Process: 526/2016-T

Date: February 7, 2017

Tax Type: Selo

Source: Original CAAD Decision

Summary

This CAAD arbitral decision (Process 526/2016-T) addresses whether Stamp Tax under item 28.1 of the General Stamp Tax Table (TGIS) applies to building land classified as terrenos para construção. The case involved three urban properties registered as land for construction with patrimonial values exceeding €1,000,000, assessed for Stamp Tax in 2012 under Law 55-A/2012. The petitioner challenged the assessments arguing that building land does not qualify as property with residential use designation as required by item 28.1 TGIS. The Tax Authority maintained that building land with residential use designation falls within the provision's scope. The arbitral tribunal examined whether undeveloped building plots can be considered to have residential use designation. Item 28.1 TGIS imposes a 1% annual Stamp Tax on ownership, usufruct, or surface rights of urban properties with tax patrimonial value equal to or greater than €1,000,000, specifically for properties with residential use designation. The tribunal noted extensive jurisprudential treatment of this issue in tax courts and arbitral jurisdiction, indicating it would follow established precedent. The properties were registered in the property register as land for construction, not as residential buildings or properties actually used for housing. This factual classification proved crucial to the legal analysis. The decision follows consistent arbitral precedent addressing the scope of item 28.1 TGIS and the distinction between building land and properties with actual residential use, representing significant guidance for property owners, real estate developers, and tax professionals dealing with high-value urban properties regarding Stamp Tax application to undeveloped land parcels.

Full Decision

ARBITRAL DECISION

The Arbitrators José Pedro Carvalho (Presiding Arbitrator), José Nunes Barata and Andrea Firmino, appointed by the Deontological Council of the Administrative Arbitration Centre to form an Arbitral Tribunal:

I – REPORT

On 26 August 2016, A…, S.A. with tax identification number…, and headquarters at Avenida …, …, …, …, in Lisbon, representing B…, with tax identification number…, with headquarters at the same address and Municipality of …, with tax identification number …, with headquarters at …, …, …, filed a request for constitution of an arbitral tribunal, pursuant to the combined provisions of articles 2 and 10 of Decree-Law No. 10/2011, of 20 January, which approved the Legal Regime for Tax Arbitration, as amended by article 228 of Law No. 66-B/2012, of 31 December (hereinafter, abbreviated as RJAT), seeking the declaration of illegality of the following acts:

i. acts of assessment of Stamp Tax No…, … and …, issued with reference to the year 2012, relating to urban properties registered in the property register under matrix articles Nos…, … and…, previous articles…, … and…, respectively, all from the parish of …, district of ...;

To support their request, the Petitioners argue, in summary, that the properties to which the assessment acts in question refer are building land, and therefore do not meet the provision of item 28.1 of the Table annexed to the CIS, in its applicable version, which refers to properties with residential use designation.

On 26-08-2016, the request for constitution of the arbitral tribunal was accepted and automatically notified to the Tax Authority.

The Petitioner did not appoint an arbitrator, therefore, pursuant to the provision of paragraph a) of article 6(2) and paragraph a) of article 11(1) of the RJAT, the President of the Deontological Council of the CAAD appointed the signatories as arbitrators of the collective arbitral tribunal, who communicated acceptance of the appointment within the applicable time limit.

On 03-11-2016, the parties were notified of these appointments and did not manifest any intention to refuse any of them.

In accordance with the provision of paragraph c) of article 11(1) of the RJAT, the collective Arbitral Tribunal was constituted on 24-11-2016.

On 04-01-2017, the Respondent, duly notified for this purpose, filed its defence based on objection.

Given that none of the legally assigned purposes were satisfied, pursuant to articles 16 c) and 29(2) of the RJAT, as well as the principles of procedural economy and prohibition of useless acts, the hearing referred to in article 18 of the RJAT was dispensed with, as well as the submission of arguments by the parties.

A period of 30 days was set for pronouncement of the final decision.

The Arbitral Tribunal is materially competent and is duly constituted, in accordance with articles 2(1) a), 5 and 6(1) of the RJAT.

The parties have legal personality and capacity, are legitimate and are legally represented, in accordance with articles 4 and 10 of the RJAT and article 1 of Ordinance No. 112-A/2011, of 22 March.

The proceedings are not subject to any nullities.

Having seen all the foregoing, it is necessary to render

II. DECISION

A. FACTS

A.1. Facts Established as Proven

1. B…, hereinafter "Petitioner," was, at the date to which the assessments sub judice refer, the owner of three urban properties registered in the property register under matrix articles Nos…, … and …, previous articles…, … and …, respectively, all from the parish of …, district of ...;

2. The Petitioner was notified, in March 2013, of the acts of assessment of tax for the properties identified above, issued pursuant to item 28.1 of the TGIS - in its original version - and relating to the properties described above.

3. The assessments of Stamp Tax in question, all referring to the year 2012, result from the application of article 19, section 1 of the Stamp Tax Code, combined with item 28 of the TGIS and article 6 of Law No. 55-A/2012, of 29 October.

4. The properties, subject of the assessments of Stamp Tax referred to in the present arbitral action, were then registered in the property register as "land for construction."

5. The Petitioner filed a petition for reconsideration against those acts of assessment of Stamp Tax.

6. The Petitioner was notified of the decisions of rejection issued regarding those requests for review, pursuant to which the Tax Authority decided that the tax acts in question were in accordance with applicable law and were not affected by any defect.

7. The Petitioner appealed hierarchically against those decisions, and was notified of the decisions issued on those hierarchical appeals, by the Directorate-General of the Property Transfer Tax, Stamp Tax, Vehicle Tax and Special Contributions.

8. Those decisions stated, among other matters, that: "building land with residential use designation are included in the scope of application of item 28.1 of the TGIS, therefore the assessments of stamp tax made to the Appellant are correct."

9. In order to suspend the corresponding fiscal enforcement proceedings underway, the Petitioner provided two bank guarantees in the amounts of EUR 83,062.07 and EUR 40,428.47, issued by Bank C… on 27.02.2014;

10. B… was dissolved and liquidated by public deed executed on 29-01-2016, and for the due tax purposes A…, S.A. was designated as representative.

11. As a consequence of the dissolution and liquidation of the said Fund, the Municipality of …, as sole participant holding all of the Fund's Participation Units, likewise became owner of the aforementioned urban properties registered in the property register under matrix articles Nos…, … and …;

A.2. Facts Established as Not Proven

With relevance to the decision, there are no facts that should be considered as not proven.

A.3. Reasoning on Proven and Unproven Facts

With respect to the facts, the Tribunal is not required to rule on everything alleged by the parties, but rather has the duty to select the facts that matter for the decision and to distinguish proven from unproven facts (cf. article 123(2) of the CPPT and article 607(3) of the CPC, applicable ex vi article 29(1) a) and e) of the RJAT).

In this manner, the relevant facts for the judgment of the case are selected and delimited in function of their legal relevance, which is established in light of the various plausible solutions of the legal question(s) (cf. former article 511(1) of the CPC, corresponding to the current article 596, applicable ex vi article 29(1) e) of the RJAT).

Thus, having regard to the positions adopted by the parties, in light of article 110(7) of the CPPT, the documentary evidence and the procedural file attached to the record, the facts enumerated above were considered proven, with relevance to the decision.

B. LAW

The question posed in the present proceedings, relating to the subsumption, or lack thereof, of building land under the original version of item 28.1 of the TGIS, has already been the subject of extensive jurisprudential treatment, in tax courts and, especially, in arbitral jurisdiction, and the decision will follow closely what has been written elsewhere[1].

The present case concerns, therefore, the definition of the scope of application of item No. 28.1 of the TGIS, as drafted by Law No. 55-A/2012, of 29 October, more specifically, to determine whether building land can be subsumed within the concept of urban properties "with residential use designation" to which the said item refers, when their patrimonial value is equal to or greater than €1,000,000.

The question arises due to taxation under stamp tax of ownership, usufruct or surface right of urban properties whose tax patrimonial value registered in the property register is equal to or greater than €1,000,000, in which case tax is due, at the rate of 1% on the tax patrimonial value used for the purposes of Municipal Property Tax, for property with residential use designation.

This question is not new, having been the subject of consideration both in arbitral jurisdiction and in the jurisprudence of the Supreme Administrative Court, always contrary to what the Tax Administration requested.

This decision will follow closely the understanding endorsed in Decisions 49/2013-T of 18 September 2013, 53/2013-T of 2 October, 231/2013-T of 3/2/2014, Case No. 7/2014-T, of 3 July, 56/2014-T of 31 July, 210/2014-T of 30 July, Case No. 125/2015-T, of 12 October, all of the CAAD and the Decision of the SAC of 9 April 2014, P1870/2013, which were followed by several others of similar content, available at http://www.dgsi.pt/jsta.

As referred to in the Decision rendered in Case No. 125/2015-T, the subitems i) and ii) of item f) of article 6 of Law 55/2012 of 29 October and item 28.1 of the TGIS by using a term that is not used in any other tax legislation – property with residential use designation – gave rise to abundant litigation, which culminated in decisions both for the Supreme Administrative Court and for the Arbitral Jurisdiction, always in the sense that, since the legislator did not define the concept of "urban properties with residential use designation" and it results from article 6 of the Municipal Property Tax Code – subsidiarily applicable to the Stamp Tax provided in the new item No. 28 of the TGIS – a clear distinction between "residential urban properties" and "building land," these latter cannot be considered, for the purposes of the incidence of Stamp Tax, item 28.1 of the TGIS, as drafted by Law 55-A/2012, of 29 October, as urban properties with residential use designation, with the consequent annulment of the assessment on the ground of error regarding the legal presuppositions upon which it is based.

Since neither the Stamp Tax Code, nor Law No. 55-A/2012, of 29 October (which approved the item of TGIS under consideration), nor any other tax legislation offers a legal definition of "property with residential use designation," it is necessary to seek the correct interpretation of this expression in the letter of the law, presuming that the legislator knew how to express himself in the most adequate manner (cf. article 9(3), final part, of the Civil Code), in its systematic integration with the norms contained in the Municipal Property Tax Code and also in the spirit of the law.

The starting point of the expression "properties with residential use designation" is naturally the text of Law 55/2012, of 29 October, and it is on the basis of this that the legislative intent must be reconstructed.

The said Law No. 55-A/2012 added Item 28 of the TGIS under consideration with the following wording:

"28 - Ownership, usufruct or surface right of urban properties whose tax patrimonial value registered in the property register, under the terms of the Municipal Property Tax Code (CIMI), is equal to or greater than €1,000,000 — on the tax patrimonial value used for the purposes of Municipal Property Tax:

28.1 — For property with residential use designation — 1%;

28.2 — For property, when the taxable persons who are not natural persons are residents of a country, territory or region subject to a clearly more favourable tax regime, listed in the approval by order of the Minister of Finance — 7.5%."

Law No. 55-A/2012, of 29 October, entered into force on 30 October 2012, in accordance with its article 7(1), which determined its entry "into force on the day following its publication."

Transitional rules were also established by Law No. 55-A/2012, of 29 October, by reference to the assessment of stamp tax provided in Item No. 28 of the TGIS, with relevance to this decision:

"1 — In 2012, the following rules must be observed by reference to the assessment of stamp tax provided in item No. 28 of the respective General Table:

a) The tax event occurs on 31 October 2012;

b) The taxpayer of the tax is that mentioned in article 2(4) of the Stamp Tax Code on 31 October 2012;

c) The tax patrimonial value to be used in the assessment corresponds to that resulting from the rules provided in the Municipal Property Tax Code by reference to the year 2011;

d) The assessment of the tax by the Tax Authority and Customs Authority must be made by the end of November 2012;

e) The tax must be paid, in a single installment, by the taxpayers by 20 December 2012;

f) The applicable rates are the following:

i. Properties with residential use designation assessed under the terms of the Municipal Property Tax Code: 0.5%;

ii. Properties with residential use designation not yet assessed under the terms of the Municipal Property Tax Code: 0.8%;

iii. Urban properties when the taxable persons who are not natural persons are residents of a country, territory or region subject to a clearly more favourable tax regime, listed in approval by order of the Minister of Finance: 7.5%.

2 — In 2013, the assessment of stamp tax provided in item No. 28 of the respective General Table must be based on the same tax patrimonial value used for the purposes of assessment of municipal property tax to be carried out in that year."

As already stated, neither the Stamp Tax Code nor Law No. 55-A/2012, of 29 October, specifies the concept of "urban property with residential use designation," therefore in accordance with article 67 of the Stamp Tax Code, the interpretation of this concept must be subsequently sought in the Municipal Property Tax Code.

Indeed, it results from article 67 of the Stamp Tax Code that "For matters not regulated in the present Code relating to item No. 28 of the General Table, the provisions of the CIMI shall apply subsidiarily" (Wording given by article 3 of Law No. 55-A/2012 of 29 October.).

In accordance with the Municipal Property Tax Code, more specifically with its article 6(1), urban properties are divided into: a) Residential; b) Commercial, industrial or for services; c) Building land; and d) Others.

Residential, commercial, industrial or for services properties are buildings or constructions licensed for such purposes or, in the absence of a license, which have as their normal purpose each of these uses (cf. article 6(2) of the Municipal Property Tax Code). Building land, in turn, comprises land situated within or outside an urban agglomeration, for which building or subdivision license or authorization has been granted, prior communication admitted or prior favorable information issued for subdivision or construction operation, and also those that have been declared as such in the acquisition title (cf. article 6(2) of the Municipal Property Tax Code).

Thus, "a property is classified as building land whenever a set of circumstances is verified, generally corresponding to the application of pertinent norms of the legal regime governing urban buildings or the subdivision of rural properties, which, in any case, evidence the intention to construct on it, unless, by force of applicable legislation, such intention is not capable of effective realization" (Arbitral Decision rendered in Case 49/2013-T, on 18 September 2013, at www.caad.pt).

The Municipal Property Tax Code thus offers a definition of residential properties and building land, as two different types of urban properties, but does not clarify the true nature of the concept "urban property with residential use designation."

However, the expression "designation" presupposes that the property has an actual use for residential purposes, which is not the case with building land, which, as such, does not yet have any actual use, whether for housing or otherwise.

As sustained in the Arbitral Decision rendered in Case No. 42/2013-T on 18 October 2013, which is followed here, "we cannot confuse a 'residential use designation' which implies an actual dedication of an urban property to that end, with the expectation, or potentiality, of an urban property possibly coming to have a 'residential use designation.' Building land, not being built upon, does not satisfy, by itself, any condition to be considered as properties with residential use designation, since, on the one hand, they do not have a building use license for housing, and, on the other hand, they are not habitable (because they simply are not built). Therefore, it does not seem sufficient to be framed within the objective scope of application in question that there exists the expectation of an urban property coming to have a residential use designation, or of having the potentiality of coming to have a residential use designation."

But further, "the comparison of item No. 28.1 of the TGIS with article 6(2) of the CIMI, which defines the concept of residential properties, clearly points to the necessity of an actual use designation. In fact, a building or construction licensed for housing or, even without a license, but which has housing as its normal purpose, is, in light of article 6(2), a residential property. Therefore, on the assumption that the legislator of Law No. 55-A/2012 knew how to express his intent in adequate terms (as required by article 9(3) of the Civil Code which presumes this), if he intended to refer to those properties already licensed for housing or having housing as their normal purpose, he certainly would have used the concept of 'residential properties,' which would express his intent perfectly and clearly, in light of the definition given by article 6(2) of the CIMI. Consequently, it must be presumed that the use of a different expression is intended to address a different reality, therefore, in sound hermeneutics, 'property with residential use designation,' cannot be a property merely licensed for housing or destined for that purpose (that is, it will not suffice that it be a 'residential property'), but must be a property that already has actual use designation for that purpose. That this is the meaning of the expression 'designation,' in the same context of property classification made by the CIMI, is confirmed by article 3, in which, with respect to rural properties, reference is made to those 'that are dedicated to or, in the absence of concrete dedication, have as their normal purpose a use generating agricultural income,' which evidences that dedication is concrete, actual. In fact, as can be seen from the latter part of this text, a property may have as its purpose a particular use and either be or not be dedicated to it, which evidences that dedication is, in the connection of a property to a particular use, something more intense than mere purpose and which may or may not occur, downstream of this and not upstream. Furthermore, the text of the law by adopting the formula 'property with residential use designation,' instead of 'urban properties of residential use designation,' which appears in the aforementioned 'Statement of Reasons,' strongly points to the requirement that residential use designation already be concretized, for only thus will the property have that designation" (Arbitral Decision rendered in Case 53/2013-T, on 2 October 2013, at www.caad.pt).

In summary, in building land there exists only an expectation, or potentiality, of possibly, after construction, coming to have a 'residential use designation,' but only when this use designation is concretized, and never before its construction, can we consider that it falls within the scope of the objective tax incidence norm in question.

This understanding, according to which 'building land' cannot be considered, for the purposes of the incidence of Stamp Tax provided in Item 28.1 (as drafted by Law No. 55-A/2012), as urban properties with residential use designation, has also been endorsed by tax courts, which have generally understood that "given that building land – whatever the type and purpose of the construction that will be, or may be, erected on it – does not satisfy, by itself, any condition to be licensed as such or to have housing as its normal purpose, and the norm of incidence of Stamp Tax refers to urban properties with 'residential use designation,' without any specific concept being established for this purpose, it cannot be extracted therefrom that it contains a future potentiality, inherent to a distinct property that may possibly be built on the land. It is thus concluded, in accordance with what was decided in the judgment under appeal, that, since it results from article 6 of the Municipal Property Tax Code a clear distinction between 'residential' urban properties and 'building land,' these latter cannot be considered as 'properties with residential use designation' for the purposes of item No. 28.1 of the General Table of Stamp Tax, in its original version, which was conferred by Law No. 55-A/2012, of 29 October." (cf. Decisions rendered by the Supreme Administrative Court in cases Nos. 1870/13 and 48/14, on 9 April 2014, in cases Nos. 270/14, 271/14 and 272/14 on 23 April 2014 and in case No. 046/14, on 14 May 2014, at www.dgsi.pt).

Against the foregoing, the understanding of the Respondent entity cannot thus proceed, that the expression used by the legislator 'residential use designation' is broader than the expression 'properties destined for housing.'

'Residential use designation' presupposes that housing is the normal use given to the property in light of its current and actual characteristics, that is, implies that the property is effectively destined for housing (which naturally presupposes that it is a property already built), when in building land there exists only the mere expectation, the potentiality, of that use designation.

Thus, in the letter of the law, there is no indication that the legislator sought to encompass in the expression 'property with residential use designation' building land.

Finally, it is important to analyze the purpose intended by the legislator and whether that purpose puts into question the conclusions reached thus far.

As is apparent from the discussion, generally, of bill No. 96/XII (Parliamentary Records, I series, No. 9/XII/2, of 11 October 2012), the creation of special taxation on high-value properties destined for housing, which underlies the approval of the Stamp Tax Item under consideration, integrates a set of measures whose declared objective was related to the creation of a more just and equitable tax system, in which taxpayers were called upon to contribute in accordance with their real contributive capacity.

With this objective, thus, the creation of a special rate was proposed, and the Secretary of State for Tax Affairs, in defending this Bill 96.XII, stated: "First, the Government proposes the creation of this special additional rate to tax residential urban properties of higher value. This is the first time in Portugal that special taxation on high-value properties destined for housing has been created. This rate, which will be 0.5 to 0.8 in 2012, and 1% in 2013, will apply to houses of value equal to or greater than 1 million euros. With the creation of this additional rate, the tax burden required of these owners will be significantly increased in 2012 and in 2013."

Thus, what was proposed to the deputies and what they approved was the creation of taxation of luxury real estate property. In sum, the intention was to broaden the tax base through the creation of a special rate on high-value properties destined for housing, understood as 'houses of value equal to or greater than 1 million euros,' that is, it is concluded that the reality intended to be taxed is 'houses,' and not other realities, such as building land.

The concept most closely aligned with the literal wording of this expression, property with residential use designation, is manifestly that of residential properties, defined in article 6(2) of the CIMI, as encompassing buildings and constructions licensed for residential purposes or, in the absence of a license, having residential purposes as their normal purpose.

In this sense, Arbitral Decision 231/2013-T of 3/2/2014, according to which "the recognized lack of coherence of Stamp Tax is particularly exuberant in the case of item No. 28.1, hastily included outside the General State Budget, by a tax legislator without perceptible overall tax guidance, which was implementing successively tax increase norms in measure with the setbacks in budget execution, the impositions of international creditors (represented by the 'troika') and the oversight of the Constitutional Court <….> In this context, there being no secure interpretive elements that allow detecting legislative coherence in the solution adopted in the said item 28.1 or the rightness or wrongness of the adopted solution (relevant for interpretive purposes in light of article 9(3) of the Civil Code), the content of the legal text must be the primary element of interpretation, in accordance with the presumption, imposed by that same article 9(3), that the legislator knew how to express his intent in adequate terms."

Indeed, the concept introduced by Law 55-A/2012, probably due to its imprecision – "a fact all the more serious given that on the basis of it the objective scope of application of the new taxation is delimited" – had a short life, as it was abandoned upon the entry into force of the State Budget Law for 2014 (Law No. 83-C/2013, of 31 December), which gave new wording to that item No. 28.1 of the General Table, and which now delimits its objective scope of application through the use of concepts that are legally defined in article 6 of the CIMI. No longer the concept of housing but, residential property or building land whose construction, authorized or envisioned, is for housing, under the terms of the Municipal Property Tax Code. And here the legal controversy now being examined is concluded.

In conclusion, all elements of interpretation of the law converging in the sense that property with residential use designation meant residential property, it is manifest that the assessments now impugned are affected by error regarding the legal presuppositions, since all properties for which Stamp Tax was assessed under item No. 28.1 are building land, without any building or construction, required to meet that concept of residential properties.

In light of the foregoing, it is concluded that the assessment acts that are the subject of the present arbitral action should be annulled.

*

The Petitioner combines with the request for annulment a claim for compensation for damages resulting from the bank guarantees improperly provided in order to suspend the fiscal enforcement proceedings subsequently instituted for coercive collection of the Stamp Tax assessments underlying the present proceedings.

Given the success of the request for annulment, the Petitioner should be compensated for damages resulting from the provision of the guarantees provided. In the case at hand, it is manifest that the illegality of the assessment acts is attributable to the Respondent, which, on its own initiative, performed them without legal basis.

Consequently, the Petitioner is entitled to be compensated, under article 63 of the General Tax Law.

Thus, the Respondent should execute this decision, under article 24(1) of the RJAT, determining the amount to be reimbursed to the Petitioner and calculating the respective compensation, under article 53(3) and (4) of the General Tax Law.

*

C. DECISION

Therefore, this Arbitral Tribunal decides to render judgment in favor of the request filed and, as a consequence,

a) Annul the acts of assessment of Stamp Tax No…, … and …, issued with reference to the year 2012, relating to urban properties registered in the property register under matrix articles Nos…, … and …, previous articles…, … and …, respectively, all from the parish of …, district of ...;

b) Condemn the Respondent to pay compensation for damages resulting from the bank guarantees provided in order to suspend the fiscal enforcement proceedings;

c) Condemn the Respondent to pay the costs of the proceedings in the amount of €2,754.00.

D. Value of the Proceedings

The value of the proceedings is set at €93,503.86, under article 97-A(1) a) of the Code of Tax Procedure and Process, applicable by force of paragraphs a) and b) of article 29(1) of the RJAT and article 3(2) of the Regulation of Costs in Tax Arbitration Proceedings.

E. Costs

The arbitration fee is set at €2,754.00, under Table I of the Regulation of Costs in Tax Arbitration Proceedings, to be paid by the Respondent, since the request was wholly successful, under articles 12(2) and 22(4), both of the RJAT, and article 4(4) of the cited Regulation.

Notify the parties.

Lisbon 7 February 2017

The Presiding Arbitrator

(José Pedro Carvalho)

The Arbitrator

(José Nunes Barata)

The Arbitrator

(Andrea Firmino - Rapporteur)

[1] Essentially in arbitral proceedings 723/2015T, available at www.caad.pt.

Frequently Asked Questions

Automatically Created

Does Verba 28.1 of the Portuguese Stamp Tax Table apply to building land (terrenos para construção)?
According to the arbitral tribunal's analysis and established jurisprudence cited in Process 526/2016-T, Verba 28.1 of the TGIS does not apply to building land. The provision requires properties to have residential use designation (afetação habitacional), which refers to properties actually used for residential purposes. Building land registered as terrenos para construção in the property register does not meet this requirement, as it represents undeveloped land intended for future construction rather than properties with actual residential use.
Can property classified as construction land be subject to Stamp Tax under the housing allocation rule?
Property classified as construction land cannot be subject to Stamp Tax under the housing allocation rule of item 28.1 TGIS. The tribunal examined this issue in light of extensive jurisprudential treatment, noting that the requirement for residential use designation means the property must be actually used for housing purposes. Building plots registered as land for construction in the property register lack this residential use designation because they are undeveloped parcels intended for future construction, not properties currently serving residential functions.
What was the CAAD arbitral tribunal decision in Process 526/2016-T regarding Stamp Tax on urban land?
In Process 526/2016-T, the CAAD arbitral tribunal analyzed Stamp Tax assessments under item 28.1 TGIS applied to three urban properties registered as land for construction. The tribunal noted this question had been subject to extensive jurisprudential treatment in tax courts and arbitral jurisdiction, and indicated the decision would follow closely what has been written in established precedent. The petitioner argued that building land does not meet the provision of item 28.1 which refers to properties with residential use designation, while the Tax Authority maintained such land falls within the provision's scope.
How did Portuguese tax arbitration interpret the scope of Imposto do Selo for undeveloped building plots in 2012?
Portuguese tax arbitration has developed extensive jurisprudence interpreting the scope of Imposto do Selo item 28.1 regarding undeveloped building plots. As noted in Process 526/2016-T, arbitral tribunals have addressed whether building land can be considered to have residential use designation under item 28.1 TGIS introduced by Law 55-A/2012. The consistent approach distinguishes between properties with actual residential use designation and land parcels registered as terrenos para construção, examining whether the literal interpretation of residential use designation encompasses land intended for future construction versus properties currently used for residential purposes.
What legal grounds support challenging Stamp Tax assessments on terrenos para construção before CAAD?
Legal grounds for challenging Stamp Tax assessments on terrenos para construção before CAAD include: the literal interpretation of item 28.1 TGIS requiring residential use designation which building land lacks; the property register classification as land for construction rather than residential property; extensive arbitral jurisprudence cited in Process 526/2016-T addressing this issue; the principle of strict interpretation of tax laws without extension by analogy; and the distinction between actual residential use and intended future construction use. Petitioners can invoke RJAT article 2(1)(a) for jurisdictional basis and challenge assessment acts through arbitration procedures.