Process: 659/2015-T

Date: March 28, 2016

Tax Type: Selo

Source: Original CAAD Decision

Summary

This CAAD arbitration case (659/2015-T) addresses the application of Stamp Tax under item 28.1 of the General Stamp Tax Table (TGIS) to properties under vertical ownership regime. The applicant company owned a building in Lisbon consisting of 20 independent residential units (apartments) in vertical ownership. The Tax Authority issued 20 separate Stamp Tax assessment acts for 2014, applying the 1% rate under item 28.1 to each unit individually, totaling €23,553.73. The central legal dispute concerns whether the taxable property value for Stamp Tax purposes should be calculated based on each independent unit separately or on the aggregate value of the entire building. The applicant argued that item 28.1, introduced by Law 55-A/2012, was designed to tax only high-value luxury properties as manifestations of wealth, and that the functional economic unit should be each independent floor or apartment capable of independent use, not the building as a whole. The company contended that under Article 38 of the IMI Code, the Taxable Property Value is determined for each floor or part susceptible of independent use. The Tax Authority raised procedural objections, arguing the request was time-barred since it was filed beyond 90 days from the voluntary payment deadline, and that non-payment of any installment causes immediate maturity of remaining installments. Additionally, the TA defended that the global TPV of the property should apply. The case highlights critical issues regarding the interpretation of Stamp Tax legislation for vertically divided properties, the calculation methodology for tax purposes, procedural deadlines for arbitration requests, and whether the social equity rationale behind taxing high-value properties applies when individual units fall below thresholds but aggregate values exceed them.

Full Decision

CAAD: Tax Arbitration

Case No.: 659/2015-T

Subject: IS – Item 28.1 of GIST; Vertical Ownership

Arbitral Decision

I. REPORT

A…, LDA., a legal entity…, with registered office at Avenue…, no.…, in Lisbon, filed a request for the constitution of a singular Arbitral Tribunal, in accordance with the combined provisions of Articles 2 and 10 of Decree-Law No. 10/2011, of 20 January (Legal Regime for Arbitration in Tax Matters, hereinafter referred to as RJAT), in which the Tax and Customs Authority (hereinafter TA) is Respondent, with the objective of obtaining a declaration of illegality of the Stamp Tax assessment act relating to the year 2014, in the amount of €23,553.73.

The request for constitution of the Arbitral Tribunal was accepted by His Excellency the President of CAAD on 6.11.2015 and automatically notified to the TA.

In accordance with the provision in subsection c) of No. 1 of Article 11 of RJAT, the singular Arbitral Tribunal was constituted on 2.02.2016.

The TA responded, defending the termination of the arbitral proceedings, in view of the verification of the temporal limitation of the application and the incompetence of the tribunal, or, should this not be accepted, the dismissal of the application.

In light of the content of the matter contained in the case file, the meeting referred to in Article 18 of RJAT was dispensed with, and the parties were notified to submit optional written submissions.

The Arbitral Tribunal is duly constituted and is materially competent, in accordance with subsection a) of No. 1 of Article 2 of RJAT.

The parties have legal personality and capacity, are legitimate, and are duly represented (Article 4 and No. 2 of Article 10 of RJAT and Article 1 of Order No. 112/2011, of 22 March).

The proceedings are free from nullities, and the exceptions raised by the Respondent shall be examined as a priority.

II. STATEMENT OF FACTS

Based on the elements contained in the case file, the following facts are considered proven:

A) The Applicant is a civil partnership in the form of a limited liability company by quota, whose purpose is to purchase and own urban properties to, in principle, satisfy the housing needs of the partners and perform all acts concerning the exercise of their property rights;

B) The Applicant is the owner and legitimate proprietor of the urban property, located at Avenue…, no.…, in Lisbon, registered in the parish of… under the property registration no.… (former parish of…), consisting of 20 floors with independent use;

C) Until 24 April 2015, the aforementioned property was in a state of vertical ownership, consisting of 20 apartments intended for housing and susceptible of independent use;

D) The TA issued, with respect to the identified property, the following IS assessments, based on item 28.1, at the rate of 1%, for the year 2014:

· Assessment Act No.…, of 20.03.2015, in the amount of €1,389.86
· Assessment Act No.…, of 20.03.2015, in the amount of €1,113.97
· Assessment Act No.…, of 20.03.2015, in the amount of €1,236.58
· Assessment Act No.…, of 20.03.2015, in the amount of €1,113.97
· Assessment Act No.…, of 20.03.2015, in the amount of €1,236.58
· Assessment Act No.…, of 20.03.2015, in the amount of €1,120.11
· Assessment Act No.…, of 20.03.2015, in the amount of €1,236.58
· Assessment Act No.…, of 20.03.2015, in the amount of €1,113.97
· Assessment Act No.…, of 20.03.2015, in the amount of €1,236.58
· Assessment Act No.…, of 20.03.2015, in the amount of €1,120.11
· Assessment Act No.…, of 20.03.2015, in the amount of €1,242.71
· Assessment Act No.…, of 20.03.2015, in the amount of €1,120.11
· Assessment Act No.…, of 20.03.2015, in the amount of €1,242.71
· Assessment Act No.…, of 20.03.2015, in the amount of €1,242.71
· Assessment Act No.…, of 20.03.2015, in the amount of €1,172.64
· Assessment Act No.…, of 20.03.2015, in the amount of €1,097.29
· Assessment Act No.…, of 20.03.2015, in the amount of €1,120.11
· Assessment Act No.…, of 20.03.2015, in the amount of €1,172.64
· Assessment Act No.…, of 20.03.2015, in the amount of €1,097.29
· Assessment Act No.…, of 20.03.2015, in the amount of €1,120.11

E) The total amount of the IS assessment act relating to the year 2014 sums to the amount of €23,553.73;

F) The Applicant paid the 1st and 2nd installment of IS up to the date of the submission of the arbitral petition.

There are no facts with relevance for the decision of the case that should be considered as unproven.

Taking into account the positions assumed by the parties, in light of Article 110, No. 7 of CPPT and the documentary evidence attached to the case file, the facts listed above are considered proven, with relevance for the decision.

III. LEGAL MATTERS

The principal question that arises in the present proceedings comes down to ascertaining what is the taxable property value relevant for the purposes of the application of items 28 and 28.1 of the General Table of Stamp Tax (GIST) with respect to urban residential properties constituted in a regime of vertical ownership, comprising floors or divisions susceptible of independent use.

A – POSITION OF THE PARTIES

The Applicant alleges in its request for arbitral opinion, in summary, the following:

  1. The period for contesting the IS assessment act should be counted from the expiration of the period for payment of the tax assessed therein, which, being paid in more than one installment, only upon the expiration of the last of those installments may the counting of the period referred to in Article 102, No. 1 a) of CPPT commence;

  2. From the analysis of Law No. 55-A/2012 which introduces item 28 of GIST, the ratio legis underlying it results clearly, being evident that it is intended, solely and only, the taxation of goods of high value, manifestations of wealth, luxury goods, which by a principle of social equity and tax justice approves the legislator to implement;

  3. Although the simple sum of the Taxable Property Value (TPV) of each of the "units" amounts to more than €1,000,000, it is not this which is the functional economic unit aimed at in the new item 28 of GIST;

  4. The TA erroneously considered, for the calculation of the tax assessment, the global TPV of the property owned by the Applicant;

  5. For the purposes of determining the TPV, and taking into account what is provided in Article 38 of the IMI Code, it is clear that this calculation is made for each floor or part of (and not of) the property susceptible of independent use.

In turn, the Respondent alleges the following:

  1. By exception: the present request for arbitral opinion is manifestly time-barred, as the tax assessment is of 20.03.2015, and the first period of voluntary payment occurred in April 2015;

  2. As the period for the submission of the request to constitute the arbitral tribunal is 90 days from the expiration of the period for voluntary payment, the arbitral request submitted on 28.10.2015 is manifestly time-barred;

  3. The request is also time-barred, as the non-payment of an installment of the tax within the established period implies the immediate maturity of the remaining installments;

  4. As the Applicant did not, as was its responsibility, prove that it had proceeded to pay the 1st installment of the tax, whose date expired on 30.04.2015, it is the same to say that, on that same date, the 2nd and 3rd installments of the tax would have matured.

  5. The act which is the subject of the request for arbitral opinion goes beyond the competence of the Arbitral Tribunal, as the object of the proceedings is the annulment not of a tax act, but of a collection note for the payment of the 2nd installment of a tax;

  6. As the Applicant did not question the tax assessment when it was duly notified thereof for payment of the 1st installment of the tax, it cannot later, when it receives the 2nd collection note, and after the respective period and competence of the arbitral tribunal have passed, come to question that assessment, which has thus become final.

  7. By way of challenge: the Applicant held the full ownership of the urban property under analysis, valued in accordance with the IMI Code, in the context of the general assessment of urban properties, contained in the article… of the urban property matrix of the parish of…, municipality and district of Lisbon, described as "property in full ownership with floors or divisions susceptible of independent use", with 20 floors susceptible of independent use, with a taxable property value (PV) in excess of €1,000,000.00;

  8. With reference to the year 2014, in compliance with and in accordance with the provision of Article 6, No. 2 of Law No. 55-A/2012, of 29/10, which added item No. 28 to GIST, with the amendment made by Law No. 83-C/2013 of 31/12 and whose respective rule of incidence refers to urban properties, valued in accordance with the IMI Code, with PV equal to or greater than €1,000,000.00 and, in accordance with its No. 28.1, housing designation, the TA proceeded to the tax assessment which is the subject of the present request for arbitral opinion.

  9. For the purposes of IS, the property in its entirety is relevant, as divisions susceptible of independent use are not deemed to be property, but only autonomous units in the regime of horizontal ownership, in accordance with No. 4 of Article 2 of the IMI Code;

  10. The provision of item 28.1 of GIST does not constitute any violation of the principle of equality, with no discrimination existing in the taxation of properties constituted in horizontal ownership and properties in full ownership with floors or divisions susceptible of independent use, or between properties with housing designation and properties with other designations;

  11. Thus, one cannot conclude for an alleged discrimination in violation of the principle of equality when, in truth, we are faced with distinct realities, valued by the legislator in different ways, as horizontal ownership and vertical ownership are differentiated legal institutions;

  12. The norm under challenge, i.e., item 28 of GIST, does not suffer from any unconstitutionality, with no violation of the constitutional principles that shape tax law, specifically, the principles of tax equality, taxpaying capacity, and proportionality;

B – THE EXCEPTIONS RAISED

In the response presented, the TA defends itself by exception that, should it be verified, leads to the dismissal of the proceedings. Let us then see whether the Respondent should be absolved of the proceedings.

a) Temporal Limitation of the Application

The arbitral petition presented has as its object the IS assessment act relating to the year 2014, the collection of which is effected in 3 installments.

In accordance with the provision of Article 23, No. 7 of the IS Code, "In the case of tax owing for the situations provided in item No. 28 of the General Table, the tax is assessed annually, (…), applying, with the necessary adaptations, the rules contained in the CIMI Code."

From this it follows that, as the tax is assessed annually, there is only one annual assessment act, although such act may be divided into several installments for the purposes of revenue collection (See CAAD Decision handed down in Case No. 726/2014).

As has already been clarified in several CAAD decisions (See decision handed down in the context of Case Nos. 205/2013 and 726/2014), "From the circumstance that the value of the assessment may be paid in several installments, it does not follow that there are three assessments. It is, rather, a single assessment that may be paid in several installments, with the taxpayer not being prevented from challenging the same due to the fact that only the payment period of one of them has elapsed."

In fact, the act which is the subject of the present arbitral proceedings is the IS assessment act, in its entirety, and not the collection documents, and it is certain that the period for the submission of the arbitral petition begins upon the expiration of the period of voluntary payment of any of the installments, should payment not be effected, or upon the expiration of the period of voluntary payment of the last IS installment (See Articles 23, No. 7 of the IS Code, Article 120, Nos. 3 and 4 of the IMI Code, Article 10, No. 1 a) of RJAT and Article 102, No. 1 a) of the Code of Tax Procedure and Process).

Taking into account that, contrary to what is strangely alleged by the Respondent in No. 9 of its Response, the Applicant effected payment of the 1st and 2nd installment of IS before submitting the arbitral petition sub judice (see the Administrative Process attached to the case file by the TA and document No. 21 attached by the Applicant with the arbitral petition), the arbitral application for opinion submitted by the Applicant is considered timely.

b) Incompetence of the Arbitral Tribunal

The examination of the exception of unchallengeable act raised by the Respondent must be analyzed in dependence on the question of whether the Applicant challenges the IS assessment act or whether, on the contrary, it merely challenges each of the IS installments in isolation.

Now, as is clear from what is alleged by the Applicant in Nos. 7, 11 to 18 and from the prayer for relief formulated, the Applicant challenges the IS assessment act, in its entirety, and not, as the Respondent contends, the payment of a single tax installment.

It has been understood that in cases where the tax must be paid in installments, the assessment is notified to the taxpayer together with the notification for payment of each of the installments, being able to be challenged only in its entirety and not installment by installment (See Arbitral decision handed down in the context of Case No. 27/2015-T, available at www.caad.org.pt).

In this respect, the esteemed Professor José Casalta Nabais elucidates, in Tax Law, 3rd Edition, Almedina, 2005, the following:

"Assessment in the broad sense, that is, as the aggregate of all operations intended to ascertain the amount of the tax, comprises: 1) The subjective assessment intended to determine or identify the taxpayer or obligated party of the tax legal relationship, 2) The objective assessment through which the taxable or taxable matter of the tax is determined and, likewise, the rate to be applied is determined, in the case of multiple rates, 3) Assessment in the strict sense reflected in the determination of the tax through the application of the rate to the taxable or taxable matter, and 4) the (eventual) deductions from the tax."

For each tax event there will be, in principle, a single assessment, by which the tax collection will be determined (see No. 7 of Article 23 of the IS Code).

In the same sense, No. 5 of Article 44 of the IS Code further provides that "where there is occasion for the assessment of the tax referred to in item No. 28 of the General Table, the tax is paid in the periods, terms and conditions defined in Article 120 of the IMI Code".

That is, in accordance with No. 2 of Article 113 of the IMI Code, "the assessment (…) is effected in the months of February and March of the following year", the tax being paid in three installments, in the months of April, July, and November, attentive to its amount – see subparagraph c), No. 1 of Article 120 of the IMI Code.

From the combination of the legal provisions cited above, it is drawn that IS is assessed annually, payment in installments being nothing more than a technique for the collection of the tax and not a partial payment thereof, as is referred to in the arbitral decision handed down in the context of Case No. 408/2014-T, available at http://www.caad.org.pt cited by the TA.

Therefore, each IS assessment act is only one unlawful act, susceptible of being challenged.

Considering that the IS assessment acts underlying the collection documents, subject of the present arbitral petition, may be challenged at the time of their issuance and notification for payment of each of the IS tax installments, that is, at the moment when the tax event is verified, it is understood that the Tribunal is competent to examine the Applicant's claim which is substantiated in the declaration of illegality of the IS assessment acts already identified, concluding with the dismissal of the exception raised by the TA regarding the absolute incompetence of this Arbitral Tribunal ratione materiae.

C – THE APPLICATION

In light of the foregoing, with respect to the position of the Parties and the arguments presented, to determine whether the IS assessment act sub judice is or is not unlawful, it will be necessary to verify what interpretation should be made of items 28 and 28.1 of GIST, namely whether the TPV on which the IS rate should be applied should be its sum or whether the individual TPV of each floor or division susceptible of independent use should be considered, in a manner similar to what occurs with properties in the regime of horizontal ownership?

Let us see what should be understood.

It results from Article 11 of the General Tax Law (LGT) that the interpretation of tax law should be effected while taking account of the general principles of interpretation.

The general principles of interpretation are established in Article 9 of the Civil Code (CC), in the following terms:

"1. The interpretation should not be confined to the letter of the law, but should reconstruct from the texts the legislative thought, taking especially into account the unity of the legal system, the circumstances in which the law was elaborated and the specific conditions of the time in which it is applied.

  1. However, the interpreter cannot consider the legislative thought that does not have in the letter of the law a minimum of verbal correspondence, even if imperfectly expressed.

  2. In fixing the meaning and scope of the law, the interpreter shall presume that the legislator enshrined the most correct solutions and knew how to express his thought in adequate terms."

Attending to the rules of interpretation of the Law, it is important to know that Law No. 55-A/2012, of 29 October, came to add items 28 and 28.1 to GIST, creating the IS rate on high-value urban properties.

The creation of this new tax event occurred in the context of economic crisis and serious crisis in public finances, with the purpose of increasing the State's tax revenues, through the taxation of those who reveal greater indicators of wealth.

The special IS rate on properties valued at over €1,000,000.00, also known as the "luxury tax", aimed to ensure the sharing of sacrifices by all and not only by those who live from the income of their work.

Under these circumstances, items 28 and 28.1 fixed the incidence of IS in the following terms:

"Ownership, usufruct or right of superficies of urban properties whose taxable property value contained in the matrix, in accordance with the Municipal Tax Code on Real Estate (IMI Code), is equal to or exceeding €1,000,000 – on the taxable property value used for the purpose of IMI:

28.1 – For residential property or for land for construction whose construction, authorized or envisaged, is for housing, in accordance with the provision of the IMI Code…… 1%."

It results, therefore, from the letter of the law that the rate provided for in item 28.1 is applicable to the right of ownership over property with housing designation, whose TPV used for the purpose of IMI is equal to or exceeding €1,000,000.00.

In accordance with the provision of Article 1, No. 6 of the IS Code, "For the purposes of this Code, the concept of property is that defined in the Municipal Tax Code on Real Estate (IMI Code)."

In turn, the IMI Code determines in its Article 2, the following:

Concept of Property

"1 - For the purposes of this Code, property is every fraction of territory, including waters, plantations, buildings and constructions of any kind incorporated therein or resting thereon, with a character of permanence, provided that it forms part of the assets of a natural or legal person and, under normal circumstances, has economic value, as well as waters, plantations, buildings or constructions, in the preceding circumstances, endowed with economic autonomy in relation to the land on which they are located, although situated in a fraction of territory that constitutes an integral part of a diverse patrimony or does not have patrimonial nature.

2 - Buildings or constructions, although moveable by nature, are deemed to have a character of permanence when devoted to non-transitory purposes.

3 - The character of permanence is presumed when buildings or constructions are resting on the same location for a period exceeding one year.

4 - For the purposes of this tax, each autonomous unit, in the regime of horizontal ownership, is deemed to constitute property."

Taking into account the concept of property established in the Law, it is clear that properties constituted in vertical ownership constitute property for the purposes of item 28 of GIST.

To the extent that the property under analysis (hereinafter Property) constitutes property in accordance with the provisions of Article 2 of the IMI Code, it is literally covered by items 28 and 28.1.

In truth, the law does not distinguish, at any moment, between property in horizontal ownership and property in vertical ownership, No. 4 of Article 2 merely establishing that in the regime of horizontal ownership each autonomous unit is deemed to be property.

From what is referred to in No. 4 of Article 2, it does not result, contrary to what is defended by the Respondent in the response presented, that only autonomous units of property in the regime of horizontal ownership are deemed to be property.

Notwithstanding, the special IS rate fixed in the item in question applies only if the Property constitutes residential property, whose taxable property value contained in the matrix, in accordance with the IMI Code, is equal to or exceeding €1,000,000.

As the IS Code does not establish what is meant by "residential", by virtue of the provision of No. 2 of Article 67 of the said Code, the rules provided for in the IMI Code are also applicable here, namely those established in Articles 6 and Article 41 of that Code.

From the analysis of the said rules, it also results clearly that the Property is covered by item 28.1, as an urban property with housing designation.

It remains, therefore, to ascertain whether the TPV contained in the matrix of the Property, in accordance with the IMI Code, is equal to or exceeding €1,000,000.

Now, as it follows from the letter of the Law, the TPV of the Property shall be that which is used for the purpose of IMI.

In this regard, it is determined in No. 1 of Article 7 of the IMI Code, applicable ex vi of No. 7 of Article 23 of the IS Code, that "The taxable property value of properties is determined in accordance with this Code."

In turn, in Nos. 2 and 3 of Article 7 of the IMI Code, rules are established for the determination of the TPV of properties with two or more designations.

As the rate provided for in items 28 and 28.1 of GIST applies only to properties with housing designation, the rules established in Nos. 2 and 3 of Article 7 of the IMI Code are not applicable to the determination of the TPV relevant within the scope of the said item.

In truth, the TPV of properties with housing designation, provided for in items 28 and 28.1, must be determined taking into account No. 3 of Article 12 of the IMI Code, according to which:

"Each floor or part of property susceptible of independent use is considered separately in the property registration, which also discriminates the respective taxable property value."

Thus, taking into account that the legislator does not attribute any relevance to the fact that the property is constituted in the regime of vertical ownership, the TPV should be imputed to each floor or part of property susceptible of independent use.

In fact, there is no rule found in the IMI Code that permits the conclusion that the TPV of property in the regime of vertical ownership should be obtained by the sum of the TPV that were attributed isolatedly to the parts that constitute it (See, inter alia, the arbitral decisions handed down in Case Nos. 50/2013-T, 131/2013-T, 177/2014-T, 396/2014-T).

Taking into account that the rules of incidence are subject to the principle of tax legality (See Article 103 of the Constitution of the Portuguese Republic (CRP) and Article 8 of the LGT), it seems there is no legal basis for the assessment of IS on the basis of the sum of the TPV of each of the parts of the Property.

In fact, the TA cannot perform an assessment operation on the basis of a rule of incidence that does not expressly provide for the basis of incidence of the tax in the terms assessed, as the rules of incidence of taxes must be interpreted in their exact terms, without recourse to analogy, making certainty and security in its application prevail (See Decision of the Central Administrative Court of the South, handed down in the context of Case No. 7648/14, of 10.07.2014).

It is understood, thus, that there is no legal basis that permits the TA to add the taxable property values of the floors or parts of property susceptible of independent use, in order to reach the threshold of eligible taxation of €1,000,000.00 provided for in item 28 of GIST.

In light of the foregoing, as none of the floors susceptible of independent use has a taxable property value in excess of €1,000,000.00, there is no occasion for the incidence of the rate provided for in item 28 of GIST.

Consequently, the annulment of the IS assessment act sub judice is necessary, and the recognition of the right to compensatory interest of the Applicant with respect to the IS installments already paid, as the illegality of the assessment act is attributable to error of the Respondent, in accordance with the provision of Article 43 of the LGT.

Taking into account the value indicated in the proceedings by the Applicant and of the assessment act sub judice, the Applicant's request for reimbursement is corrected from €47,107.46 to €23,553.73, considering it to be merely a clerical error.

IV. DECISION

Under these terms, this Arbitral Tribunal decides:

A) To judge entirely favorably the application for annulment of the IS assessment act relating to the urban property registered in the urban property matrix of the parish of…under No.…, relating to the year 2014;

B) To condemn the Tax and Customs Administration to repay to the Applicant the amount of tax paid, plus compensatory interest;

C) To condemn the Respondent in the costs of the present proceedings, as the unsuccessful party.

V. VALUE OF THE PROCEEDINGS

In accordance with the provision of Article 306, No. 2 of the Code of Civil Procedure, 97-A, No. 1 a) of CPPT and Article 3, No. 2 of the Regulation of Costs in Tax Arbitration Proceedings, the value of the application is fixed at €23,553.73.

VI. COSTS

In accordance with the provision of Articles 12, No. 2 and 22, No. 4, both of RJAT, and Article 4, No. 4 of the Regulation of Costs of Tax Arbitration Proceedings, the arbitration fee is fixed at €1,224, in accordance with Table I of the said Regulation, charged to the Respondent.

Let notification be made.

Lisbon, 28 March 2016

The Arbitrator,

Magda Feliciano

(The text of this decision was prepared by computer, in accordance with Article 131, No. 5 of the Code of Civil Procedure, applicable by reference of Article 29, No. 1, subsection e) of Decree-Law No. 10/2011, of 20 January (RJAT), with its drafting governed by the orthography prior to the Orthographic Agreement of 1990.)

Frequently Asked Questions

Automatically Created

What is Verba 28.1 of the Tabela Geral do Imposto do Selo (TGIS) and how does it apply to high-value properties?
Verba 28.1 of the Tabela Geral do Imposto do Selo (TGIS) is a provision introduced by Law 55-A/2012 that imposes Stamp Tax on high-value residential properties at a rate of 1%. This provision was enacted based on principles of social equity and tax justice to tax luxury goods and manifestations of significant wealth. It applies to urban properties intended for housing when their Taxable Property Value (Valor Patrimonial Tributário) exceeds certain thresholds, specifically targeting properties valued over €1,000,000. The tax is assessed annually and can be paid in installments. The underlying legislative intent (ratio legis) is to ensure that owners of high-value real estate contribute proportionally more to tax revenues, reflecting their greater economic capacity.
How does vertical property (propriedade vertical) affect Stamp Tax (Imposto do Selo) liability in Portugal?
Vertical property (propriedade vertical) significantly affects Stamp Tax liability by raising the question of whether each independent unit or the entire building serves as the assessment base. In vertical ownership, a building is divided into floors or divisions capable of independent use, each with separate property registration. For Stamp Tax under Verba 28.1 purposes, the critical issue is determining the relevant Taxable Property Value (VPT). Property owners argue that Article 38 of the IMI Code requires calculating VPT for each floor or part susceptible of independent use separately, meaning each apartment should be assessed individually. If assessed per unit, many may fall below the €1,000,000 threshold and escape taxation. If the Tax Authority uses the aggregate value of all units in the building, the combined value may exceed thresholds, triggering liability. This distinction is crucial for determining whether Stamp Tax applies at all and the total amount owed.
Can property owners challenge Stamp Tax assessments on buildings with independent units through CAAD tax arbitration?
Yes, property owners can challenge Stamp Tax assessments on buildings with independent units through CAAD (Centro de Arbitragem Administrativa) tax arbitration. Property owners have the right to contest assessments they believe are illegal or incorrectly calculated, including disputes over whether Stamp Tax under Verba 28.1 should apply to individual units or aggregate property values. The arbitration process is governed by the Legal Regime for Arbitration in Tax Matters (RJAT - Decree-Law 10/2011). Owners must file a request for constitution of an arbitral tribunal, which CAAD's President reviews for acceptance. Once accepted, the Tax Authority is notified and must respond, and a tribunal is constituted to hear the case. The arbitral tribunal has material competence to decide on the legality of tax assessments, making it an effective alternative to court litigation for resolving tax disputes involving complex valuation and interpretation issues.
What are the deadlines and procedural requirements for filing a tax arbitration request against a Stamp Tax assessment at CAAD?
The deadline for filing a tax arbitration request at CAAD against a Stamp Tax assessment is 90 days from the expiration of the voluntary payment period, according to Article 102(1)(a) of the Tax Procedure Code (CPPT). Procedural requirements include: (1) filing a formal request for constitution of an arbitral tribunal under Articles 2 and 10 of RJAT; (2) identifying the contested tax act and amount; (3) payment of required fees; (4) demonstrating legal standing and proper representation. Critical timing issues arise when tax is payable in installments - taxpayers may argue the deadline begins only after the last installment's due date, while the Tax Authority typically counts from the first installment. Non-payment of any installment may cause immediate maturity of remaining installments, potentially affecting deadline calculations. Failure to meet these deadlines can result in the request being deemed time-barred, as the Tax Authority argued in this case when the request was filed on October 28, 2015, for an assessment dated March 20, 2015.
Does Stamp Tax under Verba 28.1 apply to each independent unit or to the total value of a vertically owned building?
This is the central dispute in Case 659/2015-T. The taxpayer argues that Stamp Tax under Verba 28.1 should apply to each independent unit separately, not to the total building value. The company contends that Article 38 of the IMI Code establishes that Taxable Property Value is calculated for each floor or part of the property susceptible of independent use, meaning each apartment constitutes the relevant functional economic unit. Since individual apartments may not exceed the €1,000,000 threshold triggering Verba 28.1, no tax would be due. The Tax Authority, however, assessed the tax by considering the global Taxable Property Value of the entire property owned by the company, issuing 20 separate assessment acts (one per unit) totaling €23,553.73. The Tax Authority's position implies that when one entity owns multiple units in vertical ownership collectively exceeding thresholds, each unit becomes taxable. This interpretation determines whether the legislative intent to tax high-value luxury properties applies based on per-unit value or aggregate ownership value, with significant implications for property holding structures.