CAAD 518/2014-T: Stamp Tax on Vertical Property Units Under Verba 28.1 TGIS Annulment

ARBITRAL DECISION

Process no. 518/2014-T

I. Report[1]

1. A..., head of the Undivided Estate of B..., NIF 703.555.332, with domicile at Rua …, Lisbon (hereinafter referred to as the Claimant), filed on 25.07.2014, pursuant to art. 10 of Decree-Law no. 10/2011, of 20 January, as subsequently amended (hereinafter Regime Jurídico da Arbitragem Tributária or RJAT), a request for arbitral pronouncement aimed at the annulment of the assessments concerning Stamp Tax (IS) for 2013 that are the subject of the collection notices with numbers 2014..., 2014..., 2014..., 2014..., 2014..., 2014..., 2014..., 2014..., 2014..., 2014..., 2014... and 2014..., with a value payable relating to the first instalment in the total amount of €5,777.34 and total collection value of €17,331.64, with the Tax Authority and Customs Authority (hereinafter, Defendant or AT) being named as the respondent.

a) Constitution of the Arbitral Tribunal

1. In conformity with articles 5, no. 2, al. a), 6, no. 1 and 11, no. 1, al. a) of the RJAT, the Deontological Council of this Centre for Administrative Arbitration (CAAD) appointed the undersigned as sole arbitrator, who accepted the appointment.

2. Pursuant to the provisions of al. c) of no. 1 and no. 8 of article 11 of the RJAT, in accordance with the communication from the President of the Deontological Council of the CAAD, the Sole Arbitral Tribunal was constituted on 21.10.2014.

b) Procedural History

1. In the request for arbitral pronouncement (hereinafter initial petition or IP), the Claimant requests the declaration of nullity or, if not so held, the annulment, of the twelve Stamp Tax assessments of the year 2013 concerning item 28.1 of the General Table of Stamp Tax (TGIS) that are the subject of the collection notices with numbers 2014..., 2014..., 2014..., 2014..., 2014..., 2014..., 2014..., 2014..., 2014..., 2014..., 2014... and 2014..., from which resulted a total collection value of €17,331.64, with the total amount relating to the first instalment being €5,777.34, further requesting that the amounts paid be reimbursed concerning the assessments made in relation to each of the storeys or parts of independent use in the total value of 5,777.34 € and that the Tax Administration be condemned to compensate the Claimant for the interest on such amounts paid on 28.4.14 at the legal rate and until full reimbursement.

2. The AT presented a response in which it sustains that the contested tax acts did not violate any legal or constitutional provision, and therefore should be maintained.

3. Following a request by the Claimant, based on the fact that it had proceeded, after the preparation of the IP, to the payment of the 2nd instalment, in the total amount of €5,777.15, of the stamp tax relating to the above-identified assessments and subject to the collection notices with numbers 2014..., 2014..., 2014..., 2014..., 2014..., 2014..., 2014..., 2014..., 2014..., 2014..., 2014..., 2014..., by arbitral order of 19.11.2014 the enlargement of the claim was admitted, as the presuppositions established in no. 2 of art. 265 of the CPC were met, subsidiarily applicable by virtue of art. 29, no. 1, e) of the RJAT, since the requested enlargement constitutes an evident development of the original claim.

4. In the same order, the Tribunal, under the provisions of al. c) of art. 16 of the RJAT, decided, following what was requested by the AT in its response and without opposition from the Claimant, that it was not necessary to promote the meeting referred to in art. 18 of the RJAT, as the circumstances provided for in the various paragraphs of no. 1 of this provision were not present. It further decided, without opposition from the Claimant, to dispense with the examination of the witness listed, as well as to dispense with the production of oral arguments, as the positions of the parties were perfectly exposed in their respective pleadings.

The date of 23 February 2015 was, finally, set for the pronouncement of the arbitral decision.

1. The Tribunal was regularly constituted and is competent to appreciate the subject matter of the case (art. 2, no. 1, al. a) of the RJAT), the parties possess legal personality and capacity, have standing (arts. 4 and 10, no. 2 of the RJAT and art. 1 of Ordinance no. 112-A/2011, of 22 March) and are duly represented.

2. The joinder of claims relating to the contested assessments is admissible in view of art. 3, no. 1 of the RJAT, given that the success of the claims depends on the appreciation of the same circumstances of fact and the interpretation and application of the same rules of law, especially the normative statement contained in item 28.1 of the TGIS.

3. The proceedings do not suffer from nullities and no questions have been raised that impede the appreciation of the merits of the case, so the conditions are met for a final decision to be rendered.

c) Issues to be Decided

1. The central issue to be resolved on the merits of the dispute concerning the claim for declaration of illegality of the contested assessments relates to determining whether, for purposes of the incidence of item 28.1 of the General Table of Stamp Tax (TGIS), in cases of a property in total ownership with storeys or divisions capable of independent use, one should consider the total value of the property resulting from the sum of the taxable patrimonial values of the various storeys or divisions with residential use, as underlies the assessments in question, or whether one should instead give relevance to the taxable patrimonial value of each storey or division with residential use, as the Claimant invokes in its IP, with consequent violation of law, by error in the presuppositions, of the contested assessments.

2. In addition to the matter concerning this defect of violation of law, the issue of the unconstitutionality of the said item 28.1 of the TGIS is also raised in the IP, due to violation of the principle of equality.
   Only, however, will it be important to appreciate this issue if and to the extent that the interpretation and concretization of the solution resulting from the mentioned item involves the subsumption to its respective legal provision of the situation that is the subject of these proceedings; if this does not occur, the appreciation of the unconstitutionality of the norm in question does not assume procedural relevance in order to resolve the dispute.

II. Decision on the Facts and its Motivation

1. Having examined the documentary evidence produced, the Tribunal deems proved, with relevance for the decision of the case, the following facts:

I. The Undivided Estate of B..., of which the Claimant is the head of household (in accordance with the deed of heirship filed as doc. no. 1 to the IP), comprises the urban property, not subject to the horizontal property regime, located at …, in Lisbon, inscribed in the urban real estate matrix of the parish of … under article … (cfr. the competent urban property record).

II. The said urban property constitutes a "property in total ownership with storeys or divisions capable of independent use", with the "total taxable patrimonial value" of €1,799,126.98, being composed of 14 divisions with independent use, namely: storage area, with use for services; C/V, with use for residential purposes, with the taxable patrimonial value of €51,301.52; IND, with use for residential purposes, with the taxable patrimonial value of €52,969.96; L 104B, with use for commercial purposes; RC DT, with use for residential purposes, with the taxable patrimonial value of €149,728.11; RC ES, with use for residential purposes, with the taxable patrimonial value of €122,204.41; 1 DT, with use for residential purposes, with the taxable patrimonial value of €175,927.84; 1 ESQ, with use for residential purposes, with the taxable patrimonial value of €163,312.36; 2 DTO, with use for residential purposes, with the taxable patrimonial value of €175,927.84; 2 ESQ, with use for residential purposes, with the taxable patrimonial value of €163,312.36; 3 DTO, with use for residential purposes, with the taxable patrimonial value of €175,927.84; 3 ESQ, with use for residential purposes, with the taxable patrimonial value of €163,312.36; 4 DTO, with use for residential purposes, with the taxable patrimonial value of €175,927.84; 4 ESQ, with use for residential purposes, with the taxable patrimonial value of €163,312.36, all as set forth in the property record.

III. With reference to the year 2013, assessments of Stamp Tax were issued on 17.03.2014, subject to the collection notices relating to the 1st instalment, in the total amount of €5,777.34, with numbers 2014..., 2014..., 2014..., 2014..., 2014..., 2014..., 2014..., 2014..., 2014..., 2014..., 2014... and 2014... relating to the twelve divisions capable of independent use intended for residential purposes identified above in II, having as a basis the total taxable patrimonial value of the twelve storeys with residential use, corresponding to €1,733,164.80, through the application of the rate of 1% established by item 28.1 of the TGIS to the taxable patrimonial value of each of the divisions capable of independent use, all in accordance with copies of the said collection notices attached to the proceedings which are reproduced herein.

IV. Subsequently, the Claimant was notified of the collection notices relating to the 2nd instalment, in the total amount of €5,777.15, with numbers 2014..., 2014..., 2014..., 2014..., 2014..., 2014..., 2014..., 2014..., 2014..., 2014..., 2014..., 2014..., in accordance with copies attached with the request to enlarge the claim.

V. In all the collection notices indicated above there appears the mention: "Taxable Patrimonial Value of the property - total subject to tax: 1,733,164.80".

VI. The Claimant proceeded on 28.4.2014 to pay the 1st instalment of the tax resulting from the assessments subject to the collection notices identified in no. III, in the total amount of €5,777.34, in accordance with payment vouchers attached to the proceedings.

VII. The Claimant proceeded on 14.7.2014 to pay the 2nd instalment of the tax resulting from the assessments subject to the said collection notices identified in no. IV, in the total amount of €5,777.15, in accordance with payment vouchers attached to the proceedings.

1. There is no other factuality relevant to the decision on the merits in view of the possible legal solutions that must be considered as not proved.

2. The Tribunal's conviction regarding the factuality deemed proved resulted from the examination of the documents contained in the proceedings, as specified in each of the points of the evidentiary matter stated above, it being that the matter of fact is, moreover, not the subject of any disagreement between the parties.

III. On the Law

a) Legal Framework

1. The legal framework immediately relevant to the decision concerns item no. 28 of the TGIS, which was introduced by art. 4 of Law no. 55-A/2012, of 29.10, in the wording applicable ratione temporis (prior to the amendment promoted by Law no. 83-C/2013, of 31.12), the content of which is as follows:

"28 - Ownership, usufruct or right of superficies of urban properties whose taxable patrimonial value appearing in the matrix, pursuant to the Code of Municipal Tax on Real Estate (CIMI), is equal to or greater than (euro) 1,000,000 - on the taxable patrimonial value used for purposes of IMI:

28.1 - For property with residential use - 1%".

1. In addition to this directly applicable normative proposition, the following provisions are also relevant from a hermeneutical perspective:

• in no. 5 of art. 46 of the CIS, pursuant to which: "Where there is to be an assessment of the tax referred to in item no. 28 of the General Table, the collection document shall be issued in the timeframes, terms and conditions defined in article 119 of the CIMI, with the necessary adaptations";

• in no. 2 of art. 67 of the CIS, according to which: "To matters not regulated in this Code concerning item no. 28 of the General Table, the provisions of the CIMI shall apply, subsidiarily".

1. Having regard, from the outset, to the references contained in the provisions cited in the preceding point, it is important to also invoke here the following provisions of the CIMI:

• no. 4 of article 2 of the CIMI: "For purposes of this tax, each autonomous unit, under the horizontal property regime, is considered as constituting a property";

• al. b) of no. 2 of art. 7 of the CIMI: "The taxable patrimonial value of urban properties with parts that can be classified in more than one of the classifications in no. 1 of the preceding article is determined: b) If the different parts are economically independent, each part is valued by application of the corresponding rules, the value of the property being the sum of the values of its parts".

• no. 3 of article 12 of the CIMI: "Each storey or part of a property capable of independent use is considered separately in the matrix inscription which also determines its respective taxable patrimonial value";

• art. 92 of the CIMI, whose nos. 1, 2 and 3 establish, respectively, the following: "Each building under the horizontal property regime corresponds to a single entry in the matrix"; "In the generic description of the building, mention should be made of the fact that it is under the horizontal property regime"; "Each of the autonomous units is described in detail and individualized by the capital letter that corresponds to it in alphabetical order";

• no. 1 of art. 119 of the CIMI which establishes that: "The services of the Directorate-General of Taxes send to each taxpayer, by the end of the month prior to payment, the competent collection document, with a breakdown of the properties, their parts capable of independent use, respective taxable patrimonial value and the collection attributed to each municipality of the location of the properties".

b) Arguments of the Parties

1. To support its request for declaration of illegality of the contested assessments, the Claimant, in its IP, alleges, fundamentally, the following (which is summarized so as to reference only the arguments that assume actual pertinence in view of the case):

i) "The property in question is not constituted under the horizontal property regime", and "Not being subject to that regime, therefore composed of autonomous units, the assessment cannot fall on each of these, under penalty of error on the facts" and "if it were, the legal requirement relating to the taxable patrimonial value would not be met pursuant to art. 4 and Law 55-A/2012 and Item 28 of the General Table of Stamp Tax, since none of the units subject to assessment reaches the taxable patrimonial value of 1,000,000.00 €" (arts. 14 to 17);

ii) "In the case at hand, the property composed of basement, ground floor and 4 storeys, is in vertical ownership and contains 12 parts, storeys or divisions with independent use, of which a large part (but not all) is intended for residential purposes, and none of the storeys intended for residential purposes has a value equal to or greater than 1,000,000.00 €, which is why it must be concluded that the legal presupposition for the incidence of IS provided for in Item 28 of the TGIS is not met" (art. 20);

iii) "if the law requires the issuance of individual assessments for the autonomous parts of properties in vertical ownership or in h.p., the criterion for the incidence of the new tax must be the same, and the present rule would only apply if one of the parts, divisions or storeys with independent use (terminology of the AT itself) had a VPT equal to or greater than one million euros, which is not the case in the proceedings at hand" (art. 24);

iv) "being this the criterion established by the IMI (part, division or storey with independent use) and being this Code applicable to matters not regulated concerning item no. 28 of the TGIS, the AT cannot manifestly consider in the present case the total value of the property for the incidence of this new tax" (art. 25);

v) "It is therefore flagrant illegality and unconstitutionality to consider in the calculation of the value the sum of the VPT attributed to each storey or independent division", and also "flagrant violation of the principle of equality and proportionality in tax matters", because "If the property were under h.p., it would be certain that none of the residential units would be subject to the new tax" (arts. 27 to 29);

vi) "the AT cannot distinguish between two situations (h.p. or vertical p.) where the legislator itself did not do so under penalty of violating the coherence of the tax system, as well as the principle of tax legality provided for in art. 103, no. 2 of the C.R.P. and also the principles of justice, equality and tax proportionality" (art. 33);

vii) "For tax purposes, therefore, the autonomous parts of properties in vertical ownership with residential use should be considered as urban residential properties since they are so considered by the A.T.", "Hence it follows that only when the value of one of these autonomous parts was greater than one million euros should it be taxed under Stamp Tax" (arts. 38 and 39);

viii) "item no. 28, by opening the possibility of taxing in a differentiated manner the ownership of real estate property of equal value held by different persons due to criteria that may contend, without the minimum necessary justification, with, namely, the principle of contributive capacity (such as the "dispersal" or "concentration" of residential real estate property of each person), cannot fail to be considered unconstitutional, due to the violation of the principle of equality" (art. 44).

1. For its part, in its response, the AT sustains, in essence, the following:

i) "from the notion of property of article 2 of the CIMI, only the autonomous units of a property under the horizontal property regime are considered as properties - no. 4 of the cited article 2 of the CIMI"; now, the Claimant is the owner of a property under total or vertical ownership regime, not of 9 [sic] autonomous units, but rather of a single property (arts. 18 to 20);

ii) "what the claimant now seeks is that the AT considers that, for purposes of assessment of this tax, there is an analogy between the total ownership regime and the horizontal property regime", but "to seek that the interpreter and applicator of tax law apply, by analogy, to the total ownership regime, the regime of horizontal property is what is abusive and illegal" because "the interpreter of tax law cannot equate these regimes, in accordance with the rule that the concepts of other branches of law have the meaning in tax law that is given to them in those branches of law" and "tax law contains no lacuna", so one cannot accept "that it be considered that, for purposes of item 28.1 of the General Table annexed to the CIS, the parts capable of independent use have the same tax regime as the autonomous units of the horizontal property regime" (arts. 21 to 28);

iii) "Being the property subject to the total ownership regime, but being physically constituted by parts capable of independent use, tax law attributed relevance to this materiality, evaluating these parts individually, pursuant to article 12 and consequently, pursuant to art. 12, no. 3, of the C.I.M.I., each storey or part of a property capable of independent use is considered separately in the matrix inscription, but in the same matrix, proceeding to the assessment of the IMI taking into account the taxable patrimonial value of each part" (art. 29);

iv) "The unity of the urban property in vertical ownership composed of various storeys or divisions is not, however, affected by the fact that all or some of these storeys or divisions are capable of independent economic use", such property continuing to be only one, "its parts therefore not being legally distinct from the autonomous units under the horizontal property regime" (arts. 35 and 36);

v) "The fact that the IMI has been calculated based on the taxable patrimonial value of each part of a property with independent economic use does not equally affect the application of item 28, no. 1, of the General Table", which results from the "determining fact for the application of that item of the General Table being the total taxable patrimonial value of the property and not separately that of each of its parcels" (arts. 39 and 40);

vi) "Any other interpretation would violate, indeed, the letter and spirit of item 28.1 of the General Table and the principle of legality of the essential elements of the tax provided for in article 103, no. 2, of the Constitution of the Portuguese Republic (CRP)", because "A type of incidence according to which the taxable patrimonial value of urban properties on which the application of item 28.1 of the General Table depends is the patrimonial value of each storey or division capable of independent use and not the total taxable patrimonial value of the urban property with residential use has certainly no expression in the law", so it is "unconstitutional, as offensive to the principle of tax legality, the interpretation of item 28.1 of the General Table, in the sense that the taxable patrimonial value on which its incidence depends is ascertained globally and not storey by storey or division by division" (arts. 41 to 44);

vii) "It is not seen (...), on the other hand, how the taxation in question could have violated the principle of equality and the prevalence of material truth referred to by the claimant", because "horizontal ownership and vertical ownership are differentiated legal institutions", and the legislator may "subject to a distinct tax legal framework, therefore discriminatory, properties in horizontal and vertical ownership regimes, in particular, benefiting the legally more evolved institution of horizontal property, without such discrimination necessarily being considered arbitrary (arts. 45 to 48).

c) Appreciation of the Tribunal[2]

1. To resolve the question under appreciation here (v. supra no. 11) regarding the definition of "taxable patrimonial value appearing in the matrix" "equal to or greater than €1,000,000" that should be applicable in cases of properties in total ownership with storeys or divisions capable of independent use, it is evidently necessary to proceed with the due interpretation of the rule of objective incidence (cfr. art. 1, no. 1 of the CIS) contained in item 28.1 of the TGIS, so as to determine, on the basis of the hermeneutical guidelines resulting from art. 11 of the General Tax Law (LGT) and art. 9 of the Civil Code, the exact meaning and scope of the said normative proposition.

It is well known that, pursuant to those hermeneutical guidelines, it is appropriate to invoke, as relevant factors in the operation of concretizing the Law, the classical grammatical, historical, systematic and teleological elements.

1. Given the recent and even cyclical character of the normativity in question, it seems useful to begin by inquiring into the options underlying it by ascertaining any intentio of the historical legislator regarding the legal question under judgment here. Let one begin, therefore, by attending to the historical element of interpretation, seeking in the preparatory work any subsidies regarding legislative choices.

Law no. 55-A/2012, of 29 October was based on Proposal for Law no. 96/XII/2nd[3], whose Statement of Reasons, after referring to the fact that: "The pursuit of the public interest, in view of the Country's economic and financial situation, requires an effort of consolidation that will require, in addition to permanent activism in reducing public expenditure, the introduction of fiscal measures inserted in a larger set of measures to combat the budget deficit" and adding that: "These measures are fundamental to reinforce the principle of social equity in austerity, ensuring an effective distribution of the necessary sacrifices for the fulfillment of the adjustment program" and that: the "Government is strongly committed to ensuring that the distribution of these sacrifices is made by all and not only by those who live on the income of their work" so "the taxation of capital and property income is expanded, equitably encompassing a broad set of sectors of Portuguese society", limits itself to referring, regarding the taxation here under consideration, that: "a rate is created under Stamp Tax inciding on urban properties of residential use whose taxable patrimonial value is equal to or greater than one million euros".

In the general discussion (v. DAR, I Series, no. 9/XII/2, of 11/10/2012, p. 32[4]) it is only possible to glean, with interest for the matter here under consideration, the following declarations of the Secretary of State for Tax Affairs (Paulo Núncio), in representation of the proposing Government, regarding the "creation of a special rate to tax high-value urban residential properties": "First of all the Government proposes the creation of a special rate on high-value urban residential properties. It is the first time in Portugal that special taxation has been created on high-value properties intended for residential purposes. This rate will be 0.5% to 0.8% in 2012, and 1%, in 2013, and shall incide on houses of value equal to or greater than 1 million euros. With the creation of this additional rate the tax burden required of these proprietors will be significantly increased in 2012 and 2013".

Well, one cannot fail to highlight in these declarations the simultaneous use, with synonymous value, of the linguistic propositions "high-value urban residential properties", "high-value properties intended for residential purposes" and "houses of value equal to or greater than 1 million euros". Now, one of the socially typical meanings of "house" is precisely that of a location or unit of residential use, so one could immediately understand that the legislator had in mind, and hence the recourse to all those propositions, an autonomous and specific consideration of dwellings, whether they be properties, autonomous units or independent storeys or divisions. In this consequence, the incidence for purposes of item 28.1 of the TGIS and the assessment of the "taxable patrimonial value appearing in the matrix" "equal to or greater than €1,000,000" would be guided by the particular consideration of each "dwelling" in order to tax the "luxury houses" (properties, houses, apartments) that the legislator seems to have had in mind in its proclaimed objective of "effective distribution of the necessary sacrifices for the fulfillment of the adjustment program".

It is believed, however, that the interpreter-applicator cannot fail to recognize that this reading emerges as semantically excessive, by associating particular normative solutions to the simple use of imprecise linguistic terms by the historical legislator, it being further necessary to bear in mind what was written in the decision of this CAAD of 2.10.2013, rendered in proc. no. 53/2013-T: "The recognized lack of coherence of Stamp Tax is particularly exuberant in the case of this item no. 28.1, hastily included on the margins of the General State Budget (sic), by a tax legislator without a perceptible overall tax orientation, that is successively implementing successive norms of tax aggravation in accordance with the setbacks of budget execution, the impositions of international institutional creditors (represented by the "troika") and the oversight of the Constitutional Court".

In this manner, it does not seem that, in this sphere, it is possible to gather from the preparatory work elements capable of, in the matter sub judice, providing a solid foundation for the interpretation of the provision under consideration.

1. Let one then direct all attention to the letter of the law, a primordial and decisive element for the fixing of "legislative thought", even though interpretation should not confine itself simply to the legal text (art. 9, no. 1 of the Civil Code and 11, no. 1 of the LGT).

Due to the literal element, the focal point that one must begin by highlighting is that the references in item 28 of the TGIS to "urban properties whose taxable patrimonial value appearing in the matrix, pursuant to the Code of Municipal Tax on Real Estate (CIMI), is equal to or greater than (euro) 1,000,000" and to "taxable patrimonial value used for purposes of IMI" imply that this rule possesses a fundamentally referential character, so that the relevant regulatory content depends on the normativity ad quam contained in the CIMI.

In fact, whether regarding the objective incidence, with the reference to the "taxable patrimonial value appearing in the matrix, pursuant to the Code of Municipal Tax on Real Estate", whether regarding the fixing of the taxable matter, with the reference to the "taxable patrimonial value used for purposes of IMI", the regulatory content of this item 28 of the TGIS results from the devolution – pursuant to a general reference – to the regulatory set that is found in the CIMI.

This is, moreover, a legislative technique that characterizes incisively the functioning of this item 28 of the TGIS, as results from the legislator having even determined, in a generic manner, that "to matters not regulated in this Code concerning item no. 28 of the General Table, the provisions of the CIMI shall apply, subsidiarily" (no. 2 of art. 67 of the CIS), as well as from various provisions of the CIS concerning this item being verified to contain particular references to provisions of the CIMI (cfr. arts. 2, no. 4, 5, no. 1, al. u), 23, no. 7, 44, no. 5, 46, no. 5 and 49, no. 3 of the CIMI).

1. When one considers the real estate reality of urban properties in total ownership with storeys or parts capable of independent use, it is indispensable to take into account, in attention to those references contained in item 28.1 of the TGIS, the provision contained in the cited art. 12, no. 3 of the CIMI, pursuant to which: "Each storey or part of a property capable of independent use is considered separately in the matrix inscription which also determines its respective taxable patrimonial value".

It results from this provision that storeys or parts of a property capable of independent use possess their own taxable patrimonial value, which is the subject of an autonomous entry in the real estate matrix (cfr., moreover, the example constituted by the property in the proceedings as results from point no. II of the evidentiary matter). There is thus a clear autonomization for purposes of IMI of the storeys or parts of property capable of independent use, which, although integrated in the same matrix article, are the subject of specific evaluation (art. 7, no. 2, al. b) of the CIMI), of separate and autonomous matrix entry and of distinct and autonomous taxable patrimonial value (referred to in no. 3 of art. 12 of the CIMI). The importance of this autonomization of the taxable patrimonial values of storeys or parts of property capable of independent use is so much assumed by the legislator of the CIMI that it is specifically provided as a ground for complaint of incorrectness of the matrix entries the "non-discrimination of the taxable patrimonial value of urban properties by storeys or divisions of autonomous use" (al. h) of no. 3 of art. 130 of the CIMI).

Now, having in mind that item 28.1 of the TGIS establishes, pursuant to the references it incorporates, that, in the taxation of urban properties with residential use, one attends, for purposes of incidence, "to the taxable patrimonial value appearing in the matrix, pursuant to the Code of Municipal Tax on Real Estate", and, for purposes of taxable matter, to the "taxable patrimonial value used for purposes of IMI", then, in urban properties in total ownership with storeys or divisions capable of independent use, one cannot fail to take into consideration the taxable patrimonial value proper to each storey, in conformity with what is provided in no. 3 of art. 12 of the CIMI, since that is both the taxable patrimonial value appearing in the matrix pursuant to the CIMI and the taxable patrimonial value used for purposes of IMI.

In this consequence, and with this one invokes the systematic element of interpretation, it results from art. 119, no. 1 of the CIMI, applicable by virtue of no. 5 of art. 46 of the CIS, that the tax collection documents discriminate the storeys or parts of property with independent use, reporting themselves in individualized terms to the parts capable of autonomous use and not to the property as a whole single unit.

In this manner, given that the parts of a property in total ownership of independent use with residential use are the subject of autonomous evaluation, have a separate entry in the real estate matrix, possess their own taxable patrimonial value appearing in the matrix and are the subject of assessment and emission of a collection document in an individualized manner, all as determined by the pertinent regulations of the CIMI (respective arts. 7, no. 2, al. b), 13, no. 2 and 119, no. 1), the same should be valid for the Stamp Tax of item 28 of the TGIS given the express reference, made in this item (without even incorporating the traditional caveat "with the necessary adaptations"), to the provisions of the CIMI in relation to the taxable patrimonial value appearing in the matrix and to the taxable patrimonial value used for purposes of IMI.

It is understood, therefore, that item 28.1 of the TGIS should be interpreted in the sense that the value relevant for purposes of the incidence of Stamp Tax corresponds to the taxable patrimonial value that appears in the matrix in relation to each storey or part of property capable of independent use, as provided in no. 3 of art. 12 of the CIMI. Consequently, in cases of properties with storeys or parts capable of independent use, the reference to "property with residential use" contained in item 28.1 of the TGIS should be understood in attention to each of these independent parts and not to the property in its entirety.

Thus, pursuant to item 28.1 of the TGIS, the incidence of stamp tax, in cases of urban properties in total ownership with storeys or divisions capable of independent use, concerns each storey or division with independent use for residential use with taxable patrimonial value equal to or greater than €1,000,000.

1. It appears, moreover, that this interpretation is particularly peremptory in a case like the present one in which the property in question possesses parts capable of independent use with residential use and parts capable of independent use with use for services and commerce (cfr. the factuality subject of no. II of the evidentiary matter).

It is that, in such circumstance, there does not appear in the matrix nor is it used for purposes of IMI a "taxable patrimonial value" that corresponds to the sum of the taxable patrimonial values of the divisions of independent use with residential use (v. in the fact proved under no. V of the evidentiary matter the mention in the collection documents of "Taxable Patrimonial Value of the property - total subject to tax: 1,733,164.80"). Indeed, what the CIMI establishes, according to the cited art. 7, no. 2, al. b), and appears in the matrix (v. in the fact reported in no. II of the evidentiary matter the reference to the "total taxable patrimonial value" of €1,799,126.98) is that the "value of the property" is "the sum of the values of its parts", therefore, of all of its parts, whatever their respective use.

In consequence, the "taxable patrimonial value of the property - total subject to tax" (cfr. point no. V of the evidentiary matter) on which the contested assessments are based does not possess correspondence with the legal category enshrined in item 28 of the TGIS of the "taxable patrimonial value appearing in the matrix, pursuant to the Code of Municipal Tax on Real Estate".

Let one insist, indeed, that the CIMI only refers, as results from art. 7, no. 2, al. b) cited above, to the "value of the property" as the sum of all of its parts that are the subject of autonomous evaluation, not therefore legitimizing the configuration of partial property values by attending only to certain economically independent parts of the property (those that possess residential use), disregarding the parts with other uses (for commerce, industry or for services). In such a context, the value of the property as provided in art. 7, no. 2, al. b) of the CIMI is not embodied, but rather the value of the set of certain parts of the property, a value that is not the subject of any provision pursuant to the Code of Municipal Tax on Real Estate nor is it taxable patrimonial value used for purposes of IMI.

It is asserted, therefore, that it is considered that in the contested assessments there is the adoption, for purposes of fixing the incidence of item 28.1 of the TGIS, of a taxable patrimonial value that finds no reception in the law.

1. Furthermore, it is judged that the interpretation thus made of item 28.1 of the TGIS, according to which, in cases of properties in total ownership with storeys or divisions capable of independent use, one should attend to the taxable patrimonial value proper to each storey or division with residential use appearing in the competent matrix, is that which is best suited to the principles of equality and contributive capacity (cfr. art. 13 and art. 104, no. 3 of the CRP), and that, for this reason, more perfectly adapts itself to the ratio legis that seems to preside over the creation of this item in Stamp Tax of "distribution of sacrifices" through taxation in Stamp Tax of "high-value properties intended for residential purposes" (v. supra no. 22).

It is that, for purposes of the regulatory logic proper to the CIMI and, therefore, of this item 28.1 of the TGIS, having regard to the legal reference to that diploma (v. supra no. 23), it is unquestionable a normative equalization of properties in total or vertical ownership, with storeys capable of independent use, with properties in horizontal ownership, with autonomous units, as results from the following: i) the rules for completing Declaration Form 1 approved by Ordinance no. 1282/2003, of 13. 11 – frame V lines 49 and 50 and Annex II – involve an entry in identical terms of properties in total ownership with storeys or divisions capable of independent use and of properties subject to the horizontal property regime; ii) taxable patrimonial values proper to each part capable of independent use of a property in total ownership are attributed in the same manner as this occurs for each autonomous unit of a property under the horizontal property regime (arts. 7, no. 2, al. b), 12, no. 3 and 93 of the CIMI); iii) they are the subject of individualized discrimination in the competent collection documents of the parts of properties capable of independent use in the same terms as this occurs with autonomous units (arts. 119, no. 1 and 4, no. 2 of the CIMI).

In this manner, given that it is the CIMI itself, to which the regulation relating to item 28 of the TGIS generally refers (v. supra no. 23), that equates the situation of the parts of properties capable of independent use with autonomous units, the normative sense attributed above to item 28.1 is that which properly respects the principle of equality, since, it is important to recognize, from a perspective of contributive capacity, there is no relevant difference between the ownership of a property with independent units with certain taxable patrimonial values proper and a property in horizontal ownership with autonomous units with the same taxable patrimonial values proper.

1. It is concluded, in light of the foregoing, that, with respect to properties in total ownership with storeys or divisions capable of independent use, one should attend exclusively to the taxable patrimonial value proper to each storey or division with residential use appearing in the matrix for purposes of the application of item 28.1 of the TGIS.

Let it be said that the sense thus ascertained of the provision contained in item 28.1 of the TGIS, contrary to what the Defendant alleges (v. supra no. 20, vi)), does not violate the principle of tax legality established by arts. 103, no. 2 and 165, no. 1, paragraph i) of the CRP, from the outset because, in conformity with the hermeneutical guidelines applicable (art. 9, no. 2 of the Civil Code), it finds adequate verbal correspondence in the legal text, within the semantic confines of the words of the law, but above all because the constitutional principle of tax legality refers, not to the plane of interpretation and application of tax norms, but rather to the plane of creation of tax norms regarding the "essential elements" of the tax (in which it is imposed, on one side, that the creation of taxes respects the reserve of law of the Assembly of the Republic or of decree-law of the Government issued under authorization from Parliament, and, on another side, that the conformation, by the law, of the objective and subjective incidence, the rate, tax benefits and guarantees of taxpayers be properly determined and substantiated, without prejudice to requirements of feasibility).

d) Application to the Case Sub Judice

1. It is now necessary to proceed with the application to the case sub judice of the legal solution that was reached regarding the interpretation of item 28.1 of the TGIS.

In this respect, in light of the factuality deemed proved in no. II of the evidentiary matter, it must be recognized that none of the storeys of independent use with residential use of the property, not constituted under the horizontal property regime, identified in no. I of the same evidentiary matter, possesses a taxable patrimonial value equal to or greater than €1,000,000.00.

Consequently, as the taxable patrimonial value of each of the said storeys of independent use with residential use is lower than that value to which item 28.1 of the TGIS refers, it follows that such storeys do not subsum under the rule of tax incidence contained in this item 28.1, so that the contested assessments suffer from a defect of violation of law, by error in the legal presuppositions regarding item 28.1 of the TGIS, which implies the declaration of their illegality and consequent annulment pursuant to art. 135 of the Code of Administrative Procedure of 1991 in force, which is decided.

1. Having regard to the success of the requested declaration of illegality of the contested assessments, due to error in the presuppositions of the act, the appreciation of the issue alleged by the Claimant regarding the unconstitutionality of item 28.1 of the TGIS remains prejudiced, as useless, as anticipated above (v. supra no. 12).

e) On Compensatory Interest

1. The Claimant further petitions for the condemnation of the AT to reimburse the tax paid in error in the amounts of €5,777.34, concerning the first instalment, and €5,777.15, concerning the second instalment (v. the facts deemed proved in nos. VI and VII of the evidentiary matter), as well as the respective compensatory interest.

Paragraph b) of art. 24 of the RJAT provides that the arbitral decision on the merits of the claim of which no appeal or challenge is available binds the tax administration from the end of the deadline provided for appeal or challenge, the administration having to, in the exact terms of the success of the arbitral decision in favor of the taxpayer and until the end of the deadline provided for the spontaneous execution of the sentences of the judicial courts of tax courts, reestablish the situation that would exist if the tax act that is the subject of the arbitral decision had not been carried out, adopting the acts and operations necessary for this purpose, which must be understood, in conformity with art. 100 of the LGT, applicable ex vi paragraph a) of no. 1 of art. 29 of the RJAT, as encompassing the payment of compensatory interest, in accordance, moreover, with the provision in no. 5 of this same art. 24 of the RJAT.

Article 43, no. 1, of the LGT establishes that "compensatory interest is due when it is determined, in a complaint or judicial challenge, that there was error attributable to the services resulting in payment of the tax debt in an amount greater than legally due", with no. 4 of art. 61 of the CPPT establishing that "if the decision that recognized the right to compensatory interest is judicial, the payment deadline is counted from the beginning of the deadline for its spontaneous execution".

1. Given that, in the case under appreciation, the illegality of the contested assessments is verified, by error in the legal presuppositions, which is attributable to the Tax Administration, which, on its own initiative, in the assessments practiced, proceeded with the incorrect interpretation and application to the case of the provision contained in item 28.1 of the TGIS, the Claimant has the right, in conformity with arts. 24, no. 1, al. b) of the RJAT and 100 of the LGT, to the reimbursement of the tax installments paid in excess in the total amount of €11,554.49 (€5,777.34 + €5,777.15), and to compensatory interest, pursuant to art. 43, no. 1 of the LGT and 61 of the CPPT, calculated from the dates of the payments of the installments in question (28.4.2014 and 14.7.2014 – cfr. facts proved under nos. VI and VII) at the rate resulting from no. 4 of art. 43 of the LGT, until complete reimbursement of the total amount paid.

IV. Decision

In consideration of the foregoing, it is decided as follows:

i) to hold fully successful the claim filed in this tax arbitral proceeding and, in consequence, to declare illegal and annul the Stamp Tax assessments contested in these proceedings;

ii) to hold successful the claim for condemnation of the Tax Authority and Customs Authority to reimburse to the Claimant the amount of tax paid in error, plus compensatory interest in accordance with legal terms, from the date on which the payments of the corresponding installments were made until the date of their complete reimbursement;

iii) to condemn the AT in the costs of the proceedings.

V. Value of the Proceedings

In accordance with the provision in art. 306, nos. 1 and 2 of the Code of Civil Procedure, in article 97-A, no. 1, al. a), and no. 3 of the Code of Administrative and Tax Procedure, applicable by virtue of paragraphs a), c) and e) of no. 1 of article 29 of the RJAT and of no. 2 of article 3 of the Regulation of Costs in Tax Arbitration Proceedings (RCPAT), the value of the proceedings is fixed at €17,331.64, which constitutes the total amount of the tax resulting from the assessments whose annulment was requested.

It is clarified that it is this amount of €17,331.64 that is relevant in accordance with the above-mentioned art. 97-A of the CPPT, applicable by virtue of art. 3, no. 2 of the RCPAT, since it is not the amounts relating to the various installments of tax paid in accordance with the above-identified collection documents issued pursuant to the provisions of arts. 44, no. 5 of the CIS and 120 of the CIMI (v. supra nos. III and IV of the evidentiary matter), that assume relevance for this purpose, but rather the total collection of €17,331.64 resulting from the contested assessments, since it is this importance whose annulment was requested (art. 97-A, no. 1, paragraph a) of the CPPT).

VI. Costs

In accordance with the provision in articles 12, no. 2, and 22, no. 4, both of the RJAT, and in article 4, no. 4 of the Regulation of Costs of Tax Arbitration Proceedings, the value of the arbitration fee is fixed at €1,224.00, pursuant to Table I of the mentioned Regulation, chargeable to the Defendant, given the success of the request for annulment of the tax acts that are the subject of these proceedings.

Let notification be made.

Lisbon, 20 February 2015.

The Arbitrator

(João Menezes Leitão)

[1] The spelling resulting from the Portuguese Language Orthographic Agreement of 1990 is adopted, having been updated, in accordance therewith, the spelling contained in the citations made.

[2] Here one resumes, having regard to the provision in art. 8, no. 3 of the Civil Code, the hermeneutical course developed in the decision subscribed by the undersigned in proc. no. 451/14-T, given that one continues to believe in its value.

[3] This proposal, entitled "Introduces amendments to the Code of Personal Income Tax, to the Code of Corporate Income Tax, to the Stamp Tax Code and to the General Tax Law" can be consulted at:
http://www.parlamento.pt/ActividadeParlamentar/Paginas/DetalheIniciativa.aspx?BID=37245.

[4] Also consultable at:
http://www.parlamento.pt/ActividadeParlamentar/Paginas/DetalheIniciativa.aspx?BID=37245.