Process: 532/2014-T

Date: March 10, 2015

Tax Type: Selo

Source: Original CAAD Decision

Summary

Process 532/2014-T addressed whether Stamp Duty under verba 28.1 TGIS applies to land classified for construction. The petitioner company challenged a 2013 stamp duty assessment before the CAAD arbitral tribunal, arguing multiple grounds for illegality. First, procedural defects: the assessment notice lacked identification of the author and proper reasoning, and the taxpayer was not granted prior hearing rights. Second, substantive error: the Tax Administration incorrectly classified the property as having residential use character when it was actually a construction plot (terreno para construção) registered in the property matrix as land for construction. The petitioner argued that verba 28.1 TGIS, as worded in 2013, only applies to urban properties with residential use character—meaning buildings or constructions licensed for habitation or with habitation as their normal destination, citing CIMI Article 6 as interpretive guidance per Stamp Duty Code Article 67(2). Construction land constitutes an autonomous category whose normal destination is construction itself, not habitation, and therefore falls outside the scope of verba 28.1. The petitioner contended the assessment suffered from error of law concerning facts, as the Tax Administration mischaracterized the legal nature of the property. This case illustrates important principles regarding the objective incidence of stamp duty on real property, the distinction between residential buildings and construction land, mandatory notification formalities under CPPT Articles 36 and 39, and taxpayers' access to CAAD arbitration for challenging stamp tax assessments.

Full Decision

ARBITRAL DECISION

  1.  REPORT

1.1. A, Lda., taxpayer no. …, filed on 26/07/2014 a request for arbitral ruling, in which it petitions for the declaration of illegality of the stamp duty tax assessment act for the year 2013.

1.2. The Honourable President of the Deontological Council of the Administrative Arbitration Centre (CAAD) designated on 11/09/2014 as arbitrator, Francisco Nicolau Domingos.

1.3. On 07/10/2014 the tribunal was constituted with a sole arbitrator.

1.4. Pursuant to the provision of art. 17, no. 1 of the RJAT, the Tax Administration (AT) was notified on 13/10/2014 to, if so wishing, submit its reply and request the production of additional evidence.

1.5. On 12/11/2014 the AT submitted its reply and requested in a separate motion the waiver of the holding of the meeting described in art. 18 of the RJAT.

1.6. The tribunal on 10/02/2015 invited the Petitioner to state whether it intended the holding of said meeting.

1.7. The Petitioner on 24/02/2015 concluded that it waived the holding of the meeting on the implicit premise that there are no exceptions which prevent the tribunal's knowledge of the petition. Also communicating in the same motion that it waived the submission of arguments.

1.8. The tribunal on 27/02/2015 decided to waive the holding of the meeting referred to in art. 18, no. 1 of the RJAT and scheduled the date for pronouncement of the final decision on 10/03/2015, on the ground of the principle of autonomy of the arbitral tribunal in conducting the proceedings and in determining the rules to be observed in order to obtain, within a reasonable time, a decision on the merits of the claims submitted, see art. 16, para. c) of the RJAT.

  1.  SANATION

The proceedings are not affected by nullities, no issues have been raised that prevent the examination of the merits of the case, the arbitral tribunal is regularly constituted and is materially competent to know and decide the petition, consequently verifying the conditions for the final decision to be rendered.

  1. POSITIONS OF THE PARTIES

Two opposing positions are in confrontation, that of the Petitioner, set forth in the request for arbitral ruling and that of the AT in its reply.

Summarizing:

The Petitioner understands in particular that:

a) "A quick analysis of the Collection Notes notified to the Petitioner shows immediately that those Notes do not contain all the elements that should be mandatorily notified to the taxpayer under art. 36, nos. 1 and 2, and 39, no. 12, of the CPPT, namely the indication of the author of the act and, should the latter have acted in the exercise of delegation or subdelegation of competence, the capacity in which he decided, the tenor and its date…";

b) "This is not a matter of nullity of notification, because that issue concerns the effectiveness of the Assessment and its enforceability and not its validity…";

c) "What is at issue here, however, is the lack of author of the Assessment, a defect that was reflected in the notification acts, but which is, in the first place, a defect of the tax act notified, that is, of the Assessment.";

d) "An act without an author cannot be valid as a tax act, as it lacks one of its essential elements…";

e) "The assessment (…) is not reasoned.";

f) "…even if it is considered that the Assessment does not require absolute motivation, which is admitted purely as a hypothesis for reasoning, it must still be said that the same contains no factual or legal motivation whatsoever, and does not present the logical and formal regularity indispensable for clear, sufficient and congruent apprehension of the reasons for the decision.";

g) "It is manifest that the Assessment does not justify the logical and formal regularity indispensable for clear, sufficient and congruent apprehension of the reasons for the decision.";

h) "Nothing is stated in the assessment that justifies in what manner the said property would have (which it does not have) the residential use character that is (or was, as of 31/12/2013) a necessary prerequisite for the incidence of the Stamp Duty of the new item 28.1 of the TGIS.";

i) Otherwise, "If the duty of hearing had been complied with, the AT would have become aware of the different nature of the property in question and of the Petitioner's reasons, and the final decision of the tax assessment procedure could have been different, even leading to the non-assessment of the Stamp Duty provided for in said item 28.1.";

j) "As it was not, the omission of the prior hearing constituted, in this case, the disregard of essential formality, projecting itself as a defect vitiating the Assessment, which constitutes grounds for its annulment under art. 99 of the CPPT, by violation of para. a) of no. 1 of art. 60 of the LGT.";

k) "Without waiving as to the defect of lack of reasoning, that is, without renouncing the right to complete knowledge of the reasons that motivated the Assessment, the Petitioner also comes to argue the illegality of the Assessment by 'error of law concerning the facts'.";

l) "In the case of the Assessment, it was considered, as it is believed, that the urban property registered in the matrix under art. … of the parish of … was an urban property with residential use, which does not correspond to its legal nature since it is a plot of land for construction where no building exists.";

m) "The weighing done by the tax administration was therefore based on an error of law concerning the facts.";

n) "The Petitioner's property on which the Assessment fell is a plot of land for construction corresponding to Lot no. …, located in …, near Rua …, in the parish of …, municipality of Lisbon, registered in the respective matrix under art. …";

o) "The land in question was intended, as of 31/12/2013 and also now, for construction, being fiscally a property of the species or type 'land for construction'…";

p) "…we therefore have that, as to the objective incidence of the tax, item 28.1 – in the wording in force as of 31/12/2013 – is imposed on urban properties with residential use character.";

q) "… urban property with residential use character exists only when there are buildings or constructions (which is well understood, for, unless we are thinking of inhabiting caves or tents, habitation can only be conceived in buildings or constructions); the second, to emphasize that residential urban properties must be licensed for residential use or have habitation as their normal destination.";

r) "Now, in the case of the property owned by the Petitioner, as well as in the case of other plots of land for construction, it is verified, on the one hand, that they are not by nature buildings or constructions, and, on the other, that they have construction as their normal destination.";

s) "Having stated this, we can establish the principle that the concept of 'residential urban properties' is equal to 'properties with residential use character' and that plots of land for construction are an autonomous category, as they do not possess a license for residential use nor do they even have habitation as their normal destination. Their normal destination or use is construction (which may be, in turn, residential, commercial, industrial or service-related).;

t) "The technical-legal meaning of 'property with residential use character', which is drawn from the provision of art. 6 of the CIMI, applicable in the context of Stamp Duty ex vi the cited art. 67, no. 2, of the Stamp Duty Code, in the wording in force at the date of the tax event, is that it is a building or construction licensed for habitation or, in the absence of a license, that has habitation as its normal destination, which excludes from the outset plots of land for construction from its scope of meaning.";

u) "And it should not be said that plots of land for construction can, nevertheless, be considered urban properties with residential use character to the extent that, in fixing their patrimonial value, a residential use coefficient has been considered under arts. 38 and 43 of the CIMI.";

v) "It is clear that the consideration of the residential use coefficient, in the manner indicated, is related to a tax appraisal operation for IMI purposes, aimed at determining the patrimonial value on which the applicable IMI rate will be imposed, which has nothing to do with defining the incidence of the tax. And what is at issue in these proceedings is the interpretation of the rule of incidence of the tax, in the wording in force at the date of the tax event (31/12/2013).;

w) "By assuming that the Petitioner's plot of land for construction was, at the date of the tax event, a property with residential use character, the AT makes a wrong interpretation of art. 1, no. 1 of the CIS and of Item 28.1 of the TGIS, as well as of art. 6, no. 1, para. f) (i), of the aforementioned Law no. 55-A/2012, or if we prefer, commits the so-called 'error of law concerning the facts', which constitutes grounds for annulment of the Assessment under art. 99 of the CPPT…." ;

x) "The conclusive proof that plots of land for construction were not covered either in the letter or in the spirit of the legislator when creating Item 28 of the Stamp Duty is given by Law no. 83-C/2013, of 31 December (Budget Law for 2014), which amended the wording of item 28.1 of the TGIS that was previously in force…"

y) "This amendment to the rule of incidence of item 28.1 of the TGIS in the State Budget for 2014, which aimed to also tax plots of land for construction, clearly demonstrates that, previously, this situation was not covered by the rule of incidence…";

z) That there exists double collection.

aa) "In considering, for purposes of the CIS, that plots of land for construction have residential use character, the AT is not truly taxing the ownership of luxury goods, albeit the value of the plots may be very high, but is taxing an economic activity, or better put the assets devoted to the development of an economic activity (in this case, the construction of residential buildings), a taxation that is deemed unconstitutional.";

bb) "This interpretive dimension of the rules of tax incidence for purposes of item 28.1 of the TGIS, in the wording previously in force (although the same reasons may be applied to the current wording introduced by the State Budget Law of 2014), according to which plots of land for construction are 'properties with residential use character' appears to be unconstitutional by violation of the constitutional principles of legality, justice and equality and impartiality, formulated in no. 2 of art. 266, as well as of arts. 13 and 104, no. 3, all of the Constitution of the Portuguese Republic, reason why, in the final analysis, that interpretation of the rule in question should be considered unconstitutional and disapplied or, in the case of the new wording, the rule itself should be disapplied.";

cc) "If the taxation of item 28.1 of the TGIS is regarded as taxation of the ownership of properties with residential use character valued at more than 1 million euros even in cases in which it does not correspond to a manifestation of luxury on the part of its owners, but only to the mere development of their economic activity, then, in that case, such taxation cannot fail to be judged unconstitutional by violation of the cited constitutional precepts and principles.";

dd) "Furthermore, the taxation of the situation of ownership of a plot of land intended for habitation, whose VPT is more than one million euros, and the non-taxation of the ownership of another plot of land intended for a different purpose than habitation, with identical or even higher VPT (much higher), frontally violates the constitutional principle of tax equality – and the principle of contributory capacity that flows from this.";

ee) "For it creates a discrimination, without foundation of any kind, between the holders of the two plots of land in question that, as has been stated, derive exactly the same utility from their plots, since both are for construction and do not yet have any building.";

ff) "There is no reason, there is no rational foundation, for treating differently, in the fiscal sphere, the situation of taxpayers who own plots of land for construction, by the mere fact that the building to be constructed on one is intended for habitation and the building to be constructed on the other is to have some purpose other than habitation.";

gg) "Reason why the aforesaid interpretive dimension of the cited rules of incidence of Stamp Duty of Item 28.1 should be disapplied, or the rules themselves, if we consider the new wording of item 28.1 of the TGIS.";

hh) "Moreover, even the taxation of Item 28.1 on properties with actual residential use character (which cannot include plots of land for construction) departs from the principles of strengthening social equity and the actual distribution of sacrifices that inspired it, as well as violates the principle of equality and contributory capacity, reason why it is requested that the same not be applied.";

ii) "The rule contained in art. 194 of the State Budget Law of 2014, which approved the new wording of item 28.1 of the TGIS, when interpreted in the sense of being applicable to tax events occurring before 01/01/2014, appears to be unconstitutional by violation of the principle of non-retroactivity of tax law formulated in no. 3 of art. 103 of the Constitution of the Portuguese Republic, also embodied in art. 12, no. 1 of the LGT, reason why, in the final analysis, it should be considered unconstitutional and disapplied…".

Otherwise, the AT argues that:

a) "Law no. 55-A/2012, of 29/10/2012 amended art. 1 of the CIS, and added to the TGIS item 28.";

b) "With this legislative amendment, Stamp Duty would also be imposed on ownership, usufruct or right of superficies of urban properties whose patrimonial value recorded in the matrix, under the terms of the Code of Municipal Property Tax (CIMI), is equal to or greater than € 1,000,000.00.";

c) "The notion of the use character of the urban property finds its seat in the part relating to the appraisal of the properties, which is well understood since the appraisal of the property (purpose) incorporates value to the property, constituting a distinctive fact that is determinative (coefficient) for purposes of appraisal.";

d) "Thus, for purposes of determining the patrimonial value for tax purposes of plots of land for construction, the application of the use character coefficient in the context of appraisal is clear, reason why its consideration for purposes of applying item 28 of the TGIS cannot be ignored…";

e) "To the contrary of what is advocated by the Petitioner, the AT understands that the concept of 'properties with residential use character', for purposes of the provision in item 28 of the TGIS, comprises both built properties and plots of land for construction, starting from the literal element of the rule.";

f) "Note that the legislator does not refer to 'properties intended for habitation', having opted for the notion of 'residential use character' – an expression that is different and broader, the meaning of which must be found in the need to integrate other realities beyond those identified in art. 6, no. 1 para. a) of the CIMI.";

g) "The mere establishment of a potential construction right immediately increases the value of the property in question, hence the rule contained in art. 45 of the CIMI which mandates the separation of the two parts of the land".;

h) "… long before the actual building of the property, it is possible to ascertain and determine the use character of the plot of land for construction.";

i) "Regarding the alleged violation of constitutional principles, the AT cannot fail to emphasize that the Constitution of the Republic requires that what is necessarily equal be treated equally and as different what is essentially different, not preventing differentiation of treatment, but only arbitrary, unreasonable discriminations, that is, distinctions of treatment that have no justification and sufficient material foundation.";

j) "The AT understands that the provision of item 28 of the TGIS does not constitute a violation of any constitutional command.";

k) "It is also important to note that taxation under Stamp Duty obeys criteria of adequacy, being applied indistinctly to all holders of properties with residential use character of value exceeding € 1,000,000.00, being imposed on the wealth embodied and manifested in the value of the properties.";

l) "In fact, the measure implemented seeks to achieve maximum effectiveness as to the objective to be reached, with minimum harm to other interests considered relevant.";

m) "Thus, the choice of this mechanism for obtaining revenue is justified, which would only be objectionable, in light of the principle of proportionality, if it resulted in manifestly indefensible.";

n) "Which is not the case since such measure will be applied indistinctly to all holders of properties with residential use character of value exceeding € 1,000,000.00.".

  1. FACTUAL MATTER

4.1. FACTS FOUND TO BE PROVEN

4.1.1. The Petitioner is the owner of a property to which corresponds the registration …, Urban, …, Lisbon.

4.1.2. The property (urban) is matricially classified as "land for construction" and has a patrimonial value for tax purposes (VPT) of 1,852,340.00.

4.1.3. There is recorded on the property a subdivision permit no. … of 11 April.

4.1.4. There is no construction on such property.

4.1.5. On 17/03/2014 the AT assessed stamp duty (item 28.1) on the property described in 4.1.1 hereof in the total amount of € 18,523.40.

4.1.6. In such assessment there is reference to the matricial identification of the property, its patrimonial value, the tax year, the date of the assessment, the item of the TGIS and the rate used to determine the amount of tax and the value of the collection.

4.2. FACTS NOT FOUND TO BE PROVEN

There are no facts with relevance to the decision that have not been found to be proven.

4.3. JUSTIFICATION OF THE FACTUAL MATTER FOUND TO BE PROVEN

The facts found to be proven originate from the documents used for each of the alleged facts and whose authenticity was not challenged. Likewise, facts that were not contested were also taken as established.

  1. THE LAW

First, the Petitioner attributes to the assessment at issue a set of formal defects: i) lack of author of the act; ii) lack of reasoning for the assessment; and iii) lack of prior hearing.

The doctrine sustains regarding the requirements of the decision of the tax procedure that: "The decision of the tax procedure, being an act defining the position of the tax administration vis-à-vis private parties, must comply with the general requirements of administrative acts, set forth in art. 123 of the CPA.(….) Under no. 2 of this art. 123, all these mentions must be stated in a clear, precise and complete manner, so that the tenor and scope of the act and its legal effects can be determined unequivocally. The failure to comply with the provisions of these dispositions is susceptible to leading to the annulment of the act due to formal defect. However, it should be borne in mind that defects may be considered remedied when it is demonstrated that, despite the imprecision or omission or irregularity of the content of the act, the objective it aimed to achieve with the imposition of this content was attained, namely that its recipient became aware of its exact scope", DIOGO LEITE CAMPOS/BENJAMIM SILVA RODRIGUES/JORGE LOPES DE SOUSA, General Tax Law – annotated and commented, 4th edition, Encontro da escrita publisher, 2012, p. 674.

Now, in the concrete case, if it is true that there is no indication of the author of the act in the assessment, it is equally true that the Petitioner understood its exact scope despite such omission. So much so is this true that the present request for arbitral ruling contains 167 articles, in which the Petitioner invokes, in particular, the defect of violation of law, double collection and a list of unconstitutionalities. Reason why such defect is considered remedied.

Furthermore, the Petitioner also alleges that the assessment is not reasoned, for, in its judgment, it is not possible to perceive the reasons for the decision, especially because it contains no factual and legal motivation whatsoever.

Case law sustains regarding the reasoning of the assessment act that: "The act will be sufficiently reasoned when the administrated party, placed in the position of a normal recipient – the bonus pater familiae of which art. 487, no. 2 of the Civil Code speaks – can come to know the factual and legal reasons that are at its genesis, so as to permit him to opt, in an informed manner, between the acceptance of the act or the activation of the legal means of challenge, and so that, in this latter circumstance, the court can also exercise effective control of the legality of the act, assessing its legal correctness in light of its contextual reasoning"[1]. Or, stated differently, the reasoning must incorporate elements of fact and of law that permit the recipient of the act to perceive the decision-making path of the AT.

In the hypothesis sub judice, it is possible to discern in the assessment/collection document, the reference to the matricial identification of the enrolled property, its patrimonial value, the tax year, the date of assessment, the item of the TGIS and the rate used to determine the amount of tax and, lastly, the value of collection. Reason why the tribunal understands that the act is sufficiently reasoned, since it contains the minimum references to the factual and legal matter used by the AT for its enactment. Even because the lack of reasoning imputed to it constituted no obstacle for the Petitioner to request its annulment in a pleading in which it imputes to the assessment a list of defects. In sum, the act does not suffer from the defect of lack of reasoning that the Petitioner imputes to it.

Third, the Petitioner imputes to the act at issue the lack of prior hearing, in that, in its judgment, the AT should have permitted it to make representations before the assessment.

Art. 60, no. 1, para. a) of the LGT provides that: "The participation of taxpayers in the formation of decisions that concern them may be effected, whenever law does not prescribe otherwise, by any of the following means: a) Right of hearing before assessment". Moreover, art. 60, no. 2, para. a) of the same diploma provides that: "Hearing is waived: a) In the case that the assessment is effected on the basis of the taxpayer's declaration…".

In the matter at hand, the assessment placed at issue with the request for arbitral ruling is based on item 28.1 of the TGIS which aims to tax the ownership, usufruct or right of superficies of properties with residential use character and having a patrimonial value for tax purposes (VPT) in the matrix equal to or greater than € 1,000,000. In this manner, the taxable value is precisely the VPT. Now, that VPT was ascertained under the terms of the CIMI and on the basis of the initiative of the Petitioner, with the submission of the declaration for that purpose, form 1 of IMI. In this line, following the submission of said declaration, the Petitioner was not prevented from participating in the appraisal of the property, through a request for a 2nd appraisal or through challenge of the act of fixation of the VPT. Consequently, if the assessment applies a fixed rate to a VPT resulting from the Petitioner's declaration and with its participation, it is decided that the AT enjoys, in this hypothesis, the right to waive prior hearing[2], see art. 60, no. 2, para. a) of the LGT.

As to the defects of content, the first issue that must be the subject of examination by the tribunal consists of knowing what the scope of incidence of item 28.1 of the TGIS is in its wording at the date of the tax events. That is, it must be determined whether plots of land for construction fall within the scope of the rule of incidence as the AT contends or, on the contrary, are excluded from it.

To accomplish such task it is necessary, first and foremost, to seek the rule as to whose parts the parties dissent in its interpretation.

Thus, item 28 of the TGIS provides that the following are subject to taxation: "Ownership, usufruct or right of superficies of urban properties whose patrimonial value for tax purposes recorded in the matrix, under the terms of the Code of Municipal Property Tax (CIMI), is equal to or greater than € 1,000,000 – on the patrimonial value for tax purposes used for purposes of IMI:

28.1 - For property with residential use character - 1 %..."[3].

Thus it is necessary to examine the concept of "(urban) property with residential use character" to which the rule under interpretation alludes. Now, it not being possible to resolve the issue by recourse to the CIS, by force of the provision of art. 67, no. 2 of the CIS it is necessary to apply the rules of the Code of Municipal Property Tax (CIMI) regarding the concept and classes of urban properties.

Consequently, art. 4 of the CIMI provides regarding the concept of urban property: "…are all those that should not be classified as rustic…". And continues art. 6, no. 1: "Urban properties are divided into: a) Residential; b) Commercial, industrial or for services; c) Plots of land for construction; d) Other". No. 2 provides that: "Residential, commercial, industrial or for services are buildings or constructions licensed for such or, in the absence of a license, that have as their normal destination each of these purposes".

Thus, for the subsumption of a property in each one of the enumerated categories, the nature of the use is relevant, that is, the purpose to which it is destined.

Now, properties that already are devoted to residential purposes fall within the stamp duty item under analysis, that is, those to which this destination has been given[4]. But it is legitimate to formulate the following question: and regarding those properties (plots of land for construction) with such destination or, those in which the destination is unknown, are they subsumed to "properties with residential use character"?

The answer to such a question cannot but be negative. In fact, the literal tenor of the item under analysis permits the exclusion from the scope of incidence of those plots of land for construction that have not concretized any type of use, to the extent that they are not yet applied or destined for residential purposes. In other words, it is not possible to proceed to their subsumption as "properties with residential use character", since they do not yet have any use character or other destination, save construction of unknown type[5].

Notwithstanding, one may question: do plots of land for construction that are not yet applied for residential purposes and already have a determined right, such as in the case of a subdivision permit, fall within the scope of incidence of item 28.1 of the TGIS? We believe not. In fact, art. 6, no. 2 of the CIMI, subsidiarily applicable, points in the direction that an effective use character is necessary.

In truth, the legislator did not use the expression "residential properties", but on the contrary "properties with residential use character", that is, the property must already have effective use character for that purpose.

Now, such interpretive sense becomes clear with the mobilization of a summary of the words of the Honourable Secretary of State for Tax Affairs, when presenting and discussing in the Assembly of the Republic the bill[6], to the extent that he advocated that such government proposal: i) aimed to create a special tax on high-value residential urban properties; ii) created special taxation on high-value properties intended for habitation and iii) the tax would be imposed on houses valued at equal to or greater than 1 million euros. Or, stated differently, the category to which the legislator refers with the expression "properties with residential use character" are "houses".

The same interpretive sense is maintained, even if it is considered that in determining the VPT of urban properties, classified as plots of land for construction, consideration should be given to the use that the building authorized or foreseen for these will have, in order to ascertain the value of the area of implantation. This does not mean that plots of land for construction should be classified as "properties with residential use character", to the extent that this destination refers in the economy of the CIMI to properties and constructions that may be inhabited[7].

Reverting such interpretive sense to the present proceedings, it must be stated that the plot of land for construction that is the subject matter hereof is not subsumed to the category of "properties with residential use character" and, as such, the assessment of stamp duty for 2013 must be declared illegal.

Notwithstanding, such interpretation could be considered shaken by the coming into force of Law no. 83-C/2013, of 31 December (State Budget Law for 2014) in the segment in which it gave new wording to item 28.1 of the TGIS, in which it now refers to the categories described in art. 6 of the CIMI, that is, "residential property" and "plot of land for construction". We understand that it does not, because as sustained by councillor ISABEL MARQUES DA SILVA[8]: "… the legislator did not attribute interpretive character (…), merely making it unequivocal for the future that plots of land for construction the authorized or foreseen building on which is for residential use are covered within the scope of item 28.1 of the General Table of Stamp Duty". That is, nothing is established regarding acts undertaken under the previous wording and demonstrates another legislative option with the reference to the classes of urban property, i) residential and ii) plots of land for construction. Consequently, such legislative amendment in no way modifies our decision set forth in the preceding paragraph.

By such sum of reasons, if the Petitioner's property was recorded matricially as land for construction at the date of the tax event for the year 2013, the rule of incidence at issue cannot be applicable to the case sub judice, under penalty of illegality. Reason why the assessment of stamp duty for 2013 must be annulled, with all legal consequences.

Finally, if the tribunal accepted the Petitioner's petition for declaration of illegality of the acts of assessment of stamp duty for the year 2013, the examination of the remaining defects imputed by it is rendered prejudicial, see art. 124 of the CPPT, applicable by force of the provision of art. 29, no. 1 of the RJAT.

  1. DECISION

In these terms and with the reasoning described above, it is decided to judge the petition for arbitral ruling to be well-founded, with the consequent annulment of the stamp duty tax assessment act for the year 2013.

  1. VALUE OF THE PROCEEDINGS

The value of the proceedings is fixed at € 18,523.40, under the terms of art. 97-A of the CPPT, applicable by force of the provision of art. 29, no. 1, paras. a) and b) of the RJAT and of art. 3, no. 2 of the Regulation of Costs in Proceedings of Tax Arbitration (RCPAT).

  1. COSTS

Costs to be borne by the AT, in the amount of € 1,224, see art. 22, no. 4 of the RJAT and of Table I attached to the Regulation of Costs in Proceedings of Tax Arbitration.

Notify.

Lisbon, 10 March 2015

The sole arbitrator,

Francisco Nicolau Domingos

[1] Decision of the Supreme Administrative Court of 23/04/2014, rendered in the course of proceedings no. 01690/13 and in which the reporting judge was councillor ASCENSÃO LOPES.

[2] In this sense, see the arbitral decision rendered in the course of proceedings no. 42/2013-T, of 18/10/2013, in which Dr. NUNO AZEVEDO NEVES performed the function of arbitrator.

[3] In the wording in force at the date of the tax events.

[4] See in this sense, decision of the Supreme Administrative Court, rendered in the course of the appeal 048/14, of 09/04/2014, in which the reporting judge was councillor ISABEL MARQUES DA SILVA; decision of the Supreme Administrative Court, rendered in the appeal 046/14 of 14/05/2014, in which the reporting judge was councillor ASCENSÃO LOPES and the arbitral decision rendered in the course of proceedings 53/2013-T, of 02/10/2013, in which councillor JORGE LOPES DE SOUSA assumed the function of arbitrator-president.

[5] See decision rendered in the course of proceedings 53/2013-T, of 02/10/2013, in which councillor JORGE LOPES DE SOUSA assumed the function of arbitrator-president.

[6] Journal of the Assembly of the Republic, I Series, no. 9/XII – 2, of 11 October, p. 32.

[7] Decision of the Supreme Administrative Court, rendered in the course of appeal 048/14, of 09/04/2014 in which the reporting judge was councillor ISABEL MARQUES DA SILVA.

[8] In the course of decision 048/14, of 09/04/2014 reported by her.

Frequently Asked Questions

Automatically Created

Is stamp tax (Imposto do Selo) under verba 28.1 TGIS applicable to land classified for construction?
No, stamp tax under verba 28.1 TGIS is not applicable to land classified for construction (terreno para construção). This provision applies only to urban properties with residential use character, which requires either buildings or constructions licensed for residential use or having habitation as their normal destination. Construction land is an autonomous category whose normal destination is construction itself, not habitation. The technical-legal meaning of 'property with residential use character' is derived from CIMI Article 6, applicable to Stamp Duty via Article 67(2) of the Stamp Duty Code, and excludes undeveloped construction plots from its scope.
What are the mandatory notification requirements for stamp tax liquidation under articles 36 and 39 of the CPPT?
Under CPPT Articles 36 and 39, stamp tax liquidation notices must contain several mandatory elements: identification of the author of the administrative act, the capacity in which the author acted (including any delegation or subdelegation of powers), the content and date of the act, legal grounds for the decision, and proper reasoning. The assessment must also indicate the tax basis, applicable rate, and amount due. Failure to include these essential elements may constitute a formal defect affecting the validity of the tax act itself, not merely a notification irregularity. Additionally, Article 60 of the LGT requires prior hearing of taxpayers before adverse decisions, and omission of this formality may vitiate the assessment and constitute grounds for annulment under Article 99 of the CPPT.
Can a taxpayer challenge a stamp tax assessment through CAAD arbitration proceedings?
Yes, taxpayers can challenge stamp tax assessments through CAAD (Centro de Arbitragem Administrativa) arbitration proceedings. The RJAT (Legal Regime of Tax Arbitration) establishes the framework for arbitral tribunals to review the legality of tax assessments, including stamp duty liquidations. The arbitral tribunal has material competence to examine whether the assessment complies with substantive and procedural legal requirements, including correct application of tax law, proper classification of taxable facts, compliance with notification formalities, and respect for taxpayer rights such as prior hearing. CAAD proceedings provide an alternative to judicial courts for resolving tax disputes, with the tribunal empowered to declare tax acts illegal and order their annulment when legal grounds exist.
What happens when a tax liquidation notice lacks identification of the author of the administrative act?
When a tax liquidation notice lacks identification of the author of the administrative act, this constitutes a fundamental formal defect that affects the validity of the tax act itself, not merely the effectiveness of its notification. An administrative act without an identified author lacks an essential element and cannot be considered valid, as the author is a constitutive element of any administrative decision. This defect goes beyond notification irregularities addressed in CPPT provisions—it concerns the intrinsic validity of the assessment. Such deficiency may lead to annulment of the act under Article 99 of the CPPT for violation of essential formalities required by Article 60(1)(a) of the LGT, particularly when combined with other defects such as lack of reasoning or omission of prior hearing.
How does the CAAD arbitral tribunal assess the legality of Imposto do Selo liquidation on building land?
The CAAD arbitral tribunal assesses the legality of Imposto do Selo liquidation on building land by examining both formal and substantive compliance with tax law. Formally, the tribunal verifies whether mandatory notification requirements were met, whether the assessment is properly reasoned, and whether the taxpayer's right to prior hearing was respected. Substantively, the tribunal analyzes whether the tax norm was correctly applied to the facts, including proper interpretation of 'urban properties with residential use character' under verba 28.1 TGIS. This involves determining whether construction land (terreno para construção) falls within the objective scope of the tax provision, applying interpretive criteria from CIMI and Stamp Duty Code provisions. The tribunal examines the property's legal classification in the property matrix, its actual characteristics, and its normal destination to determine if error of law concerning facts occurred in the assessment process.