Process: 618/2015-T

Date: April 22, 2016

Tax Type: Selo

Source: Original CAAD Decision

Summary

This Portuguese tax arbitration case (Process 618/2015-T) concerns a Stamp Tax assessment of €11,118.00 for 2012 on an urban property valued at €1,111,800.00 under Item 28.1 of the General Table of Stamp Tax (TGIS). The claimant, owner of a plot of urban land for construction in the Union of Parishes, challenged the assessment through CAAD arbitration after the Tax Authority dismissed their official review request on June 26, 2015. Item 28.1, introduced by Law 55-A/2012 of October 29, imposes annual Stamp Tax on ownership of high-value properties exceeding €1,000,000 in patrimonial tax value. The claimant argued the assessment lacked proper reasoning as required by Articles 77 et seq. of the General Tax Law (LGT) and should be annulled under Article 135 of the Administrative Code (CPA). The property's tax value had been determined by general assessment at €555,650.00 on December 27, 2012, but was subsequently recalculated at €1,111,800.00 on February 15, 2013, comprising €534,357.62 for commercial use and €577,436.06 for residential use. The claimant paid both instalments and filed for official review on February 10, 2015, followed by the arbitration request on September 28, 2015. Key procedural issues included the timeliness of the arbitration request and whether the assessment complied with mandatory reasoning requirements. The claimant sought declaration of illegality, restitution of taxes paid, and compensatory interest under Articles 43 and 100 of LGT and Article 61 of CPPT. The singular arbitral tribunal was constituted on December 11, 2015, with final decision scheduled for April 22, 2016.

Full Decision

ARBITRAL DECISION

I – REPORT

A. – PARTIES

A..., hereinafter designated as the Claimant, with taxpayer number..., with address at Avenue... Plot..., no..., ..., ...-... Amora, filed a request on 28 September 2015 for the constitution of an arbitral tribunal in tax matters, under the terms of Article 2, No. 1, paragraph a) of Decree-Law No. 10/2011, of 20 January (Legal Regime for Tax Arbitration - RJAT) and under Articles 1, paragraph a) and 2 of Order No. 112-A/2011, of 22 March, with the purpose of resolving the dispute opposing it to the Tax and Customs Authority, which shall hereafter be designated as the Respondent.

B. – CONSTITUTION OF THE TRIBUNAL

  1. The request for constitution of the Arbitral Tribunal was accepted by the President of CAAD on 30/09/2015 and automatically notified to the Claimant and to the Tax and Customs Authority on 30/09/2015, with the President of the respective Deontological Council having designated the undersigned as arbitrator of the Singular Arbitral Tribunal, under the terms of Article 6, No. 1, of RJAT, an assignment which was accepted in accordance with legally established procedures.

  2. On 23/11/2015, the Parties were notified of such designations, in accordance with the combined provisions of Article 11, No. 1, paragraph b) of RJAT, in Articles 6 and 7 of the Deontological Code, having not expressed any intention to refuse the designation of the arbitrators.

  3. Under these circumstances, the Tribunal was constituted on 11/12/2015, in accordance with the provisions of paragraph c), No. 1, of Article 11 of Decree-Law No. 10/2011, which was notified to the Parties on that date.

C. – CLAIM

The object of the request for constitution of the Arbitral Tribunal is the assessment of Stamp Tax for the year 2012, in the amount of €11,118.00 (eleven thousand, one hundred and eighteen euros), on the basis of item 28.1 of the General Table of Stamp Tax, concerning the urban property registered under the current property matrix number..., of the Union of Parishes of..., ... and..., with the Claimant requesting that the Arbitral Tribunal declare the illegality of such assessment and, consequently, determine the restitution of the tax paid with respect to the 1st and 2nd instalments, plus compensatory interest, in accordance with the terms and for the purposes provided in the combined provisions of Articles 43 and 100 of the General Tax Law (LGT) and also Article 61 of the Tax Code of Procedural and Procedural Code (CPPT).

D. – PROCEDURAL CONDUCT

Following the communication of the date of constitution of the Arbitral Tribunal, on 11/12/2015, the subsequent procedural steps proceeded as follows:

  • On 14/12/2015 – The Respondent was notified to, in accordance with Nos. 1 and 2 of Article 17 of RJAT, present a response within 30 days and, if it so wishes, request additional evidence production and remit to the Arbitral Tribunal a copy of the administrative file;

  • On 26/01/2016 – The Respondent presented a Response to the Request for Arbitral Pronouncement, having inserted the administrative file in the CAAD online "Platform";

  • On 05/02/2016 – The Tribunal granted the Claimant a period of 10 days to pronounce itself, if it so wishes, on the matter of the exception contained in the Response;

  • On 16/02/2016 – The Claimant pronounced itself on the matter of the exception contained in the Response offered by the Respondent;

  • On 20/02/2016 – The Tribunal dispensed with the holding of the meeting provided for in Article 18 of RJAT, as the exception had already been subject to contradictory proceedings, and fixed a period of 10 days for the Claimant to produce written arguments, with the Respondent able to produce them in succession relative to those produced by the taxpayer from the date of notification of the Claimant's arguments, or from the failure to present them, and set 22 April 2016 as the date for the pronouncement of the final decision.

  • On 15/03/2016 – The Claimant presented written arguments.

  • The Respondent did not present written arguments.

  • On 22/04/2016 – The Tribunal pronounced the arbitral decision.

E. – CLAIM OF THE CLAIMANT AND ITS GROUNDS

To support the Request for Arbitral Pronouncement, the Claimant alleged, in summary, the following:

— The object of the request for constitution of an Arbitral Tribunal is the assessment of Stamp Tax for the year 2012, in the amount of €11,118.00 (eleven thousand, one hundred and eighteen euros), on the basis of item 28.1 of the General Table of Stamp Tax, concerning the urban property registered under the (current) property matrix number..., of the Union of Parishes..., ... and..., municipality of ..., district of Setúbal.

— The request for constitution of an arbitral tribunal was filed following the order issued on 26 June 2015, by the Head of the Financial Services Office of..., through which he dismissed the request for official review submitted by the Claimant.

— The Claimant is the owner and legitimate possessor of the urban property identified above.

— It is a plot of urban land for construction.

— In 2012, the land had, according to the construction viability project provided by the Municipal Council of..., approval for different uses.

— The construction viability project provided, in 2012, for the use of the land for commerce and housing.

— On 27 December 2012, the TPC (Patrimonial Tax Value) attributed by the Tax Authority to that property was, by virtue of general assessment, €555,650.00 (five hundred and fifty thousand, six hundred and fifty euros).

— The property in question currently has a patrimonial tax value of €1,111,800.00 (one million, one hundred and eleven thousand and eight hundred euros), of which:

a) €534,357.62 (five hundred and thirty-four thousand, three hundred and fifty-seven euros and sixty-two cents), calculated by reference to commerce and

b) €577,436.06 (five hundred and seventy-seven thousand, four hundred and thirty-six euros and six cents), calculated by reference to housing.

— The patrimonial tax value (TPC) identified above was determined by the Respondent on 15 February 2013.

— The Claimant was notified by the Respondent to make payment of €11,118.00 (eleven thousand, one hundred and eighteen euros), as Stamp Tax for the year 2012, determined in the assessment proceedings.

— The Claimant made payment of both the 1st instalment and the 2nd instalment, in the amounts indicated by the Respondent and within the periods granted to it for that purpose.

— On 10 February 2015, the Claimant filed a request for official review of the said assessment.

— Following which, on 26 June 2015, an order dismissing the said request was issued by the Head of the Financial Services Office of....

— On 17 August 2015, by the Councillor for the Department, in the exercise of authority delegated by the President of the Municipal Council of..., the architectural project was approved, which provides for the construction of a service building on the plot of land in question.

— In the Claimant's view, the assessment in question is not properly reasoned, in accordance with the provisions of Articles 77 and et seq. of the General Tax Law (LGT), and should, in its understanding, be annulled in accordance with Article 135 of the Administrative Code (CPA), applicable by reference of paragraph d), Article 2 of the Tax Procedural Code (CPPT).

— The Respondent did not invoke the facts which, according to the position assumed by it, justified the taxation implicit therein.

— The said assessment makes no reference to any opinion or information containing the factual and legal reasoning that led to its issuance.

— Although the assessment act notified is silent as to its reasoning, apparently such taxation occurred due to the application of item 28.1 of the General Table of Stamp Tax (TGIS).

— On the other hand, item 28.1 of TGIS was introduced by Article 4 of Law No. 55-A/2012, of 29 October, with the following wording:

"28 - Ownership, usufruct or right of superficies of urban properties whose patrimonial tax value appearing in the register, in accordance with the Real Estate Tax Code (CIMI), is equal to or greater than €1,000,000 - on the patrimonial tax value used for the purposes of IMI:

28.1 - Per property with housing use - 1%"

— In the Claimant's view, for the year 2012, the legislator did not determine the incidence of land for construction, but only urban properties, given that only these can have a housing use, since land for construction cannot have such use.

— Because there is only the legal expectation that such housing reality will be (in the future) built thereon.

— And only once completed could there be potential or actual use, or specific allocation to the housing purpose.

— Only with the amendment made by Law No. 83-C/2013, of 31 December, did item 28.1 come to include also land for construction, with the distinction between properties and land for construction resulting from the provisions of Article 6 of the Real Estate Tax Code (CIMI).

— Such a rule by which the legislator provided for the future, in view of the prohibition of retroactivity in tax law.

— In light of this amendment to the objective scope of urban properties - now including land for construction – for the purposes of Stamp Tax (IS), the Claimant considers that in 2012, the year of the tax to which the present assessment refers, there is no incidence of such properties.

— Therefore, the Claimant concludes that the tax event did not occur, and the assessment is illegal.

— The Claimant further added that the provision, with the wording in force in the year 2012, not only refers to properties, but requires that they have the aforementioned housing use.

— Which, in the Claimant's understanding, does not occur, as there is no use for housing, but at most, intended use for housing.

— The tax legislator reserves the term "intended use" for an abstract susceptibility or potentiality, and the term "use" for a concrete allocation or actual functional utilization.

— Therefore, the housing use required by the scope provision could never have had as its object the land for construction, as there is in it, at most, an abstract potentiality of coming to have that purpose or specific use in the future.

— Moreover, by force of Article 6, No. 1, paragraph a), of Law No. 55-A/2012, the tax event is dated 31.10.2012.

— On the date of the tax event, the property in question did not yet have a patrimonial tax value equal to or greater than €1,000,000.00 (one million euros), therefore, also by this means, the conditions for taxation are not met.

— As such patrimonial value was only determined on 15 February 2013, through assessment sheet no..., following Real Estate Tax Declaration No. ... filed on 30 November 2012.

— Thus, in the Claimant's understanding, on the date of the tax event - 30 October 2012 - the mentioned urban property did not have a patrimonial tax value equal to or greater than the threshold required by the legislator in the scope provision, and such assessment, carried out in February 2013, cannot have retroactive effects.

— And even if such assessment were considered, the patrimonial value of the property amounts to €1,111,800 only if the two uses are added together: commerce and housing.

— To the portion possibly allocated to housing there corresponds a value of €577,436.06, not meeting what is required by the scope provision, as it falls short of €1,000,000.00 (one million euros).

— On the other hand, and even if this were not the case, the assessment contains an error in the quantification of the tax obligation, as the transitional regime for the year 2012 was not applied, with the corresponding rate, but instead the future rate of 1% was applied, in accordance with Article 6, No. 1, paragraph f), items i) and ii), of Law No. 55-A/2012).

— Therefore, also by this means, the assessment in question appears, in its view, to be illegal.

— In the Claimant's understanding, there was an error attributable to the services, which resulted in the payment of an alleged tax debt that, in fact, did not exist.

— Which places the State under the obligation to pay compensatory interest, in accordance with the terms and for the purposes provided in Article 43 of the General Tax Law (LGT).

— Therefore, the Claimant should be recognized as having the right to compensatory interest, in accordance with the terms and for the purposes provided in Article 43 of the LGT.

— Compensatory interest covers the entire period from the incorrect payment until the issuance of the credit note.

F. – RESPONSE OF THE RESPONDENT AND ITS GROUNDS

The Respondent, duly notified for that purpose, timely presented its Response, in which it alleged, in summary, with respect to the matter in question, the following:

I – BY EXCEPTION

EXPIRATION OF THE RIGHT TO ACTION

— The Claimant petitions only that the tribunal annul the assessment act in question.

— The legally defined period for challenging this tax act of assessment has been exceeded, in arbitral proceedings.

— Article 10 of RJAT establishes, regarding assessment/self-assessment acts, that the period for filing a request for arbitral pronouncement is 90 (ninety) days, referring, as to the moment of the beginning of counting, to what is provided in Nos. 1 and 2 of Article 102, Nos. 1 and 2 of the Tax Procedural Code (CPPT).

— The period of 90 (ninety) days has as its starting point the day following the end of the period for voluntary payment of the tax obligation – cf. paragraph a) of No. 1 of Article 102, No. 1 of CPPT.

— According to No. 2 of Article 85 of CPPT, the deadline for payment of the tax in question herein occurred on 30-04-2014.

— The request for constitution of the arbitral tribunal was filed on 28-09-2015.

— Therefore, the request filed is untimely and the tribunal cannot take cognizance of it.

— Having exceeded the period for direct challenge (i.e., of the primary act), the timeliness of the request could only be based on the existence of some form of gracious challenge of the assessment act where a decision had been pronounced denying/dismissing, wholly or partially, the claims formulated therein by the tax subject (which would constitute a second-level act).

— The Claimant challenged the assessment tax act administratively.

— The Respondent dismissed/denied the review of the act in the manner requested.

— Notwithstanding having alluded to and identified these circumstances, the Claimant did not formulate/concretize to the Tribunal any request aimed at annulling what was decided in that proceeding.

— The Tribunal's powers of cognition are limited by the claim and cannot exceed it, leaving the Tribunal prevented from examining and ruling with respect to the claim filed for annulment of the assessment act in question, in accordance with the provisions of Articles 608, No. 2 and 609, No. 1 of the Code of Civil Procedure.

— Consequently, the Respondent understands that the claim filed (leading to the declaration of illegality of the act and, consequently, its annulment) should be declared unfounded, as untimely and, consequently, the Respondent be absolved of the instance – cf. paragraph e), No. 1, Article 278 of the Code of Civil Procedure in force, applicable ex vi paragraph e) No. 1 of Article 29, No. 1 of Decree-Law No. 10/2011, of 20 January.

Subsidiarily,

REGARDING THE (ALLEGED) LACK OF REASONING

— Reasoning must be express, through a concise exposition of the factual and legal grounds of the decision, and may consist of a mere declaration of agreement with the grounds of prior opinions, information or proposals, which would in this case constitute an integral part of the respective act, with the lack of reasoning being equivalent to the adoption of grounds which, due to obscurity, contradiction or insufficiency, do not specifically clarify the motivation of the act.

— The act is reasoned when, by the motivation adduced, it is apt to reveal to a normal recipient the factual and legal reasons that determine the decision, enabling him to react effectively through legal means against its unlawfulness.

— The Claimant understood perfectly the meaning and scope of the assessments, as results from the very juridical-argumentative exercise he made in the request for arbitral pronouncement.

— Therefore, the Respondent concludes that there is no formal defect of lack of reasoning.

II BY IMPUGNATION

— The Respondent further considers that the concept of land for construction, for tax purposes, does not integrate the concept of property allocated to housing, under the provisions of No. 1 of Article 1 of the Stamp Tax Code (CIS) and the same item 28.1.

— The property in question has the nature of land for construction, as appears in the property register, where there are no buildings or constructions, and therefore do not possess, nor could possess, a license for use for housing, with the Claimant understanding that, in these terms, the Respondent's understanding would suffer from an error in the factual premises.

— Moreover, the property has a housing use, as appears in the assessment sheet and the Real Estate Tax Declaration (Mod. 1 of IMI).

— The determination of the TPC of urban properties in the Real Estate Tax Code (CIMI) is ascertained within the scope of a proper assessment procedure, whether by initiative of the tax subject, by periodic assessments, or by the occurrence of some transfer fact.

— The result of the assessment of the property is notified to the tax subject and, if the latter does not agree with it, may present a request for second assessment.

— For its part, not agreeing with the result of the second assessment requested by it, the tax subject has at its disposal the possibility of judicially challenging, in accordance with CPPT, the result of that assessment, on the ground of any illegality.

— The Claimant did not object, did not challenge, did not raise a new calculation or new assessment, therefore the assessment and the TPC of the property in question became final, and the Tribunal completely lacks material jurisdiction to determine the legality of that assessment.

— It is the understanding of the Respondent that the properties in question have the legal nature of property with housing use, therefore, the assessment acts that are the object of the present request for arbitral pronouncement should be maintained as they substantiate a correct interpretation of item 28.1 of TGIS, amended by Law No. 55-A/2012, of 29 October.

— Law No. 55-A/2012, of 29 October amended Article 1 of the Stamp Tax Code (CIS) and added item 28.1 to TGIS, with Stamp Tax now applying also to ownership, usufruct or right of superficies of urban properties whose patrimonial tax value appearing in the register, in accordance with the Real Estate Tax Code (CIMI), is equal to or greater than €1,000,000.00.

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

— In the absence of any definition of the concepts of urban property, land for construction and housing use, under Stamp Tax, one must resort to CIMI in search of a definition that permits ascertaining the possible subjection to Stamp Tax, in accordance with what is provided in No. 2 of Article 67 of the Stamp Tax Code in the wording given by Law No. 55-A/2012, of 29 October.

— Under the terms of the said legal provision, to matters not regulated in the Code, concerning item 28.1 of TGIS, the provisions of CIMI are subsidiarily applicable.

— Article 2, No. 1 of CIMI provides that

"property is any portion of territory, encompassing water, plantations, buildings and constructions of any nature incorporated or standing thereon, with a character of permanence, provided that it forms part of the assets of a natural or legal person and, in normal circumstances, has economic value, as well as water, plantations, buildings or constructions, in the circumstances above, endowed with economic autonomy in relation to the land where they are situated, even though situated in a portion of territory that constitutes an integral part of other assets or does not have a patrimonial nature".

— According to the provisions of No. 1 of Article 6 of CIMI, urban properties are divided into residential properties, commercial, industrial or service properties, land for construction and others.

— For its part, the classification of residential properties, commercial, industrial or service properties is dependent on their respective licensing, or in its absence on the normal destination for the purpose in question and not on their use (cf. No. 2 of Article 6 of CIMI).

— The notion of use of urban property is found in the part relating to the assessment of property, in that the assessment of the property (purpose) incorporates value to the property, constituting a fact of distinction that is determining (coefficient) for assessment purposes.

— As results from the expression "...value of authorized buildings", contained in No. 2 of Article 45 of CIMI, the legislator chose to determine the application of the assessment methodology of properties in general, to the assessment of land for construction, being therefore applicable to them the use coefficient provided for in Article 41 of CIMI.

— Contrary to what is argued by the Claimant, the Respondent understands that the concept of "properties with housing use", for the purposes of item 28.1 of TGIS, encompasses both built properties and land for construction, particularly in view of the literal element of the provision.

— With respect to land for construction, the TPC corresponds, in accordance with the provisions of No. 1 of Article 45 of CIMI, to

"the sum of the value of the area of implantation of the building to be constructed, which is that situated within the perimeter of fixing the building to the ground, measured by the exterior, added to the value of the land adjacent to the implantation."

— Clarifying No. 2 of this provision that the value of the implantation area varies between 15% and 45% of the value of authorized or predicted buildings.

— In this manner, the Respondent contends that in the assessment of land for construction, one necessarily considers the area to be built that is authorized and the use to be given to that construction, that is, the characteristics of the urban property that will be constructed thereon.

— Accordingly, as the application of the use coefficient for purposes of determining the TPC of land for construction is clear, its consideration for the purposes of applying item 28.1 of TGIS (in the prior wording) cannot be ignored.

— The Respondent understands that the assessment under challenge substantiates a correct interpretation and application of law to the facts, not suffering from a defect of violation of law, and should, consequently, be judged unfounded and the Respondent be absolved of the claim.

— The Claimant further alleges that, having regard to the application of the transitional regime provided for in Law No. 55-A/2012, of 29 October, the factual and legal prerequisites for the incidence of item 28.1 of TGIS are not met.

— Law No. 55-A/2012, of 29 October established, in its Article 6, a set of transitional provisions, resulting from this regulatory framework that the legislator foresaw the existence of two tax events with respect to the year 2012:

(1) a first event on 31-10-2012, which is based on the situation and patrimonial value of the property on 31-12-2011, with assessment and payment of the tax on 20-12-2012, and

(2) a (2) second event on 31-12-2012, which is based on the situation and patrimonial value of the property on 31-12-2012, with its assessment and payment from April of the year 2013.

— And, consequently, with respect to the year 2012 and urban properties registered in the assessment roll as having housing use, two assessments were issued:

(1) a first one through November 2012 with deadline for payment on 20-12-2012, which was based on the situation and value of the property on 31-12-2011, and

(2) a second assessment in February and March 2013, with payment in one, two or three instalments, from April 2013, which was based on the situation and value of the property on 31-12-2012.

— The legislator intended, thus, to standardize the assessment procedure of item 28.1 of TGIS and of Real Estate Tax, so that, in assessments made annually, the tax base considered would be the patrimonial tax value appearing in the assessment roll on 31-12 of the year to which they refer.

— In the case at hand, we are dealing with an assessment made in 2013, based on the patrimonial value of the property on 31-12-2012, effected under No. 2 of the cited Article 6.

— If it were understood, as is being argued, that for the year 2012, the only tax event is situated on 31-10-2012 and that the only assessment would have to be made through November 2012, No. 2 of the said provision would be completely emptied of meaning, as it would not be possible to assess stamp tax in 2013 having as the tax base the patrimonial value of the property used for the purposes of the Real Estate Tax assessment of the same year (TPC on 31-12-2012).

— In the concrete case, having the property been subjected to general assessment of urban properties, the patrimonial value attributed to it came into force on 31-12-2012, for the purposes of Real Estate Tax and item 28 of TGIS, as provided in No. 4 of Article 15-D of Decree-Law No. 287/2003 of 12 November.

— And verifying that, as is the case, on 31-12-2012, the Claimant was the owner of a plot of land for construction, to which housing use was attributed within the scope of its assessment, and that the patrimonial value of that property, relevant for assessment purposes (the same value used for Real Estate Tax assessments made in 2013), was superior to one million euros, the prerequisites for tax incidence are deemed to be met.

— The rate provided for in TGIS being applicable at the moment the tax is due, as results from Article 22 of the Stamp Tax Code, that is, 1%, as was considered in the assessment, the Claimant's claims thus fail.

— It is further noted that, notwithstanding the property in question having two distinct uses, and the assessment having calculated separately the value of each, the truth is that it is only and exclusively one property.

— Being certain that we are dealing with a single property with two distinct uses, it is the understanding of the Respondent's Assessment Services Directorate that the criterion of dominance of the real estate market in the area should be applied in validating the use and corresponding location coefficient.

— Therefore, given that the property that is the object of the request for arbitral pronouncement is predominantly allocated to housing, that is the use relevant for assessment and property register purposes, and the objective and subjective prerequisites for subjection to stamp tax are met, specifically item 28.1 of TGIS.

— For the Respondent to incur the duty to pay compensatory interest, the following requirements must be met:

a) That there be an error in an assessment act of a tax;

b) That it be attributable to the services;

c) That the existence of that error be determined in a gracious complaint proceeding or judicial challenge proceeding;

d) That from that error has resulted the payment of a tax debt in an amount superior to that legally due.

— It is required, thus, in order for the Respondent to incur the duty to pay compensatory interest, that there be some form of illegality denoting the improper character of the tax obligation in light of substantive provisions, illegality that must necessarily be attributable to an error of the services.

— With no error attributable to the services in the assessment of the tax occurring, no right to compensatory interest should be recognized to the Claimant.

— The Respondent merely limited itself, therefore, to applying the legal consequences that, from a tax perspective, were required given the occurrence of the factual prerequisites underlying the correction effected, therefore should be, also, judged unfounded the challenge as to the requested interest.

The Respondent concludes in favor of the unfoundedness of the Claimant's claim, with the consequent absolution of the action.

G. – RESPONSE OF THE CLAIMANT TO THE EXCEPTION OF UNTIMELINESS OF THE REQUEST

— The request for constitution of the Arbitral Tribunal was filed by the Claimant on 28 September 2015, following the notification made on 03 June 2015, of the decision pronounced on the request for official review filed by it.

— It results clearly from the tenor of the request for constitution of Tribunal filed by the Claimant that, on the one hand, the same has as its object the assessment act of Stamp Tax, referring to the year 2013, in the amount of €11,118.00 (eleven thousand, one hundred and eighteen euros), on the other hand, still, it is expressed in Article 2 of that petition that "The present request for constitution of an Arbitral Tribunal is filed following the order issued on 26 June 2015, by the Head of the Financial Services Office..., through which it dismissed the request for official review filed by the Claimant herein."

— Thus, as to the delimitation of the object of the request, the Claimant expressly referred to the substantive matter in dispute – the assessment act of tax being contested – and the administrative act dismissing the review, fulfilling the provisions of paragraph b), No. 2, Article 10 of the Legal Regime for Tax Arbitration (RJAT).

— In the decision pronounced in case No. 3/2015-TCAAD – invoked by the Respondent in support of this exception – in the delimitation of the object of the request there was no tacit or express reference to the act dismissing the means of challenge, which is manifestly not the case here, and therefore the conclusions of that decision cannot be transposed to the present case.

— On the other hand, in the decision pronounced in case No. 261/2013 – T – also invoked by the Respondent, it is only extracted that, if the request for arbitral constitution has as its object the administrative act dismissing it, in the delimitation of the request, this must be referred to, which, results from the plain language of the request for constitution of Arbitral Tribunal, was done by the Claimant.

— Doctrine and jurisprudence – namely, that emanating from the Supreme Administrative Court – have concluded that when the contentious phase precedes an administrative phase, the action is composed of two objects: the mediate or real object, which is the tax act whose legality has been put in question, and the immediate or direct object, which is translated in the decision dismissing the means of challenging the first-level tax act.

— If the Claimant in Article 1 of its petition, mentioned its mediate object, the substantive matter in dispute, the assessment act of the tax, in Article 2 of that petition, expressly, referred to the immediate object of the action, the administrative act dismissing the request for tax review.

— In these terms, the period for filing the request for constitution of the Arbitral Tribunal did not have its beginning on the expiration of the period for voluntary payment of the tax, but rather, on the date of dismissal of the request for tax review.

  • Concludes, thus, that the exception of expiration is unfounded.

H. – ISSUES TO BE DECIDED

Given the positions assumed by the Parties in accordance with the arguments presented, the following are the issues which this tribunal must examine and decide:

1.– Main Issues:

  • Expiration of the right to action

  • Illegality of the stamp tax assessment

2 – Compensatory interest – Existence or not of the right to compensatory interest, under Article 43 of the LGT, in the event that the assessment is annulled and the refund of the requested amount is determined, which would have been improperly paid.

3 – Responsibility for the payment of arbitral costs.

H. – PROCEDURAL PREREQUISITES

  1. The Arbitral Tribunal is regularly constituted and has material jurisdiction, in accordance with the provisions of paragraph a), No. 1, Article 2 of RJAT (Decree-Law No. 10/2011, of 20 January).

  2. The Parties enjoy legal personality and capacity, are legitimate and are regularly represented, in accordance with Articles 4 and 10, No. 2 of RJAT and Article 1 of Order No. 112/2011, of 22 March.

  3. The case is not affected by defects that affect its validity.

I. – FACTUAL MATTER

1.1 – PROVEN FACTS

With relevance for the examination of the issues raised, the Tribunal finds the following facts to be proven:

  1. The Claimant is the owner and legitimate possessor of the urban property registered under the (current) property matrix number..., of the Union of Parishes of..., ... and..., municipality of ..., district of Setúbal.

  2. It is a plot of urban land for construction.

  3. In 2012, the land had, according to the construction viability project provided by the Municipal Council of..., approval for different uses.

  4. The construction viability project provided, in 2012, for the allocation of the land to commerce and housing.

  5. On 27 December 2012, the TPC attributed by the Tax Authority to that property was, by virtue of general assessment, €555,650.00 (five hundred and fifty thousand, six hundred and fifty euros).

  6. The property in question currently has a patrimonial tax value of €1,111,800.00 (one million, one hundred and eleven thousand and eight hundred euros), of which:

a) €534,357.62 (five hundred and thirty-four thousand, three hundred and fifty-seven euros and sixty-two cents), calculated by reference to commerce and

b) €577,436.06 (five hundred and seventy-seven thousand, four hundred and thirty-six euros and six cents), calculated by reference to housing.

  1. The patrimonial tax value (TPC) identified above was determined by the Respondent on 15 February 2013.

  2. The Claimant was notified by the Respondent to make payment of €11,118.00 (eleven thousand, one hundred and eighteen euros), as Stamp Tax for the year 2012, determined in the assessment proceedings.

  3. The Claimant made payment of both the 1st instalment and the 2nd instalment, in the amounts indicated by the Respondent and within the periods granted to it for that purpose.

  4. On 10 February 2015, the Claimant filed a request for official review of the said assessment.

  5. Following which, on 26 June 2015, an order dismissing the said request was issued by the Head of the Financial Services Office of....

  6. On 17 August 2015, by the Councillor for the Department, in the exercise of authority delegated by the President of the Municipal Council of..., the architectural project was approved, which provides for the construction of a service building on the plot of land in question.

  7. On 28 September 2015, the Claimant requested the constitution of the singular arbitral tribunal in tax matters.

I. 2 – REASONING OF THE PROVEN FACTS

The facts found to be proven are based on the documents indicated with respect to each, and on the factual elements brought into the case by the Parties, to the extent that their correspondence with reality was not questioned.

I. 3 – FACTS NOT PROVEN

There are no facts not proven with relevance for the examination of the issues to be decided.

J. – LEGAL MATTER

Having fixed the factual matter, we proceed, below, to its legal qualification and to the determination of the applicable law, taking into account the issues to be decided that were enumerated.

As the Respondent has raised the exception of untimeliness of the request for arbitral pronouncement, the examination of the legal matter shall begin with this issue.

In the Respondent's view, this request, which was filed on 28.09.2015, was filed beyond the 90-day period provided for in Article 10, No. 1, paragraph a) of RJAT.

Therefore, it is necessary to determine the moment of the beginning of the counting of the period for filing the request for arbitral pronouncement.

With respect to this issue, two hypotheses are opened:

The counting of the period should begin from the expiration of the period for voluntary payment of the tax obligation, as the Respondent claims, or, from the notification of the decision dismissing the official review filed by the Claimant, as it understands.

This determination of the beginning of the counting of the 90-day period is essential, since, as we shall see, if it is the date of payment of the tax, this request will be untimely, if it is that of notification of the dismissal of the official review, the issue of legality may be examined by this arbitral tribunal.

Article 10, No. 1, paragraph a) of RJAT, with respect to tax assessment acts, refers, as to the beginning of the counting of the 90-day period, to what is established in Nos. 1 and 2 of Article 102 of CPPT.

This means that, with relevance for the situation in question, the period would have its beginning on the day following the date of voluntary payment of the tax obligation (Article 102, No. 1, paragraph a) of CPPT), which occurred on 30.04.2014.

But, had the Claimant impugned in this proceeding the act of dismissal of the official review, a new period would be opened, and the tribunal would be enabled to examine the legality of the primary assessment act, as is peacefully admitted by doctrine and jurisprudence of CAAD, notwithstanding the explicit reference in Article 2, No. 1, paragraph a) to the jurisdiction of arbitral tribunals to declare the illegality of assessment acts.

In light of the foregoing, to answer this issue, it is indispensable to proceed with a rigorous determination of the object of the request for arbitral pronouncement.

In fact, with the Tribunal's cognition powers being, in this matter, delimited by the facts alleged by the parties, decisions cannot be taken on issues that have not been raised by the parties, nor condemn on a different object from that claimed, in view of the provisions of Articles 608 and 609 of the Code of Civil Procedure.

From the examination of the case it results that the request for arbitral pronouncement expressly had as its object the assessment act of Stamp Tax for the year 2012, in the amount of €11,118.00 euros, on the basis of item 28.1 of the General Table of Stamp Tax, concerning the urban property registered under the current property matrix number..., of the Union of Parishes of..., ... and..., with the Claimant requesting that the arbitral tribunal declare the illegality of such assessment, and, consequently, determine the restitution of the tax paid with respect to the 1st and 2nd instalments, plus compensatory interest.

The determination of the object of the request results clearly not only from the initial segment of the petition, but also from the final conclusion, where expressly only the request for annulment of the assessment act is formulated.

In Article 2 of the initial petition, the Claimant states that the present request is filed "following the order issued on 26 June 2015. ... which dismissed the request for official review".

However, throughout the request for arbitral pronouncement, beyond this informative reference, no other allusion to the order of dismissal is apparent, there being no examination of that dismissal, particularly regarding its grounds, nor any manifestation of the intention to challenge it.

In fact, nowhere did the Claimant formulate any request for annulment of the decision of dismissal, therefore the same cannot be considered for the effects sought, being outside the scope of the request for pronouncement.

Instead, what is exclusively put in issue by the Claimant is the direct challenge of the assessment act, without, it is insisted, concretizing or formulating any request aimed at annulling the dismissal of the official review.

Therefore, the immediate and sole object of the request, in the terms in which it was delimited by the Claimant, is the illegality of the assessment act and not the dismissal of the official review, specifically, its annulment.

Having delimited with precision the object of the request for arbitral pronouncement, which was circumscribed by the Claimant, as was said, to the assessment act of the tax, it must be concluded that the applicable period is that for challenging this act, reason for which, having been filed the request on 28/09/2015, the 90-day period established in paragraph a), No. 1, Article 10 of RJAT was exceeded, since voluntary payment occurred on 30.04.2014.

Therefore, the exception raised is deemed well-founded, leaving the examination of the remaining issues raised in the case prejudicial.

As to the responsibility for arbitral costs, the law is categorical in attributing responsibility for the payment of costs to the party that gives rise to it, in view of the provisions of Nos. 1 and 2, Article 527 of the Code of Civil Procedure, applicable by force of Article 29, No. 1, paragraph e) of RJAT.

Therefore, responsibility for the payment of arbitral costs rests with the Claimant.

L. – DECISION

In light of the foregoing, the present Arbitral Tribunal decides:

a) To judge well-founded the exception of untimeliness of the request for arbitral pronouncement, and, consequently

b) To judge unfounded the request for arbitral pronouncement, thereby absolving the Respondent

c) To condemn the Claimant to pay the costs of the present proceeding (Article 527, Nos. 1 and 2 of the Code of Civil Procedure, ex vi Article 29, No. 1, paragraph e) of RJAT).

Value of the case: In conformity with the provisions of Articles 306, No. 2 of CPC (ex. 315, No. 2) and 97-A, No. 1 of CPPT and Article 3, No. 2 of the Regulation of Costs in Tax Arbitration Proceedings, the value of the case is set at €11,180.00.

Costs: In harmony with No. 4 of Article 22 of RJAT, the amount of costs is set at €918.00, in accordance with Table I attached to the Regulation of Costs in Tax Arbitration Proceedings.

Notify the parties.

Lisbon, 22 April 2016

The Arbitrator

José Nunes Barata

(Drafted in traditional orthography)

Frequently Asked Questions

Automatically Created

What is Verba 28.1 of the Portuguese Stamp Tax General Table (TGIS) and how does it apply to high-value properties?
Item 28.1 of the Portuguese Stamp Tax General Table (TGIS) was introduced by Article 4 of Law No. 55-A/2012 of October 29, 2012, and imposes an annual Stamp Tax on ownership of high-value real estate properties. It applies to urban properties with a patrimonial tax value (Valor Patrimonial Tributário - VPT) exceeding €1,000,000. The tax is calculated based on the property's official tax valuation as determined by the Tax Authority. In this case, the property had a patrimonial tax value of €1,111,800.00 (comprising €534,357.62 for commercial use and €577,436.06 for residential use), triggering the €11,118.00 Stamp Tax assessment for 2012. This provision represents a wealth tax on high-value property ownership, distinct from traditional transaction-based stamp duties.
Can taxpayers challenge Stamp Tax (Imposto do Selo) assessments on real estate through CAAD arbitration?
Yes, taxpayers can challenge Stamp Tax (Imposto do Selo) assessments on real estate through the Administrative Arbitration Centre (CAAD - Centro de Arbitragem Administrativa) under Article 2, No. 1, paragraph a) of Decree-Law No. 10/2011 (RJAT - Legal Regime for Tax Arbitration). The process typically begins with filing an official review request (pedido de revisão oficiosa) with the Tax Authority. If this request is dismissed, the taxpayer may then file for constitution of an arbitral tribunal within the applicable deadline. In this case, the claimant successfully initiated arbitration proceedings on September 28, 2015, following dismissal of their official review request on June 26, 2015. CAAD arbitration provides an alternative dispute resolution mechanism to judicial courts for resolving tax disputes, offering faster proceedings and specialized tax law expertise.
What are the deadlines and timeliness requirements for filing a tax arbitration request with CAAD?
The timeliness (tempestividade) of a CAAD arbitration request is governed by specific deadlines under Portuguese tax law. Taxpayers must first exhaust administrative remedies by filing an official review request (pedido de revisão oficiosa) with the Tax Authority. Following dismissal of this request, taxpayers have a limited period to file for arbitration. In this case, the claimant filed their official review on February 10, 2015, which was dismissed on June 26, 2015. The arbitration request was then filed on September 28, 2015, approximately three months after the dismissal. The respondent raised a procedural exception regarding timeliness, which was subject to contradictory proceedings on February 5, 2016, with the claimant responding on February 16, 2016. Compliance with these deadlines is critical, as late filing can result in dismissal of the arbitration request on procedural grounds.
How are indemnity interest claims handled in Portuguese tax arbitration proceedings under Articles 43 and 100 of the LGT?
Indemnity interest (juros indemnizatórios) claims in Portuguese tax arbitration are governed by Articles 43 and 100 of the General Tax Law (Lei Geral Tributária - LGT) and Article 61 of the Tax Procedural Code (Código de Procedimento e de Processo Tributário - CPPT). Article 43 of LGT establishes the right to compensatory interest when the Tax Authority unduly retains taxpayer funds. Article 100 of LGT addresses interest payable on tax refunds. When taxpayers successfully challenge tax assessments and obtain restitution of amounts paid, they are entitled to compensatory interest calculated from the date of payment until restitution. In this case, the claimant requested not only declaration of illegality of the €11,118.00 Stamp Tax assessment and restitution of the 1st and 2nd instalments paid, but also compensatory interest calculated according to these legal provisions. The arbitral tribunal has authority to order payment of such interest as part of the final decision if the claim succeeds.
What is the procedure for requesting restitution of Stamp Tax paid on urban properties valued over €1,000,000?
The procedure for requesting restitution of Stamp Tax paid on urban properties valued over €1,000,000 involves a multi-step process. First, taxpayers must file an official review request (pedido de revisão oficiosa) with the competent tax authority (in this case, the Head of the Financial Services Office) challenging the legality of the assessment. This request must set forth the legal and factual grounds for challenging the tax. If the official review is dismissed, taxpayers may then file a request for constitution of an arbitral tribunal with CAAD under Decree-Law 10/2011, seeking declaration of illegality of the assessment and consequent restitution of amounts paid. The arbitration request must specify the challenged act, the legal grounds for annulment (such as lack of proper reasoning under Articles 77 et seq. of LGT or violation of Article 135 of the Administrative Code), and the relief sought, including restitution with compensatory interest. Payment of the tax before challenging it (as occurred in this case with both instalments) does not preclude seeking restitution if the challenge succeeds. The arbitral decision, if favorable, will order the Tax Authority to refund the amounts paid plus applicable interest.