Process: 658/2016-T

Date: March 30, 2017

Tax Type: Selo

Source: Original CAAD Decision

Summary

In Process 658/2016-T, a Portuguese company challenged Stamp Tax assessments totaling €13,566.10 on construction land valued at €1,356,610 in Matosinhos. The claimant argued that Verba 28.1 of the General Table of Stamp Tax (TGIS) applies exclusively to land for residential construction, not commercial or productive purposes, and that the assessments violated constitutional principles of taxpaying capacity and equality. The Tax Authority (AT) contended that following the 2013 amendment by Law 83-C/2013, Verba 28.1 applies to all construction land meeting the statutory criteria, regardless of intended use. The AT argued the tax serves fiscal consolidation objectives under Portugal's Economic and Financial Adjustment Programme and cited favorable Constitutional Court precedent. The case illustrates key interpretative disputes regarding the scope of Stamp Tax on high-value construction land, the distinction between residential and non-residential development purposes, and the procedural framework for challenging such assessments through CAAD arbitration. The tribunal found no procedural defects and proceeded to substantive analysis of whether the legislation's reference to construction land encompasses commercial development properties or applies restrictively to residential housing projects only.

Full Decision

ARBITRAL DECISION

1. REPORT

1.1. A…, Lda., taxpayer no.…, with registered address at Rua …, …, in Porto, submitted on 31/10/2016 a request for arbitral pronouncement, in which it petitions the declaration of illegality and unconstitutionality of the acts of Stamp Tax assessment for the year 2015, corresponding to documents no. 2016…, no. 2016…, and no. 2016…, in the amounts of € 4,522.04, € 4,522.03, and € 4,522.03, respectively.

1.2. The Honourable President of the Deontological Council of the Administrative Arbitration Centre (CAAD) designated, on 02/12/2016, the signatory of this decision as sole arbitrator.

1.3. On 19/01/2017 the arbitral tribunal was constituted.

1.4. In compliance with the provisions of Article 17.º, paragraph 1, of the Legal Regime of Tax Arbitration (RJAT), the Tax and Customs Authority (AT) was notified on 19/01/2017 to, if it so wished, present its response and request the production of additional evidence.

1.5. On 22/02/2017 the AT presented its response, accompanied by the respective administrative file.

1.6. On 22/02/2017 the arbitral tribunal decided to dispense with the holding of the meeting referred to in Article 18.º, paragraph 1, of the RJAT, on the grounds of the principle of the arbitral tribunal's autonomy in conducting the proceedings, inviting both parties to, if they so wished, present optional written submissions and scheduled the date for rendering the final decision.

1.7. The Claimant and the Defendant did not present optional written submissions.

2. PRELIMINARY RULING

The arbitral tribunal was regularly constituted and is materially competent.

The parties have legal personality and capacity and are legitimate, with no defects in representation.

There are no nullities, exceptions, or preliminary questions that prevent the tribunal from considering the merits, and none that the tribunal is obliged to consider ex officio.

Consequently, the conditions are met for the rendering of the final decision.

3. POSITIONS OF THE PARTIES

There are two positions in conflict: that of the Claimant, set forth in the request for arbitral pronouncement, and that of the AT in its response.

In summary, the Claimant contends that the assessment in question suffers from the following defects:

a) Illegality resulting from the erroneous interpretation of Item no. 28.1 of the General Table of Stamp Tax (General Table), insofar as it applies only to land for construction exclusively intended for residential use, the legislator having chosen not to burden the productive sector; and further

b) Illegality resulting from an error regarding the legal requirements through the application of a materially unconstitutional rule, based on the violation of the constitutional principles of taxpaying capacity and equality.

For its part, the AT maintains that:

a) The Claimant acknowledges that the property in question is a "land for construction";

b) On the other hand, to the situation in question the wording of Item no. 28.1 of the General Table as introduced by Law no. 83-C/2013 of 31 December is applicable, which expressly refers to the Municipal Property Tax Code for the definition of "land for construction";

c) Following the entry into force of the new wording of Item no. 28.1 of the General Table, the questions raised regarding the taxation of land for construction were, according to the AT, resolved;

d) Thus, it is clear from the text of the law that Item no. 28.1 of the General Table applies to land for construction:

  • for which a licence or authorization for a subdivision or construction operation has been granted, prior notification admitted, or favourable preliminary information issued;

  • and also those that were classified as such in the acquisition deed;

e) The AT further argues that, well before the actual construction of the property, it is possible to determine and ascertain the designation of the land for construction;

f) Therefore, according to the AT, the mere creation of a right of potential construction immediately increases the value of the property in question;

g) With regard to the alleged unconstitutionality of the assessments, the AT contends that Item no. 28.1 of the General Table does not violate any constitutional parameter, in particular the Principles of equality and taxpaying capacity;

h) In fact, the Constitution of the Portuguese Republic requires that what is necessarily equal be treated equally and what is essentially different be treated differently, not preventing differential treatment, but only arbitrary, unreasonable discriminations, that is, distinctions of treatment that do not have sufficient material justification and foundation;

i) The constitutional principle of equality therefore does not imply the prohibition of all positive or negative discriminations, but only those that appear to lack reasonable foundation, which constitutes the constitutional limit of the prohibition of arbitrariness;

j) Thus, the norm of tax incidence provided for in Item no. 28.1 of the General Table, introduced by Article 4.º of Law no. 55-A/2012, of 29 October, establishes two basic distinctive requirements for tax liability to occur: i) the qualification of the property according to its residential use and ii) its tax asset value equal to or exceeding € 1,000,000.00;

k) It is further important to note that the legislator, in addition to conceiving Item no. 28.1 of the General Table as a measure for obtaining fiscal revenue necessary for the budgetary consolidation effort enshrined in the Economic and Financial Adjustment Programme (EAFP) agreed between the Portuguese Government and the International Monetary Fund (IMF), the European Commission, and the European Central Bank (ECB);

l) Therefore, taxation under Stamp Tax as provided for in Item no. 28.1 of the General Table complies with the criterion of adequacy, insofar as it aims to tax the wealth embodied in the ownership of properties of high value whose acquisition implicitly demonstrates a certain economic capacity.

m) The AT concludes that recent case law of the Constitutional Court regarding Item no. 28.1 of the General Table has pronounced itself precisely in a sense contrary to the Claimant's claim.

4. FACTS

4.1. FACTS FOUND TO BE ESTABLISHED

On the basis of the documents contained in the file, the following is found to be established:

4.1.1. The Claimant is the owner and legitimate proprietor of the urban property of the type "land for construction" located in the Union of Parishes of … and …, municipality of Matosinhos, district of Porto, registered in the urban property matrix under article….

4.1.2. The urban property in question has no building or structure erected on its land, being merely a "land for construction", as described in the property record.

4.1.3. The tax asset value of the urban property in question amounts to € 1,356,610.00.

4.1.4. The voluntary payment period for the Stamp Tax assessment of 2015 (document no. 2016…), in the amount of € 4,522.04, ended on 30 April 2016.

4.1.5. The voluntary payment period for the Stamp Tax assessment of 2015 (document no. 2016…), in the amount of € 4,522.03, ended on 30 September 2016.

4.1.6. The voluntary payment period for the Stamp Tax assessment of 2015 (document no. 2016…), in the amount of € 4,522.03, ended on 30 November 2016.

4.1.7. In order to obtain suspension of the enforcement proceedings underlying the said assessment acts, the Claimant proceeded to present a bank guarantee.

4.2. FACTS NOT FOUND TO BE ESTABLISHED

There are no facts relevant to the decision that have not been established.

5. LEGAL ANALYSIS

5.1. (ILLEGALITY OF THE STAMP TAX ASSESSMENT ACT OF 2015

Pursuant to the wording in force at the date of the facts, as amended by Law no. 83-C/2013, of 31 December, Item no. 28.1 of the General Table provides that Stamp Tax applies to:

"28 - Ownership, usufruct or right of superficies of urban properties whose tax asset value shown in the register, in accordance with the Municipal Property Tax Code (CIMI), is equal to or greater than (euro) 1,000,000 - on the tax asset value used for the purpose of IMI:

28.1 - For each residential property or for land for construction whose authorized or planned construction is for residential purposes, in accordance with the provisions of the IMI Code - 1%" [emphasis added];

Considering the letter of the law, it is verified that the norm of tax incidence, regarding land for construction, restricts the tax event to land for construction whose authorized or planned construction is exclusively for residential use.

Insofar as the Stamp Tax Code does not contain a definition of "land for construction", it is necessary to determine the concept of "land for construction" as provided in Article 6.º, paragraph 3, of the IMI Code.

Accordingly, land for construction is considered as "(…) land situated within or outside an urban agglomeration, for which a licence or authorization for a subdivision or construction operation has been granted, prior notification admitted or favourable preliminary information issued, and also land that has been declared as such in the acquisition deed, except land where the competent authorities prohibit any of these operations, specifically land located in green areas, protected areas, or which, in accordance with municipal territorial planning instruments, are designated for public spaces, infrastructure or equipment".

In fact, the concept of "land for construction" for tax purposes should not be understood as a concept of a formal nature, but rather as a concept of a material nature, especially reflected in the potential destination for construction.

In this sense, José Maria Fernandes Pires argues that "The value of land for construction corresponds, fundamentally, to a legal expectation, embodied in a right to construct thereon a property with certain characteristics and with a certain value." [1] [emphasis added].

In practice, prior to the exercise of the right to construct thereon, what exists is a mere expectation of being able to erect a construction.

Thus, the ownership of a property right over land for construction, even if of value exceeding € 1,000,000.00, on which no construction has been erected, nor authorized or planned, cannot be considered a manifestation of wealth subsumed under Item no. 28.1 of the General Table.

Indeed, a "land for construction" cannot, without more, be considered as a property exclusively used for residential purposes.

In reality, the land may never be built upon; it may be built upon exclusively for commercial purposes; it may even be built upon simultaneously for commercial and residential purposes or for collective residential use.

João Ricardo Catarino and Vasco Branco Guimarães also argue that "The Stamp Tax on properties of high tax asset value was created in 2012, by Law no. 55-A/2012, of 29 October, and represents, in substantive terms, an additional IMI tax on those properties, although, legally speaking, it is another tax event subject to Stamp Tax."

"Generally subject to this tax are urban properties with tax asset value equal to or exceeding 1 million euros that are intended for residential use or are land for construction whose authorized or planned construction is for residential purposes, in accordance with the provisions of the Stamp Tax Code." [emphasis added] [2].

For their part, António Santos Rocha and Eduardo José Martins Brás argue that "(…) firstly, (…) the stamp tax provided for in this item applies solely to urban property, so that all properties classified as rural will be excluded from it."

"In this way, Item 28.1 will cover urban properties that fall into the category of residential urban properties and land for construction whose authorized or planned construction is intended for residential use (…) whose tax asset value shown in the register is equal to or exceeding € 1,000,000." [emphasis added] [3].

Meanwhile, Andreia Gabriel Pereira contends that "Regarding objective incidence, the tax administration has maintained that the initial provision of Item no. 28 of the General Table of Stamp Tax permitted, from the outset, the taxation of land for construction whose tax asset value reached or exceeded 1 million euros."

"However, on this point, there is already abundant case law from the Supreme Administrative Court and arbitral case law (issued by arbitral tribunals constituted before the CAAD under the Legal Regime of Tax Arbitration) to the contrary."

"According to that case law, since the legislator has not defined the concept of «urban property with residential use» on which the incidence of the aforementioned Item no. 28 of the General Table of Stamp Tax depends, it is necessary to resort to the rules of the IMI Code and, insofar as Article 6.º of the IMI Code establishes a clear distinction between residential urban properties and land for construction, it is concluded that these cannot be considered for the purposes of incidence of Stamp Tax as «urban properties with residential use» – see, for example, the judgment of the Supreme Administrative Court of 29 October 2014, rendered in case no. 0505/14 or the arbitral decision issued in case no. 202/2014, on 16 October 2014." [emphasis added].

"In order to end the increasing litigation on this matter and acknowledging the absence of a legal rule that previously permitted it, the legislator amended, through the State Budget for 2014, point 28.1 of Item no. 28 of the General Table of Stamp Tax, now expressly providing that, in addition to «residential properties», Item no. 28 includes «land for construction whose authorized or planned construction is for residential purposes» – see Article 194.º of the State Budget for 2014, approved by Law no. 83-C/2013, of 31 December." [emphasis and highlight added].

"However, as the Supreme Administrative Court has also maintained, the said amendment does not have an interpretative character – see the judgment of the Supreme Administrative Court of 2 July 2014, rendered in case no. 0467/14 –, which determines that land for construction whose authorized or planned construction is intended for residential use with value equal to or exceeding 1 million euros can only be subjected to taxation through the application of Item no. 28 of the General Table of Stamp Tax from 2014 onwards (…)" [emphasis added] [4]

In the case at hand, the authorized construction contemplates for the building to be constructed its use for commercial purposes.

On the other hand, licensing does not, by itself, constitute a guarantee of the completion of the work, so there is uncertainty regarding the verification of effective residential use.

As is moreover evident from the Subdivision/Apportionment Licence no. …/08, it is provided that the urban property of the type "land for construction" in question was intended for both collective residential use and commerce.

Now, in the context of the application of Item no. 28.1 of the General Table, case law has been consistent in considering that "(…) only properties that are actually intended for residential use fall within the scope of incidence (…), an interpretation that was based on the literal element «designation», which presupposes a concrete and effective use for residential purposes, and on the «ratio legis», resulting from the restriction of the field of application of the rule to properties with residential use, to the circumstances in which the law was enacted." [5]

The present wording of Item no. 28.1 of the General Table, introduced by Law no. 83-C/2013, of 31 December, innovatively expanded the scope of objective incidence of the rule by explicitly including "land for construction" for which construction for residential purposes has been authorized or planned.

However, although the previous wording restricted the scope of incidence to effective use for residential purposes, the present wording of Item no. 28.1 of the General Table, having now included "land for construction", maintained the conditional requirement regarding the inclusion of construction, authorized or planned, for residential purposes.

In practice, it continues to restrict the scope of incidence, in the case of "land for construction", to construction authorized or planned that is for residential purposes, in accordance with the provisions of the IMI Code.

For this reason, the fact that the "land for construction" has a tax asset value exceeding € 1,000,000.00 cannot be considered the sole and exclusive condition for the application of Item no. 28.1 of the General Table.

In this regard, the subjection to Item no. 28.1 of the General Table depends on the cumulative fulfilment of the following requirements (in addition to ownership of the property):

  • the tax asset value shown in the register, in accordance with the IMI Code, to be equal to or exceeding € 1,000,000.00;

  • the property to be land for construction; and

  • the construction authorized and planned for it to be for residential purposes, in accordance with the IMI Code. [6]

Accordingly, it is necessary to verify in the case at hand whether these requirements are met.

As to the first requirement, the Claimant does not contest the tax asset value of the property, so it is verified: the property as a whole has a tax asset value exceeding € 1,000,000.00.

As to the second requirement, the Claimant likewise does not contest the qualification of the property as "land for construction" nor its inclusion in the definition contained in Article 6.º, paragraph 3, of the IMI Code [7], so it is also verified.

It is not sufficient that these two requirements be met; it is necessary to analyze the third requirement: that the construction authorized and planned be for residential purposes, in accordance with the provisions of the IMI Code.

Now, as is evident from the Subdivision/Apportionment Licence, the property in question is not intended solely for residential use; it has a mixed designation: commerce and collective residential use.

Furthermore, without needing to enter into the discussion of what constitutes "authorization or planning of construction for residential purposes", both in urban planning and tax terms [8], there is no doubt in this specific case: even if it were considered that the Apportionment Licence permits conferring on the property the provision for a construction to be erected on it, the fact is that, in this case, the Apportionment Licence is clear: the destination of the "land for construction" is commerce and collective residential use.

For this reason, it is evident that the third requirement contained in the norm of tax incidence is not met, insofar as the "land for construction" does not have construction authorized or planned exclusively for residential use.

In the same sense, see also the provisions of the arbitral decision rendered in case no. 578/2015-T, according to which:

"(…) What is proven by the property certificate issued in 2015, attached to the case file, in which the property in question is, as of that date, still described as «land for construction».

Furthermore, in addition, we are dealing with a property where part is potentially designated for services and another for residential use, so it does not have construction planned exclusively for residential use. It is, therefore, a situation not provided for, having as reference both the literal element and the reason for the norm of tax incidence." [highlight and emphasis added].

See also the provisions of the arbitral decision rendered in case no. 522/2015-T, according to which:

"(…) Given the foregoing, regarding the urban property in question – «land for construction, with an area of 667 m2, for which the Lisbon City Council authorized the construction of a building with 17 storeys (5 of which in basement) and total construction area of 7,511 m2, of which 2,668 m2 intended for parking, 1,363 m2 intended for commerce/offices and 3,480 m2 intended for residential use» – the Stamp Tax provided for in the tax incidence norm contained in Item 28.1 of the TGIS does not apply." [highlight and emphasis added].

For all the foregoing, it is demonstrated that the cumulative requirements on which Item no. 28.1 of the General Table makes its application dependent are not met. For this reason, the Claimant's claim is granted.

The consideration of the other questions raised by the Claimant is therefore rendered moot, as the illegality of the above-mentioned assessments has been declared, due to a substantive defect that prevents the renewal of the acts, thereby effectively ensuring the protection of the Claimant's rights, in accordance with Article 124.º of the Tax Procedure and Process Code (CPPT). [9]

5.2. COMPENSATION FOR UNDUE GUARANTEE

The Claimant submits a claim for recognition of the right to compensation for the provision of an undue guarantee.

As is evident from the facts established, the Claimant proceeded to present a bank guarantee in order to obtain suspension of the fiscal enforcement proceedings relating to the collection of the Stamp Tax debt.

In accordance with the provisions of Article 24.º, paragraph b), of the RJAT, an arbitral decision on the merits of the claim against which no appeal or challenge lies binds the AT from the expiry of the period provided for appeal or challenge, and it must, in the exact terms of the success of the arbitral decision in favour of the taxpayer and until the expiry of the period provided for the voluntary enforcement of sentences of judicial tax tribunals, "restore the situation that would have existed if the tax act that was the subject of the arbitral decision had not been performed, adopting the acts and operations necessary for this purpose".

Regarding the claim for a ruling ordering the payment of compensation for the provision of an undue guarantee, Article 171.º of the CPPT establishes that "compensation in case of a bank guarantee or equivalent guarantee unduly provided shall be requested in the proceedings in which the legality of the enforceable debt is disputed" and that "compensation must be requested in the objection, challenge or appeal or, if its basis is subsequent, within thirty days of its occurrence".

Thus, it is unambiguous that the process of judicial challenge encompasses the possibility of a ruling ordering the payment of undue guarantee compensation and, in principle, is the appropriate procedural remedy for submitting such a claim, which is justified by evident reasons of procedural economy, since the right to compensation for an undue guarantee depends on what is decided regarding the legality or illegality of the assessment act.

Now, the request for the constitution of the arbitral tribunal and for arbitral pronouncement has as its corollary that it is in the arbitral process that the "legality of the enforceable debt" will be discussed, so, as follows from the express wording of Article 171.º, paragraph 1, of the CPPT, the arbitral process is also the appropriate one for considering the claim for compensation for an undue guarantee.

Regarding the regime of the right to compensation for an undue guarantee, José Maria Fernandes Pires (Coordinator), Gonçalo Bulcão, José Ramos Vidal, Maria João Menezes, in an annotation to Article 53.º of the General Tax Law (LGT), maintain that:

"There are three constituent elements of the right to compensation for an undue guarantee:

a. Firstly, a bank guarantee or equivalent guarantee to have been provided in fiscal enforcement;

b. Secondly, the taxpayer to have borne costs with the provision or maintenance of the guarantee. The objective of this rule is precisely the reimbursement to the taxpayer of all costs borne with the provision or maintenance of the guarantee that proved to be undue, so it is essential to the constitution of the right that those costs have actually been borne;

c. Thirdly, it to have been established that the tax was undue because the assessment that gave rise to it was wholly or partially annulled. In this case, two distinct circumstances may still occur:

i. In cases where the annulment of the assessment results from an error of the tax administration itself, the right to compensation is constituted from the date of the provision of the undue guarantee;

ii. In the remaining cases, namely when the error is the responsibility of the taxpayer, the right to compensation is only constituted after three years have passed from the constitution of the guarantee." [10]

In the case at hand, it is manifest that the defect affecting the Stamp Tax assessment acts is attributable to the AT, as the corrections were made on its initiative and the Claimant in no way contributed to these errors being committed.

Therefore, the Claimant has the right to compensation for the guarantee provided.

However, as there are no elements that permit determining the amount of compensation, the ruling must be made with reference to what is determined in the execution of this decision (see Articles 609.º, paragraph 2, of the Code of Civil Procedure and 565.º of the Civil Code).

6. DECISION

With the grounds stated above, the arbitral tribunal decides:

a) To fully grant the claim for declaration of illegality of the Stamp Tax assessment referring to the year 2015, in the total amount of € 13,566.10, with all legal consequences;

b) To grant the claim for arbitral pronouncement regarding the recognition of the right to compensation for an undue guarantee and to condemn the AT to pay the sum to be determined in the execution of this decision; and

c) To condemn the AT in the costs of this proceeding, as the losing party.

7. VALUE OF THE PROCEEDINGS

The value of the proceedings is fixed at € 13,566.10 (thirteen thousand, five hundred and sixty-six euros and ten cents), in accordance with Article 97.º-A of the Tax Procedure and Process Code (CPPT), applicable by virtue of paragraphs a) and b) of Article 29.º, paragraph 1, of the RJAT and paragraph 2 of Article 3.º of the Regulation of Costs in Tax Arbitration Proceedings (RCPAT).

8. COSTS

Costs to be borne by the AT, in the amount of € 918 (nine hundred and eighteen euros), in accordance with Table I of the Regulation of Costs in Tax Arbitration Proceedings, in accordance with Article 22.º, paragraph 2, of the RJAT.

Let it be notified.

Lisbon, 30 March 2017

The Arbitrator,

(Hélder Filipe Faustino)

Text prepared by computer, in accordance with Article 131.º, paragraph 5, of the CPC, applicable by reference of Article 29.º, paragraph 1, paragraph e), of the RJAT.

The present decision is written in accordance with the orthography prior to the Orthographic Agreement of 1990.

[1] See "Lessons on Taxes on Property and Stamp Tax", 2nd edition, 2013, p. 104.

[2] See "Lessons in Tax Law Vol. I – General Principles and Domestic Taxation", 4th edition, 2015, p. 430.

[3] See "Taxation of Property – IMI, IMT and Stamp Tax (Annotated and Commented)", 1st edition, 2015, p. 730.

[4] See "«Luxury Houses» and Stamp Tax. Commentary on the judgment of the Supreme Administrative Court (2nd Section), of 5 February 2015, rendered in case no. 0993/14, Rapporteur Counsel Francisco Rothes", Review of Public Finances and Tax Law, Year VII, No. 4, July 2015, pp. 237 and following.

[5] See the judgment of the Supreme Administrative Court of 28 January 2015, rendered in case no. 0419/14, available at http://www.dgsi.pt.

[6] See arbitral decision rendered in case no. 116/2016-T.

[7] "Land for construction is considered land situated within or outside an urban agglomeration, for which a licence or authorization for a subdivision or construction operation has been granted, prior notification admitted, or favourable preliminary information issued".

[8] See arbitral decision rendered in case no. 467/2015-T.

[9] Subsidiarily applicable by virtue of Article 29.º, paragraph 1, paragraph a), of the RJAT.

[10] "General Tax Law Commented and Annotated", Almedina, 2015, p. 550.

Frequently Asked Questions

Automatically Created

Does Stamp Tax (Imposto do Selo) under Verba 28.1 of the TGIS apply to construction land not exclusively designated for housing?
Based on the Tax Authority's position supported by Constitutional Court case law, Stamp Tax under Verba 28.1 of the TGIS applies to all construction land (terrenos para construção) with a tax asset value equal to or exceeding €1,000,000, regardless of whether it is exclusively designated for housing. The 2013 amendment by Law 83-C/2013 clarified that the tax applies to land for which construction licenses have been granted or that are classified as construction land in acquisition deeds, without limiting application to residential purposes only. However, taxpayers have contested this broad interpretation, arguing the legislator intended to exempt the productive sector.
Can a taxpayer challenge Stamp Tax assessments on construction land through tax arbitration at CAAD?
Yes, taxpayers can challenge Stamp Tax assessments on construction land through the Administrative Arbitration Centre (CAAD). Process 658/2016-T demonstrates the standard procedure: file a request for arbitral pronouncement (pedido de pronúncia arbitral) within the legal deadline, provide a bank guarantee to suspend enforcement if desired, await appointment of arbitrator(s), allow the Tax Authority to respond (typically within 60 days of notification), and participate in the arbitral proceedings. The tribunal must determine its competence, verify parties' legitimacy, and rule on substantive legality and constitutionality claims. CAAD arbitration offers a faster alternative to judicial courts for resolving tax disputes.
What constitutional principles can be invoked to contest Stamp Tax on construction land in Portugal?
Taxpayers contesting Stamp Tax on construction land can invoke the constitutional principles of taxpaying capacity (capacidade contributiva) and equality (igualdade/princípio da igualdade). The taxpaying capacity principle requires that taxes reflect actual economic ability to pay, which claimants argue is violated when taxing undeveloped land without income generation. The equality principle prohibits arbitrary discriminations and requires treating essentially different situations differently - taxpayers argue that taxing productive/commercial land identically to residential luxury properties lacks reasonable justification. However, the Tax Authority argues these principles are satisfied because the tax targets wealth embodied in high-value property ownership (above €1,000,000), demonstrating economic capacity regardless of use.
How is the exclusive housing use requirement interpreted for construction land under Verba 28 of the Tabela Geral do Imposto do Selo?
The interpretation of the exclusive housing use requirement under Verba 28 of the TGIS is the central dispute in construction land Stamp Tax cases. Taxpayers argue that Verba 28.1's legislative intent was to tax only residential (habitação) construction land, with the legislator deliberately excluding the productive economic sector from this fiscal burden. The Tax Authority interprets the provision broadly, arguing that the 2013 amendment's reference to the Municipal Property Tax Code definition of 'land for construction' encompasses all such land meeting statutory criteria (construction licenses, authorizations, or classification in deeds), without requiring exclusive residential designation. Recent Constitutional Court case law reportedly supports the Tax Authority's broader interpretation.
What is the procedure and timeline for filing a tax arbitration request (pronúncia arbitral) against Stamp Tax assessments at CAAD?
The procedure for filing a tax arbitration request against Stamp Tax assessments at CAAD involves: (1) submitting a request for arbitral pronouncement (pedido de pronúncia arbitral) within the legal deadline after the voluntary payment period expires; (2) the CAAD President designates an arbitrator (typically within 30-60 days); (3) the arbitral tribunal is formally constituted; (4) the Tax Authority is notified and given opportunity to respond (usually 30 days); (5) the tribunal may dispense with hearings based on written submissions; (6) parties may submit optional written conclusions; (7) the tribunal issues its decision. In Process 658/2016-T, the timeline was: request filed October 31, 2016; arbitrator designated December 2, 2016; tribunal constituted January 19, 2017; AT response February 22, 2017. Taxpayers should provide bank guarantees to suspend enforcement during arbitration.