Process: 570/2014-T

Date: February 2, 2015

Tax Type: Selo

Source: Original CAAD Decision

Summary

CAAD Process 570/2014-T addresses whether Stamp Duty under Item 28.1 of the General Table of Stamp Duty (TGIS) applies to land for construction valued over one million euros. The taxpayer A, LDA challenged a Stamp Duty assessment of €10,667.60 for 2013, arguing that their urban property, classified as land for construction with a taxable value of €1,066,760, should not be subject to the 1% tax rate under Item 28.1 TGIS. Item 28.1, introduced by Law 55-A/2012, imposes Stamp Duty on 'urban properties with residential use' whose taxable patrimonial value equals or exceeds €1,000,000. The taxpayer contended that land for construction, which permits building properties for various purposes including residential, commercial, services or parking, cannot be classified as property 'with residential use' since it lacks actual residential assignment. The word 'afetação' (use/assignment) implies dedicating something to a particular purpose, which undeveloped construction land does not possess. The taxpayer argued the legislator's intention was to tax luxury dwellings, not vacant building plots. The taxpayer cited consistent CAAD jurisprudence (decisions 42/2013-T, 53/2013-T, 180/2013-T) and Supreme Administrative Court rulings establishing that Article 6 of the Municipal Property Tax Code (CIMI) clearly distinguishes between 'residential urban properties' and 'land for construction,' and the latter cannot be considered properties with residential use for Stamp Duty purposes under Item 28.1 TGIS. The Tax Authority argued the property possessed residential use character. Following established jurisprudence, the tribunal likely ruled that applying Stamp Duty to construction land violated the principle of legality and typicality of tax incidence norms under Article 103 of the Portuguese Constitution, as it constituted erroneous qualification of the taxable event. Taxpayers who prevail in such arbitrations are entitled to restitution of taxes paid plus compensatory interest from the payment date under Article 43 of the General Tax Law.

Full Decision

ARBITRAL DECISION

A – REPORT

  1. A, LDA., legal entity no. …, with registered office at Rua … Vizela, filed a request for the constitution of an arbitral tribunal, under the terms of art. 2º, no. 1, a) and 10º, no. 1 and 2 of the Legal Regime for Tax Arbitration, established in Decree-Law 10/2011, of 20 January, hereinafter designated "RJAT" and of articles 1º and 2º of Ordinance no. 112-A/2011, of 22 March, with a view to the declaration of illegality of the Stamp Duty assessment act relating to the year 2013, and the recognition of the right to compensatory interest, the Tax Authority and Customs Authority (hereinafter designated by "AT") being the respondent authority.

  2. Having admitted the request for constitution of a singular arbitral tribunal, and the applicant not having opted for the appointment of an arbitrator, under the terms of the provision in paragraph a) of no. 2 of article 6º and paragraph b) of no. 1 of article 11º of the RJAT, in the wording introduced by article 228º of Law no. 66-B/2012, of 31 December, the Deontological Council appointed the undersigned as arbitrator.

The parties were notified of this appointment, and did not manifest the intention to refuse the arbitrator's appointment, under the terms of article 11º no. 1 paragraphs a) and b) of the RJAT and of articles 6º and 7º of the Deontological Code, and, in accordance with the provision of paragraph c) of no. 1 of article 11º of the RJAT, in the wording introduced by article 228º of Law no. 66-B/2012, of 31 December, the arbitral tribunal was constituted on 01-10-2014.

  1. Notified, the AT submitted a response in which it raised no exceptions.

  2. With the consent of the parties, the meeting provided for in art. 18º of the RJAT was waived, as well as the submission of pleadings.

  3. The applicant requests that the illegality and inherent annulment of the Stamp Duty assessment act relating to the year 2013 be declared, with the consequent restitution of the tax paid, plus compensatory interest, alleging in summary:

a) It was notified of the Stamp Duty assessment no. 2014 …, for the year 2013, in the amount of 10,667.60 €, relating to the urban property located in … Union of parishes of … (… and …), municipality of Vizela, registered in the property matrix under article ….

b) The stamp duty assessment in question was made on the basis of item 28.1 of the General Table of Stamp Duty (GTSD), in the wording introduced by Law no. 55-A/2012 of 29 October (State Budget Law for 2013).

c) The taxable value of the property in question is 1,066,760 €, to which the rate of 1% was applied, the rate provided for in the aforementioned item 28.1 of the GTSD.

d) This resulted in the assessment in the amount of 10,667.60 €.

e) The aforementioned Law no. 55-A/2012, of 29 October, added item 28 to the General Table of Stamp Duty (GTSD), with the following wording:

"Ownership, usufruct or right of superficies of urban properties whose taxable patrimonial value recorded in the matrix, under the terms of the Municipal Property Tax Code (CIMI), is equal to or greater than € 1,000,000 – calculated on the taxable patrimonial value used for the purposes of IMI:

28.1 – For properties with residential use – 1% (…)".

f) In the transitional provisions contained in article 6º of that Law no. 55-A/2012, the following rules were established:

c) The taxable patrimonial value to be used in the assessment of the tax corresponds to that resulting from the rules established in the Municipal Property Tax Code by reference to the year 2011.

g) The IMI Code defines the types of property, but does not refer to the concept of "property with residential use".

h) The word "use" [afetação], in this context of utilization of a property, has the meaning of "action of assigning something to a particular use".

i) The Applicant contends that the property in question is not a "property with residential use".

j) It is a plot of land for construction.

k) A plot of land for construction permits the construction of properties for residential purposes but also permits the construction of properties for commerce, services or parking.

l) Therefore, a plot of land for construction can never be classified as a property with residential use.

m) Therefore, the Applicant's property cannot fall within the scope of item 28.1 of the GTSD as it is not a property with residential use.

n) Furthermore, the legislator's intention in creating item 28.1 of the GTSD was to tax luxury dwellings, that is, dwellings with taxable patrimonial value above one million euros.

o) The legislator's intention was to tax dwellings with higher value, and not plots of land for construction, as they do not have the required residential use.

p) It has been uniform case law of the CAAD to declare illegality of Stamp Duty assessments under item 28.1 of the GTSD applied to plots of land for construction (examples: CAAD decisions no. 42/2013-T (Rapporteur Nuno Azevedo Neves), no. 53/2013-T (Rapporteurs Jorge Manuel Lopes de Sousa, Conceição Pinto Rosa and Alberto Amorim Pereira), no. 180/2013-T Rapporteur Suzana Fernandes da Costa).

q) The Supreme Administrative Court has also pronounced on this matter in decisions no. 046/14 of 14-05-2014, no. 0274/14 of 14-05-2014, no. 0396/14 of 28-05-2014 and no. 0425/14 of 28-05-2014.

r) All these decisions state that "as the legislator has not defined the concept of 'urban properties with residential use', and as article 6º of the IMI Code – subsidiarily applicable to Stamp Duty provided for in the new item no. 28 of the General Table – results in a clear distinction between 'residential urban properties' and 'plots of land for construction', the latter cannot be considered, for the purposes of the incidence of Stamp Duty (Item 28.1 of the GTSD, in the wording of Law no. 55-A/2012, of 29 October), as urban properties with residential use".

s) Therefore, the Applicant contends that the property in question is not subject to stamp duty, there being in the case in question an erroneous qualification of the taxable event.

t) Being the urban property in question a plot of land for construction, the same does not fall within the scope of the norm of objective incidence of Item 28.1 of the GTSD, which undermines the legality of the assessment.

u) We are thus faced with a clear violation of the principle of legality and typicality of tax incidence norms, enshrined in article 103º of the Constitution of the Portuguese Republic.

v) Having paid the tax relating to the first installment, it requests that it be paid compensatory interest from the date of payment, under the terms of art. 43º of the General Tax Law.

  1. In turn, the respondent replied, alleging in summary:

a) It is the AT's understanding that the property in question has the legal nature of a property with residential use, and therefore the assessment acts that are the subject of this request for arbitral pronouncement should be upheld as they embody a correct interpretation of Item 28 of the General Table, added by Law 55-A/2012, of 29/12.

b) Law no. 55-A/2012, of 29/10/2012 amended art. 1º of the Tax Code and added to the GTSD item 28; with this legislative change, Stamp Duty would also apply to ownership, usufruct or right of superficies of urban properties whose taxable patrimonial value recorded in the matrix, under the terms of the Municipal Property Tax Code (CIMI) is equal to or greater than €1,000,000.00.

c) Stamp duty would thus apply to all acts, contracts, documents, titles, papers and other facts or legal situations provided for in the general table, including gratuitous transfers of assets.

d) In the absence of any definition of the concepts of urban property, plot of land for construction and residential use, in the context of Stamp Duty, recourse must be made to the CIMI in search of a definition that permits ascertaining whether Stamp Duty applies, in accordance with the provisions of art. 67º, no. 2 of the Tax Code in the wording given by Law no. 55-A/2012, of 29/10.

e) Pursuant to the aforementioned legal provision, to matters not regulated in the Code, relating to item no. 28 of the GTSD, the provisions of the CIMI apply subsidiarily.

f) Article 2º no. 1 of the CIMI provides that "a property is any portion of territory, including water, plantations, buildings and constructions of any kind incorporated in or situated on it, with a character of permanence, provided 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 in a portion of territory that constitutes an integral part of a different asset or does not have a patrimonial nature".

g) In turn, article 6º, no. 1 of the CIMI provides on the types of urban properties existing, including in this concept plots of land for construction, that is, "lands situated inside or outside an urban cluster, for which a license or authorization has been granted, prior notification admitted or favorable prior information issued for a subdivision or construction operation, and also those that have been so in the acquisition title, excepting lands where the competent entities forbid any of those operations…".

h) The notion of use of the urban property is rooted in the section relating to the assessment of properties, which is well understood since the assessment of the property (purpose) incorporates value to the property, constituting a distinguishing fact that is decisive (coefficient) for purposes of assessment.

i) As results from the expression "…value of authorized buildings", contained in art. 45º, no. 2 of the CIMI, the legislator chose to determine the application of the methodology for assessing properties in general, to the assessment of plots of land for construction, and therefore the affectation coefficient provided for in art. 41º of the CIMI applies to them. In this sense, see the Decision no. 04950/11, of 14/02/2012, of the Southern Administrative Court: "The regime for assessing the taxable patrimonial value of plots of land for construction is enshrined in art. 45º of the CIMI. The assessment model is the same as that of constructed buildings, although starting from the building to be constructed, taking as basis its respective project, the value of the plot of land for construction corresponds, fundamentally, to a legal expectation, embodied in a right to construct thereon a property with certain characteristics and a certain value. It will be this expectation of production of wealth materialized in a property to be constructed that makes the value of the assets increase and the wealth of the owner of the plot of land for construction, as soon as the property in question comes to be considered as a plot of land for construction. For this reason, the greater the value of the property to be constructed, the greater is the value of the plot of land for construction that underlies it (cfr. Art. 6º, no. 3 of the CIMI)." In conclusion, in the assessment of plots of land for construction the legislator intended that the methodology for assessing urban properties in general be applied, and thus all coefficients should be taken into consideration, notably the affectation coefficient provided for in art. 41º of the CIMI, further resulting such legal obligation from no. 2 of art. 45º of the CIMI, by referring to the value of authorized or foreseen buildings on the same plot of land for construction".

j) Thus, for purposes of determining the taxable patrimonial value of plots of land for construction, the application of the affectation coefficient in the context of assessment is clear, and therefore its consideration for purposes of applying item 28 of the GTSD cannot be ignored, with this line of reasoning applying:

a. In the application of law to specific cases, it is important to determine the exact meaning and scope of the norm, so as to reveal the rule it contains, an indispensable condition for it to be applied, in accordance with the provisions of art. 9º of the Civil Code, ex vi art. 11º of the General Tax Law.

b. Article 67º no. 2 of the Tax Code orders the subsidiary application of the provisions of the CIMI.

c. The use of the property (aptitude or purpose) is a coefficient that contributes to the assessment of the property, in determining the taxable patrimonial value, applicable to plots of land for construction;

d. Item 28 itself of the GTSD refers to the expression "properties with residential use", calling for a classification that overlaps the types provided for in no. 1 of art. 6º of the CIMI.

k) The notion of use of the urban property is rooted in the section relating to the assessment of properties, which is well understood since the assessment of the property (purpose) incorporates value to the property, constituting a distinguishing fact that is decisive (coefficient) for purposes of assessment.

l) Contrary to what is advocated by the Applicant, the AT understands that the concept of "properties with residential use", for purposes of the provision in item 28 of the GTSD, includes both constructed properties and plots of land for construction, not least having regard to the literal element of the norm.

m) Note that the legislator does not refer to "properties intended for residential purposes", having opted for the notion of "residential use". A different and broader expression whose meaning must be found in the need to integrate other realities beyond those identified in art. 6º, no. 1 paragraph a) of the CIMI.

n) Indeed, the mere establishment of a right of potential construction of a plot of land for construction immediately increases the value of the property in question, hence the rule contained in art. 45º of the CIMI which requires separating the two parts of the land.

o) On one side, the part of the land where the building to be constructed will be located is considered, and on the other the area of free land. Having determined the amount of the first part, the value determined is reduced to a percentage between 15% and 45% as provided in no. 2 of that norm, because the construction has not yet been carried out.

p) With regard to the legal regime of urbanization and construction, it should be noted that it has as its premise buildings already constructed.

q) One cannot ignore that the license permit for the carrying out of urbanistic operations should contain, among other elements, the number of plots and indication of the area of location, purpose, construction area, construction area, number of floors and number of housing units of each of the plots, with specification of housing units intended for housing at controlled costs, when foreseen, under the terms of paragraph a) of art. 77º of the Legal Regime for Urbanization and Construction.

r) And also that art. 77º of the Legal Regime for Urbanization and Construction contains mandatory specifications, notably for permits for subdivision operations or urbanization works, and for construction works.

s) Municipal Master Plans also establish the strategy for municipal development, the municipal policy for land planning and urban management and other urban policies. It integrates and articulates the guidelines established by land management instruments of national and regional scope and establishes the model for spatial organization of municipal territory.

t) In these terms, much before the actual construction of the property, it is possible to determine and establish the use of the plot of land for construction.

u) As for the alleged unconstitutionality raised, the same should be dismissed, because: as stated in art. 13º of the Constitution of the Republic, it is known that "it requires equal treatment of what is necessarily equal and different treatment of what is essentially different, not preventing differentiation of treatment, but only arbitrary or unreasonable discriminations, that is, distinctions of treatment that do not have sufficient justification and material basis".

v) Thus, the AT understands that the provision of item 28 of the GTSD does not constitute any violation of the principle of equality of art. 13º of the Constitution, which applies to ownership, usufruct or right of superficies of urban properties with residential use, whose taxable patrimonial value recorded in the matrix, under the terms of the CIMI, is equal to or greater than € 1,000,000.00, that is, applies to the value of the property.

w) It is a general and abstract norm, applicable uniformly to all cases in which the factual and legal prerequisites are met.

x) It is also important to note that taxation in the context of stamp duty obeys the criterion of adequacy, being applied uniformly to all holders of properties with residential use of value exceeding € 1,000,000.00, applying to the wealth embodied and manifested in the value of properties, lacking any unconstitutionality by violation of the principle of proportionality or contributory capacity.

y) In truth, the measure implemented seeks to achieve maximum effectiveness regarding the objective to be achieved, with minimum injury to other interests considered relevant, the choice of this mechanism for obtaining revenue being justified, which would only be censurable, in light of the principle of proportionality if it resulted in manifestly indefensible.

z) Which does not occur because such measure shall apply uniformly to all holders of properties with residential use of value exceeding €1,000,000.00.

aa) For all the foregoing, the assessments in question embody a correct interpretation and application of law to the facts, and do not suffer from the vice of violation of law, whether of the Constitution or of the Tax Code.

  1. The Arbitral Tribunal was properly constituted and is materially competent.

The parties have legal personality and capacity and are legitimate (arts. 4º and 10º, no. 2, of the same decree-law and art. 1º of Ordinance no. 112-A/2011, of 22 March).

The proceedings do not suffer from nullities.

B. DECISION

  1. STATEMENT OF FACTS

1.1. PROVEN FACTS

The following facts are considered proven:

a) The applicant is registered in the property matrix as owner of the urban property corresponding to a plot of land for construction located in Rua …, Union of parishes of … (… and …), municipality of Vizela, registered in the urban property matrix under article ….

b) Having been notified of the Stamp Duty assessment no. 2014 …, for the year 2013, in the amount of 10,667.60 €, relating to the identified property.

c) Tax assessment made on the basis of item 28.1 of the General Table of Stamp Duty (GTSD), in the wording introduced by Law no. 55-A/2012 of 29 October.

d) The assessment had as its premise the attribution to the plot of land for construction in question of residential use.

e) The deadline for voluntary payment of the first installment of the assessed stamp duty ended on 30-04-2014.

f) The applicant proceeded to pay the first installment of the tax.

g) On 29-07-2014 the applicant filed the request for arbitral pronouncement that gave rise to the present proceedings.

1.2 The facts were considered proven on the basis of the documents attached to the proceedings.

1.3 UNPROVEN FACTS

There are no facts considered unproven with relevance to the consideration of the request.

1.4 THE LAW

The substantive question to be considered in the proceedings has already been the subject of various arbitral decisions which have, we may say unanimously, had the same interpretive sense.

What is at issue here is, in sum, to determine whether a plot of land for construction can be considered as having residential use for purposes of applying, in particular, item 28.1 of the GTSD.

The applicant contends that it cannot, invoking, in particular, that the word "use" [afetação], in this context of utilization of a property, has the meaning of "action of assigning something to a particular use", it not being possible to assign a plot of land for construction to such use.

In turn, the respondent argues that the concept of "properties with residential use" includes both constructed properties and plots of land for construction, not least because much before the actual construction of the property, it is possible to determine and establish the use of the plot of land for construction.

Neither the Tax Code nor Law 55-A/2012, of 29 October, define or establish clarifying criteria for the concept of property with residential use. This latter decree-law only also added a no. 2 to art. 67º of the Tax Code, stipulating that "to matters not regulated in the present Code relating to item 28 of the General Table, the provisions of the CIMI apply, subsidiarily".

Now, if it is true that tax law, through the CIMI, gives us an exact definition of what is understood by property (art. 2º), as well as its classification and division between rural and urban properties (arts. 3º to 5º), identifying, regarding the latter, the various types (art. 6º), it is also true that in those classifications the concept of "residential use" is not used.

In support of its thesis, the AT argues that "the notion of use of the urban property is rooted in the section relating to the assessment of properties, which is well understood since the assessment of the property (purpose) incorporates value to the property, constituting a distinguishing fact that is decisive (coefficient) for purposes of assessment.

An understanding which we do not share. Indeed, the rules for determining the taxable patrimonial value of plots of land for construction, defined in art. 45º of the CIMI, have no relation to the classification of properties, merely indicating the factors to be considered in their assessment.

From the fact that the legislator intended that in the assessment of plots of land for construction the methodology for assessing urban properties in general be applied, considering in particular the coefficients provided for in that article, it does not follow that to the same any specific use is or has been attributed.

Moreover, there being no legal definition for the concept of residential use, we must ascertain the meaning of the term use, within the general linguistic framework. Which will have the meaning of assigning something to a particular use.

It thus seems, on a first approach, to result that a property with residential use will be one that is effectively intended for residential use.

Is it the case that a plot of land for construction, for having already determined purpose - designedly residential – defined in its licensing, is to be considered as having that use, or does that use only derive from the actual attribution of that purpose when realized?

We lean towards the second hypothesis. We permit ourselves to transcribe, in this regard, an excerpt from the arbitral decision delivered in case no. 53/2013:

  • "… in good hermeneutics, 'property with residential use', cannot be a property merely licensed for residential purposes or intended for that end (that is, it will not be enough to be a 'residential property'), having to be a property that already has actual use for that end.

That this is the meaning of the expression "use", in the same context of property classification that the CIMI makes, is confirmed by article 3º, in which, regarding rural properties, reference is made to those that are "used for, or, in the absence of concrete use, have as normal destination a use generating agricultural income", which evidences that use is concrete, actual. In truth, as is seen from the final part of this text, a property may have a determined use as its destination and be or not be assigned to it, which evidences that use, at the level of the connection of a property to a determined use, is something more intense than mere destination and which may or may not occur, downstream of this and not upstream".

In sum, to conclude that from a mere right of potential construction of a plot of land for construction, starting only from the elements of the matrix and the circumstance that its assessment was carried out with reference to the coefficients applicable to residential urban properties, results its necessary residential use, lacks legal support.

Not having the property of which the applicant is owner residential use, the assessment, whose declaration of illegality is requested, suffers from a vice consisting of error regarding the legal prerequisites, which affects it with illegality.

COMPENSATORY INTEREST

In addition to the restitution of the tax unduly paid, the applicant requests that the right to payment of compensatory interest be declared.

Such right is enshrined in art. 43º of the General Tax Law, which has as its premise that it be ascertained, in a gracious reclamation or judicial challenge, that there was error attributable to the services from which results payment of the debt in an amount greater than that legally owed.

The recognition of the right to compensatory interest in the arbitral proceedings results from the provision of art. 24º, no. 5 of the RJAT.

In the case in question, it is manifest that the illegality of the assessment act in question is attributable to error by the AT.

Therefore, the applicant has the right to the requested payment of compensatory interest.

  1. DECISION

In view of the foregoing, it is decided:

a) to judge favorably, on grounds of violation of law, the request for annulment of the tax act that is the subject of the arbitral request corresponding to the Stamp Duty assessment relating to the year 2013, as well as the request for payment of compensatory interest;

b) to condemn the Tax Authority and Customs Authority to return to the applicant the amount of tax paid, plus the respective compensatory interest;

c) to condemn the respondent to pay the costs of the proceedings.

VALUE OF THE CASE: In accordance with the provisions of art. 306º, no. 2 of the Code of Civil Procedure, art. 97º-A, no. 1, a) of the Code of Tax Procedure and art. 3º, no. 2 of the Regulation of Costs in Tax Arbitration Proceedings, the value of the case is fixed at 10,667.60 € (ten thousand six hundred and sixty-seven euros and sixty cents).

COSTS: Pursuant to the provision of art. 22º, no. 4, of the Regulation of Costs in Tax Arbitration Proceedings, the amount of costs is fixed at 918.00 € (nine hundred and eighteen euros), in accordance with Table I attached to the Regulation of Costs in Tax Arbitration Proceedings.

Let notice be given.

Lisbon, 18-02-2015

The Arbitrator

António Alberto Franco

Frequently Asked Questions

Automatically Created

Does Verba 28 of the Tabela Geral do Imposto do Selo (TGIS) apply to land for construction (terrenos para construção)?
No, Verba 28 of the Tabela Geral do Imposto do Selo (TGIS) does not apply to land for construction (terrenos para construção). Item 28.1 TGIS specifically targets 'urban properties with residential use' valued at or above €1,000,000. According to consistent CAAD and Supreme Administrative Court jurisprudence, including Process 570/2014-T, land for construction constitutes a distinct category under Article 6 of the Municipal Property Tax Code (CIMI) and cannot be classified as property 'with residential use' since it lacks actual residential assignment or dedication. The term 'afetação' (use) requires the property to be assigned to a specific purpose, which undeveloped construction land does not possess. Construction land merely has potential for future residential development but is not itself a property with residential use.
Can urban properties classified as land for construction be subject to Stamp Tax under Verba 28.1 TGIS?
No, urban properties classified as land for construction cannot be subject to Stamp Tax under Verba 28.1 TGIS. The legal distinction between 'residential urban properties' and 'land for construction' is clearly established in Article 6 of the CIMI Code, which is subsidiarily applicable to Stamp Duty. Process 570/2014-T and multiple precedents (CAAD decisions 42/2013-T, 53/2013-T, 180/2013-T, and Supreme Administrative Court decisions 046/14, 0274/14, 0396/14, 0425/14) have consistently held that construction land does not fall within the objective incidence norm of Item 28.1 TGIS. These properties lack the required 'residential use' characteristic, as they permit construction for various purposes including residential, commercial, services, or parking. Applying Stamp Duty to construction land violates the principle of legality and typicality of tax incidence under Article 103 of the Portuguese Constitution.
How did CAAD Process 570/2014-T rule on the legality of Stamp Tax on building land valued over one million euros?
CAAD Process 570/2014-T ruled that Stamp Tax assessments on building land valued over one million euros are illegal. The taxpayer challenged a €10,667.60 Stamp Duty assessment on land for construction with taxable value of €1,066,760, arguing it did not qualify as 'property with residential use' under Item 28.1 TGIS. Following established jurisprudence from prior CAAD decisions and Supreme Administrative Court rulings, the tribunal found that construction land constitutes a distinct category under the CIMI Code and cannot be considered property with residential use for Stamp Duty purposes. The assessment represented erroneous qualification of the taxable event and violated constitutional principles of legality and typicality in taxation. The decision ordered annulment of the assessment, restitution of taxes paid, and payment of compensatory interest. The legislator's intention was to tax luxury dwellings, not undeveloped construction plots.
What is the procedure to challenge a Stamp Tax (Imposto do Selo) assessment through tax arbitration at CAAD?
To challenge a Stamp Tax (Imposto do Selo) assessment through tax arbitration at CAAD, taxpayers must file a request for constitution of an arbitral tribunal under Article 2(1)(a) and Article 10(1)(2) of the Legal Regime for Tax Arbitration (RJAT), established by Decree-Law 10/2011 of 20 January, and Articles 1-2 of Ordinance 112-A/2011 of 22 March. The request must seek declaration of illegality of the assessment act and specify the respondent authority (Tax Authority and Customs Authority). Once admitted, an arbitrator is appointed by the Deontological Council if the applicant does not choose one. Parties are notified and may refuse the appointment. The arbitral tribunal is constituted once acceptance is confirmed. The Tax Authority submits a response, and parties may waive the meeting under Article 18 RJAT. The tribunal then issues a decision on legality and any requests for restitution and compensatory interest.
Are taxpayers entitled to compensatory interest (juros indemnizatórios) when a Stamp Tax assessment under Verba 28 TGIS is annulled?
Yes, taxpayers are entitled to compensatory interest (juros indemnizatórios) when a Stamp Tax assessment under Verba 28 TGIS is annulled. Article 43 of the General Tax Law (Lei Geral Tributária) establishes the right to compensatory interest when illegally collected taxes are restituted. In Process 570/2014-T, the taxpayer explicitly requested compensatory interest from the date of payment of the first installment. When an arbitral tribunal declares a Stamp Duty assessment illegal and orders annulment with consequent restitution of taxes paid, compensatory interest automatically accrues from the date of payment until restitution. This compensates taxpayers for the financial loss resulting from having funds improperly withheld by the Tax Authority due to an illegal assessment. The interest calculation runs from the payment date through the actual date of reimbursement to the taxpayer.