Process: 677/2015-T

Date: April 15, 2016

Tax Type: Selo

Source: Original CAAD Decision

Summary

In Process 677/2015-T, a Portuguese company challenged the 2014 stamp duty assessment on a Lisbon property under Verba 28 of the General Schedule of Stamp Tax (TGIS). The property, comprising basement, shops, and five floors for independent residential and commercial use, had a total tax-determined value (VPT) of €2,287,080, but individual units ranged only from €12,930 to €334,720. The claimant argued that since no individual unit exceeded the €1,000,000 threshold established in Verba 28 TGIS for stamp duty liability, the tax assessment was illegal. The Tax Authority raised a preliminary objection, arguing the CAAD arbitral tribunal lacked jurisdiction because the claimant challenged only the third installment payment (€5,422.57) rather than the entire collection act. The Authority contended that payment in installments is merely a collection technique for a singular tax act, and individual installments cannot be autonomously challenged. The tribunal preliminarily agreed with this jurisdictional argument, noting that only the complete collection act constitutes a challengeable harmful act under Article 2(1)(a) of RJAT. The substantive issue centered on whether vertical property buildings not constituted under horizontal property regime should be assessed as single properties or as aggregations of independent units for stamp duty purposes. The claimant cited favorable CAAD case law recognizing the illegality of taxing such properties when individual units fall below the €1,000,000 threshold, emphasizing that each autonomous fraction should be evaluated separately for determining stamp duty liability under Verba 28 TGIS.

Full Decision

ARBITRATION AWARD

I - REPORT

  1. A…, SA, NIPC [Corporate Identification Number]…, with registered office at Avenue…, no.…, …-…, filed a request for an arbitral decision, under the terms of paragraph a) of no. 1 of Article 2, of no. 1 of Article 3 and paragraph a) of no. 1 of Article 10, all of the RJAT [Legal Framework for Tax Arbitration], requesting the AT [Tax and Customs Authority], for the purpose of assessing the legality of the tax collection acts for stamp duty, relating to the year 2014, affecting ownership of a property in split ownership, registered in the tax roll under urban property no. … of the parish of … within the area of the … Lisbon Tax Office, as shown in the collection documents attached to the request, relating to the 3rd installment.

  2. Which was filed without exercising the option of designating an arbitrator, and was accepted by His Excellency the President of CAAD [Administrative Arbitration Centre] and automatically notified to the AT on 31/08/2015.

  3. Pursuant to and for the purposes of Article 6, no. 2 of RJAT, by decision of His Excellency the President of the Deontological Council, duly communicated to the parties within the legally applicable time periods, on 27/10/2015, arbitrator Arlindo José Francisco was designated by the tribunal, who communicated acceptance of his appointment within the legally stipulated time period.

  4. The tribunal was constituted on 22/01/2016 in accordance with the provisions contained in paragraph c) of no. 1 of Article 11 of RJAT, in the wording introduced by Article 228 of Law no. 66-B/2012 of 31 December.

  5. With its request, the claimant seeks the annulment of the stamp duty collection act, relating to the year 2014 (third installment) which affected the TTV [Tax-Determined Value] of the property already identified.

  6. It supports its position, in summary, on the understanding that the TTV of each of the independent units has a TTV much lower than € 1,000,000.00 that item 28 of GGST [General Schedule of Stamp Tax] stipulates for there to be liability to stamp duty.

  7. That such collections are affected by illegality, as has been recognized by the case law of CAAD in various proceedings, to conclude that the collections in question cannot be maintained in the legal order.

  8. In its response, the respondent, in the first place, considers that the request exceeds the jurisdiction of the tribunal, since the claimant does not challenge a tax act, but the payment of the 3rd installment of a tax act, a matter which it considers entirely outside the jurisdiction of the tribunal, by virtue of the provisions of Article 2 of RJAT.

  9. It cites various CAAD proceedings whose decisions go in the direction advocated by it, yet not failing to, by way of challenge, rebut the claimant's position to conclude that the tax acts in question do not violate any legal rule and should be maintained in the legal order.

II - PRELIMINARY MATTERS

The tribunal was properly constituted.

The parties have legal capacity and standing, demonstrate themselves to be legitimate and are properly represented in accordance with Articles 4 and 10, no. 2 of RJAT and Article 1 of Regulation no. 112-A/2011 of 22 March.

In light of the respondent's response which, besides the exception already referred to, requested dispensation from the submission of the PA [administrative file], as well as from holding the meeting provided for in Article 18 of RJAT and from submitting arguments, the tribunal issued the following order on 19/02/2016: "I invite the claimant to, within 10 days, if it so wishes, comment on what was requested by the AT, regarding the dispensations:

  • from the meeting under Article 18 of RJAT;
  • from the submission of the administrative file; and
  • from the submission of arguments.

Notify accordingly."

After the time period granted elapsed, the following order was issued:

"Considering the case and given the silence of the claimant regarding the order of 19/02/2016, the tribunal finds that the conditions are met for issuing the decision, setting for this purpose the date of 15 April 2016.

The claimant is advised that it must provide proof of payment of the subsequent arbitration fee with CAAD by the aforementioned date of 15 April 2016.

Notify accordingly."

In this manner, the process not being affected by any nullities, the exception of lack of jurisdiction of the tribunal raised by the respondent will be considered first.

III - GROUNDS

1 - The issues to be decided, with relevance to the case, are as follows:

a) Whether the assessment of the legality of the stamp duty corresponding to the collection notices for the 3rd installment of the year 2014, object of the present request for arbitral decision, exceeds or does not exceed the jurisdiction of the tribunal established in Article 2 of RJAT

b) In the event the tribunal considers itself competent, to assess whether the tax acts at issue are or are not legal.

c) And should their illegality be confirmed, with the consequent annulment, whether or not there will be grounds for reimbursement of the amounts incorrectly paid plus compensatory interest.

2 - Statement of Facts

The factual matters considered relevant and proven based on the elements attached to the case file are as follows:

a) The claimant was, in the year 2014, owner of the property already identified, located at Street… no. … and…, municipality of Lisbon, registered in the urban tax roll under property no. … of the parish of…, previously under property no. … of the parish of….

b) The aforementioned property consists of a basement, shops and five floors for independent use intended for residential and commercial purposes.

c) The property in the year 2014 was not under the regime of split ownership, and its total TTV was € 2,287,080.00.

d) None of the floors or independent units have a TTV equal to or greater than € 1,000,000.00 (they range between € 12,930.00 and € 334,720.00).

e) The economic value attributed by the claimant to the case was € 5,422.57, which corresponds to the value of the 3rd installment challenged here.

There is no factual matter deemed unproven that is relevant to the decision.

3 - Legal Matters

Regarding the exception of lack of jurisdiction raised by the respondent

The AT, in its response, raises the exception of lack of jurisdiction of the tribunal, stating, in summary, that the arbitration tribunals are competent to assess the acts of tax collection under Article 2, no. 1, paragraph a) of RJAT, but will not be so for assessing the payment of a collection notice relating to an installment of that collection act.

In the specific case, the object of the proceeding is the payment of the 3rd installment of stamp duty relating to the year 2014 in the amount of € 5,422.57, a matter which, in its understanding, entirely exceeds the jurisdiction established.

The respondent further argues that the collection act is singular and the fact that it can be paid in installments does not mean that multiple collections have occurred, basing its position also on decisions already issued in various CAAD proceedings.

The claimant, despite being notified of the order of 19 February 2016, alleged nothing.

It must decide

The declaration of illegality of tax collection acts falls within the scope of paragraph a) of no. 1 of Article 2 of RJAT.

As is understood from the request for arbitral decision, the aim is to assess the legality of the stamp duty collections, relating to the year 2014 (third installment).

From the tribunal's perspective, the possibility of payment in installments is a collection technique for a particular collection act which is unique and only it can constitute a harmful act capable of being challenged. Any installment considered autonomously is not a collection act, nor even part of that act; it is merely a collection technique.

In the specific case, the stamp duty collection act provided for in item 28 of GGST is the single act of determining the total amount of the tax to be paid; the possibility that the amount determined can be paid in installments does not mean that multiple collections occur equal to the number of installments.

This single collection act can be challenged, whether after notification for payment of the 1st, 2nd or 3rd installment, as long as the request is directed at the single collection act.

We follow the position advocated in proceeding 736/2014 of CAAD, which, with all due respect, is transcribed as follows:

"… In order to answer the question that concerns us, it is pertinent to bear in mind the concept of tax assessment (art. 97, no. 1, para. a) of CPPT) or tax assessment acts (art. 2, no. 1, para. a) of RJAT). In the teaching of José Casalta Nabais, "taxation in the broader sense, that is, as the set of all operations intended to determine the amount of the tax, comprises: 1) Subjective assessment intended to determine or identify the taxpayer or passive subject of the tax legal relationship, 2) Objective assessment through which the taxable base or taxable matter of the tax is determined and, as well, the tax rate applicable in the case of plurality of rates is determined. 3) Taxation in the strict sense reflected in the determination of the collection through the application of the tax rate to the taxable base or taxable matter, and 4) the (possible) deductions from the collection. As follows from the notion of taxation given to us by the distinguished professor, for each tax event there will, in principle, be a single assessment, by which the collection to be paid will be determined. That is, moreover, what follows from art. 23, no. 7 of the Stamp Duty Code in providing that "in the case of stamp duty due by the situations provided for in item no. 28 of the General Schedule, the tax is assessed annually (…)", with the necessary adaptations, the rules contained in CIMI [Code of Corporate Income Tax] applying. Moreover, Article 113, no. 2 of CIMI, applicable by cross-reference of that rule in the Stamp Duty Code, provides that "the assessment (…) is carried out in the months of February and March of the following year." From the fact that, by force of law, the same can be paid in various installments, it does not follow that multiple assessments have occurred. The assessment is only one and only constitutes a harmful act, capable of being challenged, which can only, evidently, be the object of a single challenge. Naturally, when the law provides for payment of the assessed amount in various installments, staggered over time, the annulment of the tax act will have consequences regarding all of them, causing the obligation to pay to cease or imposing the obligation to refund and compensatory interest payable by the Tax Authority, in case of payment by the taxpayer. What the law does not provide for, neither in the arbitration sphere, nor in the context of judicial challenge proceedings, is the annulment claim regarding payment of installments per se, since such effect will only result from the annulment of the tax assessment act, which as we have seen, consists of the quantification of the total amount to be paid and which is only and solely a single tax act."

Sharing this tribunal's perspective, verifying that the request is directed exclusively at the stamp duty paid within the 3rd installment and that the economic value attributed to the case is precisely the value of the 3rd installment (€ 5,422.57), it is necessary to conclude that the object of the request is not directed at the act of tax collection, but at the collection technique itself, in this case the 3rd installment, it being certain that the law does not provide for the challenge per se of installments.

Taking into account Article 2, no. 1, paragraph a) of RJAT which establishes the material jurisdiction of arbitration tribunals, we must conclude that the matter submitted for assessment does not fall within the jurisdiction of the arbitration tribunal, the dilatory exception provided for in paragraph c) of no. 1 of Article 89 of CPTA [Code of Administrative Court Procedure], applicable ex vi Article 29, no. 1, paragraph c) of RJAT, occurring.

Thus, the exception raised by the respondent is well-founded, and accordingly, the consideration of the remaining issues is prejudiced.

IV - DECISION

In light of the foregoing, the tribunal decides as follows:

a) Declare the exception raised by the respondent well-founded, dismissing it from the proceedings.

b) Set the value of the case at € 5,422.57 in accordance with the provisions contained in Article 299, no. 1 of CPC [Civil Procedure Code], Article 97-A of CPPT [Code of Tax Procedure and Process], and Article 3, no. 2, of RCPAT [Regulations on Costs in Tax Arbitration Proceedings].

c) Fix the costs, under no. 4 of Article 22 of RJAT, in the amount of € 612.00 in accordance with the provisions in Table I referred to in Article 4 of RCPAT, which are to be borne by the claimant.

Notify accordingly.

Lisbon, 15 April 2016

Text prepared by computer, pursuant to the provisions of Article 131, no. 5 of CPC, applicable by cross-reference of Article 29, no. 1, paragraph e) of RJAT, with lines left blank and reviewed by the tribunal.

The Arbitrator

Arlindo José Francisco

Frequently Asked Questions

Automatically Created

Is Stamp Tax (Imposto do Selo) under Verba 28 of TGIS applicable to properties held in vertical ownership when individual units have a VPT below €1,000,000?
The central issue in this case is whether Stamp Tax under Verba 28 TGIS applies when a property in vertical ownership has individual independent units each valued below €1,000,000, even though the total building value exceeds this threshold. The claimant argued that each autonomous unit should be assessed separately against the €1,000,000 threshold, and since none individually met this requirement, no stamp duty should be levied. The claimant cited CAAD case law supporting the position that such collections are illegal when applied to buildings with multiple independent fractions where no single unit reaches the statutory threshold. The Tax Authority's position suggested the property should be assessed as a whole, but the substantive merits were not fully addressed due to the jurisdictional objection raised.
How does CAAD arbitral jurisprudence treat the taxation of vertical property buildings under the Stamp Tax regime?
CAAD arbitral jurisprudence, as referenced in this decision, has addressed vertical property taxation under the Stamp Tax regime in various proceedings. The claimant cited multiple CAAD decisions recognizing that stamp duty collections on vertical property buildings are affected by illegality when individual autonomous units have tax-determined values below the €1,000,000 threshold established in Verba 28 TGIS. This case law trend suggests that CAAD tribunals analyze whether independent fractions within a building not constituted under horizontal property regime should be treated as separate taxable units rather than as a single aggregated property. The jurisprudential approach favors assessing each autonomous unit individually against the threshold, protecting taxpayers from stamp duty when constituent parts fall below the €1,000,000 limit, even if the building's total value exceeds it.
Can a taxpayer challenge a Stamp Tax liquidation on a single installment payment before the CAAD arbitral tribunal?
The CAAD tribunal addressed this jurisdictional question as a preliminary matter. The Tax Authority argued that arbitration tribunals are competent to assess tax collection acts under Article 2(1)(a) of RJAT, but not to evaluate individual installment payments. The tribunal agreed with this position, holding that payment in installments is merely a collection technique for a singular, unique tax collection act. An installment considered autonomously is neither a collection act nor part of that act—it is simply a payment mechanism. Therefore, only the complete collection act itself constitutes a harmful act capable of being challenged under RJAT. The claimant should have challenged the entire stamp duty assessment for 2014, not just the third installment payment of €5,422.57. This jurisdictional requirement ensures that taxpayers challenge the substantive legality of the tax determination rather than fragmenting disputes into multiple proceedings over individual payment installments.
What is the legal distinction between vertical property and horizontal property for purposes of Stamp Tax under Verba 28 TGIS?
Vertical property (propriedade vertical) refers to a building with independent units or fractions stacked vertically that has not been legally constituted under the horizontal property regime (propriedade horizontal). In this case, the property consisted of basement, shops, and five floors for independent residential and commercial purposes, but was explicitly not under the horizontal property regime in 2014. Horizontal property involves formal legal constitution where each unit becomes an independent property with its own registration, creating distinct ownership rights. For Stamp Tax purposes under Verba 28 TGIS, this distinction is crucial: the central question is whether each autonomous unit in a vertical property building should be assessed individually against the €1,000,000 threshold, or whether the entire building is treated as a single property. The claimant's position, supported by CAAD case law, is that even without formal horizontal property constitution, independent fractions should be evaluated separately for determining stamp duty liability.
What procedural requirements must be met to file an arbitral pronouncement request (pedido de pronúncia arbitral) under RJAT against a Stamp Tax assessment?
To file an arbitral pronouncement request (pedido de pronúncia arbitral) under RJAT against a Stamp Tax assessment, several procedural requirements must be met as demonstrated in this case: (1) The request must be filed under the applicable provisions of RJAT, specifically Article 2(1)(a) for tax collection acts, Article 3(1), and Article 10(1)(a); (2) The claimant may file without designating an arbitrator, allowing automatic designation by the CAAD President through the Deontological Council; (3) The request must be accepted by the CAAD President and the Tax Authority automatically notified; (4) The arbitral tribunal is constituted according to Article 11 RJAT; (5) The parties must have legal capacity, standing, legitimacy, and proper representation under Articles 4 and 10(2) of RJAT and Regulation 112-A/2011; (6) The claimant must attribute an economic value to the case; (7) The claimant must provide proof of payment of the subsequent arbitration fee by the deadline set by the tribunal. These requirements ensure proper jurisdiction and procedural regularity for arbitral tax dispute resolution.