CAAD 485/2015-T: Stamp Tax Verba 28.1 TGIS Constitutional Review

Process: 485/2015-T

Date: April 6, 2016

Tax Type: Selo

Summary

CAAD arbitral case 485/2015-T addresses the constitutionality of Stamp Tax (Imposto do Selo) under Item 28.1 of the General Stamp Tax Table (TGIS) as amended by Law 83-C/2013 (State Budget 2014). The claimant challenged assessments for 2014, arguing that Item 28.1 violates constitutional principles of equality and ability to pay. Item 28.1 imposes a 1% annual tax on residential properties and land designated for residential construction based on their registered tax property value (VPT). The claimant contended this creates arbitrary and unconstitutional distinctions: commercial properties with identical values escape taxation while residential properties are taxed; land for construction is taxed identically to completed residential buildings despite different economic capacity; properties differing by merely one euro in value face drastically different tax treatment; and horizontal property ownership receives preferential treatment over full ownership. The claimant invoked Articles 13 and 104(3) of the Portuguese Constitution, which mandate equality in taxation and require property taxes to contribute to citizen equality. Additionally, Articles 5 and 55 of the General Tax Law (LGT) require taxation to respect equality, proportionality, and ability to pay. The claimant cited multiple CAAD precedents (cases 51/2013-T, 247/2013-T, 292/2013-T, 218/2013-T) finding Item 28.1 unconstitutional for treating taxpayers in identical situations differently without rational justification. Procedurally, the award was reformed under Article 616 of the Civil Procedure Code (CPC), applicable via Article 29 RJAT, after the court initially overlooked the claimant's submission of bank guarantees provided to suspend enforcement proceedings. The reform allowed consideration of the claim for compensation of guarantee costs, demonstrating that CAAD awards can be corrected for factual oversights even under the general non-appealability regime.

Full Decision

REFORM OF THE FINAL ARBITRAL AWARD

In the request for arbitral decision, the Claimant requested compensation for damages resulting from guarantees to be provided in order to suspend the enforcement proceedings instituted or to be instituted for coercive collection of the amounts of the assessments subject to the same request for arbitral decision, guarantees that it undertook to attach.

On 27 November 2015, the Claimant sent to the CAAD its final arguments in which it alleged and requested the attachment to the case file of the bank guarantee provided for suspension of the enforcement proceedings, which it had undertaken to attach, and a copy of which was annexed to the said arguments.

However, in the arbitral decision handed down on 06.04.2015, this Court considered, by mere oversight, as an unproven fact that the Claimant had provided guarantees and that, as this had not been demonstrated or alleged, the request for the AT's condemnation to pay compensation for damages resulting from the provision of this guarantee was wholly unfounded and inadmissible.

Accordingly, the Claimant formulated in that part a request for reform of the decision in order to consider the compensation claim partially founded.

The Respondent was notified to make representations and made none within the determined time period (See order of 10-4-2016).

A decision must be made.

The Court did not in fact become aware of the attachment of documents when the Claimant presented its final arguments.

The reform of the award is, in this case, admissible considering in particular the provisions of article 616º of the CPC, applicable ex vi article 29º of the RJAT and also considering the rule of ordinary non-appealability provided in the RJAT (See preamble of DL nº 10/2011, of 20 January and articles 25 et seq. of this legal diploma).

Accordingly and granting the request for reform, a new complete text of the award, reformed in the terms requested, is issued and immediately follows this order and completely replaces the previous one.

· Parties to be notified.

Lisbon and CAAD, 22-4-2016

The Collective Arbitral Court,

José Poças Falcão
(President)

Jorge Carita
(Member)

Suzana Fernandes Costa
(Member)

ARBITRAL AWARD

I - REPORT

A…, tax identification number …, with registered office at Avenue …, …, Tower …, …, in Lisbon (Tax Service of Lisbon-…), managed and represented by A..., S.A., tax identification number …, with registered office at the same address, presented, on 27/7/2015, pursuant to the provisions of subparagraph a) of section 1 of article 10º of Decree-Law nº 10/2011, of 20 January, which approves the Legal Regime for Arbitration in Tax Matters (RJAT), a request for arbitral decision in which the Tax and Customs Authority - AT is the Respondent, requesting the "(...)declaration of illegality of the Stamp Duty assessments relating to the year 2014 and to item 28.1 of the General Table of Stamp Duty ("TGIS") (...)".

The request for constitution of the arbitral tribunal was accepted by the President of the CAAD, and the Tax and Customs Authority (hereinafter referred to as "AT" or the "Respondent") was notified of its constitution on 7 August 2015.

The Court was duly constituted on 7 October 2015.

The subject matter of the proceedings and the position of the parties

A - Position of the Claimant:

The Claimant begins by stating that item 28.1 of the General Table of Stamp Duty (TGIS), in the wording given by Law nº 83-C/2013, of 31 December (State Budget Law for 2014), provides that residential properties and land for construction whose construction, authorized or planned, is for residential purposes, are subject to Stamp Duty at the rate of 1% on the respective tax property value shown in the register.

And it alleges that the said item "is manifestly unconstitutional by reason of violation of the principles of equality and proportionality, whereby the assessment acts in question must, consequently, be annulled".

According to the Claimant "the principle of equality, enshrined in articles 13º and 266º, section 2 of the Constitution of the Portuguese Republic ("CRP") and in article 6º of the Code of Administrative Procedure ("CPA"), binds the Tax Administration to promote, in its relations with taxpayers, equal treatment of situations that appear to be identical, while simultaneously imposing that it treat as different what is legally or materially unequal". And it further states that "in the field of tax law, the principle of equality appears, from the outset, mentioned in sections 1 and 2 of article 5º of the General Tax Law ("LGT"), which provides that "taxation aims to satisfy the financial needs of the State and other public entities and promotes social justice, equal opportunities and the necessary corrections of inequalities in the distribution of wealth and income", and that "taxation respects the principles of generality, equality, legality and material justice"". The Claimant also refers to article 55º of the General Tax Law (LGT), stating that this article guides all the activity of the Tax Administration, imposing that it exercise its duties in pursuit of the public interest, in accordance with the principles of legality, equality, proportionality, justice, impartiality and expeditiousness, in respect of the guarantees of taxpayers.

The Claimant also states that in the matter of taxation of property, article 104º section 3 of the CRP expressly provides that "the taxation of property must contribute to equality among citizens".

And concludes that, "it must be concluded that to tax a plot of land for construction under Stamp Duty as if it were a property with residential use and high tax property value constitutes a violation of the constitutional principle of equality".

The Claimant presents examples that support its thesis. The Claimant states that it results from item 28.1 of the TGIS, a contrario, that an urban property intended for commerce or services is not subject to Stamp Duty, even though it has a tax property value (VPT) exceeding one million euros, whereas a property with residential use with the same VPT as the former is subject to Stamp Duty. Another example is the case of two urban properties with residential use with a difference of one euro in VPT, a difference that leads to absolutely different results: one will pay Stamp Duty and the other will not. Another situation is the case of a property constituted in horizontal ownership with 11 autonomous units with a VPT of 100,000 € each, which will not be covered by item 28.1 of the TGIS, but if it is an urban property with similar characteristics under a regime of full ownership, taxation will apply.

The Claimant makes reference to the arbitral decision of 07-03-2014, of case nº 51/2013-T, in which, similarly to the present case, the application of item 28.1 of the TGIS to land for construction was at issue. And it also mentions the arbitral decision of 28-07-2014, handed down in case nº 247/2013-T, the arbitral decision of 2 February 2015, handed down in case nº 292/2013-T, and the arbitral decision of 24-02-2014, handed down in case nº 218/2013-T, which concludes that "(…) the claimant cannot be denied to be right when it concludes that «(…) the assessment of Stamp Duty now under review violates manifestly the principle of tax equality provided in article 13º of the CRP, because: (i) it is based on a rule that treats taxpayers in identical situations in a markedly different manner, the measure of difference not being assessed by their real taxpaying capacity; (ii) it is based on an arbitrary legal solution devoid of any rational foundation (…)»"

Thus, for the Claimant, item 28.1 of the TGIS establishes a taxation regime that rewards differentiated treatment and unjustified inequality among taxpayers in similar situations, in clear violation of the principle of equality enshrined in article 13º of the CRP.

And concludes by stating that "by treating identically situations that are materially and manifestly distinct, the assessments in question manifestly violate the principle of equality, a defect liable to result in their annulment and which is hereby invoked for all legal purposes".

On the other hand, the Claimant further alleges that "item 28.1 of the TGIS is also unconstitutional by reason of violation of the principle of proportionality, inherent in article 266º, section 2 of the CRP, in article 5º, section 2 of the CPA and, in the field of tax law, in article 55º of the LGT".

Indeed, the Claimant states that item 28.1 of the TGIS has burdened, in a manifestly grave, disproportionate and arbitrary manner, a restricted number of taxpayers – the holders of urban properties with residential use and with a tax property value equal to or exceeding one million euros.

The Claimant further considers that "item 28 of the TGIS also conflicts with the constitutional principle of tax equality by determining a manifest situation of double legal taxation", since the tax fact on which item 28.1 applies is the ownership, usufruct or right of superficies of urban properties with residential use and a tax property value equal to or exceeding one million euros, and this ownership of a real right is also taxed under Municipal Property Tax (IMI). This double legal taxation creates, in the view of the Claimant, negative discrimination against certain taxpayers compared with others who, on the same tax fact (i.e., the ownership of a real right over an urban property), saw only a single tax applied. On the issue of double taxation, the Claimant refers to the arbitral decision of 28-07-2014, handed down in case nº 247/2013-T, and the arbitral decision of 07-03-2014, handed down in case nº 51/2013-T, which have already pronounced on this issue.

And concludes that the assessments of Stamp Duty sub judice, insofar as they result from the application of item 28.1 of the TGIS, must be annulled, with all legal effects.

Finally, the Claimant requests that, should it be otherwise decided, which is granted only as a matter of legal duty, it is important to ascertain whether the residential use provided for in item 28.1 of the TGIS results from the valuations of the properties in question, making an appeal, for this purpose, to the concrete valuation data contained in the respective property records.

And in relation to the property entered in the register under article …, it results from the property record attached to the case file that the said property was assigned "different uses".

And from the "Calculation Demonstration" contained in the property record, it results that, for calculating the VPT of the property in question, different formulas were taken into account depending on the «use», namely, Commerce, Residential, Services and "other use", determining the property value of each part (Vtc, Vth, Vts and Vto).

In calculating the VPT of each part, different use coefficients were taken into account: the use coefficient of 1.2 for the commerce part, 1 for the residential part, 1.1 for the services part and 1.1 for the "other use" part. The Claimant states that these coefficients reflect those provided in article 41º of the CIMI, depending on the type of use of the constructed properties.

The Claimant alleges that the sum of the VPT values calculated for the commerce, services and "other use" parts (€ 4,890,221.65 + € 41,431,903.32 + € 2,528,371.51 = € 48,850,496.48) exceeds the VPT of the residential part (€ 46,548,299.03), and concludes that the part dedicated to residential use is not the principal use.

The Claimant concludes by arguing that "since the tax rule on item 28.1 of the TGIS refers to a property with «residential use», a property with different uses, including commerce and services, cannot be considered as falling within its scope, such uses being those the legislator expressly intended to exclude from the scope of the rule", and that, therefore, given that the land in question has been assigned different uses, Stamp Duty should have applied only to the part of the property with residential use. And thus, Stamp Duty should have applied only to the tax property value of the part considered dedicated to residential use, that is, to the value of € 46,548,299.03 and not to the total tax property value of the property (€ 93,398,800.00 at the time of valuation).

Finally, the Claimant requests the condemnation of the Tax and Customs Authority (AT) to pay compensation for damages resulting from guarantees to be provided, guarantees that the Claimant undertook to attach following their presentation.

B - Position of the Respondent

The Tax and Customs Authority presented a response on 11-11-2015.

The AT states that, in relation to the urban article …, property with different uses, it proceeded to annul 51% of the assessments, that is, it annulled the part of the assessments that corresponded to uses other than residential.

The AT considers "that the properties in question have the legal nature of property with residential use, whereby the assessment acts subject to this request for arbitral decision must be maintained as they embody a correct interpretation of Item 28.1 of the TGIS, added by Law nº 55-A/2012, of 29 October".

According to the AT "in the absence of any definition of the concepts of urban property, land for construction and residential use, under Stamp Duty law, one must resort to the CIMI in search of a definition that permits the determination of possible subjection to Stamp Duty, in accordance with the provisions of section 2 of article 67º of the CIS in the wording given by Law nº 55-A/2012, of 29 October."

Under the terms of the said legal provision, matters not regulated in the Code, relating to item 28.1 of the TGIS, the provisions of the CIMI apply subsidiarily.

Section 1 of article 2º of the CIMI provides that «a property is every parcel of territory, encompassing waters, plantations, buildings and constructions of any nature incorporated therein or situated thereon, with a character of permanence, provided that it forms part of the patrimony of a natural or legal person and, in normal circumstances has economic value, as well as waters, plantations, buildings or constructions, in the circumstances mentioned above, endowed with economic autonomy in relation to the land on which they are located, although situated on a parcel of territory that constitutes an integral part of a diverse patrimony or does not have a patrimonial nature».

According to the provisions of section 1 of article 6º of the CIMI, urban properties are divided into residential properties, commercial, industrial or service properties, land for construction and others. The classification of residential, commercial, industrial or service properties is dependent on the respective licensing, or in its absence on the normal destination for the purpose in question and not on its use (cf. section 2 of article 6º of the CIMI). Indeed, that normative provision, regarding the types of urban properties in existence, provides that – including in this concept land for construction – «land situated 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 in the title of acquisition, except for land on which competent entities prevent any of those operations…»

The AT argues that the notion of use of urban property is found in the part relating to the valuation of properties, which is well understood since the valuation of the property (purpose) incorporates value to the property, constituting a determinative fact of distinction (coefficient) for purposes of valuation.

According to the AT, "for purposes of determining the VPT of land for construction, the application of the use coefficient in valuation is clear, whereby its consideration for purposes of applying item 28.1 of the TGIS cannot be ignored, and these considerations apply in this sense:

a. In the application of law to concrete cases it is important to determine the exact meaning and scope of the rule, in order to reveal the rule contained therein, an indispensable condition for it to be applicable, in accordance with the provisions of article 9º of the Civil Code (CC), ex vi article 11º of the General Tax Law - LGT.

b. Section 2 of article 67º of the CIS mandates the subsidiary application of the provisions of the CIMI.

c. The use of the property (suitability or purpose) is a coefficient that contributes to the valuation of the property, in the determination of the tax property value, applicable to land for construction;

d. Item 28.1 itself of TGIS refers to the expression "property with residential use", appealing to a classification that overlays the types provided in section 1 of article 6º of the CIMI."

Contrary to what the Claimant proposes, the AT considers that the concept of "property with residential use", for purposes of the provisions of item 28.1 of the TGIS, comprises both constructed properties and land for construction, first and foremost given the literal element of the rule.

The AT argues that the legislator does not refer to "properties intended for residential purposes", having opted for the concept "residential use", which in the view of the AT is a different and broader expression whose meaning must be found in the need to integrate other realities beyond those identified in subparagraph a) of section 1 of article 6º of the CIMI.

The Respondent concludes that "there is, thus, no basis whatsoever for the alleged illegality that the Claimant seeks to attribute to the assessments sub judice, the Respondent entity having acted in strict compliance with the law, to which it is rigorously bound, subsuming the tax fact to the express normative provision", and that the assessments in question embody a correct interpretation and application of law to facts, suffering from no defect of violation of law, and should, in consequence, be judged unfounded and the AT absolved of the claim.

It further states, at the end, that "if the grounds of this request for arbitral decision are essentially based on the (alleged) unconstitutionality of the aforementioned Item 28.1 of the CIS, should the Arbitral Court come to accept the Claimant's claim and, inherently, refuse the application of this rule on the grounds of its unconstitutionality, it is requested, by appeal to the provisions of article 280º, section 3, of the CRP and article 72º, section 3, of the Constitutional Court Law, that notification be made to the Public Prosecutor of the learned arbitral award, so that it may fulfill its legal prerogatives".

C – Case Management

This Court has absolute jurisdiction.

The proceedings are proper and the parties are legitimate and have legal and procedural capacity.

There are, for consideration at this time, no incidental or preliminary questions, nullities or exceptions.

The merits of the claim must be considered and decided.

II REASONING

The Proven Facts

The following are the essential proven facts:

a) The Claimant was, at the end of 2014, the owner of the urban property entered in the property register under article …, located at Avenue … and Avenue …, parish of …, municipality of Lisbon, entered in the register as land for residential construction, and with the tax property value of € 6,844,261.62 [as per property record attached with the arbitral request as document 1];

b) The Claimant was notified of the assessment of Stamp Duty nº 2015 … in the amount of € 68,442.62, relating to the year 2014 and the property referred to in the preceding subparagraph [as per document 4 attached to the arbitral request];

c) The Claimant was also, in 2014, the owner of the urban property entered in the property register under article … located at Avenue …, parish of …, municipality of Lisbon, entered in the register as land for residential construction, and with the tax property value of € 1,205,199.23 [as per property record attached with the arbitral request as document 2];

d) The Claimant was notified of the assessment of Stamp Duty nº 2015 … in the amount of € 12,051.99, relating to the year 2014 and the property referred to in the preceding subparagraph [as per document 5 attached to the arbitral request];.

e) The Claimant was also, in 2014, the owner of the urban property entered in the property register under article …, located at Street … (…), parish of …, municipality of Lisbon, entered in the register as land for construction with different uses – commerce, residential, services and others – and with the tax property value of € 95,500,273.00 [as per property record attached with the arbitral request as document 3];

f) The Claimant was notified of the assessment of Stamp Duty nº 2015 … in the amount of € 955,002.73, relating to the year 2014 and the property referred to in the preceding point [as per document 6 attached to the arbitral request].

g) In relation to the urban article …, [cfr supra, e)] property with different uses, the AT proceeded to annul 51% of the collection which it reduced to €46,548,299.03. [Cfr articles 1 to 5 of the response presented by the AT in this proceeding] –

h) The requesting entity provided a bank guarantee in the amount of €883,823.47 to suspend the tax enforcement proceedings for collection of the 1st and 2nd installments of the assessments subject to the present case file [Doc 4 with the final arguments of the Claimant].

Unproven Facts

There are no other essential proven and/or unproven facts.

Motivation

The Court's conviction was based on the documents attached to the case file by the Claimant and Respondent, namely the assessments, collection documents and property records, all analyzed critically and in connection with the position of the parties in the proceedings and bearing in mind the absence of controversy regarding the factual framework but solely and exclusively to reduce essentially to law the subject matter of the dispute.

II REASONING (cont.)

The Law

At its core and in the reasoning presented by the Claimant, the issue concerns the alleged illegality of the impugned tax acts resulting from the application of a rule (item 28, added to the TGIS by Law nº 55-A/2012, of 29-10, in the wording given by Law nº 83-C/2013, of 31-12), unconstitutional by reason of violation of the principles of equality, tax equality and proportionality.

Although not in absolutely clear form, the Claimant also appears to assert the illegality of the assessment acts on the basis of interpretation of article 28.1 of the TGIS, which it considers does not encompass land for residential construction to the extent that it lacks the necessary valuation.

The tax acts in question are the additional assessments of Stamp Duty for the year 2014 and relating to urban properties, with tax property values of €6,844,261.62 (cadastral article nº…, parish of …, Lisbon), €1,205,199.23 (cadastral article nº…, of the parish of … – land for construction) and €95,500,273.00 (cadastral article nº…, of the parish of … – Land for construction).

The Claimant understands that such assessments are vitiated by illegality resulting from the violation of the constitutional principles of tax equality and proportionality, in addition to which, in relation to cadastral article nº…, it includes the use for commerce and services (€93,398,800.00) when it should only apply to the residential part (€46,548,299.03)[1].

Let us then see.

The Assessment and the Essential Applicable Rules

For purposes of exposition, the following is the transcription of the essential legal provisions, in order then to assess the tax acts in light of the defects invoked by the claimant.

Thus:

Law nº 55-A/2012, of 29 October [amends the Personal Income Tax Code, the Corporate Income Tax Code, the Stamp Duty Code and the General Tax Law]:

Article 3º

Amendment to the Stamp Duty Code

Articles 1º, 2º, 3º, 4º, 5º, 7º, 22º, 23º, 44º, 46º, 49º and 67º of the Stamp Duty Code, approved by Law nº 150/99, of 11 September, shall have the following wording:

(…)

Article 2º

[...]

1 - ...

2 - ...

3 - ...

4 - In the situations provided for in item nº 28 of the General Table, the taxpayers referred to in article 8º of the CIMI are the persons liable for the tax.

Article 23º

[...]

1 - ...

2 - ...

3 - ...

4 - ...

5 - ...

6 - ...

7 - In the case of tax due under 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, with the necessary adaptations, applying the rules contained in the CIMI.

Article 67º

[...]

1 - (Previous body of the article.)

2 - Matters not regulated in this Code relating to item nº 28 of the General Table shall be governed, subsidiarily, by the provisions of the CIMI.»

Article 4º

Addition to the General Table of Stamp Duty

Item nº 28 is added to the General Table of Stamp Duty, annexed to the Stamp Duty Code, approved by Law nº 150/99, of 11 September, with the following wording:

«28 - Ownership, usufruct or right of superficies of urban properties whose tax property value shown in the register, under the Code of Municipal Property Tax (CIMI), is equal to or exceeding (euro) 1,000,000 - on the tax property value used for purposes of IMI:

28.1 - For property with residential use - 1 %;

28.2 - For property, when the taxpayers who are not natural persons are resident in a country, territory or region subject to a clearly more favorable tax system.

Article 6º

Transitional Provisions

1 - In 2012, the following rules shall be observed with reference to the assessment of stamp duty provided for in item nº 28 of the respective General Table:

a) The tax fact occurs on 31 October 2012;

b) The taxpayer is the one mentioned in section 4 of article 2º of the Stamp Duty Code on the date referred to in the preceding subparagraph;

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 with reference to the year 2011;

d) The assessment of the tax by the Tax and Customs Authority must be effected by the end of November 2012;

e) The tax shall be paid, in a single installment, by the taxpayers

by 20 December 2012;

f) The applicable rates are as follows:

i) Properties with residential use valued under the Municipal Property Tax Code: 0.5 %;

ii) Properties with residential use not yet valued under the Municipal Property Tax Code: 0.8 %;

iii) Urban properties when the taxpayers who are not natural persons are resident in a country, territory or region subject to a clearly more favorable tax system, shown in the list approved by order of the Minister of Finance: 7.5 %.

2 - In 2013, the assessment of stamp duty provided for in item nº 28 of the respective General Table shall apply to the same tax property value used for purposes of municipal property tax assessment to be effected in that year.

3 - The failure to deliver, in whole or in part, within the indicated time period, of the amounts assessed as stamp duty constitutes a tax infraction, punished under the law.

Article 7º

Entry into Force and Effectiveness

1 - This law enters into force on the day following its publication.

2 - The amendments to article 72º of the Personal Income Tax Code and to article 89º-A of the General Tax Law take effect from 1 January 2012.

In the wording given to it by Law nº 83-C/2013, of 31 December, this item has the following wording, insofar as relevant here:

28 - Ownership, usufruct or right of superficies of urban properties whose tax property value shown in the register, under the Code of Municipal Property Tax (CIMI), is equal to or exceeding € 1,000,000 - on the tax property value used for purposes of IMI:

28.1 - For residential property or for land for construction whose construction, authorized or planned, is for residential purposes, under the provisions of the Municipal Property Tax Code - 1 %.

The justification for the addition of item 28 to the TGIS (original wording) was indicated in the Statement of Reasons of Draft Law nº 96/XII/2nd, in which, among other things, the following is stated:

The pursuit of the public interest, in light of the Country's economic and financial situation, requires a consolidation effort that will require, in addition to permanent activism in reducing public expenditure, the introduction of fiscal measures inserted in a broader set of measures to combat the budget deficit.

These measures are fundamental to strengthen the principle of social equity in austerity, ensuring an effective distribution of the necessary sacrifices for compliance with the adjustment program. The Government is strongly committed to ensuring that the distribution of these sacrifices will be made by all and not only by those who live off the income from their work. In accordance with this goal, this bill expands the taxation of income from capital and property, comprehensively encompassing a broad range of sectors of Portuguese society.

In these terms, the taxation of income from capital and equity gains will be increased, with the respective rates going from 25% to 26.5% under Personal Income Tax. The rates of taxation applicable to income obtained from, or transferred to, tax havens are also increased to 35%.

On the other hand, a tax rate is created under Stamp Duty applying to urban properties of residential use whose tax property value is equal to or exceeding one million euros.

Finally, this bill introduces a measure to strengthen the fight against tax fraud and evasion, through reinforcement of the regime applicable to manifestations of wealth of taxpayers (Personal Income Tax) and transfers to and from tax havens. In the first place, the operational implementation of Personal Income Tax assessment based on manifestations of wealth is strengthened, reducing the differential from 50% to 30% between manifestations of wealth and income declared under Personal Income Tax. On the other hand, transfers to and from tax havens made between accounts of the taxpayer, not declared under the law, are now considered a manifestation of wealth and, as such, subject to taxation under Personal Income Tax by indirect methods".

The crux of the dispute that this Court is required to resolve concerns the question of whether the rule subject to the said item 28.1 of the TGIS, in establishing taxation under Stamp Duty of urban properties with residential use (now including land for construction with such use), should be subject to non-application on the grounds of its non-conformity with the Constitution, given the statutory provisions of article 204 of the CRP, to the extent that in the facts submitted for judgment, the courts cannot apply rules that infringe the provisions of the Constitution or the principles enshrined therein (see, article 25, section 1 of the RJAT) – more specifically whether such rule is unconstitutional by reason of violation of the principles of equality and proportionality established in articles 266º-2 of the Constitution, 7º of the Code of Administrative Procedure and 55º of the LGT - and if, consequently, the assessments impugned founded on the aforesaid rule of the Stamp Duty Code must be invalidated.

Given the challenging nature of the tax arbitral proceeding [cf. article 2º of the RJAT and 99º and 124º of the CPPT, applicable ex vi article 29º, section 1, subparagraph a), thereof], the Arbitral Court must resort to article 124º of the CPPT, on the basis of the identical nature of the means of challenge.

Thus, by legal indication, defects to which the Claimant would attribute nullity shall first be addressed and, subsequently, those to which it attributes mere voidability. To define which defects shall first be addressed in the decision, the court should "(…) consider the qualification of the defects made by the challenger, that is, give priority to the appreciation of the defects which this qualifies as generating non-existence or nullity, at least to assess whether or not such qualification should be given to them" - see. Jorge Lopes de Sousa, Code of Tax Procedure and Process Annotated and Commented, Vislis, Lisbon, vol. II, 2011, 6th edition, p. 327).

In this case, no defects leading to the nullity of the tax acts are invoked.

Because this leads to better protection of the interests and rights of the Claimant, the alleged constitutional defects shall first be appreciated and, thereafter, if the appreciation is not prejudiced, the other issues raised shall be appreciated.

It should be noted that courts do not have to appreciate all arguments formulated by the parties to appreciate and decide the questions that are raised – this has been repeatedly affirmed for a long time by the jurisprudence [See inter alia, Decision of the Plenary of the 2nd Section of the STA, of 7 June 95 (case nº5239), in DR – Appendix of 31 March 97, pp. 36-40 and Decision STA – 2nd Sec – of 23 April 97, DR/AP of 9 Oct 97, p. 1094.

Let us then see.

A. The principles of equality (tax), taxpaying capacity and proportionality

As will be seen better below, the illegality of the tax act exclusively founded on alleged unconstitutionalities is not subject to review by the Tax Administration, the decision could never fail to apply the Law founded on its unconstitutionality.

Being, in the case at hand, the assessment acts for Stamp Duty (SDU) relating to the year 2014, the regime provided for in the TGIS applies to them, in the wording given by the cited Law nº 55-A/2012, of 29 October and Law nº 83-C/20143, of 31 December.

And these were the provisions that the AT applied for the assessment subject to the challenge.

And also, by the strict application of these rules, there is no doubt that the result is correct, that is, applying the rate of 1% of the VPT of the properties in 2014, the value of the assessment is clearly what was assessed, already taking into account the partial revocation of the assessment relating to cadastral article nº… in recognition of the partial use of the construction for purposes other than residential.

The claim of the claimant and denied by the AT was the request for non-application of the legal regime on which the assessment was based, for that to violate the constitutional principles mentioned above.

The Claimant is not right.

The AT is subject to the principle of legality (cf. article 266º, section 2 of the CRP and article 55º of the LGT) and "(…) cannot fail to apply a rule on the grounds of unconstitutionality, unless the Constitutional Court has already declared the unconstitutionality of the same with binding general force (cf. article 281º of the CRP) or if there is disregard for constitutional norms that are directly applicable and binding, such as those referring to rights, freedoms and guarantees (cf. article 18º, section 1, of the CRP), which is not the case (…)" [Cfr Decision of the STA, of 12-10-2011, published in http://www.dgsi.pt/jsta.

As VIEIRA DE ANDRADE says, "(…)this conflict [between constitutionality and the principle of legality] cannot be resolved through the automatic prevalence of constitutional law over statutory law. That is not what is at issue, because what is at stake is not the constitutionality of the law, but the judgment that administrative organs may make about that constitutionality. On the one hand, the Administration is not an organ for reviewing constitutionality; on the other hand, the submission of the Administration to law does not aim only at the protection of the rights of individuals, but also at the defense and pursuit of public interests […]. The grant to administrative power of unlimited powers to control the unconstitutionality of the laws to apply would lead to administrative anarchy, would invert the Law-Administration relationship and would directly assault the principle of separation of powers, as established in our Constitution (…)" (Constitutional Law, Almedina, 1977, p. 270.).

And, in the same sense, JOÃO CAUPERS (currently Judge of the Constitutional Court) states that "(…)the Administration does not, in principle, have the competence to decide on the non-application of norms whose constitutionality presents doubts to it, contrary to courts, to whom the diffuse and concrete review of constitutional conformity is entrusted, as shown by the differences between articles 207º [now 204º] and 266º, section 2 of the Constitution. While the former prevents courts from applying unconstitutional norms, the latter provides for the subordination of administrative organs and agents to the Constitution and the law.

It appears clear that the essential difference between the two provisions stems precisely from the fact that it was not intended to entrust the Administration with the task of reviewing the constitutionality of laws. The performance of such a function by the latter must be viewed as exceptional (…)" (Fundamental Rights of Workers and the Constitution, Almedina, 1985, p. 157.).

We conclude thus, with the cited Doctrine and Jurisprudence, that, in Portuguese Constitutional Law, there is no possibility for the Administration to refuse to obey a rule that it considers unconstitutional, substituting itself for the organs of review of constitutionality, unless it is a matter of violation of rights, freedoms and guarantees constitutionally enshrined.

Hence, the AT could never have refused to apply the aforesaid rule of the Stamp Duty Code, in recognition that it would affront constitutional provisions and/or principles.

As that responsibility is exclusively for appreciation by the Courts, it is incumbent on this Court to appreciate and decide.

The question is, in essence, whether the requesting entity, owner of properties with tax property value, each, exceeding €1,000,000.00, for purposes, wholly or partially, residential, taxed under Stamp Duty relating to 2014, in light of the cited rules introduced by Law nos 55-A/2011 and 83-C/2013 sees or does not see its right to respect for the aforesaid constitutional principles "assailed".

The principle of equality, fundamental in a rule of law state, translates into the prohibition of any discrimination in the treatment of equal situations (equalizing dimension) and admission of unequal treatment of unequal situations (differentiating dimension).

In the matter of taxation, the principle of equality[2] is expressed in the "[(…)idea of generality or universality, under which all are bound to the obligation to pay taxes, and of uniformity, requiring that such obligation be assessed by a single criterion — the criterion of taxpaying capacity. This thus implies equal tax for those with equal taxpaying capacity (horizontal equality) and different tax (in qualitative or quantitative terms) for those with different taxpaying capacity in proportion to this difference (vertical equality) (…)]" (Casalta Nabais, Tax Law, 5th edition, Coimbra, 2009, pp. 151-152).

As a presupposition and criterion of taxation, the principle of taxpaying capacity "(…)removes the tax legislator from arbitrariness, obliging it, in the selection and articulation of tax facts, to adhere to manifestations of taxpaying capacity, that is, to erect as the subject matter and taxable matter of each tax a specific economic presupposition that is a manifestation of this capacity and is present in the various legal hypotheses of the respective tax (…)" (Casalta Nabais, Work Cited, p. 154).

Or that is and in other words: it is constitutionally forbidden to the ordinary legislator to determine its norms in a "capricious" manner, but rather to submit them to serious and rigorous dictates of equalization and positive discrimination, as the cases may be.

The principle of equality has its express recognition in our Fundamental Law [cf. article 13º of the Constitution].

From this it results that this principle can also express itself in the obligation to impose differentiating measures in order to obtain equality of opportunity necessary for equality (tending to be real) among citizens.

Or that is: the principle of equality should only be considered violated if the treatment considered as unequal is arbitrary or, in less incisive terms, if the unequal treatment is not justified and reasonable.

The Claimant further understands that "item 28 of the TGIS conflicts with the constitutional principle of tax equality by determining a manifest situation of double legal taxation", since the tax fact on which item 28.1 applies is the ownership, usufruct or right of superficies of urban properties with residential use and a tax property value equal to or exceeding one million euros, and this ownership of a real right is also taxed under Municipal Property Tax (IMI).

This double legal taxation creates, in the view of the Claimant, negative discrimination against certain taxpayers compared with others who, on the same tax fact (i.e., ownership of a real right over an urban property), saw only a single tax applied. On the issue of double taxation, the Claimant refers to the arbitral decision of 28-07-2014, handed down in case nº 247/2013-T, and the arbitral decision of 07-03-2014, handed down in case nº 51/2013-T, which have already pronounced on this issue.

It is true that in the arbitral decisions cited it was affirmed that double legal taxation means that the same manifestation of wealth, which is expressed in the same tax fact, is taxed twice, meaning negative discrimination in relation to other taxpayers whose taxation was carried out only once on the same tax fact.

Such does not have, as the cited decisions recognized, literal expression in the constitutional text, being instead derived from the principle of taxpaying capacity.

On the other hand, it is true that some Portuguese tax doctrine has insisted on this aspect as a corollary of the principle of equality ("…in imposing intra-systemic limits, that is, coherence among the various taxes and coherence of the tax system as a whole, the principle in question should be called upon to solve problems such as double internal taxation, whether this is expressed in double legal taxation or in an overlapping of taxes, multiple or plural taxation, which results in the same goods, for example real property, being the object of various taxes, the conversion of taxes, which materializes in the transformation of taxes on income into taxes on property by virtue, for example, of the inertia of the legislator in the face of the phenomenon of inflation, etc." (Cf. JOSÉ CASALTA NABAIS, Tax Law, 7th ed., Coimbra, 2012, p. 164).

This alleged double legal taxation would consist in the fact that the ownership of real rights is simultaneously taxed under CIMI and under Stamp Duty, which would apply to the same reality.

It does not appear to be so since one thing is to tax every and any property under CIMI (cf. article 2º) another will be to tax another tax reality which are residential properties or land for that purpose, of value exceeding €1,000,000.00.

Moreover the active subjects in each of these tax legal relationships are different: the State, in the case of Stamp Duty and the Municipalities, in the case of IMI.

It is thus (the question of double legal taxation) a vision or analysis that does not have legal and/or statutory support since there is no constitutional recognition, nor any expression in the constitutional text to any prohibition of double legal taxation, nor can such prohibition even be deduced as any logical and necessary consequence of the principle of taxpaying capacity as a principle embodying, in the field of taxation, the principle of equality".

On the other hand, "(…)the principle of taxpaying capacity expresses and embodies the principle of tax or fiscal equality in its "uniformity" dimension – the obligation of all to pay taxes according to the same criterion – with taxpaying capacity filling the unitary criterion of taxation», understanding this criterion as being that in which «the incidence and distribution of taxes – of 'fiscal taxes,' more precisely – should be made according to the economic capacity or 'capacity to spend' (-) of each person and not according to what each person might eventually receive in public goods or services (benefit criterion)" [Cf. Decision of the Constitutional Court nº 142/04[3]]

It is in this context that the differentiation of tax treatment of property, in particular real property, will be justified, in order to tax, in an aggravated and proportional manner, the holders of higher-value properties or even creating an autonomous taxation for those properties of exceptionally high value on the basis of the presumption – which we know does not always materialize – that whoever has property of high value has the corresponding taxpaying capacity.

In the matter of tax equality, taxpaying capacity is an essential element to consider since true equality of tax treatment of taxpayers will only exist if there is identical taxation for taxpaying capacities that are equally identical. As is plain to see.

The special taxation, under Stamp Duty, applying to properties with residential use of value exceeding € 1,000,000, was, as seen previously, introduced into our tax system by Law nº 55-A/2012, of 29-10, with the addition to the General Table of Stamp Duty (TGIS) of item 28.1 [cf. article 4º of the cited Law].

After polemical jurisprudential treatment concerning the application or not of the aforesaid regime to land for residential construction (cf., in the CAAD, for all, the Decision handed down in case nº 51/2013, of 7 March), it is necessary to analyze the state of the question in light of the new wording of the TGIS.

Let us then see whether the legislative option, expressed in the introduction of this new regime of subjection to Stamp Duty, violates, by the manner in which it was formulated, the constitutional principle of equality, in the tax dimension, with the inherent corollary expressed in the principle of taxpaying capacity.

It has been the repeated understanding of the Constitutional Court that "(…)only those choices of regime made by the ordinary legislator can be censured, on the grounds of violation of the principle of equality, in those cases in which it is proved that they result in differences of treatment among persons that do not find justification in reasonable, perceivable or intelligible grounds, taking into account the constitutional purposes which, with the measure of difference, are pursued" (Cf. Decision of the Constitutional Court nº 47/2010[4]).

This understanding was again reiterated in the decision of the Plenary of the Constitutional Court relating to the successive appreciation of rules of the State Budget for 2013 - Decision nº 187/2013, of 5 April 2013.

At the basis of the approval of the cited Law nº 55-A/2012 was the "(…) pursuit of the public interest, in light of the Country's economic and financial situation (…)" and the requirement of "(…) a consolidation effort that will require, in addition to permanent activism in reducing public expenditure, the introduction of fiscal measures inserted in a broader set of measures to combat the budget deficit (…)" measures "(…) fundamental to strengthen the principle of social equity in austerity, ensuring an effective distribution of the sacrifices necessary to comply with the adjustment program (…) and in accordance with this aim, this bill expands the taxation of income from capital and property, comprehensively encompassing a broad range of sectors of Portuguese society (…)" – Cf. the terms of the "Statement of Reasons" in Draft Law nº 96/XII/2nd presented by the Government to the Assembly of the Republic and which was at the basis of the approval of the aforementioned Law (Cf. Records of the Assembly of the Republic – Series A, of 21-9-2012, pp. 44-52).

Contradictorily, such aims do not appear to be expressed in or be fully evident from Law nº 55-A/2012.

First of all because one cannot understand or apparently explain the reason for taxation only of properties for residential purposes, excluding, consequently, those which, although of value exceeding € 1,000,000, are not for that purpose.

Moreover, the taxation by item 28.1 of the TGIS apparently leads to manifest inequity to the extent that it leaves out of such taxation, unexplained and inexplicably, real property of the same taxpayer which, although all for residential purposes, have each a VPT below €1,000,000 but which together add up to a VPT exceeding (and, sometimes, even much exceeding) €1,000,000.

That is: the principle of taxpaying capacity expressed in the payment of tax according to the index of this capacity [the value of real property assets of the taxpayer] will be put into question to the extent that the regime of taxation under Stamp Duty [and which, in this case, is expressed in taxation of property] would not assure – quite the contrary – effective equality of taxation according to the taxpaying capacity of the citizens subject to this incidence.

This Doctrine was argued in the decision handed down on 24-2-2014 in case nº 218/2013-T, but did not receive approval from the Constitutional Court [Cf., v. g., Decision nº 590/2015, of 11-11-2015 (www.tribunalconstitucinal.pt) in the appeal brought from the decision of the Arbitral Court handed down in case nº 219/2013-T of the CAAD (cf. internet, www.caad.org.pt )]

The Constitutional Court considered that, in particular, "(...)the principle of taxpaying capacity does not dispense with the concurrence of other constitutional principles. As referred to in Decision nº 711/2006, «it is clear that the "principle of taxpaying capacity" must be made compatible with other principles with constitutional dignity, such as the principle of the Social State, the freedom of legislative formulation, and certain requirements of practicability and cognoscibility of the tax fact, indispensable also for fulfillment of the purposes of the tax system». And it continues: «To ascertain, however, the existence of a particularism sufficiently distinct to justify an inequality of legal regime, and to decide the circumstances and factors to be taken as relevant in such ascertainment, is a task that primarily falls to the legislator, who holds primacy in the embodiment of constitutional principles and the corresponding freedom of legislative formulation. For this reason, the principle of equality appears fundamentally to legal operators, in the exercise of constitutionality review, as a negative principle (…) - as a prohibition of arbitrariness».

In sum, in the synthesis of Decision nº 695/2014, "the principle of tax equality can be embodied through different aspects: a first is in the generality of the tax law, in its application to all without exception; a second, in the uniformity of the tax law, in treating in the same way taxpayers who find themselves in equal situations and differently those who find themselves in different situations, in proportion to the difference, to be assessed by taxpaying capacity; a last is in the prohibition of arbitrariness, in preventing the introduction of discriminations among taxpayers that are devoid of rational foundation".

"(...)Taxation resulting from the rule of incidence housed in item nº 28 takes on the nature of a partial tax (thus, JOSÉ MARIA FERNANDES PIRES, op. cit., p. 507), taking as its tax base the urban property dedicated to residential use, calculating the respective tax property value per relevant legal and economic unit. It does not constitute a general tax on property, or even a tax on all real property, in such terms as to found a comparison based on a view of personalization of the tax and from a base that pays attention to all the property of the tax subject (...)".

Although it lacks binding general force, the aforesaid decision of the Constitutional Court is sufficiently persuasive to permit acceptance or not to reject the orientation that the rule in question does not suffer from unconstitutionality by reason of violation of the principles of equality, proportionality and taxpaying capacity.

Hence, this Court concludes in favor of the unfoundedness of the claim for annulment of the tax acts by application of a rule (item 28 of the TGIS) in recognition that it does not suffer from unconstitutionality by reason of violation of the principles of tax equality, proportionality and taxpaying capacity.

Land for Construction of Non-Exclusively Residential Building

The Claimant alleges that, in relation to the aforesaid cadastral article nº …, the sum of the VPT values calculated for the commerce, services and "other use" parts (€ 4,890,221.65 + € 41,431,903.32 + € 2,528,371.51 = € 48,850,496.48) exceeds the VPT of the residential part (€ 46,548,299.03), and concludes that the part dedicated to residential use is not the principal, arguing that "since the tax rule on item 28.1 of the TGIS refers to a property with «residential use», a property with different uses, including commerce and services, cannot be considered as falling within its scope, such uses being those the legislator expressly intended to exclude from the scope of the rule", and that, therefore, given that the land in question has been assigned different uses, Stamp Duty should have applied only to the part of the property with residential use. And thus Stamp Duty should have applied only to the tax property value of the part considered dedicated to residential use, that is, to the value of € 46,548,299.03 and not to the total tax property value of the property (€ 93,398,800.00).

In this matter, it appears, in truth, to be irrelevant to ascertain which is the principal use of the building to be constructed on the land to the extent that what is absolutely relevant is to ascertain whether the VPT of the land in the part intended for residential use is or is not exceeding €1,000,000.00.

Now, as it has been demonstrated and the Claimant recognizes, the VPT of the residential part amounts to €46,548,299.39 and it is on this value that the assessment should have applied – as it ultimately did.

In truth, the AT partially revoked the original assessment act disregarding, for purposes of the assessment, the difference between this value (€46,548,299.30) and the total VPT of the land on which that assessment had applied (€93,398,800.00).

This is enough to not evidence, or have the illegality in the assessment be remedied.

C. The question of double legal taxation.

This question has been addressed supra.

D. The question of compensation for improper guarantee

The LGT provides:

Article 53º

Guarantee in Case of Improper Payment

1 - The debtor who, to suspend enforcement, offers a bank guarantee or equivalent shall be indemnified wholly or partially for damages resulting from its provision, if it has maintained it for a period exceeding three years in proportion to the outcome in administrative review, administrative challenge or opposition to enforcement that have as their object the debt guaranteed.

2 - The time period referred to in the preceding section does not apply when it is verified, in a gracious reclamation or judicial challenge, that there was error attributable to the services in the assessment of the tax.

3 - The indemnification referred to in section 1 has as its maximum limit the amount resulting from the application to the guaranteed value of the rate of indemnity interest provided in this law and can be requested in the administrative review proceeding itself or judicial challenge, or autonomously.

4 - Indemnification for provision of improper guarantee shall be paid by deduction from the tax revenue of the year in which payment was made.

In this case, the Claimant requests the condemnation of the Tax and Customs Authority to pay compensation for damages resulting from guarantees provided in the course of tax enforcement.

As the provision of the bank guarantee is proven, the Claimant shall have the right to be recompensed for the costs and damages resulting from this provision given the outcome of the present challenge proceeding.

As it is well known that for the service of providing a bank guarantee, costs/commissions are paid to the Banks based on, in particular, the risk, value and term of the guarantee, it must be concluded that, despite not having been alleged, the claimant has borne [and certainly continues to bear] costs for the maintenance of the guarantees.

Now, having provided guarantees for the total value of the assessments subject to this challenge, interest, costs and other accruals (Cf. article 199º-6 of the CPPT) and going to obtain partial success in this action, those bank costs will be liquidated in due course based on the criterion of proportionality provided in article 53º-3 of the LGT.

That is: the presuppositions are recognized as present that confer on the claimant the right to indemnification under the terms of the cited article 53º of the LGT.

It is true that the amount of indemnification was not specified.

However, this would not necessarily have had to be alleged since whoever demands indemnification does not need to indicate the exact amount of damages – Cf. article 569º of the Civil Code.

The liquidation of the indemnification shall thus take place in the course of execution of judgment and bearing in mind the limitations of its amount provided in article 53º-3 of the LGT.

III – DECISION

In accordance with the above, the members of this Arbitral Court agree as follows:

A) Partially to judge the claim unfounded, maintaining in the legal order the assessments of Stamp Duty nº 2015 … in the amount of € 68,442.62, relating to the year 2014 and nº 2015 … in the amount of € 12,051.99, relating to the year 2014;

B) Partially to judge the claim founded in relation to the assessment nº 2015 … in the amount of € 955,002.73, relating to cadastral article nº…, of the parish of … (Lisbon), reducing this to the amount of €467,951.33, corresponding to 49% of that assessment;

C) Partially to judge the claim founded, in the terms and within the limits set out, concerning the claim for indemnification for damages resulting from the provision of the bank guarantee for the value of the 1st and 2nd installments (€883,823.47) of the assessments subject to the present case file;

D) To condemn the Tax and Customs Authority to pay indemnification to the Claimant, under the terms and within the limits provided in article 53º of the LGT and to be liquidated in the course of execution of judgment, resulting from the partial success of the claim;

E) Wholly to judge unfounded everything else requested, and

F) To condemn both parties in costs in proportion to their respective defeats in the terms specified below.

Value of the Proceeding

In accordance with the provisions of article 306º, section 2 of the CPC, article 97º-A, section 1, subparagraph a) of the CPPT and article 3º, section 2 of the Regulation of Costs in Tax Arbitration Proceedings, the proceeding is valued at € 1,035,497.34

Costs

Under the terms of article 22º, section 4 of the RJAT, the amount of costs is fixed at € 14,382.00, under Table I annexed to the Regulation of Costs in Tax Arbitration Proceedings, to be borne by the Tax and Customs Authority and the Claimant, in the proportion resulting from the AT's defeat in the amount of €487,051.14.

Lisbon, 6-4-2016

The Collective Arbitral Court,

José Poças Falcão
(President)

Jorge Carita
(Member)

Suzana Fernandes da Costa
(Member)

CAAD: Tax Arbitration
Case No.: 485/2015-T
Subject: Stamp Duty – Item 28.1 of the TGIS, in the wording introduced by Law nº 83-C/2013, of 31-12 (State Budget/2014); constitutional principles of equality, taxpaying capacity and equality

Arbitral Decision replaced by Arbitral Decision of 22-04-2016

TAX ARBITRATION PROCEEDING Nº 485/2015-T - CAAD

ARBITRAL DECISION

I - REPORT

A…, tax identification number …, with registered office at Avenue …, …, Tower … … Floor, in Lisbon (Tax Service of Lisbon-…), managed and represented by B… – …, S.A., tax identification number …, with registered office at the same address, presented, on 27/7/2015, pursuant to the provisions of subparagraph a) of section 1 of article 10º of Decree-Law nº 10/2011, of 20 January, which approves the Legal Regime for Arbitration in Tax Matters (RJAT), a request for arbitral decision in which the Tax and Customs Authority - AT is the Respondent, requesting the "(...)declaration of illegality of the Stamp Duty assessments relating to the year 2014 and to item 28.1 of the General Table of Stamp Duty ("TGIS") (...)".

The Court was duly constituted on 7 October 2015.

The subject matter of the proceedings and the position of the parties

A - Position of the Claimant:

The Claimant also states that in the matter of taxation of property, article 104º section 3 of the CRP expressly provides that "the taxation of property must contribute to equality among citizens".

And concludes that the assessments of Stamp Duty sub judice, insofar as they result from the application of item 28.1 of the TGIS, must be annulled, with all legal effects.

And in relation to the property entered in the register under article …, it results from the property record attached to the case file that the said property was assigned "different uses".

The Claimant concludes by arguing that "since the tax rule on item 28.1 of the TGIS refers to a property with «residential use», a property with different uses, including commerce and services, cannot be considered as falling within its scope, such uses being those the legislator expressly intended to exclude from the scope of the rule", and that, therefore, given that the land in question has been assigned different uses, Stamp Duty should have applied only to the part of the property with residential use. And thus Stamp Duty should have applied only to the tax property value of the part considered dedicated to residential use, that is, to the value of € 46,548,299.03 and not to the total tax property value of the property (€ 93,398,800.00 at the time of valuation).