CAAD 695/2014-T: Stamp Tax Verba 28.1 on Vertical Property – VPT Threshold for Non-Horizontal Regime

ARBITRAL DECISION

CAAD: Tax Arbitration

Case No. 695/2014-T

Subject: Stamp Duty, Item 28.01 TGIS28.1

· REPORT

A..., taxpayer with Tax Identification Number ..., resident at ..., No. ..., ..., in Lisbon (hereinafter the Applicant) hereby, under the combined provisions of Articles 2, paragraph 1, subparagraph a) and 10, paragraph 1, subparagraph a), of the Legal Framework for Tax Arbitration (RJAT), submits a request for an arbitral ruling against the Tax and Customs Authority (hereinafter AT or Respondent), seeking a declaration of illegality and consequent annulment of the Stamp Duty assessments for the year 2013, relating to thirteen units of ... parish of ..., municipality of Lisbon, in the total amount of € 10,352.80, which are documented in the annexes to the request for arbitral ruling.

The arguments presented by the Applicant are, in summary, as follows:

· The Applicant is the owner of the urban property located at Avenue ..., Nos. ..., in Lisbon, parish of ..., municipality of Lisbon;

· At the time the tax event occurred, this property consisted of four shops and thirteen independent-use storeys, whose value was determined separately, in accordance with the provisions of Article 7, paragraph 2, subparagraph b) of the Code of the Municipal Property Tax;

· The said property was not then constituted under the horizontal property regime;

· Each of the independent-use storeys had its own assigned taxable asset value, determined in accordance with the provisions of the Code of the Municipal Property Tax;

· The taxable asset value of the property totaled € 1,514,060.00, corresponding to the sum of the taxable asset values assigned to each independent-use storey;

· None of the storeys had a taxable asset value equal to or exceeding € 1,000,000.00;

· On the taxable asset value of the aforementioned storeys (with the exception of the shops), the AT assessed stamp duty with reference to the year 2013, in accordance with Article 4 of Law No. 55-A/2012, of 29 October (stamp duty of item 28.1 of the TGIS);

· Thus the applicant received the respective collection notices, with the application of a 1% rate on the taxable asset value of each storey;

· From the AT's perspective, for a property not constituted under horizontal property, the criterion for determining the incidence of stamp duty is the global taxable asset value of the storeys;

· The essential legal issue to be decided is whether, with reference to properties not constituted under the horizontal property regime, composed of various storeys, the relevant taxable asset value is that corresponding to the sum of the taxable asset values assigned to the different storeys (global taxable asset value) or the taxable asset value assigned to each of those storeys;

· The subjection to stamp duty of properties with residential allocation resulted from the addition of item 28 of the TGIS, effected by Article 4 of Law No. 55-A/12, which specified the following tax events:

" – Ownership, usufruct or right of superficies of urban properties whose taxable asset value recorded in the matrix, in accordance with the Code of the Municipal Property Tax (CIMI), is equal to or greater than € 1,000,000.00 – on the taxable asset value used for the purposes of IMI:

28.1 – For property with residential allocation – 1%";

· To matters not regulated in the Stamp Duty Code, relating to item 28 of the TGIS, the CIMI applies on a subsidiary basis (Article 67, paragraph 2 of the Stamp Duty Code, added by the said Law No. 55-A/12);

· Now, considering that registration in the property matrix for vertical properties, constituted by different storeys with independent use, in accordance with the CIMI, follows the same registration rules as properties constituted under horizontal property, and the respective IMI, as well as the IS, are levied individually in relation to each part, it leaves no doubt that the legal criterion for defining the incidence of the new tax must be the same;

· Moreover, the AT itself admits that this is the criterion, which is why the assessments themselves issued are very clear in their essential elements, from which it follows that the values subject to tax are those corresponding to the taxable asset values of the various storeys, each separately, which is why we have individualized assessments, sent to the Applicant;

· Therefore, if the legal criterion requires the issuance of individualized assessments for the various storeys of properties in vertical property, in the same manner as it establishes for properties in horizontal property, it clearly established the criterion, which must be unique and unequivocal, for defining the rule of incidence of the new tax;

· Thus, the new stamp duty would only apply if any of the storeys with independent use presented a taxable asset value equal to or greater than € 1,000,000.00;

· The AT cannot, therefore, 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 the CIMI and this is the Code applicable to matters not regulated regarding item 28 of the TGIS;

· The law itself expressly establishes, in the final part of item No. 28 of the TGIS, that the 1% IS should apply, for properties with residential allocation, "on the taxable asset value used for the purposes of IMI", when this is equal to or greater than € 1,000,000.00;

· Beyond being contrary to the letter of the law, the criterion defended by the AT violates the principles of legality and fiscal equality, as well as the principle of the prevalence of substantive truth over formal juridical reality;

· In truth, the legislator, upon introducing this legislative innovation, clearly sought to tax "luxury dwellings", with taxable asset value equal to or greater than € 1,000,000.00, which would become subject to a special rate of stamp duty, intending to introduce a principle of taxation on wealth manifested in the ownership of luxury property with residential allocation;

· This results, among other sources, from the analysis of the discussion of bill No. 96/XII, in the National Assembly, available for consultation in the Journal of the National Assembly, I Series, No. 9/XII, of 11 October 2012, where it explicitly refers to the incidence of the new special rate on "houses valued at equal to or greater than 1 million euros";

· Clearly, the legislator understood that this value, when attributed to a dwelling (house, autonomous unit or storey with independent use) expresses a capacity to contribute above average and, as such, susceptible to determining a special contribution to ensure fair distribution of the fiscal burden;

· In this manner, it is illegal to consider as the reference value the sum of the taxable asset values assigned to each storey;

· On the other hand, the tax legislator cannot treat equal situations differently. If the property were constituted under the horizontal property regime, none of its residential units would be subject to the incidence of the new tax;

· That is precisely why Article 12, paragraph 3 of the CIMI states that "each storey or part of property susceptible to independent use is considered separately in the property registration, which also determines the respective taxable asset value";

· The discrimination effected by the AT represents an arbitrary and illegal discrimination; nothing in the law requires, moreover, the constitution of horizontal property;

· For all these reasons and further to what will be duly supplied, the request for an arbitral ruling should be judged as well-founded, consequently annulling the assessments challenged, as moreover has been the consistent understanding of the CAAD in cases identical to the present (by way of example, the arbitral decision recently issued in case No. 160/2014-T, in a case substantially similar to that now submitted for arbitral ruling).

The Tax and Customs Authority presented its response in the following terms:

· The Applicant is the owner of the urban property registered in the property matrix of the parish of ..., municipality of Lisbon, under article ..., composed of a total of 6 storeys and 17 units susceptible to independent use, to which has been assigned a total taxable asset value of € 1,514,060.00;

· Of the 17 units susceptible to independent use, 12 are intended for residential use as appears from the respective property register;

· The taxable asset value was determined separately, in accordance with Article 7, paragraph 2, subparagraph b), of the Code of the Municipal Property Tax (CIMI), and (…) the taxable asset value of the storeys/parts with residential allocation in the assessments was € 1,035,280.00;

· (…) it would be on this value of €. 1,035,280.00 that the A.T. assessed, in accordance with Article 6, paragraph 1, subparagraph f), sub-item i), the stamp duty of item 28.1. of the General Table, as worded by Article 4 of Law No. 55-A/2012, of 29 October, at the rate of 1 per cent; from these stamp duty assessments resulted, in relation to the first installments, a total amount of € 10,352.80;

· The subjection to stamp duty of item 28.1 of the General Table results from the combination of two facts, namely, the residential allocation and the taxable asset value of the urban property recorded in the matrix being equal to or greater than € 1,000,000.00;

· The situation of the Applicant's property falls literally within the scope of item 28.1 of the TGIS, which reads as follows:

"28 – Ownership, usufruct or right of superficies of urban properties whose taxable asset value recorded in the matrix, in accordance with the Code of the Municipal Property Tax (CIMI); is equal to or greater than € 1,000,000.00 – on the taxable asset value used for the purposes of IMI:

28.1 – For property with residential allocation – 1%";

· The Applicant is the owner of a property under the regime of full or vertical ownership, therefore there are no autonomous units to which the tax law can assign the qualification of property (…) This would result from the definition of property in Article 2 of the CIMI, in accordance with which only autonomous units of property under the horizontal property regime are treated as properties – paragraph 4 of the aforementioned Article 2 of the CIMI;

· (…) what the Applicant wishes is that the AT consider, for the purposes of assessment of the present tax, that there exists analogy between the regime of full ownership and that of horizontal property, because it would be illegal to have discrimination in the tax-juridical treatment of the two property regimes;

· As is well known, horizontal property is a specific legal regime of property provided for in Article 1414 et seq. of the Civil Code, which provides for and regulates the manner of constitution as well as other rules regarding the rights and obligations of co-owners, recognizing it as a more evolved property regime;

· Now, to claim that the interpreter and applicator of tax law apply, by analogy, to the regime of full ownership, the regime of horizontal property would be, to say the least, abusive and illegal;

· The interpreter of tax law is prohibited from equating the two property regimes, in accordance with the rule that the concepts of other branches of law have the meaning in tax law that is given to them in those branches of law, or as stated in Article 11, paragraph 2 of the LGT, concerning the interpretation of tax law: "Whenever terms proper to other branches of law are used in tax norms, they must be interpreted in the same sense they have in those fields, unless otherwise directly provided by law";

· Furthermore, given that in determining the meaning of tax norms and in qualifying the facts to which they apply, the general rules and principles of interpretation and application of laws are observed, as provided in Article 11, paragraph 1 of the LGT, which refers to the Civil Code which, in Article 10, concerning the application of analogy, determines that this will only be applicable in case of gaps in the law; however, the tax law contains no such gap;

· It cannot be accepted that it be considered, for the purposes of item 28.1 of the General Table annexed to the CIS, that the parts susceptible to independent use have the same tax regime as autonomous units of the horizontal property regime, under penalty of open violation of the principle of legality;

· With the property being subject to the regime of full ownership (…), the tax law attributed relevance to such materiality, evaluating individually, in accordance with Article 12, paragraph 3, of the CIMI, each storey or part of property susceptible to independent use (…) are considered separately in the property registration, which equally determines the respective taxable asset value on which IMI is assessed;

· Such legal norm is not unprecedented, having correspondence in Article 232, Rule 1, of the Code of Land Tax and Agricultural Industry Tax (CCPIIA), which provided that each dwelling or part of property be taken automatically for purposes of determining the collective income on which assessment (…) in the scope of the CCPIIA, the collective income had necessarily to correspond to the sum of the rent or rental value of each of the components of the property with economic autonomy;

· Such legal norm is therefore relevant for purposes of registration in the property matrix, the autonomy which, within the same property, can be attributed to each of its parts, economically and functionally independent;

· In that case, the property registration must make reference to each of the parts and also to the taxable asset value corresponding to each of them, determined separately in accordance with Articles 37 et seq. of the CIMI;

· The unity of the urban property under vertical ownership (…) is not, however, affected by the fact that all or part of those storeys or units are susceptible to economic independent use; such property does not cease to be a single one, therefore, its distinct parts are not juridically equated to autonomous units under the horizontal property regime;

· The fact that IMI was calculated based on the taxable asset value of each part of property with economic independent use does not equally affect the application of item 28, paragraph 1, of the General Table;

· This results from the fact that the determining element for the application of that item of the General Table is the total taxable asset value of the property and not separately that of each of its components;

· 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 tax provided for in Article 103, paragraph 2, of the Constitution of the Portuguese Republic (CRP);

· It is for the law – Law of the National Assembly and Decree-Law with legislative authorization – to establish the essential elements of tax incidence; (…) A type of incidence in accordance with which the taxable asset value of urban properties upon which the application of item 28.1 of the General Table depends is the taxable asset value of each storey or unit susceptible to independent use and not the global taxable asset value of the urban property with residential allocation certainly has no expression in law;

· It is thus unconstitutional, as offensive to the principle of tax legality, the interpretation of item 28.1 of the General Table, to the effect that the taxable asset value upon which its incidence depends is determined floor by floor or unit by unit, and not globally;

· In truth, horizontal property and vertical property are differentiated legal institutions (…) The legislator can, however, subject to a distinct tax-juridical framework, therefore discriminatory, properties in regimes of horizontal and vertical ownership, in particular, favoring the juridically more evolved institution of horizontal property, without such discrimination necessarily being considered arbitrary;

· (…) the property registration of each part susceptible to independent use is not autonomous, by matrix, but rather appears in a description in the matrix of the property as a whole (…) these procedural norms of evaluation, property registration and assessment of the parts susceptible to independent use do not permit one to affirm that there exists an equating of the property under the regime of full ownership to the regime of vertical property (…);

· The tax event for stamp duty of item 28.1, consisting in the ownership of urban properties whose taxable asset value recorded in the matrix, in accordance with the CIMI, is equal to or greater than € 1,000,000.00, the taxable asset value relevant for purposes of the incidence of the tax is, thus, the total taxable asset value of the urban property and not the taxable asset value of each of the parts that compose it, even when susceptible to independent use;

· And this interpretation of the stamp duty incidence norm results from the combination of another incidence norm to IMI which is Article 1, in accordance with which IMI is levied on the taxable asset value of urban properties, taking into account the definition of property in Article 2 and of urban property contained in Article 4 and also the types of urban properties described in Article 6;

· The tax acts challenged, in terms of substance, did not violate any legal or constitutional provision and should be maintained in the legal order;

· In these terms, with the erudite supplementation of Your Excellency, the request for a declaration of illegality and consequent annulment of the contested assessments should be judged as unfounded, absolving the AT of the claim.

The request for constitution of the arbitral tribunal was filed on 25 September 2014, was accepted by His Excellency the President of the CAAD on the following day and notified to the Tax and Customs Authority on 6 October 2014.

In accordance with the provisions of paragraph 1 of Article 6 and subparagraph a) of paragraph 1 of Article 11 of the RJAT, His Excellency the President of the Deontological Council designated the undersigned as arbitrator, a function accepted in accordance with law.

The Sole Arbitral Tribunal was duly constituted on 4 December 2014 and is materially competent to examine and decide the dispute that is the subject matter of the present proceedings.

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

The proceedings do not contain defects and no exceptions were raised.

The parties waived the holding of the meeting referred to in Article 18 of the RJAT, as well as the submission of arguments, whether oral or written.

· FINDINGS OF FACT

· Facts considered proven:

· At the time the tax event occurred, the Applicant was the owner of the urban property registered in the property matrix under article ... of the parish of ..., municipality of Lisbon;

· The said property, in accordance with the property register issued by the Finance Service of the area of its location (Finance Service of Lisbon ...) consisted of seventeen storeys or units of independent use, to which was assigned a total taxable asset value of € 1,514,060.00;

· Thirteen of the said storeys or units of independent use were allocated to residential use, with their respective taxable asset values ranging between € 72,440.00 and € 85,620.00, with their sum totaling € 1,035,280.00;

· The thirteen Stamp Duty assessments were issued by the AT, in accordance with Item 28.1, of the TGIS, at a rate of 1%, on the taxable asset value of each of the storeys or units of independent use, allocated to residential use;

· The Applicant was notified to pay the following Stamp Duty assessments, with reference to the storeys or units of independent use, allocated to residential use, of the aforementioned urban property, in a single installment, during the month of June 2014:

· To the request for arbitral ruling were attached copies of the notices for payment of the contested assessments, with no indication of their payment.

· Reasoning for the findings of fact

The Tribunal's conviction regarding the established facts resulted from the analysis of the documentary evidence attached to the request for arbitral ruling (copy of the property register of the urban property identified therein and of the notices for payment of each of the contested assessments), as well as the reference made to them in the AT's response.

· Facts not proven

There are no facts relevant to the decision of the case that should be considered unproven.

· FINDINGS OF LAW – REASONING

In the judgment, the judge must pronounce himself on all questions that he must examine, refraining from pronouncing himself on questions of which he should not be aware (final segment of paragraph 1 of Article 125 of the Code of Tax Procedure and Process – CPPT, applicable on a subsidiary basis to the tax arbitral process, by virtue of the provision of Article 29, paragraph 1, subparagraph a), of the RJAT).

The questions brought before the proceedings, both by the Applicant and by the AT Respondent, are whether, in an urban property not subject to the horizontal property regime, subjection to stamp duty, in accordance with item No. 28.1 of the TGIS, is determined by the Taxable Asset Value (TAV) corresponding to each of the parts of the property, economically independent and intended for residential use, as the Applicant argues, or whether, on the contrary, it is determined by the global taxable asset value of the property, which would correspond to the sum of all the taxable asset values of the storeys or units of independent use and allocated to residential use that compose it, as the AT maintains, and whether either of the interpretations in confrontation is unconstitutional, due to violation of the principles of legality and fiscal equality.

Before the positions in confrontation and described above, it should be noted that the AT is correct in stating that a property constituted under horizontal property is a distinct juridical-tax reality from an urban property in "full" or "vertical" ownership.

This is required by the rules of interpretation, which take the text as the starting point, and to which falls the negative function of eliminating any meaning that has no support in the letter of the law.

From the start, because paragraph 4 of Article 2 of the CIMI establishes the legal fiction that each of the autonomous units of a property constituted under horizontal property constitutes a property, while a part of independent use of an urban property not constituted under horizontal property continues to be merely that – a part of a property and not a property, as, moreover, the AT acknowledges in its response, when it affirms that "horizontal property and vertical property are differentiated legal institutions".

That alone would suffice to conclude that, since the legislator has established distinct tax qualifications for juridically different realities (properties and parts of properties), it will not be legitimate for the applicator of the norm to create a new rule of incidence of that tax, determining the taxation of parts of properties, as this is a matter subject to the principle of tax legality, inherent in Article 103, paragraph 2, of the Constitution of the Portuguese Republic (CRP), in accordance with which the essential elements of taxes – incidence, rate, tax benefits and taxpayer guarantees – are established by law of the National Assembly, except where there is legislative authorization to the Government (Article 165, paragraph 1, subparagraph i) and paragraph 2, of the CRP).

Now, item 28 of the TGIS, added by Article 4 of Law No. 55-A/2012 of 29 October, determined, in its original wording, applicable to the case at hand, the objective incidence of stamp duty on urban properties with residential allocation (and not, as the AT understands, on parts of properties), whose taxable asset value, for the purposes of IMI, is equal to or greater than € 1,000,000.00, by establishing that stamp duty applies to:

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

28.1 — For property with residential allocation — 1%;

28.2 — For property, when the taxpayers who are not natural persons are resident in a country, territory or region subject to a clearly more favorable tax regime, included in the list approved by ordinance of the Minister of Finance — 7.5%.»

Here too the literal element of the norm must be the starting point for its interpretation and, "in the absence of other elements that lead to the selection of the less immediate meaning of the text, the interpreter should opt in principle for that meaning which best and most immediately corresponds to the natural meaning of the verbal expressions used, and in particular to their technical-juridical meaning, assuming (not always correctly) that the legislator knew how to express his thought correctly".

In support of the thesis that the taxable asset value relevant for the incidence of Stamp Duty of item 28.1 of the TGIS is the global taxable asset value of the property not constituted under horizontal property, the AT argues that each and every one of its units of independent use were "valued in accordance with Article 12, paragraph 3, of the C.I.M.I", a norm which, according to the Respondent, corresponds to "Article 232, Rule 1, of the Code of Land Tax and Agricultural Industry Tax (…), which provided that each dwelling or part of property be taken automatically (sic) for purposes of determining the collective income on which assessment (…)", in which case "the collective income had necessarily to correspond to the sum of the rent or rental value of each of the components of the property with economic autonomy".

However, the transposition of the interpretation given within the scope of the Code of Land Tax and Agricultural Industry Tax (CCPIIA), approved by Decree-Law No. 45,104, of 1 July 1963 and, for the most part, repealed by Decree-Law No. 442-C/88, of 30 November, to the Code of IMI, in which there exists no norm identical to that of Article 232 of the Code first cited, does not appear viable for several reasons, in particular, because the former Land Tax was configured as a tax on income, real or presumed, as follows from its preamble, in which it was stated that "As to urban properties, the principle of taxing real income whenever possible applied from the outset, a principle which (…) in this case had necessarily to be restricted to rented properties. (…) As to non-rented properties, (…) there could only be maintenance of taxation based on an estimated income (…)", while the Municipal Property Tax is a tax on patrimony, whose evaluation rules are based on objective criteria.

In fact, paragraph 1 of Article 232 of the CCPIIA provided that "Each dwelling or part of new property susceptible to separate rental will be taken autonomously for the purpose of determining the collective income on which assessment is to be levied" (underlined), but such autonomy was only relevant for purposes of entry in the registers and respective unitary assessment, and no longer for purposes of property registration, differently from what is currently determined by Article 12, paragraph 3, of the CIMI.

Regarding the determination of the value of properties not constituted under horizontal property, Article 7, paragraph 2, of the CIMI applies, but only for "urban properties with parts classifiable under more than one of the classifications of paragraph 1 of the preceding article", in which case, in accordance with its subparagraph b) "(…) each part is valued by application of the corresponding rules, with the value of the property being the sum of the values of its parts".

In accordance with paragraph 1 of Article 6 of the CIMI, urban properties are classified as: a) Residential; b) Commercial, industrial or for services; c) Land for construction; d) Other.

From the combination of the norms of paragraph 2 of Article 7 and paragraph 1 of Article 6, both of the CIMI, it follows that, if an urban property not constituted under horizontal property comprises, exclusively, parts or units intended for residential use, the value of the property does not equal the sum of its parts. The same as to say that each of the parts is autonomous.

Having arrived at this point, it will be necessary to question the subjection to stamp duty of item 28.1 of the TGIS of a part or unit of independent use, intended for residential use, of a property not constituted under horizontal property, in which are integrated parts or units of independent use, classifiable under another of the classifications of paragraph 1 of Article 6 of the CIMI, for example, units intended for commerce, industry or services, as is the case at hand, in which, of the 17 storeys/units of independent use, only 13 are intended for residential use.

Now, the answer must be in the negative, notwithstanding the provision of subparagraph b) of paragraph 2 of Article 7 of the CIMI, in accordance with which the value of the property is the sum of the values of its parts or units of independent use, classifiable in more than one of the classifications of paragraph 1, of Article 6 of the same Code.

This is because here, observe, we are not comparing two juridically distinct realities, such as the parts or units of independent use of an urban property not constituted under horizontal property with the autonomous units of properties subject to that regime, which, for the purposes of IMI, are themselves properties.

Here, what is in confrontation are realities in all respects identical, that is, parts or units of independent use and intended for residential use, integrated in urban properties not constituted under horizontal property.

And the answer to the question must be negative, for nothing would justify that the legislator intended to tax parts or units of independent use and residential allocation of an urban property not constituted under horizontal property, integrated by other parts or units of independent use intended for other purposes and not tax parts or units of independent use and residential allocation of an urban property not constituted under horizontal property, composed exclusively of parts or units of independent use intended for residential use. Should the legislator have intended to treat in different manner identical realities, it would then have to be concluded that there was a blatant violation of the principle of equality.

Not appearing to be this the legislative intent, it cannot be accepted that the AT formulate a rule of incidence de novo, different from that created by the legislator, intending to tax parts of properties, even though economically and functionally independent and, as such, separately registered in the matrix, which also discriminates the respective taxable asset value (cf. paragraph 3 of Article 12 of the CIMI), for the law is clear in subjecting to stamp duty of item 28.1 of the TGIS, urban properties of residential allocation, whose taxable asset value, for the purposes of IMI, exceeds € 1,000,000.00.

Beyond the grammatical element, that is, the text of the law, there is however to emphasize that, in determining the meaning and value of the norm, the interpreter cannot fail to consider the logical element or, in accordance with paragraph 1 of Article 9 of the Civil Code, fail to "reconstitute (…) the legislative thought, taking above all into account the unity of the legal system, the circumstances in which the law was elaborated and the specific conditions of the time in which it is applied".

Effectively, as the Applicant refers in the initial petition and has already served as grounds for other arbitral decisions, "from the analysis of the discussion of bill No. 96/XII/2, in the National Assembly, available for consultation in the Journal of the National Assembly, I Series, No. 9/XII, of 11 October 2012, where it explicitly refers to the incidence of the new special rate on "houses valued at equal to or greater than 1 million euros".

We have therefore that, beyond the grammatical element of the interpretation of the incidence norm contained in item 28.1 of the TGIS, also its rational or teleological element, the ratio legis or purpose pursued by the legislator in elaborating that norm, points toward taxation being applied to urban properties of high taxable asset value and not to parts of urban properties, even though of independent use, with taxable asset value of value less than legally determined.

· Questions subject to suspended jurisdiction

The questions falling within the powers of cognition of the tribunal are, in accordance with paragraph 2 of Article 608 of the CPC, applicable on a subsidiary basis to the tax arbitral process, by reference in Article 29, paragraph 1, subparagraph e), of the RJAT, "the questions that the parties have submitted to its examination, except those whose decision is suspended by the solution given to others (…)".

In view of the reasons set out above, the examination of questions concerning the alleged unconstitutionality of the interpretations given by the Applicant and the Respondent to the norm of item 28.1 of the TGIS, due to violation of the principles of legality and fiscal equality, is suspended, in light of the fact that this norm does not permit the interpretation that was given to it, in this case, by the AT, when issuing the assessments that are the subject matter of the request for arbitral ruling, which cannot be maintained in the legal order.

· DECISION

Based on the grounds set out above and, in accordance with Article 2 of the RJAT, it is hereby decided:

· The request for a declaration of illegality of the Stamp Duty assessments challenged is judged as well-founded, determining their annulment, with all further legal consequences.

VALUE OF THE CASE: In accordance with the provisions of Article 306, paragraphs 1 and 2, of the CPC, 97-A, paragraph 1, subparagraph a), of the CPPT and Article 3, paragraph 2, of the Regulations on Costs in Tax Arbitration Proceedings, the case is valued at € 10,352.80 (ten thousand, three hundred and fifty-two euros and eighty cents).

COSTS: Calculated in accordance with Article 4 of the Regulations on Costs in Tax Arbitration Proceedings and Table I attached thereto, in the amount of € 918.00, chargeable to the Tax and Customs Authority.

Lisbon, 20 February 2015.

The Arbitrator,

/Mariana Vargas/

Document prepared by computer, in accordance with paragraph 5 of Article 131 of the CPC, applicable by reference to subparagraph e) of paragraph 1 of Article 29 of Decree-Law No. 10/2011, of 20 January.

The wording of this decision complies with the 1990 spelling agreement.