Process: 72/2015-T

Date: June 11, 2015

Tax Type: Selo

Source: Original CAAD Decision

Summary

In CAAD Arbitration Case 72/2015-T, three property co-owners challenged Stamp Duty assessments totaling €4,246.77 under Item 28.1 of the General Stamp Tax Table (TGIS) for the second installment of 2013 on their Lisbon urban property. Item 28.1 imposes annual Stamp Duty on high-value real estate based on property tax values. Before the arbitration tribunal could rule on the merits, the contested assessments were annulled on March 27, 2015 in a separate arbitration case involving the same tax debts. This created supervening uselessness of the dispute (inutilidade superveniente da lide) under Article 277(e) of the Civil Procedure Code, as the claimants had already obtained the relief sought—annulment of the illegal assessments—through the other proceedings. The central legal question became who should bear the €306 arbitration fee. The claimants argued the Tax Authority should pay since it made illegal assessments, while the AT contended it bore no responsibility because the uselessness resulted from annulment in different proceedings, not voluntary satisfaction of the claim in this case. Under Article 536 of the CPC and the CAAD Cost Regulation, the respondent pays costs only when supervening uselessness is attributable to facts imputable to them. The tribunal found insufficient evidence proving the AT's responsibility for the uselessness in these specific proceedings, as the annulment occurred independently in another case. This decision clarifies that taxpayers pursuing parallel arbitration cases on identical assessments risk bearing arbitration costs if one case succeeds before the other concludes.

Full Decision

CAAD – Tax Arbitration Center

ARBITRATION PROCEDURE No. 72/2015-T

Subject: Stamp Duty. Item 28.1 of the TGIS. Supervening Uselessness of the Dispute. Liability for Payment of the Arbitration Fee.

ARBITRATION DECISION

  1. REPORT

A, NIF …, resident in …, B, married, NIF …, resident in … and C, divorced, NIF …, resident in …, (hereinafter referred to as Claimants), filed a request for constitution of an arbitration tribunal in accordance with the provisions of articles 2 and 10 of the Legal Regime of Arbitration in Tax Matters (RJAT), in which the Tax and Customs Authority (hereinafter AT or Respondent) is the Respondent, with a view to declaring illegal the tax assessment acts for the second installments of Stamp Duty for the year 2013, relating to the urban property registered in the property register under article ... of the parish of ..., municipality of Lisbon, of which they are co-owners.

The said second installments of Stamp Duty for the year 2013, in the total amount of €4,246.77, are evidenced by collection notes Nos. 2014 ...8, 2014 ...8, 2014 ...6, 2014 ...4, 2014 ...2, 2014 ...0, issued in the name of the first Claimant, Nos. 2014 ...2, 2014 ...2, 2014 ...0, 2014...8, 2014 ...6, 2014 ...4, in the name of the second Claimant and Nos. 2014 ...6, 2014 ...6, 2014 ...4, 2014 ...2, 2014 ...0, 2014 ...8, in the name of the third Claimant, all with voluntary payment dates in November 2014, as evidenced by the documentary proof attached to the request for arbitration pronouncement.

The request for constitution of the arbitration tribunal was filed with CAAD on 6 February 2015, was accepted by the Illustrious President of CAAD on 9 February 2015 and automatically notified to the Tax and Customs Authority on the same date.

Having the Claimants elected not to nominate an arbitrator, the Deontological Council of CAAD designated the undersigned as arbitrator of the singular arbitration tribunal. Having accepted the appointment within the applicable period, the parties were notified of this designation on 1 April 2015.

The Singular Arbitration Tribunal was duly constituted on 17 April 2015 and is competent to hear and decide upon the request formulated by the Claimants.

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

  1. MATTER OF FACT

a. Facts Considered Proven

2.1. On the date of constitution of the Arbitration Tribunal, the undersigned became aware of the content of the request presented by the Claimants, dated 2 April 2015, and on that date notified to the Respondent, which did not comment thereupon.

2.2. In that request, addressed to this Singular Arbitration Tribunal, notification was made that (i) the second installments of the assessments of Stamp Duty (Item 28.1 of the TGIS) for the year 2013, which are the subject of the request for arbitration pronouncement, were annulled by the decision rendered on 27 March 2015, in the course of another case that was conducted before CAAD (whose decision had not yet been published at that time), (ii) thus verifying the supervening uselessness of the dispute, as the satisfaction of the claim formulated in the present proceedings was obtained in the course of that other case; (iii) however, these proceedings should continue so that the Claimants may be reimbursed for the arbitration fee paid therein; (iv) the only interest in the examination of case No. 72/2015-T concerns only the arbitration fee and its reimbursement to the now Claimants, as it was and is the Tax Administration that is the sole and exclusive party responsible for having, illegally, carried out the assessments corresponding to the collection documents inserted therein, (v) being the Claimants convinced that there being nothing to decide with respect to the annulment of the assessments questioned in case 72/2015-T, the right continues to exist for them to receive the arbitration fee paid therein, in the amount of €306.00 and, further, (vi) the proceedings to be filed due to supervening uselessness of the dispute.

2.3. By arbitration order dated 20 April 2015, the head of the AT was notified to present, within a period of 30 days and in view of the provisions of no. 2 of article 12 of the RJAT and article 536 of the Code of Civil Procedure (CPC), subsidiarily applicable "ex vi" of the provisions of article 29, no. 1, paragraph e), of the same RJAT, a response to the previously identified request, offering or requesting the production of additional evidence it deemed appropriate.

2.4. In the response transmitted to the proceedings on 18 May 2015, AT (i) confirmed that the Stamp Duty installments that were the subject of the request for arbitration pronouncement had already been the subject of an annulment decision on 27 March 2015, in the course of the aforementioned tax arbitration case; (ii) declared that the continuation of the proceedings in this case is useless, as the Claimants already have their claim satisfied in the course of the said case, whose decision has become final; (iii) declared verified the supervening uselessness of the dispute – article 277, paragraph e) of the CPC, applicable "ex vi" of article 29 of the RJAT; (iv) declined the responsibility of the Respondent for payment of the costs of the arbitration proceedings, provided for in article 2, no. 2 of the Regulation of Costs in Tax Arbitration Proceedings, as established in article 31, no. 3, paragraph a) of the Arbitration Regulation; (v) that, should it be decided to continue with the proceedings, the AT submits the same response that was provided in the course of the case in which the decision annulling the installments now being contested was rendered; (vi) request the exemption from holding the meeting referred to in article 18 of the RJAT, as well as the production of final pleadings.

2.5. By order issued on 25 May 2015, the meeting referred to in the cited article 18 of the RJAT was exempted, as well as the production of pleadings, notifying the Claimants to, within a period of 10 days, produce documentary evidence of the facts which, in accordance with nos. 3 and 4 of article 536 of the CPC, would demonstrate that the supervening uselessness of the dispute is imputable to the Respondent, namely because it voluntarily satisfied the claim that was at the origin of the request for constitution of the Arbitration Tribunal.

2.6. In the same order referred to in the preceding point, the date of 11 June 2015 was set for the rendering of the arbitration decision.

2.7. By request dated 29 May 2015, the Claimants reiterated the request for reimbursement of the initial arbitration fee, as well as the condemnation of the AT for payment of the arbitration fee owed, in its entirety.

2.8. In support of their claim, the Claimants invoked other arbitration decisions, which at that date had not yet been published, without, however, offering documentary evidence of the responsibility of the Respondent for payment of the arbitration fee owed in the present proceedings.

b. Grounds

The conviction of this Singular Arbitration Tribunal regarding the facts described above was based on critical analysis of the procedural documents contained in the proceedings.

c. Facts Not Proven

It is not proven that the supervening uselessness of the dispute is attributable to a fact imputable to the Respondent.

  1. MATTER OF LAW – GROUNDS

3.1. Delimitation of the Question to Be Decided

As follows from the above evidence, verifying the supervening uselessness of the dispute, motivated by the annulment, in the course of another tax arbitration case, of the Stamp Duty installments that are the subject of the request for arbitration pronouncement, the only question to be decided concerns the request for reimbursement of the initial arbitration fee paid by the Claimants with the request for constitution of the arbitration tribunal.

3.2. The Initial and Subsequent Arbitration Fee. Its Reimbursement

The Regulation of Costs in Tax Arbitration Proceedings (hereinafter RCPAT) establishes the regime of arbitration fees applicable to tax arbitration cases organized at CAAD, in accordance with the provisions of no. 1 of article 12 of the RJAT. The RCPAT are subsidiarily applicable, in accordance with its article 6: i) the rules relating to the value of the case contained in the Code of Tax Procedure and Process (CPPT) and, ii) the rules relating to costs contained in article 17 and "Table IV" of the Regulation of Procedural Costs.

For its part, no. 1 of article 12 of the RJAT establishes that, for the constitution of the arbitration tribunal, an arbitration fee is due, to be calculated in accordance with the RCPAT, with no. 2 of the same provision providing that, in cases where the claimant elects not to nominate an arbitrator, the initial arbitration fee is paid on the date of presentation of the request for constitution of the arbitration tribunal, with the fixing of the amount of costs and its eventual apportionment between the parties being effected in the final decision.

Thus, in cases of designation of arbitrator(s) by CAAD, the initial arbitration fee corresponds to 50% of the arbitration fee resulting from Table I annexed to the RCPAT, to be paid before the formulation of the request for constitution of the arbitration tribunal, with 50% of the remaining value to be transferred to the CAAD account before the date set for rendering the arbitration decision (article 4, nos. 1 to 3 of the RCPAT).

Being the arbitrator(s) designated by CAAD and fixed in the final decision the amount of costs and its eventual apportionment between the parties, these are notified, after the decision becomes final, of the cost account; if the losing party has not paid the initial arbitration fee, because it did not bear the burden of proceeding, it must pay the costs in which it was condemned, within thirty days from the date of notification, after which, if applicable, CAAD will reimburse the claimant for the amount to which it is entitled (article 4, nos. 4 and 5 of the RCPAT).

In accordance with the provisions of no. 6 of article 4 of the RCPAT, there shall be no reimbursement, return or compensation, for any reason whatsoever, of the arbitration fee, outside the cases expressly provided for in the same Regulation.

In addition to the situation identified at the end of no. 5 of article 4 of the RCPAT, the possibility of reimbursement of the arbitration fee is expressly provided only in case the procedure has ceased, for any reason, before the date of constitution of the arbitration tribunal, as provided in article 3-A thereof.

3.3. From the Request for Constitution of the Arbitration Tribunal to Its Effective Constitution

In tax arbitration cases organized at CAAD, two distinct phases generally succeed one another: the phase of the procedure (Chapter II of the RJAT) and the phase of the proceedings proper (Chapter III of the RJAT), with the transition between the phases being marked by the constitution of the arbitration tribunal.

The request for constitution of the arbitration tribunal is addressed to the President of CAAD, within the time periods and with the formalities provided for in article 10 of the RJAT, and must be preceded by payment of the initial arbitration fee, proof of which must be attached thereto (cf. article 10, no. 2, paragraph f) of the RJAT).

The acceptance of the request for constitution of the arbitration tribunal marks the beginning of the procedure phase, during which the Respondent entity may, within thirty days from knowledge of the request for constitution of the arbitration tribunal, "proceed to the revocation, ratification, reform or conversion of the tax act whose illegality has been raised, practicing, when necessary, substitute tax act", and must in that case notify the President of CAAD of its decision (cf. no. 1 of article 13 of the RJAT).

After that thirty-day period has elapsed from the date of knowledge of the request for constitution of the arbitration tribunal, without the Respondent having adopted any of the conduct provided for in no. 1 of article 13 of the RJAT, and the taxpayer having elected not to nominate an arbitrator, CAAD designates the arbitrator(s), notifies the parties of the designation (article 11, no. 1 of the RJAT) and, if they do not oppose such designation, informs them of the constitution of the arbitration tribunal, within the ten subsequent days (article 11, no. 1, paragraph c) and no. 8 of the RJAT).

Once the arbitration tribunal is constituted, the tax arbitration proceedings begin (article 15 of the RJAT), followed by the proceedings culminating in the final decision.

3.4. Apportionment of Costs in Case of Supervening Uselessness of the Dispute

The supervening uselessness of the dispute occurs when, on the date of presentation of the claim in court by the plaintiff or opposition by the defendant, they were founded and have ceased to be so, due to supervening circumstances.

As to liability for payment of costs in such situations, the rules contained in article 536 of the CPC are applicable, subsidiarily applicable to the tax arbitration proceedings, "ex vi" of the provisions of article 29, no. 1, paragraph e) of the RJAT.

There a distinction is made between situations in which the supervening uselessness of the dispute is due to a fact not imputable to the parties, with costs apportioned between them in equal parts (nos. 1 and 2 of article 536 of the CPC), and those in which the cause of supervening uselessness is imputable to one of the parties, leaving that party responsible for payment of all costs.

It is considered in no. 4 of the mentioned article that supervening uselessness is imputable to the defendant (here, the Respondent), namely when it voluntarily satisfies the claim of the plaintiff (in this case, the Claimants).

3.5. On the Annulment of the Stamp Duty Installments (Item 28.1 of the TGIS) that are the Subject of the Request for Constitution of the Arbitration Tribunal by the Now Claimants

As appears from the evidence above, the request for constitution of the singular arbitration tribunal, having as its object the annulment of the second installments of the assessments of Stamp Duty (Item 28.1 of the TGIS) for the year 2013, issued in the name of the Claimants, was filed with CAAD on 6 February 2015, was accepted by the Illustrious President of CAAD on 9 February 2015 and automatically notified to the AT on the same date.

After the period established by no. 1 of article 13 of the RJAT had elapsed, without the AT having proceeded to revoke the contested acts, the parties were notified of the designation of the undersigned as arbitrator on 1 April 2015.

By request dated 2 April 2015, addressed to the Tax Arbitration Tribunal to be constituted, and therefore still in the procedure phase, the Claimants informed the tribunal of the supervening uselessness of the dispute, requesting the continuation of the proceedings so that they could be reimbursed for the initial arbitration fee.

According to the Claimants, the supervening uselessness would be attributed to the annulment of all assessments (1st and 2nd installments) of Stamp Duty for the year 2013, on 27 March 2015, in the course of another tax arbitration case that was conducted before CAAD, although only the annulment of the 1st installments had been requested, whereas the 2nd installments were precisely those that constituted the subject matter of the present proceedings.

The responsibility for the supervening uselessness, according to the Claimants, would lie with the AT, "in that it was and is the Tax Administration that is the sole and exclusive party responsible for having, illegally, carried out the assessments corresponding to the collection documents inserted therein and referred to above", for which reason "they request of the Most Worthy Arbitrator Judge that the reimbursement of the arbitration fee of €306.00 to the claimants be decreed and that the filing of the proceedings due to supervening uselessness of the dispute be ordered."

Notified by CAAD of the request presented by the Claimants, the AT did not comment on its content.

Having reached this point, it is necessary to inquire:

a. Whether the procedure ceased with the annulment of the Stamp Duty installments in question, permitting reimbursement of the initial arbitration fee in accordance with article 3-A of the RCPAT.

b. Whether, having the procedure not ceased, supervening uselessness of the dispute should be imputable to the Respondent, in order to determine responsibility for payment of the arbitration fee.

c. Whether the facts determining the said responsibility are of official knowledge or whether the burden of proof thereof rests upon the party seeking the beneficial effect to which they lead.

Let us examine:

a. As to the first of the questions outlined above, the answer should be negative.

Indeed, although the annulment of the 2nd installments of the assessments of Stamp Duty for the year 2013 reviewed here occurred on 27 March 2015, that is, on a date prior to the constitution of the Arbitration Tribunal, the procedure did not cease.

And it did not cease due to a fact imputable to the Claimants, who expressly formulated before the Arbitration Tribunal to be constituted the request for reimbursement of the initial arbitration fee, declaring that for that purpose "(…), speaking materially, the substantive examination in the cited case 72/2015-T, although it is clothed with total supervening uselessness, nevertheless, with due respect and saving a better opinion, must proceed, so that the claimants may be reimbursed of the arbitration fee paid therein" (emphasis in original).

b. Having the request for reimbursement of the initial arbitration fee been addressed to the Arbitration Tribunal to be constituted, this Singular Arbitration Tribunal could only proceed to its examination after having been constituted and, therefore, already in the proceedings phase.

Thus, it is necessary, by application of the rules on costs in case of supervening uselessness of the dispute, contained in nos. 3 and 4 of article 536 of the CPC, to determine responsibility for its payment.

However, nothing in the present proceedings allows, as the Claimants intend, imputing to the AT responsibility for supervening uselessness of the dispute, on a date prior to that of constitution of the Arbitration Tribunal.

Namely, there is nothing to suggest that the claim of the Claimants was voluntarily satisfied by the AT, by it having, within the period provided for in no. 1 of article 13 of the RJAT, revoked the contested acts, in which case there would have been no occasion for constitution of the Arbitration Tribunal, unless, as came to pass, it had been constituted at the exclusive initiative of the Claimants.

Now, although the revocation of the act by the AT is an annulment revocation, the term "annulment" is reserved for its elimination from the legal order as a consequence of a jurisdictional decision.

With the statements of both the Claimants and the Respondent converging that the annulment of the installments that are the subject of the present request for arbitration pronouncement occurred in the course of another tax arbitration case, it cannot be concluded that there was voluntary satisfaction of their claim by the AT, in that it was that other Tax Arbitration Tribunal that determined the annulment of the contested acts.

Nor shall it suffice to say that "it was and is the Tax Administration that is the sole and exclusive party responsible for having, illegally, carried out the assessments corresponding to the collection documents inserted therein and referred to above", because that is a matter already decided in the tax arbitration case in which the Stamp Duty assessments for 2013 were annulled, and whose decision constitutes res judicata.

c. The Claimants, both in their request of 2 April 2015 and in that presented on 29 May 2015, make reference to decisions rendered in tax arbitration cases, which had not yet been published, without attaching copies thereof or even a copy of the response of the AT in the case in which the Stamp Duty assessments identified above were annulled.

Although the elements attached to the proceedings (initial petition, request of 2 April 2015, response of the AT and request of 29 May 2015) permit founding the conviction of the undersigned, expressed hereinafter, the question may be raised whether the remaining elements to which reference is made in the procedural documents (the aforesaid arbitration decisions), were they necessary to the decision, would be of official knowledge.

In accordance with the provisions of paragraph c) of no. 2 of article 5 of the CPC, matters of official knowledge are notorious facts and those which the court becomes aware of in the exercise of its functions (article 412, no. 2 of the CPC).

The facts of which the judge has functional knowledge are those contained in another case that has been conducted before the same court and which permit, for example, verifying the exceptions of res judicata or lis pendens (article 577, paragraph i)), but not those of a case conducted in a different court and which, being able to have constitutive, modifying or extinguishing effects of the right, must be alleged and proved by the parties.

Although the Tax Arbitration Tribunal cannot be considered an ad hoc tribunal, given the permanence of the Institution that houses it, the fact remains that "it acts in the form of ephemeral adjudication formations whose activity ends at the same time as the proceedings for the resolution of which they were designated"[1], with the arbitrator(s) being designated case by case and the tribunal dissolving with the filing of the proceedings that determined its constitution (article 23 of the RJAT).

Thus, the facts determining the satisfaction of the claim of the Claimants in another tax arbitration case[2], whose decision has become final, and of which these did not provide proof, are not of official knowledge to this Singular Arbitration Tribunal.

  1. DECISION

Based on the grounds of fact and law set out above and, in accordance with article 12 of the RJAT, it is decided, judging the present request for reimbursement of the initial arbitration fee unfounded, to declare the responsibility of the Claimants for payment of costs in their entirety.

VALUE OF THE CASE: In accordance with the provisions of article 306, nos. 1 and 2 of the CPC, 97-A of the CPPT and 3, no. 2 of the RCPAT, the case is valued at €4,246.77 (four thousand two hundred and forty-six euros and seventy-seven cents).

COSTS: Calculated in accordance with article 4 of the RCPAT and Table I attached thereto, in the amount of €612.00 (six hundred and twelve euros), to be borne by the Claimants.

Lisbon, 11 June 2015.

The Arbitrator,

/Mariana Vargas/

Text produced by computer, in accordance with no. 5 of article 131 of the CPC, applicable by reference to paragraph e) of no. 1 of article 29 of Decree-Law 10/2011, of 20 January.

The drafting of this decision follows the orthographic agreement of 1990.

[1] Cf., in particular conclusion 37 of Advocate General Maciej Szpunar, presented on 8 April 2014, in case C-377/13 (Ascendi case), available at https://www.caad.pt/noticias/arbitragem-tributaria/246-primeiro-reenvio-prejudicial.

[2] Cf. FREITAS, José Lebre de Freitas, "Introduction to Civil Procedure – Concept and general principles in light of the new code", 3rd Edition, Coimbra Editora, 2013, p. 171, footnote 49, "Official knowledge of the exception of res judicata (art. 578) does not imply official knowledge of the facts on which the exception is founded".

Frequently Asked Questions

Automatically Created

What is the Stamp Tax under Verba 28.1 of the General Stamp Tax Table (TGIS) on high-value properties?
Stamp Tax under Item 28.1 (Verba 28.1) of the General Stamp Tax Table (TGIS) is an annual tax imposed on ownership of urban real estate properties in Portugal. It applies to properties with high tax values and is calculated based on the property's patrimonial value (valor patrimonial tributário). Property owners receive assessments in installments throughout the year, and co-owners are each individually liable for their proportional share of the total stamp duty owed on the jointly-owned property.
What does supervening uselessness of proceedings (inutilidade superveniente da lide) mean in Portuguese tax arbitration?
Supervening uselessness of proceedings (inutilidade superveniente da lide) occurs when the dispute becomes moot after the arbitration case begins because the relief requested has already been obtained through other means. Under Article 277(e) of the Portuguese Civil Procedure Code (applicable to tax arbitration via RJAT Article 29), proceedings are declared supervenient useless when circumstances arise after filing that eliminate the need for a decision. In tax arbitration, this commonly happens when the Tax Authority voluntarily annuls contested assessments during pending proceedings or when parallel cases on identical issues are decided favorably elsewhere.
Who is responsible for paying the arbitration fee when the Tax Authority annuls the assessment before the decision?
Responsibility for the arbitration fee when the Tax Authority annuls assessments before the arbitration decision depends on whether the supervening uselessness is attributable to the Tax Authority's conduct. Under Article 536 of the Civil Procedure Code and Article 2(2) of the CAAD Cost Regulation, the respondent pays arbitration costs only when the uselessness results from facts imputable to them—specifically, voluntary satisfaction of the claimant's request. If the annulment occurs independently in separate proceedings rather than as voluntary acknowledgment of illegality in the specific case, the Tax Authority may not be liable for arbitration fees. Claimants must prove with documentary evidence that the AT voluntarily satisfied their claim to obtain fee reimbursement.
How can property co-owners challenge Stamp Tax assessments through CAAD tax arbitration?
Property co-owners can challenge Stamp Tax assessments through CAAD (Centro de Arbitragem Administrativa) by filing a request for constitution of an arbitration tribunal under the Legal Regime of Arbitration in Tax Matters (RJAT). The process involves: (1) submitting a written request identifying the contested assessment acts with supporting documentation; (2) paying an initial arbitration fee (€306 in this case); (3) choosing whether to nominate an arbitrator or letting CAAD designate one; (4) presenting legal arguments for why the assessments are illegal; and (5) participating in the arbitration proceedings. Co-owners can file jointly as claimants, and each receives individual collection notes for their proportional share of the stamp duty owed on the co-owned property.
What happens when the Tax Authority voluntarily annuls a Stamp Tax assessment during pending arbitration proceedings?
When the Tax Authority voluntarily annuls a Stamp Tax assessment during pending arbitration proceedings in that same case, the supervening uselessness of the dispute is attributed to the AT, which then becomes responsible for paying the arbitration costs under Article 536(3) of the Civil Procedure Code. However, if the annulment occurs in separate parallel proceedings rather than voluntary satisfaction in the specific arbitration case, the situation is different. The arbitration tribunal must determine whether the uselessness is imputable to the Tax Authority's conduct. Claimants seeking cost reimbursement must provide documentary proof under Articles 536(3) and 536(4) CPC demonstrating the AT voluntarily recognized the illegality and satisfied the claim. If annulment happens independently in other proceedings, taxpayers may not recover arbitration fees despite ultimately prevailing on the merits.