Process: 576/2015-T

Date: March 14, 2016

Tax Type: Selo

Source: Original CAAD Decision

Summary

CAAD arbitration case 576/2015-T addressed whether Stamp Tax under item 28.1 of the General Table should be calculated based on aggregate or individual property values for buildings with multiple independent units. A real estate investment fund challenged €16,930 in 2014 stamp tax assessments on an urban property containing 13 independently-usable floors or divisions. The fund argued that item 28.1, which taxes residential properties with taxable property values (VPT) of €1 million or more, should apply separately to each independent division rather than the property's total value. The claimant relied on the IMI Code (CIMI), which registers each independent floor separately with its own VPT, arguing constitutional equality principles require treating vertical ownership divisions like horizontal ownership autonomous fractions. The fund contended the legislation targeted luxury properties exceeding €1 million, which none of the individual divisions qualified as. The Tax Authority countered that the property was held in full ownership with divisions, fundamentally different from horizontal ownership with autonomous fractions. Under CIMI Article 2(4), only autonomous fractions in horizontal ownership constitute separate properties, while divisions in vertical ownership remain part of a single property. The Authority argued that while IMI may be assessed per division for administrative purposes, Stamp Tax item 28.1 intentionally taxes the property as a unified legal-tax entity based on aggregate VPT. The case turned on interpreting whether CIMI's treatment of independent divisions as separate units for registration purposes extends to Stamp Tax assessment, or whether the legislature intended item 28.1 to apply holistically to properties in full ownership regardless of internal divisions. This distinction has significant implications for real estate investment funds holding large properties with multiple independent units.

Full Decision

ARBITRAL DECISION

I – Report

  1. On 1.09.2015, A... – Real Estate Investment Fund Management Company, S.A., with collective person number ... and registered office at Avenue ..., no. ..., ... floor, Lisbon, in its capacity as Managing Company of the Special Closed Real Estate Investment Fund – B..., with tax identification number ... and registered office at Avenue ..., no. ..., ... floor, Lisbon, requested from CAAD the constitution of an arbitral tribunal, pursuant to Article 10 of Decree-Law No. 10/2011, of 20 January (Legal Regime of Arbitration in Tax Matters, hereinafter referred to only as "RJAT"), against which the Tax and Customs Authority is the Respondent, with a view to the annulment of twelve acts of assessment of stamp tax relating to 2014 (item no. 28.1 of the General Stamp Tax Table), carried out by the Respondent on 20.03.2015, in the total value of € 16,930.00 relating to the urban property registered in the property register under article ..., of the parish of ..., County of Lisbon.

The Claimant further requests the condemnation of the Respondent to pay it the taxes paid relating to the assessments in question, which it considers undue, as well as compensatory interest.

  1. The request for constitution of the arbitral tribunal was accepted by the Honourable President of CAAD and notified to the Tax and Customs Authority.

In accordance with the provisions of Article 6, paragraph 1, of the RJAT, by decision of the President of the Ethics Council, duly communicated to the parties within the legally applicable periods, the undersigned was appointed as arbitrator, who communicated acceptance of the appointment to the Ethics Council and to the Administrative Arbitration Centre within the regularly applicable period.

The Arbitral Tribunal was constituted on 23.11.2015.

  1. The arguments presented by the Claimant in support of its claim were, in summary, as follows:

a. The Claimant was notified to proceed with payment of Stamp Tax, by reference to the various divisions of the property to which the assessments subject to the present proceedings relate, consisting of a total of thirteen floors or divisions with independent use.

b. From the perspective of the Tax Authority, by reference to properties constituted in vertical ownership, the criterion for determining the incidence of item 28.1 of the GTST is the "aggregated" TPV of the various divisions intended for residential purposes that make up the property.

c. This understanding is unlawful, insofar as the subjection of the various divisions of a property with the characteristics of that which is at issue in the present procedure should be determined by the TPV attributed to each of the independent divisions of the property and not by the "total" TPV thereof.

d. This is because the IMI Code – to which Article 67, paragraph 2 of the Stamp Tax Code expressly refers regarding matters relating to item 28 of the GTST not regulated – stipulates that each floor or part of the property susceptible of independent use is considered separately in the registration which discriminates its respective TPV (Article 12 of the CIMI).

e. It follows that the IMI Code expressly provides the rule that the tax is assessed by reference to the TPV of each division, so item 28 of the GTST may only legitimately apply to divisions that form part of properties constituted in vertical ownership when this part/division presents a TPV equal to or greater than € 1,000,000.00.

f. Also in the light of the constitutional principle of equality, the stamp tax assessments in question should be made individually for the various autonomous parts of properties in vertical ownership, in accordance with what happens for properties constituted in horizontal ownership, on pain of illegality and consequent annulment.

g. Furthermore, with the provision of item 28 of the GTST the legislator intended to impose an additional burden on taxpayers owning properties with "luxury" residential use (TPV exceeding one million euros), which does not occur with the various divisions that make up the urban property in question, so that, also from this perspective, the illegality of the assessments sub judice should be concluded.

h. As a consequence of the annulment of the assessments, the Respondent is obliged to refund the amounts unduly paid, as well as compensation for all damages caused by the time the Claimant was deprived of the use of the capital unduly paid.

i. The payment of compensatory interest, under Article 43, paragraph 1, of the LGT is a legal effect that arises from the fact that a tax act is annulled administratively or judicially, being the realization of a right to compensation that has constitutional basis in Article 22 of the Constitution of the Portuguese Republic.

  1. The Tax and Customs Administration, called upon to comment, contested the Claimant's claim, defending itself by way of objection, in summary, with the following arguments:

a. With reference to the year 2014, in compliance and in accordance with the provisions of Article 6, paragraph 2 of Law No. 55-A/2012, of 29/10, which added item no. 28 to the GTST, as amended by Law No. 83-C/2013 of 31/12 and whose incidence rule refers to urban properties, valued in accordance with the CIMI, with TPV equal to or greater than € 1,000,000.00 and, in accordance with paragraph 28.1 thereof, residential use, the Tax Authority proceeded to notify the collection documents for payment of the 1st installment of the assessments in question.

Now, what is at issue here are collection notes that result from the direct application of the legal rule, which translates into objective elements, without any subjective or discretionary assessment.

c. The concept of property is defined in Article 2, paragraph 1 of the CIMI, being established in its paragraph 4 that in the horizontal ownership regime each autonomous fraction is deemed to constitute a property.

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

e. As regards the assessment of IMI, where these are properties in full ownership, the TPV which serves as the basis for its calculation will undoubtedly be the global TPV of the property.

f. In compliance with the provisions of Article 119, paragraph 1 of the CIMI, the collection document is sent to the taxpayer with discrimination of the parts susceptible of independent use, their respective taxable property value and the amount of tax imputable to each municipality where the properties are located.

g. The tax being correctly assessed and the tax determined being owed, compensatory interest is not owed, not least because there is no error attributable to the Services, which merely acted, as they should, in strict compliance with the legal rule.

The thesis defended by the Claimant lacks legal support, because although the assessment of Stamp Tax, in the situations provided for in item no. 28.1 of the GTST, proceeds in accordance with the rules of the CIMI, the truth is that the legislator preserves the aspects that need the necessary adaptations, namely those in which, as is the case with properties in full ownership, although with floors or divisions susceptible of independent use and although the IMI is assessed with respect to each part susceptible of independent use for the purposes of Stamp Tax the property as a whole is relevant because the divisions susceptible of independent use are not deemed to be property, but only the autonomous fractions in the horizontal ownership regime, as provided in paragraph 4 of Article 2 of the CIMI.

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

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

In fact, it appears from the property register that the property is in full ownership regime, composed of various parts susceptible of independent use.

Since the properties are in full ownership regime, not having autonomous fractions to which the tax law attributes the qualification of property, because from the notion of property in Article 2 of the CIMI, only the autonomous fractions of property in horizontal ownership are deemed to be properties – paragraph 4 of the cited Article 2 of the CIMI.

From the above, the vice of violation of law by error regarding the presuppositions of law should be judged unfounded, and the assessments impugned should remain in the legal order as they constitute a correct application of law to the facts.

Everything that is now being defended in this arbitral forum has already been the subject of binding information from the Tax Authority, with a decision of agreement of 11.2.2013 from the Legal Deputy of the Director-General of the Tax and Customs Authority.

Wherefore, we must necessarily conclude that the notifications made regarding payment of tax installments did not violate any legal or constitutional principle, and should thus be maintained.

  1. Finding that there was no situation provided for in Article 18, paragraph 1, of the RJAT, which would make necessary the arbitral meeting provided therein, the same was dispensed with, on the basis of the prohibition of performing useless acts and also on the principles of celerity, simplification and procedural informality.

The holding of arguments was also dispensed with, pursuant to Article 18, paragraph 2, of the RJAT, "a contrario".

  1. The tribunal is materially competent and is regularly constituted in accordance with the RJAT.

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

The process is not vitiated by any defects that would invalidate it.

  1. It is necessary to resolve the following questions:

a) Whether the assessments subject to the present proceedings are unlawful and consequently should be annulled.

b) Whether the Respondent should be condemned to refund to the Claimant the amounts paid, corresponding to the assessments subject to the present proceedings.

c) Whether the Respondent should be condemned to pay the Claimant compensatory interest.

II – Relevant Factual Matter

  1. The following facts are considered proven:

8.1. The Special Closed Real Estate Investment Fund – B..., with tax identification number ..., for which the company A... – Real Estate Investment Fund Management Company, S.A., is manager, is registered in the register as owner of the urban property registered in the property register under article ..., of the parish of ..., County of Lisbon, consisting of a total of thirteen floors or divisions with independent use.

8.2. As at the date of the tax facts, twelve of the thirteen independent parts of the property had residential use and each of these parts had been subject to independent assessment by the Tax Administration, which fixed their respective taxable property values between € 96,190.00 and € 161,690.00 and totalled € 1,693,000.00.

8.3 The Respondent carried out, on 20.03.2015, twelve acts of assessment of stamp tax relating to the year 2014 (item no. 28.1 of the General Stamp Tax Table), in the total value of € 16,930.00 relating to the identified urban property, in accordance with the provisions set out in the documents attached by the Claimant with the request for arbitral opinion and which are deemed reproduced herein.

8.4 The taxes were assessed individually on the taxable property values of each floor or part susceptible of independent use.

8.5 The Claimant paid the 1st, 2nd and 3rd installments of the assessments in question on 30.04.2015, 30.07.2015 and 30.11.2015, respectively, which corresponds to the total of the tax assessed.

With interest for the decision of the case, there are no unproven facts.

  1. The Tribunal's conviction regarding the decision of the factual matter was based on the documents in the proceedings, as well as the documents submitted, and it should be noted that there is agreement between the parties regarding the factual matter, the disagreement being confined to the matter of law.

III – Applicable Law

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

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

28.1 For a residential property or for land intended for construction where the construction, authorized or planned, is for residential purposes, in accordance with the provisions of the Municipal Property Tax Code: 1%.

28.2 For a 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 an order approved by the Minister of Finance: 7.5%".

  1. Article 67, paragraph 2 of the Stamp Tax Code provides that "To matters not regulated in this Code relating to item no. 28 of the General Table, the provisions of the CIMI shall apply subsidiarily".

Article 2, paragraph 4 of the Municipal Property Tax Code (hereinafter CIMI) provides that "For the purposes of this tax, each autonomous fraction, in the horizontal ownership regime, is deemed to constitute a property".

The same code further establishes in Article 92:

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

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

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

In turn, Article 12, paragraph 3 of this Code provides that "Each floor or part of property susceptible of independent use is considered separately in the registration, which also discriminates its respective taxable property value".[1]

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

However, since each of these units can be subject to lease or any other use by the respective owner, the register must show these units and a taxable property value must be attributed to each of them".[2]

Article 12, paragraph 3, of the CIMI is thus applicable to situations of properties in conditions to satisfy the objective requirements of submission to the horizontal ownership regime, provided for in Article 1415 of the Civil Code, but where there is no evidence of a constitutive deed of the same.

  1. Regarding these urban properties in conditions to satisfy the objective requirements of submission to the horizontal ownership regime, in substance, the economic reality subject to taxation does not cease to be the same by virtue of the fact that the act constituting horizontal ownership has, or has not, been performed. In the perspective of taxation of these realities, there is no substantive difference in the CIMI regarding the treatment of a real estate depending on the constitution of horizontal ownership.

In effect, in the regime of Articles 38 et seq. of the CIMI which regulate the determination of the taxable property value of real estate, there is no substantive differentiation between real estate constituted in horizontal ownership and real estate with objective conditions for such, but in which submission to such a regime has not occurred[3], namely, such circumstances do not appear in the increasing or decreasing elements provided for in the tables of Articles 43, paragraph 2 of the code.

  1. The essential question to be resolved in the present proceedings concerns whether in properties with parts or floors susceptible of independent use, but not subject to the horizontal ownership regime, the real estate will be considered as a unit for the purposes of applying item 28 of the GTST or whether its independent parts will be considered individually.

In the first case, the value relevant for the purpose of the subsumption to item 28 will be that resulting from the consideration of all of its parts and, in coherence, a single assessment should be made, solely with respect to the real estate, and not as many assessments as there are parts or floors susceptible of independent use.

In the second case, the value to be considered for this purpose will be that of each of the parts susceptible of independent use, similar to what occurs in the autonomous fractions of properties subject to the horizontal ownership regime, with as many assessments as there are parts susceptible of independent use but only and solely with respect to parts susceptible of independent use whose value is equal to or greater than 1,000,000 €.

The Tax Authority made as many assessments as there are parts susceptible of independent use, a procedure which in our view does not harmonize with its own thesis that, in these cases, the reality targeted by Item 28 of the GTST is the real estate as a whole and not each of its autonomous parts.

  1. The question has already been examined in various arbitral decisions[4], which were to the effect of considering that the value to be considered for this purpose will be that of each of the parts susceptible of independent use, similar to what occurs in the autonomous fractions of properties subject to the horizontal ownership regime, a solution which we consider to be correct.

In a first moment of interpretation of item 28 of the GTST, the expression "urban properties", in conjunction with Article 2, paragraph 4 of the CIMI, which attributes the quality of urban property to autonomous fractions in the horizontal ownership regime and apparently does not attribute it to parts susceptible of independent use, could point to the consideration of the property as a whole.

But, still within the scope of the literal element, the item points in a different direction by referring to "residential property", insofar as, in cases of properties with parts susceptible of independent use, the use can only be determined fraction by fraction [5] and not globally, insofar as it may happen, and frequently does happen in this type of real estate, that there are parts used for residential purposes and others used for other purposes.

Thus, the legislator in referring to "residential property", as regards properties with floors or parts of property susceptible of independent use, could only have had in mind each of these fractions and not the property as a whole.

  1. This reading of the literal element is in complete harmony with the aforementioned rules of the CIMI, as well as with the other interpretative elements, as demonstrated in the various decisions of CAAD in this matter and to whose jurisprudence we adhere without reservation.

As was written in the decision delivered in case 50/2013-T:

"the ratio legis underlying the rule of item 28 of the GTST, introduced by Law No. 55-A/2012 of 29 October, and in obedience to the provision of Article 9 of the Civil Code, according to which the interpretation of a legal rule should not be limited to the letter of the law, but should reconstruct from the texts and other elements of interpretation the legislative thought, taking into account the unity of the legal system, the circumstances in which it was drafted and the specific conditions of the time in which it is applied.

The legislator in introducing this legislative innovation considered as the determining element of contributory capacity urban properties with residential use of high value (luxury), more rigorously, of value equal to or greater than €1,000,000.00, on which it began to apply a special rate of stamp tax, intending to introduce a principle of taxation on wealth expressed through the ownership, usufruct or right of superficies of luxury urban properties with residential use. For this reason, the criterion was the application of the new rate to urban properties with residential use, whose TPV is equal to or greater than €1,000,000.00.

This same conclusion is drawn from the analysis of the discussion of bill No. 96/XII in the Assembly of the Republic, available for consultation in the Official Journal of the Assembly of the Republic, I series, no. 9/XII/2, of 11 October 2012.

The rationale for the measure designated as the "special tax on residential urban properties of highest value" is based on the invocation of the principles of social equity and fiscal justice, calling for contribution in a more intense manner the holders of properties of high value intended for residential purposes, with the new special rate applying to "houses 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) expresses a contributory capacity above the average and, as such, capable of determining a special contribution to ensure the fair distribution of the tax burden."

  1. From the above, it is considered that in the case of urban properties with parts or floors susceptible of independent use the value to be considered for the purpose of applying item 28 of the GTST is the taxable property value of each of these independent parts, with only the parts susceptible of independent use whose own taxable property value is greater than € 1,000,000 being subject to this tax.

  2. In the case at hand, being the taxable property value of each of the parts susceptible of independent use lower than that amount, the same do not fall within the scope of the tax incidence rule, so that the assessments sub judice are vitiated by the defect of violation of law and consequently cannot fail to be annulled.

  3. The Claimant further requested the condemnation of the Respondent to refund the amounts paid corresponding to the assessment object of the present proceedings, as well as the respective compensatory interest.

Let us see.

In accordance with the provisions of Article 24, subparagraph b) of the RJAT, the arbitral decision on the merits of the claim against which no appeal or objection lies binds the tax administration from the end of the period provided for appeal or objection, and the latter must, in the exact terms of the success of the arbitral decision in favor of the taxpayer and until the end of the period provided for the spontaneous execution of the decisions of the tax courts, "restore the situation that would exist if the tax act subject to the arbitral decision had not been performed, adopting the acts and operations necessary for that purpose", which is in harmony with the provision of Article 100 of the LGT [applicable by virtue of the provision of subparagraph a) of paragraph 1 of Article 29 of the RJAT] which establishes that "the Tax Administration is obliged, in case of total or partial success of a claim, judicial impugnation or appeal in favor of the taxpayer, to the immediate and full restoration of the legality of the act or situation subject to the dispute, including the payment of compensatory interest, if applicable, from the end of the period of execution of the decision".

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

The judicial impugnation process, although it is essentially a process of annulment of tax acts, admits the condemnation of the Tax Administration in the payment of compensatory interest, as is apparent from Article 43, paragraph 1, of the LGT, in which it is established that "compensatory interest is owed when it is determined, in a claim or judicial impugnation, that there was an error attributable to the services from which results payment of the tax debt in an amount greater than that legally owed" and from Article 61, paragraph 4 of the CPPT (in the wording given by Law No. 55-A/2010, of 31 December, to which corresponds paragraph 2 in the original wording), which provides that "if the decision recognizing the right to compensatory interest is judicial, the payment period is calculated from the beginning of the period of its spontaneous execution".

Thus, paragraph 5 of Article 24 of the RJAT in establishing that "payment of interest of any kind is owed, in accordance with the terms provided in the general tax law and in the Tax Procedure and Process Code" should be understood as allowing the recognition of the right to compensatory interest in the arbitral process.

In the case at hand, it is manifest that, following the declaration of illegality of the assessment acts, there is entitlement to reimbursement of the tax, by virtue of the aforementioned Articles 24, paragraph 1, subparagraph b), of the RJAT and 100 of the LGT, as this is essential to "restore the situation that would exist if the tax act subject to the arbitral decision had not been performed".

As regards compensatory interest, it is still necessary to assess this claim in light of Article 43 of the General Tax Law.

Paragraph 1 of that article provides that "Compensatory interest is owed when it is determined, in a claim or judicial impugnation, that there was an error attributable to the services from which results payment of the tax debt in an amount greater than that legally owed".

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

In the case "sub judice", since the error that gave rise to the assessments subject to the present proceedings is not attributable to the Claimant, the request for condemnation of the Respondent as to compensatory interest cannot fail to be granted.

Wherefore, the Tax and Customs Authority must give execution to the present decision, in accordance with Article 24, paragraph 1, of the RJAT, refunding the amounts paid by the Claimant relating to the annulled assessments, with compensatory interest, at the legal rate.

Compensatory interest is owed from the date of payment until the date of processing of the credit note, in which they are included (Article 61, paragraph 5, of the CPPT).

IV – Decision

Accordingly, the Arbitral Tribunal decides, judging the request for arbitral opinion to be entirely successful:

a) Decree the annulment of the assessments subject to the present proceedings.

b) Condemn the Respondent to refund to the Claimant the amounts paid with compensatory interest at the legal rate, calculated from the date of payment until the date of processing of the credit notes.

Value of the action: € 16,930.00 (sixteen thousand nine hundred and thirty euros) in accordance with the provisions of Article 306, paragraph 2, of the Civil Procedure Code and 97-A, paragraph 1, subparagraph a), of the Tax Procedure and Process Code and 3, paragraph 2, of the Regulation of Costs in Arbitration Proceedings.

Costs borne by the Respondent in the amount of € 1,224.00 (one thousand two hundred and twenty-four euros) in accordance with paragraph 4 of Article 22 of the RJAT.

Let it be notified.

Lisbon, CAAD, 14.03.2016

The Arbitrator

Marcolino Pisão Pedreiro

[1] Also pointing to the individualized consideration of these parts susceptible of independent use, Article 119, paragraph 1 of the CIMI determines that the tax collection document shall contain the "discrimination of the properties, their parts susceptible of independent use, their respective taxable property value".

Also pointing in the same direction, Article 15-O of Decree-Law No. 287/2003, of 20 November, added by Law 60-A/2011 of 30/11, referring to the collection of IMI for the purposes of the safeguard regime, mentions "property or part of urban property subject to the general assessment".

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

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

The circulars no. 40012, of 23.12.1999 and 40.025, of 11.08.2000 (which can be consulted in MUNICIPAL PROPERTY TAX CODE, Commented and annotated, by Martins Alfaro, Áreas Editora, 2004, 589-592 and in the cited work of Silvério Mateus and Corvelo de Freitas, pages 294-295 and 259-261, and the second can still today be consulted at the website http://info.portaldasfinancas.gov.pt/pt/informacao_fiscal/legislacao/instrucoes_administrativas/oficios_circulados_contribuicao_autarquica.htm) explicitly explained the understanding that except in cases of reconstruction, modification or improvement of the property that implies some variation of the taxable value, the transition to the horizontal ownership regime does not give rise to a new assessment.

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

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

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

Frequently Asked Questions

Automatically Created

What is Verba 28.1 of the Portuguese Stamp Tax General Table and how does it apply to property?
Verba 28.1 of the Portuguese Stamp Tax General Table (GTST) is a provision introduced by Law 55-A/2012 that imposes annual stamp tax on urban properties intended for residential use with a taxable property value (VPT) equal to or exceeding €1,000,000. The provision applies to properties valued according to the IMI Code (CIMI) rules. This tax was designed to impose an additional fiscal burden on high-value residential properties. The application requires determining whether the €1 million threshold is met and whether the property qualifies as residential use under CIMI classification standards.
How should the VPT be calculated for buildings with independent units under Stamp Tax rules?
The calculation method for VPT in buildings with independent units under Stamp Tax rules depends on the property's legal structure. For properties in horizontal ownership regime, each autonomous fraction is considered a separate property under CIMI Article 2(4), and each fraction's individual VPT is assessed separately for Stamp Tax purposes. However, for properties held in full ownership with floors or divisions susceptible of independent use (vertical ownership), the Tax Authority's position is that the global aggregate VPT of the entire property should be used, treating it as a single legal-tax entity. While the IMI Code registers each independent division separately with discriminated VPT values per CIMI Article 12, this administrative separation does not automatically translate to separate Stamp Tax assessments under item 28.1 for vertical ownership properties.
Can each independent floor or division of a vertical property be assessed separately for Stamp Tax purposes?
According to the Tax Authority's interpretation, each independent floor or division of a vertical ownership property cannot be assessed separately for Stamp Tax item 28.1 purposes. The Authority distinguishes between properties in full ownership with divisions versus horizontal ownership with autonomous fractions. Under CIMI Article 2(4), only autonomous fractions in horizontal ownership are deemed separate properties. Properties in full ownership, even with multiple independently-usable divisions, constitute a single property for Stamp Tax purposes, with the tax assessed on the aggregate VPT. The claimant contested this interpretation, arguing that CIMI Article 12's requirement to separately register each independent division with its own VPT should extend to Stamp Tax assessment, and that constitutional equality principles mandate treating vertical divisions like horizontal fractions.
What was the outcome of CAAD arbitration process 576/2015-T regarding Stamp Tax on real estate?
The provided excerpt of CAAD arbitration process 576/2015-T does not include the final decision, as the text is incomplete. The case involved a real estate investment fund challenging €16,930 in stamp tax assessments for 2014 on a property with 13 independent divisions. The fund argued for individual assessment of each division based on separate VPT values, while the Tax Authority defended aggregate assessment treating the property as a unified entity. The arbitration tribunal was constituted on November 23, 2015, with arguments presented regarding interpretation of CIMI provisions and item 28.1's application to vertical versus horizontal ownership structures. The outcome would determine whether properties with multiple independent units should be taxed based on total or individual VPT values.
Are real estate investment funds liable for Stamp Tax on properties with multiple independent units valued over €1,000,000?
Yes, real estate investment funds can be liable for Stamp Tax on properties with multiple independent units valued over €1,000,000, depending on how the valuation threshold is applied. In case 576/2015-T, a real estate investment fund was assessed €16,930 in stamp tax for a property containing 13 independent divisions. The Tax Authority applied item 28.1 based on the aggregate VPT of all divisions exceeding €1 million, even though individual divisions fell below this threshold. The fund's liability depends on whether the property is structured in horizontal ownership (autonomous fractions assessed separately) or vertical ownership (full property assessed as single unit). Real estate investment funds holding large properties with multiple independent units must consider this distinction when evaluating potential Stamp Tax exposure under item 28.1 of the General Table.