Process: 584/2016-T

Date: March 2, 2017

Tax Type: Selo

Source: Original CAAD Decision

Summary

CAAD Process 584/2016-T examines the application of Stamp Tax (Imposto de Selo) under Item 28.1 of the General Stamp Tax Table (TGIS) to vertical property comprising multiple independent residential units. The claimant, head of an estate, challenged assessments totaling €10,365.70 for years 2011 and 2012 on a Lisbon property containing nine separately valued units with individual Taxable Patrimonial Values (VPT) ranging from €37,700 to €177,270. The central legal controversy concerns whether the 1% stamp tax rate, applicable to residential properties with VPT equal to or exceeding €1,000,000, should be calculated on the aggregate value of all units (€1,426,460) as determined by the Tax Authority, or separately for each independent unit, none of which individually exceeds the €1,000,000 threshold. The claimant argued that since the property was not constituted under horizontal property regime (condomínio horizontal) but consisted of units with independent valuations under CIMI Article 7(2)(b), and no individual unit exceeded €1,000,000, the stamp duty assessments were illegal. The arbitration proceeded through CAAD with a sole arbitrator appointed by the Deontological Council. Legal grounds for annulment were based on CPA Article 133(2)(i), alleging violation of Item 28 TGIS provisions. The case highlights critical issues regarding vertical property taxation, the interpretation of VPT calculation methodologies for stamp duty purposes, and procedural aspects of challenging tax liquidations through administrative arbitration, including the rights of heirs to contest assessments and secure refunds of garnished amounts with compensatory interest.

Full Decision

ARBITRAL DECISION

REPORT

A - PARTIES

HEAD OF THE ESTATE OF A..., with Tax Identification Number..., hereinafter referred to as Claimant or taxpayer.

TAX AND CUSTOMS AUTHORITY (which succeeded the General Directorate of Taxes, by means of Decree-Law No. 118/2011, of 15 December) hereinafter referred to as Respondent or TA.

The request for constitution of the arbitral tribunal was accepted by the President of CAAD, and the Arbitral Tribunal was regularly constituted on 19-12-2016, to examine and decide the subject matter of the present proceedings, and automatically notified the Tax and Customs Authority on 19-12-2016, as stated in the respective minutes.

The Claimant did not proceed to appoint an arbitrator, therefore, pursuant to the provisions of No. 1 of article 6 and of subparagraph b) of No. 1 of article 11 of Decree-Law No. 10/2011, of 20 January, as amended by article 228 of Law No. 66-B/2012, of 31 December, the Deontological Council designated Paulo Ferreira Alves as arbitrator, the appointment having been accepted in accordance with the legally provided terms.

On 30-11-2016 the parties were duly notified of such designation, and did not manifest any intention to refuse the appointment of the arbitrators, in accordance with article 11 No. 1, subparagraphs a) and b) of the RJAT and Articles 6 and 7 of the Deontological Code.

In accordance with the provisions of subparagraph c) of No. 1 of article 11 of Decree-Law No. 10/2011, of 20 January, as amended by article 228 of Law No. 66-B/2012, of 31 December, the singular arbitral tribunal is regularly constituted on 19-12-2016.

Both parties agree to the waiver of the meeting provided for in article 18 of the RJAT.

The arbitral tribunal is regularly constituted. It is materially competent, in accordance with articles 2, No. 1, subparagraph a), and 30, No. 1, of Decree-Law No. 10/2011, of 20 January.

The parties have legal personality and capacity, are legitimate and are legally represented (articles 4 and 10, No. 2, of the same statute and article 1 of Ordinance No. 112-A/2011, of 22 March).

The proceedings are not affected by defects that would invalidate it.

B – REQUEST

  1. The Claimant seeks the declaration of illegality of the tax assessment acts in respect of Stamp Duty: Nos.:..., ..., ..., ..., ..., ..., ..., ... and ... ..., ..., ..., ..., ..., ..., ..., ... for the year 2014, which fixed a total tax collection and tax payable of €10,365.70 (ten thousand three hundred and sixty-five euros and seventy cents).

C – CAUSE OF ACTION

  1. To support its request for arbitral pronouncement, the Claimant alleged, with a view to the declaration of illegality of the tax assessment acts in respect of Stamp Duty, already described in point 1 of this Decision, in summary, the following:

I. The Claimant requested the constitution of an Arbitral Tribunal and submitted the following request for Arbitral Pronouncement, with a view to the declaration of illegality and consequent annulment of the assessment of Stamp Duty - item 28-1 of the RGIS in the amount of €10,365.70 (total value for the years 2011 and 2012) (Doc. No. 1), which are in tax enforcement proceedings, with payments and garnishments of amounts, whose garnished amounts to the taxpayer have not yet been applied in the tax enforcement proceedings, despite the taxpayer having visited the ... Lisbon Tax Office several times so that the garnished amounts would be applied in the tax enforcement proceedings. To date this has not happened.

II. The annulment of the assessments is sought, item 28.1 of the Stamp Duty Regulation. Assessment No....., ..., ..., ..., ..., ..., ..., ... and ... all assessments are dated 04-04-2014, for the year 2014.

III. As well as the annulment of the assessments, item 28.1 of the Stamp Duty Regulation. Assessment No....., ..., ..., ..., ..., ..., ..., ... and ..., these assessments are dated 07-03-2014, and for the year 2011.

IV. All these assessments of item 28.1 of the Stamp Duty Regulation relate to the property located on ... Street No. ... to ... in Lisbon, registered in the urban property register under No. ..., with the location..., years 2011 and 2012.

V. The Claimant alleges that it is the owner of the urban property located on ... Street No. ... to ... .

VI. The property comprises various units, capable of independent use, of which 9 floors are owned by the Claimant, respectively: Ground Floor - With Taxable Patrimonial Value of €37,700.00; 4th Floor East - With Taxable Patrimonial Value of €172,370.00; 4th Floor West - With Taxable Patrimonial Value of €172,370.00; 3rd Floor East - With Taxable Patrimonial Value of €172,370.00; 3rd Floor West - With Taxable Patrimonial Value of €172,370.00; 2nd Floor West - With Taxable Patrimonial Value of €172,370.00; 2nd Floor East - With Taxable Patrimonial Value of €172,370.00; 1st Floor West - With Taxable Patrimonial Value of €177,270.00; 1st Floor East - With Taxable Patrimonial Value of €177,270.00.

VII. All units/floors capable of independent use have their respective taxable patrimonial values (TPV) determined separately, in accordance with the provisions of article 7 No. 2, subparagraph b) of the CIMI.

VIII. The property, although consisting of floors/units capable of independent use, was not, in 2011 and 2012, constituted under a horizontal property regime.

IX. The property in total ownership, comprising various floors/units capable of independent use, but only nine units are owned by the Claimant, has its total TPV amounting to the value of €1,426,460.00.

X. Being that none of the units or floors with residential designation has a taxable patrimonial value exceeding €1,000,000.00.

XI. With respect to the said 9 units constituting the property of the Claimant in this property (recall the units Ground Floor, 4E, 4W, 3E, 3W, 2W, 2E, 1W and 1E) the Tax Authority assessed a stamp duty, with reference to the years 2011 and 2012, in accordance with articles 6, No. 1, subparagraph f), sub-item i), contained in item 28.1 of the TGIS, as amended by article 4 of Law No. 55-A/2012, of 29 October, at the rate of 1%.

XII. The claimant did not pay the Assessments indicated above.

XIII. Therefore these assessments have been converted into tax enforcement proceedings.

XIV. By the present action, the taxpayer seeks to challenge the assessment act which determined the calculation, which is deemed illegal, for each of the 9 units of the property already referred to, of the amount of stamp duty payable for the entire years 2011 and 2012.

XV. What is being challenged, therefore, by the present action, is the assessment of Stamp Duty for the entire years 2011 and 2012. And it is sought that the assessment of Stamp Duty be annulled, the assessments issued (identified above) should be considered null, under article 133, No. 2, subparagraph i) of the CPA.

XVI. The Claimant concludes by petitioning: a) The declaration of illegality of the tax assessment act of Stamp Duty sub judice, identified above, and its consequent annulment, with all legal consequences, because it violates the rules contained in item No. 28 of the TGIS; b) The condemnation of the TA to refund to the taxpayer the amounts paid and garnished in the tax enforcement proceedings that resulted from the assessments identified above, to which shall be added compensatory interest at the legal rate of 4% from the date of the payments or execution of the garnishment, until the date of actual and full reimbursement; c) The condemnation of the TA to payment of procedural costs and other legal fees that may be due.

D - RESPONDENT'S REPLY

  1. The Respondent, duly notified for such purpose, timely submitted its reply in which, in brief summary, alleged the following:

I. The subjection to stamp duty of item 28.1 of the General Table annexed to the CIS results from the combination of two facts: residential designation and the patrimonial value of the urban property registered in the property register being equal to or greater than €1,000,000.00.

II. As to residential designation, Urban properties may be, among others, residential or service-oriented, in accordance with subparagraphs a) and b) of No. 1 of article 6 of the CIMI.

III. Therefore, the stamp duty assessments contested (2011 and 2012) were issued in accordance with the information contained in the property record of the property, therefore they are valid and do not suffer from any illegality.

IV. As to the patrimonial value of the urban property registered in the register being equal to or greater than €1,000,000.00.

V. At the time the Claimant held full ownership of the urban property under examination, assessed in accordance with the CIMI, as part of the general assessment of urban properties, described as "property in total ownership with floors or units capable of independent use", with taxable patrimonial value (VP) exceeding €1,000,000.00.

VI. In compliance and in accordance with the provisions of article 6, No. 2 of Law No. 55-A/2012, of 29/10, which added item No. 28 to the TGIS, with the amendment made by Law No. 83-C/2013 of 31/12 and whose respective rule of incidence refers to urban properties, assessed in accordance with the CIMI, with VP equal to or greater than €1,000,000.00 and, in accordance with its No. 28.1, residential designation, the TA proceeded to notify the collection documents for payment of the assessments in question.

VII. Article 44, No. 5 of the CIS, as amended by Law No. 55-A/2012, of 29/10 provides that, when an assessment occurs, the tax referred to in item 28 of the TGIS is paid, within the deadlines, terms and conditions defined in article 120 of the CIMI, in three instalments in the months of April, July and November, as provided in No. 1, subparagraph c) of article 120.

VIII. Now, what is at issue here are assessments that result from the direct application of the legal norm, which translates into objective elements, without any subjective or discretionary appreciation.

IX. As to the payment of compensatory interest, the respondent submits that the right to compensatory interest provided in No. 1 of article 43 of the LGT, arising from the judicial annulment of an assessment act, depends on having been demonstrated in the proceedings that this fact is affected by error regarding the factual or legal assumptions attributable to the Tax Administration.

X. The error supporting the right to compensatory interest is not any defect or illegality but that which is materialized in defective appreciation of relevant factuality or in erroneous application of legal rules.

XI. Since, at the date of the facts, the Tax Administration made the application of the law in the terms to which, as an executive body, it is constitutionally bound, one cannot speak of error by the services within the meaning of article 43 of the LGT.

  1. The Respondent concludes by arguing for the legality of the assessment acts in respect of Stamp Duty, and in terms of substance, do not violate any legal or constitutional provision, and should be maintained in the legal order.

E - STATEMENT OF FACTS

  1. Before entering into the examination of these issues, it is necessary to present the factual matter relevant to their understanding and decision, which was done on the basis of documentary evidence, and taking into account the facts alleged.

  2. In respect of relevant facts, this tribunal finds the following facts to be established:

  3. The Claimant is the owner of the urban property, not constituted under a horizontal property regime, located on ... Street No. ... to ... .

  4. The property comprises various units, capable of independent use, of which 9 floors are owned by the Claimant, respectively: Ground Floor - With TPV of €37,700.00; 4th Floor East - With TPV of €172,370.00; 4th Floor West - With TPV of €172,370.00; 3rd Floor East - With TPV of €172,370.00; 3rd Floor West - With TPV of €172,370.00; 2nd Floor West - With TPV of €172,370.00; 2nd Floor East - With TPV of €172,370.00; 1st Floor West - With TPV of €177,270.00; 1st Floor East - With TPV of €177,270.00.

  5. All units/floors capable of independent use have their respective taxable patrimonial values (TPV) determined separately, in accordance with the provisions of article 7 No. 2, subparagraph b) of the CIMI.

  6. The said urban property constitutes a property in total ownership with floors capable of independent use, with 9 floors or units, with total patrimonial value of €1,426,460.00.

  7. The assessments contain the following mention: Patrimonial Value of the property - Total subject to tax €1,426,460.00.

  8. The patrimonial value of the property is €1,426,460.00, and the value of the units of independent use with residential designation of the property is €1,426,460.00.

  9. The patrimonial value, value of the units of independent use with residential designation of the property at the date of the assessments is €1,426,460.00, being that none of the units or floors with residential designation and with independent use has a taxable patrimonial value exceeding €1,000,000.00.

  10. The TA assessed the stamp duty provided for in items No. 28 and 28.1 of the General Table of Stamp Duty (TGIS), as amended by article 4 of Law No. 55-A/2012, of 29/10, at the rates of 0.5% and 1%, considering as "TPV – total subject to tax", from the stamp duty assessments resulted a collection and tax payable with a total amount of €10,365.70.

  11. The Claimant did not proceed to pay the tax in the amount of €10,365.70, corresponding to the collection and tax enforcement proceedings were instituted against it.

F - UNPROVEN FACTS

  1. Of the facts of interest for the decision of the case, contained in the impugnation, all the objects of concrete analysis, those that are not contained in the factuality described above were not proven.

G - ISSUES TO BE DECIDED

  1. Given the positions of the parties assumed in the arguments presented, the central issues to be decided are the following, which must therefore be examined and decided:

I. As alleged by the Claimant:

i. The declaration of illegality of the tax assessment acts in respect of Stamp Duty, Nos., which fixed a total tax payable of €10,365.70 (ten thousand three hundred and sixty-five euros and seventy cents).

II. As alleged by the Respondent

i. By way of exception, of the manifest expiration of the right of action and consequent untimeliness of the request.

H - EXCEPTION, MANIFEST EXPIRATION OF THE RIGHT OF ACTION AND CONSEQUENT UNTIMELINESS OF THE REQUEST

  1. The Respondent alleges that the request for constitution of the Arbitral Tribunal is manifestly untimely.

I. The deadline for payment of the collection notes, underlying the assessment of stamp duty-item 28, for the year 2011, occurred on 2014-04-30.

II. The deadline for payment of the collection notes, underlying the assessment of stamp duty-item 28, for the year 2012, occurred on 2014-06-30.

III. Thus, whether in relation to the 2011 assessment or the 2012 assessment, the deadline for requesting constitution of the Arbitral Tribunal, provided for in article 10, No. 1, subparagraph a), of Decree-Law No. 10/2011, of 20 January, had long since expired, and this was only presented on 2016-09-28.

IV. However, the Arbitral Tribunal cannot fail to examine the verification of all the requirements and all the prerequisites of article 78 of the General Tax Law (LGT), under pain of – which would be absolutely inadmissible -, the Claimant being able to perhaps have used the request for official review of the 2011 and 2012 assessments with the sole purpose of, after all the administrative and contentious deadlines had expired, to succeed procedurally and artificially in opening a new deadline for arbitral appeal.

V. Note that the deadline for payment of the tax was 2014-04-30 (for the year 2011) and 2014-06-30 (for the year 2012) and that the request for official review of the assessment was submitted on 2016-03-01, that is, after all the deadlines for administrative claim, hierarchical appeal and judicial challenge had expired.

VI. And the fact is that, as we will demonstrate, the request for official review of the assessment is not the appropriate means to obtain the review of the assessments, in the terms and deadline in which it was formulated, and even less can it have the effect of opening a new and final deadline for requesting constitution of the arbitral tribunal.

VII. That is, the request for official review cannot, in any circumstance, and provided that, as is the case, its prerequisites are not met, constitute a means with the potential to open a new deadline for submission of the request for constitution of the Arbitral Tribunal.

VIII. This means that the timeliness of the present request for constitution of the Arbitral Tribunal would always depend on a verification of the requirements and prerequisites for applicability of article 78 of the LGT, to which this Tribunal must submit the present request, so as to dispel the legitimate doubt that the same request was merely a means attempted to open a new deadline for submission of the present request. Now,

IX. As in its petition the Claimant never refers to the possibility that there may have been in the tax assessment act the commission of any gross or notorious injustice, the possibility of the review of the tax act being able to possibly shelter itself in the situation provided for in Nos. 4 and 5 of the rule is from the outset excluded.

X. Similarly, in obedience to the same legal provision, we are not faced with the application of the provisions of No. 2 of article 78 of the LGT, given that the present assessments do not relate to self-assessments, situations exclusive to which the rule would be applicable.

XI. Thus we conclude that the request for official review could only have been submitted on the basis of No. 1 of article 78 of the LGT.

XII. Having reached here, we have only two possibilities: either the review of the tax act by initiative of the taxpayer (first part of the rule), or by initiative of the Tax Authority (TA) (second part of the article).

XIII. But we immediately conclude, in the present situation, that review of the tax act by initiative of the TA is impossible, since, being required to submit the respective request within the deadline for administrative claim, the fact is that the Claimant did not submit it within that deadline.

XIV. It would therefore always be useless, and for this reason not admitted by law (article 57, No. 1, of the LGT) the examination of the request for review by initiative of the Claimant (article 78, No. 1, of the LGT), given the untimeliness thereof and its lack of foundation due to the absence of any error attributable to the services.

XV. We are faced with a peremptory deadline which, when exceeded, extinguishes the right to perform the act. This is the case here.

  1. The Claimant was granted a deadline to present a response to the exception, which it did in the following terms:

I. First and foremost, it is important to bear in mind that, as appears from the case file, the Claimant requested the TA the declaration of illegality and consequent annulment of the assessment of Stamp Duty - item 28-1 of the RGIS for the years 2011 and 2012, whose deadline for payment of the collection notes, underlying the assessment of Stamp Duty for the year 2011, occurred on 2014-04-30 and for 2012 occurred on 2014-06-30.

II. It did so on 01/03/2016, under article 78 of the General Tax Law, through a request for official review, considering that there had been gross or notorious injustice, and an error attributable to the Services of the TA.

III. The TA took no position, the Claimant concluding that there was a tacit dismissal, in accordance with article 57 Nos. 1 and 5 of the LGT.

IV. In accordance with article 98, No. 1 and 2 subparagraph d) of the LGT, the Claimant has the right to challenge all acts injurious to its rights, and may be injurious the tacit dismissal of a request for

V. The challenge is based on the illegality of the tax assessment and the request for constitution of the arbitral tribunal was submitted within ninety days from the formation of the presumption of tacit dismissal, article 102 No. 1 d) of the CPPT and article 10 of the RJAT - Decree-Law 10/2011 of 20 January.

VI. No doubts arise as to the material competence of the Arbitral Tribunal to know the merit of the present request, from the light of the very jurisprudence established within the scope of CAAD.

VII. Effectively the examination of issues pertaining to the request for official review of tax acts and the dismissal of such request, provided for in article 78 of the LGT, is included in the competencies assigned to the arbitral tribunals operating in CAAD - article 2 of the RJAT, provided that through the act of dismissal the TA carries out an examination of the merits, as happens in this case.

VIII. In light of the foregoing, since in the present situation the review act has as its object an assessment act, it must be concluded that the former (review act) inevitably falls within the scope of administrative declaration, precisely that which the TA alludes to in its reply.

IX. However, and even if what has been said so far would already allow us to inform the conclusions of the TA, one should not fail to inquire what the law intends to obtain through the final part of subparagraph a) of article 2 of Ordinance No. 112-A/2011, of 22 March, through which it makes the examination of claims relating to declaration of illegality of self-assessment acts dependent on prior recourse to the administrative avenue, alluding to articles 131 to 133 of the CPPT.

X. But the assessment of the tax act under examination is not dependent on prior recourse to the administrative avenue.

XI. The scope of this interpretation is to restrict its binding effect to cases in which this recourse to the administrative avenue was used, as there is no reason to restrict it in cases in which the request for review is made in accordance with articles 78 of the LGT.

XII. The absence of administrative declaration is not an obstacle to the examination by the arbitral tribunals operating in CAAD of the claim for declaration of illegality of acts that is a corollary of the illegality of acts of dismissal of a request for official review.

XIII. Thus, it should be concluded that to uphold the TA's understanding would be equivalent to the prevalence of the formal over the substantive, which is only permitted by a positivistic reading of the law used by it, something that is not to be tolerated.

  1. In this respect, it is necessary to decide on the competence of the arbitral tribunals operating in CAAD. On a first level, the competence of the arbitral tribunals operating in CAAD is limited to the matters indicated in article 2, No. 1, of Decree-Law No. 10/2011, of 20 January (RJAT), whose No. 1, subparagraph a) establishes that the arbitral tribunals are competent to examine the claim for declaration of illegality of assessment acts and self-assessment acts of taxes.

  2. On a second level, the competence of the arbitral tribunals operating in CAAD is also limited by the terms to which the Tax Administration bound itself to that jurisdiction, concretized in Ordinance No. 112-A/2011, of 22 March, as article 4 of the RJAT establishes that "the binding of the tax administration to the jurisdiction of the tribunals constituted in accordance with the present law depends on an ordinance of the Government members responsible for the areas of finance and justice, which establishes, in particular, the type and maximum value of the disputes covered", in which the binding to the jurisdiction of the arbitral services is requested - DGCI and DGAIEC - entities merged in the current Tax and Customs Authority, effective 1 January 2012.

  3. In view of this second limitation of the competence of the arbitral tribunals operating in CAAD, the resolution of the question of competence depends essentially on the terms of this binding, since, even if one is faced with a situation that can be framed in that article 2 of the RJAT, if it is not covered by the binding, the possibility of the dispute being jurisdictionally decided by this Arbitral Tribunal is precluded.

  4. In subparagraph a) of article 2 of this Ordinance No. 112-A/2011, expressly excluded from the scope of the Tax Administration's binding to the jurisdiction of the arbitral tribunals operating in CAAD are "claims relating to the declaration of illegality of self-assessment acts, withholding at source and payment on account that have not been preceded by recourse to the administrative avenue in accordance with articles 131 to 133 of the Code of Procedure and Tax Process".

  5. The express reference to the preceding "recourse to the administrative avenue in accordance with articles 131 to 133 of the Code of Procedure and Tax Process", should be interpreted as referring to cases in which such recourse is mandatory, through the administrative claim, which is the administrative means indicated in those articles 131 to 133 of the CPPT, to whose terms it refers. In fact, from the outset, it would not be understood that, since administrative challenge was not necessary "when its foundation is exclusively a matter of law and the self-assessment has been made in accordance with generic guidelines issued by the tax administration" (article 131, No. 3, of the CPPT, applicable to assessment cases), the arbitral jurisdiction would be excluded because this administrative challenge, which is understood to be unnecessary, was not made.

  6. It is excluded from arbitral jurisdiction, as it is not covered by article 2, No. 1 of the RJAT, the examination of acts of dismissal of requests for official review that do not involve the examination of the legality of assessment acts - See arbitral decisions issued, among others, in cases No. 73/2012-TCAAD and 210/2013-TCAAD.

  7. In fact there was legislative concern to exclude from the competencies of the arbitral tribunals operating in CAAD the examination of the legality of administrative acts that do not involve the examination of the legality of assessment acts, as follows from, at the outset, the generic directive of creation of an alternative means to the process of judicial challenge and to the action for recognition of a right or legitimate interest – See subparagraph a) of No. 4 of article 124 of Law No. 3-B/2010, of 28 April, in which are indicated among the possible objects of the tax arbitral process "administrative acts that involve the examination of the legality of assessment acts", specification that can only be justified by a legislative intent to exclude from the possible objects of the arbitral process the examination of the legality of acts that do not involve the examination of the legality of assessment acts.

  8. Questions of determination of the competence of the tribunals are of priority and ex officio examination and determine the absolute incompetence of the tribunal ratione materiae and hierarchiae, in accordance with article 13 of the Code of Procedure of the Administrative Court and article 578 of the Code of Civil Procedure by subsidiary application, provided for in article 29 of the RJAT.

  9. It constitutes a dilatory exception the incompetence, whether absolute or relative, of the Arbitral Tribunal as to the material capacity to examine the acts subject to the arbitral claim (article 577 of the CPC and article 2 of the RJAT).

  10. The question is, in this case and as is being seen, to determine whether it is included in the competencies of the arbitral tribunals operating in CAAD the declaration of illegality of assessment acts when this illegality was not examined by the act that dismissed the request for official review.

  11. Effectively the examination of issues pertaining to the request for official review of tax acts and the dismissal of such request, provided for in article 78 of the LGT, is included in the competencies assigned to the arbitral tribunals operating in CAAD - article 2 of the RJAT.

  12. The act of dismissal of a request for official review of the tax act constitutes an administrative act in the face of the definition provided by article 120 of the Code of Administrative Procedure [subsidiarily applicable in tax matters, by force of the provision in article 2, subparagraph d), of the LGT, 2, subparagraph d), of the CPPT, and 29, No. 1, subparagraph d), of the RJAT], as it constitutes a decision of an organ of the Administration that, under public law norms, was intended to produce legal effects in an individual and concrete situation.

  13. On the other hand, it is also unquestionable that it is an act in tax matters since the application of rules of tax law is made in it. Thus, that act of dismissal of the request for official review constitutes an "administrative act in tax matters".

  14. From subparagraphs d) and p) of No. 1 and No. 2 of article 97 of the CPPT, is inferred the rule that the challenge of administrative acts in tax matters can be made, in the judicial tax process, through judicial challenge or special administrative action depending on whether these acts involve or do not involve the examination of the legality of tax administrative acts of assessment – being that in the concept of "assessment", in the broad sense, are encompassed all acts that are reduced to the application of a rate to a certain taxable matter and, therefore, also acts of withholding at source, of self-assessment and of payment on account.

  15. In face of this criterion of distribution of the fields of application of the process of judicial challenge and special administrative action, acts issued in procedures for official review of self-assessment acts may only be challenged through the process of judicial challenge when they involve the examination of the legality of these same assessment acts. Otherwise, the special administrative action shall apply.

  16. For this reason, the solution of the question of the competence of this Arbitral Tribunal by reference to the content of the act of dismissal of the request for official review depends on the analysis of the act of dismissal of the request for official review.

  17. Now, in the concrete case, the act of dismissal of the request for official review is, originally, a silent act, in so far as it was only by the effect of the passage of time that the existence of a tacit dismissal was fictionally created.

  18. Subsequently and already pending this arbitral process, an express act is issued dismissing the request submitted on the grounds of untimeliness.

  19. That is: even if one could presume a substantive examination denying the request for annulment on illegality grounds, such presumption was removed or negated by the express pronouncement as it was made.

  20. For this reason the request for arbitral pronouncement formulated is outside the scope of material competence of CAAD established in the RJAT and in the Ordinance (No. 112-A/2011, of 22-3) of binding to arbitration of the Tax and Customs Authority (TA).

  21. Effectively, this request could only be decided within the scope of a special administrative action and not within the scope of the present process.

  22. For this reason it must be considered that the present tribunal is incompetent to decide in the terms petitioned by the Claimant.

  23. In fact and being more precise:

  24. The scope of tax arbitral jurisdiction results, on a first level, from the provision of article 2, No. 1 of the RJAT, which enumerates the criteria for determining the material competence of the arbitral tribunals in the following terms:

"The competence of the arbitral tribunals comprises the examination of the following claims:

a) The declaration of illegality of acts of assessment of taxes, of self-assessment, of withholding at source and of payment on account;

b) The declaration of illegality of acts of determination of the taxable matter when it does not give rise to the assessment of any tax, of acts of determination of the taxable base and of acts of determination of patrimonial values".

  1. Now in face of this provision, it should be understood that the competence of the arbitral tribunals "is restricted to the activity connected with acts of assessment of taxes, remaining outside its competence the examination of the legality of administrative acts of total or partial dismissal or of revocation of exemptions or other tax benefits, when dependent on recognition by the Tax Administration, as well as of other administrative acts relating to tax questions that do not involve examination of the assessment act, to which refers subparagraph p) of No. 1 of article 97 of the CPPT" (Jorge Lopes de Sousa, Commentary on the Legal Framework of Tax Arbitration in Guide to Tax Arbitration, Almedina, 2013, p. 105).

  2. The examination of the competence of the arbitral tribunal involves a judgment on the suitability to the case sub judice of the procedural means of special administrative action or of the process of judicial challenge, in attention to the provision of article 97 of the CPPT, which proceeds to the definition of their respective fields of application distinguishing "the challenge of administrative acts in tax matters that involve the examination of the legality of the assessment act" (subparagraph d) of No. 1) and the "contentious appeal of the total or partial dismissal or of the revocation of exemptions or other tax benefits, when dependent on recognition by the tax administration, as well as of other administrative acts relating to tax questions that do not involve examination of the legality of the assessment act" (subparagraph p) of No. 1), being that, in accordance with No. 2 of article 97, the "contentious appeal of administrative acts in tax matters, which do not involve the examination of the legality of the assessment act, of the authorship of the tax administration, comprising the central government, the regional governments and their members, even when practiced by delegation, is regulated by the norms on process in the administrative courts".

  3. To materialize such distinction between the field of application of these procedural means, which, by force of subparagraph a) of No. 1 of article 2 of the RJAT, is relevant in the definition of the competence of the tax arbitral tribunals, it constitutes settled jurisprudential guidance that "the use of the process of judicial challenge or of contentious appeal (currently special administrative action, by force of the provision of article 191 of the CPTA) depends on the content of the impugned act: if it involves the examination of the legality of an assessment act, the process of judicial challenge shall apply and if it does not involve an examination of that type, contentious appeal/special administrative action shall apply" (see the decision of the STA of 25.6.2009, case No. 0194/09).

  4. Thus, bearing in mind these basic principles, to ascertain the competence of the arbitral tribunal it is necessary to ascertain the content of the impugned act, in order to verify whether it involved the examination of an assessment act.

  5. For this purpose, as follows from the expression "examination" used in subparagraph d) of No. 1 of article 97 of the CPPT, it is sufficient that in the act in question the "legality of the assessment act" has been assessed or examined, even if that examination is not the basis of the administrative decision (See in this sense the arbitral decision of 06/12/2013, issued in case No. 117/2013-T).

  6. From the foregoing results the obvious conclusion that, whether in the case of tacit dismissal or in the case of express dismissal, the Tax Administration did not examine the legality of the assessment.

  7. As a final note, it is noted that certain jurisprudential understanding is not unknown to the effect that tacit dismissal is equivalent to a substantive pronouncement [see for example the Decisions of the STA issued in cases Nos. 306/09, of 8-7 and 1950/13, of 2-7].

  8. The understanding that what is at issue, mediately, in the case of tacit dismissal of claim, hierarchical appeal and/or official review, is the legality of the tax act will be admissible, in general theory, if concretely there is no untimeliness, for example, in the submission of the respective requests (claim, appeal or review).

  9. Which is manifestly not the case.

  10. That is: the act that is at issue and which constitutes the immediate object of the present process is, consequently and indubitably, the decision to dismiss the request for official review submitted.

  11. As such, it is considered, following and with the grounds of previous decisions issued by the Arbitral Tribunal, that it does not fall within the scope of arbitral competencies to examine the legality or illegality of decisions of dismissal, tacit or express, of requests made under article 78 of the LGT.

  12. Thus and in conclusion: this Arbitral Tribunal is materially incompetent to examine and decide the request that is the subject of the dispute sub judicio, in accordance with articles 2, No. 1, subparagraph a) and 4, No. 1, both of the RJAT and articles 1 and 2, subparagraph a), of Ordinance No. 112-A/2011, which constitutes a dilatory exception precluding examination of the merits of the case, in accordance with the provision of article 576, Nos. 1 and 2 of the CPC ex vi article 2, subparagraph e) of the CPPT and article 29, No. 1, subparagraphs a) and e) of the RJAT, which precludes examination of the request and the dismissal of the instance of the TA, in accordance with articles 576, No. 2 and 577, subparagraph a) of the CPC, ex vi article 29, No. 1, subparagraphs a) and e) of the RJAT.

  13. Which obviously renders prejudicial the examination of the other issues raised in the case file.

J - DECISION

Thus, having regard to all the foregoing, the present Arbitral Tribunal decides:

a) To uphold the exception of material incompetence raised by the Tax and Customs Authority and, in consequence, dismiss the Respondent from the instance;

b) To consider, in consequence, prejudicial the examination of the other exceptions and the issue of merit.

The value of the case is fixed at €10,365.70 (ten thousand three hundred and sixty-five euros and seventy cents), the value of the assessment given the economic value of the case assessed by the value of the stamp duty assessments impugned, and in accordance the costs are fixed, in the respective amount of €918.00 (nine hundred and eighteen euros), at the charge of the Claimant in accordance with article 12, No. 2 of the Legal Framework for Tax Arbitration, article 4 of the RCPAT and Table I annexed to the latter. – No. 10 of article 35, and Nos. 1, 4 and 5 of article 43 of the LGT, articles 5, No. 1, subparagraph a) of the RCPT, 97-A, No. 1, subparagraph a) of the CPPT and 559 of the CPC).

Notify.

Lisbon, 2 March 2017

The Arbitrator

Dr. Paulo Ferreira Alves

[1] To the effect that the appropriate procedural means for knowing the legality of an act of decision in a procedure of official review of an assessment act is special administrative action (which succeeded contentious appeal, in accordance with article 191 of the CPTA) if in that decision the legality of the assessment act was not examined, reference may be made to the decisions of the Supreme Administrative Court of 20-5-2003, case No. 638/03; of 8-10-2003, case No. 870/03; of 15-10-2003, case No. 1021/03; of 24-3-2004, case No. 1588/03, of 6-11-2008, case No. 357/08. Adopting the understanding that the process of judicial challenge is the appropriate procedural means to challenge acts of dismissal of administrative claims that have examined the legality of assessment acts, reference may be made to the decisions of the STA of 15-1-2003, case No. 1460/02; of 19-2-2003, case No. 1461/02; and of 29-2-2012, case No. 441/11.

[2] In this same sense, see the decision of the Arbitral Tribunal, No. 147/2014-T.

[3] See for example, in addition to others cited previously, the Decisions Nos. 236/2013-T and 244/2013-T, in www.caad.org.pt

Frequently Asked Questions

Automatically Created

What is the Stamp Tax (Imposto de Selo) applied under Verba 28 of the TGIS on vertical property in Portugal?
Under Verba 28.1 of the TGIS, Stamp Tax is applied at a 1% rate annually on residential urban properties with a Taxable Patrimonial Value (VPT) equal to or exceeding €1,000,000. For vertical property not constituted under horizontal property regime, the critical issue is whether the VPT threshold applies to each independent unit separately or to the aggregate value of all units within the same property. This case examines whether nine separately valued units totaling €1,426,460, but individually below €1,000,000, should be subject to stamp duty.
Can heirs challenge Stamp Tax liquidation assessments through CAAD arbitration proceedings?
Yes, heirs can challenge Stamp Tax liquidation assessments through CAAD (Centro de Arbitragem Administrativa) arbitration proceedings. As demonstrated in Process 584/2016-T, the head of an estate successfully initiated arbitration to contest stamp duty assessments. The arbitral tribunal is materially competent under Articles 2(1)(a) and 30(1) of Decree-Law 10/2011. Heirs have legal personality, capacity, and standing to dispute tax assessments affecting inherited property, seeking annulment and refund of amounts paid or garnished in tax enforcement proceedings.
How does Portuguese tax law define vertical property (propriedade vertical) for Stamp Tax purposes?
Portuguese tax law defines vertical property (propriedade vertical) as property comprising multiple units capable of independent use with separate Taxable Patrimonial Values determined under CIMI Article 7(2)(b), but not legally constituted under horizontal property regime (condomínio horizontal). Each floor or unit maintains individual valuation for property tax purposes. This differs from horizontal property where units are legally independent. The classification significantly impacts Stamp Tax liability under Verba 28 TGIS, as it determines whether the €1,000,000 threshold applies per unit or to the aggregate property value.
What are the legal grounds for requesting annulment of Stamp Tax liquidation under Verba 28 of the TGIS?
Legal grounds for annulment of Stamp Tax liquidation under Verba 28 TGIS include: violation of the substantive provisions of Item 28 TGIS regarding the €1,000,000 VPT threshold; incorrect calculation methodology when property comprises independently valued units; and procedural illegality under CPA Article 133(2)(i) for violation of legal provisions. Claimants must demonstrate that assessments incorrectly aggregate VPT values or misapply the residential designation requirement. Challenges may seek declaration of illegality, annulment of assessments, refund of amounts paid with compensatory interest at 4% legal rate, and recovery of garnished funds from tax enforcement proceedings.
What is the procedure for constituting a CAAD arbitral tribunal to dispute Stamp Tax assessments in Portugal?
The procedure for constituting a CAAD arbitral tribunal involves: (1) submitting a request for arbitration identifying contested tax acts; (2) acceptance by the CAAD President; (3) appointment of arbitrators - parties may appoint arbitrators or, if declined, the Deontological Council designates them per Decree-Law 10/2011, Article 11(1)(b); (4) notification to parties within legally prescribed timeframes; (5) opportunity to refuse arbitrator appointments under Articles 6-7 of the Deontological Code; (6) formal constitution of the tribunal upon acceptance; (7) notification to the Tax Authority; (8) parties may waive the preliminary meeting under RJAT Article 18. The tribunal is constituted within specific deadlines, ensuring competency, legitimacy, and proper legal representation throughout proceedings.