Stamp Tax on Vertical Property (Verba 28 TGIS) – CAAD Arbitral Decision 745/2014-T

ARBITRAL DECISION

I. REPORT

1. A… (hereinafter "Claimant"), with the tax identification number ("TIN") …, resident at Quinta …, …, … …, filed, on 28 October 2014, pursuant to the combined provisions of Articles 2 and 10 of Decree-Law No. 10/2011, of 20 January, i.e., the Legal Framework for Arbitration in Tax Matters ("RJAT"), a petition for constitution of an arbitral tribunal, so as to declare the following unlawful:

u The Stamp Tax ("ST") assessments Nos. … to … (15 assessments, with single originating assessment No. …, linked to the Municipal Property Tax ("IMI") assessment), of 22 March 2013, in the total amount of € 13,895.70 (see table below), and, cumulatively;

u The ST assessments Nos. … to … (15 assessments, with single originating assessment No. … linked to the IMI assessment, of 17 March 2014, in the total amount of € 13,895.70, (see table below), in a total of € 27,791.40;

With the Tax and Customs Authority (the "Respondent" or "TCA") being the defendant.

A) Constitution of the Arbitral Tribunal

1. Pursuant to the provisions of Article 6(2)(a) and Article 11(1)(b) of the RJAT, the Deontological Board of this Administrative Arbitration Centre ("CAAD") appointed the undersigned as sole arbitrator, who communicated his acceptance of the appointment within the applicable period, and notified the parties of such appointment on 19 December 2014.

2. Thus, in accordance with the provisions of Article 11(1)(c) of the RJAT, and by communication of the President of the Deontological Board of CAAD, the Sole Arbitral Tribunal was constituted on 7 January 2015.

B) Procedural History

1. In the petition for arbitral decision, the Claimant petitioned for the declaration of unlawfulness of the ST assessments mentioned above, concerning the years 2012 and 2013, respectively, by reference to an urban property, established in condominium ownership (from July 2014), located at Rua …, No. …, in Lisbon, registered in the property register of the parish of … under article …º (in this regard, it should be noted that, until that date it was registered under article …º).

2. The TCA presented its response, petitioning for the dismissal of the petition for arbitral decision, on the grounds that there was no breach of law, requesting that the tax acts under analysis, as they did not violate any legal or constitutional provision, be maintained in the legal order.

3. By order of 28 May 2015, the Sole Arbitral Tribunal, under the provisions of Article 16(c) of the RJAT, and following the request made by the TCA, decided, without opposition from the parties, that it was not necessary to convene the hearing referred to in Article 18 of the RJAT, given the simplicity of the issues at hand, as well as because the Tribunal considered that it had at its disposal all the necessary elements to make a clear and impartial decision.

4. It likewise decided, in accordance with Article 18(2) of the RJAT, that oral arguments were not necessary, as the positions of the parties were perfectly defined in their respective pleadings, and set 26 June 2015 as the date for the arbitral decision.

5. The Tribunal was properly constituted and is competent to determine the issues indicated (Article 2(1)(a) of the RJAT), the parties have legal standing and capacity and have full legitimacy (Articles 4 and 10(2) of the RJAT and Article 1 of Ordinance No. 112-A/2011, of 22 March). No irregularities have occurred and no exceptions were raised, and therefore nothing prevents judgment on the merits.

6. Thus, the present case is in a position for the final decision to be rendered.

II. ISSUE TO BE DECIDED

1. The central issue to be examined and decided regarding the merits of the case, as appears from the parties' pleadings, is the following: by reference to properties not established under a condominium ownership regime, composed of various floors and divisions susceptible of independent use (and with residential purpose), what is the Taxable Patrimonial Value ("TPV") relevant for the purposes of calculating the ST payable, pursuant to Item No. 28 of the General Table of ST ("GTST").

2. That is to say, the present tribunal seeks to ascertain whether, as the Claimant alleges, the amount to be considered is the TPV attributed, individually, to each of the parts susceptible of autonomous use, or, alternatively, the total value resulting from the sum of the TPVs of those autonomous units, as suggested by the Respondent.

III. DECISION ON THE FACTS AND ITS JUSTIFICATION

1. Having examined the documentary evidence produced, the tribunal finds proved, and relevant to the decision of the case, the following facts:

I. The Claimant is the owner of an urban property, established in condominium ownership, in July 2014, located at Rua …, No. …, Lisbon, registered in the property register of the parish of …, under article …, with 15 floors susceptible of independent use, as detailed below:

II. The TPV indicated in the table above was assessed for purposes of the IMI in 2012.

III. Until 10 July 2014, the date on which the condominium ownership of the aforementioned property was established, the property was established in full ownership, and registered in the register of the parish of …, under article ….º (former article ….º of the parish of …).

IV. The Claimant received, in respect of the years 2012 and 2013, and as a result of Item No. 28 of the GTST, the TCA's assessment notices, mentioned above, in the total amount of € 27,791.40.

V. On 27 March 2014, the Claimant filed an Administrative Complaint contesting the aforementioned assessments, in respect of 2012, in the total amount of € 13,895.70, having obtained no response from the TCA to date (the temporal prerequisites for its deemed rejection having been met).

VI. The Claimant had not, at the time of filing the petition for constitution of the arbitral tribunal, proceeded to payment of the 3rd instalment of ST for the property in question, in respect of the year 2013. However, after the proceedings were underway, the Claimant informed the arbitral tribunal of its payment, and thus, for purposes of this decision, the amount of € 27,791.40 (concerning Item No. 28 of the GTST) is considered as paid, and also € 882.72 (relating to surcharges), in a total of € 28,675.12.

1. The Tribunal's conviction regarding the facts established as proved resulted from the documents attached to the record and contained in the petition and the uncontested allegations of the parties, as specified in the foregoing points regarding the facts.

2. There is no factual matter relevant to the decision of the case established as not proved.

IV. ON THE LAW

A) Legal Framework

1. Given that the legal issue to be decided in this case requires interpretation of the relevant legal texts, it is important, first, to set out the norms that compose the relevant legal framework, at the date the facts occurred.

2. The liability for ST of properties with residential purpose resulted from the addition of Item No. 28 to the GTST, effected by Article 4 of Act 55-A/2012, of 29 October, which defined the following tax events:

"28 – Ownership, usufruct or right of surface of urban properties whose taxable patrimonial value recorded in the register, pursuant to the Municipal Property Tax Code (CIMI), is equal to or greater than € 1,000,000.00 – on the taxable patrimonial value for IMI purposes:

28.1 – For property with residential purpose – 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 favourable tax regime, listed in the ordinance approved by the Minister of Finance – 7.5%."

1. Note that, by reference to the year 2012, Article 6 of that Act established the following transitional provisions:

"1 - In 2012, the following rules must be observed by reference to the assessment of stamp tax provided for in item No. 28 of the respective General Table:

a) The tax event occurs on 31 October 2012;

b) The taxpayer in relation to the tax is the one mentioned in Article 2(4) of the Stamp Tax Code on the date referred to in the previous paragraph;

c) The taxable patrimonial value to be used in the assessment of the tax corresponds to that which results from the rules provided for in the Municipal Property Tax Code by reference to the year 2011;

d) The assessment of the tax by the Tax and Customs Authority must be effected by the end of the month of November 2012;

e) The tax must be paid, in a single instalment, by taxpayers by 20 December 2012;

f) The applicable rates are as follows:

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

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

iii) Urban properties where the taxpayers who are not natural persons are resident in a country, territory or region subject to a clearly more favourable tax regime, listed in the ordinance approved by the Minister of Finance: 7.5%.

(…)"

1. The aforementioned law also added to the ST Code, Article 23(7), concerning the assessment of ST: "where the tax is owed for the situations provided for in item No. 28 of the General Table, the tax is assessed annually, in relation to each urban property, by the central services of the Tax and Customs Authority, applying, with the necessary adaptations, the rules contained in the CIMI", and Article 67(2) which provides that "to matters not regulated in this code concerning item 28 of the General Table, the CIMI is applied subsidiarily".

2. In this context, and having regard to the foregoing indication, let us now focus on the Municipal Property Tax Code.

3. First, note Article 2(4) of the CIMI which states that "for purposes of this tax, each autonomous unit, under the condominium ownership regime, is considered as constituting a property".

4. In turn, Article 12(3) of the CIMI establishes that "each floor or part of a property susceptible of independent use is considered separately in the property register, which also discriminates the respective taxable patrimonial value".

5. Thus, it is within this legal framework that it is important to decide whether, in cases where condominium ownership of an urban property with various autonomous units is not established, the TPV, for purposes of Item No. 28 of the GTST, is calculated, individually, for each unit susceptible of autonomous use, or, alternatively, determined by the sum of the TPVs of those units.

B) Arguments of the Parties

1. In this regard, the Claimant, in its petition, argues, in summary, as follows:

2. With respect to the aforementioned assessments, the Claimant considers that, since the property in question meets, in its understanding, the conditions necessary for establishing condominium ownership, the determination of its TPV, for purposes of applying Item No. 28 of the GTST, should be done individually (that is, for each autonomous unit) and not, as the TCA intends, on the basis of its total TPV (which could only be accounted for through the sum of individual TPVs).

3. The Claimant begins by asserting that the legislator's objective, with the introduction of Item No. 28 of the GTST, was "to increase tax revenues through enhanced taxation of so-called luxury properties, establishing as the indicator of such luxury the fact that a property intended for habitation has a value equal to or greater than one million euros".

4. In this context, in its opinion, there is no doubt that a property composed of units of autonomous or independent use "is, for this purpose, in exactly the same position as a property established in condominium ownership: if none of the units is worth in itself as much as or more than one million euros, it cannot be said that there is a luxury property at issue, according to the legal criterion".

5. Because, for the Claimant, "a unit in a vertically divided property is no less autonomous in law than the others, and can be, for example, leased separately, as a distinct and separate legal entity from the other units".

6. And indeed, in the Claimant's understanding, this is precisely what occurs with respect to the IMI, "(…) the truth is that units with independent use are, for IMI purposes, treated in all respects as true autonomous units: they have their own taxable patrimonial value, they have their own autonomous IMI assessments (…)".

7. However, where there are cases of doubt in the interpretation of the norms, which the Claimant accepts in this situation, it should, in the Claimant's understanding, have recourse to Article 11(3) of the General Tax Law ("LGT") (in order to support the aforementioned interpretation), that is, "having regard to the economic substance of the facts".

8. In this manner, for the Claimant, "we cannot disregard consideration of the economic autonomy of each unit, with the consequent autonomous consideration of its unitary taxable patrimonial value for purposes of application of item 28.1 of the GTST".

9. Thus, the Claimant considers that, "the taxable patrimonial value of units with independent use could never be summed, for purposes of Item 28 of the GTST, so as to apply and assess the said tax whenever such sum reaches or exceeds the value of one million euros: on the contrary, the taxable patrimonial value relevant for purposes of determining applicability or otherwise of the said item is that of each unit individually considered".

10. Finally, it is important to mention that the Claimant also supports its thesis on the arbitral decision handed down in the context of decision No. 50/2013-T, of 29 October.

11. In conclusion, the Claimant then petitioned that the aforementioned assessments be annulled and the respective amount paid be reimbursed (which now amounts, with surcharges, to € 28,675.12), plus compensatory interest, pursuant to and by virtue of Articles 30(e) and 43 of the General Tax Law.

12. For its part, the Respondent, after being duly notified for this purpose, presented its response in which, in summary, it argued as follows:

13. "The present claimant is the owner of a property in full or vertical ownership. From the notion of property in Article 2 of the CIMI, only the autonomous units of property under condominium ownership are considered as properties – Article 2(4) of the cited CIMI. Therefore, since the property of which it is the owner is in a regime of full ownership, it does not have autonomous units, to which the tax law attributes the qualification of property".

14. In this manner, the Respondent considers that the Claimant is not the owner of autonomous units, but rather of a single property.

15. Thus, according to the Respondent "(…) what the present claimant seeks is for the TCA to consider, for purposes of assessment of the present tax, that there exists an analogy between the regime of full ownership and that of condominium ownership, since there should be no discrimination in the legal-fiscal treatment of these two ownership regimes, as it would be unlawful".

16. However, for the Respondent, seeking to apply the condominium ownership regime, by analogy, to the vertical ownership regime is abusive and unlawful.

17. Because, for the Respondent, "tax law contains no gap! The CIMI determines, to which the said item refers, that under the condominium ownership regime the units constitute properties. The property not being subject to this regime, legally the units are parts susceptible of independent use without there being common parts".

18. For the Respondent, "the unity of the urban property in vertical ownership composed of several floors or divisions is not, however, affected by the fact that all or part of those floors or divisions are susceptible of independent economic use".

19. Whereby, in the Respondent's opinion, "such property does not (…) cease to be but one, and thus its distinct parts are not legally equated with autonomous units under condominium ownership".

20. In the Respondent's understanding, "the fact that IMI was calculated on the basis of the taxable patrimonial value of each part of property with independent economic use does not equally affect the application of Item 28(1) of the General Table".

21. It concludes its response by saying that, "the taxable patrimonial value relevant for purposes of the incidence of the tax is, thus, the total taxable patrimonial value of the urban property and not the taxable patrimonial value of each of the parts that compose it, even when susceptible of independent use".

22. The Respondent thus considers that the assessments it carried out result from a correct interpretation and application of the law to the facts, requesting, in this manner, that the claim raised be judged unfounded.

C) The Tribunal's Assessment

1. By way of introduction, it should be stated that, in the understanding of the present tribunal, and having regard to the legal framework previously presented, the essential normative proposition to be taken into account for the decision of the case is that which results from Item No. 28 of the GTST.

2. It should also be noted that, in the eyes of the arbitral tribunal, the issue to be decided concerns, exclusively, a matter of law, namely to understand, for purposes of applying the said item, what is the relevant TPV.

3. First, it should be clarified that it is clear, from the wording of the law, that the TPV to be considered, for purposes of applying Item No. 28 of the GTST, can only be that which is determined within the scope of the Municipal Property Tax Code.

4. This is, indeed, what is stated, in the very words of the said item "(…) whose taxable patrimonial value recorded in the register, pursuant to the Municipal Property Tax Code (CIMI), is equal to or greater than € 1,000,000.00".

5. Thus, attention should be paid, once more, to what follows from Article 2(4) of the CIMI which states that "for purposes of this tax, each autonomous unit, under the condominium ownership regime, is considered as constituting a property".

6. Reinforced, nevertheless, by Article 12(3) of the same Code, which establishes that "each floor or part of a property susceptible of independent use is considered separately in the property register, which determines the respective taxable patrimonial value".

7. It is thus concluded that, for purposes of calculating the IMI payable, the TPV is considered, individually, for each floor or part susceptible of independent use.

8. And if this is the method of determination followed for the IMI, it must necessarily be the model equally applied in the context of Item No. 28 of the GTST, in the terms set out above.

9. Nevertheless, and should the doubts raised still persist, the present tribunal relies on some previously rendered arbitral decisions, which have addressed the matter under analysis.

10. Thus, first, let us examine decision No. 50/2013-T, of 29 October, likewise mentioned by the Claimant, which states the following.

11. "Act No. 55-A/2012 says nothing regarding the qualification of the concepts in question, in particular, regarding the concept of 'property with residential purpose'. However, Article 67(2) of the Stamp Tax Code, added by the said Act, provides that 'to matters not regulated in this code concerning item 28 of the General Table, the CIMI is applied subsidiarily'.

The rule of incidence refers, therefore, to urban properties, the concept of which is that which results from the provisions of Article 2 of the CIMI, compliance with the determination of the TPV following the terms provided for in Article 38 and following of the same code.

Consulting the CIMI, it is verified that its Article 6 merely indicates the different kinds of urban properties, among which it mentions residential properties (…)

From this we can conclude that, in the legislator's view, what matters is not the legal-formal precision of the concrete situation of the property but rather its normal use, the purpose to which the property is destined. We further conclude that for the legislator the situation of the property in vertical or condominium ownership did not matter, as no reference or distinction is made between them. What matters is the material reality underlying its existence as an urban property and its use.

(…)

Using the criterion that the law itself introduced in Article 67(2) of the Stamp Tax Code, 'to matters not regulated in this code concerning item 28 of the General Table, the Municipal Property Tax Code is applied subsidiarily'" (emphasis ours).

1. That is, having regard to the fact that the registration in the property register of properties in vertical ownership, for purposes of the Municipal Property Tax Code, follows the same registration rules as properties established in condominium ownership, the respective IMI, as well as the new ST, being assessed individually in relation to each of the parts, it does not appear, to the present tribunal, that there is any doubt that the legal criterion for defining the incidence of the new tax must be the same.

2. In this context, if the law requires, with respect to IMI, the issuance of individualized assessment notices for the autonomous parts of properties in vertical ownership, in the same manner as it establishes for properties in condominium ownership, it will require, in the same terms, with respect to the rule of incidence of Item No. 28 of the GTST.

3. Whereby, the ST, in the context of Item No. 28 of the GTST, could only be incurred on a given unit if that unit, possibly, had a TPV exceeding €1,000,000.00.

4. And, moreover, it was this very understanding that was adopted by the TCA.

5. Indeed, the TCA also issued individualized assessment notices, relating to each of the units susceptible of autonomous use, demonstrating that, in its opinion, the said units, notwithstanding not being legally established in condominium ownership, would, for all purposes, be independent of one another.

6. However, the TCA overlooked the fact that it could not, by virtue of the framework previously set forth, proceed to sum the individual TPVs of the previously mentioned units, seeking to obtain a value that would fall within the base of incidence of Item No. 28 of the GTST.

7. This when the legislator itself established a different rule within the scope of the Municipal Property Tax Code which, as previously referred to, is the Code applicable to matters not regulated in the Stamp Tax Code, with respect to Item No. 28 of the GTST.

8. In summary, the criterion established by the TCA, of considering the value of the sum of individual TPVs attributed to the parts, floors or divisions with independent use, taking advantage of the fact that the property is not established in the regime of condominium ownership, finds, in the eyes of the present tribunal, no legal support, being, in particular, contrary to the criterion applicable in the context of IMI and, by reference (in the terms mentioned above), in the context of ST.

9. In this context, the present tribunal considers that the criterion defended by the TCA violates the principles of legality and fiscal equality, as well as that of the prevalence of material reality over legal-formal reality.

10. Likewise, note that Article 12(3) of the Municipal Property Tax Code makes no distinction regarding the regime of properties established in condominium or vertical ownership.

11. As such, and since if the property were established in the regime of condominium ownership, none of its residential units would be subject to the incidence of the new tax, the TCA cannot treat materially equal situations differently.

12. In this regard, see what was said regarding this matter in the Arbitral Decision handed down in the context of Case No. 132/2013-T, of 16 December, whose understanding the present tribunal adopts.

"Indeed, it makes no sense to distinguish in the law what the law itself does not distinguish (ubi lex non distinguit nec nos distinguere debemus).

Moreover, to distinguish, in this context, between properties established in condominium and full ownership would be an 'innovation' without associated legal support, especially because, as has been stated here, nothing indicates, neither in item No. 28, nor in the provisions of the CIMI, a justification for that particular differentiation.

Note, by way of example, what Article 12(3) of the CIMI says: each floor or part of a property susceptible of independent use is considered separately in the property register, which also discriminates the respective taxable patrimonial value.

The uniform criterion that is required is, thus, the one that determines that the incidence of the rule in question only takes place when any of the parts, floors or divisions with independent use of property in condominium or full ownership with residential purpose, has a TPV exceeding €1,000,000.00.

Setting as the reference value for the incidence of the new tax the total TPV of the property in question, as the present respondent intended, finds no basis in the applicable legislation, which is the CIMI, given the reference made by the cited Article 67(2) of the Stamp Tax Code.

(…)

Moreover, admitting such differentiation of treatment could produce results incomprehensible from a legal point of view and contrary to the objectives that the legislator said it had for adding item No. 28. By way of example, suppose the following scenario, which appears plausible in light of the interpretation made by the present respondent: a citizen who is the owner of a property established in full ownership intended for habitation, with the total value of autonomous units equal to or exceeding €1,000,000.00 and the TPV of each one less than €1,000,000.00, is subject to an annual tax of 1% of that value (as occurred in the situation under analysis); whereas another citizen who holds a property with the exact same characteristics as the previous one but which has been established in condominium ownership, with the total value of autonomous units likewise equal to or exceeding €1,000,000.00 and the TPV of each one less than €1,000,000.00, will not be subject to taxation pursuant to the mentioned item No. 28.

On the other hand, one could ask: if such units have the same owner, why does it not make sense to aggregate, for taxation purposes, the respective TPVs? The answer can be illustrated through another scenario: a citizen who is the owner of a property in condominium ownership, in which each of its 20 units has a TPV less than €1,000,000.00, would be subject to taxation if – should such aggregation be admitted – the total TPV exceeded that value; whereas another citizen with identical 20 units distributed among 5, 10 or 20 properties would not be subject to any taxation pursuant to the mentioned item No. 28.

If this line of reasoning makes sense – thus justifying, therefore, the non-aggregation of the TPVs of units of properties in condominium ownership – there is no reasonable reason why the same should not be applied to the autonomous units of properties in full ownership.

Observing now the case under analysis, it is established that the TPVs of the floors (autonomous units) of the property with residential purpose vary between (…), whereby each of them is less than €1,000,000.00.

From this it is concluded, as a result of what has been stated, that the ST referred to in item No. 28 of the GTST cannot be incurred on the same, and therefore the tax assessment acts challenged by the claimant are unlawful" (emphasis ours).

1. A final point worth highlighting (notwithstanding the previous framework being sufficient to recognize the unlawfulness of the tax assessment acts carried out by the TCA), is based on the understanding advocated, both by the legislator and by the government itself, at the time of the addition of Item No. 28 to the GTST.

2. In this regard, let us now focus on the arbitral decision handed down in the context of case No. 48/2013-T, of 9 October, which analyzes, in an extensive manner, the objectives underlying the addition of the said item.

3. "Act No. 55-A/2012, of 29/10, has no preamble, hence it is not possible to derive the legislator's intention from it.

Such act of the Parliament originated from legislative proposal No. 96/XII (2nd), which, in its statement of reasons, speaks of the introduction of fiscal measures inserted in a broader set of measures to combat the budget deficit.

In the statement of reasons of the said legislative proposal, it is stated that, 'these measures are fundamental to reinforce the principle of social equity in austerity, ensuring an effective distribution of the sacrifices necessary to comply with the adjustment programme. The Government is strongly committed to ensuring that the distribution of those sacrifices will be made by all and not just by those who live from the income of their work. In accordance with that goal, this act broadens the taxation of capital and property, comprehensively covering a broad set of sectors of Portuguese society'.

In that statement of reasons it is further stated that, beyond the increase in taxation of capital income and securities gains, a rate is created in stamp tax applicable to urban properties of residential purpose whose taxable patrimonial value is equal to or greater than one million euros.

That is, in such statement of reasons, it is also not clarified what is understood by urban properties with residential purpose.

In his intervention in Parliament, in the presentation and discussion of the said legislative proposal, the Secretary of State for Tax Affairs stated the following:

'The Government has elected social equity as the priority principle of its fiscal policy. This is even more important in times of rigor as a way to ensure fair distribution of fiscal effort.

During the demanding period that the country is going through, during which it is obliged to comply with the economic and financial assistance programme, it becomes even more pressing to affirm the principle of equity. It cannot always be the same – employees and pensioners, bearing the fiscal burdens.

For the tax system to be more just, it is decisive to promote the broadening of the tax base, requiring increased effort from taxpayers with higher income and thereby protecting Portuguese families with lower income.

For the tax system to promote more equality, it is fundamental that the effort of budgetary consolidation be distributed among all types of income, with special emphasis on capital income and high-value properties. This matter, it should be recalled, was extensively addressed in the Constitutional Court decision.

Finally, for the tax system to be more equitable, it is crucial that everyone be called upon to contribute according to their capacity to pay, granting the tax administration enhanced powers to monitor and inspect situations of fraud and tax evasion.

In this sense, the Government presents today a set of measures that effectively reinforce a fair and equitable distribution of adjustment effort among a broad and comprehensive set of sectors of Portuguese society.

This proposal has three essential pillars: the creation of special taxation on urban properties valued above 1 million euros; the increase in taxation on capital income and securities gains; and the reinforcement of rules to combat fraud and tax evasion.

First, the Government proposes the creation of a special rate on urban residential properties of highest value. This is the first time in Portugal that special taxation has been created on high-value properties intended for habitation. This rate will be 0.5% to 0.8% in 2012, and 1%, in 2013, and will apply to homes valued at equal to or greater than 1 million euros. With the creation of this additional tax, the fiscal effort required of these owners will be significantly increased in 2012 and 2013'".

1. Next, it is necessary to gather the conclusions that permit, without margin for doubt, a decision on the matter under discussion (that is whether, for purposes of applying Item No. 28 of the GTST, in cases where a property with various autonomous units, susceptible of independent use, is not established in condominium ownership, the relevant TPV is determined by the sum of individual TPVs, or, alternatively, is individually considered).

2. In this sense, it should first be stated that this matter is, from the outset by force of Article 67(2) of the Stamp Tax Code, subject to the norms of the Municipal Property Tax Code, "to matters not regulated in this code concerning item 28 of the General Table, the CIMI is applied subsidiarily".

3. As such, and as has been stated many times, in the understanding of the present tribunal, the mechanism for determining the relevant TPV for purposes of the said item, is that which is established in the Municipal Property Tax Code.

4. Now, Article 12(3) of the Municipal Property Tax Code establishes that "each floor or part of a property susceptible of independent use is considered separately in the property register, which also discriminates the respective taxable patrimonial value".

5. The legislator disregarding, in the terms previously mentioned, any prior establishment of condominium or vertical ownership.

6. Indeed, for the legislator, what matters is the material reality underlying its existence as an urban property and its use.

7. It should be noted that the TCA itself appears to agree with the criterion expounded, which is why the assessments that it itself issues are very clear in their essential elements, from which results that the value of incidence corresponds to the TPV of each of the floors and the individualized assessments.

8. Therefore, 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 condominium ownership, it clearly established the criterion, which must be unique and unequivocal, for the definition of the rule of incidence of the new tax.

9. Thus, there would only be incidence of ST (in the context of Item No. 28 of the GTST) if some of the parts, floors or divisions with independent use presented a TPV exceeding € 1,000,000.00.

10. The TCA cannot consider as the reference value for the incidence of the new tax the total value of the property, when the legislator itself established a different rule in the context of IMI (and, as previously mentioned, this is the code applicable to matters not regulated concerning Item No. 28 of the GTST).

11. In conclusion, the current legal regime does not impose the obligation to establish condominium ownership, whereby the TCA's action amounts to arbitrary and unlawful discrimination.

12. Indeed, the TCA cannot distinguish where the legislator itself saw fit not to do so, under penalty of violating the coherence of the tax system, as well as the principle of fiscal legality provided for in Article 103 of the Constitution of the Portuguese Republic, and also the principles of justice, equality and fiscal proportionality.

13. In the case at hand, the property in question was, at the relevant date of the facts, established in full ownership and had 15 units with independent use, as results from the documents appended by the Claimant.

14. Given that none of these units, individually considered, has a taxable patrimonial value equal to or greater than €1,000,000.00, as results from the documents submitted with the record, it is concluded that the legal prerequisite for incidence was not met.

V. DECISION

1. The present Arbitral Tribunal hereby decides:

A) To uphold the petition for arbitral decision and, in consequence, to declare unlawful and annul the ST assessments mentioned above, by reference to the years 2012 and 2013, and respective surcharges, from which resulted tax payable in the amount of € 28,675.12 (which should now be reimbursed), concerning the taxation of urban properties with TPV equal to or greater than €1,000,000, pursuant to the provisions of Item No. 28 of the GTST;

B) To condemn the Respondent, pursuant to Article 43(1) of the General Tax Law and Article 61(2) and (5) of the Code of Administrative Court Procedure, to payment of compensatory interest, at the rate resulting from Article 43(4) of the General Tax Law, calculated on the amount paid in excess (i.e. € 28,675.12), from the date on which the aforementioned assessments were paid and until full reimbursement of the amount referred to; and

C) To condemn the Respondent for the costs of the proceedings.

VI. VALUE OF THE CASE

1. The value of the case is hereby fixed at € 28,675.12, pursuant to Article 97-A(1)(a) of the Code of Administrative Court Procedure, applicable by virtue of Article 29(1)(a) and (b) of the RJAT and Article 3(2) of the Costs Regulation in Tax Arbitration Proceedings ("RCPAT").

VII. COSTS

1. In accordance with the provisions of Article 22(4) of the RJAT, the arbitration fee is hereby fixed at € 1,530, pursuant to Table I of the mentioned Regulation, to be borne by the Respondent, given the complete upholding of the petition.

Let notification be made.

Lisbon, CAAD, 26 June 2015

The Arbitrator

(Sérgio Santos Pereira)