Process: 53/2015-T

Date: November 25, 2015

Tax Type: Selo

Source: Original CAAD Decision

Summary

CAAD Arbitration Process 53/2015-T examines whether Stamp Tax under Item 28.1 of the General Table applies to a property in Porto held under vertical ownership (propriedade total) comprising multiple independent residential units. The taxpayer challenged stamp tax assessments totaling €12,546 for 2013, arguing the Tax Authority incorrectly aggregated the taxable property values (VPT) of ten independent divisions totaling €1,254,600 to trigger the €1,000,000 threshold. Item 28.1, introduced by Law 55-A/2012, imposes a 1% annual stamp tax on urban residential properties with VPT equal to or exceeding €1,000,000, targeting high-value luxury real estate. The taxpayer contended that properties in vertical ownership with independent units should receive identical tax treatment to horizontal ownership (condominium) regimes, where each autonomous fraction is taxed separately. The claimant argued no individual division exceeded the €1,000,000 threshold, thus none should incur Item 28.1 liability. Additionally, the taxpayer asserted the property has mixed allocation (residential and commercial/service units), placing it outside Item 28.1's scope which specifically targets residential properties. The taxpayer cited CAAD precedents (Awards 132/2013-T and 50/2013-T) establishing that vertical versus horizontal ownership distinctions lack legal basis under CIMI provisions, which apply subsidiarily per Article 67(2) of the Stamp Tax Code. The arbitration tribunal, constituted under Decreto-Lei 10/2011 (RJAT), was designated on April 13, 2015. The case raises fundamental questions about tax equality principles, whether the legislative intent to tax luxury residential properties extends to aggregating independent units in vertical ownership, and the proper application of CIMI registration rules to stamp tax assessments. The dispute illustrates the complexity of applying Item 28.1 to properties with multiple autonomous divisions and the tension between property registration formats and tax incidence criteria.

Full Decision

ARBITRATION AWARD

The arbitrator Guilherme W. d'Oliveira Martins, designated by the Ethics Council of the Administrative Arbitration Center (CAAD) to constitute the present arbitral tribunal, established on 01.10.2014, decides in the following terms:

I. REPORT

  1. On 02-02-2015, the taxpayer A…, NIF…, filed a request for constitution of a single arbitral tribunal, pursuant to the combined provisions of articles 2 and 10 of Decree-Law No. 10/2011, of 20 January (Legal Regime of Arbitration in Tax Matters, hereinafter designated only as RJAT), in which the Tax and Customs Authority is the respondent.

  2. The request for constitution of the arbitral tribunal was accepted by the Esteemed President of CAAD on 30-07-2014 and notified to the AT on 02-02-2015.

  3. Pursuant to the provisions of subparagraph a) of paragraph 2 of article 6 and subparagraph b) of paragraph 1 of article 11 of Decree-Law No. 10/2011, of 20 January, in the wording introduced by article 228 of Law No. 66-B/2012, of 31 December, the Ethics Council designated as arbitrator of the single arbitral tribunal the undersigned, who communicated acceptance of the corresponding assignment within the applicable timeframe.

  4. On 25.03.2015 the parties were duly notified of this designation, and did not express a will to refuse the designation of the arbitrator pursuant to the combined provisions of article 11, paragraph 1, subparagraphs a) and b) of RJAT and articles 6 and 7 of the Code of Ethics.

  5. Thus, pursuant to the provisions of subparagraph c) of paragraph 1 of article 11 of Decree-Law No. 10/2011, of 20 January, in the wording introduced by Law No. 66-B/2012, of 31 December, the Arbitral Tribunal was constituted on 13.04.2015.

  6. On 02.02.2015 a meeting required by article 18 of RJAT was held and in light of the position demonstrated by the parties, it was determined that no written submissions would be produced, with the case being ready for decision.

  7. The Tribunal set 01.10.2015 as the date for rendering the arbitration award.

  8. As it was not possible to render the award by the announced date, the initial deadline was successively extended until the final date of 26.01.2016, by orders of 05.10.2015, 14.10.2015, 26.11.2015.

  9. In the present case, the taxpayer A…, NIF…, challenges the stamp tax assessments on item 28.1 of the General Table annexed to the CIS, relating to the real property identified below, in the amount of € 12,546.00, by reference to the year 2013, issued by the Tax and Customs Authority - as per documents no. 1 to 14 attached to the initial request.

I2. The grounds of the claimant's request are as follows:

  • The claimant is the owner of the urban real property registered in the respective property register of the parish …, municipality of Porto, under article …, this property being constituted in the regime of full ownership, also designated vertical.

  • The said property comprises 10 divisions or parts capable of independent use, intended for residential purposes, as may be inferred from the respective collection documents.

  • On the taxable property value (VPT) of each division, the Tax Administration issued the stamp tax provided for in item No. 28.1 of the General Table of Stamp Tax (TGIS) annexed to the Stamp Tax Code (CIS) in the wording given to it by article 4 of Law No. 55-A/2012, of 29 October, at the rate of 1% provided for in sub-subparagraph i) of subparagraph f) of paragraph 1 of article 6 of that same law.

  • The AT issued assessment notices for the stamp tax claimed here because the 10 divisions with independent use have residential allocation and their respective fourteen VPT total the sum of € 1,254,600.00.

  • Item No. 28.1 of the TGIS, created by Law 55-A/2012 of 29 October 2012, more precisely by its article 4, provides that on the ownership of each urban real property with residential allocation, whose VPT recorded in the register, pursuant to CIMI, has a value equal to or greater than € 1,000,000.00, stamp tax is levied on its VPT used for purposes of IMI at 1%.

  • Thus, there is stamp tax liability under item No. 28.1 of the TGIS when the combination of two requirements is verified: (i) the residential allocation of the property, (ii) the VPT recorded in the register is equal to or greater than € 1,000,000.00.

  • The legislator in creating this item, 28.1 of the TGIS, intended to tax not real estate property in itself, but high-value or luxury real estate property, for which reason the item in question applies only to properties with residential allocation and not to properties with mixed allocation.

  • Now in the case at hand, the property has mixed allocation, with 10 of the divisions capable of independent use having residential allocation, and the remaining having commercial or service allocation, for which reason it falls outside the scope and application of item 28.1 of the TGIS.

  • Even adding to the foregoing that, as the property is in full ownership and is comprised of parts with commercial allocation and parts with residential allocation, the claimant does not see how the AT can define the allocation of the property as residential.

  • For which reasons we understand that the assessment notices in question were issued by the AT, in disregard of the purpose of item 28.1 and in clear violation of the applicable norms and tax principles applicable to the case at hand.

  • Even if not so understood, and merely by duty of representation, the truth is that the fact that the property is in vertical ownership and not horizontal ownership cannot by itself be an indicator of greater tax capacity.

  • To the matriculation registration of immovable property in vertical ownership, although comprised of different divisions with independent use, pursuant to CIMI, the same registration rules apply to immovable property constituted in horizontal ownership, and thus the respective Municipal Tax on Immovable Property, IMI, and Stamp Tax, IS are levied individually in relation to each of the divisions.

  • Law 55-A/2012, which amended the Stamp Tax Code, more precisely its article 67, adding thereto paragraph 2, provides that in all matters not regulated by the same, and as concerns item 28, the CIMI shall be applied subsidiarily.

  • The truth is that neither article 2 of CIMI, which defines the concept of property, nor article 38 of the same statute, relating to the determination of VPT, results in any distinction regarding the registral situation of the property, that is, whether it is in vertical or horizontal ownership.

  • In this regard and according to the arbitration award handed down by CAAD in case 132/2013, "it makes no sense to distinguish in law what the law itself does not distinguish (ubi lex non distinguit nec nos distinguere debemus).

Furthermore, to distinguish, in this context, between properties constituted in horizontal and full ownership would be an "innovation" without associated legal support, especially because, as has been stated here, nothing indicates, neither in item No. 28, nor in the provisions of CIMI, a justification for this particular differentiation".

  • Also in this sense, see the arbitration award handed down by CAAD in case No. 50/2013T, "Also following these considerations that inspire the legislative innovation under consideration, one must conclude that the existence of property in vertical or horizontal ownership cannot be, by itself, an indicator of tax capacity. On the contrary, it follows from the law that each should receive the same tax treatment in obedience to the principles of justice, tax equality and material truth. Already the existence in each property of independent dwellings, under a regime of horizontal or vertical ownership, may be capable of triggering the incidence of the new tax if the VPT of each of the parts or fractions is equal to or greater than the limit defined by law: €1,000,000.00". (our emphasis).

  • Especially because it follows from paragraph 3 of article 12 of CIMI that each fraction or part of property capable of independent use should be considered separately in matriculation registration.

  • Regarding the criterion that should determine the incidence of this rule see the arbitration award handed down by CAAD in case 132/2013, "The uniform criterion that is required is thus the one that determines that the incidence of the rule in question occurs only when one of the parts, floors or divisions with independent use of property in horizontal or full ownership with residential allocation, has a VPT exceeding €1,000,000.00. To establish as the reference value for the incidence of the new tax the global VPT of the property in question, as the now respondent intended, finds no basis in the applicable legislation, which is CIMI, given the referral made by the cited article 67, paragraph 2, of the CIS".

  • The discrimination carried out by the AT in the case at hand has thus no foundation whatsoever, being contrary to principles of legality and tax justice, arbitrary and illegal, since according to the arbitration award of case 50/2013T, already cited, "The tax legislator cannot treat equal situations differently. Now, if the property were in a regime of horizontal ownership, none of its residential fractions would be subject to the new tax.", yet thus and in the AT's understanding, because it is in vertical ownership, it falls within the scope of this tax.

  • The concentration of independent divisions in the same property cannot constitute a cause for stamp tax on item No. 28 of the TGIS to apply to each one, just as the concentration of several residential properties owned by the same person does not constitute a cause for that tax to apply to a residential property.

  • In this regard see the reasoning set forth in the arbitration award handed down by CAAD in case 132/2013T, "it is concluded that item No. 28, by opening the possibility of taxing in a differentiated manner the ownership of real estate property of equal value held by different persons on the basis of criteria that may conflict, without the minimum necessary justification, in particular with the principle of tax capacity (such as the case of "dispersal" or "concentration" of each person's residential real estate property), cannot but be considered unconstitutional, given the violation of the principle of equality", our emphasis.

  • Reasons that lead us to understand that such assessment notices issued by the AT are wholly arbitrary and illegal.

I3. In response to the claimant's request, the AT:

  • Given the claimant's position, we cannot at all adhere to any of their arguments, for the reasons that follow, but we will focus only on the interpretive question of the provision of incidence.

  • The claimant's property situation falls squarely, which is to say literally, within the prediction of the item in question.

  • The now claimant is the owner of a property in a regime of full or vertical ownership. From the notion of property in article 2 of CIMI, only the autonomous fractions of property in a regime of horizontal ownership are deemed properties - paragraph 4 of the cited article 2 of CIMI. Therefore,

  • As the property of which he is the owner is in a regime of full ownership, it does not have autonomous fractions, to which tax law attributes the qualification of property.

  • Thus, the now claimant, for purposes of IMI and also of stamp tax, by virtue of the wording of the said item, is not the owner of 10 autonomous fractions, but rather of a single property.

  • Taking this fact as established, what the now claimant seeks is for the AT to consider, for purposes of assessment of the present tax, that there exists analogy between the regime of full ownership and that of horizontal ownership, since there should be no discrimination in the tax-legal treatment of these two property regimes, as it would be illegal.

  • As is well known, horizontal ownership is a specific legal regime of property provided for in article 1414 and following articles of the Civil Code, whose mode of constitution is provided for there, as well as the other rules on the rights and obligations of co-owners, and one must recognize in this statutory provision the existence of a more developed property regime.

  • Now, to claim that the interpreter and applier of tax law apply, by analogy, to the regime of full ownership the regime of horizontal ownership is what is abusive and illegal, as we will see in detail.

  • These two property regimes are civil law regimes, which have been imported into tax law, namely pursuant to the terms referred to in article 2 of CIMI.

  • And the interpreter of tax law cannot equate these regimes, in accordance with the rule according to which the concepts of other branches of law have the meaning in tax law that is given to them in those branches of law, or in the words of article 11, paragraph 2 of the LGT, on the interpretation of tax law: "Whenever in tax norms terms specific to other branches of law are employed, they must be interpreted in the same sense as that which they have there, unless otherwise directly results from the law."

  • On the other hand, still taking into account that in determining the meaning of tax norms and in qualifying the facts to which they apply the general rules and principles of interpretation and application of laws are observed, as provided in article 11, paragraph 1 of the LGT, which thus refers to the Civil Code, its article 10 on the application of analogy determines that this shall only be applicable in case of gaps in the law.

  • Now tax law contains no gap whatsoever! The CIMI determines, to which the cited item refers, that in the regime of horizontal ownership the fractions constitute properties. The property not being subject to this regime, legally the fractions are parts capable of independent use, without there being common parts.

  • We cannot therefore accept that it be considered that for purposes of item 28.1 of the General Table annexed to the CIS, the parts capable of independent use have the same tax regime as the autonomous fractions of the regime of horizontal ownership.

  • As the property is subject to the regime of full ownership, but is physically comprised of parts capable of independent use, tax law attributed relevance to this materiality, evaluating these parts individually, pursuant to article 12 and consequently, pursuant to article 12, paragraph 3, of C.I.M.I., each floor or part of property capable of independent use is considered separately in matriculation registration, but in the same register, proceeding with the assessment of IMI taking into account the taxable property value of each part.

  • The floors or independent divisions, evaluated pursuant to article 12, paragraph 3, of CIMI, are considered separately in matriculation registration, which also discriminates the respective taxable property value on which IMI is levied.

  • Such legal rule is not novel, having correspondence in the body of article 232, rule 1, of the Code of Real Estate Contribution and Tax on Agricultural Industry (C.C.P.I.I.A.), which provided that each dwelling or part of property shall be taken automatically for purposes of determining the taxable income on which the assessment should be levied.

  • Already, thus, within the scope of the C.C.P.I.I.A., the taxable income necessarily had to correspond to the sum of the rent or rental value of each of the components of the property with economic autonomy.

  • It is not seen how, on the other hand, the taxation in question may have violated the principle of equality referred to by the claimant.

  • In truth, horizontal and vertical ownership are differentiated legal institutes.

  • The constitution of horizontal ownership implies, it is true, a mere legal alteration of the property, with no new valuation occurring (Office-Circular No. 40.025, of 11 August 2000, of the Directorate of Services of Municipal Contribution. D.S.C.A.).

  • The legislator may, however, subject to a distinct tax legal framework, thus discriminatory, properties in horizontal and vertical ownership regimes, in particular, benefiting the legally more developed institute of horizontal ownership, without such discrimination having to be considered necessarily arbitrary.

  • Such discrimination may also be required by the need to impose coherence on the tax system.

  • Finally, it should be noted that the matriculation registration of each part capable of independent use is not autonomous by register, but is contained in a description in the register of the property in its entirety - see the property record of this property which is the document of the owner containing the matriculation elements of the property.

  • What is intended to be concluded is that these procedural norms of valuation, matriculation registration and assessment of the parts capable of independent use do not permit one to affirm that there exists an equation of the property in a regime of full ownership to the regime of vertical ownership, this being because, and as has already been stated,

  • These legal-civil regimes are different, and tax law respects them.

II. PRELIMINARY DETERMINATION

  1. The Tribunal is competent and is regularly constituted pursuant to articles 2, paragraph 1, subparagraph a), 5 and 6, all of RJAT.

  2. The parties have legal standing and capacity, are legitimate and are legally represented, pursuant to articles 4 and 10 of RJAT, and article 1 of Ordinance No. 112-A/2011, of 22 March.

  3. The case does not suffer from defects and no preliminary questions were raised that warrant analysis.

  4. The conditions are thus in place to appreciate the merits of the request.

III. REASONING

III.A ESTABLISHED FACTS

Before proceeding to the appreciation of the substantive questions, it is necessary to present the factual matter relevant to its respective understanding and decision, which, having examined the documentary evidence and the administrative tax proceeding attached to the case file and also taking into account the facts alleged, is established as follows:

  • The claimant is the owner of the urban real property registered in the respective property register of the parish …, municipality of Porto, under article …, this property being constituted in the regime of full ownership, also designated vertical.

  • The said property comprises 10 divisions or parts capable of independent use, intended for residential purposes, as may be inferred from the respective collection documents.

  • Regarding independent use, the said floors or divisions are not by formal legal definition considered urban real properties (but will be "parts of property" according to paragraph 3 of article 12 of CIMI).

  • Thus, it proceeded to sum their VPT to determine if the minimum VPT of 1,000,000.00 euros was achievable in the said property, a value on which, if equal to or greater than this threshold, it imposed the rate of 1% of the IS on item 28.1 of the TGIS.

  • Nevertheless, formally, the assessment notice came subdivided into as many assessments as there are floors or parts of the property in vertical ownership, just as occurs at the level of IMI assessment.

  • Now, the said action by the AT goes against the interpretation it makes of the provision in which it defends the application "with the necessary adaptations" of the "rules of CIMI" to the situations provided for in item No. 28 of the General Table (paragraph 7 of article 23 of the CIS).

  • However, the interpretation made by the AT does not find correspondence with current legal reality. Thus it may be seen,

  1. By summing the VPT of each floor or independent division allocated to residential purposes in order to ascertain the taxation threshold of 1,000,000.00 euros, the AT stipulated a legal interpretation, without legal support, which is a global VPT of urban properties in vertical ownership, with residential allocation. This is because, although items 28 and 28.1 make reference to the noun "urban properties" and "per property," the truth is that for purposes of ascertaining the taxable matter one must attend to the "taxable property value used for purposes of IMI."
  • Now, this is the literal element on which the said rule bears. Thus, the taxable property value to be considered in the operation of determining the taxable matter and subsequent assessment of IS on items 28 and 28.1 of the TGIS as regards urban properties with residential allocation in vertical ownership, with floors or divisions capable of independent use, is that which results exclusively from paragraph 3 of article 12 of CIMI.
  1. Establishing that the said article states that "each floor or part of property capable of independent use is considered separately in matriculation registration, which also discriminates the respective taxable property value."

  • In the absence of exact terminological correspondence of the concept, the starting point of interpretation is naturally the text of the law, and it is on the basis of this that the legislative intent must be reconstructed, as required by paragraph 1 of article 9 of the Civil Code, applicable by virtue of the provisions of article 11, paragraph 1 of the General Tax Law (LGT).

  • The very literal tenor of the expression used in item 28.1 of the TGIS is that of "taxable property value used for purposes of IMI." The rules of incidence of taxes as well as those granting exemptions or exclusions from taxation must be interpreted in their exact terms, without resort to analogy, making prevail the certainty and security in their application.

  1. What leads us to the conclusion that urban properties in vertical ownership, as a whole, do not have VPT, with the law determining in such cases that VPT be attributed to each floor or part of property separately - as per paragraph 3 of article 12 of CIMI.

  • Therefore, there is no legal support for the sum of taxable property values of the floors or parts of property capable of independent use, with residential allocation, in order to reach the eligible taxation threshold of 1,000,000.00 euros or more.

  • Even though paragraph 7 of article 23 illustrates that "the tax is assessed annually, in relation to each urban property," the expression "each urban property" encompasses, bearing in mind the principles of interpretation and application of norms enunciated, urban properties in horizontal ownership and floors or parts of urban properties in vertical ownership, provided they are allocated to residential purposes, always starting from the taxable base that is mentioned in the law, the taxable property value used for purposes of IMI (final part of item 28 of the TGIS).

  • Now, as very well stated in the arbitration pronouncement handed down in the course of case No. 203/2014-T, "at the level of interpretation of tax norms there may be used the very particular rule found in paragraph 3 of article 11 of the LGT: "if doubt persists about the meaning of the incidence norms to apply, the economic substance of the tax facts should be heeded."

  • Now, if for the floors comprising the autonomous fractions of urban residential properties in horizontal ownership, (even though by definition and "ope legis" they are urban properties), for each taxpayer, the VPT are not added to determine the threshold of eligible value for subjection to IS (1,000,000.00 euros) of item 28 of the TGIS (operation of determining the taxable matter), why should this occur as regards the "parts of property or floors" of urban properties in vertical ownership?"

  • And it continues:

  • "In both cases the same tax capacity of the taxpayers is manifested (their level of wealth at the level of immovable assets). It is the same "economic substance" analyzed from different angles, revealing the same "ability-to-pay."

  • From the literal wording of items 28 and 28-1 of the TGIS, especially from the final part of item 28 of the TGIS, combined with paragraph 7 of article 23 of the CIS, the conclusion is to be drawn, with the "necessary adaptations of the rules of CIMI," that the VPT of the floors or parts of the property identified above should not be added to find a new global VPT of urban property, in the part with residential allocation, an operation of determining eligible taxable matter that the law does not contemplate."

  • By assessing the tax to the now claimant, by considering that the VPT would be ascertained based on the sums of the VPT of each floor or independent division allocated to residential purposes in order to ascertain the taxation threshold of 1,000,000.00 euros, the AT incurred in error in the application of the law.

  1. The said procedure presents itself in total opposition with the spirit underlying the provision contained in the added item 28 of the General Table of Stamp Tax, which expressly mandates to take into account the "taxable property value for purposes of IMI."

  • As results from the principle of legality as it is provided in article 103, paragraph 2 of the C.R.P., and being the rule in question one of incidence, one cannot through the interpretative route assert a result that is not expressed in the law.

  • This error constitutes a defect of violation of law that determines the voidability of the assessment in question, pursuant to the provision of article 135 of the Code of Administrative Procedure ("CPA"), applicable ex vi article 29, paragraph 1, subparagraph d), of RJAT.

  1. Likewise, the AT's interpretation violates the principle of equality established in articles 13 and paragraph 3 of article 104 of the Constitution. This is because it makes no sense to establish a different VPT for two types of taxes, VPT without legal support for the application of distinct criteria that will influence the taxable base.

  • The principle of equality is one of the structuring principles of the Rule of Law, which has as its fundamental equation: to treat equally what is equal and differently what is different. The jurisprudence of the Constitutional Court has recognized the principle of tax capacity as an expression of tax equality, from which extracting the precise technical requirements for the legal shaping of taxes in accordance with the said principle (cf. Judgment No. 106/2013, of 20.02.2013).

  • Now the distinction between "full ownership" and "horizontal ownership" is not sufficient to justify a differentiated treatment of the scope of application of item 28 of the Table of Stamp Tax, since in both cases the same tax capacity is verified.

  • See the position defended by CAAD, being noted, merely by way of example, what was stated in the arbitration pronouncement handed down in case 132/2013-T:

  • "Indeed, how can one justify, even in light of principles of social equity and tax justice defended by the legislator – note that in this regard the press release of the Council of Ministers of 20/9/2012 referred to the measure as being essential "to reinforce the principle of social equity in austerity" – that this taxation applies only to residential real estate property and not to non-residential real estate property? And how can this discrimination be made compatible with what is provided in article 104, paragraph 3, of the C.R.P.?

  • Given the foregoing, it is concluded that item No. 28, by opening the possibility of taxing in a differentiated manner the ownership of real estate property of equal value held by different persons on the basis of criteria that may conflict, without the minimum necessary justification, in particular with the principle of tax capacity (such as the case of "dispersal" or "concentration" of each person's residential real estate property), cannot but be considered unconstitutional, given the violation of the principle of equality."

  • Stated thus, and additionally, the act of assessment of stamp tax that is the subject of the present request for arbitration pronouncement is an act consequent to the violation of a constitutional principle, and is therefore void.

V. DECISION

In these terms, and with the grounds set out, the Arbitral Tribunal decides to find wholly well-founded the request for annulment of the stamp tax assessments challenged, with the consequent annulment of those assessments.

The value of the case is set at € 12,546.00, pursuant to subparagraph a) of paragraph 1 of article 97-A of CPPT, applicable by virtue of subparagraphs a) and b) of paragraph 1 of article 29 of RJAT and paragraph 2 of article 3 of the Regulation of Costs in Tax Arbitration Proceedings.

The amount of the arbitration fee is set at € 918.00, pursuant to Table I of the Regulation of Costs of Tax Arbitration Proceedings. Payment of the arbitration fee, pursuant to Table I of the Regulation of Costs of Tax Arbitration Proceedings, is the responsibility of the Respondent, pursuant to articles 12, paragraph 2, and 22, paragraph 4, both of RJAT, and article 4, paragraph 4, of the cited Regulation.

Lisbon, 25 November 2015

The Arbitrator,

Guilherme d'Oliveira Martins.

Frequently Asked Questions

Automatically Created

What is the Stamp Tax (Imposto de Selo) under Verba 28.1 of the General Table and how does it apply to high-value residential properties in Portugal?
Stamp Tax under Item 28.1 of the General Table (Tabela Geral do Imposto do Selo) was introduced by Law 55-A/2012, Article 4, and imposes an annual 1% tax on the ownership of urban residential properties with a taxable property value (VPT) recorded in the property register of €1,000,000 or more. This provision targets high-value or luxury residential real estate. The tax applies when two cumulative requirements are met: (i) the property has residential allocation, and (ii) the VPT equals or exceeds €1,000,000. The tax is calculated on the VPT used for Municipal Property Tax (IMI) purposes. Article 67(2) of the Stamp Tax Code provides that CIMI (Municipal Property Tax Code) applies subsidiarily to matters not regulated regarding Item 28. The legislative intent was to create additional tax burden on luxury residential properties, not on all real estate or mixed-use properties.
How does the CAAD tax arbitration tribunal assess Stamp Tax liability for properties held under vertical ownership (propriedade total)?
The CAAD arbitration tribunal analyzes whether properties held in vertical ownership (propriedade total) with multiple independent divisions should be taxed as a single unit or per individual division. According to CAAD precedents cited in this case (Awards 132/2013-T and 50/2013-T), the tribunal applies the principle that 'where the law does not distinguish, we should not distinguish' (ubi lex non distinguit nec nos distinguere debemus). The tribunal examines whether CIMI Articles 2 (property definition) and 38 (VPT determination) differentiate between vertical and horizontal ownership regimes. Prior awards establish that vertical versus horizontal ownership cannot alone indicate greater tax capacity, and both should receive equal tax treatment under principles of tax justice, equality, and material truth. The tribunal considers whether each independent division with its own VPT should be assessed separately, similar to horizontal ownership fractions, rather than aggregating all divisions' values.
Can a property composed of multiple independent units designated for housing be taxed as a single unit under Verba 28.1 of the Stamp Tax General Table?
The central dispute in Process 53/2015-T is precisely whether multiple independent units in a property held under vertical ownership can be aggregated and taxed as a single unit under Item 28.1. The taxpayer argues that a property comprising ten independent divisions with separate residential use should be taxed per division, not as a consolidated whole. Since no individual division has a VPT exceeding €1,000,000, the taxpayer contends none triggers Item 28.1 liability. The Tax Authority's position aggregates the total VPT of all divisions (€1,254,600) to determine tax incidence. The taxpayer relies on CAAD precedents establishing that independent dwellings under vertical or horizontal ownership should receive identical treatment, with Item 28.1 applying only if each individual part or fraction has VPT ≥ €1,000,000. Additionally, the taxpayer argues the property has mixed allocation (residential and commercial units), which excludes it from Item 28.1's scope that specifically targets residential properties.
What is the procedure for challenging Stamp Tax assessments through the CAAD arbitration process under Decreto-Lei 10/2011 (RJAT)?
The CAAD arbitration process under Decreto-Lei 10/2011 (RJAT - Legal Regime of Arbitration in Tax Matters) allows taxpayers to challenge tax assessments through administrative arbitration. In this case, the taxpayer filed an arbitration request on February 2, 2015, designating the Tax and Customs Authority as respondent. The CAAD President accepted the request on July 30, 2014, and notified the AT on February 2, 2015. The Ethics Council designated an arbitrator pursuant to Article 6(2)(a) and Article 11(1)(b) of RJAT, as amended by Law 66-B/2012. Parties were notified of the arbitrator designation on March 25, 2015, with opportunity to refuse under RJAT Article 11(1) and the Code of Ethics Articles 6-7. The tribunal was constituted on April 13, 2015. An Article 18 RJAT meeting occurred on February 2, 2015, where parties agreed not to produce written submissions, making the case ready for decision. The tribunal set deadlines for the award, which were extended multiple times until January 26, 2016.
What are the legal grounds for contesting Stamp Tax liquidations of €12,546 on urban properties registered in the Porto municipal property matrix?
Taxpayers can contest Stamp Tax liquidations through CAAD arbitration by demonstrating that assessments violate applicable legal norms and tax principles. In this case, the taxpayer challenged €12,546 in stamp tax assessments for 2013 on grounds including: (1) improper aggregation of VPT from independent divisions in vertical ownership rather than treating each division separately; (2) mischaracterization of property allocation as purely residential when it includes commercial/service units, thus falling outside Item 28.1's scope targeting luxury residential properties; (3) violation of tax equality principles by treating vertical ownership differently from horizontal ownership without legal basis; (4) disregard of legislative intent behind Item 28.1 to tax high-value luxury residences, not properties with multiple modest-value independent units; and (5) failure to apply CIMI provisions subsidiarily as required by Stamp Tax Code Article 67(2), which treat vertical and horizontal ownership identically for registration and tax purposes. The challenge is supported by CAAD precedents establishing that vertical/horizontal ownership distinctions lack legal foundation.