Process: 526/2014-T

Date: March 13, 2015

Tax Type: Selo

Source: Original CAAD Decision

Summary

This arbitration decision (Process 526/2014-T) addresses whether Stamp Duty under Item 28.1 of the General Table of Stamp Duty (TGIS) applies to construction land (terreno para construção) classified with residential use potential. The claimant, A, S.L. – Branch in Portugal, challenged a 2013 Stamp Tax assessment of €12,274.45 on urban property classified as 'land for construction' owned in 1/2 proportion. The taxpayer argued that Item 28.1 only applies to properties actually authorized for housing or physically configured for residential occupation, citing Supreme Administrative Court (STA) precedents. They contended that mere classification as construction land with residential development potential does not constitute 'properties with residential use' under the literal interpretation of CIMI Articles 60(1) and (2). The Tax Authority countered that the valuation methodology in CIMI Article 45(2) applies use coefficients from Article 41 to construction land, making the residential use coefficient relevant for determining Stamp Tax applicability. AT maintained that 'properties with residential use' encompasses both built properties and developable land, representing a broader concept than merely 'properties intended for housing.' The claimant also alleged defects in reasoning, asserting the assessment failed to establish existence of any building for residential use or licensed housing. The case was submitted to CAAD arbitration under the RJAT framework, with both parties consenting to waive the hearing and written pleadings given similar issues decided in previous CAAD cases. This dispute represents a fundamental interpretation question about whether Stamp Tax on high-value properties extends to undeveloped construction land based on anticipated residential use versus requiring actual residential occupation or licensing.

Full Decision

ARBITRAL DECISION

THE PARTIES

Claimant: A, S.L. – Branch in Portugal, NIPC PT …, with registered office at Rua … Matosinhos.

Respondent: Tax and Customs Authority (AT).

DECISION

REPORT

a) On 25-07-2014, the company A, S.L. – Branch in Portugal, NIPC PT …, filed a request for constitution of a singular arbitral tribunal (TAS), pursuant to the combined provisions of articles 2 and 10 of Decree-Law no. 10/2011, of 20 January (Legal Regime of Arbitration in Tax Matters), hereinafter referred to only as RJAT.

b) The request was submitted by a lawyer whose power of attorney was attached.

THE REQUEST

c) The Claimant petitions for annulment of the Stamp Duty (IS) assessment for item 28.1 of the General Table of Stamp Duty (TGIS), with reference to the year 2013, with document identification 2014 …, dated 18.03.2014, generating a total collection of €12,274.45, relating to the urban property of which it is owner in the proportion of 1/2, of the type "land for construction", registered in the urban property register of the Union of Civil Parishes of … and … under article …

d) Invoking various decisions of the Supreme Administrative Court (STA) in support of its understanding, it expresses that the tax act under scrutiny is unlawful, embodying an erroneous reading of item 28.1 of the TGIS, arguing in the sense that "… the concept of property with residential use is what literally results from articles 60, nos. 1 and 2 of the Municipal Property Tax Code (CIMI) and, as such, 'Residential Use' requires that the property generating stamp duty under Item 28 be authorized with a license intended for housing or have housing as its normal destination, in this segment falling properties which by their physical configuration — regardless of municipal license — can be effectively used as housing".

e) And that even if there were no "error as to the factual basis, there would still have been an error due to lack of reasoning" insofar as there is no invocation of the existence of "any building intended for normal residential use", "and much less the fact that there exists a property licensed for uni- or multifamily housing".

f) It concludes by requesting annulment of the assessment indicated above, for "error as to the factual basis and also for defect in reasoning", pursuant to article 99 of the Administrative Procedure Code (CPPT).

OF THE ARBITRAL TRIBUNAL

g) The request for arbitral decision was accepted by the President of CAAD and immediately notified to AT on 28.07.2014.

h) By the Deontological Council of CAAD, the signatory of this decision was designated as arbitrator, and the parties were notified thereof on 11.09.2014.

i) Therefore, the Singular Arbitral Tribunal (TAS) has been properly constituted, as of 26.09.2014, to consider and decide the subject matter of this dispute.

j) All these acts are documented in the communication of constitution of the TAS dated 26.09.2014, which is hereby incorporated by reference.

k) Following the request made by AT in the submission of 30.10.2014 and given that questions identical to those already raised in many other cases already decided by CAAD are raised in this proceeding, the TAS by order of 03.11.2014 decided to dispense with the meeting of the parties referred to in article 18 of the RJAT and likewise with the production of submissions, should the Claimant not object thereto within the period of 5 days, which did not occur.

l) Therefore, the Claimant and AT gave their express or tacit consent to the non-holding of the meeting of the parties referred to in article 18 of the RJAT and likewise, to the unnecessary production of submissions.

m) Therefore, the meeting of the parties provided for in article 18 of the RJAT was not held, nor were submissions produced.

PROCEDURAL REQUIREMENTS

n) Capacity, legitimacy and representation - the parties have legal personality and capacity, are legitimate and are duly represented.

o) Contradictory principle - AT submitted its response to the request for decision filed by the Claimant on 30.10.2014. All orders of the TAS and all submissions and documents filed by the parties were duly notified to the respective counterparty.

p) Dilatory exceptions - the proceeding does not suffer from nullities and the request for arbitral decision is timely since it was submitted within the prescribed period under subparagraph a) of no. 1 of article 10 of the RJAT.

SUMMARY OF THE CLAIMANT'S POSITION

As to the illegality embodying a possible erroneous reading of item 28.1 of the TGIS

q) The Claimant invokes various decisions of the STA in support of its understanding.

r) And along these lines of argumentation it expresses that the tax act under scrutiny is unlawful, embodying an erroneous reading of item 28.1 of the TGIS, arguing in the sense that "… the concept of property with residential use is what literally results from articles 60, nos. 1 and 2 of the Municipal Property Tax Code (CIMI) and, as such, 'Residential Use' requires that the property generating stamp duty under Item 28 be authorized with a license intended for housing or have housing as its normal destination, in this segment falling properties which by their physical configuration — regardless of municipal license — can be effectively used as housing".

s) And that even if there were no "error as to the factual basis, there would still have been an error due to lack of reasoning" insofar as there is no invocation of the existence of "any building intended for normal residential use", "and much less the fact that there exists a property licensed for uni- or multifamily housing".

SUMMARY OF THE TAX AUTHORITY'S POSITION

As to the illegality embodying a possible erroneous reading of item 28.1 of the TGIS

t) AT argues in the sense that the "notion of use of the urban property is based on the part relating to property valuation, which is well understood because the valuation of the property (purpose) incorporates value into the property, constituting a determining fact of distinction (coefficient) for purposes of valuation".

u) "As results from the expression 'value of authorized buildings', contained in article 45-2 of the CIMI, the legislator opted to determine the application of the valuation methodology for properties in general to the valuation of land for construction, being therefore applicable to them the use coefficient provided for in article 41 of the CIMI".

v) And it alleges that "for purposes of determining the tax property value of land for construction it is clear that the application of the use coefficient is applicable in the context of valuation, so that its consideration for purposes of applying item 28-1 of the TGIS cannot be ignored".

w) It clarifies that "the use of the property (capacity or purpose) is a coefficient that contributes to the valuation of the property, in the determination of the tax property value, applicable to land for construction".

x) Summarizing its reasoning it expresses that "Item 28 of the TGIS itself refers to the expression 'properties with residential use', appealing to a classification that overlies the categories provided in no. 1 of article 6 of the CIMI."

y) AT understands that "the concept of 'properties with residential use', for purposes of the provision in item 28 of the TGIS, comprises both constructed properties and land for construction, precisely considering the literal element of the rule", since "the legislator does not refer to 'properties intended for housing', having opted for the notion of 'residential use', an expression that is different and broader whose meaning must be found in the need to integrate other realities beyond those identified in article 6-1, subparagraph a), of the CIMI".

z) Concludes for the legality of the assessment act in light of the Constitution and tax principles, so that it must be maintained in the legal order as it constitutes a correct application of the law to the facts.

II - QUESTIONS FOR THE TRIBUNAL TO RESOLVE

The questions presented to the Tribunal concern only the interpretation and application of legal rules.

On this specific matter, CAAD has already pronounced itself in several decisions in which the substantive question is the same and likewise the STA itself, that is, the scope of the provision of the rule of incidence of items 28 and 28-1 of the TGIS is discussed.

The limit of interpretation is the letter, the text of the rule. There then follows the "task of interconnection and valuation that escapes the literal domain".

Starting from the principle that every rule has a provision and an enactment, the question that arises here is to ascertain, by delimiting, whether the rule of incidence, as drafted – in its provision - (urban properties … with residential use), encompasses or not the legal-tax reality defined in law as "land for construction".

In this accordance, it appears to the TAS that the question it should resolve is the following:

• Does the tax act of IS assessment now contested suffer from any non-conformity with the law, namely "error in the qualification of the tax fact" (or error as to the factual basis) that affects its maintenance in the tax legal order?

AT did not attach the Tax Administration's Response (PA), in substance accepting that the documents attached by the Claimant with the request for decision comprise what would be its content.

III. PROVEN AND UNPROVEN FACTS. REASONING

Relevant to the decision to be adopted are the following facts which are considered proven, indicating the respective documents and/or the articles of the Claimant's request and AT's response as to the facts admitted by agreement, as reasoning:

Proven Facts

  1. The Claimant is listed as holder of 1/2 of the full ownership of the urban property of the type "land for construction", registered in the urban property register of the Union of Civil Parishes of … and … under article … - As per the urban property register attached with the request for decision as Document no. 2.

  2. The description of the urban property is made as follows: "Type of property: land for construction". – As per the urban property register attached with the request for decision as Document no. 2.

  3. In the urban property register attached with the request for decision as Document no. 2, under "valuation data" it states: "type of location coefficient: housing" and contains a box indicating: "Ca – 1.00".

  4. The urban property in question has a tax property value (CIMI): of €2,454,890.00, determined in 2011 - As per the urban property register attached with the request for decision as Document no. 2.

  5. And such tax property value resulted from "IMI Form 1 no. … filed on 2011.12.28, valuation sheet …, valued on 2012.01.10 – As per the urban property register attached with the request for decision as Document no. 2.

  6. The Claimant was notified, on a date not ascertained, of the assessment of Stamp Duty (IS) for item 28.1 of the TGIS, with reference to the year 2013, with document identification 2014 …, dated 18.03.2014, generating a total collection of €12,274.45 – Document no. 1 attached with the request for decision.

  7. This duty was assessed solely on the basis of item 28.1 of the TGIS, with the wording introduced to it by Law 55-A/2012, of 29 October - Document no. 1 – assessment note - attached with the request for decision and overall position of AT in the response.

Unproven Facts

There is no other factuality alleged that is relevant to the proper resolution of the procedural dispute. The evidentiary valuation of the documents attached to the proceeding by the Claimant was not challenged, the TAS understanding, due to the fact that AT did not attach the Tax Administration's Response (PA), that this would correspond to Documents nos. 1 and 2 attached by the Claimant with the request for decision.

IV. CONSIDERATION OF THE QUESTIONS FOR THE TAS TO RESOLVE

It appears to us that with the creation of a new item in the TGIS, item 28, (by article 4 of Law 55-A/2012, of 29.10), in essence creating a new "fact or legal situation" subject to fiscal taxation, it was only intended to broaden the incidence of stamp duty to a new legal-factual reality, but not altering the division of the various categories of urban properties existing.

It was not intended, as it appears to us, to create a new classification of urban properties overlying the categories provided in no. 1 of article 6 of the Municipal Property Tax Code.

The tax act in question occurred during the validity of the previous wording of item 28.1 of the TGIS so that the current wording given to it by article 194 of Law no. 83-C/2013, of 31 December (State Budget for 2014) is not applicable here, since it only applies from 01 January 2014.

We are thus, as mentioned above, only and exclusively, within the scope of the activity of interpretation and application of rules, that is, in the task of delimiting the legal-factual situations that should be considered as encompassed in the rule of incidence of this new tax and which results from the combination of items 28 and 28-1 of the TGIS.

Nevertheless, the law, in its literal element which is always the limit of any interpretation, in item 28-1 TGIS, refers to "… by property with residential use".

That is, this concrete rule of incidence of the tax should not then be interpreted, delimited, as if it had the literality of "residential urban properties", because the interpreter, in respect of the command of no. 3 of article 9 of the Civil Code, cannot proceed from the assumption that the legislator did not know the exact terms of no. 1 of article 6 of the CIMI which divides the various categories of urban properties.

But it also does not seem that it can be understood that the rule of incidence automatically encompasses, beyond the category of urban properties "residential", the category "land for construction".

It seems to us, therefore, that in light of the literal element of the rule of incidence (revealing the legislator's intent) chosen by the legislator: "urban properties … with residential use" it was intended to encompass other categories of urban properties, beyond "urban properties …residential" according to the division of no. 1 of article 6 of the Municipal Property Tax Code.

We do not, however, mean to indicate that the category of urban properties "land for construction" (or any other category of urban properties) is clearly and automatically (that is, "by operation of law"), encompassed in the rule of incidence of item 28-1 of the TGIS.

To this end, we transcribe, for purposes of simplification and uniformization, what is stated in the arbitral decision CAAD Case 48/2013-T (by way of example), in the part to which we adhere:

"The subjection to stamp duty of properties with residential use resulted from the addition of item 28 of the General Table of Stamp Duty, effected by article 4 of Law 55-A/2012, of 29/10, which typified the following tax facts:

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

28-1 – By property with residential use- 1%;

28-2 – By property, when the liable persons who are not natural persons are resident in a country, territory or region subject to a clearly more favorable tax regime, contained in the list approved by ordinance of the Minister of Finance – 7.5%.

…

Regarding the situations typified in item 28.1 only properties with residential use are subject.

Law no. 55-A/2012, of 29 October, nowhere clarifies what are properties with residential use. However, in no. 2 of article 67 of the Stamp Duty Code, added by the said law, it was stipulated that "to matters not regulated in this Code concerning item 28 of the General Table, the CIMI applies, subsidiarily".

The CIMI also does not clarify what are properties with residential use, but only what are the various types of properties, qualifying no. 2 of article 6 as "residential, commercial, industrial or for services buildings as such licensed or, in the absence of license, which have as their normal destination each of these purposes".

That is, for purposes of the CIMI, both residential properties licensed for housing, even if they are not being used for that purpose, as well as, in case of lack of license, which have as their normal destination that purpose.

As for land for construction, which is of interest in the present case, given the assessment carried out and contested on land for construction, the CIMI, in no. 3 of article 6, tells us that "they are those located within or outside an urban cluster, for which a license or authorization for subdivision operation or construction has been granted, and also those which have been so declared in the acquisition title, excepting land where the competent entities prohibit any of those operations, namely those located in green areas, protected areas or which, in accordance with municipal land use plans, are designated for spaces, infrastructures or public equipment".

From the two rules transcribed above it is not possible to extract what the legislator intended to say when referring to properties with residential use.

Law no. 55-A/2012, of 29/10, has no preamble, therefore from it is not possible to withdraw the legislator's intention.

This law of the Assembly of the Republic originated from bill no. 96/XII (2nd), which, in its statement of reasons refers to the introduction of fiscal measures inserted in a broader set of measures to combat budget deficit.

In the statement of reasons of the aforementioned bill, it is said that, "these measures are fundamental to reinforce the principle of social equity in austerity, guaranteeing an effective distribution of the sacrifices necessary to comply with the adjustment program. The Government is strongly committed to ensuring that the distribution of these sacrifices will be made by all and not only by those who live on the income from their work. In accordance with this objective, this law expands the taxation of capital and property, equitably encompassing a broad set of sectors of Portuguese society".

In that statement of reasons it is further said that, in addition to the increase in taxation of capital income and securities capital gains, a tax is created under stamp duty affecting urban properties with residential use whose tax property value is equal to or greater than one million euros.

That is, in such a statement of reasons, it is also not clarified what is meant by urban properties with residential use.

…

In his intervention in the Assembly of the Republic, in the presentation and discussion of the aforementioned bill, the Secretary of State for Tax Affairs made the following statement: "The Government has chosen social equity as the priority principle of its fiscal policy. This is even more important in times of rigor as a way to ensure fair distribution of the fiscal burden.

In the demanding period the country is going through, during which it is bound to comply with the economic and financial assistance program, it becomes even more pressing to affirm the principle of equity. They cannot always be the same - employees and pensioners, bearing the tax burdens.

For the tax system to be fairer it is decisive to promote the expansion of the tax base requiring increased effort from taxpayers with higher income and thus protecting Portuguese families with lower income.

For the tax system to promote more equality it is fundamental that the effort of budget consolidation be distributed among all types of income encompassing with special emphasis capital income and high-value properties. This matter, it is recalled, was extensively addressed in the Constitutional Court's ruling.

Finally, for the tax system to be more equitable, it is crucial that everyone be called upon to contribute according to their contributive capacity, conferring on the tax administration reinforced powers to control and monitor situations of fraud and tax evasions.

In this sense the Government presents, today, a set of measures that effectively reinforce a fair and equitable distribution of the adjustment effort among a broad and comprehensive set of sectors of Portuguese society.

This proposal has three essential pillars: the creation of special taxation on urban properties valued above 1 million euros; the increase in taxation on capital income and securities capital gains and the reinforcement of rules to combat fraud and tax evasion.

First, the Government proposes the creation of a special tax on the highest-value residential urban properties. For the first time in Portugal, special taxation is created on high-value properties intended for housing. This tax will be 0.5% to 0.8% in 2012, and 1%, in 2013, and will apply to properties valued at equal to or greater than 1 million euros. With the creation of this additional tax the fiscal burden required of these owners will be significantly increased in 2012 and 2013".

"In their interventions, in the discussion of such bill, deputies Pedro Filipe Soares, of the BE, and Paulo Sá, of the PCP, speak of the taxation of luxury real estate property, and there are even allusions to previous bills on the same subject that did not come to be approved."

First, it must be noted that there is no doubt that the category of urban properties considered "residential" (subparagraph a) of no. 1 of article 6 of the CIMI) which are "… buildings or constructions licensed for such or, in the absence of license, which have housing as their normal destination", automatically fall within the provision of the rule of incidence of items 28 and 28-1 of the TGIS.

But from the simple consideration of the literal element of the law it will result that it was intended to encompass more than this legal-tax reality encompasses.

Given that, as already stated, by force of the command of no. 3 of article 9 of the Civil Code, it does not seem possible for the interpreter to understand that the expression "urban properties … with residential use" has the same practical scope (scope of application) as if it said "residential urban properties", starting from the principle that it was intended to encompass more than what would be encompassed through this latter literal element.

In the case at hand AT defends that "the notion of use of the urban property is based on the part relating to property valuation, which is well understood because the valuation of the property (purpose) incorporates value into the property, constituting a determining fact of distinction (coefficient) for purposes of valuation" and therefore one should resort to article 41 (use coefficient) of the Municipal Property Tax Code.

And it further expresses: "tax law considers as an integrating element for purposes of valuation of land for construction the value of the construction area, which varies between 15% and 45% of the value of authorized or planned buildings based on the urban development and construction project."

But then does the expression "urban properties … with residential use", encompass or can encompass "land for construction" as unbuilt urban properties but with constructive capacity for residential properties?

Now, only with the elements contained in the property register, as is the case, in which a mere constructive or building potential is demonstrated, it appears to us that without additional reasoning in the tax act, without demonstration that the category of urban property "land for construction" already has any economic utility at the level of residential use, it will not be possible to consider it encompassed in the rule of incidence of items 28 and 28-1 of the TGIS.

Does this mean that the expression "urban properties … with residential use", cannot encompass "land for construction" as unbuilt urban properties but with constructive capacity for residential properties?

It appears to us that situations of subjection can occur in the immense complexity of the economy, of economic utility, even informal, in light of the commands placed to the interpreter contained in no. 3 of article 9 of the Civil Code and no. 3 of article 11 of the General Tax Law.

Only that as to "land for construction" as unbuilt urban properties but with constructive capacity for residential properties, it appears to us that it is not sufficient to demonstrate "residential use" the elements contained in the register. There will be a need for other reasoning, other factual matter, beyond what is contained in the register, that evidences the economic utility with that specific purpose.

It does not seem to us possible through extensive interpretation, using reasoning by analogy with the buildings considered residential urban properties, to conclude, without more, that the category of urban properties considered "land for construction" fall "by operation of law" in the tax rule of incidence, being sufficient to allege the legal-formal qualification and the elements of the register, given that, it must be noted, there will be a need to demonstrate its "residential use" in concreto.

The Claimant alleges the non-conformity of the tax act with the law of erroneous qualification of the tax fact, in addition to lack of reasoning.

In truth, even if it is understood, as it seems to us should be understood, in general and abstract terms, that "land for construction" as indeed any other urban property beyond the category of urban properties "residential" (because these always have residential use by definition) can have, in terms of practical, economic and functional utility a "residential use" in concreto (even in the informal economy), the truth is that its consideration "by operation of law" as having "residential use" starting only from the elements of the register and the fact that its valuation is done with reference to the coefficients applicable to residential urban properties, constitutes non-conformity with the rule of incidence of items 28 and 28-1 of the TGIS, occurring, in this case, the illegality provided for in subparagraph a) of article 99 of the Administrative Procedure Code and there is also verified that provided for in subparagraph c) of article 99 of the Administrative Procedure Code by the occurrence of an absence of reasoning that the law, in the reading expressed above, requires.

The contested act contains no reasoning whatsoever in the sense referred to above, beyond the consideration that it is an urban property of the type "land for construction" "with constructive capacity for residential properties" in hypothetical terms, which is configured to be insufficient.

As a consequence of the above it must be held that the request formulated by the Claimant is well-founded, since the IS assessment carried out by AT is not in conformity with the law.

V. DECISION

On the grounds and for the reasons set forth above, it is held that the request of the Claimant seeking annulment of the Stamp Duty (IS) assessment for item 28.1 of the TGIS, with reference to the year 2013, with document identification 2014 …, dated 18.03.2014, generating a total collection of €12,274.45, relating to the urban property of which it is owner in the proportion of 1/2, of the type "land for construction", registered in the urban property register of the Union of Civil Parishes of … and … under article …, is well-founded, annulling the assessment.

Case Value: in accordance with the provision of article 3, no. 2, of the Regulation of Costs in Tax Arbitration Proceedings (and subparagraph a) of no. 1 of article 97A of the Administrative Procedure Code), the case is assigned the value of €12,274.45.

Costs: in accordance with the provision of article 22, no. 4, of the RJAT, the amount of costs is fixed at €918.00, according to Table I annexed to the Regulation of Costs in Tax Arbitration Proceedings, to be borne by the Respondent.

Notify.

Lisbon, 13 November 2014

Singular Arbitral Tribunal,

Augusto Vieira

Text prepared on computer in accordance with the provision of article 131, no. 5, of the Civil Procedure Code, applicable by referral of article 29 of the RJAT.

The present decision follows the spelling prior to the Orthographic Agreement of 1990.

Frequently Asked Questions

Automatically Created

Does Verba 28.1 of the TGIS apply Stamp Tax to construction land (terrenos para construção) in Portugal?
Yes, according to the Tax Authority's interpretation, Verba 28.1 of the TGIS applies Stamp Tax to construction land (terrenos para construção) when such land is classified with a residential use coefficient for valuation purposes under the Municipal Property Tax Code (CIMI). The Tax Authority argues that CIMI Article 45(2) applies the valuation methodology and use coefficients from Article 41 to land for construction, making residential-classified construction land subject to Stamp Tax. However, taxpayers frequently challenge this interpretation, arguing that only properties actually licensed for housing or physically configured for residential occupation should fall under Item 28.1, not merely developable land with residential potential.
What is the legal definition of 'housing allocation' (afetação habitacional) under Article 6 of the CIMI for Stamp Tax purposes?
The legal definition of 'housing allocation' (afetação habitacional) under Article 6 of the CIMI for Stamp Tax purposes is contested between taxpayers and the Tax Authority. Article 6(1)(a) of CIMI classifies urban properties by type, while Articles 60(1) and (2) address property use. Taxpayers argue that 'residential use' under Item 28 of TGIS requires properties authorized with a license intended for housing or having housing as their normal destination—meaning properties that by their physical configuration can be effectively used as housing, regardless of municipal license. The Tax Authority maintains a broader interpretation, contending that 'properties with residential use' encompasses properties valued with a residential use coefficient under CIMI valuation rules, including construction land classified for residential development, not merely completed residential buildings.
Can a taxpayer challenge a Stamp Tax assessment on construction land through CAAD tax arbitration?
Yes, taxpayers can challenge a Stamp Tax assessment on construction land through CAAD (Centro de Arbitragem Administrativa) tax arbitration. The Legal Regime of Arbitration in Tax Matters (RJAT), established by Decree-Law 10/2011 of 20 January, provides jurisdiction for taxpayers to contest Stamp Tax liquidations through arbitral tribunals. As demonstrated in Process 526/2014-T, taxpayers may file requests for constitution of a singular arbitral tribunal under Articles 2 and 10 of RJAT to challenge assessments they consider unlawful. The arbitration request must be filed within prescribed time limits and can address both substantive legal interpretation issues (such as whether Item 28.1 applies to construction land) and procedural defects (such as insufficient reasoning in the assessment act).
What are the grounds for annulling a Stamp Tax liquidation based on incorrect legal assumptions or lack of reasoning?
Grounds for annulling a Stamp Tax liquidation based on incorrect legal assumptions or lack of reasoning include: (1) Error as to the factual basis (erro sobre os pressupostos de facto) when the assessment is based on incorrect or unproven facts, such as asserting residential use exists without establishing that a building intended for residential use actually exists or that property is licensed for housing; (2) Defect in reasoning (vício de fundamentação) when the assessment fails to adequately explain the legal and factual basis for applying the tax, violating the duty to provide reasoning for administrative acts; and (3) Error in legal interpretation when the Tax Authority incorrectly applies legal provisions, such as misinterpreting the scope of 'properties with residential use' under Item 28.1 of TGIS. These grounds are recognized under Article 99 of the Tax Procedure Code (CPPT) as bases for challenging the legality of tax assessments.
How does the STA case law interpret the scope of Verba 28 of the Tabela Geral do Imposto de Selo regarding residential property?
Supreme Administrative Court (STA) case law, as invoked by taxpayers in challenges like Process 526/2014-T, interprets the scope of Verba 28 of the Tabela Geral do Imposto de Selo regarding residential property more restrictively than the Tax Authority's position. The STA precedents cited by claimants generally support the interpretation that 'properties with residential use' under Item 28 should be construed literally according to CIMI Articles 60(1) and (2), requiring that properties be authorized with licenses intended for housing or have housing as their normal destination. This jurisprudence emphasizes that residential use requires actual capacity for residential occupation—properties that by their physical configuration can effectively be used as housing—rather than mere classification with residential development potential. The STA's approach distinguishes between completed or occupiable residential properties and undeveloped construction land, generally finding that bare land without residential structures does not constitute property 'with residential use' subject to Stamp Tax under Item 28.1, even if zoned or valued for future residential development.