Process: 502/2015-T

Date: March 12, 2016

Tax Type: Selo

Source: Original CAAD Decision

Summary

This CAAD arbitral case (Process 502/2015-T) addresses a critical issue in Portuguese Stamp Tax law: whether Verba 28.1 of the Tabela Geral do Imposto do Selo (TGIS) applies to the aggregate value of a vertical ownership property or to each independent unit separately. The taxpayer challenged Stamp Tax assessments totaling €13,239.20 for 2014 on an urban property comprising 18 independent units (16 residential) with a combined taxable value of €1,385,630. Crucially, no individual unit exceeded €1,000,000. The claimant argued that the taxable base should mirror the IMI (Real Estate Tax) approach, treating each independent unit separately rather than aggregating values. This interpretation would exempt the property since individual units fall below the €1,000,000 threshold. The Tax Authority contended that vertical ownership properties must be valued as a whole, with the taxable property value being the sum of all independent units. A preliminary jurisdictional issue arose regarding CAAD's competence to review Stamp Tax assessments versus payment notices. The tribunal had to determine whether it could adjudicate the legality of assessment acts under Article 2 of the LRAT. This decision has significant implications for owners of multi-unit properties in vertical ownership, particularly regarding the interpretation of legislative intent behind Verba 28.1, which targeted properties worth over €1,000,000, and whether this means individual units or aggregate property values.

Full Decision

ARBITRAL DECISION

I. REPORT

A..., Tax Identification Number..., resident in Street..., no...., in Lisbon, (hereinafter referred to only as the Claimant), submitted, on 28-07-2015, a request for constitution of a singular arbitral tribunal, pursuant to articles 2º and 10º of Decree-Law no. 10/2011, of 20 January (Legal Regime of Arbitration in Tax Matters, hereinafter referred to only as LRAT), in conjunction with subsection a) of article 99º of the Tax Procedural Code, in which the Tax and Customs Authority is the Respondent (hereinafter referred to only as the Respondent).

The Claimant requests the annulment of the Stamp Tax assessments for the year 2014, with reference to item 28.1 of the General Table of Stamp Tax (hereinafter, GTST) relating to the urban property in vertical ownership located at Ave..., no...., in..., ..., registered in the urban property matrix of the union of parishes of...,... and... under article....

The Claimant also requests the condemnation of the Respondent to reimburse the tax unduly paid, corresponding to the first installment, payable during the month of April 2015.

The request for constitution of the arbitral tribunal was accepted by the Honorable President of CAAD on 29-07-2015 and notified to the Tax and Customs Authority on that same date.

Pursuant to the provisions of subsection a) of paragraph 2 of article 6º and subsection b) of paragraph 1 of article 11º of the LRAT, the Ethics Council appointed the undersigned as arbitrator of the singular arbitral tribunal, who communicated acceptance of the task within the applicable time period.

On 05-10-2015 the Parties were duly notified of this appointment, and did not manifest the will to refuse the appointment of the arbitrator, pursuant to the combined provisions of article 11º paragraph 1, subsections a) and b) of the LRAT and articles 6º and 7º of the Code of Ethics.

In accordance with the provisions of subsection c) of paragraph 1 of article 11º of the LRAT, the singular arbitral tribunal was constituted on 20-10-2015.

Notified to respond, the Respondent submitted the corresponding answer, raising the lack of jurisdiction of this tribunal to assess the claim submitted by the Claimant.

The Claimant was granted a period to pronounce itself in writing on the exception raised, which it did. With this application, the Claimant attached to the file the payment documents of the second and third installments of the Stamp Tax assessed, requesting the update of the economic value of the claim to € 13.329,20.

By order of 24-01-2016 the meeting provided for in article 18º of the LRAT was dispensed with, and the parties were granted a period to submit successive written statements.

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The Claimant alleges, briefly, that there was an error of fact and law in the assessment of the disputed tax by taking as a factual assumption the total aggregated value of the parts susceptible of independent use that compose the property and not the individual value of each of those same parts. By express referral of the law, the base of incidence of Stamp Tax of item 28.1 of the GTST should be the same as that of the Real Estate Tax (IMI). In this measure, being a property in vertical ownership composed of units susceptible of independent use intended for housing, the taxable property value relevant for purposes of Stamp Tax assessment will be that of each one of them individually considered and not their sum, as it appears from the payment notices sent to the Claimant. This same results from the fact that in the context of IMI there is no distinction between properties in horizontal and vertical ownership, all being subject to the same rules of registration in the matrix, assessment and evaluation.

Furthermore, the application of the law that the Respondent is making violates the very ratio legis resulting from the discussion of draft law no. 96/XII in the Assembly of the Republic in which it was found that the new Stamp Tax would impact "houses worth equal to or more than 1 million euros" and not on properties worth more than 1 million euros.

In response, the Respondent begins by invoking the exception of lack of jurisdiction of this tribunal by considering that the Claimant seeks the assessment of the legality of a payment component of an assessment act and not the assessment of the legality of the assessment itself. In this measure, taking into account that, pursuant to article 2º of the LRAT, arbitral tribunals can only pronounce on the legality of assessment acts and acts of determination of taxable matter, one must conclude that this tribunal lacks jurisdiction to assess the claim made. Without prejudice, and as regards the substantive issue, the Respondent maintains, briefly, that in properties not subject to horizontal ownership, the units susceptible of independent use have no autonomy; the autonomization for purposes of registration in the matrix and assessment does not contend with their legal-tax nature, with the law determining that the value of the property will necessarily correspond to the sum of the value of the various independent units. Units of independent use cannot be considered as "properties" in accordance with the legal definition, so they cannot be relevant for purposes of incidence of item 28.1 of the GTST. For purposes of this norm, one must take into account the taxable property value of the property in vertical ownership which will correspond, pursuant to the law, to the sum of the values of each unit susceptible of independent use. It concludes, therefore, that the contested assessments are legal and, for that reason, should be maintained.

Called upon to pronounce itself on the exception raised, the Claimant defends that it is unequivocal from the initial petition submitted that the object of these proceedings refers to the Stamp Tax assessment acts for the year 2014 and not to the payment notices of the first installment, so the exception raised will not hold. In addition, the Claimant requests the attachment to these proceedings of the collection documents of the second and third installments of the assessed tax, expanding the request for condemnation of the Respondent to reimburse the corresponding amounts and updating the economic value of the arbitral claim to € 13.239,20.

III. PRELIMINARY RULING

The Arbitral Tribunal was duly constituted and has jurisdiction.

The parties have legal personality and capacity and are legitimate (articles 4º and 10º, paragraph 2, of the same instrument and article 1º of Order no. 112-A/2011, of 22 March).

The proceedings have no defects.

IV. FACTUAL MATTER

A. Proven Facts

The following facts are considered proven:

  1. During the year 2015, the Claimant was notified to proceed with payment of collection documents nos. 2015..., 2015..., 2015..., 2015..., 2015..., 2015..., 2015..., 2015..., 2015..., 2015..., 2015..., 2015..., 2015..., 2015..., 2015..., 2015..., 2015..., 2015..., 2015..., 2015..., 2015..., 2015..., 2015..., 2015..., 2015..., 2015..., 2015..., 2015..., 2015..., 201..., 2015..., 2015..., 2015..., 2015..., 2015..., 2015..., 2015..., 2015..., 2015..., 2015..., 2015..., 2015..., 2015..., 2015..., 2015... and 2015..., in the total amount of € 13.239,20.

  2. The identified payment notices relate to the Stamp Tax for the year 2014, item 28.1 of the GTST, assessed with reference to the urban property in vertical ownership located at Ave..., no...., ..., ..., registered in the urban property matrix of the union of parishes of...,... and... under article....

  3. The identified property has a taxable property value of € 1.385.630,00.

  4. The identified property is composed of 18 units susceptible of independent use, 16 of which are intended for housing.

  5. None of the units susceptible of independent use intended for housing has a taxable property value exceeding € 1.000.000.

  6. The installments payable in April and July 2015 were fully paid within the respective legal periods.

B. Unproven Facts

No other facts with relevance to the arbitral decision were proven.

C. Justification of Factual Matter

The factual matter given as proven is based on the documentary evidence invoked and not contested.

V. LEGAL MATTER

A. On the Exception of Lack of Jurisdiction

For an adequate assessment of the exception raised, it is necessary, first of all, to determine and delimit in concrete terms the object of the arbitral pronouncement request.

Thus, pursuant to the request presented, it is concluded that the Claimant intends the annulment of the Stamp Tax assessment acts of item 28 of the GTST that gave rise to the identified payment documents.

This same results from the text of the initial petition presented in which the Claimant informs that "(…) on the taxable property value of the floors mentioned above (with exception of the basements), the TA assessed stamp tax with reference to the year 2014, pursuant to item 28.1 of the General Table of Stamp Tax – hereinafter called GTST – as amended by Law no. 83-C/2013" (see article 8º of the i.p.). It further states that "It is with these assessment acts that the claimant does not conform, since it understands, by force of the reasons to be presented below, that those are illegal" (see article 11º of the i.p.).

It also results, unequivocally, from the final claim deduced in which the Claimant concludes, briefly, that "For all these reasons and furthermore for what will be learnedly supplemented, the arbitral pronouncement request should be judged as having merit, thereby annulling the contested assessment acts and determining the restitution to the claimant of the amounts paid by him" (see article 50º of the i.p.).

Contrary to what the Respondent seems to conclude, the Claimant did not request the annulment of the identified payment notices in the proceedings – although such annulment is a consequence of the merit of the declaration of illegality of the contested assessment acts – but rather the annulment of the tax assessments that are at their origin. As far as this tribunal can conclude from the Claimant's request, what is at issue is the illegality of the assessment underlying the payment notices of the Stamp Tax installments identified and not the illegality of the collection documents themselves.

In the view of this tribunal, the interpretation that the Respondent makes of the claim submitted by the Claimant has no support – not even literal – in the procedural documents produced, so it cannot hold.

The object of this action is, therefore, the set of assessment acts that gave rise to the payment notices attached to the file. And as assessment acts that they are, they can be the object of judicial challenge under subsection a) of paragraph 2 of article 95º of the General Tax Code and subsection a) of paragraph 1 of article 97º of the Tax Procedural Code, or of a request for arbitral pronouncement under subsection a) of paragraph 1 of article 2º of the LRAT, with a view to assessing its legality.

Given the above, considering that the object of the present request for arbitral pronouncement are actual assessment acts, it is concluded that the exception of lack of jurisdiction raised by the Respondent is unfounded.

B. On the Illegality of the Stamp Tax Assessments

The essential issue to be decided in this dispute concerns the determination of the base of incidence of Stamp Tax, item 28.1 of the GTST, when it is a property in vertical ownership and whose units susceptible of independent use are intended for housing.

In concrete terms, it is necessary to decide whether the taxable property value relevant as a criterion of tax incidence will correspond to (i) the sum of the value of each of the units susceptible of independent use, as the Respondent claims, or (ii) the individual taxable property value of each of those units susceptible of independent use, considered autonomously and by themselves, as the Claimant argues.

The doubt results from the interpretation of items 28 and 28.1 of the GTST, whose wording in force on 31 December 2014 was as follows:

"28. Ownership, usufruct or surface right of urban properties whose taxable property value contained in the matrix, pursuant to the Real Estate Tax Code (RETC), is equal to or greater than € 1.000.000 - on the taxable property value used for Real Estate Tax purposes:

28.1 Per residential property or per land for construction whose building, authorized or foreseen, is for housing, pursuant to the provisions of the Real Estate Tax Code – 1%"

The legislator did not take care to establish the legal concept of "residential property," having expressly provided that all matters not regulated in the Stamp Tax Code with reference to said item 28 of the GTST would be applied subsidiarily the provisions of the Real Estate Tax Code (See paragraph 2 of article 67º of the Stamp Tax Code). It is necessary, then, to look in the Real Estate Tax Code for such concept so that one can conclude on the base of incidence of item 28.1 of the GTST.

The legal definition of "property" is contained in article 2º of the Real Estate Tax Code, clarifying in paragraph 4 that "For purposes of this tax, each autonomous fraction, in the horizontal ownership regime, is deemed to constitute a property."

From the reading of this article, and in particular the mentioned paragraph 4, one would be led to conclude that, for purposes of the Real Estate Tax, an autonomous fraction of property in horizontal ownership assumes the nature of "property" whereas a unit susceptible of independent use of a property in vertical or total ownership will not assume such nature, having no legal-tax autonomy.

As a result of this difference in framing, it would be defensible that, for purposes of item 28.1 of the GTST, each autonomous fraction should be considered as a "property," so there would only be grounds for the payment of such tax if, intended for housing, the same had a taxable property value exceeding the indicated amount. In the case of property in total ownership, the taxable property value to be considered for purposes of determining incidence would result from the sum of the taxable property values of each independent unit intended for housing – see subsection b) of paragraph 2 of article 7º of the Real Estate Tax Code. This is the position of the Respondent.

However, it so happens that in a comparative analysis of the Real Estate Tax regime applicable to autonomous fractions of property in horizontal ownership and to units susceptible of independent use of property in vertical ownership, it is concluded that there is no difference whatsoever. Indeed, notwithstanding that the formal legal nature is distinct, the tax regime of these figures is exactly the same. Materially, the law establishes no difference, as can be seen:

(i) properties in horizontal and total ownership are subject to the same rules of registration in the matrix, with it being expressly provided in paragraph 3 of article 12º of the Real Estate Tax Code that parts susceptible of independent use are considered separately in the matrix registration which will discriminate their respective taxable property value;

(ii) properties in horizontal and total ownership are subject to the same rules and procedures of assessment, with it being expressly determined in subsection b) of paragraph 2 of article 7º of the Real Estate Tax Code that, if the parts that compose the property in total ownership are economically independent, each part is assessed by application of the corresponding rules.

This identity of regime goes even further, having relevant repercussions at the level of the tax assessment itself, since the legislator determined that the Real Estate Tax assessment should be made with discrimination of the properties, their parts susceptible of independent use and respective taxable property value – see paragraph 1 of article 119º of the Real Estate Tax Code. It is, therefore, the legislator determining that tax assessment should be made individually, considering each economic reality (units susceptible of independent use) and not each legal reality (property or autonomous fraction of property in horizontal ownership).

From this it is concluded that, for purposes of Real Estate Tax, the autonomous fractions of property in horizontal ownership and the parts susceptible of independent use that compose a property in total ownership have exactly the same tax treatment. But more relevant than that: for purposes of Real Estate Tax, the base of incidence of the tax is determined in exactly the same manner, corresponding to the own and individual value of each autonomous fraction or independent part, fixed at the assessment stage and contained in the matrix; the assessment is made in an individualized and autonomous manner based on each of the independent parts of the property, whether or not autonomous fractions.

In the case of properties in total ownership, the Real Estate Tax is not assessed on the basis of the total taxable property value of the property, but on the basis of the individual taxable property value of each autonomous unit that composes it; the total tax bill due corresponds to the sum of the individual tax bills for each autonomous unit, determined based on their respective individual taxable property values. Everything proceeds in exactly the same manner as that applied to the autonomous fractions of property in horizontal ownership.

Furthermore, pursuant to item 28.1 of the GTST, only "residential properties" are subject to taxation. Now, in properties composed of independent units with different purposes and uses – as is verified in the present proceedings, in which the basements of the property are intended for warehouse and parking – the determination of the affectation can only be made based on each of these units and not based on the property as a whole. This same results from subsection b) of paragraph 2 of article 7º of the Real Estate Tax Code. On this aspect, it is appropriate to refer J. Silvério Mateus and L. Corvelo de Freitas, Taxes on Real Estate Property – The Stamp Tax, Annotated and Commented, Engifisco, 1st Edition, 2005, p. 121, note 5, who understand that "The rules provided for in this paragraph 2, relating to the determination of the taxable property value of urban properties with more than one affectation, have to do with the diversity of some of the assessment elements provided for in articles 38º and following of the Real Estate Tax Code, namely (….). On the other hand, this provision is in consonance with the principle of autonomization of the independent parts of an urban property, even if not constituted in horizontal ownership, provided for in paragraph 3 of article 12º." (emphasis ours)

In a situation like this, how would one conclude that the property would be "residential," having parts of it intended for other purposes?

In fact, according to the assessment rules provided for in the Real Estate Tax Code, what has affectation is not the property as a building in its entirety but the autonomous units that compose it, whether they are autonomous fractions or not. It is based on the actual and material use that the affectation of each independent unit or autonomous fraction is determined, with the law not providing for a specific affectation for the property as a building. Each independent unit – whether or not an autonomous fraction – has, therefore, its own affectation which does not "contaminate" the affectation of the property as a whole.

Thus, one cannot argue that "residential property" corresponds to the strict and particular concept of article 2º of the Real Estate Tax Code (covering only, for the purpose we intend, buildings and autonomous fractions of properties in horizontal ownership) since, as demonstrated, it would have no concrete practical applicability (as noted, a property in vertical ownership can have more than one affectation or purpose). In our view, in using this expression the legislator wished to refer to the property as a reality susceptible of affectation, hence to the independent parts that compose each property, whether or not they have the legal nature of autonomous fractions.

It is concluded, therefore, that, for purposes of applying item 28.1 of the GTST, the units susceptible of independent use that integrate a property in the total ownership regime and autonomous fractions are, in substance, identical realities and that, for that reason, are subject to the same regime of incidence.

In that measure, the final part of item 28 of the GTST, in determining that the tax will incide "(…) on the taxable property value used for Real Estate Tax purposes:" expressly refers to the individual value of each independent part that composes the property in total ownership and not to the total value of the property (corresponding to the sum of the individual taxable property values), since it is this individual value that is considered in Real Estate Tax for all purposes.

Furthermore, pursuant to the aforementioned paragraph 7 of article 23º of the Stamp Tax Code, the tax assessment due pursuant to item 28 of the GTST is assessed annually in accordance with the rules provided in the Real Estate Tax Code. And it was exactly these rules that led the Respondent to assess the tax individually for each autonomous unit and considering its respective individual taxable property value. Hence multiple payment notices were issued.

Were the understanding of the Respondent to apply here, there would be only one Stamp Tax assessment per property and not as many assessments as there are units susceptible of independent use.

Finally, it should be noted that this matter has been the subject of various decisions of CAAD, all in this same sense, transcribing here, by way of example, the arbitral decision handed down in proc. 50/2013-T, in the part to which we adhere:

"Therefore, being thus, considering that the registration in the matrix of immovable properties in vertical ownership, constituted by different parts, floors or divisions with independent use, pursuant to the Real Estate Tax Code, follows the same registration rules of immovable properties constituted in horizontal ownership, with their respective Real Estate Tax, as well as the new Stamp Tax, assessed individually in relation to each of the parts, it offers no doubt that the legal criterion for defining the incidence of the new tax must be the same.

Indeed, the TA admits that this is the criterion, which is why the assessment itself issued is very clear in its essential elements, from which it results that the value of incidence is the corresponding to the taxable property value of the 2nd floor and the individualized assessment on the part of the property corresponding to that same floor.

Therefore, if the legal criterion imposes the issuance of individualized assessments for the autonomous parts of properties in vertical ownership, in the same manner as it establishes for properties in horizontal ownership, it clearly established the criterion, which must be unique and unequivocal, for the definition of the rule of incidence of the new tax.

Thus, there would only be grounds for incidence of the new stamp tax if any of the parts, floors or divisions with independent use presented a taxable property value exceeding € 1.000.000,00.

Thus, the TA cannot consider as the reference value for the incidence of the new tax the total value of the property, when the legislator itself established a different rule in the context of the Real Estate Tax Code, and this is the code applicable to matters not regulated as regards item 28 of the GTST.

The criterion sought by the TA, of considering the value of the sum of the taxable property values assigned to the parts, floors or divisions with independent use, with the argument that the property is not constituted in the horizontal ownership regime, finds no legal support and is contrary to the criterion applicable in the context of the Real Estate Tax Code and, by referral, in the context of Stamp Tax.

To which is added the fact that the law itself expressly establishes, in the final part of item 28 of the GTST, that the Stamp Tax to incide on urban properties of value equal to or exceeding €1.000.000,00 – "on the taxable property value used for Real Estate Tax purposes."

In the same sense, reference should be made to the decision handed down in proc. 132/2013-T, from which we transcribe the part that we subscribe to entirely:

"Indeed, it makes no sense to distinguish in the law what the law itself does not distinguish (ubi lex non distinguit nec nos distinguere debemus). Furthermore, distinguishing, in this context, between properties constituted in horizontal and total ownership would be an "innovation" without associated legal support, particularly since, as has been stated here, nothing indicates, neither in item no. 28, nor in the provisions of the Real Estate Tax Code, a justification for that particular differentiation. Note, for example, what article 12º, paragraph 3, of the Real Estate Tax Code says: "each floor or part of a property susceptible of independent use is considered separately in the matrix registration, which also discriminates its respective taxable property value."

The uniform criterion that is imposed is, therefore, the one that determines that the incidence of the rule in question only takes place when any of the parts, floors or divisions with independent use of property in horizontal or total ownership with residential affectation possesses a taxable property value exceeding €1.000.000,00. Fixing as the reference value for the incidence of the new tax the global taxable property value of the property in question, as the now respondent intended, finds no basis in the applicable legislation, which is the Real Estate Tax Code, given the referral made by the cited article 67º, paragraph 2, of the Stamp Tax Code.

Finally, as has been recalled in several Arbitral Decisions (see A.D. no. 48/2013-T and A.D. no. 50/2013-T), it is not seen, in the works relating to the discussion of draft law no. 96/XII in the Assembly of the Republic, the invocation of an interpretive ratio distinct from that presented here. Indeed, such a measure, termed "special tax on residential urban properties of highest value," was justified with the need to comply with the principles of social equity and tax justice, burdening more significantly the holders of properties with high value intended for housing, and, in that measure, making the new "special tax" incide on "houses worth equal to or exceeding 1 million euros."

Now, if such logic seems to make sense when applied to «housing» - be it «house», «autonomous fraction» or «part of a property with independent use» / «autonomous unit» -, because it is assumed to have above-average contributory capacity and, in that measure, justifies the need to realize additional contributory effort, it would make little sense to then disregard the determinations "unit by unit" when only through the sum of the taxable property values of the same (because held by the same individual) would the million euros threshold be exceeded.

More recently, in the judgment of 09-09-2015, handed down in proc. no. 047/15 (available at www.dgsi.pt), the Supreme Administrative Court came to confirm what has been the understanding of the arbitrators of the Tax Arbitration Center concluding that: "I. Regarding properties in vertical ownership, for purposes of incidence of Stamp Tax (Item 28.1 of the GTST, as amended by Law no. 55-A/2012, of 29 October), subjection is determined by the combination of two factors: residential affectation and taxable property value contained in the matrix equal to or exceeding € 1.000.000. II. In the case of a property constituted in vertical ownership, the incidence of Stamp Tax should be determined, not by the taxable property value resulting from the sum of the taxable property value of all divisions or floors susceptible of independent use (individualized in the matrix entry), but by the taxable property value assigned to each of those floors or divisions intended for housing."

Given everything stated above, the tribunal concludes that for purposes of applying item 28 of the GTST to properties in total ownership, the same rules of the Real Estate Tax Code provided for properties in horizontal ownership apply, so the taxable property value to be considered for purposes of incidence will be the individual value of each unit susceptible of independent use.

The material substance is what imposes itself as the determinant criterion of contributory capacity and not the mere formal legal reality of the property, so materially, the tax regime applicable to properties in total ownership is exactly the same as that applied to properties in the horizontal ownership regime.

None of the independent units that compose the identified property presents a value exceeding € 1.000.000, so the minimum quantitative requirement for purposes of incidence of item 28.1 of the GTST is not met.

For all these reasons, this tribunal considers the Claimant's claim meritorious, concluding that the Stamp Tax assessment acts due pursuant to item 28.1 of the GTST, with reference to the year 2014, contained in the documents attached to the file suffer from the defect of violation of law, due to error on the factual and legal presuppositions, which justifies their annulment [article 135º of the Code of Administrative Procedure, applicable by force of the provisions of article 2º, subsection c), of the General Tax Code].

VI. DECISION

In accordance with the above, this Arbitral Tribunal decides to judge the request for arbitral pronouncement meritorious as to the request for annulment of the Stamp Tax assessments with reference to the year 2014 contested by the Claimant, ordering their annulment and condemning the Respondent to reimburse the tax unduly paid by the Claimant.

Value of the proceedings: In accordance with the provisions of article 306º, paragraph 2, of the Code of Civil Procedure and 97º-A, paragraph 1, subsection a), of the Tax Procedural Code and 3º, paragraph 2, of the Regulation of Costs in Tax Arbitration Proceedings, the proceedings are assigned the value of € 13.239,20.

Costs: Pursuant to paragraph 4 of article 22º of the LRAT, the amount of costs is fixed at € 918,00, pursuant to Table I attached to the Regulation of Costs in Tax Arbitration Proceedings, to be borne by the Tax and Customs Authority.

Let this arbitral decision be recorded and notified to the parties.

Lisbon, 12-03-2016

The Singular Arbitrator

(Maria Forte Vaz)

Frequently Asked Questions

Automatically Created

Does Stamp Tax under Verba 28.1 of the TGIS apply to the aggregate value of a vertical property or to each independent unit separately?
Under Verba 28.1 of the TGIS, the central dispute is whether Stamp Tax applies to each independent unit separately or to the aggregate property value. The taxpayer argues that since the taxable base references IMI rules, and IMI treats each independent unit individually regardless of horizontal or vertical ownership, each unit should be taxed separately. The Tax Authority maintains that in vertical ownership (without horizontal property regime), units lack legal autonomy, and the property value equals the sum of all independent units. Therefore, if the aggregate exceeds €1,000,000, Stamp Tax applies to the entire property value.
Can a taxpayer challenge Stamp Tax assessments on high-value urban properties through CAAD tax arbitration?
Yes, taxpayers can challenge Stamp Tax assessments through CAAD (Centro de Arbitragem Administrativa) tax arbitration under the LRAT (Legal Regime of Arbitration in Tax Matters). However, a jurisdictional question arose in this case: CAAD tribunals have competence to review the legality of assessment acts (atos de liquidação) and acts determining taxable matter under Article 2 of the LRAT. The Tax Authority argued this case concerned payment notices rather than assessment acts themselves. The tribunal ultimately confirmed its jurisdiction, finding the challenge clearly targeted the Stamp Tax assessment acts for 2014, not merely payment components.
What is the legal basis for contesting Imposto do Selo liquidations on vertical ownership properties under Portuguese tax law?
The legal basis for contesting Imposto do Selo liquidations on vertical ownership properties includes: (1) challenging errors in determining the taxable base under Verba 28.1 of the TGIS; (2) arguing that Article 15(2) of the Stamp Tax Code requires following IMI rules for determining taxable property value; (3) asserting that independent units in vertical ownership should be treated separately, not aggregated; (4) invoking legislative intent from parliamentary debates indicating the tax targeted individual houses worth ≥€1,000,000, not aggregated property values; and (5) filing arbitration requests under Article 10 of the LRAT in conjunction with Article 99(a) of the Tax Procedural Code.
Is the CAAD arbitral tribunal competent to review Stamp Tax assessments related to Verba 28.1 of the Tabela Geral do Imposto do Selo?
Yes, the CAAD arbitral tribunal has competence to review Stamp Tax assessments related to Verba 28.1 of the TGIS. Despite the Tax Authority's preliminary objection claiming lack of jurisdiction, the tribunal confirmed its competence under Article 2 of the LRAT, which grants arbitral tribunals authority to assess the legality of tax assessment acts (atos de liquidação) and acts of determination of taxable matter. The tribunal distinguished between challenging the assessment act itself (within CAAD competence) and challenging mere payment notices (potentially outside competence). Since the claimant explicitly requested annulment of the Stamp Tax assessments for 2014, not just payment notices, the tribunal had full jurisdiction.
How is the taxable base determined for Stamp Tax purposes when a building comprises multiple independent units in vertical property?
For Stamp Tax purposes under Verba 28.1, the taxable base determination for buildings with multiple independent units in vertical property depends on interpreting Article 15(2) of the Stamp Tax Code, which references IMI valuation rules. The taxpayer position argues that each independent unit constitutes a separate taxable property with its own VPT (valor patrimonial tributável), just as in IMI, where vertical and horizontal ownership properties follow identical matrix registration and evaluation rules. The Tax Authority position contends that in vertical ownership lacking the horizontal property regime, independent units have no legal autonomy; therefore, the property's taxable value necessarily equals the sum of all unit values, and this aggregate determines whether the €1,000,000 threshold is exceeded for Verba 28.1 application.