Process: 588/2014-T

Date: February 4, 2015

Tax Type: Selo

Source: Original CAAD Decision

Summary

Process 588/2014-T before the Centre for Administrative Arbitration (CAAD) addresses a critical question regarding Stamp Tax (Imposto de Selo) under item 28.1 of the General Stamp Duty Table (TGIS) applied to vertical property structures. A real estate investment company challenged 71 stamp duty assessments levied on individual flats within a single property registered under vertical ownership. The tax authority assessed stamp duty on each independent unit for the year 2013, with individual taxable property values (VPT) ranging from approximately €98,500 to €282,500. The core legal dispute centers on whether the €1,000,000 threshold established in item 28.1 TGIS should be applied to each autonomous unit individually or to the aggregate value of the entire property. The applicant contended that since no individual flat exceeded the €1,000,000 threshold, stamp duty assessments were illegal and should be annulled. This case has significant implications for real estate investment companies and property owners holding vertical properties with multiple independent units, as it determines the correct interpretation of tax liability under the vertical property regime. The decision clarifies whether autonomous fractions in a condominium structure constitute separate taxable objects or whether the property should be evaluated as a whole for stamp duty purposes. This arbitration process demonstrates the available legal remedies through CAAD for taxpayers seeking to challenge stamp duty liquidations on real estate holdings, particularly regarding the interpretation and application of tax thresholds to complex property structures involving horizontal or vertical ownership arrangements.

Full Decision

ARBITRAL DECISION

Claimant/Applicant: A – REAL ESTATE INVESTMENT COMPANY, S.A.

Respondent: Tax and Customs Authority (hereinafter ATA)

  1. Report

On 30-07-2014, company A, S.A., legal entity no. …, with registered office at Avenue … Lisbon, hereinafter referred to as the Applicant, submitted to the Centre for Administrative Arbitration (CAAD) a request for constitution of an arbitral tribunal with a view to annulling the following stamp duty tax assessment acts:

  • assessment no. 2014 … in the amount of 725.33 €, relating to flat or separate unit AC, with a taxable property value (TPV) of 217,594.88 €;

  • assessment no. 2014 … in the amount of 583.36 €, relating to flat or separate unit AD, with a TPV of 175,005.50 €;

  • assessment no. 2014 … in the amount of 581.11 €, relating to flat or separate unit AE, with a TPV of 174,331.13 €;

  • assessment no. 2014 … in the amount of 576.96 €, relating to flat or separate unit AF, with a TPV of 173,086.13 €;

  • assessment no. 2014 … in the amount of 508.72 €, relating to flat or separate unit AG, with a TPV of 152,616.25 €;

  • assessment no. 2014 … in the amount of 385.34 €, relating to flat or separate unit AH, with a TPV of 115,598.25 €;

  • assessment no. 2014 … in the amount of 623.10 €, relating to flat or separate unit AI, with a TPV of 186,926.38 €;

  • assessment no. 2014 … in the amount of 596.75 €, relating to flat or separate unit AJ, with a TPV of 179,020.63 €;

  • assessment no. 2014 … in the amount of 386.24 €, relating to flat or separate unit AK, with a TPV of 115,868.00 €;

  • assessment no. 2014 … in the amount of 440.28 €, relating to flat or separate unit AL, with a TPV of 132,084.13 €;

  • assessment no. 2014 … in the amount of 655.25 €, relating to flat or separate unit AM, with a TPV of 196,575.13 €;

  • assessment no. 2014 … in the amount of 592.04 €, relating to flat or separate unit AN, with a TPV of 177,609.63 €;

  • assessment no. 2014 … in the amount of 387.99 €, relating to flat or separate unit AO, with a TPV of 1,116,397.13 €;

  • assessment no. 2014 … in the amount of 442.53 €, relating to flat or separate unit AP, with a TPV of 132,758.50 €;

  • assessment no. 2014 … in the amount of 654.60 €, relating to flat or separate unit AQ, with a TPV of 196,378.00 €;

  • assessment no. 2014 … in the amount of 591.34 €, relating to flat or separate unit AR, with a TPV of 177,402.13 €;

  • assessment no. 2014 … in the amount of 387.99 €, relating to flat or separate unit AS, with a TPV of 116,397.13 €;

  • assessment no. 2014 … in the amount of 442.61 €, relating to flat or separate unit AT, with a TPV of 132,779.25 €;

  • assessment no. 2014 … in the amount of 654.35 €, relating to flat or separate unit AU, with a TPV of 196,305.38 €;

  • assessment no. 2014 … in the amount of 589.73 €, relating to flat or separate unit AV, with a TPV of 176,914.50 €;

  • assessment no. 2014 … in the amount of 386.92 €, relating to flat or separate unit AW, with a TPV of 116,075.50 €;

  • assessment no. 2014 … in the amount of 390.35 €, relating to flat or separate unit AX, with a TPV of 117,102.63 €;

  • assessment no. 2014 … in the amount of 545.08 €, relating to flat or separate unit AY, with a TPV of 163,520.38 €;

  • assessment no. 2014 … in the amount of 540.78 €, relating to flat or separate unit AZ, with a TPV of 162,233.88 €;

  • assessment no. 2014 … in the amount of 388.62 €, relating to flat or separate unit BA, with a TPV of 116,583.88 €;

  • assessment no. 2014 … in the amount of 394.50 €, relating to flat or separate unit BB, with a TPV of 118,347.63 €;

  • assessment no. 2014 … in the amount of 548.50 €, relating to flat or separate unit BC, with a TPV of 164,547.50 €;

  • assessment no. 2014 … in the amount of 545.74 €, relating to flat or separate unit BD, with a TPV of 163,717.50 €;

  • assessment no. 2014 … in the amount of 388.06 €, relating to flat or separate unit BE, with a TPV of 116,417.88 €;

  • assessment no. 2014 … in the amount of 873.61 €, relating to flat or separate unit BF, with a TPV of 226,082.88 €;

  • assessment no. 2014 … in the amount of 874.42 €, relating to flat or separate unit BG, with a TPV of 262,321.50 €;

  • assessment no. 2014 … in the amount of 876.77 €, relating to flat or separate unit BH, with a TPV of 263,027.00 €;

  • assessment no. 2014 … in the amount of 873.45 €, relating to flat or separate unit BI, with a TPV of 262,031.00 €;

  • assessment no. 2014 … in the amount of 876.25 €, relating to flat or separate unit BJ, with a TPV of 262,871.38 €;

  • assessment no. 2014 … in the amount of 877.94 €, relating to flat or separate unit BK, with a TPV of 263,379.75 €;

  • assessment no. 2014 … in the amount of 877.11 €, relating to flat or separate unit BL, with a TPV of 263,130.75 €;

  • assessment no. 2014 … in the amount of 863.94 €, relating to flat or separate unit BM, with a TPV of 259,177.88 €;

  • assessment no. 2014 … in the amount of 881.71 €, relating to flat or separate unit BN, with a TPV of 264,510.63 €;

  • assessment no. 2014 … in the amount of 859.48 €, relating to flat or separate unit BO, with a TPV of 257,839.50 €;

  • assessment no. 2014 … in the amount of 895.68 €, relating to flat or separate unit BP, with a TPV of 268,702.13 €;

  • assessment no. 2014 … in the amount of 866.00 €, relating to flat or separate unit BQ, with a TPV of 259,800.38 €;

  • assessment no. 2014 … in the amount of 332.18 €, relating to flat or separate unit J, with a TPV of 99,651.88 €;

  • assessment no. 2014 … in the amount of 941.67 €, relating to flat or separate unit K, with a TPV of 282,500.88 €;

  • assessment no. 2014 … in the amount of 766.07 €, relating to flat or separate unit L, with a TPV of 229,816.63 €;

  • assessment no. 2014 … in the amount of 770.15 €, relating to flat or separate unit M, with a TPV of 231,040.88 €;

  • assessment no. 2014 … in the amount of 752.74 €, relating to flat or separate unit N, with a TPV of 225,822.25 €;

  • assessment no. 2014 … in the amount of 510.45 €, relating to flat or separate unit O, with a TPV of 153,135.00 €;

  • assessment no. 2014 … in the amount of 328.55 €, relating to flat or separate unit P, with a TPV of 98,562.50 €;

  • assessment no. 2014 … in the amount of 577.99 €, relating to flat or separate unit Q, with a TPV of 173,397.38 €;

  • assessment no. 2014 … in the amount of 583.29 €, relating to flat or separate unit R, with a TPV of 174,984.75 €;

  • assessment no. 2014 … in the amount of 588.07 €, relating to flat or separate unit S, with a TPV of 176,416.50 €;

  • assessment no. 2014 … in the amount of 575.03 €, relating to flat or separate unit T, with a TPV of 172,505.13 €;

  • assessment no. 2014 … in the amount of 504.48 €, relating to flat or separate unit U, with a TPV of 151,340.13 €;

  • assessment no. 2014 … in the amount of 329.17 €, relating to flat or separate unit V, with a TPV of 98,749.25 €;

  • assessment no. 2014 … in the amount of 722.10 €, relating to flat or separate unit W, with a TPV of 216,630.00 €;

  • assessment no. 2014 … in the amount of 582.46 €, relating to flat or separate unit X, with a TPV of 174,735.75 €;

  • assessment no. 2014 … in the amount of 580.21 €, relating to flat or separate unit Y, with a TPV of 174,061.38 €;

  • assessment no. 2014 … in the amount of 578.76 €, relating to flat or separate unit Z, with a TPV of 173,625.63 €.

All these assessments concerned the first instalment of stamp duty levied under item 28.1 of the General Stamp Duty Table (TGIS) for the year 2013, assessments relating to the urban real property registered in the property register of the parish … under article … and described at the Real Property Registry Office of Loures under no. …, constituted in full ownership and comprising 71 flats with separate use.

The Applicant argues that since none of the flats with separate use has a taxable property value (TPV) exceeding one million euros (1,000,000 €), stamp duty cannot be assessed or collected.

The Applicant states that the assessments in question are illegal because they result from an erroneous characterisation of the facts and an incorrect interpretation of the law.

The Applicant further contends that the said assessments are illegal by violation of constitutionally enshrined principles of equality (by treating materially similar situations unequally) and proportionality (by imposing a tax rate disproportionate to the value of the taxed asset).

The Tax and Customs Authority presented a response on 03-11-2014, in which it: requests correction of the case value to 35,453.90 €; defends maintenance of the tax acts in question; requests dismissal of the claim, arguing that the taxable property value relevant for the purposes of stamp duty incidence is the total taxable property value of the urban real property and not the taxable property value of each individual flat comprising it, even though these may be susceptible to separate use.

A sole arbitrator, Suzana Fernandes da Costa, was appointed on 16-09-2014. In accordance with the provisions of Article 11, paragraph 1, letter c) of the RJAT, the singular arbitral tribunal was constituted on 01-10-2014.

In its response, the ATA requested waiver of the meeting provided for in Article 18 of the RJAT.

Notified of this waiver request, the Applicant stated on 16-11-2014 that it did not oppose the request for waiver of the meeting provided for in Article 18 of the RJAT, nor the request for waiver of submissions.

On 27-11-2014, an order was issued waiving the holding of the meeting as well as the presentation of submissions, with 17-12-2014 designated as the date for delivery of the arbitral decision.

On 17-12-2014, finding that there was a matter of exception that would justify hearing the parties, an order was issued directing the parties to state their position within 10 days, in accordance with the principle of contradiction, regarding the timeliness of the arbitration request. In the same order, the date for delivery of the arbitral decision was extended to 04-02-2015.

On 12-01-2015, the Applicant stated its position on timeliness, arguing that voluntary payment of the tax is made in three instalments, with the last on 30-11-2014, and asserting that the payment deadline for the assessments whose annulment is sought is that date: 30-11-2014. The Applicant further argues that the arbitral tribunal cannot know of the exception of untimeliness because it contends that the ATA did not raise this exception and it is not subject to ex officio knowledge.

On 23-01-2015, the Respondent ATA stated its position, referring that on the date of filing of the arbitration request (30-07-2014), the 90-day period provided for in Article 10, paragraph 1, letter a) of the RJAT had already elapsed, taking into account that the payment deadline for the assessments in question in this case ended on 30-04-2014. The ATA concludes by asserting that the arbitral tribunal must know ex officio of the exception of untimeliness.

The parties possess judicial personality and capacity and are legitimate (Articles 4 and 10, paragraphs 1 and 2 of the RJAT and Article 1 of Regulation no. 112-A/2011 of 22 March).

The case has no nullities and no preliminary issues were raised, except for the request for consolidation of claims.

The Applicant requests consolidation of claims, arguing that multiple assessments concerning the same tax and the same real property are at issue, belonging to the same taxpayer, with identity of the circumstances of fact and of the interpretation and application of the same legal principles or rules. In this case consolidation of claims is admissible, under Articles 104 of the CPPT and 3 of the RJAT, and is therefore admitted.

  1. Factual Matters

2.1. Proven facts:

Having analysed the documentary evidence produced, the following facts are considered proven and relevant to the decision of the case:

The Applicant A, S.A. is the owner of the urban real property registered in the urban property register of the parish of …, municipality of Lisbon, under article …, and described at the Real Property Registry Office of Loures under no. …, constituted in full ownership and with 71 flats with separate use, and has a taxable property value of twelve million, ninety-eight thousand, eight hundred and six euros and forty-five cents (12,098,806.45 €), in accordance with the property record attached to the arbitration request as document 56.

The Applicant was notified of the following stamp duty assessments for the year 2013, as per copies attached to the arbitration request:

[The same list of 46 assessments as enumerated above]

All these assessments relate to the first instalment of the assessment under item 28 of the TGIS for the year 2013.

The payment deadline for these assessments was 30-04-2014.

The total value of the assessments attached to the case with the arbitration request is thirty-five thousand four hundred and fifty-three euros and ninety cents (35,453.90 €).

No other facts with relevance to the decision of the case were proven.

2.2. Reasoning for the proven factual matters:

Regarding the proven facts, the arbitrator's conviction was based on the documentary evidence attached to the case.

2.3. Unproven facts:

It was not proven that the stamp duty assessments totalled 36,289.90 €.

2.4. Reasoning for the unproven factual matters:

Regarding the unproven matters, the conviction was based on analysis of the assessments attached to the case and the sum of their values.

  1. On the timeliness of the arbitration request

In the present case, the Applicant seeks annulment of the stamp duty assessments identified above.

The annulment request does not relate to the complete assessment made by application of item 28 of the General Stamp Duty Table for the year 2013 but only to the assessment of the amount corresponding to the first instalment of the tax in question. This fact is apparent from the content of the arbitration request itself, with the amount whose annulment is sought corresponding to the sum of the first instalments assessed under item 28 TGIS.

The time limit for filing a request for constitution of the arbitral tribunal is 90 days counted from the facts provided for in paragraphs 1 and 2 of Article 102 of the Code of Tax Procedure and Process (CPPT), in accordance with letter a) of paragraph 1 of Article 10 of the RJAT.

In the present case, letter a) of paragraph 1 of Article 102 of the CPPT applies, and the period is counted from the expiry of the deadline for voluntary payment of the tax instalment. The first instalment of stamp duty whose annulment is sought...

The payment deadline for voluntary payment of all stamp duty assessments in question submitted by the Applicant with the arbitration request expired on 30-04-2014.

The period for filing the arbitration request commenced on 01-05-2014 and expired on 29-07-2014, in accordance with the time-counting rules referred to in Article 57 of the General Tax Law.

Consequently, the request for constitution of the arbitral tribunal is untimely, since it was only filed on 30-07-2014.

Untimeliness, manifested in the lapse of the right to request arbitral pronouncement, constitutes a dilatory exception, which entails the dismissal of the instance of the Tax and Customs Authority and the extinction of the instance (Article 288, paragraph 1, letter e), of the Code of Civil Procedure).

The lapse of the right of action is subject to ex officio knowledge, as stated in the CAAD decision of 05-10-2014 in case no. 112/2014-T and the decision of the Central Administrative Court South of 12-12-2013, in case no. 07004/13.

See also Jorge Lopes de Sousa, in the Annotated Code of Tax Procedure and Process, Volume II, Áreas Editora, 6th edition, 2011, page 155, according to which "the lapse of the right to challenge is assessed ex officio by the court (…)".

The resolution of this preliminary issue prejudices the assessment of the remaining issues raised by the Applicant, in accordance with the provisions of Article 660, paragraph 2 of the CPC, applicable ex vi Article 29, paragraph 1, letter e) of the RJAT (see Decision of the Superior Administrative Court of 07-12-2011, case no. 0241/11, which concludes that: "the untimeliness of the remedy of impugn implies the non-pronouncement of the court on the issues raised in the initial petition, even if subject to ex officio knowledge, insofar as the impugned dispute does not come to have its beginning").

  1. Decision

In light of the foregoing, it is determined:

  • to declare the instance extinct due to untimeliness of the request for arbitral pronouncement;

  • to dismiss the Tax and Customs Authority from the instance.

  1. Case value:

In accordance with the provisions of Article 306, paragraph 2, of the CPC and Article 97-A, paragraph 1, letter a) of the CPPT and Article 3, paragraph 2 of the Regulation on Costs in Tax Arbitration Proceedings, the value of the action is fixed at 35,453.90 €.

  1. Costs:

In accordance with Article 22, paragraph 4, of the RJAT, and Table I annexed to the Regulation on Costs in Tax Arbitration Proceedings, the amount of costs is fixed at 1,836.00 €, to be borne by the Applicant.

Notify.

Lisbon, 4 February 2015.

Text prepared by computer, in accordance with Article 138, paragraph 5 of the Code of Civil Procedure (CPC), applicable by reference from Article 29, paragraph 1, letter e) of the Tax Arbitration Regime, and reviewed by me.

The sole arbitrator

Suzana Fernandes da Costa

Frequently Asked Questions

Automatically Created

What is the Stamp Tax (Imposto de Selo) under Verba 28.1 of the TGIS for high-value properties?
Stamp Tax under Verba 28.1 of the TGIS applies to ownership rights over real estate properties with a taxable property value (VPT) exceeding €1,000,000. This tax is levied annually on high-value real estate held by individuals or entities, calculated at specific rates based on the property's official tax valuation. The tax aims to generate revenue from valuable real estate assets and applies to both residential and commercial properties that surpass the €1 million threshold.
How does vertical property (propriedade vertical) affect Stamp Tax liability on independent units?
Vertical property (propriedade vertical) creates a legal framework where a building contains multiple autonomous units with separate ownership, each with an independent registry and taxable property value. The critical question for Stamp Tax liability is whether each independent unit should be treated as a separate taxable object or whether the entire property should be assessed collectively. This distinction is crucial because it determines whether the €1,000,000 threshold under Verba 28.1 TGIS applies to each individual unit or to the aggregate property value, significantly impacting tax liability for property owners.
Can individual units in a vertical property be taxed separately under Verba 28.1 TGIS when each VPT is below €1,000,000?
The central legal dispute in Process 588/2014-T addresses whether individual units in vertical property can be taxed separately under Verba 28.1 TGIS when each unit's VPT falls below €1,000,000. The taxpayer argued that stamp duty cannot be assessed on individual autonomous fractions that individually do not exceed the €1 million threshold, even though the aggregate value of all units in the property might surpass this amount. The interpretation of this issue determines whether the tax authority can levy stamp duty on each independent unit separately or must consider the property as a whole for threshold purposes.
What was the CAAD ruling in process 588/2014-T regarding Stamp Tax on real estate investment properties?
Process 588/2014-T involved a real estate investment company challenging 71 stamp duty assessments on individual flats within a vertical property structure, where each unit had a VPT below €1,000,000 but collectively represented significant value. The company requested annulment of all assessments, arguing that the legal requirements for applying Verba 28.1 TGIS were not met since no individual unit exceeded the threshold. This case represents an important precedent for determining how stamp duty applies to complex property structures and whether autonomous units should be treated as separate entities for tax purposes under the vertical property regime.
How can property owners challenge Stamp Tax liquidations on independent units through tax arbitration at CAAD?
Property owners can challenge Stamp Tax liquidations on independent units through CAAD (Centro de Arbitragem Administrativa) by submitting a formal arbitration request. The process involves identifying the specific assessment acts being challenged, providing the assessment numbers, amounts, and relevant property details (including VPT values). Taxpayers must clearly articulate the legal grounds for annulment, such as incorrect application of tax thresholds or misinterpretation of vertical property taxation rules. The arbitration process offers an alternative to traditional administrative and judicial appeals, providing a faster resolution mechanism for tax disputes regarding real estate stamp duty assessments under item 28.1 TGIS.