Process: 495/2016-T

Date: January 16, 2017

Tax Type: Selo

Source: Original CAAD Decision

Summary

CAAD arbitration process 495/2016-T addressed a fundamental dispute regarding Stamp Tax (Imposto de Selo) under Item 28.1 of the General Table on properties with multiple independently-used floors or divisions. The claimant, as head of an estate, challenged €10,362.20 in Stamp Duty assessments for 2015, arguing that where a property comprises floors with independent use (propriedade vertical or total ownership), each floor's individual patrimonial value—not their aggregate sum—should determine tax liability. Since each floor's value fell below the €1,000,000 threshold, the claimant contended Item 28.1 did not apply. The Tax Authority maintained that for non-horizontal property buildings with autonomous divisions, the entire property constitutes a single taxable unit under the Municipal Property Tax Code (CIMT). The TCA argued that Article 2(4) of the CIMT only excepts horizontal property fractions as separate properties, while full ownership properties with independent divisions remain unified for tax purposes. The controversy centers on whether separate property registry entries for each floor—required under the CIMT for administrative and valuation purposes—create separate taxable units for Stamp Tax, or whether the property's total residential patrimonial value determines Item 28.1 applicability. This case illuminates critical interpretive questions about coordinating the Stamp Tax Code with the Municipal Property Tax Code's property definitions, particularly regarding inherited estates containing vertical properties with values straddling the million-euro threshold when aggregated but falling below it individually.

Full Decision

ARBITRAL DECISION

  1. REPORT

1.1. A..., in the capacity of Head of the Estate of B..., taxpayer no. ..., with domicile at Rua ..., ..., ..., in ... (hereinafter referred to as "Claimant"), submitted on 03/08/2016 a request for arbitral determination for the purposes of reviewing and declaring the illegality of the acts of assessment of Stamp Duty for the year 2015, concerning the application of Item no. 28.1 of the General Table of Stamp Duty (General Table), in the total amount of €10,362.20 (ten thousand, three hundred and sixty-two euros and twenty cents) on a property of which she is the owner.

1.2. His Excellency the President of the Ethics Council of the Administrative Arbitration Centre (CAAD) designated, on 30/08/2016, the signatory of this decision as sole arbitrator.

1.3. On 10/11/2016 the arbitral tribunal was constituted.

1.4. In compliance with the provisions of Article 17(1) of the Legal Regime of Tax Arbitration (LRTA), the Tax and Customs Authority (TCA) was notified on 11/11/2016 to, if it wished, submit a response and request the production of additional evidence.

1.5. On 13/12/2016 the TCA submitted its response, requesting the waiver of the meeting described in Article 18 of the LRTA, as well as of the presentation of pleadings.

1.6. Given that this is a matter exclusively of law, the arbitral tribunal on 14/12/2016 decided to waive the holding of the meeting referred to in Article 18(1) of the LRTA, on the grounds of the principle of autonomy of the arbitral tribunal in conducting the proceedings, inviting both parties to, if they wished, submit optional written pleadings and scheduled the date for delivery of the final decision.

1.7. Neither the TCA nor the Claimant submitted optional written pleadings.

  1. PROCEDURAL REVIEW

The arbitral tribunal was duly constituted and is materially competent.

The parties have legal personality and capacity and are legitimate, with no defects of representation.

There are no nullities, exceptions or preliminary issues that prevent the tribunal from adjudicating on the merits and which it is required to consider ex officio.

Consequently, the conditions are met for the final decision to be rendered.

  1. POSITIONS OF THE PARTIES

There are two opposing positions: that of the Claimant, set out in the request for arbitral determination, and that of the TCA in its response.

In summary, the Claimant alleges that:

a) Where a property comprises floors or divisions with independent use, the subjection to Stamp Duty is determined, not by the taxable real property value of the property, but by the taxable real property value of those floors or divisions.

b) The TCA itself acknowledged this in the acts of assessment now contested, by declaring as the total value subject to tax only the taxable real property value relating to the floors or divisions with independent use that comprise the property, to the exclusion of others.

c) However, where a property comprises floors or divisions with independent use, the subjection to Stamp Duty is not determined by the sum of the taxable real property values of all such floors or divisions, but by the taxable real property value of each one.

d) In accordance with the provisions of the Code of the Municipal Property Tax (MPT), each floor or part of a property capable of independent use is considered separately in the property register.

e) It is precisely to the taxable real property value contained in the register that the text of the law directs attention to determine the incidence of Stamp Duty under Item no. 28 of the General Table.

f) The taxable real property value contained in the register that determines the subjection to Stamp Duty under Item no. 28.1 of the General Table of each floor or part of a property capable of independent use is, therefore, the taxable real property value of that floor or part, and not the sum of that taxable real property value and the taxable real property values of the other floors and parts existing in the same property.

g) Since the taxable real property value of each of the floors contained in the register, in accordance with the Municipal Property Tax Code, is less than €1,000,000.00, Stamp Duty under Item no. 28.1 of the General Table does not apply.

h) Whereby the acts of assessment now contested are illegal due to violation of the rule of incidence of Item no. 28.1 of the General Table.

Otherwise, the TCA maintains that:

a) The interpretation of Item no. 28.1 of the General Table added by Law no. 55-A/2012, of 29 October, has raised much controversy regarding the formula for calculating the tax in relation to a property not constituted under horizontal property ownership and whose areas and physical divisions are operated autonomously.

b) The crux of the dispute thus lies in the interpretation of that legal provision in light of the principles invoked by the Claimant and also advocated by the TCA.

c) The TCA reiterates the understanding that if the building is constituted in full ownership with parts capable of independent use (so-called full ownership), it integrates the legal tax concept of "property", that is, a single unit and the taxable real property value of the same is determined by the sum of the parts with residential allocation and, where this is equal to or greater than €1,000,000.00, there is subjection to Stamp Duty under Item no. 28 of the General Table.

d) That is, in relation to a property not constituted under the horizontal property ownership regime, the criterion for determining the incidence of Stamp Duty is the global taxable real property value of the fractions and other divisions intended for residential use.

e) A conclusion that is founded on the following premises:

· In the Stamp Duty Code, there is no definition of the concepts of urban property, so the provisions of the Municipal Property Tax Code must be applied to ascertain whether there is possible subjection to Stamp Duty;

· Article 2(1) of the Municipal Property Tax Code defines the concept of property;

· Article 2(4) of the Municipal Property Tax Code provides an exception for autonomous fractions of properties constituted under the horizontal property ownership regime, which it considers, exceptionally, as properties;

· Conversely, where a property is constituted in full ownership with parts or divisions capable of independent use, it is the property as a whole, and no longer each of those parts, that integrates the concept of "property", for the purposes of MPT and Stamp Duty;

· This is not prevented by the fact that each floor/division is recorded separately in the property register, and with their respective taxable real property values, as such discrimination is only relevant, for tax purposes, given the concept of property registers contained in the Municipal Property Tax Code and in the matters regulated in that statute for the organization of registers;

· The requirement to organize registers in this manner is due to the need to reflect the autonomy that, within the same property, belongs to each of its parts, which may be functionally and economically independent;

· This autonomization is only justified because within the same property there may be use for commerce or residential purposes, with or without lease, which is determinant in the rules for tax valuation under the Municipal Property Tax Code, given the different allocation coefficients provided for in that statute.

f) In accordance with which it is concluded that the Claimant, for the purposes of MPT and also of Stamp Duty, by virtue of the wording of the aforementioned Item no. 28 of the General Table, is not the owner of autonomous fractions, but rather of a single property, with the TCA considering that this is the understanding that best accords with the principle of legality to which all its activity is devoted.

g) Accordingly, the TCA does not recognize any error in the factual or legal assumptions on which the tax acts of assessment of the tax in question may have been based and, consequently, does not recognize the right of the taxpayer to payment of compensatory interest provided for in Article 43 of the General Tax Law (GTL) in the event of error attributable to the services.

  1. OBJECT OF THE REQUEST

In the case at hand, the question that the Claimant seeks to have decided consists in determining whether Item no. 28.1 of the General Table, in the case of properties not constituted under horizontal property ownership, applies to the sum of the taxable real property value attributed to the different parts or floors, or rather, to the taxable value of each part of the property with independent economic use.

  1. FACTUAL MATTER

5.1. FACTS DEEMED PROVEN

In view of the documents submitted to the proceedings, it is deemed proven that:

5.1.1. Part of the undivided estate of B... is the property located at Rua ... and Rua ... no...., registered in the urban property register of the parish of ..., municipality of Lisbon, under the property registration article no...., in which four heirs were qualified without distinction of share or right.

5.1.2. The property is held in full ownership with floors or divisions capable of independent use and is composed of 7 floors (including sub-basement, basement, ground floor and 4 floors) and 14 divisions with independent use, allocated for residential purposes, whose taxable real property value, determined under the Municipal Property Tax Code, ranges from €51,250.00 to €84,110.00.

5.1.3. The property in question was registered in the property register in 2012 and the sum of the taxable real property values of the aforementioned autonomous fractions allocated for residential purposes amounts to €1,036,220.00 (one million, thirty-six thousand, two hundred and twenty euros), with each of them individually having a taxable real property value less than €1,000,000.00.

5.1.4. The Claimant was notified of the acts of assessment of Stamp Duty relating to the year 2015, carried out under Item no. 28.1 of the General Table, on the floors and divisions with independent use allocated for residential purposes, in the total amount of €10,362.20 (ten thousand, three hundred and sixty-two euros and twenty cents), namely:

· Document no. 2016..., relating to the floor or division with independent use identified as "1 D", in the amount of €728.00;
· Document no. 2016..., relating to the floor or division with independent use identified as "1 E", in the amount of €841.10;
· Document no. 2016..., relating to the floor or division with independent use identified as "2 D", in the amount of €728.00;
· Document no. 2016..., relating to the floor or division with independent use identified as "2 E", in the amount of €841.10;
· Document no. 2016..., relating to the floor or division with independent use identified as "3 D", in the amount of €728.00;
· Document no. 2016..., relating to the floor or division with independent use identified as "3 E", in the amount of €841.10;
· Document no. 2016..., relating to the floor or division with independent use identified as "4 D", in the amount of €728.00;
· Document no. 2016..., relating to the floor or division with independent use identified as "4 E", in the amount of €841.10;
· Document no. 2016..., relating to the floor or division with independent use identified as "CV D", in the amount of €773.70;
· Document no. 2016..., relating to the floor or division with independent use identified as "CV E", in the amount of €718.80;
· Document no. 2016..., relating to the floor or division with independent use identified as "RC D", in the amount of €781.70;
· Document no. 2016..., relating to the floor or division with independent use identified as "RC E", in the amount of €726.30;
· Document no. 2016..., relating to the floor or division with independent use identified as "SCV D", in the amount of €512.50;
· Document no. 2016..., relating to the floor or division with independent use identified as "SCV E", in the amount of €572.80.

5.1.5. The first installment of the Stamp Duty now contested was paid in full and on time by the Claimant, on 25/04/2016.

5.1.6. The second installment of the Stamp Duty now contested was paid in full and on time by the Claimant, on 23/07/2016.

5.2. FACTS NOT DEEMED PROVEN

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

  1. THE LAW

On the Incidence of Item no. 28.1 of the General Table

The question to be decided consists in determining whether the tax acts of assessment of Stamp Duty are illegal, due to erroneous interpretation and application of Item no. 28.1 of the General Table, added by Law no. 55-A/2012, of 29 October, in considering that the taxable real property value of an urban property constituted under the full ownership regime, with floors or divisions of independent use allocated to residential purposes that is relevant for the purposes of incidence is constituted by the value resulting from the sum of the taxable real property value attributed to each of those floors or divisions.

On this matter, there is already abundant case law from the Supreme Administrative Court[1] (SAC) and, as well, arbitral case law, which we indicate, by way of example, in proceedings no. 277/2013-T, no. 291/2013-T, no. 35/2014-T, no. 464/2014-T, no. 639/2014-T, no. 724/2014-T, no. 245/2014-T, no. 152/2015-T and no. 21/2015-T, which we follow.[2]

According to the factual circumstances established, the TCA assessed Stamp Duty on the basis that the taxable real property value of the urban property constituted under the full ownership regime is greater than €1,000,000.00, taking into account the sum of the taxable real property value of each of the 14 floors or divisions with independent use allocated to residential purposes, which make up the aforementioned property.

Let us examine this.

In accordance with the provisions of Item no. 28 of the General Table, the following are included in the scope of incidence of Stamp Duty:

"Ownership, usufruct or surface right of urban properties whose taxable real property value contained in the register, in accordance with the Code of the Municipal Property Tax (CMPT), is equal to or greater than €1,000,000 - on the taxable real property value used for the purpose of MPT:

28.1 For a residential property or for land for construction whose construction, authorized or planned, is for residential purposes, in accordance with the provisions of the Municipal Property Tax Code - 1%.[3]

28.2 - For a property, when the taxpayers that are not natural persons are resident in a country, territory or region subject to a clearly more favorable tax regime, listed in the authorization approved by order of the Minister of Finance - 7.5%".

The prerequisites for incidence of Item no. 28.1 of the General Table are thus urban properties, with residential allocation, whose taxable real property value contained in the register and used for the purposes of assessment of MPT is equal to or greater than €1,000,000.00.

However, Law no. 55-A/2012, of 29 October, says nothing regarding the qualification of the concepts in question, namely, regarding the concept of "property with residential allocation", which is of interest to us here.

Moreover, Law no. 55-A/2012, of 29 October, by reference to Item no. 28 of the General Table, made several amendments to the Stamp Duty Code, namely regarding its assessment and payment, expressly referring to the rules provided for in the Municipal Property Tax Code with the necessary adaptations, and it is also provided in Article 67(2) of the Stamp Duty Code that, "In matters not regulated in this Code concerning Item no. 28 of the General Table, the provisions of the CMPT shall apply subsidiarily."

From the analysis of the aforementioned rules, it is clear that the concept of "property with residential allocation" provided for in Item no. 28.1 of the General Table is not defined in the Stamp Duty Code, nor in the aforementioned Law no. 55-A/2012, of 29 October, nor in the Municipal Property Tax Code, whose rules are of subsidiary application, given the provision in Article 67(2) of the Stamp Duty Code.

It is thus unequivocal that a property in full ownership or under a vertical property ownership regime constitutes an urban property, in accordance with the provisions of Articles 2(1) and 4(1) of the Municipal Property Tax Code, applicable subsidiarily, and it is also certain that, both for the purposes of the incidence of Item 28.1 of the General Table, and for the purposes of classification of urban properties[5], the legislator makes no distinction between properties constituted under vertical and horizontal property ownership regimes (as mentioned in the arbitral decisions rendered in proceedings no. 50/2013-T and no. 132/2013-T), and the tax prerequisite of Item no. 28.1 of the General Table is urban properties that are effectively already allocated to residential purposes, because what is relevant is the effective and current use of each of the properties.

What then will be the taxable real property value relevant in the case of urban properties under full ownership regime composed of floors or divisions susceptible of independent use with "residential allocation", for the purposes of incidence of Item 28.1 of the General Table?

As results from Item no. 28.1 of the General Table itself and from Article 6(1) of Law no. 55-A/2012, of 29 October, Stamp Duty shall apply to the taxable real property value used for the purposes of MPT.

Let us thus examine what the taxable real property value used for the purposes of MPT is.

The taxable real property value of each property is determined in accordance with Article 38 et seq. of the Municipal Property Tax Code, in accordance with the provisions of Article 7(1) of the Municipal Property Tax Code.

In the case of a property under full or vertical ownership regime, each floor or division with independent use that comprises it is equally subject to valuation, and a taxable real property value is attributed to each of those floors or divisions, in accordance with the provisions of Articles 12 and 38 of the Municipal Property Tax Code.

In fact, Article 12(1) of the Municipal Property Tax Code provides that "property registers are records which contain, in particular, the characterization of properties, their location and their taxable real property value, the identification of the owners (...)", further providing in its Article 12(3) that, "Each floor or part of a property capable of independent use is considered separately in the property register, which also distinguishes its respective taxable real property value", and, in accordance with the provisions of Article 119(1) of the Municipal Property Tax Code, it is upon that value separately considered that the MPT shall be assessed and collected in relation to each floor or part with independent use that comprises an urban property under a vertical or full ownership regime, given the autonomy of each of those units.

This understanding is also shared by J. Silvério Mateus and L. Corvelo de Freitas[6] according to whom, "Another aspect that should be highlighted in the register concerns the need to reflect the autonomy that, within the same property, can be attributed to each of its parts, functionally and economically independent. In these cases, the property register must not only refer to each of these parts but must expressly refer to the taxable real property value corresponding to each of them. An example that may illustrate this situation is the case of an urban property, not constituted under the horizontal property ownership regime and composed of several floors. (...) However, since each of these units may be subject to lease or some other use by its respective owner, the register must highlight these units and taxable real property value must be attributed to each of them." [emphasis ours].

On the other hand, and as evidenced in the arbitral decision rendered in proceedings no. 194/2014-T, which we also follow, "the Municipal Property Tax Code consecrates, both as regards the property register and the distinction of its respective taxable real property value, and as regards the assessment of the tax, the autonomization of the parts of urban property capable of independent use and the segregation/individualization of the taxable real property value relating to each floor or part of a property capable of independent use.

Thus each property, in accordance with the concepts defined by Article 2 of the CMPT, corresponds to a single article in the register (Article 82(2) of the CMPT) but, according to Article 12(3) of the same Code, referring to the concept of property register (...), "each floor or part of a property capable of independent use is considered separately in the property register, which also distinguishes its respective taxable real property value (...)".

That is, the rule is autonomization, the characterization as "property" of each part of a building, provided it is functionally and economically independent, capable of independent use, in accordance with the concept of property defined in Article 2(1) of the CMPT: property is any fraction (of land, including waters, plantations, buildings and constructions of any nature incorporated into it or built on it, with a character of permanence) provided it is part of the assets of a natural or legal person and, in normal circumstances, has economic value, as well as waters, plantations, buildings or constructions, in the previous circumstances, endowed with economic autonomy."

Having in mind that under the Municipal Property Tax Code, the floors or divisions with independent use that comprise an urban property under full or vertical ownership regime are taxed autonomously, since the MPT is assessed individually on the taxable real property value attributed to each of those floors or divisions with independent use, given the relevance of their autonomy, necessarily, the principles and rules must be the same in the context of Stamp Duty (notably, regarding what is provided concerning registration in the register and assessment of MPT), both because this is what is prescribed by Item no. 28.1 of the General Table at the end, and by subsidiary application, by virtue of the provisions of Article 67(2) of the Stamp Duty Code.

Consequently, and on the assumption that the legislator in question "consecrated the most accurate solutions and knew how to express his thinking in appropriate terms" (see the provision in Article 9(3) of the Civil Code ("CC"), by referral of Article 11 of the GTL), only the floors, parts or divisions with independent use with residential allocation, whose taxable real property value is equal to or greater than €1,000,000.00, are covered by the rule of incidence of Item no. 28.1 of the General Table.

Thus, and as referred to in the arbitral decision rendered in proceedings no. 132/2013-T, "The uniform criterion that is required is thus the one that determines that the incidence of the rule in question only takes place when one of the parts, floors or divisions with independent use of property in horizontal or full ownership with residential allocation, possesses a taxable real property value greater than €1,000,000.00" and not when this value results from the sum of the taxable real property value attributed to each floor or division with independent use.

As also mentioned in the arbitral decision rendered in proceedings no. 50/2013-T, "The criterion sought by the TCA, of considering the value of the sum of the taxable real property values attributed to the parts, floors or divisions with independent use, with the argument that the property is not constituted under the horizontal property ownership regime, finds no legal foundation and is contrary to the criterion that is applicable in the context of the CMPT and, by referral, in the context of Stamp Duty. To which is added the fact that the law itself expressly provides, in the final part of Item 28 of the GTSD, that the Stamp Duty to apply to urban properties of value equal to or greater than €1,000,000.00 – "on the taxable real property value used for the purpose of MPT."

For all the foregoing, we cannot agree with the understanding of the TCA.

In fact, if it is the very rule set out in Item no. 28.1 of the General Table at the end that determines that Stamp Duty applies "on the taxable real property value used for the purpose of MPT", what is relevant for purposes of tax incidence is the taxable real property value individualized for each of the parts, floors or divisions with independent use on which MPT is assessed annually, that is, the assessment of Stamp Duty is in accordance with the rules provided in the Municipal Property Tax Code, by express referral of the aforementioned Item no. 28 of the General Table and Article 67(2) of the Stamp Duty Code.

So much so is this the case that the TCA, to assess Item no. 28.1 of the General Table, under examination, starts from each of those floors or divisions with independent use, applying the respective rate to the taxable real property value attributed to each of those divisions with residential allocation, in accordance with the rules of the Municipal Property Tax Code, and then adds that taxable real property value.

The interpretation to the effect that what is relevant in the rule of incidence of Item no. 28.1 of the General Table is the taxable real property value attributed to each of the autonomous parts, floors or divisions with independent use with residential allocation and not the value resulting from the sum of those taxable real property values is that which also results from its respective ratio legis, as required by Article 9(1) of the CC, applicable by virtue of the provision in Article 11 of the GTL.

In fact, in the presentation and discussion of Bill no. 96/XII/2nd[7] in the National Assembly, the Secretary of State for Tax Affairs stated the following:

"This is the first time Portugal has created special taxation on high-value residential properties. This rate will be 0.5% to 0.8% in 2012, and 1% in 2013, and will apply to houses valued at equal to or greater than 1 million euros. With the creation of this additional rate, the tax burden required of these owners will be significantly increased in 2012 and 2013" [emphasis ours].

On this matter, we follow the arbitral decision rendered in proceedings no. 50/2013-T in stating that "The legislator, in introducing this legislative innovation, considered as the determining element of contributory capacity urban properties, with residential allocation, of high value (luxury), more precisely, of value equal to or greater than €1,000,000.00, on which a special Stamp Duty rate now applies, seeking to introduce a principle of taxation on wealth externalized in the ownership, usufruct or surface right of urban properties of luxury with residential allocation. For this reason, the criterion was the application of the new rate to urban properties with residential allocation, whose taxable real property value is equal to or greater than €1,000,000.00.

This same conclusion is reached from the analysis of the discussion of Bill no. 96/XII in the National Assembly, available for consultation in the National Assembly Record, 1st Series, no. 9/XII/2, of 11 October 2012.

The rationale for the measure designated "special rate on high-value residential urban properties" is thus based on the invocation of the principles of social equity and fiscal justice, calling on the holders of high-value properties intended for residential use to contribute in a more intense manner, with the new special rate applying to "houses valued at equal to or greater than 1 million euros".

It is clear that the legislator understood that this value, when attributed to a residence (house, autonomous fraction or floor with independent use) reflects above-average contributory capacity and, as such, is capable of determining a special contribution to ensure fair distribution of the tax burden."

For all the foregoing, and in accordance with the factual circumstances established, the taxable real property value of each of the 14 floors or divisions with independent use allocated to residential purposes that comprise the property constituted in full ownership, and which was determined in accordance with the rules of the Municipal Property Tax Code, is less than €1,000,000.00, and thus the prerequisites for taxation under Item no. 28.1 of the General Table are not met.

Therefore, the tax acts of assessment of Stamp Duty, which are the subject of this arbitral determination proceeding, in the total amount of €10,362.20, suffer from the defect of violation of the provisions of Item no. 28.1 of the General Table and Article 67(2) of the Stamp Duty Code, due to error regarding their legal prerequisites, and the illegality of those assessment acts is thereby declared, with the consequent annulment thereof.

  1. DECISION

With the grounds set out, the arbitral tribunal decides:

a) To uphold the request for arbitral determination and, consequently, to declare illegal the assessments of Stamp Duty contained in the identified collection documents, with all legal consequences;

b) To uphold the request for recognition of the Claimant's right to payment of compensatory interest;

c) To order the TCA to reimburse the Claimant the Stamp Duty improperly paid, in the amount of €10,362.20;

d) To condemn the TCA in costs.

  1. VALUE OF THE CASE

The value of the case is fixed at €10,362.20 (ten thousand, three hundred and sixty-two euros and twenty cents), in accordance with Article 97-A of the Code of Procedure and Tax Procedure (CPPT), applicable by virtue of the provisions of Article 29(1)(a) and (b) of the LRTA and Article 3(2) of the Regulation of Costs in Tax Arbitration Proceedings (RCPAT).

  1. COSTS

Costs to be borne by the TCA, in the amount of €918 (nine hundred and eighteen euros), in accordance with Table I of the Regulation of Costs in Tax Arbitration Proceedings, pursuant to Article 22(2) of the LRTA.

Notify.

Lisbon, 16 January 2017

The Arbitrator,

(Hélder Filipe Faustino)

Text prepared by computer, in accordance with the provisions of Article 131(5) of the Code of Civil Procedure, applicable by referral of Article 29(1)(e) of the LRTA. The writing of this decision is governed by the orthography prior to the Orthographic Agreement of 1990.

[1] By way of illustration, we highlight the Judgment rendered in proceedings no. 047/15, of 09/09/2015, according to which: "I - With respect to properties in vertical ownership, for purposes of the incidence of Stamp Duty (Item 28.1 of the GTSD, as amended by Law no. 55-A/2012, of 29 October), the subjection is determined by the combination of two factors: residential allocation and the taxable real property value contained in the register equal to or greater than €1,000,000. II - Where a property is constituted in vertical ownership, the incidence of Stamp Duty must be determined, not by the taxable real property value resulting from the sum of the taxable real property value of all divisions or floors capable of independent use (individualized in the property article), but by the taxable real property value attributed to each of such floors or divisions intended for residential use.", available at www.dgsi.pt

[2] See Andreia Gabriel Pereira, "The «Luxury Houses» and Stamp Duty. Commentary on the Judgment of the Supreme Administrative Court (2nd Section), of 5 February 2015, rendered in proceedings no. 0993/14, Reporting Justice Francisco Rothes", Journal of Public Finance and Tax Law, Year VII, No. 4, July 2015, pp. 235 et seq.

[3] This wording was amended by Law no. 83-C/2013, of 31 December, although this does not have great relevance to the case at hand.

[4] See Article 23(7), Article 44(5), Article 46(5) and Article 49(3) of the Stamp Duty Code.

[5] See Article 6 of the Municipal Property Tax Code (also of subsidiary application).

[6] "Taxes on Real Estate Assets and Stamp Duty, Commented and Annotated", pp. 159 and 160.

[7] Available in the National Assembly Record DAR, 1st Series no. 9/XII/2012, of 11/10/2012.

Frequently Asked Questions

Automatically Created

What is Verba 28.1 of the Portuguese Stamp Tax General Table and how does it apply to properties worth over €1 million?
Item 28.1 of the General Table of Stamp Duty (Tabela Geral do Imposto de Selo), introduced by Law 55-A/2012 of 29 October, imposes annual Stamp Tax on urban properties for residential use with a patrimonial tax value (valor patrimonial tributário) equal to or exceeding €1,000,000. The tax applies to ownership rights over such properties. Controversy exists regarding its application to properties not constituted under horizontal property ownership (propriedade horizontal) but containing floors or divisions with independent use: whether the threshold applies to each division's individual value or to the aggregate value of all residential divisions within the property.
How is Stamp Tax calculated for buildings with independently used floors or divisions (propriedade vertical)?
For vertical properties (propriedade vertical or total ownership with independently-used divisions), Stamp Tax calculation depends on legal interpretation. The claimant's position argues that each floor or division registered separately in the property registry with its own patrimonial value should be taxed individually only if that specific floor exceeds €1,000,000. The Tax Authority's position maintains that the entire building constitutes a single 'property' under Article 2 of the Municipal Property Tax Code (CIMPT), requiring summation of all residential divisions' patrimonial values, with Item 28.1 applying if the total reaches or exceeds €1,000,000, regardless of individual division values.
Can the Portuguese Tax Authority levy Stamp Tax based on the total patrimonial value of a vertical property instead of individual units?
The Portuguese Tax Authority argues it can levy Stamp Tax based on total patrimonial value of vertical properties (full ownership with independent divisions) rather than individual units. The TCA's legal basis includes: (1) Article 2(1) of the CIMT defines 'property' as the whole unit; (2) Article 2(4) creates an exception only for autonomous fractions under horizontal property regime, treating them as separate properties; (3) For non-horizontal property buildings, separate registry entries for divisions serve administrative purposes under the CIMT but do not fragment the property into multiple taxable units; (4) Separate registration reflects functional autonomy for valuation coefficients (residential vs. commercial use) but maintains the property's unity for tax purposes. The TCA contends this interpretation accords with the legality principle governing its activities.
What was the outcome of CAAD arbitration process 495/2016-T regarding Stamp Tax on inherited property?
The provided excerpt of CAAD arbitration process 495/2016-T does not include the final decision. The text presents the claimant's arguments (challenging €10,362.20 in Stamp Duty assessments on inherited property, arguing individual floor values below €1,000,000 preclude Item 28.1 application) and the Tax Authority's response (defending aggregation of residential divisions' values for properties not under horizontal ownership regime). The arbitral tribunal was constituted on 10/11/2016, with both parties waiving the hearing and optional pleadings. However, the excerpt ends mid-sentence during the TCA's position statement, before presenting the tribunal's legal analysis, factual findings, or ruling on the assessment's legality.
What legal grounds support taxing individual units rather than the entire building under Portuguese Stamp Tax law?
Legal grounds supporting individual unit taxation rather than whole-building aggregation include: (1) The Municipal Property Tax Code (CIMT) requires each floor or division capable of independent use to be 'considered separately in the property register' (Article 6 and related provisions); (2) Each division receives its own distinct patrimonial tax value inscription in the registry; (3) Item 28.1's reference to 'patrimonial tax value...inscribed in the registry' arguably directs attention to each registered value individually; (4) The principle that tax incidence rules should be interpreted strictly, not extensively; (5) Horizontal property fractions are taxed individually despite being parts of larger buildings, suggesting physical divisions with independent use merit separate treatment; (6) Registry separation reflects genuine legal and economic autonomy of each division. However, these arguments conflict with Article 2's definition of 'property' and the CIMT's structural distinction between horizontal property (explicitly excepted) and other property forms.