Process: 537/2015-T

Date: March 7, 2016

Tax Type: Selo

Source: Original CAAD Decision

Summary

This CAAD arbitral decision (Process 537/2015-T) addresses whether Stamp Tax under item 28.1 of the General Stamp Tax Table applies to multi-unit properties based on total or individual unit values. The taxpayer challenged nine 2014 Stamp Tax assessments totaling €15,062.20 on a building with ten independent units. While the building's total VPT was €1,524,920, each individual unit's VPT ranged between €18,700 and €260,970—all below the €1,000,000 threshold. The taxpayer argued that Article 12(3) of the IMI Code requires independent units to be considered separately in the property register, and since item 28.1 references 'VPT shown in the register,' each unit should be assessed individually. The taxpayer also raised constitutional equality concerns, arguing that taxing based on property concentration rather than dispersal lacks justification. The Tax Authority countered that properties in full ownership differ from horizontal property regimes, where only autonomous fractions under Article 2(4) CIMI constitute separate properties. For full ownership properties with independent parts, the Tax Authority maintained the whole property is relevant for Stamp Tax purposes, despite IMI's separate assessment of independent units. This case clarifies the critical distinction between property ownership structures and their impact on Stamp Tax liability under high-value residential property provisions.

Full Decision

ARBITRAL DECISION

I – Report

1. On 06.08.2015, the Head of the Estate of A…, NIF …, domiciled at …, … Lisbon, requested the CAAD to constitute an arbitral tribunal, pursuant to article 10 of Decree-Law no. 10/2011, of 20 January (Legal Framework for Arbitration in Tax Matters, hereinafter referred to only as "RJAT"), in which the Tax and Customs Authority is the Respondent, with a view to the annulment of nine stamp tax assessment acts relating to 2014 (item no. 28.1 of the General Table of Stamp Tax), in the total amount of € 15,062.20 made by the Respondent on 20.03.2015, concerning the property situated at …, …, parish of …, municipality of Lisbon, registered in the urban property register under article number …-U, which forms part of said undivided estate.

The Claimant further requests that the Respondent be condemned to pay indemnatory interest on the tax which, as a consequence of those acts, was unduly paid.

2. The request for constitution of the arbitral tribunal was accepted by the Honorable President of the CAAD and notified to the Tax and Customs Authority.
Pursuant to the provisions of no. 1, article 6, of the RJAT, by decision of the President of the Ethics Council, duly communicated to the parties within the legally applicable time limits, the undersigned was appointed arbitrator, who communicated acceptance of the charge to the Ethics Council and to the Administrative Arbitration Center within the regularly applicable time limit.

The Arbitral Tribunal was constituted on 4.11.2016.

3. The grounds presented by the Claimant in support of its claim were, briefly, as follows:

- The taxes were assessed individually on the tax property values (TPV) of the floors or parts capable of independent use of the property situated at …, …, parish …, municipality of Lisbon, belonging to the undivided estate of A….

- The property comprises a total of ten floors and divisions with independent use whose tax property value (TPV), determined under the Municipal Property Tax Code (CIMI), varies between € 18,700.00 and € 260,970.00 and totals € 1,524,920.00

- Item no. 28.1 of the TGIS provides that for the ownership of each urban property with residential use whose TPV shown in the register, under the terms of the CIMI, is equal to or greater than € 1,000,000, stamp tax is levied on its TPV used for purposes of IMI.

- Where a property such as that in this case, comprising floors or divisions capable of independent use, the liability to stamp tax is determined, not by the TPV of the property, but by the TPV of those floors or divisions.

- Moreover, under the terms of the CIMI, each floor or part of property capable of independent use is considered separately in the property registration (article 12 no. 3 of the CIMI).

- And it is precisely to the "TPV shown in the register" that the legal text directs one to attend in order to determine the incidence of stamp tax of item no. 28 of the TGIS.

- Since the TPV of each of the floors shown in the register, under the terms of the CIMI, is less than € 1,000,000, stamp tax of item no. 28.1 of the TGIS, here contested, is not levied.

- The assessment acts now contested are illegal by violation of the tax incidence norm of item no. 28.1 of the TGIS.

- Furthermore, it could not constitute a cause of that incidence, possibly, the failure to constitute in the horizontal property regime a property consisting of independent dwellings.

- The legal form of ownership of the property cannot be decisive in determining that incidence.

- Being a tax on immovable property, stamp tax of item no. 28 of the TGIS would tax differently the ownership of immovable property of equal value held by two different persons:

- It would exclude from taxation that which has ownership of residential immovable property of greater value, but dispersed across several properties, while it taxes that which has immovable property of lesser value concentrated in a single property.

- Now, since the concentration or dispersal of immovable property is not a criterion of tax capacity or any other legitimate taxation criterion, it is necessary to conclude that the tax incidence norm of item no. 28 of the TGIS annexed to the CIS, in that interpretation, would be unconstitutional, by violation of the principle of equality inscribed in article 13 of the Constitution of the Portuguese Republic.

4. The ATA – Tax and Customs Administration, called upon to respond, contested the Claimant's claim, defending itself by exception and by challenge, in summary, with the following grounds:

BY EXCEPTION:

- The Arbitral Tribunal is materially incompetent, in light of the provision of article 2 of the RJAT to assess the legality of a provision of the assessment act, which is not in itself any tax act,

- There being no doubt whatsoever, as evidenced by all documents attached to it, that the Claimant contests exclusively the payment notices which constitute the 1st installment of the stamp tax for the year 2014, relating to the property.

- Terms in which it concludes for the manifest material incompetence of the Arbitral Tribunal, and for the merit of the exception raised.

BY CHALLENGE,

e. With reference to the year 2014, in compliance with and pursuant to article 6, no. 2 of Law no. 55-A/2012, of 29/10, which added item no. 28 to the TGIS, with the amendment made by Law no. 83-C/2013 of 31/12 and whose respective tax incidence norm refers to urban properties, valued under the terms of the CIMI, with VP equal to or greater than € 1,000,000.00 and, pursuant to its no. 28.1, residential use, the TA proceeded to notify the payment documents for payment of the 1st installment of the assessments in question.

- Now, what is at issue here are payment notices which result from the direct application of the legal norm, which translates into objective elements, without any subjective or discretionary appraisal.

g. The concept of property is defined in article 2, no. 1 of the CIMI, and it is provided in its no. 4 that in the horizontal property regime, each autonomous fraction is deemed to constitute a property.

h. It follows from the analysis of the normative provision that a "property in full ownership with floors or divisions capable of independent use" is, unequivocally, different from an immovable in horizontal property regime consisting of autonomous fractions, that is, several properties.

i. As regards the assessment of IMI, where these are properties in full ownership, the VP which serves as the basis for its calculation will unquestionably be the VP which the now Claimant defines as the "global value of the property."

j. In compliance with the provision of article 119, no. 1 of the CIMI, the payment document is sent to the taxpayer with a breakdown of the parts capable of independent use, their respective tax property value and the amount payable to each municipality where the properties are located.

k. And since the assessment is correct and the assessed tax is due, indemnatory interest is not due, in particular because there is no error attributable to the Services, which merely acted, as they should, in strict compliance with the legal norm.

l. The thesis defended by the Claimant lacks legal support, because although the assessment of IS in the situations provided for in item no. 28.1 of the TGIS is processed according to the rules of the CIMI, the truth is that the legislator makes exceptions for aspects that require appropriate adjustments, namely those in which, as is the case with properties in full ownership, even with floors or divisions capable of independent use (although IMI is assessed for each part capable of independent use) for purposes of IS the property as a whole is relevant because divisions capable of independent use are not deemed to be property, but only autonomous fractions in the horizontal property regime, as provided in no. 4 of article 2 of the CIMI.

- What expressly results from the letter of the law is that the legislator intended to tax with item 28.1 in question the properties as a single legal-tax reality, as referred to below.

- The liability to stamp tax of item 28.1 of the General Table attached to the CIS results from the combination of two facts: residential use and the tax property value of the urban property registered in the matrix being equal to or greater than € 1,000,000.00.

- In fact, it appears from the property record that the property is in full ownership regime, composed of several parts capable of independent use.

- Where the properties are in full ownership regime, not possessing autonomous fractions, to which tax law attributes the qualification of property, because from the notion of property in article 2 of the CIMI, only the autonomous fractions of property in horizontal property regime are deemed to be properties – no. 4 of the cited article 2 of the CIMI.

- From the foregoing, the defect of violation of law by error as to the legal presuppositions should be judged without merit, the assessments contested being maintained in the legal order as they constitute a correct application of the law to the facts.

- All that is now being defended in this arbitral forum was already the subject of binding information from the TA, with concordance dispatch of 11.2.2013 of the Legal Substitute of the Director-General of the Tax and Customs Authority.

- Therefore, we must necessarily conclude that the notifications made for payment of the tax installment did not violate any legal or constitutional principle, and should therefore be maintained.

5. The Claimant responded in writing to the exception raised by the Respondent, in summary, in the following terms:

- As follows from the initial petition in the present case – from its opening, but also from its request – the annulment claim formulated by the now Claimant was directed against the 9 stamp tax assessment acts, in the total amount of € 15,062.20, all issued on 20 March 2015.

- For that very reason, the Claimant did not direct its request for declaration of illegality and consequent annulment against any of the three payment installments of the stamp tax assessments for 2014, individually, as the TA claims, but rather against the assessment acts to which all of those refer, in this case in the joint amount of € 15,062.20, which is precisely the sum of the amounts shown in all of them under the column designated "amount payable."

- As is also natural, it is not required of the now Claimant that it attach to the request presented in court all the payment notices for the 1st, 2nd and 3rd installments of stamp tax relating to 2014, especially since all are identical to each other and all are in the possession of the tax administration which issued them.

- Moreover, as of the date of the request the claimant had not yet even received notice to pay the third installments of stamp tax relating to 2014, so these could not be attached to the respective request.

- But also because, having the now Claimant been duly notified of the 9 stamp tax assessment acts for 2014, issued on 20 March 2015, it could not be required of him to await the maturity of all payment installments in order only then to be able to exercise his guarantee to judicially review the legality of the assessments.

- And if everything were to fail, without granting it, since as of the present date the TA has already notified the Claimant of all subsequent installments, the exception raised should nevertheless fail by force of the provision of article 278, no. 3, of the CPC.

6. Finding that there is no situation provided for in article 18, no. 1 of the RJAT which would make the arbitral meeting provided for therein necessary, the holding of the same was dispensed with, on the grounds of the prohibition of the performance of useless acts and also in the principles of celerity, simplification and procedural informality.

The holding of pleadings was also dispensed with, pursuant to article 18, no. 2, of the RJAT, "a contrario."

7. The tribunal is materially competent and is duly constituted pursuant to the RJAT.

The parties have legal personality and capacity, are legitimate and are legally represented.

The process is free from defects that would invalidate it.

8. It is necessary to resolve the following issues:

a) Whether the material incompetence of the arbitral tribunal is verified for the declaration of illegality of the acts which are the subject of the present process.

b) Whether the assessments which are the subject of the present process are illegal and consequently should be annulled.

II. Clarification

9. Exception of material incompetence of the arbitral tribunal.

In the initial petition the Claimant expressly indicates as the object of the request for arbitral decision the stamp tax assessments which it expressly identifies. It further indicates the sum of the value of the assessments made by the Respondent which corresponds to the value of the process indicated.

Thus, there is no doubt that the acts which are the subject of the present process are the stamp tax assessments, and it is also unquestionable that the appraisal of the legality of the same is included within the competence of the Arbitral Tribunal, pursuant to article 2, no. 1, paragraph a) of the RJAT.

Consequently, the exception raised by the Respondent is judged without merit.

II – The relevant factual matter

10. The following facts are considered proven:

10.1 The head of the undivided estate of A… was notified of nine stamp tax assessment acts relating to 2014 (item no. 28.1 of the General Table of Stamp Tax), in the total amount of € 15,062.20 made by the Respondent on 20.03.2015, concerning the property situated at …, …, parish of …, municipality of Lisbon, registered in the urban property register under article number …-U, which forms part of said undivided estate.

10.2 The taxes were assessed individually on the tax property values of the floors or parts capable of independent use as follows:

a) Article no. …-U-…-…, tax of € 2,149.10 on the TPV of € 214,910.00;

b) Article no. …-U-…-…, tax of € 1,730.20 on the TPV of € 173,020.00;

c) Article no. …-U-…-…, tax of € 1,177.90 on the TPV of € 117,790.00;

d) Article no. …-…-…, tax of € 2,315.10 on the TPV of € 231,510.00;

e) Article no. …-U-…-…, tax of € 1,810.10 on the TPV of € 181,010.00;

f) Article no. …-U-…-…, tax of € 2,609.70 on the TPV of € 260,970.00;

g) Article no. …-U-…-R/C, tax of € 984.20 on the TPV of € 98,420.00;

h) Article no. …-U-…-1st, tax of € 1,125.60 on the TPV of € 112,560.00; and

i) Article no. …-U-…-2nd, tax of € 1,160.30 on the TPV of € 116,030.00.

10.3 The property comprises a total of ten floors or divisions with independent use and each of these parts was subjected to autonomous evaluation by the Tax Administration, which fixed the respective tax property values between € 18,700.00 and € 260,970.00 and totals € 1,524,920.00.

10.4 Of these ten floors and divisions, nine are allocated to residential use, whose total TPV amounts to € 1,506,220.00.

10.5 On 11.11.2015 the Claimant paid the 3rd installment of the assessments in question, in the total amount of 5,020.70 €.

With respect to facts alleged by the Claimant, with interest for the decision of the case, there are no unproven facts.

It is deemed pertinent to note that the Claimant did not prove and did not even allege having paid the amounts relating to the first and second installment relating to the sub judice assessments.

In the initial petition there is no reference to the payment of the first and second installments and (coherently) the request formulated does not include a request for tax restitution but only "the condemnation of the State to pay indemnatory interest to the now contestant on the tax which, as a consequence of those acts, was unduly paid."

On 19.01.2016 he submitted a request alleging and proving having paid the third installments of tax, but from the request for arbitral decision, nor from any subsequent request any allegation of payment of the first and second installments. Similarly, there is no proof of such payments in the record.

In this respect, such payments cannot be deemed proven.

11. The Tribunal's conviction as to the decision of the factual matter was based on the documents contained in the process, as well as on the pleadings presented, it being noted that there is agreement between the parties as to the factual matter, the disagreement being limited to the matter of law.

III – Applicable Law

12. Item 28 of the General Table of Stamp Tax provides that the following are subject to stamp tax:

"Ownership, usufruct or right of superficies of urban properties whose tax property value shown in the register, under the terms of the Municipal Property Tax Code (CIMI), is equal to or greater than (euro) 1 000 000 - on the tax property value used for purposes of IMI:

28.1 For residential property or land for construction whose authorized or envisaged construction is for residential purposes, pursuant to the provisions of the IMI Code: 1%.

28.2 For property, when the taxpayers who are not natural persons are resident in a country, territory or region subject to a clearly more favorable tax regime, listed in the list approved by ministerial decree of the Minister of Finance: 7.5%."

13. Article 67, no. 2 of the CIS establishes that "For matters not regulated in the present Code concerning item no. 28 of the General Table, the provisions of the CIMI apply subsidiarily."

Article 2, no. 4 of the Municipal Property Tax Code (hereinafter CIMI) provides that "For purposes of this tax, each autonomous fraction, in the horizontal property regime, is deemed to constitute a property."

It further provides article 92 of the same code:

"1 - To each building in horizontal property regime corresponds only one entry in the register.

2 - In the generic description of the building it should be mentioned the fact that it is in horizontal property regime.

3 - Each of the autonomous fractions is described in detail and individualized by the capital letter corresponding to it according to alphabetical order."

For its part, article 12, no. 3 of this Code provides that "Each floor or part of property capable of independent use is considered separately in the property registration, which also discriminates its respective tax property value."[1]

Writing on this norm, J. Silvério Mateus and L. Corvelo de Freitas tell us: "An example that can illustrate this situation is the case of an urban property, not constituted in horizontal property ownership and which is composed of several floors. Legally this property constitutes a single unit (…).

However, since each of these units can be the object of rental or any other use by the respective holder, the register must evidence these units and a tax property value must be attributed to each of them."[2]

It appears, thus, that article 12, no. 3, of the CIMI, is applicable to situations of properties in conditions to satisfy the objective requirements of submission to the horizontal property regime, provided for in article 1415 of the Civil Code, but in which the existence of a constitutive title does not occur.

14. With respect to urban properties in conditions to satisfy the objective requirements of submission to the horizontal property regime, in substance, the economic reality subject to taxation is not different by reason of the fact that the act constituting horizontal property has, or has not, occurred. From the perspective of the taxation of these realities, there is no substantial difference in treatment in the CIMI of an immovable as a function of the constitution of horizontal property.

Indeed, in the regime of articles 38 and following of the CIMI which regulate the determination of the tax property value of immovables, there is no substantial differentiation between immovables constituted in horizontal property and immovables with objective conditions for such, but in which submission to such a regime did not occur,[3] in particular, such circumstances do not appear among the elements of increase or decrease provided for in the tables of article 43, no. 2 of the code.

15. The essential issue to be resolved in the present process concerns the question of whether in properties with parts or floors capable of independent use, but not submitted to the horizontal property regime, the immovable will be considered as a unit for purposes of application of item 28 of the TGIS or whether its independent parts will be considered individually.

In the first case, the value relevant for purposes of subsumption to item 28 will be that resulting from the consideration of all of its parts and, in coherence, only one assessment should be made, relating solely to the immovable, and not as many assessments as there are parts or floors capable of independent use.

In the second case, the value to be considered for this purpose will be that of each of the parts capable of independent use, similar to what occurs in the autonomous fractions of properties submitted to the horizontal property regime, and as many assessments should be made as there are parts capable of independent use but, only and exclusively, in relation to parts capable of independent use whose value is equal to or greater than 1,000,000 €.

The TA made as many assessments as there are parts capable of independent use, a procedure which in our view is not in harmony with its own thesis that, in these cases, the reality aimed at by Item 28 of the TGIS is the immovable in its entirety and not each of its autonomous parts.

16. The issue has already been considered in various arbitral decisions,[4] which were to the effect of considering that the value to be considered for this purpose will be that of each of the parts capable of independent use, similar to what occurs in the autonomous fractions of properties submitted to the horizontal property regime, a solution which we deem correct.

In an initial interpretive moment of item 28 of the TGIS, the expression "urban properties," in combination with article 2, no. 4 of the CIMI, which attributes the quality of urban property to autonomous fractions in the horizontal property regime and apparently does not attribute it to parts capable of independent use, might point to the consideration of the property as a whole.

But, even within the scope of the literal element, the item points in a different direction by referring to "residential property," in that, in cases of properties capable of independent use, the allocation can only be determined fraction by fraction[5] and not globally, in that it can happen, and does happen frequently with this type of immovables, that there are parts allocated to residential use and others allocated to other purposes.

Thus, the legislator in referring to "residential property," with respect to properties with floors or parts of property capable of independent use, could only have had in mind each of these fractions and not the property in its entirety.

17. This reading of the literal element is in complete harmony with the above-mentioned norms of the CIMI, as well as other interpretive elements, as demonstrated in the various decisions of the CAAD in this matter and to whose jurisprudence we adhere without reservation.

As was written in the decision given in process 50/2013-T:

"the ratio legis underlying the rule of item 28 of the TGIS, introduced by Law no. 55-A/2012 of 29 October, and in obedience to the provision of article 9 of the Civil Code, according to which the interpretation of the legal norm should not be limited to the letter of the law, but should reconstruct from the texts and other interpretive elements the legislative intent, having in account the unity of the legal system, the circumstances in which it was elaborated and the conditions specific to the time in which it is applied.

The legislator in introducing this legislative innovation considered as the determinant element of tax 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 a special rate of stamp tax was introduced, seeking to introduce a principle of taxation on the wealth externalized in the ownership, usufruct or right of superficies of urban properties of luxury with residential allocation. For this reason, the criterion was the 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 is drawn 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 (Journal of the Assembly of the Republic), I series, no. 9/XII/2, of 11 October 2012.

The justification for the measure designated as "special tax on the highest value urban residential properties" is based on the invocation of the principles of social equity and fiscal justice, calling those holding high-value properties intended for residential use to contribute in a more intense manner, with the new special rate applying to "properties with value equal to or greater than 1 million euros."

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

18. From the foregoing, it is considered that in the case of urban properties with parts or floors capable of independent use, the value to be considered for purposes of application of item 28 of the TGIS is the tax property value of each of those independent parts, with only those parts capable of independent use whose own tax property value exceeds € 1,000,000 being subject to this tax.

19. In the case at hand, since the tax property value of each of the parts capable of independent use is less than that amount, they do not fall within the tax incidence norm, so that the sub judice assessments are defective by violation of law, and consequently cannot but be annulled.

20. The Claimant further requested the condemnation of the Respondent to pay the respective indemnatory interest on the tax which, as a consequence of those acts, was unduly paid.

Let us examine this.

Although article 2, no. 1, paragraphs a) and b), of the RJAT uses the expression "declaration of illegality" to define the competence of arbitral tribunals operating in the CAAD, making no reference to condemnatory decisions, it should be understood that the competences include the powers that in judicial challenge proceedings are attributed to tax tribunals, being this the interpretation that is in harmony with the sense of the legislative authorization on which the Government based itself to approve the RJAT, in which it proclaims, as a first directive, that "the arbitral tax process should constitute an alternative procedural means to the judicial challenge process and to the action for recognition of a right or legitimate interest in tax matters."[6]

The judicial challenge process, despite being essentially a process of annulment of tax acts, admits the condemnation of the Tax Administration to payment of indemnatory interest, as is clear from article 43, no. 1, of the LGT, in which it is established that "indemnatory interest is due when it is determined, in administrative reclamation or judicial challenge, that there was error attributable to the services resulting in payment of the tax debt in an amount greater than the legally due" and article 61, no. 4 of the CPPT (in the version given by Law no. 55-A/2010, of 31 December, which corresponds to no. 2 in the original version), which "if the decision recognizing the right to indemnatory interest is judicial, the period for payment is counted from the beginning of the period of its spontaneous execution."

On the other hand, no. 5 of article 24 of the RJAT in establishing that "payment of interest is due, regardless of its nature, pursuant to the provisions of the general tax law and the Code of Procedure and Tax Process" should be understood as permitting the recognition of the right to indemnatory interest in the arbitral process, such claim being assessed in light of article 43 of the General Tax Law [applicable by force of the provision in paragraph a) of no. 1 of article 29 of the RJAT].

The provision of no. 1 of that article states that "Indemnatory interest is due when it is determined, in administrative reclamation or judicial challenge, that there was error attributable to the services resulting in payment of the tax debt in an amount greater than the legally due."

We endorse the understanding of Diogo Leite de Campos, Benjamim Silva Rodrigues and Jorge Lopes de Sousa who sustain that "The error attributable to the services that carried out the assessment is demonstrated when they proceed with administrative reclamation or judicial challenge of that same assessment and the error is not attributable to the taxpayer" (GENERAL TAX LAW, Annotated and Commented, writing meetings, 4th Edition, 2012, p. 342).

In the case "sub judice," since the error that gave rise to the assessments which are the subject of the present process is not attributable to the Claimant, the request for condemnation of the Respondent as to indemnatory interest cannot but proceed.

Indemnatory interest is due from the date of payment until the processing of the credit note, in which they are included (article 61, no. 5, of the CPPT).

IV – Decision

Thus, the arbitral tribunal decides, judging the request for arbitral decision wholly with merit:

a) To decree the annulment of the assessments which are the subject of the present process.

b) To condemn the Respondent to pay indemnatory interest at the legal rate on the amounts paid relating to the annulled assessments, counted from the date of payment until the processing of the credit notes.

Value of the action: € 15,062.20 (fifteen thousand sixty-two euros and twenty cents) pursuant to the provision of article 306, no. 2, of the CPC and article 97-A, no. 1, paragraph a), of the CPPT and article 3, no. 2, of the Arbitration Proceedings Costs Regulation.

Costs payable by the Respondent in the amount of € 918.00 (nine hundred and eighteen euros) pursuant to no. 4 of article 22 of the RJAT.

Notify.

Lisbon, CAAD, 07.03.2016

The Arbitrator

Marcolino Pisão Pedreiro

[1] Also in the sense of the individual consideration of these parts capable of independent use, article 119, no. 1 of the CIMI determines that the tax payment document shall contain the "breakdown of the properties, their parts capable of independent use, their respective tax property value."

Pointing also in the same sense, article 15-O of Decree-Law no. 287/2003, of 20 November, added by Law 60-A/2011 of 30/11, referring to the collection of IMI for purposes of the safeguard regime, mentions "property or part of urban property subject to general evaluation."

[2] TAXES ON IMMOVABLE PROPERTY, STAMP TAX, Annotated and Commented, Engifisco, 1st Edition, 2005, pp. 159-160.

[3] This was already the case under the Property Contribution Code and the Code on Industry and Agricultural Tax and the Municipal Contribution Code.

The circular offices nos. 40012, of 23.12.1999 and 40.025, of 11.08.2000 (which can be consulted in MUNICIPAL PROPERTY TAX CODE, Commented and Annotated, by Martins Alfaro, Áreas Editora, 2004, 589-592 and in the cited work of Silvério Mateus and Corvelo de Freitas, pages 294-295 and 259-261, and the second can still be consulted on the website http://info.portaldasfinancas.gov.pt/pt/informacao_fiscal/legislacao/instrucoes_administrativas/oficios_circulados_contribuicao_autarquica.htm) expressly clarified the understanding that unless in cases of reconstruction, modification or improvement of the property which entails some variation of the taxable value, the transition to the horizontal property regime does not give rise to new evaluation.

[4] Among others, those given in processes 50/2013-T, 132-2013-T, 181/2013-T, 183/2013-T, 185/2013-T, 248/13, 177/2014-T, 396/2014-T, 461/2015-T and 474/2015-T, which can be consulted at https://caad.org.pt/.

[5] We use the expression here in the sense of part or floor capable of independent use.

[6] On this question see Jorge Lopes de Sousa, Comment on the Legal Framework for Tax Arbitration, in GUIDE TO TAX ARBITRATION, Coord. Nuno Villa-Lobos and Mónica Brito Vieira, 2013, Almedina, pp. 110-116).

Frequently Asked Questions

Automatically Created

Does the €1,000,000 VPT threshold under Stamp Tax clause 28.1 apply to the whole building or to each independent unit separately?
The central dispute is whether the €1,000,000 VPT threshold in Stamp Tax item 28.1 applies to the entire building or each independent unit separately. The taxpayer argued that Article 12(3) of the IMI Code requires each independent unit to be registered separately, and since item 28.1 references 'VPT shown in the register,' units below €1,000,000 should be exempt. The Tax Authority maintained that properties in full ownership are assessed as a whole for Stamp Tax purposes, distinguishing them from horizontal property regimes where Article 2(4) CIMI treats autonomous fractions as separate properties. This interpretation means a building worth €1,524,920 in total triggers Stamp Tax even when individual units are below the threshold.
How are independent parts of an urban property assessed for Stamp Tax (Imposto do Selo) purposes under Portuguese law?
Under Portuguese law, independent parts of urban properties are assessed differently depending on ownership structure. For IMI purposes, Article 12(3) of the CIMI requires separate consideration and registration of parts capable of independent use. However, for Stamp Tax purposes under item 28.1, the Tax Authority distinguishes between full ownership properties and horizontal property regimes. In full ownership, the entire property is considered one taxable unit regardless of independent divisions. Only autonomous fractions in horizontal property regime are deemed separate properties under Article 2(4) CIMI. This creates a critical distinction where IMI may assess independent units separately while Stamp Tax considers the aggregate value when determining liability for properties exceeding €1,000,000.
Can the Tax Authority (AT) levy Stamp Tax on individual units whose VPT is below €1,000,000 based on the total building value?
According to the Tax Authority's position, yes—Stamp Tax can be levied on individual units with VPT below €1,000,000 when the total building value exceeds the threshold, provided the property is in full ownership rather than horizontal property regime. The Tax Authority argued that while IMI breaks down assessments by independent parts for administrative purposes, this breakdown does not create separate properties for Stamp Tax purposes. The taxpayer contested this interpretation, arguing it violates Article 12(3) CIMI's requirement for separate registration and the constitutional equality principle, as it taxes property concentration differently from dispersed holdings of equal value. The taxpayer also argued that legal ownership form should not determine tax incidence.
What is the role of Article 12(3) of the IMI Code (CIMI) in determining Stamp Tax liability for multi-unit properties?
Article 12(3) of the IMI Code (CIMI) states that each floor or part of a property capable of independent use is considered separately in the property registration. The taxpayer relied heavily on this provision, arguing that since item 28.1 of the Stamp Tax Table references 'VPT shown in the register,' the separate registration of independent units mandates individual assessment for Stamp Tax purposes. However, the Tax Authority distinguished between registration for IMI purposes and the definition of 'property' for Stamp Tax purposes, arguing that Article 2(4) CIMI only treats autonomous fractions in horizontal property regime as separate properties. This creates tension between IMI's separate registration requirement and Stamp Tax's aggregation approach for full ownership properties with independent units.
Is the taxpayer entitled to compensatory interest (juros indemnizatórios) when Stamp Tax liquidations on independent property units are annulled?
The taxpayer requested compensatory interest (juros indemnizatórios) on unduly paid Stamp Tax if the liquidations were annulled. Entitlement to compensatory interest depends on whether the Tax Authority made an error attributable to the tax services. The Tax Authority argued that no compensatory interest is due because it acted in strict compliance with the legal norm and made no attributable error. Under Portuguese tax law, compensatory interest is generally payable when tax is collected without legal basis and the error is attributable to the tax administration. However, if the administration reasonably applied a legal interpretation later deemed incorrect by an arbitral tribunal, the question of attributability becomes more nuanced. The final determination would depend on the tribunal's assessment of whether the Tax Authority's interpretation was reasonable under the circumstances.