Summary
Full Decision
ARBITRAL DECISION
I. REPORT
A…, S. A., legal entity no. …, with registered office at Rua …, nos. … to …, in Porto, (hereinafter referred to simply as Claimant), filed, on 28/10/2016, a request for constitution of a single arbitral tribunal, (hereinafter referred to as initial request or abbreviated I.R.) pursuant to the provisions of paragraph a) of number 1 of article 2, number 2 of article 5, number 1 of article 6, and articles 10 and following of the Legal Framework for Tax Arbitration (hereinafter LFTA), in conjunction with paragraph a) of article 99 and paragraphs e) and f) of no. 1 of article 102, both of the Tax Procedure and Process Code (hereinafter TPPC), in which the Tax and Customs Authority is the Respondent (hereinafter referred to simply as Respondent).
The Claimant requests the declaration of illegality of the tax act imposing Stamp Tax for the year 2015, in the total amount of €29,808.38, relating to item 28.1 of the General Table of Stamp Tax (GTST), which was assessed on the urban property described in the Land Registry Office of Porto, under the number …, parish of … and registered in the urban property matrix under article …
The request for constitution of the Arbitral Tribunal was accepted by the Honorable President of CAAD on 11/11/2016 and automatically notified to the Tax and Customs Authority.
Pursuant to the provisions of paragraph a) of no. 2 of article 6 and paragraph b) of no. 1 of article 11 of the LFTA, the Deontological Council appointed the undersigned as arbitrator of the single arbitral tribunal, who communicated acceptance of the assignment within the applicable period.
On 28/12/2016 the Parties were duly notified of this appointment, and neither expressed intention to refuse the appointment of the arbitrator, in accordance with the combined provisions of article 11 no. 1, paragraphs a) and b) of the LFTA and articles 6 and 7 of the Deontological Code.
In accordance with the provision set forth in paragraph c) of no. 1 of article 11 of the LFTA, the single arbitral tribunal was constituted on 12/01/2017.
By order of 16/01/2017 notification was ordered to the Director-General of the Tax and Customs Authority to join the administrative file, present a response and request the production of additional evidence.
On 23/11/2016 the Claimant requested that proof of payment of the third installment of the contested tax assessment be joined to the case file.
The Respondent presented a response on 14/02/2017 and joined the Administrative File, having requested waiver of the meeting referred to in article 18 of the LFTA and of production of arguments, as well as contending that the hearing of the witness listed by the Claimant was unnecessary.
By order of 15/02/2017, the parties were notified to submit final arguments, if they so wished.
In response to said order, the Claimant requested that the witness listed in the I.R. be heard, as the same would be useful to prove the facts alleged by the Claimant in articles 8, 9, 21 and 23 of the I.R.
By order of 28/02/2017, the previous order of 15/02/2017 was revoked and the Claimant invited to, within 10 days, join to the case file documentary evidence of the facts alleged in articles 8 and 9 of the initial petition and also the Model 1 Declaration of IMI no. …, which it will have submitted on 30/11/2006, according to the information contained in document no. 2 joined with the I.R.
On 10/03/2017, the Claimant joined 3 documents to the case file and also a copy of the decision issued by the Arbitral Tribunal in case no. 611/2016 –T, on 14/02/2017, in which the Claimant was also a party, and the request and cause of action being identical to those of the present proceedings.
By order of 14/03/2017 the joining of the documents to the case file was admitted and the parties were notified for final arguments, and the production of testimonial evidence was waived.
The Claimant presented arguments on 30/03/2017 and the Respondent on 19/04/2017.
The arguments of the Claimant are, in summary, as follows:
The Claimant contends that the said assessment and subsequent acts are vitiated by the following defects:
a) Error in the interpretation of Item 28.1 insofar as it only applies to land for construction with exclusive designation for housing;
b) Error in the interpretation of Item 28.1 of the GTST, insofar as the item does not apply to the productive sector;
c) Error regarding the legal prerequisites through the application of a materially unconstitutional norm, based on the violation of the Principle of Equality through discrimination of companies engaged in purchasing for construction and resale, compared to other companies;
d) Error regarding the legal prerequisites through the application of a materially unconstitutional norm, based on the violation of the Principle of Equality to the extent that it subjects taxation to the ownership of land for construction regarding which the construction, authorized or planned, does not include housing of value equal to or greater than that amount.
Concluding with a request for declaration of illegality and consequent annulment of the contested act, in accordance with no. 1 of article 163 of the Administrative Procedure Code (APC).
It contends that the Tax Authority makes an erroneous interpretation of the concept of "land for construction whose construction, authorized or planned, is for housing," and that the rule of incidence does not apply to the land for construction of which it is the owner because the same has no construction, nor any project approved by the Municipality, lacking the necessary municipal licensing that would designate the purpose as "housing" for the said property. It further argues that item 28.1 of the GTST only applies to land for construction with exclusive designation for housing.
It also relies on the fact that in 1996 a subdivision project was presented, which aimed at dividing the land for construction into four lots, designated for commercial and service purposes, that is, non-residential, notwithstanding that said project was rejected in that same year.
The Claimant cites various decisions of the Supreme Administrative Court and the CAAD to support its position, although referring to situations of taxation for tax years prior to the entry into force of Law no. 83-C/2013 of 31/12.
The Claimant further attributes another error to the Tax Authority's interpretation, that it leads to an increase in taxation on the productive sector, which was not in the spirit of the legislator when creating the norm. Regarding the legislative intent behind the introduction of item 28 of the GTST it cites numerous decisions of the Arbitral Tribunal.
It also invokes that item 28.1 of the GTST is unconstitutional because it violates the principle of equality provided for in article 13 of the Constitution of the Portuguese Republic, in its aspects of the principle of proportionality and the principle of contributive capacity, by contending that the norm penalizes and discriminates against real estate companies compared to companies engaged in other sectors of activity and that do not need to hold land for construction with designation planned or approved for housing.
It also considers the item unconstitutional, based on the violation of the cited Principle of Equality, to the extent that it subjects taxation to the ownership of land for construction regarding which the construction, authorized or planned, does not include housing of value equal to or greater than €1,000,000.00.
It concludes by requesting reimbursement of the tax improperly paid, plus compensatory interest.
In summary, regarding the grounds upon which the Claimant bases its arbitral request for annulment of the contested act, the Respondent invokes that it was issued in accordance with the information contained in the property record and results from the direct application of the legal norm, which moreover is clear.
It notes that the legislator's choice of "property with housing designation" over "residential property" appeals to the allocation coefficient, which applies, uniformly, to all urban properties (cf. article 41 of the IMI Code).
It contends that after the entry into force of the wording of item 28.1 introduced by Law 83-C/2013, of 31/12 it became clear that the item applies to land for construction, with housing designation, and one should resort to the IMI Code to define what is meant by land for construction and what is meant by housing designation.
Specifically regarding the violation of the principle of equality, in its aspects of the principle of proportionality and the principle of contributive capacity, invoked by the Claimant, the Respondent invokes doctrine and various decisions of the Constitutional Court, both regarding the alleged violation of the principle of equality by item 28.1 of the GTST, and by other rules of incidence.
The Respondent further appeals to the legislative intent of the norm to defend its constitutionality.
It concludes by contending that, the assessment being correct, no compensatory interest is due.
It concludes by defending the lack of merit of the request for arbitral pronouncement.
II. PROCEDURAL ORDER
The request for constitution of the Arbitral Tribunal was timely filed (cf. article 10, no. 1, paragraph a) of the LFTA).
The Arbitral Tribunal was regularly constituted and has jurisdiction (cf. article 2, no. 1, paragraph a) of the LFTA combined with article 10, no. 1, paragraph a) of the same statute).
The parties have legal personality and capacity and are legitimate and the cumulation of claims is admissible (cf. articles 4 and 10, no. 2, of the LFTA and article 1 of Order no. 112-A/2011, of 22 March).
The value of the dispute is fixed at €29,808.38 as indicated by the Claimant, in accordance with the provisions of articles 3, no. 2 of the Regulation of Costs in Tax Arbitration Proceedings (RCPAT), 97-A, no. 1, paragraph a) of the TPPC and 306, no. 2 of the Code of Civil Procedure (CCP).
It is necessary to examine the merits of the claims.
III. REASONING
A. Proven Facts
There is no disputed factual matter alleged, the following essential facts being specifically proven for the judgment of the case:
1.) The Claimant's corporate purpose is the purchase, sale, resale and leasing of real property, as well as the provision of related services.
2.) The Claimant was the owner as of 31/12/2015 of the urban property – land for construction – subject to the tax assessment now in question, located in the parish of …, municipality of Porto, registered in the urban property matrix under article U-…, with the current cadastral value of €2,980,838.01, which originated from urban article no. … of the same parish and municipality (Document no. 2 of the I.R.).
3.) On 14/08/1996 the Municipal Chamber of Porto rejected a subdivision request presented by the Claimant, which aimed at dividing the land for construction into four lots, designated for commercial and service purposes, that is, non-residential, on the grounds of violation of the provisions of article 4 of the Porto Urban Development Plan Regulation (Documents no. 1 and 2 of the request of 10/03/2017).
4.) The property on which the taxation now at issue was assessed (U-…) was registered in the urban property matrix through the submission of IMI Model 1 Declaration, submitted to the Tax Authority on 30/11/2006 (Document no. 2 of the I.R. and Document no. 3 of the request of 10/03/2017).
5.) In the assessment, to determine the allocation coefficient, given that no building permit or certificate of constructive feasibility was presented, the construction envisioned for the location was considered to be of the type – housing, taking into account the Urban Development Plan and the construction in the surrounding area (fact invoked by the Respondent in the Administrative File and not contested by the Claimant).
6.) The property to which the urban property article in question relates, owned by the Claimant, was not constructed or under construction as of 31/12/2015 (fact invoked by the Claimant and not contested by the Respondent).
7.) The property now at issue was registered in the matrix, having utilized the allocation coefficient "housing" and the location coefficient "housing" (Document no. 2 of the I.R.).
8.) The Claimant's property is covered by the Porto Urban Development Plan (Document no. 1 of the request).
9.) The Claimant was notified of the Stamp Tax assessment for the tax year 2015, for the property in question, which determined an amount to be paid of €29,808.38 in three installments (Documents no. 3 and 4 of the I.R. and Document joined with the Claimant's request of 23/11/2016).
10.) The Claimant paid the 1st, 2nd and 3rd installments of the contested assessment, respectively the collection notices 2016…, 2016… and 2016…, on 14/04/2016, 04/07/2016 and 03/11/2016, in the amount of €9,936.14, €9,936.12 and €9,936.12 (Documents no. 5 and 6 of the I.R. and Document joined with the Claimant's request of 23/11/2016).
B. Essential Unproven Facts
There are no facts, alleged or of official knowledge, relevant to the decision and unproven.
C. Motivation
For the conviction of the Arbitral Tribunal regarding the proven facts, the documentary evidence referred to above in the various points were relevant and, in general, all other documents joined to the case file, all analyzed critically and in conjunction with the pleadings.
D. Law
Questions to be decided:
In summary and if we understand correctly, the following are the questions to be examined and decided.
1) Is item 28.1 of the GTST, insofar as it subjects Stamp Tax to "land for construction whose construction, authorized or planned, is for housing, in accordance with the provisions of the IMI Code – 1%" applicable to the Claimant's property?
2) Is item 28.1 of the GTST, insofar as it subjects Stamp Tax to "land for construction whose construction, authorized or planned, is for housing, in accordance with the provisions of the IMI Code – 1%" unconstitutional due to violation of the principle of equality?
Let us examine:
1) Is item 28.1 of the GTST, insofar as it subjects Stamp Tax to "land for construction whose construction, authorized or planned, is for housing, in accordance with the provisions of the IMI Code – 1%" applicable to the Claimant's property?
The Claimant contends that the tax assessments and the respective collection notices are illegal because they violate Item 28.1 of the GTST, with the wording given to it by Law no. 83-C/2013, of 31/12, due to error in the interpretation of the said item, which led the Tax Authority to improperly include its property in the said rule of incidence.
Let us examine the applicable law. With the legislative amendment made by article 194 of Law no. 83-C/2013, of 31/12, the scope of incidence of Item 28.1 of the General Table of Stamp Tax was expanded to cover land for construction, whose construction, authorized or planned, is for housing.
According to the interpretation rules contained in article 11 of the General Tax Law, it will be necessary to resort to the concept of "land for construction" contained in the IMI Code (IMILC). The IMILC defines land for construction as land situated, within or outside an urban agglomeration, for which a building or construction license has been granted, or authorization admitted, prior notification or favorable preliminary information issued for subdivision or construction operations, and also those that have been declared as such in the acquisition title, except for land on which the competent entities prohibit any of those operations, particularly those located in green areas, protected areas or which, in accordance with municipal land use planning plans, are designated for public spaces, infrastructure or equipment (cf. article 6, no. 3).
It follows, in turn, from articles 45 of the IMILC, combined with article 40-A of the same statute that the allocation of land for construction is relevant for purposes of calculating the taxable property value of that land. Thus, it is based on the allocation, authorized or planned, that the value of the area of implantation is defined (cf. article 45, no. 2 of the IMI), which varies between 15% and 45% of the value of the buildings authorized or planned.
Also the allocation coefficient, provided for in article 41 of the IMILC is relevant for the determination of the taxable property value, and in the case at hand was registered in the property record as "housing," as shown in the property record, there being no notice that the Claimant has challenged the legality of the act fixing the taxable property value or the assessment process.
From the foregoing, we must conclude, as in the arbitral decision in case no. 527/2015-T that "the fact that in determining the taxable property value of land for construction one takes into account the allocation for purposes of determining the respective value of the area of implantation (cf. article 45, no. 1 and 2 of the IMILC) leads to the delimitation of the rule of incidence provided for in Item 28.1 of the General Table of Stamp Tax, not only based on the type of urban property in question (land for construction) but also based on its allocation: housing (article 40-A, no. 1 of the IMI Code), commerce or services (article 40-A, no. 2 of the IMI Code), industry (article 40-A, no. 3 of the IMI Code) or parking (article 40-A, no. 4 of the IMI Code), by reference to article 40-A, no. 5 and article 45 of the IMI Code"" and thus, the expression "land for construction whose construction, authorized or planned, is for housing" should be interpreted to mean land for construction whose allocation, authorized or planned, is for housing.
Let us see. In accordance with the provisions of no. 1 of article 45 of the IMILC "the taxable property value of land for construction is 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 part, added to the value of the land adjacent to the implantation" and with no. 2 of the same provision, the value of the area of implantation "varies between 15% and 45% of the value of the buildings authorized or planned." Now, both in the calculation of the value of the area of implantation, and in the calculation of the value of the adjacent area, the allocation coefficient provided for in article 41 of the IMI Code is used as a parameter.
Now, in the specific case, since the Claimant's property is land for construction whose allocation, authorized or planned, is for housing it falls within the scope of incidence of the norm provided for in Item 28.1 of the General Table of Stamp Tax, being applicable to the property of which the Claimant is the owner.
Accordingly, this Tribunal understands that land for construction whose allocation, authorized or planned, is for housing and which has a taxable property value equal to or greater than €1,000,000, as is the land for construction now at issue, are covered by the rule of incidence contained in Item 28.1 of the GTST, in the wording given by Law no. 83-C/2013, of 31/12, and therefore the Claimant's argument in this regard is unfounded.
2) Is item 28.1 of the GTST, insofar as it subjects Stamp Tax to "land for construction whose construction, authorized or planned, is for housing, in accordance with the provisions of the IMI Code – 1%" unconstitutional due to violation of the principle of equality?
The Claimant contends the unconstitutionality of the rule of incidence due to violation of the principle of equality. Let us see if the argument is well-founded.
There are already numerous decisions of the Constitutional Court on the constitutional issues raised by taxpayers regarding item 28.1 of the GTST, and there are also arbitral decisions on this matter.
These are, therefore, decisions issued under the same legislation and with identity of legal grounds.
Thus, in deference to the principle of procedural economy, the Tribunal refers to Constitutional Court Decisions no. 590/2015, 568/2016 and 692/2016, issued on 11/11/2015, 19/10/2016 and 14/12/2016, respectively, which confirmed that item 28.1 of the GTST is not unconstitutional, with the wording given to it by Law no. 83-C/2013, of 31/12, referring entirely to their reasoning, transcribing only the parts it considers most relevant:
"(…) The constitutional principle of tax equality, as a specific expression of the general structural principle of equality (article 13 of the Constitution), is embodied "in the generality and uniformity of taxes. Generality means that all citizens are subject to the payment of taxes (…); in turn, uniformity means that the distribution of taxes among citizens obeys the same criterion identical for all" (TEIXEIRA RIBEIRO, Lessons on Public Finances, 5th edition, p. 261). And such criterion, as emphasized by CASALTA NABAIS, is found in the principle of contributive capacity: "This thus implies equal tax for those who have equal contributive capacity (horizontal equality) and different tax (in qualitative or quantitative terms) for those who have different contributive capacity in proportion to that difference (vertical equality)" (Tax Law, 7th edition, 2012, p. 155). As a prerequisite and criterion of taxation, the principle of contributive capacity "on the one hand, constituting the ratio or cause of taxation keeps the fiscal legislator from arbitrariness, requiring that in the selection and articulation of tax facts, it adheres to manifestations of contributive capacity, that is, erects as the object and taxable matter of each tax a certain economic prerequisite that is a manifestation of that capacity and is present in the various legal hypotheses of the respective tax" (CASALTA NABAIS, ibid., p. 157).
Thus it has been stated by the Constitutional Court, an example being Decision no. 84/2003:
"The principle of contributive capacity expresses and concretizes the principle of fiscal or tax equality in its aspect of "uniformity" – the duty of all to pay taxes according to the same criterion – with contributive capacity filling the unitary criterion of taxation", being understood this criterion as that in which "the incidence and distribution of taxes – more precisely of "fiscal taxes" – should be made according to the economic capacity or "capacity to spend" (…) of each one and not according to what each one may eventually receive in goods or public services (benefit criterion). (…) Notwithstanding the silence of the Constitution, it is the generalized understanding of doctrine that "contributive capacity" continues to be a basic criterion of our "fiscal Constitution" and it can (or should) be reached from the structural principles of the fiscal system set forth in articles 103 and 104 of the CRP (…)"."
This Tribunal has, however, emphasized that the principle of contributive capacity does not dispense with the need for other constitutional principles. As stated in Decision no. 711/2006, "it is clear that the "principle of contributive capacity" must be reconciled with other principles with constitutional dignity, such as the principle of the Social State, the freedom of the legislator to shape the law, and certain requirements of practicability and cognoscibility of the tax fact, also indispensable for the fulfillment of the purposes of the fiscal system". And it continues: "To ascertain, however, the existence of a particularism sufficiently distinct to justify an inequality of legal regime, and to decide the circumstances and factors to be considered as relevant in such ascertainment, is a task that primarily falls to the legislator, who holds the primacy of the concretization of constitutional principles and the corresponding freedom to shape the law. Therefore, the principle of equality presents itself fundamentally to legal operators, in the context of control of constitutionality, as a negative principle (…) - as a prohibition of arbitrariness".
In sum, in the synthesis of Decision no. 695/2014, "the principle of tax equality can be embodied through different aspects: a first, is in the generality of the tax law, in its application to all without exception; a second, in the uniformity of the tax law, in treating equally taxpayers who are in equal situations and differently those who are in different situations, to the extent of the difference, to be assessed by contributive capacity; a final, is in the prohibition of arbitrariness, in forbidding the introduction of discriminations among taxpayers that are devoid of rational basis".
13. The argument of the appellant places itself in this last plane, responding negatively to the question about the reason for the taxation investigated, fundamentally by assuming, in its view, an unsystematic and arbitrary character, based on the consideration that the taxation of real property should be done under IMT and IMI, and for discriminating without rational basis taxpayers with the same contributive capacity. Without grounds, be it said.
14. First of all, from the classification of the taxation under analysis in the scope of Stamp Tax, and not in other species of taxes, does not result, in itself, infraction of any parameter of constitutionality. Even if one were to conclude for the introduction of a factor of incoherence, or even of imbalance, in the system of taxation of real property, as the appellant intends, mere unsystematicity of the questioned norm is not apt to determine constitutional censure (cf., even in other fields of regulation, Decisions no. 353/2010 and 324/2013).
Note, however, that the incidence of Stamp Tax, marked by heterogeneity, refers here, regarding essential elements of the calculation of the tax, particularly as to the normative criteria defining the taxable property value to be considered, to the regulation contained in the IMI Code, ensuring, or at least promoting, a certain degree of harmony between the various legislative bodies in the field of real property taxation. Doctrine even attributes to it the condition of "additional IMI tax," aimed at "discriminating properties of higher taxable property value and subjecting them to a more burdensome fiscal regime than the rest" (JOSÉ MARIA FERNANDES PIRES, ibid., p. 504), explaining the creation of a new fact subject to Stamp Tax, in addition to the heterogeneity that characterizes this tax, by the need to increase the fiscal revenue of the State, given that IMI revenue reverts to the municipalities and Stamp Tax is a revenue of the State (ibid., p. 506).
Other means can certainly be conceived at the legislator's reach, possibly through resort to other tax species, but it is no less certain that the option taken is inscribed in the broad margin of discretion of the fiscal legislator, being incapable of founding autonomous constitutional censure.
15. Nor is there found in the rule of incidence at issue an arbitrary fiscal measure, because it is devoid of rational basis. As seen, the legislative amendment had as its purpose the expansion of the taxation of real property, making it fall more intensely on ownership which, by its value substantially higher than that of the generality of urban properties with housing allocation, reveals greater indicators of wealth and, as such, is capable of founding the imposition of an increased contribution for the remedying of public accounts of its titleholders, in realization of the aforementioned "principle of equity in austerity".
The appellant affirms that the norm at issue is "iniquitous" and advances with two hypothetical cases that, in its view, make evident the violation of the principles of tax equality and contributive capacity.
15.1. The first case compares two taxpayers, in which one possesses "property worth approximately one million and two hundred fifty thousand euros" and bears Stamp Tax by way of the rule of incidence of item no. 28, and another who, by "possess[ing] property worth 20 million euros but does not have, in that asset, any property with taxable property value exceeding 1 million" bears no taxation. Therefrom it follows, it contends, "vertical inequality" among taxpayers without justifying grounds.
However, the proposed comparison does not find merit, as it diverges, in the tertium comparationis chosen, from the structure of the norm under analysis. The taxation resulting from the rule of incidence lodged in item no. 28 assumes the nature of a partial tax (thus, JOSÉ MARIA FERNANDES PIRES, ibid., p. 507), taking as the taxable base the urban property designated for housing, calculating the respective taxable property value by relevant legal and economic unit. It is not a general tax on assets, or even a tax on all real property, in terms of founding a comparison rooted in a view of personalization of the tax and from a base that attends to all assets of the tax subject.
15.2. It is worth noting that the Constitution does not impose on the legislator the creation of a general tax on assets, assigning to taxation on assets the function of contributing to equality among citizens (article 104, no. 3, of the Constitution), the legislator being free as to the solution to adopt. It can, as CASALTA NABAIS points out, in pursuit of such constitutional objective, "proceed to the discrimination of assets, taxing the highest and exempting the lowest or adopting progressive rates" (ibid., p. 436). And, even if one can extract from the principle of contributive capacity a model of a general tax on assets with a taxable base extended to all manifestations of wealth, the obstacles of practicability that oppose it are capable of leading in practice to the creation of inequalities among taxpayers. As stated by SÉRGIO VASQUES (Contributive Capacity, Income and Assets, in Tax Law, 2005a, no. 23, p. 44):
"[W]here such taxes have been instituted – and there are not many cases – their application has been vitiated by the grossest fraud, thereby producing an inequality among taxpayers that cannot be tolerated. The equality of a tax is measured by the results of its application and when the legislator knows in advance that it cannot tax any manifestation of wealth with effective equality, it should then refrain from subjecting it to tax.
We can therefore conclude by saying that the principle of contributive capacity has useful and precise content in the shaping of taxes on assets but that the model to which it points, that of a tax on global net assets, produces in practice breaks in equality greater than the gains it brings. When it is said that there is no room in modern fiscal systems for a tax on global assets alongside VAT and tax on personal income this will surely be true – not by force of the principle of contributive capacity, which demands it, but for reasons of practicability that are beyond it.'"
15.3. Thus being the case, the assessment of respect for the principle of fiscal equality in its material dimension needs to be referred to the unit property designated for housing, which means the conclusion that in the first case there is no arbitrary discrimination among taxpayers in the uniform operation of the relevant substantive criterion, translated in the attribution to each property with housing allocation of taxable property value equal to or greater than €1,000,000.00.
As, further, there persists an effective connection between the tax obligation and the economic prerequisite selected as the object of the tax, without infringing the principle of contributive capacity, whose scope, not being excluded, diminishes in the context of taxation on assets, compared to what happens in taxation on income (thus, SÉRGIO VASQUES, Manual of Tax Law, Coimbra, 2011, p. 254). Indeed, the appellant does not dispute that the taxable property value on which the incidence of the tax depends is reached only by urban properties with housing vocation of the highest economic significance, externalizing levels of wealth corresponding to the highest standards of Portuguese society.
15.4. The second case, according to the appellant demonstrative of inequality on the horizontal plane, compares the taxation that was imposed on it, as owner of property whose taxable property value exceeds "barely" the amount of €1,000,000.00, with the non-taxation of a hypothetical taxpayer who was the owner of 10 properties, whose taxable property value was situated at €990,000.00.
It is worth noting that the existence of distinct application results in the face of very approximate values - in excess or by defect - of a quantitative expression stipulated normatively as the limit – positive or negative – of any legal effect is inherent to its fixing by the legislator. Whether in the definition of tax incidence, or in the establishment of tax exemptions or benefits based on value criteria, it is always possible to find examples of taxpayers with differentiated treatment based on a quantitative variation of very reduced significance.
For being necessarily thus, the differentiation carried in the second hypothesis placed does not appear to be devoid of rational basis, in accordance with the scope, structure and nature of the norm under analysis: aimed at increasing the taxation of properties with housing allocation of high value, the fiscal measure could not fail to determine, by imperative of the principle of tax legality, the concrete taxable property value from which it would begin to apply to such properties a special rate of Stamp Tax, which excludes, also on this point, the verification of arbitrariness on the part of the legislator." (cf. pages 13 to 17 of Constitutional Court Decision no. 590/2015, underlined ours)
"The unconstitutionality of item no. 28.1 of the GTST, in the original wording, was the subject of a negative judgment in Decision no. 590/2015 of this Tribunal: it was considered that such precept was not vitiated by unconstitutionality, no violation being found of the principles of equality and contributive capacity (v. their respective no. 12 to 15) and, likewise, of proportionality (v. their respective no. 16). Such jurisprudence was reiterated in Decisions no. 83/2016 and 247/2016.
The argumentation of the Tribunal then expended was followed very closely in the decision now appealed. And with reason.
Notwithstanding the change in wording already noted, the argumentation that was then adopted is entirely applicable in situations in which Stamp Tax assessment on land for construction whose construction, authorized or planned, is for housing, in accordance with the provisions of the IMI Code, is at issue, and whose taxable property value is equal to or greater than €1,000,000, as occurs, precisely, in the present proceedings. Moreover, the parameters invoked by the appellant were duly addressed by the Constitutional Tribunal in the mentioned Decision.
For this reason, understanding that such jurisprudence should be maintained, reference is made to its respective reasoning regarding the alleged violation of the principles of equality and proportionality." (cf. page 6 of Constitutional Court Decision no. 568/2016).
On the violation of the principle of proportionality by item 28 of the GTST, in addition to the Constitutional Court Decisions mentioned above, we refer to the summary of the decision of the 2nd Section of the Northern Central Administrative Court, issued in case no. 385/13.9BEPRT, on 16/02/2017, whose reasoning we accept and endorse: "II) The fiscal measure under analysis did not affect in the past the rights of the respective tax subjects; it only determined, given its periodic character and the continuity of the legal relations on which it applies, an additional burden to be paid in the future by virtue of the ownership of certain real property rights, regardless of when such ownership began.
III) The legislative amendment had as its purpose the expansion of the taxation of real property, making it fall more intensely on ownership which, by its value substantially higher than that of the generality of urban properties with housing allocation, reveals greater indicators of wealth and, as such, is capable of founding the imposition of an increased contribution for the remedying of public accounts of its titleholders, in realization of the aforementioned "principle of equity in austerity".
IV) The items of Stamp Tax collected by way of the incidence provided for in item no. 28 are apt and capable of achieving the purposes of broader distribution of effort in a period of additional fiscal and financial sacrifices that the legislator sought to achieve, and that, as a fiscal measure aimed at affecting more intensely the holders of real property rights of enjoyment over urban properties with housing vocation and of the highest value, within the reach only of those with high economic strength, no reasons are perceived to conclude that the dimensions of necessity or just measure, contained in the principle of proportionality, are not respected."
Following the jurisprudence transcribed above there remain, therefore, no doubts whatsoever for this Tribunal regarding the soundness of the interpretation that has been adopted by the Constitutional Court regarding the rule of incidence contained in article 28.1 of the GTST, with the wording given to it by Law no. 83-C/2013, of 31/12, and therefore in the case at hand this Tribunal cannot refuse the application of said norm on the grounds of its unconstitutionality, as the Claimant seeks.
Thus, since the Claimant's urban property is land for construction with allocation, planned or authorized, for housing, the said norm should be applied, which does not suffer from the defect of unconstitutionality attributed to it by the Claimant.
Accordingly, also in this regard, the Claimant's request is unfounded.
Accordingly and with the reasoning above, it is decided:
To render the arbitral pronouncement request entirely unfounded.
To condemn the Claimant in the costs of the proceedings.
Communicate to the Attorney General of the Republic, for the purposes of article 280, no. 5 of the CRP.
Value: The value of the dispute is fixed at €29,808.38 as indicated by the Claimant, in accordance with the provisions of articles 3, no. 2 of the Regulation of Costs in Tax Arbitration Proceedings (RCPAT), 97-A, no. 1, paragraph a) of the TPPC and 306, no. 2 of the Code of Civil Procedure (CCP).
Costs: The amount of costs is fixed at €1,530.00 (one thousand five hundred and thirty euros) under the provisions of article 22, no. 4 of the LFTA and Table I attached to the RCPAT, to be borne by the Claimant, in accordance with the provisions of articles 12, no. 2 of the LFTA and 4, no. 4 of the RCPAT and 527 of the CCP.
Let notification be made.
Lisbon, 14 July 2017
The Arbitrator,
Susana Soutelinho
Frequently Asked Questions
Automatically Created