Process: 683/2014-T

Date: May 15, 2015

Tax Type: Valor do pedido:

Source: Original CAAD Decision

Summary

This landmark tax arbitration case (Process 683/2014-T) addresses whether Stamp Duty under clause 28.1 of the General Stamp Duty Table (TGIS) applies to vertical property based on individual unit values or aggregate building value. The claimant owned a Lisbon property with 37 independent units in vertical ownership, 28 residential, with total patrimonial value of €1,661,670. The Tax Authority assessed Stamp Duty totaling €8,308.35 for 2013. The claimant challenged these assessments arguing that since no individual unit exceeded the €1,000,000 threshold, the tax was inapplicable. The claimant further alleged constitutional violations of fiscal equality, tax legality, contributive capacity, justice and proportionality principles, claiming vertical properties were discriminated against compared to horizontal properties where separate units are taxed individually. Procedural objections included lack of prior hearing before assessment and incompetence of the deciding authority on the gracious complaint. The Tax Authority defended that the relevant patrimonial value is the total building value, not individual unit values, even when units have independent use. The case raises fundamental questions about property taxation methodology in vertical ownership regimes and whether aggregating unit values for properties under single ownership violates constitutional tax principles, particularly when the same units held by different owners would escape taxation entirely.

Full Decision

ARBITRAL DECISION

CAAD: Tax Arbitration

Process no. 683/2014-T

Subject: Stamp Duty – item 28.1 of the TGIS

Claimants/Applicants: A…

Respondent: Tax and Customs Authority (hereinafter T.A.)

  1. Report

On 16-09-2014, A…, married, taxpayer no. …, resident at Rua …, …, … Lisbon, hereinafter referred to as the Claimant, submitted to the Administrative Arbitration Centre (CAAD) a request for the establishment of an arbitral tribunal with a view to annulling the tax acts for the assessment of Stamp Duty no. 2014 …, 2014 …, 2014 …, 2014 …, 2014 …, 2014 …, 2014 …, 2014 …, 2014 …, 2014 …, 2014 …, 2014 …, 2014 …, 2014 …, 2014 …, 2014 …, 2014 …, 2014 …, 2014 …, 2014 …, 2014 …, 2014 …, 2014 …, 2014 …, 2014 …, 2014 … and 2014 …, in the total amount of €8,308.35, from item 28.1 of the General Table of Stamp Duty, relating to the year 2013 and to the urban property located at Travessa …, no. …, … Lisbon, registered in the real estate cadastre of the parish of ... under article …, constituted in vertical ownership and with 37 units with independent use, of which 28 are intended for housing.

The Claimant further requests the annulment of the consequent express dismissal act of the gracious complaint concerning the aforementioned Stamp Duty assessments.

The Claimant alleges that, since none of the units with independent use has a tax patrimonial value (VPT) exceeding one million euros (€1,000,000), Stamp Duty cannot be assessed or collected.

The Claimant states that the Stamp Duty assessments in question are illegal due to an erroneous qualification of the taxable fact, error regarding the legal assumptions, erroneous quantification of the income and patrimonial values in question, violation of legal formalities, and lack of competence. With regard to the violation of legal formalities, the Claimant alleges that the taxpayer has the right to a hearing prior to assessment, which did not occur in the present case.

The Claimant contends that the normative interpretation of item 28.1 of the TGIS conducted by the T.A. is unconstitutional, by reason of violation of the principles of fiscal equality, tax legality, contributive capacity, justice, the prevalence of material truth over formal legal reality, and proportionality in tax matters, as set forth in articles 13, 18, 81 paragraph b), 103 and 104 of the Constitution of the Portuguese Republic.

The Claimant alleges that the express dismissal act of the gracious complaint concerning the aforementioned Stamp Duty assessments should be annulled due to lack of competence, since the body that decided the gracious complaint in the amount of €8,308.35 was the local peripheral office (Finance Service of Lisbon …).

The Tax and Customs Authority submitted a response on 23-12-2014, defending the maintenance of the tax acts in dispute, requesting the dismissal of the claim, and alleging that the patrimonial value relevant for purposes of tax incidence is the total patrimonial value of the urban property and not the patrimonial value of each of the units or divisions that comprise it, even if they are capable of independent use.

A sole arbitrator, Suzana Fernandes da Costa, was designated on 07-11-2014. In accordance with the provision of article 11 no. 1 paragraph c) of the RJAT, the singular arbitral tribunal was established on 24-11-2014.

In its response, the T.A. requested the dispensation of the holding of the meeting provided for in article 18 of the RJAT, as well as the dispensation of the submission of arguments.

On 21-01-2015, the Claimant's representative submitted an incident of qualification, as the death of the Claimant A… had occurred on 21-09-2014.

The death certificate and the deed of qualification of heirs were attached to the record, and the spouse and children were identified as his sole heirs:

  • B…, widow, taxpayer no. …, resident at Avenida …, no. …, …, Lisbon;

  • C…, married, taxpayer no. …, resident at Avenida …, no. …, …, Lisbon;

  • D…, married, taxpayer no. …, resident at Avenida …, no. …, …, Lisbon;

  • E…, single, of legal age, taxpayer no. …, resident at Avenida …, no. …, …, Lisbon;

  • F…, married, taxpayer no. …, resident at Avenida …, no. …, …, Lisbon;

  • G…, married, taxpayer no. …, resident at Rua …, no. …, …, Lisbon.

On 28-01-2015, an order was issued ordering the notification of the T.A. to contest, if it so wished, within 15 days, the incident of qualification filed.

On 02-03-2015, an order was issued finding the incident of qualification of heirs admissible and admitting the intervention of the heirs of Claimant A….

In the same order, the heirs were ordered to be notified to pronounce themselves on the T.A.'s request for dispensation of the holding of the meeting provided for in article 18 of the RJAT as well as the submission of arguments.

Upon examination of the record, it was found that the T.A. had not been properly notified to contest. Thus, on 04-03-2015, an order was issued for the notification of the T.A. to contest the incident of qualification filed.

Properly notified, the T.A. did not pronounce itself.

On 25-03-2015, an order was issued finding the incident of qualification filed admissible and admitting the intervention of the heirs of A…. The heirs were again ordered to be notified to pronounce themselves on the T.A.'s request for dispensation of the holding of the meeting provided for in article 18 of the RJAT as well as the submission of arguments.

As the heirs did not pronounce themselves, an order dated 20-04-2015 dispensed with the holding of the meeting, as there were no exceptions to consider and taking into account the legal reasoning of the procedural documents. The date of 15-05-2015 was further set for the issuance of the arbitral decision, and the Claimants were warned of the payment of the subsequent arbitration fee by the date of the arbitral decision.

The parties possess legal personality and capacity and are legitimate (articles 4 and 10 no. 1 and 2 of the RJAT and article 1 of Ordinance no. 112-A/2011 of 22 March).

The arbitral claim is timely, in accordance with article 10 no. 1 paragraph a) of Decree-Law no. 10/2011 of 20 January and article 102 no. 1 paragraph a) of the Code of Tax Procedure and Process.

The process does not suffer from nullities and no preliminary questions were raised.

  1. Factual Matter

2.1. Proven Facts:

After analyzing the documentary evidence produced and the position of the parties contained in the procedural documents, the following facts are considered proven and relevant to the decision of the case:

  1. The Claimant A… was the owner of half of the urban property located at Travessa …, no. …, … Lisbon, registered in the real estate cadastre of the parish of ... under article …, constituted in vertical ownership and with 37 units with independent use, of which 28 are intended for housing, as per the real estate record attached to the arbitral claim as document 28.

  2. The patrimonial value of all units of the aforementioned property intended for housing was, at the date of the assessments in question, one million, six hundred and sixty-one thousand six hundred and seventy euros (€1,661,670.00), as stated in the Stamp Duty assessments attached to the arbitral claim as documents 1 to 27.

  3. The Claimant was notified of the following Stamp Duty assessments for the year 2013:

  • assessment no. 2014 … in the amount of €199.60 (single payment), relating to the R/C C of the aforementioned property, whose VPT is €39,920.00;

  • assessment no. 2014 … in the amount of €324.35, relating to the 1st floor A of the aforementioned property, whose VPT is €64,870.00;

  • assessment no. 2014 … in the amount of €274.45, relating to the 1st floor B of the aforementioned property, whose VPT is €54,890.00;

  • assessment no. 2014 … in the amount of €274.45, relating to the 1st floor C of the aforementioned property, whose VPT is €54,890.00;

  • assessment no. 2014 … in the amount of €324.35, relating to the 1st floor D of the aforementioned property, whose VPT is €64,870.00;

  • assessment no. 2014 … in the amount of €324.35, relating to the 2nd floor A of the aforementioned property, whose VPT is €64,870.00;

  • assessment no. 2014 … in the amount of €274.45, relating to the 2nd floor B of the aforementioned property, whose VPT is €54,890.00;

  • assessment no. 2014 … in the amount of €274.45, relating to the 2nd floor C of the aforementioned property, whose VPT is €54,890.00;

  • assessment no. 2014 … in the amount of €324.35, relating to the 2nd floor D of the aforementioned property, whose VPT is €64,870.00;

  • assessment no. 2014 … in the amount of €324.35, relating to the 3rd floor A of the aforementioned property, whose VPT is €64,870.00;

  • assessment no. 2014 … in the amount of €274.45, relating to the 3rd floor B of the aforementioned property, whose VPT is €54,890.00;

  • assessment no. 2014 … in the amount of €274.45, relating to the 3rd floor C of the aforementioned property, whose VPT is €54,890.00;

  • assessment no. 2014 … in the amount of €324.35, relating to the 3rd floor D of the aforementioned property, whose VPT is €64,870.00;

  • assessment no. 2014 … in the amount of €324.35, relating to the 4th floor D of the aforementioned property, whose VPT is €64,870.00;

  • assessment no. 2014 … in the amount of €324.35, relating to the 4th floor A of the aforementioned property, whose VPT is €64,870.00;

  • assessment no. 2014 … in the amount of €274.45, relating to the 4th floor B of the aforementioned property, whose VPT is €54,890.00;

  • assessment no. 2014 … in the amount of €274.45, relating to the 4th floor C of the aforementioned property, whose VPT is €54,890.00;

  • assessment no. 2014 … in the amount of €324.35, relating to the 5th floor A of the aforementioned property, whose VPT is €64,870.00;

  • assessment no. 2014 … in the amount of €274.45, relating to the 5th floor B of the aforementioned property, whose VPT is €54,890.00;

  • assessment no. 2014 … in the amount of €274.45, relating to the 5th floor C of the aforementioned property, whose VPT is €54,890.00;

  • assessment no. 2014 … in the amount of €324.35, relating to the 5th floor D of the aforementioned property, whose VPT is €64,870.00;

  • assessment no. 2014 … in the amount of €324.35, relating to the 6th floor A of the aforementioned property, whose VPT is €64,870.00;

  • assessment no. 2014 … in the amount of €274.45, relating to the 6th floor B of the aforementioned property, whose VPT is €54,890.00;

  • assessment no. 2014 … in the amount of €274.45, relating to the 6th floor C of the aforementioned property, whose VPT is €54,890.00;

  • assessment no. 2014 … in the amount of €324.35, relating to the 6th floor D of the aforementioned property, whose VPT is €64,870.00;

  • assessment no. 2014 … in the amount of €274.45, relating to the R/C A of the aforementioned property, whose VPT is €54,890.00;

  • assessment no. 2014 … in the amount of €324.35, relating to the R/C B of the aforementioned property, whose VPT is €64,870.00;

  • assessment no. 2014 … in the amount of €324.35, relating to the R/C D of the aforementioned property, whose VPT is €64,870.00.

  1. None of the units or divisions with independent use has a tax patrimonial value exceeding one million euros.

  2. The Claimant filed a gracious complaint concerning all the Stamp Duty assessments in question in the present proceedings.

  3. The gracious complaint of the Stamp Duty assessments was expressly dismissed, the Claimant being notified of its dismissal by registered mail with proof of receipt on 19-06-2014, as per a copy of the decision attached to the record by the Claimant.

  4. The Claimant A… died on 21-09-2014, as per the death certificate attached to the record;

  5. On 21-01-2015, his heirs filed an incident of qualification, which was admitted.

  6. The heirs of the Claimant, qualified in this process, are:

  • B…, widow, taxpayer no. …, resident at Avenida …, no. …, …, Lisbon;

  • C…, married, taxpayer no. …, resident at Avenida …, no. …, …, Lisbon;

  • D…, married, taxpayer no. …, resident at Avenida …, no. …, …, Lisbon;

  • E…, single, of legal age, taxpayer no. …, resident at Avenida …, no. …, …, Lisbon;

  • F…, married, taxpayer no. …, resident at Avenida …, no. …, …, Lisbon;

  • G…, married, taxpayer no. …, resident at Rua …, no. …, …, Lisbon.

No other facts with relevance to the decision of the case were proven.

2.2. Justification of the Proven Factual Matter:

With regard to the proven facts, the conviction of the arbitrator was based, on the one hand, on the documents attached to the record by the Claimants, namely the assessments and the real estate record, and on the other hand, on the positions taken by the parties.

  1. Legal Matter:

3.1. Object and Scope of the Present Process

The question to be decided in the present proceedings is whether item 28.1 of the General Table of Stamp Duty (TGIS), in the case of properties not constituted in horizontal ownership, applies to the sum of the tax patrimonial value attributed to the different parts or units (global VPT), or rather to the tax patrimonial value of each part of the property with independent economic use.

On this question have already pronounced themselves, among others, the CAAD decisions handed down in processes number 280/2013-T, 26/2014-T, 88/2014-T, 206/2014-T, 290/2014-T, 428/2014-T, 451/2014-T, 457/2014-T, 458/2014-T and 567/2014-T.

3.2. Question of the Tax Patrimonial Value Relevant for the Application of Item 28.1 of the TGIS and of the Alleged Violation of the Principle of Equality

According to the Tax and Customs Authority, in a property in vertical ownership (or not constituted under a horizontal ownership regime), the criterion for determining the incidence of stamp duty is the global tax patrimonial value of the units and divisions intended for housing.

For the Claimants, by contrast, the subjection to stamp duty contained in item no. 28.1 of the TGIS should be measured not by the total value of the property but by the value attributed to each of the parts with independent use, according to the respective VPT, and should follow the same criterion as the determination of the IMP.

Let us examine:

Law no. 55-A/2012 of 29 October added item 28 to the General Table of Stamp Duty (TGIS), with the following wording:

"28 – Ownership, usufruct or right of surface of urban properties whose tax patrimonial value as shown on the register, in accordance with the Code of Municipal Tax on Real Property (CIMI), is equal to or greater than €1,000,000 – on the tax patrimonial value used for purposes of IMP:

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

In the transitional provisions contained in article 6 of that Law no. 55-A/2012, the following rules were established:

c) The tax patrimonial value to be used in the assessment of the tax corresponds to that resulting from the rules provided in the Code of Municipal Tax on Real Property by reference to the year 2011; (…)

f) The applicable rates are as follows:

i) Properties with residential purpose assessed in accordance with the IMP Code: 0.5%;

ii) Properties with residential purpose not yet assessed in accordance with the IMP Code: 0.8%;"

Item 28.1 TGIS and sub-items i) and ii) of paragraph f) of no. 1 of article 6 of Law no. 55-A/2012 contain a concept that is not used in any other tax legislation, which is that of "property with residential purpose."

In turn, article 67, no. 2 of the Stamp Duty Code, added by the aforementioned Law, provides that "to matters not regulated in the present code concerning item 28 of the General Table, the CIMI applies subsidiarily."

The rule of incidence refers to urban properties, the concept of which results from article 2 of the CIMI, the determination of the VPT being governed by article 38 and following of the same code.

In turn, article 6 of the CIMI indicates the different types of urban properties, and provides that "residential, commercial, industrial or service buildings or constructions are those licensed for such purposes or, in the absence of a license, that have as their normal destination each of these purposes." (see paragraph a) of no. 1 of article 6 CIMI).

It must be concluded therefore that for the legislator it is irrelevant whether the property is in vertical ownership or in horizontal ownership, what is relevant being only the material truth underlying its existence as an urban property and its use.

Since the Stamp Duty Code refers to the CIMI, we must consider that the registration in the real property register of properties in vertical ownership, constituted by different parts, units or divisions with independent use, obeys the same registration rules as properties constituted in horizontal ownership.

It follows from this that the respective IMP, as well as Stamp Duty, are assessed individually in relation to each of the parts. For this reason, the legal criterion for defining the incidence of the new tax must be the same.

Thus it is concluded as in CAAD decision 50/2013-T, according to which "if the legal criterion imposes the issuance of individualized assessments for the autonomous parts of properties in vertical ownership, in the same manner as it establishes for properties in horizontal ownership, clearly it has established the criterion, which must be unique and unequivocal, for the definition of the rule of incidence of item 28.1 of the TGIS".

It thus results from the law that there would be tax incidence of stamp duty of item 28.1 of the TGIS only if one of the parts, units or divisions with independent use presented a VPT exceeding one million euros (€1,000,000.00), which does not occur in the present proceedings.

The criterion defended by the T.A., which takes into account the sum of the parts, with the argument that the property would not be constituted under a horizontal ownership regime, does not find legal support and is contrary to the criterion that results from the CIMI and that is applied by referral in the context of Stamp Duty.

Furthermore, the law itself expressly establishes, in the final part of item 28 of the TGIS, that Stamp Duty to incur on urban properties of value equal to or exceeding one million euros (€1,000,000.00) – "on the tax patrimonial value used for purposes of IMP."

In conclusion, the tax patrimonial value relevant for purposes of the application of item 28.1 of the TGIS is the VPT of the part, unit or division with independent use.

The Claimant alleges that the application of item 28.1 of the TGIS violates the principle of equality enshrined in articles 13 and 104 no. 3 of the Constitution of the Portuguese Republic.

In accordance with the interpretation upheld above, the taxation of parts with independent use of value less than one million euros is not covered by the rule of incidence; therefore, their taxation does indeed violate the principle of equality, more specifically in its corollaries of contributive capacity and fiscal proportionality.

With regard to the principle of equality, see CAAD decisions no. 50/2012-T and 218/2013-T, and Constitutional Court decisions no. 142/04 and 187/2013.

We conclude as in CAAD decision no. 218/2013-T, "the assessment of Stamp Duty under consideration manifestly violates the principle of fiscal equality provided for in article 13 of the CRP, because: i) it is based on a rule that treats taxpayers in identical situations in very different ways, the measure of the difference not being ascertained by their real contributive capacity; ii) it is based on an arbitrary legal solution devoid of any rational basis."

In the case at hand, the property in question is in vertical ownership and contains several units and divisions with independent use intended for housing, as proven above. Given that none of the units intended for housing has a patrimonial value equal to or exceeding one million euros (€1,000,000.00), as results from the documents attached to the record, it is concluded that the legal assumption for the incidence of Stamp Duty provided for in Item 28 of the TGIS is not verified.

Looking now at the ratio legis of the provision in question in item 28.1 TGIS and citing CAAD decision no. 50/2013-T "the legislator, when introducing this legislative innovation, considered as the determining element of contributive capacity urban properties, with residential purpose, of high value (luxury), more precisely, of value equal to or exceeding one million euros (€1,000,000.00), on which it then imposed a special rate of stamp duty, intending to introduce a principle of taxation on wealth demonstrated by the ownership, usufruct or right of surface of luxury urban properties with residential purpose. Therefore, the criterion was the application of the new rate to urban properties with residential purpose, whose VPT is equal to or exceeding one million euros (€1,000,000.00). Clearly the legislator understood that this value, when attributed to a residential unit (house, autonomous fraction or unit with independent use) demonstrates above-average contributive capacity and, as such, capable of determining a special contribution to ensure fair distribution of the fiscal burden." But when applied to a part or fraction that does not exceed the aforementioned value of one million euros, the rule of incidence will not be verified.

The principle of fiscal equality determines that one should be treated fiscally equally what is equal and differently what is different. Now, differential treatment of fractions or parts of a property is not justified merely by the fact that the same is already in horizontal ownership, provided that the fractions or parts have independent use.

As CAAD decision of process no. 218/2013-T states, "The principle of fiscal equality has as its basis the general principle of equality provided for in article 13 of the CRP, resulting from which the principle of contributive capacity that, by constitutional imperative, is the assumption and criterion of taxation."

Professor Casalta Nabais affirms that the principle of fiscal equality has embedded within it especially "the idea of generality or universality, according to which all citizens are bound by the duty to pay taxes, and of uniformity, requiring that such duty be measured by one same criterion — the criterion of contributive capacity. This thus implies equal tax for those with equal contributive capacity (horizontal equality) and different tax (in qualitative or quantitative terms) for those with different contributive capacity in proportion to this difference (vertical equality) (Casalta Nabais, Direito Fiscal, 5th edition, Coimbra, 2009, p. 151-152)."

In CAAD decision of process no. 50/2013-T it can be read that "the tax legislator cannot treat equal situations differently. Now, if the property were in a horizontal ownership regime, none of its residential fractions would be subject to the incidence of the new tax."

Thus, and in line with the jurisprudence of the Constitutional Court and CAAD, we conclude for the violation of the principle of fiscal equality and contributive capacity.

3.3. Questions of Prejudiced Knowledge

Resulting from the foregoing the declaration of illegality of the assessments which are the subject of the present process, by a defect that prevents the renewal of the acts, the knowledge of the remaining defects imputed to them by the Claimant is prejudiced.

In truth, article 124 of the CPPT, subsidiarily applicable by virtue of article 29 no. 1 of the RJAT, in establishing an order of knowledge of defects, presupposes that, once a defect is judged admissible which ensures effective protection of the rights of the challengers, it is not necessary to know of the remaining ones, for, if it were always necessary to consider all defects imputed to the challenged act, the order of their knowledge would be irrelevant.

From the foregoing, knowledge is not taken of the remaining defects imputed by the Claimant and his heirs to the acts whose declaration of illegality was requested.

  1. Decision

Based on the foregoing, it is determined that the claim formulated by the Claimant and his heirs in the present tax arbitral process is entirely upheld, with respect to the illegality of the Stamp Duty assessments, relating to the year 2013, no. 2014 … in the amount of €199.60, no. 2014 … in the amount of €324.35, no. 2014 … in the amount of €274.45, no. 2014 … in the amount of €274.45, no. 2014 … in the amount of €324.35, no. 2014 … in the amount of €324.35, no. 2014 … in the amount of €274.45, no. 2014 … in the amount of €274.45, no. 2014 … in the amount of €324.35, no. 2014 … in the amount of €324.35, no. 2014 … in the amount of €274.45, no. 2014 … in the amount of €274.45, no. 2014 … in the amount of €324.35, no. 2014 … in the amount of €324.35, no. 2014 … in the amount of €324.35, no. 2014 … in the amount of €274.45, no. 2014 … in the amount of €274.45, no. 2014 … in the amount of €324.35, no. 2014 … in the amount of €274.45, no. 2014 … in the amount of €274.45, no. 2014 … in the amount of €324.35, no. 2014 … in the amount of €324.35, no. 2014 … in the amount of €274.45, no. 2014 … in the amount of €274.45, no. 2014 … in the amount of €324.35, no. 2014 … in the amount of €274.45, no. 2014 … in the amount of €324.35, no. 2014 … in the amount of €324.35.

  1. Value of the Process:

In accordance with article 306, no. 2, of the CPC and 97-A, no. 1, paragraph a) of the CPPT and 3, no. 2 of the Regulation of Costs in Tax Arbitration Processes, the value of the action is fixed at €8,308.35.

  1. Costs:

Pursuant to article 22, no. 4, of the RJAT and Table I attached to the Regulation of Costs in Tax Arbitration Processes, the amount of costs is fixed at €918.00, payable by the Tax and Customs Authority.

Let notification be made.

Lisbon, 15 May 2015.

Text produced by computer, in accordance with article 138, no. 5 of the Code of Civil Procedure (CPC), applicable by referral from article 29, no. 1, paragraph e) of the Tax Arbitration Regime, reviewed by me.

The sole arbitrator

Suzana Fernandes da Costa

Frequently Asked Questions

Automatically Created

Does Stamp Tax under clause 28.1 of TGIS apply to individual units in a vertical property when none exceeds €1,000,000 in taxable heritage value?
Under the Tax Authority's interpretation, Stamp Duty under clause 28.1 of TGIS applies when the total aggregate patrimonial value of all units in a vertical property exceeds €1,000,000, even if no individual unit reaches this threshold. The claimant contested this interpretation, arguing each independent unit should be assessed separately, and since none exceeded €1,000,000 individually, no tax should apply. This interpretation dispute is central to the case, as it determines whether vertical property taxation focuses on individual autonomous units or the building as a whole.
Can the Tax Authority aggregate the patrimonial value of all units in a vertical property building for Stamp Tax purposes?
The Tax Authority asserts it can aggregate the patrimonial values of all units in a vertical property building under single ownership for Stamp Tax purposes under clause 28.1 of TGIS. The Authority argues the relevant value is the total patrimonial value of the urban property, not individual unit values, regardless of their capacity for independent use. The claimant challenges this aggregation methodology as constitutionally flawed, creating discriminatory treatment between vertical properties (where values are summed) and situations where the same units are owned separately (where each would be taxed only if individually exceeding €1,000,000).
What constitutional principles are violated by taxing vertical property differently from horizontal property under Portuguese Stamp Tax law?
The claimant argues the Tax Authority's interpretation violates multiple constitutional principles enshrined in the Portuguese Constitution: fiscal equality (Article 13) by treating identical economic situations differently based on ownership structure; tax legality by extending the law beyond its proper scope; contributive capacity by taxing aggregated values rather than actual individual property values; justice and proportionality in taxation; and the prevalence of material truth over formal legal constructs. The core constitutional argument is that vertical property owned by one person is taxed while identical units owned separately escape taxation, creating arbitrary discrimination without legitimate justification.
Is a prior hearing required before the Tax Authority issues Stamp Tax assessments on real estate under clause 28.1 of TGIS?
Portuguese tax law generally requires a prior hearing (audiência prévia) before tax assessment under the principles of administrative procedure, allowing taxpayers to present their position before decisions affecting their rights. The claimant alleged this procedural guarantee was violated as no hearing was provided before the Stamp Duty assessments were issued. However, the requirement for prior hearing in tax assessments has exceptions and depends on the nature of the tax and assessment type. For automated assessments based on registered patrimonial values, administrative practice may not require prior hearing, though this procedural objection formed part of the claimant's challenge to the assessments' legality.
Which tax authority body is competent to decide a gracious complaint on Stamp Tax assessments below a certain threshold?
The claimant challenged the competence of the Finance Service of Lisbon (local peripheral office) to decide the gracious complaint on Stamp Tax assessments totaling €8,308.35, arguing this body lacked jurisdiction. Portuguese tax procedure law establishes hierarchical competence based on assessment amounts and tax types. The competence issue is relevant because decisions by incompetent authorities are voidable administrative acts. The determination of which tax authority body has jurisdiction to decide administrative complaints depends on specific threshold amounts defined in tax procedure regulations, which may allocate different value ranges to local, regional, or central tax offices.