Process: 484/2014-T

Date: October 24, 2014

Tax Type: Selo

Source: Original CAAD Decision

Summary

CAAD arbitration process 484/2014-T addressed the controversial application of Stamp Tax (Imposto de Selo) under items 28 and 28.1 of the General Stamp Tax Table (TGIS) to urban properties held in vertical ownership. The claimant, A, LDA., challenged tax assessments totaling €14,426.99 for 2013 on a Lisbon building comprising multiple residential floors in full ownership. The core dispute centered on whether the €1,000,000 taxation threshold should apply to each independent floor individually or to the aggregate patrimonial value of the entire building. The claimant argued that properties in vertical ownership with floors capable of independent use should be taxed per floor, similar to horizontal property (condominium) units, none of which individually exceeded the threshold. The Tax Authority contended that for Stamp Tax purposes, the entire property must be considered as a single unit when held in full ownership, regardless of divisible floors, distinguishing this from the IMI (property tax) treatment. The claimant further raised constitutional concerns regarding violation of equality principles under Articles 13(1) and 104(3) of the Portuguese Constitution, arguing discriminatory treatment between horizontal and vertical ownership structures. Subsidiarily, the claimant challenged procedural defects in the assessment acts, including lack of identification of the act's author, absence of signature, and failure to reference delegated powers. This case exemplifies the complexity of applying Stamp Tax to vertical ownership structures and highlights the arbitration procedure available through CAAD for contesting tax assessments within the legal framework established by RJAT.

Full Decision

ARBITRAL DECISION

THE PARTIES

Claimant: A, LDA., limited liability company, NIPC PT ..., with registered office in ... Lisbon.

Respondent: TAX AND CUSTOMS AUTHORITY (AT).

DECISION

REPORT

a) On 11-07-2014, A, LDA., limited liability company NIPC PT ..., filed a request with the CAAD seeking, under the Legal Framework for Tax Arbitration (RJAT), the constitution of a singular arbitral tribunal (TAS).

b) The request is signed by lawyers representing the Claimant.

THE REQUEST

c) The Claimant petitions for the annulment of the assessment acts for Stamp Tax (IS) item 28 of the TGIS, contained in the following documents:

Based on item 28.1 of the TGIS – Year 2013

[Documents listed with redacted information]

relating to the year 2013, generating a total collection of 14,426.99 euros, with reference to an urban property in full ownership, with floors or divisions capable of independent use, more specifically regarding the floors intended for residential purposes that comprise it, namely:

ü Urban property located in Lisbon, at ..., nos. 79, 79A, 79B and 79C, currently registered in the urban property matrix of the parish of ..., municipality and district of Lisbon, under articles ...-1D, ...-1E, ...-2D, ...-2E, ...-3D, ...-3E, ...-4D, ...-4E, ...-5D, ...-5E, ...-6D, ...-6E, ...-7D, ...-7E, ...-8D, ...-8E.

d) It argues, in summary, that the assessment acts are illegal by violation of the taxable event rule of item 28.1 of the TGIS insofar as the AT added the patrimonial values of the floors in full ownership and none of them individually has a TPV equal to or exceeding 1,000,000.00 euros, contending that it should be the TPV of each floor and not their sum that is relevant for taxation purposes.

e) And that the taxable event rule, in the interpretation applied in practice by the AT, is unconstitutional by violation of the principle of equality inscribed in articles 13-1 and 104-3 of the Fundamental Law.

f) It further invokes, subsidiarily, another non-compliance of the assessment acts, namely for not identifying the author of the act, not containing a signature and not alluding to the exercise of own or delegated powers.

g) It petitions in general terms for the annulment of the tax acts identified in c), restitution of the amounts paid (at least the first installment of the assessments issued with reference to each floor) and also indemnifying interest.

OF THE ARBITRAL TRIBUNAL

h) The request for constitution of the TAS was accepted by the President of the CAAD and automatically notified to the AT on 16.07.2014.

i) By the Deontological Council of the CAAD, the signatory of this decision was appointed arbitrator, with the parties being notified thereof on 29.08.2014.

j) Therefore, the Singular Arbitral Tribunal (TAS) has been, since 15.09.2014, duly constituted to appraise and decide the subject matter of this dispute.

k) All these acts are documented in the communication of constitution of the Singular Arbitral Tribunal dated 15.09.2014 which is hereby reproduced (it being understood that the date placed in the 4th paragraph of this document, of 15.07.2014, constitutes a manifest error).

l) On 15.09.2014 the AT was notified in accordance with and for the purposes of article 17-1 of the RJAT.

m) Since questions identical to those already raised in many other cases already decided at the CAAD are brought up in this proceeding, the TAS in the order referred to in the previous item invited the parties to pronounce themselves on the waiver of the meeting referred to in article 18 of the RJAT and likewise of pleadings.

n) By petition of 14.10.2014 the AT came to state that it did not oppose the non-holding of the parties' meeting and likewise the non-presentation of pleadings.

o) By order of 15.10.2014 the notification to the Claimant of the petition containing the AT's position was ordered and 31.10.2014 was scheduled as the date for the issuance of the final decision, should the Claimant object to the Tribunal's invitation and the Respondent's proposal.

p) Therefore, having both parties waived, expressly or tacitly, the holding of the parties' meeting of article 18 of the RJAT and the presentation of supplementary pleadings, these procedural acts were not held.

PROCEDURAL PREREQUISITES

q) Legitimacy, capacity and representation - the parties have legal personality and capacity, are legitimate and are represented.

r) Contradiction - the AT was notified in accordance with item l). All orders issued in the proceeding and all documents joined were notified to the respective counterparty.

s) Dilatory exceptions - the proceeding does not suffer from nullities and the petition for arbitral pronouncement is timely as it was presented within the period prescribed in subsection a) of no. 1 of article 10 of the RJAT.

SUMMARY OF THE CLAIMANT'S POSITION

Regarding the possible illegality of the assessment acts due to non-compliance with the taxable event rule of item 28.1 of the TGIS

t) The Claimant contends that the taxable patrimonial value (TPV) relevant in the case under discussion, given that it is a property in full ownership that comprises floors or divisions with independent use, all with residential purpose, is not the sum of all these floors or divisions, but the TPV of each one.

u) Subsidiarily it invokes another legal non-compliance of the assessment acts, arguing that they do not identify the author of the act, do not contain a signature and do not allude to the exercise of own or delegated powers.

v) It contends that the taxable base of the stamp tax of item 28.1 of the TGIS should be the same as that of the IMI, since the law prescribes the subsidiary application of the IMI Code regarding matters not regulated in the Stamp Tax Code.

Regarding the possible unconstitutionality of the rule inherent in item 28.1 of the TGIS, in the implicit reading applied in practice by the AT

w) The Claimant considers that the IS assessments, in the implicit interpretation applied in practice by the AT, of items 28 and 28.1 of the TGIS (in which the TPVs of the floors are added to determine the 1,000,000.00 euros taxation threshold) are in non-compliance with the principle of equality enshrined in articles 13-1 and 104-3 of the Portuguese Constitution.

SUMMARY OF THE TAX AND CUSTOMS AUTHORITY'S POSITION

Regarding the possible illegality of the assessment acts due to non-compliance with the taxable event rule of item 28.1 of the TGIS

x) The AT contends that "although the IS assessment, under the conditions set forth in item 28.1 of the TGIS is carried out in accordance with the CIMI rules, the truth is that the legislator reserves the aspects that require the necessary adaptations."

y) Such is the case of properties in full ownership, even though with floors or divisions capable of independent use, since although IMI is assessed in relation to each part capable of independent use,"

z) "For IS purposes the property as a whole is relevant since divisions capable of independent use are not deemed to be a property, but only autonomous fractions under the horizontal property ownership regime, as per article 2-4 of the CIMI"

Regarding the possible unconstitutionality of the rule inherent in item 28.1 of the TGIS, in the implicit reading applied in practice by the AT

aa) There is no violation of the principle of equality because there is no discrimination between properties in horizontal ownership and properties in full ownership with floors or divisions capable of independent use or between properties with residential purpose and properties with other purposes.

bb) Since item 28.1 of the TGIS is a general and abstract rule, applicable without distinction to the cases provided therein.

cc) The different valuation and taxation of a property in full ownership as against a property in horizontal ownership derives from the different legal effects inherent to these two figures.

dd) These are distinct realities, valued by the legislator in different ways.

ee) Contending for the legality of the tax acts because they constitute a correct application of the law to the facts.

II - ISSUES THAT THE TRIBUNAL MUST RESOLVE

On this matter, in particular, the CAAD has already pronounced itself in various decisions in which the substantive question is the same, namely, the scope of the taxable event rule provision of items 28 and 28-1 of the TGIS is discussed.

The limit of interpretation is the letter, the text of the rule. There then remains the "task of interconnection and valuation that escapes the literal domain."

Starting from the principle that every rule has a provision (and a disposition), the question that arises here is to ascertain, by delimiting, whether the taxable event rule, as it is written – in its provision - (ownership of urban properties ... with residential purpose ... whose taxable patrimonial value recorded in the matrix, in accordance with the CIMI, is equal to or exceeding 1,000,000.00 euros – on the taxable patrimonial value used for IMI purposes), allows or does not allow the understanding that as regards properties "with residential purpose" in vertical ownership, with floors or divisions capable of independent use, held by an entity, the TPV on which the rate will be applied should be their sum or should the individual TPV of each floor or division capable of independent use be considered, similarly to what happens with properties under horizontal ownership regime.

Fundamentally what is at issue is the adoption of an adequate reading of the scope of the taxable event rule provision of items 28 and 28.1 of the TGIS, in light of what no. 7 of article 23 of the CIS states regarding the determination of the taxable matter and consequent tax assessment operation:

"Where the tax is due for the situations provided 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."

As we have mentioned in other decisions, regarding the interpretation of tax rules there is a rule, although it may be considered residual, very specific, which is found in no. 3 of article 11 of the LGT: "persisting doubt about the meaning of the applicable taxable event rules, the economic substance of the tax facts must be considered." This is a criterion to be used in the interpretation of rules.

We do not defend an "economic interpretation" of tax law rules.

But it appears to us that here too an appeal can be made to the analysis of the "economic substance of the tax facts" to properly implement the "necessary adaptations of the rules contained in the CIMI," in order to resolve the question that arises.

We are thus, solely and exclusively, within the scope of the activity of interpretation and application of rules, that is, the task of delimiting the legal-factual situations that should be considered as falling within the provision of the taxable event rule of this new tax and which results from the combination of items 28 and 28-1 of the TGIS and in this case what should be acceptable at the level of the "necessary adaptations of the rules contained in the CIMI," following the command of no. 7 of article 23 of the CIS.

The question of conformity of the taxable event rule provision, against the constitutional text, will only arise if the interpreter reaches the conclusion that a certain and unequivocal reading of the law – correctly applied to a concrete case - strikes one or several constitutional principles with such intensity that the legislative option adopted could not have been adopted, still considering that the AT cannot, based on possible unconstitutionalities of rules, not declared by the courts, refrain from applying the law, in the sense it considers most assertive.

It appears to us that the crucial question to which the TAS should respond is the following:

  1. Do items 28 and 28-1 of the TGIS, as taxable event rules, as they are written – in their provision - (ownership of urban properties ... with residential purpose ... whose taxable patrimonial value recorded in the matrix, in accordance with the CIMI, is equal to or exceeding 1,000,000.00 euros – on the taxable patrimonial value used for IMI purposes), allow or do not allow the understanding that as regards properties "with residential purpose" in vertical ownership, with floors or divisions capable of independent use, held by an entity, the TPV on which the rate will be applied should be their sum or should the individual TPV of each floor or division capable of independent use be considered, similarly to what happens with properties under the horizontal ownership regime?

From the response given to this question will result the merit or lack thereof of the request, and if the answer is not in accordance with what the AT has ably defended, it will not be necessary for the TAS to pronounce itself on the remaining grounds invoked by the Claimant in the petition for pronouncement, with possible reflection on the validity of the assessment acts now in question.

III. PROVEN AND UNPROVEN FACTS. GROUNDS

With relevance to the decision to be adopted, these are the facts considered proven, indicating the respective documents (proof by documents) and/or the articles of the Claimant's petition and the AT's response regarding facts admitted by agreement, as grounds:

Proven Facts

  1. The Claimant, A, LDA., limited liability company NIPC PT ..., is listed as holder of the right of full property ownership of an urban property under full ownership regime, with floors or divisions capable of independent use, more specifically regarding the floors intended for residential purposes that comprise it, namely: Urban property located in Lisbon, at ..., nos. 79, 79A, 79B and 79C, currently registered in the urban property matrix of the parish of ..., municipality and district of Lisbon, under articles ...-1D, ...-1E, ...-2D, ...-2E, ...-3D, ...-3E, ...-4D, ...-4E, ...-5D, ...-5E, ...-6D, ...-6E, ...-7D, ...-7E, ...-8D, ...-8E – Articles 18 and 162 of the petition for pronouncement, Document no. 2 attached with the petition for pronouncement (urban property record), Document 7 attached with the petition for pronouncement (IS assessment notices) and article 1 of the AT's response.

  2. The Claimant was notified, on a date not determined, of the Stamp Tax assessments of item 28 of the TGIS, expressed in item c) of the Report, generating a total collection of 14,426.99 euros - Articles 18 and 162 of the petition for pronouncement, Document 7 attached with the petition for pronouncement (IS assessment notices) and article 1 of the AT's response, it being understood that the amount indicated, by a manifest and notorious error, as to the total collection, does not correspond to the sum of the amounts expressed in the documents attached to the proceeding.

  3. The floors or divisions capable of independent use subject to taxation with residential purpose, have TPV comprised between 98,619.25 euros (all floors left side, except the 8th floor) and 79,347.98 euros (each of the two floors of the eighth floor), with their TPVs totaling 1,442,703.86 euros – Document 7 attached with the petition for pronouncement (IS assessment notices) and article 1 of the AT's response.

  4. In the urban property record of the property referred to in 1) it states: "Total patrimonial value: € 1,801,391.06" – Document no. 2 attached with the petition for pronouncement (urban property record).

  5. In the assessment notices it states "Patrimonial Value of the property-total subject to tax: 1,442,703.86" euros, which corresponds to the sum of the TPV of the floors with residential purpose of the property identified in 1) – Document 7 attached with the petition for pronouncement (IS assessment notices) and article 1 of the AT's response.

  6. Tax assessed on the basis of item 28.1 of the TGIS with the wording given to it by Law 55-A/2012, of 29 October - Document 7 attached with the petition for pronouncement (IS assessment notices) and article 1 of the AT's response.

  7. The Claimant proceeded with the payment of the tax - first installments – for the amounts indicated in c) of the Report – Article 161 of the petition for pronouncement, Document 7 attached with the petition for pronouncement (IS assessment notices), stamps affixed to Document 7 and overall position of the AT in the response.

Unproven Facts

There is no other factuality alleged that is relevant for the proper composition of the procedural dispute.

The settled matter results from the documents submitted by the Claimant, whose contents and evidentiary valuations did not merit disagreement from the AT and from facts admitted, expressly or tacitly, by agreement of the parties.

IV. APPRAISAL OF THE ISSUES THAT THE TAS MUST RESOLVE

Do items 28 and 28-1 of the TGIS, as taxable event rules, as they are written – in their provision - (ownership of urban properties ... with residential purpose ... whose taxable patrimonial value recorded in the matrix, in accordance with the CIMI, is equal to or exceeding 1,000,000.00 euros – on the taxable patrimonial value used for IMI purposes), allow or do not allow the understanding that as regards properties "with residential purpose" in vertical ownership, with floors or divisions capable of independent use, held by an entity, the TPV on which the rate will be applied should be their sum or should the individual TPV of each floor or division capable of independent use be considered, similarly to what happens with properties under the horizontal ownership regime?

The subjection to stamp tax of properties with residential purpose resulted from the addition of items 28, 28-1 and 28-2 to the General Table of Stamp Tax, effected by article 4 of Law 55-A/2012, of 29/10, which typified the following tax events:

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

28-1 – For property with residential purpose - 1%;

28-2 – For property, when the tax subjects who are not natural persons are resident in a country, territory or region subject to a clearly more favorable tax regime, listed in the schedule approved by ministerial order of the Minister of Finance – 7.5%."

With relevance to the case, we refer to:

· No. 7 of article 23 of the CIS regarding tax assessment: "Where the tax is due for the situations provided 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."

· No. 4 of article 2 of the CIMI: "For purposes of this tax, each autonomous fraction, under the horizontal ownership regime, is deemed to constitute a property."

· No. 3 of article 12 of the CIMI: "Each floor or part of a property capable of independent use is considered separately in the matricial registration which also determines its respective taxable patrimonial value."

It appears to us that the response to the question raised in this petition for pronouncement has to do with the reading made by the AT of no. 7 of article 23 of the CIS.

The AT will have considered, in order to proceed with the sum of the TPVs of the floors or divisions/parts of urban property, in order to determine whether the minimum TPV threshold of 1,000,000.00 euros is attainable, for each urban property, that the floors or divisions capable of independent use are not by formal legal definition considered urban properties.

And will have considered that this addition of TPVs is required because the law states that "the necessary adaptations" of the "CIMI rules" must be carried out (no. 7 of article 23 of the CIS).

This is what results from the AT's response – see article 16.

But is this reading of the law configured as the most assertive?

In truth, although items 28 and 28.1 speak of "urban properties" and "per property" and no. 7 of article 23 of the CIS refers to "the tax is assessed annually, in relation to each urban property," what is relevant here is that, at the level of determination of the eligible taxable matter and assessment of this tax, the "... with the necessary adaptations, the rules contained in the CIMI" be applied, as the aforementioned no. 7 of article 23 of the CIMI states. But, obviously, "adaptations" only to the extent necessary.

What happened - as regards urban properties with residential purpose, in vertical ownership, with floors or divisions capable of independent use - was that the AT made the "adaptation" that was relevant, in the IS assessment operations, to sum the TPVs of each floor or independent division affected to residential purposes (excluding the TPVs of the floors or divisions intended for other purposes), creating a new legal reality, without legal support, which is a global TPV of urban properties in vertical ownership, with residential purpose.

This operation in the tax process (taxable event – determination of taxable matter – assessment – payment) will strike against the literal element of the taxable event rule, item 28 of the TGIS, which states that this tax is levied on "the taxable patrimonial value used for IMI purposes."

For the AT, in the operation of determination of the taxable matter and consequent IS assessment of items 28 and 28.1 of the TGIS (operation of application of a rate to the taxable matter), as regards urban properties with residential purpose, in vertical ownership, with floors or divisions capable of independent use, should not consider any taxable patrimonial value (on which the ad valorem tax rate is applied) other than that which results exclusively from no. 3 of article 12 of the CIMI. Whether for IMI or for this IS.

And for the reason that urban properties in vertical ownership, as a whole, do not have TPV. The law provides in these cases that the TPV be attributed to each floor or part of the property separately.

The above conclusion will not be undermined by the fact that in the property records of this type of property the "total patrimonial value" is indicated which corresponds to the sum of the TPVs of all floors, regardless of their purpose. What is relevant for this taxation is not the "total patrimonial value," it is only the "taxable patrimonial value" of urban properties with residential purpose.

Creating a new legal reality, in order to find a new form of determination of the taxable matter (a TPV for the floors or parts of property capable of independent use, of residential purpose, severed from the TPV of the others intended for different purposes) does not constitute having support in the "necessary adaptations" to which no. 7 of article 23 of the CIS alludes.

Furthermore, there is, it is perceived, non-compliance with the literal element of the final part of the taxable event rule (item 28 of the TGIS) which states that the tax is levied on "the taxable patrimonial value used for IMI purposes," and therefore should not be levied on the sum of taxable patrimonial values of properties, parts of properties or floors, and no legal support is found in the operation of adding taxable patrimonial values of the floors or parts of property capable of independent use, of residential purpose, excluding the TPVs of the others intended for different purposes, so as to achieve the eligible taxation threshold of 1,000,000.00 euros or more.

That is, it is not in accordance with the law, the creation of a new TPV for purposes of IS taxation as to item 28 of the TGIS, as results from the notation on all collection notes of "patrimonial value of property – total subject to tax" – item 5 of the settled factual matter.

What is to say that when no. 7 of article 23 refers to "... the tax is assessed annually, in relation to each urban property," this expression "each urban property" will intend to encompass, in light of the interpretation and application principles of rules enunciated, urban properties in horizontal ownership and floors or parts of urban properties of properties in vertical ownership, provided they are affected to residential purposes, but always starting from a single taxable base for all legal purposes: the taxable patrimonial value used for IMI purposes (final part of item 28 of the TGIS).

The question does not, in our view, need to be raised at the level of violation of the CRP, it being sufficient, in compliance with what no. 7 of article 23 of the CIS states, that "the necessary adaptations of the CIMI rules" be carried out, which will be to consider that the expression "each urban property" encompasses not only floors in horizontal ownership (which are urban properties ope legis) but also "floors or parts of property capable of independent use" (no. 3 of article 12 of the CIMI).

If, for example, as regards floors that compose the autonomous fractions of residential urban properties, in horizontal ownership, (even though they are by definition and "ope legis" urban properties) the TPVs are not added to determine the threshold of eligible TPV for subjection to IS, by taxpayer, of 1,000,000.00 euros (operation of determination of the taxable matter), why should this occur as to the "parts of property or floors" of properties in vertical ownership?

In both cases the same contributory capacity of taxpayers is manifested (their level of wealth at the level of real estate assets). It is the same "economic substance" analyzed from different angles. In both situations the same "ability-to-pay" is manifested.

In truth it is the aforementioned rule, in its literality, notably the final part of item 28 of the TGIS, combined with no. 7 of article 23 of the CIS, that allows the conclusion, with the "necessary adaptations of the CIMI rules," that the AT should not add the TPVs of the floors or parts of the property identified above to find a new TPV relating to those that are affected to residential purposes, severed from the TPV of those that are affected to other purposes.

The Claimant alleges, fundamentally, the non-compliance of the tax acts with tax law, alleging the illegality contained in subsection a) of article 99 of the CPPT: "erroneous qualification ... of tax facts."

In fact, with the grounds expressed above, the IS assessments challenged and carried out as they were, are not in harmony with the taxable event rule of items 28 and 28-1 of the TGIS, with the illegality foreseen in subsection a) of article 99 of the CPPT thus occurring.

As the first ground of the request formulated by the Claimant in the petition for pronouncement (item d) of the Report) proceeds, it does not become necessary to appraise the other grounds (items e) and f) of the Report), as manifestly unnecessary.

As a consequence of the above, the Claimant's requests for annulment of the tax acts brought before the Arbitral Tribunal proceed, since the IS assessments carried out by the AT are not in conformity with the law, in the reading above advocated.

In fact, it results from the proven facts (item 3) of part III of this decision) that none of the floors or parts of property has, per se, a TPV that is equal to or exceeding the taxation threshold indicated in item 28 of the TGIS (TPV equal to 1,000,000.00 euros).

Request for Interest

In the legislative authorization on which the Government based itself to approve the RJAT, granted by article 124 of Law no. 3-B/2010, it is stated that "the tax arbitration proceeding must constitute an alternative procedural means to the judicial challenge proceeding and to the action for the recognition of a right or legitimate interest in tax matters."

Although subsections a) and b) of no. 1 of article 2 of the RJAT use the expression "declaration of illegality" to define the competence of the arbitral tribunals operating at the CAAD and do not make reference to constitutive (annulling) and condemnatory decisions, it should be understood, in harmony with the aforementioned legislative authorization, that within its competencies are included the powers that in challenge proceedings are attributed to tax tribunals in relation to acts whose appraisal of legality falls within their competencies.

Therefore, condemnation of the tax administration in the payment of indemnifying interest can be issued here.

Article 43 of the LGT "does nothing but establish an expeditious and, so to speak, automatic means of indemnifying the injured party. Irrespective of any allegation and proof of the harm suffered, he has the right to the indemnification established therein, translated into indemnifying interest in cases included in the provision (…)" Decision of the STA of 2-11-2006, proceeding 604/06, available at www.dgsi.pt"

In the case at hand, the Claimant proved that it proceeded with the payment of the assessed tax - first installments – for the amounts indicated in c) of the Report, as per item 7) of the settled factual matter, therefore it is entitled to indemnifying interest counted from the date of payment, total or partial, of the tax assessments now annulled until the date of issuance of the respective credit notes, counting the period for that payment from the beginning of the period for spontaneous execution of this decision (article 61, nos. 2 to 5, of the CPPT), at the rate determined in accordance with the provisions of no. 4 of article 43 of the LGT.

V. DECISION

In accordance with and on the grounds set forth above, it is judged:

  1. The Claimant's request is upheld, annulling the Stamp Tax assessments contained in the documents indicated in item c) of the Report (which are hereby reproduced), generating a total collection of 14,426.99 euros, with reference to an urban property in full ownership, with floors or divisions capable of independent use, more specifically regarding the floors intended for residential purposes that comprise it, namely:

· Urban property located in Lisbon, at ..., nos. 79, 79A, 79B and 79C, registered in the urban property matrix of the parish of ..., municipality and district of Lisbon, under articles ...-1D, ...-1E, ...-2D, ...-2E, ...-3D, ...-3E, ...-4D, ...-4E, ...-5D, ...-5E, ...-6D, ...-6E, ...-7D, ...-7E, ...-8D, ...-8E,

for non-compliance with the rules contained in items 28 and 28.1 of the TGIS and in no. 7 of article 23 of the CIS.

  1. Consequently, the AT is condemned to proceed with the restitution of whatever has been paid.

  2. The Claimant's request for condemnation of the AT in the payment of indemnifying interest to the Claimant is also upheld, counted from the date of payment of the IS tax installments, in whole or in part, until the date of issuance of the respective credit note, counting the period for that payment from the beginning of the period for spontaneous execution of this decision (article 61, nos. 2 to 5, of the CPPT), at the rate determined in accordance with the provisions of no. 4 of article 43 of the LGT.

Value of the proceeding: in accordance with the provisions of article 3, no. 2, of the Regulation of Costs in Tax Arbitration Proceedings (and subsection a) of no. 1 of article 97A of the CPPT), the value of 14,426.99 euros is fixed for the proceeding.

Costs: in accordance with the provisions of article 22, no. 4, of the RJAT, the amount of costs is fixed at € 918.00, in accordance with Table I attached to the Regulation of Costs in Tax Arbitration Proceedings, to be borne by the respondent.

Notify.

Lisbon, 24 October 2014

Singular Arbitral Tribunal,

Augusto Vieira

Text prepared by computer in accordance with the provisions of article 131, no. 5, of the CPC, applicable by reference to article 29 of the RJAT.

The wording of this decision is governed by the spelling prior to the Orthographic Agreement of 1990.

Frequently Asked Questions

Automatically Created

What is the Stamp Tax (Imposto de Selo) under Items 28 and 28.1 of the TGIS and how does it apply to urban properties?
Stamp Tax under items 28 and 28.1 of the TGIS applies annually to urban properties with a taxable patrimonial value (valor patrimonial tributável - VPT) equal to or exceeding €1,000,000. Item 28 applies to properties generally, while item 28.1 specifically addresses buildings or their integral parts for residential purposes. The tax base corresponds to the patrimonial value determined under the Municipal Property Tax Code (CIMI). The critical interpretative issue concerns whether buildings in full ownership with multiple independent floors should be taxed as a single property based on aggregate value or as separate units based on individual floor values.
How does vertical ownership (propriedade vertical) of an urban building affect Stamp Tax liability in Portugal?
Vertical ownership (propriedade vertical) significantly impacts Stamp Tax liability because Portuguese tax authorities treat properties held in full ownership differently from horizontal property (condominium) ownership. For buildings in vertical ownership comprising floors or divisions capable of independent use, the Tax Authority aggregates the patrimonial values of all floors to determine if the €1,000,000 threshold is met, treating the entire building as one taxable property. This contrasts with horizontal property regime where each autonomous fraction is assessed independently. The distinction derives from Article 2(4) of CIMI, which defines autonomous fractions only within the horizontal property framework, not for properties in full ownership despite having independently usable divisions.
Can individual housing units in a building held in total ownership be assessed separately for Stamp Tax purposes?
Individual housing units in a building held in total ownership cannot be assessed separately for Stamp Tax purposes according to the Tax Authority's interpretation, even when each unit has independent use capability. The AT position maintains that only autonomous fractions under the horizontal property ownership regime (propriedade horizontal) qualify as separate properties for taxation. Floors or divisions in buildings held in full ownership are aggregated into a single taxable base, regardless of their independent functionality. This interpretation contrasts with IMI treatment, where Article 4(1) of CIMI establishes that each part capable of independent use constitutes an autonomous taxable unit. The subsidiary application of CIMI to Stamp Tax matters does not extend to this fundamental distinction.
What was the outcome of CAAD arbitration process 484/2014-T regarding the annulment of Stamp Tax assessments?
The complete outcome of CAAD arbitration process 484/2014-T is not fully detailed in the available excerpt, which concludes mid-argument. The arbitral tribunal was constituted on September 15, 2014, with both parties waiving the oral hearing and supplementary pleadings due to the similarity of issues with other decided cases. The tribunal scheduled October 31, 2014, for the final decision. The claimant sought annulment of Stamp Tax assessments totaling €14,426.99 for 2013, restitution of amounts paid, and indemnifying interest. The case involved fundamental questions about the interpretation of items 28 and 28.1 of TGIS, constitutional equality principles, and procedural compliance of assessment acts.
What is the procedure for challenging Stamp Tax liquidation acts through CAAD tax arbitration in Portugal?
The procedure for challenging Stamp Tax liquidation acts through CAAD tax arbitration follows the Legal Framework for Tax Arbitration (RJAT). Taxpayers must file a request for constitution of a singular arbitral tribunal (TAS) within the legal deadline established in Article 10(1)(a) of RJAT. The request must be signed by legal representatives and specify the contested acts and grounds for annulment. After acceptance by the CAAD President, the Tax Authority is automatically notified. The Deontological Council appoints an arbitrator, and the tribunal is constituted upon acceptance. Parties may waive the oral hearing (Article 18 RJAT) and supplementary pleadings, particularly when issues are similar to previously decided cases. The procedure ensures contradiction principles, with all parties notified of orders and documents. This alternative dispute resolution mechanism provides specialized tax expertise outside the traditional court system.