construction area above ground of 5,188 m2, divided by housing with 3,900 m2 (33 units), commerce with 784 m2 and services with 504 m2, as per property certificate and pages … to … of no. … of the Municipal Bulletin of the Municipality of Lisbon attached to the proceedings as documents 3 and 4.

3. The Claimant was notified of the Stamp Tax assessment no. 2016…, referring to the year 2015, in the amount of 18,523.40 € to be paid by 31-07-2016, as per the assessment attached to the proceedings as document 7.

4. The Claimant proceeded to pay the Stamp Tax assessment in the amount of 18,523.40€, on 13-07-2016, as per document attached to the proceedings.

Other facts with relevance for the resolution of the case were not proven.

2.2. Reasoning of the proven facts:

Regarding the proven facts, the arbitrator's conviction was based on the documentary evidence attached to the proceedings and on facts admitted by agreement.

3. LEGAL MATTERS:

3.1. Object and scope of these proceedings

The issue to be decided in these proceedings is whether the property in question, being land for construction with authorization for the construction of two blocks intended for various purposes, namely residential, commercial and services, is or is not subject to Stamp Tax provided for in item 28.1 of the General Table of Stamp Tax (TGIS), in the wording given to it by Law no. 83-C/2013 of 31 December (State Budget Law for 2014).

On this same issue, among others, the decisions of the CAAD issued in proceedings number 480/2015-T, 498/2015-T and 522/2015-T have already ruled.

Let us begin by analyzing the material defect, invoked by the Claimant, of violation of the tax incidence rule contained in item 28.1 of the TGIS, which, if verified, will definitively exclude the possibility of imposing on the Claimant a new tax assessment made under that same rule. Furthermore, and as mentioned in the CAAD decision in proceedings no. 522/2015-T, it will only be necessary to proceed with the examination of the question of unconstitutionality of item 28.1 if and to the extent that the interpretation and realization of the solution arising from the aforementioned item involves the subsumption of the situation sub judice to its respective legal provision.

3.2. On the delimitation of the objective scope of incidence of item 28.1 of the TGIS

It is important to first list the legal rules relevant at the date of occurrence of the facts.

The subjection to Stamp Tax of properties with residential affectation resulted from the addition of item 28 to the TGIS, carried out by article 4º of Law no. 55-A/2012 of 29 October, which typified the following tax facts:

"28 – Ownership, usufruct or right of superficies of urban properties whose taxable property value contained in the matrix, in accordance with the Municipal Property Tax Code (CIMI), is equal to or greater than € 1,000,000.00 – on the taxable property value used for IMI purposes:

28.1 – For property with residential affectation – 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 favorable tax regime, contained in the list approved by order of the Minister of Finance – 7.5%".

The aforementioned law also added no. 7 of article 23º of the Stamp Tax Code, which states that "as regards the tax due by the situations provided for in item no. 28 of the General Table, the tax is assessed annually, in relation to each urban property, by the central services of the Tax and Customs Authority, applying, with the necessary adaptations, the rules contained in the CIMI". It also added no. 2 of article 67º which provides that "matters not regulated in this Code concerning item 28 of the General Table, the CIMI shall apply, subsidiarily".

Subsequently, Law no. 83-C/2013 of 31 December (State Budget Law for 2014) amended the wording of item 28.1 of the TGIS, in force from 1 January 2014, which now reads as follows:

"28.1 – For residential property or for land for construction whose building, authorized or planned, is for housing, in accordance with the provisions of the IMI Code – 1%".

Article 2º of the IMI Code refers to the concept of property:

"1 - For purposes of this Code, property is every fraction of territory, including waters, plantations, buildings and constructions of any nature incorporated or based therein, with a character of permanence, provided that it forms part of the assets of a natural or legal person and, in normal circumstances, has economic value, as well as waters, plantations, buildings or constructions, in the circumstances above, endowed with economic autonomy in relation to the land where they are located, although located in a fraction of territory that constitutes an integral part of a diverse patrimony or does not have a patrimonial nature.

2 - Buildings or constructions, even though movable by nature, are deemed to have a character of permanence when affected to non-transitory purposes.

3 - The character of permanence is presumed when buildings or constructions have been based in the same place for a period exceeding one year.

4 - For purposes of this tax, each autonomous fraction, under the horizontal property regime, is deemed to constitute a property."

In turn, article 4º defines what urban properties are:

"Urban properties are all those that should not be classified as rural properties, without prejudice to the provisions of the following article."

Article 6º provides, in turn, that:

"1 – Urban properties are divided into:

a) Residential;

b) Commercial, industrial or for services;

c) Land for construction;

d) Others.

2 – Residential, commercial, industrial or for services are buildings or constructions licensed for such purpose or, in the absence of a license, that have as their normal destination each of these purposes.

3 – Land for construction is considered to be land located within or outside an urban agglomeration, for which a license or authorization has been granted, prior notification admitted or favorable prior information issued for a subdivision or construction operation, and also those that have been so declared in the acquisition title, excepting land that the competent entities prohibit any of those operations, namely those located in green zones, protected areas or that, in accordance with municipal spatial planning plans, are affected to public spaces, infrastructure or equipment" (…).

As for the TPV of land for construction, let us see what article 45º of the IMI Code provides.

"1 - The taxable property value of land for construction is the sum of the value of the area of implantation of the building to be constructed, which is that located within the perimeter of fixation of the building to the ground, measured by the external part, added to the value of the land adjacent to the implantation.

2 - The value of the area of implantation varies between 15% and 45% of the value of buildings authorized or planned.

3 - In setting the percentage of the value of the land of implantation account is taken of the characteristics referred to in no. 3 of article 42.

4 - The value of the area adjacent to the construction is calculated in accordance with no. 4 of article 40.

5 - When the document proving constructive viability referred to in article 37. only refers to the indices of the PDM, the evaluating experts must estimate, in a reasoned manner, the respective construction area, taking into account, in particular, the average construction areas of the surrounding area. (Added by Law no. 64-B/2011, of 30 December)."

Finally, note the rules on the interpretation of laws, which are fundamental for understanding the scope of the concept of property with residential affectation.

Article 11º of the LGT determines that:

"1. In determining the meaning of tax rules and in qualifying the facts to which they apply, the general rules and principles of interpretation and application of laws are observed.

2. Whenever tax rules employ terms specific to other branches of law, they must be interpreted in the same sense as they have therein, unless otherwise directly follows from the law.

3. If doubt persists about the meaning of the incidence rules to apply, regard must be had to the economic substance of the tax facts.

4. Gaps resulting from tax rules covered by the legislative reserve of the Assembly of the Republic are not susceptible to analogical integration".

And article 9º of the Civil Code states that:

"1. Interpretation must not be confined to the letter of the law, but must reconstruct from the texts the legislative thought, taking especially into account the unity of the legal system, the circumstances in which the law was elaborated and the specific conditions of the time in which it is applied.

2. However, the interpreter cannot consider legislative thought that does not have in the letter of the law a minimum of verbal correspondence, even if imperfectly expressed.

3. In fixing the meaning and scope of the law, the interpreter shall presume that the legislator adopted the most appropriate solutions and knew how to express its thought in adequate terms".

On the interpretation of law, let us see what is stated in the arbitral decision issued in proceedings no. 53/2013-T: "The relevance of the text of the law is especially emphasized in the matter of interpretation of Stamp Tax incidence rules, which amount to a mixture, under a common denomination, of an incongruous set of taxes of completely distinct natures (on income, on spending, on assets, on acts, etc.), which leaves no appreciable margin for application of the primary interpretative criterion, which is the unity of the legal system, which demands its global coherence. (…)

In this context, lacking safe interpretative elements that allow one to detect legislative coherence in the solution adopted in the aforementioned item no. 28.1 or the correctness or incorrectness of the adopted solution (relevant for interpretative purposes in light of no. 3 of article 9º of the Civil Code), the tenor of the legal text must be the primary element of interpretation, in accordance with the presumption, imposed by the same no. 3 of article 9º, that the legislator knew how to express its thought in adequate terms."

Indeed, we find that the wording of item 28.1, both the first and that given by the State Budget Law for 2014, has a fundamentally referential character, since its relevant regulatory content depends on the legal rules contained in the IMI Code.

In fact, whether as to the objective incidence, with the reference to "urban properties" and to "taxable property value contained in the matrix, in accordance with the Municipal Property Tax Code", or as to the fixation of the taxable matter, with the reference to "taxable property value used for IMI purposes", item 28 of the TGIS results from a general reference to the IMI Code. This aspect is reinforced by no. 2 of article 67º of the Stamp Tax Code, which determines that matters not regulated in the Stamp Tax Code concerning item 28 of the TGIS shall apply, subsidiarily, the provisions of the IMI Code.

According to the literal wording of item 28.1 of the TGIS, with the wording given by the State Budget Law for 2014, urban properties with TPV equal to or greater than € 1,000,000.00 are subject to this tax incidence rule, which are residential properties or land for construction with building, authorized or planned, for housing.

In accordance with article 6º no. 2 of the IMI Code, residential buildings or constructions licensed by municipalities for that purpose are, or in the absence of a license, that have as their normal destination that use.

As for land for construction, and agreeing with what the arbitral decision in proceedings no. 522/2015-T states, only those for which building authorization or planning for residential purposes exists are covered by the scope of incidence of item 28.1 of the TGIS, in the sense resulting from the definition of residential property given by no. 2 of article 6º of the IMI Code. In this way, land for construction for which building authorization or planning for purposes other than residential purposes is provided, namely for commercial, industrial or services purposes, is excluded from subjection to item 28.1 of the TGIS.

In fact, we agree with the above-mentioned decision (decision in proceedings no. 522/2015-T), when it states that "the limitation of the application of the tax to residential properties and land for construction in which building for housing is provided or authorized, reveals the intention not to burden the productive sector and enterprises in general and, in that sense, it was not intended to include within the scope of incidence of the tax either properties affected to services, industry or commerce, that is, properties affected to economic activity, nor land for construction for which building for those other purposes is provided or authorized. This is understandable in a context in which the economy was in a recessionary spiral, publicly proclaimed at the highest level, with unemployment rates reaching historic levels, with an avalanche of business closures due to economic unsustainability".

The aforementioned decision further states that "bearing in mind this situation and it being known and public that the revival of economic activity and the increase in exports are the gateways out of the crisis, it is understandable that, despite the pressing need to increase tax revenues, legislative measures were not taken that would hinder economic activity, namely the aggravation of the tax burden that hinders it and affects competitiveness in international terms".

In fact, we must conclude that the available interpretative elements, including the circumstances in which the law was elaborated and the specific conditions of the time in which it is applied, clearly point to the fact that it was not intended to include within the scope of incidence of item 28.1 of the TGIS non-residential properties and land for construction for which building authorization or planning for purposes other than housing is provided.

3.3. On the (non)application of item 28.1 of the TGIS to the case sub judice

As proven, the urban property in question in these proceedings is "land for construction, and corresponds to lot no. …/…, of the Municipal Initiative Subdivision License no. …/2005, with an area of 1,998 m2, for which the Municipality of Lisbon authorized the construction of two blocks, designated as Block 1 and Block 2, with a construction area above ground of 5,188 m2, divided by housing with 3,900 m2 (33 units), commerce with 784 m2 and services with 504 m2, as per property certificate and pages … to … of no. … of the Municipal Bulletin of the Municipality of Lisbon attached to the proceedings as documents 3 and 4". It is, therefore, land for construction for which building authorization for housing, commerce and services is provided.

Now, the property matrix contains no TPV of the part intended for housing, another TPV of the part intended for commerce and yet another TPV of the part intended for services, nor is it used for IMI purposes. The IMI Code, in article 7º, no. 2, paragraph b), states that the value of the property is the sum of the values of its parts, therefore, of all its parts, whatever their affectation may be.

Therefore, it is not legally possible to proceed to annul the assessment in the part relating to non-residential affectation, and maintain the assessment in the part relating to residential affectation of the property, under penalty of violation of article 7º no. 2 paragraph b) of the IMI Code. On the other hand, one would be considering, for purposes of fixing the incidence of item 28.1 of the TGIS, values that do not correspond to the taxable property value used for IMI purposes (and, therefore, for purposes of applying item 28.1 of the TGIS), that is, one would be adopting a taxable property value that does not find support in law.

In conclusion, the land for construction in question in these proceedings is not subject to Stamp Tax provided for in item 28.1 of the TGIS.

Consequently, the disputed assessment suffers from the defect of violation of law of item 28.1 of the TGIS, due to error regarding the legal presuppositions, which implies the declaration of its illegality and consequent annulment.

Given the merit of the requested declaration of illegality of the disputed assessment, due to a defect that prevents the renewal of the act, the examination of the remaining defects attributed to it by the Claimant becomes moot and unnecessary.

4. COMPENSATORY INTEREST

The Claimant states that it proceeded to pay the assessment in question in these proceedings, and requests the reimbursement of the amount paid plus compensatory interest, in accordance with article 43º of the General Tax Law (LGT).

Article 43º no. 1 of the LGT determines that "compensatory interest is due when it is determined, in a gracious claim or judicial challenge, that there has been error attributable to the services from which results payment of the tax debt in an amount higher than legally owed", with no. 4 of article 61º of the CPPT providing that "if the decision recognizing the right to compensatory interest is judicial, the payment period is counted from the beginning of the period for its voluntary execution".

In these proceedings, it is verified that the illegality of the disputed assessment, due to error in the legal presuppositions, is attributable to the A.T.A. for having proceeded to the incorrect interpretation and application of the legal provision contained in item 28.1 of the TGIS.

Thus, the Claimant has the right, in accordance with the provisions of articles 24º, no. 1, paragraph b), of the RJAT and 100º of the LGT, to the reimbursement of the amount of tax unduly paid and to compensatory interest, in accordance with the provisions of articles 43º, no. 1, of the LGT and 61º of the CPPT, calculated from the date of payment of the tax (13-07-2016), at the rate resulting from no. 4 of article 43º of the LGT, until the date of processing of the respective credit note, in which they shall be included.

5. DECISION

In view of the foregoing, it is determined:

a) Judge the request made by the Claimant in this tax arbitral proceeding to be well-founded as to the illegality of the Stamp Tax assessment no. 2016 … in the amount of 18,523.40 €;

b) Judge the request to condemn the Tax and Customs Authority to reimburse the Claimant the amount of tax paid, plus compensatory interest in accordance with legal provisions, from the date such payment was made until the date of complete reimbursement thereof.

6. VALUE OF THE PROCEEDING:

In accordance with the provisions of article 315º, no. 2, of the CPC and 97º-A, no. 1, paragraph a) of the CPPT and 3º, no. 2 of the Regulation of Costs in Tax Arbitration Proceedings, the value of the action is fixed at 18,523.40€.

7. COSTS:

In accordance with article 22º, no. 4, of the RJAT, and Table I attached to the Regulation of Costs in Tax Arbitration Proceedings, the amount of costs is fixed at € 1,224.00, due by the Tax and Customs Authority.

Notify.

Lisbon, 3 March 2017.

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

The Arbitrating Judge

Suzana Fernandes da Costa

Frequently Asked Questions

Automatically Created

Is a construction land plot subject to Stamp Tax under verba 28.1 of the TGIS when the planned building includes both housing and commercial areas?
Under Portuguese tax law interpretation, construction land subject to Stamp Tax under verba 28.1 of the TGIS when the planned building includes housing components presents interpretive challenges. The claimant argued that the literal wording of item 28.1—'land for construction whose building, authorized or planned, is for housing'—excludes mixed-use projects combining residential with commercial/service areas. However, the Tax Authority applied the assessment methodology from IMI Code Article 45(2), which considers all authorized or planned buildings and applies corresponding coefficients, including housing coefficients when residential use is planned. This suggests the Authority's position that mixed-use land with housing components falls within item 28.1's scope when the taxable property value reaches the €1 million threshold, regardless of concurrent commercial designation.
How is the taxable patrimonial value (VPT) determined for mixed-use construction land under Portuguese Stamp Tax law?
The taxable patrimonial value (VPT) for mixed-use construction land under Portuguese Stamp Tax law is determined by applying IMI Code valuation methodology. According to Article 45(2) of the IMI Code, construction land valuation must reference the value of buildings authorized or planned on that land. The assessment applies all relevant coefficients from the IMI framework, including the affectation coefficient under Article 41 of the IMI Code. When land has authorization or planning for mixed uses, the Tax Authority's position is that housing coefficients apply to the residential component. However, the claimant challenged this approach, arguing that without separate VPT allocations in the property matrix for housing, commercial, and service components, there's no legal basis for determining which portion of the €1,852,340 total VPT relates to housing versus other uses for Stamp Tax purposes under item 28.1.
Can a taxpayer challenge the constitutionality of verba 28.1 of the Stamp Tax General Table at CAAD arbitration?
Yes, taxpayers can challenge the constitutionality of verba 28.1 of the Stamp Tax General Table at CAAD arbitration. In this case, the claimant raised constitutional challenges alleging violations of principles enshrined in the Portuguese Constitution: equality (Article 13), tax legality and fairness (Article 104(3)), and legality and impartiality in public administration (Article 266(2)). CAAD arbitral tribunals have jurisdiction to hear constitutional arguments related to tax provisions, though they cannot declare provisions unconstitutional with erga omnes effect—that power rests with the Constitutional Court. However, arbitrators can refuse to apply provisions they find unconstitutional in the specific case (diffuse constitutional review). The claimant's constitutional challenges focused on alleged discrimination against businesses holding construction land as part of their economic activity versus private luxury asset holders, and unequal treatment compared to land designated for non-residential construction.
What constitutional principles apply to the taxation of construction land under Imposto de Selo in Portugal?
Constitutional principles applicable to taxation of construction land under Imposto de Selo in Portugal include: (1) Tax legality and fairness (Article 104(3) of the Constitution), requiring taxes to be based on clear legal foundations and aligned with taxpayers' economic capacity; (2) Equality (Article 13), prohibiting unjustified discrimination between similarly situated taxpayers; (3) Legality and impartiality in public administration (Article 266(2)), requiring administrative acts to comply with law and avoid arbitrary distinctions. The claimant argued item 28.1 violates equality by taxing construction land held for business purposes (development activity) at the same rate as luxury residential properties held by wealthy individuals, despite different economic realities. Further, the claimant contended the provision discriminates by taxing land for residential construction while exempting equally valuable land designated for commercial, industrial, or service buildings, creating unjustified differential treatment without rational basis.
What is the CAAD arbitration procedure for contesting a Stamp Tax assessment on urban land classified as terreno para construção?
The CAAD arbitration procedure for contesting a Stamp Tax assessment on urban land classified as terreno para construção follows the Tax Arbitration Regime (RJAT). The taxpayer must submit a request for constitution of an arbitral tribunal to the Administrative Arbitration Centre (CAAD), identifying the challenged tax assessment act and grounds for annulment. In this case, filed on 29-07-2016, the request challenged the 2015 Stamp Tax assessment under item 28.1 for land with VPT of €1,852,340. An arbitrator is appointed, and the tribunal constitutes formally (here on 14-11-2016). The Tax Authority submits a response within the legal deadline (submitted 13-12-2016), defending the assessment's legality. The procedure includes potential hearings under Article 18 of RJAT, though parties may request exemption. The taxpayer typically must pay the disputed tax amount before proceeding, and if successful, can claim reimbursement plus compensatory interest under Article 43 of the General Tax Law (LGT).