Process: 528/2014-T

Date: March 25, 2015

Tax Type: Selo

Source: Original CAAD Decision

Summary

This arbitral decision addresses the application of Portuguese Stamp Tax under Item 28.1 of the General Table of Stamp Tax (TGIS), which taxes residential real estate with a taxable property value (VPT) exceeding €1,000,000. Three taxpayers challenged 213 Stamp Tax assessments totaling €29,168.35 related to a property held under full ownership containing multiple independent residential units. The central legal question concerns whether the €1,000,000 threshold applies to each independent unit separately or to the entire property as a whole. The petitioners argued that following Municipal Property Tax Code (CIMI) rules under Articles 12(3) and 113(1), each independently used residential unit should be valued separately for tax purposes, and since none exceeded €1,000,000 individually, no Stamp Tax was due. They further contended that assessing tax on the aggregate property value violates constitutional equality principles, as identical properties structured under horizontal ownership (condominium regime) would escape taxation when individual fractions fall below the threshold. The Tax Authority defended the assessments, asserting that the relevant VPT is the total value of the urban property under full ownership, not the sum of its component parts. The Tax Authority argued that vertical ownership and horizontal ownership are distinct legal regimes, and applying horizontal ownership rules by analogy would violate the principle of tax legality enshrined in Article 103(2) of the Portuguese Constitution. The case was submitted to a singular arbitral tribunal under the Legal Regime of Arbitration in Tax Matters (LRAMT), with both parties waiving oral hearings as the matter involved purely legal questions. The petitioners sought declaration of illegality and annulment of the assessments, plus restitution of taxes paid and compensatory interest.

Full Decision

ARBITRAL DECISION

I. REPORT

A..., taxpayer no. …, resident at Avenue ..., 54A, 5th floor, in Lisbon, B..., taxpayer no. …, resident at Street …, in Lisbon, C..., taxpayer no. …, resident at Avenue ..., in Lisbon (hereinafter referred to only as "Petitioners"), filed a request for establishment of a singular arbitral tribunal, pursuant to the provisions of paragraph a) of no. 1 of Article 2 and Article 10, both of Decree-Law no. 10/2011, of 20 January (Legal Regime of Arbitration in Tax Matters, hereinafter referred to only as "LRAMT"), with a view to:

a) Declaration of illegality of 213 assessment acts for Stamp Tax ("ST") issued by the Tax and Customs Authority ("TCA" or "Respondent Entity"), in the total amount of 29,168.35 euros, on the basis of item 28.1 of the General Table of Stamp Tax ("GTST"), dated 17 March 2014 and relating to the year 2013, contained in the collection documents better identified in Articles 10, 11 and 12 of the request for arbitral pronouncement and in Articles 18, 19 and 20 of the supplementary petition to the arbitral request, and, consequent annulment of those acts;

b) Condemnation of the Respondent Entity to the restitution of the tax, wrongly paid, plus the respective compensatory interest.

To this end, they allege, in summary, that:

  1. The TCA wrongly assessed Stamp Tax on realities that do not meet the requirements established by item 28.1 of the GTST, since all independently used units serving residential use in the property held under full ownership have a taxable property value ("TPV") below €1,000,000.00;

  2. Consequently, the assessments are illegal, by violating the provisions of Item 28.1 of the GTST, as well as the provisions of no. 3 of Article 12 and no. 1 of Article 113 of the Municipal Property Tax Code ex vi no. 2 of Article 67 of the Stamp Tax Code;

  3. Indeed, the rule of incidence provided therein in the referred Item establishes that subject to Stamp Tax are real estate that have residential purpose or are lands intended for construction of buildings for residential use and have a taxable property value ("TPV") greater than €1,000,000.00;

  4. The assessment of Stamp Tax must follow the rules provided for in the Municipal Property Tax Code ("CMPT"), by express reference of Item 281.1 of the GTST and of no. 2 of Article 67 of the Stamp Tax Code, with such rule of incidence referring to real estate whose concept results from Article 2 of the Municipal Property Tax Code and the determination of TPV follows the provisions of Article 38 and following of the same Code;

  5. In accordance with the rules of the Municipal Property Tax Code it is over the TPV considered separately for each unit with independent use that will be calculated and assessed the Municipal Property Tax, pursuant to the provisions of no. 3 of Article 12 and no. 1 of Article 113, as if it were an autonomous fraction. Such treatment must be identical for purposes of Stamp Tax assessment and not over the sum of the TPV of the units that comprise the property held under full ownership;

  6. Whereby, only units with independent use intended for residential purposes with TPV equal to or greater than €1,000,000.00 are subject to taxation, with none of the units comprising the property in question having a TPV equal to or greater than such value;

  7. The intention of the legislator in introducing such a rule was to consider as the determining element of contributive capacity residential urban real estate with luxury residential allocation, considering as such those having a TPV equal to or greater than €1,000,000.00, subjecting them to ST;

  8. The Stamp Tax assessments are furthermore unconstitutional, by violation of the principle of equality, provided for in Article 13, Article 103, no. 2 and Article 104, no. 2 of the Constitution of the Portuguese Republic ("CPR"), since, if the property in question were constituted under the horizontal property regime there would be no Stamp Tax taxation, given that the TPV assigned to each of its autonomous fractions/units intended for residential use does not exceed €1,000,000.00, with no alteration to the real estate asset value of the Petitioners, with the TCA engaging in negative discrimination of the Petitioners, "based on the mere legal situation of the property, and not the factual situation".

The arbitral tribunal was constituted on 26-10-2014, in compliance with the provisions of paragraph c) of no. 1 of Article 11 of the LRAMT.

Notified for this purpose, the Respondent Entity submitted a response, in which it invokes, in summary:

i. The situation of the Petitioners' property falls literally within item 28.1 of the GTST, being owners of a single property and not of autonomous fractions. It is abusive and illegal to interpret and apply, by analogy, the horizontal property regime to the full ownership regime;

ii. The TPV relevant for purposes of item 28 of the GTST is the total tax property value of the urban real estate and not the tax property value of each of the parts that compose it, even if susceptible to independent use, not negating this interpretation the fact that the assessment of Municipal Property Tax is calculated based on the tax property value of each of those parts;

iii. The unity of the urban real estate in vertical ownership composed of several floors or units is not affected by the fact that they are susceptible to independent economic and independent use, ceasing to be a single property, and thus its distinct parts juridically cannot be equated to autonomous fractions of a property constituted under horizontal ownership;

iv. Any other interpretation would violate the letter and spirit of item 28.1 of the GTST and the principle of legality of the essential elements of the tax, provided for in Article 103, no. 2 of the CPR, not having "certainly" any expression in law;

v. The taxation in question did not violate the principle of equality, since vertical ownership and horizontal ownership are differentiated legal institutions, the latter implying a mere legal alteration, not giving rise to a new assessment, with the legislator being able to subject to a distinct and discriminatory tax framework properties in horizontal and vertical ownership regimes, "without such discrimination necessarily being considered arbitrary";

Concluded by the legality and maintenance of the Stamp Tax assessment acts.

By supplementary petition, the joining by the Petitioners to these proceedings of the collection documents relating to the second and third installment of the Stamp Tax assessed on 17.03.2014 was admitted, as they had been received after the date of submission of this request for arbitral pronouncement.

As it is a strictly legal question, the arbitral tribunal decided to waive the holding of the meeting provided for in Article 18 of the LRAMT, by proposal of the Respondent Entity and with the consent of the Petitioners. As the Petitioners did not waive the submission of written allegations, notified to this effect, they maintained their position, developing it in light of the TCA's response and renewed their request for annulment of the assessments and consequent reimbursement of the tax wrongly paid and payment of compensatory interest.

The TCA submitted no allegations.

The Arbitral Tribunal was regularly constituted and is materially competent, in accordance with the provisions of Article 2, no. 1, paragraph a) of the LRAMT.

The parties are endowed with legal personality and capacity, are legitimate and are regularly represented, as provided for in Articles 4 and 10, no. 2 of the LRAMT and Article 1 of Order no. 112-A/2011, of 22 March.

No. 1 of Article 3 of the LRAMT provides for the possibility of accumulation of claims and joinder of claimants, determining that "The accumulation of claims even if relating to different acts and the joinder of claimants are admissible when the merit of the claims depends essentially on the assessment of the same factual circumstances and the interpretation of the same legal principles or rules."

In the case at hand, the Petitioners are co-owners of the property held under full ownership regime and intend to have the question of the tax property value that is relevant for purposes of the incidence of Stamp Tax established in item 28.1 of the GTST assessed, being thus faced with the same factual circumstances and the interpretation of the same legal principles and rules, rendering the present accumulation of claims and joinder of claimants admissible, as provided for in no. 1 of Article 3 of the LRAMT.

The proceedings do not suffer from nullities and there are no exceptions that must be considered or that prevent the merits of the case from being examined.

II. GROUNDS

2.1. Facts

Based on the elements contained in the proceedings and with interest for decision, the following facts are deemed proven:

  1. The Petitioners A..., B... C... are co-owners of the urban property held under full ownership regime (not constituted under horizontal ownership regime) located …, parish of ... and Municipality of Lisbon, described in the Real Estate Registry Office of Lisbon under no. … of the Parish of ... and registered under Article … in the urban real estate register of the parish of ..., in the proportions of 15/44, 42/132 and 15/44, respectively, with a total taxable property value of €4,097,424.82.

(see Permanent Certificate of real estate registration and property records attached to the request for arbitral pronouncement as documents nos. 1 and 2, whose contents are deemed reproduced);

  1. The identified property in full ownership is composed of 92 units with independent use (shops, mezzanines, floors and lofts), arranged over 6 floors.

(see Property records attached to the request for arbitral pronouncement as document no. 2, whose content is deemed reproduced);

  1. Of the 92 units with independent use of the urban property identified above, 21 units are allocated to commerce, services, warehouses and industrial activity, whose TPV totals €1,180,599.82.

(see Property records attached to the request for arbitral pronouncement as document no. 2, whose content is deemed reproduced);

  1. And the remaining 71 units with independent use are allocated to residential purposes, whose TPV totals €2,916,825.00.

(see Property records and copies of collection documents attached to the request for arbitral pronouncement as documents nos. 2, 3 to 218 and documents nos. 1 to 25 attached to the supplementary petition to that arbitral request, whose contents are deemed reproduced);

  1. The TPV assigned to each of the 71 units with independent use intended for residential purposes of the urban property identified above is less than €1,000,000.00, ranging between €11,935.35 and €227,276.85.

(see Property records and copies of collection documents attached to the request for arbitral pronouncement as documents nos. 2, 3 to 218 and documents nos. 1 to 25 attached to the supplementary petition to the request for arbitral pronouncement, whose contents are deemed reproduced);

  1. Petitioner A... was notified of the Stamp Tax assessment acts for the year 2013, with assessment date on 2014-03-17, contained in collection documents for payment relating to a sole installment, first and second installment of the tax assessed for each unit with independent use allocated to residential purposes, at the rate of 1%, with the payment deadline in April and July 2014, having made the respective tax payment, in the terms discriminated below:

Collection Document no. Description of Property TPV Share Payment Collection Tax Payment Date

2014 … -U-…-1/LJ €28,301.73 15/44 €96.48 €96.48 14-04-2014

2014 … -U-…-15/2D €60,939.75 15/44 €207.75 €207.75 14-04-2014

2014 …-U-…-15/3D €54,740.53 15/44 €186.62 €186.62 14-04-2014

2014 … -U-...-15/3E €70,370.15 15/44 €239.90 €239.90 14-04-2014

2014 … -U-...-15SLJ €57,403.35 15/44 €195.69 €195.69 14-04-2014

2014 … -U-...-16/LJ €22,997.13 15/44 €78.40 €78.40 14-04-2014

2014 … -U-...-17RC1 €64,981.35 15/44 €221.53 €221.53 14-04-2014

2014 … -U-...-1º €39,026.70 15/44 €133.05 €133.05 14-04-2014

2014 … -U-...-2/LJ €22,449.83 15/44 €76.53 €76.53 14-04-2014

2014 … -U-...-2E82 €59,171.55 15/44 €201.72 €201.72 14-04-2014

2014 … -U-...-3/3D €42,415.75 15/44 €144.60 €144.60 14-04-2014

2014 … -U-...-3/3E €42,963.05 15/44 €146.46 €146.46 14-04-2014

2014 … -U-...-3/SLJ €19,765.95 15/44 €67.38 €67.38 14-04-2014

2014 … -U-...-3E82 €53,635.40 15/44 €182.85 €182.85 14-04-2014

2014 … -U-...-4/LJ €20,807.93 15/44 €70.94 €70.94 14-04-2014

2014 … -U-...-4D82 €15,040.23 15/44 €51.27 €51.27 14-04-2014

2014 … -U-...-4E82 €15,040.23 15/44 €51.27 €51.27 14-04-2014

2014 … -U-...-6/1A €19,597.55 15/44 €66.81 €66.81 14-04-2014

2014 … -U-...-6/1B €11,935.35 15/44 €40.69 €40.69 14-04-2014

2014 … -U-...-6/2C €19,597.55 15/44 €66.81 €66.81 14-04-2014

2014 … -U-...-6/2D €11,935.35 15/44 €40.69 €40.69 14-04-2014

2014 … -U-...-6/2DT €56,014.05 15/44 €190.96 €190.96 14-04-2014

2014 … -U-...-6/2E €57,245.48 15/44 €195.16 €195.16 14-04-2014

2014 … -U-...-6/3E €19,797.53 15/44 €67.49 €67.49 14-04-2014

2014 … -U-...-6/3ES €57,834.88 15/44 €197.16 €197.16 14-04-2014

2014 … -U-...-6/3F €12,303.73 15/44 €41.94 €41.94 14-04-2014

2014 … -U-...-6/4D €51,204.13 15/44 €174.56 €174.56 14-04-2014

2014 … -U-...-6/4E €54,582.65 15/44 €186.08 €186.08 14-04-2014

2014 … -U-...-6/4G €19,797.53 15/44 €67.49 €67.49 14-04-2014

2014 … -U-...-6/4H €12,061.65 15/44 €41.12 €41.12 14-04-2014

2014 … -U-...-6/RCD €40,942.25 15/44 €139.58 €139.58 14-04-2014

2014 … -U-...-6/RCE €22,060.40 15/44 €75.21 €75.21 14-04-2014

2014 … -U-...-7/LJ €12,377.40 15/44 €42.20 €42.20 14-04-2014

2014 … -U-...-8/1 €48,446.58 15/44 €165.16 €165.16 14-04-2014

2014 … -U-...-8/1D €16,534.78 15/44 €56.37 €56.37 14-04-2014

2014 … -U-...-8/1E €17,134.70 15/44 €58.41 €58.41 14-04-2014

2014 … -U-...-8/1F €14,398.20 15/44 €49.08 €49.08 14-04-2014

2014 … -U-...-8/2D €16,534.78 15/44 €56.37 €56.37 14-04-2014

2014 … -U-...-8/2E €17,134.70 15/44 €58.41 €58.41 14-04-2014

2014 … -U-...-8/2F €14,345.58 15/44 €48.91 €48.91 14-04-2014

2014 … -U-...-8/3D €16,703.18 15/44 €56.94 €56.94 14-04-2014

2014 … -U-...-8/3E €17,313.63 15/44 €59.02 €59.02 14-04-2014

2014 … -U-...-8/3F €14,492.93 15/44 €49.41 €49.41 14-04-2014

2014 … -U-...-8/4D €15,987.48 15/44 €54.50 €54.50 14-04-2014

2014 … -U-...-8/4E €16,650.55 15/44 €56.76 €56.76 14-04-2014

2014 … -U-...-8/4F €12,503.70 15/44 €42.63 €42.63 14-04-2014

2014 … -U-...-8/RCD €23,923.33 15/44 €81.56 €81.56 14-04-2014

2014 … -U-...-8/RCE €23,923.33 15/44 €81.56 €81.56 14-04-2014

2014 … -U-...-8/SLD €51,183.08 15/44 €174.49 €174.49 14-04-2014

2014 … -U-...-9/1D €41,215.90 15/44 €140.51 €140.51 14-04-2014

2014 …

-U-...-9/1E €17,303.10 15/44 €58.99 €58.99 14-04-2014

2014 … -U-...-9/2D €41,215.90 15/44 €140.51 €140.51 14-04-2014

2014 … -U-...-9/2E €17,303.10 15/44 €58.99 €58.99 14-04-2014

2014 … -U-...-9/3D €41,636.90 15/44 €141.94 €141.94 14-04-2014

2014 … -U-...-9/3E €17,482.03 15/44 €59.60 €59.60 14-04-2014

2014 … -U-...-9/4D €37,879.48 15/44 €129.13 €129.13 14-04-2014

2014 … -U-...-9/4E €16,597.93 15/44 €56.58 €56.58 14-04-2014

2014 … -U-...-9/RCD €18,176.68 15/44 €61.97 €61.97 14-04-2014

2014 … -U-...-9/RCE €30,711.95 15/44 €104.70 €104.70 14-04-2014

2014 … -U-...-RC D €38,532.03 15/44 €131.36 €131.36 14-04-2014

2014 …-U-...-RC E €52,772.35 15/44 €179.91 €179.91 14-04-2014

2014 … -U-...-S/LFD €56,014.05 15/44 €190.96 €190.96 14-04-2014

2014 … (1st) -U-...-15/1E €75,474.78 15/44 €257.30 €128.65 14-04-2014

2014 … (1st) -U-...-15/2E €77,400.85 15/44 €263.87 €131.94 14-04-2014

2014 … (1st) -U-...-1D82 €99,734.90 15/44 €340.01 €170.01 14-04-2014

2014 … (1st ) -U-...-1DF82 €104,481.68 15/44 €356.19 €178.10 14-04-2014

2014… (1st ) -U-...-2DF82 €104,481.68 15/44 €356.19 €178.10 14-04-2014

2014 … (1st) -U-...-3/1 €85,220.93 15/44 €290.53 €145.27 14-04-2014

2014 … (1st ) -U-...-3DF82 €94,503.98 15/44 €322.17 €161.09 14-04-2014

2014 … (1st ) -U-...-3EF82 €114,859.33 15/44 €391.57 €195.79 14-04-2014

2014 … (1st) -U-...-6/16L €227,276.85 15/44 €774.81 €258.27 14-04-2014

2014 … (2nd ) €258.27 04-07-2014

TOTAL €9,943.76 €8,396.61

(see Copy of collection documents attached as documents nos. 3 to 74 to the request for arbitral pronouncement, whose contents are deemed reproduced);

  1. Petitioner B... was notified of the Stamp Tax assessment acts for the year 2013, with assessment date on 2014-03-17, contained in collection documents for payment relating to a sole installment, first and second installment of the tax assessed for each unit with independent use allocated to residential purposes, at the rate of 1%, with the payment deadline in April and July 2014, having made the respective tax payment, in the terms discriminated below:

Collection Document no. Description of Properties TPV Share Payment Collection Tax Payment Date

2014 … -U-...-1/LJ €28,301.73 42/132 €90.05 €90.05 04-04-2014

2014 … -U-...-15/1E €75,474.78 42/132 €240.15 €240.15 04-04-2014

2014 … -U-...-15/2D €60,939.75 42/132 €193.90 €193.90 04-04-2014

2014 … -U-...-15/2E €77,400.85 42/132 €246.28 €246.28 04-04-2014

2014 … -U-...-15/3D €54,740.53 42/132 €174.17 €174.17 04-04-2014

2014 … -U-...-15/3E €70,370.15 42/132 €223.91 €223.91 07-04-2014

2014 … -U-...-15SLJ €57,403.35 42/132 €182.65 €182.65 04-04-2014

2014 … -U-...-16/LJ €22,997.13 42/132 €73.17 €73.17 08-04-2014

2014 … -U-...-17RC1 €64,981.35 42/132 €206.76 €206.76 04-04-2014

2014 … -U-...-1º €39,026.70 42/132 €124.18 €124.18 07-04-2014

2014 … -U-...-2/LJ €22,449.83 42/132 €71.43 €71.43 04-04-2014

2014 … -U-...-2E82 €59,171.55 42/132 €188.27 €188.27 07-04-2014

2014 … -U-...-3/3D €42,415.75 42/132 €134.96 €134.96 08-04-2014

2014 … -U-...-3/3E €42,963.05 42/132 €136.70 €136.70 08-04-2014

2014 … -U-...-3/SLJ €19,765.95 42/132 €62.89 €62.89 08-04-2014

2014 … -U-...-3E82 €53,635.40 42/132 €170.66 €170.66 08-04-2014

2014 … -U-...-4/LJ €20,807.93 42/132 €66.21 €66.21 08-04-2014

2014 …

-U-...-4D82 €15,040.23 42/132 €47.86 €47.86 08-04-2014

2014 … -U-...-4E82 €15,040.23 42/132 €47.86 €47.86 08-04-2014

2014 … -U-...-6/1A €19,597.55 42/132 €62.36 €62.36 08-04-2014

2014 … -U-...-6/1B €11,935.35 42/132 €37.98 €37.98 08-04-2014

2014 … -U-...-6/2C €19,597.55 42/132 €62.36 €62.36 08-04-2014

2014 … -U-...-6/2D €11,935.35 42/132 €37.98 €37.98 08-04-2014

2014 … -U-...-6/2DT €56,014.05 42/132 €178.23 €178.23 15-04-2014

2014 … -U-...-6/2E €57,245.48 42/132 €182.14 €182.14 07-04-2014

2014 … -U-...-6/3E €19,797.53 42/132 €62.99 €62.99 08-04-2014

2014 … -U-...-6/3ES €57,834.88 42/132 €184.02 €184.02 15-04-2014

2014 … -U-...-6/3F €12,303.73 42/132 €39.15 €39.15 15-04-2014

2014 … -U-...-6/4D €51,204.13 42/132 €162.92 €162.92 15-04-2014

2014 … -U-...-6/4E €54,582.65 42/132 €173.67 €173.67 15-04-2014

2014 … -U-...-6/4G €19,797.53 42/132 €62.99 €62.99 07-04-2014

2014 … -U-...-6/4H €12,061.65 42/132 €38.38 €38.38 15-04-2014

2014 … -U-...-6/RCD €40,942.25 42/132 €130.27 €130.27 07-04-2014

2014 … -U-...-6/RCE €22,060.40 42/132 €70.19 €70.19 15-04-2014

2014 … -U-...-7/LJ €12,377.40 42/132 €39.38 €39.38 07-04-2014

2014 … -U-...-8/1 €48,446.58 42/132 €154.15 €154.15 15-04-2014

2014 … -U-...-8/1D €16,534.78 42/132 €52.61 €52.61 15-04-2014

2014 … -U-...-8/1E €17,134.70 42/132 €54.52 €54.52 15-04-2014

2014 … -U-...-8/1F €14,398.20 42/132 €45.81 €45.81 15-04-2014

2014 … -U-...-8/2D €16,534.78 42/132 €52.61 €52.61 15-04-2014

2014 … -U-...-8/2E €17,134.70 42/132 €54.52 €54.52 15-04-2014

2014 … -U-...-8/2F €14,345.58 42/132 €45.65 €45.65 15-04-2014

2014 … -U-...-8/3D €16,703.18 42/132 €53.15 €53.15 15-04-2014

2014 … -U-...-8/3E €17,313.63 42/132 €55.09 €55.09 15-04-2014

2014 … -U-...-8/3F €14,492.93 42/132 €46.11 €46.11 15-04-2014

2014 … -U-...-8/4D €15,987.48 42/132 €50.87 €50.87 04-04-2014

2014 … -U-...-8/4E €16,650.55 42/132 €52.98 €52.98 15-04-2014

2014 … -U-...-8/4F €12,503.70 42/132 €39.78 €39.78 07-04-2014

2014 … -U-...-8/RCD €23,923.33 42/132 €76.12 €76.12 15-04-2014

2014 … -U-...-8/RCE €23,923.33 42/132 €76.12 €76.12 04-04-2014

2014 … -U-...-8/SLD €51,183.08 42/132 €162.86 €162.86 08-04-2014

2014 … -U-...-9/1D €41,215.90 42/132 €131.14 €131.14 04-04-2014

2014 … -U-...-9/1E €17,303.10 42/132 €55.06 €55.06 07-04-2014

2014 … -U-...-9/2D €41,215.90 42/132 €131.14 €131.14 04-04-2014

2014 … -U-...-9/2E €17,303.10 42/132 €55.06 €55.06 07-04-2014

2014 … -U-...-9/3D €41,636.90 42/132 €132.48 €132.48 04-04-2014

2014 … -U-...-9/3E €17,482.03 42/132 €55.62 €55.62 07-04-2014

2014 … -U-...-9/4D €37,879.48 42/132 €120.53 €120.53 08-04-2014

2014 … -U-...-9/4E €16,597.93 42/132 €52.81 €52.81 07-04-2014

2014 … -U-...-9/RCD €18,176.68 42/132 €57.83 €57.83 08-04-2014

2014 … -U-...-9/RCE €30,711.95 42/132 €97.72 €97.72 15-04-2014

2014 … -U-...-RC D €38,532.03 42/132 €122.60 €122.60 04-04-2014

2014 … -U-...-RC E €52,772.35 42/132 €167.91 €167.91 07-04-2014

2014 … -U-...-S/LFD €56,014.05 42/132 €178.23 €178.23 04-04-2014

2014 … (1st ) -U-...-1D82 €99,734.90 42/132 €317.34 €158.67 15-04-2014

2014 …1st)

-U-...-1DF82 €104,481.68 42/132 €332.44 €166.22 15-04-2014

2014 … (1st) -U-...-2DF82 €104,481.68 42/132 €332.44 €166.22 15-04-2014

2014 … (1st ) -U-...-3/1 €85,220.93 42/132 €271.16 €135.58 15-04-2014

2014 … (1st) -U-...-3DF82 €94,503.98 42/132 €300.69 €150.35 15-04-2014

2014 … (1st) -U-...-3EF82 €114,859.33 42/132 €365.46 €182.73 15-04-2014

2014 … (1st ) -U-...-6/16L €227,276.85 42/132 €723.15 €241.05 15-04-2014

2014 … (2nd) €241.05 08-07-2014

TOTAL €9,280.83 €8,080.02

(see Copy of collection documents attached as documents nos. 75 to 146 to the request for arbitral pronouncement, whose contents are deemed reproduced);

  1. Petitioner C... was notified of the Stamp Tax assessment acts for the year 2013, with assessment date on 2014-03-17, contained in collection documents for payment relating to a sole installment, first and second installment of the tax assessed for each unit with independent use allocated to residential purposes, at the rate of 1%, with the payment deadline in April and July 2014, having made the respective tax payment, in the terms discriminated below:

Collection Document no. Description of Properties TPV Share Payment Collection Tax Payment Date

2014 … -U-...-1/LJ €28,301.73 15/44 €96.48 €96.48 13-04-2014

2014 … -U-...-15/2D €60,939.75 15/44 €207.75 €207.75 13-04-2014

2014 … -U-...-15/3D €54,740.53 15/44 €186.62 €186.62 13-04-2014

2014 … -U-...-15/3E €70,370.15 15/44 €239.90 €239.90 13-04-2014

2014 … -U-...-15SLJ €57,403.35 15/44 €195.69 €195.69 13-04-2014

2014 … -U-...-16/LJ €22,997.13 15/44 €78.40 €78.40 13-04-2014

2014 … -U-...-17RC1 €64,981.35 15/44 €221.53 €221.53 13-04-2014

2014 … -U-...-1º €39,026.70 15/44 €133.05 €133.05 13-04-2014

2014 … -U-...-2/LJ €22,449.83 15/44 €76.53 €76.53 13-04-2014

2014 … -U-...-2E82 €59,171.55 15/44 €201.72 €201.72 13-04-2014

2014 … -U-...-3/3D €42,415.75 15/44 €144.60 €144.60 13-04-2014

2014 … -U-...-3/3E €42,963.05 15/44 €146.46 €146.46 13-04-2014

2014 … -U-...-3/SLJ €19,765.95 15/44 €67.38 €67.38 13-04-2014

2014 … -U-...-3E82 €53,635.40 15/44 €182.85 €182.85 13-04-2014

2014 … -U-...-4/LJ €20,807.93 15/44 €70.94 €70.94 13-04-2014

2014 … -U-...-4D82 €15,040.23 15/44 €51.27 €51.27 13-04-2014

2014 … -U-...-4E82 €15,040.23 15/44 €51.27 €51.27 13-04-2014

2014 … -U-...-6/1A €19,597.55 15/44 €66.81 €66.81 13-04-2014

2014 … -U-...-6/1B €11,935.35 15/44 €40.69 €40.69 13-04-2014

2014 … -U-...-6/2C €19,597.55 15/44 €66.81 €66.81 13-04-2014

2014 … -U-...-6/2D €11,935.35 15/44 €40.69 €40.69 13-04-2014

2014 … -U-...-6/2DT €56,014.05 15/44 €190.96 €190.96 13-04-2014

2014 … -U-...-6/2E €57,245.48 15/44 €195.16 €195.16 13-04-2014

2014 … -U-...-6/3E €19,797.53 15/44 €67.49 €67.49 13-04-2014

2014 … -U-...-6/3ES €57,834.88 15/44 €197.16 €197.16 13-04-2014

2014 … -U-...-6/3F €12,303.73 15/44 €41.94 €41.94 13-04-2014

2014 … -U-...-6/4D €51,204.13 15/44 €174.56 €174.56 13-04-2014

2014 … -U-...-6/4E €54,582.65 15/44 €186.08 €186.08 13-04-2014

2014 … -U-...-6/4G €19,797.53 15/44 €67.49 €67.49 13-04-2014

2014 … -U-...-6/4H €12,061.65 15/44 €41.12 €41.12 13-04-2014

2014 … -U-...-6/RCD €40,942.25 15/44 €139.58 €139.58 13-04-2014

2014 … -U-...-6/RCE €22,060.40 15/44 €75.21 €75.21 13-04-2014

2014 … -U-...-7/LJ €12,377.40 15/44 €42.20 €42.20 13-04-2014

2014 … -U-...-8/1 €48,446.58 15/44 €165.16 €165.16 13-04-2014

2014 … -U-...-8/1D €16,534.78 15/44 €56.37 €56.37 13-04-2014

2014 … -U-...-8/1E €17,134.70 15/44 €58.41 €58.41 13-04-2014

2014 … -U-...-8/1F €14,398.20 15/44 €49.08 €49.08 13-04-2014

2014 … -U-...-8/2D €16,534.78 15/44 €56.37 €56.37 13-04-2014

2014 … -U-...-8/2E €17,134.70 15/44 €58.41 €58.41 13-04-2014

2014 … -U-...-8/2F €14,345.58 15/44 €48.91 €48.91 13-04-2014

2014 … -U-...-8/3D €16,703.18 15/44 €56.94 €56.94 13-04-2014

2014 … -U-...-8/3E €17,313.63 15/44 €59.02 €59.02 13-04-2014

2014 … -U-...-8/3F €14,492.93 15/44 €49.41 €49.41 13-04-2014

2014 … -U-...-8/4D €15,987.48 15/44 €54.50 €54.50 13-04-2014

2014 … -U-...-8/4E €16,650.55 15/44 €56.76 €56.76 13-04-2014

2014 … -U-...-8/4F €12,503.70 15/44 €42.63 €42.63 13-04-2014

2014 … -U-...-8/RCD €23,923.33 15/44 €81.56 €81.56 13-04-2014

2014 … -U-...-8/RCE €23,923.33 15/44 €81.56 €81.56 13-04-2014

2014 … -U-...-8/SLD €51,183.08 15/44 €174.49 €174.49 13-04-2014

2014 … -U-...-9/1D €41,215.90 15/44 €140.51 €140.51 13-04-2014

2014 … -U-...-9/1E €17,303.10 15/44 €58.99 €58.99 13-04-2014

2014 … -U-...-9/2D €41,215.90 15/44 €140.51 €140.51 13-04-2014

2014 … -U-...-9/2E €17,303.10 15/44 €58.99 €58.99 13-04-2014

2014 … -U-...-9/3D €41,636.90 15/44 €141.94 €141.94 13-04-2014

2014 … -U-...-9/3E €17,482.03 15/44 €59.60 €59.60 13-04-2014

2014 … -U-...-9/4D €37,879.48 15/44 €129.13 €129.13 13-04-2014

2014 … -U-...-9/4E €16,597.93 15/44 €56.58 €56.58 13-04-2014

2014 … -U-...-9/RCD €18,176.68 15/44 €61.97 €61.97 13-04-2014

2014 … -U-...-9/RCE €30,711.95 15/44 €104.70 €104.70 13-04-2014

2014 … -U-...-RC D €38,532.03 15/44 €131.36 €131.36 13-04-2014

2014 … -U-...-RC E €52,772.35 15/44 €179.91 €179.91 13-04-2014

2014 … -U-...-S/LFD €56,014.05 15/44 €190.96 €190.96 13-04-2014

2014 … (1st) -U-...-15/1E €75,474.78 15/44 €257.30 €128.65 13-04-2014

2014 … (1st) -U-...-15/2E €77,400.85 15/44 €263.87 €131.94 13-04-2014

2014 … (1st) -U-...-1D82 €99,734.90 15/44 €340.01 €170.01 13-04-2014

2014 … (1st) -U-...-1DF82 €104,481.68 15/44 €356.19 €178.10 13-04-2014

2014 … (1st) -U-...-2DF82 €104,481.68 15/44 €356.19 €178.10 13-04-2014

2014 … (1st) -U-...-3/1 €85,220.93 15/44 €290.53 €145.27 13-04-2014

2014 … (1st) -U-...-3DF82 €94,503.98 15/44 €322.17 €161.09 13-04-2014

2014 … (1st) -U-...-3EF82 €114,859.33 15/44 €391.57 €195.79 13-04-2014

2014 … (1st) -U-...-6/16L €227,276.85 15/44 €774.81 €258.27 13-04-2014

2014 … (2nd) €258.27 06-07-2014

TOTAL €9,943.76 €8,396.61

(see Copy of collection documents attached as documents nos. 147 to 218 to the request for arbitral pronouncement, whose contents are deemed reproduced);

  1. Petitioner A... was further notified for payment of the second and third installment of the Stamp Tax for the year 2013, with assessment date on 2014-03-17, assessed for each unit with independent use allocated to residential purposes, with the payment deadline in November 2014, having made the respective payment, in the amount of €1,547.15, contained in the collection documents, in the terms discriminated below:

Collection Document no. Description of Properties TPV Share Payment Collection Tax Payment Date

2014 … (2nd Installment) -U-...-15/1E €75,474.78 15/44 €257.30 €128.65 02-11-2014

2014 … (2nd Installment) -U-...-15/2E €77,400.85 15/44 €263.87 €131.93 02-11-2014

2014 … (2nd Installment) -U-...-1D82 €99,734.90 15/44 €340.01 €170.00 02-11-2014

2014 … (2nd Installment) -U-...-1DF82 €104,481.68 15/44 €356.19 €178.09 02-11-2014

2014 … (2nd Installment) -U-...-2DF82 €104,481.68 15/44 €356.19 €178.09 02-11-2014

2014… (2nd Installment) -U-...-3/1 €85,220.93 15/44 €290.53 €145.26 02-11-2014

2014 … (2nd Installment) -U-...-3DF82 €94,503.98 15/44 €322.17 €161.08 02-11-2014

2014 … (2nd Installment) -U-...-3EF82 €114,859.33 15/44 €391.57 €195.78 02-11-2014

2014 … (3rd Installment) -U-...-6/16L €227,276.85 15/44 €774.81 €258.27 02-11-2014

TOTAL €1,547.15

(see Copy of collection documents attached as documents nos. 1 to 9 to the supplementary petition to the request for arbitral pronouncement submitted by the Petitioners, whose contents are deemed reproduced);

  1. Petitioner C... was further notified for payment of the second and third installment of the Stamp Tax for the year 2013, with assessment date on 2014-03-17, assessed for each unit with independent use allocated to residential purposes, at the rate of 1%, with the payment deadline in November 2014, having made the respective payment, in the amount of €1,547.15, contained in the collection documents, in the terms discriminated below:

Collection Document no. Description of Property TPV Share Payment Collection Tax Payment Date

2014… (2nd Installment) -U-...-15/1E €75,474.78 15/44 €257.30 €128.65 02-11-2014

2014 … (2nd Installment) -U-...-15/2E €77,400.85 15/44 €263.87 €131.93 02-11-2014

2014 … (2nd Installment) -U-...-1D82 €99,734.90 15/44 €340.01 €170.00 02-11-2014

2014 … (2nd Installment) -U-...-1DF82 €104,481.68 15/44 €356.19 €178.09 02-11-2014

2014 …0 (2nd Installment) -U-...-2DF82 €104,481.68 15/44 €356.19 €178.09 02-11-2014

2014 … (2nd Installment) -U-...-3/1 €85,220.93 15/44 €290.53 €145.26 02-11-2014

2014 … (2nd Installment) -U-...-3DF82 €94,503.98 15/44 €322.17 €161.08 02-11-2014

2014 … (2nd Installment) -U-...-3EF82 €114,859.33 15/44 €391.57 €195.78 02-11-2014

2014 … (3rd Installment) -U-...-6/16L €227,276.85 15/44 €774.81 €258.27 02-11-2014

TOTAL €1,547.15

(see Copy of collection documents attached as documents nos. 10 to 18 to the supplementary petition to the request for arbitral pronouncement submitted by the Petitioners, whose contents are deemed reproduced);

  1. Petitioner B... was further notified for payment of the second and third installment of the Stamp Tax for the year 2013, with assessment date on 2014-03-17, assessed for each unit with independent use allocated to residential purposes, at the rate of 1%, with the payment deadline in November 2014, having made the respective payment, in the amount of €1,200.81, contained in the collection documents, in the terms discriminated below:

Collection Document no. Description of Property TPV Share Payment Collection Tax Payment Date

2014 … (2nd Installment) -U-...-1D82 €99,734.90 42/132 €317.34 €158.67 03-11-2014

2014 … (2nd Installment) -U-...-1DF82 €104,481.68 42/132 €332.44 €166.22 03-11-2014

2014 … (2nd Installment) -U-...-2DF82 €104,481.68 42/132 €332.44 €166.22 03-11-2014

2014 … (2nd Installment) -U-...-3/1 €85,220.93 42/132 €271.16 €135.58 03-11-2014

2014 … (2nd Installment) -U-...-3DF82 €94,503.98 42/132 €300.69 €150.34 03-11-2014

2014 … (2nd Installment) -U-...-3EF82 €114,859.33 42/132 €365.46 €182.73 03-11-2014

2014 … (3rd Installment) -U-...-6/16L €227,276.85 42/132 €723.15 €241.05 03-11-2014

TOTAL €1,200.81

(see Copy of collection documents attached as documents nos. 19 to 25 to the supplementary petition to the request for arbitral pronouncement submitted by the Petitioners, whose contents are deemed reproduced);

  1. In the notification documents for payment of the Stamp Tax for the year 2013, the Tax Property Value of the Property appears as – total subject to Tax: 2,916,825.00.

(see Collection documents attached to the request for arbitral pronouncement as documents 3 to 218 and documents 1 to 25 attached by separate petition to the arbitral request, whose contents are deemed reproduced)

  1. The above identified Stamp Tax assessments were made on the basis of item 28.1 of the GTST, at the rate of 1%.

(see Collection documents attached to the request for arbitral pronouncement as documents 3 to 218 and documents 1 to 25 attached by separate petition to the arbitral request, whose contents are deemed reproduced);

  1. From the referred Stamp Tax assessments resulted a total amount of 29,168.35 euros.

(see Collection documents attached to the request for arbitral pronouncement as documents 3 to 218 and documents 1 to 25 attached by separate petition to the arbitral request, whose contents are deemed reproduced).

Given the positions assumed by the parties and given that the question to be resolved by this arbitral tribunal is strictly legal (identified below), the facts deemed proven were based on the documents attached to the proceedings and marked in each of the points of the factual matter, which were not disputed.

There are no other facts not proven with interest for the decision of the case.

2.2 Law

The question to be decided in these arbitral proceedings is whether the tax assessment acts for Stamp Tax are illegal, by erroneous interpretation of item no. 28.1 of the GTST, added by Law no. 55-A/2012, of 29 October, in considering that the tax property value ("TPV") of an urban property held under full ownership (not constituted under horizontal ownership regime), with floors or independently used units allocated to residential purposes, that is relevant for purposes of incidence of that item consists of the value resulting from the sum of the TPV attributed to each of those floors or units. If the Stamp Tax assessments also suffer from the defect of unconstitutionality, by violation of the principle of equality.

On the question subject of these proceedings, this Arbitral Tribunal has already pronounced itself, namely in the decisions rendered in cases nos. 50/2013-T; 132/2013-T and 194/2014-T, whose arbitral jurisprudence we follow.

As results from the established facts, the TCA's services assessed Stamp Tax to the Petitioners, at the rate of 1%, by considering that the TPV of the urban property constituted under full ownership, of which they are co-owners, is greater than €1,000,000, taking into account the sum of the TPV of each of the 71 units with independent use allocated to residential purposes, which comprise that property, thus framing it within item 28.1.

The Petitioners argue that the TCA wrongly assessed Stamp Tax on realities that do not meet the requirements of item 28 of the GTST, since, in their understanding, pursuant to the Municipal Property Tax Code it is over the TPV considered separately for each unit with independent use that will be calculated and assessed the Municipal Property Tax, in accordance with the provisions of no. 3 of Article 12 and no. 1 of Article 113 of that normative, as if it were an autonomous fraction. Such treatment must be identical for purposes of Stamp Tax assessment and not over the sum of the TPV of the units that comprise the property held under full ownership, given the subsidiary application of the Municipal Property Tax Code standards, by force of the provisions of no. 2 of Article 67 of the Stamp Tax Code. Whereby, only units with independent use intended for residential purposes with TPV equal to or greater than €1,000,000.00 are subject to taxation, with none of the units comprising the property in question having a TPV equal to or greater than such value.

For its part, the Respondent maintains, in summary that, the TPV that is relevant for purposes of incidence of item 28.1 of the GTST is the total TPV of the urban property and not the TPV of each one of the parts that compose the property in vertical ownership, even if susceptible to independent use.

Let us examine.

Article 4 of Law no. 55-A/2012, of 29 October added to the GTST item no. 28, with the following wording (in its original version):

"28 — Ownership, usufruct or right of superficies of urban real estate whose tax property value contained in the register, pursuant to the Code of Municipal Property Tax (CMPT), is equal to or greater than €1,000,000 — over the tax property value used for the purpose of Municipal Property Tax:

28.1 — For property with residential allocation — 1%;

28.2 — For property, when the taxable 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 order of the Minister of Finance — 7.5%."

(italics ours)

Providing Article 6 of the above-cited Law as to the year 2013 that, "the assessment of stamp tax provided for in item no. 28 of the respective General Table shall be based on the same tax property value used for the purposes of assessment of municipal property tax to be carried out in that year."

At the time of the facts, the requirements of incidence of item 28.1 of the GTST are thus urban properties, with residential allocation, whose TPV contained in the register, pursuant to the CMPT, is equal to or greater than 1,000,000.00 euros.

Law no. 55-A/2012, of 29 October, by reference to item 28 of the GTST further established various amendments to the Stamp Tax Code, namely as to its assessment and payment, expressly referring to the rules provided for in the CMPT (see Article 23, no. 7, Article 44, no. 5, Article 46, no. 5, Article 49, no. 3 of the Stamp Tax Code) with the necessary adjustments, providing in no. 2 of Article 67 of the Stamp Tax Code that, "To matters not regulated in this Code regarding item no. 28 of the General Table, the provisions of the CMPT apply, subsidiarily."

From the referred rules, it is evident that the concept of "property with residential allocation" provided for in the above-mentioned item no. 28, no. 1 is not defined in the Stamp Tax Code, nor in the cited Law, nor in the CMPT, whose rules are of subsidiary application, as provided for in no. 2 of Article 67 of the Stamp Tax Code.

On this question, this Arbitral Tribunal has already pronounced itself in the decision rendered in case no. 53/2013-T, which we follow here, in understanding that a "property with residential allocation" must be "a property that already has effective allocation to that purpose".

It is unequivocal that a property in full ownership or under vertical ownership regime constitutes an urban property, pursuant to the provisions of no. 1 of Article 2 and Article 4 of the CMPT, applicable subsidiarily by force of the provisions of Article 67 of the Stamp Tax Code, and it is also certain that, both for purposes of incidence of item 28.1 of the GTST, and for purposes of classification of urban properties, pursuant to the provisions of Article 6 of the CMPT (also of subsidiary application), the legislator makes no distinction between properties constituted in vertical ownership and under horizontal ownership regime (as mentioned in the arbitral decisions rendered in cases nos. 50/2013-T and 132/2013-T), with the tax requirement of item 28.1 being urban properties that are actually already allocated to residential purposes, since, what is relevant is the effective and current use of each of the properties.

What then will be the tax property value relevant in the case of properties in full ownership composed of floors or units susceptible to independent use with "residential allocation", for purposes of incidence of item 28.1 of the GTST?

The tax property value of each property is determined pursuant to Article 38 and following of the CMPT. In the case of a property under full ownership or vertical ownership regime, each floor or unit with independent use that comprises it is equally subject to assessment, being assigned a tax property value to each one of those floors or units, in conformity with the provisions of Articles 12 and 38 and following of that normative.

Indeed, no. 1 of Article 12 of the CMPT establishes that "property registers are records containing, in particular, the characterization of properties, the location and their tax property value, the identification of owners (…)", providing in no. 3 thereof that, "Each floor or part of property susceptible to independent use is considered separately in the property register entry, which also discriminates the respective tax property value", and, in conformity with the provisions of no. 1 of Article 119 of the CMPT, it is over that property value separately considered that the Municipal Property Tax will be calculated and assessed in relation to each floor or part with independent use that comprise an urban property under vertical or full ownership regime, given the autonomy of each one of those units.

As write Silvério Mateus and Freitas Corvelo, in "the Taxes on Real Estate Property and the Stamp Tax, Commented and Annotated", 1st Edition, Engifisco, pages 159 and 160, "Another aspect that should be evidenced in the register concerns the need to make relevant the autonomy that, within the same property, can be attributed to each one of its parts, functionally and economically independent. In these cases, the property register entry not only must make reference to each one of these parts but must make express reference to the tax property value corresponding to each one of them.

An example that can illustrate this situation is the case of an urban property, not constituted under horizontal ownership regime and that is composed of several floors. (…) However, as each one of these units can be subject to lease or to any other use by its respective holder, the register must evidence these units and must assign tax property value to each one of them." (italics ours)

As evidenced in the Arbitral Award rendered in case no. 194/2014-T, which we follow here, "the Municipal Property Tax Code establishes, both as to property register entry and discrimination of the respective tax property value, and as to tax assessment, the autonomization of parts of urban property susceptible to independent use and the segregation/individualization of TPV relating to each floor or part of property susceptible to independent use.

Thus to each property, pursuant to the concept defined in Article 2 of the CMPT, corresponds a sole article in the register (no. 2 of Article 82 of the CMPT) but, according to no. 3 of Article 12 of the same Code, referring to the concept of property register (…), "each floor or part of property susceptible to independent use is considered separately in the property register entry, which also discriminates the respective tax property value (…).

That is, the rule is autonomization, characterization as "property" of each part of a building, as long as functionally and economically independent, susceptible to independent use, in accordance with the concept of property defined in no. 1 of Article 2 of the CMPT: property is any fraction (of territory, encompassing waters, plantations, buildings and constructions of any nature incorporated or resting therein, with a character of permanence) as long as it forms part of the patrimony of a natural or legal person and, in normal circumstances, has economic value, as well as waters, plantations, buildings or constructions, in the preceding circumstances, endowed with economic autonomy."

Thus, when no. 4 of Article 2 provides that "For the purposes of this tax, each autonomous fraction, under the horizontal ownership regime, is deemed to constitute a property", it does not establish properly an exceptional or special regime for properties in horizontal ownership.

After all, each building in horizontal ownership (Article 92 of the CMPT) has only one property register entry (no. 1), generically describing the building and mentioning the fact that it is found under horizontal ownership regime (no. 2) and the matrix autonomy is materialized in the assignment to each one of the autonomous fractions, detailed and individualized, of a capital letter, according to alphabetical order (no. 3). This seems to be the specificity of buildings in horizontal ownership; in other cases, of properties in vertical or full ownership, the units or floors with autonomy but without the status of horizontal ownership, the register also enshrines autonomy but evidencing the units with indication of the type of floor/story." (italics ours)

Indeed, when an urban property constituted in full ownership moves to the horizontal ownership regime it maintains the same property register article number, equally maintaining the tax property value that was assigned to each one of its autonomous parts or floors, such fractions coming to be identified by alphabet letters, since there is no place for a new assessment, with only a merely legal alteration of the property regime being verified. It is thus verified that, in the seat of Municipal Property Tax the rules and principles are the same, whether for properties constituted in horizontal ownership, whether for properties constituted in full or vertical ownership, namely in what is provided as to assessment and determination of TPV, entry in the register and Municipal Property Tax assessment.

Considering that in light of the CMPT, the floors or units with independent use that compose an urban property under full or vertical ownership regime are taxed autonomously, since Municipal Property Tax is assessed individually over the TPV attributed to each one of those units or parts with independent use, given the relevance of their autonomy, necessarily, the principles and the rules must be the same in the seat of Stamp Tax (namely, in what is prescribed as to assessment and determination of TPV, entry in the register and Municipal Property Tax assessment), whether because the item 28.1 of the GTST so imposes in fine, whether by subsidiary application, by force of the provisions of no. 2 of Article 67 of the Stamp Tax Code.

In conformity, and, in the assumption that the legislator in question "established the most appropriate solutions and knew how to express his thought in adequate terms" (in accordance with the provision of no. 3 of Article 9 of the Civil Code, by reference of Article 11 of the General Tax Law), only units, parts or independently used units with residential allocation whose TPV contained in the register is equal to or greater than €1,000,000.00 are covered by the rule of incidence of item 28.1 of the GTST.

As emphasized in the arbitral decision rendered in case no. 132/2013-T, "The uniform criterion that is thus imposed is that which determines that the incidence of the rule in question only takes place when one of the parts, floors or independently used units of property in horizontal or full ownership with residential allocation possesses a TPV greater than €1,000,000.00" (italics ours) and not when this value results from the sum of the TPV attributed to each floor or unit with independent use.

As also mentioned in the arbitral decision rendered in case no. 50/2013-T "The criterion intended by the TCA, of considering the value of the sum of the TPVs attributed to the parts, floors or independently used units, with the argument that the property is not constituted under horizontal ownership regime, finds no legal support and is contrary to the criterion that is applicable in the seat of CMPT and, by reference, in the seat of Stamp Tax.

To which is added the fact that the law itself expressly establishes, in the final part of item 28 of the GTST, that the Stamp Tax to be applied to urban properties with value equal to or greater than €1,000,000.00 – "over the tax property value used for the purpose of Municipal Property Tax."

In light of the foregoing, one cannot agree with the TCA in asserting that the Petitioners intend, for purposes of Stamp Tax assessment, is that there exist "analogy between the regime of full ownership and that of horizontal ownership", since, as they correctly point out, (apart from never having defended such an argument), recourse to analogy implies that there was a gap in the law, which does not occur in the present case (to say nothing of the provisions of no. 4 of Article 11 of the General Tax Law).

Rather, it is the provision itself established in item 28.1 of the GTST in fine that determines that Stamp Tax applies "over the tax property value used for the purpose of Municipal Property Tax", whereby, what is relevant for purposes of tax incidence is the tax property value individualized for each one of the parts, floors or units with independent use over which Municipal Property Tax is assessed annually, that is, the Stamp Tax assessment obeys the rules provided for in the CMPT, by express reference of the mentioned item 28 and of no. 2 of Article 67 of the Stamp Tax Code and not because "in the horizontal ownership regime the fractions constitute properties. Not being the property subject to this regime, juridically the fractions are parts susceptible to independent use, without there being common parts", as the TCA alleges.

In light of the foregoing, we equally cannot agree with the Respondent Entity in asserting that the interpretation here accepted and defended by the Petitioners violates the principle of tax legality, provided for in no. 2 of Article 103 of the CPR, by allegedly offending the letter and spirit of item 28.1 of the GTST. Well, on the contrary, the TCA's interpretation is that violates the principle of tax legality, calling into question the principle of legal certainty and protection of confidence.

The Respondent itself in making a brief review of the provisions of the previous Real Estate Contribution Code and the Tax on Industry and Agriculture, Municipal Contribution and the provisions contained in the CMPT recognizes the relevance of the autonomy that "within the same property, can be attributed to each one of its parts, economically and functionally independent", for purposes of entry in the property register.

So much so that, the TCA to assess item 28.1 of the GTST, here at issue, departs from each one of those floors or independently used units, making the rate of 1% apply over the tax property value attributed to each one of those units with residential allocation, in accordance with the rules of the CMPT, and then sums that tax property value, overlooking that the property in question is composed of more independently used units with allocation to other purposes, namely, commercial and services.

Moreover and contrary to the law, the TCA cannot arbitrarily sum only the TPV of the independently used units with residential allocation, to reach a tax property value equal to or greater than €1,000,000.00, when the property in question is composed of other floors or independently used units with uses independent allocated to other purposes.

For, following the reasoning of the TCA, in defending that it is a requirement of incidence of item 28.1 of the GTST the overall tax property value of the property and not that of each one of its parts, then it cannot thus come to tax the tax, since the property of which the Petitioners are co-owners is composed of floors or units with independent use that are allocated to residential use, commerce and services, totaling a tax property value of €4,097,424.82 (and not €2,916,825.00), not thus having the factual and legal requirements met for incidence of item 28.1 of the GTST, since its floors are not solely allocated to residential purposes.

The interpretation in the sense that what is relevant in the rule of incidence of item 28.1 of the GTST is the TPV attributed to each of the autonomous parts or units with independent use with residential allocation and not the value resulting from the sum of those tax property values is that which equally results from its ratio legis, as imposed by no. 1 of Article 9 of the Civil Code, applicable by force of the provisions of Article 11 of the General Tax Law.

Indeed, in the presentation and discussion of Bill no. 96/XII/2nd (which can be consulted in the Diário da Assembleia da República [Journal of the Assembly of the Republic] I Series no. 9/XII/2012, of 11-10-2012) in the Assembly of the Republic, the Secretary of State for Tax Affairs, declared at one point the following:

"This is the first time that Portugal has created a special taxation on properties of high value intended for residential use. This rate will be 0.5% to 0.8%, in 2012, and 1%, in 2013, and will apply to homes with a value equal to or greater than 1 million euros. With the creation of this additional tax rate, the tax burden required of these owners will be significantly increased in 2012 and in 2013".

(bold and italics ours)

To this end, we follow the arbitral decision rendered in case no. 50/2013-T in stating that "The legislator in introducing this legislative innovation considered as the determining element of contributive capacity urban properties, with residential allocation, of high value (luxury), more precisely, of value equal to or greater than €1,000,000.00, on which it came to apply a special tax rate of stamp tax, intending to introduce a principle of taxation on wealth externalized in the ownership, usufruct or right of superficies of urban properties of luxury with residential allocation. For this reason, the criterion was application of the new rate to urban properties with residential allocation, whose TPV is equal to or greater than €1,000,000.00.

This same conclusion results from the analysis of the discussion of Bill no. 96/XII in the Assembly of the Republic, available for consultation in the Diário da Assembleia da República, I series, no. 9/XII/2, of October 11, 2012.

The justification of the measure designated as "special tax on residential urban properties of higher value" is based on the invocation of the principles of social equity and fiscal justice, calling to contribute in a more intense way the holders of properties of high value intended for residential use, bringing to bear the new special rate on the "homes of value equal to or greater than 1 million euros."

Clearly the legislator understood that this value, when attributed to a residential unit (house, autonomous fraction or floor with independent use) translates a contributive capacity above the average and, as such, susceptible of determining a special contribution to ensure the fair distribution of tax effort."

(italics ours)

In accordance with the established factuality, the TPV of each one of the 71 units with independent use allocated to residential purposes, which comprise the property held under full ownership of which the Petitioners are co-owners, and, which was determined according to the rules of the CMPT, is less than €1,000,000.00, whereby, the requirements for taxation of item 28.1 of the GTST are thus not met.

Whereby, the Stamp Tax assessment acts, subject of the present arbitral pronouncement proceeding, in the total amount of €29,168.35, suffer from the defect of violation of the provisions of item 28.1 of the GTST and of no. 2 of Article 67 of the Stamp Tax Code, by error over its legal requirements, thus declaring the illegality of those assessment acts, with the consequent annulment thereof (Article 135 of the Administrative Procedure Code, of subsidiary application ex vi Article 29, no. 1, paragraphs a) and d) of the LRAMT).

Thus prejudiced is the examination of the other questions raised by the Petitioners, namely the alleged defect of unconstitutionality, due to the declaration of illegality of the above-identified assessments, by substantive defect that prevents the renewal of the acts, effectively ensuring the protection of the rights of the Petitioners, in harmony with the provision of Article 124 of the Code of Tax Procedure and Process, subsidiarily applicable by force of the provisions in paragraph a) of no. 1 of Article 29 of the LRAMT.

III. Restitution of Tax Paid and Compensatory Interest

The Petitioners further request the restitution of the tax already paid, plus the respective compensatory interest.

Let us examine.

Paragraph b) of no. 1 of Article 24 of the LRAMT provides that the TCA must "reestablish the situation that would have existed if the tax act subject of the arbitral decision had not been performed, adopting the acts and operations necessary for this purpose", in the exact terms of the merit of the arbitral decision in favor of the taxable person and until the end of the deadline provided for the voluntary execution of the judgments of the tax courts, in the event that an appeal has not been filed or the arbitral decision on the merit of the claim has been impugned.

Moreover, Article 100 of the General Tax Law - under the heading "effects of a decision favorable to the taxable person" - determines that the "tax administration is obliged, in case of full or partial merit of complaints or administrative appeals, or of judicial proceedings in favor of the taxable person, to the immediate and complete reestablishment of the situation that would have existed if the illegality had not been committed, including the payment of compensatory interest, in the terms and conditions provided for by law".

Whereby, in light of the provisions of Article 100 of the General Tax Law and of paragraph b) of no. 1 of Article 24 of the LRAMT, it is unequivocal that in casu the Petitioners have the right to restitution of the tax paid, following the declaration of illegality of the assessment acts, subject of the pronouncement of the present proceedings.

Let us examine the request for payment of compensatory interest.

No. 5 of the mentioned Article 24 of the LRAMT further establishes that it is "due the payment of interest, regardless of its nature, in the terms provided for in general tax law and in the Code of Tax Procedure and Process". It results from the mentioned legal provision that in case of merit of arbitral decision in favor of the taxable person there will be place to the payment of compensatory interest, in the terms of no. 1 and 2 of Article 43 and Article 100 of the General Tax Law.

No. 1 of Article 43 of the General Tax Law establishes that are " due compensatory interest when it is determined, in gracious complaint or judicial impugn, that there was error attributable to the services from which results payment of the tax debt in amount superior to legally due". Thus, as tells us Jorge Lopes de Sousa, in "Guide to Tax Arbitration", Almedina, March 2013, page 223, the right to compensatory interest depends on the verification of the following requirements:

"- that there be an error in a tax assessment act;

  • that it be attributable to the services (directly or through generic guidance);

  • that the existence of that error be determined in a gracious complaint procedure or judicial impugn;

  • that as a result of that error, payment of a tax debt in amount superior to legally due has resulted".

In the case at hand, doubts remain that the tax assessment acts for Stamp Tax, subject of the present arbitral decision, were due to an error attributable to the services, that is, to an error over the legal requirements, in light of the considerations above described, and to which reference is made. From that error resulted the payment of the tax, in the amount of €29,168.35 as per the factual matter deemed proven.

Whereby, with all the requirements being met, the Petitioners will have the right to the payment of compensatory interest, which will be calculated and accounted for in accordance with Article 61 of the Code of Tax Procedure and Process, that is, from the date on which each one of the Petitioners made the payment of the tax, calculated on the basis of the amounts paid until the date of complete reimbursement of the paid amounts, at the legal rate.

IV. DECISION

In these terms and in the grounds exposed, this Arbitral Tribunal decides:

a) To uphold the request for declaration of illegality of the Stamp Tax assessment acts, contained in the identified collection documents, in the total amount of €29,168.35, with the consequent annulment thereof;

b) To condemn the Tax and Customs Authority to reimburse the Petitioners of the amounts that each one of them paid;

c) To condemn the Tax and Customs Authority to pay to each one of the Petitioners compensatory interest, at the legal rate, from the date on which each one made the payment of the tax, until the date of complete reimbursement of those amounts, calculated on the basis of the referred amounts.

The value of the case is set at €29,168.35, in conformity with the provisions of paragraph a) of no. 1 of Article 97-A of the Code of Tax Procedure and Process and no. 2 of Article 3 of the Regulation of Costs in Tax Arbitration Proceedings, as well as Article 306 of the Code of Civil Procedure.

Costs charged to the Respondent Entity, in the amount of €1,530.00, in accordance with the provisions of no. 4 of Article 22 of the LRAMT and of no. 4 of Article 4 of the Regulation of Costs in Tax Arbitration Proceedings and of Table I attached to the same Regulation.

Notify.

Lisbon, 25 March 2015.

The arbitrator,

Conceição Pinto Rosa

(Text prepared by computer, pursuant to Article 131, no. 5 of the Code of Civil Procedure, applicable by reference of Article 29, no. 1, paragraph e) of the LRAMT)

Frequently Asked Questions

Automatically Created

Is Stamp Tax (Imposto do Selo) under Verba 28.1 TGIS applicable when individual housing units have a VPT below €1,000,000 but the total building value exceeds that threshold?
According to this arbitration case, there is a fundamental dispute regarding Stamp Tax application under Verba 28.1 TGIS when individual housing units have VPT below €1,000,000 but the total building exceeds that threshold. The taxpayers argued that Stamp Tax should not apply because each independent residential unit had a VPT below €1,000,000, relying on IMI Code provisions (Articles 12(3) and 113(1) CIMI) that require separate valuation of independently used units. However, the Tax Authority maintained that for properties held under full ownership (propriedade total), the relevant VPT is the total value of the entire urban property, not individual components. The Tax Authority argued that applying the €1,000,000 threshold to separate units would require an impermissible analogical application of horizontal ownership rules to vertical ownership situations, violating the tax legality principle under Article 103(2) of the Portuguese Constitution.
How should the taxable value (VPT) be determined for properties held under total ownership (propriedade total) with independent units for Stamp Tax purposes?
The determination of taxable value (VPT) for properties held under total ownership with independent units for Stamp Tax purposes is the core issue in this case. The taxpayers contended that Verba 28.1 TGIS and Article 67(2) of the Stamp Tax Code expressly refer to Municipal Property Tax Code (CIMI) rules, which under Articles 12(3) and 113(1) require that IMI be calculated separately for each independently used unit as if it were an autonomous fraction. They argued this same treatment must apply for Stamp Tax assessment. Conversely, the Tax Authority argued that the unity of urban real estate under vertical ownership is not affected by the existence of multiple floors or units with independent use, and thus the property remains a single unit for valuation purposes. The Tax Authority emphasized that these distinct parts cannot be juridically equated to autonomous fractions under horizontal ownership, and the total VPT of the single property is the legally relevant value for Stamp Tax incidence under Verba 28.1 TGIS.
Can taxpayers request arbitral proceedings to challenge multiple Stamp Tax assessments issued by the Portuguese Tax Authority (AT)?
Yes, taxpayers can request arbitral proceedings to challenge multiple Stamp Tax assessments issued by the Portuguese Tax Authority. This case demonstrates that Article 3(1) of the Legal Regime of Arbitration in Tax Matters (LRAMT) expressly permits the accumulation of claims relating to different acts and the joinder of multiple claimants when the merits depend essentially on the same factual circumstances. In this proceeding, three taxpayers jointly challenged 213 separate Stamp Tax assessment acts totaling €29,168.35, all issued on March 17, 2014, relating to tax year 2013. The arbitral tribunal accepted jurisdiction over all accumulated claims under Articles 2(1)(a) and 10 of LRAMT. Additionally, the tribunal permitted the petitioners to join assessment acts related to the second and third installments received after the initial arbitration request was filed, demonstrating procedural flexibility in consolidating related tax disputes for efficient resolution.
What is the relationship between IMI valuation rules (Articles 12 and 113 CIMI) and the Stamp Tax incidence under Verba 28.1 of the TGIS?
The relationship between IMI valuation rules and Stamp Tax incidence under Verba 28.1 TGIS is central to this dispute. Verba 28.1 TGIS expressly incorporates Municipal Property Tax Code concepts by reference, as does Article 67(2) of the Stamp Tax Code. The taxpayers argued that this incorporation requires applying Articles 12(3) and 113(1) of CIMI, which mandate that IMI be calculated based on the VPT considered separately for each independently used unit, treating each as if it were an autonomous fraction. They contended that identical valuation methodology must apply for Stamp Tax purposes, meaning only independent units with individual VPT equal to or exceeding €1,000,000 should be subject to taxation. The Tax Authority rejected this interpretation, arguing that while IMI may be calculated based on separate unit values, this does not transform the legal nature of the property from a single asset under full ownership into multiple autonomous fractions for Stamp Tax purposes. The Authority maintained that the statutory reference to CIMI rules pertains to the concept of real estate and valuation methodology, not the legal characterization of ownership structure.
Are taxpayers entitled to reimbursement of unduly paid Stamp Tax plus compensatory interest (juros indemnizatórios) when liquidations are declared illegal?
Yes, taxpayers are entitled to reimbursement of unduly paid Stamp Tax plus compensatory interest (juros indemnizatórios) when liquidations are declared illegal. In this arbitration request, the petitioners expressly sought not only the declaration of illegality and annulment of the 213 Stamp Tax assessment acts, but also the condemnation of the Tax Authority to restitution of the tax wrongly paid, together with respective compensatory interest. This remedy is a standard and established right under Portuguese tax law when administrative tax assessments are judicially or arbitrally declared illegal or annulled. The payment of compensatory interest compensates taxpayers for the financial loss suffered due to the erroneous deprivation of funds that should not have been collected. The Legal Regime of Arbitration in Tax Matters (LRAMT) provides arbitral tribunals with full jurisdiction to order such restitution and interest payments when ruling in favor of taxpayers, ensuring complete remediation of illegal tax assessments.