Process: 505/2015-T

Date: December 24, 2015

Tax Type: Selo

Source: Original CAAD Decision

Summary

This CAAD arbitration decision addresses the constitutionality and legality of Stamp Tax (Imposto do Selo) assessments under Verba 28.1 of the General Stamp Tax Schedule (TGIS) for construction land valued over €1 million. The taxpayer, A… S.A., challenged six 2014 stamp tax assessments totaling approximately €23,195, arguing the tax violated constitutional equality principles. The claimant contended that Verba 28 unconstitutionally discriminates among taxpayers and improperly taxes construction land based merely on authorization or intention for housing use, rather than actual housing allocation. The company argued that taxation of an 'expectation' that may never materialize constitutes an error in factual and legal presuppositions, since construction land cannot be inhabited until buildings are completed. The Tax Authority defended the assessments, asserting that Law 83-C/2013 clearly established a 1% stamp tax rate on urban properties with tax asset values of €1 million or more, including residential properties and construction land authorized or intended for housing. The AT argued the €1 million threshold represents a legitimate legislative choice to tax luxury residential properties more heavily, with differentiated treatment justified by property allocation and social function. The authority maintained that proportional ad valorem taxation is constitutionally permitted under Article 104(3) of the Portuguese Constitution, and that treating different property allocations differently respects rather than violates equality principles. The arbitral tribunal, constituted in October 2015, found itself properly constituted with competent jurisdiction, determined the parties had legal standing, identified no procedural defects, and proceeded to adjudicate the merits after waiving the oral hearing.

Full Decision

ARBITRAL DECISION

1. REPORT

1.1. A…, S.A., taxpayer no. …, with tax domicile at …, in Lisbon, filed on 28/07/2015, a request for arbitral determination, in which it petitions for a declaration of illegality of the Stamp Tax assessment acts for the year 2014, corresponding to documents nos. 2015 …, 2015 …, 2015 …, 2015 …, 2015 … and 2015 …, in the amounts of € 4,556.20, € 4,556.20, € 4,556.20, € 3,175.48, € 3,175.46 and € 3,175.46, respectively.

1.2. The Honorable President of the Deontological Council of the Administrative Arbitration Centre (CAAD) designated, on 26/08/2015, the signatory of this decision as sole arbitrator.

1.3. On 21/10/2015 the arbitral tribunal was constituted.

1.4. In compliance with the provisions of Article 17, paragraph 1 of the Legal Framework for Tax Arbitration (RJAT), the Tax and Customs Authority (AT) was notified on 21/10/2015 to, if it so wished, submit a response and request the production of additional evidence.

1.5. On 23/11/2015 the AT submitted its response, accompanied by a request proposing the waiver of the hearing referred to in Article 18 of the RJAT.

1.6. The arbitral tribunal on 24/11/2015 decided to waive the hearing referred to in paragraph 1 of Article 18 of the RJAT, on the grounds of the principle of autonomy of the arbitral tribunal in the conduct of proceedings, inviting both parties to, if they so wished, submit optional written submissions and set a date for pronouncement of the final decision.

1.7. The Claimant and the Respondent did not submit optional written submissions.

2. SANCTION

The arbitral tribunal was regularly constituted and is materially competent.

The parties have legal capacity and standing and are legitimate, with no defects in representation.

There are no nullities, exceptions or preliminary issues that prevent adjudication of the merits and which must be addressed ex officio.

The request for constitution of the arbitral tribunal was filed within the period provided in Article 10, paragraph 1, subparagraph (a) of the RJAT, and is therefore timely.

Consequently, the conditions are met for pronouncement of the final decision.

3. PARTIES' POSITIONS

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

In summary, the Claimant contends that:

a) "Through item 28 of the General Schedule of Stamp Tax, the Government intended to establish a 'special taxation' that applies only to urban properties with a value exceeding 1 million euros.";

b) "Thus, and as resulted from the intervention of the State Secretary for Tax Affairs in the presentation and discussion of Bill no. 96/XII, through this provision the Government sought to promote a 'more equitable tax system', in which taxpayers 'are called to contribute according to their tax capacity.";

c) "Now, '(…) the said item thus aimed to tax the wealth and economic capacity of taxpayers.";

d) "However (…), the taxation achieved with this item is manifestly contrary to constitutional principles, in particular to the principle of equality constitutionally enshrined.";

e) "Now (…), item 28 of the General Schedule of Stamp Tax and the special taxation resulting from it promote differentiated treatment and unjustified inequality among taxpayers, in manifest violation of the principle of equality enshrined in Article 13 of the CRP".

f) "(…) the taxation of 'land for construction' is based on the existence of a mere 'authorization' or a mere 'provision' that the land in question may be built upon and that such construction is intended for housing.";

g) "This taxation is thus based on a mere 'expectation of allocation' which, ultimately, may never be realized.";

h) "In fact, in accordance with the legislator's intent, the special taxation provided for in item 28.1 should apply to properties effectively allocated to housing, specifically 'houses' - not necessarily encompassing 'land for construction' with a 'building, authorized or intended, for housing.' [emphasis by the Claimant];

i) "What the legislator sought to tax were properties with effective 'housing allocation', always associated with 'buildings' or 'constructions', existing ones, since only these could be inhabited - although the wording given to the item in 2014 appears manifestly contrary to the intent that was at the genesis of this taxation.";

j) "This is not necessarily the case with 'land for construction', which does not appear to be capable of being used for housing and will only be if and when the construction authorized and intended for it is built on them - being that, in that case, they would no longer be 'land for construction' but another type of urban property, i.e., 'residential', 'commercial, industrial or for services' or 'other' (…)." [emphasis by the Claimant];

k) In conclusion, "(…) the Stamp Tax assessments, by applying to a mere 'expectation or provision' of construction intended for housing appear manifestly illegal, due to error in the factual and legal presuppositions, and should be promptly annulled.".

Conversely, the AT contends that:

a) "(…) the normative framework on which the assessment now under scrutiny is based corresponds to taxation under Stamp Tax as set out in item 28.1 of the Schedule Annexed to the Stamp Tax Code, as amended by Law no. 83-C/2013, of 31 December, which entered into force on 01.01.2014.";

b) "It follows from that normative framework that Stamp Tax applies (cf. Article 1 of the CIS), at the rate prescribed therein (cf. Article 22 of the CIS), to:

'28 - Ownership, usufruct or surface right of urban properties whose tax asset value recorded in the matrix, pursuant to the Municipal Property Tax Code (CIMI), is equal to or exceeding (euro) 1 000 000 - on the tax asset value used for the purpose of IMI:

28.1 - For residential property or land for construction whose construction, authorized or intended, is for housing, pursuant to the Municipal Property Tax Code - 1%'"";

c) "The fact that the legislator established a value (€1,000,000.00) as the delimiting criterion for the tax incidence, below which the provision of the tax rule is not met, constitutes a legitimate choice by the legislator regarding the definition of the scope of 'luxury residential properties' intended to be taxed more heavily, especially since any other value of similar magnitude would likewise assume an artificial character that is inherent to any quantitative fixing of a level or limit.";

d) "Add further that there is no confusion between this dimension of proportionality of the principle of equality with the classical separation between proportional taxation and progressive taxation, nothing preventing at the constitutional level that the property taxation in question be based on a proportional ad valorem rate (cf. Article 104, paragraph 3 of the CRP).";

e) "But, concluding, succinctly, it follows indisputably that, if the allocation of the property and its respective social function are different, the situation may - and should - be treated differently, as moreover is imposed by the very principle of equality.";

f) "Thus, since the differentiated treatment finds sufficient material justification, the principle of equality is respected, both per se and in its dimension of proportional equality.";

g) "It is therefore to be concluded that the assessment in question embodies a correct interpretation and application of law to facts, suffering from no defect of violation of law, whether of the CRP or the CIS, and consequently, the Claimant's claim should be dismissed and the Respondent Entity should be absolved of the petition.".

4. FACTUAL MATTERS

4.1. FACTS DEEMED PROVEN

In light of the documents admitted into the proceedings, the following facts are deemed proven:

4.1.1. The Claimant is the sole owner of urban properties of the type "land for construction" located in the parishes of … and …, councils of … and …, district of Porto, registered in the matrix under entries … and …, respectively.

4.1.2. The tax asset value (VPT) of the urban properties in question amounted, at the date of the assessments in question, to € 1,366,860.00 and € 1,114,640.08, respectively.

4.1.3. The voluntary payment period for the 2014 Stamp Tax assessment (document no. 2015 …), in the amount of € 4,556.20, ended on 30/04/2015.

4.1.4. Voluntary payment of the 2014 Stamp Tax assessment (document no. 2015 …), was made on 20/04/2015.

4.1.5. The voluntary payment period for the 2014 Stamp Tax assessment (document no. 2015 …), in the amount of € 4,556.20, ended on 31/07/2015.

4.1.6. Voluntary payment of the 2014 Stamp Tax assessment (document no. 2015 …), was made on 07/07/2015.

4.1.7. The voluntary payment period for the 2014 Stamp Tax assessment (document no. 2015 …), in the amount of € 4,556.20, ended on 31/11/2015.

4.1.8. The voluntary payment period for the 2014 Stamp Tax assessment (document no. 2015 …), in the amount of € 3,715.48, ended on 30/04/2015.

4.1.9. Voluntary payment of the 2014 Stamp Tax assessment (document no. 2015 …), was made on 20/04/2015.

4.1.10. The voluntary payment period for the 2014 Stamp Tax assessment (document no. 2015 …), in the amount of € 3,715.46, ended on 31/07/2015.

4.1.11. Voluntary payment of the 2014 Stamp Tax assessment (document no. 2015 …), was made on 07/07/2015.

4.1.12. The voluntary payment period for the 2014 Stamp Tax assessment (document no. 2015 …), in the amount of € 3,715.46, ended on 30/11/2015.

4.2. FACTS NOT DEEMED PROVEN

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

5. LAW

5.1. (IL)LEGALITY OF THE 2014 STAMP TAX ASSESSMENT ACT

In the case at hand, the fundamental issue for appraisal by the arbitral tribunal consists in determining whether or not the taxation is in conformity with Item no. 28 of the General Schedule of the Stamp Tax Code ("General Schedule") with the principles inherent in fundamental law.

On this matter, it is important, first of all, to bear in mind the tenor of the Judgment of the Constitutional Court no. 590/2015, Case no. 542/14, of 11 November 2015[1], precisely, on the issue of unconstitutionality of Item no. 28 of the General Schedule, added by Law no. 55-A/2012, of 29 October and its paragraph 1, added by Law no. 55-A/2012, of 29 October and, subsequently, amended by Law no. 83-C/2013, of 31 December, specifically regarding the violation of the principles of tax equality, tax capacity and proportionality.

This is case law that we also embrace here, as we agree with it entirely, as follows:

"The appellant contends that the provision in question merits constitutional censure, for violation of the principles of proportionality, equality and tax capacity, fundamentally from the consideration, on the one hand, that the measure is not apt for the stated purpose and, on the other, that it affects arbitrarily only some owners of some property.

Different was the understanding of the Arbitral Tribunal appealed from, to which the Respondent Tax and Customs Authority adhered in the present appeal. After enumerating the various legal controversies raised by item 28 of the TGIS and analyzing the evolution of property taxation, the decision appealed from ruled out the violation of the principles of equality and tax capacity, endorsing the understanding adopted in the decision of case no. 50/2014-T of CAAD, which it transcribed, notably in the following excerpts:

'[T]he legislator in introducing this legislative innovation considered as a determining element of tax capacity urban properties with housing allocation, of high value (luxury), more precisely, of value equal to or greater than €1,000,000.00, over which a special rate of stamp tax began to apply, intending to introduce a principle of taxation on wealth externalized in the ownership, usufruct or surface right of urban properties of luxury with housing allocation. For this reason, the criterion was the application of the new rate to urban properties with housing allocation, whose VPT is equal to or greater than €1,000,000.00'.

'[...] The justification for the measure designated as "special tax on residential urban properties of highest value" is based on the invocation of the principles of social equity and fiscal justice, calling to contribute more intensely the holders of properties of high value intended for housing, with the new special rate applying to "houses with value equal to or greater than 1 million euros". Clearly the legislator understood that this value, when imputed to a residence (house, autonomous fraction or apartment with independent use) reflects a tax capacity above average and, as such, capable of determining a special contribution to ensure fair distribution of the fiscal burden'.

Principles of tax equality and tax capacity

Let us then proceed to appraise the parameter of constitutionality to which the appellant dedicated the greatest part of its argument, founded on the principles of tax equality and tax capacity (Articles 13, 103 and 104 of the Constitution).

The constitutional principle of tax equality, as a specific expression of the general structuring principle of equality (Article 13 of the Constitution), finds concrete expression "in the generality and uniformity of taxes. Generality means that all citizens are subject to the payment of taxes [...]; in turn, uniformity means that the distribution of taxes among citizens obeys the same identical criterion for all" (TEIXEIRA RIBEIRO, Lectures on Public Finance, 5th edition, p. 261). And such criterion, as emphasizes CASALTA NABAIS, is found in the principle of tax capacity: "This thus implies equal tax for those with equal tax capacity (horizontal equality) and different tax (in qualitative or quantitative terms) for those with different tax capacity in proportion to this difference (vertical equality)" (Tax Law, 7th edition, 2012, p. 155). As a presupposition and criterion of taxation, the principle of tax capacity "on the one hand, constituting the ratio or cause of taxation removes the fiscal legislator from arbitrary action, obliging him that in the selection and articulation of tax facts, he adheres to revelations of tax capacity, that is, he establishes as the object and taxable matter of each tax a certain economic presupposition that is a manifestation of such capacity and is present in the various legal hypotheses of the respective tax" (CASALTA NABAIS, op. cit., p. 157).

This has been affirmed by the Constitutional Court, an example of which is Judgment no. 84/2003:

'The principle of tax capacity expresses and concretizes the principle of fiscal or tax equality in its aspect of "uniformity" – the duty of all to pay taxes according to the same criterion – with tax capacity fulfilling the unitary criterion of taxation', understanding this criterion as being that in which 'the incidence and distribution of taxes – of "fiscal taxes" more precisely – should be made according to the economic capacity or "capacity to spend" [...] of each one and not according to what each one may eventually receive in goods or public services (benefit criterion). [...] Notwithstanding the silence of the Constitution, it is a generalized understanding of doctrine that "tax capacity" remains a basic criterion of our "fiscal Constitution" and that it can (or should) be reached from the structuring principles of the fiscal system formulated in Articles 103 and 104 of the CRP [...]'.

This Court has, however, noted that the principle of tax capacity does not dispense with the concurrence of other constitutional principles. As noted in Judgment no. 711/2006, 'it is clear that the "principle of tax capacity" must be reconciled with other principles with constitutional dignity, such as the principle of the Social State, the freedom of configuration of the legislator, and certain requirements of practicability and cognoscibility of the tax fact, also indispensable for the fulfillment of the purposes of the fiscal system'. And it continues: 'To ascertain, however, the existence of a particularism sufficiently distinct to justify an inequality of legal regime, and to decide on the circumstances and factors to be regarded as relevant in this appraisal, is a task that primarily falls to the legislator, who holds the primacy of concretization of constitutional principles and the corresponding freedom of configuration. For this reason, the principle of equality presents itself fundamentally to legal operators, in the seat of control of constitutionality, as a negative principle [...] – as a prohibition of arbitrary action'.

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

The appellant's argument places itself in this latter plane, responding negatively to the inquiry about the rationale for the taxation under scrutiny, fundamentally by assuming, in its view, a non-systematic and arbitrary character, from the consideration that the taxation of real property should be done under IMT and IMI, and by discriminating without rational foundation taxpayers with the same tax capacity. Without reason, be it said.

From the outset, the fact that the taxation under analysis falls within the scope of Stamp Tax, and not other types of taxes, does not, in itself, result in a breach of any constitutional parameter of constitutionality. Even if it were to be concluded that the introduction of a factor of incoherence, or even imbalance, in the system of taxation of real property had occurred, as the appellant claims, the mere non-systematicity of the provision in question is not apt to determine constitutional censure (cf., even in other fields of regulation, Judgments no. 353/2010 and 324/2013).

Note, however, that the incidence of Stamp Tax, marked by heterogeneity, refers here, as to essential elements of the tax assessment, namely as to the normative criteria defining the property value to be considered, to the regulation contained in the IMI Code, ensuring, or at least promoting, a certain degree of harmony between the various legislative bodies in the scope of property taxation. Doctrine itself attributes to it the condition of "additional IMI tax", directed to "discriminate properties of higher property value and subject them to a more onerous fiscal regime than the others" (JOSÉ MARIA FERNANDES PIRES, op. cit., p. 504), explaining the creation of a new taxable event under Stamp Tax, beyond the heterogeneity that marks this tax, by the need to increase the State's tax revenues, given that IMI revenue reverts to the municipalities and Stamp Tax is a State revenue (op. cit., p. 506).

Surely, one could conceive of other avenues available to the legislator, possibly through resort to other tax species, but it is no less certain that the option taken finds inscription in the broad margin of configuration of the fiscal legislator, being incapable of founding autonomous constitutional censure.

Neither is there found in the tax incidence provision under scrutiny an arbitrary fiscal measure, because devoid of rational foundation. As has been seen, the legislative change had as its purpose the broadening of property taxation, causing it to fall more intensely on ownership which, by its value considerably higher than that of the generality of urban properties with housing allocation, reveals greater indicators of wealth and, as such, is capable of founding the imposition of additional contribution for the sanitation of public accounts on its holders, in realization of the aforementioned "principle of social equity in austerity".

The appellant states that the provision in question is "inequitable" and advances with two hypothetical cases which, in its view, make manifest the violation of the principles of tax equality and tax capacity.

The first case compares two taxpayers, in which one has "property with a value of about one million two hundred and fifty thousand euros" and bears Stamp Tax by way of the tax incidence provision of item no. 28, and another who, by "possess[ing] property with a value of 20 million euros but has, in that sum, no real property with tax asset value exceeding 1 million" does not bear any taxation. From this it follows, it contends, an "unjustified vertical inequality" among taxpayers.

However, the proposed comparison does not find place, as it departs, in the tertium comparationis elected, from the structure of the provision under analysis. The taxation resulting from the tax incidence provision housed in item no. 28 assumes the nature of a partial tax (thus, JOSÉ MARIA FERNANDES PIRES, op. cit., p. 507), taking as the taxable base the urban property allocated to housing, calculating the respective tax asset value per relevant legal and economic unit. It is not a general tax on property, or even a tax on all real property, so as to found a comparison rooted in a perspective of personalization of the tax and based on a basis that regards all the property of the tax subject.

It is to be noted that the Constitution does not impose on the legislator the creation of a general tax on property, attributing to taxation on property the function of contributing to equality among citizens (Article 104, paragraph 3, of the Constitution), the legislator being free as to the solution to adopt. It may, as notes CASALTA NABAIS, in pursuance of such constitutional objective, "proceed to discrimination of patrimonies, taxing the highest and exempting the lowest or adopting progressive rates" (op. cit., p. 436). And, even if one could extract from the principle of tax capacity a model of a general tax on property with a taxable base extended to all manifestations of wealth, the obstacles of practicability opposed to it are capable of conducting in reality to the creation of inequalities among taxpayers. As SÉRGIO VASQUES notes (Tax Capacity, Income and Property, in Fiscal Matters, 2005, no. 23, p. 44):

'[A]nd where such taxes have been instituted – and there are not many cases – their application has been marred by the grossest fraud, producing thereby an inequality among taxpayers that cannot be tolerated. The equality of a tax is measured by the results of its application and when the legislator knows in advance that it cannot tax any manifestation of wealth with effective equality, it should then refrain from subjecting it to tax.

We can therefore conclude by saying that the principle of tax capacity has a useful and precise content in the configuration of taxes on property but that the model to which it points, that of a tax on net global property, produces in practice breaks in equality greater than the gains it brings. When one affirms that there is no room in modern fiscal systems for a tax on global property alongside VAT and personal income tax this may well be true – not by force of the principle of tax capacity, which claims it, but for reasons of practicability that are foreign to it.'

Thus, the assessment of respect for the principle of fiscal equality in its material dimension requires to be referred to the unit of property allocated to housing, which entails the conclusion that in the first case there is no arbitrary discrimination among taxpayers in the uniform operation of the relevant substantive criterion, expressed in the attribution to each property with housing allocation of tax asset value equal to or greater than €1,000,000.00.

As, further, there persists an effective connection between the tax obligation and the economic presupposition selected as the object of the tax, without infringing the principle of tax capacity, whose scope, not being excluded, diminishes in the scope of property taxation, compared to what happens in income taxation (thus, SÉRGIO VASQUES, Manual of Tax Law, Coimbra, 2011, p. 254). In effect, the appellant does not dispute that the tax asset value on which the tax incidence depends is reached only by urban properties with housing vocation of higher economic significance, externalizing levels of wealth corresponding to the highest standards of Portuguese society.

It is to be noted that the existence of distinct application results before values very similar – by excess or by default – of a quantitative expression stipulated normatively as a limit – positive or negative – of any legal effect is inherent to its fixation by the legislator. Whether in the definition of tax incidence, whether in the enactment of exemptions or tax benefits based on value criteria, it is always possible to find examples of taxpayers with differentiated treatment based on a very small quantitative variation.

For being necessarily thus, the differentiation involved (…) does not show itself devoid of rational foundation, in accordance with the scope, structure and nature of the provision under analysis: aimed at increasing the taxation of properties with housing allocation of high value, the fiscal measure could not but determine, by imperative of the principle of fiscal legality, the concrete property value from which a special rate of Stamp Tax began to apply on such properties, which also rules out, at this point, the verification of arbitrariness on the part of the legislator.

Principle of proportionality

As regards the violation of the principle of proportionality, pointed out by the appellant (…) as a corollary of the violation of the principles discussed above, the lack of reason of the appellant is evident. In effect, the appellant sustains in allegations, even if for the purpose of another parameter, that there is not, in the case, an adequate means-end relationship, because the revenue collected with this tax has "no relevant significance", being the value collected in 2012 "necessarily a scarce revenue" (cf. fls. 16 and 17 of the allegations, at fls. 301 and 302 of the proceedings).

The reasoning takes, however, as a premise something that does not correspond to the purpose of the provision: the legislator did not aim to achieve only by this means the objective of rebalancing public accounts, admittedly difficult. It intended, as has been seen, to broaden the taxable base to wealth externalized in the ownership of urban properties intended for housing of high value and, from the perspective of promotion of budgetary consolidation, as an instrument for obtaining more revenue and, correspondingly, for relief of the effort that might fall on other sources of revenue or on the reduction of public expenditure, with a view to meeting public deficit targets, there is no doubt that the amounts of Stamp Tax collected by way of the incidence provided for in item no. 28, whatever their amount, are apt and apt to realize the purposes of extended distribution of effort in a period of additional fiscal and financial sacrifices that the legislator sought to achieve. As, as a fiscal measure directed to affect more intensely the holders of real rights of enjoyment over urban properties with housing vocation and of higher value, within reach only of those with high economic strength, there are no reasons to conclude from the violation of the dimensions of necessity or just measure, contained in the principle of proportionality." [emphasis and underline ours].

In light of the foregoing, we are led to conclude that the provision in question does not suffer from any unconstitutionality, there being no violation of the constitutional principles shaping tax law, specifically, the principles of tax equality, tax capacity and proportionality. For this reason, the Claimant's petition is not upheld.

6. DECISION

In these terms and with the justification described above, it is decided to dismiss the request for arbitral determination, absolving the AT of the petition.

7. VALUE OF THE CASE

The value of the case is set at € 24,815.00 (twenty-four thousand, eight hundred and fifteen euros), pursuant to Article 97-A of the Code of Tax Procedure and Process (CPPT), applicable by force of Article 29, paragraph 1, subparagraphs (a) and (b) of the RJAT and paragraph 2 of Article 3 of the Regulation of Costs in Tax Arbitration Proceedings (RCPAT).

8. COSTS

Costs to be borne by the Claimant, in the amount of € 1,530 (one thousand five hundred and thirty euros), pursuant to Table I of the Regulation of Costs in Tax Arbitration Proceedings, pursuant to Article 22, paragraph 2 of the RJAT.

Notify.

Lisbon, 24 December 2015

The Arbitrator,

(Hélder Filipe Faustino)

Document prepared by computer, in accordance with the provisions of Article 131, paragraph 5, of the CPC, applicable by referral of Article 29, paragraph 1, subparagraph (e) of the RJAT.

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

[1] Available at www.dre.pt.

Frequently Asked Questions

Automatically Created

Is Stamp Tax under Verba 28 of the TGIS applicable to construction land valued over one million euros?
Yes, Stamp Tax under Verba 28.1 of the TGIS applies to construction land (terrenos para construção) with a tax asset value of €1 million or more when the authorized or intended construction is for housing purposes. Law 83-C/2013 of 31 December established this taxation at a 1% rate on the property's tax asset value as recorded in the property matrix under the Municipal Property Tax Code (CIMI). The tax applies to ownership, usufruct, or surface rights over such properties, regardless of whether construction has commenced or been completed.
Why was the Stamp Tax on high-value urban properties under Verba 28 challenged as unconstitutional?
The Stamp Tax under Verba 28 was challenged as unconstitutional primarily on equality grounds under Article 13 of the Portuguese Constitution. The claimant argued that the tax creates unjustified differentiated treatment among taxpayers, violating the principle of proportional equality. Specifically, the challenge contended that taxing construction land based on mere authorization or intention for housing constitutes taxation of an 'expectation' rather than actual wealth or effective housing allocation. The claimant maintained that only properties actually used for housing should be subject to this special taxation, not land that cannot yet be inhabited.
What was the CAAD arbitral tribunal's decision on the legality of Stamp Tax assessments for 2014 under Verba 28?
While the complete decision is not provided in the excerpt, the CAAD arbitral tribunal found itself properly constituted with material competence to decide the case. The tribunal determined that the parties had legal capacity and standing, identified no procedural defects or nullities requiring ex officio consideration, and confirmed the arbitration request was timely filed under Article 10(1)(a) of RJAT. The tribunal proceeded to adjudicate the merits after waiving the oral hearing, with both parties presenting written arguments on whether the 2014 Stamp Tax assessments under Verba 28.1 were legal and constitutional.
How does the constitutional principle of tax equity apply to Imposto do Selo on properties exceeding €1 million?
The constitutional principle of tax equity (Articles 13 and 104 of the Portuguese Constitution) requires that taxpayers contribute according to their economic capacity and that similar situations be treated similarly while different situations be treated differently. Regarding Stamp Tax on properties exceeding €1 million under Verba 28, the Tax Authority argued this represents legitimate progressive taxation targeting luxury properties, with differentiated treatment justified by property allocation and social function. The €1 million threshold reflects a legislative policy choice to ensure wealthier taxpayers contribute proportionally more. However, claimants challenged whether taxing construction land (a mere expectation) equally with completed housing violates proportionality and horizontal equity principles.
What is the procedure to challenge Stamp Tax liquidation acts through CAAD tax arbitration in Portugal?
To challenge Stamp Tax liquidation acts through CAAD tax arbitration in Portugal, taxpayers must file a request for arbitral determination (pedido de constituição do tribunal arbitral) within the statutory period established in Article 10(1) of the Legal Framework for Tax Arbitration (RJAT). The procedure includes: (1) submitting the arbitration request identifying the contested acts and legal grounds; (2) appointment of the arbitrator(s) by the President of the Deontological Council; (3) constitution of the arbitral tribunal; (4) notification to the Tax Authority to submit a response; (5) optional hearing or written submissions; and (6) pronouncement of the final arbitral decision. The process offers an alternative to judicial courts for resolving tax disputes.