Summary
Full Decision
Case No. 559/2014-T
The arbitrators Dr. Jorge Manuel Lopes de Sousa (arbitrator-president), Prof. Dr. Maria do Rosário Anjos and Dr. Luís Máximo dos Santos, designated by the Deontological Council of the Administrative Arbitration Centre to form the Arbitral Court, constituted on 01-10-2014, hereby agree as follows:
1. Report
A... 29 – REAL ESTATE COMPANY, S.A., TIN ... ("A... 29"); A... 31 – REAL ESTATE COMPANY, S.A., TIN ... ("A... 31"); A... 32 – REAL ESTATE COMPANY, S.A., TIN ... ("A... 32"); A... 33 – REAL ESTATE COMPANY, S.A., TIN ... ("A... 33"); A... 34 – REAL ESTATE COMPANY, S.A., TIN ... ("A... 34"); A... 40 – REAL ESTATE COMPANY, S.A., TIN ... ("A... 40"); A... 41 – REAL ESTATE COMPANY, S.A., TIN ... ("A... 41"); A... 42 – REAL ESTATE COMPANY, S.A., TIN ... ("A... 42"); A... 43 – REAL ESTATE COMPANY, S.A., TIN ... ("A... 43"); and B... – REAL ESTATE COMPANY, S.A., TIN ... ("B..."), all with registered offices at Avenue ..., (hereinafter jointly referred to as "Claimants") hereby, in accordance with article 10 of Decree-Law No. 10/2011 of 20 January (hereinafter "RJAT"), request the constitution of a collective arbitral court.
The Claimants request a pronouncement with a view to declaring the unlawfulness of the Stamp Tax (IS) assessments issued by the Tax and Customs Authority, in the total amount of € 353,285.75 ("Contested Assessments," which appear in documents Nos. 1 to 12 attached to the request for arbitral pronouncement, which are summarized in the table below:
The Claimants further request that the Tax and Customs Authority be ordered to terminate the fiscal enforcement proceedings that have been and may be instituted for recovery of the aforementioned amount, as well as to reimburse the costs incurred from any provision of guarantees within the scope of such proceedings.
The Claimants understand, in summary, that:
(a) The classification of land for construction as "properties with residential designation," for purposes of item 28 of the General Stamp Tax Table (TGIS), is unlawful due to violation of articles 6, 41 and 45 of the Municipal Property Tax Code (CIMI);
(b) The taxation on real property introduced by Law No. 55-A/2012, namely by item 28 of the TGIS, leads to flagrant inequalities between citizens that find no material justification therefor. Thus, item 28 of the TGIS violates, grossly, the principle of equality, constitutionally enshrined, namely as regards its proportional equality aspect;
(c) With respect to the land situated in ..., held in co-ownership, the assessment also violates the principle of equality.
The Tax and Customs Authority (ATA) responded, contending that the request for declaration of unlawfulness and consequent annulment of the contested assessments should be judged unfounded, with its absolution from the claim.
By order of 30-10-2014, the meeting provided for in article 18 of the RJAT was dispensed with and the proceedings were to continue with optional written submissions.
The parties did not submit submissions.
The arbitral court was properly constituted and is materially competent, in accordance with articles 2, No. 1, paragraph a), and 30, No. 1, of the RJAT.
The parties have legal personality and capacity, are entitled to stand before the court (articles 4 and 10, No. 2, of the same decree and article 1 of Ordinance No. 112-A/2011 of 22 March) and are properly represented.
The proceedings contain no nullities.
2. Findings of Fact
2.1. Facts deemed proven
a) The Claimants A... 29, A... 31, A... 32, A... 33 and A... 34 are co-owners of the urban property with matrix entry U-1... of the Parish of ..., which is land for construction and has a taxable property value of € 1,051,956.79 in the proportions of 1425/1000, 2206/10000, 2016/10000, 3580/10000 and 773/10000 (documents Nos. 1, 2, 3, 4, 5 and 13 attached to the request for arbitral pronouncement, the contents of which are hereby reproduced);
b) Claimant A... 40 is the owner of the urban property with matrix entry U-2... of the Parish of ..., which is land for construction and has a taxable property value of € 4,655,830.00 (documents Nos. 6 and 14 attached to the request for arbitral pronouncement, the contents of which are hereby reproduced);
c) Claimant A... 41 is the owner of the urban property with matrix entry U-3... of the Parish of ..., which is land for construction and has a taxable property value of € 4,656,640.00 (documents Nos. 7 and 15 attached to the request for arbitral pronouncement, the contents of which are hereby reproduced);
d) Claimant A... 42 is the owner of the urban property with matrix entry U-4... of the Parish of ..., which is land for construction and has a taxable property value of € 4,666,090.00 (documents Nos. 8 and 16 attached to the request for arbitral pronouncement, the contents of which are hereby reproduced);
e) Claimant A... 43 is the owner of the urban property with matrix entry U-5... of the Parish of ..., which is land for construction and has a taxable property value of € 4,666,090.00 (documents Nos. 9 and 17 attached to the request for arbitral pronouncement, the contents of which are hereby reproduced);
f) Claimant B... is the owner of the urban property with matrix entry U-6... of the Parish of ..., which is land for construction and has a taxable property value of € 6,261,290.00 (documents Nos. 10 and 18 attached to the request for arbitral pronouncement, the contents of which are hereby reproduced);
g) Claimant B... is the owner of the urban property with matrix entry U-7... of the Parish of ..., which is land for construction and has a taxable property value of € 5,723,070.00 (documents Nos. 11 and 19 attached to the request for arbitral pronouncement, the contents of which are hereby reproduced);
h) Claimant B... is the owner of the urban property with matrix entry U-8... of the Parish of ..., which is land for construction and has a taxable property value of € 3,592,480.00 (documents Nos. 12 and 20 attached to the request for arbitral pronouncement, the contents of which are hereby reproduced);
i) Claimant A... 29 was notified of assessment No. 2014 ..., of 18-03-2014, made under item 28.1 of the General Stamp Tax Table, in the amount of € 1,577.74, relating to the year 2013 and to the property with matrix number U-9... (document No. 1, attached to the request for arbitral pronouncement, the contents of which are hereby reproduced);
j) Claimant A... 31 was notified of assessment No. 2014 ..., of 18-03-2014, made under item 28.1 of the General Stamp Tax Table, in the amount of € 2,442.45, relating to the year 2013 and to the property with matrix number U-9... (document No. 2, attached to the request for arbitral pronouncement, the contents of which are hereby reproduced);
k) Claimant A... 32 was notified of assessment No. 2014 ..., of 18-03-2014, made under item 28.1 of the General Stamp Tax Table, in the amount of € 2,232.08, relating to the year 2013 and to the property with matrix number U-9... (document No. 3, attached to the request for arbitral pronouncement, the contents of which are hereby reproduced);
l) Claimant A... 33 was notified of assessment No. 2014 ..., of 18-03-2014, made under item 28.1 of the General Stamp Tax Table, in the amount of € 3,963.72, relating to the year 2013 and to the property with matrix number U-9... (document No. 4, attached to the request for arbitral pronouncement, the contents of which are hereby reproduced);
m) Claimant A... 34 was notified of assessment No. 2014 ..., of 18-03-2014, made under item 28.1 of the General Stamp Tax Table, in the amount of € 855.85, relating to the year 2013 and to the property with matrix number U-9... (document No. 5, attached to the request for arbitral pronouncement, the contents of which are hereby reproduced);
n) Claimant A... 40 was notified of assessment No. 2014 ..., of 17-03-2014, made under item 28.1 of the General Stamp Tax Table, in the amount of € 46,558.30, relating to the year 2013 and to the property with matrix number U-2... (document No. 6, attached to the request for arbitral pronouncement, the contents of which are hereby reproduced);
o) Claimant A... 41 was notified of assessment No. 2014 ..., of 17-03-2014, made under item 28.1 of the General Stamp Tax Table, in the amount of € 46,565.40, relating to the year 2013 and to the property with matrix number U-3... (document No. 7, attached to the request for arbitral pronouncement, the contents of which are hereby reproduced);
p) Claimant A... 42 was notified of assessment No. 2014 ..., of 17-03-2014, made under item 28.1 of the General Stamp Tax Table, in the amount of € 46,660.90, relating to the year 2013 and to the property with matrix number U-4... (document No. 8, attached to the request for arbitral pronouncement, the contents of which are hereby reproduced);
q) Claimant A... 43 was notified of assessment No. 2014 ..., of 17-03-2014, made under item 28.1 of the General Stamp Tax Table, in the amount of € 46,660.90, relating to the year 2013 and to the property with matrix number U-5... (document No. 9, attached to the request for arbitral pronouncement, the contents of which are hereby reproduced);
r) Claimant B... was notified of assessment No. 2014 ..., of 17-03-2014, made under item 28.1 of the General Stamp Tax Table, in the amount of € 62,612.90, relating to the year 2013 and to the property with matrix number U-6... (document No. 10, attached to the request for arbitral pronouncement, the contents of which are hereby reproduced);
s) Claimant B... was notified of assessment No. 2014 ..., of 17-03-2014, made under item 28.1 of the General Stamp Tax Table, in the amount of € 57,230.70, relating to the year 2013 and to the property with matrix number U-7... (document No. 11, attached to the request for arbitral pronouncement, the contents of which are hereby reproduced);
t) Claimant B... was notified of assessment No. 2014 ..., of 17-03-2014, made under item 28.1 of the General Stamp Tax Table, in the amount of € 35,924.80, relating to the year 2013 and to the property with matrix number U-8... (document No. 12, attached to the request for arbitral pronouncement, the contents of which are hereby reproduced);
u) On 29-07-2014, the Claimants submitted the request for constitution of the arbitral court (CAAD information system).
2.2. Facts deemed not proven
There are no facts relevant to the decision that have not been proven.
2.3. Basis for the proven facts
The proven facts are based on the documents indicated for each of the points, the authenticity and correspondence to reality of which have not been contested.
3. Legal Issues
3. Legal Issues
The question that is the subject of the present action is whether land for construction, to which residential designation has been attributed in the evaluation process, falls within the scope of item 28.1 of the General Stamp Tax Table (TGIS), in its original wording.
3.1. Regime of Law No. 55-A/2012, of 29 October
Law No. 55-A/2012, of 29 October, made several amendments to the Stamp Tax Code and added item 28 to the TGIS, with the following wording:
28 – Ownership, usufruct or right of superficies of urban properties whose taxable property value contained in the register, in accordance with the Municipal Property Tax Code (CIMI), is equal to or greater than € 1,000,000 – on the taxable property value used for IMI purposes:
28.1 – For properties with residential designation – 1%;
28.2 – For properties, where the tax subjects who are not natural persons are residents in a country, territory or region subject to a clearly more favourable tax regime, contained in the list approved by ordinance of the Minister of Finance – 7.5%.
In the transitional provisions contained in article 6 of said Law No. 55-A/2012, the following rules were established regarding the assessment of the tax provided for in that item:
1 – In 2012, the following rules must be observed with reference to the assessment of stamp tax provided for in item No. 28 of the respective General Table:
a) The taxable event occurs on 31 October 2012;
b) The subject liable to the tax is the one mentioned in No. 4 of article 2 of the Stamp Tax Code on the date referred to in the preceding paragraph;
c) The taxable property value to be used in the assessment of the tax corresponds to what results from the rules provided for in the Municipal Property Tax Code with reference to the year 2011;
d) The assessment of the tax by the Tax and Customs Authority must be made by the end of November 2012;
e) The tax must be paid, in a single instalment, by the subjects liable to the tax until 20 December 2012;
f) The applicable rates are as follows:
i) Properties with residential designation assessed in accordance with the Municipal Property Tax Code: 0.5%;
ii) Properties with residential designation not yet assessed in accordance with the Municipal Property Tax Code: 0.8%;
iii) Urban properties where the tax subjects who are not natural persons are residents in a country, territory or region subject to a clearly more favourable tax regime, contained in the list approved by ordinance of the Minister of Finance: 7.5%.
2 – In 2013, the assessment of the stamp tax provided for in item No. 28 of the respective General Table must be based on the same taxable property value used for the purposes of assessing municipal property tax in that year.
3 – The failure to pay, in whole or in part, within the prescribed period, of the amounts assessed as stamp tax constitutes a tax infraction, punished in accordance with the law.
The term "designation" used in said item 28.1 and in sub-paragraphs i) and ii) of paragraph f) of No. 1 of article 6 of Law No. 55-A/2012 is a concept not used in any other tax legislation in these precise terms, which is "property with residential designation."
Namely, in the CIMI, which in several rules of the Stamp Tax Code introduced by that Law is indicated as a diploma of subsidiary application with respect to the tax provided for in said item No. 28 [articles 2, No. 4, 3, No. 3, paragraph u), 5, paragraph u), 23, No. 7, and 46 and 67 of the Stamp Tax Code], such a concept is not used.
Law No. 83-C/2013, of 31 December, amended said item No. 28.1, giving it the following wording:
28.1 - For residential properties or for land for construction the building of which, authorized or intended, is for residential purposes, as provided for in the Municipal Property Tax Code – 1%
3.2. Concepts of properties used in the CIMI
In the IMI, the types of properties are enumerated in its articles 3 to 6 as follows:
Article 2
Concept of property
1 – For the purposes of this Code, property is any parcel of land, including water, plantations, buildings and constructions of any nature incorporated in it or placed on it, with a permanent character, provided that it forms part of the assets of a natural or legal person and, in normal circumstances, has economic value, as well as water, plantations, buildings or constructions, in the aforementioned circumstances, endowed with economic autonomy in relation to the land on which they are located, although situated on a parcel of land that constitutes an integral part of a diversified asset or does not have a patrimonial nature.
2 – Buildings or constructions, even if movable by nature, are deemed to have a permanent character when devoted to non-transitory purposes.
3 – The permanent character is presumed when the buildings or constructions have been placed at the same location for a period exceeding one year.
4 – For the purposes of this tax, each autonomous fraction, under the horizontal property regime, is deemed to constitute one property.
Article 3
Rural properties
1 – Rural properties are land situated outside an urban agglomeration that are not to be classified as land for construction, as provided for in No. 3 of article 6, provided that:
a) They are devoted or, in the absence of concrete designation, have as their normal purpose a use generating agricultural income, such as is considered for the purposes of personal income tax (IRS);
b) Without having the designation indicated in the preceding paragraph, they are not constructed or have only buildings or constructions of an accessory character, without economic autonomy and of reduced value.
2 – Also rural properties are land situated within an urban agglomeration, provided that, by force of a legally approved provision, they may not have a use generating any income or may only have a use generating agricultural income and are actually having this designation.
3 – Also rural properties are:
a) Buildings and constructions directly devoted to the production of agricultural income, when situated on the land referred to in the preceding numbers;
b) Water and plantations in the situations referred to in No. 1 of article 2.
4 – For the purposes of this Code, urban agglomerations are considered, in addition to those situated within legally fixed perimeters, nuclei with a minimum of 10 dwellings served by public use roads, with their perimeter delimited by points distanced 50 m from the axis of the roads, in the transversal direction, and 20 m from the last building, in the direction of the roads.
Article 4
Urban properties
Urban properties are all those that should not be classified as rural, without prejudice to the provisions of the following article.
Article 5
Mixed properties
1 – Whenever a property has rural and urban parts it is classified, in its entirety, in accordance with the main part.
2 – If neither of the parts can be classified as main, the property is deemed to be mixed.
Article 6
Types of urban properties
1 – Urban properties are divided into:
a) Residential;
b) Commercial, industrial or for services;
c) Land for construction;
d) Others.
2 – Residential, commercial, industrial or for services are buildings or constructions licensed for such purposes or, in the absence of a license, that have as their normal purpose each of these purposes.
3 – Land for construction is considered to be land situated within or outside an urban agglomeration for which a license or authorization has been granted, prior communication admitted or favorable preliminary information issued for a subdivision or construction operation, and also those that have been so declared in the acquisition deed, except for land on which the competent authorities prohibit any of such operations, namely those located in green areas, protected areas or that, in accordance with the municipal land use planning plans, are devoted to public spaces, infrastructure or facilities. (As amended by Law No. 64-A/08, of 31-12)
4 – Land situated within an urban agglomeration that are not land for construction nor are covered by the provisions of No. 2 of article 3, and also buildings and constructions licensed or, in the absence of a license, that have as their normal purpose purposes other than those referred to in No. 2 and also those of the exception in No. 3, fall within the provision of paragraph d) of No. 1.
3.3. Rules on interpretation of laws
Article 11 of the General Tax Law establishes the essential rules for the interpretation of tax laws as follows:
Article 11
Interpretation
-
In determining the meaning of tax rules and in qualifying the facts to which they apply, the general rules and principles of interpretation and application of laws are observed.
-
Whenever tax rules use terms specific to other branches of law, they must be interpreted in the same sense as they have there, unless otherwise directly provided by law.
-
If doubt persists as to the meaning of the tax rules of application to be applied, account must be taken of the economic substance of the tax facts.
-
Gaps resulting from tax rules covered by the reserve of law of the Assembly of the Republic are not susceptible to analogical integration.
The general principles of interpretation of laws, to which No. 1 of article 11 of the General Tax Law refers, are established in article 9 of the Civil Code, which provides as follows:
Article 9
Interpretation of law
-
The interpretation should not be limited to the letter of the law, but should reconstruct from the texts the legislative intent, taking especially into account the unity of the legal system, the circumstances in which the law was enacted and the specific conditions of the time in which it is applied.
-
However, the legislative intent that does not have in the letter of the law a minimum of verbal correspondence, even if imperfectly expressed, cannot be considered by the interpreter.
-
In establishing the meaning and scope of the law, the interpreter shall presume that the legislator adopted the most correct solutions and knew how to express his intent in adequate terms.
3.4. Hypotheses for interpreting the concept of "property with residential designation"
As can be seen from the CIMI rules transcribed, the concept of "property with residential designation" is not used in the classification of properties.
Nor is this concept, with this terminology, found in any other statute.
Thus, in the absence of exact terminological correspondence of the concept of "property with residential designation" with any other used in other statutes, several interpretive hypotheses can be raised.
The starting point for the interpretation of that expression "properties with residential designation" 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 No. 1 of article 9 of the Civil Code, applicable by force of the provisions of article 11, No. 1, of the General Tax Law.
3.5. Concept of "property with residential designation" as referring to residential properties
The concept most closely corresponding to the literal tenor of this expression used is manifestly that of "residential properties," defined in No. 2 of article 6 of the CIMI as encompassing "buildings or constructions" licensed for residential purposes or, in the absence of a license, that have as their normal purpose residential purposes.
If one understands that the expression "property with residential designation" coincides with "residential properties," it is manifest that the assessments will be defective due to error regarding the factual and legal presuppositions, since all properties with respect to which the Stamp Tax was assessed under said item No. 28.1 are land for construction, without any building or construction, required by that No. 2 of article 6 for the fulfilment of that concept of "residential properties."
Therefore, if one were to adopt the interpretation that "property with residential designation" means "residential property," the assessments whose declaration of unlawfulness is sought would be unlawful, because there is no building or construction on any of the land.
However, the non-correspondence of the terms of the expression used in item No. 28.1 of the TGIS with that extracted from No. 2 of article 6 of the CIMI points to the sense that it was not intended to use the same concept.
3.6. Concept of "property with residential designation" as a concept distinct from "residential properties"
The word "designation," in this context of use of a property, has the meaning of "action of assigning something to a determined use." ([1])
"When, as is the rule, the rules (legislative formulations) admit more than one meaning, then the positive function of the text is expressed in giving stronger support to or more strongly suggesting one of the possible meanings. In fact, among the possible meanings, some will correspond to the most natural and direct meaning of the expressions used, while others can only fit within the verbal framework of the rule in a forced, contrived manner. Now, in the absence of other elements that lead to the choice of the less immediate meaning of the text, the interpreter should opt in principle for that meaning that best and most immediately corresponds to the natural meaning of the verbal expressions used, and in particular to its technical-legal meaning, in the assumption (not always exact) that the legislator knew how to express his intent correctly." ([2])
The relevance of the text of the law is especially emphasized in the matter of interpretation of the rules of incidence of Stamp Tax, which are reduced to an amalgam, under a common denomination, of an incongruous set of taxes of completely distinct natures (on income, on expenditure, on property, on acts, etc.), which leaves no appreciable margin for application of the primary interpretive criterion, which is the unity of the legal system, which requires its global coherence.
The acknowledged lack of coherence of the Stamp Tax is particularly exuberant in the case of this item No. 28.1, hastily included on the margins of the State Budget, by a tax legislator without perceptible overall fiscal orientation, who is successively implementing norms of fiscal burdening as per the reverses of budget execution, the impositions of international institutional creditors (represented by the "troika") and the oversight of the Constitutional Court.
In fact, although in the "Statement of Reasons" of the Bill No. 96/XII/2nd ([3]), on which Law No. 55-A/2012 was based, the Government's laudable concern is mentioned to "strengthen the principle of social equity in austerity, ensuring an effective distribution of the sacrifices necessary to comply with the adjustment program" and its commitment "to ensure that the distribution of these sacrifices will be made by all and not just by those who live from the income of their work," it is manifest, on the one hand, that those reasons of equity, certainly existing, did not start to apply in mid-2012, already existing at the beginning of the year, when the State Budget came into force, and on the other hand, that the scope of item No. 28.1, by taxing additionally properties with residential designation and not also those that do not have it, suggests that the concerns of social equity and the proclaimed intention to distribute the sacrifices among all reaches much more some than properly all.
In this context, without there being sure interpretive elements that allow detecting legislative coherence in the solution adopted in said item No. 28.1 or the correctness or incorrectness of the adopted solution (relevant for interpretive purposes in the light of No. 3 of article 9 of the Civil Code), the tenor of the legal text must be the primary element of interpretation, in accordance with the presumption, imposed by the same No. 3 of article 9, that the legislator knew how to express his intent in adequate terms.
In light of those meanings of the words "designation" and "designate," which are "to give purpose" or "to apply," the formula used in that item No. 28.1 of the TGIS manifestly encompasses properties that have already been given the purpose of residential use, properties that are already applied to residential purposes, so it becomes important to enquire whether it also encompasses properties that, although not yet applied to residential purposes, are destined for such purposes.
To this end, it will be necessary to clarify when it can be understood that a property is designated for residential purposes, namely whether it is when such purpose is assigned to it in a subdivision permit or licensing act or similar, or only when the actual assignment of that purpose is materialized.
From the outset, the comparison of item No. 28.1 of the TGIS with No. 2 of article 6 of the CIMI, which defines the concept of residential properties, points in the sense that an actual designation is necessary.
In fact, a building or construction licensed for residential purposes or, even without a license, but having residential purposes as its normal purpose, is, in light of No. 2 of that article 6, a residential property, since in it such classification is given to "buildings or constructions licensed for such purposes or, in the absence of a license, that have as their normal purpose each of these purposes."
Therefore, on the assumption that the legislator of Law No. 55-A/2012 knew how to express his intent in adequate terms (as required by article 9, No. 3, of the Civil Code, which presumes this), if it intended to refer to those buildings already licensed for residential purposes or that have residential purposes as their normal purpose, it would certainly have used the concept of "residential properties," which would express perfectly and clearly his intent, in light of the definition given by that No. 2 of article 6 of the CIMI.
Consequently, it must be presumed that the use of a different expression is intended to have a different reality in view, so that, in sound hermeneutics, "property with residential designation" cannot be merely a property licensed for residential purposes or intended for that purpose (i.e., it will not be sufficient that it be a "residential property"), and must be a property that already has actual designation for that purpose.
That this is the meaning of the expression "designation," in the same context of property classification as the CIMI does, is confirmed by article 3, in which, with respect to rural properties, reference is made to those "that are devoted or, in the absence of concrete designation, have as their normal purpose a use generating agricultural income," which shows that designation is concrete, actual. In fact, as can be seen from the final part of this text, a property can have a determined use as its purpose and be or not be devoted to it, which shows that designation is, at the level of the connection of a property to a determined use, something more intense than mere purpose and may or may not occur, downstream of this and not upstream. ([4])
Furthermore, the text of the law, by adopting the formula "property with residential designation," instead of "urban properties with residential designation," which appears in the aforesaid "Statement of Reasons," strongly points to the sense that it is required that the residential designation already be materialized, for only thus the property will be with such designation.
In the case at hand, one is faced with a reality even more distant from residential designation than even the non-existence of any building or construction and, therefore, it cannot be considered that there exists a designation that presupposes its existence.
On the other hand, the legislative intention not to extend the scope of application to land for construction was expressly mentioned by the Government when presenting Bill 96-XII to the Plenary of the Assembly of the Republic, stating, through the State Secretary for Tax Affairs:
"First, the Government proposes the creation of a special rate to tax high-value urban residential properties. This is the first time that Portugal has created special taxation on high-value properties intended for housing. This rate will be 0.5% to 0.8% in 2012, and 1% in 2013, and will apply to houses valued at equal to or greater than 1 million euros. With the creation of this additional rate, the fiscal effort required of these owners will be significantly increased in 2012 and 2013." ([5])
The express reference to "houses" as the target of the application of the new tax leaves no room for doubt as to the legislative intention.
On the other hand, no reference to "land for construction" is found in the discussion of said Bill.
With respect to article 45 of the CIMI, it has no relationship with the classification of properties, merely indicating the factors to be considered in the valuation of land for construction. What is considered there, by making reference to the "building to be constructed," is the consideration of the purpose of the land, which, as has been seen, is something that, in the context of the CIMI, does not entail designation and occurs before it.
Law No. 83-C/2013, of 31 December, contrary to what the Tax and Customs Authority contends, did not aim to clarify the logical element underlying the original wording of item No. 28.1, but rather came indirectly to confirm the interpretation that it did not encompass land for construction.
In fact, if the original wording of that item No. 28.1, by speaking of "property with residential designation" already intended to encompass buildings and constructions constituting "residential properties" (as provided for in article 6, No. 2, of the CIMI), and land for construction for which residential construction was authorized or intended, it would be natural to assign to the new wording an interpretive nature, similar to what the same Law No. 83-C/2013 does in other provisions [article 177, No. 7, with respect to paragraphs a) and b) of No. 3 of article 17-A of the Personal Income Tax Code, and article 185, No. 1, with respect to article 3-A of the Value Added Tax Code] and is usual to be done in budget laws, when it is intended that the new wordings apply to situations potentially encompassed by the previous wordings.
Therefore, the fact that interpretive nature was not assigned to the new wording points to the sense that it was intended to alter the scope of application of said item No. 28.1 of the TGIS and not to maintain it, clarifying it.
Based on the foregoing, the contested assessments suffer from a defect of error regarding the factual and legal presuppositions, embodied in violation of item No. 28.1 of the TGIS, which justifies their annulment (article 135 of the Administrative Procedure Code). ([6])
4. Decision
For these reasons, this Arbitral Court hereby agrees to:
a) Judge the request for arbitral pronouncement well-founded;
b) Annul the Stamp Tax assessments Nos. 2014 ..., 2014 ..., 2014 ..., 2014 ..., 2014 ..., 2014 ..., 2014 ..., 2014 ..., 2014 ..., 2014 ..., 2014 ..., and 2014 ...;
5. Case Value
In accordance with the provisions of article 315, No. 2, of the Code of Civil Procedure and 97-A, No. 1, paragraph a), of the Tax Code of Procedure and Taxes and article 3, No. 2, of the Regulation on Costs in Tax Arbitration Proceedings, the case is assigned a value of € 353,285.75.
6. Costs
Pursuant to article 22, No. 4, of the RJAT, the costs are fixed at € 6,120.00, in accordance with Table I annexed to the Regulation on Costs in Tax Arbitration Proceedings, at the charge of the Tax and Customs Authority.
Lisbon, 28 November 2014
The Arbitrators
(Jorge Manuel Lopes de Sousa)
(Maria do Rosário Anjos)
(Luís Máximo dos Santos)
([1]) Dictionary of Contemporary Portuguese Language of the Academy of Sciences of Lisbon, Volume I, page 102.
The Houaiss Dictionary of the Portuguese Language defines "designation," in a context close to this, as "act that gives purpose to a public asset."
The Great Dictionary of the Portuguese Language, by JOSÉ PEDRO MACHADO, indicates "to designate" and "to apply" among the meanings of "to designate."
([2]) BAPTISTA MACHADO, Introduction to Law and Legitimizing Discourse, page 182.
([3]) Bill No. 99/XII/2nd is available at:
http://www.parlamento.pt/ActividadeParlamentar/Paginas/DetalheIniciativa.aspx?BID=37245
([4]) Other provisions of the CIMI make it clear that the term "designation" is used to reference existing situations and not merely future ones, even if foreseeable, like "purpose."
This is the case with article 9 of the CIMI, which, after establishing that "the tax is due from" "the 4th year following, inclusive, that in which land for construction came to be included in the inventory of a company that has as its purpose the construction of buildings for sale" or "the 3rd year following, inclusive, that in which a property came to be included in the inventory of a company that has as its purpose its sale" [paragraphs d) and e) of No. 1], provides that "for purposes of the provisions of paragraphs d) and e) of No. 1, taxpayers must communicate to the tax service of the area where the properties are located, within 60 days counted from the date of verification of the fact determining its application, the designation of the properties to those purposes."
The "designation of the properties to those purposes," in the context of this article 9, is reduced to the concrete assignment to the properties of the purpose "for sale," materialized by their inventory, not being sufficient that they were built or acquired with a view to their sale.
([5]) Page 32 of the Parliamentary Records (Diário da Assembleia da República), No. 9 of the 2nd Legislative Session of the XII Legislature, relating to the Plenary Session of 10-10-2012, available at
([6]) In this sense, the Supreme Administrative Court has been deciding, as can be seen from the rulings of 09-04-2014, handed down in cases Nos. 01870/13 and 048/14, and of 23-04-2014, handed down in cases Nos. 0271/14, 0270/14 and 0272/14, available at http://www.dgsi.pt/jsta.nsf/2eae0bd4de5026e80256b480065970d?CreateDocument
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