Process: 495/2015-T

Date: December 30, 2015

Tax Type: Selo

Source: Original CAAD Decision

Summary

Process 495/2015-T addressed the constitutionality of Stamp Tax under item 28.1 of the Portuguese General Stamp Tax Table (TGIS), which imposes an annual tax on urban properties with taxable patrimonial values exceeding €1,000,000. The claimant, owner of building land with a taxable value of €31,218,181.03, challenged a Stamp Tax assessment of €104,060.61 for 2014, arguing violation of constitutional principles of equality and protection of confidence. The central legal argument concerned alleged double taxation: the claimant contended that item 28.1 of TGIS creates a periodic tax substantially identical to the Municipal Property Tax (IMI), thereby taxing the same manifestation of taxpaying capacity twice through concurrent annual assessments. The claimant emphasized that both taxes are direct, real, and periodic, operating on the same taxable base and assessment mechanisms, with the only distinction being revenue allocation. Additionally, the equality challenge focused on the €1,000,000 threshold, arguing it creates arbitrary distinctions between taxpayers with similar economic capacity. The Tax and Customs Authority defended the assessment, requesting that if unconstitutionality were declared, the arbitral tribunal should notify the Public Prosecutor's Office under Article 280(3) of the Portuguese Constitution and Article 72(3) of the Constitutional Court Law, enabling proper constitutional review procedures. This procedural mechanism reflects the limited competence of arbitral tribunals to refuse application of unconstitutional norms while preserving the Constitutional Court's exclusive authority for definitive constitutional rulings. The case exemplifies the intersection between administrative tax arbitration and constitutional review in Portugal's legal system, particularly regarding wealth taxation on high-value real estate properties.

Full Decision

ARBITRAL DECISION

The arbitrators Dr. Jorge Manuel Lopes de Sousa (arbitrator-president), Prof. Doctor Jorge Bacelar Gouveia and Dr. Arlindo José Francisco, appointed by the Deontological Council of the Centre for Administrative Arbitration to form the Arbitral Tribunal, constituted on 13-10-2015, agree as follows:

1. Report

A… - …, S.A., legal entity number …, with registered office in Quinta …, …, in ..., parish of …, municipality of Loulé, (hereinafter designated as "Claimant"), filed a petition for constitution of a collective arbitral tribunal, pursuant to article 10, no. 1, paragraph a), of Decree-Law no. 10/2011, of 20 January (hereinafter "RJAT"), with a view to the declaration of illegality of the Stamp Tax assessment number 2015 …, of 20-03-2015, relating to the tax year 2014 – 1st instalment, which set a tax in the amount of € 104,060.61.

The petition for constitution of the arbitral tribunal was accepted by the President of CAAD and notified to the TAX AND CUSTOMS AUTHORITY on 14-08-2015.

In accordance with the provisions of paragraph a) of no. 2 of article 6 and paragraph b) of no. 1 of article 11 of the RJAT, the Deontological Council appointed the undersigned arbitrators, who communicated their acceptance of the assignment within the applicable deadline.

On 28-09-2015, the Parties were notified of such appointment and did not express any intention to refuse the appointment of the arbitrators, in accordance with article 11, no. 1, paragraphs a) and b) of the RJAT and articles 6 and 7 of the Deontological Code.

Accordingly, in conformity with the provision in paragraph c) of no. 1 of article 11 of the RJAT, the collective arbitral tribunal was constituted on 13-10-2015.

The Tax and Customs Authority responded defending the lack of merit of the claims and requesting that, should the application of article 28 of the General Stamp Tax Table (TGIS) be refused on the grounds of its unconstitutionality, by appeal to the provisions of article 280, no. 3, of the CRP and article 72, no. 3, of the Constitutional Court Law, notification of the reasoned arbitral award be ordered to the Public Prosecutor's Office, so that it may comply with its legal prerogatives.

By order of 03-06-2015, the meeting provided for in article 18 of the RJAT and the arguments were dispensed with.

The arbitral tribunal was properly constituted.

The parties have legal personality and capacity, are legitimate (articles 4 and 10, no. 2, of the same statute and article 1 of Ordinance no. 112-A/2011, of 22 March) and are properly represented.

The proceedings do not suffer from any defects of nullity.

No preliminary questions were raised that could prevent consideration of the merits of the case.

2. Factual Matters

2.1. Proven Facts

The following facts are considered proven:

A) The Claimant is the owner of a parcel of land for construction, designated Lot …-…, registered in the urban property register of the parish of ... under no. …, with the taxable patrimonial value of € 31,218,181.03 (Documents nos. 1 and 2, attached with the petition for arbitral decision, whose contents are accepted as reproduced);

B) The Claimant acquired the property on 17-12-2004 (Document no. 2, attached with the petition for arbitral decision, whose content is accepted as reproduced);

C) The Claimant was notified of the Stamp Tax assessment no. 2015 …, dated 20-03-2015, through which the collection of € 312,181.81 for the year 2014 and the 1st instalment in the amount of € 104,060.61 is determined, relating to the aforementioned property, on the basis of item 28.1 of the TGIS;

D) On 28-07-2015, the Claimant filed the petition for constitution of the arbitral tribunal that gave rise to the present proceedings.

2.2. Unproven Facts

There are no facts relevant to the decision of the case that have not been proven.

2.3. Justification for the Determination of the Factual Matters

The facts were proven based on the documents attached with the petition for arbitral decision, with no controversy regarding the factual matters.

There is no controversy concerning the factual matters.

3. Legal Matters

The Claimant requests the declaration of illegality of the impugned assessment on the ground of violation of the constitutional principles of equality and protection of confidence.

3.1. Issue of Violation of the Principle of Equality

3.1.1. Positions of the Parties

The Claimant attributes to the impugned assessment violation of the principle of equality for the following reasons, in summary:

– The IMI, being a tax that applies to property (and not to income, as was the case with the Property Contribution that preceded the Municipal Contribution), the revenue from which is allocated to municipalities, is a direct, real (or objective) and periodic tax (which results from the presumption of permanence of the tax situation, which presupposes a renewal, generally annual, of tax obligations);

– item no. 28 of the CIS, being absolutely innovative in relation to the realities previously taxed by Stamp Tax, establishes an equally direct, real and periodic tax, the taxation of which occurs even at the moment and in accordance with the rules provided in the IMI Code, with appropriate adaptations;

– thus, the same manifestation of taxpaying capacity is taxed twice, by two periodic taxes, with annual renewal;

– item no. 28 of the CIS, under the apparent form of a tax usually qualified as being of single obligation, establishes a true periodic tax, altogether similar to the IMI (with the exception of the destination of the tax revenue, which in the case of Stamp Tax is allocated directly to the State Budget);

– there exists a clear overlap between the taxable event subject of item no. 28 of the CIS and the taxable event subject of article 8, no. 1, of the Municipal Property Tax Code (CIMI);

– taking into account the principle of equality, which manifests itself in particular through the principle of taxpaying capacity, the same manifestation of ability to pay cannot give rise to two distinct and concurrent assessment processes, even though from a strictly formal point of view they have as their object different taxes;

– taxpayers with identical taxpaying capacity are not covered by the incidence of item no. 28 only because the properties of which they are owners have a taxable patrimonial value below € 1,000,000.00 - consider, by hypothesis, properties with a taxable patrimonial value of € 999,999.00 that would cease to be covered by the incidence rule.

The Tax and Customs Authority regarding the violation of the principle of equality states as follows, in summary:

– article 104, no. 3 of the CRP provides that "taxation of property must contribute to equality among citizens";

– the principle of equality, as far as property is concerned, must be interpreted with some restraint, in the sense that it does not involve a particular and autonomous legal content of the principle of equality in the context of taxation on property;

– "the principle of fiscal equality always has inherent above all the idea of generality or universality, in terms of which all citizens are bound by the duty to pay taxes, and of uniformity, requiring that such duty be measured by the same criterion - the criterion of taxpaying capacity. This thus implies equal tax for those with equal taxpaying capacity (horizontal equality) and different tax (in qualitative and quantitative terms) for those with different taxpaying capacity in proportion to that difference (vertical equality)";

– "the principle of taxpaying capacity expresses and implements the principle of fiscal or tax equality. This is because if the principle of tax equality presupposes equal treatment of equal situations and unequal treatment of unequal situations, taxpaying capacity is the tertium comparationis - that is, the criterion - which must serve as the basis for comparison. In this sense, the principle of taxpaying capacity operates both as a condition or prerequisite and as a criterion or parameter of taxation (...). It operates as a prerequisite or condition in that it prevents taxation from reaching wealth or income that does not exist; it serves as a criterion or parameter because it determines that the levy on the property of taxpayers is made in accordance with their "ability to pay". That is, taxpayers with the same ability to pay should pay the same taxes (horizontal equality), and taxpayers with different ability to pay should pay different taxes (vertical equality)";

– "only the choices of regime made by the ordinary legislature can be censured on the ground of breach of the principle of equality in those cases in which it is proven that from them result differences in treatment between persons that do not find justification in grounds";

– the fact that the legislature established a value (€1,000,000.00) as a delimitative criterion of the incidence of the tax, below which the provision of the tax rule is not fulfilled, constitutes a legitimate choice of the legislature as to the fixing of the material scope of "luxury residential properties" intended to be taxed more heavily, especially since any other value of comparable magnitude would equally assume an artificial character that is inherent to any fixing of a quantitative level or limit.

3.1.2. Decision on the Issue of Violation of the Principle of Equality

Item 28 was added to the TGIS by Law no. 55-A/2012, of 29 October.

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

28 - Ownership, usufruct or surface right of urban properties whose taxable patrimonial value entered in the register, in accordance with the Municipal Property Tax Code (CIMI), is equal to or greater than € 1,000,000 - on the taxable patrimonial value used for IMI purposes:

28.1 – For residential property or for construction land whose construction, authorized or foreseen, is for residential purposes, in accordance with the provisions of the IMI Code - 1%.

The justification for the addition of this item to the TGIS was indicated in the Preamble to Bill no. 96/XII/2nd, in which, among other things, the following is stated:

"The pursuit of the public interest, in view 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 budgetary deficit.

These measures are fundamental to reinforce the principle of social equity in austerity, guaranteeing an effective distribution of the necessary sacrifices to comply with the adjustment programme. 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 from the income of their work. In accordance with this objective, this bill extends the taxation of capital income and property, equitably covering a broad set of sectors of Portuguese society.

In these terms, the taxation of capital income and securities gains will be increased, with the respective rates changing from 25% to 26.5% under IRS. The taxation rates 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 Tax applying to urban properties intended for residential use whose taxable patrimonial value is equal to or greater than one million euros.

Finally, this bill introduces a measure to strengthen the fight against tax fraud and evasion, through the reinforcement of the regime applicable to displays of wealth of taxpayers (IRS) and transfers to and from tax havens. First, the operationalization of IRS assessment based on displays of wealth is strengthened, reducing the differential from 50% to 30% between displays of wealth and income declared under IRS. On the other hand, transfers to and from tax havens effected between accounts of the taxpayer, not declared in accordance with law, now become a display of wealth and, to that extent, subject to taxation under IRS by indirect methods".

The Claimant's argument was considered in the decision of the Constitutional Court no. 590/2015, of 11-11-2015, handed down in case no. 542/14, in terms which are accepted here, in essence.

As regards the fact that it is two taxes with the same taxable event "the inscription of the taxation under analysis within the scope of Stamp Tax, and not other species of taxes, does not result, in itself, in breach of any parameter of constitutionality. Even if it were to be concluded that an incoherence factor, or even imbalance, was introduced in the system of taxation of real property, as the appellant claims, the mere unsystematic nature of the questioned rule is not suitable to determine constitutional censure (see, even though in other fields of regulation, Decisions no. 353/2010 and 324/2013)" (...) "Certainly, other ways can be conceived at the disposal of the legislature, possibly by recourse to other species of taxes, but it is no less certain that the option taken is inscribed in the broad margin of discretion of the fiscal legislature, being unsusceptible to found autonomous constitutional censure".

"Nor is there in the incidence rule in question an arbitrary fiscal measure, because deprived of rational foundation. As has been seen, the legislative amendment had the purpose of extending the taxation of property, causing it to weigh more heavily on ownership which, by its value considerably higher than that of the generality of urban properties intended for residential use, reveals greater indicators of wealth and, as such, is susceptible to justify the imposition of increased contribution for the sanitation of public accounts on its holders, in realization of the aforementioned 'principle of social equity in austerity'".

Moreover, situations of double taxation, translated in the application of two taxes to the same taxable event, are frequent in cases where the public entities benefiting from them are distinct, as is the case here, since IMI is municipal revenue and Stamp Tax is state revenue. A parallel situation occurs with the municipal surtax which, currently, applies, like the CIT, to the taxable matter of this tax (article 18, no. 1, of Law no. 73/2013, of 3 September).

As regards the argument that taxpayers with identical taxpaying capacity are not covered by the incidence of item no. 28 only because the properties of which they are owners have a taxable patrimonial value below € 1,000,000.00, for example € 999,999.00, the aforementioned Constitutional Court decision states as follows:

It should be noted that the existence of distinct applicable results in face of very approximate values - by excess or by defect - of a quantitative expression stipulated normatively as a limit – positive or negative – of any legal effect is inherent to its fixing by the legislature. Whether in the definition of tax incidence, or in the enactment of exemptions or tax benefits based on criteria of value, it is always possible to find examples of taxpayers with differentiated treatment based on a quantitative variation of very reduced expression.

Because it must necessarily be so, the differentiation presented in the second hypothesis raised does not appear to be devoid of rational foundation, in accordance with the scope, structure and nature of the rule under analysis: aimed at increasing the taxation of properties with residential use of high value, the fiscal measure could not fail to determine, by imperative of the principle of fiscal legality, the concrete patrimonial value from which it began to apply to such properties a special rate of Stamp Tax, which also rules out, on this point, the existence of arbitrariness on the part of the legislature.

In line with this jurisprudence, it is understood that there is no violation of the principle of equality, for the reasons indicated by the Claimant.

3.2. Issue of Violation of the Principles of Proportionality and Protection of Confidence

3.2.1. Positions of the Parties

The Claimant defends as follows, in summary:

– as understood by the Constitutional Court in decision no. 413/2014, "the application of the principle of confidence must start from a rigorous definition of the cumulative requirements to which the situation of confidence must comply, to be worthy of protection: first, the expectations of stability of the legal regime in question must have been induced or fed by the behavior of public authorities; they must equally be legitimate, that is, based on good reasons, to be evaluated within the constitutional legal-axiological framework; finally, the citizen must have oriented his life and made choices, precisely, based on expectations of maintenance of the legal framework"; "given that these requirements are verified, there must be a balancing or weighing of the interests of individuals unfavorably affected by the change in the normative framework that regulates them and the public interest that justifies that change. Indeed, for the situation of confidence to be constitutionally protected, it is still necessary that there be no reasons of public interest that justify, in adequate balancing, the non-continuity of the behavior that generated the situation of expectation";

– upon entry into force of item no. 28 of the TGIS, this new tax came to affect the expectation that taxpayers (owners of real property at the date of approval of the new law) created that there would be no extraordinary and unpredictable taxation for the holding of their property;

– that modification of taxpayers' expectations is considered as involving an intolerable breach of the principle of confidence, and therefore it should have been deemed constitutionally inadmissible;

– the measures do not have a temporary character, but rather a permanent one, so the argument that the new tax was aimed at ensuring extraordinary revenue needs does not hold, as there is no temporal prediction of the validity of that exceptional taxation;

– with which the legislature violated the constitutional principle of proportionality, this being the ultimate criterion for assessing constitutional-legal protection of confidence.

The Tax and Customs Authority defends that

– the normative underlying the present assessment applies to taxable events subsequent to its entry into force (01-01-2014), so it does not extend its effects to already established legal situations;

– thus, there are no expectations specifically deserving of protection in view of the principle invoked, with the result that any alleged breach of the principle of protection of confidence is extinguished;

– no. 3 of article 103 of the Constitution of the Portuguese Republic applies only to situations configurable as strong retroactivity, authentic or proper, that is, of 1st degree, translated by the application of the new law to facts entirely verified under the old law, having already produced all their effects within the scope of that law.

3.2.2. Decision on the Issue of Violation of the Principles of Proportionality and Protection of Confidence

The Claimant invokes the affect on the expectation that taxpayers (owners of real property at the date of approval of the new law) created that there would be no extraordinary and unpredictable taxation for the holding of their property, but there is no basis whatsoever for the formation of consistent expectations in this sense.

In fact, direct or indirect taxation of real property has undergone evolution over time, with frequent changes: in the last 30 years, it went from indirect taxation of property through taxation of actual or presumed income from properties which was done in the Property Contribution, in force until the end of 1988, to the Municipal Contribution Code, which directly taxed property until the end of 2003, and to the Municipal Property Tax which continued this taxation in new ways, from 2004 onwards, these latter cumulatively, from 1989 onwards, with taxation of property income at the level of income taxes.

In parallel, the taxation of changes in the ownership of properties which was carried out through the conveyance tax and the tax on successions and donations, which were in force until the end of 2003, was eliminated and there came to exist taxation of transfers under Municipal Tax on Onerous Transfers of Real Property and Stamp Tax.

For this reason, there is no basis for consistent expectations by owners of properties in the sense of the eternalization or prolonged validity of the taxation existing at the beginning of 2012. At least it is certain, to use the terminology used by the Claimant, that any eventual "expectations of stability of the legal regime in question" were not "induced or fed by the behavior of public authorities".

On the other hand, as explained in Bill no. 96/XII/2nd, which was transcribed in part above, the country's economic and financial situation required a budgetary consolidation effort, controlled by international creditors, which had to be translated not only into a reduction in expenditures, but mainly into an increase in state revenues.

This increase in revenues was carried out primarily through the increase in taxation of labor income and pensions, but elementary concerns of justice demanded that an effort be made to realize an "effective distribution of the necessary sacrifices to comply with the adjustment programme" and "ensure that the distribution of these sacrifices will be made by all and not only by those who live from the income of their work".

In this context of adoption of budgetary consolidation measures required to mitigate the financial crisis in which the country found itself, it cannot be concluded that the partial change in the regime of taxation of real property operated by Law no. 55-A/2012, of 29 October, could imply frustration of legitimate expectations of owners of high-value properties.

In truth, in addition to, as has been said, the legislative evolution not providing solid support for the formation of expectations about the unalterability of property taxation, it is certain that any hypothetical expectations that owners of properties might have formed in the sense of being protected from the enormous generalized national effort that required budgetary consolidation could not be considered legitimate, as they would not be compatible with the constitutional principle of justice.

For this reason, it cannot fail to be concluded that there were reasons of public interest that justified, in adequate balancing, the non-continuity of the regime of taxation of real property existing prior to the creation of item 28 of the TGIS.

On the other hand, the increase in taxation of holders of rights over properties intended for high-value residential use does not appear disproportionate, especially when compared with the generalized increase in taxation of labor and pensions.

Thus, as correctly stated by the Tax and Customs Authority, the limit to legislative discretion in this matter is only that which results from the prohibition of retroactivity constitutionally established in article 103, no. 3, of the CRP, which manifestly is not violated as regards the application, in the year 2014, of the taxation provided for in item 28.1 of the TGIS, as the wording of this rule that applies was introduced by Law no. 83-C/2013, of 31 December, in force as of 1-1-2014.

For the foregoing, there is no alleged breach of the principle of protection of confidence and the principle of proportionality.

4. Decision

In these terms, the Arbitral Tribunal agrees to judge the petition for arbitral decision as lacking merit.

5. Value of the Proceedings

In accordance with the provisions of article 306, no. 2, of the CPC, 97-A, no. 1, paragraph a), of the CPPT and 3, no. 2, of the Regulations on Costs in Tax Arbitration Proceedings, the value of the proceedings is fixed at € 104,060.61.

6. Costs

In accordance with article 22, no. 4, of the RJAT, the amount of costs is fixed at € 3,060.00, in accordance with Table I attached to the Regulations on Costs in Tax Arbitration Proceedings, to be borne by the Claimant.

Lisbon, 11-12-2015

The Arbitrators

(Jorge Manuel Lopes de Sousa)

(Jorge Bacelar Gouveia, with dissenting opinion attached)

(Arlindo José Francisco)

DISSENTING OPINION

CAAD: Tax Arbitration

Case no. 495/2015 – T

I – Introduction

I disagree with the decision of the Arbitral Tribunal taken in Case no. 495/2015 as I consider that item no. 28 of the TGIS is unconstitutional in violating the principles of equality and protection of confidence enshrined in the Constitution of the Portuguese Republic, in accordance with the reasoning contained in the Arbitral Decision handed down in Case no. 301/2013, of which I was the author.

It is true that the Constitutional Court has already ruled in the sense of the non-unconstitutionality of the said rule, namely in Decision no. 590/2015, a position with which I disagree and which does not bind us within the scope of a proceeding for concrete successive review of constitutionality relating to another arbitral case, the Constitutional Court not having, in that forum, the power to hand down decisions with general binding force.

As a matter of ethical duty and in the exercise of the independence that is the hallmark of the jurisdictional function in the context of this Arbitral Tribunal, and also because the argument expounded by the esteemed judges of the Constitutional Court in the aforementioned decision was not convincing to me, I could not fail to take this decision.

The Arbitrator

Prof. Doctor Jorge Bacelar Gouveia

Lisbon, CAAD, 30 December 2015.

Frequently Asked Questions

Automatically Created

What is the Stamp Tax (Imposto do Selo) under Verba 28.1 of the Portuguese General Stamp Tax Table (TGIS)?
Stamp Tax (Imposto do Selo) under item 28.1 of the Portuguese General Stamp Tax Table (TGIS) is an annual tax imposed on the ownership of urban real estate properties located in Portugal with a taxable patrimonial value exceeding €1,000,000. Introduced as an innovative tax provision, it operates as a periodic tax assessed annually at rates determined by the property's taxable value, using assessment mechanisms similar to Municipal Property Tax (IMI). The tax applies to building land and other high-value urban properties, with the first installment calculated proportionally for partial tax years. Unlike traditional stamp tax provisions that tax specific transactions or acts, item 28.1 taxes the ongoing ownership status of valuable real estate, making it functionally similar to a wealth or property tax despite its classification under stamp tax legislation.
Can the constitutionality of Article 28.1 of the TGIS be challenged in Portuguese tax arbitration proceedings?
Yes, the constitutionality of Article 28.1 of the TGIS can be challenged in Portuguese tax arbitration proceedings, but with specific procedural limitations. While arbitral tribunals under the Administrative Arbitration Centre (CAAD) have jurisdiction to hear constitutional challenges to tax provisions, they cannot declare norms unconstitutional with erga omnes effect. Instead, pursuant to Article 280(3) of the Portuguese Constitution (CRP) and Article 72(3) of the Constitutional Court Law, when an arbitral tribunal concludes that a norm is unconstitutional, it must refuse to apply that norm to the specific case and notify the Public Prosecutor's Office with a reasoned decision. The Public Prosecutor then has the authority to appeal to the Constitutional Court for a definitive ruling on constitutionality. This mechanism preserves the Constitutional Court's exclusive competence for abstract constitutional review while allowing arbitral tribunals to provide effective remedies in individual tax disputes involving constitutional issues.
How does CAAD arbitral tribunal process 495/2015-T address Stamp Tax on high-value urban property?
CAAD arbitral tribunal process 495/2015-T addressed Stamp Tax on high-value urban property by analyzing whether item 28.1 of the TGIS violates constitutional principles when applied to building land worth €31,218,181.03. The tribunal examined the claimant's arguments that the Stamp Tax assessment of €104,060.61 for 2014 constituted unconstitutional double taxation, since the same property was already subject to Municipal Property Tax (IMI). The proceedings focused on whether imposing two periodic, direct, and real taxes on identical property ownership violates the principle of equality and taxpaying capacity. The tribunal also considered the arbitrary nature of the €1,000,000 threshold, which exempts properties valued just below this amount while fully taxing those exceeding it. The Tax Authority's response invoked constitutional provisions requiring that property taxation contribute to equality among citizens, while defending the legitimacy of the assessment and requesting proper constitutional review procedures if unconstitutionality were found.
What are the legal grounds for claiming unconstitutionality of Stamp Tax on building land in Portugal?
The legal grounds for claiming unconstitutionality of Stamp Tax on building land in Portugal include: (1) Violation of the principle of equality (Article 13 CRP) by creating arbitrary distinctions between property owners based solely on whether their property's taxable value exceeds €1,000,000, treating substantially similar taxpayers differently without sufficient justification; (2) Double taxation of the same manifestation of taxpaying capacity, as both IMI and Stamp Tax item 28.1 impose periodic annual taxes on the same property ownership, contravening the principle that identical economic capacity should not generate concurrent assessment obligations for substantially identical taxes; (3) Violation of the principle of taxpaying capacity by measuring tax obligations based on presumed rather than actual economic ability to pay; (4) Breach of the principle of protection of legitimate expectations and legal certainty by introducing an entirely new periodic tax burden on property ownership without corresponding changes to the established property tax system; and (5) Potential violation of Article 104(3) CRP requiring that property taxation contribute to equality among citizens, rather than creating new inequalities through overlapping tax burdens.
What is the role of the Constitutional Court referral under Article 280(3) CRP in tax arbitration cases?
The Constitutional Court referral under Article 280(3) CRP in tax arbitration cases serves as a procedural bridge between administrative tax arbitration and constitutional review. When a CAAD arbitral tribunal concludes that a tax norm is unconstitutional, it has the power to refuse to apply that norm in the specific case before it (concrete or incidental review), but lacks authority to declare the norm unconstitutional with general binding effect (abstract review). Article 280(3) CRP and Article 72(3) of the Constitutional Court Law require the arbitral tribunal to notify its reasoned decision to the Public Prosecutor's Office, which may then appeal to the Constitutional Court within a specified timeframe. This mechanism ensures that constitutional questions arising in tax arbitration receive definitive review by the body constitutionally empowered to make binding declarations of unconstitutionality. It protects both taxpayer rights by allowing immediate relief from unconstitutional tax assessments and institutional integrity by preserving the Constitutional Court's monopoly on authoritative constitutional interpretation, while preventing fragmented or contradictory constitutional rulings across multiple arbitral proceedings.