Process: 636/2014-T

Date: April 30, 2015

Tax Type: Selo

Source: Original CAAD Decision

Summary

Process 636/2014-T examines whether Verba 28.1 of the Portuguese General Stamp Tax Table (TGIS) applies to urban construction land valued over €1 million. The claimant challenged a €10,090.56 stamp duty assessment (1% of the €1,009,005.52 taxable property value) on construction land, arguing that Verba 28.1 only applies to properties with residential use, not undeveloped building plots. The claimant raised both procedural and substantive grounds: (1) the assessment notice lacked identification of the author and proper signature, violating articles 123 and 133 of the Administrative Procedure Code; (2) the assessment lacked substantiation as required by articles 36 CPPT and 77 LGT; (3) no prior hearing was conducted before assessment; and (4) construction land does not constitute 'property with residential use' under Verba 28.1. The Tax Authority defended that the concept of residential use property encompasses both built properties and construction land. The arbitral tribunal determined the dispute involved solely legal interpretation rather than factual matters, dispensing with witness testimony and oral arguments. The case addresses critical issues regarding the scope of stamp duty on real estate, procedural requirements for tax assessments, and whether potential future use (residential construction) suffices to trigger current taxation under Verba 28.1 TGIS.

Full Decision

ARBITRAL DECISION

Process No. 636/2014-T

Claimant/Petitioner: A…

Respondent: Tax and Customs Authority (hereinafter AT)

  1. Position of the Parties

A…, Tax Number …, resident at Street …, hereinafter designated as the claimant, submitted, on 27-08-2014, to the Administrative Arbitration Centre (CAAD) a petition for the constitution of an arbitral tribunal, with a view to declaring unlawful the assessment of stamp duty on item no. 28 of the General Table of Stamp Duty, concerning a plot of land for urban construction, registered in the urban property register under article … of the parish of …, and municipality of Santa Cruz, referring to the year 2013, in the total amount of € 10,090.56.

The claimant requests the declaration of nullity of the stamp duty assessment.

The claimant alleges, in summary, that the disputed assessment does not contain the indication of its author, is not properly substantiated, and was not preceded by prior hearing; that the immovable property to which the stamp duty assessment refers, whose legality is disputed, is a plot of land for urban construction and not a property with residential use, and there is not, in his perspective, the legal premise for the application of item 28.1 of the General Table of Stamp Duty, and that the AT made an incorrect interpretation regarding the objective and subjective scope of the tax.

A single arbitrator, Ricardo Marques Candeias, was appointed on 15-10-2014. In accordance with the provisions of art. 11(1)(c), RJAT, the singular arbitral tribunal was constituted on 30-10-2014.

Notified for this purpose, the AT submitted a response on 05-12-2014. It argued that the concept of properties with residential use for the purposes of item 28 of TGIS comprises both built properties and construction land, arguing for the rejection of the petition for nullity.

On 15-12-2014, the claimant submitted a petition that it entitled "Response", through which it took position regarding the content of the AT's response, set out its intention not to waive the production of witness evidence, and protested to attach the collection notices referring to the 2nd and 3rd instalments of the Stamp Duty of the year 2013.

Although notified to attach the administrative file (PA), the respondent informed that there is no administrative file relating to the assessment in question in the case file. It further added that it accepts the documents submitted by the claimant, not contesting their veracity.

Considering the position assumed by the AT regarding the factual matters alleged, the arbitral tribunal understood, by order dated 22-04-2015, having reviewed the case file, and verifying that the discussion is limited to a matter of law, that it was not necessary to hear witnesses or to carry out the evidentiary procedures requested by the claimant.

Through the same order, the claimant was notified to pronounce on the proposal for waiver of the holding of the meeting referred to in art. 18, RJAT, and waiver of oral arguments, requested by the AT.

On 27-04-2015, the date of 30-04-2015 was set for the delivery of the decision.

The claimant pronounced on the order of 22-04-2015, through a petition dated 28-04-2015. He manifested his non-opposition to the waiver of the presentation of arguments, provided that the tribunal maintained the decision to waive the hearing of witnesses and other evidentiary procedures, which was verified. With respect to the waiver of holding an arbitral meeting, the claimant pronounced himself in the sense of accepting the waiver, should it be understood that there is no exception or preliminary question to be decided before ruling on the petition.

Considering the position of the claimant and the elements of the case, on 28-04-2015 an order was issued determining the waiver of the presentation of arguments and the waiver of the arbitral meeting provided for in art. 18, RJAT.

The parties possess legal personality and capacity and are legitimate (arts. 4 and 10(1)(2), RJAT, and art. 1, of Ordinance no. 112-A/2011, of 22 March). The case does not suffer from nullities and no preliminary questions were raised that need to be considered.

  1. Facts

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

a) The plot of land for construction, registered in the urban property register under article … of the parish of …, municipality of Santa Cruz, has as its active holder the present claimant;

b) The taxable property value of the land referred to in a) is € 1,009,005.52;

c) The AT assessed, on 17-03-2014, the Stamp Duty for the year 2013, relating to the land referred to in a), in the amount corresponding to 1% of its taxable property value - € 10,090.56;

d) The claimant was notified through document no. 2014 004208482 for payment of the amount of € 3,363.52 relating to the first instalment for the year 2013, due in April 2014.

The arbitrator's conviction was based on the documentary evidence attached to the case file, specifically, points a) and b) result from the content of the property register attached to the case file, and points c) and d) result from the collection document of the first instalment of the tax.

For the decision of the case, no other facts with relevance were proven.

  1. Law

These are the facts that matter to consider. Let us see then.

The claimant comes to allege in its initial petition, regarding the formal defect of lack of identification of the author of the act, that "A quick analysis of the collection notice notified to the Claimant shows immediately that it does not contain all the elements that should be mandatorily notified to the taxpayer (…) namely the indication of the author of the act (…)."

The claimant argues: "In that collection notice there is not indicated the professional category or position held by the person who, among the officials and agents of a given service, performed it, nor even their respective signature, even if typed."

The claimant contends that "we are thus before a tax act that imposes a tax on the Claimant but which has no defined author."

Concluding, on this particular point, that "Not containing the disputed assessment the indication of its author and the respective signature, even if typed, the same violates art. 123(1)(a) and (g) of the CPA, being null under the terms of arts. 133(1) of the CPA and 99(d) of the CPPT (…)"

Regarding the lack of substantiation of the assessment, the claimant argues that "it was notified to pay the collection notice intended for the collection of the stamp duty assessment here disputed (…), without this containing any substantiation of this tax act."

It further states, referring to the assessment, "that it does not contain any factual or legal motivation, and does not present the logical and formal regularity indispensable for the clear, sufficient and congruent understanding of the reasons for the decision."

The claimant concludes, on this particular point, that "The requirement for substantiation of administrative acts that affect citizens' rights or legally protected interests is, moreover, a constitutional requirement (…) Not containing the assessment act the due substantiation, not even by reference, this violated the provisions of art. 36(1) and (2) of the CPPT and art. 77(1) of the LGT, being therefore voidable in accordance with the provisions of art. 99(c) of the CPPT (…)."

Regarding the invoked lack of prior hearing, the claimant contends "that the exercise of the right to hearing in the situations and terms provided for in the same article, namely "before the assessment", occurs "whenever the law does not prescribe otherwise"."

The claimant states "(…) that the mere completion of model 1 of the IMI does not permit, by itself, to understand what the position is, in factual and legal terms, of the taxpayer regarding an assessment of stamp duty."

To conclude that "the omission of prior hearing embodied, in this case, the pretermission of essential formality, projecting itself as a vitiating defect of the assessment, which constitutes grounds for its nullity under the terms of article 99(d) of the CPPT and art. 135 of the CPA, by violation of paragraph a) of no. 1 of article 60 of the LGT."

Regarding the substantive issue, the claimant comes to argue the unlawfulness of the assessment due to error on the factual premises and error of law concerning the facts.

The claimant comes to allege in its initial petition that "The property of the Claimant, which was subject to the assessment, is a plot of land (…). The land in question is not being used or intended for housing (…)."

The claimant contends that "(…) the land does not possess, nor could it possess, a license of use for housing. The land in question is intended for construction, being fiscally a property of the type or species "land for construction", as is moreover indicated in the respective property register."

The claimant continues, arguing that "Because the legal situation of the said urban property is not that of a property with residential use, but of a property with constructive use, it could not be taxed under art. 1(1) of the CIS and item 28.1 of TGIS."

The claimant continues its argument by stating that "residential properties or properties with residential use are buildings or constructions licensed for housing or which, even when they do not have a housing license, have as their normal destination housing (art. 6(2) of CIMI)."

The claimant argues "Now, in the case of the property subject to the disputed assessment, as well as in other plots of land for construction, it is verified, on the one hand, that they are not by nature buildings, on the other, that they have as their normal destination housing."

The claimant further states that "a plot of land for construction does not have, given its economic substance, the characteristics of an inhabitable property, so it cannot but be understood that it is not covered by the tax incidence rule provided for in item 28.1 of TGIS."

The claimant refers in its argument to the amendment to the State Budget Law of 2014, arguing that "in order for the assessment to have been made under the rule of incidence whose wording resulted from the amendment to the State Budget Law of 2014, which came to include plots of land for construction (…), it would be necessary for this amendment to have entered into force during the year 2013. Which did not occur."

On this point, the claimant concludes by referring to "(…) It follows from all that has been set out above that plots of land for construction were not covered by the rule of incidence, contained in item 28.1 of TGIS, under which the AT made the assessment now in question."

The claimant further refers that a different understanding from the one it has set out would violate the constitutional principle of non-retroactivity of tax law, embodied in art. 103(3) of the CRP.

The claimant adds that "in presuming that the Claimant's land for construction is a property with residential use, the AT makes an incorrect interpretation of art. 1(1) of the CIS and item 28.1 of TGIS, or if you prefer, commits the so-called "error of law concerning the facts", which constitutes grounds for the nullity of the assessment, under the terms of article 99 of the CPPT and art. 135 of the CPA (…)."

In another line of argument, the claimant bases its position on the error regarding the objective and subjective scope of the tax.

The claimant argues that the AT committed an error on the premises of the assessment, with regard to the objective and subjective scope, in that "by judgment of 14/05/2007 (…) the Judicial Court of Santa Cruz determined the adjudication of the right of ownership of the plot with 1,665 m2, valued at € 118,631.99 (€71.25/m2), to the expropriating entity – Regional Secretariat of Planning and Finance. (…) That is, the expropriating entity has administrative possession of the expropriated plot since 24/04/2003. (…) The property of the present Claimant was completely fenced off by the expropriating entity."

The claimant further reinforces the following: "the administrative possession of the expropriating entity was not limited to the 1,665 m2, of the formally expropriated plot, since it has total possession of the property!"

Adding to the argument raised, the claimant refers that there is an incorrectness of the elements contained in the property register of the property, notwithstanding that the finance services did not proceed with the updating of the property register entry.

The claimant further states that, although it has directed petitions in that sense, "that finance service did not pronounce on the petitions of the present Claimant", adding "if the Santa Cruz Finance Service had proceeded with the alteration of the property register entry as was its duty, under the terms of art. 13(3)(a) and (c) of CIMI, either officially or following the petitions directed to it by the Claimant, it would certainly not have issued the tax assessment here disputed."

The claimant further contends, in another line of argument, that "even if it were otherwise understood, which is not conceded, it would still be said that the AT incorrectly considered that the present Claimant was the passive subject of the tax, when it is the Regional Secretariat of Planning and Finance (expropriating entity) that behaves as owner and legitimate proprietor of the property."

The claimant adds that "Since the administrative possession of the totality of the Claimant's property – and not just the plot of 1,665 m2 to be expropriated – the Claimant does not enjoy "full and exclusive manner of the rights of use, enjoyment and disposal of it (…) There is no doubt that the expropriating entity has held, since 24/04/2003, the possession of the totality of the property now in question."

The claimant further contends that "The expropriated party, after administrative possession of the property to be expropriated, must fully respect the rights of enjoyment and use of the expropriating entity, being able to do nothing to prevent the same."

The claimant concludes, on this point, "Having the Claimant demonstrated that, notwithstanding still appearing on the register as owner, it has been deprived of use and enjoyment of the property, as a function of an expropriation, and that it is the Regional Secretariat of Planning and Finance (expropriating entity) that has possession of it, this should be, and not the present Claimant, the passive subject of the tax (…) Consequently, the Claimant cannot be obliged to pay stamp duty on a property that, long ago, has materially ceased to "belong" to him."

The claimant further bases its argument on the unconstitutionality of Law no. 55-A/2012 of 29/10, by violation of the principle of equality, arguing that "The taxation under stamp duty of properties affected for residential purposes, with the exclusion of those that, although of equal or superior value to €1,000,000.00, are not affected for that purpose, is contrary to the principle of equality, provided for in articles 13 and 104 of the CRP."

The claimant further contends the unconstitutionality of the interpretation made by the AT of item 28.1 of TGIS, by violation of the constitutional principles of legality, justice, equality, impartiality and proportionality.

The claimant concludes its substantiation by arguing for the acceptance of the petition for arbitral pronouncement and that, by way of it, be "declared the nullity of the disputed assessment or should it be otherwise understood, which is not conceded, determine its nullity."

For its part, the AT comes to counter the position of the claimant, substantiating its claim on the fact that the concept of "properties with residential use", for the purposes of item 28 of TGIS, encompasses both built properties and land for construction.

In the understanding of the AT "For purposes of determining the taxable property value of land for construction, the application of the allocation coefficient in the context of assessment is clear, so its consideration for purposes of applying item 28 of the General Table of Stamp Duty cannot be ignored, with the following order of considerations being relevant:

  • In the application of law to specific cases, it is important to determine the exact meaning and scope of the rule, so that the rule contained in it is revealed, an indispensable condition so that it can be applied, in accordance with the techniques and interpretative elements generally accepted and provided for in art. 9 of the Civil Code (art. 11 of the LGT);

  • Art. 67(2) of the CIS mandates the subsidiary application of the provisions of CIMI;

  • The allocation of the immovable (aptitude or purpose) is a coefficient that contributes to the assessment of the immovable, in the determination of the taxable property value, applicable to plots of land for construction;

  • Item 28 itself of RGIS refers to the expression "properties with residential use", appealing to a qualification that overlaps the species provided for in no. 1 of art. 6 of CIMI."

The AT argues that "The allusion to properties with residential use contained in item 28 of the CIS should be understood in a broad manner, encompassing both built residential properties and plots of land for construction, by virtue of the very wording of the rule and the concept used."

Appealing to the normative content, the AT contends "tax law considers as an element integral to the assessment of plots of land for construction, the value of the built-up area, which varies between 15% and 45% of the value of authorized or planned buildings based on the urban planning and construction project."

Further adding that "On the other hand, the Municipal Master Plans establish the strategy for municipal development, municipal policy for land planning and urban development, and other urban policies, integrating and articulating the guidelines established by land management instruments at national and regional level. Thus, much before the actual building of the property, it will be possible to ascertain and determine the allocation of the land for construction."

According to the AT "Item 28 of TGIS applies to the ownership, usufruct or right of superficies of urban properties with residential use, whose taxable property value appearing on the register, under the terms of CIMI, is equal to or greater than € 1,000,000.00, that is, it applies to the value of the immovable."

Regarding the unconstitutionality of the rule "The different aptitude of properties (housing/services/commerce) sustains the different treatment, having constituted an option of the legislator, for political and economic reasons, to exclude from the scope of stamp duty properties intended for purposes other than residential."

The AT refers that taxation under stamp duty complies with the criteria of adequacy, and therefore does not violate the principle of proportionality.

The entire substantiation produced in the response concludes to the effect that "the assessment in crisis does not suffer from the defect of violation of law, and consequently, the claim raised should be judged without merit and the Respondent Entity should be absolved of the petition."

Having set out a brief description of the argumentative palette woven by the parties, let us see then.

Notwithstanding the claimant has raised various issues, the one that presents itself as the central issue to be decided is whether the scope of item 28.1 of the General Table of Stamp Duty (TGIS) encompasses land for construction. Considering the petition that was filed by the claimant, if this is clarified, all others will be rendered moot. Let us go, then, to the essence of the case.

This issue has already been the subject of several CAAD decisions, namely those delivered in processes 180/2013-T, 202/2014-T and 369/2014-T, which we shall follow closely.

Item 28 of the General Table of Stamp Duty (TGIS) was added by Law no. 55-A/2012, of 29 October. It establishes the following:

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

28.1 – For property with residential use – 1% (…);"

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

c) The taxable property value to be used in the assessment of the tax corresponds to that resulting from the rules provided for in the Code of Municipal Property Tax by reference to the year 2011; (…)

f) The applicable rates are as follows:

i) Properties with residential use assessed under the terms of the IMI Code: 0.5%;

ii) Properties with residential use not yet assessed under the terms of the IMI Code: 0.8%;

Item 28.1, TGIS, and sub-paragraphs i) and ii) of paragraph f) of no. 1 of art. 6 of Law no. 55-A/2012, contain an innovative concept throughout tax legislation which is that of "property with residential use."

The CIMI establishes in no. 1, of art. 2, the concept of property. It defines it as "any portion of territory, encompassing waters, plantations, buildings and constructions of any nature incorporated therein or placed thereon, with a character of permanence, provided that it forms part of the patrimony of a natural or legal person and, in normal circumstances, has economic value, as well as waters, plantations, buildings or constructions, in the previous circumstances, endowed with economic autonomy in relation to the land on which they are implanted, although located in a portion of territory that constitutes an integral part of a diverse patrimony or does not have patrimonial nature."

Art. 4, CIMI, establishes that urban properties are "all those that should not be classified as rural, without prejudice to the provisions of the following article."

In turn, art. 6, ibidem, proceeds to the classification of the various types of urban properties, distinguishing them, in no. 1 of the said article, into four subcategories: "a) Residential; b) Commercial, industrial or for services; c) Land for construction; d) Others."

In no. 2 of the same article we find the criterion used for this distinction: "Residential, commercial, industrial or for services are buildings or constructions licensed for such or, failing a license, which have as their normal destination each of these purposes."

From the analysis of the article above transcribed it follows that the closest notion of "property with residential use" is that of "residential properties", defined by art. 6(2), CIMI. However, we believe that if the legislator had intended to apply the same concept to one and the other definition, it would have used the same expression for both.

As read in the CAAD Decision delivered in Process 180/2013-T, "The word "allocation" (or "use"), in this context of utilization of a property, has the meaning of "action of destining something to a determined use". As read in the decision of the CAAD delivered in process no. 53/2013-T: "in sound interpretation, «property with residential use», cannot be a property merely licensed for housing or intended for that purpose (that is, it will not be sufficient that it be a «residential property»), having to be a property that already has actual use for that purpose."

Thus, "it is to be concluded that the available interpretative elements, including the «circumstances in which the law was elaborated and the specific conditions of the time in which it is applied», point clearly in the direction that it was not intended to encompass within the scope of item no. 28.1 situations of properties that are not yet affected for housing, namely plots of land for construction held by companies."

Effectively, the expression "with residential use" has underlying the idea of a real, actual and present potentiality. It does not seem possible to us to interpret art. 6(1)(a), CIMI, in the sense that it contemplates other realities beyond those that have correspondence with the letter of the law, since if such were the intention of the legislator, it would have expressly provided for it in the letter of the law. An extensive interpretation of the provision would violate the principles established in art. 9, CCivil, and art. 11, LGT.

And even regarding "plots of land for construction" as urban properties not built but with constructive capacity for residential immovables, it is not reasonable that, resorting to an extensive interpretation of the rule, the type of urban properties considered "land for construction" have place in the so-called "residential use."

Beyond the literal element of the rule, the historical element also contributes to the understanding now manifested.

Effectively, item 28.1, TGIS, was amended by Law 83-C/2013, of 31 December - State Budget Law for 2014 - so as to include, from 01-01-2014, properties for construction.

According to art. 194 of the cited law, "For residential property or for a plot of land for construction whose building, authorized or planned, is for housing..."

The innovation introduced by the law in reference allows one to infer that such properties were not covered by the wording in force until 31-12-2013. This understanding shall apply to the assessment in crisis in the present proceedings, since it relates to the year 2013.

Furthermore, the tax established by item 28 of TGIS aims to harmonize the distribution of the tax burden of taxpayers, imposing this tax on holders of property of high value (exceeding € 1,000,000.00) intended for housing.

Indeed, with the principle of fiscal equality determining that what is equal should be treated equally from a fiscal standpoint and what is different should be treated differently, there is no justification for the different treatment, for tax purposes, of land for construction.

In light of the foregoing, the assessments in question suffer from the defect of violation of law, due to error in the legal premises. Such understanding sustains and justifies the declaration of their unlawfulness and consequent nullity.

The claimant also based its argument on the nullity of the assessments due to lack of identification of the author of the act, lack of substantiation, pretermission of the right to prior hearing, and error on the premises of the assessment with respect to the objective and subjective scope of the tax. It further raised the unconstitutionality of the assessment by violation of the principles of equality, legality, justice, impartiality and proportionality.

Considering the substantiation above adduced, being the decision in the sense of declaration of unlawfulness of the assessment that is the subject of the present process, due to defect of violation of law and error in the legal premises, the knowledge of the defects invoked and the unconstitutionality raised, as a subsidiary matter, by the claimant, is rendered moot.

The property in question is a plot of land for construction, having no residential use whatsoever. We observe, thus, the non-verification of the legal premise for the application of Stamp Duty provided for in item 28 of TGIS.

As a consequence of the foregoing, we conclude that the stamp duty assessment disputed by the claimant is unlawful.

In accordance with the provisions of arts. 12(2) and 22(4), both of the RJAT, and art. 4(3), of Table I annexed to the Regulation of Court Costs in Tax Arbitration Processes, the costs of the present process are the responsibility of the respondent.

  1. Decision

Before the above described, it is decided to judge the petition formulated by the claimant in the present tax arbitration process as fully merited, declaring the unlawfulness of the Stamp Duty assessment, made under the terms of item 28.1 TGIS, referring to the year 2013, which applied to the plot of urban construction land, registered in the urban property register under article … of the parish of …, and municipality of Santa Cruz, in the total amount of € 10,090.56, and the same should be considered null, with the necessary legal consequences.

The respondent is further condemned to the payment of costs in accordance with the terms above and below referred to.

Value of the Case:

In accordance with the provisions of arts. 306(2), CPC, and 97-A(1)(a), CPPT, and 3(2), of the Regulation of Costs in Tax Arbitration Processes, the value of the action is fixed at € 10,090.56.

Costs:

Under the terms of art. 22(4), RJAT, and Table I annexed to the Regulation of Costs in Tax Arbitration Processes, the amount of costs is fixed at € 918.00, due by the Tax and Customs Authority.

Notify.

Lisbon, 30 April 2015.

Text prepared by computer, in accordance with art. 131(5), CPC, applicable by remission of art. 29(1)(e), RJAT, with blank verses and reviewed by me.

The Single Arbitrator

Ricardo Marques Candeias

Frequently Asked Questions

Automatically Created

Does Verba 28.1 of the Portuguese Stamp Tax General Table apply to urban construction land?
The application of Verba 28.1 of the TGIS to urban construction land is disputed in this case. The claimant argues that construction land is not a 'property with residential use' and therefore falls outside the scope of Verba 28.1, which should apply only to built properties with actual residential use. The Tax Authority contends that the concept includes both built properties and construction land designated for future residential construction. The core legal issue is whether the potential future residential use of undeveloped land is sufficient to trigger stamp duty under Verba 28.1, or whether actual residential use is required.
Can Stamp Tax (Imposto de Selo) be levied on building plots valued over €1 million under Verba 28?
Yes, the Tax Authority assessed stamp duty on a building plot valued at €1,009,005.52 at the rate of 1% (€10,090.56) under Verba 28 of the TGIS. However, the legality of this assessment is under challenge. The claimant argues that construction land should not be subject to stamp duty under Verba 28.1, which refers to 'properties with residential use.' The dispute centers on whether undeveloped land classified as 'terrain for construction' in the urban property register qualifies as a property with residential use merely because it may be developed for residential purposes in the future.
What are valid grounds to challenge a Stamp Tax assessment on construction land in Portugal?
Valid grounds to challenge a stamp tax assessment on construction land include: (1) Procedural defects - lack of identification of the author of the assessment and absence of signature in violation of articles 123(1)(a)(g) and 133(1) of the Administrative Procedure Code and article 99(d) CPPT, constituting grounds for nullity; (2) Lack of substantiation - absence of factual and legal grounds for the assessment violating articles 36(1)(2) CPPT and 77(1) LGT, making the assessment voidable under article 99(c) CPPT; (3) Absence of prior hearing - failure to conduct prior hearing before assessment as required by law; (4) Substantive grounds - arguing that construction land does not fall within the legal definition of 'property with residential use' under Verba 28.1 TGIS, as it lacks actual residential use and is merely undeveloped land.
Is a terrain for urban construction considered a property with residential use for Stamp Tax purposes?
This is the central substantive issue in the case. The claimant argues that terrain for urban construction is NOT a property with residential use for stamp tax purposes under Verba 28.1 TGIS. According to the claimant, Verba 28.1 should apply only to properties with actual residential use, not to undeveloped construction land that merely has potential for future residential development. The Tax Authority takes the opposite position, arguing that the concept of 'properties with residential use' encompasses both built residential properties and construction land designated for residential development. The arbitral tribunal must interpret whether 'residential use' requires actual current use or includes land with residential building potential.
What procedural defects can invalidate a Portuguese Stamp Tax liquidation notice?
Several procedural defects can invalidate a Portuguese stamp tax liquidation notice: (1) Lack of identification of the author - the assessment notice must identify the official who performed the act, including professional category or position and signature (even if typed), as required by article 123(1)(a)(g) of the Administrative Procedure Code; failure constitutes nullity under articles 133(1) CPA and 99(d) CPPT; (2) Absence of substantiation - the assessment must contain factual and legal grounds with logical and formal regularity for clear understanding, as required by articles 36(1)(2) CPPT and 77(1) LGT; lack of substantiation makes the assessment voidable under article 99(c) CPPT and violates constitutional requirements; (3) Omission of prior hearing - failure to provide the taxpayer opportunity for prior hearing before assessment when required by law constitutes a procedural violation that can invalidate the assessment.