Stamp Tax on Vertical Property Under Verba 28 TGIS: CAAD Arbitration Case 562/2015-T

ARBITRAL DECISION

1. REPORT

1.1. A..., Lda., with registered office at Rua..., ..., ..., ... and ..., in Lisbon, registered in the Commercial Registry Office of Lisbon under registration number and tax identification number for legal entity ... (hereinafter referred to as "Applicant"), filed on 31/08/2015, a request for arbitral pronouncement with a view to the examination and declaration of illegality of the acts of assessment of Stamp Tax for the year 2014, relating to the application of Item No. 28.1 of the General Table of Stamp Tax (General Table), in the total amount of € 20,657.59 (twenty thousand, six hundred and fifty-seven euros and fifty-nine cents) to a property of which it is the owner.

1.2. His Excellency the President of the Deontological Council of the Administrative Arbitration Centre (CAAD) designated, on 22/09/2015, as sole arbitrator the signatory of this decision.

1.3. On 17/11/2015 the arbitral tribunal was constituted.

1.4. In compliance with the provisions of Article 17(1) of the Legal Framework for Tax Arbitration (RJAT), the Tax and Customs Authority (AT) was notified on 17/11/2015 to, if it so wished, present its response and request the production of additional evidence.

1.5. On 14/12/2015 the AT presented its response, requesting exemption from holding the meeting described in Article 18 of the RJAT.

1.6. As this was a question exclusively of law, the arbitral tribunal on 16/12/2015 decided to dispense with the holding of the meeting referred to in Article 18(1) of the RJAT, on the grounds of the principle of autonomy of the arbitral tribunal in conducting the proceedings, inviting both parties to, if they so wished, present optional written pleadings and scheduled the date for delivery of the final decision.

1.7. The Applicant presented written pleadings, maintaining, in essence, the contents of the previously filed submissions.

1.8. On 19/01/2016, the AT presented written pleadings, maintaining the entire content of its previously presented response and further requested that a Decision of the Constitutional Court be attached to the proceedings, in which it concluded that Item No. 28 of the General Table does not suffer from any unconstitutionality, with no violation of the constitutional principles governing tax law, specifically the principles of fiscal equality, taxpaying capacity and proportionality.

1. CLARIFICATION OF ISSUES

The arbitral tribunal was regularly constituted and is materially competent.

The parties have legal status and capacity and are entitled to be parties, with no defects in representation.

There are no nullities, exceptions or preliminary questions that prevent consideration of the merits and which must be examined ex officio.

Consequently, the conditions for delivery of the final decision are met.

1. POSITIONS OF THE PARTIES

There are two opposing positions: that of the Applicant, set out in the request for arbitral pronouncement, and that of the AT in its response.

In summary, the Applicant holds that:

a) "The Applicant is the owner of the urban property located in the parish of..., municipality of Lisbon, registered in the urban property register under article... (…)";

b) "The (…) identified urban property in full ownership comprises the following twelve divisions and floors capable of independent use, intended for commerce and housing (…)";

c) "The Stamp Tax assessments in question were issued pursuant to Item 28.1 of the TGIS, introduced by Law No. 55-A/2012, of 29 October, and amended by Law No. 83-C/2013, of 31 December.";

d) "However, the Applicant does not agree, since the said item does not apply to urban properties in full ownership, with floors or divisions capable of independent use, characterized by the fact that no floor or division has a taxable asset value equal to or greater than € 1,000,000.00.";

e) "Indeed, in accordance with Item 28.1 of the TGIS, the taxable event for Stamp Tax comprises «Ownership, usufruct or right of surface of urban properties whose taxable asset value shown in the register, in accordance with the Code of Municipal Tax on Real Property (CIMI), is equal to or greater than € 1,000,000.00.»";

f) "The tax rate applicable in this context is 1% «For residential property or land for construction (…).»" [emphasis by Applicant];

g) "The objective taxable event of Stamp Tax is thus delimited by the type of property – residential urban property – and by the taxable asset value used for the purposes of Municipal Tax on Real Property (IMI) – equal to or greater than € 1,000,000.00 –.";

h) "To determine with precision the meaning and scope of the concept of 'property' and also of the respective «taxable asset value», which are determinative of the incidence of Stamp Tax under Item 28.1 of the TGIS, it is important to refer to the provisions of the Code of IMI, as required by Article 1(6) and Article 67(2), both of the Code of Stamp Tax.";

i) "The case law of the Administrative Supreme Court has uniformly held that the concept of property is based on three essential elements «(…) a physical element (fraction of territory, including waters, plantations, buildings and constructions of any nature incorporated or situated thereon, with a permanent character), a legal element (requirement that the thing - movable or immovable - forms part of the assets of a natural or legal person) and an economic element (requirement that the thing have economic value in normal circumstances).»" [emphasis by Applicant];

j) "In the present case, it is evident that the floors and divisions, capable of independent use, which compose the urban property in question each constitute, in themselves, a property, within the meaning of the cited Article 2(2) of the Code of IMI.";

k) "Indeed, in relation to each floor and division capable of independent use, the aforementioned essential elements characterizing a property are thus present.";

l) "(…) as appears from the property records (…), the divisions and floors that make up the urban property in question each have a defined economic use – residential or services – in accordance with Article 6(2) of the Code of IMI.";

m) "The economic value of each of the divisions and floors in question is all the more evident given that their economic destination and use is not the same, with some divisions having housing as their economic destination and others services (…).";

n) "Furthermore, on this point, the economic value of each of the divisions and floors is also evidenced by the fact that a concrete and autonomous taxable asset value was determined for each one (…).";

o) "On the basis of the provisions (…) in the context of IMI, specifically with regard to the determination of taxable asset value, property registration and collection of the tax, the legislator accords the same treatment to property in full ownership as to property in horizontal co-ownership.";

p) "Indeed, the legislator provides that for each floor or division a taxable asset value is determined, that the division capable of independent use is discriminated, and that the tax is assessed and collected individually on each division capable of independent use, on the basis of that individually determined taxable asset value, just as occurs with fractions of property constituted in horizontal co-ownership.";

q) "From this it may be inferred, therefore, that the legislator gave prevalence to material reality over legal form.";

r) "That is, in material terms there are no differences between property constituted in horizontal co-ownership and property in full ownership made up of floors or divisions capable of independent use.";

s) "In conclusion, in light of all the foregoing, the property which constitutes the taxable event of Item 28.1 of the TGIS is, in the present case, each of the floors and divisions capable of independent use,";

t) "And, the taxable asset value to be considered for the purposes of incidence of Item 28.1 of the TGIS is the taxable asset value of each of the floors and divisions capable of independent use, since, as has been seen, it is this value that is used for the purposes of IMI (…)";

u) "Thus, in other words, similarly to what occurs with IMI, and whose regime is subsidiarily applicable (…), the divisions and floors capable of independent use which make up property in full ownership should each be considered as a property, with their own taxable asset value, and not the property as a whole, considering as taxable asset value the sum of those.";

v) "Therefore, in summary, the taxable event for the purposes of Item 28.1 of the TGIS is the ownership of each of the floors or divisions capable of independent use.".

By contrast, the AT contends that:

a) "At the date in question, the Applicant held full ownership of the urban property under analysis, valued in accordance with the CIMI, as part of the general valuation of urban properties, described as «property in full ownership with floors or divisions susceptible of independent use», with taxable asset value (VP) exceeding € 1,000,000.00.";

b) "With reference to the year 2014, in compliance and in accordance with the provisions of Article 6(2) of Law No. 55-A/2012, of 29/10, which added Item No. 28 to the TGIS, as amended by Law No. 83-C/2013 of 31/12 and whose respective taxable event provision refers to urban properties, valued in accordance with the CIMI, with VP equal to or greater than € 1,000,000.00 and, in accordance with its Item 28.1, housing use, the AT proceeded to notify the collection documents for payment of the assessments in question.";

c) "Article 44(5) of the Code of Stamp Tax, as amended by Law No. 55-A/2012, of 29/10, provides that, where an assessment is made, the tax referred to in Item 28 of the TGIS is paid, in the periods, terms and conditions defined in Article 120 of the CIMI, in three instalments in the months of April, July and November, in accordance with Article 120(1)(c) of the said article.";

d) "Now, what is at issue here are collection notices resulting from direct application of the legal rule, which translate into objective elements, without any subjective or discretionary assessment." [emphasis by AT];

e) "The concept of property is defined in Article 2(1) of the CIMI, and it is provided in Article 2(4) that in the regime of horizontal co-ownership, each autonomous fraction is deemed to constitute a property.";

f) "It follows from analysis of the normative provision that a «property in full ownership with floors or divisions susceptible of independent use» is, unequivocally, different from real property in the regime of horizontal co-ownership, consisting of autonomous fractions, that is, several properties.";

g) "As regards the assessment of IMI, in the case of properties in full ownership, the VP that serves as the basis for its calculation would undoubtedly be the VP which the now Applicant defines as «overall value of the property».";

h) "In compliance with the provision of Article 119(1) of the CIMI, the collection document is sent to the taxpayer with discrimination of the parts susceptible of independent use, their respective taxable asset value and the tax attributable to each municipality of the location of the properties.";

i) "And the assessment being correct and the tax calculated being owed, compensatory interest is not owed, primarily because there is no error attributable to the Services, which merely acted, as they should, in strict compliance with the legal rule. (…)";

j) "The subjection to Stamp Tax of Item 28.1 of the General Table annexed to the Code of Stamp Tax results from the combination of two facts: housing use and the taxable asset value of the urban property registered in the matrix being equal to or greater than € 1,000,000.00.";

k) "Indeed, it appears from the property records that the property is in the regime of full ownership, comprised of various parts susceptible of independent use.";

l) "Being this the registration information, in accordance with Article 23(7) of the Code of Stamp Tax, the assessment of Stamp Tax for the year 2014 was carried out by the Tax Administration, taking into account the nature of the urban property, at the date of the taxable event, applying, with the necessary adaptations, the rules contained in the CIMI.";

m) "In accordance with the rules of the CIMI, specifically Article 113(1), the assessment is made on the basis of the taxable asset values of the properties and in relation to the taxpayers appearing in the registers on 31 December of the year to which they refer (in the case of the 2014 tax).";

n) "From the foregoing, the defect of violation of law due to error as to the legal presuppositions should be judged unfounded, with the assessments impugned remaining in the legal order as they constitute a correct application of the law to the facts.";

o) "It is not apparent how the taxation in question could have violated the principle of equality.";

p) "With regard to the violation of this principle, the AT holds that the provision of Item 28.1 of the TGIS does not constitute any violation of the principle of equality, with no discrimination existing in the taxation of property constituted in horizontal co-ownership and property in full ownership with floors or divisions susceptible of independent use, or between property with housing use and property with other uses.";

q) "Horizontal co-ownership and vertical co-ownership are differentiated legal institutions.";

r) "The fact that the Applicant legitimately disagrees with this discrimination does not imply violation of any principle of tax law or even constitutional law.";

s) "What is intended to be concluded is that these rules, procedures of valuation, the rules on property registration, and also the rules on assessment of the parts susceptible of independent use, do not allow one to assert that there should be an equalization of property in the regime of full ownership with the regime of vertical co-ownership, this being because, and as has already been stated, it would be illegal and unconstitutional.";

t) "It is thus a consequence that the taxable event of Stamp Tax of Item 28.1 consists of ownership of urban properties whose taxable asset value shown in the register, in accordance with the CIMI, is equal to or greater than € 1,000,000.00, that the taxable asset value relevant for the purposes of incidence of the tax is, thus, the total taxable asset value of the urban property and not the taxable asset value of each of the parts that compose it, even when susceptible of independent use.";

u) "Item 28.1 thus applies to ownership, usufruct or right of surface of urban properties with housing use, whose taxable asset value shown in the register, in accordance with the CIMI, is equal to or greater than € 1,000,000.00.";

v) "This is a general and abstract rule, applicable uniformly to all cases in which its factual and legal presuppositions are met.";

w) "In this manner, one cannot conclude on an alleged discrimination in violation of the principle of equality when, in truth, we are dealing with distinct realities, valued by the legislator in different ways.";

x) The AT concludes "(…) that the collection notices for Stamp Tax, Item 28 of the TGIS, year 2014, now impugned, remain entirely valid and legal, concluding on their legality." [emphasis by AT].

1. SUBJECT-MATTER OF THE REQUEST

The question which the Applicant seeks to have decided consists of whether Item No. 28.1 of the General Table, in the case of properties not constituted in horizontal co-ownership, applies to the sum of the taxable asset value assigned to the different parts or floors, or rather to the tax value of each part of the property with independent economic use.

1. MATTERS OF FACT

5.1. FACTS CONSIDERED PROVEN

In light of the documents filed in the proceedings, the following is given as proven:

5.1.1. The Applicant is the owner of an urban property located in the parish of..., municipality of Lisbon, registered in the urban property register under property article number... .

5.1.2. The urban property subject to these proceedings is in full ownership with floors or divisions susceptible of independent use, comprised of 12 divisions with independent use, namely: L14; L14 A; L14 B; L14 C; L14 D; L37 A B; L37 D E; 1st; 2nd; 3rd; 4th and 5th, 5 of which are designated for housing.

5.1.3. The property in question was registered in the matrix in 1988 and the taxable asset value ("VPT") at the date of the assessments in question varied between € 391,452.59 and € 458,551.73, with the total of the 5 divisions amounting to € 2,065,758.23.

5.1.4. The Applicant was notified of the acts of assessment of Stamp Tax for the year 2014, contained in the collection documents for payment of the first instalment of the tax assessed for each floor or division with independent use assigned to housing and which make up the mentioned urban property, at the rate of 1%, with the payment deadline of 30/04/2015, in the terms detailed below:

5.1.5. Voluntary payment of the Stamp Tax assessments impugned, 1st instalment, was made on 24/04/2015.

5.1.6. The Applicant was notified of the acts of assessment of Stamp Tax for the year 2014, contained in the collection documents for payment of the second instalment of the tax assessed for each floor or division with independent use assigned to housing and which make up the mentioned urban property, at the rate of 1%, with the payment deadline of 31/07/2015, in the terms detailed below:

5.1.7. Voluntary payment of the Stamp Tax assessments impugned, 2nd instalment, was made on 29/07/2015.

5.1.8. At the time of filing the present request for arbitral pronouncement, the Applicant was awaiting notification of the collection documents for payment of the third instalment, which was to take place during November 2015.

5.2. FACTS NOT CONSIDERED PROVEN

There are no facts relevant to the decision that have not been given as proven.

1. THE LAW

The question to be decided consists of whether the acts of assessment of Stamp Tax are illegal due to erroneous interpretation and application of Item No. 28.1 of the General Table, added by Law No. 55-A/2012, of 29 October, when it considers that the taxable asset value ("VPT") of an urban property constituted in the regime of full ownership, with floors or divisions of independent use assigned to housing which is relevant for the purposes of incidence of that Item is constituted by the value resulting from the sum of the taxable asset value (VPT) imputed to each of those floors or divisions.

Moreover, whether the assessments of Stamp Tax suffer, further, from the defect of unconstitutionality, due to violation of the principles of equality, taxpaying capacity and progressivity.

On this matter there is already abundant case law from the Administrative Supreme Court (STA) and, as well, arbitral case law in the proceedings No. 277/2013-T, No. 291/2013-T, No. 35/2014-T, No. 464/2014-T, No. 639/2014-T, No. 724/2014-T, No. 245/2014-T, No. 152/2015-T and No. 21/2015-T, whose arbitral case law we follow. [1]

As appears from the established facts, the AT assessed Stamp Tax by considering that the VPT of the urban property constituted in the regime of full ownership is greater than € 1,000,000.00, taking into account the sum of the VPT of each of the 5 floors or divisions with independent use assigned to housing that make up the said property.

Let us examine this.

In accordance with the provision of Item No. 28 of the General Table, the taxable event for Stamp Tax comprises:

"Ownership, usufruct or right of surface of urban properties whose taxable asset value shown in the register, in accordance with the Code of Municipal Tax on Real Property (CIMI), is equal to or greater than € 1,000,000 - on the taxable asset value used for the purpose of IMI:

28.1 For residential property or land for construction whose construction, authorized or planned, is for housing, in accordance with the provisions of the Code of IMI - 1%.

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

The presuppositions of incidence of Item No. 28.1 of the General Table are thus urban properties, with housing use, whose VPT shown in the register and used for the purposes of IMI assessment is equal to or greater than € 1,000,000.00.

Law No. 55-A/2012, of 29 October, by reference to Item No. 28 of the General Table, further established various amendments to the Code of Stamp Tax, specifically as regards its assessment and payment, expressly referring to the rules provided for in the Code of IMI [2] with the necessary adaptations, and also providing in Article 67(2) of the Code of Stamp Tax that "To matters not regulated in the present Code relating to Item No. 28 of the General Table, the provisions of the CIMI shall apply, subsidiarily.".

From analysis of the said rules, it is thus verified that the concept of "property with housing use" provided for in the aforementioned Item No. 28, Article 28.1 of the General Table is not defined in the Code of Stamp Tax, nor in the cited Law No. 55-A/2012, of 29 October, nor in the Code of IMI, the rules of which are of subsidiary application, in light of the provision in Article 67(2) of the Code of Stamp Tax.

On this matter, the arbitral tribunal has already pronounced itself in the decision delivered in proceedings No. 53/2013-T, which we follow, holding that a "property with housing use" must be "a property that already has effective assignment to that purpose".

It is thus unequivocal that property in full ownership or in the regime of vertical co-ownership constitutes urban property, in accordance with the provision in Articles 2(1) and 4(1) of the Code of IMI, applicable subsidiarily, and it is also certain that, both for the purposes of incidence of Item 28.1 of the General Table and for the purposes of classification of urban properties [3], the legislator makes no distinction between property constituted in vertical co-ownership and in the regime of horizontal co-ownership (as mentioned in the arbitral decisions delivered in proceedings No. 50/2013-T and No. 132/2013-T), the taxable presupposition of Item No. 28.1 of the General Table being urban properties that are already effectively assigned to housing, since what is relevant is the actual and current use of each of the properties.

What, then, shall be the taxable asset value relevant in the case of urban properties in the regime of full ownership comprised of floors or divisions susceptible of independent use with "housing use", for the purposes of incidence of Item 28.1 of the General Table?

In accordance with what appears from Item itself 28.1 of the General Table and Article 6(1) of Law No. 55-A/2012, of 29 October, Stamp Tax shall apply to the VPT used for the purposes of IMI.

Let us see, therefore, what the VPT used for the purposes of IMI is.

Now, the VPT of each property is determined in accordance with Articles 38 and following of the Code of IMI, in conformity with the provision in Article 7(1) of the Code of IMI. In the case of property in the regime of full ownership or vertical co-ownership, each floor or division with independent use which comprises it is also subject to valuation, being assigned a taxable asset value to each of those floors or divisions, in conformity with the provision in Articles 12 and 38 of the Code of IMI.

Indeed, Article 12(1) of the Code of IMI provides that "property registers are records which include, in particular, the characterization of properties, their location and their taxable asset value, the identification of owners (…)", further providing in Article 12(3) that "Each floor or part of property capable of independent use is considered separately in the property registration, which also discriminates the respective taxable asset value", and in conformity with the provision in Article 119(1) of the Code of IMI, it is on that taxable asset value separately considered that the IMI shall be calculated and assessed in relation to each floor or part with independent use which make up an urban property in the regime of vertical or full ownership, having regard to the autonomy of each of those units.

As Silvério Mateus and Corvelo de Freitas [4] state, "Another aspect that should be highlighted in the matrix relates to the need to highlight the autonomy that, within the same property, can be assigned to each of its parts, functionally and economically independent.

In these cases, the property registration must not only make reference to each of these parts but must make express reference to the taxable asset value corresponding to each of them. An example that can illustrate this situation is the case of an urban property, not constituted in the regime of horizontal co-ownership and comprised of various floors. (…) However, since each of these units can be the subject of lease or any other use by its respective owner, the matrix must highlight these units and a taxable asset value must be assigned to each of them." [emphasis ours].

As highlighted in the arbitral decision delivered in proceedings No. 194/2014-T, which we also follow, "the Code of IMI establishes, both as to the property registration and discrimination of the respective taxable asset value and as to the assessment of the tax, the autonomization of the parts of urban property capable of independent use and the segregation/individualization of the VPT relating to each floor or part of property capable of independent use.

Thus to each property, in accordance with the meaning conceptually defined by Article 2 of the CIMI, corresponds a single entry in the matrix (Article 82(2) of the CIMI) but, according to Article 12(3) of the same Code, relating to the concept of property matrix (…), 'each floor or part of property capable of independent use is considered separately in the property registration, which also discriminates the respective taxable asset value (…).

That is, the rule is autonomization, characterization as a "property" of each part of a building, provided it is functionally and economically independent, capable of independent use, in accordance with the concept of property defined in Article 2(1) of the CIMI: property is every fraction (of territory, including waters, plantations, buildings and constructions of any nature incorporated or situated thereon, with a permanent character) provided it forms part of the assets of a natural or legal person and, in normal circumstances, has economic value, as well as waters, plantations, buildings or constructions, in the circumstances mentioned above, endowed with economic autonomy.".

Having regard to the fact that under the Code of IMI, the floors or divisions with independent use which make up an urban property in the regime of full or vertical co-ownership are taxed autonomously, since IMI is assessed individually on the VPT assigned to each of those floors or divisions with independent use, having regard to the relevance of their autonomy, necessarily the principles and rules must be the same in the context of Stamp Tax (particularly, as to the provision regarding registration in the matrix and assessment of IMI), both because Item 28.1 of the General Table requires it in its closing words, and because of subsidiary application, by virtue of the provision in Article 67(2) of the Code of Stamp Tax.

Consequently, and, on the assumption that the legislator in question "has adopted the most appropriate solutions and knew how to express their thinking in adequate terms" (see the provision in Article 9(3) of the Civil Code ("CC"), by reference to Article 11 of the General Tax Law), only the floors, parts or divisions with independent use with housing use whose VPT is equal to or greater than € 1,000,000.00 are covered by the taxable event provision of Item No. 28.1 of the General Table.

Thus, and as mentioned in the arbitral decision delivered in proceedings No. 132/2013-T, "The uniform criterion that is required is, thus, the one that provides that the incidence of the rule in question only takes place when one of the parts, floors or divisions with independent use of property in horizontal or full ownership with housing use, possesses a VPT exceeding € 1,000,000.00" and not when this value results from the sum of the VPT imputed to each floor or division with independent use.

As also mentioned in the arbitral decision delivered in proceedings No. 50/2013-T, "The criterion intended by the AT, of considering the value of the sum of the VPT assigned to the parts, floors or divisions with independent use, on the argument that the property is not constituted in the regime of horizontal co-ownership, finds no legal basis and is contrary to the criterion that applies in the context of CIMI and, by reference, in the context of IS.

To which must be added the fact that the law itself expressly establishes, in the closing part of Item 28 of the TGIS, that the IS to apply to urban properties of value equal to or greater than € 1,000,000.00 – "on the taxable asset value used for the purpose of IMI.".

For all the foregoing, one cannot agree with the AT's position.

In fact, if it is the rule itself provided for in Item No. 28.1 of the General Table in its closing words that provides that Stamp Tax applies "on the taxable asset value used for the purpose of IMI", what is relevant for tax incidence purposes is the individualized taxable asset value for each of the parts, floors or divisions with independent use on which IMI is assessed annually, that is, the assessment of Stamp Tax complies with the rules provided for in the Code of IMI, by express reference in the said Item No. 28 of the General Table and Article 67(2) of the Code of Stamp Tax.

So much so that the AT, in order to assess Item No. 28.1 of the General Table under examination, starts from each of those floors or divisions with independent use, applying the respective rate to the taxable asset value assigned to each of those divisions with housing use, in accordance with the norms of the Code of IMI, and then sums that taxable asset value.

The interpretation to the effect that what is relevant in the taxable event provision of Item No. 28.1 of the General Table is the VPT imputed to each of the autonomous parts, floors or divisions with independent use with housing use and not the value resulting from the sum of those taxable asset values is also that which results from its legislative intent, as required by Article 9(1) of the CC, applicable by virtue of the provision in Article 11 of the General Tax Law.

Indeed, in the presentation and discussion of Bill No. 96/XII/2nd (available in the Official Journal of the Republic DAR, I Series No. 9/XII/2012, of 11-10-2012) in the National Assembly, the Secretary of State for Tax Affairs declared the following:

"It is the first time in Portugal that special taxation has been created on properties of high value intended for housing. This rate will be 0.5% to 0.8%, in 2012, and 1%, in 2013, and shall apply to properties of value equal to or greater than 1 million euros. With the creation of this additional tax rate, the tax burden required of these owners will be significantly increased in 2012 and 2013" [emphasis ours].

On this point, we follow the arbitral decision delivered in proceedings No. 50/2013-T in referring to "The legislator, when introducing this legislative innovation, considered as the determinative element of taxpaying capacity urban properties, with housing use, of high value (luxury), more precisely, of value equal to or greater than € 1,000,000.00, on which a special Stamp Tax rate was subsequently imposed, intending to introduce a principle of taxation on wealth externalized in the ownership, usufruct or right of surface of luxury urban properties with housing use. For this reason, the criterion was for application of the new rate to urban properties with housing use, whose VPT is equal to or greater than € 1,000,000.00.

This conclusion is borne out by analysis of the discussion of bill No. 96/XII in the National Assembly, available for consultation in the Official Journal of the Republic, I series, No. 9/XII/2, of 11 October 2012.

The justification for the measure referred to as 'special rate on urban residential properties of the highest value' is thus based on the invocation of the principles of social equity and fiscal justice, calling on holders of properties of high value intended for housing to contribute in a more intensive manner, applying the new special rate to 'properties of 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 taxpaying capacity above the average and, as such, capable of determining a special contribution to ensure fair apportionment of the tax burden.".

Thus, and in accordance with the established facts, the VPT of each of the 5 floors or divisions with independent use assigned to housing which make up the property constituted in full ownership, and which was determined in accordance with the rules of the Code of IMI, is less than € 1,000,000.00, and thus the presuppositions of taxation of Item No. 28.1 of the General Table are not met.

Therefore, the acts of assessment of Stamp Tax, subject to the present proceedings for arbitral pronouncement, in the total amount of € 20,657.59, suffer from the defect of violation of the provision of Item No. 28.1 of the General Table and Article 67(2) of the Code of Stamp Tax, due to error as to its legal presuppositions, and thus the illegality of those assessment acts is declared, with the consequent annulment thereof.

In effect, consideration of the other questions raised by the Applicant is thus rendered moot, in particular the alleged defect of unconstitutionality, having been declared the illegality of the assessments identified above, due to a substantive defect which prevents renewal of the acts, effectively ensuring protection of the rights of the Applicant, in accordance with the provision of Article 124 of the Code of Tax Procedure and Process [5].

1. DECISION

On the grounds set out, the arbitral tribunal decides:

a) To uphold the request for arbitral pronouncement and, in consequence, declare illegal the assessments of Stamp Tax contained in the identified collection documents, with all legal consequences;

b) To uphold the request for acknowledgment of the right of the Applicant to payment of compensatory interest;

c) To order the AT to refund to the Applicant the Stamp Tax wrongfully paid, in the amount of € 20,657.59;

d) To condemn the AT to pay costs.

1. VALUE OF THE PROCEEDINGS

The value of the proceedings is fixed at € 20,657.59 (twenty thousand, six hundred and fifty-seven euros and fifty-nine cents), in accordance with Article 97-A of the Code of Tax Procedure and Process (CPPT), applicable by virtue of Articles 29(1)(a) and (b) of the RJAT and Article 3(2) of the Regulation of Costs in Tax Arbitration Proceedings (RCPAT).

1. COSTS

Costs to be borne by the AT, in the amount of € 1,224.00 (one thousand two hundred and twenty-four euros), in accordance with Table I of the Regulation of Costs in Tax Arbitration Proceedings, in accordance with Article 22(2) of the RJAT.

Notify.

Lisbon, 20 January 2016

The Arbitrator,

(Hélder Filipe Faustino)

Text prepared by computer, in accordance with the provision of Article 131(5), of the Code of Civil Procedure, applicable by reference to Article 29(1)(e) of the RJAT. The drafting of the present decision is governed by the orthography prior to the Orthographic Agreement of 1990.