Process: 482/2014-T

Date: March 25, 2015

Tax Type: Selo

Source: Original CAAD Decision

Summary

CAAD Process 482/2014-T addresses a critical interpretative question regarding Stamp Tax (Imposto de Selo) under item 28.1 of the General Stamp Tax Table (TGIS), which applies to urban properties with a tax property value (VPT) exceeding one million euros. The dispute involves a building located in Lisbon, registered under a single urban property article, constituted in full ownership and comprising 13 floors with independent use for residential purposes. The total VPT of the property amounts to €1,348,230.78, while none of the individual floors exceeds the €1 million threshold. Four co-owners challenged 52 Stamp Tax assessment acts totaling €11,459.90 relating to the 2013 tax year. The claimants argued that since no individual floor with independent use has a VPT exceeding €1 million, the Stamp Tax under item 28.1 cannot be legitimately assessed, asserting that such application would violate the constitutional principle of equality. The Tax and Customs Authority (ATA) defended the assessments, contending that the relevant property value for tax incidence purposes is the total property value of the urban property as a whole, not the individual property values of each floor, even where those floors are capable of independent use. This case highlights a fundamental issue in Portuguese tax law: whether item 28.1 of TGIS applies to the aggregate value of a building registered as a single property or to the individual values of autonomous units within it. The arbitration procedure followed standard CAAD protocols, with the sole arbitrator appointed in August 2014 and the tribunal constituted in October 2014. Both parties waived the oral hearing and pleadings. The case value was determined at €11,459.90, corresponding to the total of the challenged assessments, requiring additional arbitration fees from the claimants.

Full Decision

ARBITRAL DECISION

CAAD: Tax Arbitration

Case No. 482/2014 – T

Subject: Stamp Tax – Item 28.1 of the General Stamp Tax Table

Claimants / Applicants: A, B, C and D

Respondent: Tax and Customs Authority (hereinafter ATA)

  1. Report

On 11-07-2014, A, taxpayer no. …, resident at Rua … Parede, B, taxpayer no. …, resident at Avenida … Lisboa, C, holder of French passport no. …, resident at Rua … Parede, in the capacity of head of household of the estate opened by the death of E, taxpayer no. …, and …, taxpayer no. …, resident at Praceta … Parede, in the capacity of head of household of the estate opened by the death of F, hereinafter referred to as Claimants, submitted to the Administrative Arbitration Centre (CAAD) a request for the constitution of an arbitral tribunal with a view to the annulment of the Stamp Tax assessment acts No. 2014 … in the amount of €271.12, No. 2014 … in the amount of €271.12, No. 2014 … in the amount of €271.12, No. 2014 … in the amount of €271.12, No. 2014 … in the amount of €271.12, No. 2014 … in the amount of €271.12, No. 2014 … in the amount of €273.80, No. 2014 … in the amount of €273.80, No. 2014 … in the amount of €276.44, No. 2014 … in the amount of €276.44, No. 2014 … in the amount of €276.44, No. 2014 … in the amount of €276.44, No. 2014 … in the amount of €90.47, No. 2014 … in the amount of €162.67, No. 2014 … in the amount of €162.67, No. 2014 … in the amount of €162.67, No. 2014 … in the amount of €162.67, No. 2014 … in the amount of €162.67, No. 2014 … in the amount of €162.67, No. 2014 … in the amount of €164.28, No. 2014 … in the amount of €164.28, No. 2014 … in the amount of €165.87, No. 2014 … in the amount of €165.87, No. 2014 … in the amount of €165.87, No. 2014 … in the amount of €165.87, No. 2014 … in the amount of €54.28, No. 2014 … in the amount of €271.12, No. 2014 … in the amount of €271.12, No. 2014 … in the amount of €271.12, No. 2014 … in the amount of €271.12, No. 2014 … in the amount of €271.12, No. 2014 … in the amount of €271.12, No. 2014 … in the amount of €273.80, No. 2014 … in the amount of €273.80, No. 2014 … in the amount of €276.44, No. 2014 … in the amount of €276.44, No. 2014 … in the amount of €276.44, No. 2014 … in the amount of €276.44, No. 2014 … in the amount of €90.47, No. 2014 … in the amount of €216.90, No. 2014 … in the amount of €216.90, No. 2014 … in the amount of €216.90, No. 2014 … in the amount of €216.90, No. 2014 … in the amount of €216.90, No. 2014 … in the amount of €216.90, No. 2014 … in the amount of €219.04, No. 2014 … in the amount of €219.04, No. 2014 … in the amount of €221.15, No. 2014 … in the amount of €221.15, No. 2014 … in the amount of €221.15, No. 2014 … in the amount of €221.15, and No. 2014 … in the amount of €72.38, from item 28.1 of the General Stamp Tax Table, relating to the year 2013 and to the urban property located at Rua …, Lisboa, registered in the urban property matrix of the parish of … under article …, constituted in full ownership and comprising 13 floors with independent use.

The Claimants allege that since none of the floors with independent use has a tax property value (TPV) exceeding one million euros (€1,000,000), Stamp Tax cannot be assessed or collected, under penalty of violating the constitutional principle of equality.

The Tax and Customs Authority filed a response on 06-11-2014, defending the maintenance of the tax acts challenged, requesting the dismissal of the claim, and arguing that the relevant property value for the purposes of tax incidence is the total property value of the urban property and not the property value of each of the floors that compose it, even if they are capable of independent use.

A sole arbitrator was appointed on 29-08-2014: Suzana Fernandes da Costa. In accordance with Article 11, No. 1, subparagraph c) of the TAR (Tax Arbitration Regulations), the sole arbitral tribunal was constituted on 08-10-2014.

In its response, the ATA requested the waiver of the holding of the meeting provided for in Article 18 of the TAR, as well as the waiver of the production of pleadings.

Notified of this request for waiver, the Claimants stated that they had no objections.

On 29-12-2014, an order was issued requiring the Claimants to attach copies of the collection documents relating to the assessments of Stamp Tax whose annulment they request, as well as copies of the decisions dismissing the objections filed by Claimants A, C and D, since these documents had not been attached with the arbitral request and the ATA did not attach the administrative file. The Claimants attached the aforementioned documents on 15-01-2015.

On 27-01-2015, an order was issued waiving the holding of the meeting provided for in Article 18 of the TAR, since there were no exceptions to be considered, and also waiving the production of pleadings. The date of 05-03-2015 was also set for the delivery of the arbitral decision.

On 05-03-2015, an order was issued setting the value of the case at €11,459.90, taking into account that the value of the assessments challenged in the arbitral request totalled this amount and not the amount indicated by the Claimants of €2,052.34. In this order, the Claimants were also ordered to pay, within one week, the remainder of the initial and subsequent arbitration fee, and the period for delivering the decision was extended by twenty days.

On 25-03-2015, the Claimants attached to the case file proof of payment of the remainder of the initial arbitration fee and the subsequent arbitration fee, paid on 10-03-2015.

The parties have legal personality and capacity and are legitimate (Articles 4 and 10, Nos. 1 and 2 of the TAR and Article 1 of Ordinance No. 112-A/2011 of 22 March).

The arbitral request is timely, pursuant to Article 10, No. 1, subparagraph a) of Decree-Law No. 10/2011 of 20 January and Article 102, No. 1, subparagraph a) of the Code of Tax Procedure and Process.

The case does not suffer from nullities and no preliminary issues were raised.

  1. Facts

2.1. Proven Facts:

Having analysed the documentary evidence produced and the position of the parties as set out in the case documents, the following facts are considered proven and relevant to the decision of the case:

  1. Claimant A is a co-owner, in the proportion of 25%, of the urban property located at Rua …, Lisboa, registered in the urban property matrix of the parish of… under article …, constituted in full ownership and comprising 13 floors intended for dwelling with independent use, as referred to in the arbitral request and in the ATA's response.

  2. Claimant B is a co-owner, in the proportion of 15%, of the urban property located at Rua …, Lisboa, registered in the urban property matrix of the parish of ... under article ..., constituted in full ownership and comprising 13 floors intended for dwelling with independent use, as referred to in the arbitral request and in the ATA's response.

  3. Claimant C is a co-owner, in the proportion of 25%, of the urban property located at Rua …, Lisboa, registered in the urban property matrix of the parish of ... under article ..., constituted in full ownership and comprising 13 floors intended for dwelling with independent use, as referred to in the arbitral request and in the ATA's response.

  4. Claimant D is a co-owner, in the proportion of 20%, of the urban property located at Rua …, Lisboa, registered in the urban property matrix of the parish of ... under article ..., constituted in full ownership and comprising 13 floors intended for dwelling with independent use, as referred to in the arbitral request and in the ATA's response.

  5. The total property value of the aforementioned property is one million, three hundred and forty-eight thousand, two hundred and thirty euros and seventy-eight cents (€1,348,230.78), as shown in the Stamp Tax assessments attached by the Claimants.

  6. None of the floors or divisions with independent use has a tax property value exceeding one million euros, as can be verified by analysis of the Stamp Tax assessments attached to the case file.

  7. Claimant A was notified of the following Stamp Tax assessments, relating to the year 2013:

  • assessment No. 2014 … in the amount of €271.12, relating to the 1st floor right of the aforementioned property, whose TPV is €108,449.88;

  • assessment No. 2014 … in the amount of €271.12, relating to the 1st floor left of the aforementioned property, whose TPV is €108,449.88;

  • assessment No. 2014 … in the amount of €271.12, relating to the 2nd floor right of the aforementioned property, whose TPV is €108,449.88;

  • assessment No. 2014 … in the amount of €271.12, relating to the 2nd floor left of the aforementioned property, whose TPV is €108,449.88;

  • assessment No. 2014 … in the amount of €271.12, relating to the 3rd floor right of the aforementioned property, whose TPV is €108,449.88;

  • assessment No. 2014 … in the amount of €271.12, relating to the 3rd floor left of the aforementioned property, whose TPV is €108,449.88;

  • assessment No. 2014 … in the amount of €273.80, relating to the 4th floor right of the aforementioned property, whose TPV is €109,518.50;

  • assessment No. 2014 … in the amount of €273.80, relating to the 4th floor left of the aforementioned property, whose TPV is €109,518.50;

  • assessment No. 2014 … in the amount of €276.44, relating to the 5th floor right of the aforementioned property, whose TPV is €110,576.75;

  • assessment No. 2014 … in the amount of €276.44, relating to the 5th floor left of the aforementioned property, whose TPV is €110,576.75;

  • assessment No. 2014 … in the amount of €276.44, relating to the 6th floor right of the aforementioned property, whose TPV is €110,576.75;

  • assessment No. 2014 … in the amount of €276.44, relating to the 6th floor left of the aforementioned property, whose TPV is €110,576.75;

  • assessment No. 2014 … in the amount of €90.47, relating to the 7th floor of the aforementioned property, whose TPV is €36,188.00.

  1. Claimant B was notified of the following Stamp Tax assessments, relating to the year 2013:

  • assessment No. 2014 … in the amount of €162.67, relating to the 1st floor right of the aforementioned property, whose TPV is €108,449.88;

  • assessment No. 2014 … in the amount of €162.67, relating to the 1st floor left of the aforementioned property, whose TPV is €108,449.88;

  • assessment No. 2014 … in the amount of €162.67, relating to the 2nd floor right of the aforementioned property, whose TPV is €108,449.88;

  • assessment No. 2014 … in the amount of €162.67, relating to the 2nd floor left of the aforementioned property, whose TPV is €108,449.88;

  • assessment No. 2014 … in the amount of €162.67, relating to the 3rd floor right of the aforementioned property, whose TPV is €108,449.88;

  • assessment No. 2014 … in the amount of €162.67, relating to the 3rd floor left of the aforementioned property, whose TPV is €108,449.88;

  • assessment No. 2014 … in the amount of €164.28, relating to the 4th floor right of the aforementioned property, whose TPV is €109,518.50;

  • assessment No. 2014 … in the amount of €164.28, relating to the 4th floor left of the aforementioned property, whose TPV is €109,518.50;

  • assessment No. 2014 … in the amount of €165.87, relating to the 5th floor right of the aforementioned property, whose TPV is €110,576.75;

  • assessment No. 2014 … in the amount of €165.87, relating to the 5th floor left of the aforementioned property, whose TPV is €110,576.75;

  • assessment No. 2014 … in the amount of €165.87, relating to the 6th floor right of the aforementioned property, whose TPV is €110,576.75;

  • assessment No. 2014 … in the amount of €165.87, relating to the 6th floor left of the aforementioned property, whose TPV is €110,576.75;

  • assessment No. 2014 … in the amount of €54.28, relating to the 7th floor of the aforementioned property, whose TPV is €36,188.00.

  1. Claimant C was notified of the following Stamp Tax assessments, relating to the year 2013:

  • assessment No. 2014 … in the amount of €271.12, relating to the 1st floor right of the aforementioned property, whose TPV is €108,449.88;

  • assessment No. 2014 … in the amount of €271.12, relating to the 1st floor left of the aforementioned property, whose TPV is €108,449.88;

  • assessment No. 2014 … in the amount of €271.12, relating to the 2nd floor right of the aforementioned property, whose TPV is €108,449.88;

  • assessment No. 2014 … in the amount of €271.12, relating to the 2nd floor left of the aforementioned property, whose TPV is €108,449.88;

  • assessment No. 2014 … in the amount of €271.12, relating to the 3rd floor right of the aforementioned property, whose TPV is €108,449.88;

  • assessment No. 2014 … in the amount of €271.12, relating to the 3rd floor left of the aforementioned property, whose TPV is €108,449.88;

  • assessment No. 2014 … in the amount of €273.80, relating to the 4th floor right of the aforementioned property, whose TPV is €109,518.50;

  • assessment No. 2014 … in the amount of €273.80, relating to the 4th floor left of the aforementioned property, whose TPV is €109,518.50;

  • assessment No. 2014 … in the amount of €276.44, relating to the 5th floor right of the aforementioned property, whose TPV is €110,576.75;

  • assessment No. 2014 … in the amount of €276.44, relating to the 5th floor left of the aforementioned property, whose TPV is €110,576.75;

  • assessment No. 2014 … in the amount of €276.44, relating to the 6th floor right of the aforementioned property, whose TPV is €110,576.75;

  • assessment No. 2014 … in the amount of €276.44, relating to the 6th floor left of the aforementioned property, whose TPV is €110,576.75;

  • assessment No. 2014 … in the amount of €90.47, relating to the 7th floor of the aforementioned property, whose TPV is €36,188.00.

  1. Claimant D was notified of the following Stamp Tax assessments, relating to the year 2013:

  • assessment No. 2014 … in the amount of €216.90, relating to the 1st floor right of the aforementioned property, whose TPV is €108,449.88;

  • assessment No. 2014 … in the amount of €216.90, relating to the 1st floor left of the aforementioned property, whose TPV is €108,449.88;

  • assessment No. 2014 … in the amount of €216.90, relating to the 2nd floor right of the aforementioned property, whose TPV is €108,449.88;

  • assessment No. 2014 … in the amount of €216.90, relating to the 2nd floor left of the aforementioned property, whose TPV is €108,449.88;

  • assessment No. 2014 … in the amount of €216.90, relating to the 3rd floor right of the aforementioned property, whose TPV is €108,449.88;

  • assessment No. 2014 … in the amount of €216.90, relating to the 3rd floor left of the aforementioned property, whose TPV is €108,449.88;

  • assessment No. 2014 … in the amount of €219.04, relating to the 4th floor right of the aforementioned property, whose TPV is €109,518.50;

  • assessment No. 2014 … in the amount of €219.04, relating to the 4th floor left of the aforementioned property, whose TPV is €109,518.50;

  • assessment No. 2014 … in the amount of €221.15, relating to the 5th floor right of the aforementioned property, whose TPV is €110,576.75;

  • assessment No. 2014 … in the amount of €221.15, relating to the 5th floor left of the aforementioned property, whose TPV is €110,576.75;

  • assessment No. 2014 … in the amount of €221.15, relating to the 6th floor right of the aforementioned property, whose TPV is €110,576.75;

  • assessment No. 2014 … in the amount of €221.15, relating to the 6th floor left of the aforementioned property, whose TPV is €110,576.75;

  • assessment No. 2014 … in the amount of €72.38, relating to the 7th floor of the aforementioned property, whose TPV is €36,188.00.

  1. The Claimants filed objections to all of the Stamp Tax assessments at issue in the present case.

  2. The objections to the Stamp Tax assessments were all expressly dismissed, and the Claimants were notified of their dismissal on 25-06-2014, 27-06-2014, 30-06-2014, 03-07-2014 and 04-07-2014, as shown by copies of the decisions attached to the case file by the Claimants.

No other facts with relevance to the decision of the case were proven.

2.2. Grounds for the Proven Facts:

With respect to the proven facts, the arbitrator's conviction was based, on the one hand, on the documents attached to the case file by the Claimants, and on the other hand, on the positions taken by the ATA regarding the facts alleged by the Claimant.

  1. Law:

3.1. Subject Matter and Scope of the Present Case

The issue to be decided in the present case is whether item 28.1 of the General Stamp Tax Table (GSTT), in the case of properties not constituted in horizontal property regime, applies to the sum of the tax property value attributed to the different parts or floors (global TPV), or rather to the tax property value of each part of the property with independent economic use.

On this issue, inter alia, the decisions of CAAD rendered in cases No. 50/2013-T, 132/2013-T, 181/2013-T, 183/2013-T, 272/2013-T, 280/2013-T, 26/2014-T, 88/2014-T, 206/2014-T and 290/2014-T have already pronounced themselves.

3.2. Issue of the Tax Property Value Relevant for Application of Item 28.1 of the GSTT and the Alleged Violation of the Principle of Equality

According to the Tax and Customs Authority, in a property in vertical ownership (or not constituted under the horizontal property regime), the criterion for determining the incidence of stamp tax is the global tax property value of the floors and divisions intended for dwelling.

However, for the Claimants, the subjection to stamp tax contained in item No. 28.1 of the GSTT must be assessed not by the total value of the property but by the value attributed to each of the parts with independent use, depending on the respective TPV, and should follow the same criterion as the determination of IMI.

Let us examine this:

Law No. 55-A/2012 of 29 October added item 28 to the General Stamp Tax Table (GSTT), with the following wording:

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

28.1 – For property with residential use – 1% (…);

In the transitory provisions contained in Article 6 of that Law No. 55-A/2012, the following rules were established:

c) The tax property value to be used in the assessment of the tax corresponds to that which results from the rules provided in the Code of Municipal Property Tax by reference to the year 2011; (…)

f) The applicable rates are the following:

i) Properties with residential use assessed in accordance with the Code of IMI: 0.5%;

ii) Properties with residential use not yet assessed in accordance with the Code of IMI: 0.8%;"

Item 28.1 GSTT and sub-items i) and ii) of subparagraph f) of No. 1 of Article 6 of Law No. 55-A/2012 contain a concept that is not used in any other tax legislation, which is that of "property with residential use".

In turn, Article 67, No. 2 of the Stamp Tax Code, added by the aforementioned Law, provides that "to matters not regulated in this code relating to item 28 of the General Table, the CMPT shall apply subsidiary."

The provision of incidence refers to urban properties, whose concept is that which results from the provision of Article 2 of the CMPT, with the determination of TPV being subject to the provisions of Article 38 and following of the same code.

In turn, Article 6 of the CMPT indicates the different types of urban properties, and provides that "residential, commercial, industrial or for services are the buildings or constructions licensed for such purpose or, in the absence of a license, which have as their normal destination each of these purposes." (see subparagraph a) of No. 1 of Article 6 CMPT).

It must be concluded that for the legislator it is irrelevant whether the property is in vertical ownership or horizontal ownership, what matters only being the material truth underlying its existence as an urban property and its use.

Since the Stamp Tax Code refers to the CMPT, we should consider that the registration in the matrix of properties in vertical ownership, constituted by different parts, floors or divisions with independent use, follows the same registration rules as properties constituted in horizontal ownership.

It follows from this that the respective IMI, as well as Stamp Tax, are levied individually in relation to each of the parts. For this reason, the legal criterion for defining the incidence of the new tax must be the same.

Thus it is concluded as in CAAD decision 50/2013-T, according to which "if the legal criterion imposes the issuance of individualized assessments for the autonomous parts of properties in vertical ownership, in the same manner as it establishes for properties in horizontal ownership, it clearly established the criterion, which must be unique and unequivocal, for the definition of the rule of incidence of item 28.1 of the GSTT".

It follows from the law that stamp tax from item 28.1 of the GSTT would only apply if any of the parts, floors or divisions with independent use presented a TPV greater than one million euros (€1,000,000.00), which does not occur in the present case.

The criterion defended by the ATA, which takes into account the sum of the parts, on the argument that the property would not be constituted under the horizontal property regime, finds no legal support and is contrary to the criterion that results from the CMPT and which applies by referral in the Stamp Tax context.

Furthermore, the law itself expressly establishes, in the final part of item 28 of the GSTT, that Stamp Tax applying to urban properties of equal or greater value than one million euros (€1,000,000.00) – "on the tax property value used for the purposes of IMI."

In conclusion, the property value relevant for the purposes of applying item 28.1 of the GSTT is the TPV of the part, floor or division with independent use.

The Claimants allege that the application of item 28.1 of the GSTT directly violates the principle of equality enshrined in Articles 13 and 104, No. 3 of the Constitution of the Portuguese Republic.

In accordance with the interpretation supported above, the taxation of parts with independent use of value less than one million euros is not covered by the provision of incidence; therefore, their taxation effectively violates the principle of equality, more specifically in its corollaries of contributory capacity and tax proportionality.

With respect to the principle of equality, see CAAD decisions No. 50/2012-T and 218/2013-T, and Constitutional Court decisions No. 142/04 and 187/2013.

We conclude as in CAAD decision No. 218/2013-T, "the Stamp Tax assessment now under consideration clearly violates the principle of tax equality provided for in Article 13 of the CRP, because: i) it is based on a rule that treats taxpayers in identical situations in a very different manner, with the measure of the difference not being determined by their real contributory capacity; ii) it is based on an arbitrary legal solution devoid of any rational basis."

In the present case, the property in question is in vertical ownership and contains several floors and divisions with independent use intended for dwelling, as proven above. Given that none of the floors intended for dwelling has a property value equal to or greater than one million euros (€1,000,000.00), as results from the documents attached to the case file, it is concluded that the legal prerequisite for the incidence of Stamp Tax provided for in Item 28 of the GSTT is not met.

Looking now at the ratio legis of the provision in question in item 28.1 GSTT and citing CAAD decision No. 50/2013-T "the legislator in introducing this legislative innovation considered as the determining element of contributory capacity urban properties, with residential use, of high value (luxury), more precisely, of value equal to or greater than one million euros (€1,000,000.00), on which it began to impose a special rate of stamp tax, intending to introduce a principle of taxation on wealth externalized in the ownership, usufruct or right of superficies of luxury urban properties with residential use. Therefore, the criterion was the application of the new rate to urban properties with residential use, whose TPV is equal to or greater than one million euros (€1,000,000.00).

Clearly the legislator understood that this amount, when attributed to a dwelling (house, autonomous fraction or floor with independent use) reflects a contributory capacity above average and, as such, capable of determining a special contribution to ensure fair distribution of the tax burden." Whereas when applied to a part or fraction that does not exceed the aforementioned value of one million euros, the provision of incidence will not be met.

The principle of tax equality determines that what is equal should be treated fiscally in an equal manner and what is different should be treated in a different manner. Now, there is no justification for differentiated treatment of fractions or parts of a property merely because the same is already in horizontal ownership, as long as the fractions or parts have independent use.

As stated in the CAAD decision in case No. 218/2013-T, "The principle of tax equality is based on the general principle of equality provided for in Article 13 of the CRP, from which results the principle of contributory capacity which, by constitutional imperative, is the prerequisite and criterion of taxation."

As Casalta Nabais states, the principle of tax equality has inherent above all "the idea of generality or universality, according to which all citizens are subject to the fulfillment of the duty to pay taxes, and of uniformity, which requires that such duty be assessed by a single criterion — the criterion of contributory capacity. This thus implies equal taxation for those with equal contributory capacity (horizontal equality) and different taxation (in qualitative or quantitative terms) for those with different contributory capacity in proportion to that difference (vertical equality) (Casalta Nabais, Direito Fiscal, 5th edition, Coimbra, 2009, pp. 151-152)."

In CAAD decision in case No. 50/2013-T, it can be read that "The tax legislator cannot treat equal situations in a different manner. Now, if the property were constituted under the horizontal property regime, none of its residential fractions would be subject to the incidence of the new tax."

Thus, and in line with the case law of the Constitutional Court and CAAD, we conclude that the principle of tax equality and contributory capacity has been violated.

  1. Decision

In view of the foregoing, it is determined that the claim filed by the Claimants in the present tax arbitration case is wholly upheld, with regard to the illegality of the Stamp Tax assessments of the year 2013, No. 2014 … in the amount of €271.12, No. 2014 … in the amount of €271.12, No. 2014 … in the amount of €271.12, No. 2014 … in the amount of €271.12, No. 2014 … in the amount of €271.12, No. 2014 … in the amount of €271.12, No. 2014 … in the amount of €273.80, No. 2014 … in the amount of €273.80, No. 2014 … in the amount of €276.44, No. 2014 … in the amount of €276.44, No. 2014 … in the amount of €276.44, No. 2014 … in the amount of €276.44, No. 2014 … in the amount of €90.47, No. 2014 … in the amount of €162.67, No. 2014 … in the amount of €162.67, No. 2014 … in the amount of €162.67, No. 2014 … in the amount of €162.67, No. 2014 … in the amount of €162.67, No. 2014 … in the amount of €162.67, No. 2014 … in the amount of €164.28, No. 2014 … in the amount of €164.28, No. 2014 … in the amount of €165.87, No. 2014 … in the amount of €165.87, No. 2014 … in the amount of €165.87, No. 2014 … in the amount of €165.87, No. 2014 … in the amount of €54.28, No. 2014 … in the amount of €271.12, No. 2014 … in the amount of €271.12, No. 2014 … in the amount of €271.12, No. 2014 … in the amount of €271.12, No. 2014 … in the amount of €271.12, No. 2014 … in the amount of €271.12, No. 2014 … in the amount of €273.80, No. 2014 … in the amount of €273.80, No. 2014 … in the amount of €276.44, No. 2014 … in the amount of €276.44, No. 2014 … in the amount of €276.44, No. 2014 … in the amount of €276.44, No. 2014 … in the amount of €90.47, No. 2014 … in the amount of €216.90, No. 2014 … in the amount of €216.90, No. 2014 … in the amount of €216.90, No. 2014 … in the amount of €216.90, No. 2014 … in the amount of €216.90, No. 2014 … in the amount of €216.90, No. 2014 … in the amount of €219.04, No. 2014 … in the amount of €219.04, No. 2014 … in the amount of €221.15, No. 2014 … in the amount of €221.15, No. 2014 … in the amount of €221.15, No. 2014 … in the amount of €221.15, and No. 2014 … in the amount of €72.38.

  1. Value of the Case:

In accordance with Article 306, No. 2, of the Code of Civil Procedure and Article 97-A, No. 1, subparagraph a) of the Code of Tax Procedure and Process and Article 3, No. 2 of the Regulation of Costs in Tax Arbitration Proceedings, the value of the action is set at €11,459.90.

  1. Costs:

Pursuant to Article 22, No. 4, of the TAR, and Table I annexed to the Regulation of Costs in Tax Arbitration Proceedings, the amount of costs is set at €918.00, payable by the Tax and Customs Authority.

Notify.

Lisbon, 25 March 2015.

Text prepared by computer, in accordance with Article 138, No. 5 of the Code of Civil Procedure (CCP), applicable by referral in Article 29, No. 1, subparagraph e) of the Tax Arbitration Regime, and reviewed by me.

The sole arbitrator

Suzana Fernandes da Costa

Frequently Asked Questions

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How does verba 28.1 of the TGIS apply to properties with independent units whose individual VPT is below one million euros?
Item 28.1 of the TGIS levies annual Stamp Tax on urban properties with a tax property value (VPT) exceeding one million euros. In cases involving properties with independent units where individual VPT values fall below the €1 million threshold, the central legal question is whether the tax applies to each autonomous unit separately or to the property as a whole. The Tax Authority's position is that when a building is registered as a single urban property article in the property matrix, the relevant VPT is the aggregate total value, regardless of how many independent units exist within it. Conversely, taxpayers argue that since each floor has independent use and its own individual VPT below the threshold, item 28.1 should not apply. This interpretation significantly impacts taxation of multi-unit buildings in full ownership that have not been subject to horizontal property division.
Can the tax authority levy Stamp Tax under verba 28.1 on a building in total ownership when no single unit exceeds the VPT threshold?
Yes, according to the Tax and Customs Authority's interpretation, Stamp Tax under item 28.1 can be levied on a building in total ownership even when no single unit exceeds the VPT threshold of one million euros. The ATA's legal position maintains that the determining factor for tax incidence is the total property value of the urban property as registered in the property matrix, not the individual values of component units with independent use. This approach treats the building as an indivisible taxable unit for Stamp Tax purposes. However, this interpretation is contested by taxpayers who argue it creates inequality compared to situations where units are separately registered or held under horizontal property regimes. The outcome of such challenges depends on whether arbitral tribunals or courts accept the aggregate valuation approach or require individual unit assessment for tax incidence purposes.
What is the CAAD arbitration procedure for challenging multiple Stamp Tax liquidation acts on urban property?
The CAAD arbitration procedure for challenging multiple Stamp Tax liquidation acts follows the framework established in Decree-Law No. 10/2011 and the Tax Arbitration Regulations (TAR). Taxpayers must submit an arbitration request within 90 days following the decision on the administrative objection (Article 10, No. 1 of the TAR). The request must identify all contested assessment acts, include supporting documentation such as collection documents and objection decisions, and pay the initial arbitration fee. A sole arbitrator or arbitral panel is appointed, and the tribunal is formally constituted once the arbitrator accepts the appointment. The Tax Authority files a response within 30 days. Parties may waive the oral hearing under Article 18 of TAR and the production of pleadings if both agree. The arbitrator may issue procedural orders to request additional documentation. The case value is calculated based on the total of all challenged assessments, which determines the applicable arbitration fees. The arbitrator must deliver the decision within the statutory deadline, which may be extended in certain circumstances.
How is the patrimonial tax value (VPT) assessed for properties constituted in total ownership with independent floors under Imposto de Selo?
For properties constituted in total ownership (compropriedade) with independent floors, the patrimonial tax value (VPT) assessment under Stamp Tax regulations presents two possible approaches. The Tax Authority adopts the position that the relevant VPT is the total registered value of the urban property as it appears in the urban property matrix under a single article number. This aggregate approach considers the building as one indivisible taxable unit regardless of internal divisions with independent use. Each co-owner is then taxed proportionally to their ownership percentage based on this total value. Alternatively, taxpayers argue for an individualized assessment where each floor with independent use should be evaluated separately for item 28.1 threshold purposes. Since Portuguese property law recognizes the possibility of independent use without formal horizontal property division, this raises questions about whether fiscal classification should follow legal form (single registration) or economic substance (multiple autonomous residential units). The VPT determination ultimately affects whether the €1 million threshold under item 28.1 of TGIS is crossed.
What are the grounds for annulment of Stamp Tax assessments under verba 28.1 when applied to individually valued independent units?
Grounds for annulment of Stamp Tax assessments under item 28.1 when applied to individually valued independent units include: (1) violation of the principle of equality enshrined in the Portuguese Constitution, arguing that taxpayers with aggregated property registrations are treated differently from those with separately registered units of similar value; (2) incorrect interpretation of the taxable event defined in item 28.1, contending that properties whose individual autonomous units do not exceed €1 million in VPT should not be subject to the tax; (3) improper application of the tax base, arguing that where units have independent use and separate valuation, each unit should be assessed independently rather than aggregating values; (4) violation of the ability-to-pay principle (princípio da capacidade contributiva), since ownership of a fraction of a building does not equate to ownership of a property exceeding €1 million; and (5) procedural irregularities in the assessment process. These grounds must be substantiated through the administrative objection procedure before proceeding to arbitration or judicial review.