Stamp Tax on Vertical Property: CAAD Ruling on Clause 28.1 TGIS for Independent Units (681/2014-T)

ARBITRAL DECISION

Claimants/Petitioners: A… and B…

Respondent: Tax and Customs Authority (hereinafter AT)

1. REPORT

On 15-09-2014, A…, Tax Identification Number …, and B…, Tax Identification Number …, residents at Rua …, … …, … Lisbon, submitted to the Administrative Arbitration Centre (CAAD) a petition for the constitution of an arbitral tribunal, with a view to the declaration of illegality of tax acts involving the levying of stamp duty pursuant to item no. 28 of the General Table of Stamp Tax (TGIS), relating to flats and divisions with independent use of the urban property in full ownership located at Rua …, no. … and …, in the parish of ..., municipality of Lisbon, registered in the urban property register under article … of the said parish, namely:

• Assessment no. 2013 …, in the amount of € 316.95, relating to the property described in matricial article U-…-1 A;

• Assessment no. 2013 …, in the amount of € 316.95, relating to the property described in matricial article U-…-1 A;

• Assessment no. 2013 …, in the amount of € 315.60, relating to the property described in matricial article U-…-1 B;

• Assessment no. 2013 …, in the amount of € 315.60, relating to the property described in matricial article U-…-1 B;

• Assessment no. 2013 …, in the amount of € 264.95, relating to the property described in matricial article U-…-1 C;

• Assessment no. 2013 …, in the amount of € 264.95, relating to the property described in matricial article U-…-1 C;

• Assessment no. 2013 …, in the amount of € 329.15, relating to the property described in matricial article U-…-1 D;

• Assessment no. 2013 …, in the amount of € 329.15, relating to the property described in matricial article U-…-1 D;

• Assessment no. 2013 …, in the amount of € 316.95, relating to the property described in matricial article U-…-2 A;

• Assessment no. 2013 …, in the amount of € 316.95, relating to the property described in matricial article U-…-2 A;

• Assessment no. 2013 …, in the amount of € 315.60, relating to the property described in matricial article U-…-2 B;

• Assessment no. 2013 …, in the amount of € 315.60, relating to the property described in matricial article U-…-2 B;

• Assessment no. 2013 …, in the amount of € 264.95, relating to the property described in matricial article U-…-2 C;

• Assessment no. 2013 …, in the amount of € 266.95, relating to the property described in matricial article U-…-2 C;

• Assessment no. 2013 …, in the amount of € 329.15, relating to the property described in matricial article U-…-2 D;

• Assessment no. 2013 …, in the amount of € 329.15, relating to the property described in matricial article U-…-2 D;

• Assessment no. 2013 …, in the amount of € 316.95, relating to the property described in matricial article U-…-3 A;

• Assessment no. 2013 …, in the amount of € 316.95, relating to the property described in matricial article U-…-3 A;

• Assessment no. 2013 …, in the amount of € 315.60, relating to the property described in matricial article U-…-3 B;

• Assessment no. 2013 …, in the amount of € 315.60, relating to the property described in matricial article U-…-3 B;

• Assessment no. 2013 …, in the amount of € 264.95, relating to the property described in matricial article U-…-3 C;

• Assessment no. 2013 …, in the amount of € 264.95, relating to the property described in matricial article U-…-3 C;

• Assessment no. 2013 …, in the amount of € 329.15, relating to the property described in matricial article U-…-3 D;

• Assessment no. 2013 …, in the amount of € 329.15, relating to the property described in matricial article U-…-3 D;

• Assessment no. 2013 …, in the amount of € 316.95, relating to the property described in matricial article U-…-4 A;

• Assessment no. 2013 …, in the amount of € 316.95, relating to the property described in matricial article U-…-4 A;

• Assessment no. 2013 …, in the amount of € 315.60, relating to the property described in matricial article U-…-4 B;

• Assessment no. 2013 …, in the amount of € 315.60, relating to the property described in matricial article U-…-4 B;

• Assessment no. 2013 …, in the amount of € 264.95, relating to the property described in matricial article U-…-4 C;

• Assessment no. 2013 …, in the amount of € 264.95, relating to the property described in matricial article U-…-4 C;

• Assessment no. 2013 …, in the amount of € 329.15, relating to the property described in matricial article U-…-4 D;

• Assessment no. 2013 …, in the amount of € 329.15, relating to the property described in matricial article U-…-6 D;

• Assessment no. 2013 …, in the amount of € 316.95, relating to the property described in matricial article U-…-5 A;

• Assessment no. 2013 …, in the amount of € 316.95, relating to the property described in matricial article U-…-5 A;

• Assessment no. 2013 …, in the amount of € 315.60, relating to the property described in matricial article U-…-5 B;

• Assessment no. 2013 …, in the amount of € 315.60, relating to the property described in matricial article U-…-5 B;

• Assessment no. 2013 …, in the amount of € 264.95, relating to the property described in matricial article U-…-5 C;

• Assessment no. 2013 …, in the amount of € 264.95, relating to the property described in matricial article U-…-5 C;

• Assessment no. 2013 …, in the amount of € 329.15, relating to the property described in matricial article U-…-5 D;

• Assessment no. 2013 …, in the amount of € 329.15, relating to the property described in matricial article U-…-5 D;

• Assessment no. 2013 …, in the amount of € 256.90, relating to the property described in matricial article U-…-RC D;

• Assessment no. 2013 …, in the amount of € 256.90, relating to the property described in matricial article U-…-RC D;

• Assessment no. 2013 …, in the amount of € 307.60, relating to the property described in matricial article U-…-RC E;

• Assessment no. 2013 …, in the amount of € 307.60, relating to the property described in matricial article U-…-RC E;

• Assessment no. 2013 …, in the amount of € 133.10, relating to the property described in matricial article U-…-RC F;

• Assessment no. 2013 …, in the amount of € 133.10, relating to the property described in matricial article U-…-RC F;

relating to the year 2012 and

• Assessment no. 2014 …, in the amount of € 133.10, relating to the property described in matricial article U-…-RC F;

• Assessment no. 2014 …, in the amount of € 133.10, relating to the property described in matricial article U-…-RC 1;

• Assessment no. 2014 …, in the amount of € 158.48, relating to the property described in matricial article U-…-1 A;

• Assessment no. 2014 …, in the amount of € 158.48, relating to the property described in matricial article U-…-1 A;

• Assessment no. 2014 …, in the amount of € 157.80, relating to the property described in matricial article U-…-1 B;

• Assessment no. 2014 …, in the amount of € 157.80, relating to the property described in matricial article U-…-1 B;

• Assessment no. 2014 …, in the amount of € 132.48, relating to the property described in matricial article U-…-3 C;

• Assessment no. 2014 …, in the amount of € 132.48, relating to the property described in matricial article U-…-1 C;

• Assessment no. 2014 …, in the amount of € 164.58, relating to the property described in matricial article U-…-1 D;

• Assessment no. 2014 …, in the amount of € 164.58, relating to the property described in matricial article U-…-1 D;

• Assessment no. 2014 …, in the amount of € 158.48, relating to the property described in matricial article U-…-2 A;

• Assessment no. 2014 …, in the amount of € 158.48, relating to the property described in matricial article U-…-2 A;

• Assessment no. 2014 …, in the amount of € 157.80, relating to the property described in matricial article U-…-2 B;

• Assessment no. 2014 …, in the amount of € 157.80, relating to the property described in matricial article U-…-2 B;

• Assessment no. 2014 …, in the amount of € 132.48, relating to the property described in matricial article U-…-2 C;

• Assessment no. 2014 …, in the amount of € 132.48, relating to the property described in matricial article U-…-2 C;

• Assessment no. 2014 …, in the amount of € 164.58, relating to the property described in matricial article U-…-2 D;

• Assessment no. 2014 …, in the amount of € 164.58, relating to the property described in matricial article U-…-2 D;

• Assessment no. 2014 …, in the amount of € 158.48, relating to the property described in matricial article U-…-3 A;

• Assessment no. 2014 …, in the amount of € 158.48, relating to the property described in matricial article U-…-3 A;

• Assessment no. 2014 …, in the amount of € 157.80, relating to the property described in matricial article U-…-3 B;

• Assessment no. 2014 …, in the amount of € 157.80, relating to the property described in matricial article U-…-3 B;

• Assessment no. 2014 …, in the amount of € 132.48, relating to the property described in matricial article U-…-3 C;

• Assessment no. 2014 …, in the amount of € 132.48, relating to the property described in matricial article U-…-3 C;

• Assessment no. 2014 …, in the amount of € 164.58, relating to the property described in matricial article U-…-3 D;

• Assessment no. 2014 …, in the amount of € 164.58, relating to the property described in matricial article U-…-3 D;

• Assessment no. 2014 …, in the amount of € 158.48, relating to the property described in matricial article U-…-4 A;

• Assessment no. 2014 …, in the amount of € 158.48, relating to the property described in matricial article U-…-4 A;

• Assessment no. 2014 …, in the amount of € 157.80, relating to the property described in matricial article U-…-4 B;

• Assessment no. 2014 …, in the amount of € 157.80, relating to the property described in matricial article U-…-4 B;

• Assessment no. 2014 …, in the amount of € 132.48, relating to the property described in matricial article U-…-4 C;

• Assessment no. 2014 …, in the amount of € 132.48, relating to the property described in matricial article U-…-4 C;

• Assessment no. 2014 …, in the amount of € 164.58, relating to the property described in matricial article U-…-4 D;

• Assessment no. 2014 …, in the amount of € 164.58, relating to the property described in matricial article U-…-4 D;

• Assessment no. 2014 …, in the amount of € 158.48, relating to the property described in matricial article U-…-5 A;

• Assessment no. 2014 …, in the amount of € 158.48, relating to the property described in matricial article U-…-5 A;

• Assessment no. 2014 …, in the amount of € 157.80€, relating to the property described in matricial article U-…-5 B;

• Assessment no. 2014 …, in the amount of € 157.80, relating to the property described in matricial article U-…-5 B;

• Assessment no. 2014 …, in the amount of € 132.48, relating to the property described in matricial article U-…-5 C;

• Assessment no. 2014 …, in the amount of € 132.48, relating to the property described in matricial article U-…-5 C;

• Assessment no. 2014 …, in the amount of € 164.58, relating to the property described in matricial article U-…-5 D;

• Assessment no. 2014 …, in the amount of € 164.58, relating to the property described in matricial article U-…-5 D;

• Assessment no. 2014 …, in the amount of € 128.45, relating to the property described in matricial article U-…-RC D;

• Assessment no. 2014 …, in the amount of € 128.45, relating to the property described in matricial article U-…-RC D;

• Assessment no. 2014 …, in the amount of € 153.80, relating to the property described in matricial article U-…-RC E;

• Assessment no. 2014 …, in the amount of € 153.80, relating to the property described in matricial article U-…-RC E;

The 2012 assessments are dated 31-07-2013; the 2013 assessments are dated 17-03-2014.

The claimants petition for the declaration of illegality of the above-mentioned stamp tax levying acts as well as for the refund of the levied amounts, together with compensatory interest.

The claimants allege, for this purpose, that the property to which the stamp tax assessments relate, whose legality is being contested, is a property in full ownership, comprised of 24 fractions susceptible of independent use, of which 23 are intended for habitation, and none of the divisions has a taxable property value equal to or greater than €1,000,000.00, and that, in their view, the legal condition for the application of item 28.1 of the General Table of Stamp Tax is not met.

Ricardo Marques Candeias was designated as sole arbitrator on 31-10-2014. In accordance with the provisions of art. 11, 1, c), RJAT, the singular arbitral tribunal was constituted on 17-11-2014.

Notified for this purpose, the AT submitted its response on 23-12-2014. It argues that the taxable property value relevant for the purposes of the incidence of the tax is the total taxable property value of the urban property and not the taxable property value of each of the parts that compose it, even if they are susceptible of independent use, because the property is not constituted in the form of horizontal ownership.

The AT also requested the waiver of the holding of the meeting referred to in art. 18 of RJAT and the respective oral arguments.

The AT was notified to attach the administrative file to the present records, but made no statement or request.

Notified to make pronouncements, the claimants stated that they had no objection to the waiver of the holding of the meeting referred to in art. 18 of RJAT and the respective oral arguments.

By order of 14-05-2015, the arbitral tribunal determined the extension of the arbitral decision by two months.

By order of 10-07-2015, the arbitral tribunal notified the claimants to attach legible copies of documents 1 to 46 and 47 to 92, extending the arbitral decision by a further two months.

The arbitral tribunal considered, in light of the evidence brought to the record, and in the absence of exceptions to be resolved, that it was not necessary to attach the administrative file, to hold the scheduled meeting, or to produce arguments. Consequently, on 14-09-2015, the date of 18-09-2015 was fixed for the rendering of the decision.

The parties have legal personality and capacity and are legitimate (arts. 4 and 10, nos. 1 and 2, RJAT, and art. 1, of Ordinance no. 112-A/2011, of 22 March). The proceedings do not suffer from any nullities and no prior questions were raised for consideration.

2. FACTS

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

a) The urban property located at Rua …, no. … and …, in the parish of ..., municipality of Lisbon, registered in the urban property register under article … of the said parish, is the property of the claimants;

b) The property is in the form of full ownership.

c) It is comprised of 24 divisions or fractions susceptible of independent use, without being constituted in the form of horizontal ownership;

d) The AT levied on 31-07-2013 the Stamp Tax relating to the year 2012, in a single instalment, relating to part of the flats or divisions with independent use existing in the property identified above, in the amount corresponding to 1% of its taxable property value, as follows:

i. Assessment no. 2013 …, in the amount of € 316.95, relating to the property described in matricial article U-…-1 A;

ii. Assessment no. 2013 …, in the amount of € 316.95, relating to the property described in matricial article U-…-1 A;

iii. Assessment no. 2013 …, in the amount of € 315.60, relating to the property described in matricial article U-…-1 B;

iv. Assessment no. 2013 …, in the amount of € 315.60, relating to the property described in matricial article U-…-1 B;

v. Assessment no. 2013 …, in the amount of € 264.95, relating to the property described in matricial article U-…-1 C;

vi. Assessment no. 2013 …, in the amount of € 264.95, relating to the property described in matricial article U-…-1 C;

vii. Assessment no. 2013 …, in the amount of € 329.15, relating to the property described in matricial article U-…-1 D;

viii. Assessment no. 2013 …, in the amount of € 329.15, relating to the property described in matricial article U-…-1 D;

ix. Assessment no. 2013 …, in the amount of € 316.95, relating to the property described in matricial article U-…-2 A;

x. Assessment no. 2013 …, in the amount of € 316.95, relating to the property described in matricial article U-…-2 A;

xi. Assessment no. 2013 …, in the amount of € 315.60, relating to the property described in matricial article U-…-2 B;

xii. Assessment no. 2013 …, in the amount of € 315.60, relating to the property described in matricial article U-…-2 B;

xiii. Assessment no. 2013 …, in the amount of € 264.95, relating to the property described in matricial article U-…-2 C;

xiv. Assessment no. 2013 …, in the amount of € 266.95, relating to the property described in matricial article U-…-2 C;

xv. Assessment no. 2013 …, in the amount of € 329.15, relating to the property described in matricial article U-…-2 D;

xvi. Assessment no. 2013 …, in the amount of € 329.15, relating to the property described in matricial article U-…-2 D;

xvii. Assessment no. 2013 …, in the amount of € 316.95, relating to the property described in matricial article U-…-3 A;

xviii. Assessment no. 2013 …, in the amount of € 316.95, relating to the property described in matricial article U-…-3 A;

xix. Assessment no. 2013 …, in the amount of € 315.60, relating to the property described in matricial article U-…-3 B;

xx. Assessment no. 2013 …, in the amount of € 315.60, relating to the property described in matricial article U-…-3 B;

xxi. Assessment no. 2013 …, in the amount of € 264.95, relating to the property described in matricial article U-…-3 C;

xxii. Assessment no. 2013 …, in the amount of € 264.95, relating to the property described in matricial article U-…-3 C;

xxiii. Assessment no. 2013 …, in the amount of € 329.15, relating to the property described in matricial article U-…-3 D;

xxiv. Assessment no. 2013 …, in the amount of € 329.15, relating to the property described in matricial article U-…-3 D;

xxv. Assessment no. 2013 …, in the amount of € 316.95, relating to the property described in matricial article U-…-4 A;

xxvi. Assessment no. 2013 …, in the amount of € 316.95, relating to the property described in matricial article U-…-4 A;

xxvii. Assessment no. 2013 …, in the amount of € 315.60, relating to the property described in matricial article U-…-4 B;

xxviii. Assessment no. 2013 …, in the amount of € 315.60, relating to the property described in matricial article U-…-4 B;

xxix. Assessment no. 2013 …, in the amount of € 264.95, relating to the property described in matricial article U-…-4 C;

xxx. Assessment no. 2013 …, in the amount of € 264.95, relating to the property described in matricial article U-…-4 C;

xxxi. Assessment no. 2013 …, in the amount of € 329.15, relating to the property described in matricial article U-…-4 D;

xxxii. Assessment no. 2013 …, in the amount of € 329.15, relating to the property described in matricial article U-…-6 D;

xxxiii. Assessment no. 2013 …, in the amount of € 316.95, relating to the property described in matricial article U-…-5 A;

xxxiv. Assessment no. 2013 …, in the amount of € 316.95, relating to the property described in matricial article U-…-5 A;

xxxv. Assessment no. 2013 …, in the amount of € 315.60, relating to the property described in matricial article U-…-5 B;

xxxvi. Assessment no. 2013 …, in the amount of € 315.60, relating to the property described in matricial article U-…-5 B;

xxxvii. Assessment no. 2013 …, in the amount of € 264.95, relating to the property described in matricial article U-…-5 C;

xxxviii. Assessment no. 2013 …, in the amount of € 264.95, relating to the property described in matricial article U-…-5 C;

xxxix. Assessment no. 2013 …, in the amount of € 329.15, relating to the property described in matricial article U-…-5 D;

xl. Assessment no. 2013 …, in the amount of € 329.15, relating to the property described in matricial article U-…-5 D;

xli. Assessment no. 2013 …, in the amount of € 256.90, relating to the property described in matricial article U-…-RC D;

xlii. Assessment no. 2013 …, in the amount of € 256.90, relating to the property described in matricial article U-…-RC D;

xliii. Assessment no. 2013 …, in the amount of € 307.60, relating to the property described in matricial article U-…-RC E;

xliv. Assessment no. 2013 …, in the amount of € 307.60, relating to the property described in matricial article U-…-RC E;

xlv. Assessment no. 2013 …, in the amount of € 133.10, relating to the property described in matricial article U-…-RC F;

xlvi. Assessment no. 2013 …, in the amount of € 133.10, relating to the property described in matricial article U-…-RC F;

e) The AT levied on 17-03-2014 the first instalment of Stamp Tax relating to the year 2013, relating to part of the flats or divisions with independent use existing in the property identified above, in the amount corresponding to 1% of its taxable property value, as follows:

i. Assessment no. 2014 …, in the amount of € 133.10, relating to the property described in matricial article U-…-RC F;

ii. Assessment no. 2014 …, in the amount of € 133.10, relating to the property described in matricial article U-…-RC 1;

iii. Assessment no. 2014 …, in the amount of € 158.48, relating to the property described in matricial article U-…-1 A;

iv. Assessment no. 2014 …, in the amount of € 158.48, relating to the property described in matricial article U-…-1 A;

v. Assessment no. 2014 …, in the amount of € 157.80, relating to the property described in matricial article U-…-1 B;

vi. Assessment no. 2014 …, in the amount of € 157.80, relating to the property described in matricial article U-…-1 B;

vii. Assessment no. 2014 …, in the amount of € 132.48, relating to the property described in matricial article U-…-3 C;

viii. Assessment no. 2014 …, in the amount of € 132.48, relating to the property described in matricial article U-…-1 C;

ix. Assessment no. 2014 …, in the amount of € 164.58, relating to the property described in matricial article U-…-1 D;

x. Assessment no. 2014 …, in the amount of € 164.58, relating to the property described in matricial article U-…-1 D;

xi. Assessment no. 2014 …, in the amount of € 158.48, relating to the property described in matricial article U-…-2 A;

xii. Assessment no. 2014 …, in the amount of € 158.48, relating to the property described in matricial article U-…-2 A;

xiii. Assessment no. 2014 …, in the amount of € 157.80, relating to the property described in matricial article U-…-2 B;

xiv. Assessment no. 2014 …, in the amount of € 157.80, relating to the property described in matricial article U-…-2 B;

xv. Assessment no. 2014 …, in the amount of € 132.48, relating to the property described in matricial article U-…-2 C;

xvi. Assessment no. 2014 …, in the amount of € 132.48, relating to the property described in matricial article U-…-2 C;

xvii. Assessment no. 2014 …, in the amount of € 164.58, relating to the property described in matricial article U-…-2 D;

xviii. Assessment no. 2014 …, in the amount of € 164.58, relating to the property described in matricial article U-…-2 D;

xix. Assessment no. 2014 …, in the amount of € 158.48, relating to the property described in matricial article U-…-3 A;

xx. Assessment no. 2014 …, in the amount of € 158.48, relating to the property described in matricial article U-…-3 A;

xxi. Assessment no. 2014 …, in the amount of € 157.80, relating to the property described in matricial article U-…-3 B;

xxii. Assessment no. 2014 …, in the amount of €157.80, relating to the property described in matricial article U-…-3 B;

xxiii. Assessment no. 2014 …, in the amount of € 132.48, relating to the property described in matricial article U-…-3 C;

xxiv. Assessment no. 2014 …, in the amount of € 132.48, relating to the property described in matricial article U-…-3 C;

xxv. Assessment no. 2014 …, in the amount of € 164.58, relating to the property described in matricial article U-…-3 D;

xxvi. Assessment no. 2014 …, in the amount of € 164.58, relating to the property described in matricial article U-…-3 D;

xxvii. Assessment no. 2014 …, in the amount of € 158.48, relating to the property described in matricial article U-…-4 A;

xxviii. Assessment no. 2014 …, in the amount of € 158.48, relating to the property described in matricial article U-…-4 A;

xxix. Assessment no. 2014 …, in the amount of € 157.80, relating to the property described in matricial article U-…-4 B;

xxx. Assessment no. 2014 …, in the amount of € 157.80, relating to the property described in matricial article U-…-4 B;

xxxi. Assessment no. 2014 …, in the amount of € 132.48, relating to the property described in matricial article U-…-4 C;

xxxii. Assessment no. 2014 …, in the amount of € 132.48, relating to the property described in matricial article U-…-4 C;

xxxiii. Assessment no. 2014 …, in the amount of € 164.58, relating to the property described in matricial article U-…-4 D;

xxxiv. Assessment no. 2014 …, in the amount of € 164.58, relating to the property described in matricial article U-…-4 D;

xxxv. Assessment no. 2014 …, in the amount of € 158.48, relating to the property described in matricial article U-…-5 A;

xxxvi. Assessment no. 2014 …, in the amount of € 158.48, relating to the property described in matricial article U-…-5 A;

xxxvii. Assessment no. 2014 …, in the amount of € 157.80€, relating to the property described in matricial article U-…-5 B;

xxxviii. Assessment no. 2014 …, in the amount of € 157.80, relating to the property described in matricial article U-…-5 B;

xxxix. Assessment no. 2014 …, in the amount of € 132.48, relating to the property described in matricial article U-…-5 C;

xl. Assessment no. 2014 …, in the amount of € 132.48, relating to the property described in matricial article U-…-5 C;

xli. Assessment no. 2014 …, in the amount of € 164.58, relating to the property described in matricial article U-…-5 D;

xlii. Assessment no. 2014 …, in the amount of € 164.58, relating to the property described in matricial article U-…-5 D;

xliii. Assessment no. 2014 …, in the amount of € 128.45, relating to the property described in matricial article U-…-RC D;

xliv. Assessment no. 2014 …, in the amount of € 128.45, relating to the property described in matricial article U-…-RC D;

xlv. Assessment no. 2014 …, in the amount of € 153.80, relating to the property described in matricial article U-…-RC E;

xlvi. Assessment no. 2014 …, in the amount of € 153.80, relating to the property described in matricial article U-…-RC E;

f) The payment deadline for the assessment notices relating to the year 2012 ended on 30-11-2013;

g) The payment deadline for the assessment notices relating to the first instalment of the year 2013 ended on 30-04-2014;

h) The claimants filed a gracious reclamation concerning the stamp tax assessments relating to the years 2012 and 2013;

i) The gracious reclamation procedure relating to the stamp tax assessments relating to the year 2013 was dismissed.

j) The total taxable property value of the property is € 1,366,170.00.

k) The claimants were notified to make payment of the assessment notices relating to the year 2012.

l) The claimants were notified to make payment of the assessment notices relating to the first instalment of the year 2013.

m) The claimants made payment of assessments no. 2013 …, no. 2013 …, no. 2013 …, no. 2013 …, no. 2013 …, no. 2013 …, no. 2013 …, no. 2013 …, no. 2013 …, no. 2013 …, no. 2013 …, no. 2013 …, no. 2013 …, no. 2013 …, no. 2013 …, no. 2013 …, no. 2013 …, no. 2013 …, no. 2013 …, no. 2013 …, no. 2013 …, no. 2013 …, no. 2013 …, no. 2013 …, no. 2013 …, no. 2013 …, no. 2013 …, no. 2013 …, no. 2013 …, no. 2013 …, no. 2013 …, no. 2013 …, no. 2013 …, no. 2013 …, no. 2013 …, no. 2013 …, no. 2013 …, no. 2013 …, no. 2013 …, no. 2013 …, no. 2013 …, no. 2013 …, no. 2013 …, no. 2013 …, no. 2013 …, relating to the year 2012 within the scope of tax enforcement proceedings no. …2013… and no. …2013…, on 28-02-2014, in the total amount of € 13,990.96;

and assessments no. 2014 …, no. 2014 …, no. 2014 …, no. 2014 …, no. 2014 …, no. 2014 …, no. 2014 …, no. 2014 …, no. 2014 …, no. 2014 …, no. 2014 …, no. 2014 …, no. 2014 …, no. 2014 …, no. 2014 …, no. 2014 …, no. 2014 …, no. 2014 …, no. 2014 …, no. 2014 …, no. 2014 …, no. 2014 …, no. 2014 …, no. 2014 …, no. 2014 …, no. 2014 …, no. 2014 …, no. 2014 …, no. 2014 …, no. 2014 …, no. 2014 …, no. 2014 …, no. 2014 …, no. 2014 …, no. 2014 …, no. 2014 …, no. 2014 …, no. 2014 …, no. 2014 …, no. 2014 …, no. 2014 …, no. 2014 …, no. 2014 …, no. 2014 …, no. 2014 …, no. 2014 …, relating to the first instalment of the year 2013, in the amount of € 6,946.10.

The arbitrator's conviction was founded on the documentary evidence attached to the record, specifically points a), b) and c) result from the content of the property register attached to the record and points d), e), f), g), h), i), j), k), l) and m) result from the assessment notices attached, and from the payment notifications, on which the respective proof of payment is affixed, as well as from the proofs of payment within the scope of the tax enforcement proceedings identified above.

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

3. LAW

These are the facts that must be assessed. Let us proceed.

The claimants assert in their initial petition that "the subjection to stamp tax of properties with residential purpose resulted from the amendment to item no. 28 of the General Table of Stamp Tax".

The claimants defend that the normative interpretation should be that: "(…) for the purposes of the objective incidence of this tax, in the case of a property in vertical ownership, the taxable property value relevant is that which is attributed to each one of the flats or residential divisions."

The claimants argue that: "Law no. 55-A/2012 did not proceed with the qualification of the concepts contained in the said item no. 28, namely the concept of 'property with residential purpose'.

(…)

From reading the CIMI it is understood that the concept of 'property with residential purpose' naturally refers to the concept of 'urban property', which is defined in articles 2 and 4. On the other hand, it is noted that the determination of the taxable property value complies with the provisions of articles 38 et seq. of the same Code.

Among the various types of 'urban properties', mention is made, in accordance with clause a), no. 1, of article 6 of CIMI, of 'residential urban properties', with no. 2 thereof determining that these 'are buildings or constructions licensed for such purpose, or, in the absence of a license, which have as their normal destination each of these purposes'.

Now, if it is true that no. 4 of article 2 of CIMI states that 'for the purposes of this tax, each autonomous fraction, under the horizontal ownership regime, is deemed to constitute a property', it is also true that there is nothing in the law that points to discrimination between properties in horizontal and vertical ownership regarding their identification as 'residential urban properties'.

In this respect, it is concluded that independent parts of properties in vertical ownership with residential purpose should be considered as 'residential urban properties'.

The claimants continue, arguing that: "as the tax administration has already recognized, what is relevant for the purposes of registration in the property matrix is the autonomy that within the same property may be attributed to each of its parts, which are economically and functionally independent, and the constitution of horizontal ownership implies a mere legal alteration of the property, not even requiring a new valuation".

The claimants argue that the AT admits the above-mentioned legal criterion regarding the assessments in question: "it results that the value of incidence is that corresponding to the taxable property value of each flat with independent use, and furthermore those assessments are individualized – one assessment act on each of the flats making up the said urban property".

The claimants continue arguing that: "Additionally to what is set forth above, there is the fact that the law itself expressly establishes, in the final part of item 28 of TGIS, that stamp tax applies to urban properties with a value equal to or greater than €1,000,000.00 (…)."

Wherefore, "the tax administration cannot consider as the reference value for the incidence of the new tax the total value of the property, when the legislator itself established a different rule under CIMI, and this is the code applicable to matters not regulated regarding item no. 28 of TGIS".

The claimants continue their argument, stating that: "The legislator, in introducing this legislative innovation, considered as the determining element of contributory capacity urban properties, with residential purpose, of high value (luxury).

(…)

the legislator understood that this value, when attributed to a dwelling – whether it be a 'house', 'autonomous fraction' or 'part of property with independent use' – denotes a contributory capacity above the average (…) which 'justifies the realization of an additional contributory effort, which ensures the fair distribution of fiscal burden'.

Concluding, in this respect, arguing that: "the residential parts of a property in vertical ownership shall not be subject to taxation based on the global taxable property value of the property, but rather on the taxable property value individually attributed to each part, and since none of the flats with independent use, which is the subject of this challenge, has a taxable property value equal to or greater than €1,000,000.00, the legal condition for the incidence of stamp tax, provided for in item no. 28 of TGIS, is not met, and therefore the assessment acts which are the subject of this request for arbitral pronouncement are illegal".

In another line of argument, the claimants defend that the AT's interpretation regarding the legal criterion for determining the incidence of stamp tax "is unconstitutional, as it violates the principles of fiscal equality, tax legality, contributory capacity, justice, the prevalence of material truth over formal legal reality, proportionality in tax matters".

The claimants further urge the erroneous quantification of income and property values, arguing that, because they are married under a separation of property regime, "the claimants are co-owners of the urban property, on which the present stamp tax assessments fell. (…) Thus, in accordance with the provisions of article 1403 of the Civil Code, the current claimants are simultaneously holders of the right of ownership over the said urban property, and inasmuch as nothing was determined to the contrary, their respective shares in that asset are quantitatively equal, wherefore, in truth, each of them is owner of only half of the aforementioned urban property.

(…)

Each of the owners is not the owner of a property of that value, but, at most, and without conceding, of a property of half of that value".

The claimants argue regarding the breach of legal formalities, invoking that the claimants were not granted "the right to prior hearing before assessment".

Finally, the claimants invoke the vice of incompetence of the act rejecting the gracious reclamation filed, arguing that: "the express rejection act of the gracious reclamation filed, handed down by the Esteemed Head of Finance of the Finance Service of Lisbon – …, apart from having to be annulled, as a consequence of the declaration of illegality of the stamp tax assessments, which is the subject of said reclamation and of this request for arbitral pronouncement, the truth is that it would always be illegal due to the vice of incompetence".

The claimants urge the illegality of the assessments, petitioning for the reimbursement of the paid amounts together with compensatory interest.

The claimants further petition that the illegality of the tacit rejection of the gracious reclamation filed be declared, relating to the year 2012; and that the illegality of the rejection of the gracious reclamation filed be declared, relating to stamp tax for the year 2013. They further petition that the AT refrain from issuing notifications to the claimants for payment of the second instalments of stamp tax already assessed, and relating to the year 2013.

The AT, for its part, comes forward to counter the position of the claimants, basing its contention on the fact that its property is in full ownership and the concentration in each property of independent dwellings is not susceptible to trigger the incidence of stamp tax on each of them.

In the AT's view, "The current claimants are co-owners of a property in full or vertical ownership. From the notion of property in article 2 of CIMI, only autonomous fractions of property under horizontal ownership are deemed to be properties – no. 4 of the cited article 2 of CIMI. Therefore, since the property of which they are co-owners is in full ownership, it does not have autonomous fractions, to which fiscal law attributes the qualification of property."

Wherefore, the claimants "are not co-owners of 23 autonomous fractions, but rather of a single property."

According to the AT, "horizontal ownership is a specific legal regime of property provided for in article 1414 and following of the Civil Code, whose mode of constitution is provided for therein, as well as the other rules on the rights and responsibilities of co-owners, and in this provision it must be acknowledged the existence of a more evolved regime of property."

The AT continues stating that "These two regimes of property are regimes of civil law, which were imported into tax law, namely in the terms referred to in article 2 of CIMI.

And the interpreter of fiscal law cannot equate these regimes, in accordance with the rule according to which the concepts of other branches of law have the meaning in tax law that is given to them in those branches of law, or in the words of article 11, no. 2 of LGT, on the interpretation of fiscal law: 'Whenever, in fiscal norms, terms specific to other branches of law are used, these should be interpreted in the same sense as that which they have therein, unless otherwise directly results from the law.'"

The AT defends that: "We cannot, therefore, accept that one considers, for the purposes of item 28.1 of the General Table annexed to the Stamp Tax Code, that the parts susceptible of independent use have the same fiscal regime as the autonomous fractions under the horizontal ownership regime.

(…)

The flats or independent divisions, assessed in accordance with article 12, no. 3, of CIMI, are considered separately in the matricial registration, which similarly discriminates the respective taxable property value on which the IMI is levied."

The AT further argues that: "Without prejudice to the co-ownership regime, when applicable, its ownership cannot be attributed to more than one owner."

The AT concludes that "any other interpretation would violate, indeed, the letter and spirit of item 28.1 of the General Table and the principle of legality of the essential elements of the tax provided for in article 103, no. 2 of the Constitution of the Portuguese Republic."

The AT further contends for the unconstitutionality of the interpretation made by the claimants of item 28.1 of TGIS, to the effect that the taxable property value on which its incidence depends is calculated for each flat and not globally, injuring the principle of tax legality.

Having provided a brief description of the argumentative range presented by the parties, let us proceed.

The issue to be decided concerns whether the rule of incidence of item 28.1 of the General Table of Stamp Tax (TGIS) is applicable to properties that are not constituted in horizontal ownership. Indeed, in such cases, the question is raised whether said item should apply to the sum of the taxable property value attributed to the different flats, that is, to the total taxable property value of the property, or, rather, to the taxable property value of each flat with economically independent use of the property.

This question has already been the subject of various CAAD decisions, namely those delivered in proceedings 132/2013-T, 14/2014-T, 30/2014-T and 88/2014-T, which we shall follow closely.

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

"28 – Ownership, usufruct or right of superficies of urban properties whose taxable property value recorded in the matrix, in accordance with the Municipal Property Tax Code (CIMI), is equal to or greater than €1,000,000 – on the taxable property value used for the purpose of IMI:

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

With the amendment of no. 2 of article 67 of the Stamp Tax Code (CIS), also carried out by said Law, it was established that as to "matters not regulated in this code regarding item 28 of the General Table, the CIMI applies subsidiarily."

By force of this referral, since the rule of incidence of item 28.1 TGIS refers to urban properties, the concept of urban property will be the one resulting from CIMI.

CIMI establishes in art. 2, 1, the concept of property. It defines it as "any parcel of land, including water, plantations, buildings and constructions of any nature incorporated or situated thereon, with a character of permanence, provided that it forms part of the assets of a singular or collective person and, under normal circumstances, has economic value, as well as water, plantations, buildings or constructions, in the aforementioned circumstances, endowed with economic autonomy in relation to the land where they are located, although located in a parcel of land that constitutes an integral part of a different asset or does not have property nature".

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

For its part, art. 6, thereof, proceeds with the classification of the various types of urban properties, distinguishing them, in no. 1 of said article, into four subcategories: "a) Residential; b) Commercial, industrial or for services; c) Construction land; d) Others".

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

Now, we verify that no provision of law in the mentioned statute results in any classification of urban properties that distinguishes them between properties in horizontal ownership versus properties in vertical ownership.

If the legislator qualifies them as the same legal and fiscal reality, there will be a lack of legal support for the application of different fiscal regimes by reason of the legal nature of the civil law that an urban property with residential purpose may have.

It is true that art. 2, 4, of CIMI determines that, "for the purposes of this tax, each autonomous fraction, under the horizontal ownership regime, is deemed to constitute a property". However, it is also true that it does not establish any differentiation between the autonomous fractions of properties in horizontal ownership and these parts of the property with independent use regarding their classification as residential urban properties.

From this it results that the legislator intended only, as it did, to differentiate urban properties considering their normal destination, that is, considering the destination to which each of them is subject. In this way, it thus prevents, from a fiscal point of view, a distinction that civil law provides, between properties in horizontal ownership and properties in vertical ownership, but does not allow this legal characterization to be relevant for what interests us, which is the scope of incidence of the tax, both of the IMI and of item 28.1 of TGIS, resulting from the aforementioned referral.

Being thus, we conclude that it is irrelevant, for taxation purposes, whether the property is in vertical or horizontal ownership. What is relevant is rather the material truth underlying its existence as an urban property and its residential use.

Furthermore, given the intention of the legislator in creating item 28 of TGIS and the application that AT has been giving it, it is considered that the criterion adopted by it regarding properties in vertical ownership does not accord with the principles of legality, equality and fiscal proportionality, enshrined constitutionally in our legal system.

The principle of fiscal equality should be understood in its material sense. Thus, the emphasis of this principle shall always rest on the contributory capacity of each taxpayer. The same is to say that we shall have an equal tax for those with equal contributory capacity, and a different tax for those with different contributory capacity. Certainly, the difference in tax shall be proportional to the different contributory capacity.

This principle is imposed on us by the articulation of art. 13 of the Constitution of the Portuguese Republic (CRP) with arts. 103 and 104 of the same statute.

Now, the tax established by item 28 of TGIS seeks to harmonize the distribution of the fiscal burden of taxpayers, by taxing those holding properties of high value intended for habitation, exceeding €1,000,000.00, per flat with independent use.

Indeed, with the principle of fiscal equality determining that what is equal should be treated fiscally equally and what is different should be treated differently, the differentiated treatment, for taxation purposes, of the flats of a property merely because it is already in horizontal ownership cannot be justified, provided that these flats have independent use.

And referring the CIS to CIMI, we consider that the registration in the property matrix of immovables in vertical ownership, constituted by different flats with independent use, should comply with the same registration rules as immovables constituted in horizontal ownership.

Note, first of all, what is provided in no. 3, of art. 12 of CIMI, according to which "each flat or part of property susceptible of independent use is considered separately in the matricial registration, which also discriminates the respective taxable property value".

Setting as the reference value for the incidence of the new tax the global taxable property value of the property in question, as the AT intends, finds no basis in the applicable legislation mentioned above.

Indeed, the respondent itself issued the Assessment Notices contained in the record, each of them relating to each one of the fractions with independent use and residential purpose. It is also evident from each of them a particular reference to the taxable property value of each fraction, for the purposes of applying item 28.1 of TGIS. It thus results that the tax was levied individually in relation to each of the parts with independent use and not considering the sum of the taxable property values of the flats of the property in full ownership.

In view of all the above, the legal criterion to be used for defining the incidence of the tax established in item 28.1 of TGIS must be identical to that established for the purposes of the IMI.

As can be read in the Arbitral Decision delivered in proceedings 132/2013-T: "it is not apparent, in the works relating to the discussion of draft law no. 96/XII in the National Assembly, the invocation of an interpretative ratio different from the one presented here. Indeed, such a measure, called the 'special tax on residential urban properties of higher value', was justified by the need to comply with the principles of social equity and fiscal justice, burdening more significantly the holders of properties with high value intended for habitation, and in that measure, making the new 'special tax' apply to 'homes with a value equal to or greater than 1 million euros'."

The mentioned decision further states that "if such logic seems to make sense when applied to 'habitation' – whether it be a 'house', 'autonomous fraction' or 'part of property with independent use' / 'autonomous unit' – because one presumes a contributory capacity above the average and, in that measure, justifies the need for an additional contributory effort, it would make little sense to disregard the calculations 'unit by unit' when only through the sum of the taxable property values thereof (because held by the same individual) would the million euros be exceeded".

Since the AT would only be right and, consequently, entitled to levy the tax in question, if any of the flats with independent use corresponded to a taxable property value greater than €1,000,000.00, which is not the case.

It is apparent from what has been said up to now that the position of the AT is contrary to the Law and to the Constitution, violating the principles of legality and fiscal equality.

The property in question is in full ownership and contains 24 divisions or fractions with independent use. As is shown to be proven, none of them has a taxable property value equal to or greater than €1,000,000.00. We thus observe the non-fulfilment of the legal condition for the incidence of Stamp Tax provided for in item 28 of TGIS.

As a consequence of the above, we conclude the illegality of the stamp tax assessments challenged by the claimants. Therefore, the taxable matter that serves as the basis for the rule of incidence of item 28.1 of TGIS must be the taxable property value determined in accordance with CIMI, for each one of the flats of the property that are susceptible of independent use.

The claimants also based their argument on the thesis of unconstitutionality due to violation of the principles of fiscal equality, tax legality, contributory capacity, justice, the prevalence of material truth over formal legal reality, proportionality in tax matters; on erroneous quantification of income and property values, arguing that, because they are married under a separation of property regime, the claimants are co-owners of the urban property; as well as on the thesis of breach of legal formalities and violation of the right to prior hearing, and also raised the unconstitutionality of the assessment due to violation of the principle of equality.

Considering the above reasoning, being the decision in the sense of declaration of illegality of the assessments which are the subject of this process, due to the vice of violation of law and error in the legal presuppositions, the consideration of the vices invoked and of the unconstitutionality raised, as a subsidiary matter, by the claimants is prejudiced.

The claimants petition that the illegality of the tacit rejection of the gracious reclamation filed be declared, relating to stamp tax for 2012 and 2013, and that the AT refrain from issuing notifications to the claimants for payment of the second instalments of stamp tax already assessed, and relating to the year 2013.

In accordance with art. 2, RJAT, the competence of arbitral tribunals, insofar as the situation in question is concerned, includes the assessment of "declaration of illegality of tax assessment acts, self-assessment, withholding at source and payment on account", wherefore the assessment of gracious reclamation proceedings and the imposition of conduct on the AT regarding the claimants' request that it refrain from issuing notifications for payment of the second instalments of stamp tax relating to the year 2013 fall outside the scope of assessment of this tribunal.

It was established as proven that the current claimants paid on 28-02-2014, within the scope of tax enforcement proceedings no. …2013… and …2013…, the tax relating to the 2012 assessments, and on 06-05-2014 the first instalment relating to the 2013 tax, having petitioned for recognition of the right to compensatory interest.

Arts. 24, 1, b), RJAT, and 100, LGT, provide that, having the tax been paid and subsequently the assessment supporting that tax being annulled, the taxpayer has the right to reimbursement of the amounts wrongfully paid.

Art. 43, LGT, provides that "compensatory interest is due when it is determined, in gracious reclamation or judicial challenge, that there was an error attributable to the services that resulted in the payment of the tax debt in an amount greater than that legally due".

As to the existence, in the case, of an error attributable to the services, this error is considered verified, according to uniform case-law of the Supreme Administrative Court (see, in this sense, the Decisions of the Supreme Administrative Court of 22-05-2002, Proc. no. 457/02; of 31.10.2001, Proc. no. 26167; of 2.12.2009, Proc. no. 0892/09) whenever they proceed with a gracious reclamation or challenge of the assessment (in the same sense, the decision in arbitral proceedings 218/2013-T).

Consequently, the claimants are entitled to compensatory interest, in accordance with arts. 43, 1, LGT, and 61, 2, 5, CPPT.

Being thus, the AT must refund the amounts of € 13,990.96 and € 6,964.10 together with interest at the legal rate of 4%, from the date of said payments 28-02-2014 and 06-05-2014 respectively, until the full restitution of the amounts by the AT.

In accordance with the provisions of arts. 12, 2, and 22, 4, both of RJAT, and art. 4, 3, of Table I annexed to the Regulation of Costs in Tax Arbitration Proceedings, the costs of the present proceedings are charged to the respondent.

4. DECISION

In light of the above, it is decided to render judgment totally granting the request formulated by the claimants in the present tax arbitral proceedings, regarding the illegality of the Stamp Tax Assessments no. 2013 …, no. 2013 …, no. 2013 …, no. 2013 …, no. 2013 …, no. 2013 …, no. 2013 …, no. 2013 …, no. 2013 …, no. 2013 …, no. 2013 …, no. 2013 …, no. 2013 …, no. 2013 …, no. 2013 …, no. 2013 …, no. 2013 …, no. 2013 …, no. 2013 …, no. 2013 …, no. 2013 …, no. 2013 …, no. 2013 …, no. 2013 …, no. 2013 …, no. 2013 …, no. 2013 …, no. 2013 …, no. 2013 …, no. 2013 …, no. 2013 …, no. 2013 …, no. 2013 …, no. 2013 …, no. 2013 …, no. 2013 …, no. 2013 …, no. 2013 …, no. 2013 …, no. 2013 …, no. 2013 …, no. 2013 …, no. 2013 …, no. 2013 …, no. 2013 …, no. 2013 …, no. 2014 …, no. 2014 …, no. 2014 …, no. 2014 …, no. 2014 …, no. 2014 …, no. 2014 …, no. 2014 …, no. 2014 …, no. 2014 …, no. 2014 …, no. 2014 …, no. 2014 …, no. 2014 …, no. 2014 …, no. 2014 …, no. 2014 …, no. 2014 …, no. 2014 …, no. 2014 …, no. 2014 …, no. 2014 …, no. 2014 …, no. 2014 …, no. 2014 …, no. 2014 …, no. 2014 …, no. 2014 …, no. 2014 …, no. 2014 …, no. 2014 …, no. 2014 …, no. 2014 …, no. 2014 …, no. 2014 …, no. 2014 …, no. 2014 …, no. 2014 …, no. 2014 …, no. 2014 …, no. 2014 …, no. 2014 …, no. 2014 …, no. 2014 …, no. 2014 …, no. 2014 …, no. 2014 …, no. 2014 …, no. 2014 …, no. 2014 …, no. 2014 … should be considered null, with the necessary legal consequences.

The respondent is further condemned to refund to the claimants the total amount of € 20,955.06, as capital, which it wrongfully received, together with interest at the legal rate of 4%, from 28-02-2014 as to the amount of € 13,990.96 and 06-05-2014 as to the amount of € 6,964.10, until the full restitution of the amount in question.

The respondent is further condemned to the payment of costs as referred to above and below.

Value of the proceedings:

In accordance with the provisions of arts. 306, 2, CPC, and 97-A, 1, a), CPPT, and 3, 2, of the Regulation of Costs in Tax Arbitration Proceedings, the value of the action is fixed at € 20,627.80.

Costs:

In accordance with article 22, 4, of RJAT, and Table I annexed to the Regulation of Costs in Tax Arbitration Proceedings, the amount of the costs is fixed at € 1,224.00 payable by the Tax and Customs Authority.

Notify.

Lisbon, 18 September 2015.

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

The sole arbitrator

Ricardo Marques Candeias